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In the High Court of South Africa
(Western Cape Division, Cape Town)
Case No: 16453/2023
In the matter between:
CASH CRUSADERS FRANCHISING (PTY) LTD Applicant
and
THE CASH CRUSADERS FRANCHISEES LISTED ON
ANNEXURE ‘ADP1’ TO THE FOUNDING AFFIDAVIT OF
ANDRIES DANIEL DU PLOOY Respondent
Heard: 10 November 2023
Delivered (electronically): 26 January 2024
JUDGMENT
LEKHULENI J
[1] This is an application to enforce compliance with an interim interdict granted by
the urgent court on 3 October 2023. This application is necessitated by the
respondents’ non-compliance with the order, presuming that it is stayed pending their
application for leave to appeal to the Supreme Court of Appeal. The applicant seeks
a declaratory order confirming that the interdict granted on 3 October 2023 is interim
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in nature and not suspended pending an application for leave to appeal or any further
appeals. In addition, and in the alternative to the declaratory relief, the applicant seeks
an execution order in terms of section 18(1) read with section 18(3) of the Superior
Courts Act 10 of 2013 ('Superior Courts Act') directing that this court's order of 03
October 2023, shall operate pending any application for leave to appeal or further
appeals.
[2] Meanwhile, the franchisees (‘the respondents’) filed a counterapplication
wherein they aver that in the event that this Court finds that the interdict order of 3
October 2023 is interlocutory and does not have the effect of a final judgment, its
operation, in particular, paragraphs 1 and 2 of that order, be suspended in terms of
section 18(2) of the Superior Courts Act pendi ng finalisation of the appeal process
including any application for leave to appeal to the Supreme Court of Appeal or an
application for leave to appeal to the Constitutional Court. The respondents also
sought an order that the applicant be ordered to pay the costs of this application,
including the costs occasioned by two Counsels.
THE FACTUAL BACKGROUND
[3] The applicant is a franchisor with franchise outlets across South Africa. It
specialises in selling a n extensive selection of new and pre- owned merchandise.
There are currently 250 Cash Crusaders outlets in existence. Of these stores,145 are
being operated by franchisees, and the remainder are corporate owned. When
instituting this application, the respondents comprised 78 of the 150 non- corporate-
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owned franchisees and represented approximately one- third of the Cash Crusaders
franchise footprint.
[4] The franchisees' business operations are made up of three main income
streams: Firstly, the sale of new goods. These goods are procured and provided to
franchisees by Cash Crusaders Corporate (Pty) Ltd, trading as CCW under brand
names exclusive to Cash Crusaders. CCW is an authorised wholesaler of these new
goods, which it sells exclusively to franchisees pursuant to orders placed by them. The
franchise agreement between the franchisor (Cash Crusaders) and the franchisees
prevents Cash Crusaders from selli ng new products to anyone other than Cash
Crusaders franchisees.
[5] Secondly, is the purchase and sale of pre- owned products from and to
members of the general public and thirdly, is the suspensive security buy transactions
('SSB transactions') concluded with members of the public. The SSB transactions are
commonly known as pawn transactions. The SSB transactions entails customers
pledging movable property items as collateral for a loan, which is subsequently
granted by the franchisee to the customers for a specified duration, usually thirty days.
These transactions are regulated by section 8(4)(a) of the National Credit Act 34 of
2005 ('the NCA').
[6] The dispute between Cash Crusaders (‘the applicant') and the respondents has
its genesis in the mechanics of the third income stream - the SSB transactions. At the
end of the 30- day period, consumers often sought to extend their loan with the
franchisees. The extension would be regarded as a new rather than an extended loan,
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which entitled the franchisees to charge a further initiation fee on each loan extension.
Subsequently, after seeking legal advice, the applicant made a business decision to
change its system concerning the SSB transactions. The new system now required
the respondents to charge only a single initiation fee as opposed to multiple initiation
fees on extensions of SSB transactions. The decision to charge a single initiation fee
regarding extensions of SBB transactions did not augur well with some of the
franchisees and triggered the current dispute between the parties.
[7] Discontented with the change in the system, i n September 2022, the
respondents filed an application with this court seeking a declaratory relief regarding
the interpretation of the NCA and whether it permitted repetitive charges of initiation
fees for extended SSB transactions. The applicant opposed the application,
contending that the dispute resolution mechanism contained in the franchise
agreement was not complied with. On 18 September 2023, the respondents' legal
representatives addressed a demand to the applicant's legal representatives,
informing them that the applicant breached the franchised agreement when it
introduced the changes to the SSB transactions.
[8] The respondents further averred that the changes the applicant introduced
caused them to suffer substantial financial losses. The respondents put the applicant
to terms, demanding that the various breaches of the franchise agreement, particularly
the change of the SSB transactions, be remedied within 10 days. On 19 September
2023, the applicant's legal representatives res ponded and denied any breach of the
franchise agreement. In addition, the applicant made proposal for the referral of the
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dispute to arbitration in terms of the franchise agreement to expedite the resolution of
the matter and same were not accepted by the respondents.
