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National Lotteries Board v Bruss NO and Others (13046/06) [2007] ZAGPHC 268 (2 November 2007)

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R D CLAASSEN J:

0 0 0 0 0 0 0 0 1.

The Applicant, duly constituted under the National Lotteries Act, 57 of 1997 ("the Act") seeks to have an allegedly "promotional competition", run by First to Seventh and Ninth Respondents ("the Respondents") declared not to be such and declaring it to be an unlawful lottery and promotional competition ("PC").

2.

The Eighth Respondent ("SABC") is also cited as a party and the same relief was initially sought against it. However, by notice the relief in paragraph 3 of the notice of motion was withdrawn against the SABC but it remained a party "merely as an interested party". (As per the notice.) The relief sought in paragraph 3 reads as follows:

" 3.

Interdicting and restraining the Eighth Respondent from:

3.1 Conducting, facilitating, promoting or deriving any benefit from Winikhaya;

3.2 Unlawfully broadcasting Winikhaya in contravention of Section 56 and 57 of the Act".

3.

The Respondents filed answering affidavits on the merits and also raised a point in limine that the Applicants had no locus standi in judicio.

4.

The SABC filed a notice that it would only raise a legal point i.e. that the application is premature because both Applicant and the SABC are organs of State bound by the Intergovernmental Relations Framework Act, 13 of 2005 and that none of the procedures prescribed by the Act, before the institution of litigation in a Court of law, had been complied with. In its heads of argument the SABC also raised the point that the Applicant does not have locus standi to bring this application, because the administration of the Act is assigned to "the Minister" (i.e. Minster of Trade and Industry). Respondent aligns themselves completely with the SABC's stance and also augmented some of the arguments.

5.

In initio the Applicant requested the Court to hear all issues simultaneously. That would obviate any sort of peace-meal determination of the issues including possible separate appeals and additional hearings. On the other hand all nine respondents requested the points in limine to be heard first because it could not only curtail the proceedings materially, but could be dispositive thereof. Upon reflection I decided to hear the points in limine, and would, depending on the circumstances thereafter, decide whether to hear the merits as well. Eventually the merits were also debated although it obviated the presence of the SABC's counsel on the last day.

6.

LOCUS STANDI IN JUDICIO:

Under this heading the Applicant also raised the locus standi issue of the SABC due to withdrawal of the relief set out in prayer 3 of the notice of motion. The SABC resisted this on the basis that even the Applicant itself regarded the SABC as an interested party and submitted that it (the SABC) had a real and substantial interest in the matter at hand as the broadcaster and sponsor/promoter of the competition, as run by the Respondents. I shall however, first deal with the locus standi of the Applicant as all nine respondents raised this issue.

7.

By agreement between the parties and by direction of the Court the SABC was the chief protagonist on the points in limine and Mr Joubert S C then duly presented his arguments first, and Mr Gautschi augmented them thereafter.

8.

The argument on all sides on this issue turned on an interpretation of the Act itself The starting point is Section 1(xiii) which reads as follows:

"'Minister' means the Minister to whom the administration of this Act is assigned."

The Applicant on the other hand is the "Board" established by Section 2 of the Act. It is therefore a creature of statute with only functions specifically, or by necessary implication, assigned to it. Its functions are spelt out in Section 10. The relevant portions thereof read as follows:

"(a) advise the Minister on the issuing of the licence to conduct the National Lottery as contemplated in section 13(1) and on any matter contemplated in section 14(2)(g);

(b) ………….

(c) administer the fund and hold it in trust;

(d) monitor, regulate and police lotteries incidental to exempt entertainment, private lotteries, society lotteries and any competition contemplated in section 54;

(e) ……………

(f) ……………

(g) …………

(h) …………

(i) perform such additional duties in respect of lotteries as the Minister may assign to the board; (No such assignment was alleged or argued)

(j) …………

9.

Section 54 of the Act deals specifically with PC's. Section 54(1) sets out when a PC is not unlawful. Section 54(1)(f) reads as follows:

"A promotional competition is not unlawful if....

(g) The Minister has not in terms of sub-section (4) declared the PC unlawful."

Subsection 4 reads as follows:

"(4) The Minister may on the recommendation of the Board by notice in the Gazette declare a PC to be unlawful."

10.

