Desert Palace Hotel Resort (Pty) Ltd v Nothern Cape Gambling Board (630/05) [2006] ZASCA 114; [2007] 3 All SA 573 (SCA); 2007 (3) SA 187 (SCA) (24 November 2006)

About SAFLII
Databases
Search
Terms of Use
RSS Feeds
South Africa: Supreme Court of Appeal
SAFLII
>>
Databases
>>
South Africa: Supreme Court of Appeal
>>
2006
>>
[2006] ZASCA 114
|

|

Desert Palace Hotel Resort (Pty) Ltd v Nothern Cape Gambling Board (630/05) [2006] ZASCA 114; [2007] 3 All SA 573 (SCA); 2007 (3) SA 187 (SCA); 69 SATC 133 (24 November 2006)

Links to summary

THE
SUPREME COURT OF APPEAL OF SOUTH AFRICA
Case No: 630/05
REPORTABLE
In the matter
between:
DESERT PALACE HOTEL
RESORT (PTY) LTD APPELLANT
v
NORTHERN CAPE
GAMBLING BOARD RESPONDENT
Coram: Cameron,
Conradie, Maya JJA, Combrinck, Cachalia AJJA
Heard: 14 November
2006
Delivered: 24
November 2006
Summary: A ‘
holder
of a licence
’ as contemplated by s 65 of the Northern Cape
Gambling and Racing Amendment Act 5 of 1996, and s 81 of Act 6 of
2000 must have
had a licence physically ‘
issued
’ for
it
to be liable for payment of gambling levies and penalties.
Neutral
citation: This case may be cited as
Desert Palace Hotel Resort v
Northern Cape Gambling Board
[2006] SCA 143 (RSA)
___________________________________________________________
JUDGMENT
___________________________________________________________
CACHALIA AJA
[1] The respondent
is a provincial gambling board (‘the Board’) and the appellant
(‘Desert Palace’) a casino operating within
its jurisdiction. The
Board as plaintiff instituted proceedings in the Northern Cape
Provincial Division against Desert Palace as
defendant for the
recovery of a penalty imposed by it purportedly in terms of the
regulations promulgated under the Northern Cape
Gambling and Racing
Act 5 of 1996 (‘the 1996 Act’). The Board had imposed the penalty
for Desert Palace’s non-payment of gambling
levies for the period
November 2000 to November 2001.
[2] It was common
cause that Desert Palace applied to the Board for a casino operator
licence in 1999. In a letter dated 17 August
that year, the
Board informed Desert Palace that the application had been approved
on 11 August 1999 and that the time period referred
to in the letter
‘shall come into effect on the date of issuing the casino operator
licence’. At the time the application was
approved, the premises
the casino was to operate from had not yet been erected. The casino
began operating at temporary premises
on 12 June 2000. However the
Board issued a temporary licence to Desert Palace only on 16 October
2001, together with a directive
that the licence was to operate
retrospectively to the date on which the casino had commenced its
operation. For reasons not relevant
to this appeal, the retrospective
application of that licence was withdrawn by court order granted
after agreement between the parties.
A new temporary licence was
issued thereafter with effect from 22 October 2001.
[3] Desert Palace
initially paid levies to the Board until November 2000 but on
legal advice withheld further payment until 11 November
2001.
The levy was eventually paid but the penalty not. As a consequence
the Board instituted the present action for payment of the
penalty.
Desert Palace resisted the claim contending that it was not a ‘
holder
of a licence
’ as contemplated by the 1996 Act, and thus not
liable for a penalty. In the alternative it contended that the
regulation purporting
to enable the Board to impose penalties for the
non-payment of levies was not authorised by the empowering section of
the Act.
[4] The stated case
the parties placed before the court below in terms of Rule 33(1)
required it to decide two questions:
Whether
Desert Palace was during the period 12 June to 11 November 2001
in law the ‘
holder of a licence
’ in terms of s 65 of
the
[1995] UKHL 15
;
1996 Act;
1
and
In
the event of its finding that Desert Palace was the ‘
holder of
a licence
’, whether the Board was entitled to levy penalties
on outstanding levies in terms of the Act read with Regulation 95
either before
or after 28 May 2001. In this regard the court
was asked to determine whether the promulgation of Regulation 95 was
authorised
by the Act’s enabling section.
