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[2018] ZAGPPHC 755
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Engen Petroleum Limited v Fastrack Trading 276 CC t/a Motorcall Service Station and Another (80739/2016) [2018] ZAGPPHC 755 (16 February 2018)
REPUBLIC
OF SOUTH AFRICA
IN THE
HIGH COURT OF SOUTH AFRICA
GAUTENG
DIVISION, PRETORIA
(1)
NOT REPORTABLE
(2)
NOT OF INTEREST TO OTHER JUDGES
(3)
REVISED
CASE
NO.:
80739/2016
16/2/2018
In
the matter between:
ENGEN
PETROLEUM
LIMITED
Applicant
versus
FASTRACK
TRADING 276 CC
t/a
MOTORCALL
SERVICE
STATION
First Respondent
ERF
346 GEZINA
CC
Second Respondent
LEON
FOURIE
Third
Respondent
PUMA ENERGY
SOUTH
AFRICA
Fourth Respondent
JUDGMENT
MPHAHLELE
J
[1]
This is an application for an order
declaring that the agreement that was concluded between the applicant
and the first and second
respondents dated 17 February 2016, for the
redesign and upgrade of existing service station on erf 2108
Lyttleton Manor township,
registration division JR, at Engen
Motorcall, Botha Avenue, Lyttleton, Centurion is valid and binding on
the parties.
[2]
The applicant contends that it was
compelled to institute this application after the first, second and
third respondents reneged
from the agreement and now alleging that
the agreement is not binding or enforceable.
[3]
The first, second and third respondents
are opposing this application. The fourth respondent is not opposing
the application and
accordingly no relief is claimed against it.
THE
PARTIES
[4]
The applicant carries on business
throughout the country and elsewhere as a manufacturer and marketer
and bulk distributor of petroleum,
diesel and chemical products and
is a franchisor of
inter alia
the
Quick Shop Convenience Store and Woolworths chains.
[5]
The first respondent operates a duly approved and licenced Engen
petrol service station,
in the premises of the second respondent. The
first respondent is also commonly known as Motorcall service station.
[6]
The second respondent is a property
owning entity which owns the immovable property in which the service
station (the business of
the first respondent) is situated.
[7]
The third respondent is the sole member
of the first respondent as well as member of the second respondent.
He is the natural person
that controls the ·first respondent
and acts on behalf of both the first and the second respondents.
[8]
The fourth respondent has made offers to
the first, second and third respondents for the operation of a Puma
service station
THE
OPERATING AGREEMENTS
[9]
The relationship between the applicant
and the first and second respondents is regulated by various retail
agreements concluded
between these parties.
[10]
By 31 January 2015 the retail agreements
were due to lapse. The parties entered into negotiations with a view
to concluding new
retail agreements. The parties extended the period
of operation of the retail agreements several times eventually ending
in August
2016.
THE
APPLICANT'S VERSION
[11]
According to the applicant, early in
2016, well within the period of extensions of the retail agreements,
the applicant and the
first and second respondents (as duly
represented by the third respondent) concluded a new agreement
in
lieu
of the extended retail
agreements, namely an agreement to redesign and upgrade the existing
petrol service station at Motorcall
service station.
[12]
On 17 February 2016, the applicant made
a written offer to the first and second respondents, for the
re-development of the Motorcall
service station site. The first and
second respondents duly represented by the third respondent who
signed the offer on their behalf,
accepted the offer in writing. The
signed agreement was dispatched by the third respondent to the
applicant under a covering e-mail
on 04 April 2016. In the covering
e-mail it was specifically stated that
"attached
please find the acceptance letter for the upgrade of Motorcall
Engen".
[13]
The applicant contends that in terms of
the agreement the applicant bound itself in respect of the
re-development of the existing
service station to rebuild the Engen
filling station on the existing property. Paragraph 4.3 provides
that:
"Upon acceptance of this
proposal it will become a binding agreement subject to the approval
by the Engen's management and
the suspensive condition referred to in
paragraph 1
".
[14]
Paragraph 1 sets out the basis of the
contractual relationship between the applicant and the first, second
and third respondents,
including the material terms of the various
retail dealer agreements to be concluded between the parties and the
parties' financial
obligations.
[15]
Pursuant to the acceptance of the agreement, a series of further
agreements had to be·
concluded to give effect to the
agreement. The applicant duly instructed its attorneys to attend to
the preparation and drafting
of the transaction agreements necessary
to give effect to the agreement as attached to the respondents'
e-mail of 04 April 2016,
including various exhibits thereto.
[16]
The applicant provided the transaction
agreements to the first to third respondents for evaluation and
signatures. By virtue of
the fact that these agreements are of a
technical nature, the applicant accepted that the finalisation of the
agreements might
take some time as the first, second and third
respondents would probably require an opportunity to evaluate the
terms thereof in
line with the signed agreement and perhaps obtain
legal assistance, in regard thereto.
[17]
The applicant maintains that it was an
express term alternatively an implied term of the agreement that the
first and second respondents
would sign the transaction agreement and
the exhibits thereto as well as any formal documents necessary for
the execution of the
agreement. Further, that the first and second
respondents shall not unreasonably refuse to sign any of the
mentioned documents.
[18]
At all material times relevant to the
transactions on the agreements and the conclusion of the agreement,
the applicant acted in
good faith and also accepted the first, second
and third respondents'
bona fides
actions. However, it later
transpired that the first, second and third respondents lacked
bona
fides
and were intent on frustrating
the execution of the transaction agreement and the exhibits thereto.
[19]
The first and second respondents have
failed and/or neglected and/or refused to sign the transaction
agreements, notwithstanding
that they are contractually obliged to do
so. Therefore, the first and second respondents, through their duly
authorised representative,
the third respondent have reneged on their
contractual obligations in terms of the agreement concluded with the
applicant.
[20]
The present dispute is rooted at the
first, second and the third respondents' demands for the applicant to
act contrary to the terms
of the agreement, in particular that the
applicant must bind itself that it would
"meet
the offer of Puma in all respects"
on
or before 16 October 2016 and 19 October 2016. Puma, the fourth
respondent, is the applicant's business competitor.
[21]
The applicant submits that, having
regard to the first and second respondents' ultimatums, the applicant
finds itself in a quandary
regarding the exercise of its rights to
operate the Engen service station, in the premises of the second
respondent in terms of
the existing agreement. The applicant
maintains that the first and second respondents are not entitled to
make these demands.
THE
RESPONDENTS' VERSION
[22]
The applicant submitted to the first and
second respondents the letter of offer, dated 17 February 2016. This
offer contains two
clauses stipulating the following suspensive
conditions:
22.1
The second unnumbered introductory
paragraph reads as follows:
"Once
accepted by you this proposal shall be subject to the approval of our
management as set out in clause 11 below and shall
be furthermore
subject to the execution of formal documentation incorporating our
standard documentation for the implementation
of the Transaction";
and
22.2
Clause 8 with the heading
"APPROVAL
BY ENGEN'S MANAGEMENT'
which
reads as follows:
"the
above proposal and the agreement arising from the acceptance thereof,
is subject to the written approval of Engen's board,
within 90 days
after execution on your behalf of formal contracts under paragraph 5
above. Every effort will be made to minimise
this approval period. In
order to finalise the proposal to the board for approval, the full
details of the entity which will contract
as outlined in this
proposal, as well as the intended date of transfer of the said
property if transfer has not already taken place,
should be furnished
to Engen".
[23]
No evidence or allegations are contained
in the founding affidavit to the effect that the suspensive
conditions were fulfilled,
or waived. The respondents submit that
there can be no valid, binding and enforceable agreement until the
formal contracts have
been agreed upon and duly signed; and Engen's
board approve those formal contracts within 90 days after its
execution.
[24]
The respondents submit that no further
agreement was concluded between the parties and the contract period
in terms of the Retail
Dealer Agreement previously concluded between
the parties expired on 31 July 2016. Therefore, the respondents
maintain that there
is consequently no binding and/or enforceable
written retail dealer agreement between the parties.
[25]
The respondent submit that the
applicant's own representative doubted whether any binding agreement
was concluded and, in this regard
made reference to the letter dated
19 August 2016 by the applicant's Mr Dirk Goldschmidt, paragraph 2
thereof states that:"
To what
extent is the signed letter offer from the dealer enforceable?..."
[26]
The respondents maintain that the
applicant retracted and varied the offer of 17 April 2016 prior to
its purported acceptance on
04 April 2016. Prior to 4 April 2016 the
applicant submitted two further revised offers. The applicant
revoked, replaced and/or
varied its own offer of 17 February 2016,
the 19th and 24th of February 2016. Therefore, the respondents could
no longer have accepted
the offer of 17 February 2016. The respondent
contend that, at best for the applicant (which is not admitted) the
purported acceptance
of the letter of
offer,
by the third respondent, on 4 April
2016 constitute a counter-offer.
[27]
I deal in turn with the various
stipulations as contained in the agreement:
27.1
The second unnumbered introductory
paragraph reads as follows:
"Once
accepted by you this proposal shall be subject to the approval of our
management
as set
out
in clause 11 below and shall be furthermore subject to the execution
of formal documentation incorporating our standard documentation
for
the implementation of the Transaction".
27.2
Paragraph 1 with the heading RETAIL
DEALER AGREEMENT provides as follows: 1.2
"You
will execute our standard Retail Dealer Agreement as in effect at the
time of execution of the formal documentation to
which
we
have referred above....."
