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[2016] ZAGPPHC 482
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Vukani Gaming Gauteng (Pty) Ltd and Others v KKK Properties CC and Others (87975/2015) [2016] ZAGPPHC 482 (21 June 2016)
REPUBLIC
OF
SOUTH AFRICA
IN
THE HIGH COURT OF SOUTH AFRICA
GAUTENG
DIVISION, PRETORIA
CASE NO: 87975/2015
DATE: 21/6/2016
Not reportable
Not of interest to other judges
Revised.
In
the matter between
VUKANI
GAMING GAUTENG (PTY)
LTD FIRST
APPLICANT
DIE
WATERGAT KROEG
CC SECOND
APPLICANT
2
GREEKS AND A BOERTJIE INVESTMENTS
CC THIRD
APPLICANT
and
KKK
PROPERTIES
CC FIRST
RESPONDENT
ROYAL
INTERNET
CAFÉ SECOND
RESPONDENT
THE
GAUTENG GAMING
BOARD
THIRD
RESPONDENT
JUDGMENT
MADIMA,
AJ
[1].
The applicants seek to interdict the first respondent from permitting
the use of its premises by the second respondent for
the purpose of
unlawful gambling activities. Similarly an order interdicting the
second respondent from conducting, permitting
or allowing the
unlawful gambling activities on the premises.
[2].
The premises, situated in the Northdale Shopping Centre in Akasia,
Pretoria are owned by the first respondent, and occupied
by the
second respondent, as the tenant.
[3].
The first applicant is Vukani Gaming Gauteng (PTY) LTD (“Vukani”).
It is the holder of a route operator licence
for the province of
Gauteng. The license allows Vukani to offer for play 1 000
Limited Payout Machines (“LPMs”)
in Gauteng province and
at sites approved and licensed by the third respondent.
[4].
The second applicant is Die Watergat Kroeg CC (“Die Kroeg”)
and conducts the business of a pub from its premises
situate at
Eeufees Street in Pretoria North. Die Kroeg is licensed by Vukani for
five LPMs in respect of the Eeufees Street premises.
[5].
The third applicant is 2 Greeks and a Boertjie Investments CC (“2
Greeks”) and conducts business as The New Maroela
Hotel in
Pretoria North. 2 Greeks is also licensed by Vukani for five LPMs
from its premises.
[6].
The first respondent is KKK Properties CC (“KKK Properties”),
and the owner of the Northdale premises. KKK properties
has not been
licenced by the third respondent. The second respondent is Royal
Internet Café (“the Royal”), and
provides internet
services from the Northdale premises. It also has not been licenced
by the third respondent. The third respondent
is the Gauteng Gambling
Board (“the Board”) established by section 3 of the
Gauteng Act 4 of 1995. No relief is sought
against the third
respondent, however it is cited herein in so far as it may have an
interest in the outcome of this application.
[7].
This matter was first brought out of this Court as an urgent
application on 6 November 2015. The applicants sought
inter alia
a
rule nisi
against the first and second respondent pending
finalization of the application on the return date. The first and
second respondent
filed their answering papers on 27 November 2015.
On 1 December 2015 the application was struck off the roll for lack
of urgency.
[8]. The matter came before me on 16
May 2016. In their heads of argument the first and second respondent
raise in their submission
certain preliminary objections that I find
no longer relevant. These objections relate to condonation or lack
thereof for the filing
of heads of argument as well as the lack of a
notice of withdrawal as attorneys of record by the applicant’s
erstwhile attorneys.
I am more interested in the merits of the case
as I have enough to work on to arrive at a decision in this
application.
Background
[9].
The applicants are the holders of licences which permit them lawfully
to offer gambling. They claim that the rights afforded
them by their
respective authority are affected by the conduct of the first and
second respondents.
[10].
Vukani has in the past reported the existence of illegal outlets to
the Board as far back as May 2011. Neither an acknowledgment
of
receipt of the complaint nor any action was taken by the Board.
