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[2014] ZAGPJHC 346
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Shell South Africa Marketing (Pty) Ltd v Exclusive Access Trading 431 (Pty) Ltd (5434/2014) [2014] ZAGPJHC 346 (28 October 2014)
REPUBLIC
OF SOUTH AFRICA
IN
THE HIGH COURT OF SOUTH AFRICA
GAUTENG
LOCAL DIVISION, JOHANNESBURG
CASE
NO:
5434/2014
DATE:
28 OCTOBER 2014
In
the matter between:
SHELL
SOUTH AFRICA MARKETING (PTY)
LTD
........................................
APPLICANT
EXCLUSIVE
ACCESS TRADING 431 (PTY)
LTD
........................................
RESPONDENT
JUDGMENT
ANDREWS,
AJ
1.
This is an application for an interdict
against the respondent, interdicting several activities that arise
out of a franchise agreement.
The applicant also seeks an order that
the respondent return certain assets to it, obtained in terms of the
franchise agreement.
Finally the applicant seeks an order that the
respondent immediately vacate the premises at the corner of
Malibongwe and Witkoppen
Drives, Randburg, failing which the Sheriff
is authorized and instructed to eject the respondent and all those
occupying through
it from the said premises.
2.
This matter was heard on 1
st
and 4
th
September 2014. At the end of the first day of argument the parties
were given an opportunity to file additional heads of argument
on the
issue of the purported termination of the franchise agreement, by the
applicant.
3.
The applicant sought an order in the
following terms:
1.
that the respondent be interdicted from:
1.1
operating a business as a retailer of
petroleum products;
1.2
using the Shell retail franchise;
1.3
holding itself out in any way as a
franchisee or agent of the applicant;
1.4
using in any way whatsoever any of the
applicant's intellectual property;
1.5
selling, using, distributing, advertising
or storing anywhere on or from the premises at the corner of
Malibongwe and Witkoppen
Drives, Randburg any product other than that
supplied by the applicant;
1.6
passing off or representing goods and
products not supplied to it by the applicant as being those of the
applicant
1.7
making any Shell product with any other
product or substance;
1.8
diluting, adding to or in any way altering
the composition of any of the Shell products delivered to the
respondent;
2.
that the respondent shall forthwith return
to the applicant:
2.1
all signs, advertising, publicity and
promotional materials, stationary, invoices, forms, specifications,
designs, records, data,
samples, models, programs and drawings
pertaining to or concerning the business or the Shell retail
franchise or bearing any of
the intellectual property as defined in
the agreements between the parties;
2.2
all copies of the manuals as defined in the
franchise agreement whether current or not;
2.3
all items of Shell equipment held on loan
or hire from the applicant in the same good working order and repair,
fair wear and tear
excepted;
3.
that the respondent shall immediately
vacate the premises at the corner of Malibongwe and Witkoppen Drives,
Randburg, failing which
the Sheriff is authorised and instructed to
eject the respondent and all those occupying through it from the said
premises;
4.
the respondent be ordered to pay the
applicants costs on the attorney client scale.
Background
5.
The following facts are common cause. The
parties entered into an agreement on 29
th
June 2011, relating to the Velgro Garage in Randburg comprising a
franchise agreement to which were attached several schedules,
to be
read together with the franchise agreement. In terms of the
agreement the respondent was entitled to conduct the business
of a
fuel filling station, convenience store and restaurant, using the
applicant's equipment, intellectual property and know how.
The
schedules included a property lease agreement (schedule 4), a
petroleum products supply agreement (schedule 5) and other
agreements.
In terms of the property lease agreement applicant let
the property to which this application relates to the respondent. The
petroleum
product supply agreement obliged the respondent to purchase
the petroleum products which it sought to sell from the applicant.
6.
The “premises” as defined in
the franchise agreement is “the area forming part of the
property currently utilised
for the operation of the businesses (as
defined in the franchise agreement) and being indicated on the sketch
plan contained in
Schedule 3 hereto together with all buildings and
other improvements thereon at corner Malibongwe and Witkoppen Drive.”
