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[2021] ZAKZDHC 45
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Hollywood Sportsbook KB (Pty) Ltd v Ethekwini Municipality and Others (D3994/2020) [2021] ZAKZDHC 45 (15 December 2021)
IN
THE HIGH COURT OF SOUTH AFRICA
KWAZULU–NATAL
LOCAL DIVISION, DURBAN
CASE
NO: D3994/2020
In
the matter between:
HOLLYWOOD
SPORTSBOOK KB (PTY) LTD
(formerly
known as KRUGERBETS (PTY)
LTD APPLICANT
and
ETHEKWINI
MUNICIPALITY FIRST
RESPONDENT
ETHEKWINI
TOWN PLANNING APPEALS
COMMITTEE SECOND
RESPONDENT
MEREBANK
HOTEL (PTY) LTD THIRD
RESPONDENT
DAN
NAIDOO RACING AND GAMBLING CC FOURTH
RESPONDENT
VIS
REDDY FIFTH
RESPONDENT
PLAYBETS
KZN (PTY)
LTD SIXTH
RESPONDENT
This
judgment was handed down electronically by circulation to the
parties’ representatives by email, and released to SAFLII.
The
date for hand down is deemed to be 15 December 2021.
JUDGMENT
CHETTY
J
[1] This
is an application to review and set aside the decision of the second
respondent, hereinafter referred
to as the ‘Appeal Committee’,
which considered an appeal arising from a special consent application
for the operating
of a restaurant and ‘special building’
as a licensed betting outlet in respect of horseracing, sports
betting, lucky
numbers and limited payout machines (‘LPMs’).
The application was made in mid-2018 in terms of the eThekwini
Municipality’s
Planning and Land Use Management By-Law, 2016
(Municipal Notice No. 114 of 2017). The applicant stated at the
outset that it holds
a bookmaker’s licence issued in terms of s
94 of the Gaming and Betting Act (KZN) 8 of 2010 (‘the KZN
Act’).
It brought the application as it intends to relocate the
operations of its branch in Springfield to Phoenix, Durban, for which
it requires planning approval in terms of the Durban Town Planning
Scheme (Phoenix Area) (‘the Scheme’). The applicant
also
clarified that it does not hold a totalisator licence in respect of
its Springfield branch, nor does it intend to apply for
such licence
in respect of the operations at the premises in Phoenix. Of critical
importance to the outcome of this application
is the applicant’s
contention that it intends to offer
only fixed odds betting
on
horseracing, sports and lucky numbers and LPM’s at its
prospective premises. It is common cause that the building in
question
falls within ‘Special Zone 31’ in terms of the
Scheme.
[2] The
application was considered by the first respondent’s (‘the
municipality’s’) Joint
Advisory Committee (‘JAC’)
which refused the application on 23 April 2019 on the basis that a
‘licensed betting
outlet in respect of horseracing, sports
betting, lucky numbers and limited payout machines is defined as a
Totalisator Depot in
the scheme and therefore does not comply with
the definition of special building.’ In addition, it was found
that the proposed
totalisator depot is not allowed on the upper floor
of a Special Zone 31 building in terms of the Scheme. For the
purposes of this
application, specific attention in argument was
devoted to the first reason for the JAC’s refusal, which was
also the Appeal
Committee’s reason for dismissing the internal
appeal. In this regard, the applicant contends that the activities
for which
it seeks authorisation do not fall within the definition of
a ‘totalisator depot’ in terms of the Scheme, and
therefore
the decision of the Appeal Committee constitutes a
reviewable irregularity under the Promotion of Administrative Justice
Act 3
of 2000 (‘PAJA’), alternatively on grounds of
legality.
[3] Is
not disputed that the uses to which a building in Special Zone 31 may
be put include those of a ‘
special building’
,
defined in the Scheme as ‘any other type of building or use not
specifically referred to in the set of definitions’.
On the
basis that the use applied for does not fall within any specific
category referred to in the definitions under the Scheme,
it was
contended by the applicant that such activities would fall under the
ambit of a ‘
special building or uses
’ as
contemplated in the Scheme and in Column 2 of the table in clause
14(b) of the regulations pertaining to Special Zone
31. This aspect
of the applicant’s argument was not met with any opposition by
the municipality and I therefor accept that
this `would not have been
a valid ground to have refused the application.
[4] Pursuant
to the application, which contained a detailed analysis of the Scheme
provisions and the uses applied
for by the applicant, valid
objections were received from the third to sixth respondents, who are
referred to by the applicant
as ‘competitor objectors’.
The essence of their objections is that the proposed land use falls
within the definition
of a ‘totalisator depot’, a
prohibited use in terms of the Scheme.
[5] In
response to the objections, the applicant provided the municipality
with a detailed response dated 11 December
2018. Of particular
importance is the contention that the proposed use applied for is
that of a ‘totalisator depot’.
In this regard the
applicant’s attorney clarified that the applicant was not
seeking to use the premises as a totalisator
depot, which the Scheme
defines as a ‘shop, office or other premises used for the
purpose of a Totalisator Agency in terms
of section 28(3) of the
Horseracing Control Consolidation Ordinance, No. 28 of 1957 as
amended’. The applicants set out in
detail the various
definitions pertaining to the use applied for, as compared to that
relied on by the competitor objectors.
