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IN THE HIGH COURT OF SOUTH AFRICA

(TRANSVAAL PROVINCIAL DIVISION)

Case number: 38803/2006

Date: 12 December 2008

Not reportable

In the matter between:

CJW MARKETING CC Applicant

and

LIMPOPO PROVINCIAL LIQUOR BOARD First Respondent

J J GEYER Second Respondent

M J VAN STADEN Third Respondent

A B SCHOEMAN Fourth Respondent

W S LAW Fifth Respondent

C D ESTERHUIZEN Sixth Respondent

JUDGMENT

______________________________________________________________

PRETORIUS J,

The applicant applies for the review of a decision of the first respondent not to grant the applicant a liquor license. The applicant applied for a liquor license for the second time and this application was refused on 3 August 2007.

The first respondent raised two points in limine.

The first is that the chairperson of the Liquor Board was not joined and that he was prejudiced as a result of his non-joinder. It is clear that no prejudice to the chairperson is alleged in the papers and this was only raised for the first time in the heads of argument. There is no affidavit from the chairperson confirming that he was prejudiced. The return of service shows that the notice of motion, founding affidavit and annexures were served on the Limpopo Province Provincial Liquor Board at c/o The Chairperson, Limpopo as well as the State Attorney in Pretoria. The Chairperson of the Liquor Board did not set out in which respects he was prejudiced. I cannot find any reason to uphold this point in limine.

The second point in limine is that this application was launched 240 days after the decision had been taken by the respondent, instead of the prescribed 180 days. The applicant sets out, in the founding affidavit a litany of problems it encountered to enable the applicant to obtain the record of proceedings. This started as early as 3 September 2007, after the first respondent had furnished reasons for the decision on 23 August 2007. The applicant set out the reason for holding back the launching of the application as follows:

“I reiterate that the launching of the review application was held back by in order to first obtain the complete record of the proceedings. The idea was that the record would be obtained and the Applicant would in initio fully motivate, with reference to the complete record, the basis upon which they contend that the First Respondent’s decision should be reviewed and set aside. I indicated to the First Respondent that the formal record was needed for this purpose and they undertook to provide me with a formal record.”

The unofficial record of proceedings was only supplied to the applicant in January 2008.

I cannot find that this delay was unreasonable, as the applicant launched the application as soon as the record was obtained. In Ntane v MEC for Social Development, Eastern Cape 2005 (6) SA 248 (ECD) at 260 Plaskett J found:

“First, the issue of condonation must be addressed mindful of the fact that s 34 of the Constitution enshrines a fundamental right of access to court and that s 39(2) enjoins a court either interpreting legislation or developing the common law or customary law to 'promote the spirit, purport and objects of the Bill of Rights' of which s 34 is part. Secondly, I take into account that s 1 (c) of the Constitution entrenches the rule of law - and its principle of legality - as a founding value of our constitutional order, and that consequently courts should be particularly careful to allow as few invalid exercises of public power as possible to slip through the net.”

The court therefore condones the delay of 60 days to launch the application. There is also a prayer in the notice of motion for the condoning of the failure to institute the judicial review according to section 7 (1) of the Promotion of Access to Justice Act 3 of 2000 and the applicant thus applied at the outset for condonation.

The liquor board states the purpose of the investigation is:

“The board must consider whether on a balance of probability, the fact in issue (public interest) is provided”

and finds

“Section 22 (2) (d) (ee) of the Liquor Act provides that “the board shall not grant an application … for any license unless … the granting of the license is in the public interest.” The words “the board shall not” are peremptory in nature and strictly forbid the board from doing something. This is the basic rule of Section 22 (2) of the Liquor Act. The words “unless” means except where or save where circumstances permit otherwise. The Section then proceeds to provide those exceptional circumstances that would contradict the prohibition. In this instance those circumstances are when the granting of the license is in the public interest.” (my emphasis)

The conclusion the first applicant comes to is

“Therefore Applicant has failed to prove that the town of Mookgopong requires more outlets than it already has.”

The applicant therefore requests the court to review the first respondent’s decision in terms of section 6 (2) (d) of Promotion of Administrative Justice Act due to the purpose of the investigation, the finding and the onus placed on the applicant.

Section 6 (2) of Promotion of Administration Justice Act provides:

“ A court or tribunal has the power to judicially review an administrative action if-

….

