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[2016] ZAKZPHC 3
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Move on Up 104 CC and Others v Sagewise 1018 CC t/a Dragon Fuels and Others (14300/15) [2016] ZAKZPHC 3 (5 January 2016)
IN THE HIGH COURT OF
SOUTH AFRICA
KWAZULU NATAL –
DIVISION, PIETERMARITZBURG
Case No :14300/15
DATE: 05 JANUARY 2016
In the matter between :
Move on Up 104
CC
.........................................................................................................
First
Applicant
Kwikcorp 1 CC t/a Leon
Motors
................................................................................
Second
Applicant
NCL Moola’s (Pty) Ltd t/a
Newcastle
Pitstop
..............................................................
Third
Applicant
We-Two Investments CC t/a Auto
City
.......................................................................
Fourth
Applicant
LMD Africa Forensics (Pty)
Ltd
.....................................................................................
Fifth
Applicant
And
Sagewise 1018 CC t/a Dragon
Fuels
............................................................................
First
Respondent
Kadbro Taxi City
CC
................................................................................................
Second
Respondent
Seyma Investments (Pty)
Ltd
.....................................................................................
Third
Respondent
Newcastle Local
Municipality
..................................................................................
Fourth
Respondent
Controller of Petroleum
Products
...............................................................................
Fifth
Respondent
Total South Africa (Pty)
Ltd
.......................................................................................
Sixth
Respondent
Engen Petroleum
Limited
.......................................................................................
Seventh
Respondent
Judgment
Lopes J
[1] This matter began as an urgent
application brought on the 10th November 2015. The matter was
opposed and adjourned on that
day with an order made providing for
the filing of affidavits. The matter was adjourned to the 3rd
December 2015 when I heard
the application.
[2] The facts may be summarised as
follows :
(a) all five applicants are legal
entities which carry on business as service stations selling
petroleum products within close proximity
to one another in the
Newcastle area;
(b) the first respondent wished to
conduct the business of a service station at 60 Murchison Street,
Newcastle;
(c) the second and third respondents
carry on the business of a service station at 22 Terminus Street,
Newcastle;
(d) during 2006, Mr Kader who is the
sole director of the first respondent , the sole member of the second
respondent, and a member
of the third respondent, applied for special
consent to carry on the business of a service station and other
activities on the
premises referred to as 60 Murchison Street,
Newcastle. That application was refused and an appeal was then made
by Kader to the
Town Planning Appeal Board in Pietermaritzburg.
(e) The Town Planning Appeal Board
granted the appeal subject to certain conditions which may be
summarised as follows :
(i) Mr Kader undertook to provide the
Newcastle Municipality with a written undertaking in terms of which
he agreed to cease operating
the service station which he then
operated at 22 Terminus Street; and
(ii) he abandoned all rights pursuant
to which he operated that service station;
(iii) the date upon which the 22
Terminus Street service station was to cease operating would be on
the last day of the month during
which the service station at 60
Murchison Street began to conduct business.
(f) Having obtained the special
consent, Mr Kader then applied for a site and retail licence for 60
Murchison Street in terms of
the Petroleum Products Act, 1977.
(g) The reasons which Mr Kader gave for
wishing to move the operation of his service station from 22 Terminus
Street to 60 Murchison
Street was that the Terminus Street service
station was ‘insufficient and very crowded’.
(h) The site licence sought by Mr Kader
for the operation of the 60 Murchison Street service station was
refused on the 21st December
2011. An appeal was launched against
the refusal of that licence on the 16th February 2012. In
supplementary heads of appeal
submitted to the Minister of Energy on
the 24th April 2012, Mr Kader stated that he could not close the 22
Terminus Street service
station due to the fact that the second
respondent had renewed its agreement with Engen Petroleum Limited,
the seventh respondent,
in respect of the supply of fuel, and to
close down that service station would constitute a breach of the
second respondent’s
agreement with Engen.
(i) The appeal was granted by the
Minister of Energy and the matter referred back to the Controller of
Petroleum Products for re-evaluation.
The application for a retail
licence for 60 Murchison Street was then approved on the 1st March
2013. It is important to note
at this stage that the conditions
imposed by the Town Planning Appeal Board at the request of Mr Kader,
were still valid and enforceable
against the property at 60 Murchison
Street.
