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[2021] ZAGPPHC 97
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Chamdor Service Station CC v Controller of Petroleum Products of the Department of Mineral Resources Energy and Others (61429/19) [2021] ZAGPPHC 97 (5 March 2021)
REPUBLIC
OF SOUTH AFRICA
IN
THE HIGH COURT OF SOUTH AFRICA
GAUTENG
DIVISION, PRETORIA
(1)
REPORTABLE:
NO
(2)
OF
INTEREST TO OTHER JUDGES: NO
(3)
REVISED.
Case
No:61429/19
In
the matter between:
CHAMDOR
SERVICE STATION CC
Applicant
and
THE
CONTROLLER OF PETROLEUM PRODUCTS
OF
THE DEPARTMENT OF MINERAL RESOURCES
ENERGY
First
Respondent
ARBITRATION
FOUNDATION OF SOUTHERN AFRICA
Second
Respondent
ARBITRATOR
HENKLOUW N. O
Third
Respondent
FUTURE
PHAMBILI PETROLEUM (PTY) LTD
Fourth
Respondent
JUDGMENT
SK
Hassim AJ
Introduction
[1]
Chamdor
Service Station CC (“
Chamdor
”),
the applicant in the main application, is a licensed retailer
contemplated in the
Petroleum
Products Act, Act No 120 of 177 (“
the
Act
”).
F
uture
Phambili Petroleum (Pty) Ltd (“
Phambili
”),
the fourth respondent is a licensed wholesaler contemplated in the
Act.
[2]
Chamdor
o
perates
a filling station from erf 370 Lewisham Township, Registration
Division I.Q, Province of Gauteng situated at 137 Main Reef
Road,
Lewisham, Krugersdorp (“
the
property
”)
in
terms of a franchise agreement incorporating a lease agreement
concluded
with Phambili’s predecessor-in-title, Caltex (Pty) Ltd
(“
Caltex
”).
The property is owned by Phambili and let to Chamdor
in
terms of the franchise agreement incorporating a lease agreement.
[3]
Chamdor
seeks to stay the arbitration of a dispute referred by Phambili to
the Arbitration Foundation of Southern Africa (“
AFSA
”)
in terms of the franchise agreement (“
the
AFSA arbitration
”)
pending the finalisation of an arbitration requested by Chamdor under
section 12B of the
Act
(“
the
section 12B arbitration
”).
Such requests are directed to the Controller of Petroleum Products
(“
the
Controller
”).
[4]
Phambili
opposes the application to stay the AFSA arbitration and counter
applies for Chamdor’s eviction from the property.
Chamdor
opposes this.
[5]
The
first, second and third respondents do not oppose either of these
applications.
[6]
Despite
seeking several orders in the notice of motion, Chamdor persists only
with the following prayer:
“
1.4
staying any proceeding instituted against the applicant until
finalisation of the Section 12B arbitration
proceedings with the
[Controller] in terms of the Judgment and Order of Teffo J on 10
November 2017.”
The
relationship between Chamdor and Phambili
[7]
The
disputes have their origins in a franchise agreement, incorporating a
lease agreement, concluded between Caltex and Chamdor
on 28 June
2001. Caltex granted to Chamdor a license to amongst others
sell and/or dispense approved Caltex petroleum products
for fifteen
(15) years from 1 August 2001
[1]
at the property which Caltex leased to Chamdor. The duration of
the lease agreement coincided with that of the franchise
agreement.
The franchise agreement specifically provided that upon it being
terminated for whatever reason, the right to
occupy the property
terminated. The franchise agreement as well as the lease would
have lapsed by effluxion of time on 31
July 2016.
[8]
The
franchise agreement provided a mechanism for the resolution of
disputes. If negotiation and mediation failed, the parties
could submit the dispute for resolution by an arbitrator appointed by
AFSA (“
the
AFSA arbitrator
”).
In the event of Caltex instituting legal proceedings in a court of
law for the eviction of Chamdor from the property,
the latter could
in terms of clause 20.6 of the franchise agreement apply to the court
for a stay of the court proceedings pending
the resolution of the
dispute by the AFSA appointed arbitrator.
