Former Way Trade and Invest (Pty) Ltd t/a Premier Service Station and Another v Bright Idea Projects 66 (Pty) Ltd t/a All Fuels (1140/2020) [2021] ZASCA 175 (14 December 2021)

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[2021] ZASCA 175
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Former Way Trade and Invest (Pty) Ltd t/a Premier Service Station and Another v Bright Idea Projects 66 (Pty) Ltd t/a All Fuels (1140/2020) [2021] ZASCA 175 (14 December 2021)

THE
SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Not
Reportable
Case no: 1140/2020
In the
matter between:
FORMER
WAY TRADE AND
INVEST
(PTY) LTD t/a PREMIER
SERVICE
STATION

FIRST
APPELLANT
LEE
BENTZ

SECOND APPELLANT
and
BRIGHT
IDEA PROJECTS 66 (PTY) LTD
t/a
ALL FUELS

RESPONDENT
Neutral
citation:
Former Way Trade and
Invest (Pty) Ltd t/a Premier Service Station and Another v Bright
Idea Projects 66 (Pty) Ltd t/a All Fuels
(1140/2020)
[2021] ZASCA 175
(14 December 2021)
Coram:
VAN DER MERWE, MAKGOKA, PLASKET, MBATHA and
MABINDLA-BOQWANA JJA
Heard:
16 November 2021
Delivered:
This judgment was handed down electronically by
circulation to the parties’ representatives by email, publication
on the Supreme
Court of Appeal website and released to SAFLII. The
date and time for hand-down of the judgment is deemed to be 10h00 on
14 December
2021.
Summary:
Contempt
of court – requisites for contempt satisfied – wilful disregard
of the order and mala fides proved on the part of the
appellants –
duty to comply with court orders – appeal dismissed.
ORDER
On
appeal from:
KwaZulu-Natal Division of
the High Court, Pietermaritzburg (Govender AJ sitting as court of
first instance):
The appeal is dismissed with costs.
JUDGMENT
Mbatha
JA (Van der Merwe, Makgoka, Plasket and Mabindla-Boqwana JJA
concurring):
[1]     On 22 April 2020, the KwaZulu-Natal
Division of the High Court, Pietermaritzburg (the high court)
declared
the first appellant, Former Way Trade and Invest (Pty) Ltd
t/a Premier Service Station, to be in contempt of court. The second
appellant,
Mr Lee Bentz, as the controlling mind of the first
appellant, was committed to prison for that contempt for a period of
30 days wholly
suspended on certain conditions. Aggrieved by these
orders, the appellants appealed to this Court with the leave of the
high court.
[2]     The background of the matter is as
follows. The respondent, Bright Idea Projects 66 (Pty) Ltd t/a All
Fuels and the first appellant, became parties to a franchise
agreement. In terms thereof, the first appellant operated a Caltex
filling
station at premises owned by the respondent and with fuel
products supplied to it by the respondent. At all times relevant
hereto,
the second appellant was the sole shareholder and director of
the first appellant. During 2017, however, a dispute arose between
the parties to the franchise agreement. The respondent took the
stance that the franchise agreement would come to an end on 31
December
2017. The first appellant, on the other hand, alleged that a
new franchise agreement had been entered into, which conferred on it
the right to continue to conduct business on the premises for a
period of five years from 1 March 2015, with a right of renewal.
[3]     The respondent consequently launched an
application in the high court for the eviction of the first appellant
from the premises. The first appellant, in turn, filed a
counter-application in which it sought an order enforcing the alleged
new
franchise agreement, alternatively a stay of the application
pending an arbitration that the first appellant had initiated. The
main
application and counter-application came before Poyo-Dlwati J on
22 January 2018. Both the litigants were represented by senior
counsel.
The parties managed to reach an agreement. By consent
Poyo-Dlwati J made that agreement an order of court (the consent
order). It
provided for the postponement of the main application and
counter-application and for the filing of further affidavits.
[4]     Paragraphs 6 and 7 of the consent order
provided as follows:
‘
6.
