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[2020] ZASCA 76
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Beadica 231 CC v Sale's Hire CC (1191/2018) [2020] ZASCA 76 (30 June 2020)
THE
SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Not Reportable
Case
no: 1191/2018
In
the matter between:
BEADICA
231
CC APPLICANT
and
SALE’S
HIRE
CC RESPONDENT
Neutral
citation:
Beadica
231 CC v Sale’s Hire CC
(1191/2018)
[2020] ZASCA 76
(30 June 2020)
Coram:
PETSE DP, MBHA, MOKGOHLOA and
NICHOLLS JJA and GORVEN AJA
Heard
:
This appeal was, by consent between the parties, disposed of without
an oral hearing in terms of
s 19(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 for hand-down is deemed to be 09H45 on 30 June
2020
Summary:
Practice and
procedure – special leave to appeal – refusal by two
judges of the Supreme Court of Appeal (SCA) –
s 17(2)
(f)
of the
Superior Courts Act 10 of 2013
– referral of order
refusing special leave to court for reconsideration and, if
necessary, variation.
Appeal – application for special leave to appeal
to the SCA – requirements for grant thereof – test not
satisfied
by establishing existence of only reasonable prospects of
success but existence of special circumstances also required.
Contract
– enforcement of – general rule that contracts
enforceable unless enforcement unconscionable or contrary to
public
policy.
ORDER
On
appeal from:
Western
Cape Division of the High Court, Cape Town (Ndita J, Baartman and
Sher JJ concurring sitting as court of appeal):
The application for the reconsideration and, if
necessary, variation of the order of this Court, granted on 15 August
2018, dismissing
applicant’s application for special leave to
appeal, is dismissed with costs.
JUDGMENT
Petse
DP (Mbha, Mokgohloa nd Nicholls JJA and Gorven AJA concurring)
[1]
This is a hybrid application that raises two discrete issues of
narrow compass. It is brought pursuant to an order of this Court
granted by Navsa AP on 13 February 2019
[1]
under s 17(2)
(d)
and
(f)
of the Superior Courts Act, 10 of 2013 (the Act). The first
application is for reconsideration and, if necessary, variation of
the decision of this Court in terms of which the applicant’s
application for special leave
[2]
to appeal was dismissed with costs. The second part of the
application is for special leave to appeal in terms of s 17(2)
(d)
of the Act.
[2]
As is usual in these types of applications, their consideration
generally requires for their determination, full argument as
if the
envisaged appeal itself were being considered. To this end, the
applicant was directed to file six copies of its application
and the
record in terms of rule 8 of this Court’s Rules. And the
parties were forewarned that they must be prepared, if called
upon to
do so, to address the court on the merits. Hence, in due course, six
copies of the application and record were filed as
were the parties’
comprehensive heads of argument in which the merits of the envisaged
appeal were addressed.
[3]
The substantive issues sought to be raised in the envisaged appeal
are two-fold. First, the principal issue is whether a party
to a
contract freely and voluntarily entered into, can deny the other
party to that contract its entitlement to enforce contractual
obligations freely and seriously undertaken by the former on the
ground that the latter, in asserting its contractual rights, in
truth
seeks to achieve an illegitimate purpose. The subsidiary issue is
whether the well-entrenched
Plascon-Evans
[3]
principle was properly applied by the Full Court of the Western Cape
Division of the High Court (the Full Court) in determining
factual
disputes in motion proceedings where final relief is sought without
recourse to the hearing of oral evidence in order to
decide where the
probabilities lie.
[4]
As to the first issue, the applicant, Beadica 231 CC (Beadica),
asserts that in the context of the facts of this case the answer
must
be in the affirmative. On this score, Beadica accepts that the terms
of the contract upon which the respondent, Sale’s
Hire CC
(Sales’ Hire), relies are, on the face thereof, objectively
reasonable and unobjectionable. Nevertheless, Beadica
contends that
Sale’s Hire ought to have been denied relief by the Full Court
because what it sought to do was to compete
unlawfully with it by
surreptitiously gaining access to Beadica’s ‘sensitive
confidential information’ under
the guise of exercising the
inspection rights that are explicitly provided for in the parties’
agreement. This, says Beadica,
is contrary to public policy and
inimical to the constitutional objective of accomplishing economic
transformation and empowerment
of the previously disadvantaged
persons as a consequence of the racially discriminatory practices of
the past. Consequently, Beadica
seeks special leave to appeal to this
Court so that this issue can be ventilated.
[5] The factual matrix against which these issues fall
to be determined now follows. Beadica is a close corporation that
sells and
lets tools and building equipment. It conducts its business
in Durbanville, Western Cape. Sale’s Hire is similarly a close
corporation whose sole member is Mr Shaun Sale. As the name suggests,
Sale’s Hire hires out building tools and equipment
to builders
in Cape Town and its environs. Previously, Sale’s Hire operated
some 20 outlets in various areas of Cape Town
and environs. Apart
from general staff, it also employed managers at its stores. Mr
Alistair Fisher, who at all times material
to this litigation, was
Beadica’s sole member, was one of its employees who rose
through the ranks to become a manager at
one of the stores.
[6]
In the course of time, Sale’s Hire decided to divest its
interests in ten of its stores which were thereafter operated
by
franchisees. The various franchisees were part of a black empowerment
scheme funded by the National Empowerment Fund Trust
[4]
(NEFT) which is a government initiative aimed at economically
empowering previously disadvantaged persons. The NEFT receives its
funding from the government. Mr Fisher is one of the beneficiaries of
the NEFT funding through Beadica.
[7]
On 12 October 2011 the parties concluded a written franchise
agreement (the franchise agreement) in terms of which Beadica,
as
franchisee, was granted by Sale’s Hire, as franchisor, a right
to acquire and operate the franchisor’s former store
in
Durbanville, Western Cape, subject to certain terms and conditions
that were fully spelt out in the franchise agreement. Of
particular
relevance for present purposes were clauses 11, 14 and 15 of the
franchise agreement.
[8] Clause 11, in material parts, reads:
‘
11.