(j) The construction of the new service
station then commenced on the site at 60 Murchison Street. On the
9th September 2015 the
applicants’ attorneys referred to the
conditions imposed by the Town Planning Appeals Board dated the 8th
November 2006,
and requested an undertaking by Kader that no more
fuel would be sold from the site at 22 Terminus Street from the end
of the month
during which the service station at 60 Murchison Street
began operations.
(k) In a letter dated the 23rd
September 2015 the first respondent and Kader’s attorney
confirmed in writing that ‘Our
client Rahim Abdul Kader and/or
Kadbro Taxi, have ceased to operate the filling station on the site
in question. Our client Mr
Kader has also now ceased to enjoy any
rights in the operation at such site.’ The letter closes with
the attorneys recording
that their client has fully complied with the
undertakings given to the Newcastle Municipality in 2006.
(l) The applicants’ attorneys
sought further assurances from the attorney acting for the first
respondent and Mr Kader, and
he replied on the 5th October 2015
suggesting that any effort to limit the operation of a service
station from the 22 Terminus
Street site would be an attempt to
stifle lawful competition, and was a violation of the
Competition
Act, 1998
and the Constitution. As I will set out later, Mr Kader
had by then purported to make over the rights to operate the service
station
at 22 Terminus Street to his wife.
(m) On the 16th October 2015 the
applicants’ attorneys notified the attorneys acting for the
first respondent and Mr Kader
that the service station at 22 Terminus
Street was continuing to operate. They were called upon to cease
that operation immediately.
The applicants’ attorneys also
wrote to the Department of Energy for clarification and intervention,
and that department
responded on the 19th October 2015 stating that
the 22 Terminus Street site was still being operated by Kadbro Taxi
City CC and
there had been no ‘change of hands’. On the
19th October 2015 the attorney acting for the first respondent and Mr
Kader addressed a strongly worded letter to the applicants’
attorneys, alleging that the applicants were unlawfully interfering
with their client’s rights to trade and requesting details of
the identity of each of the legal entities represented by the
applicants’ attorneys.
(n) It is common cause that both the
service station at 22 Terminus Street and the one at 60 Murchison
Street have continued to
operate by, inter alia, selling fuel in
contravention of the provision imposed by the Town Planning Appeal
Board. Eventually this
application was delivered on an urgent basis.
(o) It appeared in the course of the
delivery of the affidavits in this application that the second and
third respondents had in
fact been de-registered on the 22nd June
2009 and the 12th November 2009 respectively. Notices had been
published by Kader in
terms of the relevant legislation for the
reinstatement on the Companies Register of the second and third
respondents. This has
been somewhat overtaken by events, as I was
informed at the hearing on the 3rd December 2015 that the second
respondent was reinstated
pursuant to an urgent application heard in
the High Court of South Africa, Gauteng Division in Pretoria on the
1st December 2015.
That order validated all the actions of the
second respondent retrospectively.
(p) The third respondent, however,
remains deregistered and I was informed that an urgent application
would be moved during the
course of the next two weeks in Pretoria to
have the third respondent similarly reinstated on the Companies
Register.
(q) In addition, it also emerged during
the course of the delivery of the various affidavits that Engen had
discovered that there
was a problem with the retail licence
certificate which was relied upon by Mr Kader in concluding the
supply agreement with Engen.
The problem was that the licence is in
the name of ‘Radbro Taxy City CC’ but used the company
registration number
of the third respondent, ‘Radbro Taxi City
CC’ which was deregistered on the 22nd June 2009, and remains
deregistered.
In this regard Engen points out that ‘Radbro
Taxy City (Pty) Ltd’ did not exist at the time the agreement
was concluded
by Engen with Mr Kader, because that company was only
registered in 2015.
(r) Engen is accordingly of the view
that Radbro Service Station (22 Terminus Street) conducted business
in contravention of the
Petroleum Products Act, 1977
, and in
concluding agreements with Engen in November and December of 2010,
the contracting party was described as ‘Kadbro
Taxi City CC’
bearing the registration number of ‘Kadbro Taxi City Service
Station CC’. As a result of these
anomalies, Engen immediately
terminated the delivery of fuel products to the 22 Terminus Street
service station. In addition,
Mr Dayal, who appeared for Engen in
the application, notified the court that it was his client’s
intention to cancel the
existing contracts between Engen and Kadbro
Taxi City CC.