7.
On 14
th
august 2012 applicant advised the respondent by letter that it was
cancelling the agreement for the operation of Velgro Garage.
It
advised that it would appoint a new retailer and the respondent would
be notified of the date on which it was required to vacate
the
premises. The reason for the termination was the alleged failure of
the respondent to settle an outstanding entry fee of R2 300 000.This
alleged obligation did not appear in the franchise agreement read
together with its schedules. Subsequent to the letter,
various
discussions were held between the parties in order to resolve the
dispute that surrounded their business relationship
but on
26
th
September
2013 the applicant advised the respondent that it intended to persist
with the termination of the contract and demanded
that the respondent
vacate the premises by no later than 27
th
September 2013. The applicant stopped supplying the respondent
with fuel on 23
rd
September 2013. The respondent disputes that termination was
lawful.
8.
The applicant alleges that on 1
st
October 2013 through remote electronic monitoring of the respondent’s
fuel tanks it established that the respondent was filling
its tanks
with fuel supplied by a third party in contravention of its
agreements with the applicant. On 3
rd
and
4
th
October
2013 applicant’s attorneys sent letters to the respondent
asking them for an undertaking to refrain from purchasing
fuel or
related products to be sold at the Shell Select store at the Velro
Garage from any unauthorised suppliant.
9.
The respondent’s attorneys replied
demanding that the fuel supply be restored by the applicant, and
threatening legal action.
No undertaking to refrain from purchasing
fuel from third parties was forthcoming. The respondent also
advised the applicant
by letter from its attorneys that it refused to
surrender the business to the applicant and stated that it was
agreeable pending
the resolution of the dispute to continue procuring
fuel from the applicant. The applicant did not continue to supply
fuel and
the respondent continued to sell fuel, procured elsewhere,
from the garage.
10.
The respondent alleged that on 15
th
November 2013, staff of the applicant endeavoured to unlawfully close
down the station by locking the pumps. After the respondent
had
communicated the attempted spoliation to the applicant through its
attorneys the applicant intervened and caused the operation
to be
halted.
11.
The application was launched on 18
th
February 2014. The respondent has
inter alia
disputed the lawfulness of the termination of the agreement and has
raised constitutional arguments disputing that the applicant
has
possessory rights which entitle it to evict the respondent. A
constitutional challenge aimed at declaring the business model
used
by the applicant and other petroleum products wholesalers as being
unconstitutional was refused by the Constitutional Court
on 14
th
November 2013.
The interdict
12.
In terms of the petroleum product supply
agreement, the respondent undertook that it would not:
a.
pass off or represent goods and products
not supplied to it by the applicant pursuant to the petroleum product
supply agreement
as being applicant’s products (clause
8.1);
b.
mix any of the applicant's products with
any other product or substance, and dilute, add to or in any way
alter the composition
of any of the applicant's products, delivered
to respondent(clause 8.2);
c.
adulterate, contaminate to incorrectly
label any of the applicant's products (clause 8.4);
d.
sell or deliver any of the applicant's
products which the applicant knows or reasonably suspects are
contaminated, adulterated or
as incorrectly labelled (clause 8.5);
e.
sell the applicants products in any other
than the authorized packaging (clause 8.6);
13.
This agreement also required the respondent
to purchase all its petroleum fuel requirements and any other
products comprising applicant
products from the applicant or its
nominee and from no other source of supply. (Clause 11.1)
14.
The applicant averred that based on
computer generated information regarding the respondent’s fuel
tanks measured on 1 October
2013 and the fact that it no longer
supplied the respondent with fuel, it could be concluded that the
respondent had obtained fuel
supplies from a third party in direct
contravention of its agreement with the applicant. It submitted that
petroleum products are
highly inflammable substances and if not
manufactured and used carefully constitute severe incendiary hazards
to people and property.
Inferior petroleum products also damaged
engines in which they are used. It stated that the applicant could
suffer incalculable
loss if it were to be held liable for petroleum
products sold from its branded premises if such products were to
cause damage to
persons or property.
15.
