THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA

JUDGMENT

Case No: 730/2007

NATIONAL LOTTERIES BOARD                                          Appellant

and

ROBIN LESLIE BRUSS NO                                               1st Respondent
BRIAN JEFFREY MILLER NO                                         2nd Respondent
GERHARD SCHALK VAN NIEKERK NO                       3rd Respondent
JACQUELINE SCHOEMAN NO                                        4th Respondent
LESLIE MONDO NO

5th Respondent
DAWID CROUS

6th Respondent
JULIAN RICHARD CUTLAND NO                                  7th Respondent
SOUTH AFRICAN BROADCASTING
CORPORATION

8th Respondent
TAINTON MICHAEL NO

9th Respondent

Neutral citation:  National Lotteries Board v Bruss (730/2007) [2008]
ZASCA 167 (1 December 2008 ).

Coram:
HARMS ADP, CLOETE, MAYA JJA, LEACH,
BORUCHOWITZ AJJA
Heard:
13 NOVEMBER 2008
Delivered:  1 DECEMBER 2008
Corrected:  1 DECEMBER 2008

Summary:  Lotteries Act, 57 of 1997 - power of Board to institute
proceedings to enforce Act – meaning of ‘subscription’ – when a lottery
is a promotional competition.

___________________________________________________________

ORDER
___________________________________________________________

On appeal from:  High Court, Pretoria (R D CLAASSEN J sitting as
court of first instance).

(1) (a) The appeal is upheld;

(b) The first to seventh and ninth respondents in their capacities
as trustees of the South African Children’s Charity Trust are
ordered to pay the costs of the appeal including the costs of two
counsel;

(c) The eighth respondent is to pay the costs of the appeal
jointly and severally with the first to seventh and ninth
respondents, the one paying the other to be absolved including
the costs of two counsel;

(2) The order of the court a quo is set aside and the following order is
substituted:
‘(a)
It is declared that:
(i)
the Winikhaya competition conducted by the first to
seventh and ninth respondents in their capacities as trustees
of the South African Children’s Charity Trust is not a
promotional competition as contemplated in the Lotteries
Act, 57 of 1997 (the Act);
(ii)
the Winikhaya competition, as presently administered

and implemented, is an unlawful lottery as contemplated in
ss 56 and 57 of the Act;

(b) The first to seventh and ninth respondents, in their capacities
aforesaid are ordered to pay the costs of this application including
the costs of two counsel. These costs are to include the costs that
were reserved on 30 November 2006;

(c) The eighth respondent is ordered to pay the costs of this
application jointly and severally with the first to seventh and
ninth respondents in their capacities aforesaid, the one paying the
other to be absolved, including the costs of two counsel. These
costs are to include the costs that were reserved on 30 November
2006.’

___________________________________________________________

JUDGMENT
___________________________________________________________

BORUCHOWITZ AJA (HARMS ADP, CLOETE JA, MAYA JA,
LEACH AJA concurring):

Introduction

[1] The appellant is the National Lotteries Board (the Board)
established by s 2 of the Lotteries Act, 57 of 1997 (the Act). The first to
seventh and ninth respondents are the trustees of the South African
Children’s Charity Trust (the Trust). The eighth respondent is the South
African Broadcasting Corporation (SABC). Where appropriate I shall

refer to them collectively as the respondents.
[2] The Trust was created in 2002 for the sole object of promoting and
raising funds for charity and charitable causes. Its beneficiaries are a
number of well known charities functioning within South Africa.

[3] In order to generate an income for these charities the Trust
promotes a campaign through the medium of a competition known as
Winikhaya which is broadcast by the SABC on television.

[4] The Board contends that the competition is an unlawful lottery and
promotional competition as contemplated in terms of ss 56 and 57 of the
Act and applied to the Pretoria High Court for a declaratory order to that
effect.

[5] The High Court (per R D Claassen J) held that the Board lacked
the power to seek an order to declare a promotional competition unlawful
and dismissed the application. It further ordered that the Board pay the
respondents’ costs including certain reserved costs of 30 November 2006.
The appeal is with leave of the court a quo.

[6] The salient features of the Winikhaya competition are the
following. Participants are required to send an SMS message or an
approved short code to a predetermined cellular telephone number. The
charge for the SMS message is at a premium rate of R7.50 per SMS. This
rate is substantially more than cellular phone rates offered by cellular
telephone network operators for SMS messages. From 6 November 2006
an alternative method of entry into the competition was made available:
Participants were entitled to deliver a postcard including a subscriber’s
cellular telephone number.

