Denmar Trading BP and Others v Corporation Retail SE (Pty) Ltd (4573/06) [2006] ZAWCHC 28; [2008] 1 All SA 47 (C) (27 June 2006)

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[2006] ZAWCHC 28
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Denmar Trading BP and Others v Corporation Retail SE (Pty) Ltd (4573/06) [2006] ZAWCHC 28; [2008] 1 All SA 47 (C) (27 June 2006)

IN THE CAPE HIGH
COURT OF SOUTH AFRICA
(CAPE OF GOOD HOPE
PROVINCIAL DIVISION)
CASE NO: 4573/2006
In the matter
between:
DENMAR TRADING
BP 1
st
Applicant
DENNISE LORRAINE
MARTIN 2
nd
Applicant
ANGHONY PETER MARTIN
3
rd
Applicant
en
CORPORATION RETAIL S
E (PTY) LTD Respondent
JUDGMENT DELIVERED
ON: 27 JUNE 2006
Meer, J:
Introduction
[1] Applicants
seek the urgent restoration of possession to them of their business,
a “Friendly Seven Eleven” store, situated
at 195 Voortrekker
Road, Maitland, of which they were dispossessed by the Respondent.
Applicants were in peaceful and undisturbed
possession of the store
when Respondent, so
they
allege, unlawfully deprived them of possession thereof on 01 May
2006. Applicants seek also an order forbidding Respondent from
interfering with the business and intimidating the employees.
[2] Respondent
opposes the application on the basis that Applicants voluntarily gave
up possession of the premises to it, and were
accordingly not
unlawfully deprived of possession thereof.
The parties and
the contractual relationships that existed between them.
[3] The first
Applicant is a close corporation with its principal place of business
at 195 Voortrekker Road, Maitland, Western Cape.
The second and third
Respondents each own a 50% share in first Applicant.
[4] Respondent is a
close corporation with its principle place of business in Epping,
Western Cape. Respondent is a franchisee of
the Metcash Group of
Companies. It owns and is licensed by Metcash to conduct the business
of a number of convenience stores under
the name and style of
“Friendly Seven Eleven”. The shop which is the subject matter of
this application is one such convenience
store. Metcash permits the
Respondent to sub franchise its convenience stores. Respondent does
so by way of sub franchise arrangements
entered into with sub
franchisees who run individual stores. Such sub franchise
arrangements are governed by three standard form
contracts, namely,
an agreement of lease, an agreement of sublease and a sub franchise
agreement.
[5] In October 2004
Respondent entered into a sub franchise arrangement with second
Applicant and the three standard form contracts
were concluded
between them. Each contract afforded the second Applicant the right
to nominate a third party as the contracting party
in her stead.
Pursuant to that right she nominated the first Applicant as the sub
franchisee.
[6] In terms of the
lease agreement the first Applicant hired from the Respondent the
business of the shop as a going concern, for
an initial period of 2
years, effective from 22 October 2004. Consideration was payable as
follows:
- a monthly rental
of R8000.00 for October – December 2004 and thereafter R10 000.00
per month until the end of the initial period.
- payment of R150
000.00 for stock in the shop (actual payment for stock amounted to
R144 361.14).
[7] The
sub franchise agreement licensed the first Applicant in conducting
the business of the shop, to use the requisite insignias,
intellectual property, know-how system, trade marks and trade names
for a period of 2 years with effect from 22 October 2004. The
sub
franchise agreement recorded the value of the business as R800
000.00.
Facts.
[8] On
26 April 2006 Respondent sent a letter to first Applicant cancelling
the sub franchise agreement. The reasons for the cancellation
as
stated in the letter, was that first Applicant had “failed, refused
and/or neglected to maintain the standards, quality, cleanliness
stock levels and timeous payments per the agreement”. The
cancellation was effected in terms of clause 31.2 of the sub
franchise
agreement. The letter notified the first Applicant that
Respondent would implement the take back procedures of the store on
01 May
2006 at 09h00. The letter stated moreover that the lease of
business and lease of premises agreements, would automatically be
terminated
upon the termination of the sub franchise agreement.