(d )the action was materially influenced by an error of law;”

The application for a liquor license was made in terms of section 19 of the Liquor Act 27 of 1989 which provides:

“Any person may make application for a license referred to in section 20.”

This is the second review application as Claassen J had previously set aside the decision of the first respondent on 8 June 2007 where the application for a liquor license for the applicant was refused by the first respondent. The second to sixth respondents do not oppose the present application and did not oppose the previous application.

Subsequent to the previous order the respondent convened a meeting for 13 July 2007, which was then postponed to 26 July 2007. In this time the Sithole – report was compiled for consideration at the meeting of 26 July 2007. On 13 July 2007 nothing had changed since the previous application for a liquor license had been refused.

Mr Sithole gave evidence at the meeting of 26 July 2007 that he was the deputy manager of Liquor Affairs in the Department of Economic Development, Environment and Tourism. He conducted an investigation on behalf of the Liquor Board regarding the liquor outlets in Mookgopong and compiled a report. He had the help of five officials in his investigation. The report is thus based on hearsay evidence. Mr Sithole is a business analyst with a B.Com degree.

It is abundantly clear that Mr Sithole was requested to investigate the situation in Mookgopong by the first respondent. The information available to the first respondent at the first meeting of 13 July 2007 was exactly the same as the information available when the first respondent refused the initial application for a liquor license. Mr Sithole had to find the evidence to substantiate the first respondent’s reason for refusing the application.

Ms Mokadikoa, counsel for the first respondent, conceded that the perception of requesting Mr Sithole’s report and consequent findings by the first respondent cannot be regarded as fair and unbiased, as the first respondent commissioned Mr Sithole to do the investigation and to compile the report.

The first respondent also regarded the applicant as having an onus on it in terms of section 22 (2) of the Liquor Act to convince the first respondent, on a balance of probabilities, that another liquor store was necessary. Ms Mokadikoa conceded that this was a flawed point of view which should not be entertained at all and was a legal misdirection by the Liquor Board.

The decision of the board is set out as:

“The Decision

1. Having considered the information presented, it is the view of the Board that-

1. the evidence that the Board has admitted has established that granting the license to applicant would result in loss of income for some of the existing outlets, with the result that some members of the public losing their jobs;

2. Applicant has not presented to the Board any facts that would contradict the consequences mentioned above should Applicant be licensed;

3. The Board takes the loss of jobs in a serious light and as going against the mandate of the Department, to which this Board is accountable; and

4. the granting of a liquor license to Applicant will not be in public interest.

2. Therefore the application for a license is refused.”

It is clear that this finding regarding job losses is pure conjecture and speculation. The Liquor Board did not take into consideration the jobs that would be created if the license is granted

There is, according to counsel for the applicant, no evidence on which the first respondent could find that Limpopo Liquor Store, situated 200 meters from the applicant’s premises, would not survive the competition if a liquor license was granted to the applicant.

The first respondent does not give any reasons as to why it is not in public interest to grant a liquor license to the applicant.

Section 6 (2) (f) (ii) and (h) of the Promotion of Administrative Justice Act provides:

“….(f) the action itself-

(i) …

(ii) is not rationally connected to-

(aa) the purpose for which it was taken;

(bb) the purpose of the empowering provision;

(cc) the information before the administrator; or

(dd) the reasons given for it by the administrator;

(g) …

(h) the exercise of the power or the performance of the function authorised by the empowering provision, in pursuance of which the administrative action was purportedly taken, is so unreasonable that no reasonable person could have so exercised the power or performed the function;.”

In Trinity Broadcasting (Ciskei) v Independent Communications Authority of South Africa 2004 (3) SA 346 (SCA) Howie P found at par [20]:

“[20] In requiring reasonable administrative action, the Constitution does not, in my view, intend that such action must, in review proceedings, be tested against the reasonableness of the merits of the action in the same way as in an appeal. In other words, it is not required that the action must be substantively reasonable, in that sense, in order to withstand review. Apart from that being too high a threshold, it would mean that all administrative action would be liable to correction on review if objectively assessed as substantively unreasonable : cf Bel Porto School Governing Body and Others v Premier, Western Cape, and Another. As made clear in Bel Porto , the review threshold is rationality. Again, the test is an objective one, it being immaterial if the functionary acted in the belief, in good faith, that the action was rational. Rationality is, as has been shown above, one of the criteria now laid down in s 6(2) (f) (ii) of the Promotion of Administrative Justice Act. Reasonableness can, of course, be a relevant factor, but only where the question is whether the action is so unreasonable that no reasonable person would have resorted to it (see s 6(2) (h) ).”

