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IN THE HIGH COURT OF SOUTH AFRICA

(NATAL PROVINCIAL DIVISION)

(REPORTABLE)

CASE NO: 8337/06

In the matter between:

MICHAEL WEARE First Applicant

BETTING WORLD (PTY) LTD Second Applicant

and

MR JOEL SIBUSISO NDEBELE N. O. First Respondent

KWAZULU-NATAL GAMBLING BOARD Second Respondent

KWAZULU-NATAL BOOKMAKERS’

CONTROL COMMITTEE Third Respondent

MANDISI BONGANI MABUTO

MPAHLWA N.O. Fourth Respondent

NATIONAL GAMBLING BOARD Fifth Respondent

JUDGMENT

Delivered on 29 February 2008

[1] This case is about bookmaking in the Province of KwaZulu- Natal (KZN ). The First Applicant operates as a bookmaker in this province. The Second Applicant wants to do likewise and maintains that the law allows him to do so. However, the authorities maintain that the law does not and I have to decide who is right.

[2] The First Applicant is a businessman who, as I have said, carries on the business of bookmaking. His business is called The Betting Shop. The Second Applicant is Betting World (Pty) Ltd, a private company, which also carries on business as a bookmaker. However, this it does in all the provinces of the country except KZN. The First Applicant is the managing director of the Second Applicant. There is a further link between the two Applicants in that in terms of an agreement between the parties the Second Applicant operates the First Applicant’s bookmaking operation in KZN.

[3] The Second Applicant operates lawfully as a bookmaker in the rest of the country. The reason why it does not operate in KZN is because of the provisions of the Regulation of Racing and Betting Ordinance 28 of 1957 (the Ordinance), in particular section 22 (5) thereof, which the authorities responsible for applying it maintain that it precludes juristic persons from operating as bookmakers. That subsection is the obstacle to the Second Applicant operating in this province, and this application is aimed at removing this obstacle. I should mention that the Second Applicant has never applied to be a bookmaker in KZN but the reason for this is that it realises that it would be an exercise in futility to do so at this stage, given section 22(5) of the Ordinance and the interpretation of it by those authorities.

[4] The Respondents are:

1. The Premier of Kwazulu-Natal, who is responsible for the administration of the Kwazulu-Natal Gambling Act 10 of 1996 (the KZN Act);

2. The Kwazulu-Natal Gambling Board which was established in terms of section 5 of the KZN Act;

3. The KZN Bookmakers’ Control Committee established in terms of section 21A of the Ordinance;

4. The Minister of Trade and Industry of South Africa, who is responsible for the administration of the National Gambling Act 7 of 2004 (the National Act);

5. The National Gambling Board established in terms of section 64 of the National Act.

[5] Only the First, Third and Fourth Respondents responded to the Application, with the First and Third Respondents opposing it and the Fourth Respondent delivering a notice to abide the decision of the court. Unless otherwise stated, I shall refer to the First and Third Respondents simply as the Respondents.

[6] At the commencement of the hearing I dealt with an application brought by the Applicants for condonation of their failure to comply with Uniform Rule 16A. Rule 16A(1)(a) requires a party raising a constitutional issue to notify the Registrar thereof at the time of filing the relevant affidavit and Rule 16A(1)(b) requires the Registrar on receipt of the notice to place it on a designated notice board. Whilst the Applicants gave notice of the application to all of the Respondents, they did not initially provide the Registrar with the Rule 16A(1)(a) notice and only did so some two months after the application papers were issued. The notice was then placed on the designated notice board. The First and Third Respondents raised this non-compliance with the rule as a preliminary point and this resulted in the Applicants bringing the condonation application. At the hearing, whilst the First and Third Respondents did not consent to the application, they did not oppose it. I am satisfied that the non-compliance with the rule was due simply to an oversight on the part of the Applicants’ attorney and that the omission has been satisfactorily explained. Furthermore, I am satisfied that nobody was prejudiced by this omission. The notice went up more than eight months before the application was argued before me. I am therefore satisfied that condonation ought to be granted.

[7] As I have mentioned, the provision of the Ordinance which the Applicants’ attack is section 22 (5) which reads as follows:

“No bookmaker’s licence shall be issued in the name of any partnership, or any company or other association of persons, or to the representative or agent or officer of any partnership, company or association, or to the representative or agent of any individual on behalf of that individual: Provided that nothing hereinbefore contained shall be deemed to prevent the carrying on of a bookmaker’s business in partnership by two or more persons each of whom is the holder of a valid bookmakers licence issued to him in terms of this Ordinance.”