[9] Instead, the respondents restated their stance that the applicant was in breach
of the agreement and threatened they would cancel the franchise agreement s if the
applicant failed to remedy the breach. Pursuant thereto, the applicant launched an
urgent application on 28 September 2023, seeking an order interdicting and restraining
the respondents from cancelling their franchise agreements and compelling them to
comply with the obligations under the agreement. The applicant regarded the
respondents' threatened cancellation of their respective franchise agreements as
unlawful. The applicant sought interim relief pending the determination of the main
application by the arbitrator to determine whether the respondents were entitled to
cancel their franchise agreement on the basis as threatened in their letter of 18
September 2023.
[10] Notwithstanding that the application was pending before the court and that the
ten days stipulated by the respondents in their letter of 18 September 2023 was yet to
expire, the respondents cancelled their respective franchise agreement with the
applicant on 26 September 2023. In addition, the respondents contended that by
cancelling the contract, the horse had bolted, and the interdict application had become
moot.
[11] The applicant amended the nature of the relief sought at the hearing of the
interdict application by seeking to hold the respondents to the terms of the franchise
agreements despite their purported cancellation thereof, pending a determination by
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an arbitrator as to their entitlement to cancel the franchise agreement on the basis
they had. The application for the interdict was heard on 28 September 2023.
[12] The court delivered a judgment in the interdict application on 3 October 2023.
The Court granted the interdict against the respondents pending an arbitrator or the
court's final determination of the dispute between the applicant and the respondents.
The Court interdicted the respondents from cancelling the franchise agreements and
further directed them to abide by and comply with their obligations under the respective
franchise agreements. In addition, the court ordered that the interdict shall operate for
a period of 60 days from the date of the order. The court directed the applicant to refer
the dispute to arbitration within a period of 60 days from the date of the order, failing
which the interdict would lapse.
[13] On 4 October 2023, the respondents applied for leave to appeal the court order.
The respondents contended that there were compelling reasons why the appeal
should be granted and that there are reasonable prospects of success on appeal. The
respondents contended, among others, that the court failed to apply and give effect to
clauses 25.12 and 25.13 of the franchise agreement , wherein the parties expressly
agreed that an interdict should be brought before and adjudicated by an arbitrator. The
respondents further contended that the court respectfully failed to appreciate the terms
of the franchise agreement and, therefore, exercised its discretion on the wrong basis.
[14] Furthermore, the respondents contended that the order is subject to appeal on
the grounds that the court impermissibly exercised jurisdiction over the respondents,
thereby rendering the order final in effect. The court heard the application for leave to
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appeal on 6 October 2023 and dismissed the application with costs on 25 October
2023. On the said day, the applicant addressed a letter to the respondents' legal
representatives seeking an undertaking that there would be compliance with the
interim interdict, bearing in mind that the court hearing the application for leave to
appeal concluded that the interdict was interim in nature in its judgment refusing leave
to appeal.
[15] On 26 October 2023, the respondents launched an application for leave to
appeal to the Supreme Court of Appeal. In addition, on the said day, the respondents'
legal representatives responded to the applicant's letter. They declined the applicant's
request to provide an undertaking that there would be compliance with the interdict
because the interim order, in their view, was final and remained suspended pending
their application for leave to appeal.
[16] Subsequently, the applicant applied first and foremost for a declaratory relief.
As a matter of urgency, the applicant seeks a declaration that section 18(2) of the
Superior Courts Act applies to the court order handed down on 3 October 2023. In
other words, that the order was interim in nature and that same is not suspended by
the lodgement of an application for leave to appeal.
[17] In the alternative to the aforegoing, the applicant sought an order under section
18(3) of the Superior Courts Act that the court order of 3 October 2023 is put into
effect, notwithstanding the respondents' pending application for leave to appeal to the
Supreme Court of Appeal. The applicant sought this alternative relief only if this Court
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finds that the order of 3 October 2023 is not an interim order as envisaged in section
18(2), but rather a final order contemplated in section 18(1) of the Superior Courts Act.
SUBMISSIONS BY THE PARTIES
[18] This case pivots on the interpretation of sections 18(1), 18(2) and 18(3) of the
Superior Courts Act. The critical question is whether the order granted on 3 October
2023 is an interim order as envisaged in section 18(2) or a final order as envisaged in
section 18(1) of the Superior Courts Act. Before I describe the parties' submissions, I
deem it expedient to set out verbatim the impugned order of 3 October 2023 and the
wording of the relevant statutory provisions of the Superior Courts Act.
[19] The applicant requests this Court to declare that the following parts of the order
are immediately executable in terms of section 18 of the Superior Courts Act.
“34.1 Pending the final determination by an arbitrator or by court of the
applications pending before court of a dispute between the parties as to the
respondents’ entitlement to cancel their respective franchise agreements (“the
franchise agreements”) concluded with the applicant on the basis set out in the
letters of MacGregor Stanford Kruger of 18 and 26 September 2023, the
respondents are interdicted from cancelling the franchise agreements and are
directed to abide by and comply fully with their obligations under the respective
franchise agreements.
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34.2 This interdict shall operate for a period of sixty (60) days from day hereof.
The applicant is to enroll the applications which are pending before and which
have not been enrolled, alternatively, refer the disputes to arbitration, whichever
the parties elect to do within the period of sixty (60) days stipulated, supra. The
interdict would lapse on the expiry of the sixty (60) days period if there has been
no enrolment or referral to arbitration.”
[20] The relevant part of section 18 of the Superior Courts Act provides as follows:
“Suspension of decision pending appeal
(1) Subject to subsections (2) and (3), and unless the court under exceptional
circumstances orders otherwise, the operation and execution of a decision
which is the subject of an application for leave to appeal or of an appeal, is
suspended pending the decision of the application or appeal.
(2) Subject to subsection (3), unless the court under exceptional circumstances
orders otherwise, the operation and execution of a decision that is an
interlocutory order not having the effect of a final judgment, which is the subject
of an application for leave to appeal or of an appeal, is not suspended pending
the decision of the application or appeal.
(3) A court may only order otherwise as contemplated in subsection (1) or (2),
if the party who applied to the court to order otherwise, in addition proves on a
balance of probabilities that he or she will suffer irreparable harm if the court
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does not so order and that the other party will not suffer irreparable harm if the
court so orders.”
[21] At the hearing of this application, the applicant's counsel Mr. Goldberg,
submitted that the applicant seeks a declaration that the order of 03 October 2023
granted in the urgent court, was an interim order and therefore not appealable in terms
of section 18(2). Mr. Goldberg submitted that the order in the main judgment makes
it clear that it is interim in nature. Mr. Goldberg further submitted that no extraneous
material is necessary to interpret the order. It clearly provides that the interdict will
apply unless there is a failure to enrol or refer a dispute to arbitration. The parties have
referred the dispute to arbitration, and the interdict remains in effect until the dispute
is resolved.
[22] Counsel referred the court to paragraph 34 of the main judgment in which the
urgent court explained that its order is interim in nature and merely serves to preserve
the status quo pending the final determination of the main dispute between the parties.
According to Counsel, the content of the court’s judgment and the text of the order
removes any doubt about the nature of the order: it is manifestly interim.
[23] It was submitted that the application for leave to appeal to the Supreme Court
of Appeal was an abuse of process. Mr. Goldberg submitted that the matter would be
heard in March and April 2024 before an arbitrator, and by the time the Supreme Court
of Appeal hears the appeal, the matter would be moot. Mr. Goldberg further submitted
that the interdict the court granted is not finally determinative of the main dispute
between the parties. It is not and can never be dispositive of whether the respondents
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established a breach of the franchise agreement by the applicant or whether the
respondents are entitled to cancel the franchise agreement. If an interim interdict is
appealable, the contention proceeded; it would defeat the very purpose of the interdict.
[24] If the court concludes that the interdictory relief of 3 October 2023 is of an
interim nature, Mr. Goldberg submitted that an enforcement order in terms of section
18(1) read with section 18(3) of the Superior Courts Act falls to be granted. Mr .
Goldberg further submitted that the respondents have no reasonable prospects of
success in the appeal against the interdict.
[25] Regarding jurisdiction, Counsel submitted that the franchise agreement
explicitly contemplates that the applicant is entitled to seek interdictory relief from the
courts without seeking this relief through arbitration. In any event, Counsel argued that
the courts retained a discretion to adjudicate disputes emanating from arbitration
agreements. Arbitration agreements do not, and cannot, oust the jurisdiction of a
courts. Even if the court erred in determining that it had jurisdiction, argued Mr .
Goldberg, the order is not appealable because it does not meet the requirements for
a final order under Zweni v Minister of Law and Order.
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[26] Counsel submitted that the urgent court correctly exercised its discretion in
granting the interdict after weighing the competing harms between the parties. Mr.
Goldberg further submitted that the respondents will not suffer irreparable harm if they
are made to comply with their franchise agreements, which they had freely concluded,
1 1993 (1) SA 523 (A).
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and that the applicant and its employees will be irreparably harmed if the execution
order is not granted.
[27] Meanwhile, Counsel for the respondents, Mr. Stelzner, submitted that the
applicant wishes to have the immediate benefits of the interdict contained in the court
order. Counsel contended that the applicant seeks to ensure the immediate
enforcement of the court order, even though there is an application to the Supreme
Court of appeal for leave to appeal pending. Mr Stelzner submitted that there is no
irreparable harm for t he applicant if the court order is not enforced pending the
application for leave to appeal. It was submitted that there would be immense
irreparable harm to the respondents if the applicant's declaratory order were to be
granted. Counsel submitted that the interdict that the court a quo granted against the
respondents is not pending this court's reconsideration of the matter. It is final in that
sense already.
[28] It was further submitted on the respondents’ behalf that the applicant seeks to
achieve with the present application an en masse enforcement of the franchise
agreements against all the respondents en bloc. The applicant seeks to enforce the
specific performance of the franchise agreement without any regard given to the
circumstances of each former franchisee person to the court order. That on its own,
Counsel submitted, already reveals the final effect of the court order and the severe
harm that will be caused to the respondents should the applicant be given the relief it
seeks in this application.
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[29] Mr. Stelzner submitted that since the cancellation of the franchise agreement
with the applicant, the respondents have disenfranchised themselves and are now
trading outside and independently of the applicant's franchise under the name, style,
and brand of Cash Xchange since 26 September 2023. The applicant seeks to undo
that and turn back the clock by more than a month to a situation before the cancellation
of the agreement. The respondents' Counsel submitted that in granting the court order,
the court a quo assumed jurisdiction, a final decision of its own which is appealable,
and finally decided the interpretation and effect of clause 25(12) of the parties'
franchise agreement.
