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[2011] ZAGPJHC 29
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Erf 179 Bedfordview (Pty) Ltd v Bedford Square Properties (Pty) Ltd and Another (44500/10) [2011] ZAGPJHC 29 (28 March 2011)
Links to summary
REPORTABLE
REPUBLIC OF SOUTH AFRICA
SOUTH GAUTENG HIGH COURT, JOHANNESBURG
CASE NO: 44500/10
DATE:28/03/2011
In the matter between:
ERF 179 BEDFORDVIEW (PTY)
Ltd
.........................................................
Applicant
and
BEDFORD SQUARE PROPERTIES (PTY)
Ltd
............................
First
Respondent
and
WOOLWORTHS (PTY)
LTD
......................................................
Second
Respondent
REASONS FOR DECISION
SPILG, J:
APPLICATION
CONTEXTUALISED
The
Applicant is the owner of properties on which the Village View
shopping centre is located. The First Respondent (who will
also be
referred as Bedford Square) had sought local government approval to
develop a large shopping centre near that of the
Applicant and also
near the Eastgate Shopping Mall. A dispute arose when the Ekurhuleni
Metropolitan Municipality approved the
development. The Applicant,
Liberty Group Limited (as owners of the land on which the Eastgate
Mall is situated) and some other
property owners appealed the
decision to the Township Board for Gauteng.
On
4 November 2003 Bedford Square and the Ekurhuleni Metropolitan
Municipality as Respondents in the proceedings before the Township
Board concluded a written agreement with the Appellants, including
the Applicant. The agreement is entitled “
Settlement
Agreement”
.
The
purpose of the agreement was to amicably settle the appeal against
the Metro Council’s decision to remove certain conditions
from
the title deeds of the property purchased by Bedford Square and to
effect a rezoning so that it could develop the property
as a major
shopping complex, which subsequently became known as the Bedford
Centre.
The
opening paragraph of the agreement records the events relating to
that appeal and concludes in paragraph 1.4 with the following
statement:
“
The
parties hereto have agreed to settle the appeal on the terms and
conditions as set out in this settlement agreement
“
.
The
paragraph that followed set out the negotiated amendments to the
town planning scheme. These amendments allowed Bedford Square
to
provide up to 10 500 sq metres of gross leasable floor area of
shops, restaurants and the like in its proposed shopping centre.
The
key provision for the purposes of this case, contained in clauses
3.1, is Bedford Square’s undertaking not to,
“
...
at any time within a period of
eleven years commencing from the date of conclusion of this
agreement conclude a lease agreement
in terms of which any rental
space located on the PROPERTY is let to Woolworths or Mica Hardware.
This provision shall be registered
as a praedial servitude against
the PROPERTY in favour of the following properties….
”
The
properties referred to expressly included that of the Applicant and
the provisions of the agreement were subsequently registered
as
praedial servitudes.
The
period of the restraint expires on 3 November 2014.
In
effect the agreement and praedial servitude are of limited scope.
They preclude Bedford Square from concluding lease agreements
with
only two of South Africa’s large and potential anchor retail
tenants, being Woolworths (the Second Respondent) and
Mica Hardware,
until the beginning of November 2014.
Before
half the restraint period had expired and seemingly disenchanted
with its pact, Bedford Square first lodged a complaint
with the
Competition Commission in May 2009. It alleged that the provisions
of the notarial deed of restraint, which constituted
a servitude,
were void and unenforceable because they resulted in
anti-competitive behaviour amounting to an abuse of dominance
in
contravention of section 8 of the Competition Act, no 89 of 1998
(
the
Act)
. The submission made was that the servitude
did not serve to protect any legitimate commercial, legal or other
interest, but
was a restrictive practice and served
…merely
as a naked restraint inhibiting free and fair competition
”
.
In
late September 2009 the Commission notified Balfour Square that
after investigation it found the complaint under section 8(d)
(i) to
be unsubstantiated and issued a Notice of Non-Referral. It however
considered that the agreement might contravene section
4(1) (b) (ii)
as one between competitors to allocate the market share amounting to
a restrictive horizontal practice. As this
was not covered by the
complaint the Commission elected to initiate its own complaint under
section 49B (1) of the Act.
Dissatisfied
with this result, a month later in October 2009 Bedford Square
launched High Court proceedings against the applicant
to declare the
notarial deed of restraint unenforceable on grounds of public
policy. It also cited Woolworths and Mica Hardware
as parties to the
proceedings. Why Bedford Square persisted in seeking a means to
renege from the agreement it had concluded
with open eyes and with
no claimed bargaining disadvantage would only become evident later.
