LAHR3713 JOURNAL

MARKING GUIDE

Introduction

1. This marking guide identifies the broad terrain that the journal must cover.

2. The marking guide maps the terrain by reproducing text from the two judgment
contrasting judgments. It does so liberally and with wide editorial licence, free of
specific referencing and academic attribution. Generally, though, only the language
underlined below is independent of the judgment contents.

3. The underlined language, which students could ideally place in a comment and/ or
concluding section, contains an elaborate, numbered critique, mainly of the concurring
judgment of Moseneke DCJ.

4. Students producing a coherent and persuasive statement based on approximately

twenty-five of the points offered below should attract a significant mark score.

5. The marking guide does not present a comprehensive critique of the two judgments.
That would exceed the assessor’s expectation of students even more than this current
document, whose aim is to give an indicative - if hopefully instructive but unstrict -
model of both what is discursively necessary and possible.

6. The marking guide principally targets the constitutional property dimensions of the
main and concurring judgments. Unlike say, the administrative law arguments, these
aspects are relevant and central to the constitutional property part of the LAHR3713
module, including the sequential, and authoritative, ‘property’, ‘deprivation’ and
‘arbitrariness’ analysis that was established in the FNB case and necessarily receives
the brief attention of this guide.

7. The background statement below merely indicates some of the necessary context for
the journal. An effective paraphrase would limit its lentgh considerably, as should be
the case.

Background

8. Shoprite Checkers (Pty) Limited v MEC for Economic Development, Environmental

Affairs and Tourism, Eastern Cape and Others 2015 (9) BCLR 1052 (CC) faced the
issue whether a grocer’s liquor licence constitutes property under section 25 of the
Constitution and whether the Eastern Cape Liquor Act 10 of 2003 arbitrarily deprived
Shoprite Checkers of property.

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9. The Liquor Board granted Shoprite grocer’s wine licences in terms of the 1989 Liquor Act
for approved supermarkets throughout the Eastern Cape between 1989 and January
2003. The holder of a grocer’s wine licence was prohibited from selling liquor other than
wine.

10. However, grocer’s wine licences granted under the 1989 Liquor Act continued to be valid
as “registrations” under the Eastern Cape Act for 10 years after the latter’s
commencement. The proviso was that after five years they could be converted into proper
registrations. The Eastern Cape Act came into effect in 2004. Shoprite did not convert its
grocer’s wine licences into full scale registrations to sell liquor at different premises. The
10-year period of validity of erstwhile grocer’s wine licences lapsed on 14 May 2014 under
the Eastern Cape Act’s transitional provisions.

11. In about September 2013, Shoprite’s representative met with a representative of the
Liquor Board to discuss the imminent lapse of its grocer’s wine licences. After taking legal
advice, Shoprite also addressed a letter to the Premier of the Eastern Cape. Further
exchanges bore no fruit and Shoprite launched an application in the High Court on a semi-
urgent basis, seeking a declaration that the relevant provisions of the Eastern Cape Act
that replaced its entitlements under the 1989 Liquor Act were constitutionally invalid.

12. The Court held that its entitlement under the grocer’s wine licence constituted property
for the purposes of section 25(1) of the Constitution, that Shoprite was deprived of this
property, and that the deprivation was arbitrary. Shoprite applied for confirmation of the
declaration of constitutional invalidity.

Froneman J

13. The case challenges a legislative change to the regulatory framework for the sale of
liquor, not its administrative enforcement. Thus, the Promotion of Administrative Justice
Act (PAJA) is not relevant.

14. The fiercely contested and evolving conversation on what should comprise property
requires us to develop our conception of property from the framework of values and
individual rights in the Constitution. The extent of constitutional protection should depend
on the kind of constitutional interest involved and the core purpose associated with that
type of property interest. The contrasting views on constitutional protection of property
can be balanced by seeking a conception of property in the Constitution and its
fundamental values and rights such as dignity, equality and freedom and free choice of
vocation.

15. The issue before the court, namely the entitlement to commercial trade under a state
licence or regulation, does not sit comfortably with private law notions of property. A
conception of property that accords with those founding values is what should animate
the question of determining the kind of property that deserves protection.

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16. The enquiry into what kind of property deserves protection under the property clause
cannot be restricted to private law notions of property. To do so would exclude other
potential constitutional entitlements that may deserve protection from the ambit of
protection under the property clause. It could also inadvertently lead to a failure to subject
private law notions of property to constitutional scrutiny in order to ensure that they accord
with constitutional norms. Extending our conception of property to embrace constitutional
entitlements beyond the original ambit of private common law property will ensure that
the property clause does not become an obstacle to the transformation of our society, but
central to its achievement.