[9]
Caltex
changed its name to Chevron South Africa (Pty) Ltd (“
Chevron
”)
on 15 August 2005. During September 2012, Chevron ceded and
assigned to Phambili its rights and obligations in terms
of the
franchise agreement. Phambili hence acquired, as against (and
in favour of Chamdor), the rights and obligations conferred
by the
franchise agreement, as well as the lease agreement. Phambili
has been the owner of the property since December 2012,
having
acquired it from Chevron.
The
2015 eviction application
[10]
It
is common cause that after Chevron exited the franchise agreement,
disputes arose between Chamdor and Phambili.
[11]
On
20 April 2015, Phambili cancelled the franchise agreement and thereby
the lease and demanded that Chamdor vacates the property.
Chamdor disputed Phambili’s right to cancel the franchise
agreement and refused to vacate.
[12]
On
14 October 2015, Phambili lodged an application under case no.
82577/2015 for Chamdor’s eviction from the property (“
the
2015 eviction application”
).
Chamdor opposed that application.
Chamdor’s
request for arbitration in terms of section 12B of the Petroleum
Products Act
[13]
The
Controller is empowered by section 12B of the Act to refer a matter
to arbitration if requested by a licensed retailer who alleges
to
have been subjected to an unfair and unreasonable contractual
practice at the hands of a licensed wholesaler (or
vice
versa
).
[14]
A
section 12B arbitration is limited in its scope; it does not extend
to all disputes arising between a licensed retailer and licensed
wholesaler. It is confined to an “
unfair
or unreasonable contractual practice by a licensed wholesaler, or
vice versa
”.
The powers of the arbitrator of a dispute contemplated in section
12B, are limited to determining whether the alleged
contractual
practices concerned are unfair or unreasonable and if so, make an
award deemed necessary to correct such practice and
if the
allegations giving rise to the arbitration were frivolous or
capricious, then make an award deemed necessary to compensate
the
party affected by the allegations.
[15]
Chamdor
was of the view that it was being treated unfairly in that amongst
others, Phambili in breach of the franchise agreement,
refused to
supply fuel to it.
[2]
On
29 July 2016 (two days before the franchise agreement lapsed by
effluxion of time), Chamdor requested the Controller to
exercise the
powers conferred by section 12B of the Act. It complained that
Phambili had indicated that it would not be renewing
the franchise
agreement and, had not offered value for the business.
The
hearing of the 2015 eviction application on 18 March 2017 by Teffo J
[16]
Chamdor
disputed Phambili’s right to terminate the franchise
agreement. On 10 November 2017, Teffo J granted an order
staying the eviction application pending the outcome of the section
12B arbitration.
[3]
The
court found amongst others that (i) Phambili had to follow the
dispute resolution process provided in the franchise agreement,
which
it had not done; (ii) the right to evict Chamdor could not be
divorced from the dispute which Chamdor had referred to the
Controller in terms of section 12B of the Act; (iii) even though the
franchise agreement had come to an end by 19 March 2017 by
effluxion
of time, Phambili could not rely on this event for the eviction of
Chamdor because it occurred after the eviction application
was
launched.
The
withdrawal of the 2015 eviction application
[17]
On
or about 16 September 2019, Phambili delivered a notice of withdrawal
of the 2015 eviction application. No tender was made
for the
payment of Chamdor’s costs.
The
referral of a dispute by Phambili to AFSA
[18]
On
12 November 2018, Phambili sent a letter of demand calling upon
Chamdor to amongst others cease trading. On 30 November
2018,
Phambili referred to AFSA two disputes (i) Chamdor’s eviction
from the property due to the franchise agreement having
lapsed by
effluxion of time; and (ii) Chamdor’s continuing activities.
The third respondent has been appointed to arbitrate
the dispute.
It is this arbitration which Chamdor applies to stay pending the
finalisation of the section 12B arbitration.
Chamdor’s
application for the stay of AFSA arbitration
[19]
The
legal basis on which Chamdor seeks to stay the AFSA arbitration
pending the finalisation of the section 12B arbitration is not
entirely clear from the founding affidavit.