[30] In Counsel's view, the order (Counsel referred to it as a hybrid order) that the
court a quo granted was also a final decision of the court. Counsel contended that the
court a quo's finding concerning the respondents' cancellation of the franchise
agreement was a final one. According to Mr. Stelzner, no other court will be called on
or can set aside this part of the order. In granting the interdict, Counsel argued, the
urgent court, effectively set aside the cancellation and ordered specific performance
of all the franchise agreements from thence onwards. That, according to Mr. Stelzner,
has a final effect.
[31] In the light of recent trends towards flexibility and the interest of justice test, as
determined recently by the Constitutional Court in the United Democratic Movement
and Another v Lebashe Investment Group (Pty) Ltd and Others ,
2 (‘Lebashe
Investment’) Mr. Stelzner submitted that the order of the court a quo in this matter is
in principle not only appealable, given its final effect, but also does not meet the
2 2023 (1) SA 353 (CC).
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requirements of section 18(2) (interim order). On the contrary, it is an order provided
for in section 18(1) (final order) , the execution of which has been suspended by
bringing the application for leave to appeal to the SCA. Mr. Stelzner submitted that the
court order is therefore one to which section 18(1) applies, and the applicant's
application for declaration that section 18(2) applies to the court order should be
dismissed.
ISSUES TO BE DECIDED
[32] From the discussion above, this Court is enjoined to determine whether the
interdict granted on 3 October 2023 is interim in nature and effect. If it is not, whether
the court should grant an execution order in terms of section 18(1) read with section
18(3) of the Superior Courts Act.
THE APPLICABLE LEGAL PRINCIPLES AND DISCUSSION
[33] For convenience, I propose to deal with the disputed issues raised above
sequentially.
Is the order granted on 3 October 2023 interlocutory in effect as envisaged in
section 18(2) of the Superior Courts Act?
[34] The applicant applied for declaratory relief. As a matter of urgency, the
applicant seeks a declaration that section 18(2) applies to the court order granted on
3 October 2023. The applicant contends that that order was an interim order and is
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not suspended by the respondents' filing of their application for leave to appeal against
it. In the alternative, the applicant contends that should the court find that this interim
order is final in effect, the court should direct that this order be put i nto effect
notwithstanding the respondents' pending application to the Supreme Court of Appeal
for leave to appeal.
[35] It is essential to remind ourselves that before the advent of section 18, the
prevailing common law position was that a court had a broad general discretion to
grant or refuse an execution order based on what was just and equitable whilst
appreciating that the remedy was one beyond the norm.
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[36] The current legal position regarding the suspension of decisions pending
appeals is regulated by section 18 of the Superior Courts Act. Sections 18(1) and (2)
envisages two situations. First, a judgment (the principal order) that is final in effect,
as contemplated in section 18(1): in such a case, the default position is that the
operation and execution of the principal order are suspended pending the decision of
the application for leave to appeal or appeal. Second, in terms of section 18(2), an
interlocutory order that does not have the effect of a final judgment: The default
position ( a diametrically opposite one to that contemplated in s 18(1)) is that the
principal order is not suspended pending the decision of the application for leave to
appeal or appeal.4
3 Ntlemeza v Helen Suzman Foundation and Another 2017 (5) SA 402 (SCA) at para 25.
4 Ntlemeza v Helen Suzman Foundation and Another (supra) at para 25.
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[37] Meanwhile, section 18(3) requires an applicant for an execution order to prove
on a balance of probabilities that he or she will suffer irreparable harm if the order is
not granted and that the other party will not suffer such harm.
[38] In South Cape Corporation (Pty) Ltd v Engineering Management Services (Pty)
Ltd,5 the Court observed that in a wide and general sense, the term 'interlocutory'
refers to all orders pronounced by the Court upon matters incidental to the main
dispute, preparatory to, or during the progress of the litigation. However, orders of this
kind are divided into two classes: (i) those which have a final and definitive effect on
the main action; and (ii) those known as 'simple (or purely) interlocutory orders' or
'interlocutory orders proper', which do not.
[39] The court held that statutes relating to the appealability of judgments or orders
that use the word 'interlocutory' or other words of similar import refer to simple
interlocutory orders. In other words, it is only in the case of simple interlocutory orders
that the statute is read as prohibiting an appeal or , making it subject to the limitation
of requiring leave. Final orders, including interlocutory orders having a final and
definitive effect, are regarded as falling outside the purview of the prohibition or
limitation.
[40] Importantly, the court observed that at common law, a purely interlocutory order
may be corrected, altered, or set aside by the Judge who granted it at any time prior
to final judgment. In contrast, an order with final and definitive effect, even though it
5 1977 (3) SA 534 (AD) at 549F– 551H.
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may be interlocutory in the wide sense, is res judicata. Meanwhile, in Zweni v Minister
of Law and Order of the Republic of South Africa (supra), it was held that for an
interdictory order or relief to be appealable, it must: (a) be final in effect and not
susceptible to alteration by the court of first instance; (b) be definitive of the rights of
the parties, in other words, it must grant definite and distinct relief, and (c) have the
effect of disposing of at least a substantial portion of the relief claimed in the main
proceedings.
[41] It is well established that an interim order may be appealed against if the
interests of justice so dictate. An interim order may be appealable even if it does not
possess all three attributes but has final effect or is such as to dispose of any issue or
portion of the issue in the main action or suit, or if the order irreparably anticipates or
precludes some of the relief which would or might be given at the hearing, or if the
appeal would lead to a just and reasonable prompt resol ution of the real issues
between the parties.