Pending final determination of the main application and the
counter-application:
(a)        the
parties shall conduct themselves as if the franchise agreement
remains of full force
and effect and comply with their respective
obligations as defined in the franchise agreement;
(b)       the Respondent
shall source all of its petroleum products from the Applicant, who
shall, in
turn, supply same to the Respondent.
(It is recorded that the Respondent had placed a further
order with Fueltech, on 19 January 2018, and agreed that the
aforegoing shall
not apply to the execution of that order).
7.         It is
recorded that the Respondent’s consent to this order is granted
without
prejudice to the Respondent’s defences raised in its
answering affidavits, including its claim to a stay of these
proceedings pending
determination by arbitration either in terms of
Section 12B
of the
Petroleum Products Act, 1977
, and/or the franchise
agreement.’
[5]     For the period commencing on 22 January
2018 to 27 July 2019, the appellants complied with the terms
of the
consent order. On 24 July 2019, the attorneys for the appellants
addressed a letter to the respondent’s attorneys stating
that
whilst being aware of the pending litigation and arbitration
proceedings between the parties, the first appellant was aggrieved
by
the alleged gross overcharging for supplies and failure by the
respondent to follow the industry guidelines in respect of pricing.
The appellants’ attorneys intimated that the first appellant would
source supplies at better prices elsewhere and that they had
advised
their client to go ahead and do so. They further stated that the
respondent must by no later than the close of business on
Friday, 26
July 2019 table to them and for their client’s consideration a
decent proposal.
[6]     On 24 July 2019, in reply to their letter
the respondent’s attorneys reminded the appellants’ attorneys
that the consent order obliged the first appellant to procure all
petroleum products from the respondent and attached a copy of the
order for their attention. The respondent’s attorneys further
pointed out that the first appellant’s intended course of action
would amount to contempt of court.
[7]     The first appellant attorneys’
response, dated 25 July 2019, was as follows:
‘
Unfortunately,
we:
1. Firstly, do not agree that the order is good and/or
valid or capable of implementation since no binding “contract”
can exist
without a price.
2. Secondly, we do not see that our directive to your
client to comply with ‘lawful’ pricing as opposed to unilaterally
imposed
prices violates the order as it must be implied that the
prices underlying paragraph 6 of the order have to be in accordance
with
industry standards if there are any.’
In response thereto, the first appellant’s attorneys were reminded
by the respondent’s attorneys that the order which obliged
the
first appellant to purchase petroleum products from the respondent
was taken by consent. The correspondence ended with a sound
warning
to this effect:
‘
I
trust that you have advised your client of the consequences of the
breach of a High Court order.’
[8]     Despite the tense exchange of letters the
first appellant placed an order for petroleum products on 25
July
2019, which were delivered and paid for by the first appellant on 29
July 2019. Unexpectedly, on 30 July 2019, the first appellant’s
attorneys emailed a letter to the respondent stating that no further
orders will be placed with the respondent until it responded
fully to
its letter of 24 July 2019. It is common cause that the first
appellant proceeded to source various petroleum products from
other
distributors and sold those products from the premises of the
respondent, using the respondent’s equipment and brand name,
Caltex.