[20]
There
are two suggestions in the founding affidavit; I put it no higher
than that. The one is that the mediation process envisaged
in
the franchise agreement, a precursor to the arbitration, was
postponed indefinitely and the other is that “
it
[is] necessary that the parties comply with the judgment and order of
Teffo J and wait until the section 12B arbitration proceedings
is
[sic] finalised
”.
[21]
In
the heads of argument delivered on behalf of Chamdor, three
additional reasons are advanced why the AFSA arbitration should be
stayed.
(i)
An
application for Chamdor’s eviction is pending before this court
(i.e., the 2015 eviction application).
(ii)
The
AFSA arbitration must be stayed to obviate conflicting pronouncements
on whether Chamdor should be evicted from the property.
(iii)
The
same issue arises in both the AFSA arbitration and the 2015 eviction
application. Chamdor consequently pleads
lis
alibi pendens
.
[22]
It
hence seems that Chamdor’s application to stay the AFSA
arbitration is based on the following:
(i)
A
mediation must be held before the dispute can be resolved by
arbitration. The mediation process has been postponed
indefinitely.
It seems that Chamdor argues that the AFSA
arbitration is premature. (“
the
mediation postponement argument
”).
(ii)
The
order of Teffo J is a bar to all proceedings against Chamdor until
the pending 12B arbitration has been finalised. (“
the
litigation barred argument”
)
(iii)
Lis
pendens
because:
(a)
the
2015 eviction application is pending in this court;
(b)
eviction
is being sought in the AFSA arbitration.
(“
the
lis pendens argument
”)
The
grounds for the stay of the AFSA arbitration are the same, or at
least similar, to those for opposing the counter application
for
eviction.
Phambili’s
counter application for eviction
[23]
The
counter application for eviction rests on Chamdor’s right to
occupy the property having ceased when the franchise agreement,
which
endured for a fixed period of 15 years, expired on 31 July 2016.
Phambili seeks to evict Chamdor because of the demise
of the
fons
et origio
of the right to occupy the property after 31 July 2016.
[24]
Chamdor
opposes the counter application for eviction on the following
principal grounds:
(i)
Teffo
J stayed the 2015 eviction proceedings pending the outcome of the
section 12B arbitration. (This is the same argument
as, or
similar to, “
the
litigation barred argument”
)
(ii)
(a)
The
issue in the AFSA arbitration is the same issue that is stayed by
Teffo J. Chamdor consequently pleads
lis
alibi pendens
.
(b)
The
2015 eviction application was brought on the basis that the
occupation of the property was unlawful because the agreement had
lapsed by effluxion of time and the stay of the eviction application
meant that the court rejected that Chamdor had to vacate the
property
because the franchise agreement had lapsed. I must immediately
state that this is factually incorrect. The
premise for the
argument is thus flawed.
(This
is the same argument as, or similar to, the
lis pendens
argument)
(iii)
Chamdor’s
right to occupy the property is derived from Teffo J’s order.
(“
the
judicial right to occupy argument
”)
(iv)
The
counter application for eviction is an abuse of the court process
(“
the
abuse of court process argument
”).
Discussion
The
mediation postponement argument
”
[25]
There
are at least two reasons why the postponement of the mediation
proceedings is no answer to Phambili’s counter application
for
eviction. First, Chamdor does not dispute the correctness of a
letter sent by Phambili’s attorneys to the Controller
that the
mediation failed because Chamdor had failed to attend the mediation
proceedings facilitated by AFSA. Second, in
terms of clause
20.4 of the franchise agreement, if the dispute referred to mediation
is not resolved within 21 days from the date
of its submission, the
dispute shall be resolved by arbitration. This period has long
passed and there is therefore no bar
to the arbitration proceeding.
Lis
alibi pendens
[26]
Chamdor
contends that Phambili applied for Chamdor’s eviction in the
2015 eviction application on the basis that the franchise
agreement
had lapsed by effluxion of time. This is incorrect. That
cause of action had not arisen when the 2015 eviction
application was
launched. The 2015 eviction application was brought on the
basis that Chamdor’s right to occupy the
property ended when
Phambili cancelled the franchise agreement because Chamdor had
breached it.