[3] At the outset of the hearing on the
3rd December 2015 Mr Grundlingh, who appeared for the applicants
together with Mr Bekker,
notified me that on the 2nd December 2015 an
employee of the first applicant had gone to the 22 Terminus Street
premises and filled
up with R20 4 worth of petrol. This, he
submitted, pointed to the fact that Mr Kader was unrepentant and was
determined to carry
on business despite the undertaking he had
suggested at the Town Planning Appeal Board hearing, and
subsequently confirmed to
the Town Planning Appeal Board.
[4] It was common cause that the issues
raised in the answering affidavits of urgency, non-joinder and the
issue of a certificate
by the Municipality in respect of the 60
Murchison Street operation, to enable it to begin trading on the 15th
September 2015,
were no longer issues in the application.
[5] Mr Grundlingh dealt with the
suggestion in the papers that the proposal by Mr Kader that special
conditions should be imposed
by the Town Planning Appeal Board, and
which were subsequently imposed by that Board, constituted a
contract, presumably between
the Town Planning Appeal Board and/or
the Newcastle Municipality and Mr Kader. The result of this was that
any legal proceedings
dealing with those special conditions had to be
viewed within the prism of the laws of contract.
[6] Mr Grundlingh referred me to
Estate Breet v Peri-Urban Areas Health Board
1955 (3) SA 523
(A) at
531 (C – D) where Schreiner JA stated :
‘To sum up the position as it
appears from the aforegoing, there is authority and reason for
holding that the steps by which
a township is established and
proceedings can be brought to recover endowment moneys, involved
mutual consent between the Administrator
and the applicant as to the
township conditions, and that the Administrator may be regarded, not
inappropriately, as making an
offer to the applicant which the latter
must accept if a township is to be brought into existence. But there
is no authority binding
on this Court to the effect that the mutual
assent, though it may properly be called an agreement (cf. Williston,
Contracts Revised
Ed., para. 2), is a contract for the purposes of
the Prescription Act.’
[7] Mr Grundlingh also referred me to
Transvaalse Raad vir die Ontwikkeling van Buitestedelike Gebiede v
Steyn Uitzicht Beleggings
(Edms) Bpk
1977 (3) SA 351
where the Court
held held that where a local authority is responsible for the
application of the provisions of a regional town
planning scheme, and
the local authority gives the owner of property the jurisdiction to
use the land for particular purposes (digging
and removing sand) then
no contractual relationship is created between the parties, but in
essence there is an extension of the
Scheme insofar as the piece of
land is concerned. Conditions imposed by the local authority on the
owner doing anything in conflict
with the provisions of the Scheme
are set out in the Ordinance and the local authority is confined to
those rights.
[8] In the light of those authorities,
Mr Grundlingh submitted that there can be no question of a contract
having been concluded.
Mr Grundlingh submitted that it was
significant to look at the conduct of Mr Kader who was the alter ego
of the first, second
and third respondents. He submitted that Mr
Kader must have known that the corporations he was involved in, were
deregistered
in 2009. On the 16th October 2015 he published a notice
for the reinstatement of the third respondent. On the day on which
he
deposed to the first, second and third respondents’
answering affidavit, the 20th November 2015, a notice was published
for
the reinstatement of the second respondent.
[9] Mr Grundlingh submitted that it was
significant that Kadbro Taxi City Service Station CC was formed
shortly after the retail
licence was granted in respect of 22
Terminus Street. This is the licence which I referred to above
reflecting the licensee as
‘Radbro Taxy City CC’. The
agreement which was concluded with Engen is concluded by Radbro Taxi
City CC, with the
incorrect registration number. Mr Kader alleged
in an affidavit deposed to by him in a urgent application in the
Pretoria High
Court for the reinstatement of that close corporation,
that the errors were ‘typographical errors’.
[10] Thereafter Radbro Taxy City (Pty)
Ltd was formed in 2015 and on the 18th September 2015 Mr Kader wrote
to one Goodness Mseko
of Engen suggesting that Engen send him new
retail dealer agreements in the name of ‘Radbro Taxi City’
(and not Kadbro
Taxi City) and he points out that the new owner of
Radbro Taxi City is Mrs Moonawar Kader, who is Mr Kader’s wife.