[6] It
bears noting that a ‘totalisator’ is defined in terms of
the KZN Act (which replaced the repealed
Horseracing Control
Consolidation Ordinance, No. 28 of 1957) as:
‘
any electronic or
mechanical device commonly known by that name and used in connection
with betting on horse races, sporting events
and any other event or
contingency for registering or indicating or registering and
indicating the number or value or number and
value of—
(a)
bets
on horses in any horse race or any combination of horse races;
(b)
bets
on any sporting event;
(c) bets
on any other event or contingency; or
(d) bets
on any combination of horse races, sporting events and other events
or contingencies,
and which is operated in
accordance with a system of betting in which the aggregate amount
staked on any one of the aforementioned
categories of bets after
deduction from such aggregate of any amounts which may lawfully be
deducted therefrom in terms of the
KwaZulu- Natal Gaming and Betting
Tax Act, 2010, is divided amongst those persons who have taken
winning bets on such categories
of bets in terms of the relevant
totalisator rules, and includes any scheme, form or system of
betting, whether mechanically operated
or not, which is operated on
similar principles.’
[7]
The
applicant’s attorney emphasised that a totalisator (commonly
referred to as a ‘tote’) caters for a specific
form of
betting, often referred to as ‘pool betting’. This
operates on different principles to other forms of betting
such as
sports betting, lucky numbers and LPMs. Notwithstanding, the
municipality refused the application for the reasons set out
above.
The applicant thereafter exhausted its rights to pursue an internal
appeal against the refusal.
[1]
It was correctly pointed out that the refusal was based on an
interpretation of the provisions of the Scheme, in particular whether
the use applied for by the applicant fell within the definition of a
‘totalisator depot’. No other reasons were proffered
for
its conclusion.
[8] In
its internal appeal, the applicant contended that the first
respondent erred in identifying the proposed
activities on the
premises with that of a totalisator depot and proceeded to
crystallise for the Appeal Committee the basis on
which the erroneous
decision was reached. In particular, the following extract from the
applicant’s appeal memorandum is
of relevance:
‘
7.10
What
is therefore crystal clear is that, to be a Totalisator, the
successful punter is paid a specific percentage of the pool of
bets
and not any specific odds offered on the bet.
7.11 What
the Appellant proposes is not any form of Totalisator and therefore
the Appellant cannot
be said to be operating a “Totalisator
Depot”.
7.12 The
Appellant does not divide winning bets into any pool which may have
accumulated for
the purpose of that bet and, instead offers specific
odds on any bet which may be taken and the number of bets or the pool
of bets
on a particular event is totally irrelevant.
7.13 Most
importantly, the Appellant does not hold any Totalisator licence, and
if the Appellant
attempted to operate any Totalisator Depot, the
Appellant would be acting unlawfully.
7.14 The
proposed activities of the Appellant therefore do not fall within the
scheme definition
of a Totalisator Depot, and, as noted above, the
Appellant has no[t] idea why the municipality came to the conclusion
that the
proposed activities constituted the operation of a
“Totalisator Depot”.
7.15 What
also needs to be noted is that Sivest contended that the proposed
activities of the
Appellant fell under the scheme definition of a
“Casino” which is not the basis for the municipality
refusing the application
and only very obliquely suggested that the
Appellant had not shown, in its motivation, that the proposed
activities fell outside
the scheme definition of a “Totalisator
Depot”.’
[9] The
appeal was determined by the Appeal Committee which resolved against
allowing oral submissions to be made
to it, and instead confined its
decision to a consideration of the written submissions presented to
it. The only reason for the
Appeal Committee’s rejection of the
appeal, dated 11 December 2019, is a regurgitation of the first
reason submitted by the
municipality when it rejected the initial
special consent application. It is against this decision that the
review application
is lodged.
[10] When
the matter came before me, counsel were in agreement that the only
issue for determination is whether
the Appeal Committee’s
refusal of the special consent application, on the sole basis that
the proposed use of the premises
constituted a totalisator depot, is
a reviewable irregularity in terms of PAJA, alternatively under the
rule of law. As will appear
from what is set out below, the
competitor objectors, being the third, fourth, fifth and sixth
respondents, do not oppose the application.
The application is
however opposed by the municipality which persists in its contention
that the activities applied for in terms
of the special consent
application do indeed fall within the definition of a totalisator
depot. The issue therefore falls to be
determined by what constitutes
the proper interpretation of the nature of the use applied for by
special consent. Put differently,
the issue is whether the
application for special consent could, on any reasonable
interpretation, have been construed as an application
for
authorisation to operate a ‘totalisator depot’.
[11]
As
a starting point, Ms
Pudifin-Jones
who
appeared on behalf of the applicant, submitted that the municipality
has made the fundamental error of confusing the two types
of betting
- that is pool betting and fixed odds bets. It is, as counsel put it,
like comparing tennis with squash. Both are ball-games,
involving the
use of rackets, and played on courts. That however is where the
similarity ends. Despite this distinction being made
pertinently
clear in the applicant’s appeal memorandum, the point appeared
not to resonate with the Appeal Committee, even
after the applicant
made it clear that it did
not
have a
totalisator licence,
[2]
and if
it did engage in the activities of a tote, it would be acting
unlawfully. In order for the applicant to operate a facility
which
offers fixed odds bets on horseracing, sports events, lucky numbers
and LPMs, it does
not
require
a totalisator licence. On the contrary, the applicant pointed out
that it has a bookmaker’s licence
[3]
which permits it, as a ‘bookmaker’ defined in the KZN
Act, to ‘accept offers or stakes in the process of transacting
bets on horse races, sports, sporting events or any other events or
contingencies, or on a combination of such horse races, sports,
sporting events, other events or contingencies’. On that basis,
the applicant contended that it was inconceivable that the
use
applied for could be construed as that of a ‘totalisator
depot’.