[8] The substantive relief which the Applicants seek in the Notice of Motion is threefold:

1. Firstly, they ask for an order declaring that juristic entities are entitled to be issued with bookmakers’ licences in KZN, despite section 22 (5) of the Ordinance. This relief is premised on an argument that on a proper interpretation of the section and the Ordinance as a whole, section 22 (5) does not preclude the issuing of such licences to juristic entities.

2. Additionally, or alternatively to this relief the Applicants seek an order declaring that if section 22 (5) of the Ordinance does in fact prohibit juristic entities from being issued with bookmakers’ licences, it is invalid and has no application because it has been replaced, amended or contradicted and set aside by the National Act.

3. Additionally or alternatively the Applicants seek orders declaring section 22 (5) to be invalid and of no force and effect and setting it aside, because it infringes the Applicants’ fundamental rights as enshrined in chapter 2 of the Constitution of the Republic of South Africa, 1996.

[9] For the Applicants to obtain the first two orders which they seek, it is not necessary for any finding to be made on the constitutionality of the subsection in question. The Applicants have sought an order which is not dependent on a declaration of unconstitutionality because of the well known principle laid down by the Constitutional Court that a court should prefer an interpretation of legislation which is in conformity with the Constitution provided that the legislation is reasonably capable of bearing that meaning, that is, provided that the interpretation is not unduly strained (Investigating Directorate: Serious Economic Offences and Others v Hyundai Motor Distributors and Others [2000] ZACC 12; 2001 (1) SA 545 (CC) at paras [23] to [24]).

[10] Section 22(5) of the Ordinance must be interpreted, firstly in the context of the Ordinance as a whole, the relevant portions of which are:

(a) From the long title it is apparent that the Ordinance aims at regulating, restricting and controlling horseracing and betting, amongst other things.

(b) In the case of betting the control is exercised in the first instance by providing in section 21(1)(a) that no person shall exercise the calling of a bookmaker or perform any act pertaining to the business of a bookmaker unless he holds a bookmaker’s licence issued in terms of the Ordinance.

c) “Bookmaker” is defined in section 1 to mean “any person who carries on the business of or acts as a bookmaker or…. “.

d) Section 22(5) then places certain restrictions on the persons to whom bookmaking licenses may be issued.

[11] To my mind the ordinary meaning of section 22 (5) is the following:

a) The first part consists of a prohibition on the granting of licenses to certain persons, and the second creates a conditional exception to that prohibition.

b) The prohibition applies to three categories of persons, namely, associations of persons, representatives of such associations, and representatives of individuals.

c) Companies and partnerships are expressly included in the first category. Other associations, not expressly mentioned, which would also fall into that category would be voluntary associations (with or without legal personality) and close corporations.

d) The exception created in the second part of the subsection relates only to partnerships and is an indirect exception. It is indirect because it does not permit the issuing of bookmaker’s licenses to partnerships. Instead, it exempts partnerships from the prohibition in section 21(1)(a) against unlicensed bookmaking. This is because it does not require a bookmaking partnership to be licensed. It allows partnerships to operate without licenses, provided that each partner is licensed.

e) The only partnerships which fall within the exception are ones whose

partners are all natural persons. This is because if a partner were not a natural person, that partner would be precluded by the prohibition in the first part of the subsection from obtaining a license.

[12] The starting point of the Applicants’ argument as advanced by Mr Arendse SC with whom Mr Du Plessis appeared, is that in accordance with the decision of the Constitutional Court in the Hyundai case all legislation must be interpreted “through the prism of the Bill of Rights”. Having done that and in particular having considered the sections in the Bill of Rights relied upon by the Applicants in moving for the third order sought by them, I should conclude that section 22(5) permits juristic entities to operate legally as bookmakers. What the Applicants in effect want me to find is that although subsection (5) expressly states that no bookmakers’ licence shall be issued in the name of any partnership, company or other association of persons what it in fact means is that a bookmakers’ licence may be issued to such entities or that no bookmaker’s licence may be refused to such entities. Not surprisingly, the Respondents, who were represented by Mr Dickson SC and Ms Gabriel, contended that the clear meaning of the subsection is that it restricts bookmaking to natural persons and in certain circumstances, partnerships.

[13] In my opinion, the interpretation advanced by the Applicants would strain the meaning of the words in the subsection beyond breaking point. To ascribe to them that meaning would be to give them a meaning completely opposite to their ordinary meaning. I conclude therefore that it is not possible to interpret the subsection in the way that the Applicants have suggested.

