Mike's Chicken (Pty) Ltd and Others v Astral Foods Limited and Another (32/CAC/Sep03) [2004] ZACAC 2; [2004] 1 CPLR 40 (CAC) (28 January 2004)

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[2004] ZACAC 2
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Mike's Chicken (Pty) Ltd and Others v Astral Foods Limited and Another (32/CAC/Sep03) [2004] ZACAC 2; [2004] 1 CPLR 40 (CAC) (28 January 2004)

IN THE COMPETITION
APPEAL COURT
CAC case no: 32/cac/sept/03
Tribunal case no: 69/am/dec01
In
the matter between:
MIKE’S CHICKEN (PTY)
LTD
First Appellant
DAYBREAK FARMS (PTY) LTD
Second Appellant
MIDWAY CHIX (PTY) LTD
Third Appellant
and
ASTRAL FOODS LIMITED
First Respondent
THE COMPETITION COMMISSION
Second Respondent
JUDGMENT
Malan
AJA
:
The
Appellants appeal against a decision of the Competition Tribunal
handed down on 18 July 2003 (“the 2003 Tribunal Order”).
The
decision of the Tribunal concerns two applications brought in terms
of
s 66(1)
of the
Competition Act 89 of 1998
which allows the
Tribunal to “vary or rescind” a decision or an order
“
(a)
erroneously sought or granted in the absence of a party affected by
it;
(b)
in which there
is an ambiguity, or an obvious error or omission, but only to the
extent of correcting that ambiguity, error or omission
;
or
(c)
made or granted as a result of a mistake common to all the parties to
the proceeding.”
The
issue concerns primarily paragraph (b) of
s 66(1).
The
2003 Tribunal Order relates to an application by Astral (the First
Respondent) for the variation and or clarification of the
order
given by the Tribunal on 16 April 2002 (“the 2002 Tribunal Order”)
approving conditionally the intermediate merger between
Astral (the
“First Respondent”) and National Chick Limited (“Natchix”).
In December 2001 Astral notified the Second Respondent
(the “Commission”) of its intention to merge with Natchix. The
merger was
dealt with as an intermediate merger by the Commission and
was prohibited. The merging parties then requested the Competition
Tribunal
to consider the merger. The Tribunal did so and approved
the merger subject to certain conditions relating to the “broiler
industry”
and the “animal feeds industry” (the “2002 Tribunal
Order”). Subsequent to the merger and in November 2002 Astral
approached
the Tribunal seeking an order as a matter of urgency
clarifying, alternatively, varying the conditions imposed in respect
of the
“broiler industry” (the “variation application”). It
did so because the First Appellant (“Mike’s Chicken”) and the
Second Appellant (“Daybreak”) had in the immediately preceding
months asserted that the 2002 Tribunal Order rendered their long-term
supply contracts, concluded with Natchix prior to the merger, null
and void. This assertion arose in the context of the failure
of
Mike’s Chicken and Daybreak to adhere to those contracts in the
second half of 2002 and to purchase the agreed number of day-old
chicks from Natchix (by that stage a division of Astral).
The
Appellants applied for leave to intervene in this application (the
“intervention application”) in December 2002 and were given
leave
to do so in February 2003. In addition, the appellants brought their
own counter-application to clarify, alternatively, vary
the
Tribunal’s Order.
In the 2003 Tribunal Order the Tribunal declined to
grant the variation sought by Astral. However, it clarified its order
because
it found that the conditions imposed on the merger were
ambiguous as to how the those conditions were to impact on existing
contracts
between Natchix and its customers. Two declaratory orders
were granted. The first was to the effect that existing contracts
were
not affected by the order. The second was that any
inconsistency between the conditions and any provision in an existing
contract
would not invalidate that contract but that non-compliance
with any condition by Astral would constitute a breach of the
conditions
to which the merger was subject. Moreover, the Tribunal
mero motu
amended its original order by the deletion of a
sentence in paragraph 1.4 (Record at 423:6-29).
In
the variation application Astral disputed that the 2002 Tribunal
Order had the effect that Mike’s Chicken and Daybreak claimed
and
asserted that it was never contemplated by any of the participants
in the intermediate merger proceedings that Natchix’s
existing
customer base would be placed in jeopardy immediately after the
conditional approval of the merger by the Tribunal. Astral
was, so
they asserted, unable to attempt to enforce its contractual remedies
against Mike’s Chicken and Daybreak in a civil forum.
Any attempt
to do so would have been met by the defence that, in terms of s 65
of the Competition Act, 89 of 1998 (“the Act”),
a civil court or
arbitration tribunal is precluded from considering the issue on its
merits, unless any competition issue was resolved.
The
variation application was not opposed by the only other party to the
intermediate merger proceedings, the Commission. The Commission
has
also advised that it does not intend participating in this appeal
and will abide the decision of this Court.