[27]
Based
on its incorrect assessment of the facts, Chamdor argues that the
counter application must fail because Teffo J had refused
to order
Chamdor’s eviction even though the franchise agreement had
lapsed by effluxion of time. Teffo J made no such
finding nor
is there any basis to infer this from the judgment. To the
contrary, Teffo J found that the franchise agreement
lapsed by
effluxion of time after the 2015 application was launched on 14
October 2015. Thus, a cause of action on the ground
that the
franchise agreement (and consequently the right to occupy the
property) had lapsed by effluxion of time did not exist
on 14 October
2015. The court therefore refused to entertain a case for
Chamdor’s eviction on the ground that the right
to occupy had
lapsed by effluxion of time.
[28]
The
causa
(ground) for the counter application (as well as the AFSA
arbitration) is the termination of Chamdor’s right to occupy
the
property by reason of the fixed term franchise agreement having
expired on 31 July 2016 by effluxion of time.
[29]
The
causa
(ground) for the 2015 eviction application is the cancellation of the
franchise agreement due to an alleged breach of its terms
by Chamdor
and the resultant termination of Chamdor’s right to occupy the
property. From a reading of Teffo J’s
judgment it appears
that Chamdor contended that because Phambili had refused to supply
fuel to it in breach of the franchise agreement,
it could not meet
its obligations to Phambili. This, Chamdor contends resulted in
Phambili invoking the breach clause and
cancelling the franchise
agreement.
[30]
The
central issue in the 2015 eviction application thus is the lawfulness
of the act which put an end to the franchise agreement
and thereby,
Chamdor’s right to occupy the property
[31]
The
issue in the section 12B arbitration goes to amongst others whether
Phambili breached the franchise agreement and if so, its
effect on
Chamdor’s obligations to it. Chamdor’s conduct may
impact on the issue whether Phambili lawfully terminated
the
franchise agreement.
[32]
The
connection between the 2015 application for eviction and the section
12B arbitration is thus evident.
[33]
In
neither the AFSA arbitration nor this application does the question
of the lawfulness of Phambili’s termination of the
franchise
agreement arise. There was no act of termination on Phambili’s
part; the franchise agreement died a natural
death because its
limited life of fifteen (15) years had expired.
[34]
The
causa
(ground) for eviction in the 2015 eviction application and the
causa
(ground) for eviction in the counter application (and the AFSA
arbitration) is not the same.
[35]
Lis
alibi pendens
does
not assist Chamdor in its application to stay the AFSA arbitration
nor in resisting the counter application for eviction.
[36]
Teffo
J stayed the 2015 eviction application consequent upon, and as a
result, of the finding that the issues arising in the 2015
eviction
application were connected to those arising in the section 12B
arbitration.
[37]
I
turn to therefore consider whether there is a connection between the
2015 eviction application, the section 12B arbitration and
the AFSA
arbitration.
[38]
While
the lawfulness of the termination of the franchise agreement and the
resultant loss of the right to occupy the property is
prominent in
the 2015 eviction application and is connected with the complaint in
the section 12B arbitration that Phambili breached
the franchise
agreement, it does not feature in the AFSA arbitration nor in the
counter application.
[39]
I
am accordingly unable to find that the issues are connected.
For the same reason I can see no risk of conflicting pronouncements
on Chamdor’s eviction.
Litigation
Barred argument
[40]
Whether
the order by Teffo J precluded Phambili, while the section 12B
arbitration was pending, from referring a dispute to AFSA
in terms of
the franchise agreement or applying at a future date for Chamdor’s
eviction depends on the terms of the order.
The substantive
order granted by Teffo J reads as follows:
“
This
application
is
stayed pending the outcome of the s12B arbitration proceedings
”
.
[emphasis
inserted]
[41]
It
is clear that what the court intended to stay, and did stay, was the
2015 eviction application pending the outcome of the section
12B
arbitration. The court did not preclude Phambili from
instituting arbitration or other legal proceedings against Chamdor.
[42]
Chamdor
perceives Teffo J’s order as a restraint against its eviction
from the property until the section 12B arbitration
is finalised.