SUPPLY
OF GOODS AND/OR SERVICES, BUSINESS IMAGE AND OPERATING STANDANRDS
11.1 Whilst it is not possible
to provide an exhaustive list of the goods and/or services the
Franchisee is entitled to provide,
the Franchisee acknowledges that
the goods and services it is entitled to provide, pursuant to this
Agreement, are only those goods
and services ordinarily provided in
the course of operating a
SALE’S HIRE
Business
and which are approved by the Franchisor.
. . .
11.2.3 to maintain the condition
and appearance of the Business and the Location in accordance with
the standards of the Franchisor
and consistent with the image of a
SALE’S HIRE
Business as a clean, sanitary,
attractive and efficiently operated Business offering high quality
tools and equipment for hire
and sale and courteous and helpful
service;
11.2.4 to effect such
maintenance of the Business and the Location as is required by the
Franchisor from time to time to maintain
such condition, appearance
and efficient operation, including without limitation:-
11.2.4.1 continuous and thorough
cleaning of the interior and exterior of the Business including the
parking bays and yards;
11.2.4.2 interior and exterior
repair of the Business;
11.2.4.3 maintenance of
equipment; tools and vehicles at peak performance;
11.2.4.4 replacement of worn out
or obsolete fixtures, furnishings, equipment, tools and signs with
approved fixtures, furnishings,
equipment, tools and signs, and;
11.2.4.5 periodic refurbishing,
painting and decorating.
11.2.5 to
upgrade the Business at reasonable intervals determined by the
Franchisor to reflect changes in the image, signage, design,
format
or operation of
SALE’S
HIRE
introduced by the Franchisor and required of
SALE’S
HIRE
Franchisees subject to approval of all construction, signage, repair
or re-fixturing in connection with such upgrading or remodelling,
and;
11.2.6 to
place or display at the Business (interior and exterior) only such
signs, emblems, lettering, logos, colour schemes and
display only
such advertising materials that are from time to time approved in
writing by the Franchisor.
. . .
11.7 The Franchisee shall offer
all products approved by the Franchisor. If the Franchisee desires to
add items to be sold or hired
at or by the Business, the prior
written approval of the Franchisor must first be obtained. The
Franchisor requires such approval
of new items to assure itself that
such items are of the type and quality approved for
SALE’S
HIRE
Businesses and are consistent with the image and format
of
SALE’S HIRE
Businesses. The Franchisee agrees
not to, without prior written approval by the Franchisor, offer any
equipment, tools or other
services or products that are not
authorised by the Franchisor for
SALE’S HIRE
Businesses. The Franchisee shall apply for any licences as required
by law to enable it to sell and hire the products from the
Approved
Location.
11.8 The Franchisee shall at all
times maintain its stock at such levels as the Franchisor may from
time to time require.
11.9 All Products, except those
contained on the Approved Supplier’s Schedule as described in
clause 11.10, must be purchased
directly from the Franchisor at a
price determined by the franchisor from time to time in accordance
with market-related indicators.
The Franchisor shall endeavour to
provide the Franchisee with the Products requested however the
Franchisor does not warrant that
it shall be able to supply the
Franchisee with the products as requested, nor that it shall be able
to do so within a reasonable
time period. In the event that the
Franchisor is unable to provide the Franchisee with the requested
products within a reasonable
time period, the Franchisor shall
attempt to facilitate the supply of such product from an alternative
supplier. The Franchisor
shall not under any circumstances become
liable for the cost of any orders placed by the Franchisor on behalf
of the Franchisee
and at the Franchisee’s instance and request
and the Franchisee hereby assumes liability to pay for any such
Product purchases
ordered on the Franchisee’s behalf and
indemnifies the Franchisor in this regard.
11.10 The Franchisor shall
provide the Franchisee with an Approved Supplier Schedule which
Schedule shall contain a directory of
Products together with the name
and contact details of the designated supplier from whom such Product
must be purchased. The Franchisee
shall be obliged to purchase such
Products from such designated supplier as recorded on the Approved
Supplier Schedule. In the
event the designated supplier is unable to
provide the Product to the Franchisee on any occasion, the Franchisee
shall be obliged
to request the Franchisor to source the supply of
the Product from an alternate supplier. The Franchisor is entitled to
amend such
Schedule at any time in the Franchisor’s discretion.
. . .
11.14 The Franchisor shall
provide training to the Franchisee and its personnel which training
shall enable the Franchisee to maintain
and effect minor repairs to
the Franchisee’s tools and equipment. The training provided by
the Franchisor to the Franchisee
shall not, in any manner, constitute
a warranty that the Franchisee’s personnel shall be competent
to properly and effectively
carry out the required repairs and
maintenance as such ability is dependent on the individual skills of
the Franchisee’s
personnel. In the event the Franchisee is
unable to carry out the repairs and/or maintenance of its tools and
equipment, the Franchisee
is obliged to request the Franchisor to
assist with repair and maintenance. Provided that the Franchisor is
in a position to carry
out the repair or maintenance required by the
Franchisee, the Franchisor is not obliged to effect any repairs or
maintenance as
requested by the Franchisee. The Franchisee is
prohibited from mandating or contracting any third party to carry out
the repairs
or maintenance of the Franchisee’s tools or
equipment without the Franchisor’s prior written approval.
. . .
11.16 At the Franchisor’s
sole discretion, and without prior warning, the Franchisee shall
undergo regular customer service
evaluations and shall be required to
pass such evaluation.
11.17 Mandatory specifications,
standards and operating procedures may be prescribed from time to
time by the Franchisor in the
Operating Manuals, or otherwise
communicated to the Franchisee verbally or in writing. All reference
thereto in this Agreement
shall include all such mandatory
specifications, standards and operating procedures.
11.18 The Franchisee shall
purchase, install and use such telephone equipment electronic
communications and computer equipment,
including hunting facilities
for at least 4 (four) hunting telephone lines, 1 (one) line for a
facsimile machine, modems and computerised
cash registers, as the
Franchisor may from time to time require. The Franchisee shall
purchase and use such computer software,
including “mail order”
software as the Franchisor may from time to time require.