[9] According to
Applicants, the complaints recorded in the letter were unfounded.
There had moreover not previously been complaints
about the business.
Upon receipt of the letter of cancellation the second Applicant
sought legal advice from her attorney, Mr Theron,
who advised her
that the Respondent did not have the right to take the law into its
own hands, and that Applicants therefore should
not allow Respondent
to enforce its threat to take over the shop. Mr Theron said the
Respondent was however entitled to conduct a
stock taking and advised
Applicants not to get into direct conflict with Respondent’s
representatives, but to ask them to contact
him after the weekend.
[10] Also upon
receipt of Respondent’s letter, second Applicant attempted to have
an urgent meeting with Mr Elia Hadjidakis, a director
of Respondent
and she phoned him on 28 April 2006 to arrange this. According to
second Applicant Mr Hadjidakis told her that he would
only be
available on Tuesday 02 May 2006.
[11] Respondent’s
version about exchanges between Applicants and Hadjidakis differs.
According to Hadjidakis on 27 April 2006 the
third Applicant
telephoned him to discuss the complaints about the manner in which
the business of the shop was being conducted and
the Respondent’s
cancellation of the sub franchise agreement as a result. The third
Applicant asked for time within which the shop
could be cleaned up.
The second Applicant requested time to consider the first Applicant’s
position and asked Hadjidakis not to
proceed with the implementation
of the take back procedures which had been scheduled for 01 May 2006.
Hadjidakis says he adopted
an accommodating attitude, offering that
Respondent would be prepared to defer the implementation of the take
back procedures for
a period of 30 days to allow the Applicants an
opportunity to remedy the breaches of the sub franchise agreement.
11.1 Hadjidakis says
thereafter, on 28 April 2006 the third Applicant again telephoned him
and reported that Applicants did not have
the resources to operate
the business in accordance with the terms of the applicable contract.
The third Applicant, according to
Hadjidakis, asked the Respondent to
proceed with the take back procedures and said that 01 May 2006,
being a public holiday, would
be convenient for the take over.
Respondent’s version is therefore that prior to the actual take
over of the shop on 01 May 2006,
Applicants had consented thereto.
Applicants vehemently deny this.
[12] On Monday 01
May 2006 the representatives of Respondent, supervised by one of its
regional managers, Mr Van As, arrived at the
store. According to
Hadjidakis, on arrival they took possession of the store with
Applicants’ consent and then went about implementing
Respondent’s
standard take back procedure. This, Hadjidakis explained, entails
firstly a stock taking as at the moment that the
sub franchisee
seizes to trade. To fix this moment, Respondent’s representatives,
in accordance with the procedure, recorded the
sales proceeds up
until the time they arrived, being the time when the sub franchisee
seized to trade. They did so by generating
what is referred to as a
“Z-report” from the cash registers in the store. This amount was
wholly due to the Applicants.
[13] According to
Respondent, Van As explained to second Applicant that he was going to
generate a Z-report to commence the stock
taking and that the sales
proceeds between that report and a second report to be generated
later, would be shared equally between
the first Applicant and the
Respondent. The second Applicant, said Hadjidakis, was completely
familiar with the procedure as it had
also been adopted when the
Applicants took over the shop from the Respondent in 2004.
[14] According to
second Applicant the particular stock take that morning was no
different in procedure to any other stock take, and
Applicants
“certainly did not consider the stock taking that morning to be an
act of taking over”.
[15] After Mr Van As
generated the ”Z report”, the stock taking commenced. The second
Applicant arranged for each of Van As’s
assistants to be
accompanied by a store employee to verify the correctness of the
count. The stock taking continued with the co-operation
of second
Applicant.
[16] The third
Applicant arrived at the shop at about 11:00am while the stock taking
was in progress. He proceeded to the office within
the shop, where
second Applicant from time to time went to speak to him. Shortly
before the stock taking was due to be completed,
Mr Van As telephoned
Mr Hadjidakis who prepared to proceed to the shop with his brother,
also a director of Respondent, to inspect
the premises.
