EX PARTE PRESIDENT
OF THE REPUBLIC OF SOUTH AFRICA: IN RE CONSTITUTIONALITY OF THE LIQUOR BILL
2000 (1) SA 732 (CC) H
2000
(1) SA p732
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Citation
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Case No
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CCT 12/99
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Court
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Constitutional Court
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Judge
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Chaskalson P, Langa DP, Ackermann J, Cameron AJ,
Goldstone J, Madala J, Mokgoro J, Ngcobo J, O'Regan J, Sachs J, Yacoob J
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Heard
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August 31, 1999
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Judgment
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November 11, 1999
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Counsel
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WH Trengove (with him AM Breitenbach) for the
Western Cape government
MJD Wallis (with him M Govindasamy) for the Minister of Trade and Industry. |
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Annotations
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I
Constitutional
practice - Courts - Constitutional Court - Referral in terms of s 84(2)(c)
of Constitution of the Republic of South Africa Act 108 of 1996 by President -
Court empowered to make decision regarding Bill's J
2000
(1) SA p733
constitutionality
only in relation to A President's reservations and not examine its every provision to certify
that every part accords with Constitution.
Constitutional
practice - Courts - Constitutional Court - Referral in terms of s 84(2)(c)
of Constitution of the Republic of South Africa Act 108 of 1996 by President -
President empowered to refer B Bill even if his or her reservations related to
only single provision in it - If Court holds that any portion of Bill relating
to President's reservations unconstitutional, whole Bill cannot be said to be
'constitutional'.
Constitutional
practice - Courts - Constitutional Court - Referral in terms of s 84(2)(c)
of Constitution of the Republic of South Africa Act 108 of 1996 by President -
If Court decides that Bill C constitutional, supervening constitutional
challenges after it has been enacted not excluded, save to extent that Court
has, in deciding questions President has placed before, already determined
them.
Constitutional
law - Parliament - Act of Parliament - Passage of Bill through Parliament -
Formalistic in extreme to hold Bill invalid on D ground that those steering it
through Parliament erred in good faith in assuming that it required to be dealt
with as Bill affecting provinces, when only consequence of error had been to
give National Council of Provinces more weight and to make passage of Bill by
National Assembly in event of inter-cameral disputes more difficult - Challenge
based on these differences cannot invalidate enactment of statute. E
Constitutional
law - Parliament - Act of Parliament - Passage of Bill through Parliament -
Once Bill falling within functional area listed in Schedule 4 of Constitution
of the Republic of South Africa Act 108 of 1996 , it has to be dealt with as
Bill affecting provinces in terms of s 76.
Constitutional
law - Constitution - Constitution of the Republic of South F Africa Act 108 of 1996 -
Relationship between central and provincial government - In order to give
effect to scheme of Constitution, which allows for exclusivity subject to
intervention justifiable in terms of s 44(2), Schedule 4 functional competences
have to be interpreted as being distinct from, and as excluding, Schedule 5
competences - Division G not, however, absolute - Where matter requires regulation
inter-provincially, Constitution ensures that national government accorded
necessary power - Corollary that where provinces accorded exclusive powers
these should be interpreted as applying primarily to matters which may
appropriately be regulated intra-provincially.
Intoxicating
liquor - Licences and authorities - Licence - Meaning H of - Liquor licence is permission
that competent authority gives to someone to do something with regard to liquor
that would otherwise be unlawful - Activity in question usually sale of liquor
at specified premises - Term 'liquor licences' in natural signification
encompasses not only grant or refusal of permission concerned, but also power
to impose conditions pertinent to that permission, as well as collection I of revenue that might arise from
or be attached to its grant.
Constitutional
law - Constitution - Constitution of the Republic of South Africa Act 108 of
1996 - Relationship between central and provincial government - Schedule 5 of
Constitution - 'Liquor licences' - Field of 'liquor licences' narrower than
liquor trade - Legislation concerning production J
2000
(1) SA p734
of liquor
products, including quality control, marketing and A import and export of such
products, falling within concurrent competence of trade and/or industrial
promotion, rather than within exclusive competence of liquor licences -
National government enjoying power to regulate liquor trade in all respects
other than liquor licensing.
Constitutional
law - Constitution - Constitution of the Republic of South B Africa Act 108 of 1996 -
Relationship between central and provincial government - Bill passed by
Parliament relating to liquor - Objectives of Bill to prohibit cross-holdings
between three tiers involved in liquor trade and establishment of uniform
conditions, in a single system, for national registration of liquor
manufacturers and distributors within C competence of national
Legislature - Where means of doing so infringing upon provincial powers, such
shown to be justified in terms of s 44(2) of Constitution.
Constitutional
law - Constitution - Constitution of the Republic of South Africa Act 108 of
1996 - Relationship between central and provincial government - Bill passed by
Parliament relating to liquor - Bill D infringing upon provincial powers
insofar as it purported to prescribe detailed mechanisms to provincial
legislatures for establishment of retail licensing mechanisms - Such not shown
to be justified in terms of s 44(2) of Constitution - Bill unconstitutional to
that extent.
Parliament
had approved the Liquor Bill [B 131B - 98]. The E President had certain
reservations about its constitutionality and referred it back to Parliament for
reconsideration. When Parliament declined to amend the Bill the President
referred it to the Constitutional Court for a decision on its constitutionality.
The Bill had been introduced to and dealt with by Parliament as a 'Bill F affecting provinces', which
resulted in a more onerous procedure being followed than if it had been dealt
with as of purely national legislative competence. The national government
subsequently contended that the Bill was in fact a matter of national
legislative competence and that the Bill fell within this competence due to the
national Legislature's right to 'override' the exclusive legislative competence
of the provinces in order to preserve economic unity and G establish national standards in
terms of s 44(2) of the Constitution of the Republic of South Africa Act 108 of
1996. The Court was required to decide whether the Bill, which was national
legislation and sought to provide a framework for the liquor industry, impinged
upon the exclusive competence (in terms of Schedule 5 of the Constitution) of
the provincial governments to regulate liquor licences. The Court was H further required to decide
whether it was entitled to go beyond the reservations raised by the President
in his referral to the Court in deciding whether the Bill was in conflict with
the Constitution. The Western Cape government, in opposing the
constitutionality of the Bill, contended, inter alia, that the Bill had
not passed through Parliament according to the correct procedure.
Held, that the Court was empowered to
make a decision I regarding the Bill's constitutionality only in relation to the
President's reservations and not to examine its every provision to certify that
in its every part it accorded with the Constitution. (Paragraphs [14], [15] and
[16] at 743E/F - G and 743H/I - 744B.)
Held, further, that the President was
empowered, in terms of s 79 of the Constitution, to refer a Bill even if her or
his reservations related to only a single provision in it. If the Court were to
hold that any portion of the Bill J
2000
(1) SA p735
relating
to the President's A reservations was unconstitutional, it followed that the whole Bill could
not be said to have been 'constitutional' under s 79(5). (Paragraph [17] at
744E - F.)
Held, further, that, even if the
Court did decide that the Bill was constitutional, supervening constitutional
challenges after it had been enacted were not excluded, save to the extent that
the Court had, in deciding the questions the President had placed before it in
the s 79 proceedings, already determined them. (Paragraph [20] at B 745C/D - D/E.)
Held, further, that it would have
been formalistic in the extreme to have held a Bill invalid on the ground that
those steering it through Parliament erred in good faith in assuming that it
had been required to be dealt with as a Bill affecting provinces, when the only
consequence of their error had been to give the National Council of Provinces
more weight and to make passage of the Bill by the National C Assembly in the event of
inter-cameral disputes more difficult. It was hard to see how a challenge based
on these differences between the relevant parliamentary procedures could
invalidate the enactment of a statute. (Paragraph [26] at 748D - E.)
Held, further, that, whatever the
proper characterisation of the Bill, it could hardly be doubted that if it did
not seek to trench on the provinces' exclusive legislative competence in
respect of D 'liquor licences', thereby requiring justification under s 44(2), a
large number of its provisions had to be characterised as falling within a
functional area listed in Schedule 4, more particularly the concurrent national
and provincial legislative competences in regard to 'trade' and 'industrial
promotion'. Once a Bill fell within a functional area listed in Schedule 4, it
had to be dealt with as a Bill E affecting provinces. The procedural point argued on
behalf of the Western Cape government therefore had no merit. (Paragraphs [28]
and [29] at 748I - 749C.)
Held, further, that, in order to give
effect to the scheme of the Constitution, which allowed for exclusivity subject
to the intervention justifiable in terms of s 44(2), the Schedule 4 F functional competences had to be
interpreted as being distinct from, and as excluding, Schedule 5 competences.
This division was not, however, absolute. (Paragraphs [50] and [61] at 760F/G -
G/H and 764B - B/C.)
Held, further, that, where a matter
required regulation inter-provincially, as opposed to intra-provincially, the
Constitution ensured that national government had been accorded the necessary G power, whether exclusively or
concurrently under Schedule 4, or through the powers of intervention accorded
by s 44(2). The corollary was that where provinces were accorded exclusive
powers these should be interpreted as applying primarily to matters which might
appropriately be regulated intra-provincially. (Paragraph [52] at 761E/F - G.)
Held, further, that in the ordinary
signification of the H word 'trade' used in Schedule 4 the concurrent national legislative
power with regard to 'trade' included the power not only to legislate
intra-provincially in respect of the liquor trade, but to do so at all three
levels of manufacturing, distribution and sale. The concurrent legislative
competence in regard to 'industrial promotion' had to be given a similarly full
meaning as conferring on the national Legislature and the provinces the power
to initiate, advance and I encourage all branches of trade and manufacture. But the exclusive
provincial competence to legislate in respect of 'liquor licences' had also to
be given meaningful content and the constitutional scheme required that this be
done by defining its ambit in a way that left it ordinarily distinct and
separate from the potentially overlapping concurrent competences set out in
Schedule 4. (Paragraphs [54] and [55] at 761I/J - 762C/D.) J
2000
(1) SA p736
Held, further, that a liquor licence
was the permission that A a competent authority gave to someone to do something with regard to
liquor that would otherwise have been unlawful. The activity in question was
usually the sale of liquor at specified premises. The term 'liquor licences' in
its natural signification encompassed not only the grant or refusal of the
permission concerned, but also the power to B impose conditions pertinent to
that permission, as well as the collection of revenue that might have arisen
from or be attached to its grant. (Paragraph [56] at 762C/D - E/F.)
Held, further, that the field of
'liquor licences' was narrower than the liquor trade. Schedule 5 used the
phrase 'liquor licences'. Legislation concerning the production of liquor
products, including quality control, marketing and import and export of such
products, would have fallen within the concurrent competence of trade C and/or industrial promotion,
rather than within the exclusive competence of liquor licences. (Paragraph [57]
at 762G/H - 763B.)
