Chairperson, Eastern Cape Gambling and Betting Board and Another v Vukani Gaming Eastern Cape (Pty) Ltd and Others (1338/2019; 1366/2019; 119/2020) [2021] ZASCA 180 (17 December 2021)

About SAFLII
Databases
Search
Terms of Use
RSS Feeds
South Africa: Supreme Court of Appeal
SAFLII
>>
Databases
>>
South Africa: Supreme Court of Appeal
>>
2021
>>
[2021] ZASCA 180
|

|

Chairperson, Eastern Cape Gambling and Betting Board and Another v Vukani Gaming Eastern Cape (Pty) Ltd and Others (1338/2019; 1366/2019; 119/2020) [2021] ZASCA 180 (17 December 2021)

THE
SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case no: 1338/2019
In
the matter between:
GOLDEN
PALACE SITE 3 (PTY) LTD

FIRST APPLICANT
GOLDEN
PALACE SITE 4 (PTY) LTD

SECOND APPLICANT
GOLDEN
PALACE SITE 1 (PTY) LTD
THIRD APPLICANT
and
VUKANI
GAMING EASTERN CAPE

FIRST RESPONDENT
CHAIRPERSON,
EASTERN CAPE
GAMBLING
BOARD
SECOND RESPONDENT
EASTERN
CAPE GAMBLING
AND
BETTING
BOARD
THIRD RESPONDENT
PIONEER
SLOTS (PTY) LTD
FOURTH RESPONDENT
MARSHALLS
WORLD OF SPORT
EASTERN
CAPE (PTY)
LTD
FIFTH RESPONDENT
K2017440277
(SOUTH AFRICA) (PTY) LTD
SIXTH RESPONDENT
GSLOTS
ISO EC (PTY)
LTD
SEVENTH RESPONDENT
K2017425418
(PTY) LTD
EIGHTH RESPONDENT
SPIN
AND WIN ENTERTAINMENT
MBIZANA
(PTY)
LTD
NINTH RESPONDENT
GEC
GAMING (PTY)
LTD
TENTH RESPONDENT
K2014000230
(PTY) LTD
ELEVENTH RESPONDENT
Case no: 1366/2019
In
the matter between:
K2017440277
(SOUTH AFRICA) (PTY) LTD
FIRST APPLICANT
K2017425418
(PTY)
LTD
SECOND APPLIANT
SPIN
AND WIN ENTERTAINMENT
MBIZANA
(PTY)
LTD
THIRD APPLICANT
GEC
GAMING (PTY)
LTD
FOURTH APPLICANT
K2014000230
(PTY)
LTD
FIFTH APPLICANT
and
VUKANI
GAMING EASTERN CAPE
FIRST RESPONDENT
CHAIRPERSON,
EASTERN CAPE
GAMBLING
BOARD
SECOND RESPONDENT
EASTERN
CAPE GAMBLING
AND
BETTING
BOARD
THIRD RESPONDENT
PIONEER
SLOTS (PTY) LTD
FOURTH RESPONDENT
MARSHALLS
WORLD OF SPORT
EASTERN
CAPE (PTY)
LTD
FIFTH RESPONDENT
GSLOTS
ISO EC (PTY)
LTD
SIXTH RESPONDENT
GOLDEN
PALACE SITE 3 (PTY) LTD
SEVENTH RESPONDENT
GOLDEN
PALACE SITE 4 (PTY) LTD
EIGHTH RESPONDENT
GOLDEN
PALACE SITE 1 (PTY) LTD
NINTH RESPONDENT
Case no: 119/2020
In
the matter between:
CHAIRPERSON,
EASTERN CAPE
GAMBLING
BOARD
FIRST APPLICANT
EASTERN
CAPE GAMBLING
AND
BETTING
BOARD

SECOND APPLICANT
and
VUKANI
GAMING EASTERN
CAPE
RESPONDENT
Neutral
citation:
The
Chairperson, Eastern Cape Gambling and Betting Board and Another v
Vukani Gaming Eastern Cape (Pty) Ltd and Others
(1338/2019); (1366/2019); (119/2020)
[2021] ZASCA 180
(17 December 2021)
Coram:
Zondi, Schippers, and Plasket JJA and Molefe and Unterhalter AJJA
Heard:
18 November 2021
Delivered:
This judgment was handed down
electronically by circulation to the parties’ representatives by
email, publication on the Supreme
Court of Appeal website and release
to SAFLII. The date and time for hand-down is deemed to be 09h45 on
17 December 2021.
Summary:
Review of the issue of a
request for proposals (RFP) for independent site operator licences –
Gambling licences - interpretation
of Regulation 59(3)
(a)
of the Eastern Cape
Gambling Regulations – deference - meaning of a decision-maker
being satisfied – over-saturation – province-wide
or locality
specific – appeal upheld.