[12] In
opposing the review and declaratory relief sought by the applicant,
the municipality contends that the
application is unsustainable on
three primary grounds. Firstly, it is contended that the use applied
for by the applicant is consistent
with that contained in the
definition of a ‘totalisator depot’. Therefore, as I
understood the argument of the municipality,
the JAC properly
considered the application as it was framed, and correctly refused
the application. Accordingly, there is no irregularity
in procedure
followed by the municipality in refusing the application, and
consequently the review application must fail. Second,
it is
contended that the applicant was deliberately attempting to ‘move
the goalposts’, as it were, from what was stated
in the initial
application, to the explanation now proffered in the application for
review. In other words that the applicant was
attempting to make out
a different case to that which it made in the application for special
consent.
[13] In
its answering affidavit, the municipality accuses the applicant of
conflating issues and misconstruing
the facts in this application. It
alleges further that the applicant now ‘goes to an extent of
trying to explain the type
of betting it will offer. Something it
never [stated] at the initial application for special consent’.
The municipality alluded
to the wording of the application for
special consent, as well as the advertisement placed in the local
newspaper, in which reference
is made to a ‘bet’ or
‘betting’ intended to take place on the premises.
Applying that line of reasoning,
it contends in its answering
affidavit that:
‘
It is clear that
anything that includes betting
as described in the act
mentioned above conforms with the definition that the Durban scheme
defines as a totalisator depot.
Totalisator betting
in any
form, is by its very nature part of “gambling and wagering”
and has been recognised as
such, for some time
.’
(emphasis in original)
Lastly,
the municipality appeared to make an argument based on the category
of application made by the applicant, suggesting that
the use applied
for was not available for the upper floors of a building, referring
to the intended use to be located on the fourth
floor of the
premises.
[14] When
the matter came before me I enquired at the outset from Mr
Mthethwa
,
who appeared on behalf of the first and second respondents, whether
the municipality, having had regard to the lengthy explanation
provided by the applicant regarding the difference between a
totalisator depot and use it applied for, was still of the view that
the special consent application would nonetheless have been refused.
After taking instructions, Mr
Mthethwa
conceded that with
hindsight, the municipality would ‘probably’ have agreed
to the granting of the special consent application
based on what has
now been put before the court. This concession in my view
significantly lowered the threshold for the applicant
to succeed on
the merits.
[15] As
regards the second contention that the applicant was attempting to
alter the ambit of its application,
to apply for a use which it had
not initially applied for, Mr
Mthethwa
was unable to offer any
meaningful rebuttal of the argument on behalf of the applicant that
in deciding an appeal, the Appeal Committee
was obliged to deal with
the matter on the basis that it was a wide appeal, and not one
strictly confined to the record of the
decision by the JAC. As stated
earlier, the JAC provided no reasons for its decision other than to
contend that the use applied
for fell within the definition of a
tote, and therefore it was a prohibited use which could not be
authorised. I agree with the
applicant’s submission that the
appeal before the Appeal Committee was an appeal in the wider sense,
in which it was at large
to reconsider the merits of the application,
with or without additional information or evidence. As such, the
Appeal Committee
was not bound to any record that may have served
before the JAC. In this regard, counsel relied on
Tikly and Others
v Johannes NO and Others
1963 (2) SA 588
(T). Indeed, the lack of
a record, as well as the procedural and decisional powers granted to
the Appeal Committee, are more suggestive
of a wider appeal than one
which is constrained to the ‘record’, such as it was,
before the JAC. See Hoexter
Administrative Law in South Africa
2
ed (2012) at 68-70; de Ville
Judicial Review of Administrative
Action in South Africa
revised 1 ed at 385-387.
[16] To
the extent that the municipality contends that the applicant altered
the ambit of its application from
the time of the special consent
application to the averments contained in the founding affidavit in
this review application, the
question which remains is why then does
the municipality persist with its opposition to this application,
knowing fully the clear
ambit of the applicant’s case? The
applicant submits that there was no error or misrepresentation in the
manner in which
it cast its application for special consent. Its
application made no reference to any form of ‘tote’
betting. To the
extent that the municipality inferred this from the
wording of the application, such inference was incorrectly and
improperly drawn.
There is no factual basis to sustain such an
inference. Moreover, even if one accepts the municipality’s
contention that
it believed the application encompassed what was
essentially ‘tote’ betting, this uncertainty was put
resoundingly
to rest when the applicant filed its response to the
competitor objectors. As stated above, the applicant categorically
denied
that it intended to engage in any activities associated with a
tote, emphasising that it did not hold a totalisator licence. The
municipality’s contention that the applicant transformed or
expanded the scope of the authorisation applied for, must therefore
fail.
[17] It
is evident that the members of the Appeal Committee failed to have
regard to the contents of the applicant’s
response to the
competitor objectors’ complaints, which clarified the scope of
the special consent application. Had the decision
makers applied
their minds to the content of the appeal memorandum and in particular
paragraphs 7.10 to 7.15 as alluded to above,
they would not, in my
view, have arrived at the decision they did. To that end, the Appeal
Committee took into account irrelevant
information and disregarded
relevant considerations and its decision to dismiss the appeal is
liable to be set aside on the grounds
in s 6(2)(
e
)(iii) of
PAJA.