[14] The second argument advanced by the Applicants is that the Ordinance as interpreted by the Respondents, is in conflict with the National Act and because the National Act takes precedence over the Ordinance, the National Act must be given effect to. The conflict which the Applicants rely on is that whilst the Ordinance does not permit juristic persons to operate as bookmakers, the National Act does. The Applicants do not contend that the provinces do not have the authority to legislate on gambling activities. However, they rely on section 146 of the Constitution which reads at follows:

“(1) This section applies to a conflict between national legislation and provincial legislation falling within a functional area listed in Schedule 4.

(2) National legislation that applies uniformly with regard to the country as a whole prevails over provincial legislation if any of the following conditions is met:

(a) the national legislation deals with a matter that cannot be regulated effectively by legislation enacted by the respective provinces individually.

(b) the national legislation deals with a matter that, to be dealt with effectively, requires uniformity across the nation and the national legislation provides that uniformity by establishing:-

1. norms and standards;

2. frameworks; or

3. national policies.”

[15] From this section it can be seen that the first requirement for it to come into operation is that there must be a conflict between national legislation and provincial legislation falling within a functional area listed in Schedule 4 (one of which is gambling). The Applicants contend that s 22 (5) of the Ordinance is inconsistent in a number of respects with the National Act.

[16] The first inconsistency pointed to by the Applicants is with the intention of the Act which, as is evident from the long title, includes the establishment of uniform norms and standards applicable to national and provincial regulation and licensing of certain gambling activities. Whilst it is true that, on the face of it, the Ordinance is in conflict with the stated intention of the Act, when one reads the Act itself, as will appear in due course, there is in fact no conflict.

[17] The second one is s 44(2) read with s 46(1) of the National Act. S 44(2) provides that it is a condition of every provincial licence that a licensee must comply with every applicable provision of this act. Section 46 reads as follows:

“46 (1) Subject to subsection (2), only a juristic person may be

licensed:-

1. to operate a casino;

2. as a route operator;

3. as a manufacturer;

4. as a testing agent;

5. as a totalisator operator; or

6. under any way other category of licence to the extent that applicable provincial law so requires.

(2) Applicable provincial law may require that a licensee contemplated in subsection (1) to be a company registered in terms of the Companies Act, 1973 (Act No. 61 of 1973).”

[18] Bookmaking is clearly not expressly dealt with by s 46. However, it is covered by s 46 (1) (f) by virtue of the following provisions of the National Act.

a) Firstly, the term bookmaker is defined in s 1 as being someone who lays or opens bets with members of the public or other bookmakers, or takes such bets with other bookmakers.

b) S 3 read with s 4 makes it clear that bookmaking is a gambling activity and section 8 provides that a person may not engage in, conduct or make available a gambling activity except for a licensed gambling activity.

c) S1 defines “licensed” in relation to a gambling activity as one which may be engaged in under a licence issued in terms of the Act or provincial legislation.

[19] It is clear that para (f) of s 46 (1) is qualified, unlike the preceding paragraphs of that subsection. The qualification is that the requirement that only juristic persons may be licensed applies only to the extent that applicable provincial law so requires. It follows therefore that unless a provincial law lays down the requirement that only juristic persons may be licensed, s 46 (1) does not require bookmaker’s licences to be restricted to juristic persons. S 46 (2) takes the matter no further because it is simply an enabling provision. In my opinion therefore there is no conflict between the National Act and the Ordinance.

[20] Mr Arendse also argued that because s 46 is an enabling provision and because the power to exclude companies is not mentioned in it, that power is excluded. I do not agree with this. To me, the section makes it plain, insofar as it relates to bookmakers, that it is left to the provincial legislatures to decide whether or not to limit licences to juristic persons.

[21] It also does not follow, contrary to what was argued by Mr Arendse, that if a provincial legislature does not pass a law restricting bookmaker’s licences to juristic persons then in that province both juristic and natural persons may be granted bookmaker’s licences. For Mr Arendse to even start advancing that argument the National Act would have had to have provided that both juristic and natural persons are entitled to be licensed as bookmakers. In the absence of such a provision, a provincial law such as the Ordinance, that restricts licences to natural persons (and allows partnerships to operate in certain circumstances) is not in conflict with the National Act and there can therefore be no question of the provincial law not applying. All that the legislature needed to do to achieve the result which the Applicants contend it did achieve, was to have omitted the words “to the extent that applicable provincial law so requires.” The presence of these words in para (f) makes it clear that the national legislature did not intend to do what the Applicants contend it did.