11.19 The Franchisee shall be
liable for the cost of all computer software including licensing and
any technical support as may
from time to time be supplied by the
Franchisor which software shall remain the Franchisor’s
property, as shall the mailing
lists and other data recorded thereby,
whether on CD, hard disks, tapes or in printed, photocopied or
facsimile or in any other
format, which the Franchisee agrees to
treat as confidential. The cost of such software as payable by the
Franchisee is not included
in the royalty and service fees payable
under clause 9 above and the Franchisor shall invoice the Franchisee
separately for these
amounts. The Franchisor shall, in its sole and
unfettered discretion, determine what software must be purchased by
the Franchisee.
The Franchisor and/or its authorised agents shall be
given access to all such data and shall be permitted to make copies
thereof
for its own purposes. The Franchisee shall not use any such
software for any other purpose, nor shall Franchisee make or use
copies
thereof for any purpose except as backup copies for security
purposes. Copies of the Franchisee’s backup disks shall be
delivered
to the Franchisor each month, by no later than the 7
th
(seventh) day of the following month.
. . .
11.21 The Franchisee shall
secure and maintain in force in its name all required licences,
permits and certificates relating to
the operation of the Business
and shall, if so required by the Franchisor, transmit copies of all
such licences, certificates and
permits to the Franchisor within 10
(ten) days of their receipt by the Franchisee. The Franchisee shall
operate the Business in
full compliance with all applicable laws,
occupational hazards and health, workmen’s compensation
insurance, unemployment
insurance and payment of taxes. All marketing
by the Franchisee shall be factual, ethical and in good taste in the
judgment of
the Franchisor and shall be subject to the Franchisor’s
prior written approval.
. . .’
[9] Clause 14, in turn, provides:
‘
14.
ACCOUNTING
REPORTS AND FINANCIAL STATEMENTS
14.1 The Franchisee shall at its
own expense obtain and properly maintain a computer based
point-of-sale register approved by the
Franchisor and will use the
software specified and/or provided by the Franchisor, to record all
sales and provide accounting and
such other information as may be
required by the Franchisor. The Franchisee shall establish and
maintain at its own expense a record-keeping
system prescribed by the
Franchisor from time to time. The Franchisor shall provide the
Franchisee with the prescribed software
and shall invoice the
Franchisee for
inter alia
; the cost of the software; the
licensing fees; any installation services; technical support or
guidance and training which may
be provided by the Franchisor, at the
Franchisor’s discretion in order to ensure that the Business
continually complies with
the mandatory accounting; reporting and
operating standards and procedures. With respect to the operation and
financial situation
of the Business, the Franchisee shall, on a daily
basis, facilitate, allow and ensure that the Franchisor is accessed
to upload
all relevant trading information from the Franchisee’s
computer system and facilitate the Franchisor ascertaining stock
levels
and such financial and other information as is required by the
Franchisor from time to time, including but not limited to:
14.1.1 the Gross and Net
Sales of the Business for the preceding calendar month and such other
information and supporting
records as the Franchisor may from time to
time require in its sole discretion;
14.1.2 financial
statements consisting of a balance sheet and a profit and loss
statement for the preceding calendar month
and a year-to-date balance
sheet and profit and loss statement for the Business;
14.1.3 a balance sheet and
an annual profit and loss statement reflecting all year-end
adjustments for the Business.
14.1.4 exact copies of all
VAT returns and income tax returns that reflect the operation of the
Business;
14.1.5 access to any
information on any computer system utilised in the operation of the
Business. In this regard the Franchisee
undertakes to ensure that the
Franchisor has access to a data line which will allow the Franchisor
access to the Franchisee’s
computer’s system at any time.
14.2 Each such report and
financial statement shall be verified as a true and correct
reflection of the Franchisee’s trading
activities and signed by
the Franchisee (or the Franchisee’s auditor, if so required by
the Franchisor) in the manner prescribed
by the Franchisor.
14.3 The Franchisee shall take
physical stock on the last day of each month and a copy of each stock
sheet shall be transmitted
to the Franchisor by e-mail. The final
monthly stock figures shall be used in preparing the financial
statements referred to above.
14.4 In addition to the
aforegoing financial reporting requirements the Franchisee shall be
obliged to properly, diligently and
timeously complete in all
respects, a Financial Report in the form prescribed by the
Franchisor, which form may be amended from
time to time in the
Franchisor’s sole discretion. The financial Report, which must
be delivered to the Franchisor in the
manner prescribed from time to
time by no later than the 5
th
day of each consecutive
month, shall include the following minimum financial information:-
14.4.1 a calculated and
itemised breakdown of the Business’s turnover for the
immediately preceding month;
14.4.2 a calculated and
itemised breakdown of all the purchases of the Business for the
immediately preceding month and how
such purchases were made, for
example cash or on credit and whether payment has been settled or
remains outstanding;
14.4.3 copies of the
Business’s bank statements for the immediately preceding month;
14.4.4
copies of the Business’s VAT returns.’
[10] Finally, clause 15 in material parts reads:
‘
5.
REVIEWS,
INSPECTIONS AND AUDITS
15.1 To determine whether the
Franchisee is complying with the specifications, standards and
operating procedures prescribed the
Franchisor for the operation of a
SALE’S HIRE
Franchised Business, the Franchisor
or its designated agents shall have the right at any reasonable time
and without prior notice
to the Franchisee to:
15.1.1
inspect the Business and the stock to ensure that
inter
alia
:-
15.1.1.1 all hire equipment and
consumables are accounted for and there are no losses due to theft or
breakage;
15.1.1.2 ensure that all hire
equipment is complete with all necessary accessories and consumables;
15.1.1.3 ensure the technical
soundness and quality of the hire equipment is maintained;
15.1.1.4 ensure the Business is
correctly stocked with hire equipment and that such stock is
correctly displayed;
15.1.1.5 ensure the signage is
correctly displayed and maintained.
15.1.2 observe the Franchisee
and any
SALE’S HIRE
managers and other employees
of the Franchisee;
15.1.3
interview
SALE’S
HIRE
managers
and other employees of the Business;
15.1.4
interview customers of the
SALE’S
HIRE
Business; and
15.1.5 gain
access to all records including those maintained by the computerised
point-of-sale or any other communications equipment.
The Franchisee shall present to
its customers such Customer Evaluation forms as are periodically
prescribed by the Franchisor and
shall participate in and/or request
that its customers participate in any marketing surveys performed by
anyone on behalf of the
Franchisor.
