Nzimande
9 June 2006
The province of KwaZulu-Natal, under the leadership of Premier Sibusiso
Ndebele, has successfully opposed a claim for R138 million brought by KwaZulu
CMS (Pty) Limited against the KwaZulu-Natal Gambling Board. During March 2004,
before Premier Ndebele took office, KZ CMS and the Gambling Board concluded an
agreement in terms of which KZ CMS undertook to supply a central electronic
monitoring system for limited payout machines operating within the province.KZ
CMS undertook to supply a central electronic monitoring system to the Gambling
Board. The system was intended to monitor limited payout machines. Limited
payout machines are smaller gambling machines, intended for gaming enthusiasts
in âpubs and clubsâ, and paying out a limited prize.
Upon assuming office after the 2004 elections, the Premier as the authority
responsible for gambling matters in the province, instructed the Board to write
to KZ CMS âasking for a temporary halting of further work on the CMS until he
had familiarized himself with the system, and also take a view on the
desirability thereof before its development and implementation is continued. KZ
CMS abruptly instituted an urgent application against the Board in order to
compel performance. There was successful opposition against the interdict but
KZ CMS then issued summons against the Gambling Board and Professor Nzimande
for an amount of R138 million for alleged repudiation of the agreement .One of
the defences pursued by the Board was that the agreement which KZ CMS concluded
with the Board is unlawful in that the Board did not have the authority to
conclude the agreement.
The issue of the Boardâs authority to conclude the agreement with KZ CMS was
separated as a preliminary issue and argued before Judge Levinsohn. In summary
Judge Levinsohn concluded that section 54 of the KwaZulu-Natal Gambling Act,
1996, requires every gaming machine to be connected to âa prescribed electronic
monitoring systemâ; that the âprescribed electronic monitoring systemâ for
limited payout machines was dealt with in regulation 156 of the gambling
regulations; that the addition of regulation 156(8)in the gambling regulations
meant that the electronic monitoring system was to be operated by âthe
provinceâ, or an entity contracted by âthe provinceâ, and that âthe provinceâ
in this context means the executive arm of government represented by the MEC in
charge of the gambling portfolio.
In the circumstances the court found that the contract was ultra vires
(unlawful), and therefore was void from the beginning. Judge Levinsohn rejected
the argument that the Board could enter into the contract because of the
implied powers found in section 7(1)(m)(iii) of the KwaZulu-Natal Gambling Act,
1996 which empowers the Board to monitor âpremisesâ and âgaming machine
operatorsâ. He found that this related to a form of monitoring by inspection,
and if the legislature had intended this to include electronic monitoring of
gaming machines, then it would have said so. On these grounds the Judge found
in the favour of the Board. Accordingly, the Plaintiffâs case has been
dismissed with costs.
Issued by: Office of the Premier, KwaZulu-Natal Provincial Government
9 June 2006
Source: KwaZulu-Natal Provincial Government (http://www.kwazulunatal.gov.za)
