Natal Bookmakers Society Co Ltd v Chairman of the Gauteng Gambling Board and Another (18592/2004) [2005] ZAGPHC 347 (24 November 2005)

IN THE HIGH COURT OF SOUTH AFRICA /ES

(TRANSVAAL PROVINCIAL DIVISION)

CASE NO: 18592/2004

DATE: 24/11/2005

not reportable

IN THE MATTER BETWEEN

NATAL BOOKMAKERS SOCIETY CO LTD APPLICANT

AND

THE CHAIRMAN OF THE GAUTENG GAMBLING BOARD 1ST RESPONDENT

SOUTH AFRICAN BETTING SERVICES LIMITED 2ND RESPONDENT

JUDGMENT

DE VOS, J

The applicant seeks to set aside the decision of the first respondent to issue, alternatively, transfer a bookmaker's licence to the second respondent under the Gauteng Gambling Act 4 of 1995.

The applicant is a co operative formed, incorporated and registered in terms of the provisions of section 2(1) of the

Co operative Act 91 of 1981. The applicant was originally registered under the provisions of the Co operative Societies

Act 29 of 1939. This Act was repealed by the provisions of the Co operative Act 91 of 1981.

The first respondent is the chairman of the Gauteng Gambling Board, who is cited in the application in his official capacity, by virtue of the provisions of Rule 53 of the Uniform Rules of Court. The second respondent is the South African Betting Services Limited. The second respondent does business as a bookmaker by setting up a platform through which bookmaking takes place through the modern facilities provided for by the internet.

The applicant represents the interests of all licensed bookmakers carrying on business as bookmakers in KwaZulu Natal. All licensed bookmakers in the province of KwaZulu Natal are members and are required to be members of the applicant in terms of the provisions of section 21(1) of the Regulation of Racing and Betting 0rdinance 28 of 1957 (KwaZulu Natal). Section 21(1) of the KwaZulu Natal ordinance is the corresponding legislative provision to the provisions of section 58(1) of the Gauteng Gambling Act, which provides that no bookmaker shall carry on business as such unless he or she is a member of an association of bookmakers approved by the Board.

Before I deal with the question whether the decision of the Gauteng Gambling Board ("the Board") falls to be reviewed and set aside the points raised in limine by the respondents, namely that the applicant does not have locus standi in judicio and has not been properly authorised to launch the application should be dealt with first.

The court's power to review administrative action does not flow directly from the common law but from the Promotion of Administrative Justice Act 3 of 2000 ("PAJA") and the Constitution. The common law informs the provisions of PAJA and the Constitution and it derives its force from the latter. See Bato Star Fishing (Pty) Ltd v Minister of Environmental Affairs [2004] ZACC 15; 2004 4 SA 490 (CC) 504F 505B. Section 6(1) of PAJA provides that any person may institute proceedings in a court or tribunal for a judicial review of an administrative action. There can be no doubt that the decision taken by the Board was an administrative action as

defined in section 1 of PAJA. It is further common cause that the Board is an organ of state exercising a public power or performing a public function in terms of the Gauteng Gambling Act. The decision taken by the Board clearly has a direct external legal effect (a licence was granted pursuant to which the second respondent carries on business purportedly as a duly licensed

bookmaker) and that that decision adversely affects the rights and duties of the applicant to (a) protect the interests of the applicant's members operating as bookmakers in competition with the second respondent; (b) protect the applicant's members against unfair competition (the applicant submitted that there can be no clearer instance of unfair competition than competition in contravention of a law, in casu the Gauteng Gambling Act); and (c) maintaining and promoting honourable practice amongst bookmakers in their dealings with each other and with race clubs, racing authorities, tattersalls committees, the state and the province of Natal and the general

public. It seems to me therefore that under the circumstances there is no merit in the first and second respondent's contention

that the applicant does not have locus standi in judicio.

The second respondent's attack on the applicant's authority to bring this application has no merit. If regard is had to the provisions of the repealed Co operative Act, the current Co operative Act and the applicant's statute it is clear that the applicant has the necessary authority to bring the application.

That brings me to the merits of the matter.