These sections were then subjected to close scrutiny by the parties,( even "nitpicking" at it, as counsel described it!) Before reverting to all the arguments it must be said that it was common cause that the Act was not well drafted and would therefore have to be scrutinized. Mr Joubert's approach was that firstly, when an Act describes various functions to various officials, the Act must be carefully scrutinized to determine the respective functions of each functionary. This is obviously so because one is dealing with a creature of statute. That much is the more applicable here because the Applicant is not expressly empowered anywhere in the Act to institute judicial proceedings for the relief as claimed in this case. In casu it is also important because by common law and now in terms of the Act, Lotteries and PC's are only unlawful if they fall foul of Section 54 of the Act. Furthermore, the Act very specifically empower the “Minister or the Board” in certain sections to do certain things. If the Legislature intended the Minister “or the Board” to institute proceedings like this, it could clearly have done so. A very clear indication of this distinction is shown in s 16, where either one may institute proceedings in a High Court for certain specific relief. This case is not one of them.

11.

The Applicant ("the Board") relied heavily on the wording of Section 10(d) which, with regard specifically to "regulating and policing" of lotteries, for its empowerment to bring a proceeding like this. The SABC et al, denied that the sub-section so empowers it. They submitted firstly that regulating and policing is to be likened to the functions of policing within the South African context. Police do not bring a criminal case to Court. It is put before the Director of Public Prosecutions and/or its delegated officers to decide on the prosecution of a particular case. It is submitted by the Respondents that the same applies in this case. Mr Gautshi even went further and submitted that Section 10(d) only empowers the Board to "monitor, regulate and police" lawful lotteries and competitions contemplated in Section 54. There is much to be said for this argument but I do not find it necessary to decide it here. It is therefore submitted on behalf of the Respondents that the power to "regulate and police", understood within the context of the Act as a whole, only empowers the Board to advise and make recommendations to the Minister regarding PC's. It does not confer the power to approach a Court for declaratory relief.

12.

Mr Joubert also submitted that inasmuch as the power to "administer" the Act, and "declare a PC unlawful" is specifically assigned to the Minister, it would require a very strong indication, if not specifically mentioned, that the Minister's functions/powers are diminished in some way. It is submitted that there are none and I could certainly not find any either.

13.

The effect of the Minister's actions was also highlighted. The Minister's decision to declare a PC lawful or not would be an administrative decision subject to review, but with immediate legal effect until reversed or set aside by a Court of Law. And that Court's decision may be taken on appeal. On the other hand the Minister might decide to seek a declaratory order first from the Court on the lawfulness of a PC. I doubt whether a Court would be willing to take the decision on behalf of a Minister but it might well decide to obtain such declaratory order on collateral issues and/or disputes which might effect the Minister's decision one way or the other. However, these issues do not really affect the relative powers of the Minister and the Board.

14.

In answer to these submissions Mr Fine SC firstly referred to Sections 56 and 57 of the Act. He summarizes them (correctly to my mind) as follows:

"Section 56(b) of the Act provides that it shall be unlawful for any person, unless authorised by or under the Act, to conduct a competition other than a promotional competition contemplated in Section 54 of the Act ,in which success does not depend, to a substantial degree, upon skill. Section 57 of the Act provides that it shall be an offence to:

1. Conduct a promotional competition unless such promotional competition has been authorised by or under the Act;

2. Contravene or fail to comply with any provisions of the Act."

He then submits in paragraph 12 if his heads of argument that these two sections have "been expressly prohibited in the interest and protection of the Applicant, being the regulatory authority contemplated in the Act." (With reference to Patz v Green 1907 (TPD) 427 at 433 and 438). He further refers to the preamble of the Act which inter alia is "to regulate and prohibit lotteries....". Then obviously he also relies on Section 10(d) quoted above which gives the Applicant the function to "regulate and police" "any competition contemplated in Section 54".

15.

As far as Sections 56 and 57 go, they to my mind do nothing to indicate who has the power to do what in terms of the Act. They simply refer to "authorization by or under the Lotteries Act or any other law". They are therefore irrelevant to the enquiry.

16.

REGULATE AND POLICE:

It was argued that Applicant's function to regulate and police PC's, made it the so-called "watchdog" and therefore had the necessary locus standi to approach the Court with the relief it is seeking. Reference is made to the dictionary meanings of "regulate" which are inter alia to "control, regulate, or keep in order by means of police or some similar force; to keep in order, administer, control". It is submitted then that the power to regulate and police PC's, expressly gives it this function.

17.

The Applicant then heavily relies on the unreported judgment of my brother Seriti J in National Lotteries Board v First Rand Bank Ltd, Case Number 37196/05 (TPD). The case decided that the Applicant has locus standi to approach a Court of law for declaratory and interdictory relief, and comes to the following conclusion (at p 19 of the typed copy):

"If the Applicant has no authority to approach the Court for relief, the Applicant would be unable to effectively carry out its mandate, particularly the mandate conferred on it by Section 10(d) of the Act."