[7] Each SMS constitutes one entry into the Winikhaya competition
and entrants are furnished with an acknowledgement of receipt and a
voucher number which is then used for the purposes of a lucky draw. The
cost of the SMS is deducted from the entrant’s cellular telephone account
or prepaid balances, by the cellular telephone operator, who in turn makes
payment to the Trust. The funds derived from the SMS messages are used
to cover the cost of running the Winikhaya competition, including a
portion of the prizes allocated. The balance is then distributed to various
charities supported by the Trust.

[8] Winners are selected by lot or chance and prizes are allocated to
the person who is the lawful holder of the cellular phone number billed
for the premium rated SMS. Every month a main prize consisting of the
proceeds of a home loan worth R500 000 is awarded to one winner. The
winner of the home loan prize is required to ensure that a minimum
amount of R25 000 of the home loan prize is used to purchase a home or
is used to pay off an existing bond. The balance of R475 000 can be
withdrawn by the winner from a home loan account, at his or her election.

[9] The Winikhaya competition has undergone changes from time to
time. The structure has been broadened to include monthly and daily cash
prizes as well as prizes of merchandise supplied by various sponsors.
These sponsors use Winikhaya to launch a number of promotions which
are designed to promote their brands and products.

[10] There are principally three issues that arise for determination:
(a)
The Board’s power to institute proceedings for declaratory
relief;
(b)
Whether the Winikhaya competition involves any ‘subscription’

as defined, and is therefore exempt from the operation of the
Act by reason of s 63 thereof;
(c)
Whether the Winikhaya competition is a promotional
competition as contemplated in s 54 of the Act and if so
whether the competition is an unlawful lottery as contemplated
in ss 56 and 57 of the Act.

[11] The legislative context in which these issues must be evaluated is
the following. As its long title indicates, the essential aim of the Act is to
regulate lotteries and to provide for matters connected therewith.

[12] In s 1 (xii)  a lottery is defined to include ‘any game, scheme,
arrangement, system, plan, promotional competition or device for
distributing prizes by lot or chance and any game, scheme, arrangement,
system, plan, competition or device, which the Minister may by notice in
the Gazette declare to be a lottery’.

[13] Apart from a National Lottery, which is to be conducted under a
licence to be awarded by the Board, the only other permissible forms of
lotteries are those incidental to exempt entertainment, private lotteries,
society lotteries and promotional competitions.

[14] In s 1 (xxiii) a promotional competition is defined as ‘a lottery
conducted for the purpose of promoting the sale or use of any goods or
services’.

[15] Section 54 of the Act deals with promotional competitions. Section
54(1) sets out a number of conditions, compliance with each of which is
necessary to render a promotional competition lawful.

[16] Unauthorised lotteries are prohibited by s 56 and the conduct of
such lotteries is made an offence by s 57. A lottery in respect of which
there is no subscription as defined is not unlawful.

Power to institute proceedings

[17] Both in this court and in the court below the respondents
challenged the power of the Board to seek an order declaring a
promotional competition unlawful.

[18] It was submitted that there were clear indications in s 54 of the Act
that the Minister and not the Board was vested with the power to seek
such order. One of the conditions that has to be fulfilled in order to render
a promotional competition lawful is that such competition has not been
declared to be unlawful by the Minister under Section 54 (4).1 Section 54
(4) provides that:

‘The Minister may on the recommendation of the board by notice in the Gazette
declare a promotional competition to be unlawful.’

[19] The respondents contend that on a proper construction of the above
provisions the Board’s function in respect of promotional competitions is
limited to the making of recommendations to the Minister as to the
lawfulness or otherwise of any promotional competition. The argument is
that the Board itself cannot declare a promotional competition unlawful
because that power is reserved for the Minister.

1 Section 54 (1)(f).

[20] The argument that the Minister and not the Board has the requisite
power to institute proceedings was rejected by this court in Firstrand
Bank Ltd v National Lotteries Board.2 It was there held that s 10 of the
Act, which assigned specific functions to the Board, implicitly conferred
on it the power to institute legal proceedings.

[21] The respondents submit that Firstrand is clearly wrong as the court
had not determined the Board’s power to institute proceedings with
reference to s 54 (4) of the Act; and that this court is at liberty to depart
therefrom.