[18]
Counsel
for the applicant submitted that the municipality, in considering the
special consent application and in concluding that
the activities for
which authorisation was sought fell within the ambit of a
‘totalisator depot’ as defined in the
Scheme, was
influenced by an error of law and its decision is accordingly
reviewable under s 6(2)(
d
)
of PAJA. This was based on an incorrect interpretation of the
definition contained in the KZN Act. In this regard, it was submitted
that the municipality misquoted and/or misread the definition of a
‘totalisator’ in the KZN Act
[4]
inasmuch as it appears to have read
only
item
(
d
)
of the definition as being limited by the words ‘and which is
operated in accordance with a system of betting . . . whether
mechanically operated or not, which is operated on similar
principles’. This is evident from a perusal of the
municipality’s
answering affidavit where the provisions of item
(
d
)
of the definition are worded as one continuous sentence so as to
read:
‘
(d) bets on any
combination of horse races, sporting events and other events or
contingencies, and which is operated in accordance
with a system of
betting ’.
[19]
I
agree with counsel for the applicant that the upshot of the
municipality’s interpretation is that
any
form of
betting would fall under the ambit of a ‘totalisator’.
This is evident from the municipality’s response
to the
applicant’s appeal memorandum,
[5]
where the municipality says the following, which I believe
encapsulates it’s reasoning:
‘
The definition of
the Totalisator Depot is described as ‘wrong’ by the
appellant. As a Land Use Management Planner,
we make a list of what
the use entails, for example, is there liquor being sold? Are there
pay out machines? Is there betting for
horse racing? Are there
betting for any monetary returns? This is not a difficult point.
Any
use that includes betting
as described in the KZN Betting Act
2010 that the Durban Scheme defines as a Totalisator Depot.’
[20] The
municipality persisted in the contention that the use applied for
constituted a ‘totalisator depot’,
but also inferred that
the applicant was being less than candid in the manner in which it
framed its application. The municipality
contended that:
‘
The municipal
decision to refuse the application was correct, given the nature of
the application. “Betting outlet in respect
of horse racing,
sports betting, lucky numbers and limited period machines” this
is regarded [as] a Totalisator Depot which
is defined in the scheme,
and such use cannot be ghostly camouflaged as a “Special
Building or Uses.”. . . .
The Respondent believe[s]
that the Appellant has the right to spell out or submit any
information pertaining his intention when
making an application. It
is very sad to note that some of the information may also use certain
technique to hide or camouflage
the actual or real activities with
the intention of achieving the desired outcome so as to benefit the
Appellant. This is exactly
what happened in this instance.”.
(
sic
)
[21] As
the Constitutional Court stated in
Cool Ideas 1186 CC v Hubbard
and Another
2014 (4) SA 474
(CC), apart from words used in a
statute being given their ordinary grammatical meaning, statutory
provisions should always be
interpreted ‘purposively’, in
the correct context and in a manner where the interpretation is made
so as to preserve
the constitutional validity of the statute under
consideration. On the contrary, it would appear from the
municipality’s
answering affidavit that despite the applicant
attempting to clarify the distinction between an entity operating a
betting facility
on the basis of all bets being pooled as opposed to
fixed odds betting, the municipality adopted the view that “any
form,
is by its very nature part of “gambling or wagering”.
This led the municipality to conclude that the applicant was
concealing its true intentions and viewed this as an opportunistic
attempt by the applicant, and formed the basis on which the review
application was opposed.
[22] The
issue for determination is therefore whether the activity for which
the applicant sought authorisation
in terms of the special consent
application, fell within the definition of a ‘totalisator
depot’. This aspect has received
the attention of our courts,
particularly in the Supreme Court of Appeal and the Constitutional
Court. The municipality acknowledges
in its answering affidavit that
our courts have drawn a clear distinction between lotteries and
sports pools on the one hand, and
gambling, casinos and wagering on
the other. It however contends that the courts have not distinguished
between the uses for which
the applicant proposes, being fixed odds
betting on sports (including horse racing) lucky numbers and LPMs, on
the one hand, and
a totalisator depot on the other. Based on this,
the municipality contends that the definition of a ‘totalisator
depot’
applies to the activities for which the applicant sought
authorisation.
[23] The
Constitutional Court in
Phumelela Gaming and Leisure Ltd v
Grundlingh and Others
[2006] ZACC 6
;
2006 (8) BCLR 883
(CC) para 1 describes the
difference in the placing of bets by a ‘punter’ in terms
of the choices available to him
as follows:
‘
A person who
wishes to wager money on the outcome of a horserace may choose to
place a bet with a bookmaker or on a totalisator.
The two systems are
different in that the bookmaker quotes odds in advance while the
totalisator does not fix odds in advance but
pays out ‘dividends’
in proportion to the amount of money wagered. To the extent that both
rely for their business
on the betting money of the public, they are
in competition. Both operate by virtue of licences issued by the
provinces and their
activities are regulated by provincial
legislation within the framework of national legislation and the
Constitution.’
[24] The
applicant explained in its appeal memorandum and in its founding
papers the difference between a bet taken
at the totalisator or
‘tote’ and a fixed odds bet. The applicant’s
argument draws heavily on
Grundlingh and others v Phumelela Gaming
and Leisure Ltd
[2005] 4 All SA 1
(SCA) para 6 where Comrie AJA
provided the following example to clearly illustrate the difference
between the two forms of betting:
‘[6] An obvious example of a
fixed-odds bet with a bookmaker would be 5 to 1 for a win on the
celebrated race horse Appeal
Court. The odds (5 to 1) would be fixed
at the moment when the bet is laid, and the payout in the event of
Appeal Court winning
would be calculable at the same moment. We know
from the evidence that the odds given by bookmakers may shorten or
lengthen as
the race approaches and that different bookmakers may
offer different odds. In the event of Appeal Court winning, the
bookmaker
must pay all the winning bets on that horse from his own
resources – save to the extent that he may have “laid
off”
such bets. He takes the betting risk. There is no pool of
bets to be divided among successful punters. The agreed odds rule.