The applicant also stated that the
petroleum products sold by it are unique to it since it adds various
unique additives to its
products. It stated that for obvious reasons
it guards its brand jealously and is fastidious about the petroleum
products that
are sold under its brand name. Insofar as the business
being conducted by the respondent is on premises that are branded
with the
applicant's branding the public at large will with good
reason conclude that the petroleum products produced by the business
had
been supplied by the applicant. If substandard petroleum products
are sold to the public, applicant’s the brand could suffer
incalculable and irreparable harm.
16.
The
respondent replied that the applicant had, unilaterally and without
signalling its intent, failed to make delivery of fuel due
on the 3
rd
and 4
th
October 2014. In general the respondent did not deal with the
applicant's factual averments in the customary manner, but
made
general submissions in its answering affidavit. In argument, it
referred to founding affidavit in an application brought by
it and
others in the Constitutional Court.
[1]
The deponent, an attorney, had made submissions in paragraph 3.7.4
thereof that all fuel sold in South Africa was manufactured
locally
and is of the same quality, hence no prejudice could be suffered by
the respondent as a result of the sale of fuel sourced
elsewhere than
from the applicant. These submissions are not of an expert
nature but even if they are, they cannot form the
basis of an
argument that the respondent could never have sold adulterated fuel
to the public. The prohibited conduct includes
mixing and diluting of
products as well as selling fuel sourced from third parties and could
be transgressed by the mixing or diluting
of fuel sourced locally.
17.
The respondent has advanced no defence to
the claim that it is unlawfully selling petroleum products under the
applicant’s
brand name which it has acquired from other parties
and that in so doing it is misleading the public into believing that
the fuel
supplied by it at Velro Garage is supplied by the applicant.
The respondent avers that the agreement has not been validly
cancelled
in which case this is conduct which is in breach of the
clause 8 of the petroleum products supply agreement. In the case of
disputes
arising between the parties in relation to matters connected
with the agreement and its schedules the parties agreed in terms of
section 31.1 of the franchise agreement to refer such disputes to
arbitration. The respondent has failed to do so and instead
has
sought to procure fuel from elsewhere while still running a service
station bearing the applicant’s brand name.
18.
As stated in
Setlogelo
v Setlogelo
1914 AD 221
at 227:
“
The
requirements for an interdict are well known, a clear right, injury
actually committed or reasonably apprehended, and the absence
of
similar protection by any other ordinary remedy.”
The
applicant has established a clear right based on contract and its
right to protect its intellectual property, actual and reasonably
apprehended invasion of that right, and the absence of similar
protection by any other ordinary remedy. Accordingly the requirements
for an interdict relating to the sale of the applicant’s
products from the premises have been met and I am willing to grant
the relief prayed for in this regard.
Possessory rights
of the applicant
19.
The respondent in its heads of argument
submitted that with the advent of Act 58 of 2003 which came into
operation on 17 March 2006,
the
Petroleum Products Act 120 of 1977
has been fundamentally changed. In accordance with the new
definitions of “hold” in respect of land on which the
retail
filling station is to be located, read with the definition of
“retail”, “outlet”, “retail
license”
and “site” read with
section 2A
(1)(c) and
read with
section 2A
(4)(b) the only person who may have possessory
rights over land on which the retail operation exists is the
land owner provided
it has been issued with a “site license”
and the only exception to this is the proprietor (under
section
2A(4)(c)
read with
section 2A(1)(d)
of the retail business to whom
the retail rights under the retail license must be granted.)
The two licenses have to be issued
conjointly – Reg(2) and R286
of the 27th March 2006, read with
section 2B(3)(c)
and
2B
(4).
The validity of the site license is dependent on the ongoing validity
of the retail license –
section 2B(3)(c).
Counsel for the
respondent argued that the upshot of the aforegoing is that other
than these two entities i.e. the owner
of the land and the owner of
the retail business, no one in the Republic can possibly legally have
possessory rights over the land
on which the retail site exists.
Accordingly no right of action for eviction can legally exist in the
hands of applicant, who does
not allege to be the owner of the land
or holder of the site license. The applicant disputed the relevance
of these contentions
to the application.
