THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT

Reportable

Case No: 914/2015

In the matter between:

SOUTH AFRICAN BROADCASTING
CORPORATION SOC LIMITED

APPLICANT

and

MASSTORES (PTY) LIMITED

RESPONDENT

Neutral citation: SABC v Masstores (1221/15) [2015] ZASCA 174 (25
November 2016)

Coram:
Lewis, Wallis and Zondi JJA and Schoeman and Schippers AJJA

Heard:
16 November 2016

Delivered:  25 November 2016

Summary:  Meaning of „sell‟ in s 27(4) of the Broadcasting Act 4 of 1999 –
whether mere agreement of sale or sale completed by delivery contemplated –
dealer selling television sets to customer where goods stored at customer‟s
premises and delivery not made – sale not concluded pending customer
obtaining requisite television licence – no breach of s 27(4) – customer not
liable for penalties – application for special leave to appeal refused.

ORDER

On appeal from: Gauteng Local Division of the High Court, Johannesburg
(Meyer, Victor and Wepener JJ sitting as a full court):

Condonation is granted for the late filing of the application for special
leave to appeal.

The application for special leave to appeal is refused with costs, including
the costs of two counsel.

JUDGMENT

Schippers AJA (Lewis, Wallis and Zondi JJA and Schoeman AJA
concurring):

[1] This is an application for special leave to appeal referred for oral
argument in terms of s 17(2)(d) of the Superior Courts Act 10 of 2013.  The
matter concerns the proper construction of s 27(4) of the Broadcasting Act 4 of
1999 (the Act).  That section provides for the applicant, the South African
Broadcasting Corporation SOC Ltd (SABC), to recover a penalty if a retailer
sells a television set to someone who does not have a licence in terms of the
Act. The specific issue is whether the respondent, Masstores (Pty) Ltd
(Masstores), is liable for penalties under s 27(4) of the Act because it entered
into an agreement with Plytrade 23 (Pty) Ltd t/a EduSolutions (EduSolutions) to

give it credit on the sale of 2 500 television sets, before EduSolutions obtained
the requisite television licence.

[2] The SABC also sought condonation for the late filing of the application
for special leave to appeal which was some eight days late. Masstores did not
oppose the condonation application.

Factual overview
[3] The basic facts are largely common ground.  Masstores, through a
subsidiary, owns and operates retail outlets known as „Game‟ and „DionWired.‟
In order to ensure that customers who buy television sets are in possession of
valid television licences, in 2009 Masstores in conjunction with the SABC
developed a unique verification system known as the „purchase order
management (POM) system.‟

[4] Briefly, the POM system works as follows. It is linked to the SABC‟s
database of television licence holders and can therefore verify whether a
customer who wishes to buy a television set has a licence.  The details of the
customer are entered into the system.  If it shows that the customer does not
have a licence or is in arrears with licence payments, the customer has to
purchase a licence or settle the arrears at the licence counter in the store.  If the
POM system finds a record of a valid licence on the SABC‟s database, the
system generates a document recording that fact and the licence reference
number.  The customer then proceeds to the checkout counter to purchase the
television set.  At that counter a barcode entered into the till by the cashier will
alert the internal point of sale system that a television set is being purchased.
Thereafter a prompt on the till requests the cashier to enter the customer‟s
licence reference number.  Only once that number has been entered, does the
system allow the sale to be concluded.  The licence reference number is then

reflected on the till slip which constitutes proof of both the sale of the product
and that the customer is in possession of a valid licence.  At the end of each day
the system matches the sale of television sets and their licence reference
numbers with the licences recorded in the SABC‟s database.  It then generates a
registration file of all licence registration and payments processed in the store
that day, which is automatically transferred to the database of the SABC.

[5] EduSolutions procures goods for schools run by the provincial
Departments of Education.  On 25 February 2011 Masstores furnished it with a
quotation for the sale of television sets and home theatre systems, for delivery to
schools in the Limpopo Province.  EduSolutions was advised that before the
sale could be concluded, it would have to produce a valid licence and that it
should contact the SABC to ascertain the correct licence to be obtained given
the bulk nature of the transaction.  It was anticipated that the requisite licence
would be procured within a few days.  That, however, did not happen.

[6] On 2 March 2011 EduSolutions wrote to Masstores requesting a credit
facility, as payment to it by the Department of Education in Limpopo could be
made only on receipt of the goods in terms of the Public Finance Management
Act 1 of 1999.  That request was granted and a payment credit facility
agreement was signed on 24 March 2011, in terms of which Masstores granted
EduSolutions a 30-day payment credit facility in the sum of R9 995 002.50.
However, Masstores could not prepare the documentation relating to the sale
because EduSolutions had not yet obtained the requisite licence from the SABC.