Mr Joubert in his argument relating to this judgment submitted that that case did not specifically determine the issue, or argument at hand here. He submitted that when analysed the real ratio decidendi of that case did not address this specific approach relating to locus standi and is therefore not binding on this Court. He also submitted that having studied the judgment and the heads of argument of the respondents in that case, and having spoken to counsel who acted for the respondents in that case, this issue was not specifically addressed. On the other hand Mr Fine handed up to Court the heads of argument of the respondents in that case and pointed out all the references therein to the same sections that were raised there, as in this case. The point is however, whether they were raised or not is neither here nor there. What is important is the ratio decidendi of the Court, and that alone. Any other findings may be of persuasive value but are not binding unless I find that actual ratio to be wrong to the extent that I cannot agree with it.

18.

It is clear from the judgment that the Court accepted that the Board has no direct authority in terms of the Act for purposes of this application. It also accepted the Applicant's submission that the Act and regulations did not prohibit the Applicant from approaching a Court. It decided that the Applicant is entitled to approach a Court "to ensure that the provisions of the Act and Regulations are adhered to".

19.

The ratio for coming to that conclusion is based on the following reasoning set out at the bottom of page 16 to page 18:

"The Applicant performs a civic duty in enforcing the provisions of the act. It has the principal duty and therefore also the obligation to monitor, regulate, police and enforce the provisions of the act and also to approach the court for necessary relief.

In Johannesburg City Council v Knoetze and Sons 1969 2 SA 148 (WLD) at 154A TROLLIP J said the following:

"The purpose of the interdict is, of course, to restrain future or continuing breaches of sec 4(1) whereas the statutory remedy of prosecuting and punishing the offender under sec 4(2) relates to past breaches of sec 4(1) .... For while the statutory remedies might be adequate to deal with past breaches, the civil remedy of interdict might be the only effective means of coping with future or continuing breaches. Hence it is not to be initially inferred that the lawgiver intended to exclude such a remedy. Indeed, the presumption is the other way, the very converse of the initial approach in considering the first problem; the civil remedy of interdict is presumed to be available unless the statute excludes it expressly or by necessary implication."

In Madrassa Adjuman Islamia v Johannesburg Municipality 1917 ad 718 AT 725 SOLOMON JA said the following:

"To exclude the right of a Court to interfere by way of interdict where special remedies are provided by Statute, might in many instances result in depriving an injured person of the only really effective remedy that he has, and it would require a strong case to justify the conclusion that such was the intention of the Legislature."

In Roodepoort-Maraisburg Town Council v Eastern Properties Ltd 1933 AD 87 at 96 STRATFORD JA said:

"Where it appears either from a reading of the enactment itself or from that plus a regard to surrounding circumstances that the legislature has prohibited the doing of an act in the interest of any person or a class of persons, the intervention of the court can be sought by any such person to enforce the prohibition without proof of special damage."

See also Industrial Council for the Building Industry (Western Province) v Leon Pascall & Co (Pty) Ltd 1951 3 SA 740 CPD at 745 A - G:

Applying the principles enunciated in the above quoted cases, my view is hat the applicant is entitled to approach the court for the relief it seeks in the notice of motion."

20.

I have no qualm with the basic principles enunciated in that part of the judgment. There is, however, one serious distinguishing factor. It was never suggested by any one in either case that the Minister did not have the power to bring this application or that the Board could not advise the Minister to declare the particular competition unlawful. Powers of a creature of statute can only be inferred if they are necessary for the proper administration of the Act in general and the functionary in particular. It can never be said that functionaries must be inferred with the power to do a specific act which has already been explicitly conferred by the Act on a specific functionary. That is what prevails in this case. The Minister may declare a PC unlawful on the recommendation of the Board. The Board may request an investigation and recommendation on a specific PC or the Board may unilaterally do it and give its recommendations to the Minister. Either way, the powers, functions and procedures are set out in the Act and are there to be utilised. For these reasons cases referred to by Seriti J do not, to my mind, support this issue and I say this for the following reasons:

20. 1 JCC v Knoetze case:

This case had at issue "future or continuing breaches" for which statutory remedies are not adequate. In casu, there is a very direct and simple remedy. The Minister may declare a competition unlawful with immediate effect. The "injured" entity must then go to Court if so advised (in casu it would be the Respondents and/or the SABC).

20. 2 Madrassa Case:

That case involved an injured party not having adequate other remedies. In casu the Board is not an "injured party".

