Tellytrack Bookies and Phumelela Ruling

In the High Court of South Africa – South Johannesburg High Court – Case No: 2014/03504

In the matter between:

  • Almenta (Pty) Ltd  – First Applicant
  • And 39 other Applicants

And

  • PHUMELELA GAMING AND LEISURE LIMITED  – First Respondent
  • GOLD CIRCLE (PTY) LTD  – Second Respondent
  • KENILWORTH RACING (PTY) LTD – Third Respondent
  • TELLYTRACK – Fourth Respondent
  • MULTICHOICE (PTY) LTD – Fifth Respondent
  • GAUTENG GAMBLING BOARD – Sixth Respondent
  • EASTERN CAPE GAMBLING AND BETTING BOARD – Seventh Respondent
  • NATIONAL GAMBLING BOARD – Eighth Respondent
  • INDEPENDENT COMMUNICATIONS AUTHORITY OF SOUTH AFRICA – Ninth Respondent

 

JUDGMENT  MATTHEE AJ:

In essence the relief sought by the applicants is for an interdict to ensure that they continue receiving “the televised broadcasting of live, real-time horseracing events” on the same terms as prevailed up until 31st January 2014, pending the outcome of their complaints to the Gauteng, Eastern Cape and National Gambling Boards.

It is common cause that the contract setting out the terms for such broadcasts came to an end on 31 January 2014.

The termination of this contract was preceded by exchanges between the various parties dealing with proposed changes to the said terms. At the heart of the dispute between the parties was the increase of the rate to be charged for the continued broadcasts to the applicants.

The applicants maintained that the first respondent had to charge a fee linked to its reasonable costs whereas the first respondent adopted the view that given, inter alia the content of the product, it was entitled to a market related fee for its offering to the applicants. In addition to this, the applicants maintained that any proposed increase by the first respondent had to be authorised by the various Gambling Boards.

When the parties could not reach agreement about the terms of the contract, the Fortieth Applicant (GAUTENG OFF-COURSE BOOKMAKERS’ ASSOCIATION – hereafter GOBA – in effect also representing the rest of the Applicants) submitted complaints to the sixth, seventh and eighth Respondents on the 23rd, 28th and 27th January 2014 respectively.

In a letter dated 18th March 2014, the sixth respondent informed the fortieth applicant (GOBA) that it “is currently investigating” the said complaint. It went on to state that:

“To date we have received a response from Phumelela (first respondent) and a reply from GOBA which we are in the process of perusing.

 

As part of our investigation we intend to, amongst others:

  • Conduct interviews with relevant people, and
  • Conduct a formal hearing.

Please note that Phumelela’s previous application to remove condition 10 of its licence conditions pertaining to the making available of visual broadcasts of race meetings for betting purposes is still pending before the Board. The matter will be heard de novo due to the fact that the term of the previous Board expired and current Board members did not form part of the previous hearing.”

What the applicants seek is an interdict to retain the terms of the contract between them and the first respondent in place prior to the 31st January 2014, pending the outcome of these proceedings/investigations referred to in the letter above.

Mr Graves SC, who, with Mr Vetten, appeared for the applicants, emphasized that the applicants relied on a statutory right, and not a contractual right. He submitted that the statutory right flowed from certain conditions attached to race meeting licences granted to the first respondent by the sixth and seventh respondents for their respective jurisdictions.

Clause 10 of the licence granted to the first respondent by the sixth respondent states:

“The licence shall make available visual broadcasts of race meetings for betting purposes. The licensee shall be entitled to recover reasonable costs for visually broadcasting such race meeting information, provided that such costs are approved by the Board.” (The comparable condition attached to the licence issued by the seventh respondent, Clause 8(6), reads as follows: “The television signal fees charged by the licensee … for a licensed bookmaker to receive a televised signal of any horseracing shall be determined by the licensee but shall be subject to the prior written approval of the ECGBB.”)

He argued that in terms of the said licence conditions the broadcasts must be provided at a reasonable rate and that such rate can only be varied with the permission of the respective Boards.

It is common cause that for many years leading up to the 31st January 2014, there was no dispute concerning the rate and that this was regulated by written contracts between the parties.

However, as of 31st January 2014 the first respondent sought to introduce a new rate, which, according to the applicants, not only was unreasonable but also was without the permission of the respective Boards.

Mr Graves argued that this conduct was in conflict with the provisions of the said licence conditions, was accordingly unlawful and consequently the applicants ought to be granted the interim relief sought pending the outcome of the said complaints.

It also is common cause that during September 2011 the first respondent made application to the sixth respondent to have the said clause 10 removed from the said licence. In this regard the first respondent in its answering affidavit testified that it has “subsequently been advised by its legal representatives that the Tellytrack product goes far beyond what is envisaged by clause 10 of the licence … (an consequently it) is not obliged to provide the Tellytrack product in order to comply with its licence. It is for this reason that no efforts have been made by Phumelela, in the past year, to follow up on the application and take steps to ensure that it is considered.” (During 2013 the first respondent made application to the seventh respondent to obtain its approval as regards television signal fees that it intended to charge the applicants).