ORDER
On
appeal from
:
Eastern Cape Division of the High
Court, Grahamstown (Van Zyl DJP, Lowe J and Beyleveld AJ sitting as
court of appeal):
1 The applicants are granted special leave to appeal.
2 The appeal is upheld with costs, including the costs
of two counsel, where employed.
3  The order of the full court is set aside and
replaced by the following order:
‘
The
appeal is dismissed with costs, including the costs of two counsel,
where employed.’
JUDGMENT
Unterhalter
AJA (Zondi, Schippers, and Plasket JJA and Molefe AJA concurring)
Introduction
[1]
Three applications for
special leave to appeal against the judgment and order of the full
court of the Eastern Cape Division of the
High Court, Grahamstown
were referred to us for oral argument. Vukani Gaming Eastern Cape
(Pty) Ltd (Vukani) is one of two licensed
route operators of limited
pay out machines (LPMs) in the Eastern Cape province. Each of these
operators has been allocated 1000
LPMs under their licence. LPMs are
akin to slot machines, but they are played for lower stakes. They are
not licensed for use in
casinos. They are to be found in restaurants,
bars and clubs.
[2]
The Eastern Cape
Gambling and Betting Board (the Board), in June 2015,
commissioned a study (the study) to assist it in formulating
a policy
in respect of the further licensing of LPMs in the province. The
study was undertaken and provided to the Board. The study
recommended
the roll out of 4000 additional LPMs. In May 2017, the Board
published its final policy and ultimately resolved to commence
with
the further licensing of 400 LPMs in the province.
[3]
The Board, in September
2017, issued a request for proposals (RFP) calling for applications
to be made for 10 independent site operator
licences (ISOs),
allocated across named district, local and metropolitan
municipalities in the Eastern Cape. The Board received bid
proposals
from several applicants. Hearings were held by the Board, and in
February 2018, the Board awarded ISOs. Among those awarded
licences
were three companies, which I shall refer to as the Golden Palace
applicants. The Golden Palace applicants are the applicants
before us
for special leave to appeal under case no. 1338/19. Five other
companies were also successful. I shall refer to them as
the Spin and
Win applicants. The Spin and Win applicants are the applicants before
us for special leave to appeal under case no.
1366/19. The Board is
also an applicant for special leave under case no. 119/20. I shall
refer to these applicants, collectively,
as the applicants.
[4]
On 15 November 2017,
Vukani brought an application to review and set aside the decision of
the Board to issue the RFP. Vukani later
extended the relief it
sought so as also to set aside the award of ISO licences that
followed upon the RFP. On 31 January 2018, Vukani
made an application
for interim relief to prevent the Board from issuing ISOs, pending
the outcome of the review. That application
was dismissed by Smith J.
The review came before Dawood J. She dismissed Vukani’s review.
Vukani was granted leave to appeal to
the full court. There the
review found favour. The full court found that the Board had failed
to comply with the requirements of
regulation 59(3) of the Eastern
Cape Gambling Regulations (the Regulations), and this rendered the
RFP unlawful. If the RFP was unlawful,
then so too were the licences
issued pursuant to the RFP. The full court, accordingly, reviewed and
set aside the RFP and the licences
issued by the Board ‘in terms of
such RFP’.
[5]
The Golden Palace
applicants, the Spin and Win applicants and the Board applied for
leave to appeal the orders of the full bench to
this Court. Their
applications were referred to us for oral argument. The parties were
directed to be prepared to argue the merits
of the appeal if called
upon to do so.
The issues
[6]
The centrepiece of
Vukani’s review is regulation 59(3). The regulations were
promulgated under s 80 of the Eastern Cape Gambling
and Betting Act 5
of 1997 (the Eastern Cape Act). Regulation 59 reads as follows:
‘
.
. .
(1)
The maximum number of limited gambling machines which may be exposed
for play in terms
of all route operator licences and limited gambling
machine site licences issued in the Province shall be 6000.