6 Thus, even if an order is cast as being interlocutor y in form, or
for a limited period, the court must also consider what the order's effect is on the parties
involved.
[42] In the present matter, it is common cause that the respondents have applied
for leave to appeal the interim interdict with the Supreme Court of Appeal. The filing of
the application for leave to appeal would suspend the order if it were a section 18(1)
type order, that is, if it is a final order or an interim order which is final in effect. If the
interim order is the one envisaged in section 18(2), there would be no automatic
6 United Democratic Movement and Another v Lebashe Investment Group (Pty) Ltd and Others 2023
(1) SA 353 (CC) at para 42.
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suspension of the order pending an appeal. In that event, the respondent would need
to bring an application for the suspension of the execution of the order.
[43] The interdict that was granted in this matter compels the respondents to comply
with the agreements which the respondents had not only cancelled at the time the
court order was made but which cancelation was already put into effect. In granting
the interdict, the court order sought to address in part past harm, rather than to avert
an imminent or threatened cancelation. The court, in effect, sought to restore an earlier
state of affairs and not to preserve the status quo, as the cancelation had already been
implemented when the court order was granted.
[44] Significantly, I find the decision of the Constitutional Court in Lebashe
Investment particularly pertinent to the disputed issues in this matter. In that matter ,
the High Court granted an interim interdict against the applicants for allegedly
publishing defamatory statements on social media against the respondents. Fearing
that irreparable harm would be caused to their dignity and reputation, the respondents
approached the High Court for an interdict restraining the applicants from making or
repeating any defamatory allegations defaming or injuring their dignity pending the
institution of an action for damages for defamation and injuria.
[45] Upon the conclusion of the motion proceedings, the High Court granted the
respondents an interim interdict pending the determination of an action for damages
for defamation. The High Court ordered the applicants to forthwith cease from making
or repeating the allegations against the respondents or from defaming or injuring the
respondents' dignity and to remove and delete the defamatory letter from the UDM's
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website and from the applicant's Twitter account pending a defamation action that was
to be instituted by the respondents against the applicants.
[46] The applicants complained that such order had restrained and prohibited them
from exercising their right to freedom of expression and from performing their duties
as political actors in terms of the Constitution. The applicants sought leave to appeal
against the interim interdict to the Supreme Court of Appeal on the grounds that the
contents of the letter were not defamatory, that the allegations were true, and that the
publication thereof was in the public interest.
[47] The applicants argued that despite the interim nature of the interdict , its
consequences were final and definitive in effect as it directed them to remove the
contents of the letter from their website and social media accounts and platforms. The
applicants, therefore, argued that it was in the interests of justice to grant them leave
to appeal. The High Court granted leave to appeal to the Supreme Court of Appeal.
When the matter came before the Supreme Court of Appeal, the application was struck
off the roll in a three- two split on the grounds that the interdict was interim in nature
and, therefore, unappealable.
[48] On appeal to the Constitutional Court, the Court was required to deal with an
interdict which, although interim in form, was final and definitive in effect as it directed
the applicants for leave to appeal to remove the contents of a certain defamatory letter
from their website and social media accounts. The court found that an interdict
restricting free speech constitutes a grave intrusion on a constitutional right.
Additionally, the court noted that since there was a likelihood that the life of the
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impugned interim interdict, granted pending the outcome of the defamation trial, might
be extended even further than it had already existed, it was sufficiently invasive and
far-reaching that it was in the interests of justice for the grant of the impugned interim
order to be treated as a ‘decision.’
[49] By parity of reasoning, in the present matter, the effect of the court's order
granted against the respondents directs the respondents to comply with the franchise
agreement until the pending application before the High Court , which has yet to be
allocated a date to have it decided finally. Additionally, it was also granted pending the
ultimate resolution of the arbitration proceedings concerning the cancelation of the
franchise agreement. Furthermore, the interim interdict was to operate for 60 days
from the date of order. The interdict was scheduled to lapse on the expiration of the
sixty (60) days if there had been no enrolment or referral to arbitration.
[50] The court was notified during the hearing of this application that the matter had
previously been referred for arbitration. Despite the passage of the 60-day period, the
interdict is still in effect.
It is apparent that there is a possibility that the duration of the
contested interim interdict, which was issued pending the conclusion of the arbitration
or court proceedings, could be further prolonged than was expected. As the
Constitutional Court found in L ebashe Investment, I believe this is invasive and far -
reaching, especially considering the breakdown of trust and confidence in the
relationship between the parties. I am further of the view that it is in the interests of
justice for the impugned interim order to be treated as a final decision.
7
7 United Democratic Movement and Another v Lebashe Investment Group (Pty) Ltd and Others (supra)
para 46; Cipla Agrimed (Pty) Ltd Merc Sharp Dohme Corp 2018 (6) SA 440 (SCA).
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[51] Crucially, the Supreme Court of Appeal in Health Professions Council of South
Africa,8 held that, where a litigant may suffer prejudice or even injustice if an order or
judgment is left to stand, leave to appeal against orders or judgments rendered during
the course of the proceedings should be granted. In my view, that consideration apply
with equal force in this matter. I am further of the opinion that this order, though cast
as an interlocutory one, has a final effect on the parties. Furthermore, it is in the
interests of justice that the impugned interim interdict be treated as a decision having
a definitive and final effect.
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[52] Furthermore, the court a quo made factual determinations during the interdict
application hearing that the applicant had not violated or breached the franchise
agreement in any manner. The court expressed its prima facie view as to the validity
of the cancelation of the franchise agreements. Pursuant to this finding, the court
granted the interim order. In my opinion, this is not a decision which another court is
able to reconsider. It is an issue central to the lis and goes to the heart of the dispute
between the parties. Importantly, it is an issue which must be considered at the
arbitration hearing in due course. Mr . Goldberg submitted at the hearing of this
application that the applic ant did not intend to enforce the court's finding that the
applicant did not breach the franchise agreement. Whilst I note Mr . Goldberg's
submission, I am of the view that this finding rendered the interim court order
appealable.
8 2010 (6) SA 469 (SCA) at para 25.
9 Government of the Republic of South Africa and Other v Von Abo 2011 (5) SA 262 (SCA) at para 17.
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[53] Furthermore, the respondents challenged the jurisdiction of the court to hear
the interdict application and relied on clause 25 of the franchise agreement as the
basis for their objection. In addition, the respondents argued that clause 25.13 allows
the applicant to approach the courts in other circumstances that do not find application
in the present matter. The court a quo dismissed this ground, finding that clause 25.13
of the franchise agreement cloaks the applicant with a discretion to either refer a
dispute to arbitration or , to approach the court to seek an interdict against the
franchisee for breach of the terms of the franchise agreement, particularly where such
breach involves an alleged impairment of the goodwill of the franchisor.
[54] The respondents' preliminary defence raising lack of jurisdiction in the present
matter was a defence that existed independently of the respondents' case. The order
of the court a quo dismissing the respondents' defence about jurisdiction had the effect
of finally and irreversibly disposing of a self -contained defence which existed
independently from and outside of the respondents' substantive defences.
10 In my
view, such an order would patently have the effect of a final judgment and is therefore
subject to appeal in terms of section 18(1) of the Superior Courts Act. More so, at
common law, a purely interlocutory order may be corrected, altered, or set aside by
the Judge who granted it at any time prior to a final judgment, whereas an order which
has final and definitive effect, even though it may be interlocutory in the wide sense,
is res judicata.
11
10 Durban’s Water Wonderland (Pty) Ltd v Botha and Another 1999 (1) SA 982 (SCA) at 992J -993A;
Labuschagne v Labuschagne; Labuschagne v Minister van Justisie 1967 (2) SA 575 (A) at 583E-F.
11 Ndlovu v Santam Ltd 2006 (2) SA 239 (SCA) at paras 9 and 10.
23
[55] Given all these considerations, I am of the view that section 18(2) of the
Superior Courts Act does not apply to the impugned court order. While the order is
interim in form, it is an order envisaged in section 18(1) of the Superior Courts Act, the
execution of which is suspended by the lodgment of the application for leave to appeal
to the Supreme Court of Appeal. I repeat, the court order is one to which section 18(1)
applies, and the applicant's application for a declaration that section 18(2) applies to
the court order falls to be dismissed. This leads me to the alternative remedy the
applicant seeks in this Court.
The enforcement order in terms of section 18(1) read with section 18(3) of the
Superior Courts Act.
[56] The applicant contended that if this C ourt concludes that the interdictory relief
of 3 October 2023 is final in nature, then the applicant submitted that an enforcement
order in terms of section 18(1) read with section 18(3) of the Superior Courts Act falls
to be granted.
[57] It is an established common law rule of practice in our Courts that generally,
the execution of a judgment is automatically suspended upon the noting of an appeal,
with the result that, pending the appeal, the judgment cannot be carried out. No effect
can be given thereto, except with the leave of the Court which granted the judgment.
To obtain such leave, the party in whose favour the judgment was given must make a
24
special application. 12 This common law rule has been codified and incorporated in
section 18 of the Superior Courts Act.
[58] The purpose of this rule as to the suspension of a judgment on the noting of an
appeal is to prevent irreparable harm from being done to the intending appellant, either
by levy under a writ of execution or by execution of the judgment in any other manner
appropriate to the nature of the judgment appealed from .13 It is trite that the court to
which an application for leave to execute is made has a wide general discretion to
grant or refuse leave and, if leave be granted, to determine the conditions upon which
the right to execute shall be exercised.14
[59] Section 18 stipulates three prerequisites for an enforcement order which must
be established on a balance of probabilities. Firstly, exceptional circumstances must
exist for an execution order to be granted. Secondly, the applicant must show that it
would suffer irreparable harm if the order granted, in this case, the interdict is not
enforced, and thirdly, that the respondent will not suffer any irreparable harm if the
enforcement order is granted. An applicant for an execution order must prove all three
requirements. In other words, all these three requirements must be fulfilled for an
execution order to be granted. I propose to deal with these requirements in turn ad
seriatim.
12 Gentiruco A.G. v Firestone SA (Pty.) Ltd 1972 (1) SA 589 (AD) at 667; Standard Bank of SA Ltd. v
Stama (Pty) Ltd 1975 (1) SA 730 (AD) at 746).
13 South Cape Corporation (Pty) Ltd v Engineering Management Services (Pty) Ltd 1977 (3) SA 534
(A) at 545A-C.
14 South Cape Corporation (Pty) Ltd v Engineering Management Services (supra) at 545B-C.
25
Exceptional Circumstances
[60] Courts have always eschewed any attempt to lay down a general rule as to
what constitutes and qualifies as exceptional circumstances.15 The reasons being that
the enquiry is factual in nature. As astutely pointed out by Mr . Goldberg, an
exceptional circumstance pertains to a fact that gives rise to a deviation or, departure
from the general rule that final orders are suspended pending appeal. The standard is
flexible and depends on the facts of each case. 16 Exceptional circumstances must
arise from the facts and circumstances of the case.
[61] In the context of this matter, I hold the view that there are exceptional
circumstances. It is common cause that the applicant and the respondents have
submitted themselves for a hearing before an arbitrator notwithstanding the application
for leave to appeal to the Supreme Court of Appeal. The final determination of the
dispute between the parties, including the issues raised in the application for leave to
appeal, will take place through a mutually agreed arbitration process scheduled for
March and April 2024. In other words, the dispute between the parties will be ventilated
in due course.
[62] The purpose of the arbitration proceedings is intended to resolve all the
disputed issues between the parties. During the hearing of the interdict application,
the respondents objected to the court's jurisdiction. They argued that the dispute
between the parties falls within the purview of clause 25 of the franchise agreement
15 MV Ais Mamas Seatrans Maritime v Owners, MV Ais Mamas, and Another 2002 (6) SA 150 (C) at
156H – 157C; Incubeta Holdings (Pty) Ltd and Another v Ellis and Another 2014 (3) SA 189 (GJ) para
16.
16 Ntlemeza v Helen Suzman Foundation 2017 (5) SA 402 (SCA) at paras 37-39. Seatrans Maritime v
Owners, MV AIS MAMAS, and Another 2002 (6) SA 150 (C) at 156F.
26
and must be arbitrated by an arbitrator. Consistent with the franchise agreement, the
parties have voluntarily submitted themselves for a hearing before the arbitrator. The
constitutional rights of both the applicant and the respondents in terms of section 34
of the Constitution would be properly vindicated at that mutually agreed upon forum.
[63] In addition, in the heads of argument, the respondents' Counsel notes that the
arbitration proceedings may extend to well over six months or so. Mr. Goldberg
submitted that from the objective facts, even if leave to appeal is granted, it is not
practically possible for the Supreme Court of Appeal to hear the appeal within the first
two terms of 2024. Furthermore, Counsel submitted that it is likely that an appeal will
only be heard towards the end of 2024 or the beginning of 2025. Mr. Goldberg pointed
out, that by that time, the actual dispute between the parties would have already been
determined through arbitration before the Supreme Court of Appeal considers whether
the interdict was correctly granted. According to him, the appeal to the Supreme Court
of Appeal will be moot when it is ripe for appellate consideration.
[64] Whilst I appreciate this argument, in my view, what is critical and exceptional in
this matter is that despite the respondents’ applying for leave to appeal the
cancellation of the franchise agreement, the parties have agreed to have the very
same dispute (issue) decided on arbitration. The speedy resolution of the dispute
through arbitration in due course will ameliorate any irreparable harm that may be
suffered by both parties, if any.
[65] I have noted the argument raised by the respondents' Counsel in his heads of
argument that the arbitration proceedings may take longer than envisaged. I am also
27
mindful of the question Counsel raised about what would happen if the arbitrator ruled
that the cancelation was valid. In my view, it is not open for this court to second-guess
the arbitrator's decision at this stage. All the disputed issues between the parties are
expected to be fittingly ventilated before the arbitrator, the forum chosen by the parties
in the franchise agreement. Clause 25.4 explicitly enjoins the parties to refer any
dispute arising out of their agreement, or its interpretation thereof for determination by
arbitration in accordance with the commercial arbitration Rules of the Arbitration
Foundation of South Africa, as amended.
[66] In my view, the cumulative effect of all these circumstances above gives rise to
the exceptionality contemplated in section 18(1) of the Act. It would have been a
different case if the parties did not agree to go to arbitration. Importantly, the hearing
of the matter is a month away. In my opinion, this requirement has been satisfied.
Has the applicant shown that it will suffer irreparable harm without the execution
order and that the respondents won't suffer harm if it is granted?
[67] Section 18(3) requires the applicant for an execution order to establish that it
will suffer irreparable harm if the order is not granted and that the respondents will not
suffer irreparable harm if the order is granted. The judgment of University of the Free
State v Afriforum and Another,
17 indicates that the requirement of irreparable harm to
the applicant and no irreparable harm to the respondent, unlike the common law
position, do not involve a balancing exercise between the two but must both be
established on the balance of probabilities.
18 In Knoop NO and Others v Gupta and
17 2018 (3) SA 428 (SCA) at para 18.
18 Knoop v Gupta (Execution) 2021 (3) SA 135 at para 48.
28
Others19, the Court noted that if the applicant cannot show that the respondent will not
suffer irreparable harm by the grant of the execution order, that is fatal.
[68] The applicant avers that unless the interdictory relief is enforced, the applicant
will suffer irreparable harm in five broad respects. First, it will experience mass
retrenchments. To this end, the applicant contended that more than 150 employees
stand to lose their employment because of the reduction in royalties. The applicant
notes that the urgent court that granted the interdict has already recognised the
devastating consequences of mass retrenchments on employees and their families
who all depend on t hem for a living. Secondly, the applicant contended that if
execution is not granted, it will lose valuable skills as the employees that may be lost
range from the CEO to trainers and operational managers. The skills and
competencies possessed by these employees have been generated over an extended
period, and their loss will detrimentally affect the applicant's business in future.
