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[2019] ZAFSHC 253
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Oosthuizen t/a Wilger Motors v Puma Energy South Africa (Pty) Ltd and Others (5280/2019) [2019] ZAFSHC 253 (28 November 2019)
IN
THE HIGH COURT OF SOUTH AFRICA
FREE
STATE DIVISION, BLOEMFONTEIN
Case
No: 5280/2019
In
the matter between:
GERTRUIDA
MAGDALENA OOSTHUIZEN
t/a
WILGER
MOTORS
Applicant
and
PUMA
ENERGY SOUTH AFRICA (PTY)
LTD
1
st
Respondent
THE
ARBITRATION FOUNDATION OF
SOUTHERN
AFRICA
2
nd
Respondent
ADVOCATE
AMM MOTIMELE
SC
3
rd
Respondent
CORAM:
MURRAY, AJ
HEARD
ON:
27 NOVEMBER 2019
JUDGMENT
BY:
MURRAY, AJ
DELIVERED
ON:
28 NOVEMBER 2019
[1]
This is an urgent application for an interdict to stay arbitration
proceedings instituted in Pretoria at the instance of the
First
Respondent pending the determination of the validity of the
Arbitration Agreement to be brought in terms of Part B of this
application. The Applicant prays for the First and Third Respondent
to be interdicted from proceeding with the arbitration until
the Part
B application has been finalised.
[2]
The Applicant and the First Respondent entered into a 10-year Dealer
Agreement on 10 November 2017. In terms thereof the
Applicant
would buy Puma fuel and products from First Respondent on a ‘cash
before or on delivery’ basis which Wilger
Motors in Brandfort,
Free State Province, would on-sell at a higher price.
[3]
The First Respondent would deliver the fuel to the said filling
station in Brandfort and install all the necessary equipment,
including electronic fuel pumps and a new computer system coupled to
pumps and the fuel tanks. All such equipment was to
remain the
property of the First Respondent who was to be responsible for the
upkeep and maintenance of all equipment installed
by it.
[4]
The Dealer Agreement contains two arbitration clauses. Clause
25 gives the First Respondent the right to elect to handle
disputes
by way of litigation or by way of referral to arbitration.
Clause 26, the general arbitration clause, determines
that a
dispute
shall
on written demand by any party to the
dispute be submitted to arbitration
in Pretoria
in accordance
with the Rules of the Arbitration Foundation (“AFSA”)
of South Africa by arbitrator/s appointed
by AFSA
and agreed to by
the parties.
[5]
Although Clause 26.1 determines that even the validity of the
arbitration agreement itself
may
be decided by the arbitrator,
and Clause 11.2.2 empowers an arbitrator to rule on a dispute
regarding the validity or scope of
the arbitration agreement,
significantly Clause 26.5 determines that
“
Nothing herein
contained shall be deemed to prevent or prohibit either party from
applying to the appropriate court for urgent relief.”
Clause
26.5 expresses the legal position regarding arbitration proceedings
in South Africa, namely that no arbitration agreement
supersedes a
party’s right to refer a particular dispute to a court of law
for adjudication.
[6]
The right of either party to, at any time during the arbitration
proceedings, apply for a stay of the proceedings in order to
have a
dispute adjudicated by a court, is based on
section 3(2)
of the
Arbitration Act 42 of 1965
which determines that
“
3(2) The court
may at any time on the application of any party to an arbitration
agreement on good cause shown:
(a) …
(b) order that any
particular dispute referred to in the
arbitration agreement
shall not be referred to arbitration
(c) order that the
arbitration agreement shall cease to have effect with reference to
any dispute referred to it”.
[7]
There can therefore be no question as to the Applicant’s right
to apply for a stay of the Arbitration proceedings in order
to refer
the dispute about the validity of the arbitration agreement to court
by way of an urgent application.
[8]
The Applicant avers that, instead of making a profit, due to the
faulty calibration of the electronics of the fuel pumps, Wilger
Motors from the very beginning failed to do so. After several
investigations by the First Respondent in which it found ‘nothing
wrong’, an independent investigation finally established that
the fuel pumps indicated a wrong total of fuel dispensed, for
instance 40 litres whereas actually 50 litres had been dispensed, and
the customer accordingly paid for only 40 litres. Despite
several written reports to First Respondent, the problem persisted.
