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[2008] ZANCHC 61
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Kuruman Hotel CC v Liquor Board, Northern Cape Province and Others (656/07) [2008] ZANCHC 61 (7 November 2008)
Reportable: Yes / No
Circulate to Judges:
Yes / No
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Magistrates: Yes / No
IN
THE HIGH COURT OF SOUTH AFRICA
(Northern
Cape Division)
Case
no: 656/07
Date
heard: 2008-10-31
Date
delivered: 2008-11-07
In
the matter of
:
KURUMAN
HOTEL CC
APPLICANT
versus
THE
LIQUOR BOARD,
NORTHERN CAPE PROVINCE
1
ST
RESPONDENT
CHAIRMAN
OF THE LIQUOR BOARD,
NORTHERN CAPE PROVINCE 2
ND
RESPONDENT
KURUMAN
LIQUOR FORUM 3
RD
RESPONDENT
Coram:
BOSIELO
AJP
et
MAJIEDT
J
JUDG
MENT
ON REVIEW
MAJIEDT J:
This
is an application in te
rms
of Rule 53 for the review and setting aside of the First
Respondent’s decision not to award a liquor licence to the
Applicant.
Most
of the facts are not in issue and can be succinctly summarized as
follows:
2.1 The Applicant applied
for an off-consumption liquor licence at the Kuruman Hotel, which the
Applicant owns. The Applicant already
holds an on-consumption liquor
licence at the said hotel.
2.2 The
Applicant’s application for a liquor licence complied with all
requirements set forth in the Liqour Act, 27 of 1989
(“
the
Act
”)
and was accepted as such by the First Respondent.
2.3
The
designated police officer submitted a written report in accordance
with the provisions contained in s140(1) of the Act.
2.4
The
Third Respondent, whose members are businesspeople active in the
liquor industry in Kuruman, filed an objection against the
Applicant’s application for a liquor licence.
2.5
The
Applicant was thereafter informed that his application had been
declined by the First Respondent and, at the request of the
Applicant, reasons were furnished by the First Respondent for its
refusal to grant the liquor licence. These review proceedings
followed thereafter.
While
the application
has
been brought in accordance with the procedure set forth in Rule 53,
it is now settled law that a Court’s power to review
administrative action flows from the Constitution, Act 108 of 1996,
and from the Promotion of Administrative Justice Act, 3 of
2000
(“
PAJA”
).
The review grounds and review powers contained in sections 131 and
132 respectively of the Act, must therefore be read and
applied,
subject to the aforementioned legislation.
See:
Bato
Star Fishing (Pty) Ltd v Minister of Environmental Affairs and
Others 2004(4) SA 490 (CC)
at
504 F – 505 A (par [22]).
The
Applicant has attacked the First Respondent’s decision on a
wide
array of grounds, in reliance of the provisions contained in PAJA.
In its papers, the Applicant contended that the refusal
to award the
licence applied for, constitutes unfair administrative action in one
or more of the following respects:
a) That the First
Respondent’s decision not to award the liquor licence was
biased or reasonably suspected of bias as contemplated
in
s6(2)(a)(iii) of PAJA;
b) That the decision was
materially influenced by an error of law (s6(2)(d) of PAJA);
c) That
the decision was taken for a reason not authorised by the empowering
legislation and/or for an ulterior purpose or motive
as contemplated
in s(6)(2)(a)(i) of PAJA;
d) That the decision was
taken in bad faith (s6(2)(e)(v) of PAJA);
e) That
the decision was taken arbitrarily or capriciously as contemplated in
s6(2)(e)(vi) of PAJA; and
f) That the decision is
not rationally connected to the purpose for which it was taken and/or
the purpose of the empowering provision
as contemplated in
s6(2)(f)(ii) of PAJA.
Properly
assessed, the gravamen of the dispute which requires adjudication is
whether the following grounds advanced by the First
Respondent for
its decision to refuse the granting of the liquor licence are good
in law or whether its decision ought to be
reviewed and set aside:
a)
That
the granting of the licence would not be in the public interest as
contemplated in s22(2)(d)(i)(ee) of the Act; and
b) That
the possibility exists that the granting of the application may cause
a harmful monopolistic condition to arise or be
aggravated
in the liquor trade or a branch thereof as contemplated in
s22(2)(d)(ii) of the Act.