[7] Whilst Masstores was in the process of doing a credit check on
EduSolutions, on 23 March 2011, Samsung, the supplier, unexpectedly
delivered the goods to Masstores‟ Game store in Polokwane.  Game had no
space to store the goods and on 24 March 2011, they were moved to a

warehouse in Polokwane belonging to EduSolutions.  Masstores took out short-
term insurance cover for the goods because it carried the risk in respect thereof.

[8] By letter dated 8 April 2011, the SABC informed Masstores that 2 500
television sets were released to EduSolutions on 24 March 2011 when it was not
in possession of the prescribed dealer licence; that Masstores failed to follow
the standard procedure in verifying EduSolutions‟ licence prior to completing
the sale; and consequently that Masstores was liable for penalties in the sum of
R 7.5 million (2 500 x R3 000).  Masstores‟ attorneys replied in a letter dated 13
April 2011 in which they set out the facts relating to the transaction and
disputed Masstores‟ liability for penalties.

[9] On 10 May 2011 the SABC issued EduSolutions with a dealer licence.
Masstores was then in a position to conclude the sale.  It was not a cash sale.
Therefore Masstores had to install computer software on its POM system to
generate a bulk sale on credit.  On 12 and 13 May 2011 Masstores processed the
order placed by EduSolutions in two batches, generating two till slips recording
the sale of the goods. Both till slips reflected the conventional details in relation
to a licence that would be shown on the till slip of any other customer of
Masstores who purchased a television set.

[10]  On 13 May 2011 Masstores sent two employees to the EduSolutions
warehouse at Polokwane to check the goods.  They were found to be in good
order and delivery notes were then issued which show that EduSolutions
received the goods on 13 May 2011.  It paid Masstores on 26 May 2011.

[11] By 30 May 2011 the issue regarding penalties had not been resolved.
Masstores thus applied to the Gauteng Local Division of the High Court,
Johannesburg for a declaratory order that it did not sell or alienate the goods to

EduSolutions within the meaning of s 27(4) of the Act; and that it was not liable
for any penalties arising from the sale of the goods.  Mailula J held that the sale
was concluded sometime before 12 May 2011, and dismissed the application
with costs.  That order was reversed on appeal by a full court (Meyer, Victor
and Wepener JJ).  It held that Masstores did not sell or alienate the goods as
envisaged in s 27(4) of the Act and that it was not liable for penalties arising
from the transaction with EduSolutions.

Is Masstores liable for penalties under s 27(4) of the Act?
[12] Section 27(1) of the Act provides that no person, business, dealer or
lessor may use a television set without a television licence issued by the SABC
against payment of the prescribed fee for each television set so used, unless
exempted by regulation.1  Masstores is a dealer within the meaning of the Act.2

[13] A „television licence‟ is defined as meaning a current and valid licence
issued in terms of the Act for the use of a television set. The Act defines „use‟
as, „the use or possession or permitting any other person to use or possess a
television set and the words “user” and “used” are construed accordingly‟.

[14] Section 27(4) of the Act reads:
„A dealer who sells or alienates a television set to a person who is not in possession of a
television licence and who is not exempted from the obligation to be in possession of a
television licence, is liable to pay a penalty of R3 000 or such amount as may be prescribed,
but such penalty may not exceed R10 000 in respect of each television set sold or alienated to
such person.‟

[15] This court has said that when interpreting legislation, what must be
considered is the language used; the context in which the relevant provision

1  Section 27(1)(a) and (b) of the Act.
2  The Act defines a „dealer‟ as a person who engages in the business of selling television sets.

appears; the apparent purpose to which it is directed; and the material known to
those responsible for its production.3

[16] On its plain language, s 27(1) of the Act proscribes the use of a television
set without a licence.  Section 27(4) must be construed in that context.  Thus a
dealer who „alienates‟ a television set by way of a donation, for example, is
liable to pay the prescribed penalty if the recipient does not have a licence.  This
construction is reinforced by three provisions of s 27: the penalty provision
contained in s 27(3) in terms of which a person who contravenes s 27(1), in
addition to payment of the licence fee, is liable to pay double the licence fee; the
penalty provision in s 27(4); and s 27(5) which provides that any person who
fails to comply with any provision of s 27 is guilty of an offence and liable on
conviction to a fine not exceeding R500 in relation to each such offence, or
imprisonment, or both.  The manifest purpose of s 27, as a whole, is to ensure
that no person uses a television set without a licence.