In May 2019 the Applicant put the First Respondent on terms
to repair
the equipment.
[9]
When this did not happen, the Applicant on 26 June 2019 cancelled the
Dealer Agreement by formal notice, relying on section
14(2)(b) of the
Consumer Protection Act of 2008
(“the CPA”)which
empowers a consumer bound by a fixed term consumer agreement to
cancel such agreement at any time by
giving the supplier 20 business
days’ notice in writing.
[10]
The First Respondent notified the Applicant that it regarded the
cancellation as a repudiation of the agreement, which repudiation
it
accepted and that it elected to terminate the agreement and to
proceed with arbitration.
[11]
On 30 August 2019 the First Respondent submitted a request for
arbitration with a statement of claim for the R20,6 million
which it
would allegedly have earned if the contract had run for 10 years as
per the agreement. The Applicant was provided
with the said
statement, and informed that AFSA accepted the duty to administer the
arbitration and that a non-refundable arbitration
fee of R49 822
plus VAT of R10 000, per party, was to be paid by 23 September
2019.
[12]
Article 6.1.4 of the AFSA Rules gave the Applicant the option to
state whether she admitted or disputed the arbitration agreement.
On 8 October 2019 the Applicant informed the First and Second
Respondents that she did not find any of the three proposed
arbitrators
acceptable, that she disputed the validity of the
arbitration agreement, that she would apply for a declaratory order
or interdict
in that regard, and that she did not accept the
applicability or jurisdiction of the AFSA rules. She informed the
First Respondent
that she did not want AFSA nominated arbitrators
since they could be prohibitively expensive and asked for a mutually
agreed arbitrator
to be appointed.
[13]
AFSA gave the Applicant an extension until 25 October 2019 to deliver
a statement of defense and to pay the first AFSA fee
in terms of
Article 6 of the Rules. When she did not do so, First Respondent paid
her fee in order to get an arbitrator appointed
by AFSA and to set
the arbitration proceedings in motion despite the Applicant’s
objections.
[14]
On 4 November 2019 AFSA appointed the Third Respondent as the
arbitrator. The Applicant was informed of his fees of R45 000
per day and R4 500 and the indication that the arbitration was
expected to run for five days. The Third Respondent set
up a
pre-trial meeting for 7 November 2019. On 8 November 2019 the
Applicant by e-mail requested a stay of the arbitration proceedings.
On the same day the First Respondent replied that the pre-trial was
to proceed as scheduled, and on 11 November 2019 the pre-trial
did
indeed take place. On 13 November 2019 the Applicant then served this
urgent application for an interim interdict to stay the
arbitration
proceedings until the application for the determination of the
validity of the arbitration agreement by the court has
been
finalised.
[15]
The First Respondent opposed the application on three grounds:
it disputes (1) the jurisdiction of this Court to entertain
the
application; (2) the Applicant’s right to rely on the
protection of the Consumer Protection Act; and (3) the urgency.
Jurisdiction:
[16]
Regarding the alleged lack of jurisdiction, Mr Bava argued that this
Court cannot have jurisdiction because the Dealer Agreement
was
concluded in Johannesburg, the Respondents are all in Gauteng, and
the Applicant agreed to the ‘
non-exclusive
jurisdiction’
of
the Johannesburg High Court. According to him the latter
agreement implied that either the Johannesburg or the Pretoria
High
Court would have jurisdiction, not the Bloemfontein High Court. But,
as Mr Benade correctly pointed out, parties to a contract
cannot
exclude jurisdiction by agreement, as Leach JA held in
Foize
Africa (Pty) Ltd v Foize Beheer BV and Others
[1]
.
[17]
S 21(1) of the Superior Courts Act determines that a Division has
jurisdiction in relation to all causes arising within its
area of
jurisdiction. The dispute between the parties arose in
Brandfort, Free State Province. Mr Pava argued that
the cause
of action arose from cancellation of the contract that was concluded
in Johannesburg and therefore the ‘cause’
referred to in
s 21(1) arose in Gauteng and the Bloemfontein Court therefore lacked
jurisdiction.
[18]
But, as Mr Benade pointed out, with reference to ,
Cordiant
Trading v Daimler Chrysler
[2]
,
a
Court which has jurisdiction over the area within which the cause of
action arose, is competent to decide a matter on that basis
alone.