Held, further, that the national
government enjoyed the power to regulate the liquor trade in all respects other
than liquor licensing. This included matters pertaining to the determination of
national economic policies, the promotion of inter-provincial commerce D and the protection of the common
market in respect of goods, services, capital and labour mobility. (Paragraph
[58] at 763B - C.)
Held, further, that the first of the
three of the objectives of the Bill, namely the prohibition on cross-holdings
between the three tiers involved in the liquor trade, namely producers,
distributors and retailers fell within the national Legislature's competence to
E regulate trade. The means used to do so, however, was in all material
respects identical to a licensing system. Accordingly, the national government
had to show that the means were necessary in terms of s 44(2). In the present
case this had been done. (Paragraphs [70], [76] and [78] at 766G - 767B, 768F/G
- G/H and 769B/C - C/D.)
Held, further, that the second
objective, namely the F establishment of uniform conditions, in a single system, for the
national registration of liquor manufacturers and distributors, was not
encompassed by the provincial exclusive power in relation to liquor licences.
In as much as it was, the intervention of the national government to maintain
economic unity had been shown to be justified in terms of s 44(2). (Paragraphs
[71] - [75], [76] and [78] at 767B - 768C, 768F/G - G/H and 769B/C - C/D.)
Held, further, that the third
objective, namely the G prescription of detailed mechanisms to provincial legislatures for the
establishment of retail licensing mechanisms fell squarely within the exclusive
provincial legislative power afforded by Schedule 5. It could therefore be
justified only if it was established that it was 'necessary' under s 44(2) or
was reasonably necessary for or H incidental to the justified substance of the Bill.
This had not been shown by the national government. (Paragraphs [79], [80] and
[81] at 769E/F - 770A and 770C - D.)
Held, accordingly, that, if the exclusive
provincial legislative competence regarding 'liquor licences' in Schedule 5
applied to all liquor licences, the national government had made out a case in
terms of s 44(2) justifying its intervention in creating a I national system of registration for
manufacturers and wholesale distributors of liquor and in prohibiting
cross-holdings between the three tiers in the liquor trade. No case had,
however, been made out in regard to retail sales of liquor, whether by
retailers or by manufacturers, nor for micro-manufacturers whose operations
were essentially provincial. The national government had to this extent failed
to establish that Parliament had the competence to enact the Liquor Bill and it
was therefore unconstitutional. (Paragraph [87] at 771E/F - G/H.) J
2000
(1) SA p737
Annotations
Reported cases
Attorney-General for Alberta v Attorney-General for Canada [1939] AC 117 (PC):
referred to
Ex parte Chairperson of the Constitutional Assembly: In re Certification
of the Constitution of the Republic of South Africa, 19961996
(4) SA 744 (CC) (1996 (10) BCLR 1253): B dicta in paras [257]
and [469] applied
Ex parte Chairperson of the Constitutional Assembly: In re Certification
of the Amended Text of the Constitution of the Republic of South Africa, 19961997
(2) SA 97 (CC) (1997 (1) BCLR 1): dictum in para [8] applied
Executive Council, Western Cape v Minister of Provincial Affairs and
Constitutional Development and Another; Executive Council, KwaZulu-Natal v
President of the Republic of South C Africa and Another2000
(1) SA 661 (CC): dicta in paras [12] and [24] - [30] applied
Fick v Woolcott and Ohlsson's Cape Breweries Ltd 1911 AD 214: applied
In re The Judiciary and In re The Navigation Act (1921) 29 CLR 257:
referred to
In re The Kerala Education Bill, 1957 D (1959) SCR 995:
applied
Ladore and Others v Bennett and Others [1939] AC 468 (PC) ([1939] 3 All ER
98): referred to
Osborne v The Commonwealth and Another (1911) 12 CLR 321 (HCA): referred to
Ex parte Speaker of the KwaZulu-Natal Provincial Legislature: In re
KwaZulu-Natal Amakhosi and Iziphakanyiswa Amendment Bill of 1995; Ex parte
Speaker of the KwaZulu-Natal E Provincial
Legislature: In re Payment of Salaries, Allowances and Other Privileges to the
Ingonyama Bill of 19951996
(4) SA 653 (CC) (1996 (7) BCLR 903): dictum in para [19] applied.
Statutes
The Constitution of the Republic of South Africa Act 108 of 1996, ss
44(2), 79, Schedules 4 and 5: see Juta's Statutes of South Africa 1998
vol 5 at 1-150, 1-156, 1-183 - 1-184. F
Referral of the Liquor Bill [B 131B - 98] to the Constitutional Court by
the President in terms of s 84(2)(c) of the Constitution of the Republic
of South Africa Act 108 of 1996 to determine whether it accorded with the G provisions of the
Constitution. The facts and the nature of the issues appear from the judgment
of Cameron AJ.
W H Trengove SC (with him A M Breitenbach) for the Western
Cape government.
M J D Wallis SC (with him M Govindasamy) for the Minister
of Trade and Industry. H
Cur adv vult.
Postea (November 11).
Cameron AJ :
Introduction I
[1] The legislation before us is inchoate. Parliament has passed a Bill,
but it has not received the assent of the President, who referred it to this
Court for a decision on its constitutionality. This is the first time that the
provisions of the Constitution of the Republic of South Africa Act 108 of J
2000
(1) SA p738
CAMERON AJ
1996 (the Constitution) allowing A for such a referral
have been invoked and our decision requires consideration of what that
procedure entails as well as of the questions raised concerning the Bill's
constitutionality.
[2] The Liquor Bill was introduced in the National Assembly on 31 August
1998. It passed through various legislative stages in B terms of s 76(1) of
the Constitution before Parliament approved it on 2 November 1998. When the
Bill was sent to the President for his assent, he declined to grant it.
Instead, because he had reservations about its constitutionality, he referred
it back to the National Assembly on 22 January 1999 for reconsideration. On 3
March 1999, the National Assembly resolved that 'the House, having C reconsidered the
Liquor Bill [B 131B - 98], returns it to the President'. No amendments had been
effected. On 8 March 1999 the President referred it to this Court for a
decision on its constitutionality. In doing so, he invoked his power pursuant
to s 84(2)(c) of the Constitution, which provides that the President is
responsible for 'referring a Bill to the Constitutional D Court for a decision
on the Bill's constitutionality'.1
[3] On 19 March 1999 the President of this Court issued directions,
attaching the President's notice of referral and inviting the President himself
and the Government of the Republic of South Africa, any political party
represented in the National Assembly, any E provincial delegation
represented in the National Council of Provinces and any provincial government
to make representations to the Court concerning the constitutionality of the
Bill and requiring any party wishing to do so to give notice of its intention
and to indicate whether it wished to lead evidence and, if so, the purpose and
relevance of that evidence. F
[4] In response, the Western Cape government indicated that it wished to
be represented and to place before the Court affidavit evidence of the
regulation of liquor and liquor licensing in the Western Cape, in South Africa
and in comparable jurisdictions, 'showing that it is not necessary to have
national legislation on G liquor licences for any of the purposes set out in
s 44(2)'.2 The Minister of Trade and Industry
wished to supply
2000
(1) SA p739
CAMERON AJ
evidence of the background to and history of the A legislation and 'why
it was necessary for Parliament to legislate on these matters in the light of
the requirements of s 44(2)'.
[5] Under further directions issued by the President of this Court, the
Western Cape government lodged an affidavit dealing with its objection to the
Bill. Thereafter, the Minister of Trade and Industry, B as representative of
the Government of the Republic of South Africa (the Minister), submitted an
affidavit, in response to which the government of the Western Cape submitted a
replying affidavit. Both the Western Cape government and the Minister were
represented at the hearing. C
Presidential referral under s 79
[6] Our decision requires us to consider first what the referral to this
Court by the President for a decision on a Bill's constitutionality entails.
The Constitution, which subjects all legislation to review for its
constitutionality and makes any law inconsistent with it invalid,3 embodies three D routes to judicial
consideration of the constitutionality of legislation passed by Parliament. One
is a challenge by an interested party in a competent Court under one or more
provisions of the Constitution.4 Another is an application by at
least one third of the members of the National Assembly to the Constitutional
Court for an order declaring all E
2000
(1) SA p740
CAMERON AJ
or part of an Act of Parliament unconstitutional.5 The A third is that invoked
in the present case, namely referral by the President before a Bill becomes a
statute.6
[7] The procedure the President invoked is not without parallel in
comparable systems, though in the United B States,7 the United Kingdom,8 Australia,9 New Zealand10 and Germany,11 no pre-enactment judicial
procedure for testing statutory or constitutional validity exists. Comparable
procedures do exist in other constitutions, though none is quite like our own.
In Ireland, the Constitution12 provides a procedure for a
pre-enactment reference of certain bills to the Supreme Court by the President
'for a decision' whether the Bill C or any specified
provision is 'repugnant' to the Constitution.13 The French Constitution of 1958
provides for the compulsory referral of 'organic laws' (that is, laws on the
Judiciary, the composition of Parliament, finance and the procedure of the Conseil
Constitutionnel), before they are promulgated, to the Conseil D Constitutionnel14 'which shall decide on their
compatibility with the Constitution'. In addition, other laws may be submitted
before promulgation to the Conseil Constitutionnel by the President of
2000
(1) SA p741
CAMERON AJ
the Republic, the Prime A Minister, the President of the National
Assembly, the President of the Senate, or 60 deputies or senators. A provision
that the Conseil Constitutionnel declares unconstitutional 'may neither
be promulgated nor applied'. The French pre-promulgation procedure has a
different focus and effect to that of South Africa, since no French law may
after promulgation be challenged before the Conseil Constitutionnel for its
constitutionality, although certain challenges may be brought before the Conseil
d'Etat.15 B
[8] In Canada, the Supreme Court Act imposes an obligation on the
Supreme Court to give advisory opinions on the constitutionality of a federal
law or proposed federal law.16 According to Hogg:
'Sometimes questions of law are referred in advance of
the C drafting of the legislation; sometimes draft
legislation is referred before it is enacted; sometimes a statute is referred
shortly after its enactment; often a statute is referred after several private
proceedings challenging its constitutionality promise a prolonged period of
uncertainty as the litigation slowly works its way up the provincial or Federal
Court system. The reference procedure enables an early resolution of the
constitutional D doubt.'17
[9] In India, similarly to South Africa, the President may in respect of
Bills withhold assent and return them to Parliament for reconsideration in
whole or part, together with recommendations. If the Bill is passed again, with
or without amendments, and presented to the President, the President must
assent to it. However, the Indian E Constitution empowers
the President to consult the Supreme Court for its 'opinion' about a question
of law or fact 'of such a nature and of such public importance that it is
expedient to obtain the opinion of the Supreme Court upon it'.18 In In re The Kerala Education
Bill, 1957,19 Das CJ stated that:
'It is for the President to determine what questions
should be F referred and if he does not entertain any serious
doubt on the other provisions it is not for any party to say that doubts arise
also out of them and we cannot go beyond the reference and discuss those
problems.'