The Appellants contend on appeal that the Tribunal was
wrong when construing and clarifying the 2002 Tribunal Order. They
argue that
the Order was not ambiguous and thus not susceptible of
alteration either by way of alteration or variation. Alternatively,
and
in so far as the Order might have been ambiguous, the Tribunal
should have made it clear that all existing contracts were
terminated.
As
appears from the decision and reasons handed down by the Tribunal on
18 July 2003, when granting the 2003 Tribunal Order, the
Tribunal
stated that it had not intended to invalidate existing long-term
supply contracts between Natchix and its customers, and
that the
2002 Tribunal Order did not have that effect. The Tribunal
formulated the issues it had to deal with thus:
“
Two
issues arise from these applications. Firstly, is the Tribunal’s
order ambiguous with regard to the meaning of independent customers
and, secondly, is the order ambiguous because the Tribunal’s
intention regarding the status of Astral’s existing long-term
supply
agreements with independent customers, post the merger, is not
clear? In regard to the second question an issue of law also arises,
namely what is the juristic effect of conditions imposed upon parties
to a merger?” (§ 13 at Record 415:21-9).
Under the heading,
Conditions in relation to the
Broiler Industry
, there are definitions of “Astral” and
“Independent customer”, and thereafter three clauses, the first
of which has four
parts. Clause 1 provides that:
“
Astral must supply any independent customer on the
following basis:
Subject to sub-paragraphs 1.3 and 1.4 below, in terms
of a standard form contract approved by the Competition Commission.
In the case of any disease or any other form of force
majeure, Astral must reduce its supply to all customers, including
entities
within the Astral group, pro rata to their ordinary
volumes purchased.
In the event that an independent customer does not
wish to enter into the standard contract with Astral, Astral must
supply that
customer in accordance with the principles set out in
sub-paragraph 1.4 below, except for those that relate to notice
periods.
Astral may not discriminate in its conditions of
supply between entities in its own group and its independent
customers for equivalent
transactions. In particular it may not
discriminate between them in relation to price, discounts or
rebates offered. The determination
of prices remains in the
discretion of Astral. Astral may not impose any condition on an
independent customer that requires
them to purchase exclusively
from Astral. The parties to the agreement must each be required to
give notice to the other if
they do not wish to renew the contract.
The length of this period must be the same for both parties and
must be reasonable having
regard to the nature of the industry.
The contracts must be of a five-year duration.”
Clause 2 stipulates that the “conditions set out in
clause 1 above shall apply for five years from date of this order”.
Clause 3 provides that: “The Commission’s discretion
in approving the standard form contract is limited to ensuring that
it complies
with the principles set out in sub-paragraph 1.4 above”.
“
Astral” is defined “unless the context indicates
otherwise” as “Astral Foods Limited or any firm controlled by
Astral Foods
Ltd within the meaning of section 12(2) of the Act”.
“Independent customer” is “any firm which, at the date of this
order
was a customer of National Chick Limited (‘Natchix’) and/or
Ross Poultry Breeders (Pty) Ltd and that is not controlled by Astral”
(see Record at 216). It is not disputed that the first two
appellants are “independent customers” as defined in the order.
The
Conditions
do not specifically refer to
existing long-term contracts between independent customers and
Natchix; nor are such contracts mentioned
elsewhere in the 2002
Tribunal Order
The Tribunal itself commented on this at paragraphs 20
and 23 of its decision and reasons of 18 July 2003 (“
the
Decision and Reasons
”). In the first sentence of the former
paragraph, the Tribunal noted:
“The
order does not specifically address long-term supply agreements that
existed before the merger” (Record at 416).
In
paragraph 23 it recorded that:
“The order does not shed any light on the status of long-term
supply agreements post the merger, nor is the language of the order
clear on what the Tribunal’s intentions were. To find clarity we
will consider the Tribunal’s reasons. If no clear answer can
be
found, we’ll step back further in history, to search the record of
the hearing (Record at 418).”
7 In the variation application Astral sought clarity as
to the meaning of the 2002 Tribunal Order vis-à-vis long-term supply
contracts
in existence at the time of the merger (Record at 13; § 2
of the Notice of Motion). The variation proposed was the insertion
of
a clause 1.5 under the
Conditions
, which
inter
alia
stated that existing contracts were unaffected by the 2002
Tribunal Order. Astral submitted that a variation of this nature was
permitted
in terms of s 66(1)(b) of the Act. Secondly, Astral sought
declaratory relief of a similar nature (Record at 13-14; § 3 Notice
of Motion). The precise relief sought in this regard was that:
“
3.1 Existing contracts with independent customers are
unaffected by this Order, subject to amendments required to ensure
consistency
with sub-paragraph 1.4 of the Tribunal Order, such
amendments pertaining to price, discounts or rebates, exclusive
purchasing obligations,
notice periods and the length of the
contract;
Independent customers who have concluded supply
contracts are to be afforded an opportunity to enter into the
standard form contract
approved by the Competition Commission;
In the event of any independent customer with an
existing contract concluding a standard form contract, neither the
volume of
chicks ordered in terms of the existing contract, nor the
notice periods specified therein, can be varied in the standard
contract;
and
In the event of an independent customer with an
existing contract not concluding the standard contract, the
existing contract
remains of full force and effect as per paragraph
(a) above.”
Astral submitted that relief of this nature was
competent in terms of s 27(1)(d) of the Act, a subsection which
provides that the
Competition Tribunal may
“
make
any ruling or order necessary or incidental to the performance of its
functions in terms of this Act”.
Astral contended that this provision gives the Tribunal
the power to explain its own rulings,
inter alia
, by means of
a declarator. The declaratory relief, while not stated in the
annexure to the notice of motion as being in the alternative,
was
dispensable in the event of the variation sought by Astral in
paragraph 2 of its notice of motion being granted. Conversely,
were
the declaratory orders (or any other declarators affirming the
continued validity of the pre-April 2002 supply contracts) to
be
given, then any variation of the Tribunal Order would not be
required. Furthermore, neither the declarators nor the variations
were necessarily required in the event of the Tribunal finding that
no amendment to the 2002 Tribunal Order was needed because the
2002
Tribunal Order did not purport to cancel existing supply contracts,
nor actually have such an effect. The Tribunal was also
informed at
the hearing that Astral would not be persisting in seeking a
variation: in essence what it wanted was declaratory relief
to the
effect that its long-term supply contracts were of full force and
effect. (See Record at 413 fn 6). In any event, the Appellants
did
not contend on appeal that any of the long-term contracts were in
fact invalidated by the order given by the Tribunal.
8 The Appellants opposed the variation application,
after having been permitted by the Tribunal to intervene and to file
an answering
affidavit and any counter-application in those
proceedings (Record at 401-409). The Appellants also filed their own
counter-application
in terms of s 66(1) of the Act (Record at
187-194). In their counter-application, they contended that the
Tribunal clearly intended
to cancel existing contracts between
Natchix and its customers (Record at 193 § 10, read with 128 §§ 23
and 24). They also alleged
that, after the merger, any Agreements
for the supply of day-old chicks could not oblige customers to
purchase minimum or fixed quantities
(Record at 193 § 10, read with
128-129 § 24). Accordingly, the Appellants requested the following
declarations/variations in relation
to the 2002 Tribunal Order
(Record at 189-190):
“
1. Declaring
that the phrase “
independent
customer
” in the order granted by the
Tribunal on 2 April 2002 in this matter includes a customer who prior
to the merger between Astral
Foods Limited (“Astral”) and
National Chicks Limited (“Natchix”) was party to a
minimum-quantity or fixed-quantity supply
agreement with Natchix.
Alternatively
,
varying the order of the Tribunal to include within the definition
of the phrase “independent customer” in the order granted
by the
Tribunal on 2 April 2002 in this matter a customer who prior to the
merger was party to a minimum-quantity or fixed-quantity
supply
agreement with Natchix.
Declaring
that in terms of the order issued by the Tribunal on 2 April 2002
all contracts between independent customers and Natchix
were
cancelled as at the date of merger.
Alternatively
,
varying the order of the Tribunal by the insertion of a paragraph 1
stating: “All existing contracts between Natchix and independent
customers are hereby cancelled.”
Varying paragraph 1.4 of the conditions imposed by the
Tribunal on 2 April 2002 by the insertion of the phrase “or that
requires
them to purchase specified minimum or fixed quantities from
Natchix” after the sentence “Astral may not impose any condition
on an independent customer that requires them to purchase
exclusively from Astral.”
9 The relief sought by the Appellants in the
counter-application was that the 2002 Tribunal Order voided, or
cancelled, all existing
contracts between Natchix and independent
customers as of 2 April 2002 – the date of the 2002 Tribunal Order.
10 The Tribunal’s order in the variation application
(the 2003 Tribunal Order) against which this appeal is brought reads
as follows
(Record at
§§ 49-50):
“
49. In view of the fact that
the reference to the five years period in paragraph 1.4 is confusing
we are persuaded that the Order
is ambiguous and that the ambiguity
will be cured by its deletion. In order to make the status of
contracts that were in existence
at the time of the Order clear, we
do not need to amend the Order, but it will suffice to add two
declaratory orders as well, given
the dispute between the parties.
We make the following order:
Varying the Order
of the Tribunal dated 2 April 2002, (the “Order”) by deleting
in paragraph 1.4 the words:
“
The contracts must be of a five year duration.”
Declaring that the validity of
any contract that was in existence with an independent customer, at
the time of the Order, remains
unaffected by the Order.
Declaring that to the extent that any
provision in any existing contract with an independent customer, is
inconsistent with the
principles in paragraph 1.4 of the Order, as
amended by this order, that such inconsistency does not invalidate
those terms of
the contract, but will if enforced by Astral Foods
Limited and/or National Chick Limited constitute a breach of the
conditions
attached to the approval of the merger.”
11 In coming to these conclusions the Tribunal obviously
accepted that it had the power to vary an order in the circumstances
set
out in s 66(1) of the Act, but that its powers in this regard are
circumscribed (Record at 415 § 9-11). The Tribunal stated, in
this
regard, in § 11:
“
It is a limited inquiry and the basic rule that the
court follows is to ascertain the court’s intention, primarily,
from the language
of the order. If the meaning of the order is clear
and unambiguous, no extrinsic fact or evidence is admiss[i]ble to
contradict,
vary, qualify or supplement it. It is decisive and cannot
be restricted or extended by anything else in the judgement. But, if
any
uncertainty in its meaning emerges, the extrinsic circumstances
surrounding or leading up to the court’s granting of the order
may
be investigated and taken into account in order to clarify it. In
doing so the order and the court’s reasons for giving it
must be
read as a whole in order to ascertain its intention. Only if it still
leaves the matter unclear and ambiguous would the court
go to the
record to cure the ambiguity.”
The Tribunal considered whether the words “independent
customers” were ambiguous and whether a variation of the 2003
Tribunal
Order was needed in that regard. It concluded that this
phrase was not ambiguous. It applied to all customers of Natchix
that were
not controlled by Astral, whether or not they were parties
to a long-term agreement (Record at 415-6 §§ 14-9). The word
“any”,
the Tribunal said (§ 15), is “extremely wide”.
The Tribunal next addressed the effect of the
conditional approval of the intermediate merger on existing long-term
supply contracts
and said (Record at 418-419 §§ 23-26):
“
23. The order does not
shed any light on the status of long-term supply agreements post the
merger, nor is the language of the order
clear on what the Tribunal’s
intentions were. To find clarity we will consider the Tribunal’s
reasons. If no clear answer can
be found, we’ll step back further
in history, to search the record of the hearing.
The
Tribunal concluded in its reasons that the merger raised competition
concerns and that it needed to impose conditions specifically
in
order to lower the risk of foreclosure, which was very real in the
short term because of structural problems in the upstream
market.
The concern of those participants at the hearing who represented the
industry was not that they would be held to an oppressive
contract
by the merged firm but that, on the contrary, the merged firm with
its own broiler outlets would self deal and not supply
them. It was
told that Cobb, Ross’ main rival in the upstream market needed at
least 5 years to fully enter the South African
market. However,
nowhere in its reasons does it specifically mention or address the
status of existing long-term contracts post
the merger or is it
possible to derive what the Tribunal had in mind. There was simply
no necessity to do this.
Existing
customers who were supplied in terms of valid contracts were, per
definition, not foreclosed. In the event that their
contract
expired or was terminated and they were then faced with the threat
of foreclosure, they could then have availed themselves,
in the same
way that any other ad hoc customer would avail itself, of the
protection extended by the conditions imposed by the
Tribunal on
Astral. But until they were denied supply by Astral the existing
contract holders had no need of the protection of
the conditions –
they were protected by the terms of their existing supply contracts.
At no stage during the merger proceedings
was it ever suggested that
the existing contracts were anti-competitive and should thus be
vitiated by the insertion of an appropriate
condition. It was
rather suggested that the structural changes wrought by the merger
would permit Astral to favour downstream
customers within its own
stable over ‘independent’ customers, that is customers outside
of the Astral stable. This was the
purpose of the conditions that
were imposed.
In
the record of the merger proceedings we find a passage where the
presiding member briefly referred to the status of existing
customers at page 65 of the transcript of 20 March 2002:
‘
It’s
just to say that our reach does not extend beyond ensuring that you
have a supplier of day-old chicks and that the transaction
does not
foreclose that. … I presume that they (
referring
to Astral
) have arrangements with existing
customers and it would simply be some sort of alteration in that
arrangement to ensure that those
customers did not have any reason to
fear that their supply would be foreclosed
.’
From the above it is clear that the Tribunal did not
think that it had the power to render void any pre-merger supply
contracts,
nor did it intend for its conditions to have such
far-reaching consequences because it refers to its “reach” as
not extending
beyond the prevention of foreclosure. It merely
envisaged that those clauses in existing contracts that did not
comply with the
Tribunal’s intention to prevent foreclosure should
not be enforced or exercised in a manner contrary to the principles
set out
in paragraph 1.4.”
The Tribunal then considered the “juristic nature of
the condition attached to a merger” and concluded (Record at 421 §
40):
“
In the present
case there was indeed no express requirement in the order that the
merged firm cancel its existing contracts. But to
the extent that
there may be an implied one, which we do not concede, it still would
not have invalidated the existing contracts
for the reasons we have
outlined.”
With regard to the other issues (ie the duration of
long-term supply agreements and whether the 2002 Tribunal Order
forbade any contract
to provide for minimum or fixed quantities of
supply) the Tribunal found (Record at p 422 § 47):
“
The Tribunal order
is clear and no ambiguity exists with regard to minimum or fixed
quantities of supply. We find no reference to
minimum quantity or
fixed quantity of supply in the Tribunal order. In fact the
interven[e]rs acknowledge this in their answering
affidavit by saying
that it is ‘implicit’ in the conditions that Astral may not
include in the new contract a clause which has
the effect of
requiring customers to purchase minimum or fixed quantities.”
With regard to the duration of the contracts (clause 1.4
of the order) the Tribunal found (Record 422 at §§ 44-6):
“
43 Paragraph 1.4 addresses specific antitrust
concerns, which the Tribunal identified may potentially flow from the
merger. These
relate to discrimination on conditions of supply,
price, discounts or rebates, exclusivity and renewal of contracts.
The Tribunal
sought to address these concerns by requiring that
standard agreements be drawn up that comply with the principles set
out in 4.1
and which standard agreements had to be effective for 5
years.
44 Paragraph
2 relates to the five years which Cobb, a competitor of Ross,
indicated it will need to become an alternative source
for
independent breeders in the South African market. The Tribunal
mentioned in its reasons that the merger only poses short-term
structural problems and that if, in five years, a new entrant has
established itself in the market, the order would be superfluous
because the foreclosure concerns would be cured. No other reason was
put forward for imposing the 5 year period.
45 However,
one gets conflicting results when one applies both conditions. For
example, if a standard agreement is entered into in
2005, 3 years
after the date of the order, it must, according to paragraph 1.4, run
for 5 years until 2010. This will mean that the
parties will be tied
to an agreement three years after the conditions of the Tribunal
order have expired in 2007, as set out in par
2. Clearly this was not
the intention of the Tribunal. It wanted to facilitate the entry of
Cobb into the market, not prescribe the
length of standard supply
agreements, a term of the contract which is usually negotiated
between parties and which takes into account
the specific needs and
future plans of each customer.
46 We
must, therefore, conclude that the Tribunal made an obvious drafting
error when it included the last sentence in par 1.4. We
find that to
cure this ambiguity, the order must be varied by the deletion of the
last sentence of paragraph 1.4.”
The
Appellants appeal against the declaration by the Tribunal that the
validity of any contract between Natchix and its customers
at the
time of the merger was unaffected by the 2002 Tribunal Order
submitting that Astral was obliged to replace these contracts
with
new ones in standard form (Appellants’ Heads at 3 § 4).
The Appellants’ grounds of appeal are the following:
“
1. The finding that the order originally issued by
the Tribunal was ambiguous as to the effect of the conditions in the
order on existing
supply agreements between Astral and its customers;
The
finding that the Tribunal’s intention as to the effect of the
conditions on existing supply agreements could not be ascertained
from its reasons for the order;
3. The finding that on a proper reading of the record of
proceedings the Tribunal’s intention as to the effect of the
conditions
on existing agreements was that the Tribunal did not
require Astral to replace its existing supply contracts with new
contracts.”
There appears to be no appeal against the last sentence
in paragraph 1.4 of the Tribunal Order. In this respect the Tribunal
found
that that an “obvious drafting error was made” (§ 46 at
Record 422) and gave an order varying the 2002 Tribunal Order by
deleting
the words “The contracts must be of a five year duration”
in paragraph 1.4.
The
Appellants advance two main arguments in support of their appeal:
first, that 2002 Tribunal Order was not ambiguous and therefore
not
susceptible to alteration, either by clarification or variation;
secondly, and in the alternative, that insofar as the 2002 Tribunal
Order was ambiguous, the Tribunal did not properly clarify that order
(or, in other words, that the Tribunal misunderstood, or has
misstated, the nature and intent of the 2002 Tribunal Order
(Appellants’ Heads at 3-4 §§ 6-7).
13 Section 66 has been modelled on Uniform Rule 42(1),
with the counterpart to s 66(1)(b) being Rule 42(1)(b). The
principles developed
in regard to Rule 42 accordingly provide
guidance in the interpretation of s 66(1) of the Act. The Tribunal,
like a court, may thus:
“
clarify its judgment or order if, on a proper
interpretation, the meaning thereof remains obscure, ambiguous or
otherwise uncertain,
so as to give effect to its true intention,
provided it does not thereby alter ‘the sense and substance’ of
the judgment or order.”
(Erasmus
Superior Court Practice
at B1-309). ,
too:
West Rand Estates Ltd v New Zealand Insurance Co Ltd
1926
AD 173
176, 186-7;
Firestone SA (Pty) Ltd v Gentiruco AG
1977 4
SA 298
(A) 306;
African National Congress v United Democratic
Movement Movement and Others (Krog and Others Intervening)
2003 1
SA 533
(CC) §§ 14-6;
Administrator Cape and Another v Ntshwaqela
and Others
1 SA 705
(A) 715F-716B.
In
Firestone South Africa (Pty) Ltd v Genticuro
AGsupra at
DH Trollip JA said:
“
First,
some general observations about the relevant rules of interpreting a
court’s judgment or order. The basic principles applicable
to
construing documents also apply to the construction of a court’s
judgment or order: the court’s intention is to be ascertained
primarily from the language of the judgment or order as construed
according to the usual, well-known rules .
Thus,
as in the case of a document, the judgment or order and the court’s
reasons for giving it must be read as a whole in order
to ascertain
its intention. If, on such a reading, the meaning of the judgment or
order is clear and unambiguous, no extrinsic fact
or evidence is
admissible to contradict, vary, qualify, or supplement it. Indeed, it
was common cause that in such a case not even
the court that gave the
judgment or order can be asked to state what its subjective intention
was in giving it
… Of course, different
considerations apply, if not the construction, but the correction of
a judgment or order is sought
by way of an
appeal
against it or otherwise … But if any
uncertainty in meaning does emerge, the extrinsic circumstances
surrounding or leading up
to the court’s granting the judgment or
order may be investigated and regarded in order to clarify it; for
example, if the meaning
of a judgment or order granted on an appeal
is uncertain, the judgment or order of the court
a
quo
and its reasons therefore, can be used to
elucidate it. if, despite that, the uncertainty still persists, other
relevant facts or
evidence are admissible to resolve it.” (My
underlining and see
Postmasburg Motors (Edms)
Bpk v Peens an Andere
1970 2 SA 35
(NC) 39FH
where Van den Heever J, as he then was, said: “In ‘n geval soos
die onderhawige, dan, moet die betekenis van die landdros
se bevel
gesoek word in die eerste plek in die betrokke dokumente.
Die
hof wat die bevel uitvaardig kan miskien genader word om ‘n
dubbelsinnigheid op te klaar … maar dit is duidelik … dat geen
getuienis toelaatbaar is om die inhoud van die hofbevel te
weerspreek, wysig, of daaraan by te voeg nie … allermins ‘n
verklaring
van die landdros self dat hy iets anders bedoel het as wat
hy gesê het
… Hierdie is ‘n regsreël,
nie slegs ‘n reël van die bewysleer waarvan die partye kan afstand
doen nie … wat geen krag verloor
as gevolg van die feit dat in
bepaalde omstandighede die hof sy bevel kan ‘wysig’ deur
byvoorbeeld ‘n kostebevel daaraan toe
te voeg nie ...(my
underlining).”
The reason for this rule that “once a court has duly
pronounced a final judgment or order, it has itself no authority to
correct,
alter, or supplement it” is that the court thereafter
becomes
functus officio
“its jurisdiction in the case having
been fully and finally exercised, its authority over the
subject-matter has ceased”
(Firestone SA (Pty) Ltd v Gentiruco
AG supra
306FG;
West Rand Estates Ltd v New Zealand Insurance
Co Ltd supra
176 and 187 and cf
First National Bank of
Southern Africa Ltd v Van Rensburg NO and Others: in re First
National Bank of Southern Africa Ltd v Jurgens
and Others
1994 1
SA 677
(T) 681EG). The exceptions to this rule are few and concern
accessory or consequential matters such as costs or interest; cases
where the judgment or order is obscure, ambiguous or otherwise
uncertain such as is alleged in this instance; the correction of
clerical,
arithmetical or other errors and questions relating to
costs (see
FirestoneSA (Pty) Ltd v Gentiruco AG supra
306H-307H;
West Rand Estates Ltd v New Zealand Insurance Co Ltd supra
176
and 187).