It is indisputable that the cause of action in this matter is a
contractual one and in
Roberts
Construction v Willcox
[3]
and
Hugo v
Wessels
[4]
it
was held that a contractual cause arises where the contract is to be
performed, wholly or in part. The First Respondent had to
deliver the
fuel and other products and to maintain the equipment in Brandfort
and the Dealer Agreement therefore had to be performed
to a major
extent in Brandfort.
[19]
In my view, therefore, the First Respondent’s contention that
this Court lacks jurisdiction to adjudicate this application
cannot
succeed.
Urgency:
[20]
The First Respondent contended that the matter lacks urgency since
the dispute about the fuel arose in 2018 already and because
the
Applicant in August 2019 already indicated that she disputed the
validity of the contract and on 9 October 2019 indicated that
she was
going to bring this application.
[21]
I find the submissions on behalf of the Applicant regarding urgency
persuasive, however. Mr Benade averred that the urgency
only started
at the earliest on 8 November 2019 when the First Respondent refused
the Applicant’s request to agree to stay
the arbitration
proceedings pending the finalisation of the application regarding the
validity of the arbitration agreement which
was to be delivered
before 18 November 2019; or on 11 November 2019 when the Third
Respondent insisted and ruled on the continuation
of the
arbitration proceedings despite the Applicant’s objections and
request for a stay till after the adjudication
of the declaratory
order.
[22]
As has already been pointed out, the Applicant had the right to
approach court regarding the dispute. At that stage AFSA Rule
8.2
would then have contributed to the urgency by determining that:
“
Any application
to a court of law on any matter so contested or other matters in
dispute … shall not affect the continuation
of the arbitration
proceedings save and to the extent that a court otherwise orders.”
[23]
The arbitration therefore was set to start (or as Mr Bava pointed out
had already started with the pre-trial) and as in
Transnet
v Rubenstein
[5]
the application was then urgent because the commencement of the
arbitration was imminent. And the Applicant cannot be
criticised
for first attempting to amicably resolve the issues before
instituting litigation.
[24]
And as Mr Benade argued, that was the point when the last of the four
requirements for an interim interdict was present and
an urgent
application could be launched, which was done within two days, on 13
November 2019. It was only when it was clear that
arbitration was
definitely to proceed, that the Applicant could submit that it had no
other remedy and had a reasonable apprehension
of irreparable harm if
the interim order were to be refused.
[25]
I therefore accept that the matter was indeed urgent.
Consumer
Protection Act:
[26
]
The First Respondent asserts that the Applicant cannot depend on the
protection of the
Consumer Protection Act essentially
because the
Dealer Agreement is not a Consumer Agreement and the Applicant is not
a consumer as defined in the Act. This, Mr Bava
argued, was because
the Applicant is a retailer in terms of the
Petroleum Products Act of
1977
and the Dealer Agreement is a long term commercial contract.
On that basis the First Respondent alleged that the Applicant
has no
clear right to interim relief.
[27]
An interlocutory interdict depends on whether the Court is satisfied
that the Applicant has a
prima facie
right, established on a
balance of probabilities, which is being infringed or is under threat
of infringement.
[28]
There is nothing in the CPA that excludes the Applicant from the
protection of the CPA against agreements that are unfair,
unjust,
unreasonable. A consumer is defined as a person to whom
any
goods or services are marketed, and the petroleum industry and
therefore petroleum products have not been exempted by
s 5(3)
of the
CPA.
[29]
The submission that the Applicant is not a consumer because she is a
retailer does not carry any water either. A franchisee,
which
is always a retailer, for instance, is specifically included in the
definition of a consumer.
[30]
I am therefore satisfied that the Applicant is a consumer and as such
has a right to the protection of the CPA which limits
the length of
fixed term contracts to 24 months, gives a right to cancel, and
which in
s 48
determines that a supplier must not supply or enter
into an agreement to supply any goods or services on terms that are
unfair,
unreasonable or unjust. It also in
s 48(1)(c)
determines that a supplier, such as First Respondent, must not
require a customer to waive any rights or to waive any liability
of
the supplier on terms which are unfair, unreasonable or unjust.
[31]
The Act further defines and provides for clauses in agreements to be
presumed unfair if they have the purpose or effect of
excluding or
hindering the consumer’s right to take legal action or exercise
any legal remedy. Regulation 44 (3)(x) includes
therein clauses that
require the consumer to take disputes exclusively to arbitration.