2
[5] The
court below (Kgomo JP) decided both questions in favour of the Board
and refused leave to appeal.
3
This court however granted leave. With regard to whether Desert
Palace was a ‘
holder of a licence
’, Desert Palace
contended that for a ‘
holder of a licence
’
to fall
within the terms of s 65 of the 1996 Act, a formal document
evidencing the licence must have been issued to it. It is common
cause that no such formal document was issued during the period in
question. (The retrospective application of the temporary licence
issued on 16 October 2001 was withdrawn and another temporary licence
issued with effect from 22 October 2001.) The Board’s contention,
on the other hand, was that the description ‘
holder of
a
licence
’
does not contemplate a document having been
issued to a licence holder, but bears a wider meaning in the sense of
a grant of a privilege
or right.
4
Thus, contended the Board, Desert Palace became a ‘
holder of a
licence
’
when its application was approved on 11 August
1999.
[6] The
court below, on the basis of the undisputed fact that Desert Palace
had operated a casino for the relevant period, albeit
without a
licence that was formally issued to it, held that it was nevertheless
a ‘
holder of a licence
’ as contemplated by s 65 of the
1996 Act. In arriving at this conclusion the court apparently
considered it inequitable that Desert
Palace derived a financial
benefit from operating the casino but demurred when required to pay
the gambling levy.
5
Thus, so the court reasoned, ‘regardless of the objective truth of
the matter, Desert Palace is deemed . . . to have been issued
with a
licence and had, accordingly, become a licence-holder’.
6
[7] In my view the
court below approached the matter on the wrong basis: First, it had
no power to ‘deem’ Desert Palace a ‘
holder of a licence
’
if the interpretation of the statute did not provide for deemed
licences. Second it placed undue emphasis in its approach to the
matter
on the facts and on what it saw as the equities, instead of
approaching it as a matter of statutory interpretation. When
interpreting
a statute, the factual circumstances of a case have no
bearing on the analysis.
[8] The
proper approach to be followed when considering a statutory provision
was formulated by Wessels AJA in
Stellenbosch Farmer’s winery
Ltd v Distillers Corporation (SA) Ltd and Another
7
as follows:
‘
In
my opinion it is the duty of the Court to read the section of the Act
which requires interpretation sensibly, ie with due regard,
on the
one hand, to the meaning or meanings which permitted grammatical
usage assigns to the words used in the section in question
and, on
the other hand, to the contextual scene, which involves consideration
of the language of the rest of the statute, as well
as the “matter
of the statute, its apparent scope and purpose, and within limits,
its background”. In the ultimate result the
Court strikes a proper
balance between these various considerations and thereby ascertains
the will of the Legislature and states
its legal effect with
reference to the facts of the particular case which is before it.’
[9] The
provincial statutes relevant to this appeal are the 1996 Act before
and after its amendment on 28 May 2001,
8
and the Northern Cape Gambling and Racing Amendment Act 6 of 2000
(‘the 2000 Act’). The 1996 Act (before amendment) was the
governing
statute at the time the Board approved Desert Palace’s
application in August 1999. It was replaced on 2 June 2000
9
by the 2000 Act, which largely re-enacted its predecessor’s
provisions. The 2000 Act was, in turn, repealed by Act 3 of 2001
10
which, as I have mentioned, came into effect on 28 May 2001.
Act 3 of 2001, in effect, revived the 1996 Act in an amended
form. To summarise, three statutory regimes apply to the period
relevant to this dispute: from August 1999 (when the licence
application
was approved) until the promulgation of the 2000 Act on 2
June 2000, the 1996 Act applied; thereafter, and until its repeal on
28
May 2001, the 2000 Act was the operative statute; and for the
remaining period with which we are concerned, until 11 November 2001,
the revived 1996 Act (as amended) applied. Inexplicably the parties
were unaware of the 2000 Act when they presented their cases
in the
court below. As a consequence that court did not consider it;
although for the purpose of deciding whether Desert Palace was
a
‘
holder of a licence
’
the differences between the
statutes are immaterial.
