National Lotteries Board v Bruss and Others (730/2007) [2008] ZASCA 167; 2009 (4) SA 362 (SCA) ; [2009] 2 All SA 164 (SCA) (1 December 2008)

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[2008] ZASCA 167
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National Lotteries Board v Bruss and Others (730/2007) [2008] ZASCA 167; 2009 (4) SA 362 (SCA) ; [2009] 2 All SA 164 (SCA) (1 December 2008)

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THE
SUPREME COURT OF APPEAL
REPUBLIC
OF SOUTH AFRICA
JUDGMENT
Case No: 730/2007
NATIONAL LOTTERIES BOARD
Appellant
and
ROBIN LESLIE BRUSS NO
1
st
Respondent
BRIAN JEFFREY MILLER NO
2
nd
Respondent
GERHARD SCHALK VAN NIEKERK NO
3
rd
Respondent
JACQUELINE SCHOEMAN NO
4
th
Respondent
LESLIE MONDO NO
5
th
Respondent
DAWID CROUS 6
th
Respondent
JULIAN RICHARD CUTLAND NO
7
th
Respondent
SOUTH AFRICAN BROADCASTING
CORPORATION
8
th
Respondent
TAINTON MICHAEL NO
9
th
Respondent
Neutral citation:
National
Lotteries Board v Bruss
(730/2007)
[2008] ZASCA 167
(1 December 2008 ).
Coram:
HARMS
ADP, CLOETE, MAYA JJA, LEACH, BORUCHOWITZ AJJA
Heard:
13
NOVEMBER 2008
Delivered:
1
DECEMBER 2008
Corrected:
1
DECEMBER 2008
Summary:
Lotteries
Act, 57 of 1997
- power of Board to institute proceedings to enforce
Act – meaning of ‘subscription’ – when a lottery is a
promotional
competition.
___________________________________________________________
ORDER
___________________________________________________________
On appeal from:
High
Court, Pretoria (R D CLAASSEN J sitting as court of first instance).
(a) The appeal is upheld;
The first to seventh and ninth
respondents in their capacities as trustees of the South African
Children’s Charity Trust are
ordered to pay the costs of the
appeal including the costs of two counsel;
The eighth respondent is to pay
the costs of the appeal jointly and severally with the first to
seventh and ninth respondents,
the one paying the other to be
absolved including the costs of two counsel;
(2) The order of the court a quo
is set aside and the following order is substituted:
‘
(a) It is declared that:
the Winikhaya competition
conducted by the first to seventh and ninth respondents in their
capacities as trustees of the South
African Children’s Charity
Trust is not a promotional competition as contemplated in the
Lotteries Act, 57 of 1997 (the Act);
the Winikhaya competition, as
presently administered and implemented, is an unlawful lottery as
contemplated in ss 56 and 57 of
the Act;
(b) The first to seventh and
ninth respondents, in their capacities aforesaid are ordered to pay
the costs of this application including
the costs of two counsel.
These costs are to include the costs that were reserved on 30
November 2006;
(c) The eighth respondent is
ordered to pay the costs of this application jointly and severally
with the first to seventh and ninth
respondents in their capacities
aforesaid, the one paying the other to be absolved, including the
costs of two counsel. These costs
are to include the costs that were
reserved on 30 November 2006.’
___________________________________________________________
JUDGMENT
___________________________________________________________
BORUCHOWITZ AJA (HARMS ADP,
CLOETE JA, MAYA JA, LEACH AJA concurring):
Introduction
[1] The appellant is the National
Lotteries Board (the Board) established by s 2 of the Lotteries Act,
57 of 1997 (the Act). The
first to seventh and ninth respondents are
the trustees of the South African Children’s Charity Trust (the
Trust). The eighth
respondent is the South African Broadcasting
Corporation (SABC). Where appropriate I shall refer to them
collectively as the respondents.
[2] The Trust was created in 2002
for the sole object of promoting and raising funds for charity and
charitable causes. Its beneficiaries
are a number of well known
charities functioning within South Africa.
[3] In order to generate an
income for these charities the Trust promotes a campaign through the
medium of a competition known as
Winikhaya which is broadcast by the
SABC on television.
[4] The Board contends that the
competition is an unlawful lottery and promotional competition as
contemplated in terms of ss 56
and 57 of the Act and applied to the
Pretoria High Court for a declaratory order to that effect.