(2)
Notwithstanding sub-regulation (1), in the first 24 months from the
date of first operation
of the first limited gambling machine on a
licensed gambling machine site in the Province, no more than 2000
limited gambling machines
shall be exposed for play in terms of all
route operator licences and limited gambling machine site licences
issued by the board.
(3)
Subject to sub-regulation (2), the board shall only issue or allow
route operator licences
or limited gambling machine site licences
which will allow more than 2000 limited gambling machines to be
operated in the Province
if–
(a)
it is satisfied that this will not lead to an over-saturation of
limited gambling machines
in the Province; and
(b)
it has considered, both in regard to the existing limited gambling
machines and such
further machines as may exceed 2000–
(i)
the social impact;
(ii)
the economic impact;
(iii)  the environmental
impact;
(iv)  the impact on problem
gambling; and
(v)  any other information
it considers relevant
and it is of the opinion that
the exposure for play of more than 2000 limited gambling machines
will be in the best interests of the
Province.
(4)
No route operator shall be licensed to operate more than 1000 limited
gambling machines.
(5)
No person shall hold a financial or controlling interest of 5 percent
or more in more
than one route operator without the consent of the
board.
(6)
No person may hold more than one route operator licence in the
Province.
(7)
Apart from the profit sharing between a route operator and site
licence holder in terms
of the agreement between them approved by the
board, no route operator may hold a financial interest in the holder
of a gambling
machine site licence.’
[7]
Two principal issues of
interpretation are posed by regulation 59(3) in this appeal. The
first issue arises from the requirement in
regulation 59(3)
(a)
that the Board may
only act if ‘it is satisfied that this will not lead to an
over-saturation of limited gambling machines in the
Province’. What
does it mean for the Board to be satisfied? And is over-saturation a
state of affairs that is appraised on a province-wide
basis or does
over-saturation require a more granular assessment? I shall refer to
this issue as the saturation question.
[8]
The second issue is
this. When must the requirements of regulation 59(3) be complied
with? Is compliance necessary in order to
issue a lawful RFP or only
at the stage that the Board grants licences. I shall refer to this
issue as the timing question.
[9]
Vukani’s review
challenged the legality of the RFP on the basis that the Board
failed to comply with regulation 59(3). That
challenge reads
regulation 59(3) to be of application at the time that the RFP
was issued. The Golden Palace applicants and
the Spin and Win
applicants submit that this is not so, and hence Vukani’s review
must fail if the timing question is answered
in favour of these
applicants. This follows, because, if regulation 59(3) is not of
application to the issuance by the Board of the
RFP, then
non-compliance with the requirements of regulation 59(3) is of no
relevance to the legality of the RFP. The Board agrees
with Vukani on
the timing question. However, the Board joins the Golden Palace and
Spin and Win applicants in their case that, the
timing issue aside,
the Board did comply with the requirements of regulation 59(3),
and hence there is no want of legality on
the part of the Board in
issuing the RFP. The saturation question should, according to the
submission of the applicants, be answered
on the basis that
regulation 59(3) requires a province-wide assessment. Vukani answers
this question differently: over-saturation
‘in the province’
requires the Board to consider whether areas within the province
would be over-saturated.
[10]
Apart from these two
issues of interpretation, Vukani’s review also challenged the RFP
on the basis that it was irrational and unlawful
because the study
upon which it relied was vitiated by error. This ground of review is
also pursued before us.
[11]
Lastly, the applicants
contend that even if we should find that Vukani’s review is
well-founded, then there was a wholesale failure
by the full court to
consider what relief would then have been just and equitable. In
essence, the Golden Palace and Spin and Win
applicants contend that
even if the RFP should be set aside as unlawful, the licences awarded
by the Board should not be invalidated.
The Board submits that this
Court should apply severance to the RFP. Vukani, unsurprisingly,
supports the relief granted by the full
court.
The interpretation of Regulation 59(3)
[12]
I turn then to the
questions that arise in this appeal concerning the interpretation of
regulation 59(3), and I commence with the
saturation question.
[13]
Following
Natal
Joint Municipal Pension Fund v Endumeni Municipality (
Endumeni),
[1]
this Court in
Capitec
Bank Holdings Limited v Coral Lagoon Investments 194 (Pty) Ltd
(
Capitec)
[2]
has explained the approach to be
adopted in the interpretation of contracts and statutes:
‘
.
