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[2019] ZAGPPHC 139
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Samancor Manganese (Pty) Ltd v Azam Fabrication CC (2018/85581) [2019] ZAGPPHC 139 (10 May 2019)
REPUBLIC OF SOUTH AFRICA
IN THE HIGH COURT OF SOUTH AFRICA
GAUTENG DIVISION, PRETORIA
CASE NO: 2018/85581
In
the matter between:
SAMANCOR
MANGANESE (PTY) LTD
Applicant
and
AZAM
FABRICATION
CC
Respondent
JUDGMENT
INTRODUCTION
[1]
The Applicant, Samancor Manganese (Pty) Ltd
t/a South 32 (‘
Samancor
’),
is the owner of the premises situated at remaining extent of portion
4 of the farm Kookfontein 545 IQ (‘
the
premises’
). The respondent, Azam
Fabrication CC (‘
Azam
’),
occupies a workshop situated on the premises (‘
the
workshop’
).
[2]
Azam came to occupy the workshop under an
oral agreement (‘
the lease
agreement
’) entered into between
Samancor and Azam in terms of which Samancor would allow Azam to
occupy the workshop for as long as
Azam was contracted to provide
engineering and fabrication services. Samancor would not charge Azam
rental in respect of its occupation
of the workshop and, in return,
Azam would perform work for Samancor at discounted rates.
[1]
[3]
The engineering and fabrication work was
formalised in a written Service Level Agreement (‘
the
SLA’
) which commenced on 9 April
2018 and would terminate on 31 March 2019.
[4]
During November 2018 Samancor formed the
view that Azam was engaging in fronting practices and on 27 November
2018 Samancor caused
a letter to be dispatched informing Azam that
Samancor would be terminating the SLA. On 30 November 2018,
Samancor’s attorneys
of record demanded that Azam vacate the
workshop on or before 5 December 2018.
[5]
Azam disputed that Samancor had terminated
the SLA validly and refused to vacate the workshop. Azam issued an
urgent application
to this court seeking, amongst other things, an
order interdicting and restraining Samancor from terminating Azam’s
right
to the workshop.
[6]
The matter was heard on 5 December 2018 and
the following order (‘
the
Order’
) was granted by agreement
between the parties:
1.
It
is noted that:
1.1.
The
Applicant alleges that a formal dispute has arisen regarding the
termination of the service level agreement which dispute will
be
arbitrated, and all the parties’ rights are reserved in
relation to the existence and/or formulation of the said disputes;
1.2.
The
parties abandon the informal dispute resolution process which exists
in terms of clause 46.1 and 46.2 of the service level agreement;
1.3.
The
parties refer the above dispute for arbitration in terms of Section
46.4 and will see to the appointment of an Arbitrator before
the 15
th
of January 2019 by the exchanging of suitable names, and in the
absence of an agreement pertaining to a particular Arbitrator,
will
approach the Pretoria Bar Counsel for the appointment of such.
1.4.
In
the absence of an agreement for a specific Arbitrator, the
appointment by the Pretoria Bar Counsel must be effected before the
20
th
of January 2019.
2.
It
is ordered as follows:
2.1.
To
the extent that the Applicant or any of the Applicant’s
employees require access to any premises controlled by the Respondent
in order to provide services to third parties, the Respondent shall
grant such access subject to:
2.1.1
The
written receipt of the following from such third party:
2.1.1.1
Names
of the individuals who require access;
2.1.1.2
A
valid medical certificate for each individual, indicating that the
individual is fit for duty;
2.1.1.3
Details
regarding the time period that access should be granted for in
respect of each individual;
2.1.1.4
Confirmation
that the third party has inspected the Applicant’s safety file,
and is satisfied with the status thereof.
2.2
The
applicant will have access to the workshop that they are currently
occupying on the Respondent’s property up until 31
March 2019,
subject to:
2.2.1
The
applicant at all times complying with the Respondent’s
occupational health and safety
policies and procedures; and
2.2.2
The
applicant assuming all responsibility and liabilities in terms of
section 37 of the Occupational Health and Safety Act.
2.3
Any
costs in relation to the Applicant’s occupation will form part
of the arbitration.
2.4
The
costs of the application is reserved and will form part of the costs
of the Arbitration.
[7]
On 3 April 2019 Samancor’s attorneys
of record wrote to Azam’s attorneys of record to advise that
despite the terms
of the Order, their client had failed to vacate the
workshop by 31 March 2019. No response to this letter was received.
[8]
In this urgent application Samancor seeks
orders declaring Azam to be in contempt of court, directing that it
pay a fine to Samancor
in the sum of R50
000, that it vacate the workshop and pay punitive costs.