[6]
[32]
And s 52 determines that if a person alleges in any proceedings
before a court that a supplier contravened s 48, the court
may make
an order as contemplated in s 52(3), namely to make a declaration
that the agreement is unconscionable, unjust, unreasonable
or
unfair. The court may also require the supplier to cease such
practice. An order such as prayed for in the
Notice of
Motion would therefore be competent in appropriate circumstances.
[33]
It appears that the stay until adjudication of Part B of the
application would not impose undue hardship on the First Respondent
since it would not cause an unduly lengthy delay. The Applicant
appears to have legitimate concerns which she has every right
to have
decided by a court of law before such issues as claims and
counterclaims are to be decided. In my view the prejudice
she
would suffer if the interim relief is not granted far outweighs the
inconvenience of a delay to the First Respondent.
[34]
It is clear, furthermore, that if the Applicant wants a stay to
pursue the adjudication of the validity of the Dealer Agreement
and
the Arbitration Agreement contained therein, she indeed has no other
satisfactory remedy.
[35]
In
Savage
v Sisters of the Holy Cross
[7]
the court pointed out that an application for an interim interdict in
essence is to be decided on the Applicant’s version.
This
was confirmed in
Arendse
v Van der Merwe
[8]
in which the court held that
“…
the
determination of the question whether a prima facie case has been
made out is usually made purely on a consideration of the
evidence
contained in the founding affidavit without regard to any evidence
adduced in rebuttal …”
[36]
It was argued on behalf of the First Respondent that it is imperative
for this Court to uphold the sanctity of the arbitration
clause so as
not to open the floodgate for commercial parties to dispute the
validity of arbitration agreements. But, of
course, it is trite
law that each case must be decided on its own circumstances.
And on the facts of this case I am satisfied
that the Applicant in
terms of the AFSA Rules and the
Arbitration Act has
the right to
request the adjudication of the validity of the Agreement by a court
and to request a stay of the Arbitration proceedings
for that
purpose, and that an order to that effect would be justified.
[37]
There is no reason to deviate from the normal procedure regarding
costs.
WHEREFORE
I make the following order:
1. The Applicant’s
non-compliance with the prescribed forms and service is condoned and
the application is heard as a matter
of urgency in terms of Uniform
Rule 6(12).
1
.25cm; margin-bottom: 0cm; line-height: 150%">
2. The First, Second and
Third Respondents are interdicted from commencing and/or proceeding
with the arbitration proceedings under
case number
AFSA PTA
01092019
between the Applicant and the First Respondent pending
the finalisation of Part B of this application.
3. The First Respondent
is ordered to pay the costs of the proceedings under Part A of this
application.
______________
H.
MURRAY, AJ
On
behalf of the applicant: Adv H J Benade
Instructed
by:
Mr
D Moller
Attorney
for the Applicant
Symington
& De Kok Attorneys
Symington
& De Kok Building
169B
Nelson Mandela Street
BLOEMFONTEIN
On
behalf of the defendant: Adv Aslam A S A Bava
Instructed
by:
Cliffe
Dekker Hofmeyer Inc
c/o
Mr A Noordman
NOORDMAN’s
1
Eight Street
Arboretum
BLOEMFONTEIN
[1]
2013 (3) SA 91
(SCA) at 99F
[2]
2005
(6) SA 205
(SCA) at 211E
[3]
1962
(4) SA 326
AD at 337 A – C where it was held that “…
it appears, therefore, that the necessary
jurisdictional
ground in this case is present. The Appellant’s
obligation had to be fulfilled on the Free State
side
as well…”
[4]
1987
(3) SA 837
AD at 850B where it was held that “the common law
acknowledges as a valid jurisdictional
ground
the circumstance that a contract …has to be executed …
within the court’s area of jurisdiction.”
[5]
2006
(1) SA 591
(SCA) at 603 B - C
[6]
Naude
& Eiselen: Commentary on the
Consumer Protection Act, p
.
reg. 44-1, 44-2; p. reg. 44-53 to reg. 44 –
56.
[7]
2015
(6) SA 1
(SAWCC) at 9 D - H
[8]
2016
(6) SA 490
(GJ) at 494 D - E