[5] The High Court (per R D
Claassen J) held that the Board lacked the power to seek an order to
declare a promotional competition
unlawful and dismissed the
application. It further ordered that the Board pay the respondents’
costs including certain reserved
costs of 30 November 2006. The
appeal is with leave of the court a quo.
[6] The salient features of the
Winikhaya competition are the following. Participants are required to
send an SMS message or an
approved short code to a predetermined
cellular telephone number. The charge for the SMS message is at a
premium rate of R7.50
per SMS. This rate is substantially more than
cellular phone rates offered by cellular telephone network operators
for SMS messages.
From 6 November 2006 an alternative method of entry
into the competition was made available: Participants were entitled
to deliver
a postcard including a subscriber’s cellular telephone
number.
[7] Each SMS constitutes one
entry into the Winikhaya competition and entrants are furnished with
an acknowledgement of receipt
and a voucher number which is then used
for the purposes of a lucky draw. The cost of the SMS is deducted
from the entrant’s
cellular telephone account or prepaid balances,
by the cellular telephone operator, who in turn makes payment to the
Trust. The
funds derived from the SMS messages are used to cover the
cost of running the Winikhaya competition, including a portion of the

prizes allocated. The balance is then distributed to various
charities supported by the Trust.
[8] Winners are selected by lot
or chance and prizes are allocated to the person who is the lawful
holder of the cellular phone
number billed for the premium rated SMS.
Every month a main prize consisting of the proceeds of a home loan
worth R500 000 is awarded
to one winner. The winner of the home loan
prize is required to ensure that a minimum amount of R25 000 of the
home loan prize
is used to purchase a home or is used to pay off an
existing bond. The balance of R475 000 can be withdrawn by the winner
from
a home loan account, at his or her election.
[9] The Winikhaya competition has
undergone changes from time to time. The structure has been broadened
to include monthly and daily
cash prizes as well as prizes of
merchandise supplied by various sponsors. These sponsors use
Winikhaya to launch a number of promotions
which are designed to
promote their brands and products.
[10] There are principally three
issues that arise for determination:
The Board’s power to institute
proceedings for declaratory relief;
Whether the Winikhaya
competition involves any ‘subscription’ as defined, and is
therefore exempt from the operation of the
Act by reason of s 63
thereof;
Whether the Winikhaya
competition is a promotional competition as contemplated in s 54 of
the Act and if so whether the competition
is an unlawful lottery as
contemplated in ss 56 and 57 of the Act.
[11] The legislative
context in which these issues must be evaluated is the following. As
its long title indicates, the essential
aim of the Act is to regulate
lotteries and to provide for matters connected therewith.
[12] In
s 1 (xii) a l
ottery
is defined to include ‘any game, scheme, arrangement, system, plan,
promotional competition or device for distributing
prizes by lot or
chance and any game, scheme, arrangement, system, plan, competition
or device, which the Minister may by notice
in the
Gazette
declare to be a lottery’.
[13] Apart
from a National Lottery, which is to be conducted under a licence to
be awarded by the Board, the only other permissible
forms of
lotteries are those incidental to exempt entertainment, private
lotteries, society lotteries and promotional competitions.
[14] In
s 1 (xxiii) a promotional competition is defined as ‘a lottery
conducted for the purpose of promoting the sale or use
of any goods
or services’.
[15] Section 54 of the Act deals
with promotional competitions. Section 54(1) sets out a number of
conditions, compliance with each
of which is necessary to render a
promotional competition lawful.
[16] Unauthorised lotteries are
prohibited by s 56 and the conduct of such lotteries is made an
offence by s 57. A lottery in respect
of which there is no
subscription as defined is not unlawful.
Power to institute proceedings
[17] Both in this court and in
the court below the respondents challenged the power of the Board to
seek an order declaring a promotional
competition unlawful.
[18] It was submitted that there
were clear indications in s 54 of the Act that the Minister and not
the Board was vested with the
power to seek such order. One of the
conditions that has to be fulfilled in order to render a promotional
competition lawful is
that such competition has not been declared to
be unlawful by the Minister under Section 54 (4).
1
Section 54 (4) provides that:
‘
The Minister may
on the recommendation of the board by notice in the
Gazette
declare a promotional competition to be unlawful.’
[19] The respondents contend that
on a proper construction of the above provisions the Board’s
function in respect of promotional
competitions is limited to the
making of recommendations to the Minister as to the lawfulness or
otherwise of any promotional competition.