15.2 The Franchisor shall have
the right at any time during business hours, and without prior notice
to the Franchisee to inspect
or cause to be inspected and audited,
the stock of the Business, the business records, bookkeeping and
accounting records, sales
and income tax records of any company,
close corporation, partnership or any other juristic or natural
person which holds any interest
in or owns the Franchisee. The
Franchisee shall fully co-operate with representatives of the
Franchisor and independent accountants
hired by the Franchisor to
conduct any such inspection or audit. In the event that any such
inspection or audit shall disclose
an understatement of the Sales of
the Business, the Franchisee shall immediately after receipt of the
inspection or audit report,
pay to the Franchisor any royalties,
marketing contributions or other fees due on the account of such
understatement, plus interest
(at the rate and on the terms provided
herein) from the date originally due until the date of payment.
15.3 The stock audit carried out
by the Franchisor will involve regular assessments of
inter alia
:-
15.3.1
recorded stock balance;
15.3.2 actual
stock on hand;
15.3.3 the
appearance, condition and quality of the stock
. . .
15.5 The Franchisor shall be
entitled to carry out inspections any time during normal business
hours and without prior warning to
the Franchisee. No warnings will
be issued or penalties incurred by the Franchisee during the first 3
(three) months after the
Commencement Date.
15.6 In the event that such
inspection or audit is made necessary by the failure of the
Franchisee to furnish reports, supporting
records or other
information timeously or at all, as herein required, or if any
understatement of Sales for the period of any audit
is determined by
any such audit or inspection , the Franchisee shall reimburse the
Franchisor for the costs of such audit or inspection
, including, but
not limited to, any charges of any independent accountants, and the
travel expenses and room and board and compensation
for the expenses
and costs (including salary) or any employee or agent of the
Franchisor. The foregoing remedies shall be in addition
to and not in
lieu of all other remedies and rights of the Franchisor hereunder or
under any applicable law.
. . .’
[11]
I have, in the preceding three paragraphs, quoted clauses 11, 14 and
15 of the franchise agreement extensively, because they
are
particularly relevant to the issues which arise for determination in
this application. In sum, clauses 11, 14 and 15 of the
franchise
agreement, amongst other things, provide that: (a) the franchisor
shall have the sole right to determine the software
that must be
purchased by the franchisee at the latter’s cost and used by
the franchisee, and allowing the franchisor free
access to all data
recorded therein; (b) the franchisee, at own expense, must obtain and
properly maintain a computer based point-of-sales
register approved
by the franchisor to record all sales, and provide the franchisor
with accounting and related information as
the latter may require
from time to time; (c) the franchisee, on a daily basis, must
facilitate, allow and ensure that the franchisor
has access to upload
all relevant trading information from the franchisee’s computer
system and facilitate the franchisor
ascertaining stock levels and
such financial and other information as required by it from time to
time; (d) the franchisor has
the right, at any reasonable time and
without prior notice to the franchisee, to: (i) inspect the
franchisee’s business and
its stock to ensure, amongst others,
that all hire equipment and consumables are accounted for, complete
and technically sound,
the business is correctly stocked with hire
equipment that is correctly displayed and signage is correctly
displayed and maintained;
(ii) observe and interview the franchisee’s
managers and employees and interview customers of the franchisee’s
business;
(iii) gain access to all records, including those
maintained by the computerised point-of-sales or any other
communications equipment;
(e) the franchisor has the right, at any
time during business hours, and without prior notice to the
franchisee, to inspect or
cause to be inspected or audited, the stock
of the business, business records, bookkeeping and accounting
records, sales and income
tax records and returns, and other records
of the business; and (f) the franchisee must fully cooperate with the
franchisor’s
representatives conducting inspections or audits.
In short, the purport of these clauses is that the franchisor has a
right to
exercise a close control over important business related
activities of the franchisee.
[12] As already indicated, Beadica’s acquisition
of Sale’s Hire’s Durbanville store was funded by the
NEFT. In
consequence, it presumably became necessary for Sale’s
Hire to enter into what the parties to that agreement have described
as a ‘co-operation agreement’ with the NEFT. In essence,
the co-operation agreement required of Sale’s Hire to:
(a)
‘source, screen and approve prospective BEE franchisees; (b)
provide ongoing business support and mentorship to selected
franchisees; and (c) provide training to the BEE franchisees on
aspects of corporate governance’. In short, it required Sale’s
Hire, once funding had been approved by the NEFT, to ensure that the
business operations of the franchisees were run successfully
and in
keeping with best practices of corporate governance.
[13]
The services rendered by Sale’s Hire to its franchisees, and in
particular Beadica, were not out of charity. The franchise
agreement
explicitly provided for ways and means whereby Sale’s Hire
would be recompensed by way of royalties and fees payable
by the
franchisees. Thus, the extensive inspection rights accorded to Sale’s
Hire in terms of the franchise agreement were
intended to ensure
that: (a) the franchisees adhered to the business standards and
practices agreed upon; (b) they purchased their
tools and equipment
from approved suppliers; and (c) importantly, the revenue generated
from sales and hire of tools and equipment
was reasonably accurate
for it was from these figures that the amount of royalties and fees
payable to Sale’s Hire would
be determined. Therefore, the
accuracy of the revenue figures generated by the franchisees was
critical to the success of the ventures
and the determination of the
amount representing royalties and fees payable to Sale’s Hire.
[14]
Some two years later, and consistently thereafter until 2016,
intractable problems began to emerge as a result of what Sale’s
Hire asserted were persistent and unwarranted refusals by Beadica to
allow it to exercise its inspection rights and Beadica’s
failure to comply with its obligations as explicitly set out in
clauses 11, 14 and 15 of the franchise agreement. Consequently,
a
letter was addressed to Beadica on behalf of Sale’s Hire in
which it was pointed out, amongst other things, that Beadica
was
committing several breaches of the terms of the franchise agreement.
However, despite Sale’s Hire’s appeal to Beadica
to
desist from the conduct of which it complained, the breaches
persisted.
[15]
On 5 December 2014, a firm of attorneys acting on behalf of the NEFT
addressed a letter to Sale’s Hire at the instance
of Beadica
and other franchisees, in which they raised various issues about what
they alleged were several respects in which Sale’s
Hire had
failed to comply with the terms of both the co-operation agreement
and the franchise agreement.