[10] The procedure the President must follow when referring a Bill to G this Court is set out
in s 79.20 In terms of s 79(1) the
President must either assent to and sign a Bill passed by Parliament, or, if he
has reservations about its constitutionality, refer it back to the National Assembly
for reconsideration. Section 79(4) then provides:
'If, after reconsideration, a Bill fully accommodates
the President's reservations, the President must assent to and sign the H Bill; if not, the
President must either -
(a) assent to and sign the
Bill; or
2000
(1) SA p742
CAMERON AJ
[11] Three related questions require clarification in the light of A the President's
invocation of this procedure:
(a) Is
the Court required to consider only the reservations the President has
expressed or can and should it direct its attention more widely?
(b) Should
the Court in determining the Bill's B 'constitutionality' examine its
every provision so as to certify conclusively that in every part it accords
with the Constitution?
(c) Does
the Court's finding regarding the Bill's constitutionality or otherwise preclude
or restrict later constitutional adjudication regarding its provisions once
enacted? C
[12] Section 79(5) requires a decision from this Court as to whether
'the Bill is constitutional'. In terms of s 167(4)(b), only the
Constitutional Court may decide on the constitutionality of any parliamentary
Bill, but may do so only in the circumstances anticipated in s 79.22 The general powers of D the Courts in dealing
with constitutional matters are set out in s 172.23 That section requires that a
Court, when deciding a constitutional matter within its power, 'must declare
that any law or conduct that is inconsistent with the Constitution is invalid
to the extent of its inconsistency'. Since the Bill has not yet been enacted,
it is clearly not a 'law' as envisaged by s 172(1). Moreover, since the Bill as
yet lacks legal E
2000
(1) SA p743
CAMERON AJ
force, the A remedy s 172 envisages - a declaration of
invalidity - is plainly inappropriate. It follows that the provisions of s 172
are not directly helpful in guiding the Court as to its role in the s 79
referral procedure.
[13] The terms of s 79 contrast with those of s 80, which empowers B members of the
National Assembly to seek an order that 'all or part' of an Act of Parliament
is unconstitutional. The contrasting wording of s 79 may seem to suggest that
this Court is obliged to audit the whole of a Bill so as to determine its
constitutionality comprehensively and conclusively. But this impression is
countered by the fact that s 79 clearly envisages that the President's C 'reservations' must
be specified when he refers a Bill back to Parliament. Section 79(3)(a)
requires that the National Council of Provinces participate in the
reconsideration of the Bill if the President's reservations are of a specific
kind - namely if they relate to 'a procedural matter that involves the
Council'; while s 79(4) requires the President to assent to and sign the Bill
if after D reconsideration it 'fully accommodates' his
reservations. Both provisions entail that the President must itemise his
reservations in relation to a Bill.
[14] It is, moreover, clear that the President is empowered to refer a
matter to this Court in terms of s 79 only if his reservations concerning the
constitutionality of the Bill are not fully accommodated E by Parliament. If the
President has no reservations concerning the constitutionality of the Bill, or
if his reservations have been fully accommodated by Parliament, the referral
would be incompetent. In the circumstances, the presidential power is limited
under s 79(4)(b) to the power to refer a Bill to the Constitutional
Court 'for a decision on its constitutionality' with F respect to his
reservations. Section 79(5) must thus be read as subject to a comparable
limitation, empowering the Court to make a decision regarding the Bill's
constitutionality only in relation to the President's reservations.
[15] This makes it clear, in answer to the first question posed in G para [11] above, that
the Court considers only the President's reservations.24 Whether it may ever be
appropriate for the Court upon a presidential referral to consider other
provisions which are manifestly unconstitutional, but which are not included in
the President's reservations, need not be decided now.
[16] By corollary (as Mr Wallis, who appeared with Mr Govindasamy
for the Minister, submitted) s 79 does not H entail a
'mini-certification' process. The specificity required of the President in
spelling out his reservations plainly negatives the notion that this Court's
function is to determine, once and for all, whether a Bill accords in its
entirety with the Constitution. What I s 79 entails is that
in deciding on the constitutionality of the Bill this Court must in the first
instance consider the reservations the President specified when he invoked the
s 79 procedure.
2000
(1) SA p744
CAMERON AJ
This contrasts A with the function the interim Constitution25 required this Court to fulfil at
the time of the adoption of the 1996 Constitution. There its task was to render
a 'final and binding' decision on whether 'all' the provisions of the 1996
Constitution conformed with the Constitutional Principles enumerated in the
interim Constitution.26 The answer to the second
question posed in para [11] above is therefore: No. B
[17] However, Mr Wallis also submitted that the President could
invoke s 79 only where his reservations about a Bill went to its
constitutionality 'as a whole'. Mr Wallis accordingly contended that
this Court, in deciding on a Bill's constitutionality, should confine itself to
questions which would result, were the Bill to C be enacted, in the
whole of the legislation being struck down as unconstitutional. This seems to
me for two reasons to be mistaken. First, if correct, it places a fetter on the
President's powers of referral under s 79 which the provision, in my view, does
not entail. The condition for the invocation of s 79 is that the President must
D have 'reservations about the constitutionality' of
a Bill. The provision does not state that the reservations must relate to the
Bill's constitutionality 'as a whole', and to read it as if it did would, in my
view, unduly attenuate the duty resting upon the President in exercising power
under the Constitution to scrutinise the constitutionality of legislation
placed before him for assent and signature. Section 79 seems to me clearly to
empower the President to E refer a Bill even if his reservations relate to
only a single provision in it. If this Court were to hold that any portion of
the Bill relating to the President's reservations is unconstitutional, it must
follow that the whole Bill cannot be said to be 'constitutional' under s 79(5).
[18] Second and equally important, the argument entails that this F Court would be
obliged to declare a Bill 'constitutional' in terms of s 79(5) even if it concluded
that material provisions in it were unconstitutional, provided only that these
did not vitiate the Bill as a whole. That cannot be correct. What the President
refers to this Court under s 79 is legislation in nascent form. Given that the
powers G accorded by s 172(1) are inapplicable, in effect
this Court's decision on the Bill's constitutionality constitutes a finding on
the President's reservations. That decision, without being able to be or
purporting to be comprehensive, must clearly encompass any provisions the Court
scrutinises in fulfilment of its remit and finds unconstitutional. Section
79(5) obliges the President to sign the Bill H only if this Court
decides that the Bill 'is constitutional'. If it withholds such a finding -
whether because the legislation is unconstitutional as whole, or only in part -
the President may not sign the Bill.
[19] There is, however, more to s 79 than only the President's
reservations. The provision envisages a series of steps, initiated by the
President, in which Parliament is itself an active participant. The President
can
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CAMERON AJ
refer a Bill to this Court only after Parliament has A unavailingly
reconsidered it in the light of his reservations. The attitude of the National
Assembly (or, where appropriate, Parliament) to the Bill's constitutionality is
therefore also a material factor in this Court's determination and it is for
this reason that this Court's Rules permit all political parties represented in
Parliament as of right to make written submissions relevant to the
determination B of the Bill's constitutionality. It follows that in
deciding on the Bill's constitutionality the Court must consider the
reservations of the President as well as any submissions relevant to them by
any party represented in Parliament.
[20] The referral procedure, in my view, requires this Court to give C a decision in terms
of s 79(5) relating to the President's reservations and the submissions
regarding those reservations made by parties represented in the National
Assembly and thereby to decide on a Bill's constitutionality. However,
regarding the third question posed in para [11] above, even if this Court does
decide that the Bill is constitutional, supervening constitutional challenges
after it has been D enacted are not excluded, save to the extent that
this Court has in deciding the questions the President placed before it in the
s 79 proceedings already determined them. In this regard, the well-established
principle that a Court of final appeal will not depart from its previous
decisions unless they are shown to have been clearly wrong has obvious
relevance.27 E
The President's referral
[21] The President stated the basis of his referral thus:
'The long title of the Bill summarises the objectives
of the Bill as follows: F
''To maintain economic unity and
essential national standards in the liquor trade and industry; to regulate the
manufacture, distribution and sale of liquor on a uniform basis; to facilitate
the entry and empowerment of new entrants into the liquor trade; and to address
and reduce the economic and social costs of excessive alcohol consumption; and
to provide for matters connected therewith.'' G
I have reservations about the constitutionality of the
Bill to the extent that the Bill deals with the registration for the
manufacture, wholesale distribution and retail sale of liquor. The relevant
provisions which make it clear that the Bill intends to establish a framework
for the registration of the manufacture, wholesale distribution and retail sale
of liquor are, inter alia, clauses 26; 27(a), (b), (c)
and (d); 29; 30; 32; 33; 34 and 35. There are other provisions H which relate generally
to the process of registration or to the sale of liquor. To the extent that
they apply to the registration for the manufacture, wholesale distribution and
retail sale of liquor they are similarly subject to my reservation as set out
below.
5. Part A of Schedule 5 of the Constitution, 1996,
lists the functional areas of exclusive provincial legislative competence. The
fifth item thereof is ''liquor
2000
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CAMERON AJ
licences''. The implication of the A inclusion of an item,
or more properly, a functional area in Schedule 5 is that Parliament may, in
terms of s 44(2) of the Constitution, 1996, only ''intervene by passing
legislation in accordance with s 76(1), with regard to a matter falling within
a functional area listed in Schedule 5, when it is necessary -
(a) . . .; B
(b) to maintain economic
unity;
(c) to maintain essential
national standards;
(d) to establish minimum
standards required for the rendering of services; or
(e) to prevent unreasonable
action taken by a province which is prejudicial to the interest of another
province or to the country as a whole''.
6. If the legislation is not so necessary then
Parliament may not C enact legislation dealing with matters falling
within a functional area listed in Schedule 5. The question as to whether this
legislation is ''necessary'' within the meaning of this section and for
the purpose set out in s 44(2)(b) - (e) is a question I am unable
to answer with certainty even though I am satisfied that the purposes the legislation
seeks to achieve are commendable. Whether the particular requirements set out
in s 44(2) D have been met has proved difficult to determine
relying as they do on an assessment of legal, factual and policy considerations
and in respect of which there are no constitutional or jurisprudential
guidelines.
