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Not reportable

Delivered 20 June 2007

IN THE HIGH COURT OF SOUTH AFRICA

(TRANSVAAL PROVINCIAL DIVISION)

CASE NO: 8985/07

In the matter between:

TAMASA TRADING 208 CC Applicant

and

JOSÉ LOIS DA COSTA CARDOSO First Respondent

THE GAUTENG PROVINCIAL LIQUOR BOARD Second Respondent

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JUDGMENT

________________________________________________________________

MURPHY J

1. The applicant seeks a declaratory order that the liquor store licence issued in favour of the first respondent by the second respondent on 22 January 2007 in respect of certain premises known as the Reeds Tops at Spar, Shop 4, The Reeds Shopping Centre in Centurion, Pretoria, under liquor board reference number GAU/032946, is null and void, because the conditional authority, issued in terms of section 33 of the Liquor Act 27 of 1989, lapsed on 30 October 2006 and accordingly the application was deemed not to have been granted in terms of that provision.

2. The applicant is a close corporation doing business as Liquor Masters in the same suburb as the first respondent, namely The Reeds. The applicant and the first respondent are therefore competitors.

3. The second respondent is the Gauteng Provincial Liquor Board, constituted in terms of the provisions of the Liquor Act 27 of 1989, read with the Gauteng Liquor Act 2 of 2003.

4. Before dealing with the dispute between the parties it is necessary to have regard to the statutory framework in which it occurs. Prior to 2003 the liquor trade in South Africa was governed by the Liquor Act 27 of 1989. That Act was repealed by of section 46 of the Liquor Act of 2003, subject to transitional provisions.

5. The transitional provisions of the Liquor Act 2003 are contained in Schedule 1 to that Act. Item 2 of Schedule 1 provides for transition from the repealed laws to provincial legislation, the purpose evidently being to transfer functional competency over the liquor trade from a national to a provincial level. Item 2(1) provides that despite section 46, in respect of each province, a provision of a law mentioned in schedule 2 that concerns the micro-manufacture, retail sale or consumption of liquor remains in force within that province until a date determined in accordance with sub-items (2) and (3) and cleared by notice in the Gazette. The mentioned sub-items (2) and (3) provide that the Premier of a province, or the member of the executive council responsible for liquor in the province, may notify by the Minister that the government of the province wishes to consult with the Minister on the determination of a date contemplated in sub-item (1), at any time after the legislature of that province has enacted legislation that is consistent with the objects and purposes of the Liquor Act; provides for regulation of the micro-manufacture, retail sale and consumption of liquor within the province; requires every person engaged in the liquor trade to be registered or to have a licence or permit; provides appropriate reasonable procedures for licensing; and establishes enforcement mechanisms to ensure proper monitoring and compliance by any persons registered or licenced in terms of the provincial legislation. If the Minister is so satisfied then he or she may determine a date and declare that date in the Gazette. In terms of sub-item (4) until the date is declared with respect to any particular Province, a reference in the Liquor Act of 2003 to “applicable provincial legislation” must be regarded as being a reference to the provisions of any law mentioned in schedule 2 that concerns the micro-manufacture, retail sale or consumption of liquor. In other words, until such time as a date is declared, the Liquor Act 27 of 1989 will be the governing legislation.

6. The Gauteng Liquor Act was adopted as legislation by the provincial legislature during the course of 2003. However, both counsel who appeared before me informed me that the operative provisions of the Act with regard to licensing have not come into operation as yet and that accordingly, in terms of section 142 of the Gauteng Liquor Act, applications for licences are required to be disposed of in accordance with the pre-existing law, namely the Liquor Act 27 of 1989. I am not entirely persuaded that the submission is correct. Despite my request to be provided with full argument with appropriate legislative references, counsel have furnished me with heads of argument that are incomplete. My own limited research indicates that the provisions of the Gauteng Liquor Act 2 of 2003 may have came into force on 1 November 2004 and that the present dispute may be governed by it. Be that as it may, the key provisions at play in this application, namely sections 22 and 33(5) are almost identical in wording to section 30 and section 35(5) respectively of the Gauteng Liquor Act 2 of 2003. Accordingly, in what follows I will assume that the parties are correct in their submission that Act 27 of 1989 continues to apply, in the safe knowledge that if they are mistaken what I have to say has equal application to the provisions of the provincial legislature.

7. Sometime before October 2005, the exact date does not appear from the papers, the first respondent made an application for a liquor licence in terms of section 19 of Act 27 of 1989. The kind of licence sought was a liquor store licence in terms of section 20(b)(iii) – (section 28(1)(b)(ii) of the provincial legislation).

