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[2023] ZAKZPHC 105
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Bright Idea Projects 66 (Pty) Ltd t/a All Fuels v Roseville Projects (Pty) Ltd t/a Sondela Service Station (4881/2022P) [2023] ZAKZPHC 105 (21 June 2023)
SAFLII
Note:
Certain
personal/private details of parties or witnesses have been
redacted from this document in compliance with the law
and
SAFLII
Policy
IN
THE HIGH COURT OF SOUTH AFRICA
KWAZULU-NATAL
DIVISION, PIETERMARITZBURG
Case
No: 4881/2022P
In
the matter between:
BRIGHT
IDEA PROJECTS 66 (PTY) LTD t/a ALL FUELS
APPLICANT
and
ROSEVILLE
PROJECTS (PTY) LTD t/a SONDELA
RESPONDENT
SERVICE
STATION
ORDER
The
following order is granted:
1.
It is declared that:
(a)
the respondent's right of occupation of the premises described as Lot
60 and Rem Lot 61
Ladysmith and situated at 2[...] P[...] Road,
Ladysmith, KwaZulu-Natal, terminated by no later than 31 July 2021;
and
(b)
the respondent's right of operation upon the aforesaid premises of
the retail fuel service
station using the brand name Caltex, or any
other name incorporating the word Caltex, terminated by no later than
31 July 2021.
2.
The respondent together with all person/sand all entity/ies occupying
by or through
the respondent be forthwith evicted from the premises.
3.
In the event of the respondent failing to comply with paragraph 2
above, the
Sheriff or his Deputy be and is hereby authorized and
directed to take all steps and to do all such things as may be
necessary,
to evict the respondent from the said premises.
4.
The respondent be and is hereby ordered to pay the costs of this
application,
such costs to be taxed on the scale as between attorney
and client, including the costs consequent upon employment of senior
counsel.
JUDGMENT
ZP
Nkosi J
Introduction
[1]
The applicant seeks an order in the following terms:
(a)
that the respondent's right of occupation of the premises described
as Lot 60 and rem Lot
61 Ladysmith and situated at 2[...] P[...]
Road, Ladysmith, KwaZulu-Natal ("the premises"), terminated
by no later than
31 July 2021;
(b)
that the respondent's right of operation upon the aforesaid premises
of a retail fuel service
station using the brand name 'Caltex', or
any other name incorporating the word Caltex, terminated by no later
than 31 July 2021;
(c)
that the respondent together with all person/s and/or entity/ies
occupying by or
through
the respondent be forthwith evicted from the premises;
(d)
in the event of the respondent failing to comply with paragraph (c)
above, the Sheriff or
his Deputy be and is hereby authorised and
directed to take all steps and to do all such things as may be
necessary, to evict the
respondent from the said premises; and
(e)
the respondent be and is hereby ordered to pay the costs of this
application, such costs
to be taxed on the scale as between attorney
and client, including the costs consequent upon the employment of
senior counsel.
The
parties
[2]
The applicant is Bright Idea Projects 66 (Pty) Ltd t/a All Fuels
("All Fuels"),
a company duly registered and incorporated
in accordance with the Corporate Laws of the Republic of South
Africa. It has its principal
place of business situated at Unit 13,
Lakeside Office Park, [...] D[...] D[...], Westville, Durban,
KwaZulu-Natal. The applicant
carries on business as the Branded
Marketer of Chevron SA (Pty) Ltd (formerly known as Caltex Oil SA
(Pty) Ltd which has changed
its shareholding and name to Astron
Energy (Pty) Ltd), under the name and style of All Fuels in respect
of KwaZulu-Natal South
Cluster.
[3]
The respondent is Roseville Projects (Pty) Ltd t/a Sondela Service
Station ("Roseville"),
a company duly registered and
incorporated in accordance with the Corporate Laws of the Republic of
South Africa. It conducts business
as a Caltex Retail Service Station
from premises situated at 2[...] P[...] Road, Ladysmith,
KwaZulu-Natal.
[4]
The relief sought by All Fuels is assailed or resisted by Roseville
on various grounds,
including the absence of locus standi to bring
the action. Such grounds are dealt with later in the judgment.
Historical
background (with applicant's case)
[5]
On 28 June 2004, Caltex Oil SA (Pty) Ltd ("Caltex")
concluded a written
franchise agreement ("the franchise
agreement") with Thorneys Family Restaurant CC ("Thorneys")
in which the
franchisor Caltex granted the franchisee, Thorneys the
right to operate a Caltex service station upon the premises forming
the
subject of the application.
[1]
The period of the franchise agreement was for five years commencing
on 1 July 2004 with two options to renew for further periods
of five
years each. Thus, the total duration of the franchise agreement
inclusive of the option period was 15 years (i.e. 1 July
2004 to 30
June 2019). Caltex changed its name to Chevron South Africa (Pty) Ltd
("Chevron") on 1 October 2005.
[6]
On 23 December 2011 All Fuels and Chevron concluded a written cession
and assignment
sales agreement ("the resale assignment
agreement") in terms of which Chevron ceded and assigned various
retail agreements,
one of which was the franchise agreement. On the
same date, All Fuels and Chevron also concluded a written branded
marketer agreement
in terms of which, inter alia, All Fuels was
appointed by Chevron as a wholesaler to promote and sell petroleum
and lubricant products
using the Chevron system within the
KwaZulu-Natal South geographical area. To that end, Chevron granted
the exclusive right and
licence to All Fuels to sell Chevron
petroleum products to the retail sector i.e. the consumer market
within KwaZulu-Natal South
geographical area.
[7]
Also on the same date, as mentioned above, Chevron and All Fuels
concluded a further
written agreement described as an agreement for
sale and purchase of assets in KwaZulu-Natal South Cluster South
Africa ("asset
purchase agreement") in terms of which
Chevron sold various immovable properties and equipment comprising
machinery, tanks
and other similar articles to All Fuels. Such sale
included the premises, tanks, machinery, equipment and the like upon
the premises
occupied by Thorneys.
[8]
Chevron informed Thorneys that it had appointed and granted to All
Fuels, inter alia,
the right and licence to sell to and through
retail outlets within the geographical area identified in the
marketer agreement and
assigned all its rights and obligations in
terms of the franchise agreement to All Fuels. All Fuels secured
registration of transfer
of the immovable property occupied by
Thorneys into its name, on 24 April 2013.
[9]
On 20 May 2014, Roseville concluded a written purchase and sale
agreement with Thorneys
for the acquisition of the service station.
It is averred that Roseville so concluded the written purchase and
sale agreement with
Thorneys knowing full well that the franchise
agreement would terminate by the effluxion of time on 30 June 2019.
[10]
On 2 June 2014, in pursuance of the acquisition of the service
station by Roseville, All Fuels
delivered a letter to Roseville which
letter documented, inter alia, that Roseville's application for the
Caltex franchise for
the service station was successfully completed.
As at 2 June 2014 and in terms of the written franchise agreement,
the remaining
term of the franchise agreement, namely Option 2 due to
commence on 1 July 2014 was for a further period of five years with
the
franchise agreement terminating on 30 June 2019.
[11]
On the same date (2 June 2014) the franchise agreement between
Chevron and Thorneys was ceded
and assigned to Roseville with effect
from 2 June 2014. Chevron changed its name to Astron (Pty) Ltd
("Astron") on 16
October 2018.
[12]
On 18 January 2019, upon impending termination (by the effluxion of
time) of the franchise agreement
on 30 June 2019, All Fuels
(apparently as a measure
ex abudanti cautela
) delivered a
letter to Roseville, in terms of clause 3.4 of the franchise
agreement in terms of which Roseville was reminded that
the franchise
agreement expired by the effluxion of time on 30 June 2019. And it
further advised that the franchise agreement which
was due to expire
would not be renewed or continued after the expiry date and further
stated that the consequence and obligation
of the termination of the
franchise agreement upon expiry thereof was set out in terms of
clause 11 of the franchise agreement.
[13]
During March 2019 Roseville's duly authorised director, namely Yusuf
Vawda ("Vawda"),
made a request to All Fuels for an
extension of the franchise agreement fora further period of five
years. After a consideration
of Roseville's request, All Fuels agreed
to extend the franchise agreement only for an additional two-year
period to 31 July2021.
[14]
On 30 June 2019 the franchise agreement terminated by the effluxion
of time after a period of
15years. In confirmation of the extension
of the two years that was afforded to Roseville, All Fuels forwarded
a letter to Roseville's
representatives advising it of the same.
[15]
On 25 January 2021, All Fuels again reminded / notified the Roseville
that the further two years'
extension terminated at midnight on 30
July 2021. The letter advised Roseville and recorded that upon
termination, the extended
franchise agreement shall not be renewed or
continued after the expiry date and that Roseville agreed to
forthwith surrender the
possession of the premises to All Fuels.
[16]
On 2 February 2021, following upon All Fuels letter, Vawda sent an
email enclosing a letter to
All Fuels in terms of which he requested
an urgent meeting with All Fuels' representatives. The requested
meeting was held on 17
February 2021 at All Fuels offices where
certain issues were discussed and conveyed as between the parties'
representatives.
[17]
It was reiterated and conveyed by All Fuels that the franchise
agreement had terminated and it
would not be granting any further
extension. Other Issues discussed were that the site needs to go
under a revamp and All Fuels
would have to put out the new franchise
agreement to the open tender/market process, which will take into
account, inter alia,
transformation and black empowerment. That
Roseville was not excluded from the open tender/market process and
was invited and more
than welcome to tender for the conclusion of a
new franchise agreement. Further that All Fuels would have to comply
with its requirements,
which entailed that a fair, objective, and
transparent process be followed to conclude a new franchise agreement
with a new prospective
franchisee.
[18]
At the said meeting, Roseville was advised that they were not
entitled to an automatic renewal,
as the agreement was for a fixed
term. It appears that Roseville believed they were entitled to a
renewal and that All Fuels could
not cancel or refuse renewal of the
franchise agreement.
[19]
On 16 March 2021 Roseville delivered a request in terms of s 128(1)
of the Petroleum Products
Act
[2]
("PPA") to the Controller of Petroleum Products
("Controller") for arbitration of the various complaints it
made against All Fuels. On 4 May 2021, All Fuels attorney, Brian
Denny ("Denny") telephonically contacted Roseville's
attorney, Matthew Robson ("Robson") and proposed that the
Roseville's application for referral be suspended pending the
outcome
of the judgments by the Constitutional Court in the two matters of
Former
Way Trade and Invest (Pty) Ltd v Bright Idea Projects (Pty) Ltd t/a
All Fuels and Another
and
Crompton
Motors CC v Bright Idea Projects 66 (Pty) Ltd
.
[20]
On 5 May 2021, Robson addressed a letter to Denny stating, inter
alia, that "we see no harm
in suspending proceedings pending the
outcome of the Constitutional Court matters....". Denny
acknowledged the letter stating
that he would accordingly advise the
Controller of the parties' arrangement/agreement to suspend
Roseville's referral pending the
outcome of the Constitutional Court
judgments.
[21]
On 31 July 2021, Roseville's right of occupation of the premises
terminated according to the
two-year extended franchise agreement. On
5 August 2021 Denny sent an email to Robson stating, inter alia, that
the franchise agreement
extended to 30 July 2021 terminated by the
effluxion of time and further that All Fuels was surprised to receive
an order of fuel
on 2 August 2021.
[22]
On 6 August 2021, and in response to the letter, Robson stated, inter
alia, that All Fuels specifically
requested the Controller to abate
Roseville's request fora s 12B arbitration. On 11 August 2021, Robson
sent an email to the Controller
requesting that he direct All Fuels'
attorney and Astron's attorney to file their submissions in response
to Roseville's request
for arbitration.
[23]
On 12 August 2021, Denny sent an email to Robson to voice his
displeasure at the development
in spite of the parties' agreement to
abate until such time as the Constitutional Court has handed down its
judgments. Astron emailed
its letter of opposition to the request for
referral to the Controller, on 24 August 2021. On 25 August 2021
Denny emailed a letter
to the Controller documenting All Fuels' bases
and grounds of opposition to the request for referral made by
Roseville to the Controller.
[24]
On 3 September 2021, the Constitutional Court delivered its judgment
in the matter of
Crompton
Street Motors CC t/a Wallers Garage Service Station v Bright Idea
Projects 66 (Pty) Ltd t/a All Fuels
.
[3]
In terms thereof, Crompton Street Motors' application for leave to
appeal was granted but the appeal was dismissed, thereby upholding
the eviction order that was granted by this court on similar grounds
to this application.
[25]
On 6 September 2021, Roseville submitted to the Controller its
responses to both All Fuels and
Astron's written objections. On the
same date, the Controller approved Roseville's request for referral
to arbitration.
[26]
On 9 September 2021, and in consequence of Roseville's acceptance
that it would for all intents
and purposes abide by the decision of
the Constitutional Court, Denny emailed a letter to Robson to record
the Constitutional Court's
findings in the Crompton case and
demanding that Roseville vacate the premises by no later than 4.00 pm
on Wednesday, 15 September
2021. The letter further recorded that the
franchise agreement terminated by effluxion of time on 31 July 2021.
[27]
On 28 September 2021 the Constitutional Court delivered its judgment
in the matter of
Former
Way Trade and Invest (Pty) Limited v Bright Idea Projects 66 (Pty)
Limited and Another
.
[4]
In terms thereof, the Court dismissed Former Way's application for
leave to appeal.
[28]
On 5 October 2021 Robson emailed a letter to Denny in which he
recorded, inter alia, that pending
the finalisation of all issues
(relating to Roseville's request for arbitration and any litigation
that might occur) Roseville
was:
(a)
prepared to buy exclusively from All Fuels;
(b)
continue to pay applicable rentals;
(c)
contract whatever standard franchise agreement that was in place with
All Fuels; and
(d)
while in possession of All Fuels' property adhere to present and
applicable terms of franchise
operations.
[29]
On 15 October 2021, All Fuels lodged its appeal against the
Controller's decision, dated 6 September
2021, referring Roseville's
complaint to arbitration. On 20 October 2021 Roseville emailed its
letter of opposition to All Fuels
appeal.
The
respondent's case
[30]
At the outset Roseville avers that there is no
vinculum iuris
in the form of any formal contract between All Fuels and itself. The
franchise agreement which seems to be central to the All Fuels'
case
is between Chevron and Thorneys.
[31]
Roseville also avers, in particular, that All Fuels has not 'stepped
into the shoes' of Chevron
to the extent that entitled it to the
relief claimed. That is so, it is claimed, because in terms of
annexures "AF9-11"
("the triad agreements") All
Fuels, as far as both property and business rights are concerned, has
a very narrow and
restricted title and entitlement which (a) keeps it
bridled by and to, at least, Chevron and (b) does not give it
independent authority
or right to make claims it is making herein as
against Roseville.
[32]
Roseville also submits that All Fuels is non-suited by reason of the
non-joinder of Astron, Chevron-Pakistan
Africa (Pty) Ltd, licensor of
Astron; Controller and Minister. Furthermore, All Fuels has no rights
of action as far as the trade
names and trademarks of Caltex product
is concerned or for the use thereof.
[33]
Roseville concedes that the franchise agreement has expired. It
contends, however, that this
alone does not in this case summarily
lead to unlawful possession of the property by Roseville or to the
right to evict by All
Fuels.
[34]
Roseville centers its argument on the right which emanates from the
licensing system and its
laws to any party or person to be in or
participate in the industry and business of supplying and selling
petroleum products to
the public. It submits that these licences
define the legal standing as well as rights of parties per se in the
petroleum business
and in certain instances such ass 128 of the PPA
which is relevant in this case.
[35]
Roseville believes strongly that since All Fuels is a licensed
wholesaler it is irrelevant that, at the same time, it happens
to be
a landowner. Its land ownership rights have been subordinated to its
legal obligations and constraints as a licensed wholesaler
(who is
prohibited by the PPA (in s 2A(5) from holding retail licences save
in specified cases listed therein).
[36]
As a plea in limine, Roseville contends that All Fuels' application
ought to be stayed pending
the arbitration proceedings that have
already been ordered in terms of s12B. It submits that the
arbitration has been set up and
structured so as to deal with most,
if not all of the issues between the parties. It indicates that the
terms of reference thereof
are contained in annexures "AF17"
and "AF29".
[37]
It is common cause that Roseville is in occupation of All Fuels
property against the will of
All Fuels. It is also common cause that
the franchise agreement terminated by the effluxion of time, on 30
June 2019, and was thereafter
by consent extended fora further
two-year period until 31 July 2021. The franchise agreement was not
renewed thereafter.
The
issues
[38]
The main issue is whether All Fuels, as a licensed wholesaler and
landowner of the premises where
Roseville operates its service
station is entitled to evict Roseville from the premises upon the
expiry of the extended franchise
agreement. The following sub
issues also require determination:
(a)
whether Roseville has been subjected to an unfair or unreasonable
contractual
practice;
(b)
whether Roseville's referral of issues to the Controller has any
merit;
and
(c)
whether All Fuels has contravened s 2A(5)(a) of the Petroleum
Products
Amendment Act.
[39]
A determination of these sub-issues seems to be dispositive of the
case since the facts on the
main issue appear to be indisputable or
common cause. I, therefore propose to deal with the sub-issues first.
[40]
Before I deal with the sub-issues in earnest, I propose to address
the issues raised in limine,
namely, All Fuels lack of locus standi
and non-joinder. Roseville contends that All Fuels is non-suited by
reason of the lack of
jurisdiction and non-joinder of Astron and
Chevron-Pakistan Africa (Pty) Ltd, the licensor of Astron;
Controller; and the Minister
of Mineral Resources and Energy. And the
argument is propounded that All Fuels has no rights of action not
only as far as the right
to evict Roseville but also to trade names
and trademarks of Caltex product or for the use thereof, which forms
part of the relief
sought by All Fuels.
[41]
All Fuels claims to have "stepped into the shoes" of Astron
in terms of the triad agreements,
being the RA Assignment Agreement
("RAAA"); the Branded Marketer Agreement ("BMA");
and the Agreement for the
Sale and Purchase of Assets ("ASA").
Roseville contends that these agreements, as a matter of
interpretation and application
only creates a "master-servant"
relationship -
locatio conduction operis
- of ongoing works
and services that All Fuels as branded marketer must deliver to its
master and overseer, Astron.
[42]
Roseville submits in its heads of argument as follows:
"6.5.3
Clause 3.4 of the "sale of assets agreement" (
annexure
AF11
at p 331) quite rightly recognizes that "3rd party
consents" are needed as regards what it defines as the
"contracts"
being
"collectively all agreements and
contracts to be assigned by Chevron to Marketer in terms of the RA
Assignment Agreement"
which agreement in turn "assigns"
(as between Chevron and Applicant),
"all its rights and
obligations under each of the RA's"
the RA's being
"the
retail agreements details of which are set out in Schedule 1".
6.5.4
Both Applicant and
Chevron/Astron
are seeking in this Court -
deliberately and craftily and seemingly in
fraudem legis
- to
run away from the consequences that the aforesaid clause imposes on
the failure of consent. The arbitration however directly
addresses
this aspect which is a trial of fact.
6.6
It is also indisputable that Applicant itself has no independent
rights to and in the
"Caltex''
name, brand or related
intellectual property - these are "owned" by some American
concern operating via
Chevron-Pakistan
. In juxta position to
this, what the deals, agreements and transactions between Applicant
and the owners or representatives of
the Caltex-brand amount to for
Applicant, is the
obligation. as a servant to a master,
to ensure the successful perpetuation of the
Caltex
brand and incumbent franchisee's."
[43]
From the foregoing, it is Roseville's case that from the triad
agreements alone All Fuels has
no locus standi, no independent rights
to evict but rather an obligation to renew the franchises it took
over and thus there has
been a fatal non-joinder of Astron (which in
turn has remained accountable to Roseville) and Chevron-Pakistan.
[44]
As to the non-joinder, Roseville submits as trite law that the party
that was to have been joined
must have a substantive legal interest
in the order that is being sought. And it further submits that Astron
has a legal interest
in its "real" rights as espoused in
Willow
Waters Homeowners Association (Pty) Ltd v Koka NO and Others
.
[5]
[45]
For the determination of the current issues, I consider that nothing
turns on the points raised
in limine. For all intents and purposes
All Fuels "stepped into theshoes" of Astron and thus has
locus standi to seek
eviction and to vindicate its ownership rights.
I believe that none of the parties proposed to have been joined have
a substantive
legal interest, above that of All Fuels,
which is
likely to be
prejudiced in the order that is sought.
Sub-issues
determination
[46]
I now turn to deal with the sub-issues referred to above. Because the
sub-issues are intertwined,
I propose to deal with all of them as
one.
[47]
The principles pertaining to the sub-issues have found expression in
a multitude of litigation
involving All Fuels and the kindred
entities in this court and various other courts. The judgments
emanating from the courts seem
conclusive and definitive of the
issues.
[48]
In
Camps
Bay Ratepayers' and Residents' Association and Anotherv Harrison and
Another
,
[6]
per Brand AJ, the importance of the doctrine of precedent was aptly
restated as follows:
'[28]
... "(C)ertainty, predictability, reliability, equality,
uniformity, convenience: these are the principal advantages
to be
gained by a legal system from the principle of stare decisis".
Observance of the doctrine has been insisted upon, both
by this Court
and by the Supreme Court of Appeal. And I believe rightly so. The
doctrine of precedent not only binds lower courts,
but also binds
courts of final jurisdiction to their own decisions. These courts can
depart from a previous decision of their own
only when satisfied that
that decision is clearly wrong. Stare decisis is therefore not simply
a matter of respect for courts of
higher authority. It is a
manifestation of the rule of law itself, which in turn is a founding
value of our Constitution. To deviate
from this rule is to invite
legal chaos.' (Footnotes omitted.)
[49]
As regards the doctrine, this court per Henriques J has correctly
expressed itself in
KZN
Oils (Pty) Ltd v Neita (Pty) Ltd t/a Keyway Motors
[7]
as follows:
'The
judgments of D Pillay J, Ploos van Amstel J and Bezuidenhout J
[103]
Among the submissions of the respondent was the diminished
precedential value of the decisions in this Division of the three
judgements of my colleagues mentioned in this judgment, the
submission being that I was not bound by the findings in these
judgments
as they are wrong. All three judgments emanate from this
Division, and in terms of the principle of stare decisis I am bound
by
them unless they are wrongly decided or distinguishable in some
other way. I have had regard to all three of these decisions and
I am
of the view that they were, given the facts of each matter, correctly
decided and there is no basis to depart from them.'
I
share the sentiment expressed above.
[50]
Section 12B(4) of the PPA provides that an arbitrator shall determine
whether the alleged contractual
practice is unfair or unreasonable
and if so "shall make such award as he or she deems necessary to
correct such practice".
Roseville submits that since the
referral to arbitration was done before these proceedings were
instituted, such warrants a stay
of these proceedings since the
arbitration has been set up and structured so as to deal with most,
if not all of the issues between
the parties.
Is
there any merit to the referral?
[51]
The core issue, in terms of Roseville's submissions, is about the
"renewability of franchises"
and the matter of fairness and
reasonableness of it, and nothing should turn on the franchise
agreement as such.
[52]
In this regard, and in annexure "AF17", constituting the
reference to arbitration and
under its heading "REMEDIAL AND
CORRECTIVE ACTION PROPOSED BY THE REQUESTER" Roseville states:
'A.
Astron
and/or
All Fuels
, depending of which of the two
is found to have that power, should offer the Requester the standard
current franchise agreement
as applied by them to all
"Caltex''
franchises. This is very clearly a "contractual" matter and
a "contractual practice".
It
further contends in its heads of argument as follows:
'6.5
It is clear that the
franchise agreement
lays numerous
"obligations" on the Franchisor as to, for instance, the
maintenance of supply of proprietary products,
use of intellectual
property and quality controls use of cards - matters which
reciprocate
to and address the ability of the Franchisee to
carry out its obligations and for the agreement to attain the mutual
objective
of the Franchise. Both parties however are committed to and
indeed subservient to the interests of the "Brand" - the
"Caltex flag". As the Preamble, Items 1 to 4 ably shows -
the "franchise agreement" is fully a reciprocal two-way
street which
obligates
the Franchisor to do a host of things
for the executability and performability of the contract by its
Franchisee.' (Footnotes omitted.)
[53]
In instances where the franchise agreement has lapsed, as agreed in
this matter, it is my considered
view that the above submissions are
misplaced. Nothing should arise from an agreement that has admittedly
lapsed.
[54]
In
Bright
Idea Projects 66 (Pty) Ltd t/a All Fuels v Crompton Street Motors CC
t/a Wallers Garage Service Station
[8]
it was held (per Ploos van Amstel J) that a party's refusal to
conclude a new contract does not constitute or amount to an unfair
or
unreasonable contractual practice. It is aptly stated in his judgment
as follows:
'[18]
I found it difficult to get to grips with counsel's submissions as to
the nature of the contractual practice which is said
to be unfair or
unreasonable as contemplated in s 12B, and should go to arbitration.
As I understood the argument the conduct on
the part of the applicant
which is said to be unfair or unreasonable is its refusal to extend
the existing franchise and lease
agreement, or conclude new ones. I
do not see how its refusal to do so can be said to be a "contractual
practice" which
can be "corrected" by an arbitrator as
contemplated in s 12B.'
[55]
In
KZN
Oils
this court said the following:
[9]
'[57]
The arbitrator, in terms of section 12B,. as well as in terms of the
referral, is required to determine whether the applicant
engaged in
any unfair and unreasonable contractual practices in relation to the
respondent. The referral is clear: the arbitrator
is not required to
deal with any eviction proceedings nor with the applicant's rights of
ownership of the property. In any event,
I do not believe that in the
face of the authorities on this aspect an arbitrator would, on the
facts of this matter, especially
in circumstances where the right of
occupation has terminated, be empowered to revisit the aspect of the
eviction but more importantly,
make any order denying the applicant
its common-law right to eviction.
…
[59]
I venture to add that I do not believe that the powers of the
arbitrator extend to making a new contract for the parties and
directing the applicant to conclude either a franchise or lease
agreement with the respondent. The applicant's counsel's reliance
on
the respective judgments in
Beadica
is clear authority for
this conclusion.'
[56]
The aforesaid judgments are on all fours with the facts and
Roseville's arguments in this case.
I cannot accept the contention
that the refusal to extend the lease in the circumstances qualifies
as "an unfair or unreasonable
contractual practice". The
refusal to grant an extension does not qualify as a "practice"
in terms of the PPA. The
purpose of the PPA was to address the
imbalances of the past and to address the unequal bargaining power in
the petroleum industry.
A fairness standard is imposed on contractual
relationships between retailers and wholesalers in order to remove
unequal bargaining
power.
[57]
Roseville does not enjoy any prospects of success in the arbitration
for "remedial and corrective
action". The arbitrator is not
empowered to order All Fuels and Roseville to conclude a new
franchise agreement. Nor does
the PPA provide that an arbitrator may
make an award which constitutes a declaratory order as to whether or
not a contract was
concluded. No contract is extant in this case and
the arbitrator has no power to create one.
[10]
[58]
I also believe that the arbitrator is not given any power to
override the rights of ownership
and the rights of owners to obtain
eviction orders against persons occupying property against the will
of the owner.
[11]
In any event
Roseville has not asked for any such award in its referral.
[59]
Accordingly, s 12B of the PPA, in the absence of express powers to
that effect, is not to be
interpreted as depriving All Fuels of its
rights to possession of the premises, and is not to be interpreted as
affording an arbitrator
a right to do so. Reference was made by
Roseville to the judgment of
The
Business Zone 1010 CC t/a Emmarentia Convenience Centre v Engen
Petroleum Ltd and Others
,
[12]
a matter concerned with the cancellation of the franchise and
operation agreement in consequence of an alleged breach by the
retailer
operating the franchise business. The cancellation by the
franchisor was challenged by the retailer as constituting an unfair
contractual
practice within the meaning of s 12B; hence the
application to the Controller to refer the matter to arbitration in
terms of s
12B(1). The Constitutional Court effectively found that
the Controller was obliged to refer the alleged unfair or
unreasonable
contractual practice to arbitration in terms of s
12B(1).
[60]
The facts and circumstances of the present case are far removed from
those in the
Business Zone
matter in the following respects:
(a)
the facts are wholly distinguishable; the latter case did not deal
with possession rights
and eviction (as set out in paragraph 37 of
the judgment);
(b)
instead, it dealt with a situation where there was an existing
contract between the parties
and what was in dispute was
cancellation;
(c)
in casu, the franchise agreement has come to an end by effluxion of
time;
(d)
the Constitutional Court effectively held that the arbitrator under
the PPA could set aside
a cancellation of·an existing contract
with the result that the contract was reinstated. That is different
from a finding
that an arbitrator may direct parties to conclude a
contract that had never been concluded in the first place; and
(e)
neither the courts nor the legislature (absent specific and
exceptional provisions e.g.
erstwhile s 252 of the Companies Act)
[13]
make contracts for the parties.
[61]
Our law, generally, recognises freedom of contract. See,
Mohamed's
Leisure Holdings (Pty) Ltd v Southern Sun Hotel Interests (Pty)
Ltd
;
[14]
Trustees,
Oregon Trust and Another v Beadica 231 CC and Others
;
[15]
Absa Ltd
v Moore and Another
,
[16]
Natal
Joint Municipal Pension Fund v Endumeni Municipality;
[17]
and Trinity Asset Management (Pty) Ltd v Grindstone Investments 132
(Pty) Ltd
.
[18]
[62]
As alluded to above, the arbitration embarked upon by Roseville has
no conceivable prospect of
success. There is manifestly no
contractual practice to speak of, having regard to the expired
franchise agreement, that All Fuels
could be said to have
unreasonably or unfairly committed. This application and arbitration
are by no means in
pari materia
.
[63]
I am of the view that staying the proceedings would be a waste of
judicial resources. The agreement
lapsed through the effluxion of
time after a two-year extension. It had a fixed termination date
which was not challenged at that
time but shortly before the expiry
of the lease agreement as happened in this case. That would have
allowed the s 12B process to
unfold well before the lease agreement
(which entitled Roseville to remain on the property) expired.
[64]
Roseville was advised on two occasions about the termination (first
when an extension was granted and again before it was due
to expire)
and that it would not be renewed. It was pertinently pointed out to
it that it would be required to vacate the premises
upon the
termination. It is unclear why Roseville waited until the life of the
agreement was to imminently expire to seek relief.
[19]
[65]
The next consideration is whether All Fuels has acted in
contravention of s 2A(5)(a) of
the PPA. Roseville
contends that All Fuels has acted in contravention of s 2A(5)(a) of
by holding or intending to hold a
retail licence. In this regard it
seems to be common cause that All Fuels carries on business as a
wholesaler and distributor of
petroleum products throughout a
national network of Caltex branded service stations. This while
Roseville in pursuance of the expired/terminated
franchise agreement
traded and continues to trade (against the will of All Fuels) as the
retailer/franchisee of the service station.