[10] Section 81(1)
of the 2000 Act corresponds to s 65(1) of the 1996 Act. It
provides as follows:
‘
.
. . every
holder of a licence
(except a manufacturer, maintenance or supplier licence) shall be
liable to, at such intervals as may be prescribed, pay a gambling
levy on the gross win which such licence holder derives from the
conduct of gambling and which gambling levy shall be calculated
on
such basis and at a rate as may be prescribed, and payable in the
manner and before the date as prescribed: Provided that different
rates may be so prescribed in respect of different types of
licences.’
[11] The
Act does not define what a ‘
licence
’ is
but merely
states that it means a licence ‘
issued
’ in terms of s 26.
Section 26(1) makes provision for eleven kinds of licences. Section
26(2) requires of any licence that it be
in writing.
11
Critically a licence holder has a duty to display the licence on the
licensed premises (s 45) and on demand to produce the ‘
licence
or certificate concerned
’ (s 46). Self-evidently this would not
be possible without a licence holder being physically in possession
of a document capable
of being displayed or produced.
[12] The
licence we are concerned with, as mentioned earlier, is a ‘
casino
operator licence
’. It is defined
12
as ‘
any licence issued in terms of section 48
’.
Section
48 requires of such licences that they ‘
be issued
’,
13
that they are ‘
link(ed) to the premises specified in the
licence
’
14
and that they ‘
authorise . . . the playing in or on the
premises or such parts of the premises as are specified in the
licence . . .’
.
15
[13] So,
unless the ‘
issued
’ licence describes the ‘
premises
’
from where the casino is to operate, it will not comply with s
48. In my view the preceding paragraphs provide strong indications
that the legislature intended a ‘
holder of a licence
’
as contemplated in s 81 of the Act to be capable of physically
possessing a valid licence in the form of a document issued to it by
the Board.
16
Not only that but its contents must display the authority granted to
the casino operator.
[14] But it is s 36
of the Act which, I think, is decisive of this appeal. It reads thus:
‘
Temporary
licences in respect of incomplete premises.
–(1)
If an application for a licence is granted by the Board in respect
of premises not yet erected, . . . the Board may, upon
being
furnished with the required forfeitable guarantee, issue a temporary
licence to the applicant concerned, subject to the compliance
of such
conditions or requirements, referred to in the temporary licence,
with regard to those premises as the Board may determine,
within such
period as may likewise be determined and referred to.
(2) . . .
(3) The period
determined under subsection (1) . . . shall not be longer than 24
months . . ..
(4) When the Board
is satisfied that the premises in respect of which a temporary
licence has been granted under subsection (1), have
been
substantially completed in accordance with the plan thereof approved
by the Board, the conditions and requirements determined
by the Board
have been complied with and [the] premises are suitable for the
purpose for which they will be used under the licence
concerned, the
Board shall issue the licence in accordance with section 31 (3) to
the applicant concerned.
(5) . . .
(6) The provisions
of this Act shall, subject to subsection (1),
mutatis mutandis
apply to temporary licences, and in such application a reference in
this Act to a licence shall, where applicable, also be construed
as a
reference to a temporary licence.’
[15] The section
provides for the issue of a temporary licence after the Board grants
an application for a licence in respect of premises
not yet erected.
That licence is issued for a limited period subject to such
conditions as the Board may determine. When the erection
of the
premises is completed according to the Board’s specifications, the
Board must then issue a licence. The section therefore
envisages a
three stage process: first the
grant
of an application; second
the
issue
of a temporary licence
and third the
issue
of the licence. It clearly distinguishes the grant or approval of an
application for a licence from the issuing of such a licence.
It
follows that for a casino operator to be a ‘
holder of a licence
’
the Board must not only have approved its application for a licence,
but also have physically issued a document to it.
