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2022
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[2022] ZAECMKHC 100
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Balobi Trading (Pty) Ltd and Others v Siyaphambili Fishing Primary Co-Op Ltd and Others (2480/2022) [2022] ZAECMKHC 100 (2 November 2022)
IN THE HIGH COURT OF SOUTH AFRICA
(EASTERN CAPE DIVISION, MAKHANDA)
Case
No: 2480/2022
In
the matter between:
BALOBI
TRADING (PTY)
LTD
First Applicant
Reg.
Nr. 2004/023388/07
BALOBI
PROCESSORS (PTY)
LTD
Second Applicant
Reg.
Nr. 2000/006993/07
BALOBI
FISHING ENTERPRISES (PTY)
LTD
Third Applicant
Reg.
Nr. 1993/003234/07
And
SIYAPHAMBILI
FISHING PRIMARY CO-OP LTD
First Respondent
Reg.
Nr. 2018/009765/07
THE
DDG OF FORESTRY, FISHERIES & AND THE
ENVIRONMENT
Second Respondent
LE
TAP
CC
Third Respondent
Reg.
Nr. 1992/015962/23
BLUE
SEAS PRODUCTS (PTY) LTD
Fourth Respondent
Reg.
Nr. 2005/005434/07
JUDGMENT
BESHE
J:
[1]
Applicants approached this court
for an order in the following terms:
“
PART
A: INTERIM INTERDICT
1.
Entertaining this Application as a matter of urgency and dispensing
with the
necessity for Applicant to adhere strictly to the rules of
this Honourable Court in regard to form, notice, service, time
periods
and condoning Applicant’s failure to adhere to such
rules of the above Honourable Court.
2.
That pending the final determination of the relief sought in Part B
hereof:
2.1
Second Respondent be interdicted and restrained from issuing any of
the forty-five squid catching
permits applied for, or to be applied
for, by First Respondent in terms of section 13 of the Marine Living
Resources Act 18 of
1998 (as amended) (“the permits”) for
the 2022/23 fishing season to the vessels of any party or otherwise;
and
2.2
First, Third and Fourth Respondents be interdicted and restrained
from fishing or otherwise dealing
with any of the aforesaid permits
which may have already been issued to First Respondent by Second
Respondent.
3.
That the costs of the application for interim relief be determined in
the proceedings
brought in Part B of this Notice of Motion.
4.
That Applicant be granted leave to supplement its founding affidavit
if necessary
for purposes of determination of Part B.
5.
Further and/or alternative relief.”
For
completeness, in Part B the applicants will essentially be seeking
that first and second respondents allocate the squid catching
permits
issued to the first respondent for the 2022 / 2023 fishing season to
vessels nominated by the applicants.
[2]
First to third applicants are
companies that are duly registered in accordance with the
laws of
this country. First applicant conducts business as buyer and
marketers of fish world-wide. Second applicant conducts business
as a
fish products manufacturing facility. Third applicant manages several
fishing vessels that are employed in the catching of
various fish
species.
[3]
First respondent is also a
company that is registered in accordance with the laws of the
Republic of South Africa. It appears to be common cause or at least
not in dispute that first respondent is a co-operative consisting
of
small scale fishing communities from historically disadvantaged
communities. The granting of fishing rights to small scale fishing
communities is a culmination of department’s Small Scale Sector
Policy whose objective as I understand it, is to recognise
the rights
of indigenous fishers and coastal communities, safeguard the said
rights and provide security for same, which has taken
many years to
formulate and adopt.
[4]
Second respondent is the Deputy
Director General: Fisheries Management of the fisheries
branch of
Department of Forestry, Fisheries and the Environment (DFFE). It is
common cause that fishing permits relevant to this
application are
issued from second respondent’s office.
[5]
Third respondent is a close
corporation whose business is that of a general fishing enterprise.
[6]
Fourth respondent is also a
company duly registered in accordance with the laws of this
country.
It also conducts business as a general fishing enterprise.
[7]
The nature of the relief sought
is succinctly outlined by the applicants in the founding
affidavit
deposed to by
Mr Rowe
as follows:
“
10.
First respondent has been granted certain long term fishing rights by
the Department in terms of authority delegated by the
Minister of
Environment, Forestry and Fisheries. Applicants have concluded
binding agreements with first respondent relating thereto.
Pursuant
thereto, the Department issued forty-five permits in respect of the
2021/2022 squid fishing season to first respondent.
In terms of these
permits, these fishing permits were allocated to applicants’
fishing vessels.
11.
First respondent, in breach of its contractual obligations, is in the
process of, or has just concluded agreements with third
and fourth
respondents relating to those same fishing rights.
12.
The Department is due to allocate forty-five permits in respect of
the 2022/2023 squid fishing season to first respondent. Applicant
seeks an interdict ordering first respondent and the Department to
allocate these permits to applicants’ fishing vessels.
In the
alternative, applicants seek an interdict preventing the respondents
from dealing with the said permits for the 2022/2023
squid fishing
season, pending the outcome of urgent arbitration proceedings to be
launched by applicants. The season has already
commenced on 1 July
2022.”
[8]
The deponent to the founding
affidavit describes himself as the Chief Executive Officer
of first
applicant and a director of first and second applicant companies. I
propose to deal only with salient aspects of the founding
affidavit
in so far as they relate to the relief sought. The following emerges
from the founding affidavit:
The
Department of Forestry, Fisheries and the Environment (DFFE) has been
in the process of implementing the Small-Scale Sector
Policy which
makes provision for the granting of community based subsistence
fishing rights since about 2012.
[9]
It became obvious to the
commercial fishing sector that viability of all vessels in the
sector
would be affected by this policy. This in view of the fact that each
vessel in the would have a reduced allocation of squid
permits. The
group, I take it of commercial operators, though its trading arm in
the form of first applicant started negotiating
with Small-Scale
Co-operatives who had applied for the allocation of small scale
fishing rights.
[10]
An agreement was concluded with first respondent
on 14 January 2020 in terms of the applicants were granted
the
“unequivocal right of first refusal to catch, process and
market any fish caught from their fishing rights”. In
this
regard, court is referred to Annexure MRFA1. Similar agreements were
concluded with other various small-scale co-operatives.
[11]
On 24 June 2020 first applicant concluded a Joint
Venture (JV) agreement with first respondent. The applicant(s)
undertook to catch, process and market the fish caught pursuant to
utilising the rights of the first respondent. During 2021 first
respondent having been allocated 45 permits by the department, such
permits were duly allocated to vessels that were nominated
by the
applicants. It is apposite to have regard to the two agreements
marked MRFA 1 and 2 respectively. The former is entitled
Agreement to
Co-operate with respect to harvesting, processing and marketing. It
is between first respondent and the applicants.
The relevant part
thereof reads thus:
“
Now
therefore the parties agree as follows
A.
The Co-op understands and agrees that DEFF has awarded them fishing
rights to be fished
by their own members and mainly for their own use
and for food security.
B.
In addition the Co-op may have been awarded squid right that could be
fished commercially
and therefore the Co-op agrees to exclusively
engage the Harvester to utilise such fishing rights on behalf of the
Co-op.
C.
The parties to this agreement understand and agree that DEFF will
clarify how such
squid rights may be utilised and that when such
details are confirmed the parties will enter into a more specific
agreement detailing
the terms and conditions whereby the Co-op will
allow the Harvester to catch and the Processor to process and the
Marketer to market
any fish caught.
D.
Notwithstanding any of the foregoing the Co-op hereby agrees to give
the Harvester
and the Processor and the Marketer the unequivocal
right of first refusal to catch, process and market any fish caught
from their
fishing rights”
[12]
The relevant parts of MRFA 2 on the other hand reads thus:
The
heading being: Small Scale Fishing Rights JOINT VENTURE Agreement
between first respondent and first applicant being the co-op
and
facilitator respectively.
“
1.
… …
2.
… …
3.
DEFF must still clarify how these squids and other rights may be
utilised; and
4.
… …
5.
… …
6.
The Facilitator will be responsible for arranging the catching,
processing and buying of any fish while utilizing the fishing
rights
awarded to the Co-op and the Facilitator confirms to accommodate a 25
man crew compliment for the Co-op, or such quantum
of crew as may be
granted to the Co-op by DEFF; and
7.
… …
8.
… …
9.
… …
10.
… …
11.
… …
12.
… …”
Now
therefore the parties agree as follows:
“
A.
The Co-op understands and agrees that DEFF has awarded them fishing
rights to be fished by their own members and mainly for their
own use
and for food security.
B.
In addition the Co-op has been awarded squid fishing right that can
be fished commercially and therefore the Co-op agrees to
exclusively
engage the Facilitator or such entity that may be appointed as
nominee by the Facilitator from time to time, to catch
the squid and
to utilise such fishing rights on behalf of the Co-op.
C.
… …
D.
… …
E.
… …
F.
In the second or third year, the parties may agree to a different
arrangement for e.g. a monthly payment or percentage of beach
price
value for fish landed or by also sharing in the fishing operation
profits by acquiring a shareholding in a vessel.
G.
Therefore the opportunity will also be available to the Co-op to
further invest and participate in the fishing industry by purchasing
a share in a squid vessel or squid vessel owning company, which the
Facilitator will manage on behalf of the Co-op. This will also
provide the Co-op an opportunity to gain experience and exposure to
commercial fishing and contribute to the upliftment of the
community.
H.
In regard to rights issued to the Co-op, other than squid rights, the
parties agree that the Facilitator will assist with the
utilization
and marketing of these other rights.
I.
The parties hereby agree to sign all such further documentation or
agreements that may be necessary from time to time to give
effect to
the terms of the agreement.
J.
The Co-op undertake to appoint a representative committee of three
persons with which will have a mandate to act on behalf of
the Co-op
in all matters and in all discussion with the Facilitator on business
related matters.
K.
The parties agree that the effective date of this agreement will be
from the date of signature of this Agreement by the last
of the
signatories hereto and will be valid for the full duration that the
Co-op holds squid and other fishing rights.”
The
agreement also provides for arbitration.
Clause 16.1
states
that this agreement constitutes the sole record of the agreement
between the parties with regard to the subject matter hereof.
[13]
The permits that had been allocated to vessels
were due to be re-allocated for the following fishing season
being
2022 / 2023. First respondent was required, in terms of the Joint
Venture agreement, to approach the department to facilitate
the
placement of permits. The parties also engaged in discussions
regarding remuneration terms for the next season as well as other
terms. It would seem that the first respondent was not happy with
what the applicants offered in this regard. It further would
appear
that the facilitation of placement of permits by the first respondent
hinged on the outcome of this negotiations. This led
the applicants
to make first respondent a compromise, which according to the
Mr
Rowe
, was accepted by first respondent. Representatives of the
first respondent never got round to signing the document signifying
its
acceptance of the terms agreed upon. According to
Mr Rowe
,
in contravention of clear rights applicants have in terms of the
Joint Venture agreement, it was intimated on behalf of first
respondent that it intended giving 15 out of the 45 permits allocated
to them to a third party. It later came to light that first
respondent intended to allocate 15 permits each to third and fourth
respondents respectively.
[14]
Applicants assert that they have a clear right
alternatively
prima facie
right to first respondent’s
permits in terms of the Joint Venture agreement. As far as injury
committed or reasonably apprehended,
it is asserted that it is
evident that first respondent intends concluding agreements with
third and fourth respondents and thus
unlawfully repudiate the Joint
Venture agreement. Further that applicants have no satisfactory
alternative remedy but to approach
this court and thereafter refer
the matter to arbitration. That accepting the repudiation will cause
irreparable harm not only
to the applicants but to employees who
would be left without an income. A damages claim is not viable
because first respondent
is not possessed of asserts which would be
sufficient to meet a substantial claim for damages. It is furthermore
asserted that
as far as the balance of convenience is concerned, the
applicant has strong prospects of success in establishing the
validity of
the Joint Venture agreement.
[15]
Based on the following reasons, it is alleged that
the matter is extremely urgent:
First,
third and fourth respondents have shown no regard for applicants’
rights in terms of Joint Venture agreement. First
respondent has
indicated that it will approach the department for fishing permits to
be allocated to third and fourth respondents’
vessels. This is
due to occur imminently. Unless the interdict sought is granted,
applicants’ arbitration proceedings will
be rendered nugatory.
[16]
The application is opposed by all the respondents.
All four respondents impugn the urgency of the matter
and therefore
the need to haul the parties to court on two days’ notice. And
without an explanation of the delay in launching
the application. The
respondents assert that if there is any urgency regarding the matter,
it is self-created by the applicants.
I have already alluded to
applicants’ version of what in their view makes the matter
extremely urgent
[my emphasis]. This is contained in the last
paragraph of 74 of the founding affidavit. Needless to say, no
explanation is provided
why it took over a month to launch the
application. The respondents point out that as far back as June 2022,
the applicants were
threatening to launch an urgent application to
force the respondents in particular the first respondent to perform
in terms of
the agreement purportedly concluded with the first
respondent. And had therefore been aware in June already that first
respondent
was not willing to come to the party and perform according
to the purported agreement. Applicants were also aware that there was
a sense of uncertainty and misunderstanding among the co-ops
pertaining to the terms,
inter alia
, of the Joint Venture
agreement with first applicant.
[17]
On the 11 July 2022 applicants once again threatened the first
respondent with urgent application.
Once again in a letter addressed
to the third respondent on 20 July 2022 the application for relief on
an urgent basis is mentioned.
The application for urgent relief was
finally issued on 3 August 2022. I am inclined to agree with the
respondents that urgency
is self-created by the applicants.
[18]
Lack of urgency is not the only point / objection
raised by the respondents. They also impugn the
locus standi
of the applicants. This on the basis that the first agreement relied
upon albeit signed by all three of the applicants or their
representatives it is not a binding contract (MRFA 1). The Joint
Venture Agreement (MRFA 2) is only signed by first applicant but
the
enforceability thereof is assailed. Whilst this objection sounds
meritorious, it can be appropriately determined by a consideration
of
the merits, namely whether there exists a binding agreement concluded
between any of the applicants and the first respondent.
It is also on
the same basis that the respondents impugn
Mr Rowe’s
authority by the respective juristic person to bring these
proceedings. Together with their reply, the applicants have now filed
a resolution authorising
Mr Rowe
to bring this application.
Merits
[19]
As can be gleaned from the points
in limine
taken by the respondents, the enforceability of the purported
agreements is assailed. The respondents assert that the agreements
are invalid by reason of lack of compliance with statutory
regulations. As regards the first agreement, first respondent asserts
that it is only an agreement to agree. That much is clearly spelt in
in
Clause C of
MRFA 1. As far as the Joint Venture Agreement,
first respondent contends that there was no meeting of minds. They
were pressured
to sign the agreement even though they had asked that
they be given an opportunity to run it past their lawyers. And that
in any
event, it is unlawful as it seeks to bind the first respondent
to the applicants for life. Something that would be contrary to the
Marine Living Resources Act
(MLRA
), the Regulations, the Small
Scale Fishing Policy and the conditions under which the fishing
rights were awarded. And is a ploy
by the applicants to capture the
small scale fishery co-operatives. That MRFA 1 has been superseded
because the signing thereof
on 14 January 2020 predates the award of
permits to the first respondent on 16 November 2021.
[20]
Second respondent also points out that applicants
have not shown the existence of exceptional circumstances
which
warrant the restraining of second respondent’s power to
exercise its statutory powers. Second respondent also re-iterates
that the purported fifteen-year Joint Venture Agreement concerned is
in conflict with the department’s objectives as per
its
policies, the MLRA. The letter advising first respondent of the
allocation of the rights concerned states in no uncertain terms
that
such rights may not be transferred or assigned to any entity. Further
that there is no relationship between the applicants
and the second
respondent and applicants have no right to protect
vis-à-vis
second respondent by interdicting the second respondent from
issuing out permits to the first respondent. Especially in light of
the fact that second respondent was not privy to the existence of the
Joint Venture Agreement in question prior to the issuance
of the
fishing rights to the first respondent. Third respondent also
disavows any agreement having been entered into between it
and first
respondent.
[21]
In adding its voice to the opposition, in addition
to the defences raised by first to third respondents,
fourth
respondent also points out that the Joint Venture Agreement is
inchoate as it does not contain the actual price to be paid
by the
applicants and only amounts to an agreement to agree. Further that,
in any event in terms of
Section 19 (2)
of the
Act
“
No
small scale fishing right or permit shall be transferable except with
the approval of and subject to the condition determined
by the
Minister
”. Fourth respondent goes so far as asserting that
the agreements in question are
contra bonos mores
. All the
respondents make the point essentially that what the applicants
envisage is to front with the co-ops and reduce them to
mere paper
rights holders. Especially that applicants contend they have signed
agreements with other co-ops besides the first respondent.
And that
this smacks of bullying on the part of the applicants.
[22]
In reply, applicants deny that the Joint Venture
is an alienation of first respondent’s fishing rights.
But is
aimed at building / creating some form of partnership with the first
respondent.
[23]
All the respondents assert that the applicants
have not met the four requirements for the granting of an
interim
interdict.
[24]
The application stumbles on the very first hurdle
to be met in order for an interim interdict to be granted.
Namely a
prima facie
right. The agreement/s relied upon by the
applicant appear to be unenforceable on a number of grounds as
demonstrated by the respondents.
The respondents have in my view cast
serious doubt on the existence of a
prima facie
right based on
the two agreements relied upon by the applicants. In fact, there is
only such agreement MFRA 2, it being the sole
memorial between the
parties. Irreparable harm, a well-grounded apprehension of
irreparable harm should the interim relief not
be granted: Applicants
have alluded to financial loss they are likely to suffer should the
first respondent not comply with the
Joint Venture Agreement. The
respondents have demonstrated aptly that as holders of long term
fishing rights, they stand to suffer
irreparable harm as their rights
and the concomitant benefits that they are designed to reap will be
rendered nugatory and they
will depend on the mercies of the powerful
actors in the fishing space such as the applicants. Their fishing
rights may even be
revoked by the department by reason of breach of
the conditions attached to the awarding of the fishing rights.
[25]
From what I have said above, it is clear that the
prospects of success on the part of the applicants in
these
circumstances are very slim. For the same reasons stated, in respect
of the requirement for apprehension of irreparable harm,
I am not
persuaded that the balance of convenience favours the applicants. In
my view, the respondents, in particular the first
respondent, has
shown that the balance of convenience favours it.
[26]
As far as the availability of a suitable or
affective alternative remedy, applicants allege that a claim
for
damages will not suit them and give reasons for asserting that. But,
the fear that the respondents may not be able to meet
their claim
seems to be directed at first respondent and not third and fourth
respondents who, it is suggested interfere with the
applicants’
contractual rights with first respondent. This remedy is therefore
still available to them.
[27]
Regarding the notice of motion, Part B which is
also styled – Final alternatively
pendete lite
relief,
envisages the hearing of the application on an urgent basis. Also
envisages in the alternative, referral of the dispute
to arbitration
whilst the second respondent is interdicted from issuing all 45 squid
catching permits to first respondent. This
is suggestive of an
alternative remedy that is available to them. But at the same time
also envisages the denial to first respondent
of its long term right
to fishing permits for even a longer period. Another reason that
shows that the balance of convenience favours
first respondent.
[28]
For these reasons, I am not persuaded that the
applicants have made out a case for the relief they seek.
[29]
Accordingly, the application is dismissed with
costs.
N
G BESHE
JUDGE
OF THE HIGH COURT
APPEARANCES
For
the Applicants
:
Adv: G Brown
Instructed
by
: ANDREW DE VOS &
ASSOCIATES
C/o
WHEELDON RUSHMERE & COLE INC.
119
High Street
MAKHANDA
Ref:
Mr M Van der Veen
Tel.:
046 – 622 7005
For
the 1
st
Respondent
: Adv: B Ford SC and
Adv: D Dyer
Instructed
by
: CULLINAN &
ASSOCIATES INC.
C/o
HUXTABLE ATTORNEYS
23
New Street
MAKHANDA
Ref:
Mr O Huxtable
Tel.:
046 – 622 2692
For
the 2
nd
Respondent
: Adv: B Ndamase and
Adv:
A Masiza
Instructed
by
: THE STATE ATTORNEY
29
Western Road
GQEBERHA
Ref.:
Ms M Botha
Tel.:
041 – 585 7921
For
3
rd
Respondent
:
Mr Friedman
Instructed
by
: FRIEDMAN SCHECKTER INC.
75
Second Avenue
Newton
Park
GQEBERHA
Ref.:
Mr Friedman
Tel.:
041 – 395 8400
For
the 4
th
Respondent
: Adv: Kincaid
Instructed
by
: MACGREGOR STANFORD
KRUGER INC.
C/o
NETTLETONS ATTORNEYS
118
A High Street
MAKHANDA
Ref.:
Mr R Hart
Tel.:
046 – 622 7149
Date
Delivered
: 2 November 2022