Brief Summary

Contract — Employment contract — Dispute regarding validity and enforcement of rugby player’s contract — Applicant sought court order to enforce arbitration award declaring no valid contract existed between parties — Respondents contended that applicant failed to comply with procedural rules — Court held that the arbitration award was binding and enforceable, and that the applicant was entitled to the relief sought, including compliance with the arbitration award and costs.

Comprehensive Summary

Summary of Judgment

1. Introduction

The matter was an urgent application in the Free State High Court, Bloemfontein, in which the applicant sought enforcement of a professional rugby player’s fixed-term employment contract and related relief. The applicant, Vrystaat Cheetahs (Edms) Beperk, applied for condonation for non-compliance with the ordinary time periods, for an arbitration award to be made an order of court, and for mandatory and prohibitory interdictory relief compelling and restraining conduct said to be inconsistent with the employment relationship.

The first respondent, Granton Lionel Starlone Mapoe, was a professional rugby player contracted to the applicant under a fixed-term “employment agreement” (the players contract). The second respondent, Sharks (Edms) Beperk, was alleged to have contracted with and utilised the first respondent despite his continuing contractual obligations to the applicant. The third respondent was Die Suid-Afrikaanse Rugby-Unie (SARU) and the fourth respondent was SARPA. Only the first and second respondents opposed the application.

The procedural history included a prior private arbitration between the parties in which the current first and second respondents were claimants and the current applicant was the respondent. That arbitration culminated in a written award dated 10 August 2010 by Adv AJR Van Rhyn SC, dismissing the claimants’ case. After the award, the first respondent did not report to the applicant for training or services, and correspondence followed in which the first respondent asserted that the applicant had repudiated the contract and that the contract was terminated. The applicant then launched the present urgent application, seeking to enforce the contract and restrain the first respondent and the second respondent from giving effect to the first respondent’s services for the second respondent during the subsistence of the players contract.

The general subject-matter concerned enforcement of a fixed-term professional sports employment contract, the effect of an earlier final and binding arbitration award on subsequent disputes, and whether further disputes should be referred to arbitration under an arbitration clause in the players contract.

2. Material Facts

It was common cause (or treated as effectively undisputed on the papers) that the applicant and the first respondent concluded a written players contract on 30 May 2008 for a fixed term running from 1 November 2008 to 31 October 2011, with staged annual remuneration payable in twelve equal monthly instalments for each year of the term.

A dispute arose between the parties, leading to a written arbitration agreement concluded on 5 August 2010 in Bloemfontein. The arbitration agreement defined the issues for determination as including whether a valid fixed-term employment contract existed between the first respondent and the applicant, whether the employment relationship had deteriorated to the extent that continuation was intolerable, and whether the first respondent was entitled to a “clearance certificate” to be employed by and play for the second respondent. The arbitration culminated in a written award dated 10 August 2010 in which the claimants’ claims were dismissed, with costs orders made against them and with the arbitrator’s costs divided as specified in the award.

After the arbitration award, the applicant (through its coach and attorneys) attempted to secure the first respondent’s return to training and service in Bloemfontein. On 12 August 2010, the applicant’s coach received an SMS from the first respondent’s phone indicating that he was not willing to comply with the request to report for practice immediately. The court accepted, however, that despite this, the position remained under discussion for a period thereafter, and that it only became finally clear on 30 August 2010—through two letters dispatched by the first respondent’s attorneys, one to the applicant’s attorneys and one to the applicant directly—that the first respondent would not report for duty because he alleged the applicant had repudiated the contract and that he accepted that repudiation and terminated the contract with immediate effect.

The alleged repudiation relied upon by the first respondent was based on two matters: the applicant’s failure to pay him remuneration for a limited period (identified as 1 May to 17 May 2010, said to be based on a “no work, no pay” stance), and the applicant’s failure timeously to pay over amounts deducted from his salary for SARPA membership fees. The applicant asserted that the non-payment of the pro rata salary was a bona fide oversight and that payment was later made; it also asserted that all SARPA deductions had by then been paid over (albeit not timeously). SARPA did not oppose the application or contradict the applicant’s account about payment having been made.