20.
Substantially the same arguments were
raised previously in two matters before this court and found to be
without merit, namely in
Engen Petroleum
and Gundu Services Station
, case number
16333/12, and
Engen Petroleum Ltd and
Mighty Solutions CC T/A Orlando Service Station
case
number 16333/12 20344/13. I can find no reason to differ from the
analysis and conclusions contained in these judgments.
21.
Section 2A(1)
prohibits a property owner
from establishing a site zoned and approved for retailing petroleum
products without a site licence
and similarly prohibits a person from
retailing petroleum products without a licence. Section 2A(4)
requires an applicant for a
site licences under 2A(1) to be the owner
of the property concerned. In the case of a retail licence the person
applying must be
the owner of business concerned.
22.
I fail to see how these provisions
have the result argued by counsel for the respondent, that no one
other than the owner of the
land and the owner of the retail business
can possibly legally have possessory rights over the land on which a
retail site exits.
The owner who acquires a site licence and develops
a site would surely be entitled, for example, to employ the services
of an intermediary
who performs management functions under a sublease
agreement, and where such intermediary in turn leases the premises to
the retailer.The
argument that the applicant does not have possessory
rights over the premises concerned is without merit.
Cancellation of
the agreement and eviction
23.
The Applicant argued that the Respondent is
in unlawful possession of the property leased to it in terms of the
agreement, based
on the fact that the lease agreement has been
cancelled and/or the entire agreement has run its course. On this
basis it is entitled
to an order for the eviction of the respondent
and the return of its products. This, it argued is evident from one
or more of the
following events:
a.
the termination date in paragraph 1 of the
franchise agreement being 31
st
March 2014; and/or
b.
the cancellation of the agreement as
evidenced in the applicant’s letters of 14
th
August 2012 and or/or 4
th
October
2013;
c.
if neither of the above, cancellation is
effected by the notice of motion in the present case.
Termination
by effluxion of time
24.
The applicant averred that the franchise
agreement together with the other agreements and the property lease
agreement had been
cancelled on 14
th
August 2012 as a result of the respondent’s breach of contract
in not paying at least R1,653 million in “key money”
a
concept not referred to in the agreement. In its replying affidavit,
dated 14
th
April 2014 the applicant also stated that the contract had by this
time come to an end by virtue of the termination date, which
it
averred was the 31
st
March 2014. The first issue for determination is the date of
termination of the contract, in the ordinary course by effluxion of
time.
25.
The franchise agreement defines the “end
date” in the definitions section as follows:
a.
“
means subject to clause 6 below is
the date on which this agreement will expire, being 31 March 2014.
(ie 3 years from the
Commencement Date).”
b.
“
commencement date” is defined
in the definitions clause of the agreement as "the first day of
the month following the
date of last signature hereof or the date
that the franchisee obtains a retail licence to operate the business
from the Department
of Energy of the government of South Africa or
such party succeeds to its functions whichever occurs last.”
The retail licence
was obtained on 28
th
November 2011. The last date of signature was on 29
th
June 2011.
c.
clause 6.1 states "this agreement
shall commence on the commencement date and,
unless
terminated earlier in terms of this agreement
,
shall endure for an initial period of three years subject to the
provisions of clause 6.2 and 6.3 below.” (emphasis
added)
26.
The date 31
st
March 2014, which is inserted in the
definition of “end date” is an agreed earlier date for
termination of the contract
by the parties, and therefore excludes
other later dates. The agreement therefore terminated on that
date if it had not been
lawfully terminated before that. Reliance by
the applicant on the averment that the contract had terminated in the
interim after
this application had been launched, amounts to a new
basis on which to claim the relief sought.The respondent argued that
the Uniform
Rules of the High Court require the application to stand
or fall by the averments in its founding papers, and that since the
date
of termination of the contract, though the effluxion of time,
had not yet come to pass when the application was launched reliance
could not be placed on it. The respondent also disputed
that 31
st
March 2014 was the date of termination of the agreement arguing that
it could be interpreted to mean that the end date was much
later.