[9]
Azam opposes the application on various
bases including: the lack of urgency, the existence of an arbitration
clause and the existence
of salvage and debtor/creditor liens. A
locus standi
point raised in the papers was abandoned during argument.
URGENCY
[10]
In
Protea
Holdings Limited v Wriwt
it was held
that:
“
[a]s
one of the objects of contempt proceedings is, by punishing the
guilty party, to compel performance of the order, it seems
to me that
the element of urgency would be satisfied if in fact it was shown
that respondents were continuing to disregard [an
order].”
[2]
[11]
Any suggestion that Samancor should
not be heard as it tarried too long in coming to Court is without
merit. Azam’s non-compliance
began on
1 April 2019. Samancor sent a letter on 3 April 2019 demanding
compliance. When
same was not forthcoming, this application was
issued on 17 April 2019.
[12]
The matter warrants an urgent
hearing, particularly in light of the fact that it is common cause
that Azam has not complied with
the Order and continues not to do so.
The urgent circumstances under which this application was
heard, and under which a
judgment and order is required to be
delivered, compels a judgment that would have been more comprehensive
had more time been available.
ARBITRATION CLAUSE
[13]
The SLA contains an arbitration clause
which reads:
46.
Dispute resolution:
46.1 Any dispute between the
Parties in regard to:
46.1.1
the interpretation of;
46.1.2
the effect of;
46.1.3
the Parties’ respective rights and obligations..
46.1.4
a breach of; and/or
46.1.5
any matter arising out of,
this Contract, shall be referred
to the Parties, who shall meet as soon as possible after referral of
the dispute to them, and shall
use their respective
bona fide
reasonable efforts to resolve the dispute.
46.2
…
46.3 In the event that the
Special Committee shall have failed, for whatever reason, to resolve
the dispute by not later than 14
(fourteen) Business Days after the
dispute shall first have been referred to the Parties for resolution
in terms of clause 46.1,
the dispute shall be submitted to and
decided by arbitration.
46.4
…
46.5
…
46.6
…
46.7 The Parties irrevocably
agree that the decision in these arbitration proceedings shall be
binding on them and may be made an
order of any Court of competent
jurisdiction.
[14]
Mr Greyling representing Azam, argued that
the aforegoing clause precluded this court from entertaining this
matter. This, so the
argument ran, was because clause 46 includes any
dispute between the parties. The parties have, as is recorded in the
Order at
paragraph 1, agreed on an arbitrator to decide the dispute
regarding the termination of the SLA and accordingly, this dispute
too,
should be decided by the arbitrator.
[15]
There are a number of difficulties with
this reasoning. Azam contends that the lease agreement and the SLA
are independent agreements
with the lease agreement being self
standing ie Azam is entitled to remain in the workshop rent free even
if it does not provide
any services to Samancor. The current dispute
relates to Azam’s occupation of the workshop, thus, to the
subject matter of
the lease agreement which, on Azam’s
construction of the facts, has nothing to do with the SLA. Azam
cannot on the one hand
argue that the agreements are not connected
yet draw on the SLA provisions when convenient.
[16]
Having regard to the nature and purpose of
contempt proceedings, contempt proceedings are not arbitrable as
their purpose, even
where an individual seeks compliance with an
order, is to vindicate judicial authority.
[3]
SALVAGE LIEN
[17]
There is certain equipment and machinery in
the workshop listed in an inventory (‘
the
machinery’
). On 8 March 2019,
Samancor laid claim to it. On 18
March 2019 Azam, through its attorneys
of record, stated that the
machinery belonged to it and called upon Samancor to provide proof
that the machinery belonged to Samancor.
Samancor did not
respond to this request or the letter.
[18]
It is trite that no
lien
can be claimed in respect of one’s own property. Samancor
accepted for purposes of this application, that the machinery
is the
property of Azam.
[4]
There thus, exists no impediment to vacate the
workshop with the machinery, the ownership of which, for present
purposes, is accepted
to be that of Azam.
THE DEBTOR/CREDITOR LIEN
[19]
Azam contends that Samancor is indebted to
it in an amount in excess of R1 million for work done in terms of the
SLA. Because of
this indebtedness, Azam contends, it is entiltled to
remain in the workshop. Whether Azam would be entitled to exercise a
lien
at
all under such factual scenario is doubtful but to put this to bed
completely, clause 35.1 of the SLA provides:
“
[Azam]
hereby waives all and any rights of lien, retention and possession
for payment of monies in terms of the Contract or for
compensation
for improvements or for any other cause whatsoever which, but for
this clause, the Contractor would have had”.