. . It is the language used, understood in the context in which it is
used, and having regard to the purpose of the provision that
constitutes the unitary exercise of interpretation. I would only add
that the triad of text, context and purpose should not be used
in a
mechanical fashion. It is the relationship between the words used,
the concepts expressed by those words and the place of the
contested
provision within the scheme of the agreement (or instrument) as a
whole that constitutes the enterprise by recourse to
which a coherent
and salient interpretation is determined. . . .’
[14]
Regulation 59 is
structured as follows: regulation 59(1) specifies the maximum number
of LPMs that may be exposed for play under licence
within the
province. The maximum number is 6000. Regulation 59(2) places a
temporal limitation on the number of LPMs that may be
exposed for
play within the first 24 months of the first operation of an LPM in
the province. That number is 2000. Vukani is one
of the two licensees
that were licensed to operate LPMs in the Eastern Cape province under
the limitation imposed by regulation 59(2).
[15]
Regulation 59(3)
regulates the basis upon which the Board may license LPMs in excess
of 2000 in the province. The power of the Board
to license additional
LPMs (I will refer to this as the additive power), that is, in
addition to the 2000 LPMs permitted under regulation
59(2), requires
the Board to comply with the provisions of regulation 59(3)
(a)
and
(b)
.
Regulation 59(3)
(a)
requires the Board
to be satisfied that the additional LPMs will not lead to saturation.
Regulation 59(3)
(b)
requires the Board
to consider a list of factors and to form the opinion that the
exposure for play of more than 2000 LPMs will be
in the best
interests of the province.
[16]
Regulation 59(3)
specifies three conditions that the Board must meet in order to
exercise the additive power. Each condition posits
a different
regulatory burden. Cumulatively, the Board must be satisfied that the
additional LPMs will not lead to saturation; it
must show it has
considered the matters listed in regulation 59(3)
(b);
and it must be of
the opinion that the exposure for play of more than 2000 LPMs will be
in the best interests of the province. Precisely
how these burdens
differ does not arise for decision in this appeal. I observe,
however, that the use of different language would
ordinarily imply
that regulation 59(3) attaches different burdens to the Board in
respect of each of the specified conditions.
[17]
In this appeal, there
is disagreement as to the interpretation of what it means for the
Board to be satisfied as required by regulation
59(3)
(a).
The Board has emphasised what it submits to be the predominantly
subjective nature of the regulatory provision and the importance
of
showing deference to the Board in its assessment of over-saturation.
Vukani submits that whether the Board was satisfied, as required
by
Regulation 59(3)
(a),
must be objectively
tested. The parties cite
Walele
v City of Cape Town and Others (
Walele)
,
[3]
but understand its holding in different ways.
[18]
Walele
in
para 60
had this to say
of a statutory provision that requires a decision-maker to be
satisfied: ‘. . .[t]he decision-maker must now show
that the
subjective opinion it relied on for exercising power was based on
reasonable grounds’.
[19]
I make two observations
of this formulation. First, the use of the descriptors subjective and
objective is not always helpful. To
hold a subjective opinion or to
be satisfied subjectively is often said to require nothing more than
that a person holds the relevant
opinion or says that they are
satisfied. Theirs is simply a personal belief. So understood, the
exercise of a public power, predicated
upon being satisfied, would
offer vanishingly little constraint. The test is simply whether the
person may be believed when saying
they are satisfied of the matters
that the regulation requires. At the other end of the spectrum, a
requirement that must be objectively
satisfied may be understood to
depend not at all upon whether the judgment of the person who
exercises the power considers the requirement
to have been met, but
whether the requirement has indeed been met. Between these poles,
there are gradations that might properly
capture the power that has
been conferred. The terms subjective and objective may obscure more
than they explain. In every case,
what matters is the proper
interpretation of the power that has been given to the
decision-maker.
[20]
The second observation
is this: conjuring the idea of deference, whether as demon or saviour
in public law, may also be apt to mislead.
The ubiquity of its
invocation is not always commensurate with its utility. What matters
is not any
a priori
position as to
whether a deferential construction of a power is warranted. Rather,
the question is to determine the nature and scope
of the power. Once
that is done, the recognition by a court of the power is not a matter
of deference or otherwise. The court’s
duty is simply to give
effect to its best understanding of what it has found the power to
be.
[21]
Regulation 59(3)
(a)
stipulates one of
the requirements for the exercise by the Board of its additive power
to issue or allow licences for LPMs in excess
of 2000 machines. Three
features of this provision are salient. First, to exercise the power
the Board must consider the consequence
of the incremental licensing
of LPMs, that is, in excess of 2000 LPMs. It is the effect of the
increase over 2000 that matters. Second,
the relevant effect that the
Board must consider is whether the incremental licensing of LPMs
leads to an over-saturation of LPMs
in the province. Third, the
Board’s consideration of these matters must satisfy the Board that
the incremental licensing will not
lead to an over-saturation of LPMs
in the province. I shall refer to this as the over-saturation
conclusion.
[22]
It is this third
dimension of regulation 59(3)
(a)
that has given rise
to some contestation between the parties. It is clear from the
language in which regulation 59(3)
(a)
is cast that the
Board must reach the over-saturation conclusion. It will not suffice
that the Board merely considers whether the
conclusion may be so. The
introductory language of regulation 59(3)
(b)
,
by contrast, stipulates that the Board has considered five listed
issues. However, there is a difference between a requirement that
is
placed upon a decision-maker to consider something and to be
satisfied of something. To be satisfied under regulation 59(3)
(a)
connotes the
stronger requirement that the Board has come to the over-saturation
conclusion.
[23]
To be satisfied that a
particular state of affairs will not come about has two noteworthy
features. The first is that it is a judgment
about what the future
holds, and it is thus a judgment made under conditions of uncertainty
Second, the Board must make a judgment
that takes the following form:
issuing the incremental licences will not lead to over-saturation.
Stated formally: doing x will not
lead to y. This is a judgment of
both probability and causation. What this means is that for the Board
to issue or allow incremental
licences and comply with regulation
59(3)
(a)
,
it must be able to come to the over-saturation conclusion and in fact
reach that conclusion. For the Board then to be satisfied,
it is
required to have reasons that support why it considers that the
over-saturation conclusion is warranted. Those reasons do not
require the concurrence of a reviewing court. They are simply reasons
that could permit a decision-maker, in the position of the Board, to
reach the saturation conclusion that it has – in other words,
it
must have a rational basis for its conclusion.
[24]
I turn next to consider
what it means for the saturation conclusion to reference an
over-saturation ‘in the Province’. The applicants
have emphasised
that regulation 59 refers repeatedly to the phrase ‘in the
Province’. Regulation 59(1) stipulates for the
maximum number
of LPMs ‘in the Province’. That maximum is clearly determined on
a province-wide basis. It matters not at all
how the LPMs are
distributed within the province. So too, regulation 59(6) states that
no person may hold more than one route operator
licence in the
province. This prohibition is self-evidently of application to the
province as a whole, and not to its parts. Why
then, so the
applicants contended, should the same language have a different
meaning in regulation 59(3)?
[25]
To this, Vukani offered
the following counter: the purpose of regulation 59(3) is to
safeguard communities against the adverse
effects of gambling. While
regulation 59 may specify quantitative maxima that clearly apply to
the province as a whole, regulation
59(3) is concerned with the
impact of the additional machines upon the social, economic and
environmental welfare of the province.
This requires that
over-saturation is to be judged at local level where an excess of
supply of LPMs will impact the welfare of persons.
That regulation
59(3) uses the language ‘in the Province’ says nothing as to
where the impact of the additional LPMs occurs in
making a judgment
of over-saturation. After all, impacts at local level remain impacts
in the province.
[26]
It is important to
place regulation 59(3) in the scheme of regulation 59. Plainly,
regulation 59(1) stipulates a maximum number of
6000 LPMs that may be
exposed for play in the province. This means that for the purpose of
determining whether the maximum has been
reached it is necessary to
count the number of machines exposed for play throughout the
province. It is an aggregative determination.
Every locality where
LPMs are played under licence must be counted, but it is the
cumulative number of LPMs in the province that
determined whether the
maximum number of 6000 has been reached.
[27]
The central question is
whether the saturation conclusion in regulation 59(3)
(a)
is also an
aggregative judgment? I have already explained that regulation
59(3)
(a)
concerns
the additive power of the Board. It is the consequences of the
incremental licensing of machines over 2000 that engage the
enquiry
posited by regulation 59(3)
(a)
.
It is consistent with such an enquiry that the Board may wish to
investigate how saturated different local areas of the province
might
be. It may well find, as occurred in this case, that many local areas
are under-saturated, and a few are over-saturated. What
conclusion
does regulation 59(3)
(a)
then permit the
Board to make?
[28]
There is, in my view,
an important distinction to be drawn between an aggregative judgment
and an allocative decision. Regulation
59(3)
(a)
is one component
part of judgments that must be made to answer the following question:
how many LPMs, over and above the 2000 already
in operation, should
be licensed? A separate question is this. If more than 2000 LPMs may
be licensed, where should these machines
be licensed for play?
[29]
If certain metropolitan
areas in the province are over-saturated, but a significant number of
other local municipalities are under-saturated,
and hence could
absorb the exposure for play of additional LPMs (over 2000), does the
over-saturation in some areas exclude the Board
from reaching the
conclusion that additional LPMs would not lead to over-saturation? I
think not. It is open to the Board to reach
the conclusion that the
additional LPMs would not lead to over-saturation because there
remains unsatisfied demand for LPMs in the
province. The additional
machines would assist to bring supply and demand into equilibrium,
under some construct of what is socially,
economically and
environmentally desirable. Put differently, over-saturation in some
areas does not mean that the province is over-saturated.
That is so
because over-saturation is an aggregative concept that is determined
across the province. So too, if there was under-saturation
in
one or two local areas, that would not preclude the judgment that the
province was indeed over-saturated.
[30]
Aggregative judgments
are common in guiding many policies. Whether a country is
over-populated, or an economy is over-taxed, or a
society is unequal,
requires an aggregative judgment to permit of affirmative answers,
even though parts of the whole indicate otherwise.
So, a country may
be considered over-populated even if there are land areas that are
sparsely settled. No contradiction arises because
the conclusion
reached is aggregative.
[31]
That the saturation
conclusion is aggregative because demand exceeds supply for the
province does not answer a different question:
where should the
additional LPMs be allocated? It may well be, as occurred in this
case, that in answering the aggregative question,
important evidence
is garnered as to where, within the province, the additional LPMs
should be licensed. But that goes to a different
issue as to how the
Board exercises its power to allocate additional licences. That may
even give rise to a ground of challenge if
the allocation was
irrational. But regulation 59(3)
(a)
is not concerned
with the allocation of licences in different areas within the
province. It is concerned to determine the number of
additional LPMs
over 2000 that the Board is empowered to issue or allow in the
province. That is a particular number based on an
aggregative
judgment as to whether that number of additional LPMs will or will
not lead to over-saturation in the province, taken
as a whole.
[32]
Vukani’s challenge to
the RFP rested upon the fact that the study had found that at least
two municipalities in the province were
over-saturated: Nelson
Mandela Bay Metropolitan Municipality (NMB) and Sarah Baartman
District Municipality (SBM). The Board accepted
the study for the
purpose of formulating its policy and ultimately issuing the RFP. The
RFP, so Vukani contended, was consequently
not lawful because the
study’s findings as to the over-saturation of NMB and SBM meant
that the Board could not have been satisfied,
as required by
regulation 59(3)
(a)
,
that the 400 additional LPMs would not lead to over-saturation in the
province. In sum, over-saturation in NMB and SBM precluded
the Board
from reaching the saturation conclusion in compliance with regulation
59(3)
(a)
.
[33]
However, once, as I
find, regulation 59(3)
(a)
required that the
Board be satisfied that the 400 additional LPMs it proposed be made
available for licence would not lead to over-saturation
on a
province-wide basis, then the Board, in publishing the RFP, did not
fail to comply with regulation 59(3)
(a)
.
The study, fairly read, concluded on various measures that the
Eastern Cape province ‘is not yet relatively over saturated with
LPMs’. Consequently, the study concluded with the recommendation
that the Board continue to roll out all 6000 LPMs that had been
allocated to the province. The Board accepted the study and reached
its saturation conclusion on a province-wide consideration of
over-saturation. In doing so, the Board did not fail to comply with
the requirements of regulation 59(3)
(a)
.
[34]
The RFP did invite
applications for ten licences, distributed  between various
municipalities, and detailed in two tables. Those
tables allocated
sites in NMB and SBM. This aspect of the RFP concerns the allocation
of licences to various municipalities. Vukani
most certainly
questioned how the Board could accept the study’s findings of
over-saturation in NMB and SBM, and yet allocate licences
to these
municipalities. The difficulty for Vukani, however, is this. Its
review is not predicated on the allocative decision of
the Board, but
rather that the over-saturation findings in respect of NMB and SBM
meant that the requirements of regulation 59(3)
(a)
were not be met. That challenge cannot be sustained because it rests
upon an interpretation of regulation 59(3)
(a)
that is incorrect.