[22] The National Act does not purport to prescribe to provincial legislatures what categories of persons may be licensed as bookmakers. On the contrary, this power was expressly left in the hands of provincial legislatures by s 46 (1) (f), and as mentioned, s 46 (2) is no more than an enabling provision.

[23] It was also argued on behalf of the Applicants that s 22 (5) of the Ordinance, or rather, the Respondents’ interpretation of it, was in conflict with the definition of bookmaker in the National Act. This is because the definition refers to a person who does certain things and “person” is defined to include “ a partnership, association, trust or a juristic person established by or in terms of any law.” I do not see how this assists the Applicants in any way. All it means is that the definition of bookmaker in terms of the Act is very wide. This is necessary to ensure that the prohibition on unlicensed gambling (which includes bookmaking) covers all categories of person. It does not follow that all the entities included in the definition of person are entitled to operate as licensed bookmakers, particularly when the Act itself contemplates that all except companies or juristic persons may be excluded from operating.

[24] Next, the Applicants contend that the Respondents’ interpretation of the Ordinance is inconsistent with the Provincial Act. According to this argument, because the Provincial Act defines a person as including a juristic person, because nowhere in the Provincial Act is there any direct reference made to juristic persons being excluded from applying for licences, and because s 21 of the Provincial Act in dealing with the circumstances in which an application for a licence will be refused does not stipulate that only natural persons may apply, it follows that in terms of the Act juristic persons may be licensed as bookmakers. Presumably the Provincial Act therefore by implication repeals or overrides the Ordinance. However, in my view, this argument overlooks both s 3 of the Provincial Act, which provides that no person shall perform any act pertaining to gambling (which in terms of the definition in s 1 includes bookmaking) except in accordance with the provisions of the Act and the Ordinance, and the fact that the licensing of bookmakers is not dealt with at all in the Provincial Act. It is clear therefore that what s 3 means is that any person who wishes to undertake gambling activities must comply with either the Provincial Act or the Ordinance, depending on which of the two deals with the gambling activity in question. Because the Provincial Act does not deal with the licensing of bookmakers, and the Ordinance does, the Provincial Act itself requires that the Ordinance’s provisions in relation to the licensing of bookmakers must be complied with. I conclude therefore that far from there being any conflict between the Provincial Act and the Ordinance they sit comfortably side by side. In fact, the Act reinforces the Ordinance.

[25] Furthermore, the fact that “person” is widely defined in the Provincial Act to include both natural and juristic persons, does not mean that all entities included in the definition of person are entitled to obtain bookmaking licences. The Act itself expressly requires compliance with the Ordinance and the Ordinance prohibits certain categories of persons from being licensed. All that it means therefore is that the category of persons hit by the prohibition on unlicensed bookmaking in the Provincial Act (when read together with the Ordinance), is wide. This was done for the same reason that it was done in the National Act.

[26] In passing, I should mention that I do not agree with the Respondents’ contention that “person” in the definition of the “bookmaker” in s 1 of the Ordinance, and hence also s 21 (1) which proscribes unlicensed bookmaking, means natural persons only. In these sections “person” must include all categories of persons, otherwise the prohibition would be ineffective in respect of juristic persons. In my opinion however, “person” in s 22 (1) means a natural person only, because that section deals with bookmakers’ licenses and ss (5) thereof limits bookmakers’ licenses to natural persons.

[27] The second series of attacks on s 22 (5) are attacks on the constitutionality of the subsection. The Applicants contend that there are various grounds for finding that the subsection is inconsistent with the Bill of Rights.

[28] The first respect in which the Applicants contend that s 22 (5) does not comply with the Bill of Rights and the Constitution is that it offends against s 9, the equality clause. This section reads as follows:

“9. Equality

(1) Everyone is equal before the law and has the right to equal protection and benefit of the law.

(2) Equality includes the full and equal enjoyment of all rights and freedoms. To promote the achievement of equality, legislative and other measures designed to protect or advance persons, or categories of persons, disadvantaged by unfair discrimination may be taken.

(3) The state may not unfairly discriminate directly or indirectly against anyone on one or more grounds, including race, gender, sex, pregnancy, marital status, ethnic or social origin, colour, sexual orientation, age, disability, religion, conscience, belief, culture, language and birth.

(4) No person may unfairly discriminate directly or indirectly against anyone on one or more grounds in terms of subsection (3). National legislation must be enacted to prevent or prohibit unfair discrimination.