[16] As there appeared to be no prospect of the amicable
resolution of the ensuing impasse, Sale’s Hire wasted no time
in
instituting urgent motion proceedings in the Western Cape Division
of the High Court (the High Court). The relief claimed against
Beadica was for an order that:
‘
1 . . .
2.1 That Applicant and/or its designated agent(s) shall have the
right at any reasonable time during business hours, and at 12
Marais
Street, Durbanville (“the approved location”) and without
prior notice to Respondent to:
2.1.1 inspect the business of Respondent;
2.1.2 observe Respondent and any of its managers
and/or employees;
2.1.3 interview Respondent’s managers and
other employees;
2.1.4 interview customers of Respondent;
2.1.5 gain access to all records of Respondent including those
maintained
by the computerised point-of-sale or any other communications
equipment;
2.1.6 inspect or cause to be inspected and audited at the approved
location its business records, bookkeeping and accounting records,
sale and income tax records and returns, and other records of
Respondent and the books and records of any company, close
corporation,
partnership or any other juristic or natural person
which holds any interest in or owns Respondent.
2.2 That Respondent be ordered not to in any way refuse or obstruct
such inspections, observations, interviews, access and/or audits
during such reasonable times in any way whatsoever.
2.3 That Respondent be ordered to fully co-operate with applicant
and/or its designated agent(s) to conduct such inspections,
observations, interviews, access and/or audits.
2.4 That Respondent be ordered to immediately re-establish and
maintain at its own expense the record-keeping system prescribed
by
the Applicant and to use Applicant’s prescribed software;
2.5 That Respondent be ordered to immediately allow and ensure, on a
daily basis, facilitate, that Applicant has access to upload
all
relevant trading information from the Respondent’s computer
system and facilitate the Applicant ascertaining stock levels
and
such financial and other information as required by the Applicant
from time to time;
. . .’
[17] Affidavits in support of the application and in
opposition to it were filed. Mr Sale deposed both to the founding and
replying
affidavits on behalf of Sale’s Hire. After making
reference to clauses 11, 14 and 15 of the franchise agreement, Mr
Sale
asserted that:
‘
6. Despite demand, Respondent refuses to
comply with the aforementioned terms of the contract in that:
6.1 Respondent frustrated and continues to
frustrate Applicant’s rights in terms of clauses 15.1 and 15.2
of the agreement,
by refusing and/or failing to enable Applicant to
conduct proper (if any) inspections, observations and audits,
including on the
following dates:
26 August 2013; 30 June 2014; 18 March 2015; 5
June 2015; 15 June 2015;
13 May 2016.
6.2 Respondent was found to be in default of its obligations in terms
of the agreement upon inspections and audits held on 28 June
and 13
September 2014,
inter alia
in that Respondent failed to:
6.2.1 correctly record the hire stock of the
franchise;
6.2.2 keep updated records of deposits by
customers;
6.2.3 separate hire stock machine parts from
“ready-for-hire” machines
on
the display floor;
6.2.4 separate defective machines from
“ready-for-hire” machines
on
the display floor;
6.2.5 record repairs effected to machines in the
books of the franchise:
6.2.6 record missing equipment;
6.2.7 adequately address safety concerns of
equipment;
6.2.8 display new products on offer;
6.2.9 keep stock on an adequate standard of
appearance and maintenance.’
[18] On 20 July 2016, Mr Fisher deposed to Beadica’s
answering affidavit. Apart from contesting the issue of urgency and
Sale’s
Hire’s entitlement to the relief sought, he
pertinently asserted the following in regard to the merits of the
claim:
‘
15. In broad terms, the Respondent opposes
this application on the basis that the Applicant improperly seeks an
order of court that
would authorise the Applicant’s exercise of
the inspection, observation, interview, access and audit rights
conferred by
the Franchise Agreement (the “inspection rights”)
for a purpose not authorised by the Franchise Agreement. In this
regard, the inspection rights are conferred for the purposes of
enabling the Applicant to determine whether the Respondent is (a)
complying with the specifications, standards and operating procedures
relating to the franchised business; and (b) paying the correct
royalties and fees payable under the Franchise Agreement. This much
is clear from clause 15.1 and the final sentence of clause
15.2 of
the Franchise Agreement. These provisions are discussed in greater
detail below.
16. The Applicant has, however, routinely abused
the inspection rights conferred by the Franchise Agreement for the
purpose of obtaining
access to the Respondent’s sensitive
confidential business information (for example, client information,
sales figures and
prices) in order to undercut the Respondent and to
lure clients away from the Respondent to the detriment of the
Respondent’s
business.’
[19]
In addition, Mr Fisher accused Sale’s Hire of having committed
material breaches of the terms of the co-operation agreement.
And
that Sale’s Hire had poached some of Beadica’s major
clients in order to entice them away as well as ‘inappropriately
and unlawfully [using] confidential and sensitive client information’
thereby making itself guilty of ‘anti-competitive
conduct
designed to deliberately restrict or prevent the commercial viability
of [Beadica’s] business’.
[20]
In due course, the matter was heard by Le Grange J (the High Court)
who dismissed the application with costs. In its judgment,
the High
Court dealt with the facts and the defences raised by Beadica.
Ultimately it came to the conclusion that, first, there
were material
disputes of fact on the papers and that absent a referral to oral
evidence, Beadica’s ‘version that [Sale’s
Hire] is
using its inspection and audit rights in the franchise agreement for
entirely different purposes as contemplated, cannot
be rejected as
false or far fetched’.
[21]
As to the nature of the relief sought, which the High Court described
as one for an interdict, it restated the requirements
that must be
established by an applicant before a court would grant an interdict.
It spelled them out as: (a) a clear right; (b)
an injury committed or
reasonably apprehended; and (c) the absence of an alternative
remedy.
[5]
It then went on to conclude that:
‘
On a conspectus of all the evidence, I am
not convinced that it will be in the interest of justice to grant the
relief sought by
the Applicant. The dispute resolution [mechanism] as
provided [for] by the co-operation agreement still exists and may
equally
benefit the applicant’.
Nevertheless,
the High Court rightly observed that Beadica, ‘in the present
instance, does not take issue with [Sale’s
Hire’s]
inspection and auditing rights as stipulated in the franchise
agreement.’ And that ‘[A]t the heart of
the respondent’s
case, is that in exercising these rights the applicant is utilising
it contrary to the principles and ethos
that underpin the
co-operation agreement between the NEF Trust and the applicant. More
importantly . . ., the applicant had used
its inspection and auditing
rights in terms of the franchise agreement to obtain confidential
pricing structure and other client
data to unlawfully compete with
the respondent.’ I fully endorse these observations. But more
about them later.
[22]
Dissatisfied with the outcome in the High Court, Sale’s Hire
sought and was granted leave to appeal against the dismissal
of its
application to the Full Court.
[23]
Following upon its analysis of the facts presented before it, the
Full Court dealt first with the question whether there
was an
irresoluble dispute of fact on the papers. After citing passages from
judgments of this Court in
Plascon-Evans
,
[6]
National Director of
Public Prosecutions
[7]
and
Wright t/a J W
Construction
[8]
as authority for the proposition that notwithstanding that there are
disputes of fact on the papers before it, if a court is satisfied
that on the facts averred by the applicant and admitted by the
respondent, together with the facts alleged in the respondent’s
affidavits, the applicant is entitled to relief, whether in whole or
part, it will grant relief consistent with such finding.
[9]
The
Plascon-Evans
rule was endorsed by the Constitutional Court in
Thint
(Pty) Ltd v National Director of Public Prosecution and Others; Zuma
and Another v National Director of Public Prosecution
and Others
[2008] ZACC 13
;
2009 (1) SA 1
(CC);
2008 (12) BCLR 1197
(CC) para 8. I do not find it
necessary to elaborate on these enduring legal principles, for
sometimes, an over-elaboration upon
an abiding and well-entrenched
principle tends to obscure rather than clarify matters. Ultimately,
the Full Court concluded that
it was satisfied that ‘there was
no serious real dispute of fact’ and that ‘the version
proffered by [Beadica]
was unsubstantiated and as such
untenable’.
[10]
[24]
This then paved the way for the Full Court to delve into the merits
of the application. On this score, it proceeded to mention
four
issues that, in its view, merited attention. These were: (a) whether
Sale’s Hire had established the requisites for
an interdict;
(b) the status of the co-operation agreement as between Sale’s
Hire and Beadica; (c) whether the enforcement
of the franchise
agreement so far as Sale’s Hire’s inspection rights were
concerned, and which Beadica had admitted
was objectively reasonable
and unobjectionable, would nevertheless be unconscionable or against
public policy; and (d) whether
the decision of the Constitutional
Court in
Barkhuizen
v Napier
[2007]
ZACC 5
;
2007 (5) SA 323
(CC) availed Beadica.
[25]
As to the requisites for an interdict, the Full Court held that these
had clearly been established. Apropos the status of the
co-operation
agreement, it stated that it was a matter entirely between the NEFT
and Sale’s Hire and that it was not open
to Beadica to enforce
its terms as it had sought to do. In relation to the contention that
the franchise agreement was unconscionable
and contrary to public
policy, the Full Court concluded that Beadica’s reliance on the
decision of the Constitutional Court
in
Bakhuizen
[11]
was misplaced.
[26]
In the result, the Full Court upheld the appeal with costs. In
substitution of the order of the High Court, the Full Court
ordered
that: ‘(a) the applicant’s application for an interdict
succeeds; (b) an interdict is . . . granted against
the respondent in
the terms set out in paragraph 2 of the notice of motion . . . ’.
[27] It bears emphasising that the courts below rightly
noted that Beadica did not take issue with the inspection and
auditing rights
accorded to Sale’s Hire by the franchise
agreement. Indeed, in its answering affidavit Beadica tellingly said
the following:
‘
I admit that I have frustrated . . .
[Sale’s Hire] . . . from carrying out inspections, and have
switched [Beadica’s]
IT systems to prevent [Sale’s Hire]
from accessing [Beadica’s] client information and sales data. .
.[and] that I have
done so lawfully, to prevent [Sale’s Hire]
from obtaining sensitive confidential information.’
[12]
Moreover,
Mr Fisher’s answering affidavit, filed on behalf of Beadica, is
replete with averments admitting that the franchise
agreement
accorded Sale’s Hire certain inspection and auditing
rights and that the latter ‘is permitted to exercise
its
inspection rights’.
[13]
[28]
Disgruntled with the outcome of the appeal, Beadica applied to this
Court for special leave to appeal against the decision
of the Full
Court. That application was dismissed with costs ‘on the
grounds that the requirements for special leave are
not satisfied’.
But it appears that Beadica was not deterred by this setback in its
determination to restore its initial
success. It applied to the
President of this Court in terms of the proviso to s 17(2)
(f)
of the Act
[14]
for reconsideration of the order refusing it special leave and, if
necessary, for its variation. Pursuant thereto, the order referred
to
in para 1 above was granted.
[29]
The application for reconsideration now confronting us therefore
pertinently raises the question whether special leave to this
Court
should have been granted. Almost four decades ago, in
Westinghouse
Brake and Equipment (Pty) Ltd v Bilger Engineering (Pty) Ltd
1986 (2) SA 555
(A), this Court stated that ‘an applicant for
special leave to appeal must show, in addition to the ordinary
requirement
of reasonable prospects of success, that there are
special circumstances which merit a further appeal. . .’. And
that it
alone is the final ‘. . . arbiter as to whether such
special circumstances exist’. It went on to give examples of
what
would constitute special circumstance. These were: (a) the
appeal raises a substantial point of law; (b) the matter is of very
great importance to the parties or of great public importance; and
(c) where the refusal of leave to appeal would probably result
in a
manifest denial of justice.
[15]
It must be stressed, however, that the list is by no means
exhaustive. The requirement for special leave now finds expression in
s 16
(b)
of the Act, which provides that ‘an appeal against any decision
of a Division on appeal to it, lies to the Supreme Court
of Appeal
upon special leave
having been granted by the Supreme Court of Appeal
’.
(Emphasis added.)
[30]
It is now timely to determine the fate of the application for
reconsideration. To this end an assessment of the merits of the
envisaged appeal is necessary.