7. The implementation of this legislation without a
clear indication of its constitutionality may be chaotic and could lead, not
only to a legislative vacuum if the framework should be set aside, but also to
uncertainty in respect of any actions already taken thereunder, E including any
registrations duly granted. I am accordingly referring this matter to the
Constitutional Court for a decision on its constitutionality.
8. In referring this matter to the Constitutional
Court I am acting in my capacity as head of State in terms of s 84(2)(c).
I am accordingly taking the liberty of serving copies of this notice of
referral on the Government, who will be represented by the Minister of F Trade and Industry,
on the Speaker of the National Assembly, on the Chairperson of the National
Council of Provinces and on the government of the Province of the Western Cape
on account of its intention, duly communicated to me, to make representations
contesting the constitutionality of the Bill. I am, however, placing the matter
before you to consider how these and other interested parties may join these
proceedings when the Court duly considers the constitutionality of the Bill.' G
The procedural challenge
[22] The Western Cape government challenges the manner in which
Parliament adopted the Liquor Bill. As can be seen from the terms of the
President's referral, the issue he had in mind was whether the H Bill was
constitutionally justified under s 44(2). Questions regarding the Bill's
constitutionality were first raised, by the Western Cape government, in early
1998. It is clear that from the outset the constitutional issue present in the
minds of those dealing with the Bill was not whether it set up a system of liquor
licences - for they I seem to have accepted that it did - but whether
there was justification under the Constitution's 'override' provisions for
Parliament to intervene in this area of exclusive provincial competence. The
measure was introduced into Parliament and dealt with as a 'Bill affecting
provinces' in terms of s 76 read with s 44(1)(b)(ii) and s 44(2) of the
Constitution. Submissions on the question whether the invocation of the
'override' was justified were J
2000
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CAMERON AJ
advanced on behalf of A the Western Cape government during the
legislative process. The President referred the Bill back to Parliament on 22
January 1999 on the basis not that there was any specific provision raising
constitutional questions, but that the regulatory framework the Bill sought to
introduce 'deals with liquor licensing in the provinces which the Bill is
entitled to do only if it is necessary' in terms of s 44(2). When the National
Assembly reconsidered the Bill, the B Minister of Trade and
Industry defended the measure on the basis of the 'national Legislature's
legitimate right to intervene in order to preserve economic unity and to
establish national standards'. The President subsequently referred it to this
Court on the identical basis. Indeed, in his notice in response to the
directions of the C President of this Court intimating that he wished
to submit evidence, the Minister himself alludes only to the 'override' issue.
The founding affidavit of the Western Cape government accordingly alludes solely
to the competency question.
[23] Only in the Minister's answering affidavit was the contention D advanced for the
first time that it was incorrect to characterise the Liquor Bill as a liquor
licensing measure, that the matters it regulated fell in the first place within
the national legislative competence and that to the extent that it dealt with
liquor licences this was incidental to its pursuit of national competencies. It
was in response to this new contention that the Western Cape government in its E written argument
raised the manner in which the Bill passed through Parliament, averring that,
if the Bill was not legislation with regard to a functional area listed in Part
A of Schedule 5 of the Constitution, it was invalid since it was enacted in accordance
with the procedure prescribed by s 76(1). Although the procedural issue was F not encompassed by
the President's reservations, we are prepared to assume that the issue is
relevant to those reservations.
[24] Chapter 4 of the Constitution, which establishes and regulates
Parliament, specifies how statutes must be enacted by Parliament. The relevant
provisions comprise the enactment of all Bills,28 Bills amending the Constitution,29 ordinary Bills not affecting
provinces,30 ordinary Bills affecting G provinces31 and money Bills.32 In terms of s 76(4)(a), a
Bill must be dealt with in accordance with the procedure in ss (1) amongst
others if it provides for legislation 'envisaged in s 44(2)'.
[25] There are three principal differences between the procedure H stipulated in s 75
for ordinary Bills not affecting provinces and that in s 76. First, the latter
gives more weight to the position of the National Council of Provinces. This
occurs chiefly through the invocation of the Mediation Committee.33 If one House rejects a Bill
passed by the other, or if one House refuses to accept a Bill as amended by the
other, the I
2000
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CAMERON AJ
legislation must be referred A to the Mediation
Committee, which consists of nine members of the National Assembly and one
delegate from each provincial delegation in the NCOP. Second, if the NCOP
raises objections to a version of the Bill approved by the Mediation Committee
in circumstances where the Bill was introduced in the National Assembly, the
Bill lapses unless B the National Assembly passes it again with a
two-thirds majority. Third, when the NCOP votes on a question under s 75, the
provisions of s 65 - in terms of which each province has a single vote in the
NCOP 'cast on behalf of the province by the head of its delegation',34 and in terms of which questions
before the NCOP are 'agreed when at least five provinces vote in C favour of the
question'35 - do not apply. Instead, in
terms of s 75(2), each delegate in a provincial delegation has one vote and the
question is decided by a majority of the votes cast (the presiding delegate
having a casting vote), subject to a quorum of one-third of the delegates.
[26] It would be formalistic in the extreme to hold a Bill invalid on D the ground that those
steering it through Parliament erred in good faith in assuming that it was
required to be dealt with under the s 76 procedure, when the only consequence
of their error was to give the NCOP more weight, and to make passage of the
Bill by the National Assembly in the event of inter-cameral disputes more
difficult. It is E hard to see how a challenge based on the first two
differences between the relevant parliamentary procedures can invalidate the
enactment of a statute. The third is, however, of import, since whether a
provincial delegation votes corporately through its head of delegation, as
prescribed by s 65, or individually by each member casting a vote, as
prescribed by s 75(2), may in defined circumstances be determinative F as to whether the
NCOP passes a Bill.
[27] However, it is, in my view, unnecessary to decide this question,
since the contention of Mr Trengove (who appeared with Mr Breitenbach
on behalf of the Western Cape government) that, if the Bill was not legislation
of the kind envisaged in s 44(2), then G it was invalid since
it should have been enacted by the s 75(1) procedure seems to me to leave out
of account the provisions of s 76(3). This subsection requires that a Bill must
be dealt with under the procedure established by either s 76(1) or s 76(2),
amongst others, 'if it falls within a functional area listed in Schedule 4'. H It must be borne in
mind, moreover, that s 76 is headed 'Ordinary Bills affecting provinces'. This
is, in my view, a strong textual indication that s 76(3) must be understood as
requiring that any Bill whose provisions in substantial measure fall within a
functional area listed in Schedule 4 be dealt with under s 76.
[28] Whatever the proper characterisation of the Bill - a question to I which I return below36 - it can hardly be doubted that,
if it does not seek to trench on the provinces' exclusive legislative
competence in respect of
2000
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CAMERON AJ
'liquor licences', thereby requiring justification under s 44(2),
a large number of its provisions must be characterised as falling 'within a
functional area listed in Schedule 4', more particularly the concurrent
national and provincial legislative competences in regard to 'trade' and
'industrial promotion'.
[29] Once a Bill 'falls within a functional area listed in Schedule 4',
it must be dealt with not in terms of s 75, but B by either the s 76(1)
or the s 76(2) procedure (the differences between the latter two relate only to
where the Bill is introduced). The procedural point argued on behalf of the
Western Cape government therefore has no merit.
The challenge to the constitutionality of the Liquor Bill C
[30] The Bill before us is the product of a process stretching back to
1994, when the development of policy in respect of the liquor industry became a
subject of the regular meetings between the national Minister of Trade and
Industry and the Members of the Executive D Committees
responsible for economic affairs, trade and industry in each of the provinces
(known as 'Min-MEC' meetings). In 1996, the Department of Trade and Industry,
in collaboration with provincial departments charged with economic affairs,
carried out an analysis of existing liquor legislation37 and researched the state of the
liquor industry. In July 1997, the national government E published a Liquor
Policy Document and a draft Bill.38 The stated objects of the draft
Bill's provisions were to address the regulation of the production,
distribution and sale of liquor through restructuring the liquor industry and
to control the economic and social costs of excessive alcohol consumption.
Submissions were called for, and over the next F year more than 350
were received. Public hearings and workshops on the policy and the draft Bill
were held both nationally and provincially. The Bill was introduced into
Parliament on 31 August 1998 and, as set out earlier, submitted to the
President for his assent and signature which resulted in the present
adjudication.
[31] In his affidavit the Minister of Trade and Industry asserts that
the objectives the Bill seeks to attain include: G
(a) erasing
the history of the use of liquor as an instrument of control over most of the
population as part of the policy of apartheid;
(b) making
the liquor industry more accessible to H historically disadvantaged
groups.
It is evident, and relevant to a proper understanding of these
proceedings, that liquor licensing has a shameful history in this country's
racial past. The manufacture, distribution, sale and use of liquor after the
Union of South Africa came into being in 1910 was regulated through the Liquor
Act 30 of 1928 and Native (Urban Areas) Act 21 of 1923 (for Africans). These
statutes together prohibited the I supply and delivery
to
2000
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CAMERON AJ
or the possession of liquor by blacks (Africans, A coloureds and
Indians).39 Blacks were allowed to be
supplied or to be in possession of liquor only for 'medical purposes';40 for 'sacramental purposes';41 or if an exemption was granted.42 Umqombothi or 'homebrew',43 derived from sorghum, was alone
treated differently.44 Under the authorisation of a B
2000
(1) SA p751
CAMERON AJ
magistrate, and in an area declared as lawful for the
production, A brewing, sale and consumption of umqombothi, the
statute did not apply.45 The availability of liquor,
especially umqombothi for Africans, was largely determined by area of
residence.46 Thus liquor acted as a means of
social control, since it was an offence for a black person to be in possession
of liquor outside the designated areas. What is more, it is B evident from the
scheme of the legislation that blacks were precluded from manufacturing liquor
apart from umqombothi. The latter was to be produced in stated quantities, in
certain instances only, and solely for household use. The possession of liquor
by blacks contrary to these provisions was an offence.47 The period between the early
1930s and late 1950s was characterised by harassment and C invasion of privacy
by police enforcing these provisions. It has been recorded that in 1957 no
fewer than 16,8 per cent of convictions of Africans for all offences were for
statutory liquor offences, such as the illegal possession of liquor and
unauthorised beer gatherings.48 In 1960 the Malan Commission of
Inquiry (into the General Distribution and Selling Prices of Alcoholic Liquor)
stated in its report that, although they ran the risk of being D arrested, Black
people could obtain liquor as they wanted through illicit channels. But,
because the trade was illegal, they had to pay high prices and the liquor often
reached them in adulterated form. The commission concluded that 'the
application of the Liquor Act is a question of impossibility in our present E era'.49 The commission also made
recommendations for changes in the law. Various amendments were consequently
passed, easing some of the restrictions.50
[32] It is against the background of this history of overt racism in the
control of the manufacturing, distribution and sale of liquor that F the Minister contends
that the provisions of the Bill constitute a permissible exercise by Parliament
of its legislative powers.
