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[2020] ZASCA 61
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Micaren Exel Petroleum Wholesaler (Pty) Ltd v Stella Quick Shop (Pty) Ltd and Another (471/2019) [2020] ZASCA 61 (9 June 2020)
THE
SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Not Reportable
Case
no: 471/2019
In
the matter between:
MICAREN
EXEL PETROLEUM
WHOLESALER
(PTY)
LTD APPELLANT
And
STELLA
QUICK SHOP (PTY)
LTD FIRST
RESPONDENT
ELEGANT
FUEL (PTY)
LTD SECOND
RESPONDENT
Neutral
citation:
Micaren Exel Petroleum
Wholesaler (Pty) Ltd v Stella Quick Shop (Pty) Ltd and Another
(Case
no 471/2019)
[2020] ZASCA 61
(9 June 2020)
Coram:
WALLIS, DAMBUZA and MBATHA JJA and LEDWABA and
EKSTEEN AJJA
Heard
:
This appeal was disposed of without an oral hearing in terms of
s19
(a)
of the
Superior Courts Act 10 of 2013
Delivered
:
This judgment was handed down electronically by circulation to the
parties’ legal representatives by email, publication
on the
Supreme Court of Appeal website and release to SAFLII. The date and
time of hand-down is deemed to be 10H00 on 9 June 2020.
Summary:
Interdict – clear right founded
on a contract – whether the contract was repudiated –
principles on inquiry into
allegation of repudiation re-stated.
ORDER
On
appeal from:
North West Division of the
High Court, Mahikeng (Nobanda AJ, sitting as court of first
instance): judgment reported
sub nom
Micaren Exel Petroleum Wholesaler (Pty) Ltd v Stella Quick Shop (Pty)
Ltd and Another
[2018] ZANWHC 43.
1 The appeal is upheld
with costs.
2 The order of the high
court is set aside and replaced with the following:
‘
(i)
The first respondent is interdicted and restrained from purchasing
and storing fuel at its premises situated at 99 and 100 Market
Street, Stella, North West, if it has not been purchased from the
applicant.
(ii)
The first respondent is ordered to pay the costs of the application.’
JUDGMENT
Dambuza JA (Wallis and
Mbatha JJA and Ledwaba and Eksteen AJJA concurring)
[1]
The issue in this appeal is whether a fuel dealership agreement
concluded between the fuel distributor, Micaren Exel Petroleum
Wholesaler (Pty) Ltd (Micaren), and the dealer, Stella Quick Stop
(Pty) Ltd (Stella), was repudiated by Micaren. The appeal is
at the
instance of Micaren. It appeals against an order of the North West
Division of the High Court, Mahikeng (Nobanda AJ) (the
high court),
in terms of which its application for an interdict against Stella,
the first respondent, was dismissed. The high court
held that the
fuel dealership agreement had been cancelled following repudiation by
Micaren. The appeal is with the leave of the
high court.
[2]
On 1 July 2014 Micaren and Stella concluded a ‘dealer
agreement’ in terms of which Micaren, as a ‘distributor’,
agreed to sell and deliver petrol and diesel fuel to Stella, the
‘dealer’. Stella was to sell the fuel from its premises
at 99-100 Market Street, Stella, in the North West Province, at the
Distributor’s ruling price as at the date of delivery.
The fuel
was to be stored in underground tanks that were to be installed by
Micaren at Stella’s premises before the effective
date of the
agreement. In terms of the agreement, Stella was prohibited from
buying fuel from any distributor other than Micaren
and only the fuel
bought from Micaren would be stored in the tanks supplied under the
agreement.
[3] More specifically, in
the relevant parts, the dealer agreement regulated the relationship
between the parties as follows:
‘
3.2
The dealer is obliged, when requiring fuel, to place an order for the
delivery of not less than 20,000 (TWENTY THOUSAND) litres
at a time.
3.3 The Dealer may not
purchase fuel and store it, if it has not been purchased from the
Distributor . . .
. . .
4.2 The Distributor
shall, within 36 (THIRTY SIX) hours of the placing of the order and
the payment of the purchase price, deliver
the Fuel to the dealer,
free of transport costs, at the premises . . .
. . .
6.1 The Distributor shall
install the equipment on the Premises before the commencement date.
6.2 Fuel delivered by the
Distributor to the Dealer may only be sold by the Dealer using the
Equipment.
6.3 It is agreed that the
Equipment belongs to Micaren Exel Petroleum Wholesaler (Pty) Ltd
which is lending the Equipment to the
Dealer. The Dealer will allow
the Distributor to install the Equipment in or on the Premises in
accordance with statutory and other
prescriptions and demands,
including SABS 089 manual.
6.4 The Equipment remains
the property of Micaren Exel Petroleum Wholesaler (Pty) Ltd and may
be used by the dealer only for the
sale of Fuel as stated in this
agreement. If the Dealer uses the Equipment for any other purposes as
those agreed upon between
them, without the prior written consent of
the Distributor, the Dealer will be liable for damages suffered by
the Distributor as
a result thereof, including the loss of Fuel,
subject to 5.2.
. . .
6.13The Dealer will not
allow installation on or near the Premises of equipment belonging to
another distributor of Fuel, and will
not use the Equipment for
storage and sale of any other distributor of Fuel subject to the
terms of this agreement pertaining to
the unavailability of fuel to
be delivered by the Distributor to the Dealer.’
The
equipment was described in the agreement as comprising three dual
pumps, four underground tanks, and one aboveground tank, the
tanks
being of various sizes.
[4]
It was common cause, both in the high court and in this court, that
from 17 January 2017 Stella started buying fuel from the
second
respondent, Elegant Fuel (Pty) Ltd, and that it was storing such fuel
in the tanks installed on the premises. This resulted
from events
that started in November 2016, when Micaren stopped delivering fuel
to Stella. On 22 November 2016 Stella admitted
liability to Micaren,
in writing, for R504 455.36 in respect of fuel that had been
delivered previously. Thereafter it made certain
payments, reducing
this amount to R449 720.39. On 22 January 2017 Micaren sent to Stella
a reconciliation of Stella’s account,
showing an outstanding
payment of R504 455.36. The reconciliation was followed, on 24
January 2017, by a notice issued in
terms of s 345 of the Companies
Act 61 of 1973 by Micaren’s attorneys to Stella, demanding
payment of R449 720.39. The notice
also advised of Micaren’s
intention to have Stella wound up if payment was not received within
21 days thereof.
[1]
On the
following day (25 January 2017) Stella’s attorneys addressed a
letter to Micaren, alleging repudiation of the dealer
agreement by
Micaren in failing to supply to Stella the ‘petroleum products’
it had ordered; and by unilaterally, and
unlawfully, imposing RAS
levies
[2]
not agreed upon by
Stella and to which Micaren was not entitled.
[5]
In terms of that letter Stella accepted the repudiation and cancelled
the dealer agreement. On 7 February 2017 Stella’s
attorneys
responded to the s345 notice, disputing the correctness of the
balance owing on Stella’s account and tendering
payment of
R66 541.52 which, according to Stella, was the balance owing to
Micaren. However, already on 28 January 2017 Micaren
had approached
the high court seeking an order that Stella be interdicted and
restrained from buying fuel from any distributor
other than itself.
[6]
Stella’s
in limine
response, that Micaren should have sought an order of specific
performance, was correctly rejected by the high court as the
interdict
sought was, in fact, a prayer for specific performance. As
regards the merits of the application, Stella contended that it had
cancelled the dealer agreement pursuant to the repudiation thereof by
Micaren and Micaren’s unilateral imposition of RAS levies
on
Stella’s account, for capital investment expended in respect of
the equipment installed on the premises.
[7]
Despite the express terms of the agreement, Stella maintained that
the fuel tanks were its own property and not the subject
of the
dealer agreement. It asserted that they had already been installed on
the premises when it acquired the property and that
Micaren’s
claim thereto was a misrepresentation. In sum, the basis of Stella’s
opposition to Micaren’s application
for an interdict was that,
because Micaren had repudiated the dealer agreement, as a result of
which it was cancelled, and because
the tanks were its own property,
the requirements for an interdict had not been met.
[8]
Although both parties were in agreement in the high court that
ownership of the tanks was not an issue in the resolution of
their
dispute, in its reply Micaren gave a detailed historical account of
its ownership of the tanks, over a period of more than
two decades,
during which the premises had changed many hands until acquisition
thereof by Stella in 2014.
[9]
The high court found that the relevant clauses (clauses 3.3 and 6.13)
of the agreement only prohibited the storage of fuel purchased
from
third party suppliers and not the purchase thereof from third
parties. It also found that it was ‘evident ex facie the
documents filed’ that the dealer agreement had been cancelled
and that, for that reason, there was no basis for the interdict
sought by Micaren. The application for an interdict to stop the
purchasing of fuel from other suppliers was accordingly dismissed.
Despite the agreement by the parties that ownership of the tanks was
irrelevant to the issues, the high court referred the issue
of
ownership of the tanks for oral evidence.
[10]
On appeal Micaren insisted, as it did in the high court, that it had
never repudiated the dealer agreement. It maintained that
its conduct
in not delivering the fuel ordered by Stella was consistent with the
terms of the contract, as Stella had not paid
for the fuel it sought
to have delivered and it owed money for fuel that had been delivered
previously. Micaren maintained that
the alleged repudiation and
purported cancellation of the agreement had to be considered within
the context of events that preceded
the alleged repudiation letter
dated 25 January 2017. According to Micaren, when raising the alleged
repudiation and cancellation
of the agreement, Stella failed to
disclose these events to the court. It (Micaren) also rebuffed as a
baseless conclusion of fact
the assertion that it had imposed
regulatory levies on Stella’s account.
[11]
The traditional approach to an inquiry into an allegation of
repudiation is to examine the objective intention of the repudiator
and the response or acceptance thereof by the aggrieved party. The
question is whether the conduct of the repudiator or non-performing
party, when fairly considered by a reasonable person in the place of
the aggrieved or innocent party, demonstrates an intention
no longer
to be bound by the contract.
[3]
Needless to say, such conduct must be viewed comprehensively. All
material aspects thereof must be taken into account. In
Nash
v Golden Pumps (Pty) Ltd
[4]
Corbett JA described repudiation as follows:
‘
Where
one party to a contract, without lawful grounds, indicates to the
other party in words or by conduct a deliberate and unequivocal
intention no longer to be bound by the contract, he is said to
“repudiate” the contract . . . Where that happens, the
other party to the contract may elect to accept the repudiation and
rescind the contract. If he does so, the contract comes to
an end
upon communication of his acceptance of repudiation and rescission to
the party who has repudiated . . .’
[12]
In a sense, repudiation is itself breach of the agreement and
acceptance thereof by the innocent party is exercise of the right
to
terminate the contract.
[5]
The
conduct from which repudiation is inferred must be clear and
unequivocal.
[6]
[13]
Evidently, the dismissal of Micaren’s application by the high
court was based solely on the letter dated 25 January 2017.
The court
simply accepted Stella’s assertion that Micaren’s failure
to deliver fuel to Stella constituted repudiation.
The full context
of the matter as set out in Micaren’s reply to Stella’s
repudiation allegation was not considered
by the high court. In this
regard the high court erred. The correct approach was to consider the
full conduct of both parties,
particularly the outstanding payments
starting from November 2016, the acknowledgment of indebtedness, and
the recurring failure
to make payments. All of this would have
weighed with the innocent party, Stella, when considering
non-delivery of the fuel by
Micaren.
[7]
Also relevant was the fact that Micaren’s refusal to deliver
fuel to Stella had persisted over a period of at least two months.
Yet, it was only when the s 345 notice was issued that Stella alleged
that the non-delivery of fuel constituted repudiation. Also
relevant
is the fact that Micaren had clearly communicated its intention to
hold Stella to payment of moneys owing under the agreement
by
repeatedly demanding payment and threatening legal action. At no
point did Micaren demonstrate an intention not to be bound
by the
agreement. On the contrary, its actions were strictly in accordance
with the agreement.
[14]
In the end the evidence shows that a reasonable dealer in Stella’s
position, having considered all of these aspects,
would not have
concluded that Micaren was repudiating the contract. The allegation
by Stella that Micaren had repudiated the contract
was therefore
unfounded. The agreement remained extant. Instead, it was Stella who
had breached its obligation under the contract
by purchasing fuel
from third party distributors. Its conduct was to Micaren’s
detriment. Micaren had satisfied the requirements
for a final
interdict. The appeal must therefore succeed.
[15] The following order
shall issue:
1 The appeal is upheld
with costs.
2 The order of the high
court is set aside and replaced with the following:
‘
(i)
The first respondent is interdicted and restrained from purchasing
and storing fuel at its premises situated at 99 and 100 Market
Street, Stella, North West, if it has not been purchased from the
applicant.
(ii)
The first respondent is ordered to pay the costs of the application.’
________________________
N DAMBUZA
JUDGE
OF APPEAL
Appearances:
For
appellants: Adv B H Swart SC
Instructed
by: Japie van Zyl Attorneys c/o Van Rooyen Tlhapi Wessels, Mahikeng
Symington
De Kok, Bloemfontein
For
respondent: Adv P J Greyling
Instructed
by: Shabort Potgieter Attorneys c/o Smit Stanton Inc., Mahikeng
Rossouw
& Conradie Inc., Bloemfontein
[1]
Section 345 of the Companies Act 61 of 1973 deems a company unable
to pay its debts if a creditor, who is owed not less than
R100, has
served on the company’s registered office a demand requiring
the company to pay and the company has, for three
weeks thereafter,
neglected to pay or to secure or compound the debt to the reasonable
satisfs ion of the creditor. In light
of item 9 of Sch 5 of the
Companies Act 71 of 2008
this provision still applies under the
Companies Act 71 of 2008
, despite the repeal of the 1973
Companies
Act.
[2
]
Described by Stella as a system that sets forth the cents per litre
of automotive fuel that would from then on be payable as
operating
expenditure and capital expenditure. Stella asserted that the system
was not applicable in this case as Micaren had
not spent any capital
investment on its (Stella’s) premises.
[3]
RH
Christie & GB Bradfield
Christie’s
Law of Contract in South Africa
7 ed (2016) at 613.
[4]
Nash
v Golden Pumps (Pty) Ltd
1985
(3) SA 1
(A) at 22C-F.
[5]
Datacolor
International (Pty) Ltd v Intamarket (Pty) Ltd
[2000] ZASCA 82
;
2001 (2) SA 284
(SCA) para 1 and the other authorities cited
therein.
[6]
Datacolor
ibid para 18.
[7]
Datacalor
ibid para 19.