[17] Around the same
time, when the stock taking was about to be completed, the third
Applicant telephoned Applicants’ attorney,
Mr Theron, to whom he
had faxed the sub franchise agreement earlier that morning. Theron
reiterated that Respondent could not take
possession of the business
and asked third Applicant to inform Respondent’s representatives,
accordingly. The third Applicant asked
Theron to speak directly to Mr
Van As which he did. Theron informed Mr Van As that Respondent may
not take possession of the business
and that if Van As and his team
did not leave, they would be trespassing.
[18] Applicants’
version is that thereafter Van As and his team left, leaving the
stock sheets with Applicants. The Applicants were
relieved although
they anticipated that Hadjidakis would probably come to the shop.
Approximately half an hour later according to
Applicants, Van As and
his team returned followed soon thereafter by the two Hadjidakis
brothers.
[19] Respondent’s
version in contrast, is that Van As and his team never left the shop
after Van As’s conversation with Applicants’
attorney, Theron.
Instead Van As telephoned Mr Elia Hadjidakis who was at that stage en
route to the shop. Both Van As and Elia Hadjidakis
were flabbergasted
by Applicants’ change of mind about the takeover, it being
altogether inconsistent with their stance on 28 April
2006, when they
had, according to Hadjidakis consented to the take over.
[20] Hadjidakis said
he himself spoke to the third Applicant on the phone and enquired why
he had changed his mind, to which third
Applicant replied that he had
not previously been able to contact his attorney.
[21] When the
Hadjidakis brothers arrived at the shop, heated words were exchanged.
Elia Hadjidakis told the Applicants that as far
as he was concerned
they had already returned the shop to Respondent and he was not
prepared to reverse the process by handing it
back to them.
Applicants deny this was said.
[22] The situation
became sufficiently heated for Applicants to summon the police on the
grounds that Respondent’s personnel were
trespassing in the store.
Inspector Fourie, arrived on the scene and, it would appear, decided
that the parties were engaged in a
civil dispute, in which he ought
not to intervene. He left the shop. Thereafter the stock taking
process was completed. According
to Hadjidakis and the other
representatives of Respondent conducted themselves in such an
intimidating fashion, that Applicants felt
powerless. The staff were
informed that their services were being taken over by Respondent and
they felt pressurized. Applicants
informed Hadjidakis that they
intended taking legal steps against Respondent. Respondent
thereafter, it would appear, obtained the
keys to the store. The
Applicants still have a key to the store, but it is Respondent who is
now in control.
Argument.
[23] Mr Maree for
Applicants submitted that in order to determine whether a spoliation
had taken place, it was crucial to establish
the precise moment of
spoliation and assess whether Applicants had consented to
Respondent’s taking possession of the business
at that point. He
urged that I should accept on a balance of probabilities Applicants’
version that Van As and his team left the
shop when ordered so to do
by third Applicant and returned half an hour later with Hadjidakis
and his brother. It was the arrival
of Hadjidakis and the events
which ensued thereafter, he submitted, which constituted the “taking
over” of the shop without Applicants’
consent. Applicants did not
consider the earlier visit by Van As and his team to stock take, to
be intimidating in any manner. This
did not disturb their peaceful
possession and control of the shop which continued right until the
arrival of the Hadjidakis brothers.
On Applicants’ version, he
submitted, Respondent’s argument that possession of the shop had
already taken place in the morning
at the commencement of the stock
taking, must fall away, given that when Van As and his team left,
possession was restored to Applicants
and continued undisturbed until
the arrival of the Hadjidakis brothers.
[24] Mr
Maree submitted also, that on a balance of probabilities it should be
found that Applicants did not consent to the take over
telephonically
on 28 April 2006, given that it was a profitable business and
Applicants were trying to arrange a meeting in order
to prevent the
take over. In any case, so his argument went, it was irrelevant even
if Applicants did agree prior to 01 May 2006
to the take over,
because the precise moment at which the existence of consent must be
assessed, is the moment that possession passed.