[22] The approach of this court to the question of stare decisis is well
settled. In order for this court to depart from a previous decision it must
be clear to it that it erred.3 This approach applies with equal force where
an interpretation of a statute is involved. The test in this regard was
articulated by Schutz JA in Robin Consolidated Industries Ltd v
Commissioner for Inland Revenue.4

‘. . . once the meaning of the words of a section in an Act of Parliament have been
authoritatively determined by this Court, that meaning must be given to them,
even by this Court, unless it is clear to it that it has erred (Collett v Priest 1931
AD 290 at 297).’

[23] The decision in Firstrand is in my view unimpeachable. It was
correctly held that although the Act did not expressly vest the Board with
the power to institute legal proceedings, it impliedly conferred upon it the
power to enforce the provisions of the Act.

2 2008 (4) SA 548  (SCA) paras 30-32.
3 See Bloemfontein Town Council v Richter 1938 AD 195 at 232.
4 1997 (3) SA 654 (SCA) at 666G.

[24] Section 10 of the Act deals with the functions of the Board. Section
10 (d) provides that:

‘The board shall, applying the principles of openness and transparency and in
addition to its other functions in terms of this Act –
(a) . . .
(b) . . .
(c) . . .
(d) montitor, regulate and police lotteries incidental to exempt entertainment,
private lotteries, society lotteries and any competition contemplated in [s] 54.’

[25]  Section 10 (d) therefore expressly assigns to the Board the
function of ‘monitoring, regulating and policing’ competitions
contemplated in s 54. The verb ‘policing’ is of particular significance. It
is defined in the Oxford English Dictionary to mean, inter alia ‘to control,
regulate, or keep in order by means of the police or some similar force; to
keep in order, administer, control’. Absent express indications to the
contrary, it is implicit that a statutory body has such powers ‘as are
reasonably required to carry out the objects of an enactment’.5 The power
to institute legal proceedings is in my view reasonably required in order
to enable the Board to properly discharge its policing function. The
submission that this function is limited to lawful promotional
competitions because s 54 only contemplates promotional competitions
which are lawful, is incorrect – because the section also contemplates
unlawful competitions (in subsections (1)(f), (4) and (5)); and also
because a lawful competition requires no policing and the suggestion that
‘to police’ means to ‘hand over to the police’ is equally without merit: the

5 See Middelburg Municipality v Gertzen 1914 AD 544 at 552-553.

phrase is used in a civil context and obviously means that the Board must
do the policing.

[26] For these reasons I conclude that the Board has the necessary
power to institute the proceedings for declaratory relief in the court a quo.

Whether the competition involves a subscription

[27]  Section 63 of the Act excludes from its ambit any lottery in respect
of which there is no subscription. The section reads:

’Savings

63 Nothing in this Act shall apply in relation to any lottery, sports pool or competition
in respect of which there is no subscription.’

[28] A ‘subscription’ is defined in s 1 of the Act to mean:

‘[T]he payment, or delivery of any money, goods, article, matter or thing, including
any ticket, coupon or any entry form, for the right to compete in a lottery.’ (My
emphasis.)

[29] It is plain from the above definition that the right to compete in any
lottery is dependent upon there being payment of money or delivery of
the goods or articles specified in the definition.

[30] The right to compete in the Winikhaya competition is described as
follows in its rules.

‘1.
Participants may enter by sending a text message via a mobile phone Short
Message Service to a given phone number or short code. The text message will be
charged at a rate fixed by the organisers from time to time.
2.
The organisers will endeavor to ensure that the text message service is
available continuously, but do not warrant availability.
3.
Participants may enter as many times as they wish and there is no restriction
on the number of prizes that may be won. Each entry is allocated a unique number
which will be entered into the competition draw.
4.
Participants may also enter by sending a postcard with their name, cellphone
number
and
the
word
“house”
to
the
postal
address
advertised
on
www.winikhaya.co.za. The participant has to have a valid cellphone number and the
winner will be the persons who on the date of the draw are the contracted or lawful
owner of the mobile number that appears on the postcard. Each postcard is considered
as one entry only. . . .
5.
Winners will be selected by lot (lucky draw) and prizes allocated based on the
mobile phone number that is billed for the winning text message. Winners will be the
persons who on the date of the draw are the contracted or other lawful holder of the
mobile phone number from which the text message was sent . . . .’