[33] The Bill is divided into seven chapters: Objects and application;
National and provincial structures and functions; Registration; Terms G
2000
(1) SA p752
CAMERON AJ
and conditions applicable to sale of liquor; Law A enforcement and
judicial proceedings; Regulations; and General provisions. It creates a
'national and uniform administrative and regulatory framework' for the liquor
industry51 through the establishment, on
the one hand, of a National Liquor Authority,52 whose task is to approve
'registration' for the manufacture and B wholesale
distribution of liquor53 and whose decisions are subject
to the National Liquor Appeal Tribunal,54 and, on the other, of provincial
liquor authorities,55 which consider 'registration'
for retail liquor sale and liquor sales at special events56 and against whose decisions
appeal lies to provincial panels of appeal.57 Within its sphere of
application,58 the Bill C prohibits, on pain of
criminal penalty,59 the manufacture, distribution or
sale of liquor unless the manufacturer, distributor or seller is registered.60 The Bill creates a panoply of
inspection, entry and enforcement powers together with attendant offences and
criminal penalties.61
[34] First, the Bill divides economic activity within the liquor D industry into three
categories: production (which it terms 'manufacturing'), distribution and
retail sales. This division, referred to in the evidence before us as the
'three-tier registration system', entails two consequences foundational to the
structures the Bill seeks to erect. First, an application for registration may
be made in respect of only one of the three categories. Multiple registration E is explicitly
excluded62 and, subject to transitional
arrangements,63 no person registered in one
category may, except for liquor sales at special events, hold a controlling
interest64 in another person registered in
a different category.65 The Minister indicates in his
affidavit that these provisions are directed at addressing the concentration of
economic power in the manufacturing sector in the F hands of a limited
number of participants and the inter-relationships between manufacturers
(including distribution depots), wholesalers, hauliers and retailers, by
limiting 'the excessive vertical integration' in the industry and thus at
opening opportunities for new entrants to the industry, particularly 'those
drawn from historically disadvantaged groups'. G
[35] Second, the Bill divides responsibility for these tiers between
national and provincial government by effecting a division between
2000
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CAMERON AJ
manufacture and distribution of liquor on the one hand and retail sale, A on the other. The
Bill treats manufacture and distribution of liquor as national issues, to be
dealt with by the national liquor authority and appeal tribunal, whose members
are appointed by the Minister. Retail sales (including sales of liquor at
special events) are treated as provincial issues and are to be dealt with by
provincial liquor B authorities and provincial panels of appeal. For
the establishment of the latter, the Bill imposes an obligation upon the provincial
legislature of each province to pass legislation.66 The national liquor authority is
charged with considering whether the statutorily prescribed requirements for
registration as a wholesaler or distributor have been C met and with
considering the 'merits' of an application, and determining the terms and
conditions applicable to the registration that conform with prescribed
criteria, norms and standards pertaining, inter alia, to limiting
vertical integration, encouraging diversity of ownership and facilitating the
entry of new participants into the industry.67 Provision is made for D objections to
applications for registration.68 The provincial liquor
authorities are obliged to consider applications for retail and special event
registrations.69 The public must be enabled to
lodge objections.70
[36] The Western Cape government launches two main attacks on the
constitutionality of the Bill. These are directed on the one hand E against the exclusion
of provincial governments from any role in the licensing of liquor manufacturers
and distributors; and, on the other, against the extent of national
intervention the Bill permits in the provinces' powers to regulate retail
licensing. The province contends that it is evident from the detail and sweep
of the Bill that its main aim is comprehensively to regulate the activities of
persons involved F in the manufacture, wholesale distribution and
retail sale of liquor and consequently that the Bill's system of 'registration'
regarding all three tiers of the industry falls squarely within the exclusive
functional area of 'liquor licences' in Schedule 5 Part A. The limited and
strictly enumerated powers the Bill confers on provincial G organs of State,
which the Bill obliges the provinces to establish, do not detract from this.
[37] The province's complaint is in essence that the Bill exhaustively
regulates the activities of persons involved in the manufacture, wholesale
distribution and retail sale of liquor; and that even in the retail sphere the
structures the Bill seeks to create H reduce the provinces,
in an area in which they would (subject to s 44(2)) have exclusive legislative
and executive competence, to the role of funders and administrators. The
province asserts that the Bill thereby intrudes into its area of exclusive
legislative competence.
2000
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CAMERON AJ
[38] The Minister for the first time in his affidavit disputes the A province's
characterisation of the Bill as a liquor licensing measure. Instead, he
asserts, the Bill is directed at trade, economic and competition issues on the
one hand and health and social welfare issues on the other. He emphasises the
national importance of having a properly structured and regulated liquor
industry: 'The fact that one B aspect of the mechanism for
implementing the government's national policies in this regard is a system of
registration of participants in the liquor industry does not', he contends,
'mean that it constitutes an impermissible trespass upon the legislative powers
of provincial legislatures'.
[39] The terms of the President's referral, and the conflicting C contentions of the
province and of the Minister, require this Court to consider the ambit of
national and provincial powers conferred by the Constitution and their
interrelation where, as here, the national Legislature is said to encroach on
an exclusive provincial competence. That requires a determination of the scope
of the exclusive provincial D legislative competence within the
functional area of 'liquor licences', which in turn requires consideration of
the national and provincial context against which that exclusive competence is
afforded. Whether the Bill, or parts of it, should properly be characterised as
a liquor licensing measure must also be considered. E
[40] The first provision of the Constitution constitutes the Republic of
South Africa as 'one, sovereign, democratic State'.71 The unitarian emphasis of this
provision is, however, not absolute, since it must be read in conjunction with
the further provisions of the Constitution, which show F that governmental
power is not located in national entities alone. That appears particularly from
s 40(1), in terms of which 'government is constituted as national, provincial
and local spheres of government which are distinctive, interdependent and
interrelated', and from s 43, in terms of which the legislative authority is
vested in Parliament for the national sphere,72 in the G provincial
legislatures for the provincial sphere73 and in municipal councils for
the local sphere.74 Section 40 is part of chap 3.
This introduced a 'new philosophy'75 to the Constitution, namely that
of co-operative government and its attendant obligations. In terms of that
philosophy, all spheres of government are obliged in terms of s 40(2) to
observe and adhere to the principles of co-operative government set out in chap
3 of the Constitution.76 H
2000
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CAMERON AJ
[41] Governmental power is thus at source distributed between the A national, provincial and
local spheres of government, each of which is subject to the Constitution and
each of which is subordinated to the constitutional obligation to respect the
requirements of co-operative governance.77 The latter include the duty,
imposed equally on each sphere of government, 'not [to] assume any power or
function except those conferred on them in terms of the B Constitution'.78 The succeeding provisions of the
Constitution must be read and understood in this light. These include
particularly the chapters setting out the distribution of legislative power
between the various spheres of government (chaps 4 (Parliament), 6 (Provinces)
and 7 (Local Government)), and Schedules 4 C and 5, which itemise
the functional areas respectively of concurrent national and provincial
legislative competence, and of exclusive provincial competence. They include
also s 43, which determines the location of the legislative authority of the
Republic, and s 44(4). The former D
2000
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CAMERON AJ
provision accords Parliament legislative authority 'as set A out in s 44'.79 Section 44(4) in turn provides
that:
'When exercising its legislative authority, Parliament
is bound only by the Constitution, and must act in accordance with, and within
the limits of, the Constitution.' B
[42] In terms of s 44(1)(a), the national legislative authority
as vested in Parliament confers on the National Assembly the power, inter
alia:
'(ii) to
pass legislation with regard to any matter, including a matter within a
functional area listed in Schedule 4, but excluding, subject to ss (2), a
matter within a functional area listed in Schedule 5'. C
Sections 44(2) and 44(3) provide:
'(2) Parliament may intervene, by passing legislation
in accordance with s 76(1), with regard to a matter falling within a functional
area listed in Schedule 5, when it is necessary -
(a) to maintain national
security; D
(b) to maintain economic
unity;
(c) to maintain essential
national standards;
(d) to establish minimum
standards required for the rendering of services; or
(e) to prevent unreasonable
action taken by a province which is prejudicial to the interests of another
province or to the country as a whole.
(3) Legislation with regard to a matter that is
reasonably necessary E for, or incidental to, the effective exercise of a
power concerning any matter listed in Schedule 4 is, for all purposes,
legislation with regard to a matter listed in Schedule 4.'
[43] The provision vesting the provincial legislatures with legislative
competence is also of significance. In terms of s 104(1), F the legislative
authority of a province is vested in its provincial legislature, 'and confers
on the provincial legislature the power' amongst others80 to pass legislation for its
province with regard to:
'(i) any
matter within a functional area listed in Schedule 4;
(ii) any
matter within a functional area listed in Schedule 5'. G
[44] Section 104(4) provides, in parallel terms to s 44(3), that
provincial legislation with regard to a matter that is reasonably necessary
for, or
2000
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CAMERON AJ
incidental to, the effective exercise of a power A concerning a Schedule
4 matter is for all purposes Schedule 4 legislation. Determining the place of s
44(3) in the constitutional scheme, and in particular its relationship to the
exclusive provincial legislative competences in Schedule 5, is not free from
difficulty. No argument concerning it was directed to us. On one approach, s
44(3) authorises an enlarged scope of encroachment on the exclusive B competences by
permitting national intrusion into Schedule 5 where this is reasonably
necessary for, or incidental to, the effective exercise of a Schedule 4 power.
On another approach, s 44(3) is not directed to the Schedule 5 competences at
all, but is designed to specify the ambit of national legislation covered by s
146, which regulates conflicts C between national and provincial
legislation falling within a functional area listed in Schedule 4. The express
allusion in s 44(3) to Schedule 4 legislation may provide support for this
approach. But since (as will appear) our decision in this case does not require
a determination of this issue, no more need be said about it.