17. The objective normative values of the Constitution thus require us to determine what kind
of property deserves protection under the property clause, by reference to the
Constitution itself. The fundamental values of dignity, equality and freedom necessitate a
conception of property that allows, on the one hand, for individual self-fulfillment in the
holding of property, and, on the other, the recognition that the holding of property also
carries with it a social obligation not to harm the public good. The function that the
protection of holding property must thus, broadly, serve is the attainment of this socially
situated individual self-fulfillment. Based on a human analogy, the learned judge applied
extended the self-fulfillment theory to juristic persons.

18. Where the holding of property is related to the exercise, protection or advancement of
particular individual rights under the Bill of Rights, the level of the protection afforded to
that holding will be stronger than where no relation of that kind exists.

19. The constitutional protection of the holding of property need not be premised on an
economic theory of property that holds that the core purpose of property must be wealth
satisfaction or the satisfaction of individual preferences.

20. Public licences do not fit easily into a private law conception of rights and property. In our
pre-constitutional law, these kinds of interests were only recognised once vested. That
recognition allowed limited procedural protection only under administrative law, which
could be extinguished by the exercise of original legislative powers. It would be a
retrogressive step to use pre-constitutional notions of vesting to determine the ambit of
property that needs to be protected under the Constitution.

21. These rights are transferable, subject to approval by the licensing authority. The right to
sell liquor is thus clearly definable and identifiable by persons other than the holder; has
value; is capable of being transferred; and is sufficiently permanent, in the sense that the
holder is, in terms of administrative law, protected against arbitrary revocation by the
issuing authority.

22. On the facts here, vesting in the conventional sense occurred when the grocer’s wine
licences were originally issued. We may legitimately differ on whether a particular
instance justifies the constitutional link in cases that are not covered by existing notions
of property, but if we do not have that standard, individual determination by the courts of
what constitutes property runs the risk of being labelled arbitrary.

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23. The grocer’s liquor licence does indeed amount to property under s 25 of the
Constitution.

24. Shoprite lost some legal entitlement and was thus deprived of property but not too
much. the reason is that any entitlement to other fundamental rights, or diminution of
any interest served by the values of the Constitution. Thus, the rationality test for
arbitrariness would suffice.

25. Justice Froneman followed the FNB framework for the evaluation of arbitrariness. The
court found the deprivation to be rational for lack of procedural and substantive
fairness. The court reasoned that the intension to simplify the liquor regulatory regime
was rational.

26. Justice Froneman indicates that s 25 protects the actual property object rather than
the exchange (commercial) value of the object or the legal relationship between
Shoprite and the object (1). I agree that this is so. However, the text of his judgment
effectively extends protection to both other aspects (1). Otherwise, the right to a
vocation would matter a great deal less (1). Clearly, the main judgment effectively
protects Shoprite’s relationship with the licence, too (1). These two aspects are the
only reason Shoprite was in court seeking protection (1). The licence or its tangible
manifestation faced no danger. No misfortune was ever going to befall them, if one
can imagine this, and the court’s competence does not extend to their legal or material
and physical integrity (1).

27. Justice Froneman’s reasoning is mostly sound and compelling, though his failure to
fully interrogate Moseneke’s vital questions of corporate power and potential abuse
and social dangers of alcohol should concerns us (1). The main judgment
disconcertingly makes too much of the individual self-fulfillment analogy, neglecting
critical social, legal and constitutional questions about the legitimate extent to which
substantially large corporate players can rightly demand constitutional cover (1).
However, the logic of the main judgment is its fidelity to the sequential, and
authoritative, ‘property’, ‘deprivation’ and ‘arbitrariness’ analysis established in FNB.

Moseneke DCJ

28. It is unnecessary to characterise Shoprite’s grocer’s wine licence as constitutional

property. The same outcome may be arrived at without deciding the difficult and fluid
question whether it is property. This difficult and fluid question is the precise reason
the parties seek a Constitutional Court decision (1). The court cannot legitimately
avoid the issue merely because it feels challenged (1). If anything, the interest in legal
certainty and principles-development suggest the opposite stance (1). The question
whether the licence is property is a preliminary conundrum requiring the court’s
pronouncement (1). The court cannot adjudicate the existence and extent of violation
without defining the thing in question (1). The court can consider this issue if it finds
the licence amounts to property (1). The judicial enquiry into the existence and
magnitude of deprivation can surely not arise if the disputed licence does not qualify

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 as property (1). Moseneke DCJ’s conclusion on the property question provides no
basis for his preferred rationality review (1). Following FNB, Moseneke DCJ could only
have considered the deprivation and rationality issues after concluding that the licence
constitutes property (1).

