Royal Internet Cafe v Vukani Gaming Gauteng (Pty) Ltd and Others (A511/2017) [2020] ZAGPPHC 434 (20 August 2020)

HIGH COURT OF SOUTH AFRICA

(GAUTENG DIVISION, PRETORIA)

(1) REPORTABLE: NO.

(2) OF INTEREST TO OTHER JUDGES: NO.

(3) REVISED.

CASE NO: A511/2017

In the matter between:

ROYAL INTERNET CAFÉ

First Applicant

and

VUKANI GAMING GAUTENG (PTY) LTD

First Respondent

DIE WATERGAT KROEG CC

Second Respondent

2 GREEKS AND A BOERTJIE INVESTMENT CC Third Respondent

JUDGMENT

This appeal has been heard in terms of the Directives of the Judge President of this Division dated 25 March 2020, 24 April2020 and 11 May 2020. The judgment and order are accordingly published and distributed electronically.

DAVIS, J

[1] Introduction

This is an appeal against the granting of an interdict by a single judge of this division against the appellant. The appellant, who conducts the business of an internet café, denies the commission of the offending conduct which the interdict seeks to prevent and primarily appeals against the acceptance by the court a quo of the evidence presented by the applicants in the initial application. The appellant argues that there were factual disputes which ought not to have been resolved “on paper” and accordingly it should not have been found that the offending conduct had been established on a preponderance of possibilities.

[2] The offending conduct

2.1 The nature of the conduct by the appellant which lead to the application in the court a quo (and the ultimate interdict) neatly appears from the terms of the interdict itself. It reads as follows:

“1. The first respondent [the appellant’s landlord] is interdicted and restrained from permitting the use of its premises situated at the Northdale Shopping Centre … for the purpose of restricted gambling activities and unlawful gambling as prohibited by the National Gambling Act 7 of 2004 and the Gauteng Gambling Act 4 of 1995.

2. The second respondent [the appellant] and all persons occupying the premises by through or on behalf of the second respondent are interdicted and restrained from:

2.1 Conducting any restricted gambling activities, unlawful gambling activity and engaging in any other conduct connected with unlawful gambling activity prohibited by the National Gambling Act 7 of 2004 and the Gauteng Gambling Act 4 of 1995.

2.2 Permitting or allowing gambling as defined in section 1 of the National Gambling Act 7 of 2004 and the Gauteng Gambling Act 4 of 1995 on and from the premises”.

2.2 Gambling in Gauteng is subject to the provisions and restrictions contained in the two acts mentioned in the interdict. The form of gambling relevant to this appeal is that similar to that which is conducted on what is known as a “limited pay-out machine” or LMP.

2.3 A LMP is defined as a gambling machine with a restricted prize. It is regulated by the “LPM regulations” promulgated under the National Gambling Act in Government Notice GNR 1425 published in Government Gazette 29602 of 6 February 2007 and under the Gauteng Gambling Act in Gauteng Notice GN 570 published in the Gauteng Provincial Gazette PG 323 of 14 February 1997.

2.4 In terms of the abovementioned regulations, gambling occurs when a game is played by staking bets up to a prescribed limit and then pushing a button which runs the game until the machine on which it is played produces a result. These games are played electronically and involve no skill on the part of the player. The prescribed aggregate stake is limited to R5 and the maximum aggregate prize is limited to R500.

2.5 Licences are issued to qualifying businesses to operate LPM’s from their premises. In 2015 when the application was launched in the court a quo the first respondent in the appeal (then being the first applicant) was such a business. At the time, its annual licence fee was R124 155,00 plus R1 255,00 per registered gaming machine/LPM. All the LPM’s on licensed premises have to be connected to a central electronic monitoring system, enabling remote monitoring to ensure that the fiscus receives all the revenue to which it is entitled and that the players are treated fairly.

2.6 The allegation was that the appellant, not being such a licenced premises, allowed and permitted the use of its touch-screen computers in the internet café to operate as unlicenced LPM’s not only in contravention of the relevant acts and the LPM regulations and without paying licence fees or gaming tax, but also in unlawful competition with the applicants in the court a quo.

[3] The evidence produced by the applicants in the court a quo

3.1 The applicant’s deponent to its founding affidavit was previously employed by the Gauteng Gambling Board for nine years, first as an inspector and then as its compliance manager. He referred to the various statutory provisions regulating gambling in the Gauteng Province and in particular the operation of LPM’s.

3.2 Apart from the strict licensing regime applicable to licensed route and site operators of LPM’s they have to comply with two further requirements. The first relates to the nature of their premises and the second to their tax obligations. In respect of the nature of licensed premises, the main business conducted on such premises may not be the operation of gaming machines. The LPM’s must be incidental to the license holder’s main business. In addition, LPM’s can only be offered for play in premises which provide for adult leisure facilities such as bars and sports clubs. Persons under 18 years of age are restricted from access to the machines.

3.3 As to the tax obligations of licensed premises, gross gaming revenue generated by LPM’s is subject to taxation at 15% in addition to income tax and VAT obligations. The income generated from legally operated LPM’s were reported as having been in excess of R36 million in 2013 in Gauteng province in gaming tax alone.

3.4 After discussing the general problems relating to the alleged increase in illegal gambling, the applicant’s deponent referred to the discovery of alleged illegal gambling operations conducted or allowed by the appellant. As set out in the judgment in the court a quo, previous reporting of illegal gambling outlets to the Gauteng Gambling Board have produced no results. This, so the deponent stated, was probably as a result of the Board’s limited capabilities and resources and the extent of its statutory responsibilities.

3.5 For purposes of establishing the nature and extent of the offending conduct i.e the illegal gambling activities conducted by the appellant, the applicants employed two investigators who visited the appellant’s business and have produced two affidavits detailing their observations.

3.6 The appellant contended, both in the court a quo and on appeal that the affidavits by the investigators contained hearsay evidence and should in any event be disregarded. It is therefore necessary to refer to the contents of these affidavits in some detail.

3.7 The first affidavit is by one Le Roux. He inter alia states the following:

3.7.1 That he has been a private investigator for 21 years, specializing in undercover and surveillance work. Before that, he was “involved in military intelligence” from 1986 – 1994.

3.7.2 He attended the appellant’s premises on 15 October 2015 from 20h10 to 21h00, on 17 October 2015 from 20h13 to 21h30 and on 23 October 2015 from 19h23 to 19h43. He described both the exterior and interior of the appellant’s premises, as well as its location and signage, denoting it as an internet café.

3.7.3 Access to the premises was obtained by pushing a bell at the security gated entrance. Access at the gate, once remotely opened, was controlled by a security guard. After entering, one encounters a blue wooden door which leads to a small non-smoking area. There were 11 “touch-screen” computers in this area which was separated from the main part of the premises by glass sliding doors. Beyond the glass sliding doors there was a reception desk to the left with two ladies occupying it. The reception desk supported a computer screen and a CCTV monitor. It is to be noted that there is a security camera positioned at the entrance gate described above. The interior of the premises was painted in a light blue colour with neon lights and posters against the walls. Two flat screen television sets streamed music videos. At the reception area, signs advertised Friday Ladies’ Night promotions. Waitresses offer complimentary beverages to the patrons but no alcohol is served. There are 42 computers in this main area of the premises in which smoking is permitted.

3.7.4 At his first visit, Le Roux was accompanied by a female associate who gave the one receptionist R100 who appeared to enter something in the computer at the reception desk before handing over a printed receipt containing a series of numbers. The receptionist then accompanied Le Roux and his associate to one of the touch screen computers and assisted them to enter the numbers recorded on the receipt into the computer. Once the numbers were successfully entered, a credit was displayed, showing the R100 paid as credits. Le Roux’s associate played games such as “Starburst”, “Magic Forest” and “Twin Spin”, all games familiar to Le Roux. The games are similar to those offered in licensed gambling establishments. Each game had a credit display which either increased or decreased as a player won or lost. In playing the games, a player is required to select the number of credits one is willing to bet. Once the bet in the chosen amount is placed on a particular game, the corresponding amount is deducted from the credit appearing on the screen. There is apparently also a default bet placed if the “Spin” button is pushed without having selected a specific amount. After playing a number of games and having won or lost, any remaining credit appearing on the screen can be redeemed for cash. This is what Le Roux’s associate did. When she and Le Roux wanted to leave at the end of the Le Roux’s first visit, they informed one of the two receptionists (apparently the one acting as cashier) that their original receipt was lost. The lady then wrote down a number from the computer and gave it to the other lady at reception. This lady then entered the details on the computer at reception and paid out R409 to Le Roux’s associate. This corresponded to the credit displayed on her screen when she had stopped playing and represented the original R100 paid and R309 worth of winnings.

3.7.5 During this visit, Le Roux counted approximately 25 persons in the main area playing similar games which he described as “casino type games”. On the visit of 23 October 2015, he noted that “the place was full with more than 50 people present”.

3.7.6 Le Roux also observed that from time to time patrons would hand over money to one of the receptionists. He also heard a lady sitting close to him during their first visit telling the person sitting next to her, before leaving that she was “cashing out”.

3.7.7 During their first visit, Le Roux asked one of the receptionists whether he could use the internet to check his e-mails on the vacant machine next to the one on which his associate was playing, but she said: “No”. Undeterred, he attempted to do something other than gambling on the machine. He succeeded in only accessing a “Windows” page which displayed an “exe” or executable file which directed to him to a global gambling platform. He could not access the internet.

3.7.8 During the course of Le Roux’s visit, his associate’s computer stopped working. They called the receptionist who switched the computer off and then on again. After doing that she inserted a USB drive into the computer, clicked on a file which came up on the screen and then a number of games appeared on the screen. She then removed the USB drive after which Le Roux’s associate was able to continue playing.

3.7.9 On a further return visit of Le Roux on 31 October 2015, again in the company of an associate, they asked for two vouchers of R50 each. There were 25 persons present, all seated in front of computers, playing casino type games. He noticed that the majority of patrons seemed to be playing a form of “slots”. Le Roux and his associate sat at computers numbers 6 and 7. When Le Roux’s associate loaded the details of one of the vouchers into the computer, an amount of R50 appeared on the screen as a credit. Le Roux took photographs of this and annexed them to his affidavit. The associate selected “play promotional games” and was required to “click” on a disclaimer following which a menu of slot machine type games appeared on the screen. This can also be seen in one of the attached photographs. After “betting” and “spinning” a number of times, Le Roux’s associate continued until all the credits were depleted. They then left the venue.

3.7.10 Le Roux and his associate returned just over an hour later. They again purchased a voucher for R50. This time around there were 15 people present, each playing casino type games as before. Not one person was doing anything else on the computers. A request by Le Roux to check his e-mails was, as before, refused. Again, the voucher was loaded and Le Roux details the playing procedure followed by his associate which, when completed, left the associate with 20264 credits. A staff member then assisted with the “cash out” process by referring to the computer and writing down a sequence of numbers from the screen on a piece of paper. Le Roux and his associate then accompanied her to reception where, after entering these numbers into the computer at reception, she paid Le Roux’s associate R202, 64 in cash. Le Roux confirmed that the layout and the patrons gambling on casino type games “mirrored” his experience from the first three visits.

3.8 The affidavit of the other investigator contracted by the applicants was from one Mr Venter. He was an investigator of two years experience. He was also a member of Emergency Assist South Africa which assists the South African Police Services in tracing missing persons. Part of his job entails some surveillance work. He has also previously worked for the SANDF for two years. Venters’ affidavit contains the following:

3.8.1 Details of his first three visits on 7 October 2015 from 21h47 to 22h55, on 8 October 2015 from 19h10 until 19h50 and on 9 October 2015 from 20h45 until 21h10. He also made a “follow-up” visit on 31 October 2015.

3.8.2 Venter explained the modus operandi of the appellants’ business as he observed it. His detailed explanation accords with that of Le Roux.

3.8.3 Venter was also accompanied by another male (“Travis”) who he observed for purposes of making his report and affidavit. At the first visit, Venter and Travis, after having passed the security gate, was not able to go to the computer terminals directly but was required to go the “Cashier” at the reception desk.

3.8.4 At the reception desk, Travis handed over R200 for which he was handed a voucher, a copy of which was annexed to Venter’s affidavit. When Venter and Travis got to their chosen computer terminal, Travis was unable to upload the voucher. One of the staff members approached and with the aid of a flash drive set up the computer. There were three possible payment options then displayed on the screen, being payment by Visa, Mastercard or cash. The credit card option appeared to have been disabled because when one “clicked” on the relevant button on the screen there was no response. The staff member, without saying anything, “clicked” on the cash option whereafter Travis could commence playing.

3.8.5 Venter noticed the patrons playing games which he recognized as games played in licensed gambling establishments and he named them. Travis played two of these games, being “Sevens” and “American Roulette”. No-one accessed the internet to browse. When Travis asked to do so, he was advised that there was no access to the internet available. The same advice was given at each of the pair’s three subsequent visits.