It is not. Teffo J’s order simply precludes Phambili from
pursuing the 2015 eviction application
before the section 12B
arbitration is finalised. The court did not interdict the
eviction of Chamdor from the property nor
did it preclude Phambili
from instituting fresh eviction proceedings.
Judicial
right to occupy property
:
Does the stay of the 2015 eviction application confer upon Chamdor
the right to occupy the property?
[43]
Chamdor
accepts that with the lapsing of the franchise agreement by effluxion
of time, the right to occupy the property also lapsed.
It however
disputes that its occupation of the property is unlawful. It contends
that the order issued by Teffo J confers upon
it the right to occupy
the property. Chamdor correctly does not argue that the order
expressly confers a right of occupation.
[44]
Teffo
J ordered no more than the stay of the 2015 eviction application.
In my view the scope of the order is limited.
[45]
I
am unable to find any indication in the judgment that the court
intended to not only stay the application before it but intended
to
preclude Phambili from evicting Chamdor from the property regardless
of the reason therefor. The 2015 eviction application
was
stayed because the issues in the section 12B arbitration and the 2015
eviction application were related (or connected).
[46]
The
issue in the section 12B arbitration is whether Phambili’s
alleged refusal to supply fuel to Chamdor constituted an unfair
and/or unreasonable contractual practice. Whether Phambili was
entitled to terminate the franchise agreement for an alleged
breach
of the terms thereof by Chamdor, arose in the 2015 eviction
application. Chamdor resisted the 2015 eviction application
on
the basis that Phambili’s failure to supply fuel resulted in it
not meeting its obligations in terms of the franchise
agreement which
in turn led to Phambili terminating the franchise agreement.
[47]
The
lawfulness of the termination of the franchise agreement was related
to the issue whether Phambili’s alleged breach of
the franchise
agreement by refusing to supply fuel to Chamdor constituted an unfair
and/or unreasonable contractual practice as
contemplated in section
12B of the Petroleum Products Act.
[48]
It
is thus evident that the close relationship between the issues was a
factor which the court considered when it stayed the 2015
eviction
application.
[49]
The
issue in the AFSA arbitration and the counter application for
eviction is not remotely related to a breach of the franchise
agreement by the parties.
[50]
In
the 2015 eviction application, fault on the part of Phambili and/or
Chamdor would determine whether the termination of the franchise
agreement by Phambili was lawful or not. Fault is irrelevant to
the AFSA arbitration or the counter application.
Abuse
of the court process
[51]
Chamdor
seeks to avoid its eviction by calling into aid the court’s
discretion to prevent an abuse of the court process.
[52]
Chamdor
contends that the judgment by Teffo J unequivocally stayed the 2015
application. However, to bypass the court order Phambili
withdrew the
2015 eviction application by notice on 18 September 2019 to open the
way for a fresh application for eviction based
on the same grounds.
It also complains that the withdrawal of the 2015 eviction
application is invalid because Phambili could
not unilaterally
withdraw the application and had to seek the leave of the court to do
so. In response, Phambili in its replying
affidavit in the
counter application, sought leave to withdraw the 2015 eviction
application.
[53]
If
Chamdor was of the view that the notice of withdrawal was irregular
or that it was wanting because the costs of the application
had not
been tendered, it was entitled to invoke the procedure in rule 30 and
apply to set aside the notice of withdrawal as an
irregular step.
It did not do so.
[54]
On
the authority of
SW
v SW
[4]
Chamdor argued amongst others that the notice of withdrawal was
invalid and therefore ineffective with the result that the
lis
had not been terminated. Whether it is ineffective or not, is
of no moment. If it is ineffective, it is pending.
I have
found that the defence of
lis
alibi pendens
is
not available to Chamdor.
[55]
Chamdor’s
further argument why the counter application constitutes an abuse of
the court process is that it is brought on
the same grounds as the
2015 eviction application. I have discussed this earlier in the
judgment. There is no substance
to the argument that the
counter application for eviction is brought on the same grounds as
the 2015 eviction application.