[9]     By that time, the main application and
counter-application had not been finally determined. Therefore,
the
respondent approached the high court on an urgent basis for a rule
nisi operating as an interim interdict. It cited the first
and second
appellants as the first and second respondents respectively. On 21
August 2019 Bezuidenhout J issued a rule nisi calling
upon the
appellants to show cause why the following order should not be made
final:
‘
2.1
THAT
the first respondent is declared to be in contempt of court in
failing to comply with paragraph 6 of the order (“
the
order”
) granted
by the Honourable Madam Justice Poyo Dlwati on
22
January 2018
under
case number 283/2018 P;
2.2
THE
second respondent be committed to prison for such period as this
Honourable Court may determine for the first respondent’s contempt
of paragraph 6 of the order granted by the Honourable Madam Justice
Poyo Dlwati on
22 January 2018
under case number 283/2018 P;
2.3
THAT
the
first respondent is interdicted and restrained from conducting the
business of a fuel retail service station as Caltex Premier
Service
Station (
alternatively
any other fuel retail service station,
from the premises described as Sub 27 of Lot 2725, Pietermaritzburg
Administrative District
of Natal, Province of KwaZulu-Natal and
situated at 238 Albert Luthuli Street, Pietermaritzburg,
KwaZulu-Natal) on any basis other
than sourcing all its fuel from the
applicant in compliance with paragraph 6 of the order of this court
granted on
22 January 2018
under the present case number;
2.4
IN
the
event of the first and second respondents failing to comply with the
provisions of paragraph 2.3 above, then . . . the first
respondent is
interdicted and restrained from conducting the business of a fuel
retail service station as Caltex Premier Service
Station
alternatively any other fuel retail service station, from the
premises described as Sub 27 of Lot 2725, Pietermaritzburg
Administrative District of Natal, Province of KwaZulu-Natal and
situated at 238 Albert Luthuli Street, Pietermaritzburg,
KwaZulu-Natal;
2.5
IN
the
event of the first and second respondents failing to comply with
either of the provisions of paragraph 2.3 or 2.4 above, . .
. the
Sheriff or his duly authorised representative/s is authorised to do
all things necessary to give effect to paragraphs 2.3 or
2.4 above;
2.6
THAT
the
first and second respondents are ordered to pay the costs of this
application, jointly and severally the one paying the other
to be
absolved, on an attorney and own client scale . . .’
He also ordered that paras 2.3 and 2.4 of the rule nisi operate as an
interim interdict with immediate effect, pending the finalisation
of
the application.
[10]   On the extended return date, K Govender AJ confirmed
the rule nisi. As I have said, the order committed the second
appellant to prison for a period of 30 days, wholly suspended on
condition that the first appellant complies fully with the consent
order.
[11]   Before I deal with the issues raised on appeal, it
is appropriate that I briefly set out the law on contempt of
court
proceedings. This Court in
Fakie N O v CCII Systems (Pty) Ltd
[2006] ZASCA 52
;
2006 (4) SA 326
(SCA), among others, found that
the contempt of court proceedings has survived constitutional
scrutiny and is a necessary tool to
enforce compliance of court
orders. To be successful in contempt of court proceedings the
applicant needs to prove the existence
of an order; service or notice
thereof; non-compliance; wilfulness and mala fides beyond any
reasonable doubt. Once the first three
requisites are established,
the respondent bears the evidential burden in relation to wilfulness
and mala fides. If he or she fails
to advance evidence that
establishes a reasonable doubt as to whether non-compliance was
wilful or mala fide, contempt would have
been established beyond a
reasonable doubt.
[12]   In
Pheko and Others v Ekurhuleni City (II)
[2015] ZACC 10
;
2015 (5) SA 600
(CC) para 1, the Constitutional Court
stated as follows:
‘
The
rule of law, a foundational value of the Constitution, requires that
the dignity and authority of the courts be upheld. This is
crucial,
as the capacity of the courts to carry out their functions depends
upon it. As the Constitution commands, orders and decisions
issued by
a court bind all persons to whom and organs of state to which they
apply, and no person or organ of state may interfere,
in any manner,
with the functioning of the courts. It follows from this that
disobedience towards court orders or decisions risks
rendering our
courts impotent and judicial authority a mere mockery. The
effectiveness of court orders or decisions is substantially
determined by the assurance that they will be enforced.’
The
court emphasised that when a court order is disobeyed, not only the
person named or party to the suit but all those, with knowledge
of
the order, aided and abetted the disobedience or wilfully are party
to the disobedience are liable.
[1]
[13]   It was common cause or undisputed that the
appellants had knowledge of the consent order. As I have
demonstrated,
it was also common cause that the second appellant
caused the first appellant to disobey the consent order by sourcing
petroleum
products from other suppliers than the respondent. The
appellants raised only two points on appeal, namely, first, that the
consent
order was ‘inchoate and incapable of implementation’ and
second, in the alternative, that the non-compliance with the consent
order had not been wilful.