[69] Thirdly, the applicant notes that it will be losing more than forty percent of its
royalty and marketing income if the order is not granted, and this is a staggering loss.
Unless the respondents comply with the franchise agreements and honour the royalty
commitment, it is contended that the applicant is likely to go insolvent soon. Fourthly,
the respondents' de-identification process exposes the applicant to reputational harm
and brand damage. The applicant contended that the respondents sought to expl oit
the good name of the applicant generated over decades by misleading the public that
the stores are merely undergoing a rebranding with a new name and look while
19 (115/2020) ZASCA 149 (19 November 2020) at para 48.
29
knowing that this is untrue. It is incorrect that the respondents are rebranding as they
have sought to insinuate.
[70] Fifthly, it was submitted that the applicant is exposed to serious legal liability
pursuant to the respondents' conduct. The applicant contended that the respondents
continued to use the applicant's intellectual property, including the use of its payment
system. Tax invoices are done in the applicant's name by the respondents, thus
triggering the general warranties of the applicant for items sold by the respondent s’
stores. To this end, the applicant submits that consumers may have a legitimate
expectation that the applicant will honour the warranty on these goods because the
invoices are drawn in its name.
Irreparable harm to the Respondents
[71] The applicant submitted that the respondents will not suffer irreparable harm if
they are made to comply with the franchise agreements as ordered by the court. The
applicant contends that most of the respondents' stores are profitable despite a volatile
economy with high interest rates, inflation and load- shedding. Despite the general
decline in the retail market, most of the respondents remain profitable.
[72] While I note the alleged harm that the applicant has highlighted, I am of the
view that the applicant has not established that the respondents will not suffer harm if
the execution order is granted. In stead, I am of the view that what has been
established on the papers is that th e respondents will suffer irreparable harm if the
30
order is executed. In the answering affidavits, the respondents averred that
implementing the court order would detrimentally affect third parties.
[73] Among others, the respondents averred that they have already placed orders
with third party suppliers as part of the de- identification process. The stock is in the
shops already or, is in the process of being delivered. The respondents are liable for
the payment of that stock to the parties. Importantly, the fact that the respondents have
purchased stock from third-party suppliers means that they have committed capital to
this and won't be able to expand additional capital in purchasing stock from the
applicant, which will be required in terms of the franchise agreement if it is executed.
[74] Moreover, apart from the stock that the respondents have purchased from third-
party suppliers, if the order is executed, the respondents would invariably not be able
to sell the stock to customers, as the stock from third party suppliers does not conform
to the applicant's requirements and those set out in the franchise agreement and
manual. The stock will then simply sit in the warehouse or a store once again to the
irremediable detriment of the respondents.
[75] In addition, in terms of the franchise agreement, the applicant dictates the
prescribed stock to be placed on its franchisees' shelves, thereby precluding third-
party stock from being placed on the shelves in the shops of its franchisees. Invariably,
if execution is granted, the current stock from the third-party suppliers will not be sold
which will result in severe cash flow constraints to the respondent s. The cumulative
effect is that there will be no funds to purchase stock from the applicant, and the
respondent will be in breach of the franchise agreement. The respondents would be
31
stuck with stock from third -party suppliers, which they've already paid for, or need to
pay for, which they cannot sell because they do not meet the requirements of the
franchise agreement. This in my view , would result in irreparable harm to the
respondents if execution of the interdict is granted.
[76] In the light of the entire body of evidence placed before this Court, I am of the
view that the harm that the respondents will suffer is overwhelming. The applicant has
not discharged the onus of showing that the respondents would not suffer irreparable
harm if the execution order is granted. The harm that the applicant will suffer is
ameliorated by the fact that this matter will be heard in due course before the arbitrator.
It is also mitigated by the fact that the respondents have committed to buying stock
from the applicant. In any event, rule 18(3) requires a different approach. The proper
meaning of that subsection, as correctly pointed out by Mr. Stelzner, is that if the loser,
in this case, the respondents, seeks leave to appeal, will suffer irreparable harm, the
order must remain stayed, even if the stay will cause the victor irreparable harm.
[77] In view of all these considerations, m y conclusion is that the order granted on
3 October 2023 falls under section 18(1) and is appealable. I am further of the opinion
that the applicant’s application for an execution order must fail. Furthermore, nothing
was presented to warrant a departure from the norm that costs follow the event.
ORDER
[78] In the result, the following order is granted:
32
78.1 The applicant’s application for a declaratory order and the alternative
application in terms of section 18(3) are hereby dismissed. The applicant is ordered to
pay the costs of this application as well as the costs of two Counsels.
__________________________
LEKHULENI JD
JUDGE OF THE HIGH COURT
33
APPEARANCES
For the applicant: Mr D Goldberg
Mr K Perumalsamy
Instructed by: ashersons Attorneys.
34 Plein Street
Cape Town
For the Respondents: Mr Stelzner SC
Mr Van Staden
Instructed by: MacGregor Stanford Kruger Inc
12
th Floor, One Thibult Square
17 Hans Strijdom Avenue
Cape Town