[7] As
the definition indicates, the totalizator operates on principles
different from those described
in the preceding paragraph. All the
bets (tote bets) on a particular race (eg all the bets for a win in
race no 1) are pooled.
From the resulting (gross) pool or total, tax
and administration expenses (which include the profit of the tote
operator) are deducted.
The net pool is divided equally between all
the successful punters in proportion to their respective stakes.
There is no betting
risk to the totalizator or its operator. Subject
to lawful deductions, the tote pays out in winnings (or dividends)
what it has
received in bets. As it was succinctly put in the papers
(in lay terms) punters on the tote bet against each other; (whether
that
is the correct legal position is unnecessary to decide –
cf
Tote Investors Ltd v Smoker
(
supra
); whereas a
punter placing a bet with a bookmaker bets against that bookmaker. It
is also clear that the odds on a tote bet are
not fixed when the bet
is laid because no odds are agreed. On the contrary, everything
depends on how much money is wagered on
the race, via the tote, and
on how many winning tickets there are. The dividend can only be
calculated after the race has been
run.
[8] The
essence of a tote bet – ie a bet on the totalizator – is
the pool system, namely
that each pool is divided among the
successful punters. That essence is reflected in the definition of a
totalizator set out above.
It also accords with the descriptions and
analyses of the totalizator to be found in several of the decided
cases cited in the
opening paragraphs of this judgment and in the
judgments referred to therein.’
[25] What
may be distilled from the above extract is that in the context of a
tote bet, the operator carries no
risk. Subject to any deductions
which in law must be made, the tote operator must pay out winnings or
‘dividends’ on
the bets placed. In comparison, a
bookmaker carries the risk when bets are placed – in other
words, a punter wagers a bet
against the ‘house’. The
bookmaker assumes all the risk and must pay out on a winning bet,
based on the odds given
at the time. Put differently, as stated in
the applicant’s heads of argument, punters on the tote bet
against each other,
whereas when a punter places a bet with a
bookmaker, he or she bets against the bookmaker (or ‘the
house’). The applicant
seeks permission to operate fixed odds
betting focusing on sports betting, including horse racing, lucky
numbers and LPMs. There
is no opportunity in this scope of activity
for a pooling of bets to be divided amongst winning punters. That
only arises in the
case of a bet taken at a tote. Even if the
applicant was seeking to operate a tote under the guise of a fixed
odds betting establishment,
it does not hold a totalisator licence
and would therefor be operating unlawfully.
[26] In
Grundlingh
, Comrie AJA, in paragraph 14 of his dissenting
judgment (noting that the majority took no issue with his explanation
of the different
types of bets that could be placed), went on to
clarify the distinction between the two forms of betting:
‘
It is clear to me
that the exotic bets under review are not tote bets. This is because
the appellants do not operate a “totalizator”
as defined.
They maintain no pools of bets to be divided among winning punters,
nor do any actual divisions of this kind take place.
As I have
already recorded, the appellants are on risk and must pay all winning
bets from their own resources. On any given race
or combination of
races, they may show a profit or a loss. That is quite different to a
totalizator which runs no betting risk
and which shows no betting
loss or profit. It follows that the bets under review are not
outlawed by the concluding words of the
definition of fixed odds
bets: “but excludes a totalisator bet”. Indeed, the
presence of these words of exclusion seems
to suggest, at least
prima
facie
, that tote bets, or some tote bets, are fixed odds bets,
hence the legislative wish to exclude them for one or other reason of
policy.’
[27]
The
decision in
Grundlingh
is
instructive, not only because of the clear manner in which Comrie AJA
articulated the difference between the two forms of betting,
but also
because the facts in that matter closely resemble those presently
before me.
[6]
The appellants in
that case were bookmakers who were interdicted in the High Court by
the respondents from offering ‘fixed
odds bets’. The
respondents operated computerised totalisator agencies throughout the
country on the basis of pool betting.
The respondents contended that
the appellants were offering ‘tote bets’, similar to the
allegation in the present matter,
and in contravention of their
licence. The appellants appealed the High Court’s order to the
Supreme Court of Appeal which
concluded that the operations of the
appellant did
not
fall
within the definition of a ‘totalisator’, for reasons
which have been alluded to in the aforegoing paragraphs.
[28] In
a further appeal, the Constitutional Court added their approval to
the distinction drawn by Comrie AJA
and said the following in
paragraph 5:
‘
Totalisators work
on the basis that all the money placed on any particular betting
event is pooled and, after deductions for administration
fees and
taxes, divided equally among the winners. The amount of money paid
out to an individual winner therefore depends on the
size of the pool
and the number of winning bets.’
As
to fixed odds betting, the Constitutional Court made the following
observations in paragraph 7, again endorsing the distinction
made by
the Supreme Court of Appeal: ‘A bookmaker, on the other hand,
fixes odds in advance. A bookmaker may take “fixed
odds bets”,
“starting price bets” and “open bets”,
depending on what the provincial legislation and
the bookmaker’s
individual licence permits. To determine a “fixed odds bet”,
a bookmaker, prior to the race,
calculates contingencies on a
particular event happening. With an “open bet” no fixed
odds are agreed upon at the time
that the bet is laid, but the amount
to be paid out is dependent on other contingencies.’