The facts

The second respondent submitted an application to the first respondent for the transfer of a bookmaker's licence from Mr Derick Brugman to the second respondent. After receipt of the application a notice of the application was given to the public in terms of General Notice No 576 published in the provincial Government Gazette 63 of 25 February 2004 and the Citizen newspaper of 25 February 2004.

The notice as published allowed for the inspection of the application as well as for receipt of written representations from interested persons to be sent to the offices of the first respondent as from 25 February 2004.

The first respondent received several objections to the application the applicant being one of them. The objections received were responded to by the second respondent. Thereafter during May 2004 the first respondent published a notice in the provincial Gazette convening a public hearing during May 2004. The hearing was held and concluded on the basis that the second respondent would be afforded a further opportunity to make further written representations on the matters which were raised by the objectors during the hearing. The second respondent, however, notified the first respondent that he would not make further representations in regard to the issues so raised. 0n 23 June 2004 the first respondent issued a bookmaker's licence to the second respondent.

Although the applicant sets out numerous grounds on which the first respondent's decision falls to be reviewed and set aside during argument counsel for the applicant, Mr Smithers, confined himself to the first stated ground of review, namely that the second respondent's declared modus operandi constitutes a contravention of the provisions of section 57 of the Gauteng Gambling Act.

Section 57 of the Gauteng Gambling Act is headed "restriction on betting through agent, and unlawful inducement to bet". The relevant provisions of section 57 read as follows:

"(1) No person shall-

(a) act as an agent for the holder of a bookmaker's licence for the purpose of betting on a sporting event, whether or not for gain; or

(b) whether or not for gain act as an intermediary between any holder of a bookmaker's licence and any other person for the purpose of betting on a sporting event.

...

(3) Any person who contravenes the provisions of subsection (1) shall be guilty of an offence."

The overview of the modus operandi of the second respondent's business as considered by the first respondent sets out that SABookmaker.com (the second respondent) is a web based betting platform offering safe and secured transactions and a real time view of all available market offers and bids whereby both bookmakers and punters can from the comfort of their offices or homes log on into the internet and enjoy the thrill of batting winners. The overview continues as follows:

"The site uses decimal odds, as opposed to conventional fractional odds, to display all the prices on its betting pages. Furthermore all transactions on the site are totally anonymous. Commission is charged only on matched stake money when 'backing' competitors – thus for

bookmakers there is no commission payable when 'laying' bets. The betting tax of 6% applies to all winning bets.

REGISTERING

Punters will initially register as new users directly from the web site by the use of their unique user name and password and completion

of the application form. 0nce this application is approved, they will be required to deposit funds into their new account, as they will not be granted any credit facilities. Currently, deposits will only consist of cash, cheque or bank transfers. 0nce our bank has cleared the deposits, you are ready to play! Should a punter have a credit balance and want to withdraw this amount from his account, he would contact the administrator who will deposit the funds directly into his banking account within three days.

Bookmakers will be registered onto the site only through the administrator who will after various credit and other checks by management, grant the bookmaker a credit facility which may at times be reduced or increased. The bookmaker will be allocated a user name and a password by the administrator on registration and thereafter the bookmaker will have the option to change the password originally

allocated, to one of his own choice. Settling will be done, either way, on a weekly basis unless otherwise negotiated.

MATCHED/UNMATCHED BETS

Bookmakers will be offering the best odds available at all times and the punter will have the option of placing his bet/s at the prices offered or he may want to place an order for a better price in which case, the bookmakers will have the choice to lay that price or not, thus giving total flexibility to both punters and bookmakers.

Matched bets are those bets that have been matched or joined together between a bookmaker and a punter and once a bet has been matched, it cannot be cancelled.

An unmatched bet is a bet that has not been matched or joined and these can be cancelled at any time.

SABookmaker.com will always match a bet at the best available odds to the user at the time of placing the bet and will never match a bet at worse odds than those requested.

EVENT MANAGEMENT

The administrator does setting up of events. The number of available events on offer will be decided on by demand, by management or both. All the local and international racing events shown on TV will be managed by the administrator as will a few sporting events.