[31]
At the outset I deem it necessary to state what Sale’s Hire’s
application in the High Court was and still is all
about. As is
manifest from the factual narrative recounted above, the essence of
the relief sought by Sale’s Hire in the
High Court as
encapsulated in prayer 2 of its notice of motion was that it should
be allowed to exercise its inspection and auditing
rights without let
or hindrance. The genesis of prayer 2 is clauses 11, 14 and 15 of the
franchise agreement. In effect it sought
an order of specific
performance of the terms of the franchise agreement that are
encapsulated in these clauses. It was therefore
a misconception to
characterise the nature of its prayers as one for an interdict. Once
this is appreciated, the crux of the dispute
between the antagonists
will be discerned. This is the topic to which I now turn.
[32]
What emerges from Beadica’s answering affidavit is that its
discontent with Sale’s Hire in large measure stems
from its
core complaint that the latter is asserting its inspection and
auditing rights as a ruse to inappropriately obtain access
to its
sensitive confidential information in order to gain an edge over
Beadica as a business competitor. The edifice of its case
that
allowing Sale’s Hire to enforce its rights for this
purpose would be unconscionable and contrary to public policy
is
built solely on this foundation.
[33]
But before dealing with this complaint it is necessary to address two
matters that are central to this application. The first
relates to
the application of the
Plascon-Evans
rule. The heads of argument filed on behalf of Beadica advance
propositions that fail to take proper account of Sale’s Hire’s
version. Such an approach is not consonant with that expressed in
Plascon-Evans
that, in a case of the kind with which we are concerned, the court’s
decision must have due regard to the facts averred by
the applicant
which are admitted by the respondent, together with the facts averred
by the respondent.
[16]
[34]
The second aspect relates to the co-operation agreement upon which
Beadica heavily relies. It is this. As the Full Court rightly
noted,
the co operation agreement is between Sale’s Hire and the
NEFT. Beadica is not a party thereto. Accordingly,
simple logic
dictates that it cannot lie in Beadica’s mouth to complain
about breaches of the co-operation agreement, if
any, by Sale’s
Hire, still less to seek to enforce its terms. Any contractual rights
and obligations flowing from the co-operation
agreement are matters
between Sale’s Hire and the NEFT. In relation to Beadica, those
rights and obligations are
res
inter alios acta
.
[17]
[35]
That the co-operation agreement may have been entered into in the
furtherance of the interests of the franchisees of which
Beadica was
one, as some of its terms suggest, matters not. Even if it were to be
accepted that Sale’s Hire breached the
co-operation agreement
in a material way, it was only the NEFT, and not third parties
without a contractual nexus, like Beadica,
that would have had legal
standing to enforce its terms.
[36]
Reverting to the crux of the matter, I think that I would not be
doing an injustice to Beadica’s case by saying that
when it is
reduced to its bare essentials it boils down to the following. It is
accepted, for example, that: (a) the franchise
agreement accords
Sale’s Hire extensive inspection rights as detailed in paras
8-10 above; and (b) the terms embodying those
rights are objectively
reasonable and not objectionable. Curiously, in the face of the clear
and unequivocal terms of clauses 11,
14 and 15, Beadica still
obdurately resisted every endeavour by Sale’s Hire to do
precisely what Beadica accepts it has a
right to do.
[37]
Beadica justifies its conduct on two bases. First, it relies on the
co operation agreement to which, as already indicated,
it is not
a party. Second, it contends that Sale’s Hire is abusing its
inspection and auditing rights in order to inappropriately
and
unlawfully undermine its business operations. And therefore, asserts
Beadica, Sale’s Hire’s objectionable conduct
is what
renders the enforcement of the terms of the agreement against it
unconscionable and contrary to public policy.
[38]
In pursuit of its application for reconsideration of the earlier
order refusing it special leave to appeal, Beadica submits
that there
are special circumstances that justify a further appeal to this
Court. In support of this submission, it is contended
that the
envisaged appeal implicates a black economic empowerment initiative
which is an important policy objective whose bedrock
is the
Constitution
[18]
itself. And that the ‘effect of the Full Court’s decision
is to allow Sale’s Hire to enforce its contractual
rights in a
manner which undermines the effective implementation of a BEE
initiative financed with public funds’ through
the NEFT.
[39]
As I see it, the logical point of departure must be the universally
accepted legal principle expressed in the maxim
pactum
sunt servanda
. But
this is not to say that all obligations freely and seriously
undertaken must be given effect to no matter what. In
Bredenkamp
and Others v Standard Bank of South Africa Ltd
[2010]
ZASCA 75
;
2010 (4) SA 468
(SCA), Harms DP, writing for a unanimous
court, whilst acknowledging that the
pactum
sunt servanda
principle was not a holy cow, nevertheless stated that ‘it is a
self evident principle’ of our law that contracts
concluded contrary to laws or public policy are of no force or
effect. Before
Bredenkamp
,
the Constitutional Court had occasion to express itself emphatically
on this, where the
pactum
sunt servanda
principle was described as ‘a profoundly moral principle, on
which the coherence of any society relies’.
[19]
The Constitutional Court went further and held that:
‘
. . . Self-autonomy, or the ability to
regulate one’s own affairs, even to one’s own detriment,
is the very essence
of freedom and a vital part of dignity. The
extent to which the contract was freely and voluntarily concluded is
clearly a vital
factor as it will determine the weight that should be
afforded to the values of freedom and dignity. . . .’
[20]
[40] But as already indicated, our courts will decline
to enforce contracts that are contrary to the law or public policy.
And this
is a power that courts have exercised for more than a
century. Thus, in
Eastwood v Shepsthone
1902 TS 294
, Innes CJ
stated in his usual inimitable style that (at 302):
‘
Now this Court has the power to treat as
void and to refuse in any way to recognise contracts and
transactions, which are against
public- policy or contrary to good
morals. It is a power not to be hastily or rashly exercised; but when
once it is clear that
any arrangement is against public policy, the
Court would be wanting in its duty if it hesitated to declare such an
arrangement
void.’