Vukani took matters in its hands and enlisted the assistance
of
private investigators, Mike Venter and Patrick Le Roux (“the
investigators”) who were also aware that illegal gambling
was
taking place at the Northdale premises. The investigators went to the
premises and observed the illegal activities. They took
the video and
still images thereof.
[11]. In their affidavit the
investigators describe at length the
modus operandi
of the
second respondent and its customers. The activities included
inter
alia
the following:
11.1.
The
exterior of the premises is intended to create the impression that
the business is that of an internet café;
11.2.
Despite
the apparent innocent nature of the business, access to the premises
is strictly controlled by security guards;
11.3.
Upon
gaining access to the premises, the person goes to a front desk and
there pays over a sum which has to be in cash only in order
to obtain
a voucher and is then shown to a computer terminal by one of the
employees;
11.4.
The
value of the voucher which can be loaded is not limited to R5.00;
11.5.
The
computer terminal has a touch screen which offers the patron no
option of accessing the internet and browsing a site of his
choosing
at will;
11.6.
instead,
all that can be accessed are forms of gambling games;
11.7.
These
games can only be played after a patron has entered the voucher
number or the front desk employee has loaded a credit to the
value of
the cash handed over;
11.8.
A
voucher is loaded by entering the voucher number which appears
thereon using the touch screen computer. Once the voucher number
is
entered, the amount of available playing credit which is equivalent
to the amount of cash the patron handed to the teller at
the front
desk appears in the right hand corner of the screen. This amount
fluctuates during play depending on the result of the
games but the
credit available at any given time always appears on the screen;
11.9.
The
machines offer a multitude of games;
11.10.
Many
of the games on offer are similar to those offered on legal LPMs. For
example, a game called Queen of the Nile is offered and
this is one
of the most popular LPM games offered in legal establishments;
11.11.
The
machines however also offer electronic card games such as poker but
no card games have been licensed and authorised for play
on LPMs;
11.12.
Each
time a player wishes to play, he is required first to place a bet;
11.13.
The
player then plays the game by pressing “buttons” on the
computer touch screen;
11.14.
The
computer then displays the result of the game;
11.15.
If
the player won the game then the value of the credit which appears on
the screen increases;
11.16.
There
is no apparent cap on the winnings, one punter won R12 000.00 in
cash;
11.17.
If
the player lost the game the value of credit on the screen decreases
by the amount which he places a bet;
11.18.
If
the player loses several games and the figure of credit available
reduces in the result to zero, the player cannot continue to
play on
the terminal but has to approach the front desk again and in return
for cash will be given another voucher or credit to
the value of the
cash will be loaded onto the machine by the front desk staff;
11.19.
A
player can cash in his winnings at any stage, if he does so, will be
paid in rand an amount equal to the number of credits appearing
on
the screen;
11.20.
In
the event that a player wishes to stop playing and redeem the amount
of credit due to him as it appears on the screen, he does
so by again
approaching the front desk, the staff of which check the amount
reflecting on the computer terminal at which the patron
has been
playing and pays the amount to the patron, again in cash;
11.21.
Liquor
is not served on the premises but tea, coffee and cool drinks are
provided free of charge;
11.22.
All
of the games are purely games of chance in the nature of games
offered on an LPM where no skill is required of the player
.
[12].
The above description of what takes place at the premises form the
basis upon which the applicants seek their relief against
the first
and second respondent. The applicants further submitted that by their
above conduct, the first and second respondents
were in contravention
of several of the laws governing gambling both national and
provincial. Specifically Mike Venter stated that
R200.00 of a
customer’s voucher was lost in 5 minutes. There is a sign
behind the reception desk of the second respondent
that states that
internet access costs R60.00 for 1 hour, R30.00 for 30 minutes and
R15.00 for 15 minutes. Le Roux’s associate
won R309.00 after
paying R100.00. He cashed out and was paid.
[13].
The applicants claim further that the second respondent in particular
was offering a gambling activity in the premises of
the first
respondent. The first respondent, by allowing such illegal activities
on its premises. This activity may not be offered
unless it is
licensed. By so doing the second respondent is in contravention both
the provisions of the national and provincial
Acts.
[14].