PLACING BETS

From the various events on the menu, choose the event you want to bet on. When it appears on your screen, you will see three columns indicating the best three prices available on that specific competitor, the best price being on the right, together with the amount of stake available at that price. This screen will only apply to punters, as they are only by law allowed to back on competitors, the screen for bookmaker accounts will show back and lay facilities.

Click on the right box to back a competitor, a screen will open next to the event and will ask you to enter a stake to be laid out on the competitor, the best odds will automatically calculate your win, and then you would submit the bet. You will then be asked to verify your bet and at the same time shown the commission payable on your bet. You will then have the further option to either

place or cancel your bet.

When a bookmaker lays odds on a competitor, these odds will show on all the other account holders in the system under the back heading on their screens, conversely when a punter submits a bid to back a competitor, these bids will show on bookmaker account screens under the lay column.

Should you wish to back the competitor at better odds than those currently on offer, you may enter the odds you are wanting and wait to see if a bookmaker accepts or lays your bid in which case it will show as a matched bet on your account."

The second respondent's director a Mr Keyzer informed the Board (the first respondent) at the hearing on 15 May 2004 that the second respondent did not intend to carry on business "as a bookmaker as such". Instead the second respondent was "arranging a marriage between the punter and the bookmaker". "We are just marrying the two parties together." It is furthermore common cause between the applicant and the first respondent that the second respondent envisages that bookmakers other than the second respondent itself will lay bets to members of the public through the medium of the second respondent's website. The second respondent's version is that other bookmakers only lay bets to or take bets back from the second respondent. Furthermore the actual bet is struck between the member of the public and the other bookmaker. However, despite agreement between the applicant and the first respondent on this point the second respondent advances the contention (it seems to me quite contrary to the submissions made by the second respondent to the Board on 15 May 2004) that the second respondent really acts as a "principal" and as "an independent party to two independent simultaneous transactions".

It is the applicant's case that in setting up this particular bookmaking business the second respondent is acting as an agent for bookmakers who will be inviting betting on the platform set up by the second respondent. 0n behalf of the first and second respondent it was argued that in interpreting section 57 one has to read it in relation to chapter 9 of the Gauteng Gambling Act which deals with bookmakers. Bookmakers are regulated in terms of chapter 9 of the Gauteng Gambling Act. A bookmaker is authorised to accept on its licensed premises of fixed odds bets on sporting events. A bookmaker is also under section 61 obligated to keep proper accounting records and to make the necessary payments to the provincial Revenue fund and to the Gauteng Gambling Board. The argument goes on to say that a proper reading of section 57 shows that it intends to prohibit anyone from representing a holder of a bookmaker's licence. As such it is aimed at bookmakers and has no bearing on the punter per se. As the argument goes it is alleged that the bookmakers laying bets on the platform created by the second respondent or even setting up bets on the said platform are acting as punters vis-a-vis the second respondent and does not deal directly with the other punters.

Both section 57(1)(a) and 57(1)(b) prohibit any person from acting as an agent or as an intermediary.

Neither an agent nor an intermediary is defined in the act. It is trite, however, that the words must be given their plain ordinary grammatical meaning. It seems to me that the very fact that the provincial legislature saw fit to prohibit a person from acting either as an agent or as an intermediary for a bookmaker with any other person in a betting transaction suggests very strongly that the legislature intended to cast the prohibition as widely as possible. It would clearly not be a defence to a criminal charge under section 57(3) that a person alleged to act as an agent or intermediary in contravention of section 57(1)(a)

or (1)(b) was not an agent in the legal sense ie that he did not have authority to bind his principal the bookmaker in contract for it would be sufficient to prove that the person concerned acted as an intermediary. An intermediary is defined in the 0xford English Dictionary as follows:

"A.adj.1. Acting or of the nature of action between two persons, parties, etc; serving as a means of interaction; a mediatory ...

2. situated or occurring between two things (in space, time, degree, or character); intermediate ...

B.sb.1 Who acts between others; an intermediate agent; a go between, middleman, mediator.

2. Something acting between persons or things, a medium means; also abstr. Action as a medium mediation agency (of something) ...

