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[2014] ZAGPPHC 321
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Pick-N-Pay Retailers (Pty) Ltd v Liberty Group Limited and Others (31739/14) [2014] ZAGPPHC 321; 2015 (4) SA 241 (GP) (5 June 2014)
IN
THE HIGH COURT OF SOUTH AFRICA
(GAUTENG
DIVISION, PRETORIA)
Case No: 31739/14
Date: 5 June 2014
Not Reportable
Not of interest to
other judges
In the matter
between:
PICK-N-PAY
RETAILERS (PTY)
LTD
...................................................................................
Applicant
and
LIBERTY
GROUP LIMITED
…
...................................................................................
1
st
Respondent
LIBERTY
GROUP PROPERTIES (PTY)
LTD
...........................................................
2
nd
Respondent
GAME
STORES (PTY)
LTD
..........................................................................................
3
rd
Respondent
MASSTORES
(PTY)
LTD
..............................................................................................
4
th
Respondent
JUDGMENT
FOURIE,
J:
[1] This is an
urgent application for interim relief sought against the first,
second and fourth respondents. The nature of the
relief is that of
an interim interdict prohibiting the first and second
respondents from acting in breach of their contractual
obligations to the applicant pending the outcome of arbitration
proceedings and against the fourth respondent from interfering
in the contractual relationship between the applicant and the
first and second respondents pending the outcome of
action proceedings
to be instituted.
[2]
The notice of motion does not refer to the fourth
respondent. However, it appears to be common cause that it is
the fourth
respondent that operates Game Stores in South Africa
and to this end only the fourth respondent has filed an
answering
affidavit on behalf of “
Game
Stores
*
in these proceedings. An application to join the fourth
respondent as a party was filed simultaneously with the
applicant’s
replying affidavit. That application has not
been opposed. It was pointed out on behalf of the applicant that
the relief
sought against the third respondent in the notice
of motion will now be sought against the fourth respondent.
[3] The applicant
(as lessee) and the first and second respondents (as lessor) are
parties to a lease agreement which relates
to a particular portion
of a shopping centre in Pietermaritzburg, known as the Midlands Mall.
The
;
applicant relies on clause 11.1 of the agreement
which reads as follows:
“
11.1 SAVE
FOR THE SUPERMARKET, the LESSOR shall not permit the following
businesses to be conducted on the PROPERTY:
11.1.1 a
hypermarket or supermarket; or
11.1.2 a
fruit and vegetable shop exceeding 200 (two hundred) square
metres; or
11.1.3
a grocery, fresh fish shop
,
butchery, bakery
t
fruit and vegetable shop and deli in respect of the mall
extending from the SUPERMARKET mall entrance from the parking
to
the
SUPERMARKET
entrance as demarcated on the SHOPPING CENTRE PLANES in yellow,
without the LESSEE’S prior written consent
;
which consent
shall not be unreasonably withheld.
”
[4]
According to the applicant the fourth respondent intends to expand
its business by selling an extensive range of perishable
and
non-perishable food items under the *
FoodCo"
brand
within the existing Game Store in the Midlands Mall. The
applicant contends that this expansion of business, if
permitted, would render the Game Store a supermarket which will
be a violation of its right to exclusivity as provided for
in clause
11.1 of the lease agreement.
[5] The applicant's
cause of action against the first and second respondents is
therefore founded in contract, while its cause
of action against
the fourth respondent is founded in delict. The first and
second respondents have indicated that they
will abide the
Court's decision on whether the applicant has proven a right to
restrain them in the manner sought in
this application. The
fourth respondent opposes the application and contends that it
is for the applicant to establish the
existence of (and give
content to) the right which it has asserted.
[6]
To succeed in obtaining interim relief against the first, second
and fourth respondents the applicant must demonstrate:
a
prima
facie
right, though
open to some doubt; a well-grounded apprehension of irreparable harm
if the interim relief is not granted
and the ultimate relief is
eventually granted; that the balance of convenience favours the
granting of an interim interdict;
and that the applicant has no
other satisfactory remedy.
[7]
The term “supermarket” is not defined in the lease
agreement. The correct approach should therefore be to determine
the ordinary grammatical meaning of this word, unless that would
lead to some absurdity or inconsistency. In the
Shorter
Oxford English Dictionary
.
6
th
Ed.