The applicant also relied on the fact that, before and after the award, the first respondent was alleged to have made himself available to the second respondent, including attending the second respondent’s training, and that it was common cause at the arbitration that the applicant had been informed on 19 May 2010 that the first respondent had already signed a contract with the second respondent. The second respondent did not, in the court’s view, advance factual matter on the papers to contradict the applicant’s characterisation that the second respondent was interfering with a continuing contractual relationship.

A further factual contention raised by the first respondent in opposition was that he had been discriminated against on the basis of race in remuneration compared with white peers, and that this contributed to why he should not be compelled to perform. The court treated the discrimination and remuneration disparity issue as having already been canvassed in the earlier arbitration, and further accepted the applicant’s reply that the “newly discovered” disparity was not credibly shown to justify re-litigation or a further referral to arbitration on the papers.

3. Legal Issues

The court was required to determine several central questions, some procedural and some substantive, arising in motion proceedings seeking final relief.

On the procedural plane, the central questions were whether the application was properly brought as urgent, whether non-compliance with section 27 of the Supreme Court Act 59 of 1959 (requiring at least 21 days where service is effected outside the division’s area) was fatal or could be treated as irrelevant in the circumstances, and whether the Free State High Court had the requisite jurisdiction over respondents who were resident or based outside its area.

On the substantive plane, the principal questions were whether there were genuine, triable disputes requiring referral to arbitration under clause 54 of the players contract, including whether the applicant had repudiated the contract and whether the first respondent validly cancelled it, and whether (even if the contract subsisted) the applicant was entitled to specific performance in the form of a mandatory order compelling the first respondent to report for duty and prohibitory relief preventing the first respondent and the second respondent from making use of the first respondent’s services until expiry (or consensual termination) of the contract.

The dispute thus involved questions of law (jurisdiction, interpretation and effect of statutory provisions, the scope of a court’s discretion to refer to arbitration, and the discretion to grant specific performance), questions of fact on the papers (repudiation, cancellation, alleged discriminatory treatment, and alleged interference), and questions of the application of legal principles to the established or accepted facts (whether conduct met the legal threshold for repudiation; whether contractual termination provisions were complied with; and whether the remedy of specific performance and final interdicts was appropriate).

4. Court’s Reasoning

On urgency, the court assessed the chronology and concluded that the applicant reasonably only faced a clear necessity to litigate once the first respondent’s stance crystallised in the 30 August 2010 cancellation letters. The court accepted that the matter was brought on a timetable designed to secure a hearing before the court recess, and that the applicant’s asserted prejudice included the practical and competitive consequences of the first respondent’s unavailability during the Currie Cup season, the “deadlock” created by the first respondent neither playing for the applicant nor being eligible to play for the second respondent, and potential consequences in relation to player availability. Applying the motion-proceedings approach, including reference to the Plascon-Evans rule in the context of the court’s discretion on urgency, the court was satisfied that urgency had been established and condonation for truncation of time periods was warranted.

Regarding section 27 of the Supreme Court Act 59 of 1959, the respondents contended that the court lacked power to condone non-compliance where final relief (not merely interim relief by rule nisi) was sought, relying on authority distinguishing between final relief and interim measures. The court, however, adopted the reasoning in Consani Engineering (Pty) Ltd v Anton Steinecker Maschinenfabrik GmbH 1991(1) SA 823 (T) to the effect that where a defendant has in fact entered the process and opposed, the object of service and of section 27—namely notice and sufficient time to defend—may be treated as achieved, rendering the point effectively moot absent demonstrable prejudice. The court examined the respondents’ asserted prejudice and found it unpersuasive, noting in particular the absence of a request for an extension of time, and the lack of concrete articulation of what additional evidence would have been gathered in the time that section 27 would have afforded. In those circumstances, and given the urgent nature of the application, the court held that non-compliance had not caused prejudice and that the section 27 point could not succeed.