27.
Under
rule 6(5)(e) of the Uniform Rules, the general rule, as stated
in
Erasmus
Superior Court Practice
[2]
,
regarding factual matter introduced for the first time in a replying
affidavit is that:
“
all
the necessary allegations upon which the applicant relies must appear
in his or her founding affidavits as he or she will not
generally be
allowed to supplement the affidavits by adducing supporting facts in
a replying affidavit. This is however not an
absolute rule for the
court has discretion to allow new matter in a replying affidavit
giving the respondent the opportunity to
deal with his in a second
set of replying affidavits. Thus a distinction must be drawn between
a case in which the new material
is first brought to light by the
applicant who knew of it at the time when his or her founding
affidavit was prepared and a case
in which facts alleged in the
respondent's answering affidavit reveal the existence or a possible
existence of the further ground
of relief sought by the applicant. In
the latter type of case the court would obviously more readily allow
an applicant in his
or her replying affidavit to utilize and enlarge
upon what has been revealed by the respondent and to set up such
additional ground
for relief as might arise there from. The court
will not allow the introduction of new material if the new material
sought to be
introduced amounts to an abandonment of the existing
claim and the substitution therefore of a fresh and completely
different claim
based on a different cause of action. Nor will the
court permit an application to be made in a case where no case at all
was made
out in the original application.”
28.
In the present case the applicant seeks to
rely on information that it knew would come to pass a month after it
launched the application,
namely the date of termination of the
contract by the effluxion of time. In the face of the respondent’s
challenge to the
lawfulness of its termination of the contract in
2012, the applicant has sought to bolster its case relying on new
grounds for
the first time in its replying affidavit. A basis has not
been set out as to why a departure from the rules in this instance
would
be justifiable or desirable and accordingly the respondent’s
objection is upheld. An applicant who wishes to rely on a fresh
cause
of action set out in its replying affidavit should indicate its
intention to do so and invite the respondent to deal with
it, and
should seek the leave of the court to rely on such cause of action,
at the hearing of the application. This creates certainty
and
fairness in the conduct of litigation.
29.
The argument that the contract
terminated by effluxion of time and that the applicant is entitled to
rely on this for the relief
sought therefore fails.
Cancellation due
to breaches of contract
a.
The Applicant argued that the Respondent is
in unlawful possession based on the fact that the lease agreement has
been cancelled
as evidenced in the applicants letters of 2012
and/or 4
th
October 2013.
b.
If neither of the above, cancellation is
effected by the notice of motion in the present case.
Cancellation in
terms of the letter of 14 August 2012
30.
Counsel for the respondent argued that no
case has been made out as to any conduct of the respondent which
might be classified as
a breach of any of the contracts which the
applicant says it cancelled. Further that the founding affidavit gave
no explanation
as to when the cancellation had taken place.
31.
The letter of 14 August 2012 purported to
terminate the franchise agreement based on conduct of the respondent
that had arisen in
the context of a separate agreement that is not
before me and was not indicated to be part of the franchise
agreement. The respondent’s
answering affidavit disputed that
there had been a lawful cancellation of the franchise agreement, and
advanced certain facts in
reply to the applicant’s averments.
32.
Paragraph 29 of the franchise agreement
states that it “constitutes the entire agreement between the
parties and supersedes
all previous oral or written understanding or
agreement/s of any kind relating to the business, the premises or the
subject matter
hereof.” Breaches of the franchise agreement are
defined in detail in clause 14. They do not refer to breaches of
other agreements
extraneous to it.
33.
In light of these facts and the
respondent’s denial of the lawfulness of the cancellation it is
not possible for me to determine
on the papers that the letter of
2012 lawfully cancelled the agreement.
34.
The applicant’s counsel contended
that the respondent, in paragraph 10 of its answering affidavit had
alleged that the franchise
agreement was invalid and unenforceable
and relying on this, contended that as a result the respondent has no
right to be in occupation
of the premises or to conduct its business
in the applicant’s getup. I have considered this
paragraph and it is ambiguously
worded, but does not convey the view
as contended for by the applicant.