[29] Yet
again the issue of whether a specific form of betting constituted a
‘tote’ bet or a ‘fixed
odds’ bet received the
attention of the Supreme Court of Appeal in
KwaZulu- Natal
Bookmakers’ Society and another v Phumelela Gaming and Leisure
Ltd and others
[2019] 4 All SA 652
(SCA). In that case the issue
before the court was whether bookmakers, in addition to their right
to accept bets on horse racing,
also had the right to accept bets for
other sports, to the exclusion of totalisator operators, whom it was
contended are confined
to taking bets on horse racing. The bookmakers
contended that the
Lotteries Act 57 of 1997
prohibited totalisator
betting on sports other than horse racing. The court considered the
provisions of
s 4(2)
of the
National Gambling Act 7 of 2004
which
defines totalisator betting as taking place when:
‘
A person places or
accepts a totalisator bet when that person stakes money or anything
of value on the outcome of an event or combination
of events by means
of –
(a)
a
system in which the total amount staked, after deductions provided
for by law or by agreement, is divided among the persons who
made
winning bets in proportion to the amount staked by each of them in
respect of a winning bet; or
(b)
any
scheme, form or system of betting, whether mechanically operated or
not, that is operated on similar principles.’
The
court stated the following in paragraph 24:
‘
Consequently, in
totalisator betting the payout that each of the winners receive is
determined
by the amount staked by each of them in their
winning bets, in proportion to the total amount
staked by all
of the persons participating in an event
, or combination of
events, after any deductions from the total amount staked, in terms
of any law or agreement.’ (emphasis
added)
[30] Swain
JA in
KwaZulu-Natal Bookmakers’ Society
arrived at the
same conclusion as Comrie AJA in
Grundlingh
as to the basis of
the distinction between pool bets taken at a tote and fixed odds bets
taken through a bookmaker. None of the
bets which the applicant
intends to offer at the new premises in Phoenix fall within the ambit
of a ‘totalisator’ or
a pool bet, nor has the
municipality been able to advance any credible argument in support of
its conclusion. The municipality
has been unable to advance any
argument as to why the ratio in
Grundlingh
does not apply to
the facts before me. As counsel for the municipality indicated at the
outset, with the benefit of hindsight and
having regard to the
activities which the applicant has clarified to constitute fixed odds
betting, the decision maker would
probably
have granted the
special consent authorisation. The municipality appears, as I have
alluded to earlier, to have misinterpreted the
statutory definition
of a ‘totalisator’ in the KZN Act, in concluding that it
applied to
any
bet wagered on horse racing, sports events,
lucky numbers and LPMs. But for this error of interpretation, the
decision maker ought
to have concluded that the activities for which
authorisation was sought would fall within the definition of a
‘special building’
as contemplated in the Scheme, and
consequently the application for special consent should have been
granted. As ‘special
building or uses’ is a land use
permissible by special consent, it follows that this is not a
prohibited use which the municipality
would have been precluded from
authorising.
[31] In
the result, for all of the above reasons, I am satisfied that the
application must succeed. The applicant
has sought a declarator that
the activities which it seeks to offer in terms of the KZN Act,
namely fixed odds betting on horse
racing, sports events, lucky
numbers and LPMs do not fall within the definition of a ‘totalisator’
as defined in the
Scheme. Ms
Pudifin-Jones
accepted that the
granting of declaratory relief is discretionary, but submitted that
the court should exercise its discretion in
favour of the applicant
inasmuch as this would help guide the municipality, to avoid a
repetition of the same dispute which is
currently before the court.
In
Rumdel Cape v South Africa Roads Agency Soc Ltd
(234/2015)
[2016] ZASCA 23
(18 March 2016) the court pointed out that:
‘
[15] . . . The
mere fact that parties are locked in dispute on a point of law or
fact does not necessarily entitle either of them
to an order
declaring which standpoint is correct. Generally speaking, a court
does not act in an advisory capacity by pronouncing
upon
hypothetical, abstract or academic issues. Instead, in order to
entertain an application for declaratory relief, a court must
be
persuaded that the applicant has an interest in an existing, future
and contingent right or obligation that will be determined
by the
declarator and that its order will be binding upon other interested
parties.
If it is so satisfied,
the court then exercises a discretion whether to grant or refuse the
order sought. In doing so the court
may decline to deal with the
matter where there is no actual dispute, where the question raised
is, in truth, hypothetical, abstract
or academic, or where the
declarator sought [will] have no practical effect.
[32]
I
am satisfied that in light of the nature of the applicant’s
business, it is more likely than not that a similar application
for
special consent which gave rise to the present application may be
sought in respect of new premises in other parts of the municipality,
or in KwaZulu-Natal. The municipality’s interpretation of the
statutory provision determining whether to allow the special
consent
application has been found to be erroneous. Added to this, the
municipality’s approach to the application appears
to have been
tinged with some degree of doubt as to the applicant’s
bona
fides
.
I put it no higher than that for the purposes of this application.
This conclusion is reached having regard to the language used,
and
averments made by municipal officials charged with assessing the
applicant’s application for special consent.
[7]
I am satisfied that the applicant has made out a case for the
declaratory relief as sought in paragraph 1 of the notice of motion.
[33] In
light of the delay which has been occasioned in awaiting the
resolution of this application, more than
three years has elapsed
from the time when the applicant applied for the special consent, and
more than two years from April 2019
when the special consent
application was refused. The applicant has been liable throughout
this period for rental on the premises,
despite being unable to use
it for the purposes for which it was intended. The prejudice to the
applicant is self-evident. The
cause of this prejudice is due to an
incorrect interpretation of the relevant statutory provision, despite
the applicant making
it clear to the municipality the precise nature
of its business and the scope of its activities. I am satisfied that
the matter
must be remitted to the decision maker in light of the
reasons set out above, and that a decision on the application must be
rendered
without delay. I consider a period of 30 days from the date
of this order to be adequate and reasonable for the municipality to
arrive at a decision. The applicant has sought to review and set
aside only the decision of the Appeals Committee and not the Town
Planning Committee which refused the special consent application.