The
following uncontroverted facts can be gleaned
ex
facie
the
designated police officer’s written report:
a) The premises in
respect whereof the Applicant applied for a licence is situated in
the central business district of Kuruman at
the Kuruman Hotel;
b) There is a church and
a primary school located approximately 200 metres from the
premises;
c) The Savoy Liquor Store
is located approximately 150 metres from the premises;
d) The Grand Liquor Store
is situated approximately 30 metres from the premises;
e) The town of Kuruman
has eight liquor stores, including the Savoy and Grand Liquor Stores;
f) The
Applicant is the owner of the Kuruman Hotel and as such possesses an
on-consumption licence there;
g) The
sole member of the Applicant is also the sole member of another close
corporation which owns the abovementioned Savoy Liquor
Store where
there is an off-consumption licence.
On
behalf of the Applicant, Ms Erasmus
contended
that the purpose of the Act is to protect the general public against
harmful conditions in the liquor industry and not
to protect persons
with competing business interests in the liquor trade. In this
regard she relied heavily on the judgment
in this Division in
Asko
Beleggings v Voorsitter van die Drankraad NO en Andere 1997(2) SA 57
(NC)
at
67 I – 68 C. As a general proposition this
contention is sound in law. In my view, however, the facts in
the
Asko
Beleggings
matter
are clearly distinguishable from the present. In that matter the
Third Respondent was in the position that she maintained
a monopoly
in the liquor trade in that particular town. The Court in the
Asko
Beleggings
matter
pertinently stated that such a situation was untenable and the
ratio
for setting aside the decision of the chairperson of the liquor
board to refuse the licence, was that the interests of healthy
competition would not be served should the Third Respondent’s
monopoly be allowed to persist.
What
is the
“public interest
?”
This concept is not defined in the Act, but has been considered in
various decisions of our courts. In the
Asko
Beleggings
matter,
supra
,
Steenkamp J (as he then was) quoted with approval the following
dictum
in
Leicester
Properties (Pty) Ltd v Farran 1976(1) 492 (D)
at 495 A-B where Miller J said:
“
The
public interest could no doubt properly be determined with reference
to the requirements
of
the inhabitants of the area within which the scheme is to be carried
out
;
the Act obviously does not require the Court to be satisfied that
the national interest would be served by the proposed reconstruction
scheme.”
(emphasis
supplied).
Steenkamp
J accordingly found that
“
public
interest
”
in s22(2)(d)(i)(ee) of the Act should be interpreted to mean that the
granting of the licence must be in the interest of
the public of the
particular town.
See:
Ask
o
Beleggings v Voorsitter van die Drankraad,
supra,
at
67 B-F.
In
Simpson
v Lewin 1956(4) SA 486 (SR)
Beadle
J considered the meaning of s50(a)(1) in the Liquor Act of the then
Southern Rhodesia, which section read as follows:
“
(i) To
the question whether a licence is necessary in the interests of the
public, having regard to the number of existing licences.”
His approach in that
regard is most instructive and in my view apposite in the
circumstances of this case. At 488 F –
489 A he
stated that:
“
The
whole object of the control of the issue of bottle store licences is
to restrict the issue of such licences. If the test were
simply
'convenience' of the public there would be little point in any
restriction. The principle behind the Act seems to be that
too many
liquor licences are not a good thing in the public interest. Too many
licences might encourage excessive drinking on the
part of the public
and might also bring in their train the evils which flow from
over-trading. For these and possibly other reasons
machinery is
devised to restrict the issue of such licences. On the other hand,
the Legislature has appreciated that the public
are entitled to
reasonable facilities to obtain liquor, and for this reason has
entrusted to the board the function of striking
a balance. The duty
of the board appears to be to ensure that, while a sufficient number
of licences are issued to supply the reasonable
needs of the public,
there are not so many issued as would likely to lead to the abuses
and evils which the restrictive provisions
of the Act are designed to
prevent. The object of sec. 50(a)(i) of the Act, in my view, is
nothing more than to direct the attention
of the board to the fact
that one of its functions is to strike this balance. Where, however,
this balance must be struck must
always be largely a matter of
opinion. The board, which normally consists of five members, is a
representative one, and the principle
behind the Act is that, in the
absence of a positive directive from the Minister, the decision in
matters such as this shall be
left to the board's discretion. Where,
therefore, a board, in the honest and diligent exercise of its
discretion, is of the opinion
that the interests of the public do not
require an additional licence in a particular area, the High Court on
appeal should be
extremely slow to come to the conclusion that the
opinion held by the board is unreasonable.”