Cancellation in
terms of the letter of 4
th
October 2013
35.
The applicant’s founding affidavit
alleged that the respondent had breached the agreement by passing off
fuel sourced elsewhere,
as being that of the applicant, and that
despite demand the respondent had refused to refrain from this
conduct. It annexed
a copy of the demand dated 3
rd
October 2013 and the respondent’s refusal to comply with this
request. Furthermore it stated that the agreement had been
cancelled. The respondent did not remedy this breach, nor deny
it in its answering affidavit and in fact annexed several
letters
from the applicant thereto which show that the breach was brought to
its attention, but not rectified. These letters, state
that the
applicant regards the said conduct as unlawful and reiterate
that the franchise agreement is in dispute or has been
terminated and
the continued occupation of the premises as unlawful. (see
letters of 4
th
and 9
th
October and 15
th
November annexed to the respondent’s answering affidavit). As
stated previously the answering affidavit did not address the
applicant’s averments
seriatim
making it unclear which facts the
respondent intended to put in dispute.
36.
If the contract had not been
terminated lawfully before 3
rd
October, this breach was a basis for lawful termination on the 4
th
October 2013, as will be set out more fully hereunder. There is
thus no substance to the respondent’s argument that
the
applicant failed to prove any breach of contract, which could have
provided a basis for lawful termination of the contract.
37.
The letter of 3
rd
October 2013 relates to conduct defined in terms of section 8 of the
petroleum products supply agreement. The letter states that
the
respondent’s current occupation is disputed and that:
“
this
notwithstanding any purchase of any fuel or related items from any un
authorised supplier is unlawful. To this end please would
you supply
us with an undertaking that no fuel or related products or items to
be sold at the Shell Select store, will be purchased
from any
unauthorised reseller at any stage and under any circumstances.”
The
letter gave 12 hour’s notice to the respondent to refrain from
the conduct concerned. The respondent refused to do so.
On the 4
th
October 2013 the applicant reiterated the demand and the fact that
the respondent’s occupation was disputed.
38.
Counsel for the applicant, referring to the
judgment in
Natal Joint Municipal
Pension Fund v Endumeni Municipality
2012 (3) SA 503
, argued that the letter of 4
th
October’s reference to the fact that the respondent’s
occupation is disputed, if seen in context, can only be a reference
to previous correspondence cancelling the contract, and is an
indication that the applicant persisted in the intention to cancel
the contract.
As
stated in by Wallis JA, in this judgment at paragraph 18.
“
Interpretation
is the process of attributing meaning to the words used in a
document, be it legislation, some other statutory instrument,
or
contract, having regard to the context provided by reading the
particular provision or provisions in the light of the document
as a
whole and the circumstances attendant upon its coming into existence.
Whatever the nature of the document, consideration must
be given to
the language used in the light of the ordinary rules of grammar and
syntax; the context in which the provision appears;
the apparent
purpose to which it is directed and the material known to those
responsible for its production. Where more than one
meaning is
possible each possibility must be weighed in the light of all these
factors. The process is objective not subjective.
A sensible meaning
is to be preferred to one that leads to insensible or unbusinesslike
results or undermines the apparent purpose
of the document.”
39.
Reading the letter of 4
th
October 2013 in the context of the applicant’s previous
correspondence with the respondent, which purports to cancel the
franchise agreement leads me to conclude that this letter intended to
reiterate that the agreement had been cancelled. A premature
act of
rescission of contract will be effective if, when the proper time for
rescinding the contract arises, the innocent party
makes it clear by
words or conduct that he or she persists in the intention to put an
end to the contract. (
LAWSA volume 5:
Contract
, paragraph 500). See also
Chesterfield Investments (Pty) Ltd v
Venter
[1972] 1 All SA 398
(W) at 406,
where Viljoen, J stated:
“
The
original cancellation may be premature and of no force or effect, but
if, at the date on which the seller is entitled to cancel,
he evinces
an attitude that the contract has been cancelled, I do not think it
matters whether he relies on the original premature
cancellation or
on a fresh cancellation, save, maybe, if the date upon which his case
of action arose becomes important.”