Accordingly, Vukani’s review, on this ground, must fail, and the
full court was in error to hold otherwise.
[35]
This finding renders it
unnecessary to determine the timing question as to when the Board
must be satisfied as to the saturation conclusion.
Even if Vukani and
the Board are correct that the requirements of regulation 59(3) must
be met in order to issue the RFP (I make
no finding on this matter),
since Vukani’s review of the RFP for non-compliance with regulation
59(3)
(a)
cannot
prevail, there is no need for this Court to decide the timing
question that was raised by the Golden Palace and the Spin and
Win
applicants.
The flawed study
[36]
It is common ground
that the Board relied upon the study to formulate its policy that
then resulted in the publication of the RFP.
Vukani contended that
the study is unlawful and irrational. The study is so defective,
Vukani submits, that it cannot support any
conclusion as to whether
the province is under-or over-saturated. Nor does the study, on its
own terms, consider the social impacts
as required by regulation
59(3)
(b)
,
and hence the study was not a rational basis for the Board to
conclude that the licensing of additional LPMs would be in the best
interests of the Eastern Cape. In sum, Vukani submits that the study
was irremediably flawed, and can provide no rational basis for
the
publication of the RFP, hence the RFP must be reviewed and set aside.
[37]
Vukani procured the
services of an expert, Professor Standish, to assess the study.
Professor Standish identified numerous errors
in the study. These
errors may be summarised as follows. First, the study failed to
define over saturation, rather, it considered
divergence from
existing average distributions of LPMs. Second, the metrics used to
measure over-saturation were the ratios of LPMs
to the population
density and gross domestic product (GDP) of municipalities. These
metrics are irrational. Third, the study failed
to apply the metrics
it chose in a consistent fashion. Fourth, the study failed to
calculate the ratios it relied upon correctly.
It equated site
licences with the number of LPMs. But a site may have many LPMs. The
calculated ratios do not reflect the actual
distribution of LPMs in
the province. Fifth, the study made numerous errors as to how to
measure the impact of LPMs. Sixth, the study
acknowledged that it
failed to determine the negative social, environmental and economic
impacts of the licensing of additional LPMs.
[38]
Vukani contends that
the study is so flawed that it cannot provide a rational basis for
the publication of the RFP. A review, so framed,
cannot prevail
simply because the study made numerous errors. Nor does it suffice to
show that, on Professor Standish’s analysis,
the study was
incorrect. What is required is a showing that the central conclusions
of the study are supported by no evidence or
reasoning that could
sustain these conclusions, and hence the study is irrational.
[39]
A reading of the study,
alongside Professor Standish’s criticisms, does not yield such a
showing. The study investigated the degree
of over or under
saturation of LPMs in the Eastern Cape in two ways. First, the study
sought to measure LPM sites relative to GDP
and population in each of
37 district municipalities and two metropolitan municipalities.
Second, the study undertook a comparative
analysis of turnover for
LPMs and the per capita tax contribution per province for LPMs to
compare the position of the Eastern Cape
with other provinces.
[40]
True enough, the study
does not offer a definition of under or over saturation. But the
methodologies adopted by the study do permit
of an understanding as
to when under or over saturation would be present. Under or over
saturation is a relative concept judged empirically
against various
criteria and the existing distributions of LPMs, as between provinces
and within the Eastern Cape. A derived definition
of this kind,
relying upon existing distributions, may be simplistic, but it is not
irrational.
[41]
So too the use of
population and GDP ratios assumes a normative constant as between the
number of LPMs and the population or GDP of
each municipality. This
is a simplifying assumption. Others could have been made. But it
cannot be said that its application can
yield no sense whatever as to
how, across the province, supply and demand may be assessed. The
number of site licences in relation
to the population or GDP of a
municipality may be a basic comparative measure of saturation, but it
cannot be said to yield nothing
of value.
[42]
Professor Standish
pointed out other errors: the inconsistent application of the study’s
models; its equation of site licences and
LPMs; and issues the study
neglected to examine, such as machine turnover. Problems with the
study, no doubt, abound, but what is
required is not an
identification of errors but a study that provides no evidence or
analysis that would permit of any conclusions
as to over-saturation.
A fair reading of the study does not meet that high threshold. For
example, the study compares gambling tax
revenue and turnover for
LPMs across provinces. It is difficult to say of this data that it is
valueless in making any judgment as
to saturation.