10.1
I
am in respectful agreement with the approach of Steenkamp J in
the
Asko
Beleggings
matter and that of Beadle J in the
Simpson
v Lewin
matter,
namely that the interests which require consideration is that of the
public in a specific area, i.e. where the liquor licence
is to be
granted. In the present case therefore it would be the interests of
the public at Kuruman.
10.2 I
have already alluded to the fact that it is not in issue, as reported
by the designated police officer in his written report,
that the sole
member of the Applicant CC, Mr. Van Zyl, already holds an
off-consumption licence at the Savoy Liquor Store which
is
approximately 150 metres from the premises and that he holds an
on-consumption licence at the Kuruman Hotel itself. The
fact that
Mr. Van Zyl holds the licence at the Savoy Liquor Store through
another Close Corporation of which he is the sole member,
is neither
here nor there. The fact of the matter is that within a radius of
approximately 150 metres there are already two
other
off-consumption liquor licences in existence and at the Kuruman Hotel
itself there is an on-consumption liquor licence.
Kuruman already
has eight off-consumption liquor licences. I am not persuaded that
the First Respondent had erred in its approach
that it was not in the
public interest to grant another off-consumption licence in the
central business district of Kuruman. While
competition is good and
generally to the benefit of consumers, the negatives associated with
the excessive consumption of liquor
as alluded to by Beadle J in
Simpson
v Lewin
,
supra
,
needs to be considered properly. I am therefore not persuaded that
the First Respondent’s decision is reviewable on this
ground.
I
turn now
to the question of a harmful monopoly. As is apparent from the
aforementioned facts, the sole member of the Applicant, Mr. Van
Zyl,
would hold three licences within a radius of 150 metres should
the First Respondent have granted his application.
In my view this
would be tantamount to a harmful monopolistic condition, given the
fact that there are in total eight off-consumption
liquor licences
in Kuruman, of which Mr. Van Zyl would then hold two. More
importantly, he would hold three liquor licences
out of five within
the immediate vicinity of the Kuruman Hotel. This can not be
beneficial to the industry at all and I am of
the view that the
Third Respondent and its members have rightly objected to his
application.
The
concept of harmful monopolistic conditions as set forth in
s22(2)(d)(ii) is not defined in the Act, nor
have
I been able to find any reported cases on that particular section.
In view of the facts and circumstances of this case,
however, I am
of the view that the First Respondent was justified in its approach
that the licence can not be awarded, since
this would give rise to a
harmful monopolistic condition.
While
Ms Erasmus was correct in her contention that the
First
Respondent had erred in its finding that a ground for the rejection
of the application was that the designated police officer
did not
recommend the application, the application for review must fail on
the grounds set forth herein above. The designated
police officer
had merely stated the facts which he found during his investigation
and which were germane to the First Respondent’s
decision. No
recommendation for or against the application was contained in his
written report.
I
t
is now well established in our law that, in exercising a discretion
by balancing competing interests, i.e. the constitutional
right to
trade freely on the one hand and the need to regulate the issuing of
liquor licences as contemplated in the Act, particularly
section 22
thereof, on the other hand, the First Respondent was merely required
to act reasonably by taking into account all
the relevant factors
and to arrive at a decision which strikes a “
reasonable
equilibrium”
between such competing interests.
See
in this regard:
Bato
Star Fishing (Pty) Ltd v Minister of Environmental Affairs,
supra
at
par. [49] (515 C-D);
Head:
Western Cape Education Department and Others v Governing Body, Point
High School and Others 2008(5) SA 18 (SCA)
at
par. [10] (25 G-H).
For
the reasons
advanced
herein, I am of the view that there is no merit in the application
and it should consequently be dismissed. Costs should
follow the
outcome.
I
would
therefore issue the following order:
THE APPLICATION FOR
REVIEW IS DISMISSED WITH COSTS.
_____________
SA MAJIEDT
JUDGE
I CONCUR AND IT IS SO
ORDERED
______________
LO BOSIELO
ACTING JUDGE PRESIDENT
FOR
THE
APPLICANT : ADV
S ERASMUS
INSTRUCTED
BY
: ENGELSMAN
MAGABANE INC
FOR
THE PLAINTIFF : ADV NR RATHIDILI
INSTRUCTED
BY
: THE
STATE ATTORNEY