On jurisdiction, the respondents argued that because the first respondent resided in Durban and the second respondent was based in Durban, the Free State High Court lacked territorial jurisdiction. The court held that although the founding papers did not expressly plead jurisdiction in so many words, the underlying facts supported jurisdiction because the players contract was concluded in Bloemfontein and performance, at least as relevant to the mandatory relief sought (reporting for duty at Vodacompark, Bloemfontein), was to occur within the court’s area. The arbitration proceedings and award were also connected to Bloemfontein. The court further relied on principles recognising jurisdiction where a contract was concluded or was to be performed in the area, and held that it had jurisdiction to grant the mandatory interdict against the first respondent. As to the interdictory relief affecting the second respondent, the court held that section 19(1)(b) of the Supreme Court Act 59 of 1959 extended jurisdiction to a party outside the area who is joined in proceedings over which the court otherwise has jurisdiction, aiming to avoid multiplicity of proceedings and conflicting judgments. The court accordingly rejected the jurisdictional objection.

On the respondents’ request for a referral to arbitration, the court accepted that it had a discretion whether to stay proceedings in favour of arbitration, and referred to the approach that courts generally lean in favour of arbitration but require a strong case to justify not holding parties to their arbitration bargain. The court then examined whether the matters raised truly constituted triable issues warranting a further arbitration.

In dealing with the alleged repudiation by the applicant and the first respondent’s purported cancellation, the court identified the governing test for repudiation as whether the conduct, fairly interpreted, evinced a deliberate and unequivocal intention no longer to be bound, and further emphasised the objective character of repudiation as a matter of perception from the standpoint of a reasonable person in the aggrieved party’s position. Applying those principles, the court considered the applicant’s continuous insistence—before and after the alleged breaches—that the contract remained valid and binding, including the applicant’s conduct in participating in and relying on the arbitration award confirming contractual validity and in repeatedly calling upon the first respondent to return to training while undertaking to meet contractual obligations. Against that background, the court found no basis for a reasonable inference that the applicant clearly and unequivocally intended not to be bound by the contract. It held that the repudiation contention did not amount to a bona fide triable issue justifying referral to arbitration.

The court additionally reasoned that even if the applicant’s conduct were treated as breach (as opposed to repudiation), clause 53 of the players contract required the first respondent to give the applicant ten days’ written notice to remedy a material breach before termination, and to exhaust grievance procedures where intolerance was alleged. On the papers, the first respondent’s immediate termination stance did not comply with these contractual preconditions. This provided a further reason why the purported cancellation could not be accepted as valid and why the matter did not warrant re-referral to arbitration.

On the allegation of discrimination, the court noted that it was not part of the stated basis of the 30 August 2010 termination letters and was raised again in the opposing affidavit. The court accepted the applicant’s reply that the remuneration disparity issue had already served before the arbitrator (as reflected in the arbitration award’s discussion), and found no bona fide new dispute justifying a fresh referral to arbitration. It further held that if the respondents wished to answer the applicant’s reply, they could have sought leave to file a further affidavit but did not do so; in the circumstances, the court accepted the applicant’s reply on this aspect.

The respondents also contended that the applicant had an alternative remedy because it had lodged a complaint with SARU under its code of conduct and disciplinary framework. The court analysed the nature of the SARU processes and concluded that the potential sanctions (warnings, fines, suspensions, and related disciplinary outcomes) would not produce the same result as the interdictory relief sought to protect the applicant’s contractual position. The court therefore held that the SARU complaint did not constitute an adequate alternative remedy that should displace the court’s intervention.

Turning to specific performance and the interdictory relief, the court accepted the principle that specific performance is generally available as a primary remedy in South African law, subject to a judicial discretion to refuse it where it would operate unreasonably harshly, be inequitable, or produce injustice. The court considered authorities dealing with personal service contracts and the general reluctance to order performance of such contracts, while affirming that there is no absolute rule barring specific performance in employment contexts. The court regarded the professional sports context as closer to a commercial bargain between parties contracting on relatively equal terms than a typical employment situation, and considered guidance drawn from cases involving professional sports and specialised employment.