29. It should suffice to test the challenged provisions for rationality. In that event, one
simply asks whether the provisions pursue a legitimate government purpose, and if
so, whether the statutory means resorted to are arbitrary or reveal naked preference
or another illogical or irrational trait. In substance the arbitrariness enquiry here would,
in process and substance, be no different from the arbitrariness enquiry under section
25 (1). This view is illogical for two reasons (1). It avoids the threshold question of the
exact nature and content of the disputed rights (1). It does not explain the court’s basis
to determine the existence and rationality of any violation (1).

30. However, if one must decide whether a liquor licence is property in the hands of its
holder, I would part ways with the main judgment. I would hold that it is not property.
This obiter view adds no analytical value to the debate (1). If the licence is not property,
what legal rights and interests are before the court (1)? How does Moseneke DCJ
reasonably arrive at the rationality test (1)? What is the basis to apply a rationality test
(1)? Why did Moseneke DCJ not choose any other test, such as reasonableness or
any other (1)? On what basis can the concurrence analyse a property challenge if the
licence does not constitute property (1)?

31. The High Court was wrong to invalidate the impugned provisions invalid on the basis
that Shoprite was arbitrarily deprived of property.

32. Moseneke DCJ concluded that Shoprite’s real grievance was not the loss of the
licence but that of a ‘business strategy and model that it prefers and cherishes’. This
business approach cannot constitute property under s 25 of the Constitution. I agree
that the motivation of the litigation is the preservation of an attractive business model
(1). However, the precise legal claim concerns the constitutional status of a liquor
licence (1), as Shoprite correctly pled and argued (1). The justice’s reframing of
Shoprite’s is thus unconvincing (1). Moreover, it serves to obscure the central
constitutional question about the status of the licence under s 25 (1), neatly but
unpersuasively enabling the deputy chief justice to avoid the definition of constitutional
property (1).

33. Relying on academic authority, Moseneke DCJ decided that the starting point for
definition of constitutional property is in effect the private common law. The problem
is that private law notions may arrest the development of constitutional conceptions of
property (1). The risk is that this could unwittingly insulate property law from
constitutional scrutiny (1).

34. The licence constitutes ‘new property’. “New property’ have limited scope, duration
and content and may be compromised by administrative decisions. In this sense, the
‘rights’ concerned do not vest and thus cannot be constitutional property. Froneman J

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 showed that the issue of vesting may be less important than the concurrence suggests
(1). In any case, vesting does occur subject to the lawful variation or termination of the
licence (1).

35. We boast…administrative justice protections that are truly expansive and meant to
police and curb executive excesses. Our jurisprudence need not convert every
conceivable interest, with or without commercial value, as a few other jurisdictions
have done, into protectable property. The main judgment is correct that the case
raises constitutional rather than administrative review issues (1).

36. Our jurisprudence need not convert every conceivable interest, with or without
commercial value, as a few other jurisdictions have done, into protectable property.
There is no quarrel with this abstract statement but it neither takes the instant dispute
further nor does it defeat Froneman J’s well-articulated model of a constitutional
conception (1), though that model may indeed dilute the independent value of
characterising a thing as property.

37. Moseneke DCJ was concerned that recognising the licence as constitutional property
would imperil legislative regulation of a harmful substance. He may be righter than
Froneman J on this point. But the point is not central to the argument and the jury
remains out on the merits of their relative approaches (1).

38. An entitlement to commercial trade under a state licence does not fit comfortably
within the constitutional notions of property. The constitutional order requires a
constitutional rather a private law definition of property (1).

39. The main judgment may very well create very difficult property jurisprudence. The
wider the definition of property, the tighter our understanding of deprivation and
arbitrariness will have to be. This is a plausible attack on the main judgment. But it
confuses the applicable right with the remediation of its violation (1).

40. Economic and commercial interests, whether objective or subjective, are part and
parcel of these permissions. The inherent limitation in the core attribute of a liquor
licence cannot be played down and supplanted by other rights in the Constitution to
justify a finding of “property” which otherwise does not fit the objective enquiry.
Moseneke DCJ recognises the importance of both the exchange value of the licence
(1). The rest of his judgment clearly perceives the importance of the relationship
between Shoprite and its grocer’s liquor licence (1). At the same, Moseneke DCJ does
to some extent, and confessedly, see his judgment as protecting the actual object in
question (1).

41. When one assesses whether a liquor licence constitutes property and whether the
Constitution clamours for its protection as property, it is necessary to ascertain
whether the interest or permission in issue is open to arbitrary confiscation or material
alteration. This is a plausible attack on the main judgment. But it confuses the
applicable right with the remedy for its violation (1).

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42. The enquiry into arbitrary deprivation in substance is no different from the enquiry into
rationality of the impugned statute. This approach begs the old threshold question:
what is the nature of the thing that the court is being asked to protect (1). It also robs
the concurrence of a sound basis to enquire into the questions it considers in the
context of the instant case (1).