In Pepcor Retirement Fund and Another v Financial Services Board and Another [2003] 3 All SA 21 (SCA) Cloete JA found in par 47:

“In my view a material mistake of fact should be a basis upon which a court can review an administrative decision. If legislation has empowered a functionary to make a decision, in the public interest, the decision should be made on the material facts which should have been available for the decision properly to be made. And if a decision has been made in ignorance of facts material to the decision and which therefore should have been before the functionary, the decision should (subject to what is said in paragraph [10] above) be reviewable at the suit of inter alios the functionary who made It – even although the functionary may have been guilty of negligence and even where a person who is not guilty of fraudulent conduct has benefited by the decision. The doctrine of legality which was the basis of the decisions in Fedsure, SAFRU and Pharmaceutical Manufacturers (supra) requires that the power conferred on a functionary to make decisions in the public interest, should be exercised properly ie on the basis of the true facts; it should not be confined to cases where the common law would categorise the decision as ultra vires.” (my emphasis)

In this instance the first respondent took a decision on a report made by Mr Sithole, which Ms Mokadikoa for the first respondent, had to admit is factually flawed. He and five functionaries observed the liquor outlets in Mookgopong for three days in the middle of the month for approximately two hours per day and compiled the report thereafter. There was no factual evidence before the first respondent which could persuade it to come to the conclusion of overtrading or that it would not be in the public interest to grant a license to the applicant.

There was furthermore no evidence of any job losses at any of the other liquor outlets should the license be granted.

The report by Mr Sithole is unscientific and based on hearsay evidence.

Ms Mokadikoa had to concede that the perception of bias was created by the first respondent’s actions in appointing mr Sithole. In the record of the proceedings it is set out:

“The concentration of outlets within a small distance as that indicated, combined with other factors are what is critical in deciding whether within the central business district of Mookgopong there are sufficient liquor outlets or not as to justify refusal of or approval of a request for a liquor license.” (my emphasis)

It is also clear that Mr Sithole’s report did not only take liquor outlets into consideration, but included on-premise liquor establishments like guest houses, when compiling his report. His report can only be regarded as unscientific in the extreme. There was no acceptable evidence of overtrading, although Mr Sithole’s report endeavored to place such evidence on record. It is furthermore clear that the public interest the first respondent refers to, is the interest of Limpopo Liquor Store, presented by Mr Geyer and not the public as meant in the Act.

In this instance the applicant was not informed in what respect the first respondent did regard the application as not in the public interest, and thus the audi alteram partem principle could not be complied with. It is also not the function of the first respondent to protect existing outlets from competition.

The first respondent misdirected itself seriously when finding that applicant’s attorney did not cross-examine Mr Geyer as he was in fact cross-examined by Mr Scheepers, on behalf of the applicant.

Counsel for the applicant argued that in exceptional circumstances a court would substitute its decision for that of the administrative tribunal and that the court should deal with this application as an exceptional case.

In Gauteng Gambling Board v Silverstar Development Ltd and Others 2005 (4) SA 67 (SCA) Heher JA found at par 29:

“[29] An administrative functionary that is vested by statute with the power to consider and approve or reject an application is generally best equipped by the variety of its composition, by experience, and its access to sources of relevant information and expertise to make the right decision. The court typically has none of these advantages and is required to recognise its own limitations. See Minister of Environmental Affairs and Tourism and Others v Phambili Fisheries (Pty) Ltd; Minister of Environmental Affairs and Tourism and Others v Bato Star Fishing (Pty) Ltd 2003 (6) SA 407 (SCA) at paras [47] - [50], and Bato Star Fishing (Pty) Ltd v Minister of Environmental Affairs and Others [2004] ZACC 15; 2004 (4) SA 490 (CC) (2004 (7) BCLR 687) at paras [46] - [49]. That is why remittal is almost always the prudent and proper course.” (my emphasis)

And in par 39:

“[39] Taking all the matters which I have referred to in the preceding paragraph into account no objection of substance enunciated in the 1998 memorandum remains unanswered. No countervailing or additional objections have been raised by the Board. The result is that the Court a quo was not merely in as good a position as the Board to reach a decision but was faced with the inevitability of a particular outcome if the Board were once again to be called upon fairly to decide the matter.” (my emphasis)

In this instance no factual evidence was available when the Board made the decision. Mr Sithole’s report was based on hearsay evidence, unscientific and unsubstantiated information and speculation. The Liquor Board did not inform the applicant which factors it regarded as in the public interest to refuse the granting of a liquor license and did not afford the applicant the opportunity to respond to this finding.