3.8.6 At the second visit, Travis similarly paid R200 for a voucher to play. He did this twice and on both occasions lost all the credits.

3.8.7 On the third visit, Travis’ luck changed. He bought a voucher for R100 in similar fashion as the preceding two nights but this time he played “Hot Sevens”. It was a busy night and there were 40 patrons. Travis’ credit went up to such an extent that he could approach the cashier and ask for a “cash out” of R300 which was paid to him, allowing him to continue to play with the remaining R100 credit on the computer, which he then did until he lost it.

3.8.8 Venter and Travis returned for a “follow-up” visit on 31 October 2015. On this occasion, there were 17 other people present. Travis paid R500 and was given a voucher in the same fashion as previously described. He then commenced playing and Venter took a photograph of him which was also annexed to his affidavit. Travis played “Blackjack” and “Magic Seams” and had lost all his money by the time the pair left at 19h30.

3.9 It is immediately apparent that the affidavits of Le Roux and Venter contain detail of their own observations, corroborated by contemporaneous photographs taken by them and copies made by them of supporting documents. The contents of the affidavits, even without any confirmatory affidavits by their associates, therefore do not constitute hearsay evidence.

[4] The evidence produced by the appellant

4.1 The appellant produced an answering affidavit by the sole director of a company which “operates” as the appellant. In his affidavit, this director disputed the urgency by which the application had initially been launched, raised a legal argument about launching applications where factual disputes should be foreseen, objected to the affidavits of Le Roux and Venter on the basis that they did not make mention therein whether they had acted as agents of the SAPS as contemplated in Section 252A of the Criminal Procedure Act 51 of 1977 and described the business of the appellant in general terms as that of a bona fide internet café and attached some photographs of the premises and the computers.

4.2 The abovementioned deponent stated that the appellant employed one manager, two cashiers and a “cleaning lady”. The security at the entrance is needed as a result of robberies in the area and other establishments have a similar security gate. Apart from these, the director had very little factual evidence to contribute. He denied the truth of the affidavits delivered by the applicants and doubted whether Le Roux and Venter were ever at the appellant’s premises.

4.3 The affidavit of the appellant’s landlord (the initial 1st Respondent) does not take any of the issues regarding the offending conduct much further.

4.4 The confirmatory affidavit of the female manager of the appellant consists of four paragraphs in total in which she denies pay outs in cash having been made, denies that any gambling takes place and denies that the internet cannot be accessed.

4.5 Two exact replica affidavits of two customers of the appellant were produced, the sole differences between the affidavits being visits to the “Spur” being mentioned in the one as opposed to visits to the “Spar” in the other and use of internet for emails and banking in the one as opposed to “Facebook” and “YouTube” in the other. Both affidavits contain the strange statement that they were made “out of fear for harassment and victimization by the Applicants and their ‘undercover investigators’”, whatever that may mean or imply. These customers state that they have never gambled at the appellant’s business and “find it strange that people may say gambling takes place there as the place is not furnished with gambling machines but ordinary computers”.

[5] Evaluation

5.1 The principles regarding the resolution of factual disputes in motion proceedings where final relief is claimed are trite. They are those set out in Plascon-Evans Paints Ltd v Van Riebeeck Paints (Pty) Ltd [1984] ZASCA 51; 1984 (3) SA 623 (A) at 634 (E) – 635 D with reference to Stellenbosch Farmers’ Winery Ltd v Stellenvale Winery (Pty) Ltd 1957 (4) SA 234 (C) at 235E – G being:

“… where there is a dispute as to the facts a final interdict should only be granted in … motion proceedings if the facts as stated by the respondent together with the admitted facts in the applicant’s affidavits justify such an order… . The power of the Court to give such final relief on the papers before it is, however, not confined to such a situation. In certain cases the denial by a respondent of a fact alleged by the applicant may not be such to raise a real, genuine or bona fine dispute of fact (see in this regard Room Hire Co (Pty) Ltd v Jeppe Street Mansions (Pty) Ltd 1949 (3) SA 1155 (T) at 1163-5 and Da Mata v Otto NO 1972 (3) SA 858 (A) at 882D – H)”.

5.2 The lastmentioned approach has further been outlined in Soffiantini v Mould 1956 (4) SA 150 (E) at 154E-H: “The respondent’s affidavits must at least disclose that there are material issues in which there is a bona fide dispute of fact capable of being decided only after viva voce evidence had been heard … . If by a mere denial in general terms a respondent can defeat or delay an applicant who comes to Court on motion, then motion proceedings are worthless, for a respondent can always defeat or delay a petitioner by such a device. It is necessary to take a robust-common sense approach to a dispute on motion as otherwise the effective functioning of the Court can be hamstrung and circumvented by the most simple and blatant stratagem”.

5.3 To this can be added the requirement to “carefully scrutinise” the answering affidavits as set out in Trust Bank van Afrika Bpk v Western Bank Bpk 1978 (4) SA 281 (A) at 293 H- 294 E and Wightman t/a J W Construction v Headfour (Pty) Ltd [2008] ZASCA 6; 2008 (3) SA 371 (SCA) at [12] and [13].

5.4 Applying these principles to the manner in which the appellant dealt with the evidence of the offending conduct placed before the court by the applicants, namely the affidavits of Le Roux and Venter, one finds that, apart from instances where the appellant’s deponent is argumentative about the admissibility of these two deponents, only generalized denials are made. The actual detail contained in the affidavits, such as dates, times, observances, plays witnessed, vouchers obtained and the like, are not placed in dispute in the fashion required in the judgments referred to above. In fact, the deponent for the appellant goes so far as to say the following: “It is further not intended to address each and every allegation made in those affidavits as it is simply not necessary in view of the lack of credibility”.

5.5 Both the issue of whether the versions of Le Roux and Venter should be accepted or not and the issue of their credibility, can only be determined once a “real factual dispute” has been raised by the production of countervailing allegations or facts. The failure by the appellant to deal with these issues except in generalized terms, results in the situation that the evidence of actual observances of gambling and the “cashing out” of winnings were left undisputed.

5.6 Insofar as the appellant’s manager, who may or may not even have been present, denied these facts in the briefest and most generalized of statements, her denials fall into the category of allegations which carry no real weight. Without any attempt having been made at dealing with the occurrences observed by Le Roux and Venter on any of their specified visits or by producing affidavits by the cashiers dealing with the express accusations of having made “pay-outs”, no real or genuine disputes have been raised. See also in this regard Ripoll-Dausa v Middleton NO [2005] ZAWCHC 6; 2005 (3) SA 141 (CPD) at 151A – 152J wherein the Plascon Evans-principle has been revisited. The applicants were fully justified in contending that this lack of real factual disputes obviated the need to file replying affidavits.

5.7 The sheer extent of unanswered detail regarding instances of offending conduct witnessed by Le Roux and Venter leads one to the inescapable conclusion that the offending conduct had been established on a balance of probabilities.

5.8 It follows from the above that the Court a quo was correct in granting the interdicts claimed by the applicants against the appellant (and the other respondents).

[6] Having reached the aforementioned conclusion, I find it unnecessary to deal with other peripheral issues raised by the appellant except for the following aspect: the appellant argued that, even if the offending conduct had been established, an alternate remedy to a final interdict had been available, namely prosecution for the contraventions of the Acts mentioned at the inception of this judgment. In this regard, however, the applicant’s principal deponent had stated that he was aware, from interactions with officials of the Gauteng Gambling Board, that the Board is “insufficiently resourced” to police all sites and attempted to rely on the services of the South African Police Services. There are “significant” delays in the finalization of criminal proceedings and a pending criminal case does not in and of itself prevent the illegal conduct form continuing, neither before nor after a conviction. The submission made by the applicants that the fact that the offending conduct might constitute a criminal offence does not accord to the applicants similar protection to that sought by way of interdict proceedings, appear to be correct. I am accordingly of the view that the court a quo was fully justified in granting the interdict.

[7] Order

I would dismiss the appeal with costs (including the costs of two counsel where employed).

N DAVIS

Judge of the High Court

Gauteng Division, Pretoria

I agree.

A J BAM

I agree and it is so ordered.

N RANCHOD

Date of Hearing: 30 June 2020

Judgment delivered: 20 August 2020

APPEARANCES:

For the Applicant: Adv N Jagga

Attorney for Applicant: Vardakos Attorneys, Vereeniging

c/o Jasper van der Westhuizen & Bodenstein Inc,

Pretoria

For the Respondent: Adv P Ellis SC with Adv A P Ellis

Attorney for Respondent: Petzer, Du Toit & Ramulifho Attorneys, Pretoria