3. Something intermediate between others; an intermediate form or stage."

Webster's Revised Underbridge Dictionary contains the following definition of the word "intermediary":

"0ne who, or that which, is intermediate; an inter agent; a go between."

Furthermore even the term "agent" seems to me to be one of wide import. It does not follow that the word "agent" is to be restricted to the legal sense in which the word is often used that is a person authorised to bind his or her principle. The word "agent" is not infrequently used legislatively in a loose sense and this has been recognised by our courts. See Watsons Shipping Ltd v Commissioner for Customs 1927 TPD 642 at 646; Fish NO v Adam t/a Charter Bazaar 1978 2 SA 313 (R) at 318C H; CIR v SA Fire and Accident Insurance Co 1960 3 SA 1 (A) 9D 10B. Cf Pace Real Estate (Pty) Ltd v Wilson 1983 3 SA 753 (W) 755G 756H. Based on the second respondent's own version of the modus operandi of its business it intends to carry on business as an agent or an intermediary for gain between bookmakers and other persons for the purpose of betting of sporting events.

I note furthermore that the second respondent expressly stipulate for itself the position of stakeholder in its standard terms and conditions. I am of the view that by doing so it stands outside the betting transactions concluded through the medium of the second respondent's website. The second respondent matches offers to place and lay bets respectively by punters and bookmakers on the website. In return for its services it receives a fee calculated as a percentage of and deducted from the punter's stake held by the second respondent pending the outcome of this event. In so doing the second respondent acts in contravention of the provisions of section 57 of the Gauteng Gambling Act as it acts as an agent or intermediary in respect of a betting transaction concluded between the punter and the bookmaker concerned.

It seems to me therefore that the first respondent's decision is unlawful in that sanctions carrying on of a bookmaker's business in direct contraventions of the provisions of the Act. It can furthermore be accepted then that the decision was materially influenced by an error of law. It follows that the decision is reviewable under section 6(2)(d) of PAJA.

Section 8 of PAJA headed "remedies in proceedings for judicial review" provides as follows:

"(1) The court or tribunal, in proceedings for judicial review in terms of section 6(1) may grant any order that is just and

equitable, including orders

(a) directing the administrator ...

(b) prohibiting the administrator ...

(c) setting aside the administrative action and

(i) remitting the matter for reconsideration by the administrator with or without directions; or

(ii) in exceptional cases

(aa) substituting or varying the administrative action or correcting a defect resulting from the administrative action; or

(bb) directing the administrator or any other party to the proceedings to pay compensation."

The argument on behalf of the applicant is that as the second respondent's modus operandi will constitute a contravention of the provisions of the Gauteng Gambling Act there is no point in referring the matter back to the first respondent for reconsideration. The position has always been that the court has a discretion to be exercised judicially upon a consideration of the facts of each case as to whether the matter should be sent back to the administrative decision-maker. It is in essence a question of fairness to both sides. See Livestock & Meat Industries Control Board v Gerda 1961 1 SA 342 (A) 349G. A court will not normally substitute its own decision for that of the board. Where the outcome appears to be a foregone conclusion there is no reason to send the matter back to the board for reconsideration. In this case as I have

already found that the modus operandi constitutes a contravention of the Gauteng Gambling Act the conclusion is foregone. Under the circumstances I am of the view that not only should the decision be set aside but should not be referred back to the Board for reconsideration.

I therefore make the following order:

1. The decision of the first respondent to issue, alternatively transfer, a bookmaker's licence to the second respondent under the Gauteng Gambling Act 4 of 1995 (Gauteng) is set aside.

2. The second respondent and the first respondent are ordered to pay the costs of this application jointly and severally the one paying the other to be absolved.

A DE VOS

JUDGE OF THE HIGH COURT

18592-2004

HEARD ON: 23/8/2005

FOR THE APPLICANT: M D C SMITHERS

INSTRUCTED BY: ADAMS & ADAMS

FOR THE 1ST RESPONDENT: I V MALEKASE & A L PLATT

INSTRUCTED BY: NDLULWA NKUHLU INC

FOR THE 2ND RESPONDENT: L J VAN TONDER & M SELLO

INSTRUCTED BY: WERKSMANS ATTORNEYS