While the reasoning in this judgment applies to the decision
of the
Appeals Committee (as the relevant decision maker), it applies
equally to the Town Planning Committee which was initially
seized
with the special consent application. However, as the applicant has
confined itself to seeking a remittal of the matter
back to the
Appeals Committee and not the Town Planning Committee, I see no
reason why such relief should be altered. The Appeals
Committee will
have to reconsider the matter in light of the views expressed in this
judgment.
[34] In
light of the municipality’s conduct, I was asked to award
attorney-client costs. Counsel relied on
Aqua Transport and Plant
Hire (Pty) Ltd v Chief Executive Officer of Dube Tradeport
Corporation N.O. and Others
(7456/2017) [2018] ZAKZDHC 15 (21 May
2018) para 36 where Lopes J said the following as regards punitive
costs:
‘
With the regard to
the question of costs, there can be no doubt that the applicant
improperly made allegations of impropriety on
the part of Rokwil
and/or Dube. The affidavits and the heads of argument are replete
with nouns and adjectives designed to impugn
the integrity of both of
them in their conduct regarding the award of the tender. That those
allegations have no merit is contained
in the withdrawal by Mr
Kemp
at the outset of the hearing. That, however, is not the end of
the matter. In my view it is both unfair and undesirable that reviews
are brought to court on the basis of spurious allegations of
impropriety, without the facts to back them. As set out above, it
was
no doubt those initial allegations which led to the prosecution of
the application. When matters became clearer, and it was
obvious that
there was no impropriety, the applicant continued nonetheless,
despite the apparent apologies. Papers issued in matters
such as this
one, are matters of public record. The suggestion that is conveyed in
the founding papers is that Rokwil and an outsourced
consultant were
connected and they contrived with Dube to have the contract awarded
to Rokwil. Withdrawing those allegations at
the outset of the
argument does not easily undo the taint of suspicion created by the
affidavits. If those allegations were reported,
the reputational
damage to all three entities may be enormous. Without evidence to
back up those allegations, the entities are
left in an untenable
situation. They cannot defend themselves. It is no apology to purport
to withdraw allegations of impropriety,
but then continue to suggest
that Aqua will continue to rely on improprieties as evidenced by the
conduct of the parties, as will
emerge in the debate! In those
circumstances I am of the view that the applicant should bear the
costs of the application, and
on an appropriate scale to express this
court’s disapproval at the conduct of making such
unsubstantiated allegations.’
[35] I
am not satisfied that punitive costs are necessary in these
circumstances as the error is fundamentally
one of interpretation of
a statutory provision. I cannot conclude with any degree of certainty
that the municipality acted for
ulterior purpose or with malice.
While its catergorisation of the applicant’s motive and manner
in which it framed its application
is less than commendable, it does
not warrant a sanction of punitive costs. My decision not to award
punitive costs is in large
measure also due to the manner in which Mr
Mthethwa
approached the matter on the day of the hearing. He
focused strictly on whether the municipality’s interpretation
of the scheme
was correct in law. If it was not, he conceded that the
decision could not stand. No attempt was by counsel made to trawl
though
much of the invective which the municipal officials appear to
have been caught up with. For those reasons, I decline to make a
punitive award of costs.
[36]
It
is necessary for me to make a few concluding comments,
albeit
obiter
,
as to the procedure followed by the municipality in processing the
internal appeal following their refusal to grant the special
consent
application. It appears from the papers that the fee to register an
appeal against a planning decision of the municipality
is yrj amount
of R5 000.00. PAJA obliges an applicant to exhaust all domestic
remedies before resorting to litigation. While the
applicant, being a
commercial entity, has not raised the issue concerning the payment of
an administrative appeal fee, I am of
the view that where internal
appeals are provided for as a necessary step before litigation, such
processes and procedures should
not come at an exorbitant cost.
Alternatively, the amount so levied should be reasonable in relation
to the time and effort the
administrator has to take in processing
such an appeal. In any event, where an applicant is ultimately
successful I see no reason
why this administrative appeal fee should
not be refunded to the applicant. In any event, the applicant has not
asked for the administrative
fee to be refunded, and despite the
sentiments I have expressed, I am constrained to adjudicate only the
issues canvassed on affidavit
before me, and more importantly to do
so with ‘judicial restraint’.
[8]
Moreover, in terms of the order below, the matter will serve again
before the Appeal Committee. There is no basis in law for the
applicant to have to pay any further administrative charge for the
matter to be reconsidered.
[37] Before
I conclude, I am constrained to say that I find it inconsistent with
the rights of just administrative
action under PAJA for a decision
maker, charged with hearing an administrative appeal, not to accord a
right to an internal appellant
to present oral submissions,
particularly where a dispute centres around a question of statutory
interpretation and where the appellant’s
attorney specifically
requested the right to be heard. It is worth noting that Hoexter
Administrative Law in South Africa
2 ed (2012) at 65 says the
following in relation to administrative appeals:
‘
Another major
distinction is that judicial review is an external safeguard against
maladministration, whereas administrative appeals
constitute an
internal or “domestic” check. Govender [‘Administrative
Appeals Tribunals’ in T W Bennet
et al (eds)
Administrative
Law Reform
(1993) 77 quoting Baxter
Administrative Law
(1984)
255] explains their main advantages as follows: “Effective
administrative appeal tribunals breed confidence in the
administration as they give the assurance to all aggrieved persons
that the decision has been considered at least twice and reaffirmed.