The
letter of 4
th
October 2013, drafted by the applicant’s
attorneys, clearly evinces an attitude that the applicant persisted
in the intention
to end the contract.
40.
The applicant averred in its founding
affidavit that the respondent is prohibited from purchasing petroleum
products from any other
supplier as a result of its contract with the
applicant, as well as from the fact that its licence to purchase such
products requires
that it purchases petroleum products from the
applicant. The letter of 3
rd
October indicates that the respondent is acting in contravention of
section 8 of the agreement and that such conduct is also unlawful.
The applicant’s founding affidavit referred to clause 16.1.1
which entitled the applicant to summarily cancel petroleum products
supply agreement under certain circumstances. It states:
“
Notwithstanding
anything to the contrary contained in this agreement Shell may at any
time by delivering written notice to that
effect to the Franchisee
terminate this agreement if :
16.1.1
Shell believes that the continued implementation thereof would
contravene any law or directive issued by any competent authority.”
41.Cclause
14.1.8 of the franchise agreement states that should any of the
schedules to this agreement terminate because of a breach
thereof by
the franchisee the applicant shall immediately be entitled to cancel
the agreement in terms of clause 14.1.10 (c) on
written notice to the
franchisee signed by the relevant district manager or person with
similar authority
41.
On 4
th
October the applicant conveyed to the respondent that it persisted in
its intention to cancel the contract, as discussed above.
It was
entitled to cancel the petroleum products supply agreement in terms
of paragraph 16 thereof and immediately cancel the franchise
agreement in terms of Clause 14.1.10 (c) thereof. This letter thus
constitutes lawful cancellation of the franchise agreement and
its
schedules. The respondent cannot dispute that continued statements
made by the applicant after this date, which are attached
to its
replying affidavit are anything other than confirmation of the
cancellation of the franchise agreement.
42.
Clause 15.2.10 of the property lease
agreement requires the respondent to immediately vacate the premises
upon termination of the
franchise agreement. Clause 15.2.2 of the
franchise agreement requires the respondent to immediately cease to
operate the business
and to use the applicant’s retail
franchise on termination of the franchise agreement.
Clause
15.2.4 of the franchise agreement requires the respondent to return
to the applicant or destroy assets listed as pertaining
to the
Business of Shell Retail Franchise. Clause 15 and clause 27 of the
franchise agreement require the respondent to immediately
cease to
use the applicant’s intellectual property and to return the
applicant’s assets, supplied under the agreement.
43.
It is not disputed that the applicant was
the lessor and that the premises were leased by it to the respondent
in terms of the franchise
agreement, and that in terms of clause 4.2
thereof no tenancy rights were created by the franchise agreement
save insofar as the
property lease agreement may have done so. It is
also common cause that the respondent has refused to vacate the
premises and to
hand to over the applicant’s assets to it.
44.
.The facts stated by the respondent
together with the facts contained in the applicant’s affidavits
which are admitted or
have not been denied, show that there can be no
doubt that the applicant had indicated its intention to persist in
the cancellation
of the agreement and had repeatedly done so after
failing to secure the respondents co-operation in not passing off
fuel sourced
elsewhere. Sufficient facts have been deposed to for the
order sought by the applicant to be made (See
Plascon-Evans
Paints Ltd v Van Riebeeck Paints (Pty) Ltd
1984(3)SA623
(A)).
The notice of
motion
45.
In the light of the above it is not
necessary to consider whether the notice of motion constitutes notice
of cancellation of the
agreement.
Costs
46.
The applicant prays for an order of costs
on the scale as between attorney and client. The agreements do not
make provision for
costs on this scale. The respondent’s
answering affidavit and heads of argument in this matter contain
several references
to the applicant in intemperate, abusive and
vexatious language, referring to it as
inter
alia
foolish, stupid, shameless,
arrogant, and as “an organisation systematically committed to
on-going criminal conduct including
blackmail, coercion and defeating
the ends of justice and violations of the Competition Act”.