The argument is that the
Board itself cannot declare a promotional competition unlawful
because that power is reserved for the
Minister.
[20] The argument that the
Minister and not the Board has the requisite power to institute
proceedings
was
rejected by this court in
Firstrand
Bank Ltd v National Lotteries Board.
2
It was there held that
s 10 of the Act, which assigned specific functions to the Board,
implicitly conferred on it the power to
institute legal proceedings.
[21] The respondents submit that
Firstrand
is clearly wrong as the court had not determined the Board’s power
to institute proceedings with reference to s 54 (4) of the
Act; and
that this court is at liberty to depart therefrom.
[22] The approach of this court
to the question of
stare
decisis
is well
settled. In order for this court to depart from a previous decision
it must be clear to it that it erred.
3
This approach applies with equal force where an interpretation of a
statute is involved. The test in this regard was articulated
by
Schutz JA in
Robin
Consolidated Industries Ltd v Commissioner for Inland Revenue
.
4
‘
. . . once the
meaning of the words of a section in an Act of Parliament have been
authoritatively determined by this Court, that
meaning must be given
to them, even by this Court, unless it is clear to it that it has
erred (
Collett
v Priest
1931 AD 290
at 297).’
[23] The decision in
Firstrand
is in my view
unimpeachable. It was correctly held that although the Act did not
expressly vest the Board with the power to institute
legal
proceedings, it impliedly conferred upon it the power to enforce the
provisions of the Act.
[24] Section 10 of the Act deals
with the functions of the Board. Section 10 (d) provides that:
‘
The board shall,
applying the principles of openness and transparency and in addition
to its other functions in terms of this Act
–
. . .
. . .
. . .
(d) montitor,
regulate and police lotteries incidental to exempt entertainment,
private lotteries, society lotteries and any competition
contemplated
in [s] 54.
’
[25] Section 10 (d) therefore
expressly assigns to the Board the function of ‘monitoring,
regulating and policing’ competitions
contemplated in s 54. The
verb ‘policing’ is of particular significance. It is defined in
the Oxford English Dictionary to
mean, inter alia ‘to control,
regulate, or keep in order by means of the police or some similar
force; to keep in order, administer,
control’. Absent express
indications to the contrary, it is implicit that a statutory body has
such powers ‘as are reasonably
required to carry out the objects of
an enactment’.
5
The power to institute legal proceedings is in my view reasonably
required in order to enable the Board to properly discharge its

policing function. The submission that this function is limited to
lawful promotional competitions because s 54 only contemplates

promotional competitions which are lawful, is incorrect – because
the section also contemplates unlawful competitions (in subsections

(1)(f), (4) and (5)); and also because a lawful competition requires
no policing and the suggestion that ‘to police’ means
to ‘hand
over to the police’ is equally without merit: the phrase is used in
a civil context and obviously means that the Board
must do the
policing.
[26] For these reasons I
conclude that the Board has the necessary power to institute the
proceedings for declaratory relief in
the court a quo.
Whether the competition
involves a subscription
[27] Section 63 of the Act
excludes from its ambit any lottery in respect of which there is no
subscription. The section reads:
’
Savings
63 Nothing in this
Act shall apply in relation to any lottery, sports pool or
competition in respect of which there is no subscription.’
[28] A ‘subscription’ is
defined in s 1 of the Act to mean:
‘
[T]he payment, or
delivery of any money, goods, article, matter or thing, including any
ticket, coupon or any entry form,
for
the right to compete in a
lottery.
’
(My emphasis.)
[29] It is plain from the above
definition that the right to compete in any lottery is dependent upon
there being payment of money
or delivery of the goods or articles
specified in the definition.
[30] The right to compete in the
Winikhaya competition is described as follows in its rules.
‘
1. Participants
may enter by sending a text message via a mobile phone Short Message
Service to a given phone number or short code.
The text message will
be charged at a rate fixed by the organisers from time to time.
2. The organisers
will endeavor to ensure that the text message service is available
continuously, but do not warrant availability.
3. Participants may
enter as many times as they wish and there is no restriction on the
number of prizes that may be won. Each
entry is allocated a unique
number which will be entered into the competition draw.
4. Participants may
also enter by sending a postcard with their name, cellphone number
and the word “house” to the postal address
advertised on
www.winikhaya.co.za
.
