The Draft Liquor Amendment Bill was published for comment in the Government Gazette of Friday the 30th September 2016.

The Bill, read in conjunction with the Final National Liquor policy document published on the same day, has serious implications for the liquor industry and will, once implemented turn the liquor trade on its head.

Our comments on the Bill are set out hereunder. In summary the Bill provides for the creation of a National Liquor Regulator which will take over most of the functions of the Minister in terms of the Liquor Act of 2003 which regulates, mainly the manufacture and distribution of liquor, but also impinges on the retail industry.

Advertising of liquor is severely curtailed, the drinking age is raised from 18 to 21, the Minister will have the right to set BBBEE levels which if not met will lead to the suspension or revocation of the registration, the Minister will prescribe guidelines to curb the effects of alcohol abuse, zoning is to be enforced, no liquor may be sold at petrol stations, no liquor may be sold near public transport facilities, schools, places of worship, recreational facilities, rehabilitation or treatment centres, residential areas, or public institutions. Additional inspectors are to be designated which signals stricter enforcement. Additional offences are created. The Minister is given the power to determine trading hours for manufacturers and distributors. An internal review process is instituted which means that this remedy will have to be exhausted before application may be made to a court for relief.

Perhaps the most revolutionary provision is making the manufacturer or distributor liable for death, injury or damage to property caused by liquor abuse.

Here under our comments on the Bill.

General

The Minister is to be replaced as a functionary in terms of the Act by a newly created body to be known as the “National Liquor Regulator” or “NLR”. The word “Minister”, wherever it appears in the Act with relation to the registration process, is replaced by the words “National Liquor Regulator”.

Section 1

The section is amended by the insertion of the definition of a “place of worship”. It is defined as ”meaning a specially designed structure or consecrated space where in individuals or a group of people come to perform acts of devotion or religious services”. The definition is problematic in several respects. It will become of importance because in terms of the new section 13A hereunder the manufacture, distribution or retail sale of liquor is prohibited within 500 meters from a place of worship. This not only applies to new applicants but also to existing licensees who will have to comply with norms and standards as approved by the National Liquor Policy Council from time to time as well as conditions imposed by the National Liquor Regulator. As the definition stands now, it is not clear whether it applies to occasional religious services or to regular services. Where “individuals” perform “acts of devotion” in their homes or elsewhere will it make the homes or other places, places of worship? More on this hereunder, when we deal with section 13A.

Section 2

A person may not advertise in a false or misleading manner, in a way which misrepresents the age of persons participating in the adverts, in a manner to target or attract persons under the age of 21 years ( the new age limit) or if the content appeals to persons under the age of 21.

I fail to see how content will be judged to appeal to a 20 year old but not to a 21 year old.

The advertisement of liquor is further prohibited “in public platforms” in the following (but not limited to) forms:

• Billboards less than 100 meters from junctions, street corners or traffic circles;
• Distribution of pamphlets containing liquor adverts;
• Radio and television advertising except in prescribed time slots;
• Adverts must reflect the harmful effect of liquor abuse.

In addition the Minister may after consultation prescribe more restrictions. This is unacceptable as it gives the Minister the power to restrict advertising severely or to ban it completely.

These restrictions, especially the one relating to pamphlets, will seriously hamper new entrants to the liquor trade. How will the public even know that the new licencee is open for business. The result is that the established licensees will be protected from legitimate competition.

Section 3

The sale or supply of liquor to persons under the age of 21 is prohibited the only exception being in respect of liquor supplied for sacramental purposes.

A person must take reasonable measures to determine the age of the person he supplies liquor to.

A person under 21 must not falsely claim to be of age nor may any other person falsely claim that another is of age when he or she is not.

(Legally a 20 year old is no longer a minor as minority ends on attaining the age of 18. He is allowed to marry without parental consent, to vote and to enter into contracts unassisted. The age limit set is an arbitrary one and is irrational. These provisions will be so difficult to enforce that they will be a dead letter. It is common cause that, despite the 18 year age limit having been in force for many years, underage drinking is rife and that the authorities are unable to enforce the law. There is no reason to suppose that they will have more success by arbitrarily raising the drinking age thereby expecting adult university students and working class men and women to abstain from alcohol. The prohibition will simply be ignored and the authorities will be unable to do anything about it. This in turn will lead to further disrespect for the law.)

Section 11 and 12

Applications to be registered as manufacturers or distributors or both, in terms of the Act, are henceforth made to the National Liquor Regulator. That body also takes over other functions which the Minister has had to date.