(2007) the word *
supermarket”
is
defined as a
“
large
self-service store, freq. one of a chain, selling a wide range
of foods, household goods, etc.”
[8]
It was argued on behalf of the fourth respondent that it is for
the applicant to prove the characteristics of a *
supermarket”
and
to establish that the proposed expansion will render the Game
Store in the Midlands Mall such a *
supermarket
It
was contended, therefore, that it is not simply a matter of
interpretation, but that oral evidence will be required to determine
this issue between the parties.
[9]
I do not agree with this submission. In describing this development
to the second respondent during November 2013, the
fourth respondent
stated in an e-mail that Game intended
“
to
re-launch the Liberty Midlands Mall with the inclusion of our
‘FoodCo’ department on the 25
th
June 2014”.
It
was also pointed out that the
“
re-launch”
would
render Game Midlands Mall a
“
NEW
generation game”
store.
To illustrate what the Game Midlands Mall will look like once
the proposed expansion to incorporate a FoodCo department
is
complete, the applicant attached photographs of the Game Store
in Rosebank, which already incorporates a Game FoodCo.
These
photographs indicate an extensive range of perishable and
non-perishable foods, personal care products, pet foods and other
household goods.
[10]
This evidence is a
prima
facie
indication
(and I make no final ruling in this regard) that the fourth
respondent intends to expand its business in the
Midlands Mall
to such an extent that it could be regarded as a supermarket as
defined above and referred to in clause 11.1
of the lease
agreement.
[11] However, the
fourth respondent asserts that it has all along proceeded on the
understanding that it was entitled to expand
its food offerings
in the manner it has described. According to the fourth respondent
it has acted with the knowledge
and consent of the second respondent.
It was therefore contended that even if the said Game Store is a
supermarket, the
fourth respondent did not act unlawfully
and intentionally by interfering with the contractual rights of
the applicant.
[12]
Interference with a contractual relationship is present where a third
party’s conduct is such that a contracting
party does not
obtain the performance to which he is entitled ex
contractu
,
or where a contracting party’s contractual obligations are
increased (Neethling, Potgieter & Visser,
Law
of Delict
.
6
th
Ed., p 306, par 6). The learned authors also point out (at p
307, footnote 263) that an adducement and a breach of contract
are not prerequisites to a successful action for the unlawful
and intentional interference by a third party in another party’s
contractual relationship. I shall therefore accept, for purposes
of this application, that unlawfulness, intentional
interference
and harm are requisites for this delict.
[13] Both the second
and fourth respondents have devoted a considerable part of their
answering affidavits to a description of the
correspondence which has
passed between them. On 16 April 2014 the second respondent informed
a senior property manager in the
employment of the fourth respondent
about the existence of the applicant’s exclusive right to
conduct the business of a supermarket
at the Midlands Mall. This was
a reply to the fourth respondent’s request for a letter of
consent for the purposes of
obtaining a licence. The following was
said in this regard:
“
PnP
further contended that the introduction of FoodCo as suggested
,
would effectively
render Game a ‘supermarket’ and therefore, Liberty
would be in breach of its obligations under
the Lease Agreement
concluded with PnP
;
should it allow
Game to introduce the FoodCo. in effect, PnP has raised an
objection to Game’s introduction of FoodCo
at the Mall.
Liberty
is in no position to determine the definition of a 'supermarket.”
Liberty can however confirm that its lease agreement
with PnP
contains a clause that prohibits Liberty from allowing a
business of a ‘supermarket’ or
'
hypermarket’
on the property, save for PnP.
Under
the circumstances, Liberty is not in a position to provide Game with
a consent letter for purposes of obtaining a licence
to sell or
supply meals or perishable foodstuffs in accordance with clause
6.2.1 of the lease agreement
,
until such time
that the issue relating to the definition of “supermarket
'”
in this regard, is
resolved, by either a declaratory order, alternatively through
the judgment that will be handed down
in the pending
litigation between Game and Shoprite Checkers.”
[14] On 24
April 2014 the second respondent gave notice to the fourth respondent
that it was, by introducing a FoodCo
at the Midlands Mall, acting
in breach of its contractual obligations to the second
respondent. This was explained as
follows:
“
We
have established that you have introduced a FoodCo at the leased
premises without our written consent as required in terms
of
clause 6.2 of the lease agreement...
