Can a liquor licence constitute property?

As we all know there are some things in life that are quite obviously property, such as pieces of land, and other physical objects like a car, a boat, furniture etc. However, when it comes to more abstract interests it’s not that simple nor certain. Recently a perfect example in this regard has occurred in South African law.

The Constitutional Court of South Africa had to face the challenge of determining if a licence granted by the State constituted property. In the recent Shoprite Checkers (Pty) Ltd v MEC[1] case, Shoprite challenged the constitutional validity of certain provisions in the Eastern Cape Liquor Act No.10 of 2003 and which will be the main focus of the Article.

Facts of the case

The Eastern Cape Liquor Board granted Shoprite grocer’s wine licences between1989 and 2003 under the Liquor Act No. 27 of 1989. In 2004 the Eastern Cape Liquor Act No.10 of 2003 (hereinafter referred to as the Act) came into force and changed how the sale of alcohol was regulated in the province. Prior to this Act Shoprite held a grocer’s wine licence, which allowed it to sell wine alongside food in its supermarkets. However, the Act provided that these licenses will only be valid until 2014. Nevertheless, licence holders could apply for a registration to sell all kinds of liquor, but only in dedicated bottle stores and not in supermarkets anymore.

Shoprite approached the High Court in Grahams Town and argued that grocer’s wine licences are property under the Constitution and that the Act, by taking away this licence, arbitrarily and unconstitutionally deprived Shoprite of its property and[2] consequently violated Shoprite’s rights in terms of section 25 of the Constitution.

The High Court found that the grocer’s wine licence constituted property under the Constitution and held that the relevant provisions of the Act arbitrarily deprived Shoprite of this property and are therefore unconstitutional. This decision was referred to the Constitutional Court for confirmation, seen that the Constitutional Court must make the final decision regarding the constitutionality of legislation.[3]

Constitutional Court judgement

Section 25(1) of the Constitution states that no law may permit arbitrary deprivation of property. Shoprite therefore had the onus to show that its grocer’s wine licence was property in terms of the section and furthermore show that the Act arbitrarily deprived it of this property.

The Court split three ways on this challenging question. The main judgement held that the licence constitutes property and that our conception of property must be derived from the Constitution and it must embrace constitutional entitlements beyond the original ambit of private common law property. The judges focused on the potential of the licence to further other constitutional rights. They considered that a grocer’s wine licence  could be held by a person who needs it in order to run a small business, which licence therefore further the right to freedom of trade and the related right to dignity. The judgment further found that the right to sell liquor bears many of the traditional hallmarks of property.[4]

The new regime was however not absolute, as Shoprite had the opportunity to convert that right to a registration to sell all kinds of liquor, although not on the same premises as a grocery business. Finally the main judgment held that the Act didn’t extinguish any other fundamental rights of holders of grocer’s wine licences or fundamental constitutional values and therefore rationality would be sufficient reason to avoid a finding of arbitrariness. It was held that changing the regulatory regime of liquor sales to provide for simplification in the licensing system was rational and that courts should not easily interfere with the choices of the Legislature. It was therefore found that there was no arbitrary deprivation of property and was therefore not found to be unconstitutional.

A concurring judgment supported the main judgment’s conclusion that the Court will not confirm the High Court’s order to be unconstitutional, because the provisions of the Act is not inconsistent with the Constitution. However, this judgment held that the characterization of the licence as property was unnecessary and that a licence is a bare permission to do something that would otherwise be unlawful. It is generally issued to overcome statutory prohibition and furthermore licences are subject to administrative withdrawal and change, they are never absolute, often conditional and frequently time-bound. Consequently they do not vest in their holder.[5]

The grant and termination of licences are protected by administrative justice and therefore may not always be arbitrary or unlawful. The Constitution authorises the Provincial Legislature to regulate the sale of liquor and defining a licence as property may impede legislative regulation, make it impracticable and may diminish the ability of the state to regulate in the public interest.

The dissenting judgment concluded that Shoprite’s grocer’s wine license constitutes property seeing that it was relatively permanent, could be traded and even sold and had commercial value. Taking this into consideration, the licence shared the attributes of more traditional kinds of property. However, the judgment found that the main judgment diminished the value of property right as a self-standing concept worthy of its individual protection under law. It held that the deprivation was absolute as Shoprite is now wholly divested of the unique essence of the licence, which entailed selling wine alongside food in the grocery stores. The provision to apply for a broader licence does not alleviate the deprivation because this option was always available to Shoprite.[6]

Conclusion

Should one therefore concede to the dissenting judgment in that it should not be necessary to consider other rights in order to protect a right as held in the main judgment? But what about the right of equality, the right of freedom, the right not to be unfairly discriminated against or the right of dignity, and how these rights all interact with one another. Is this interaction so significant that it just cannot be ignored? One thing is for certain, the right to property is entrenched in our Constitution, and it affects the lives of each and every living person in our Country, and it might just be important enough to consider that it needs to enjoy individual protection.

However, one needs to consider the fact that our Constitution was carefully drafted and the Rule of Law embedded in our Constitution enjoys the centre of attention. The Provincial Legislator is granted very specific authority to regulate matters set out in the Schedules to the Constitution, which includes the regulation of licenses and therefore should one constitute a license to be property, and although a license may have many of the traditional hallmarks of property, it would have an undesirable effect as such would limit the Province to exercise its power to regulate the liquor industry and may create a very difficult property jurisprudence and ultimately infringe on the Rule of Law.

BIBLIOGRAPHY

Olivier Property yields to purpose: Shoprite Checkers v MEC
Olivier P Property yields to purpose: Shoprite Checkers v MEC African Legal Centre http://africanlegalcentre.org/piet-olivier (6 July 2015)

Van der Walt and Pienaar Inleiding tot die Sakereg
Van der Walt AJ and Pienaar GJ Inleiding tot die Sakereg 6de uitgawe (Juta Claremont 2011)

Shoprite Checkers (Pty) Limited v Member of the Executive Council for Economic Development, Environmental Affairs And Tourism, Eastern Cape and Others (CCT 216/14) [2015] ZACC 23

Shoprite Checkers (Pty) Limited v Member of the Executive Council for Economic Development, Environmental Affairs And Tourism, Eastern Cape and Others Constitutional Court Media Summary

Constitution of the Republic of South Africa, 1996

[1] Shoprite Checkers (Pty) Limited v Member of the Executive Council for Economic Development, Environmental Affairs And Tourism, Eastern Cape and Others (CCT 216/14) [2015] ZACC 23.

[2] Olivier Property yields to purpose: Shoprite Checkers v MEC.

[3] Section 167(5) of the Constitution of the Republic of South Africa, 1996.

[4] Olivier Property yields to purpose: Shoprite Checkers v MEC & Shoprite Checkers (Pty) Limited v Member of the Executive Council for Economic Development, Environmental Affairs And Tourism, Eastern Cape and Others (CCT 216/14) [2015] ZACC 23 CC Media Summary.

[5] Shoprite Checkers (Pty) Limited v Member of the Executive Council for Economic Development, Environmental Affairs And Tourism, Eastern Cape and Others (CCT 216/14) [2015] ZACC 23 CC Media Summary.

[6] Olivier Property yields to purpose: Shoprite Checkers v MEC and Shoprite Checkers (Pty) Limited v Member of the Executive Council for Economic Development, Environmental Affairs And Tourism, Eastern Cape and Others (CCT 216/14) [2015] ZACC 23 CC Media Summary.

February 11, 2016
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