[14]   The first point was based on the contention that the
franchise agreement was unenforceable or invalid because it
did not
state prices for the fuel products nor provided for a method of
determination thereof. Clause 6.3 of the franchise agreement
provided:
‘
The
FRANCHISEE will pay CALTEX the CALTEX invoice price for all CALTEX
products sold by Caltex to it under the contract’.
With reference to
Shell SA (Pty) Ltd v Corbitt and Another
1986
(4) SA 523
(C) at 526, the high court held that the franchise
agreement had allowed the respondent to charge its usual, normal or
current prices
and that therefore the prices were determinable. Save
for pointing out that it was not appropriate to interpret the clause
of the
franchise agreement without having regard to its context, it
is not necessary to determine whether this approach was correct.
[15]   This is so because the consent order created
self-standing obligations. In its contextual setting the consent
order
clearly provided that pending the final determination of the
main application and counter-application and without prejudice to the
first appellant’s rights, the appellants would continue to operate
a Caltex filling station as before, that is, as if the franchise
agreement remained of full force and effect. Thus, as an interim
measure, the first appellant was bound not only to source all the
petroleum products from the respondent, but also to pay the invoiced
prices for these products, as it had done since 2015.
[16]   To the extent that the appellants might have
intended to say that the first appellant’s conduct had not been
mala
fide, they carried the burden to adduce evidence that created a
reasonable doubt as to whether the first appellant had in good faith
believed that it was entitled to source petroleum products from other
suppliers than the respondent. In the light of the circumstances
under which the consent order was made, the compliance with it from
January 2018 to July 2019 and the contents of the correspondence
referred to above, their evidence did not raise a reasonable doubt as
to the first appellant’s mala fides. The second point can
be
briefly disposed of. The non-compliance with the consent order was
clearly deliberate, that is wilful. The appeal must therefore
fail.
[17]   Before I conclude, I am constrained to comment on
the decision of the high court to grant leave to appeal to this
Court.
Section 17(6)
(a)
of the
Superior Courts Act 10 of
2013
reads as follows:
‘
(6)
(a)
If leave is granted under subsection (2)
(a)
or
(b)
to appeal against a decision of a Division as a court of first
instance consisting of a single judge, the judge or judges granting
leave must direct that the appeal be heard by a full court of that
Division, unless they consider –
(i)        that the
decision to be appealed involves a question of law of importance,
whether because
of its general application or otherwise, or in
respect of which a decision of the Supreme Court of Appeal is
required to resolve
differences of opinion; or
(ii)       that the
administration of justice, either generally or in the particular
case, requires
consideration by the Supreme Court of Appeal of the
decision, in which case they must direct that the appeal be heard by
the Supreme
Court of Appeal.’
[18]     Thus, ordinarily, leave to appeal
against a decision of a single Judge of a division of the high court
should be granted to the full court of the relevant division. Leave
to this Court should only be given after the Judge is satisfied
that
the requirements of (i) and (ii) of
s 17(6)(
a
) are satisfied.
In the present case, it is not clear whether these provisions were
considered when granting leave to this Court.
The appeal involves no
question of law of importance. There are no differences of opinion to
be resolved by this Court. There is
no suggestion that the
administration of justice, either generally or in this case, requires
consideration by this Court. On these
considerations, if the high
court was minded to grant leave, it should have granted it to the
full court, and not to this Court.
[19]   In the result, the following order is made:
The appeal
is dismissed with costs.
Y T MBATHA
JUDGE
OF APPEAL
Appearances:
For
appellants:
B G Savvas
Instructed
by:
K Swart & Company c/o Stowell & Company,
Pietermaritzburg
Honey Attorneys, Bloemfontein.
For respondent:
D Ramdhani SC
Instructed by:
Norton Rose Fulbright South Africa Inc.,
c/o Venns Attorneys, Pietermaritzburg
Webbers Attorneys, Bloemfontein.
[1]
Pheko and Others v Ekurhuleni City (II)
[2015] ZACC 10
;
2015 (5) SA 600
(CC) para 47;
T
wentieth
Century Fox Fil Corporation and Others v Playboy Films (Pty) Ltd and
Another
1978 (3) SA 202
(W) at 203.