[17] As to the meaning of „sell‟ in s 27(4) of the Act, Wessels J in Nimmo v
Klinkenberg Estates Co Ltd,4 noted that the word „sale‟ has different meanings.
He said (at 314):
„Now the word “sale” is used with various meanings. To lawyers discussing it from an
academic point of view it means the time when the parties have arrived at a valid and binding
agreement, apart from any question whether the purchase-price has been paid or whether
there has been delivery of the article sold. But it is also clear that in ordinary parlance the
word “sale” is used in a somewhat wider sense than a mere agreement. In a cash transaction it
means delivery of the property on payment of the purchase-price, and a sale is said to fall
through when the seller or the purchaser fails to complete his part of the contract. In the case
of a sale for credit the word “sale” ordinarily means the actual transfer of the property.‟

3  Natal Joint Municipal Pension Fund v Endumeni Municipality [2012] ZASCA 13; 2012 (4) SA 593 (SCA)
para 18.
4  Nimmo v Klinkenberg Estates Co Ltd 1904 TH 310, which was referred to by this court in Modelay v Zeeman
& others 1968 (4) SA 639 (A) at 643A; and also Street v Evans 1977 (3) SA 950 (RA) at 951H-952A.

[18] The term „sale‟ in a statutory provision has been interpreted to mean a
sale in the wider sense rather than a mere agreement.  In R v Nel,5 Solomon JA
held that the word „sale‟ in the Transvaal Liquor Licensing Ordinance of 1902
meant a sale in the ordinary sense, namely a sale completed by delivery,6 in
defining a general retail liquor licence, an hotel liquor licence and other licences
where liquor sold is to be consumed on the premises.

[19] Likewise in R v Levy & another,7 a case in which the accused was
charged with selling bread below the prescribed weight, it was held that the
word „sale‟ as used in a regulation made under s 48 of the Weights and
Measures Act 32 of 1922, was not limited to the mere formation of a contract of
sale but included delivery of the thing sold: the main obligation of a seller in a
contract of sale.8

[20] The word „sell‟ in s 27(4) must bear the meaning assigned to it in the
scheme of s 27 of the Act, unless another or narrower meaning is specifically
assigned.  In my view the full court correctly held that it means a sale in the
ordinary sense: not only the making of the agreement, but its fulfilment by
delivery.  Two basic reasons underlie this conclusion.  First, if the purpose of
s 27 is to prohibit the use of a television set without a licence, and „use‟ means
the actual use or possession of a television set, then delivery to the user is an
indispensable requirement before the penalty provision contained in s 27(4) may
be invoked.  Second, this is a sensible and businesslike construction, which
gives effect to the purpose of s 27.9  Any other construction would produce a
manifest absurdity: it would mean that where there is a mere agreement to buy
and sell a television set and the customer has not taken delivery of it, a dealer

5  R v Nel 1921 AD 341.
6  At 342.
7  R v Levy & another 1953 (3) SA 466 (A).
8  At 471G-472A.
9 Natal Joint Municipal Pension Fund (n 2 above) para 18.

would immediately be liable to pay the penalty prescribed in s 27(4).  And this
even in circumstances where the dealer seeks to verify whether or not the
customer has a licence.  It would also mean that, contrary to authority in this
court, a sale subject to a suspensive condition that the purchaser obtain a licence
would fall foul of the section and attract a penalty, despite the fact that no
delivery had been effected.10  Such a construction is at odds with the plain
language of s 27(1), the immediate context of s 27(4) and the overall purpose of
s 27 of the Act.

[21] Applying the meaning of a sale as envisaged in s 27(4) of the Act to the
facts of this case, in my opinion, and contrary to the SABC‟s assertion, there
was no agreement of purchase and sale between Masstores and EduSolutions on
24 March 2011, let alone the physical delivery of the television sets.

[22] The POM system was put in place precisely to ensure that Masstores
complies with its obligations under s 27(4) of the Act, and that the SABC
receives revenue from licences. They had agreed the method by which
television sets would be sold. There can be no suggestion that the transaction
with EduSolutions was going to take place other than in accordance with the
POM system, the only difference being that it was a bulk sale on credit.   From
the outset EduSolutions was informed that the sale would not be concluded
unless and until it was in possession of the requisite licence.  That is indeed
what happened.  And it is confirmed by the conduct of the parties and
contemporaneous documentation.