At the time of the
take over of the shop by Hadjidakis, even assuming that there had
been prior consent, Applicants had changed their
mind which they were
entitled to do, and consent to the take over was absent.
[25] He pointed also
with reference to the case
Nino Bonino v de Lange
1906 TS 120
at 123 that an agreement between parties to the effect that one of
them could take possession without consent, is invalid.
[26] Finally, Mr
Maree argued that the take over procedure which commenced with the
stock taking did not contain the elements for
the passing of
possession as defined at common law. Applicants were still in control
of the premises, had the keys, were in control
of the employees,
occupied the office and trading still continued. The Applicants did
not regard the stock taking as a take over
but merely as a first step
to what might later occur. The Respondent did not possess the shop to
the exclusion of Applicants at that
stage, nor does it allege so.
[27] Mr Tyler, who
appeared for the Respondent submitted that Respondent took possession
of the shop with the arrival of Van As and
his team that morning to
implement the take back procedure. The Applicants he submitted
appreciated that the Respondent was engaged
in taking back the shop
at that time as no other possible reason could have existed for Van
As to state that Respondent would share
equally in the sales proceeds
generated between the first Z-report and the second Z-report.
Applicants were moreover familiar with
the take over procedure. The
fact that the Applicants offered no opposition whatsoever to Van As
during the period from the commencement
of the stock taking to about
11h:45, he argued, is compatible with one inference only, namely that
Applicants had indeed consented
to the take back of the shop, but had
afterwards changed their minds.
[28] In order to
obtain a
mandament van spolie,
an Applicant must show that he
was in peaceful and undisturbed possession of the thing and he was
unlawfully deprived of such possession.
[29] The Respondent
can justify taking possession of the shop and business from the
Applicants by showing that the Applicants genuinely
and freely
consented to give up their possession thereof see
Stocks Housing
(Cape) (Pty) Ltd v Chief Executive Director, Department of Education
& Culture Services
1996 (4) SA 231
(C) at 240B - D;
LAWSA
vol. 27 paragraph 269.
[30] The main
purpose of the
mandament van spolie
is to preserve public
order by restraining persons from taking the law into their own hands
and by inducing them to submit the matter
to the jurisdiction of the
courts. As has been stated “peace in a community could not be
maintained if every person who asserted
that he had a claim to a
particular thing was entitled to resort to self help to gain
possession of a thing”, see
Parker v Mobil Oil of Southern
Africa (Pty) Ltd
1979 (4) SA 250
(NC) at 255C-D;
George
Municipality v Vena & Another
1989 (2) SA 263
(A) at 271I;
LAWSA
vol. 27 paragraph 265.
[31] In
Runsin
Properties (Pty) Ltd v Ferreira
1982 (1) SA 658
SE at 670
Addleson J stated:
“
The essence of
the remedy by way of spoliation is that it is a robust one.
Discretion and considerations of convenience do not enter
into it. I
do not think it is not necessary to cite authority for that
proposition other than to refer to the convenient summary
in Wille’s
Principles of South African Law
7
th
Edition at p199
as follows:
“
Consequently, if
a person without being authorized by a judicial decree disposesses
another, the court, without enquiring into the
merits of the dispute,
will summarily grant an order for restoration of possession to the
applicant as soon as he has proved two
facts, namely that he was in
possession and that he had been despoiled of possession by the
respondent. The policy of the law is
neatly summed up in the maxim
spoliatus ante omnia restituenda est
”.
[32] It is trite
that common law possession consists of both an objective and
subjective element, namely the objective or physical
element,
corpus
,
dententio
and the subjective or mental,
animus
. See
S
v R
1971 (3) SA 798
at 801A-B;
LAWSA
vol. 27 paragraph
246. Physical control over a building is exercised by the person who
occupies it, (
R v Betelezie
1941 TPD 191
;
LAWSA
vol. 27
paragraph 248) or who holds the key to the building. See
Malan v
Dippenaar
1969 (2) SA 59
at 62H - 63A-B;
Liquidators of Royal
Hotel Co v Rutherford
1906 CTR 179 at 181;
LAWSA
vol. 27
paragraph 248.