(5) Discrimination on one or more of the grounds listed in subsection (3) is unfair unless it is established that the discrimination is fair.”

[29] As pointed out by the Applicants, not only is equality a fundamental right in terms of the Constitution but it is also a core value of the Constitution. This is emphasised in, amongst others, ss 1 and 7(1) of the Constitution. In addition, s 36 (1) restricts the limitation of fundamental rights to situations where they are “justifiable in an open and democratic society based on human dignity, equality and freedom “. Finally, s 39 (1) (a) requires courts, when interpreting the Bill of Rights, to promote “the values that underlie an open and democratic society based on human dignity, equality and freedom”.

[30] The Applicants would only be entitled to rely on the equality clause in the Constitution if juristic persons are entitled to the rights in the Bill of Rights. This is because it is s 22 (5)’s prohibition on juristic persons from operating as licensed bookmakers in Kwazulu-Natal that is being attacked. The Constitution is not categorical one way or the other on this aspect, although it does deal with it. S 8 (4) provides that a “juristic person is entitled to the rights in the Bill of Rights to the extent required by the nature of the rights and the nature of the juristic person”. The Applicants contend that the rights in question, those enshrined in s 9 (1) of the Constitution, namely, the right to equality before the law and to equal protection and benefit of the law are capable of being exercised by a juristic person and taking into account the provisions of the Constitution, particularly the commitment in s 1 (c) to the rule of law, juristic persons are to be included under the term “everyone” in s 9 (1). As authority for this proposition, the Applicants cite firstly South African Constitutional Law – Bill of Rights, 2^nd edition, by Cheadle Davis and Haysom p 3 – 25.

[31] Secondly, reliance is placed on the following statement in AK Entertainment CC v Minister of Safety and Security and Others 1994 (4) BCLR 31 (E) at 38:

“It is difficult to appreciate why a corporation should not be entitled to enforce section 8 (the equality provision of the Interim Constitution) where an executive or administrative functionary blatantly treats it unequally from all other persons.”

[32] In answer to this argument, the Respondents have submitted firstly that s 8(4) of the Constitution distinguishes between natural persons and secondly that s9(1) only applies to distinctions between different juristic persons and not to those between natural persons on the one hand and juristic persons on the other.

[33] In my view the statement in Andrews v Law Society of British Columbia 1989 CanLII 2 (SC); (1989) 1 SCR 143 (56 DLR (4th) 1) that the purpose of the equality clause in the Canadian Charter of Rights and Freedoms, s 15 (1), which reads “every individual is equal before and under the law and has a right to equal protection and equal benefit of the law without discrimination, and in particular, without discrimination based on race, national or ethnic origin, colour, religion, sex, age, mental or physical disability” was “to ensure equality in the formulation and application of the law”, is applicable to s 9 (1) of the Constitution.

[34] On reading s 8 (4) it is immediately clear that juristic persons do not automatically qualify for protection under the Bill of Rights. They only do so to the extent required, firstly by the nature of the rights and secondly by the nature of the juristic person. The test appears to be more stringent in two respects than that imposed by s 7 (3) of the Interim Constitution, which read that juristic persons were entitled to the rights in chapter 3 “where, and to the extent that, the nature of the right permits”. Firstly, one is now required to have regard to both the right and the person. Secondly, the entitlement now only arises if the two factors require it (the Afrikaans version uses the word “vereis”), whereas previously it arose if the right merely permitted it. To my mind, under the Interim Constitution one merely had to ask whether the right was capable of being exercised by a juristic person, whereas now there is an additional requirement.

[35] Determining whether a juristic person can successfully invoke s 8(4) involves a careful consideration of the rights and the juristic person in question. The first step must still be to consider whether the juristic person in question is capable of exercising the right in question. One then has to consider whether the juristic person is entitled to exercise the right. It seems clear to me that before one can say that the nature of a particular right and a particular juristic person require the juristic person to be entitled to the right, something more must be present than it being merely possible for such a juristic person to exercise such a right. (See Cheadle, Davis and Haysom, p 3 – 24). If that were not the case the Constitution would either have followed the wording of the Interim Constitution or have read that a juristic person is entitled to the rights in the Bill of Rights to the extent that the rights are capable of being exercised by the juristic person in question. In my view that “something more” is that the Constitution requires that juristic persons or a particular category of juristic persons be entitled to the right in question. In determining whether this is the case, one of the important factors to consider is the consequences of not according the right to juristic persons, as was done by the Constitutional Court in the Hyundai case at para [18].