27.3
In terms of clause 4.3 of the agreement
"Upon acceptance of this
proposal it will become a binding agreement subject to the approval
by Engen's management and the
suspensive conditions referred to in
paragraph 1".
27.4
Clause 8 with the heading
"APPROVAL
BY ENGEN'S MANAGEMENT"
as
appears in paragraph 22.2 above.
[28]
The applicant contends that the
allegations that the suspensive conditions contained in the document
have not been fulfilled lacks
any merit. The applicant submit that it
appears
ex facie
the
agreement that the alleged suspensive conditions were for the benefit
of the applicant, relating to the approval of the proposal
by the
applicant's management and/or board as well as the execution of the
standard formal documentation.
[29]
The applicant contends further that it
is apparent from the relevant terms of the agreement that the first
to third respondents
are not at liberty to cancel or withdraw from
the contract at all. Instead, the only remaining condition after
acceptance as aforesaid,
was for the applicant's management to
approve or disapprove the accepted proposal.
[30]
The agreement provides that:
"All
formal documents necessary to give effect to this agreement shall be
prepared by Engen as per its standard documents and
shall contain
such further provisions and shall be in such form as we may
determine. We warrant that the further provisions and
form so
determined by ourselves, will be consistent with the provisions and
form of similar documents used by us./ or otherwise
will be
reasonable having regard to our legitimate concerns which we consider
require protection".
[31]
The applicant maintains that it was an
express term alternatively an implied term that the first and second
respondents would sign
the transaction agreement and the exhibits
thereto as well as any formal documents necessary for the execution
of the agreement
. The applicant alleges that the first and second
respondents unreasonably refused to sign any of the aforesaid. This
is denied
by the respondents who submit that the signing of those
agreements was not an express or implied term , but a suspensive
condition.
[32]
The applicant provided the documents to
the first to third respondents for evaluation and signatures. By
virtue of the fact that
these agreements are of a technical nature,
the applicant accepted that the finalisation of the agreements might
take some time
as the first, second and third respondents would
probably require an opportunity to evaluate the terms thereof in line
with the
signed agreement and perhaps obtain legal assistance in
regard thereto.
[33]
The respondents contend that the terms
of the letter of 17 February 2016 by themselves are too narrow and
too vague to constitute
a firm and binding agreement. The letter in
effect attempts to achieve a binding agreement whereby the parties
thereto agreed to
conclude future agreements. The letter seems to be
a means to achieving a final agreement, it does not contain all the
material
terms relating to the final contract in order to render the
contents of the letter to be a binding and enforceable contract.
[34]
The applicant conceded that the
finalisation of the agreements might take some time due to the
technical nature of the documents,
this reinforces the proposition by
the respondents that there could not have been consensus about the
terms of the final agreements,
when the letter of 17 February 2016
was drafted by the applicant and subsequently accepted by the
respondents.
[35]
It has been held that an agreement that
confers an unfettered discretion upon a party to determine the nature
or extent of his obligations
is void for vagueness [Benlou Properties
(Pty)Ltd v Vector Graphics (Pty)Ltd 1993(1) SA 179 (AD)]. The
agreement of 17 April 2016
seeks to confer an unfettered discretion
on the part of the applicant to determine and enforce the standard
terms and conditions
contained in the so-called formal agreements
upon the respondents, without negotiations or consensus. These formal
agreements include,
among others, the notarial deed of lease,
restraint of transfer, development agreement, dealer agreements, and
memorandum of agreement
of sub-lease. Absence of agreement on these
crucial documents renders the agreement void for vagueness.
[36]
A party wishing to claim specific
performance in terms of a contract must:
36.1
allege and prove the terms of the
contract;
36.2
allege and prove compliance with any
antecedent or reciprocal obligations, or tender to perform them;
36.3
allege non-performance by the defaulting
party; or claim specific performance.
[37]
The applicant presented the letters of
17 February 2016, 19 February 2016 and 20 February 2016 to the
respondents. These letters
contained different proposals from which
the respondents had to make a choice. On 4 April 2016 the respondents
made the election
and chose to be bound by the letter of 17 February
2016. This is the agreement which the applicant contends is binding
and forms
the basis of the relief sought by the applicant.
[38]
Apart from the fact that the applicant
did not tender any evidence establishing that the suspensive
conditions were fulfilled, or
waived the agreement is vague to such
an extent that it is not possible to ascertain the true intention of
the contracting parties.
The parties cannot be said to have reached
consensus on all material terms of the agreement. Consequently, the
application must
fail.
[39]
In the result, the application is
dismissed with costs.
S S
MPHAHLELE
JUDGE OF
THE HIGH COURT,
PRETORIA
FOR THE
APPLICANT: Adv L Sigogo
INSTRUCTED
BY: DMS Inc.
FOR
THE RESPONDENTS: Adv MP van der Merwe, SC
INSTRUCTED
BY: Couzyn Hertzog & Horak Attorneys