[33] Possession
moreover need not be exclusive possession. See
Engling and Another
v Bosielo and Others
1994 (2) SA 388
at 395B – E;
Mankowitz
v Loewenthal
1982 (3) 758 (AD) at 761E;
Nienaber v Stuckey
1946 AD 1049
at 1055. A spoliation claim will lie at the suit of a
person who holds jointly with others. See
Coetzee v Coetzee
1982
(1) SA 933
(C);
Bennett Pringle (Pty) Ltd v Adelaide Municipality
1977 (1) SA 230
(ECD) at 233A. Where one of the joint possessors
of the thing takes exclusive possession of it against the others
will, the latter
can avail himself of the mandament van spolie
against the former. See
Du Randt en ‘n Ander v Du Randt
1995
(1) SA 401
at 404D – E; Erasmus
Superior Court Practice
E9-6.
[34] An aspect of
the entity that is the subject matter of possession in this case, to
which counsel drew my attention, is its corporeal
as well as its
incorporeal nature. The entity comprised two components as it were, a
business, an incorporeal thing, and the physical
premises, a
corporeal, from which the business was conducted. The business and
the premises were however so closely identified that
it can be said
possession of the one comprised equally possession of the other, or
as Mr Maree submitted, possession of the business
largely
constituted possession of the premises and vice versa.
[35] Applying these
principles to the case at hand I come to the view that Applicants
continued to have control of the shop after
the arrival of Van As at
9h:00am that morning and the implementation of the take over
proceedings commencing with the stock taking.
Applicants retained the
keys to the premises which had not yet been handed over at that
stage, they maintained control of the office,
the employees, who had
not been informed that their employment contracts with Applicants
were terminated, and Applicants importantly
were still in occupation
of the premises. It was only after the arrival of Mr Hadjidakis and
his brother that this situation came
to an end and possession passed.
Until that stage Applicants had the elements of possession specified
at common law, namely animus
and corpus. This, I find to be so,
regardless of whether Van As and his team left the premises before
Hadjidakis arrived. On this
aspect I note that Ms Jacobs, a former
employee of Applicants, currently employed by Respondent, in her
affidavit supports Applicants’
version that Van As and his team
left the premises before the arrival of Hadjidakis.
[36] I accordingly
come to the view that Applicants were in peaceful and undisturbed
possession of the premises at the time of the
arrival of Hadjidakis
and that they were deprived of such possession without their consent
after his arrival. This being so, Applicants
are entitled to avail
themselves of the remedy provided for in the
mandament van spolie
.
Urgency.
[37] Mr Tyler
submitted that this matter was never urgent, ought not to have been
launched with the urgency in which it was brought
and thus
constituted an abuse of the process of court. He argued that the
application stood to be dismissed solely on these grounds
and urged
that I do so.
[38] He emphasized
that the application was launched on 09 May 2006 for hearing on 12
May 2006. On the latter date when it came before
the 3
rd
division Judge, the Respondent had not been able to complete its
answering affidavits and for that reason alone the application was
postponed to 31 May 2006 for hearing on the semi-urgent role. The
issue of urgency was not determined and is still open for
determination.
[39] For urgency, Mr
Tyler submitted Applicants relied on two misplaced propositions,
firstly that the first Applicant was the owner
of the business and
the Respondent’s conduct was causing it ongoing, daily loss as an
owner and secondly that Respondent was placing
enormous pressure on
the employees of the business and might be influencing them against
the Applicants.
[40] The first of
these grounds was shown not to be so as Applicants were the lessees
and not the owner of the shop. The Respondent
was the owner. The
second of the aforementioned grounds, Mr Tyler contended, never rose
above the level of mere suspicion, and as
matters have now unfolded,
cannot be accepted. It is inconceivable, that if the employees were
under pressure, Ms Jacobs, an employee
would have deposed to a
confirmatory affidavit in favour of the Applicants, submitted Mr
Tyler.