[31] The Trust contends that there is no contravention of the Act since
there is no subscription as defined. I do not agree with that contention. It
is clear from the Winikhaya competition rules that the payment of R7.50
in respect of the SMS message forms a fundamental and integral part of
the method of participation. The alternative method of participation by
means of a postcard also cannot avail the respondents as the delivery or
posting of a postcard constitutes ‘. . . delivery of [a] . . . thing’ as
envisaged in the definition of subscription.

[32] It was submitted on behalf of the respondents that a distinction
must be made between the right to compete, and the mechanism of
competing for those who have the right to compete. The argument was

that the premium rated SMS and the postcard do not give a person the
right to compete, but are merely the mechanisms employed to enable
persons to compete. Reliance was placed on a decision in R v Barret &
Co Ltd and another.6 For the reasons stated above, I am not in agreement
with this submission.

[33] I accordingly hold that the Winikhaya competition involves a
subscription as defined and falls within the ambit of the Act.

Whether Winikhaya is a promotional competition

[34] A promotional competition is defined in s 1 (xxiii) of the Act as ‘a
lottery conducted for the purpose of promoting the sale or use of any
goods or services’.

[35] The Board contends that Winikhaya is not a promotional
competition in that it is not a lottery conducted for the purpose of
promoting the sale or use of any goods or services. Accordingly the
Board contends that the competition is an unlawful lottery which is
neither authorised nor sanctioned under s 56 (a) of the Act.

[36] There is a significant difference in wording between the Act and
the regulations as to the nature of the goods or services that may form the
object of a promotional competition. The Act refers to ‘the sale or use of
any goods or services’ whereas the regulations adopt a more restrictive
definition. Goods or services are defined in s 1 of the regulations to mean:

‘Goods or services which are ordinarily manufactured, sold, supplied, distributed or

6 1956 (1) SA 751 (C).

delivered or in any other way form a substantial part of the business of the promoter
involved in a particular promotional competition in the calendar year during which
that promotional competition is held.’ (My emphasis.)

[37] It is not permissible to use a definition created by a Minister in
regulations to interpret the intention of the Legislature in an Act of
Parliament, notwithstanding that the Act may include the regulations.7
On the basis of the definition contained in the Act any goods or services
may form the object of a promotional competition and there is no reason
why a competition cannot promote the goods or services of entities other
than the promoters.

[38] The vital question that arises is whether the object or purpose of
the Winikhaya competition is to promote goods or services.

[39] In their initial answering affidavit the first to seventh respondents
assert that Winikhaya is a promotional competition which has as its
objects the promotion of SABC 1 and in particular its programme
‘Generations’, and the Trust and the charities that it supports. Initially,
Winikhaya also promoted People’s Bank, and promotes from time to time
various other products and brands which are related to homes or
homelife, such as Tedelex and Motorola. In the first supplementary
answering affidavit the respondents allege that the structure of the
competition has been broadened to include a range of promotions and that
various sponsors use Winikhaya to launch a number of promotions each
of which is designed to promote products related to house and home. By
entering the competition a participant could win the various prizes such

7 See Moodley v Minister of Education and Culture, House of Delegates 1989 (3) SA 221 (A) at 233E-
F.

as for example a home theatre system, blankets or a voucher to spend at a
well-known furniture supplier. In the third supplementary affidavit the
respondents allege that during March 2007 Pep Stores became the
headline sponsor of Winikhaya and that since then the monthly and daily
cash prizes have been supplemented by the addition of Pep merchandise
and shopping vouchers.

[40] It is clear that the dominant purpose and main activity of the
Winikhaya competition is to raise funds and generate an income for the
charities who are the beneficiaries of the Trust. In the questions and
answers attached to the Winikhaya competition rules it is stated that ‘the
promotion was designed by the [Trust] in order to generate funding for its
beneficiary charities.’ To this end the Trust contracts with sponsors who
have pledged prizes which are used to induce members of the public to
enter the competition, thereby increasing the income to the Trust through
the receipt of the premium rated SMS. The fact that Winikhaya provides
goods as prizes is merely incidental to its main activity which is the
raising of funds for the benefit of the various charities who are the
beneficiaries of the Trust. It is artificial and incorrect to regard these
fundraising activities as the promotion of goods or services. They no
doubt have that effect but that is not the reason the competition is held.