The participant has to have a valid cellphone number and the winner
will be the persons who on the date of the draw are the contracted
or
lawful owner of the mobile number that appears on the postcard. Each
postcard is considered as one entry only. . . .
5. Winners will be
selected by lot (lucky draw) and prizes allocated based on the mobile
phone number that is billed for the winning
text message. Winners
will be the persons who on the date of the draw are the contracted or
other lawful holder of the mobile phone
number from which the text
message was sent . . . .’
[31] The Trust contends that
there is no contravention of the Act since there is no subscription
as defined. I do not agree with
that contention. It is clear from the
Winikhaya competition rules that the payment of R7.50 in respect of
the SMS message forms
a fundamental and integral part of the method
of participation. The alternative method of participation by means of
a postcard
also cannot avail the respondents as the delivery or
posting of a postcard constitutes ‘. . . delivery of [a] . . .
thing’
as envisaged in the definition of subscription.
[32] It was submitted on behalf
of the respondents that a distinction must be made between the right
to compete, and the mechanism
of competing for those who have the
right to compete. The argument was that the premium rated SMS and the
postcard do not give
a person the right to compete, but are merely
the mechanisms employed to enable persons to compete. Reliance was
placed on a decision
in
R
v Barret & Co Ltd and another
.
6
For the reasons stated above, I am not in agreement with this
submission.
[33] I accordingly hold that the
Winikhaya competition involves a subscription as defined and falls
within the ambit of the Act.
Whether Winikhaya is a
promotional competition
[34] A promotional competition is
defined in s 1 (xxiii) of the Act as ‘a lottery conducted for the
purpose of promoting the sale
or use of any goods or services’.
[35] The Board contends that
Winikhaya is not a promotional competition in that it is not a
lottery conducted for the purpose of
promoting the sale or use of any
goods or services. Accordingly the Board contends that the
competition is an unlawful lottery
which is neither authorised nor
sanctioned under s 56 (a) of the Act.
[36] There is a significant
difference in wording between the Act and the regulations as to the
nature of the goods or services
that may form the object of a
promotional competition. The Act refers to ‘the sale or use of any
goods or services’
whereas the regulations adopt a more restrictive definition. Goods or
services are defined in s 1 of the regulations
to mean:
‘
Goods or services
which are ordinarily manufactured, sold, supplied, distributed or
delivered or in any other way form a substantial
part of the business
of
the promoter
involved in a particular promotional competition in the calendar year
during which that promotional competition is held.
’
(My
emphasis.)
[37] It is not permissible to use
a definition created by a Minister in regulations to interpret the
intention of the Legislature
in an Act of Parliament, notwithstanding
that the Act may include the regulations.
7
On the basis of the definition contained in the Act any goods or
services may form the object of a promotional competition and
there
is no reason why a competition cannot promote the goods or services
of entities other than the promoters.
[38] The vital question that
arises is whether the object or purpose of the Winikhaya competition
is to promote goods or services.
[39] In their initial answering
affidavit the first to seventh respondents assert that Winikhaya is a
promotional competition which
has as its objects the promotion of
SABC 1 and in particular its programme ‘Generations’, and the
Trust and the charities that
it supports. Initially, Winikhaya also
promoted People’s Bank, and promotes from time to time various
other products and brands
which are related to homes or homelife,
such as Tedelex and Motorola. In the first supplementary answering
affidavit the respondents
allege that the structure of the
competition has been broadened to include a range of promotions and
that various sponsors use
Winikhaya to launch a number of promotions
each of which is designed to promote products related to house and
home. By entering
the competition a participant could win the various
prizes such as for example a home theatre system, blankets or a
voucher to
spend at a well-known furniture supplier. In the third
supplementary affidavit the respondents allege that during March 2007
Pep
Stores became the headline sponsor of Winikhaya and that since
then the monthly and daily cash prizes have been supplemented by
the
addition of Pep merchandise and shopping vouchers.
[40] It is clear that the
dominant purpose and main activity of the Winikhaya competition is to
raise funds and generate an income
for the charities who are the
beneficiaries of the Trust. In the questions and answers attached to
the Winikhaya competition rules
it is stated that ‘the promotion
was designed by the [Trust] in order to generate funding for its
beneficiary charities.’ To
this end the Trust contracts with
sponsors who have pledged prizes which are used to induce members of
the public to enter the
competition, thereby increasing the income to
the Trust through the receipt of the premium rated SMS. The fact that
Winikhaya provides
goods as prizes is merely incidental to its main
activity which is the raising of funds for the benefit of the various
charities
who are the beneficiaries of the Trust. It is artificial
and incorrect to regard these fundraising activities as the promotion
of goods or services. They no doubt have that effect but that is not
the reason the competition is held.