A discrete concern identified by the court was enforceability and the risk of contempt if the order required performance of “good rugby” or otherwise involved qualitative judgments about performance. Because of that concern, the court declined to grant the principal formulation of prayer 3 (which sought immediate reporting for duty to comply with the contractual obligations in clause 17), but granted the alternative formulation requiring the first respondent to report for duty at Vodacompark by a specified deadline (or such extended time as the applicant might agree in writing). The court concluded that the respondents had not discharged the onus of showing good and sufficient grounds to refuse the form of specific performance embodied in that alternative relief.

As to the prohibitory interdict restraining the first respondent from making his services available to the second respondent during the contract term, the court held that such a restraint could be implied from the employment relationship and was, in any event, supported by the applicable SARU player status and movement regulations placed before the court, which the court understood to prohibit the relevant conduct. Regarding the relief against the second respondent, the court found on the papers that the second respondent had unlawfully interfered with the contractual relationship, including by contracting with the first respondent with knowledge of his existing obligations to the applicant, and that the second respondent had not advanced a substantive factual basis to resist the interdictory relief.

Finally, on making the arbitration award an order of court, the court noted that no respondent advanced a substantive case why this should not occur in terms of the statutory mechanism, and held that, in the context of the overall dispute and the need for finality, it was appropriate to make the award an order of court notwithstanding arguments that this aspect was not urgent when viewed in isolation.

5. Outcome and Relief

The court granted condonation and heard the matter as an urgent application. It made the arbitration award of Adv AJR Van Rhyn SC dated 10 August 2010 an order of court. It ordered the first respondent to report for duty at the applicant’s premises at Vodacompark, Bloemfontein by 15h00 on 30 September 2010 (or within such longer time as the applicant might agree in writing).

The court further granted prohibitory interdicts restraining the first respondent from making his professional rugby services available to the second respondent in various specified ways until 31 October 2011 (or earlier consensual termination of the players contract), and restraining the second respondent from permitting the first respondent to provide such services and from interfering with the contractual relationship during the contract’s duration.

The court ordered the first and second respondents jointly and severally to pay the costs of the application, the one paying the other to be absolved.

Cases Cited

Plascon-Evans Paints v Van Riebeeck Paints (Pty) Ltd 1984(3) SA 623 (A).

Shield Insurance Company Ltd v Van Wyk 1976(1) SA 770 (NC).

Turquoise River Inc v Macmenamin and Others 1992(3) SA 653 (D).

Scott v Howe 2007(3) SA 425 (O).

Consani Engineering (Pty) Ltd v Anton Steinecker Maschinenfabrik GmbH 1991(1) SA 823 (T).

S.A. Metropolitan Lewensversekeringsmaatskappy Bpk v Louw N.O. 1981(4) SA 329 (O).

De Klerk v De Klerk 1986(4) SA 424 (W).

Veneta Mineraria SPA v Carolina Collieries (Pty) Ltd 1987(4) SA 883 (AD).

Einwald v The German West African Company (1887) 5 SC 86.

Vulindlela Furniture Manufacturers (Pty) Ltd v MEC, Department of Education and Culture, Eastern Cape, and Others 1998(4) SA 908 (TkD).

Roberts Construction Company Ltd v Willcox Bros (Pty) Ltd 1962(4) SA 326 (A).

Majola v Santam Insurance Company Ltd 1976(1) SA 874 (SE).

Cordiant Trading CC v Daimler Chrysler Financial Services 2005(6) SA 205 (SCA).

Mossgas (Pty) Ltd v Eskom and Another 1995(3) SA 156 (WLD).

Rhodesian Railways Ltd v McKintosh 1932 AD 359.

Street v Dublin 1961(2) SA 4 (W).

Inrybelange (Edms) Bpk v Pretorius 1966(2) SA 416 (A).

Van Rooyen v Minister van Openbare Werke en Gemeenskapsbou 1978(2) SA 835 (A).

Datacolor International (Pty) Ltd v Intamarket (Pty) Ltd 2001(2) SA 284 (SCA).