Your actions in
this regard constitute a breach of the terms of the lease
agreement... You are hereby given notice to remedy
the
abovementioned breach within 7 (seven) days from date hereof...”
[15]
It is not necessary to determine whether or not the second respondent
had given permission to the fourth respondent, prior
to 16 April
2014, to introduce a FoodCo as suggested by the fourth respondent. It
appears that there is evidence (I make
no final assessment in
this regard) that during April 2014 representatives of the
fourth respondent were made aware of
the following: the
existence of the exclusivity clause in the lease agreement
between the applicant and the second respondent; the
fact that
the applicant by then had already contended that the introduction
of a FoodCo as suggested, would render the Game
store a
“
supermarket*
and
had
raised an objection to the introduction thereof; and, if the
fourth respondent would proceed with the introduction of a FoodCo,
that it would constitute a breach of the terms of the lease agreement
between the second and fourth respondent.
[16]
By introducing a FoodCo in these circumstances would in my view
constitute (at least) an attempt to unlawfully and
intentionally interfere
with the contractual relationship
between the applicant and the second respondent. Interference of
this nature, if allowed
to continue, will probably have the
effect that the applicant will not obtain the performance to
which it is entitled
ex
contractu,
i.e.
to enjoy the right of exclusivity. In my view this would be
sufficient to constitute harm for purposes of this particular
delict. I therefore conclude that the applicant has demonstrated a
prima facie
right
for purposes of an interim interdict.
[17] Insofar as the
requisites of irreparable harm and no alternative remedy are
concerned, it is clear from the evidence that
the fourth respondent
intends to expand its Game Store at the Midlands Mall to incorporate
a Game FoodCo. The applicant
has explained that once this is
done, it will suffer damages which are largely unquantifiable and
thus irreparable. In
my view an award of damages in due course
will therefore not be a suitable alternative remedy in these
circumstances.
[18] As far as the
balance of convenience is concerned, the fourth respondent has
pointed out that the prejudice it would suffer,
should interim
relief be granted, is considerable. Not only will the
fourth respondent be prevented from taking steps
to recover its
significant investment in the refurbishment of its store
(approximately R20 million), but it will also
suffer damage to
its goodwill as a result of the expectations of customers being
unable to be realised.
[19] In answer
thereto, the applicant points out that the costs of the development
have been incurred in the knowledge that
there was a dispute
between the applicant and the second respondent which may result
in the development of the Game FoodCo
being stopped. It was therefore
argued that the harm to the fourth respondent which may have flowed
from its own decision
to continue the development in the knowledge
of that dispute, is of its own doing.
[20] It is not
necessary for me to finally decide this issue. Suffice it to say
that to me it appears that if interim relief
is not granted, and the
fourth respondent continues with its development in the interim,
the prejudice that the applicant
will suffer will probably be
more severe than the prejudice to be suffered by the fourth
respondent if the interim relief
is granted. Having regard to
these considerations, I am satisfied that the balance of
convenience favours the applicant.
[21] In view of all
the evidence, I am of the view that the application should
succeed. However, it needs to be emphasised
that I make no
final ruling with regard to any of the issues between the
parties. These issues can be finally determined
in the
arbitration or action proceedings to be instituted.
[22] In the result I
make the following order:
(a) The fourth
respondent is joined as a party to this application;
(b)
An interim interdict is granted in terms of which the first and
second respondents are prohibited from acting in breach
of their
contractual obligations to the applicant by permitting and/or
consenting and/or allowing the fourth respondent
to operate a
“
Game
FoodCo”
within
the existing Game Store at the Liberty Midlands Mall
in Pietermaritzburg, and to preserve the status quo as it
was before the introduction of a “Game
FoodCo”
pending the outcome of arbitration proceedings which are to
be instituted by the applicant on or before 18 June 2014;
(c)
An interim interdict is granted in terms of which the
fourth respondent is prohibited from interfering in the
contractual relationship
between the applicant and the first and
second respondents by opening or operating a “Game
FoodCo”
within
the existing Game Store at the Liberty Midlands Mall in
Pietermaritzburg, and to preserve the status quo as it was before
the
introduction of a “Game
FoodCo”,
pending
the outcome of action proceedings which are to be instituted by
the applicant against the fourth respondent on or
before 18 June
2014;
(d) The costs of
this application are reserved.
D S FOURIE
JUDGE OF THE HIGH
COURT
PRETORIA