Bedford
Square disavowed reliance on the provisions of the Act, as it was
obliged to do in order to ensure that it would not fall
foul of the
exclusive jurisdiction enjoyed by the Competition Tribunal and
Competition Appeal Court (loosely referred to as the
Competition
Courts). It was also content not to pursue the section 4
investigations initiated by the Competition Commission or
parallel
remedies under the Act. In particular it did not seek to either lay
a further complaint, attempt to obtain a prompt
referral of the
matter to the Competition Tribunal nor, and perhaps most
significantly, otherwise position itself as a complainant
for
purposes of obtaining interim relief under section 49C of the Act.
On
10 December 2009 the High Court application was dismissed. Willis J
held (at para 4) that the first hurdle Bedford Square
needed to
overcome, as conceded by it , was whether the contract underpinning
the notarial deed was contrary to public policy.
The learned judge
after hearing argument found that it was not and dismissed Bedford
Square’s application.
On
7 May 2010 Bedford Square was granted leave to appeal .The SCA
recently heard argument and its decision is awaited.
The
Applicant believed that Bedford Square had launched the High Court
application to declare the servitude unenforceable pursuant
to an
abortive attempt to let retail space to Woolworths. This averment
was not disputed.
However
after leave to appeal was granted and during August 2010 the
Applicant noticed large signs being erected outside the Bedford
Centre advertising that Woolworths would be opening there on 1
March 2011.
Despite
attempts to obtain clarity regarding the intentions of
Woolworths and Bedford Square, the applicant was met with what can
best
be described as
“stonewalling”.
The
Applicant believed that it had no option but to launch the present
application, which it did in early November 2010.
The
application, as originally brought, sought to;
interdict
and prohibit Bedford Square from concluding, or acting pursuant to,
any lease agreement in terms of which retail space
was allocated to
Woolworths on Erf 39 Bedford Gardens and the Remaining Extent of
Erf 135 Bedfordview Extension 10 Township
until the earlier of 3
November 2014 or the final finding that the written agreement of
settlement concluded between inter
alia the Applicant and Bedford
Square on 3 and 4 November 2003 and the notarial deed of restraint,
executed by the Applicant
and the First Respondent on 21 June 2006,
are unenforceable;
direct
Bedford Square to cancel any lease agreement that it had concluded
with Woolworths in terms of which retail space located
on the
property is to be let to the Second Respondent at any time prior to
3 November 2014;
obtain
costs against Bedford Square, but if Woolworths opposed then costs
against them as well.
On
15 November 2010 Woolworths gave notice of its intention to abide
the court’s decision.
Bedford Square filed notices under
Rule 35(12) requesting documents. The applicant contended that they
were not relevant but nonetheless
produced some 150 pages of
documents and then called on Bedford Square to deliver its Answering
Affidavit. This was met with
a rule 30A notice. The Applicant
submitted that this was part of the dilatory tactics adopted by
Bedford Square which was intent
on giving occupation of the premises
to Woolworths on 1 March 2011. The applicant requested that the
matter be set down for hearing
on the week of 2 February 2011.
By
the time the matter was heard Bedford Square had still not filed an
answering affidavit. On 10 February 2011 Claassen J dismissed
the
First Respondent’s rule 30A notice and held that it ought to
have filed an answering affidavit. Claassen J declined
to accept a
brief affidavit from the first respondent and granted an interim
order prohibiting it from concluding or acting pursuant
to any lease
agreement contemplated in the original application. The order was
granted with immediate effect and returnable on
1 March 2011. Leave
was given to anticipate the return date.
Bedford
Square then anticipated the return day and sought a variation of the
order.
Watt-Pringle AJ
set aside the interim relief granted
on 10 February and ordered that:
Pending the final determination
of this application the first respondent is interdicted from
permitting the second respondent
to open its premises to the public
for trading without first having given written notice to the
applicant’s attorneys of
not less than three weeks prior
thereto.
Bedford Square was also directed to serve its answering
affidavit by 25 February 2011. Costs were ordered to be in the
cause.
The
learned judge considered that :
The
main application was for final relief (at para17):
Bedford
Square was entitled to anticipate the return day as it did and seek
the amended order even though it had not filed
an affidavit in the
main application:
The
applicant was not entitled to the relief claimed in the main
application of November 2011 because Bedford Square had still
not
filed an answering affidavit and that only an interim order could
be made at that stage.