[66]
It is unclear in what respects All Fuels is holding or intending to
hold a retail licence. I
consider the contention to be vacuous and
unmeritorious.
[67]
In conclusion, the following emerges from the facts of this case and
the law:
(a)
Astron ceded and assigned all of its rights, obligations and
interests in the franchise
agreement to All Fuels;
(b)
the franchise agreement expired by the effluxion of time on 31 July
2021;
(c)
the franchise agreement did not grant any automatic rights of
renewal;
(d)
clause 11.1 of the franchise agreement provides that upon termination
of the contract, for
whatever reason, the franchisee and its
permitted assigns, heirs and executors will forthwith surrender
possession of the premises
to the franchisor;
(e)
clause 19.2 of the franchise agreement provides that the contract
constitutes the entire
agreement between the parties who acknowledge
that there are no other oral or written undertakings or agreements
between them relating
to the subject matter of the contract and no
amendments or other modification of the contract shall be valid or
binding on the
parties thereto unless reduced to writing and executed
by both parties thereto;
[20]
(f)
the parties did not conclude any further franchise agreement for the
period
beyond 31 July 2021;
(g)
Roseville's refusal to vacate the premises and surrender its retail
licence constitutes
unlawful conduct contrary to the terms and
conditions of clause 11 of the franchise agreement which was
voluntarily and consensually
entered into between the parties;
(h)
the parties contracted freely and voluntarily and the terms agreed
upon are sacred and must
be enforced as Roseville has failed to
demonstrate any good reason for its failure to comply with its
obligation to vacate the
premises;
(i)
once the franchise agreement terminated by the effluxion of time,
Roseville
no longer had the business as the business system and
procedures for establishing and operating the Caltex franchise as
well as
all intellectual property rights associated with Caltex brand
belongs to Astron. These intellectual property rights were licensed
for use for a specified period of time on terms and conditions which
are expressed in the franchise agreement and/or supply agreements;
(j)
section 12B (4) of the PPA provides that an arbitrator shall
determine whether an alleged contractual practice is unfair
and
unreasonable and if so, to make an award as he or she deems necessary
to correct such practice;
(k)
the arbitrator however is not afforded any power in an arbitration
under s 12B to
make an award which tends to create a contract between
the parties where none exists. Nor is an arbitrator entitled to
override
ownership rights duly entrenched in the Constitution, in
regard to any property or to order the continued possession of
premises
in circumstances where no such right exists or is
demonstrated;
(I)
an arbitrator, insofar as remedial corrective action in the form of a
new agreement
is concerned, cannot relax the
pacta
sunt servanda
principle as it would be tantamount to the arbitrator making
agreements for the parties which is impermissible in law. And so are
the courts;
[21]
(m)
the principles of human dignity and freedom enshrined in the
Constitution recognise that parties
are entitled to regulate their
commercial relationships in terms of contracts electively concluded
between them as free agents.
The principle of contractual autonomy is
central to the constitutional principles of dignity, privacy and
freedom. The franchise
agreement in the present matter was concluded
in the context of such constitutional values;
(n)
a contravention of s 2A (5) of the PPA has not been shown to be
engaged nor does it constitutes
a contractual practice which falls
under the auspices of a referral in terms of s 12B (1) of the PPA;
and
(o)
there was no unfair or unreasonable contractual practice committed
and Roseville has not
proved any case to the contrary.
[68]
The franchise agreement having come to an end, it is Roseville's
contractual and legal obligation
to vacate the premises and to
terminate all operations as a Caltex franchisee. Its unlawful holding
over of the premises, in circumstances
where it has no right of
occupation of the same, constitutes an arbitrary deprivation of
property and a subversion of the pristine
principles and values of
the Constitution which should not be countenanced by this court.
[69]
From the foregoing, I believe the referral to an arbitrator is
without merit and a stay of the
proceedings is unwarranted. The
interests of constitutionalism demand that Roseville be held to its
contractual obligation to vacate
the premises.
Costs
[70]
Roseville appears to have obfuscated and distorted the issues
pertinent to the determination
of the matter by replicating similar
failed defences raised in decided matters (referred to above) and in
some respects nuanced
them hoping a different conclusion would be
reached. I find the approach untenable and akin to an abuse of the
process of court.
The court's displeasure needs be demonstrated in
the scale of costs granted.
Order
[71]
In the result, the following order is granted:
1.
It is declared that:
(a)
the respondent's right of occupation of the premises described as Lot
60 and Rem Lot 61 Ladysmith and situated at 2[...] P[...] Road,
Ladysmith, KwaZulu-Natal, terminated by no later than 31 July 2021;
and
(b)
the respondent's right of operation upon the aforesaid premises of
the
retail fuel service station using the brand name Caltex, or any
other name incorporating the word Caltex, terminated by no later
than
31 July 2021.
2.
The respondent together with all person/sand all entity/ies
occupying
by or through the respondent be forthwith evicted from the premises.
3.
In the event of the respondent failing to comply with paragraph
2
above, the Sheriff or his Deputy be and is hereby authorized and
directed to take all steps and to do all such things as may
be
necessary, to evict the respondent from the said premises.