It follows from the primary rule of construction that
the words used must be given their ordinary and grammatical meaning
unless this
would result in “some absurdity, some repugnancy or
inconsistency with” the rest of the text (
Coopers & Lybrandt
and Others v Bryant
3 SA 761
(A) 767EF). As it was said in
Total
South Africa (Pty) Ltd v Bekker NO
1 SA 617
(A) 624I-625B after
referring to the admissibility of “background” and “surrounding”
circumstances as a guide to interpretation:
“
What is clear, however, is that where
sufficient certainty as to the meaning of a contract can be gathered
from the language alone
it is impermissible to reach a different
result by drawing inferences from surrounding circumstances
… The underlying reason for this approach is that where words in a
contract, agreed upon by the parties thereto, and therefore
common to
them, speak with sufficient clarity, they must be taken as expressing
their common intention …”. ( My underlining.
See also
Delmas
Milling Company Limited v Du Plessis
1955 3
SA 447
(A) at 454G-455A;
Sun Packaging v
Vreulink
[1996] ZASCA 73
;
1996 4 SA 176
(A)
at 184CD);
Coopers &
Lybrand supra
at 768AE);
Plaaslike
Oorgangsraad Bronkhorstspruit v Senekal
2001
3 SA 9
(A) 18G-19A);
Frankel Max Pollak
Vinderine Inc v Menell Jack Hyman Rosenberg & Co Inc and Others
[1996] ZASCA 21
;
1996 3 SA 355
(A) 363 B).
It follows that where the language of the order is
unambiguous, no reference to extrinsic evidence may be made to
ascertain its proper
meaning. Only when the order is ambiguous, in
the sense that it cannot be properly construed, may a court vary it
in terms of s
66. The power given by s 66 is substantially similar
to the one given by Rule 42 of the Uniform Rules of Court: it follows
that
the court may not alter the “sense and substance” of the
order or correct an order.
14 The order of the Tribunal is unambiguous. It states
that Astral “must supply any independent customer” … in terms
of a standard
form contract approved by the Competition Commission”.
Only one exception is provided for in paragraph 1.3 of the order, viz
that
if “an independent customer does not wish to enter into the
standard contract with Astral, then Astral must supply that customer
in accordance with the principles set out … below”. It is clear
from the terms of the order that there are only two ways in
which
customers can be supplied: either in terms of the supply contract or
on an
ad hoc
basis where the customer does not wish to enter
into the standard term contract. Both methods are regulated by the
order. The word
“any” is clear and unambiguous and leaves no
room to differentiate between classes of customer. The obligation on
Astral is
unequivocal and applies to all customers. Indeed, the
order seeks to remove all discrimination between customers since it
calls
upon Astral not to “discriminate in its conditions of supply
between entities in its own group and its independent customers for
equivalent transactions”. The order sets out specific conditions
of supply applicable to all customers, for example, those relating
to
price, discounts or rebates (Order 1.4 at Record 217:6-15).
“Independent customers” are not to be worse off than entities
in
the Astral group. A uniform regime is introduced by the order
available to all customers whether they have long-term contracts
with
Astral or not. Astral “must” supply in accordance with this new
set of rules. There is nothing ambiguous in the order.
It is
perfectly clear and contains neither an obvious error nor an
omission. The 2002 Tribunal Order did not make any reference
to
long-term supply contracts. This, however, does not render the order
ambiguous and subject to correction or interpretation by
the Tribunal
despite the fact that the Tribunal was aware of their existence.
There is nothing absurd, repugnant or inconsistent
in the order.
In so far as reference to the reasons or context of the
order is permissible, a word of warning should be expressed. The
record
of the proceedings before the Tribunal reflects an on-going
debate between the Tribunal and the parties and their
representatives.
It does not necessarily reflect the considered
reasoning of the Tribunal but rather shows an exploration of the
issues to be determined.
It would be erroneous to elevate remarks
made by the members of the Tribunal during proceedings before it to
reasons given for the
order. However, the letter written on behalf
of the Respondents dated 28 February 2002 (Record at 427 ff) shows
beyond doubt that
the conditions imposed were intended by Astral to
alleviate the concerns of the Commission that Astral will pursuant to
the merger
“foreclose” the market for day old chicks. It was
intended that Astral would, for this purpose, conclude with
all
its
customers fixed term contacts on certain terms. This offer, made on
behalf of Astral, was confirmed several times during the
proceedings
before the Tribunal (see Record at 294:6-17; 369:20-370:3; 381-2;
386:23-387:19 (“It applies across the board”);
391:4-11;
398:12-18 and compare the other remarks at 344:19-23; 349-50;
379:16-21.) It follows that, read with the reasons, the
order of the
Tribunal is not ambiguous. The Tribunal itself is not empowered to
state what it subjectively had meant with the order
or to correct a
perceived error. Section 27(1)(d) was obviously not intended to
provide for an eventuality covered specifically
by s 66.
