Lottostar (Pty) Ltd and Others v Ithuba Holdings (Pty) Ltd and Others

The National Lotteries Commission (NLC) and Ithuba Holdings (Pty) Ltd, the exclusive holder of the National Lottery licence, brought an application in the Mpumalanga High Court against Lottostar (Pty) Ltd seeking a declaratory order that Lottostar's scheme of offering fixed-odd bets on lottery outcomes was illegal and contravened s 57(2)(g) of the Lotteries Act 57 of 1997. Lottostar held a bookmaker licence issued by the Mpumalanga Gambling Board (MGB) under the Mpumalanga Gambling Act 5 of 1999. Betting World (Pty) Ltd successfully intervened as a respondent. The high court (Mphahlele J) upheld a preliminary point regarding non-compliance with s 41 of the Constitution and the Intergovernmental Relations Framework Act. On appeal, the Full Court set aside that order and declared Lottostar's betting scheme unlawful, interdicting it from offering such bets and ordering costs against Lottostar, the MGB and Betting World. The matter then proceeded to the Supreme Court of Appeal.

• Whether further parties, including the Minister of Trade and Industry, Members of the Executive Council of other Provinces, Provincial Gambling Authorities of other provinces, and other bookmakers holding licences under provincial gambling laws, should be joined to the proceedings
• Whether the appeal could proceed absent joinder of parties who have an interest in the result of the proceedings
• Whether the matter constitutes a test case with implications for comparable provisions of gambling legislation in other provinces
• Whether provincial gambling legislation permitting betting on lotteries is constitutionally valid
• Whether the Mpumalanga Gambling Act is inconsistent with national legislation
• The proper application of joinder principles at appellate stage

The court issued the following directions: (i) the attorneys for the NLC and NGB must notify each of the further parties (Provincial Gambling Authorities and relevant Ministers) of these proceedings and the Full Court order, and serve them with a copy of the judgment; (ii) indicate that all papers will be available for inspection or electronic transmission for two weeks; (iii) file an affidavit with the Registrar confirming compliance with these directions; (iv) Provincial Gambling Authorities must bring the proceedings to the attention of any bookmaker offering bets on lottery outcomes pursuant to licences issued under comparable provincial legislation; (v) each such further party must within two weeks indicate to the Registrar whether they consent to be bound by the judgment or wish to participate in the appeal. The adjudication of the appeal was stayed pending compliance with these directions. Costs were reserved for later determination. Further directions would issue regarding parties expressing unwillingness to be bound or wishing to participate.

Where parties before a court reference matters requiring consideration beyond the original conception of the case, this may engage the interests of third parties not before the court, potentially requiring their joinder. The question of joinder depends not on the nature of the subject-matter of the suit, but on the manner in which, and the extent to which, the court's order may affect the interests of third parties. Courts will order joinder to ensure all parties interested in the subject-matter of the dispute and whose rights may be affected are before it, to avoid multiplicity of proceedings and waste of costs. At appellate stage, where non-joinder issues arise after substantial time and costs have been invested, courts may adopt expedient procedural mechanisms to notify potentially affected parties and provide them opportunity to consent to be bound or participate, rather than requiring the matter to revert to first instance. This is particularly appropriate in test cases raising constitutional questions affecting concurrent national and provincial legislative competence that will impact similarly situated parties across multiple provinces.

The court observed that the primary issues raised are essentially questions of law deserving of the court's attention, from which not just the present but also other similarly placed litigants will likely benefit. The court noted that the matter appears to be very much in the nature of a test case, and that similar litigation will likely follow implicating comparable provisions of gambling legislation in other provinces. The court stated that neither its reasoning nor any order issued can simply be ignored in the adjudication of such future matters. The court indicated that when interpreting legislation involving functional areas of concurrent national and provincial legislative competence (Schedule 4 of the Constitution), regard must be had to s 150 of the Constitution, which requires courts to prefer any reasonable interpretation that avoids conflict between national and provincial legislation. The court acknowledged that the interests of further parties should have been considered at first instance to determine whether their joinder was necessary, convenient or neither, but recognized the real difficulty in addressing this at an appellate stage twice removed from the court of first instance.

This judgment is significant for its pragmatic approach to the joinder of parties at the appellate stage in matters with wide-ranging constitutional and legislative implications. It demonstrates the court's willingness to adopt flexible procedural mechanisms to avoid multiplicity of proceedings and wastage of costs, particularly in test cases affecting functional areas of concurrent national and provincial legislative competence under Schedule 4 of the Constitution. The case highlights the court's recognition that matters framed narrowly may evolve to raise broader constitutional questions affecting third parties not originally contemplated, requiring the court to ensure all interested parties are before it. The judgment also illustrates the tension between provincial and national competence in regulating gambling and lotteries, and the potential for provincial legislation to be challenged on constitutional grounds. The procedural approach adopted serves as precedent for managing complex multi-party disputes with constitutional dimensions at appellate level.