Section13

The Minister is given the power to prescribe “the level of Broad Based Black Economic Empowerment to be met by registrants”.

This is a drastic change and if enforced strictly could put many registrants out of business.

The Minister “shall” further prescribe “guidelines for combatting socio-economic harms caused by liquor abuse”. This gives the Minister wide ranging powers and we can only speculate what those guidelines will be. They could be anything from product warning labels to further taxation.

Failure to comply with the above will result in “the suspension or revocation of the registration certificate”.

Section13A

No application may be granted for:

• areas not classified for trading in liquor (we think this refers to zoning);
• premises attached to petrol service stations;
• premises near public transport facilities (This is very vague. It may refer to train or bus stations but could equally refer to a railway line or a bus route).

“The manufacturing, distribution or retail sale of liquor in either rural or urban community (is there any other?), is prohibited on any location that is less than 500 metres away from schools, place of worship, recreational facilities (cinema’s?), rehabilitation or treatment centres, residential areas, public institutions, and other alike amenities.” These places are badly described and not defined anywhere. What is a public institution? What constitutes a residential area? Many shopping centres have a residential component above the shopping area. Will there be no liquor sold in those shopping centres?

I will quote sub-section 3 verbatim as I do not know what it means:

“Where such application (sic) is already registered or in areas with the highest population density (sic), the registrants shall-

a. Comply with norms and standards as approved by the National Liquor Policy Council from time to time;

b. Comply with any registration conditions as imposed by the National Liquor regulator”.

My best guess is that existing licensees will be allowed to continue trading but that the above bodies may impose restrictions upon them to prevent harm to the listed institutions etc. If existing licensees are to be exempted from the blanket ban on this basis then the legislator should have said so.

A transgression of the above provisions will be visited by a “penalty” (I think they mean a fine), suspension, revocation or all three.

Section 25

Additional officials may be designated as liquor inspectors including police officers, customs officials, traffic officers, health inspectors, peace officers, fisheries inspectors or any person designated as an inspector by the Department of Health, or by the Minister upon the request of that person.

Section 32A

This section introduces an internal review process which provides for hearing of objections against the decisions of the Minister, inspectors or designated inspectors. The purpose is to avoid the high cost of litigation. Only after the above internal review process has been completed may an objector who is not satisfied approach a court. As the most important decisions will henceforth be made not by the Minister but by the National Liquor Regulator it is not understood why this provision does not also relate to decisions by that body.

Section 34

The following additional offences are added to the list

• Manufacture, distribute, sell, supply or possess any counterfeit, goods, liquor or methylated spirits;
• Distribute liquor to an unlicensed person (This is just a correction of a previous omission in the Act);
• Engage in fronting as defined in the BBBEE Act.

Section 34A

This is probably the most controversial provision of the Bill.

A manufacturer or distributor who distributes (sic) liquor to a retailer who does not have a liquor licence shall be jointly and severally liable (with who?) for:

a. Any harm or unlawful conduct caused wholly or partly as a consequence of the supply of liquor to the unlicensed retailer;

b. Death of, or injury to any natural person; or

c. Any loss of or physical damage to any property, irrespective of whether it is movable or immovable.

Sub-section (2) makes no sense at all. It reads:

“The manufacturer or distributor who distributes liquor to an unlicensed (sic) contemplated in subsection 1 above, irrespective of whether the harm resulted from negligence on the part of the manufacturer or distributor as the case may be.( sic) (I think they forgot to finish the sentence).

An unlicensed retailer, who sells liquor to any person, will be liable for any harm whether it resulted from his negligence or not.

A manufacturer, or distributor and an unlicensed retailer are guilty of an offence where the liquor product found in the unlicensed premises “is linked to the manufacturer or distributor.”

I have some sympathy with what the legislator is attempting to do here. He wants to cut off the supply of liquor to the illegal trader at source. I doubt however that the above provisions will withstand scrutiny by our courts. They seek to hold a person liable for damages despite the fact that there is no causal connection between the actions of that person and the actual harm caused.

Section 39A

The section deals with the establishment and powers of the National Liquor Regulator. That body is inter alia given the power to “monitor and oversee the liquor trade in the Republic, the activities of the provincial liquor board and municipalities……” The Constitution does not allow this as each tier of Government has exclusive rights and duties relating to liquor.

Section 42

The Minister is given the right to determine trading days and hours for manufacturers and distributors. Presently these hours are set out in the Norms and Standards which override any legislation which is in conflict with it. I do not see the purpose of this amendment.

Solly Epstein
C & A Friedlander Inc.

 

 

 

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE)