Restivox (Pty) Ltd t/a Crazy Slots v Chairperson of the Free State Gambling, Liquor and Tourism Authority NO and Others (6271/2018) [2020] ZAFSHC 80 (13 March 2020)

IN THE HIGH COURT OF SOUTH AFRICA

FREE STATE DIVISION, BLOEMFONTEIN

Case No.:6271/2018

In the matter between:

RESTIVOX (PTY) LTD t/a CRAZY SLOTS APPLICANT

and

MR. D PILLAY, THE CHAIRPERSON OF THE

FREE STATE GAMBLING, LIQUOR AND

TOURISM AUTHORITY N.O. 1ST RESPONDENT

MR K DICHABE, CHIEF EXECUTIVE OFFICER,

TOURISM AUTHORITY 2ND RESPONDENT

TOURISM AUTHORITY 3RD RESPONDENT

CORAM: OPPERMAN, J et VAN RHYN, AJ

HEARD ON: 3 FEBRUARY 2020

JUDGMENT BY: I VAN RHYN, AJ

DELIVERED: 13 FEBRUARY 2020

INTRODUCTION:

[1] The Applicant launched an application in terms of the provisions of Rule 53 of the Uniform Rules of Court, read with Section 6 of the Promotion of Administrative Justice Act, Act 3 of 2000 (“PAJA”) to obtain an order reviewing and setting aside the decision by the Free State Gambling and Tourism Authority (“the Authority”), dated 1 November 2018.

[2] A Notice of Intention to Oppose was served by the Respondents on 11 January 2019. On 15 February 2019 the Respondents served the record relating to the impugned decision in terms of the provisions of Rule 53(1)(b). The time period for filing of an answering affidavit lapsed without any response from the Respondents. The notice of set down dated 25 October 2019, the index to the review application as well as the Applicant’s heads of argument were served upon the attorneys acting on behalf of the Respondents. There was no appearance on behalf of any of the Respondents when the application for review was heard on 3 February 2020.

[3] This unopposed application to review and set aside the decision of the Authority is not directed against the statutory duty imposed on the Applicant to pay an annual fee (upon renewal) for its licence as route operator, but against the decision of the Authority that the Applicant pay the fee of R697.00 in respect of each of the 1 000 Limited Gambling Machines (“LPM”) authorized in terms of the Route Operator Licence granted to the Applicant.

BACKGROUND:

[4] Restivox (Pty) Ltd, a private company trading as Crazy Slots (“the Applicant”) applied for a Limited Gambling Machine Operator licence, referred to as a “Route Operator Licence” subsequent to a “Request for Proposal”, inviting

applicants to apply for such a licence subject to certain terms and conditions. The First Respondent is Mr D Pillay, the

Chairperson of the Free State Gambling, Liquor and Tourism Authority. Mr K Dichabe, the Chief Executive Officer of the Board is cited as the Second Respondent and the Free State Gambling, Liquor and Tourism Authority is cited as the Third Respondent. The

Respondents are responsible for, inter alia, considering applications of various types of gambling licences including Route Operator Licences and LPM site licences.

[5] A Route Operator Licence is a gambling licence granted in terms of the provisions of Section 72 of the Free State Gambling Liquor and Tourism Act, Act 6 of 2010 (the “Free State Act”). It permits a route operator, subject to complying with certain prescribed conditions, to make available LPMs for play at licenced sites. A LPM is a gambling machine, similar to a slot machine found in a casino, in respect of which the stakes and prizes are limited as prescribed by the Limited Gambling Machines Rules published by the Authority under section 134 of the Free State Act.[1]

[6] Once a Route Operator Licence has been granted by the Authority, the route operator will then enter into agreements with chosen site operators to install LPMs at certain sites, for instance at public venues, pubs, café’s or restaurants on the route granted by the Authority. The Authority will only authorize the installation and operation of LPMs at a site subsequent to completion of the prescribed process which, inter alia, include the following: publishing a notice in the Provincial Gazette and the media; inviting applications for LPM site licences.[2] A Gambling Machine Site Licence must authorise, subject to the provisions of the Act, the operation and keeping in or on the licenced premises, any gambling machines specified in the licence. The holder of a Gambling Machine Site Licence may be linked to the holder of the operator licence or may be independent.[3]

[7] In terms of the provisions of Section 72(4) of the Free State Act the holder of a Route Operator Licence may not make available for play more LPMs than authorized in terms of the licence on any particular site. The holder of the Route Operator Licence must furthermore maintain the LPMs owned and operated by the route operator. The route operator is responsible to collect money from the machines already in operation and pay to the Authority all levies in respect of those machines.[4] The Authority will only authorize the installation and operation of LPMs at a site subsequent to perusing the contents of the agreement concluded between the route operator and the site operator to ascertain whether the agreement complies with the prescribed provisions of the Free State Act. These agreements, inter alia, provide for profit-sharing between the route operator and the site operator as prescribed by the Authority. The route operator

shares in the profits generated by the LPMs at the site and as a quid pro quo the route operator remains responsible for the installation of the LPMs at the approved sites and for certain administrative functions

relevant thereto. It is therefore evident that the route operator may only install and permit the operation of LPMs at the various sites, once so authorized by the Authority.

[8] The powers and duties of the Authority are regulated in terms of Section 5 of the Free State Act. In terms of the provisions of Section 64(1)(b) and (c), read with Section 72 and Section 73 of the Free State Act, the Authority (also referred to as “the Board”) may grant Limited Gambling Machine Operator Licences and Limited Gambling Site Operator Licences.

THE RELEVANT FACTS:

[9] The Applicant is the holder of a route operator licence, Number FSGLTB/GOL/02 issued in terms of the provisions of Section 72 of the Free State Act to conduct the business of a gaming machine operator on such gaming machine sites as the Board may approve and licence. The licence was issued on 30 June 2017. In terms of Schedule A, which consist of the terms and conditions of the Route Operator Licence, the Applicant shall expose LPMs for play only on sites licenced by the Board for this purpose. Furthermore Clause 11 of Schedule A reads as follows:

“The licensee shall not commence any gambling activity on the licensed sites without the prior written approval and authorization by the Board.”

[10] In terms of the Route Operator Licence, the Applicant may operate a maximum number of 1 000 (one thousand) LPMs at licensed sites. A licence fee and a fee in respect of each LPM are payable by the route operator.[5] The Authority issued a tax invoice dated 20 February 2018 in respect of Applicant’s Route Operators Licence in the amount of R69 723.00. In respect of the licence for gambling machines, an amount of R697.00 in respect of each of the 1 000 LPMs was invoiced.

[11] On 13 March 2018 the Applicant, through its attorney, Cliffe Dekker Hofmeyr addressed a letter to the Authority pertaining to the amount payable in respect of each of the 1 000 LPMs due to the fact that by 31 March 2018, the Authority had only authorized the operation of 150 LPMs at thirty (30) sites. Therefore, although the Applicant was issued with a licence to operate 1 000 LPMs, the operation of the specified number of LPMs may only commence once the different sites are licenced and subsequent to Applicant’s

application to the Authority for authorization to install and operate a certain number of LPMs at a specific licensed site.

INTERPRETATION OF THE RELEVANT LEGISLATION:

[12] On behalf of the Applicant it is contended that the proper interpretation of Regulation 91 is that the amount of R697.00 per LPM is only payable once the Authority has authorized the LPMs for placement and operation at licensed sites. Section 95 of the Free State Act provides for the payment of an annual fee by the route operator in respect of the Route Operator Licence fee and the LPM fee. Regulation 91 provides as follows:

“Every holder of a gaming operator licence shall pay a licence fee of R69 723, 00 plus-

(a) R697, 00 per gaming machine authorised in terms of the licence.”

[13] The proper approach to the interpretation of the language used in an enactment is not to consider a single word and then apply what is seen as its ordinary meaning, instead the process of interpretation involves a proper consideration of the context in which the language has been used and by applying a purposive approach. In Natal Joint Municipal Pension Fund v Endumeni Municipality [6] Wallace JA held as follows:

“Interpretation is the process of attributing meaning to the words used in a document, be it legislation, some statutory instrument, or contract having regard to the context provided by reading the particular provision or provisions in the light of the document as a whole and the circumstances attendant upon its coming into existence. Whatever the nature of the document, consideration must be given to the language used in the light of the ordinary rules of grammar and syntax; the context in which the provision appears; the apparent purpose to which it is directed and the material known to those responsible for its production. Where more than one meaning is to be possible, each possibility must be weighed in light of all these factors. The process is objective. A sensible meaning is to be preferred to one that that leads to insensible or unbusinesslike results or undermines the apparent purpose of the document. Judges must be alert to, and guard against, the temptation to substitute what they regard as reasonable, sensible or businesslike for the words actually used. To do so in regard to a statute or statutory instrument is to cross the divide between interpretation and legislation. In a contractual context it is to make a contract for the parties other than the one they in fact made. The ‘inevitable point of departure is the language of the provision itself’ read in context and having regard to the purpose of the provision and the background to the preparation and production of the document”

[14] In Cool Ideas 1186 CC v A.C Hubbard and Another[7] it was held that the principles regarding statutory interpretation are as follows:

“A fundamental tenet of statutory interpretation is that the words in a statute must be given their ordinary grammatical meaning, unless to do so would result in an absurdity. There are three important interrelated riders to this general principle, namely:

(a) that statutory provisions should always be interpreted purposively;

(b) the relevant statutory provision must be properly contextualised; and

(c) all statutes must be construed consistently with the constitution, that is, where reasonably possible, legislative provisions ought to be interpreted to preserve their constitutional validity. This proviso to the general principle is closely related to the purposive approach referred to in (a).” [8] (Footnotes omitted)

[15] An analysis of the relevant statutory framework is apposite. On behalf of the Applicant it is contended that the ordinary grammatical

meaning of the word “authorized” as used in Regulation 91 provides that authorization was only given by the Authority to the Applicant to install a certain number of LPMs at authorized sites, subsequent to the Route Operator Licence issued to the Applicant. Therefore the “authorization” envisaged by Regulation 91 involves a process to be adopted and implemented by the Respondent subsequent to the Route Operator

Licence issued in terms of the provisions of Section 72 of the Free State Act. Further support for the contention that the meaning of the word “authorized” in Regulation 91(a) should be interpreted in a manner less onerous for the Applicant, is to be found in Section 72(3) of the Free State Act, which provides that:

“A route operator licence must authorise, subject to the provisions of this Act, the operation of any prescribed gambling machines on the licensed premises of the holder of a gambling machine site licence, and for such purposes the holder of such a gambling machine operator licence may enter into an agreement with the holder of such a gambling machine site licence for the placement of such gambling machines on the premises concerned”

[16] Applicant has not been authorized to physically set up and operate the LPMs at the various sites and has only been granted approval for a limited number of machines to be operational. According to the tax invoice dated 29 February 2018 only eighty two (82) LPMs were authorized and an amount of R697.00 per LPM, totalling R57 154.00 was levied. The granting of the Route Operator Licence is not authority to operate the LPMs by which that has not been the subject of the process by which gambling machines are installed at the various sites and approved or authorized for operation by the Authority. This fact was obviously considered and taken into account by the Authority as per the tax invoice. However, in terms of the exact same tax invoice the Applicant is furthermore invoiced to pay the licence fee pertaining to 1000 gambling machines, levied at R 697.00 per gambling machine, totalling R 697 000,00.

[17] Included in the record is an opinion provided by the Chief Director of Legal Services, The Office of the Premier of the Free State Province, Advocate A Swanepoel who opines that “… there is no indication in the Act or Regulations that the authorization of a gambling machine operator licence is dependent on the authorization of the limited gambling machine site licence.” Advocate Swanepoel’s interpretation of the relevant sections of the Free State Act is that the Applicant has been granted

authorization/licensed to operate 1 000 gambling machines on licensed sites. The fact that the Applicant has not yet

identified 1 000 LMP sites does not take away the authorization granted to operate 1 000 LPMs.

[18] In my view the construction placed on the provisions of Section 72 and Section 73 by Advocate Swanepoel is wholly untenable. Such an interpretation will have the opposite effect to what the legislation was intended to achieve. In short, even though the Applicant was issued with a licence to obtain 1 000 LPMs, the Applicant has not yet received authorization to allow, or expose for play, all of the 1 000 LPMs envisaged in Clause 12 of the Route Operator Licence issued by the Authority.

[19] On behalf of the Applicant it is contended that the proper interpretation is that the amount of R697.00 per LPM is only payable

once the Authority has in fact authorized the LPMs for placement and operation at licensed sites. The Legislature does not intend absurd results, but intends to advance the public interest. The entitlement of the holder of a route operator licence to make available for play at specific sites a certain number of LPMs is subject to the authority being satisfied that the holder of the site licence has in fact complied with the relevant provisions of the Free State Act. Furthermore, this interpretation of the relevant sections of the Free State Act, supports the further objectives entailed in the Legislation that only subsequent to a Gambling Machine Site Licence for placement of such gambling machines on the premises being granted or issued, may the LPMs become operational. To my mind, the meaning attributed to the language of the provisions of the Free State Act and regulations discussed above, with due regard to the context and the purpose of the provisions, is a more plausible and sensible one. The Applicant prays for a cost order only in the event of opposition of the application. The review is not opposed.

[20] In the result I hold that Section 95 of the Free State Act pertaining to licence fees ought to be interpreted purposively in that licence fees in respect of LPMs may only be charged and payable subsequent to authorization and installation of the LPMs at the authorized sites and in accordance with the site operators licence.

ORDER:

[21] I, therefore, propose the following order:

1. The decision of the First, Second and Third Respondents dated 1 November 2018 is hereby reviewed, declared invalid and set aside.

2. No order is made in respect of costs.

_______________________

I VAN RHYN, AJ

I concur and it is so ordered.

_____________________

M OPPERMAN, J

On behalf of the Applicant: ADV F JACOBS

Instructed by: NOORDMANS ATTORNEYS

On behalf of the Respondents: no appearance

Instructed by: MOROKA ATTORNEYS

[1] Definitions, Section 1.1.

[2] Section 72 of the Free State Act.

[3] Section 77(4) of the Free State Act.

[4] Section 72(4)(a) to (c)

[5] Section 95 of the Free State Act.

[6] 2012 (4) SA 593 (SCA) at [18].

[7] 2014 (4) SA 474 (CC).

[8] 2014 (4) SA 474 (CC) at [28].