DUTY TO OBEY COURT ORDERS
[20]
As the Court held in
Bezuidenhout
v Patensie Sitrus Beherend Bpk
[5]
"A court
order stands and must be strictly obeyed until set aside by a higher
court, and the same court which granted the original
order does not
have the right to nullify its effect or interfere with that order
except in very limited circumstances in the context
of variation".
[6]
The Court went on to hold as follows:
"The issue in the present
application is whether I have the competence to make an order that
would nullify the effect of the
earlier order made by another Judge
of the High Court in respect of the same issue, between the same
parties. I thought it obvious
that I do not possess that competence.
An order of a
court of law stands until set aside by a court of competent
jurisdiction. Until that is done the court order must
be obeyed even
if it may be wrong (Culverwell v Beira
1992 (4) SA 490
(W) at 494A -
C). A person may even be barred from approaching the court until he
or she has obeyed an order of court that has
not been properly set
aside (
Hadkinson
v Hadkinson
[1952]
2 All ER 567
(CA);
Bylieveldt v
Redpath
1982 (1) SA 702
(A) at 714). In
Kotze v Kotze
1953 (2) SA 184
(C) Herbstein J provided the rationale at 187F:
'The matter
is one of public policy which requires that there shall be obedience
to orders of Court and that people should not be
allowed to take the
law into their own hands.'
"
[21]
The Supreme Court of Appeal has stressed
that it is furthermore the duty of our courts to enforce parties’
obligations to
make "
serious good
faith endeavours to comply
" with
orders of court.
[7]
The importance of ensuring compliance with court
orders was emphasised by Froneman J in
Magidimisi
v Premier of the Eastern Cape and Others
:
"in a
constitutional democracy based on the rule of law final and
definitive court orders must be complied with by private
citizen and
the state alike. Without that fundamental commitment constitutional
democracy and the rule of law cannot survive in
the long run. The
reality is as stark as that."
[8]
[22]
The compulsion contained in section 165(5)
of the Constitution that court orders are binding lies at the heart
of the judicial authority
of the Republic and hence at the
effectiveness of the Constitution to perform its function. The
State and the Courts bear
a constitutional duty to ensure that court
orders are adhered to and enforced.
[23]
The duty to obey court orders is important
not only because it vindicates the rule of law and the legal rights
of the parties, but
also because it fortifies and protects the
dignity of the Courts in furtherance of the public interest:
"it is clear that contempt
of court is not merely a mechanism for the enforcement of court
orders. The jurisdiction of
the Superior Courts to commit
recalcitrant litigants for contempt of court when they fail or refuse
to obey court orders has at
its heart the very effectiveness and
legitimacy of the judicial system … That, in turn, means
that the Court called
upon to commit such a litigant for his or her
contempt is not only dealing with the individual interest of the
frustrated successful
litigant but also, as importantly, acting as
guardian of the public interest."
[24]
The Courts are mere instruments of
enforcement of the Constitution. If Court orders are not complied
with the Constitution is not
complied with and hence the reference to
a Constitutional crisis is not an exaggeration. It is thus not merely
a matter of the
Court’s honour. It is the functionality of our
society as one governed by the rule of law. If a party truly
experiences difficulty
in complying with an order (for example,
because its wording is vague), then it is incumbent upon that party
immediately to pursue
the appropriate legal avenues to seek a
variation of the order. It is not appropriate for such a party
to adopt a supine
attitude amounting to disdain for the order.
[25]
Azam has not varied the order nor did it
apply to do so. In any event, this does not excuse
non-compliance with court orders
in the interim. All orders
must be obeyed fully until set aside, on pain of contempt,
[9]
for the good reasons adverted to above.
[26]
The Constitutional Court, in the majority
judgment of the Honourable Khampepe J in
Department
of Transport v Tasima (Pty) Ltd
pronounced definitively on the import of court orders, which warrants
full citation (emphases added, footnotes omitted):
[10]
"
The
general rule is that orders that do not concern constitutional
invalidity do have force from the moment they are issued.
And
in light of section 165(5) of the Constitution,
the
order is binding, irrespective of whether or not it is valid, until
set aside
.
The common law has long
recognised this position. In
Honeyborne
, De Villiers CJ
found that if an agent—
“
were
to be allowed to defy the authority of the court on the ground of an
error of judgment on the part of the court, the question
would in
every case be whether the magistrate is right in his reading of the
law or whether the agent is correct in his, but there
would be no
tribunal on the spot to decide between them.
Undoubtedly
it is the duty of the agent to bow to the decision of the court and
to seek his remedy elsewhere
;
and it is equally the duty of the court to uphold its own dignity and
see that its authority is respected by the practitioners
before the
court.”