Counsel for the applicant raised
strenuous objection to this conduct,
in heads of argument and in his address to court, stating that such
conduct cannot be countenanced,
as litigants are not free to use
intemperate language in court proceedings. No facts have been
tendered by the respondent to substantiate
or justify the use of
unfounded, scurrilous allegations and derogatory language. The
applicant asked that the relief sought in
the notice of motion be
granted with costs on a punitive scale.
47.
The respondent also sought a costs order
“both on an attorney and client scale as well as jointly and
severally with the applicant,
de bonis
propriis
against all the registered
directors of the applicant and all officials who have signed letters
in annexures hereto on behalf of
the applicant.”
48.
Notwithstanding the applicant’s
complaint, counsel for the respondent continued to use intemperate
language in supplementary
heads of arguments, referring to
applicant’s arguments as “wholly cock eyed” and its
conduct as “abject,
obstinate and petulant” without any
justification. This is language that undermines the dignity of
proceedings in the High
Court, and cannot be tolerated. Many of these
statements were made in heads of argument, although some do appear in
the respondent’s
answering affidavit. am reluctant to punish
the respondent for the misdemeanours of its legal representatives, as
it appears to
have been acting on their advice following actions
which were admitted to have constituted attempted spoliation by the
applicant.
49.
As an indication of my disapproval of the
conduct of the respondent’s legal representatives, the
respondent’s attorneys
are ordered to pay the costs of the
applicant’s counsel for the second day of hearing herein
de
bonis propriis
.
I make the following
order:
a.
That the respondent is interdicted from
1.
operating a business as a retailer of
petroleum products;
2.
using the Shell Retail Franchise;
3.
holding itself out in any way as a
franchisee or agent of the applicant;
4.
using in any way whatsoever any of the
applicant's intellectual property;
5.
sellng, using, distributing, advertising or
storing anywhere on or from the premises at the corner of Malibongwe
and Witkoppen Drives,
Randburg any product other than that supplied
by the applicant;
6.
passing off or representing goods and
products not supplied to it by the applicant as being those of the
applicant;
7.
making any Shell product with any other
product or substance;
8.
diluting, adding to or in any way altering
the composition of any of the Shell products delivered to the
respondent.
b.
that the respondent shall forthwith return
to the applicant:
2.1
all signs, advertising, publicity and
promotional materials, stationary, invoices, forms, specifications,
designs, records, data,
samples, models, programs and drawings
pertaining to or concerning the business or the Shell Retail
Franchise or bearing any of
the intellectual property as defined in
the agreements between the parties;
2.2
all copies of the manuals as defined in the
franchise agreement whether current or not;
2.3
all items of Shell equipment held on loan
or hire from the applicant in the same good working order and repair,
fair wear and tear
excepted
c.
that the respondent shall within 15 days of
date of this judgment vacate the premises at the corner of
Malibongwe and Witkoppen
Drives, Randburg, failing which the Sheriff
is authorised and instructed to eject the respondent and all those
occupying through
it from the said premises.
d.
the respondent is ordered to pay the
applicant’s costs on the scale as between party and party. The
respondent’s attorneys
are ordered to pay the costs of
applicant’s counsel for 4
th
September 2014, being the second day of hearing herein on the scale
de
bonis propriis
.
A
ANDREWS
ACTING
JUDGE OF THE HIGH COURT OF SOUTH AFRICA
GAUTENG
LOCAL DIVISION, JOHANNESBURG
DATE
HEARD : 4
th
September 2014
DATE
DELIVERED : 28 October 2014
For
the Plaintiff : Adv Hitchings
Instructed
by : Cliffe Decker Hofmeyer Inc.
For
the Defendant : Adv Savvas
Instructed
by : Venn & Muller Attorneys
[1]
Gundu
Service Station CC and others versus Engen Petroleum Limited and 15
others. CCT 134/13
[2]
Superior
Court Practice - Rules Regulating the Conduct of the Proceedings of
the Several Provincial and Local Divisions of the
Supreme Court
of South Africa
service
45, 2014 B1-45