[11] In the light of these facts Mr
Grundlingh points to the letter of the 23rd September 2013 when the
attorney acting for the
first respondent and Mr Kader recorded that
‘Our client Rahim Abdul Kader and/or Kadbro Taxi have ceased to
operate the filling
station on the site in question’. This
being a reference to the 22 Terminus Street site. Mr Grundlingh
submitted that what
Mr Kader is trying to do is suggest that he no
longer has any rights or obligations in respect of the 22 Terminus
Street premises,
and, accordingly he is not in breach the special
conditions imposed by the Town Planning Appeals Board. Mr Grundlingh
submitted
that given the conduct of Mr Kader in relation to the 22
Terminus Street site which was contrary to the special conditions
imposed
by the Town Planning Appeals Board, the applicants had no
option but to approach this court for an urgent interim interdict.
That
interdict is to operate pending the resolution of the
application made by the first, second and third respondents to the
Newcastle
Municipality for the removal of the special conditions.
[12] Mr Combrink, who appeared for the
first and second respondents, conceded that in terms of the
Petroleum
Products Act, 1977
, both a site licence and a retail licence were
required in order to operate a petroleum retail outlet. If either of
the licences
was missing, any such operation would be unlawful. He
conceded that the second respondent, in the absence of the third
respondent
which has been deregistered and which was the holder of
the site licence for the 22 Terminus Street outlet, could not legally
sell
petroleum from the 22 Terminus Street outlet. As a
pre-requisite for that to happen the third respondent had to be
re-instated
retrospectively.
[13] Mr Combrink submitted that ‘need’
was not a requirement for a Town Planning Scheme. A Town Planning
Scheme relates
to the ‘usage’ of the particular property
and is consent for that site to operate in a particular way. Matters
relating
to use such as, in the case of a service station, that tanks
must be a certain distance from the boundary, that no large trucks
may be placed on the forecourt, that no loud music may be played, etc
are ‘use’ requirements because the conduct of
the service
station involved the public’s use of the facility.
[14] Mr Combrink submitted that a
municipality may impose ‘usage’ conditions. However,
the condition imposed in this
matter had nothing whatsoever to do
with the usage of the 60 Murchison Street site. What was imposed was
a competitive based condition
which was not in terms of the by-laws.
This was a commercial consideration only, and was tantamount to
requiring that in order
to satisfy the objectives at the hearing, Mr
Kader undertook not to trade at both premises but only to trade at
one. Mr Combrink
submitted that if the conditions imposed were not
countenanced by the Town Planning Scheme, the prospect of their
removal was a
good one. The application has to be made to the
Newcastle Municipality because the Town Planning Appeal Board no
longer exists.
He submitted that the probabilities are that the
application to remove the special conditions, which had already been
launched
by the first, second and third respondents, had good
prospects of succeeding. Mr Combrink submitted that the conditions
which
had been made applicable in Transvaalse Raad related to ‘usage’
and a particular piece of land. If the condition is
not related to
the land, as in this case, and has nothing to do with 60 Murchison
Street per se, or the usage of the land, then
it is not a condition
which can be maintained.
[15] Mr Combrink referred to the
question of the enforcement of criminal sanctions in the event of a
breach of the conditions.
He submitted that he was bound to concede
that the conditions which had been imposed by the Town Planning
Appeals Board altered
the nature of the scheme otherwise they would
have had no legal efficacy, and no possibility of a prosecution
existed in the event
of a breach. He submitted that in those
circumstances the conditions were nothing more than an extension of
the Scheme.
[16] Mr Combrink referred to the
balance of convenience in this regard, and submitted that the
stronger the prospects of success,
the less the need to have the
balance of convenience favour the applicant. He submitted that in
this case the prospects of success
for the applicants in having the
conditions maintained by the Newcastle Municipality were weak, and
accordingly there was a greater
need for the balance of convenience
to favour it.
[17] In this regard Mr Combrink
submitted that the applicants had shown no prejudice because there is
a further Sasol site being
constructed in Newcastle with the licence
currently under review. The respondents had put up figures showing
the quantity of fuel
which they pumped, and they challenged the
applicants to do likewise. He submitted that the applicants had
chosen not to do so
and in those circumstances had not proved they
had suffered any loss or prejudice whatsoever. In addition, Mr
Combrink pointed
to the fact that the area was rapidly expanding, and
the probabilities were that their pumping figures had increased and
that they
had suffered no loss whatsoever.