[56]
Notwithstanding
the existence of the 2015 eviction application and the order made in
terms thereof staying it, I find that neither
the order nor the
application are a bar to fresh proceedings for the eviction of
Chamdor from the property. The
causa
(ground) for the counter application is not the same as the
causa
(ground) for the March 2015 eviction application. When the
franchise agreement lapsed by effluxion of time on 31 July 2016,
a
fresh cause of action for the eviction of Chamdor from the property
arose because the right to evict was independent and unrelated
to
whether Chamdor had breached the franchise agreement and Phambili had
lawfully cancelled the lease.
[57]
Whether
the 2015 eviction application is alive or not, is irrelevant. It did
not and does not prevent the eviction of Chamdor on
the ground that
the right to occupy lapsed on the termination of the franchise
agreement by effluxion of time.
[58]
The
order issued by Teffo J does not disentitle Phambili from bringing a
fresh application for Chamdor’s eviction. What
is not
permitted is a determination of the 2015 eviction application while
the matter referred to arbitration in terms of section
12B of the Act
remains unresolved.
[59]
Phambili
was entitled in law to bring an application for Chamdor’s
eviction from the property on the basis that the franchise
agreement
had lapsed resulting in the right to occupy the property lapsing.
[60]
Where
a party exercises rights conferred by law a charge that the exercise
of the right constitutes an abuse of the court process
is
ill-advised.
Phambili’s
application to withdraw the 2015 eviction application
[61]
Having
found that the 2015 eviction application was no bar to the counter
application for eviction, Phambili’s application
for leave to
withdraw that application has become moot.
Conclusion
[62]
I
consequently find that Chamdor’s application to stay the AFSA
arbitration pending the outcome of the section 12B arbitration
falls
to be dismissed. Insofar as the counter application is concerned
Phambili is entitled to the eviction order.
[63]
I
am not inclined to authorise the South African Police Service to
assist the Sheriff in the eviction. The South African Police
Service is not before the court and it is inappropriate to burden it
with the task of giving effect to court orders between private
persons. This is not its function. Even if it was, the
South African Police Service has apart from other things human
resource constraints. I do not know what the cost of giving
effect to the eviction will be, but it is unreasonable and unfair
to
burden the fiscus with the cost.
[64]
I
am not prepared to grant an order requiring Chamdor to forthwith
vacate the property. It should be allowed a reasonable
time to
do so.
Order
In
the result the following order is made:
1.
The
application by, Chamdor Service Station CC (“
Chamdor
”),
is dismissed with costs.
2.
Chamdor,
and all persons occupying the immovable property through, it must
vacate the property, Erf 730 Lewisham Township, Registration
Division
I.Q, Province of Gauteng, situated at 137 Main Reef Road, Lewsham,
Krugersdorp (“
the
property
”),
within one month of the service of this order.
3.
The
Sheriff is authorised and directed to evict Chamdor and all persons
occupying the property through it, from the property.
4.
The
Sheriff may request any person to assist in giving effect to this
order.
5.
Chamdor
is to pay the costs of the counterapplication.
S
K HASSIM AJ
Acting
Judge: Gauteng Division, Pretoria
(electronic
signature appended)
4
March 2021
This
judgement was prepared and authored by the Judge whose name is
reflected and is handed down electronically by circulation to
the
plaintiff’s legal representatives by email and by uploading it
to the electronic file of this matter on CaseLines.
The date
for hand-down is deemed to be 5 March 2021.
Appearances:
For
the applicant:
Adv T Moretlwe
For
the fourth respondent: Adv L Hollander
[1]
The
contract period of 15 years was divided into three periods of five
years each. Chamdor could elect to extend the duration
of the
contract after the first and second periods for a further five
years. There was no right to extend beyond the third
five-year
period.
[2]
Chamdor
also averred that Phambili despite having approved a sale of the
franchise, frustrated the sale by refusing to enter into
a lease
agreement with the prospective purchaser and surreptitiously offered
to the prospective purchaser a franchise and lease
at another site.
[3]
On
or about 18 September 2019, Phambili withdrew the eviction
application and counter-applied in this application for Chamdor’s
eviction from the property.
[4]
2015
(6) SA 300
(ECP)