[43]
Finally, the
acknowledgment in the study that the social ills of gambling have not
yet been fully determined for South Africa or the
Eastern Cape does
not mean that the study failed to marshal evidence and offer analysis
of the social, economic and environmental
impacts of the additional
LPMs, as required by regulation 59(3)
(b)
.
On the contrary and by way of example, the study considered the
investment that would be attracted to the Eastern Cape and its
multiplier
effect; a questionnaire was administered to 298 punters
across 35 LPMs in the province to ascertain the socio-economic
impacts of
the LPM industry upon punters; questionnaires were also
administered to community members and site operators for the same
purpose;
and findings were made as to problem gambling. The study
cannot be read to have either ignored social, economic and
environmental
impacts or to have so glossed over these matters as to
leave no foundation for the Board to take up a position on these
matters.
[44]
In my view, therefore,
whatever the limitations of the study identified by Professor
Standish, the study is not vitiated by error
to the point that the
Board’s reliance upon it tainted the RFP with irrationality.
Vukani’s review on this ground must also fail.
The remaining issues
[45]
The Board pressed us to
make a finding that the issue of the RFP is not administrative action
reviewable under the PAJA, but is rather
action reviewable under the
principle of legality. The full court did not determine this issue. I
can see no reason why this Court
should do so, and nothing in
City
of Tshwane Metropolitan Municipality and Others v Nambiti
Technologies (Pty) Ltd
[4]
compels such a finding. The grounds
of review advanced by Vukani are not altered as to their substance
whether the issue of the RFP
is administrative action reviewable
under the PAJA or whether the RFP is reviewable under the principle
of legality. Nothing in this
appeal turns on the matter, and I see no
reason to resolve an issue that is not required to decide this
appeal.
[46]
Vukani opposed the Spin
and Win applicants’ application for leave to appeal on the basis
that these applicants had taken no part
in the proceedings before the
full court. I do not understand that objection to be persisted in by
Vukani. Nor should it be. The
Spin and Win applicants are parties to
these proceedings and their election to rely on the submissions of
the Golden Palace applicants
at the full court’s hearing does not
preclude them from pursuing an application for leave to appeal.
Conclusion
[47]
The Board, the Golden
Palace applicants and the Spin and Win applicants have made out their
case for special leave to appeal. As this
judgment makes plain, their
applications enjoyed strong prospects of success and raised a
substantial question of law as to how regulation
59(3)
(a)
was to be interpreted.
[48]
As to the merits of the
appeal, I find that the appeal must be upheld and Vukani’s review
of the RFP and the issue of licences to
which it gave rise must be
dismissed. The costs follow the result, including the costs of two
counsel, where so employed.
[49]
The following order is
made:
1 The applicants are granted special leave to appeal;
2 The appeal is upheld with costs, including the costs
of two counsel, where employed;
3  The order of the full court is set aside and
replaced with an order as follows:
‘
The
appeal is dismissed with costs, including the costs of two counsel,
where employed’.
DAVID UNTERHALTER
ACTING JUDGE OF APPEAL
Appearances
For
applicants under case number:
Ismail
Jamie SC (with Him Mitchell De Beer)
119/2020
Instructed
by:
Tshangana Le Roux Inc
c/o Honey Attorneys, Bloemfontein
For
applicants under case number:
Sarah Pudifin-Jones
1338/2019
and 1366/2019
Instructed by:

Woodhead Bigby Attorneys, Umhlanga
c/o Lovius Block Inc, Bloemfontein
For
respondents:
Steven Budlender SC (with him Michael Bishop and Eshed Cohen)
Instructed
by:
Edward Nathan Sonnenbergs
c/o Tshangana Attorneys, Bloemfontein
[1]
Natal Joint Municipal Pension Fund v Endumeni
Municipality
[2012] ZASCA 13
;
[2012] 2
All SA 262
(SCA);
2012 (4) SA 593
(SCA) para 18.
[2]
Capitec Bank Holdings Limited v Coral Lagoon
Investments 194 (Pty) Ltd
[2021] ZASCA
99
;
[2021] 3 All SA 647
(SCA) para 25
[3]
Walele v City of Cape Town and Others
[2008] ZACC 11
;
2008
(6) SA 129
(CC) para 60
[4]
City of Tshwane Metropolitan Municipality and
Others v Nambiti Technologies (Pty) Ltd
[2015]
ZASCA 167
;
[2016] 1 All SA 332
(SCA);
2016 (2) SA 494
(SCA) paras
24–26.