Benson v S.A. Mutual Life Assurance Society 1986(1) SA 776 (A).

Haynes v King Williamstown Municipality 1951(2) SA 371 (A).

National Union of Textile Workers v Stag Packings (Pty) Ltd 1982(4) SA 151 (T).

Troskie v Van der Walt 1994(3) SA 545 (O).

Santos Professional Football Club (Pty) Ltd v Igesund 2003(5) SA 73 (K).

Nationwide Airlines (Pty) Ltd v Roediger and Another 2008(1) SA 293 (W).

Klimax Manufacturing Ltd v Van Rensburg [2004] 2 ALL SA 301 (O).

Tamarillo (Pty) Ltd v B.N. Aitken (Pty) Ltd 1982(1) SA 398 (A).

Hasewinkel v Simoes 1966(2) SA 81 (W).

Legislation Cited

Supreme Court Act 59 of 1959, section 27.

Supreme Court Act 59 of 1959, section 19(1)(b).

Arbitration Act 42 of 1965, section 31.

Rules of Court Cited

Uniform Rule of Court 30(1).

Held

The court held that the matter was urgent on the facts and that the applicant’s failure to comply with ordinary time periods was condoned. It held further that although section 27 of the Supreme Court Act 59 of 1959 applied because service occurred outside the court’s area, the respondents had in fact opposed on the merits and had not demonstrated prejudice of a kind that justified dismissal or postponement; the object of section 27 was treated as achieved in the circumstances.

The court held that it had territorial jurisdiction based on the contract having been concluded in Bloemfontein, the performance required by the mandatory relief being within the court’s area, and the further joinder-based jurisdictional extension contemplated by section 19(1)(b) in relation to the second respondent.

On the merits, the court held that the applicant had not repudiated the players contract on the facts and that the first respondent’s purported termination was not validly effected, including because clause 53 of the players contract required notice to remedy (and, where applicable, grievance procedures) before termination. It held that the disputes advanced did not constitute bona fide triable issues requiring referral to arbitration, and that the discrimination-related contentions did not justify a further arbitration, particularly given the earlier arbitration’s treatment of remuneration disparity issues.

The court held that the applicant had no adequate alternative remedy through SARU’s disciplinary processes that would yield the same protective result as the interdictory relief sought. It exercised its discretion to grant specific-performance-type relief in a limited form by ordering the first respondent to report for duty by a fixed time, while refusing the broader formulation that risked contempt difficulties tied to qualitative performance. It granted final prohibitory interdicts against both the first and second respondents, and made the prior arbitration award an order of court.

LEGAL PRINCIPLES

The judgment applied the principle that repudiation is assessed objectively and requires conduct that, fairly interpreted, is clear-cut and unequivocal, such that a reasonable person in the aggrieved party’s position would conclude that proper performance will not be forthcoming, as articulated in the cited authorities.

It applied the principle that where a contract prescribes preconditions for termination (including notice to remedy and grievance procedures), a party seeking to terminate must comply with those preconditions; failure to do so undermines the validity of a purported cancellation.

It reaffirmed that a court has a discretion whether to stay proceedings in favour of arbitration, but that referral is not warranted where the disputes raised do not amount to bona fide triable issues capable of affecting the outcome.

The judgment applied the principle that specific performance is generally available as a primary remedy in South African law, including in the context of employment contracts in appropriate circumstances, subject to a judicial discretion to refuse it where it would be inequitable, cause undue hardship, or be impracticable to enforce. In exercising that discretion, the court considered the nature of professional sports employment and the enforceability concerns arising from orders that might expose a respondent to contempt disputes about qualitative performance.

It applied the principle that a purported alternative remedy must be adequate in the sense of providing substantially the same protective result as the relief sought; disciplinary sanctions available through a sporting regulator were held not to be an adequate substitute for contractual enforcement and interdictory protection of the applicant’s contractual rights on the facts.

Vrystaat Cheetahs (Edms) Beperk v Mapoe and Others (4587/2010) [2010] ZAFSHC 175 (29 September 2010)