20. 3 Roodepoort Maraisburg-Case:

This case dealt with a statutory prohibition and damages. There is no question of a specific prohibition and/or damages in casu.

21 0.

Seriti J then finds as follows at page 18:

As indicated those cases and principles do not apply to the present case and I find it of no binding authority on me.

22.

Having considered all the arguments I find that the Applicant does not have the necessary authority to approach this Court. Over and above the contentions advanced on behalf of the Respondents mentioned above, I am also motivated by what I stated in paragraph 20 here above, i.e. where the specific power is entrusted to a certain individual the same powers to another functionary will not be inferred, unless it cannot operate at all without the specific power. That is definitely not the case here. Then there is also the question referred to above that the powers are so clearly divided between the two entities, that it was not the Legislature’s intention to give this specific power to the Board.

23.

Having come to the said conclusion, it obviously disposes of the whole case. Counsel for the Respondents urged me not to make any finding on the balance of the issues, should I decide on any point in limine in their favour. Mr Fine for the Applicants requested the opposite. I am declining Mr Fine's request for the following reasons. Should I make a finding on the merits of the application, it would obviously come to, and have an affect on the Minister's mind, should he be placed in the position to make a decision on the Respondent's competition in terms of Section 54(1)(f). This must be obvious. Nothing at present, barring perhaps this application, prevents him from doing so. Furthermore, the Minister may even decide not to declare it unlawful, for instance due to its being "in the public interest", or some other reason. On the other hand, should I make a finding in favour of the Applicant the Minister might obviously feel bound by that decision and not exercise an unfettered discretion as he is obliged to do in terms of the Act. I therefore decided to only give a judgment on this one point in limine.

24.

It is therefore not necessary to decide any other point. I may however, just for the record say that regarding the arguments raised in respect of the Intergovernmental Relations Framework Act, I agree with all counsel that it is amazingly poorly drafted and should be revisited by the Legislature with the greatest of urgency. I might also just mention in passing, for what it is worth that I agree with the Applicant's submissions that it is not applicable in this case for the various reasons set out in the heads of argument of the Applicant, as augmented in Court.

25.

COSTS:

Normally costs follow the result and in casu it was common cause that it should include the costs of two counsel. There is however, a previous postponement where the costs were reserved. The matter was postponed because the Applicant was forced to join the Ninth Respondent as he was also a trustee of the relevant trust that is running the competition. In argument there was a huge issue as to whose fault it was that the Ninth Respondent was not joined earlier or at least timeously. It is so that on the one hand the trust's list of trustees was not in order and one person only "acted" as a trustee prior to being formally appointed by the Master. On the other hand the Applicant was warned way ahead of time of the necessity to join the Ninth Respondent but it refused, inter alia due to the absence of his name in the Master's records. In the final instance it does not really matter. If Applicants had acceded to the request timeously, if only ex abundanti cautela, the postponement would not have been necessary. Furthermore, since the Applicants failed in any event on the point in limine, as it should have in terms of my finding at that stage, it should pay the costs of the application.

26.

Applicant also submitted that the SABC should seek its costs from the other respondents because it had no interest after the Applicant withdrew its relief against the SABC in terms of prayer 3 of the notice of motion. I disagree. Not only was Applicant retained "as an interested party", in the Applicant's own words, but as sponsor/promoter of the underlying competition, it had a real and substantial interest in the matter. There is therefore no reason why Applicant should not pay their costs as well.

27.

The last question is the SABC's costs for the last day of hearing, where only the merits were argued, but where junior counsel, on behalf of the SABC stayed in attendance. The main reason I directed Mr Joubert to begin the argument on the points in limine is that he and his client do not have an interest in the arguments relating to the merits. He could therefore be excused from further attendance once the points in limine had been dealt with. As it was, Mr Joubert had fully dealt with the argument on costs of the previous postponement in his argument, there was thus nothing to add on behalf of the SABC. I can understand that the SABC has an interest in the matter as far as the merits are concerned, but having only entered an appearance to defend on the legal points, it had no real interest in the matter thereafter. If it wanted to appoint counsel on a watching brief basis, it was certainly entitled to do that, but the other parties should not be saddled with those costs.

28.

I therefore make the following order:

1. It is declared that the Applicant has no locus standi, in terms of the National Lotteries Act, No. 57 of 1997, to bring this application;

2. The application is dismissed with costs;

3. Costs include the costs of two counsel;

4. The cost of Eighth Respondent's counsel's attendance on Friday, 19 October 2007 is to be paid by the Eighth Respondent itself.

CLAASSEN R D

JUDGE OF THE HIGH COURT