It is common cause that the respective Boards have not consented to the said rate proposed by the first respondent. Furthermore, in the letter referred to above, the reference to the application by the first respondent “to remove condition 10” and that such application “is still pending before the Board” is in fact a reference to this application to the sixth respondent.

At the hearing of the matter a concern I raised with the applicants was the efficacy of any order I might give, given that they had withdrawn against the fifth respondent and that on the papers at that stage, the fifth respondent had terminated its contract with, inter alia, the first respondent.

During his reply, Mr Graves informed the court that evidence had come to his attention which called into question the assertion by the first respondent that the fifth respondent had terminated the contract with the first respondent. I then directed the parties to submit affidavits to deal with this matter.

Having perused the affidavits, I am of the view that although they raise issues which might need more ventilation at another time, this does not prevent me from disposing of the present application based on the evidence before me.

A perusal of the correspondence between the parties between September 2013 and the hearing of the matter and the unanswered questions regarding whether or not there was any collusion between the first and fifth respondent, certainly raises suspicions as regards the submission of Mr Graves that the first respondent has not at all times acted in good faith. In this regard a further issue which is troubling is the apparent about face by the first respondent as regards its application to have clause 10 of its licence deleted.

However, the problem that this court has is that it simply is not in a position, on the evidence before it, to make any call beyond forming some prima facie views. To interrogate and test the submissions and allegations by the respective parties will require the sort of modus operandi referred to by the sixth respondent in its letter dated 18th March 2014, partially quoted above.

Furthermore, I am of the view that it would be premature for this court to intervene in this matter prior to the said complaints being finalised by the sixth and seventh respondents, which would include the consideration of the said application to remove clause 10 of the licence conditions and the latest position adopted by the first respondent in this regard.

In any event, if one has regard to the detailed nature of the said complaints, on the present papers I am of the view that without an opportunity to test the evidence of the parties, and call for further evidence where required, this court is not in a position to grant the relief sought, even if I accept the applicants’ argument that it is merely interim relief.

I understand that if in due course it is found by the sixth and seventh respondents that the first respondent has acted unlawfully and/or in bad faith, it will be difficult for the applicants to pursue a damages claim. However, although it might be difficult, that course of action will be open to them. Furthermore, even though it will be difficult, I am of the view that this does warrant this court intervening at this stage, given that the respective statutory bodies are seized of the matters.

At this juncture I would make the following observation. On the papers before me, prima facie it would appear as if the sixth and seventh respondents have been remiss in their statutory duty to make a decision about the said complaints and applications within a reasonable time. If this is the case, then obviously it is open to the applicants to bring an application for an order compelling the said respondents to comply with their statutory duty.

 

 I now turn to the issue of costs.

In his reply, Mr Graves in effect conceded that Mr Smithers SC, who appeared for the second respondent, was correct that if the relief sought by the applicants was based on a statutory right, then relief could only be sought against the first respondent, as the licensee. The same argument would apply to the third and fourth respondent.

As regards the fifth respondent, it is common cause that before the hearing of the matter an agreement was reached between it and the applicants which involved the applicants withdrawing as against the fifth respondent. Accordingly there was no appearance for the fifth respondent. The sixth to ninth respondents did not enter the proceedings and accordingly no order of costs was asked against them.

This leaves the issue of costs arising from the relief sought against the first respondent, which would constitute the bulk of the legal costs of the application.

Mr Campbell SC, who, with Mr Friedman, appeared for the first, third and fourth respondents argued that the application should be dismissed with costs, and that such costs include the costs of two counsel.

I agree with him as regards the costs arising from the defence of the matter by the third and fourth respondents. However, given the simple defence which was at the disposal of the third and fourth respondents, I am unpersuaded that the costs of two counsel was justified.

Turning to the costs of the first respondent, I am of the view that although two counsel were warranted, it would be placing form above substance to decide on the issue of costs at this stage before the said complaints have been pronounced on. I would be loathe in any way, by omission or commission, in effect to reward any party who has acted unlawfully, or indeed if not unlawfully, in bad faith.

As previously stated, at the moment the jury is still out in this regard and hopefully the sixth and seventh respondents will soon comply with their statutory duty and in the process shed some light on the outstanding issues. The applicants and the first respondent can thereafter come back to this court and present evidence on the issue of costs. Although this course of action is at the expense of finality, in the present circumstances I am of the view that the lesser of the two evils is not in any way inadvertently to reward a party for acting unlawfully or in bad faith.

 Accordingly I would make the following order:

  1. The application is dismissed.
  2. The applicants are to pay the costs of the second, third and fourth respondents.
  3. The applicants and the first respondent are granted leave to approach the court at a later stage, on augmented papers, to deal with the issue of costs arising from this application.

 

KEITH MATTHEE AJ – 16th May 2014

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