[45] The provinces' concurrent and exclusive legislative powers are D set out in Schedules
4 and 5:
'Schedule 4
FUNCTIONAL AREAS OF CONCURRENT NATIONAL AND PROVINCIAL
E
LEGISLATIVE COMPETENCE
PART A
Administration of indigenous forests
Agriculture
Airports other than international and national
airports
Animal control and diseases
Casinos, racing, gambling and wagering, excluding
lotteries F and sports pools
Consumer protection
Cultural matters
Disaster management
Education at all levels, excluding tertiary education
Environment
Health services
Housing
Indigenous law G and customary law,
subject to chap 12 of the Constitution
Industrial promotion
Language policy and the regulation of official
languages to the extent that the provisions of s 6 of the Constitution H expressly confer upon
the provincial legislatures legislative competence
Media services directly controlled or provided by the
provincial government, subject to s 192
Nature conservation, excluding national parks,
national botanical gardens and marine resources
Police to the extent that the provisions of chap 11 of
the I Constitution confer upon the provincial
legislatures legislative competence
Pollution control
Population development
Property transfer fees
Provincial public enterprises in respect of the
functional areas in this Schedule and Schedule 5
2000
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Public A transport
Public works only in respect of the needs of
provincial government departments in the discharge of their responsibilities to
administer functions specifically assigned to them in terms of the Constitution
or any other law
Regional planning and B development
Road traffic regulation
Soil conservation
TourismTradeTraditional leadership, subject to chap 12
of the Constitution
Urban and rural development
Vehicle C licensingWelfare
services
PART B
The following local government matters to the extent set
out in s 155(6)(a) and (7):
Air pollution
Building regulations
Child care D facilities
Electricity and gas reticulation
Firefighting services
Local tourism
Municipal airports
Municipal E planning
Municipal health services
Municipal public transport
Municipal public works only in respect of the needs of
municipalities in the discharge of their responsibilities to F administer functions
specifically as signed to them under this Constitution or any other law
Pontoons, ferries, jetties, piers and harbours,
excluding the regulation of international and national shipping and matters
related thereto
Stormwater management systems in built-up areas
Trading regulations
Water and sanitation services G limited to potable water
supply systems and domestic waste-water and sewage disposal systems
Schedule 5
FUNCTIONAL AREAS OF EXCLUSIVE PROVINCIAL LEGIS- LATIVE
COMPETENCE
PART A
Abattoirs
Ambulance H services
Archives other than national archives
Libraries other than national libraries
Liquor licences
Museums other than national I museums
Provincial planning
Provincial cultural matters
Provincial recreation and amenities
Provincial sportProvincial roads and traffic J
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CAMERON AJ
Veterinary services, excluding A regulation of the
profession
PART B
The following local government matters to the extent
set out for provinces in s 155(6)(a) and (7):
Beaches and amusement facilities
Billboards and the display of advertisements in public
B places
Cemeteries, funeral parlours and crematoria
Cleansing
Control of public nuisances
Control of undertakings that sell liquor to the public
Facilities for the C accommodation, care
and burial of animals
Fencing and fences
Licensing of dogs
Licensing and control of undertakings that sell food
to the public
Local amenities
Local sport facilities
Markets
Municipal abattoirs
Municipal parks and D recreation
Municipal roads
Noise pollution
Pounds
Public places
Refuse removal, refuse dumps and solid waste disposal
Street E trading
Street lightingTraffic and parking'
[46] By contrast with Schedule 5, the Constitution contains no express
itemisation of the exclusive competences of the national Legislature. These may
be gleaned from individual provisions requiring F or authorising
'national legislation' regarding specific matters.81 They may also be derived by
converse inference from the fact that specified concurrent and exclusive
legislative competences are conferred upon the provinces, read together with
the residual power of the national Parliament, in terms of G s 44(1)(a)(ii),
to pass legislation with regard to 'any matter'. This is subject only to the
exclusive competences of Schedule 5 which are in turn subordinated to the
'override' provision in s 44(2). An obvious instance of exclusive national
legislative competence to which the Constitution makes no express allusion is
foreign affairs. H
[47] The list of exclusive competences in Schedule 5 must therefore be
given meaning within the context of the constitutional scheme that accords
Parliament extensive power encompassing 'any matter' excluding only the
provincial exclusive competences. The wide ambit of the functional competences
concurrently accorded the national Legislature I
2000
(1) SA p760
CAMERON AJ
by Schedule 4 creates the potential for overlap, not merely A with the provinces'
concurrent legislative powers in Schedule 4, but with their exclusive
competences set out in Schedule 5. Examples of concurrent Schedule 4
competences which could overlap with Schedule 5 competences include 'trade' and
'liquor licences'; 'environment' and 'provincial planning'; 'cultural matters'
and 'provincial B cultural matters' as well as 'libraries other than
national libraries'; and 'road traffic regulation' and 'provincial roads and
traffic'.
[48] Whereas the Constitution makes provision for conflicts between
national and provincial legislation falling within a functional area in
Schedule 4,82 and between national legislation
C and a provincial constitution,83 the sole provision made for
conflicts between national legislation and provincial legislation within the
exclusive provincial terrain of Schedule 5 is in s 147(2), which provides that
national legislation referred to in s 44(2) prevails over Schedule 5 provincial
legislation. This suggests that the Constitution contemplates that Schedule 5
competences must be interpreted so as to be distinct from D Schedule 4
competences and that conflict will ordinarily arise between Schedule 5
provincial legislation and national legislation only where the national
Legislature is entitled to intervene under s 44(2).
[49] As pointed out in the first Certification judgment, the
introduction into the 1996 Constitution of a category of exclusive E powers gave the
provinces 'more powers'84 than they had enjoyed under the interim
Constitution. This Court found that Parliament's power of intervention in the
field of these exclusive powers was 'defined and limited' by s 44(2): 'Outside
that limit the exclusive provincial power remains intact and beyond the
legislative competence of Parliament.'85 This F Court also held that,
if regard is had to the nature of the exclusive competences in Schedule 5 and
the requirements of s 44(2), 'the occasion for intervention by Parliament is
likely to be limited'.86
[50] It follows that, in order to give effect to the constitutional
scheme, which allows for exclusivity subject to the intervention G justifiable under s
44(2), and possibly to incidental intrusion only under s 44(3),87 the Schedule 4 functional
competences should be interpreted as being distinct from, and as excluding,
Schedule 5 competences. That the division could never have been contemplated as
being absolute is a point to which I return in due course.
[51] The Constitution-makers' allocation of powers to the national H and provincial
spheres appears to have proceeded from a functional vision of what was
appropriate to each sphere and, accordingly, the competences itemised in
Schedules 4 and 5 are referred to as being in respect of 'functional areas'.
The ambit of the provinces' exclusive powers must, in I
2000
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CAMERON AJ
my view, be determined in the light of that vision. It A is significant that s
104(1)(b) confers power on each province to pass legislation 'for its
province' within a 'functional area'. It is thus clear from the outset that the
Schedule 5 competences must be interpreted as conferring power on each province
to legislate in the exclusive domain only 'for its province'. From the
provisions of s 44(2) it is evident that the national government is B entrusted with
overriding powers where necessary to maintain national security, economic unity
and essential national standards; to establish minimum standards required for
the rendering of services; and to prevent unreasonable action by provinces
which is prejudicial to the interests of another province or to the country as
a whole. From s 146 C it is evident that national legislation within the
concurrent terrain of Schedule 4 that applies uniformly to the country takes precedence
over provincial legislation in the circumstances contemplated in s 44(2), as
well as when it:
(a) deals
with a matter that cannot be regulated effectively by provincial legislation; D
(b) provides
necessary uniformity by establishing norms and standards, frameworks or
national policy;
(c) is
necessary for the protection of the common market in respect of the mobility of
goods, services, capital and labour, for the promotion of economic activities
across provincial boundaries, the E promotion of equal opportunity or
equal access to government services or the protection of the environment.
[52] From this it is evident that where a matter requires regulation
inter-provincially, as opposed to intra-provincially, the Constitution ensures
that national government has been accorded the necessary power, F whether exclusively
or concurrently under Schedule 4, or through the powers of intervention
accorded by s 44(2). The corollary is that where provinces are accorded
exclusive powers these should be interpreted as applying primarily to matters
which may appropriately be regulated intra-provincially.
[53] It is in the light of this vision of the allocation of G provincial and
national legislative powers that the inclusion of the functional area 'liquor
licences' in Schedule 5 Part A must, in my view, be given meaning. That
backdrop includes the express concurrency of national and provincial
legislative power in respect of the functional area of 'trade' and 'industrial
promotion' created by Schedule 4. H
[54] According to The New Shorter Oxford Dictionary, 'trade' in
its ordinary signification means the '(b)uying and selling or exchange
of commodities for profit, spec between nations; commerce, trading,
orig. conducted by passage or travel between trading parties'.88 Nothing in I Schedule 4 suggests
that the term should be restricted in any way and the Western Cape government
did not contend that Parliament's concurrent competence in regard to 'trade'
should be limited to cross-border or inter-provincial trade. It follows that in
its ordinary signification, the
2000
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CAMERON AJ
concurrent national legislative power with regard to A 'trade' includes the
power not only to legislate intra-provincially in respect of the liquor trade,
but to do so at all three levels of manufacturing, distribution and sale.
[55] The concurrent legislative competence in regard to 'industrial B promotion' should, in
my view, be given a similarly full meaning as conferring on the national
Legislature and the provinces the power to initiate, advance and encourage all
branches of trade and manufacture.89 But the exclusive provincial
competence to legislate in respect of 'liquor licences' must also be given
meaningful content and, as suggested earlier, the constitutional C scheme requires that
this be done by defining its ambit in a way that leaves it ordinarily distinct
and separate from the potentially overlapping concurrent competences set out in
Schedule 4.
[56] As Mr Trengove, relying on dictionary definitions and the
judgment of Innes J in Fick v Woolcott and Ohlsson's Cape Breweries Ltd,90 correctly submitted, a D liquor licence is the
permission that a competent authority gives to someone to do something with
regard to liquor that would otherwise be unlawful. The activity in question, as
emerges from the judgment of Innes J, is usually the sale of liquor at
specified premises. It also seems to me that the term 'liquor licences' in its
natural signification encompasses not only the grant or refusal of the E permission concerned,
but also the power to impose conditions pertinent to that permission, as well
as the collection of revenue that might arise from or be attached to its grant.
[57] The Western Cape government contended that liquor licences are
never an end in themselves, but control and regulate the production, F distribution and sale
of liquor in pursuit 'of yet further social, economic and financial
objectives'. Accordingly, the province contended, the authors of the Constitution
must have intended the term 'liquor licences' in Schedule 5 Part A to encompass
all legislative means and ends appurtenant to the liquor trade at all levels of
production, manufacture and sale and that these were intended to be G reserved, outside the
circumstances envisaged by s 44(2), for the exclusive competence of the
provinces. This submission cannot, in my view, be accepted. In the first place,
the field of 'liquor licences' is narrower than the liquor trade. The Schedule
does not refer simply to 'liquor' or the 'liquor trade' or the 'liquor
industry'. H Instead it uses the phrase 'liquor licences'. There
is a range of legislation in South Africa regulating the liquor trade.