[41] From the aforegoing there can be no doubt that the Winikhaya
competition is not a promotional competition as defined.

Conclusion

[42] It follows that the Winikhaya competition as presently
administered and implemented is an unlawful lottery as contemplated in

terms of ss 56 and 57 of the Act. Section 56 contains a general
prohibition against the conduct of lotteries and competitions which are
not authorised under the Act. No matter how meritorious the competition
might be it does not comply with the prescribed conditions and the Trust
is obliged to discontinue its operations. The appeal must succeed.

Costs

[43] As the Board has been successful it is entitled to the costs of both
the appeal and of the application in the court below. These costs should
include the costs that were reserved on 30 November 2006. The
postponement on that occasion was caused by the filing by the
respondents of their first and second supplementary affidavits. The costs,
which are to include the cost consequent upon the employment of two
counsel, are to be borne by the first to seventh and ninth respondents
jointly.

[44] Although the Board initially applied for certain interdictory relief
against the SABC such application was withdrawn on 9 November 2006.
Despite such withdrawal the SABC sought to intervene and further
participate in the proceedings on the basis of a point of law which was
abandoned during the course of the appeal. In the circumstances the
SABC ought to pay the costs of the appeal and of the application in the
court a quo jointly and severally with the first to seventh and ninth
respondents, the one paying the other to be absolved, including the costs
consequent upon the employment of two counsel.

Order

[45] The following order is made:

(1) (a) The appeal is upheld;

(b) The first to seventh and ninth respondents in their capacities
as trustees of the South African Children’s Charity Trust are
ordered to pay the costs of the appeal including the costs of two
counsel;

(c) The eighth respondent is to pay the costs of the appeal jointly
and severally with the first to seventh and ninth respondents, the
one paying the other to be absolved including the costs of two
counsel;

(2) The order of the court a quo is set aside and the following order is
substituted:
‘(a)
It is declared that:
(i)
the Winikhaya competition conducted by the first to
seventh and ninth respondents in their capacities as trustees of
the South African Children’s Charity Trust is not a promotional
competition as contemplated in the Lotteries Act, 57 of 1997
(the Act);
(ii)
the Winikhaya competition, as presently administered
and implemented, is an unlawful lottery as contemplated in ss
56 and 57 of the Act;

(b) The first to seventh and ninth respondents, in their capacities
aforesaid are ordered to pay the costs of this application including
the costs of two counsel. These costs are to include the costs that
were reserved on 30 November 2006;

(c) The eighth respondent is ordered to pay the costs of this
application jointly and severally with the first to seventh and
ninth respondents in their capacities aforesaid, the one paying the
other to be absolved, including the costs of two counsel. These
costs are to include the costs that were reserved on 30 November
2006.’

_________________________
P BORUCHOWITZ
ACTING JUDGE OF APPEAL

APPEARANCES:

For Appellant:

D M Fine SC

M M Antonie

Instructed by

Spoor & Fisher; Centurion; Pretoria

Matsepes Inc; Bloemfontein

For First to Seventh
And Ninth Respondent: A Gautschi SC

Y Guidozzi

Instructed by

Amanda Martin Attorneys; Sandton

Naudes; Bloemfontein

For Eighth Respondent: A P Joubert SC
M N Augustine

Instructed by

Barry Aaron & Associates; Sandton

Naudes; Bloemfontein
THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA

MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL

From:
The Registrar, Supreme Court of Appeal

Date:
1 December 2008

Status:
Immediate

Please note that the media summary is intended for the benefit of the media and
does not form part of the judgment of the Supreme Court of Appeal

NATIONAL LOTTERIES BOARD

AND

R L BRUSS NO AND 8 OTHERS

Today the Supreme Court of Appeal (SCA) upheld an appeal by the
National Lotteries Board against the judgment of the Pretoria High Court
in favour of the trustees of the South African Children’s Charity Trust
(the Trust).

The Trust promotes and raises funds for charity and charitable causes.
In order to generate an income for these charities the Trust promotes a
campaign through the medium of a competition known as ‘Winikhaya’
which is broadcast on television by the SABC.

The SCA held that the Winikhaya competition, as presently administered
and implemented by the trustees of the Trust is not a promotional
competition as contemplated in the Lotteries Act, 57 of 1997 and is an
unlawful lottery as contemplated in sections 56 and 57 thereof.
Consequently, the appeal was upheld with costs.