As
the Tribunal has recognized in its
Reasons and Decisions
, it
would have been beyond the power of the Tribunal to “void” or
cancel the existing long-term contracts of the Appellants
(§ 29ff
at Record 419). Section 16(2) of the
Competition Act gives
the
Tribunal the power to (a) approve a merger, (b) approve a merger
“subject to any conditions”, or (c) prohibit implementation
of a
merger. There is no restriction in the Act on the kind of
conditions that may be imposed, but they must be conditions, to
which the merger by law is subject. The Tribunal could not have
interfered with an existing and on-going contractual relationship
between Natchix and its customers. It was for Natchix to find a way
of complying with the merger conditions imposed if it wished
to
proceed with the merger. If Natchix finds that it cannot comply with
the conditions then it has the option of not continuing
with the
merger or of seeking to appeal against the Tribunal’s decision on
the grounds that the conditions are unreasonable.
But the Tribunal
could not, and did not, declare, when approving the merger, that all
such long-term contracts were “voided”
(see s 65(1)).
The only power that the Tribunal has to “void”
contracts is derived from s 58(1)(a)(vi) of the Act, which permits
the Tribunal
to make an appropriate order in relation to a
prohibited
practice
, including “declaring the whole or any part of an
agreement to be void”. The Tribunal can thus only “void” a
contract if
it relates to a practice prohibited in terms of Chapter 2
of the Act (which concerns restrictive practices and the abuse of a
dominant
position). A contract that does not offend the Act (and
more particularly Chapter 2 thereof) is beyond the scope of the
Tribunal
to terminate. The conditions, in this case, relate to the
merger, not to any long-term or other contract between the Appellants
and any other person. Should the conditions not be fulfilled and the
merger nonetheless be proceeded with, the sanctions provided
for in
the Act (ss 59(1)(d), 15(1) and 16(3)) may result. This eventuality,
however, does not affect the validity of any of the
long-term supply
contracts.
16 It follows that the Appellants are substantially
successful in their appeal: the order is not “obscure, ambiguous or
uncertain”
and requires no declaration explaining its meaning.
Although there is no basis for the third ground of appeal relating to
the effect
of the conditions on existing contracts the Appellants
were substantially successful and should be awarded the costs of the
appeal.
As I have said, there is no appeal against paragraph 1 of
the order and, consequently, no reason to set that part of the order
aside.
17 The 2003 Tribunal Order was made on 18 July 2003.
The Appellants’ notice of appeal was served and filed on 17
September 2003.
The notice of appeal was, in terms of Competition
Appeal Court Rule 16(1), required to be filed within 15 business days
of the 2003
Tribunal Order: in other words, by Friday 8 August 2003.
The appellants’ notice of appeal was delivered 28 or 29 court days
late,
and 40 calendar days out of time. The Appellants are thus
required to apply for condonation in terms of Competition Appeal
Court
Rule 4(4), which permits this Court to condone late performance
of an act in respect of which those rules prescribe a time limit
“on
good cause shown”.
The Appellants’ explanation for non-compliance with
the applicable rules relates primarily senior counsel’s being out
of the country
from 15 July 2003 to 1 August 2003 and his being
unavailable immediately thereafter for consultations. The
Appellants’ attorney
was also out of office around 8 September
2003. The Appellants’ senior counsel returned to Johannesburg a
week before the time
expired for lodging the notice of appeal. It is
correct, as was argued on behalf of the Respondents, that not all the
delays have
been adequately explained. It is also correct that there
is no suggestion that the Appellants approached Astral, or its
attorneys,
before, on, or immediately after 8 August 2003 to inform
them that an appeal would be lodged and to request an indulgence in
respect
of the late filing of the notice of appeal.
Condonation is not, and should not be, granted as a
matter of course (
Darries v Sheriff, Magistrate’s Court,
Wynberg
1998 3 SA 34
(SCA) at 40G-41E). In this matter the
Appellants have explained their delay, albeit in a cursory fashion.
The reason advanced is
acceptable: it cannot be said that they were
flagrantly or grossly acting in breach of the rules albeit that their
failure to inform
the Respondents of their intention to lodge an
appeal deserves censure. However, in view of the obvious merit of
the appeal the
application for condonation should be granted.
17 I
would therefore
(a) grant the application for condonation for the late
filing of the Appellants’ notice of appeal;
uphold
the appeal with costs including the costs of two counsel; and
set
aside paragraphs 2 and 3 of the order of the Tribunal dated 18 July
2003.
Malan
AJA
I
agree and it is so ordered
Selikowitz
JA
I
agree
Mailula
AJA
Counsel
for Appellants: David Unterhalter SC with Mark Wesley
Attorneys
for Appellants: Espag Hattingh Attorneys
Counsel
for First Respondent: PB Hodes SC and PBJ Farlam
Attorneys
for First Respondent: Sonnenberg Hoffman Galombik
No
appearance for Second Respondent
Date
of hearing: 5 December 2003
Date
of judgment: 28 January 2004