Production, marketing, export and import of wine and spirits is regulated in
terms of two important statutes, the Wine and Spirit Control Act 47 of 1970 and
the Liquor Products Act 60 of 1989. These are primarily concerned with aspects
of the liquor trade and industry and not with
2000
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CAMERON AJ
liquor A licensing itself. Legislation concerning the
production of liquor products, including quality control, marketing and import
and export of such products would fall within the concurrent competence of
trade and/or industrial promotion, rather than within the exclusive competence
of liquor licences.
[58] The structure of the Constitution, in my view, suggests that the
national government enjoys the power to B regulate the liquor
trade in all respects other than liquor licensing. For the reasons given
earlier, this, in my view, includes matters pertaining to the determination of
national economic policies, the promotion of inter-provincial commerce and the
protection of the common market in respect of goods, services, capital and
labour mobility. C
[59] For his part, Mr Wallis contended that the term 'liquor
licences' must be understood to apply only to the retail sale of liquor. But
the basis of his submission that the history of liquor licensing legislation in
South Africa shows that the area of application of liquor licences was not the
whole field of production, D distribution and sale of liquor, but
only the narrower field of the supply of liquor to the public or consumers,
cannot be sustained. This is apparent from the provisions of the earlier
legislation, which plainly encompass also the production of liquor.91 I would in any event have grave
reservations about undertaking a task of constitutional interpretation E as though it depended
on the prior meaning our legislation or case law attributed to any particular
term.
[60] Even within the retail tier of the liquor trade, Mr Wallis
sought to diminish the area the Bill occupied within the notional common
terrain by contending that the province still had legislative leeway within
which to exercise its exclusive competence. F Insofar as the Bill
infringed the provinces' exclusive competence in regard to licensing of retail
liquor sales, Mr Wallis contended in reliance on a number of Canadian
cases that its 'pith and substance' lay in its radical restructuring of the
liquor industry through the creation of the three-tier system, which enabled a
variety of trade and other issues falling within Parliament's exclusive or G concurrent competence
to be addressed. Against this background, Mr Wallis contended that the
Bill's system of registration was 'purely incidental' to the means the Bill
chose to address other, competent, issues and that its infringement, if any, on
the area of 'liquor licences' was accordingly permissible under the
Constitution. Mr Wallis finally contended H
2000
(1) SA p764
CAMERON AJ
that the Minister had in any A event established
that the legislation was 'necessary' for a number of purposes under s 44(2).
[61] It is not necessary for the purposes of this judgment to consider
the utility or applicability of the Canadian 'pith and substance' cases to the
development of an indigenous South African B jurisprudence
regarding national and provincial legislative competences. It is sufficient to
say that, although our Constitution creates exclusive provincial legislative
competences, the separation of the functional areas in Schedules 4 and 5 can
never be absolute: 'Whenever a legislature's authority is limited some rule
must be adopted to address the possibility that a [single] law may touch
upon subject-matter [both] within and outside legislative competence.'327 P
Craig and M Walters 'The Courts, Devolution and Judicial Review' (1999) Public
Law 274 at 299.. 92
[62] That Schedule 4 legislation may impact on a Schedule 5 functional
area finds recognition on one reading of s 44(3). Whatever its true reading93 this provision was not D designed to undermine
the Schedule 5 competences. They retain their full meaning and effect, except
where encroachment by national legislation would in fact be 'reasonably
necessary for, or incidental to' the effective exercise of a Schedule 4 power.
Since, however, no national legislative scheme can ever be entirely water-tight
in E respecting the excluded provincial competences, and
since the possibility of overlaps is inevitable, it will on occasion be
necessary to determine the main substance of legislation and hence to ascertain
in what field of competence its substance falls; and, this having been done,
what it incidentally accomplishes. This entails that a Court determining
compliance by a legislative scheme with the competences F enumerated in
Schedules 4 and 5 must at some stage determine the character of the
legislation. It seems apparent that the substance of a particular piece of
legislation may not be capable of a single characterisation only and that a
single statute may have more than one substantial character. Different parts of
the legislation may thus require different assessment in regard to a disputed
question of legislative competence. G
[63] In Ex parte Speaker of the KwaZulu-Natal Provincial Legislature:
In re KwaZulu-Natal Amakhosi and Iziphakanyiswa Amendment Bill of 1995; Ex
Parte Speaker of the KwaZulu-Natal Provincial Legislature: In re Payment of
Salaries, Allowances and Other Privileges to the Ingonyama Bill of 199594 , this H Court had to
determine whether a provincial Bill fell within the legislative competence
granted the provinces in Schedule 6 of the interim Constitution. Chaskalson P
rejected the argument that the 'purpose' of legislation was irrelevant to the
constitutionality inquiry:
'It may be relevant to show that although the
legislation purports to deal with a matter within Schedule 6 its true purpose
and I effect is to achieve a different goal which falls
outside the functional areas listed in Schedule 6. In such a case
2000
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CAMERON AJ
a Court would A hold that the
province has exceeded its legislative competence.95 It is necessary, therefore, to
consider whether the substance of the legislation, which depends not only on
its form but also on its purpose and effect, is within the B legislative
competence of the KwaZulu-Natal provincial legislature.'96
[64] The question therefore is whether the substance of the Liquor Bill,
which depends not only on its form but also on its purpose and effect, is within
the legislative competence of Parliament. The Bill's objects are set out in s 2
thus:
'The objects of this Act are to maintain economic
unity and essential national standards in the liquor trade and industry, to
encourage and support the liquor industry and to manage and reduce the
socio-economic and other costs of excessive alcohol consumption by - C
(a) establishing a national
and uniform administrative and regulatory framework within which the liquor
industry can conduct its business;
(b) creating an environment in
which -
(i) the
entry of new participants into the liquor industry is facilitated;
(ii) appropriate
steps are taken against those selling liquor D outside the administrative and
regulatory framework established in terms of this Act;
(iii) those
involved in the liquor industry may attain and maintain adequate standards of
service delivery;
(iv) community
considerations on the registration of retail premises are taken into account;
and E
(v) the
particular realities confronting the liquor industry can be addressed;
and
(c) promoting a spirit of
co-operation and shared responsibility within all spheres of government, and
among other interested persons in their dealings with consumers of liquor and
in their attempt to address the socio-economic costs and health and other
related problems associated with excessive alcohol consumption.' F
[65] The Bill seeks to attain these objects, amongst others, through the
establishment of a National Liquor Advisory Committee, drawn from a broad
spectrum of persons in the public and private sectors, including all sectors of
the liquor industry and a wide range of the functional G areas of government.
This committee is to advise the Minister on various matters. These include 'the
facilitation of the advancement, upliftment and economic empowerment of persons
or groups or categories of persons disadvantaged by unfair discrimination';
'the consumption of alcohol amongst the youth'; and 'the problems that
excessive alcohol consumption has on public health and family and social life'.97 H
[66] As described earlier, the Bill also prohibits vertical cross-holdings
within the liquor industry. The specific means it employs is the establishment
of a national system of registration under a National Liquor Authority. In
terms of the registration system, no person may be registered in more than one
of the three tiers. The attainment of this I
2000
(1) SA p766
CAMERON AJ
objective is, according to the Minister's A affidavit, one of the
prime reasons for the Bill's enactment and the Bill's national system of
registration is essential to it. The Minister underscores the necessity for
these measures by alluding to the history of racism in the structure and
control of the liquor trade, in regard to which the National Liquor Advisory
Committee is empowered to advise him. B
[67] The Bill seeks to create the 'national and uniform administrative
and regulatory framework', referred to in s 2(a), through uniform
licensing conditions at national level for manufacturers and distributors.98 It also seeks to attain this
goal by requiring that provincial legislatures pass legislation to establish
provincial liquor C authorities99 which will consider and approve
applications for retail and special event licences,100 and by prescribing the
application procedure for retail registration in great detail.101
[68] The question is whether the substance of this legislation falls D within the excluded
field of 'liquor licences', in which case the justifications itemised in s
44(2) will have to be shown; or whether it falls within a permitted competence
of Parliament even without such justification. In answering this question, as
indicated above,102 it does not seem to me that the
objective should be to subject the Bill to a uniform analysis directed at
yielding a single characterisation. E
[69] The true substance of the Bill is, in my view, directed at three
objectives. These are: (a) the prohibition on cross-holdings between the
three tiers involved in the liquor trade, namely producers, distributors and
retailers; (b) the establishment of uniform conditions, in a single
system, for the national registration of liquor manufacturers and distributors;
and, in a further attempt at F establishing national uniformity within
the liquor trade, (c) the prescription of detailed mechanisms to
provincial legislatures for the establishment of retail licensing mechanisms.
[70] Regarding (a): In my view, the Bill's prohibition of
cross-holdings falls within the national Legislature's competence to G regulate trade. On
any approach, the vertical and horizontal regulation of the liquor trade, and
the promotion of racial equity within the trade, are legislative ends which
fall within the functional competence Schedule 4 accords the national
Parliament under the headings of trade and industrial promotion. I did not
understand counsel for the Western H Cape government to
contest this. The Bill, however, attains this objective by employing a specific
means, namely a system of registration which is in all material respects
identical to a licensing system. In addition, the Bill accords to national
government regulatory functions in regard to liquor licensing in the production
and distribution sphere. That the ends the national Legislature so seeks to
attain fall within its power does not automatically I
2000
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CAMERON AJ
entail that the means it has chosen, namely a system of liquor licensing,
are competent. For that conclusion to be reached, the national government must
show that the means is 'necessary' for one of the purposes specified in s
44(2), or, on one reading of s 44(3),103 that they are reasonably
necessary for, or incidental to the effective exercise of a Schedule 4 power. B
[71] Regarding (b) (the national system of registration for
producers and wholesalers): Persuasive justification for understanding 'liquor
licences' more narrowly than the reading advanced by the Western Cape
government appears, as indicated earlier, from the scheme of the Constitution.
These suggest that the primary purport of the exclusive competences, including
'liquor licences', C lies in activities that take place within or can be
regulated in a manner that has a direct effect upon the inhabitants of the
province alone. In relation to 'liquor licences', it is obvious that the retail
sale of liquor will, except for a probably negligible minority of sales that
are effected across provincial borders, occur solely D within the province.
The primary and most obvious signification of the exclusive competence
therefore seems to me to lie in the licensing of retail sale of liquor.
[72] As far as the Bill's 'three-tier' structure is concerned, the same
considerations suggest that manufacturing or production of liquor was not
intended to be the primary field of 'liquor licences'. The E manufacturing and
wholesale trades in liquor have a national and also international dimension.