.
Watt Pringle AJ then made the following order on 17 February 2011:
The
interim relief granted by Claassen J on 10 February 2011 was set
aside:
Pending
the final determination of the main application, Bedford Square was
interdicted and restrained from permitting Woolworths
opening its
premises to the public for trading without first having given
written notice to the applicant’s attorneys,
not less than
three weeks prior thereto:
Bedford
Square was to file its answering affidavit by 25 February 2010;
Costs
to be in the cause.
It
will be recalled that a day before this order was made, the SCA
heard argument in the appeal from Willis J’s substantive
order
dismissing Bedford Square’s application to declare the
notarial restraint unenforceable.
It
is evident that at this stage the First Respondent was running out
of options, particularly if the SCA decided not to uphold
its
appeal. This is so because despite Woolworths’ undertaking to
abide the court’s decision and despite the decision
of Willis
J being binding unless set aside on appeal, it appears that
Woolworths continued fitting out the Bedford Square premises
with
the intention of open its doors for business in time to attract
trade over the Easter weekend which now is just under a
month away,
Good Friday falling on 22 April.
On
21 February 2011 Bedford Square then launched urgent interim
proceedings before the Competition Tribunal. It appears that Bedford
Square may have initiated a further complaint to qualify as a
complainant under section 49C for the purposes of acquiring
locus
standi
. However the resolution of these matters falls within the
exclusive jurisdiction of the Tribunal. I will therefore assume for
present purposes that Bedford Square satisfies the
locus standi
requirements under section 49C of the Act.
I
return to the Applicant’s High Court application. On 25
February 2011 Bedford Square delivered its answering affidavit,
in
which the existence of a written lease agreement between the two
Respondents was disclosed for the first time. The salient
features
of this lease are:
The
document is the product of proposals identified inter alia as
“
Bedford Square\Master HoA Corporate FSA 2008.10.doc”
and was last edited on 27 April 2010:
The agreement was signed on 4 May
2010 by Bedford Square and on 26 May 2010 by Woolworths:
In
terms of the printed document the commencement date of the lease
was to be no later than 1 October 2010. This was altered
in
manuscript on an unknown date to 15 March 2011 and then to 24 March
2011 (see clause 6.1):
Should
the commencement date not have occurred prior to 1 November 2010
(subsequently changed in manuscript to 15 April and
then again to
28 April 2011) then Woolworths would be entitled to cancel the
lease:
The
lease period is 10 years from the commencement date with a right to
renew on four occasions- and on each occasion the period
would be
5 years:
Woolworths
was entitled to take beneficial occupation rent free:
at
least 60 days ahead of the commencement date at no cost “
for
shopfitting purposes”
;
at
least 88 days prior to the commencement date of the refrigeration
plant room:
Bedford
Square indemnified and held Woolworths harmless against all loss,
liability, damage or expense which it may suffer as
a consequence
of
“…. any claim which may be made against the
Lessee arising out of or in any way related to any existing
restrictions
that may be implemented or imposed by statute, law,
law or regulation or regulatory body or court of law against
Woolworths
opening a store in Bedford Square”.
The Applicant filed its reply. A
supplementary affidavit on behalf of Bedford Square was later filed
by consent. It dealt with
subsequent events relating to the
proceedings before the Tribunal, namely that the Commission
confirmed on 9 March 2011 that
it would be serving and filing its
referral application under section 49B with the Tribunal on 14 March
2011 and that Bedford
Square’s application before the Tribunal
for interim relief under section 49C was set down for hearing on 15
April 2011.
The
last two features resulted in the Applicant amending the relief
sought to cater for the outcome of any proceedings before
the
Competition Courts. The applicant also contends that there was no
need for this court to refer the section 4(1) (b) (ii)
issue raised
by Bedford Square in these High Court proceedings to the Tribunal
since there was now a competent referral by the
Commission itself. I
agree with this submission and I do not deal with it further.
A
significant feature in contextualising the proceedings that have
culminated in the application before me and the relief Bedford
Square seeks from the Tribunal is Bedford Square’s admission
that Woolworths intends operating at the Bedford Centre pending
the
outcome of the SCA decision and the outcome of both proceedings now
before the Tribunal. The objectives are plain. They are
to achieve a
fait accompli
with Woolworths opening its doors come Good
Friday. This court cannot fail to appreciate that if Woolworths
opens for business
either before the SCA decision is pronounced or
the Tribunal decides on the section 4(1) (d) (ii) referral by the
Commission
then it can claim that circumstances have changed,
employees may be out of work and so forth.