More importantly, they include a second decision- maker who is able
to exercise a ‘calmer, more objective and reflective
judgement’
in reconsidering the issue.”’
[38]
To
have denied the applicant the right to make oral submissions at the
appeal stage, without rendering reasons for why this position
was
adopted
[9]
, in my view serves to
undermine confidence in the decision-making processes of the
municipality. It infringes on an appellant’s
the right to have
its dispute adjudicated in a fair, open and transparent manner.
[39] In
the result, I make the following order:
1. It
is declared that the activities which the Applicant seeks to offer on
the premises situated
on the Upper Floor of Redbro Centre, 46
Parthenon Street, Phoenix, Durban (namely fixed odds betting on horse
racing, sports and
lucky numbers and limited payout machines) do
not
fall within the definition of a “
totalisator depot
”
in the Durban Town Planning Scheme (Phoenix Area);
2. The
decision of the Second Respondent of 11 December 2019 under reference
TPAC06/05/2019/C
is declared unlawful and invalid, and is reviewed
and set aside;
3. The
matter is remitted to the Second Respondent to be reconsidered within
a period of 30 days
from the date of this Order;
4. The
first respondent is directed to pay the applicant’s costs.
M
R CHETTY
Appearances
For
the applicant: S
Pudifin-Jones
Instructed
by: Richard
Evans & Associates
Ref: MH
Bremner/K043.H008/20
C/O Goldman
Schultz Attorneys
Address: 3
Innesdale, 101 Innes Road Morningside
For
the respondent: B Mthethwa Instructed by:
Poswa Incorporated
Address: Unit
607, 6th Floor Strauss Daly Building 41 Richefond Circle Umhlanga
Date
reserved: 29
October 2021
Date
of Judgment: 15 December
2021
[1]
It is noted at page 142 of the record that an administrative fee of
R5 000 was paid by the applicant in
order to
pursue the internal remedy of appeal.
[2]
A ‘totalisator licensee’ is defined in s 1 of the Gaming
and Betting Act (KZN) 8 of 2010 (‘the KZN Act’)
as ‘a
person licensed by the Board, in terms of section 110, to conduct a
totalisator on a horse race, sporting event or
other event or
contingency’.
[3]
Defined in s 1 of the KZN Act as ‘a licence issued, in terms
of section 94, to a person that owns one or more bookmaking
rights
and which licence authorizes the holder thereof to operate a
bookmaking business’
[4]
The term ‘’totalisator depot’’ is only used
in the Scheme, the term ‘’totalisator’’’
is defined in the Act.
[5]
Dated May 2018 and submitted by eThekwini Municipality Development
Planning, Environment and
Management:
Land Use Management (Central Regional Office).
[6]
In
Grundlingh
it was
noted the definition of ‘’totalisator’’ in
the Gauteng Gambling Act 4 of 1995 is very similar to
that in the
KZN Act, except that the definition in the KZN Act is more
comprehensive. A notable difference between the Gauteng
Act and the
KZN Act is that the former had a definition of ‘’fixed
odds bet’’ whereas the latter does
not. Importantly, the
definition of ‘’fixed odds bet’’ in the
Gauteng Act specifically
excludes
a
totalisator bet (
Grundlingh
,
para 5), but there is no definition of ‘’fixed odds
bet’’ in the KZN Act. The comments by Farlam and
Conradie JJA in
Grundlingh
,
para 39 are noteworthy:
‘
The review of
the legislation in the Transvaal, more recently in Gauteng, and also
nationally shows that in regulating the racing
industry the
provincial (and latterly national) legislatures have not, apart from
a short interval of proscription enacted by
the Gauteng Provincial
Legislature, considered it offensive for bookmakers to make use of
totalizator dividends in calculating
the pay-out on exotic bets.
Under the national Act presently in force it
would be
lawful for a bookmaker to take a bet where the payout is based on a
totalizator dividend.
For many years before 1995 it was
also expressly permitted in the Transvaal
.’
[7]
See para [20] above, where the municipal official commenting on the
special consent application stated the
following
: “The Respondent believe[s] that the Appellant has the right
to spell out or submit any information pertaining
his intention when
making an application. It is very sad to note that some of the
information may also use certain techniques
to hide or camouflage
the actual or real activities with the intention of achieving the
desired outcome so as to benefit the
Appellant. This is exactly what
happened in this instance.”. (
sic
)
[8]
See
Fischer
& another v Ramahlele & others
2014
(4) SA 614
(SCA) where the stated :
[14] It is not for the
court to raise new issues not traversed in the pleadings or
affidavits, however interesting or important
they may seem to it,
and to insist that the parties deal with them. The parties may have
their own reasons for not raising those
issues. A court may
sometimes suggest a line of argument or an approach to a case that
has not previously occurred to the parties
However, it is then for
the parties to determine whether they wish to adopt the new point.
They may choose not to do so because
of its implications for the
further conduct of the proceedings, such as an adjournment or the
need to amend pleadings or call
additional evidence. They may feel
that their case is sufficiently strong as it stands to require no
supplementation. They may
simply wish the issues already identified
to be determined because they are relevant to future matters and the
relationship between
the parties. That is for them to decide and not
the court. If they wish to stand by the issues they have formulated,
the court
may not raise new ones or compel them to deal with matters
other than those they have formulated in the pleadings or
affidavits.
[9]
The appeal was considered in December 2019 before the emergence of
the Covid 19 pandemic and
subsequent
measures to have virtual hearings.