[41] Whilst it is so
that the founding affidavit stated that Applicant was the owner of
the premises, I accept as suggested by Mr
Maree, that second
Applicant made the submission in error and cleared this up in her
replying affidavits.
[42] I am of the
view that notwithstanding the fact that the Applicants were not the
owners of the business, their prejudice as lessees
who ran the
business, who had obligations to the people employed in the business,
and who had invested a considerable sum of money
in the business was
equivalent to that of an owner of the business. Their concerns
likewise for their employees, whether or not they
were subjected to
pressure by Respondent, was real. The consequences and prejudice of
having the business one conducts and employees
under one’s control
taken over at short notice without one’s consent is, I believe a
circumstance sufficiently serious to warrant
urgent recourse to legal
remedy, without having to wait for a hearing in due course.
[43] Mr Tyler
referred me to
Mangala v Mangala
1967 SA (2) 415 ECD where it
was held that the mere fact that an application is one for a
spoliation order, does not render it, urgent.
It is not, I believe,
the nature of this application
per se
that renders it urgent,
but its circumstances as referred to above.
[44] I note in
passing that the provisions of clause 31.2 of the sub-franchise
agreement in terms of which Respondent terminated such
agreement at
short notice may well offend against the principle of
parate
executie
, as discussed in the cases,
Bock and Others v
Dubouroro Pty Ltd
2004 (2) SA 242
SCA at 247E-F and
S A Bank
of Athens Ltd v Van Zyl
2005 (5) SA 93
SCA.
[45] The clause may
also be in violation of the right of access to the courts prescribed
at Section 34 of the Constitution Act 108
of 1996. See
Lesapo v
North West Agricultural Bank
[1999] ZACC 16
;
2000 (1) SA 409
CC; see also
First
National Bank of South Africa Ltd v Land and Agricultural Bank
[2000] ZACC 9
;
2000 (3) SA 626
CC. I am grateful to counsel for their submissions
which I called for on this aspect. Mr Tyler in essence submitted that
these cases
are distinguishable from the case at hand, whilst the
gist of Mr Maree’s submissions were that the judgments support and
strengthen
the common law principles underlying the remedy of
mandament van spolie
.
[46] The
termination of the sub franchise agreement may well have been open to
attack, in keeping with the aforementioned cases,
on the basis of the
contents of clause 31.3. It is well to be mindful of the principles
highlighted in these cases. The accepted
wisdom is however that for
purposes such as the present, a spoliation application, it is not
necessary to consider the clause in
terms of which the sub franchise
agreement was cancelled, and I accordingly delve no further into the
potentially offending clause.
See
Stocks Housing (Cape) (Pty) Ltd
supra
at 240A - E. It would in any event not have been
necessary for me to consider the clause given my finding that
Applicants were dispossessed
without their consent, and are for that
reason entitled to restoration of possession.
Costs.
[47] It was
submitted on behalf of Respondent that a departure from the normal
rule pertaining to costs was warranted in this case
on account of the
urgent bringing of the application. I do not agree that such a
departure is warranted, given my finding on the
aspect of urgency.
[48] The following
order is granted:
1. Respondent and
all its representatives are ordered to immediately restore peaceful
and undisturbed possession to Applicants of
the premises situated at
195 Voortrekker Street, Maitland, from which First Applicant
conducted a business known as Friendly Seven
Eleven.
2. Respondent and
its representatives are prohibited from interfering with First
Applicant’s business on the premises, except in
accordance with the
terms of the franchise agreement.
3. Respondent and
its representatives are prohibited from intimidating any employees
and are also prohibited from interfering with
the work of employees,
save as provided for in terms of the franchise agreement
4. The
status quo
ante
pertaining to the running of the business on the premises is
restored to what it was before 01 May 2006, such to include the
receipt
and depositing of moneys in respect of Lotto, electricity and
general goods.
5. Respondent shall
pay the costs of this application.
MEER, J