4.
The respondent be and is hereby ordered to pay the costs of this
application,
such costs to be taxed on the scale as between attorney
and client, including the costs consequent upon employment of senior
counsel.
ZP
Nkosi J
Case
information
DATE
OF HEARING:
17
FEBRUARY 2023
DATE
JUDGEMENT HANDED DOWN:
21
JUNE 2023
COUNSEL
FOR THE APPLICANT:
D.
RAMDHANI SC
(Instructed
by Norton Rose Fulbright
South
Africa Inc.
3
Pencarrow Park
La
Lucia Ridge
Umhlanga
Ref:
ALL 1261/B Denny
Te:031
582 5600
c/o
Stowell & Co
295
Pietermaritzburg Street
Pietermaritzburg
3201
Email:
Saraw@stowell.co.za)
COUNSEL
FOR THE RESPONDENT:
B
G SAVVAS
(Instructed
by Murray Kotze & Associates
105
Club avenue
Waterkloof
Heights
Pretoria
Ref:
MJ kotze / 04389/MTR c/o J Leslie Smith & Co Inc
332
Jabu Ndlovu Street Pietermaritzburg
Ref:
A Ganas / Prisha / 22JL0041
Tel:
033 845 9700)
[1]
Annexure "AF1" to the founding affidavit.
[2]
Petroleum Products Act 120 of 1977
.
[3]
Crompton
Street Motors CC t/a Wallers Garage Service Station v Bright Idea
Projects 66 (Pty) Ltd t/a All Fuels
2022 (1) SA 317 (CC).
[4]
Former
Way Trade and Invest (Pty) Limited v Bright Idea Projects 66 (Pty)
Limited and Another
2021 (12) BCLR 1388 (CC).
[5]
Willow
Waters Homeowners Association (Pty) Ltd v Koka NO and Others
2015 (5) SA 304(SCA)
para 22.
[6]
Camps
Bay Ratepayers' and Residents' Association and Another v Harrison
and Another
2011 (4) SA 42 (CC).
[7]
KZN
Oils (Pty) Ltd v Neita (Pty) Ltd t/a Keyway Motors
[2021] 2 All SA 478
(KZP).
[8]
Bright
Idea Projects 66 (Pty) Ltd t/a All Fuels v Crompton Street Motors CC
t/a Wallers Garage Service Station
(1916/201SP) [2019] ZAKZPHC 39 (6 June 2019).
[9]
KZN
Oils
above fn 7.
[10]
See
Sasol
Oil (Pty) Limited v Eurozar (Pty) Ltd and Others
(56719/2021) [2022] ZAGPJHC 17(19 January 2022); and
Manndre
Beleggings CC v Minister of Energy and Others
(51067/15) [2018] ZAGPPHC 93 (22 March 2018).
[11]
Bright
Idea Projects 66 (Pty) Ltd v Former Way Trade and Invest (Pty) Ltd
2018 (6) SA 86 (KZP).
[12]
The
Business Zone 1010 CC t/a Emmarentia Convenience Centre v Engen
Petroleum Ltd and Others
2017 (6) BCLR 773 (CC).
[13]
Companies Act 61 of 1973.
[14]
Mohamed's
Leisure Holdings (Pty) Ltd v Southern Sun Hotel Interests (Pty) Ltd
2018 (2) SA 314 (SCA).
[15]
Trustees,
Oregon Trust and Another v Beadica 231 CC and Others
2019 (4) SA 517 (SCA).
[16]
Absa
Ltd v Moore and Another
2016
(3) SA 97
(SCA) para 42.
[17]
Natal
Joint Municipal Pension Fund v Endumeni Municipality
2012 (4) SA 593
(SCA) para 18.
[18]
Trinity
Asset Management (Pty) Ltd v Grindstone Investments 132 (Pty) Ltd
2018 (1) SA 94
(CC) para 14.
[19]
Crompton
Street Motors CC t/a Wallers Garage Service Station v Bright Idea
Projects 66 (Pty) Ltd t/a All Fuels
2022 (1) SA 317
(CC);
Bright
Idea Projects 66 (Pty) Ltd v Former Way Trade and Invest (Pty) Ltd
2018
(6) SA 86
(KZP) paras 31, 32 and 40;
Engen
Petroleum Ltd v Tlhamo Retail (Pty) Ltd
2010 JDR 0958 (GSJ) at 8-9;
Hansco
Motors CC v BP Southern Africa (Pty) Ltd
2011 JDR 1397( KZP) paras 32-34; and
Astron
Energy Ltd v Union West Motors (Pty) Ltd t/a Pinetown Service
Station
(Case No: 8149/2019P) (18 September 2020) paras 8-9.
[20]
Kythera
Court v Le Rendez-Vous Cafe CC and Another
2016
(6) SA 63
(GJ) paras 36-37.
[21]
Trustees,
Oregon Trust and Another v Beadica 231 CC and Others
2019 (4) SA 517
(SCA);
Roazar
CC v The Falls Supermarket CC
2018 (3) SA 76
(SCA) para 24; and
Mohamed's
Leisure Holdings (Pty) Ltd v Southern Sun Hotel Interests (Pty) Ltd
2018 (2) SA 314
(SCA