[18] In reply Mr Grundlingh pointed out
that at the Town Planning Appeals Board hearing in 2006, Mr Kader had
been faced with the
problem of objectors. In order to resolve that
problem he had come up with the offer which he had made to the Board.
The effect
of that order was he would essentially operate either
from 22 Terminus Street or 60 Murchison Street, but not from both.
Mr Grundlingh
pointed out that what had in fact occurred was that Mr
Kader had made a concession. The fact that he was now intending to
apply
to the Newcastle Municipality to set aside those conditions to
which he agreed, indicates that he does not consider it a contract.
Mr Grundlingh also indicated that in 2012 Mr Kader indicated to the
Regulator that he would abide by the concessions that he had
made,
but two months later said that he could not do so. From April of
2012 until December of 2014 nothing was done, and it was
only in
November of 2015 that an application was made for the removal of the
special conditions. It was anticipated that the application
to the
Newcastle Municipality could take between four and five months to be
finalised, and that during that period, prejudice will
be suffered by
the applicants. The balance of convenience did not favour the
respondents because they delayed in bringing the
application and
whatever prejudice results to them is self-created.
[19] Mr Grundlingh also pointed out
that the applicants were willing to make the pumping figures
available to the court in order
to enable it to assist in the
decision. The applicants had not refused to reveal these figures to
the court.
[20] The applicants seek to interdict
and restrain the respondents from conducting the service stations at
22 Terminus Street and
60 Murchison Street at the same time. What
they seek to implement is no more than the special conditions agreed
to by Mr Kader
in 2006. They seek this relief only as an interim
order pending the institution and finalisation of the proceedings for
the removal
of the restrictive conditions. The requisites for an
interim interdict are :
(a) a prima facie right;
(b) irreparable harm;
(c) the balance of convenience; and
(d) no other satisfactory remedy.
[21] In my view the applicants have
clearly demonstrated a prima facie right being the restrictions on
the operation of the property
situated at 60 Murchison Street which
were imposed by the Town Planning Appeal Board at the request of Mr
Kader, who thereafter
gave the necessary undertakings sought in terms
of those restrictions.
[22] I am satisfied that the applicants
will suffer irreparable harm in that if both 60 Murchison Street and
22 Terminus Street
operate at the same time, the overall market share
of the applicants will be reduced during the period up until the
Newcastle Municipality
makes a decision regarding the removal of the
restrictive conditions.
[23] I am also satisfied that the
balance of convenience favours the applicants. I have some
difficulty with the suggestion that
Mr Kader should not be bound by
the undertakings which were given to the Town Planning Appeal Board.
In my view they should operate
until they are set aside. In
addition, it is factor in assessing the prejudice to Mr Kader and the
respondents that Mr Dayal indicated
in reply that Engen intended to
persist in the non-supply of fuel to the 22 Terminus Street site, and
intended to cancel the supply
contracts.
[24] I am also satisfied that there is
no other satisfactory alternative remedy available to the applicants.
The computation of
their damages would be inexact and difficult to
compute with any accuracy.
[25] With regard to the question of
costs, it is clear that Mr Kader has sought to employ various tactics
to avoid having to comply
with the undertakings which he gave to the
Town Planning Appeals Board in 2006. In my view it would be just and
equitable were
he to be ordered to pay the costs.
[26] In all the circumstances I make an
order as follows :
(a) Judgment is granted in terms of
paragraphs 2, 3, 4 and 5 of the Notice of Motion dated the 27th
October 2015.
(b) The first and second respondents
are directed to pay the costs occasioned by the applicants’,
jointly and severally, the
one paying the other to be absolved, and
such costs are to include the costs consequent upon the employment of
two counsel where
appropriate.
Date of hearing : 3rd December 2015
Date of judgment : 5th January 2016
For the Applicants : Mr Grundlingh
and Mr Bekker (instructed by Geldenhuys Malatji Inc).
For the First and Second Respondents
: Mr L Combrink (instructed by Sarlie & Ismail Inc).
For the Seventh Respondent : Mr S
Dayal (instructed by Maharaj Attorneys).