[16] I
mentioned earlier that in this case the licence application was
approved before the erection of the casino premises. Section
36 which
applies to ‘
temporary licences in respect of incomplete
premises
’ is therefore applicable. The Board’s letter to
Desert Palace dated 17 August 1999 evidences nothing more than
an approval
of a casino operator licence. This much was conceded
before us in argument by the Board. The Board’s Chairman understood
that clearly
when he stated in the letter that the licence ‘shall
come into effect on the date of issuing the casino operator licence’.
Implicit
in this statement is that the issue of a licence will follow
later. Moreover the letter makes no reference to any condition
referred
to in s 36(4) to be complied with before the Board may issue
a licence. It follows that the board’s contention that the word
‘
licence
’ must mean a privilege or right and not a
document evidencing such privilege or right, must fail.
17
[17] For these
reasons I conclude that Desert Palace was not a ‘
holder of a
licence
’ as contemplated by s 81 of the 2000 Act for the period
12 June 2000 to 28 May 2001, when that Act was repealed. On the same
basis
Desert Palace was not a ‘
holder of a licence
’
as
contemplated by s 65 of Act 5 of 1996 for the remaining period,
28 May 2001 to 11 November 2001, because the provisions
in the
1996 Act were revived substantially unchanged. Accordingly for the
purposes of both the 2000 Act and the 1996 Act (as amended)
the
appellant was not the ‘
holder of a licence
’. This
conclusion makes it unnecessary to consider the second question
referred to in para 4. It follows that the appeal must succeed.
[18] I make the
following order. The appeal succeeds with costs including the costs
of two counsel. The order of the court below is
substituted with the
following:
‘
The
plaintiff’s action is dismissed with costs.’
_____________
A
CACHALIA
ACTING
JUDGE OF APPEAL
CONCUR:
CAMERON JA
CONRADIE
JA
MAYA
JA
COMBRINCK
AJA
1
Section
65 reads as follows: ‘
Imposition of gambling and betting
taxes.
–(1) Over and above any value-added tax or other sales
tax, if any, and income tax which may be payable in terms of any
other
law, every
holder of a licence
(except a manufacturer,
maintenance or supplier licence) shall be liable to, at such
intervals as may be prescribed, pay a gambling
levy on the gross win
which such licence holder derives; from the conduct of gambling and
which gambling levy shall be calculated
on such basis and at a rate
as may be prescribed, and be payable in the manner and before the
date as prescribed: Provided that
different rates may be so
prescribed in respect of different types of licences.’
2
The
enabling provision is s 65 (3).
3
The
judgment is reported as
Northern Cape Gambling Board v Desert
Palace Hotel Resort (Pty) Ltd
[2005] 2 All SA 61
(NC).
4
Cf
President
of the RSA: In re Constitutionality of the
Liquor Bill
[1999] ZACC 15
;
2000 (1) SA 732
(CC) para 56.
5
Northern
Cape Gambling Board v Desert Palace
(above)
para 19.3.
6
Northern Cape Gambling Board v
Desert Palace (above)
para 24.
7
1962
(1) SA 458
(A) at 476E-G. Also quoted with approval in
Feldman v
Migdin
2006 (6) SA 12
(A) para 16.
8
See
the Northern Cape Gambling and Racing Amendment Act 3 of 2001. It
was promulgated on 8 June 2000 by Notice 30 in Provincial
Gazette No 519, deemed effective from 2 June.
9
See
s 113 of Act 6 of 2000.
10
The
repeal was effected by s 71 of Act 3 of 2001.
11
This
was not a requirement of the 1996 before its amendment by Act 3 of
2001.
12
Section
1.
13
Section
48(1).
14
Section
48(6).
15
Section
48(7).
16
10
Lawsa
(reissue)
para 295.
17
The
board made reference to several provisions it contended supported
its construction. These include ss 10, 13, 19, 27, 28, 29,
30, 31,
32, 33, 34, 37, 40, 42 and 44. It is unnecessary to analyse them.
The contention is unmeritorious.