This reading of section 165(5)
accepts the Judiciary’s fallibilities. As explained in
the context of administrative
decisions, “administrators may
err, and even . . . err grossly.” Surely the authors of
the Constitution viewed
Judges as equally human. The creation
of a judicial hierarchy that provides for appeals attests to this
understanding.
Like administrators, Judges are capable of
serious error. Nevertheless, judicial orders wrongly issued are
not nullities.
They exist in fact and may have legal
consequences.
…
The
obligation to obey court orders “has at its heart the very
effectiveness and legitimacy of the judicial system”
.
Allowing parties to ignore court orders would shake the foundations
of the law, and compromise the status and constitutional
mandate of
the courts.
The
duty to obey court orders is the stanchion around which a state
founded on the supremacy of the Constitution and the rule of
law is
built.
This is because the legal
consequence that flows from non-compliance with a court order is
contempt. The “essence”
of contempt “lies in
violating the dignity, repute or authority of the court.”
By disobeying multiple orders
issued by the High Court, the
Department and the Corporation repeatedly violated that Court’s
dignity, repute and authority
and the dignity, repute and authority
of the Judiciary in general. That the underlying order may have
been invalid does not
erase the injury. Therefore, while a
court may, in the correct circumstances, find an underlying court
order null and void
and set it aside, this finding does not undermine
the principle that damage is done to courts and the rule of law when
an order
is disobeyed.
A conclusion that an order is invalid
does not prevent a court from redressing the injury wrought by
disobeying that order
, and deterring future litigants from doing
the same, by holding the disobedient party in contempt.
[27]
The above pronouncement underscores the
constitutional basis for the requirement to obey court orders and
judicial authority. The
fact that a party may consider the legal
position or requirements to be different to what they have been held
by a Court to be,
or if they are actually different, is irrelevant to
the efficacy and enforceability of the court order. As such,
once granted,
the order is enforceable against the world, even if it
is wrong or contrary to other law.
[28]
I find that there can be no legal
impediment to the enforcement of the Order.
CONTEMPT OF COURT
[29]
Civil contempt is the wilful and
mala
fide
refusal or failure to comply with
an order of court. This was confirmed in
Fakie.
[11]
In
Fakie
,
the Supreme Court of Appeal held that whenever committal to prison
for civil contempt is sought, the criminal standard of proof
applies.
[12]
A declaration of contempt (other than the prayers
relating to imprisonment) and any mandatory or interdictory order
can, however,
be made on the civil standard.
[13]
[30]
For the purposes of a finding of
contempt, an applicant must establish the order, service or notice of
the order, non-compliance
with the terms of the order; and wilfulness
and
mala fides
in the non-compliance. However, once the applicant has proved
the order, service thereof and non-compliance therewith, wilfulness
and
mala fides
are presumed. The respondent then bears the evidentiary burden
in relation to wilfulness and
mala
fides
. Should the respondent fail
to advance evidence that establishes a reasonable doubt as to whether
its non-compliance was
wilful and
mala
fide
, the applicant would have proved
contempt beyond a reasonable doubt.
[14]
[31]
Azam’s defence as to why it did not
comply with the order, in addition to the already stated defences,
was that it had agreed
to the order on an incorrect application of
the two contracts that govern the relationship between it and
Samancor. It assumed,
erroneously, that when the SLA terminated
(which was 31 March 2019) then too, the lease agreement would
terminate.
[32]
This, as already dealt with, is no defence
at all as court orders must be complied with until set aside.
[15]
This aside, Azam’s interpretation of the
lease agreement and the SLA in any event leads to an un-business like
result as it
would entitle Azam to occupy the premises for no rental
at all.
[33]
It is trite law that court orders must be
adhered to in their terms, and that it is a serious matter of
foundational constitutional
import if court orders are ignored or
breached. The very effectiveness of the rule of law is
undermined.
[16]
[34]
Although a punitive element is
involved, the main objectives of contempt proceedings are to
vindicate the authority of the court
and coerce litigants into
complying with court orders. Elaborating upon this, Plasket AJ
pointed out in
Victoria Park Ratepayers
v Greyvenouw CC
[17]
that contempt of court has obvious implications
for the effectiveness and legitimacy of the legal system and the
judicial arm of
government. There is thus a public interest
element in every contempt committal:
"it is clear that contempt
of court is not merely a mechanism for the enforcement of court
orders. The jurisdiction of
the Superior Courts to commit
recalcitrant litigants for contempt of court when they fail or refuse
to obey court orders has at
its heart the very effectiveness and
legitimacy of the judicial system… That, in turn, means
that the Court called
upon to commit such a litigant for his or her
contempt is not only dealing with the individual interest of the
frustrated successful
litigant but also, as importantly, acting as
guardian of the public interest."