It
is plain that Bedford Square has consistently breached the terms of
its own bargain and has yet to offer an explanation as
to why it did
not exhaust its legal remedies before concluding the agreement with
Woolworths and before implementing its terms
by giving Woolworths
access to fit out the store and advertise at its Centre that
Woolworths would commence trading some three
and a half years before
the restraint expired.
The
argument presented during the proceedings before me demonstrates
that Bedford Square believes it is worth taking the risk
that a
court will not wish to disturb a
fait accompli
even if
achieved by persistent breaches of a contract which it has already
been told by a court, and which, unless upset on
appeal, is binding
on the basis of
res iudicata
or precludes a defence by
reasons of at least issue estoppel (See
Liley
v Johannesburg Turf Club
1983 (4) SA 548
(W) at 551-552
,
Horowitz
v Brock
1988 (2)
SA 160
(A)
and
Kommissaris
Van Binnelandse Imkomste v Absa Bank Bpk
1995 (1) SA 653
(A))
. The question is whether Bedford Square
is lawfully entitled to do so. I proceed to consider the issues
raised as to whether
the application before me should succeed or
not.
THE
ISSUES
The
issues are confined to a narrow compass. They are:
Whether the First Respondent can
challenge the agreement and whether the Tribunal has jurisdiction
to consider whether the agreement
amounts to a prohibited practice
under the Act, because the rights that the Applicant seek to
enforce are not pursuant to an
agreement between parties but rather
a praedial servitude existing over land registered against a
servient tenement in favour
of a dominant tenement:
Whether
this Court has jurisdiction to deal with a defence raised under
section 4(1)(b)(ii) of the Act even if raised in interdictory
proceedings:
Whether
the common law attack based on public interest is
res iudicata
:
Whether
the relief sought is final or interim. And:
If
final whether this court would in effect be determining the
existence or otherwise of a prohibited practice which falls
within
the exclusive jurisdiction of the Competition Courts; and
if
interim whether the Applicant is obliged to demonstrate a
prima facie
right
and
a balance of convenience in
its favour even though it may be able to establish
a clear right. This issue arises
because the Applicant did not
deal with the question of balance of convenience:
Whether
the applicant is not adequately protected by an ordinary damages
claim:
Whether
circumstances have changed.
Common
to many of the issues is the question of whether this court’s
jurisdiction to grant interdictory relief is curtailed
by the
exclusive jurisdiction conferred on the Competition Courts, and that
will be answered in part by whether the orders now
sought would
finally dispose of the issues regarding whether the agreement is a
prohibited restrictive practice and therefore
void or unenforceable
under the Act. I will start with the issue of jurisdiction and the
nature of the relief sought.
In
short Mr
Peter
argues that Bedford Square can straddle both
jurisdictions, and as long as it has one foot in the exclusive
jurisdiction of the
Tribunal Bedford Square is untouchable and can
continue implementing its lease with Woolworths in continued breach
of its common
law obligations. The result would of course render
the High Court decision ineffectual until the issues under the
Competition Act are
eventually determined.
Mr
Blou
for the Applicant contends that such a consequence is
saved by section 65 (1) of the Act. I agree albeit on broader
grounds.
If this was not so the decision of this court and indeed by
the SCA, if it dismisses Bedford Square’s appeal, would lack
effectiveness under the Act.
I
proceed to give my reasons regarding the applicability of section
65(1) of the Act.
HIGH
COURT JURISDICTION AND SECTION 65(1) OF THE ACT
Section
62 of the Act is headed “
Appellate Jurisdiction
”
and deals with the right to appeal a decision of the Competition
Tribunal to the Competition Appeal Court and, in respect
of a matter
not
within its exclusive jurisdiction, from there (subject
to applicable legislation) to the SCA and the Constitutional Court.
Nonetheless it also creates areas of exclusive jurisdiction and also
non-exclusive jurisdiction for what I continue to loosely
term the
Competition Courts.
Exclusive
Competition Court jurisdiction is to be found in sections 62(1) and
(3)(a). Non-exclusive jurisdiction is acknowledged
in sections 62(2)
and (3)(b). Section 62(5) also recognises that these specialist
bodies have no jurisdiction to assess damages
despite the claim
arising from a prohibited practice.
The
following portions of sections 62(1) and (2) are relevant for the
purposes of this case:
“
62(1)
The Competition Tribunal and Competition Appeal Court share
exclusive jurisdiction in respect of the following matters:
Interpretation and application
of Chapters 2, 3 and 5, other
A question or matter referred
to in sub-section (2); or
…
..
The functions referred to in
section 21(1), 27(1) and 37, other than a question or matter
referred to in subsection (2)
In addition to any other
jurisdiction granted in this Act to the Competition Appeal Court,
the Court has jurisdiction over
–
……
……
(c)the
question whether a matter falls within the excusive jurisdiction
granted under subsection (1).”
The
reference in section 62(1)(b) to section 27(1) is relevant because
of the provisions of subsection (d) which read:
“
27(1)
The Competition Tribunal may-
………
(d) make
any ruling or order necessary or incidental to the performance of
its functions in terms of this Act”
An
order necessary or incidental to the Tribunal’s functioning is
expressly provided for in section 49C, namely the grant
of interim
relief “
in respect of the alleged practice
”
(my emphasis), ie a prohibited practice under section 4 of the
Act. One of the considerations for the grant of such relief is the
“…
need to prevent serious or irreparable damage to
the applicant”.
An Applicant who can qualify for interim
relief is limited to the person who submitted a complaint against an
alleged prohibited
practice to the Commission in the prescribed
form. See the section 1(1) (iv) definition read with section 49C
(1).
The
Applicant relies on Section 65(1) for the relief it seeks. Section
65 as a whole is directly relevant in order to determine
the
application of section 65(1). This section falls under Chapter 6 of
the Act (which is headed
“Enforcement”)
.Therefore,
by reason of the application of section 62 all its subsections are
beyond the exclusive jurisdiction of the Competition
Courts, which
are limited to Chapter 2,3 and 5 matters. This also leaves it open
for a High Court to pronounce on the proper
interpretation of
section 65 as a whole.
Section
65 reads:
“
65.
Civil actions and jurisdiction
Nothing in this Act renders
void a provision of an agreement that, in terms of this Act, is
prohibited or may be declared
void, unless the Competition
Tribunal or Competition Appeal Court declares that provision to
be void.
If , in any action in a civil
court, a party raises an issue concerning conduct that is
prohibited in terms of this Act,
that court must not consider
that issue on its merits, and –
if the issue raised is one in
respect of which the Competition Tribunal or Competition Appeal
Court has made an order,
the court must apply the determination
of the Tribunal or the Competition Appeal Court to the issue;
or
otherwise, the court
must
refer that issue to the Tribunal to be considered on its merits,
if the court is satisfied that-
the issue has not been raised
in a frivolous or vexatious manner;
and
the resolution of that issue
is required to determine the
final outcome
of the action”.
(emphasis added)
Bedford
Square argues that the legislature carefully selected the word
“
unless”
in section 65(1) instead of “
until
”
and that “ ….
nothing in the
Competition Act
renders
void a provision of an agreement and in terms of the
Competition Act is
either prohibited or may be declared void unless
the Competition Tribunal or Competition Appeal Board declares that
provision
to be void” (Heads para 21)
. I understand the
argument to be that the section is limited to not rendering void the
agreement until it is declared void or
is prohibited under the Act
but has no jurisdictional or other consequences.
Replacing
the word
“ unless
” with
“until
”
is unhelpful. Even if there is a distinction it is one without
significance having regard to the context of section
65(1). In any
event it is apparent that the legislature was careful to assume
and ensure the continued validity of an agreement
unless
disturbed by a pronouncement of the Competition Courts and despite
it being subject to a section 4 complaint or subsequent hearing.
Section
65(1) must be read in the context of the legislation as a whole, and
the knowledge that can readily be imputed to the
legislature that
the Act would result in parallel litigation before the High Court (
and possibly concluding in final and binding
decisions of the SCA on
appeal), in respect of unlawful competition including unfair
restraints, prior to a Competition Tribunal
being seized of a
restrictive practices complaint arising from the same agreement.
Moreover
the legislature would have been aware of the delay that may arise
before the Tribunal finalises its deliberations.
It
should also be recalled that the sanction for engaging in a
prohibited restrictive practice is not directed at providing
compensation to the counterparty to the agreement but rather an
administrative penalty against those involved in these practices.
The object of the Act is to protect the public against
anti-competitive behaviour.
Moreover the question of preserving
the agreement between the parties as provided for in terms of
section 65(1) does not amount
to “
an issue concerning
conduct that is prohibited ”
. On the contrary it concerns
conduct that is expressly permitted until there is a declaration by
the Tribunal.
It
is also significant that the legislature has only clothed a
complainant with
locus standi
to bring an interim order under
section 49C. No relief is afforded under the Act to a person who
wishes to enforce a restraint
in the interim. Finally an interim
order under section 49C is limited to interdicting the continuation
of the alleged prohibited
practice, and then for no more than a
period of six months at a time, subject to extensions on application
not exceeding a further
six months .
If
Bedford Square’s argument is sound then:
There
would be a
lacuna
in the Act since a person in the position
of the Applicant armed with a High Court order would not be able to
approach any
Court of competent civil law jurisdiction (because of
the exclusive jurisdiction of the Competition Courts) nor would it
be
able to approach the Tribunal for interim relief to enforce the
judgment pending the outcome of a complaint under the
Competition
Act. Mr
Peter conceded that this could take a considerable time.
More glaring would be the omission, if the SCA dismissed Balfour
Square’s appeal yet the Applicant was remediless to
obtain relief pending the outcome of the Competition Courts
deliberations:
An Applicant would be remediless to
apply for interim relief before a High Court even if armed with an
SCA judgment dismissing
an appeal based on unlawful competition,
despite the acknowledgment in the Act that the agreement is not
void unless declared
so by a Competition Court, yet there is
nothing in the Act barring a complainant seeking an interim
interdict while the agreement
remains valid under section 65(1).
On
an ordinary interpretation of the section in its context, and having
regard to the procedures provided for in the Act as a
whole and the
overlapping of common law rights
inter partes
and the
protection consumers are entitled to if anti-competitive behaviour
is found to amount to a prohibited practice, I am
satisfied that
section 65 (1) was intended to ensure that the agreement in issue
remained valid unless the Competition Court
declared otherwise.
There
are other important aids to interpreting statutes that would
reinforce this result and would be inimical to the position
adopted
by Bedford Square. The first is that where there is a right there is
a remedy
(ubi ius ibi remedium)
. See
Minister of the
Interior & Another v Harris & Others
1952 (4) SA 769
(A) at 780 – 781
and
August
& Another v Electoral Commission & Others
1999 (4) BLCR 363 (CC) at para 34.
Since
section 65(1) preserves the validity of an agreement unless it is
declared void or prohibited by the Tribunal or Competition
Appeal
Court then a party to the agreement seeking to have its terms
respected in the interim must be entitled to approach a
court of
competent jurisdiction for relief.
A
High Court is competent to grant interim relief to preserve the
status quo
. Since section 65 falls outside the Competition
Courts’ exclusive jurisdiction, and in any event has limited
jurisdiction
to only confer
locus standi
on a complainant who
wishes to stop an alleged prohibited practice, section 65(1) must be
read in a way that preserves the right
to approach a court for a
remedy. This is supported also by
Airoadexpress (Pty) Ltd v
Chairman, Local Road Transportation Board, Durban, and others
1986(2) SA 663 (A) at p676D where it was accepted that a court
retains the inherent jurisdiction to grant interim relief to avoid
an injustice.
Moreover
if the legislature intended to take away the High Court’s
jurisdiction to grant interim relief it would have done
so in
express terms or at least by necessary implication. This was not
done.
Mr
Peter was eventually constrained to concede the point. He however
contended that section 65(1) affords no more than interim
relief and
does not afford a litigant final relief. He also argues that the
Applicant has not made out a case for interim relief.
This brings
me to the next substantive issue for determination.
NATURE
OF APPLICANT’S RELIEF
I
agree with Mr Peter that section 65 is not intended to be a
springboard for final relief. In its terms it presupposes that the
agreement might be declared void or its application be otherwise
prohibited. I have no quarrel with that. The section provides
only
that as long as the Competition Court has not pronounced on the
agreement in issue it remains effective. If the Competition
Courts
do not hold it void or otherwise prohibit its application, the
agreement will continue to enjoy validity subject to the
common law
as between the parties to the agreement and, in this case, the
praedial servitude.
The
issue is whether the applicant seeks relief that is final in effect
or not. In considering this, I should have regard to how
the court
has previously regarded the nature of this application.
It
is apparent that Claassen J did not purport to classify the nature
of the relief sought. The interim order granted was concerned
with
providing relief until an answering affidavit was filed and the main
application could be heard.
Watt
Pringle AJ regarded the main application as one for final relief.
However this may have been because, as appears from the
judgment,
Applicant’s counsel argued for this very proposition.
Before
me, Mr Blou contended that the relief sought should not be
classified either as permanent or interim. The relief was that
based
on an application of the provisions of section 65(1) of the Act.
In
my view it is necessary to characterise the relief sought.
The
starting point is that the relief claimed before the High Court had
to traverse both common law and statutorily created rights
and
limitations in order to meet the First Respondent’s
utilisation of both civil court and the Competition Tribunal
procedures.
Mr.
Blou contends that the Applicant has a clear right to the relief
sought. In short the Applicant relies on the agreement as
being
enforceable at common law and the fact that a court of competent
jurisdiction has found that its terms are not against
public policy
and has refused to declare it unenforceable. In regard to its
statutory position the applicant relies on the right
accorded or
recognised under section 65(1) of the Act to treat the agreement as
valid unless the Competition Court declares it
void or prohibits its
application.
In
order to establish a clear right an applicant must prove on a
balance of probabilities facts which in terms of substantive
law
give rise to the right. See
Nienaber v Stuckey
1946 AD 1049
at 1053 – 1054.
The
Applicant claims a clear right, by reason of the provisions of
section 65(1), to interdictory relief pending the proceedings
initiated under the
Competition Act that
the agreement constitutes a
prohibited restrictive horizontal practice. I have already found
that in its terms
section 65(1)
preserves the validity of an
agreement unless the Tribunal or Competition Appeal Board declares
it void or prohibits its application,
contingencies that have not
taken place to date.
As
regards its common law position, the Applicant has a clear right to
enforce its judgment and to meet any
defence to it on that basis or that of
issue estoppel (
see above).
The question of whether the application
for leave to appeal suspended the
operation of the judgment was not
raised before me, the First Applicant
accepting that the order appealed
against was that it was not entitled
to a declaratory order rendering the
agreement unenforceable. The only
real issue raised was an argument
based on changed circumstances to
which I will refer later.
Accordingly the reliance on
section
65(1)
does not result in relief that is final in effect. It does no
more than afford relief based on a remedy that is contingent on the
outcome of proceedings before the Tribunal or the Competition Appeal
Court. A contingent right always remains dependent on the
outcome of
the stipulated event occurring and is not of final effect until the
result is known. Compare CIR
v Golden Dumps
[1993] ZASCA 89
;
1993 (4) SA 110
(AD)
.
Accordingly,
provided the interdictory relief remains contingent on the outcome
of proceedings before the Tribunal or on Appeal
from it, sitting as
a High Court I will not be granting an interdict of final effect and
therefore will not be making a decision
that directly or indirectly
usurps the exclusive jurisdiction of the Tribunal to determine
whether the agreement constitutes
a prohibited horizontal
restrictive practice under section 4 of the Act.
Subject
to the question of whether damages are a suitable alternative
remedy, I am satisfied that the Applicant has demonstrated
a clear
right under the common law to interdictory relief. The relief cannot
be final in effect since the SCA may find that the
appeal succeeds.
However until the outcome of the SCA decision, Willis J’s
judgment has the effect of pronouncing on
the applicant’s
rights , a decision which is effectively binding on me as
res
iudicata
or which precludes a defence to the merits based on
that or on principles which underpin issue estoppel.
REQUIREMENTS
FOR INTERIM RELIEF
It
is evident that the relief to which the Applicant is entitled cannot
be final in effect since it will terminate if the SCA
upholds the
appeal or if the Tribunal declares the agreement void or otherwise
unenforceable.
Mr
Peter contends that the Applicant has not averred prejudice and is
required to demonstrate this if it is to obtain relief that
is in
substance not of final effect. He also contends that if a clear
right is established then the applicant is confined to
final relief
and may not obtain interim relief because its rights have been
definitively determined.
The
first proposition offends the basic principles of interim
interdictory relief. It should not be overlooked that the need
to
demonstrate only a
prima facie
right, provided the balance of
convenience is favourable and subject to the court’s
discretion, simply alleviates the
applicant from the more onerous
evidentiary burden of demonstrating a clear right. Nothing more.
Accordingly if the applicant
can demonstrate a clear right it does
not have to show in addition that the balance of convenience favours
it. The applicant
then only has to show further an injury actually
committed or reasonably apprehended and the absence of a
satisfactory alternative
remedy. See standard text books such as
Herbstein & Van Winsen
’s
The Civil Practice of
the Supreme Court of South Africa
(4
th
ed) at p1065,
(5
th
Ed) at 1456 and the seminal decision of
Setlogelo
v Setlogelo
1914 AD 221
at p 227.