[36] In deciding whether or not a particular right may be claimed by a juristic person, one should also not lose sight of the fact that although a juristic person has a separate existence from the persons involved in it, whether they be members, directors or employees, the fact remains that all juristic persons have natural persons who have an interest in them and can only operate through natural persons. This means that the denial of a right to a juristic person can have a direct effect on natural persons.

[37] It is apparent that there are some rights which are clearly capable of being exercised by juristic persons and others which are clearly not. The rights which clearly fall into the latter category are ones such as the rights of children in s 28, the right to education in s 29, the right to human dignity in s 10 and the right to life in s 11. On the other hand it would seem that the rights to property in s 25 (1) to (4) and the rights of employers in s 23 (3) are quite capable of being exercised by juristic persons. I am of the opinion that the rights in s 9 (1) of the Constitution are such that they are capable of being exercised by juristic persons.

[38] Apart from the cases relied upon by counsel, it was stated by Olivier JA in a separate concurring judgment in Transnet Ltd v Goodman Brothers (Pty) Ltd [2000] ZASCA 151; 2001 (1) SA 853 (SCA) at para [41] that one of the most fundamental rights guaranteed in our Bill of Rights is the right to equality enshrined in s 9. The learned judge then went on to hold that this right justified the application of s 33 of the Constitution (which deals with the right to just administrative action) to tender processes. The learned judge also held that the respondent, a private company, was entitled to the protection of s 33 of the Constitution. The majority judgment did not consider the applicability of s 9 of the Constitution but held (at para [11]) that the tenderer, the respondent, was entitled to rely on s 33 of the Constitution.

[39] In Botha and Another v Nthiyane and Another 2002 (1) SA 289 (W) at para [82] the court held that the second defendant, a close corporation and hence a juristic person, was entitled to the benefit of an entrenched right to freedom of expression in terms of s 16 of the Bill of Rights. The court held that this flowed from the provisions of s 8 (2), (3) and (4) of the Constitution.

[40] In the Hyundai case (at paras [17] – [18]) the Constitutional Court held that juristic persons enjoy the right to privacy although not to the same extent as natural persons, because juristic persons are not the bearers of human dignity and this right is based on human dignity.

[41] Having regard to the purpose of s 9 (1) of the Constitution, to the consequences which could flow from not according juristic persons s 9 (1) rights and to the values enshrined in the Constitution, I am of the opinion that the Constitution requires juristic persons to be accorded those rights. I can see no reason why any categories of juristic person should be excluded. Support for this is to be found in the Transnet and AK Entertainment cases and in Cheadle, Davis and Haysom, referred to above. Furthermore, if, on the strength of the Botha and Hyundai cases, juristic persons are entitled to the rights of freedom of expression and privacy, then a fortiori, they are entitled to the right to equality before the law. After all, the former rights are ones which are more closely associated with natural persons than the latter.

[42] I can see no basis for the Respondents’ argument that juristic persons can only rely on s 9 (1) if the differentiation is between juristic persons inter se. Firstly, the Constitution does not expressly say so. Secondly, it goes against the reasoning in the Transnet and AK Entertainment cases mentioned above. Thirdly, the distinction between the two categories of differentiation is not based on principle. Where does one draw the line? Does one only regard a differentiation as potentially unconstitutional if it is between two companies or between any two juristic persons or between private companies only? In my opinion, once it is decided that the right to equality is applicable to juristic persons, then all juristic persons are included in the term “everyone” in s 9 (1) of the Constitution. It goes without saying of course that by virtue of the inherent differences between natural and juristic persons, there will be many cases where legislation differentiates quite legitimately between these two categories of persons.

[43] As a general rule, a partnership does not have a separate legal existence from the partners themselves, although in certain circumstances a separate existence is recognised (see Strydom v Protea Eiendoms Agente 1979 (2) SA 208 (T), in which Nestadt J, as he then was, set out the legal position and the legal authorities in detail). Voluntary associations may either be legal personalities separate from individual members or not. In the former category one has the associations that are duly registered as companies in terms of the Companies Act (so-called section 21 companies) and universitates and in the latter associations which remain unincorporated at common law (Bamford, the Law of Partnership and Voluntary Association in South Africa, 3^rd edition at 126 and the authorities cited there). It seems to me therefore that partnerships and other associations which do not have juristic personality would not be classified as juristic persons for purposes of s 8 of the Constitution and need not rely on s 8(4) in order to be entitled to the rights in the Bill of Rights. However, it is not necessary for me to decide this point.

[44] The next question to be answered is whether or not the Ordinance differentiates between different persons. There is no question that it does. Its express purpose is to differentiate between natural persons and associations of persons by limiting the granting of bookmakers’ licenses to natural persons. There is a further distinction that is made and that is between partnerships on the one hand and other associations of persons on the other. Whereas partnerships may carry on the business of a bookmaker provided that each partner holds a valid bookmaker’s license, other associations of persons are completely precluded from operating as bookmakers.

[45] It can therefore be seen that the distinction drawn by s 22 (5) is not simply one between natural persons and juristic persons as argued on behalf of both the Applicants and the Respondents. It is one, firstly, between individual natural persons and associations of persons, whether or not those associations have separate juristic personalities, and secondly between different categories of associations of persons, once again, irrespective of whether the associations are separate legal entities or not.

[46] Next, one has to consider whether the distinctions are permissible or not from a constitutional point of view. Applying the test laid down in Harksen v Lane N O and Others [1997] ZACC 12; 1998 (1) SA 300 (CC) at para [42] for a provision which differentiates between people or categories of people not to fall foul of s 9 (1) of the Constitution there “must be a rational connection between the differentiation in question and the legitimate governmental purpose it is designed to further or achieve”.

[47] The general governmental purpose which s 22 (5) appears to have been enacted to achieve is to control bookmaking, which is a form of gambling. In this regard it is important to bear in mind that the courts have frequently stated that although gambling is no longer a wholly prohibited activity, it is one that must be strictly controlled and licensed because if it is not it can spawn a great deal of social evil (Gambling Association of South Africa (Kwazulu-Natal) and others v Premier of Kwazulu-Natal and others (1) 1997 (4) SA 497 (N) at 503 I – 504B; Mohunram and another v National Director of Public Prosecutions and Another [2006] ZASCA 12; 2007 (4) SA 222 (CC) at paras [77] – [81]). In the light of these decisions, there is no doubt that the governmental purpose of controlling gambling in order to protect the public is a legitimate one. Indeed, the Applicants did not contend otherwise.

[48] The rational connection between the distinctions made in s 22 (5) and the protection of the public are, according to the Respondents, to be found in the following:

a) In order to prevent the criminal activities associated with gambling it is necessary to have an individual whom the authorities can look to in connection with any wrongdoing, and this is not possible with juristic persons.

b) One cannot allow juristic persons, for example companies, to operate as bookmakers unless the authorities have the power to investigate applicants and other people connected with them, and the Ordinance does not give the authorities this power.

c) If juristic persons are allowed to become bookmakers the investigations would be far more comprehensive and costly than in the case of individuals. Consequently, before this can be allowed, the legislation must provide for all application, investigation and other costs to be recovered from the applicant and this the Ordinance does not do.

[49] Mr Dickson also contended that the steps taken by the legislature in enacting s 22 (5) were policy decisions and it is not for the courts to second guess the legislature in matters of policy. It is quite correct that if the distinctions made in s 22 (5) are rationally connected to controlling gambling then they are simply policy decisions which I cannot sit in judgment on. However, if that connection is not there, then they are not matters of policy and I am entitled to pass constitutional judgment on them.

[50] Turning to the first argument advanced by Mr Dickson, it is simply not correct that legislation cannot, in the case of juristic persons, make one person responsible, together with the licensee, to the licensing authorities. After all, I was informed that this is one of the measures which is contained in the Bill. Furthermore, s 22 (5) itself allows partnerships to operate as bookmakers and does not require them to nominate an individual to represent them. This, notwithstanding the fact that a partnership can have as many as 20 partners.

It can therefore hardly be argued that in terms of the Ordinance the authorities are able to look to one person per bookmaking business as the responsible person.

[51] Similarly, I see no rational basis for the distinction between partnerships and other associations. On the assumption that it is necessary for a representative to be appointed, one could just as easily be appointed by other associations as by partnerships. I also see no reason why in the case of partnerships, they may carry on the business of bookmaking provided that each partner has a bookmaker’s licence, whereas the same rule does not apply to companies, close corporations and voluntary associations, namely, that each member must hold a bookmaker’s licence.

[52] It is a different matter of course to say that a declaration of unconstitutionality should be suspended in order to enable the legislature to introduce measures such as those mentioned above prior to juristic persons being allowed to operate as bookmakers. However, such a factor is not relevant at this stage of the inquiry.

[53] As far as the second two points raised by Mr Dickson are concerned, I also do not consider them relevant at this stage of the inquiry. The fact that the Ordinance has certain gaps in it may be relevant to the question of the suspension of a declaration of unconstitutionality but not to the principle issue of whether the subsection is rationally connected to its purpose.

[54] Even if I am wrong in this regard, I am of the opinion that the differentiation made in s 22 (5) constitutes unfair discrimination. Firstly, there is no doubt that the subsection differentiates between different categories of persons. The differentiation is not one of the specified grounds of differentiation. However, objectively speaking, different categories of person are treated differently. Finally, for the reasons mentioned above in relation to whether the differentiation was rationally connected to controlling gambling, I am of the opinion that the discrimination is unfair.

[55] I accordingly find that s 22 (5) of the Ordinance is unconstitutional for non-compliance with s 9 (1) of the Constitution. It could be argued that only the first part of the subsection should be struck down because the proviso, standing alone, would be unobjectionable. However, if the proviso were to be saved, it would differentiate irrationally between partnerships and other kinds of associations, but this time against and not in favour of partnerships. In my opinion therefore the whole subsection should be struck down. Having come to this conclusion it is not necessary for me to deal with other grounds of unconstitutionality relied upon by the Applicants.

[56] On the merits of the application it remains to decide whether or not I should order the declaration of unconstitutionality to take effect immediately taking into account the factors mentioned in Mistry v Interim Medical and Dental Council of South Africa 1998 (4) SA 1127 (CC) at para [37]. I am of the opinion that this is a case in which it would not be appropriate for the declaration to take effect immediately. I do not agree that the Ordinance can be implemented effectively simply by removing the prohibition on all entities other than natural persons or partnerships of natural persons from operating as bookmakers. Given the purpose of the legislation and the inherent dangers in an inadequately controlled gambling environment I am of the opinion that the legislature ought to be given an opportunity to rectify the Ordinance either by amending it or by replacing it with other legislation, so as to ensure that it contains all the safeguards which may be necessary to ensure the optimum control of the bookmaking industry. Amongst the matters which spring to mind as ones which may need to be dealt with are those mentioned by Mr Dickson in attempting to convince me that the provision was not unconstitutional, the most significant of which is the requirement that an individual must act as representative and take responsibility on behalf of any juristic person who obtains a bookmaker’s licence.

[57] Furthermore, it appears from the papers that gambling law in KZN is undergoing a complete overhaul at present, with a bill consolidating the law and replacing the Ordinance having been published in 2006. This is the KwaZulu-Natal Gaming and Betting Bill of 2006 (the Bill), which I was informed by counsel for the Respondents addresses all concerns raised by the Respondents in connection with juristic persons being allowed to operate in terms of the Ordinance. I was also informed that it would take some time for the legislation to be finalised, not less than 12 months apparently. The fact that legislation which would remedy the defect in the Ordinance is already on the drawing boards is all the more reason to suspend the declaration of invalidity.

[58] Mr Dickson urged me to give the legislature 12 months within which to make the necessary amendments to the Ordinance. However, I am of the opinion that this period is unnecessarily long. The evidence before me is that the new legislation, which allows juristic persons to operate as bookmakers and contains safeguards dealing specifically with juristic persons, has been in gestation for over two years already. Furthermore, I was informed during argument that public hearings on the Bill have already taken place. Four months have passed since the matter was argued and I can see no reason why the legislature should need longer than three months to do what is required of it.

[59] On the question of costs, all the parties agreed that whichever party succeeded was entitled to costs and that the matter was of sufficient importance and complexity to justify the employment of two counsel.

[60] I accordingly make the following order:

1. The Applicants’ failure to comply with Rule 16A is condoned.

2. Section 22 (5) of the Regulation of Racing and Betting Ordinance, No 28 of 1957 (KwaZulu-Natal) is declared to be inconsistent with s 9(1) of the Constitution and is declared invalid.

3. The order in paragraph 2 above is suspended for a period of three months from the date of this order.

4. The First and Third Respondents are ordered, jointly and severally, to pay the costs of the application, and these costs are to include the costs occasioned by the employment of two counsel.

………………………………

RALL A. J.

APPEARANCES

1. For the Applicants

N Arendse SC and M Du Plessis

Instructed by

Garlicke and Bousfield Inc.

C/o Venn Nemeth and Hart Inc.

2. For the First and Third Respondents

A J Dickson SC and A A Gabriel

Instructed by

J H Nicholson, Stiller and Geshen

C/o Stowell and Company

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