[23] Thus, on 6 April 2011, Masstores sent an email to the SABC advising it
that EduSolutions had already contacted the SABC regarding the licence

10 Corondimas v Badat1946 AD 548 at 551 and the cases collected and discussed in Geue & another v Van der
Lith & another 2004 (3) SA 333 (SCA) paras 7-12.

requirements; that Masstores was unable to record the sale on its system
because it did not have a licence reference number from the SABC; and that the
latter had requested the relevant documents from EduSolutions after which the
SABC would furnish Masstores with the dealer reference number to enable it to
conclude the sale.

[24] Similarly, on 7 April 2011 EduSolutions sought clarity on the requisite
licence and informed the SABC that the sale had not yet been concluded and
that it was storing the goods on behalf of Masstores.  Now there was no reason
for EduSolutions to fabricate this evidence: it was not in the circumstances
liable for any penalty under the Act.  The letter of 7 April 2011 was sent to the
SABC precisely because Masstores had from the outset made it clear that the
sale would not be concluded without the requisite licence.  And this is supported
by documentation showing the attempts by EduSolutions to obtain the licence,
until it eventually received a dealer licence pursuant to a meeting with
representatives of the SABC on 10 May 2011.

[25] Then there is the insurance cover taken out by Masstores in respect of the
goods, before the sale could be concluded.  It insured the goods on 24 March
2011 as it retained ownership and the risk.  These facts are confirmed by the
manager of the insurance company who stated that on 13 May 2011 she was
informed that the sale had been concluded and that the risk had passed to
EduSolutions.  Further, absent ownership, Masstores would not have had an
insurable interest in the goods.11

[26] Apart from all of this, Masstores could not process a bulk sale of
television sets on credit to EduSolutions on its POM system; it had to install

11 As to which, see M F B Reinecke, J P van Niekerk & P M Nienaber „Insurance‟ in 12(1) Lawsa 2 ed (2012)
para 50.

special software to do so.  The sale was concluded only after EduSolutions
obtained a valid licence on 10 May 2011.  The reference number of that licence
was recorded on the relevant till slips when Masstores processed the sale in two
batches on 12 and 13 May 2011.  That is when delivery of the television sets
took place.  The facts show that Game in Polokwane did not have any storage
space pending conclusion of the sale and for this reason the goods were stored
in EduSolutions‟ warehouse.  So, the transaction was concluded in accordance
with the POM system and the intention of the parties.

[27] It follows that the SABC‟s contention that the payment credit facility
agreement entered into between Masstores and EduSolutions on 24 March 2011
constitutes a sale as contemplated in s 27(4) of the Act, is quite wrong and
insupportable on the evidence.  That agreement did no more than provide
EduSolutions with a 30-day payment credit facility.

[28] The evidence also discloses that throughout the SABC was apprised of
the status of the transaction with EduSolutions. More particularly, the SABC
was aware of the ongoing attempts to ensure that the requisite licence was in
place before the sale could be concluded. In the circumstances, the SABC‟s
claim for penalties of R7.5 million was opportunistic and contrived.

[29] Masstores is accordingly not liable for penalties under s 27(4) of the Act.

[30] What remains are the SABC‟s claims that the judgment of the court
below makes its regulatory and revenue collection processes cumbersome and
expensive; and that the POM system would be undermined at the point of sale if
delivery happens at a different date.  These claims, as the POM system
demonstrates, are simply unfounded.  The sale of a television set cannot be
processed until a valid television licence number has been entered and accepted

at the till in a store.  Indeed, it is common ground that from July 2010 to June
2011 only one out of 327 900 television sets sold by Masstores had an
unresolved television licence query.

[31] The SABC has not shown any special circumstances that warrant the
grant of special leave to appeal, and in particular has shown no reasonable
prospect of success on appeal. In the result, the application for special leave to
appeal must be refused.

[32] The following order is issued:

1 Condonation is granted for the late filing of the application for special leave
to appeal.
2 The application for special leave to appeal is refused with costs, including
those of two counsel.

___________________
A Schippers
Acting Judge of Appeal

Appearances:

For the Applicant:
V Maleka SC (with N Mayet-Beukes; heads of
argument prepared by I Semenya SC and N Mayet-
Beukes)

Instructed by:
Ningaza Horner Inc, Sandton
Symington & De Kok, Bloemfontein

For the Respondent:
I Miltz SC (with JF Nicholson)
Instructed by:
Shepstone & Wylie, Johannesburg

Matsepes Inc, Bloemfontein