[35]
The basis for my not declaring Azam to be
in wilful contempt, even though it has breached the Order, is to be
found, primarily,
in the following three reasons:
35.1.
The interpretation Azam attached to
the interplay between the lease agreement and the SLA is incorrect
and unsustainable.
Even if Azam were entitled to stay in the
workshop rent free, on its own version, the lease agreement could be
terminated on reasonable
notice. That has, from all the facts,
clearly now occurred. Insofar as there was uncertainty about any or
all of these facts, it
has now been clarified and Azam will be given
the benefit of the alleged doubt up to this point.
35.2.
Azam similarly erroneously contended
that because Samancor laid claim to the machinery, the only way it
could assert its rights
was to claim a lien over the machinery. That
too has now been shown to be wrong and has been clarified.
35.3.
Azam confusedly and erroneously
relied on an arbitration clause.
[36]
To issue the same orders repeatedly is
obviously pointless. What I have found, however, is that the reasons
advanced for non-compliance,
whilst being sufficient to have averted
the finding of wilfulness and mala fides (by not a large margin), are
not sufficient for
non-compliance and in the light of this judgment
such excuses have been deprived of all further usefulness.
[37]
Azam has breached an order of this court
and as a mark of my displeasure for it having done so, I intend
ordering it to pay the
costs of this application as between attorney
and client.
[38]
Mr Greyling submitted for Azam that
if I were to enforce the Order, I should amend the period for
compliance to be 30 June 2019.
Mr Mckenzie, acting for Samancor,
argued that Azam has had more than sufficient time and that 7 days
would suffice. In my view
and having regard to all the circumstances
of this case, compliance by 31 May 2019 would afford Azam ample
opportunity to vacate
the workshop. This is particularly so as Azam
has already entered into a new lease agreement with Tegmul Properties
(Pty) Ltd on
1 February 2019 for a period of 5 years and is paying
rental.
[39]
I accordingly make the following order:
39.1.
This application is enrolled as an
urgent application.
39.2.
The Respondent is declared to be in
breach of the order handed down on 5 December 2018 (‘
the
Order’
).
39.3.
The Respondent is ordered to cease
acting in contravention of the Order and to vacate the workshop
premises situated at 1
Kookfontein, Lion Avenue, Samancor, on or before 30 May 2019.
39.4.
The Respondent is to pay the
applicant’s costs as between attorney and client.
Ingrid Opperman
Judge of the High Court
Gauteng Local Division, Johannesburg
Heard: 7
May 2019
Judgment
delivered: 10 May 2019
Appearances:
For
Applicant: Adv AC McKenzie
Instructed
by: Hogan Lovells (South-Africa) Inc
For
Respondent: Adv PJ Greyling
Instructed
by: Deysel Attorneys
[1]
There exists a dispute about the interplay
between these two agreements but more about that later.
[2]
1978 (3) SA 865
at 868.
[3]
See
Fakie NO v CCII
Systems (Pty) Ltd,
[2006] ZASCA 52
;
2006 (4) SA 326
(SCA) paras 38-40.
[4]
Quite rightly in my view. The ownership of the
equipment does not fall for determination in these proceedings.
[5]
2001 (2) SA 224 (E)
[6]
2001 (2) SA 224
(E) at 229
[7]
Meadow Glen Home Owners Association and Others
v City of Tshwane Metropolitan Municipality and Another
[2015] 1 All SA 299
(SCA), paras 7 to 8. See too
S v Mxhosa,
1986 (1) SA 346
(C) at 353F
[8]
2006 JDR 0346 (B)
, para 1.
[9]
Clipsal Australia (Pty) Ltd & others v GAP
Distributors (Pty) Ltd & others
2010 (2) SA 289
(SCA) para [22]
[10]
2017 (2) SA 622
(CC), paras [180] - [188].
[11]
Footnote 3 hereof
[12]
Ibid
, para [19].
[13]
Ibid
, para [42]
;
see also
Matjhabeng
Local Municipality v Eskom Holdings Limited and Others; Mkhonto and
Others v Compensation Solutions (Pty) Limited
2017 (11) BCLR 1408
(CC) at paras [50] to [55].
[14]
Ibid
,
paras [19], [22] – [24].
[15]
Para [26] hereof
[16]
Tasima
(supra),
para [183].
[17]
[2004] 3 All SA 623
(SE) para 23.