Section 5 of the National Gambling Act provides that an activity is a
gambling game if it is played upon payment of any consideration
with
the chance that the person playing the game might become entitled to,
or receive a payment, and the result might be determined
by the skill
of the player, the element of chance or both.
[15].
Section 1 of the Gambling Act defines gambling as the wagering of a
stake or money or anything of value on the unknown result
of a future
event at the risk of losing all or a portion thereof for the sake of
a return, irrespective of whether any measure
of skill is involved or
not and encompasses all forms of gaming and betting but excluded the
operation of a machine contemplated
in sub-section (3) or (4).
[16].
The first and second respondents challenge the evidence of the
investigators on the basis that the investigators did not participate
personally on the sting operations. There also are no affidavits
deposed to by those claimed to be the participants in the gathering
of the information.
[17]
The first and second respondents also claim that the applicants seek
a final interdict where the principles in
Plascon Evans Paints v
Van Riebeeck Paints (Pty) Ltd
[1984] ZASCA 51
;
1984 (3) SA 623
(A)
had not been met. Further that the applicants failed to file a
replying affidavit.
[18]
In its answering affidavit the second respondent asserts that the
business it runs is a bona fide internet business with internet
based
facilities that customers make use of in order to access the internet
for a fee which inter alia also “allows for gameplay.”
The second respondent further states that ….
games may
obviously also be accessed on the computers, and that “this
does not mean however that the playing thereof takes
place on the
basis that the second respondent is a party thereof or enters into
any form of agreement with the customers in terms
whereof the
customer stands to win anything by playing any game
”.
[19].
The second respondent further asserts that “
Should a
customer however visit a site on the internet that allows for gaming
(and even gambling such as a bookmaker online site
or an online
casino) the second respondent has nothing to do with those
activities
”.
[20]
The second applicant submitted supporting affidavits by Hendrick
Fourie, and Leon Krugell, customers who frequent the Northdale
premises which both somewhat refer to as Northvale Shopping Centre.
Both state that they have never utilized the internet at the
premises
for gambling purposes and have not seen anyone do that. They both
state that the money that exchanges hand between the
cashier and the
customer relates to airtime that costs R15.00 and multiples thereof.
Where he has not utilized all of his airtime,
the customer is
refunded the difference.
[21]
The manageress also deposed to an affidavit stating that neither she
nor her staff members have made any payouts in cash value
as a
consequence of gambling as no gambling takes place on the premises.
[22]
The applicants attached to their papers stills from video recordings
made by the investigators and confirm the accuracy thereof.
The first
and second respondents make much of the fact that the investigators
confirm the accuracy of the stills but not the authenticity
thereof.
[23]
The first and second respondent state that the applicants have failed
to file supporting affidavits by the patron who won.
Importantly the
second respondent claims that unless a client complains, there is no
control over the sites a client chooses to
visit on the internet.
[24]
It seems the second respondent is not in a position to control and
regulate the conduct of its customers who frequent his shop.
The
possibility exists that customers of the second respondent do in fact
conduct gambling activities on the second respondent’s
machines. I have great sympathy for the second respondent if it is
not in a position to control what its customers do on its machines
at
any given point. This does not mean that the second respondent is
completely without a solution. It could for example disable
its
machines of the gambling sites or monitor the activities of its
customers. The former would be the best option to make the
second
respondent to not fall foul of the gambling laws.
[25]
There is further no doubt that the conduct of the second respondent
in allowing customers to gamble or its inability to prevent
the
customers from gambling on the premises is an affront to public
policy and is unlawful. To compound matters for the second
respondent
the gaming activity that is allowed by the second respondent on the
premises is not open to the scrutiny by independent
testing
authorities to verify the algorithms and mathematical processes used
in the LPMs, so that players can be treated fairly.
[26]
What purportedly occur on the premises is undoubtedly unlicensed
gambling and a contravention of the gambling laws both at
national
and provincial level. For the second respondent to lawfully offer
gambling activities, it must acquire a licence issued
by the third
respondent. The second respondent is not a holder of a route operator
licence or an independent site operator license
at sites that have
been approved by the third respondent.