[41] From the aforegoing there
can be no doubt that the Winikhaya competition is not a promotional
competition as defined.
Conclusion
[42] It follows that the
Winikhaya competition as presently administered and implemented is an
unlawful lottery as contemplated
in terms of ss 56 and 57 of the Act.
Section 56 contains a general prohibition against the conduct of
lotteries and competitions
which are not authorised under the Act. No
matter how meritorious the competition might be it does not comply
with the prescribed
conditions and the Trust is obliged to
discontinue its operations. The appeal must succeed.
Costs
[43] As the Board has been
successful it is entitled to the costs of both the appeal and of the
application in the court below.
These costs should include the costs
that were reserved on 30 November 2006. The postponement on that
occasion was caused by the
filing by the respondents of their first
and second supplementary affidavits. The costs, which are to include
the cost consequent
upon the employment of two counsel, are to be
borne by the first to seventh and ninth respondents jointly.
[44] Although the Board initially
applied for certain interdictory relief against the SABC such
application was withdrawn on 9 November
2006. Despite such withdrawal
the SABC sought to intervene and further participate in the
proceedings on the basis of a point of
law which was abandoned during
the course of the appeal. In the circumstances the SABC ought to pay
the costs of the appeal and
of the application in the court a quo
jointly and severally with the first to seventh and ninth
respondents, the one paying the
other to be absolved, including the
costs consequent upon the employment of two counsel.
Order
[45] The following order is made:
(1) (a) The appeal is upheld;
(b) The first to seventh and
ninth respondents in their capacities as trustees of the South
African Children’s Charity Trust are
ordered to pay the costs of
the appeal including the costs of two counsel;
(c) The eighth respondent is to
pay the costs of the appeal jointly and severally with the first to
seventh and ninth respondents,
the one paying the other to be
absolved including the costs of two counsel;
(2) The order of the court a quo
is set aside and the following order is substituted:
‘
(a) It is declared that:
(i) the Winikhaya competition
conducted by the first to seventh and ninth respondents in their
capacities as trustees of the South
African Children’s Charity
Trust is not a promotional competition as contemplated in the
Lotteries Act, 57 of 1997 (the Act);
(ii) the Winikhaya competition,
as presently administered and implemented, is an unlawful lottery as
contemplated in ss 56 and
57 of the Act;
(b) The first to seventh and
ninth respondents, in their capacities aforesaid are ordered to pay
the costs of this application including
the costs of two counsel.
These costs are to include the costs that were reserved on 30
November 2006;
(c) The eighth respondent is
ordered to pay the costs of this application jointly and severally
with the first to seventh and ninth
respondents in their capacities
aforesaid, the one paying the other to be absolved, including the
costs of two counsel. These costs
are to include the costs that were
reserved on 30 November 2006.’
_________________________
P BORUCHOWITZ
ACTING JUDGE OF APPEAL
APPEARANCES:
For Appellant: D M Fine SC
M M Antonie
Instructed by
Spoor & Fisher;
Centurion; Pretoria
Matsepes Inc; Bloemfontein
For First to Seventh
And Ninth Respondent: A Gautschi
SC
Y Guidozzi
Instructed by
Amanda Martin Attorneys;
Sandton
Naudes; Bloemfontein
For Eighth Respondent: A P
Joubert SC
M N Augustine
Instructed by
Barry Aaron & Associates;
Sandton
Naudes; Bloemfontein
1
Section 54
(1)(f).
2
[2008] ZASCA 29
;
2008
(4) SA 548
(SCA) paras 30-32.
3
See
Bloemfontein Town
Council v Richter
1938
AD 195
at 232.
4
[1997] ZASCA 12
;
1997
(3) SA 654
(SCA) at 666G.
5
See
Middelburg
Municipality v Gertzen
1914
AD 544
at 552-553.
6
1956
(1) SA 751
(C).
7
See
Moodley
v Minister of Education and Culture, House of Delegates
1989
(3) SA 221
(A) at 233E-F.