Manufacturers and wholesalers ordinarily trade across the nation and some trade
both nationally and internationally. Little, if any, liquor production is
directed to an intra-provincial market only. On the contrary, in large measure,
the production of F liquor - whether brewing of beer (which on the
evidence before us occurs largely in the northern provinces), or viticulture
and wine production (which occurs 'overwhelmingly' within the Western Cape), or
the production of vodka, cane spirit and gin (which occurs 'mostly' in
KwaZulu-Natal) - is necessarily directed at an extra-provincial or
international market.
[73] The same considerations, in my view, apply in general to the G distribution of liquor,
where the scale of distribution is likely, in almost all cases, to be inter- as
opposed to intra-provincial. The regulation and control of liquor distribution,
on this approach, therefore falls outside the primary signification of the
exclusive competence. If production and distribution of liquor were to be
regulated by each province, manufacturers and distributors would H require licences from
each province for the purpose of conducting national trading and possibly a
national licence for export.
[74] These considerations point to the conclusion that the provincial
exclusive power in relation to 'liquor licences' was in the first instance not
intended to encompass manufacturing and distribution of I liquor. The exclusive
competences in Schedule 5 all point to intra-provincial activities and concerns
only and exclude those with a national dimension.
2000
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CAMERON AJ
Of the 12 exclusive competences itemised in A Schedule 5 Part A,
nine contain express terms confining their ambit to provincial or non-national
issues. This obviously signifies that 'liquor licences', too, must mean
intra-provincial liquor licences.
[75] But it is unnecessary to conclude that the competence in regard to
'liquor licences' does not extend to intra-provincial production B and distribution
activities since the national government has, in my view, in any event shown
that, if the exclusive provincial legislative competence in respect of 'liquor
licences' extends to licensing production and distribution, its interest in maintaining
economic unity authorises it to intervene in these areas under s 44(2).
'Economic C unity' as envisaged in s 44(2) must be understood
in the context of our Constitution, which calls for a system of co-operative
government, in which provinces are involved largely in the delivery of services
and have concurrent legislative authority in everyday matters such as health,
housing and primary and secondary education. They are entitled D to an equitable share
of the national revenue, but may not levy any of the primary taxes and may not
impose any tax which may 'materially and unreasonably' prejudice national
economic policies, economic activities across provincial boundaries or the
national mobility of goods, services, capital or labour.104 Our constitutional structure
does not contemplate that provinces will E compete with each
other. It is one in which there is to be a single economy and in which all
levels of government are to co-operate with one another. In the context of
trade, economic unity must, in my view, therefore mean the oneness, as opposed
to the fragmentation, of the national economy with regard to the regulation of
inter-provincial, as opposed to intra-provincial, trade. In that context it
seems to follow F that economic unity must contemplate at least the
power to require a single regulatory system for the conduct of trades which are
conducted at a national (as opposed to an intra-provincial) level.
[76] Given the history of the liquor trade, the need for vertical and
horizontal regulation, the need for racial equity and the need to avoid G the possibility of
multiple regulatory systems affecting the manufacturing and wholesale trades in
different parts of the country, in my view, the 'economic unity' requirement of
s 44(2) has been satisfied. Indeed, many of the considerations mentioned
earlier in relation to the primary signification of the term 'liquor licences'
suggest the conclusion that manufacture and distribution of liquor H require national, as
opposed to provincial, regulation.
[77] The Minister's affidavit states in this regard that duplicated or
varying provincial licensing requirements would be 'unduly burdensome' for
manufacturers and that it was therefore 'economically I imperative that
control over the activities of manufacturers should take place at national
level'. He states that major industries, including the liquor industry 'as a
single integrated industry', should not have to 'run the risk of fragmentation
arising out of a variety of differing regulatory regimes
2000
(1) SA p769
CAMERON AJ
being imposed upon their A operations in different provinces',
including what he described as the deleterious effects of 'cross-border arbitrage'
between competing provinces. He avers that '(w)ithout a national system
of regulation and a national standard to which wholesalers will have to adhere
the results would be chaotic': 'The spectre arises of a single business
operation having to be separately licensed on differing terms and B conditions in
different parts of South Africa.'
[78] For the reasons given earlier, the Constitution entrusts the
legislative regulation of just such concerns to the national Parliament and I
am of the view that the Minister has shown, at least in regard to manufacturing
and distribution of liquor, that the maintenance of C economic unity
necessitates for the purposes of s 44(2)(b) the national Legislature's
intervention in requiring a national system of registration in these two areas.
The manufacturing and wholesale distribution of liquor (national and
international sales) are important industries, which provide employment for a
substantial number of persons. They also generate foreign income. That these
trades require D control is obvious and the most effective way of
doing so is through a national regulatory system. This enables the government
to regulate the trade vertically and horizontally, to set common standards for
all traders concerned and enables traders to conduct their activities with a
single licence, according to a single regulatory system. The Western E Cape government's
denial of the Minister's averment that the production and distribution tiers
necessitate a national approach can thus not be sustained.
[79] The provisions of s 30, however, require different consideration.
They deal with the award of retail licences and do so by F prescribing in some
detail to the provincial legislatures what structures should be set up and how
those structures should go about considering and awarding liquor licences. I
will accept in the Minister's favour, as contended by Mr Wallis, that
the provincial liquor boards are entrusted with considerable leeway in applying
what the Bill calls 'community considerations'105 on the registration of G retail premises.
Nevertheless, on the analysis advanced above, the licensing competence in
respect of retail sales of liquor falls squarely within the exclusive
provincial legislative power afforded by Schedule 5. Section 30 and its
attendant apparatus can therefore be justified only if it is established that
they are 'necessary' under s 44(2) or, on one reading of s 44(3), that they are
reasonably H necessary for, or incidental to the justified
substance of the Bill.
[80] While the Minister's evidence, in my view, shows that the national
interest necessitated legislating a unified and comprehensive national system
of registration for the manufacture and distribution of liquor, it failed to do
so in respect of its retail sale. There he I averred only that
'consistency of approach' is 'important'. This may be true. But importance does
not amount to necessity and the desirability from the national government's
point of view of consistency in this field cannot warrant
2000
(1) SA p770
CAMERON AJ
national legislative intrusion A into the exclusive
provincial competence and no other sufficient grounds for such an intrusion
were advanced.
[81] It was not suggested by the Minister, nor raised in argument by Mr Wallis
on his behalf, that the intrusion into the exclusive provincial competence of
'liquor licences' was permissible B in terms of s 44(3).
Nor was this issue raised by the President in his referral to this Court. In
the circumstances it is not necessary to deal with this question. If s 44(3)
applies to national legislative intrusions into the exclusive provincial
competences,106 I am inclined to the view that
the phrase 'reasonably necessary for, or incidental to' should be C interpreted as
meaning 'reasonably necessary for and reasonably incidental to'. Whatever
meaning is to be assigned to this formulation, and I prefer to express no
opinion on it, the scale of the intrusion the Bill envisages upon the
provinces' exclusive competence in regard to retail liquor licences cannot be
justified.
[82] The deponent on behalf of the Western Cape government emphasised
the 'positive features of provincial D differentiation' and
contended that the Constitution envisaged that the provincial system of
government with its attendant exclusive legislative powers would lead, over
time, to 'differences between provinces' approaches to the matters within their
legislative and executive competence'. The E overall
constitutional scheme, as indicated earlier, in my view provides warrant for
this view in the field of retail liquor sales. The national government has
accordingly not shown that the retail structures sought to be erected by the
Bill are reasonably necessary for or incidental to the national system created
for producers (manufacturers) and distributors. F
[83] The same considerations seem to me to apply to the Bill's
provisions regarding micro-manufacturers107 and manufacturers of sorghum
beer,108 who are permitted to sell the
liquor produced by them 'directly to the public for consumption on and off the
registered premises, as prescribed'.109 In effect, these provisions G confer national
permission for retail sales in circumstances where it does not seem to me that
the national government has made a case under s 44(2) for intervening in the
provinces' exclusive legislative competence. The provisions of s 46(2) also
require scrutiny. These permit a manufacturer to sell the liquor produced
'directly to the H public for consumption on and off the registered
premises, subject to the terms and conditions that the relevant authority may
determine'. To the extent that this exempts wine farms, for instance, from the
national prohibition on producers holding retail licences, it lies within the
competence of national government. But insofar as this provision precludes
provinces from also requiring provincial I
2000
(1) SA p771
CAMERON AJ
licences for what is in effect retail selling, it too lies beyond the
competence A of the national Legislature.
[84] The provisions of s 44(2) have also not been satisfied in regard to
the national regulation of micro-manufacturers of liquor, whose businesses may
be essentially provincial in character. B
[85] This is not to say that in the absence of provincial legislation a
national scheme providing for minimum standards in the field of retail sales, to
operate in default of provincial provisions in this regard, would not be
competent as being 'necessary' within s 44(2). It was common cause that none of
the provinces had in the exercise of their exclusive competence enacted any
legislation in the field of 'liquor licences'. If Parliament deems it necessary
to repeal the C existing liquor legislation, including the Liquor
Act of 1989, in the exercise of its national competence, the resulting void, if
not filled by the provinces, may well entitle Parliament to provide by way of
legislation for such minimum standards and procedures. It is at present,
however, unnecessary to consider that question. D
[86] The Province also objected to the Bill in as much as it directs
provincial legislatures to pass legislation in a specified form to create
provincial liquor authorities to deal with retail liquor licensing.110 This was not included in the E President's
reservations and it is therefore not necessary to deal with it.
[87] To summarise: I conclude that, if the exclusive provincial
legislative competence regarding 'liquor licences' in Schedule 5 applies to all
liquor licences, the national government has made out a case in terms of s
44(2) justifying its intervention in creating a F national system of
registration for manufacturers and wholesale distributors of liquor and in
prohibiting cross-holdings between the three tiers in the liquor trade. No case
has, however, been made out in regard to retail sales of liquor, whether by
retailers or by manufacturers, nor for micro-manufacturers whose operations are
essentially provincial. The Minister has to this extent failed to G establish that
Parliament had the competence to enact the Liquor Bill and it is therefore
unconstitutional.
Costs
[88] Neither of the parties represented before this Court asked for H costs. No order is
therefore necessary.
Conclusion and order
[89] The decision of this Court is that to the extent indicated in this
judgment the Liquor Bill [B 131B - 98] is unconstitutional. I
Chaskalson P, Langa DP, Ackermann J, Goldstone J, Madala J, Mokgoro J,
Ngcobo J, O'Regan J, Sachs J and Yacoob J concurred.
2000
(1) SA p772
Attorneys for the Government of the Western Cape: De Klerk & Van
Gend, Cape A Town. Attorneys for the Minister of Trade and
Industry: Cheadle, Thompson & Haysom.
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