8. The application for the liquor licence appears to have been approved by the second respondent on 31 October 2005, but a “licence”was issued subject to what has been referred to as a provisional or conditional authority in terms of section 33. Section 33 is concerned with liquor licences in respect of incomplete premises. The relevant portions of it read:

(1) If an application for a licence (excluding a temporary liquor licence and an occasional licence) is granted by the Board in respect of premises not yet erected, or premises requiring any structural alteration, addition or reconstruction to be effected so as to make them suitable for the purposes for which they will be used under the licence, the chairperson shall issue a notice to the applicant concerned in which he or she shall be ordered to comply with such conditions or requirements, referred to in the notice, with regard to those premises as the chairperson may determine, within such period as may likewise be determined and referred to.

(2) The chairperson may at any time after the issue of such a notice, on application by the applicant concerned –

(a) withdraw or amend any condition or requirement determined under subsection (1);

(b) extend the period determined under subsection (1);

(c) extend or further extend the period determined under subsection (1) or the period so determined and extended under paragraph (b) of this subsection, as the case may be, in respect of premises not yet erected at the time of the issue of the notice, if he or she is satisfied that a substantial part of the premises has since been erected;

(d) approve an amended plan in respect of the premises.

3. The period determined under subsection (1) or the period so determined and extended under subsection (2)(b), as the case may be, shall not be longer than 24 months, and the period extended or further extended under subsection (2)(c), as the case may be, shall not be longer than a further 12 months.

4. When the chairperson is satisfied that the premises in respect of which a notice has been issued under subsection (1), have been completed in accordance with the plan thereof approved by the chairperson or the Board, as the case may be, the conditions and requirements determined by the chairperson have been complied with and the premises are suitable for the purposes for which they will be used under the licence concerned, he or she shall issue the licence in accordance with section 32(1) –

(a) in a case contemplated in subsection (6) and subject to this Act and the law regarding deceased estates, insolvency, judicial management or mental health, to the administrator, manager, curator or person so contemplated;

(b) in any other case, to the applicant concerned.

(5) If the licence is not issued before the expiration of the period determined under subsection (1), extended under subsection (2)(b) or further extended under subsection (2)(c), as the case may be, the notice concerned shall lapse and the application for the licence shall be deemed not to have been granted.”

9. The conditional authority granted to the first respondent by the second respondent was confirmed in a letter addressed to the first respondent’s representative dated 31 October 2005 which reads as follows:

“APPLICATION IN TERMS OF SECTION 19 OF THE LIQUOR ACT, 1989: THE REEDS TOPS AT SPAR, PRETORIA

The above-mentioned application refers.

The Liquor Store Licence will be issued upon receipt of the following within 12 months:

1.Designated police officer’s inspection report.

2.Proof of Wine Demarcation.”

10. It is common cause that on 8 August 2006 the first respondent applied for extension of the provisional authority for a further 12 month period in terms of section 33(2)(b). The application was lodged two months prior to the expiry of the 12 months stipulated in the original conditional approval.

11. Unfortunately, the initial 12 month period was not extended prior to 30 October 2006 and the chairperson, acting under the provisions of section 33(2)(b), granted the extension only on 20 November 2006, a few weeks after the original 12 month period had expired. Thereafter, on 22 January 2007, the liquor licence was issued by the second respondent to the first respondent.

12. The applicant submits that the second respondent lacked jurisdiction to issue the liquor licence on 22 January 2007 because the original application was deemed not to have been granted at the expiration of the original period of the conditional authority. Section 33(5) provides that if the licence is not issued before the expiration of the period determined under section 33(1) as extended under section 33(2), the notice concerned shall lapse and the application for the licence shall be deemed not to have been granted. In short, the applicant submits that when the second respondent decided to issue the licence on 22 January 2007 there was no valid application before it in terms of section 19 since the original section 19 application was deemed not to have been granted by virtue of the operation of the provisions of section 33(5). The first respondent counters that in terms of section 33(2) an applicant for a liquor licence who has been granted a conditional authority under section 33(1) may apply to have the period extended and the chairperson is entitled and authorised by the section to extend the period “at any time after the issuing of such a notice”. Counsel submitted that the word “any” is of wide import and of unqualified generality.

13. I have doubts whether the general language used would be sufficient basis to extend an authority that has already expired. The clear intention of section 33(5) is that the notice should lapse at the expiry of the period. However, for the reasons that follow I do not believe such results in the invalidity of the licence granted on 22 January 2007.

14. Although the point was not raised by either party, I have given some thought to whether the principle cessante ratione legis, cessat et ipsa lex is of application in the present circumstances. The maxim means that if the reason of the law ceases to exist, the law itself also falls away. Our courts have applied the rule in order to suspend the operation of a statutory provision if the ratio is found not to exist in the specific circumstances. A court should seek to ascertain the ratio of a statutory provision in order to determine whether that ratio, when applied to the particular circumstances, still exists - see Labuschagne v Labuschagne; Labuschagne v Minister van Justisie 1967(2) SA 575(A) at 587 D – F.

15. The ratio of section 33 is to provide a mechanism of control to ensure that applicants applying for liquor licences in respect of incomplete premises comply with the conditions and requirements referred to in the notice. In the event of their non-compliance, the liquor licence will then fall away and thus require re-consideration of the grant of a licence to ensure that there has indeed been compliance.