[27]
The first respondent as the owner of the premises is also precluded
by section 87(2) of the Gauteng Act from allowing gambling
activities
without a licence. LPMs may only be offered to play under licence.
Section 8 of the National Act read with the definition
of “licenced”
in section 1 and section 48 of the Gauteng Act should be complied
with by the first respondent. Section
48 of the Act provides that “
No
person shall maintain premises where gaming machines or gambling
devices are available to be played or be in possession of gaming
machine or gambling devices without the necessary licence.
The
contravention of sections of the National and Gauteng Acts constitute
criminal offences. The premises are zoned for commercial
use and not
for entertainment. This means that both the first and second
respondents are acting in breach of the law
[28]
I find it extraordinary that the applicants would go to the extent of
appointing private investigators to monitor the first
respondent’s
premises and the activities of the second respondent’s
customers unless they had reasonable suspicion
that illegal
activities were taking place on the premises. I also find that the
applicants would not have brought this application
if there was any
doubt regarding the findings of the investigators. The probability
must therefore favour the applicants in this
instance.
[29]
The applicants have a right to the protection of gambling revenue
which is affected by the illegal gambling activities of the
second
respondent. Any other operator, especially an operator without a
licence issued by the third respondent competes unfairly
with the
applicants for revenue derived from gambling activities.
[30]
The applicants have thereby been harmed by the first and second
respondent in their business. There is no any other remedy
available
to the applicants other than to interdict the conduct of the first
and second respondents. This is more so that the unlawful
activities
are ongoing.
[31]
Vukani for its part has to pay to the State an annual licence fee of
R124 155.00 plus R1 255.00 per registered gaming
machine.
All LPMs have to be connected to a central electronic monitoring
system in terms of section 27 of the National Act. This
enables the
authorities to monitor the machines remotely and ensure that the
fiscus derives all the revenue to which it is entitled
and the
players are treated fairly.
[32]
The illegal outlets such as the one operated by the second respondent
do not pay gaming tax. This affects the bottom-line of
the
applicants. There is little doubt in that regard.
[33] It has already been stated above
that the third respondent has limited resources and capabilities to
enforce the Gauteng Act
and monitor illegal gambling activities. This
is evidenced by the non-responsiveness of the third respondent to the
correspondences
of the applicants as far back as 2011 to act on the
activities of unlicenced players.
[34]
The probabilities are overwhelming that gambling does take place at
the premises.
[35]
The second respondent’s answer to the investigators’
report is that it is not corroborated and is hearsay. It is
in breach
of the constitutional right to privacy. The further defence is that
the applicants have failed to comply with section
252A of the CPA
1977.
[36]
I find both points unhelpful. Undercover operations are permissible
if they do not go beyond providing an opportunity to commit
an
offence.
Kotze v S
[2010] 1 All SA 220
(SCA),
2010 (1)
SACR 100
(SCA).
Investigations to uncover the commission of
an offence are permissible. The applicants acted within the law when
they employed
the investigators to uncover the illegal activities
taking place at the premises of the first respondent and committed by
customers
of the second respondent.
[37]
I am satisfied that the applicants have satisfied and complied with
all of the requirements for an interdict. There shall be
no prejudice
to the respondents at all in the grant of the relief sought by the
applicants. On the contrary it is the applicants
who will continue to
suffer harm if the interdict is not granted.
[38]
In the circumstances I make the following order
1.
The
first respondent is interdicted and restrained from permitting the
use of its premises situated at The Northdale Shopping Centre,
204
Grafenheim Street, Nina Park, Akasia (“the premises”) 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, 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 activity, 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.
3.
The
second respondent to pay the costs of the application.
________________________________
TS
MADIMA: AJ
ACTING JUDGE OF THE HIGH COURT
On behalf of the
Applicant: Adv
A.F Arnoldi SC
Instructed
by: PDR
Attorneys
Pretoria
Tel:
012 342-9895
On behalf of the
Respondent: Adv
______________
Instructed
by: Vardakos
Attorneys
Pretoria
Tel:
012 342-4890
Dates of
Hearing: 16
May 2016
Date of
Judgment: 21
June 2016