In Standard Bank v Bophuthathtswana Ltd v Reynolds NO and Others 1995 (3) SA 74 (BG) the court stated the principle where a decision taken by an administrative tribunal which is not supported by any evidence or insufficient evidence will be null and void:

“Our Courts have held that where a decision-maker takes a decision unsupported by any evidence, or by some evidence which is insufficient reasonably to justify the decision arrived at, or where the decision-maker ignores uncontroverted evidence which he was obliged to reflect on, the decisions arrived at will be null and void.”

In the present case Ms Mokadikoa for the first respondent, conceded that there is a perception of bias where the first respondent appointed its own officials to investigate the prevalence of liquor stores in Mookgopong. She further conceded that Mr Sithole’s report was flawed as the investigation and report were done in an unscientific way and based on hearsay evidence and conceded that the Board should not have relied on this report.

It is also clear that Mr Geyer cannot be seen as the public whose interests must be protected, as he is an owner of a liquor store and the applicant will operate in direct competition with him. In Maharaj v Chairman Liquor Board 1997 (1) SA 273 (N) “public interest” was defined by Nicholson J at p 281 G:

“It is of course essential to determine what the phrase 'in the public interest' means. Paraphrasing the dicta in a number of cases it may be said to be encapsulated in the following propositions:

(a) It does not mean that the public whose interest is to be served is necessarily to be widely representative of the general public.

(b) It means that the public would be better served if the applicant were granted the licence than that the existing state of affairs was to continue.

(c) It is not the national interest that is intended but that of the inhabitants in the areas for which the licence is sought or visitors to that area.”

The public interest that must be considered is that of the inhabitants of Mookgopong. The interest that will be affected is that of the other liquor outlets, that have a commercial interest. It is clear that Mr Geyer is the only opponent to the granting of the license. The inhabitants of Mookgopong can only benefit it there is a healthy competition between the liquor outlets.

The first respondent exercised its power in the refusing of the application in a grossly unreasonable manner, based on flawed, biased and insufficient evidence. This will not be cured by referring the matter back to the first respondent - that has already been done.

The provision of section 5 (3) of the Promotion of Administrative Justice Act provides:

“(3) If an administrator fails to furnish adequate reasons for an administrative action it must, subject to subsection (4) and in the absence of proof to the contrary, be presumed in any proceedings for judicial review that the administrative action was taken without good reason.”

This applies to the present matter. It will be futile to send the matter back, as it is clear from the actions of the first respondent what the outcome will be and that the same decision will be taken. The report and evidence of Mr Sithole have impeded and compromised the Liquor Board’s decision. In the New Constitutional and Administrative Law Volume 2, Cora Hoexter at page 290 sets out the following:

“The courts’ respect for the distinction between appeal and review makes them extremely reluctant to usurp the decision-making powers that the legislature has delegated to the administration. As Hiemstra J put in the leading case of Johannesburg City council v Administrator, Transvaal, the court is ‘slow to assume a discretion which has by statute been entrusted to another tribunal or functionary’.”

In this instance the Liquor Board did not comply with the provisions of section 5 (3) of the Promotion of Administrative Justice Act. The Liquor Board’s decision should be set aside.

Section 8 (1) (c) (ii) (aa) of the Promotion of Administrative Justice Act provides:

“(c) setting aside the administrative action and—

(i) remitting the matter for reconsideration by the administrator, with or without directions; or

(ii) in exceptional cases—

(aa) substituting or varying the administrative action or correcting a defect resulting from the administrative action;” (my emphasis)

In Commisioner, Competition Commission v General Council of the Bar of South Africa and others 2002 (6) SA 606 (SCA) at par 14 – 15 the Supreme Court of Appeal held:

“Suffice it to say that the remark in Johannesburg City Council v Administrator, Transvaal, and Another that 'the Court is slow to assume a discretion which has by statute been entrusted to another tribunal or functionary' does not tell the whole story. For, in order to give full effect to the right which everyone has to lawful, reasonable and procedurally fair administrative action, considerations of fairness also enter the picture.” (my emphasis)

and:

“…Baxter Administrative Law at 682 - 4 lists a case where the Court is in as good a position to make the decision as the administrator among those in which it will be justified in correcting the decision by substituting its own. However, the author also says at 684:

“The mere fact that a court considers itself as qualified to take the decision as the administrator does not of itself justify usurping that administrator's powers . . .; sometimes, however, fairness to the applicant may demand that the Court should take such a view.” (my emphasis)

This, in my view, states the position accurately. All that can be said is that considerations of fairness may in a given case require the Court to make the decision itself provided it is able to do so.” (my emphasis)

It has been illustrated by the actions of the Liquor Board that the decision will be a foregone conclusion if it is referred back to the Liquor Board and will result in a further review application.

In Johannesburg City Council v Administrator, Transvaal 1969 (2) SA 72 (T) Hiemstra J found that there are three instances in common law in which special (or exceptional) circumstances will allow the court to substitute the decision of the administrative body:

- Where the end result is a foregone conclusion, and it would be a waste of time to remit the decision to the original decision-maker.

- Where further delay would cause unjustifiable prejudice `to the applicant.

- Where the original decision-maker has exhibited bias or incompetence to such a degree that it would be unfair to ask the applicant to submit to its jurisdiction again.

In Gauteng Gambling Board v Silverstar Development Ltd and Others(supra) at par 38 Heher held:

“For the reasons which follow I am satisfied that despite the manifest advantages which the Board holds (by comparison with a court) as a decision-maker, the particular facts of the present case are such as to remove it from the limitations imposed by the general principles outlined in para [31].

1. Applications, like trials, depend on evidence not conjecture. The Board, despite ample opportunity, has laid no basis in fact or expert opinion to suggest that a reasonable possibility exists that, upon balanced reconsideration, it will make a finding adverse to Silverstar.

2. The Board brought to bear the information and expertise at its disposal in its evaluation of the applications in 1997 and in respect of the combined application in 2001. The Court a quo had and this Court on appeal has the benefit of all that input in the contemporaneous reports prepared by the Board.

3. The combined application was, in substance if not in form, an application by Silverstar on Silverstar's terms, a reality which the Board has either not appreciated or has chosen to ignore. “

I find that in this case exceptional circumstances exist due to the fact that the future decision of the Liquor Board is a foregone conclusion having regard to the Liquor Board’s previous actions by appointing Mr Sithole to investigate the present liquor outlets and by accepting his flawed, unsubstantiated and unscientific report. These actions show bias and it will be unfair to the applicant to subject it to a third application, knowing what the outcome will be.

In this instance the Court is in as good a position as the Liquor Board to make the decision. There can be no more information at the disposal of the Liquor Board at the next hearing to come to a decision. In all fairness, having regard to all the facts, arguments and authorities I am of the opinion that a proper case has been made for substitution. I have studied and considered:

- the pleadings;

- the record of proceedings;

- the letter of refusal - the decision by the Liquor Board;

- the concessions by the counsel for the Liquor Board;

- the serious legal misdirection regarding the onus;

- the misdirection regarding the cross – examination of Mr Geyer by the applicant’s attorney.

I come to the conclusion that in this instance I have to make the bold decision to review and set aside the first respondent’s decision and to substitute the decision.

The following order is made:

1. The failure to launch the application within the prescribed period of 180 days referred to in section 7 (1) of the Promotion of Access to Justice Act 3 of 2000 is condoned;

2. The decision by the first respondent refusing the application of the applicant to obtain a liquor store license in respect of a business to be known as Kentucky Liquors on premises described as Shop 3, Business Building, Erf 172 situated at 32 Hans van Rensburg Street, Naboomspruit, district of Potgietersrus, is set aside;

3. A liquor store license is granted to the applicant;

4. The first respondent is directed to issue the liquor store license once the premises for the proposed business have been completed;

5. The first respondent to pay the costs of this application.

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C Pretorius

Judge of the High Court

Case number : 38803/2006

Heard on : 1 December 2008

For the Applicant : P van Rensburg

Instructed by : E Scheepers

For the Respondent : MM Mokadikoa

Instructed by : State Attorney

Date of Judgment : 12 December 2008

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