16. In the present instance the conditions attached to the conditional authority were the provision of a designated police officer inspection report and proof of wine demarcation; the latter presumably being aimed at ensuing that liquor is separated from other produce. On 20 November 2006, that is three weeks after the notice lapsed, the appointed liquor officer, Inspector WP Baartman, issued the required certificate in respect of the premises in which he attested to the fact that the premises had been completed in all respects in accordance with the plan submitted with the original application. The upshot of this is that when the chairperson belatedly gave his attention to the question of an extension, the first respondent had already complied with the conditions in the notice and the designated police officer’s inspection report had in fact been submitted. Thus, considering that the first respondent made application for an extension prior to the expiry date, had complied with the requirements in the notice shortly after the expiry date and that ultimately the licence was granted, it might be said that the ratio of the provisions of section 33 had ceased to exist at the time the licence was issued in January 2007 and thus that section 33(5) should be held to be inoperative, as the legislature could not have intended it to pertain when the purpose for its existence had fallen away or been fully complied with.

17. It seems to me therefore that this could indeed be a case where the maxim should apply. The ratio of the deeming provision is to compel the applicant to comply with the requirements in the conditional notice. The ratio fell away when the applicant belatedly complied while its application for an extension was pending, and which had not been granted only in consequence of an administrative oversight by the chairperson of the board. It would be overly formalistic, technical and artificial to set aside the licence and then require the very same application, supplemented by the very same police officer’s inspection report, to be resubmitted to the board with the most likely result that the licence would be issued again.

18. Accordingly, in accordance with the principle of cessante ratione legis cessat et ipsa lex, a case might have been made that the provisions of section 33(5) should not be operative in the circumstances of this matter.

19. But more appropriately, pursuing a somewhat different but related tack, the review should be decided by determining whether the board was functus officio when it took its decision to grant the licence on 22 January 2007 and thus acted ultra vires. Proceeding along this line of reasoning, it is necessary to consider the intention of the legislature when providing for the lapsing of the notice and deeming of the application “not to have been granted” under section 33(5). There are three possibilities. First, most drastically, the provision might be construed to mean that the application should be regarded as having been considered and refused with the result that the board is functus officio. Second, the notice being a conditional authority, its lapsing is merely intended to revoke the grant of the provisional licence under section 33(1), but that the application lodged under section 19 nevertheless remains valid pending a final decision under section 22. Thirdly, it may mean that the licence is considered not to be granted, but because no decision has in fact been taken by the board, the applicant is entitled to submit a fresh application for a licence.

20. I am not convinced that the deeming provision was intended by the legislature to result in the board becoming functus officio. The lapsing of a temporary, conditional licence does not involve the taking of a final decision in terms of section 22 in relation to an application.

21. Section 22 provides that an application for a licence shall be considered by the board and it may (a) refuse the application; or (b) grant the application. It is only when the application is granted or refused by the board that it should be considered functus officio. The choice of language in section 22 bears significance for a proper interpretation of section 33(5). The latter provision does not deem the licence to have been refused on the lapsing of the section 33(1) notice. There is a consequential difference between deeming a licence not to be granted and a deemed refusal. In the former situation it remains open to the authority to either grant or refuse the licence at some point in the future. All that happens when the section 33(1) licence lapses by virtue of section 33(5) is that the conditional licence holder may no longer assume that the licence will be granted on the fulfilment of the conditions to which the conditional authority was subjected. It may yet be refused. The board must reconsider the section 19 application in the light of the events subsequent to the lapse of the conditional authority.

21. Because there is no deemed refusal the board is therefore not functus officio. The question then simply is whether the board requires to be seized by a fresh application or whether it may decide the application upon the original application in respect of which it granted the conditional authority, as supplemented if need be. Practical common sense favours the board being permitted to proceed on the papers before it. Should it be aware of a significant change in circumstances, besides the lapsing of the notice, it would be well advised to seek submissions or representations from other interested parties.

22. In the present matter the board sought to extend the conditional authority on 20 November 2006 and granted the licence finally on 22 January 2007. Whether it was permitted to “extend” the conditional licence subsequent to its expiry, as I have said, is debatable, but on the assumption that it granted a final licence under section 22, not being functus officio, it was entitled to do so, and section 33(5) posed no bar in that regard.

23. In the result, the application is dismissed with costs.

JR MURPHY

JUDGE OF THE HIGH COURT

Date Heard: 22 May 2007

For the Applicant: C de W van der Merwe, Pretoria

Instructed By: Marius Blom & GC Germishuizen Inc., Pretoria

For the 1^st Respondent: Adv EP van Rensburg, Pretoria

For the 2^nd Respondent: Adv MB Matlejoane, Pretoria

Instructed By: Emil Scheepers Inc., Pretoria (1^st Respondent)

The State Attorney, Pretoria (2^nd Respondent)

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