The facts of this case demonstrate
the fallacy of the second argument. So too the case where an order
freezing a bank account
is obtained pending the outcome of
proceedings to recover stolen funds. An interim interdict will be
granted irrespective of
whether the applicant demonstrates a clear
right or a prima facie right and the balance of convenience favours
it. It is not
compelled to seek a final interdict.
There
remain three further issues concerning the interim relief sought. I
will deal with them briefly.
I
am satisfied that the applicant does not have a satisfactory
alternative remedy. It was entitled to enforce the restraint under
common law and unless it is declared void or is otherwise prohibited
by a decision under the
Competition Act, the
agreement is regarded
as valid and therefore enforceable by reason of section 65(1) of the
Act.
There
is no merit in the contention that circumstances have changed. The
first respondent suggests that because the applicant
has tied up
Woolworths at its shopping centre for another extensive lease period
there is no need for the protection of the restraint.
In my view the
argument misses the point. The applicant’s shopping centre
attracts customer traffic because there is a
specific tenant mix and
because Woolworths is an anchor tenant. If Woolworths becomes a
tenant at the first respondent’s
larger centre, the
commercial risk is that passing trade and regular customers who
frequent the applicant’s centre will
migrate. This no doubt
was a significant commercial consideration for the eleven year
restraint that locked out only Woolworths
and Mica Hardware when the
First Respondent wished to put up its larger shopping complex.
Finally
I should say something about the construction of the order.
It
is axiomatic that if the SCA upholds the appeal then the interdict
lapses. I do not believe that this needs to be mentioned.
It follows
as a matter of law. If the appeal is disallowed then the order of
Willis J stands and the interdict gives effect to
it. As with cases
where an interim interdict properly construed is of final effect,
this order clearly is not of final effect
but is pending the outcome
of the SCA decision. If the decision is to dismiss the appeal then
it is the finality of that decision
which is determinative.
The
various contingencies arising from the proceedings before the
Tribunal which render the interdict not to be final in effect
are catered for in paragraphs 1 (a) and (b) of the order.
These various contingencies that have
yet to mature also explain why the order seeking cancelation of the
lease must be postponed
to await the outcome of the SCA decision
and the various proceedings under the
Competition Act.
ORDER
It
is for these reasons that I made the following order on 15 March
2011:
1. The
First Respondent is interdicted and prohibited from concluding, or
acting pursuant to, any lease agreement in terms
of which retail
space
allocated on Erf 39 Bedford Gardens
and the Remaining Extent of Erf
135 Bedfordview Extension 10 Township
is let to the Second
Respondent
until the earlier of 3 November 2014 or unless prior thereto, and
for so long as its order or declaration remains effective
(having
regard not only to the consequences of any appeal or review to a
court of competent jurisdiction but also
inter alia
to the
provisions of section 49C of the Competition Act no 89 of 1988);
The
Competition Tribunal or Competition Appeal Court declares void the
effective provisions of the written agreement of settlement
concluded between
inter alia
the Applicant and Bedford
Square on 3 and 4 November 2003 or declares void the notarial deed
of restraint, executed by the
Applicant and the First Respondent
on 21 June 2006; or
The
Competition Tribunal grants an interim order against the Applicant
herein under section 49C of the Competition Act as
a consequence
of a complaint that the effective provisions referred to in (a)
hereof are prohibited under Chapter 2 of that
Act.
The
relief sought by the Applicant for an order directing the First
Respondent to cancel any lease agreement that it had concluded
with
Woolworths in terms of which retail space located on the property is
to be let to the Second Respondent at any time prior
to 3 November
2014 is postponed
sine die
and at least 15 days notice must
be given to the other party/parties if this part of the relief is to
be set down for hearing.
The
First Respondent is ordered to pay the costs of this application,
including the costs of two counsels when engaged.
_________________________________________________
DATES
OF HEARING: 11 March 2011
DATE
OF ORDER: 15 March 2011
REVISED
JUDGEMENT: 28 March 2011
LEGAL
REPRESENTATIVES:
For
the Plaintiffs; Adv J Blou SC
Adv
J.J Bitter
Instructing
Attorneys; Rothbart Inc.
For
1
st
and 2
nd
Respondents; Adv J Peter
SC
Adv
M J Engelbrecht
Instructing
Attorneys; Vining Camerer Inc.