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[2015] ZAGPJHC 192
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Masstores (Proprietary) Limited v South African Broadcasting Corporation Limited (A5071/2014, 3294/2012) [2015] ZAGPJHC 192 (31 August 2015)
THE HIGH COURT OF SOUTH
AFRICA
GAUTENG LOCAL DIVISION,
JOHANNESBURG
JUDGMENT
Appeal Case No:
A5071/2014
Case No: 3294/2012
DATE: 31 AUGUST 2015
In the matter between:
MASSTORES (PROPRIETARY)
LIMITED
.........................................................................
Appellant
And
SOUTH AFRICAN
BROADCASTING
...............................................................................
Respondent
CORPORATION LIMITED
Case Summary: Interpretation –
Subection 27(4) of the
Broadcasting Act 4 of 1999
– provision
imposes liability to pay a penalty upon a dealer who ‘sells or
alienates’ a television set to a person
who is not in
possession of a television licence and who is not exempted from the
obligation to be in possession of one - the meaning
of the word
‘sells’ cannot be limited to the mere formalities of a
contract of sale but the word is employed to refer
to the wider
transaction completed by delivery.
JUDGMENT
MEYER J (VICTOR AND WEPENER JJ
concurring)
[1] This is an appeal against an order
of the Gauteng Local Division of the High Court (Mailula J) on 22
August 2012, dismissing
with costs an application for declaratory
relief brought by the appellant, Masstores (Pty) Ltd (Masstores),
against the respondent,
the South African Broadcasting Corporation
Limited (the SABC). The appeal is with the leave of the court a quo.
[2] The objectives of the SABC, in
terms of s 8 of the Broadcasting Act 4 of 1999 (the Act), include the
provision of television
broadcasting services and television
programmes funded inter alia by licence fees. The use of any
television set by any person,
business, dealer or lessor is
prohibited in terms of s 27(1) of the Act unless they are in
possession of a television licence issued
by the SABC or exempted by
regulation. Section 27(4), the construction of which is presently in
dispute, reads as follows:
‘A dealer who sells or alienates
a television set to a person who is not in possession of a television
licence and who is
not exempted from the obligation to be in
possession of a television licence, is liable to pay a penalty of R3
000 or such higher
amount as may be prescribed, but such penalty may
not exceed R10 000 in respect of each television set sold or
alienated to such
person.’
Masstores, it is common cause, is a
‘dealer’ for the purposes of s 27(4) of the Act. It
sells almost 328 thousand television
sets annually through the
countrywide retail stores known as ‘Game’ and
‘DionWired’.
[3] Ptytrade 73 (Pty) (Ltd) trading as
Edusolutions (EduSolutions) is involved in the management and
procurement of goods for schools
run by the Provincial Departments of
Education in various provinces. EduSolutions purchased 2 500
television sets (the television
sets) and 2 500 home theatre systems
from Masstores for delivery to schools in the Limpopo Province. It
was a sale for credit.
The date of the conclusion of the contract of
sale is in issue: the SABC asserts that it was on 24 March 2011 and
Masstores maintains
that it was on 12 and 13 May 2011. It is common
cause that EduSolutions received its dealer’s television
licence from the
SABC on 11 May 2011. Masstores thereafter, on 13
May 2011, delivered the television sets to EduSolutions. Payment by
EduSolutions
of the purchase price to Masstores was made on 26 May
2011.
[4] The SABC asserted that the
television sets, although only delivered to EduSolutions on 13 May
2011 and paid for on 26 May 2011,
were sold at a time when
EduSolutions was not in possession of a dealer’s television
licence. The SABC accordingly, in terms
of s 27(4) of the Act,
demanded the payment of penalties from Masstores in respect of each
television set sold to EduSolutions,
which penalties total the sum of
R7,5 million. Masstores refused to comply with the SABC’s
demand. It maintained that it
sold the television sets to
EduSolutions only after the SABC had issued the required television
licence and Masstores was thus
not liable to pay penalties to the
SABC in terms of s 27(4) of the Act. The SABC refused to reverse the
penalties levied against
Masstores.
[5] Hence the application in the
Gauteng Local Division in terms of which Masstores sought a
declaratory order that: (a) it did
not sell or alienate the
television sets to EduSolutions prior to EduSolutions having first
obtained the television licence as
required in terms of s 27(4) of
the Act; (b) the sale of the television sets was not in breach of the
Act; and (c) it is not liable
for any penalties arising from the
sale. Masstores asserted in the court a quo that it was the common
intention of EduSolutions
and itself that unless EduSolutions had
been in possession of a valid television licence issued by the SABC
there was to be no
contract of sale. That is why, so Masstores
asserted, the sale was only processed through the generation of its
customary till
slips, recorded and delivery of the television sets
effected once EduSolutions had been in possession of a valid dealer’s
television licence issued to it by the SABC. The application was
dismissed with costs, the court a quo having found on the facts
that
the sale agreement had been concluded on 24 March 2011 when both
parties signed a written ‘payment credit facility agreement’.
Such are the provisions of that document, the court a quo found, as
constituting a contract of sale between Masstores and EduSolutions.
[6] Two questions are raised in this
appeal: the point on which the case was decided in the court a quo,
and more specifically
whether or not Masstores and EduSolutions had
the requisite consensus - the former to sell and the latter to buy –
prior
to EduSolutions coming into possession of the requisite
television licence and the proper interpretation of s 27(4) of the
Act,
and in particular the meaning to be ascribed to the word
‘sells’, which is a question that was raised for the
first
time when application for leave to appeal against the judgment
and order of the court a quo was made. It is to that question of
law
that I now turn. Section 27(4) of the Act must be interpreted in
accordance with the established principles of interpretation.
(See
Natal Joint Municipal Pension Fund v Endumeni Municipality
2012 (4)
SA 593
(SCA) para 18; Bothma-Batho Transport (Edms) Bpk v S Bothma &
Seun Transport (Edms) Bpk
2014 (2) SA 494
(SCA) para 12.)
[7] The requisites or essential
elements of a contract of purchase and sale (emptio venditio) were
concisely set out by Innes CJ
in Union Government (Minister of
Finance) v Van Soelen
1916 AD 92
(at 101). There the Chief Justice
at the time stated that-
‘. . . the requisites of a sale
are well known, merx, pretium, consensus. There must be a
merchantable article, an agreed
price, and the consensus of both
parties, the one to buy and the other to sell; or the one to acquire
and the other to alienate.’
(See also McAdams v Fiander’s
Trustee & Bell N.O.
1919 AD 207
at 223-224; Commissioner for
Inland Revenue v Saner
1926 AD 162
at 172; Westinghouse Brake &
Equipment (Pty) Ltd v Bilger Engineering (Pty) Ltd
1986 (2) SA 555
(AD) at 574B-D); BC Plant Hire CC t/a BC Carriers v Grenco (SA)
(Pty) Ltd
2004 (4) SA 550
(CPD) para 41.) Payment and delivery are
usually incidental to the concluded contract of sale. The delivery
of the merx, which
is the main obligation imposed on a seller by a
contract of sale (R v Levy
1953 (3) SA 466
(A) at 471H-472A; Modelay
v Zeeman and Others 1968(4) SA 639 (A) at 644C; R v Hayden
1926 TPD
419
at 423) transfers the ownership or dominium of the thing sold
provided the price was paid, security found or credit given (R v Nel
1921 AD 339
at 346; Laing v South African Milling Co. Ltd
1921 AD
387
at 394).
[8] But, as was said by Solomon JA in
Rex v Nel
1921 AD 339
(at 342)-
‘. . . the word sale is an
equivocal one, which may be used in more senses than one. It may
mean simply the contract of sale,
or, as was said by Lush, J., in
Bristow v. Piper
(1915, 1 K.B. 279)
“it is frequently used as a
short way of describing a sale in the ordinary sense, a sale
completed by delivery.”’
And in Nimmo v Klinkenberg Estates Co.
Ltd
1904 TS 310
, Wessels J said the following regarding the various
meanings with which the word ‘sale’ is used:
‘To lawyers discussing it from an
academic point of view it means the time when the parties have
arrived at a valid and binding
agreement, apart from any question
whether the purchase price has been paid or whether there has been
delivery of the article sold.
But it is also clear that in ordinary
parlance the word “sale” is used in a somewhat wider
sense than the mere agreement.
In a cash transaction it means
delivery of the property and payment of the purchase price, and a
sale is said to fall through
when the seller or the purchaser fails
to complete his part of the contract. In the case of a sale for
credit the word “sale”
ordinarily means the actual
transfer of the property.’
[9] The question that arises,
therefore, is in what sense the word ‘sell’ is used in ss
27(4) of the Act. Did the Legislature
intend for a dealer to incur
the liability to pay a penalty upon the mere conclusion of a contract
of sale with a person who is
not in possession of a television
licence and who is not exempt from the obligation to be in possession
of one or is it the intention
that the word also includes the
delivery of the television set to such a person? In other words, is
the word used in its narrow
sense of a concluded agreement of sale or
in its wider sense of not merely a concluded agreement of sale but
the wider transaction
embracing the delivery of the television set
sold?
[10] A ‘television licence’
is defined in s 1 of the Act to mean ‘a current and valid
written licence issued in
terms of this Act for the use of a
television set’ and a ‘”television licence fee”
means a fee prescribed
in terms of this Act and payable for the use
of a television set’. The word ‘use’ is defined to
mean ‘the
use or possession of a television set or permitting
any other person to use or possess a television set and the words
“user”
and “used” are construed accordingly’.
The manner or mode of using the television sets is not defined in
the
Act. But s 27(1)(c) provides that ‘[a] user who is
required to be in possession of a television licence must possess all
the categories of television licences as prescribed, which pertain to
such use’ and ss 40(1)(c)(iii) and (iv) empower the
Minister
charged with the administration of the Act by notice in the Gazette
to make regulations regarding ‘the purpose for
which and the
place where a television set may be used’ and ‘different
categories of television licences which any
user of a television set
may be required to possess’. The dictionary meaning of the
verb ‘use’ followed by the
word ‘of’ is ‘make
use of or employ something.’ (See: The New Shorter Oxford
English Dictionary 1993 Ed
Vol 2 p 3531.)
[11] Subsection 27(1)(a) prohibits the
‘use’ of any television set by any ‘person’
and ss 27(1)(b) by any
‘business, dealer or lessor’
unless such person, business, dealer or lessor is in possession of a
television licence
issued by the SABC or exempted by regulation.
This is where ss 27(4) fits into the legislative scheme. It imposes
liability to
pay a penalty upon a dealer ‘who sells or
alienates a television set to a person who is not in possession of a
television
licence and who is not exempted from the obligation to be
in possession of a television licence’. The purpose of s 27(4)
is clear: it assists the SABC in its collection of television
licence fees from persons, businesses, dealers or lessors to whom
television sets are sold or alienated and who are obliged in terms of
the Act to be in possession of the prescribed television
licence. If
not exempted, such a person, business, dealer or lessor is only
obliged to obtain a television licence if they use
the television set
as prescribed or if they possess the television set or if they permit
any other person to use or possess the
television set purchased.
Mere agreement to buy and to sell a television set at an agreed price
does not amount to using or possessing
or of permitting someone else
to use or possess the television set.
[12] I am therefore of the view that
the meaning of the word ‘sells’ as used in ss 27(4)
cannot be limited to the mere
formalities of a contract of sale. The
word was employed to refer to the wider transaction completed by the
delivery by the dealer
of the television set pursuant to the
concluded contract of sale. Limiting the meaning of that word merely
to the concluded contract
would not give it a commercially sensible
meaning. On the contrary it would result in the absurdity that the
dealer in question
will be liable to pay a penalty when selling or
alienating a television set to a person, business, dealer or lessor
who at the
time of concluding the contract of sale was not using or
possessing or permitting someone else to use or permit the television
set and thus not obliged in terms of the Act to be in possession of a
valid television licence issued by the SABC. Such a meaning
would be
contrary to the clear purpose of ss 27(4).
[13] My conclusion on the proper
interpretation of ss 27(4) is decisive of the appeal. It is
accordingly not necessary to consider
the point on which the case was
decided in the court a quo. Masstores and the SABC are ad idem that
the engagement by each party
of the services of two counsel were
warranted and prudent.
[14] In the result the following order
is made:
(a) The appeal is upheld with costs,
including those of two counsel.
(b) The order of the court a quo is set
aside and replaced with the following order:
‘1.It is declared that:
1.1 the applicant did not sell or
alienate 2 500 television sets to Ptytrade 73 (Pty) Ltd t/a
EduSolutions prior to EduSolutions
having first obtained the
requisite television licence as required in terms of
s 27(4)
of the
Broadcasting Act 4 of 1999
;
1.2 the sale of the abovementioned
television sets by the applicant to EduSolutions is not in breach of
the
Broadcasting Act; and
1.3 the applicant is not liable for any
penalties arising from the abovementioned transaction.
2. The respondent is directed to pay
the costs of the application, including the costs of two counsel
where two counsel have been
employed.’
P.A. MEYER
JUDGE OF THE HIGH COURT
Date of Hearing: 19 August 2015
Date of Judgment: 31 August 2015
Counsel for Appellant: Adv I Miltz
SC (assisted by Adv JF Nicholson)
Attorneys for Appellant: Shepstone &
Wylie, Umhlanga Rocks, Durban
C/o Shepstone & Wylie, Sandton,
Johannesburg
Counsel for Respondent: Adv I
Semenya SC (assisted by Adv N Mayet)
Attorneys for Respondent: Ningiza
Horner Inc, Sandton, Johannesburg