[41] In
Sasfin (Pty) Ltd v Beukes
[1988] ZASCA 95
;
1989 (1) SA 1
(AD);
[1989] 1 All SA 347
(A) Smallberger JA, writing for the
majority, embraced the legal proposition propounded by Innes CJ and
said the following (at
9A-E):
‘
No court should therefore shrink from the
duty of declaring a contract contrary to public policy when the
occasion so demands. The
power to declare contracts contrary to
public policy should, however, be exercised sparingly and only in the
clearest of cases,
lest uncertainty as to the validity of contracts
result from an arbitrary and indiscriminate use of the power. One
must be careful
not to conclude that a contract is contrary to public
policy merely because its terms (or some of them) offend one's
individual
sense of propriety and fairness. In the words of Lord
Atkin in
Fender v St John-Mildmay
(1938)
AC 1
at 12, “the doctrine should only be invoked in clear cases
in which the harm to the public is substantially incontestable,
and
does not depend upon the idiosyncratic inferences of a
few judicial minds.”
. . .
In grappling with this often difficult problem it
must be borne in mind that public policy generally favours the utmost
freedom
of contract, and requires that commercial transactions should
not be unduly trammelled by restriction on that freedom.’
[42] The remarks of the Constitutional Court in
Barkhuizen
where it endorsed the principle that everyone has a
right to freely enter into contracts bears repeating. There, Ngcobo J
said
(para 57):
‘
Self-autonomy, or the ability to regulate
one’s own affairs, even to one’s own detriment, is the
very essence of freedom
and a vital part of dignity.’
Since
the advent of our new constitutional order, public policy
considerations are now infused with the values underlying the
Constitution.
[43] In
A B and Another v Pridwin Preparatory School
and Others
[2018] ZASCA 150
;
2019 (1) SA 327
(SCA) para 27, upon
which Beadica heavily relies, this Court extracted six principles
from various decision of our courts in which
the subject of private
contracts and public policy was broached. Only five of these
principles bear relevance to this case. These
are:
‘
(i) Public policy demands that contracts
freely and consciously entered into must be honoured;
(ii) A court will declare invalid a contract that is prima facie
inimical to a constitutional value or principle, or otherwise
contrary to public policy;
(iii) Where a contract is not prima facie contrary to public policy,
but its enforcement in particular circumstances is, a court
will not
enforce it;
(iv) The party who attacks the contract or its enforcement bears the
onus to establish the facts;
(v) A court will use the power to invalidate a
contract or not to enforce it, sparingly, and only in the clearest of
cases in which
harm to the public is substantially incontestable and
does not depend on the idiosyncratic inferences of a few judicial
minds.’
[44]
Although this Court’s judgment in
Pridwin
Preparatory School
has recently been overturned by the Constitutional Court,
[21]
that Court nevertheless endorsed the principles referred to in the
preceding paragraph in
Beadica
231 CC and Others v Trustees for the time being of the Oregon Trust
and Others
CCT109/19
[2020] ZACC 13
(17 June 2020) and said that these ‘principles
are derived from a long line of cases and find support in the
decisions of
this Court’.
[22]
The Constitutional Court went on to state that two of the principles
enumerated in
Pridwin
Preparatory School
required further elucidation. First, the Constitutional Court
recognised that the principle of
pactum
sunt servanda
‘
continues
to play a crucial role in the judicial control of contracts through
the instrument of public policy, as it gives expression
to central
constitutional values’.
[23]
What is important, the Constitutional Court emphasised, is that the
pactum sunt servanda
principle ought not be elevated above
all else but has to be looked at through the prism of ‘a wide
range of constitutional
values’.
[24]
Thus, in short, the Constitutional Court has reiterated that public
policy considerations must be infused with constitutional values.
[45]
The other principle qualified by the Constitutional Court is that of
‘perceptive restraint’ which proceeds from
the premise
that contracts freely and voluntarily entered into should be
honoured. Whilst acknowledging that this is a sound approach
to
adopt, the Constitutional Court cautioned that courts should be
careful not to take this principle beyond its natural limits.
And
that the principle of ‘perceptive restraint’ should not
be invoked in a manner that permits the enforcement of
contracts
‘that undermine the very goals that our Constitution is
designed to achieve’.
[25]
[46]
There has been no suggestion in the papers that the franchise
agreement does not accord Sale’s Hire the rights it asserted
in
this litigation. On the contrary, Sale’s Hire’s
assertions have been unequivocally admitted. What the thrust of
Beadica’s case amounts to is that, in exercising its rights,
Sale’s Hire ventured into unlawful activities that are
at
variance with its rights under the franchise agreement. Thus, the
complaint here is that the relevant clauses cannot be enforced
because they are being used for unlawful purposes. The issue before
us is twofold: (a) is the unlawfulness established (in which
event
the
Plascon-Evans
rule would apply); and, (b) if so, what should the result be? Would
it mean that Sale’s Hire is left without a crucial mechanism
by
which it can determine royalties and fees, a mechanism which Beadica
has not impugned, or does it mean that Sale’s Hire
is entitled
to invoke its inspection rights for as long as it does so lawfully?
Significantly, Beadica has not contended that there
is an overriding
constitutional obligation that must first be fulfilled. It was
submitted in Beadica’s heads of argument
that ‘Sale’s
Hire seeks to enforce contractual rights for a purpose other than the
purpose expressly prescribed by
the agreement and that is unlawful,
namely, to gain confidential information and to use it in its
unlawful competition with Beadica’.
In the premises, Beadica
submits that ‘enforcing Sale’s Hire’s rights would
be contrary to public policy’.
[47]
But as this Court made plain in
Pridwin
Preparatory School
,
a party who impugns a contract or its enforcement bears the onus to
establish the facts. This requirement accords with the trite
legal
principle that a party who alleges must prove. (See in this regard:
Pillay v Krishna and
Another
1946 AD 946
at 952-953.) This must be all the more so, particularly in
circumstances where, as a general rule, courts are enjoined to
exercise
their power to refuse to enforce contracts if to do so would
be contrary to public policy, sparingly and, even then, in the
clearest
of cases. In
Barkhuizen
,
too, the Constitutional Court endorsed the principle that a party
seeking to avoid the enforcement of a contract bears the onus
to
‘demonstrate why its enforcement would be unfair and
unreasonable in the given circumstances’.
[26]
[48]
It bears emphasising that in this case the grant of an order of
specific performance in favour of Sale’s Hire will not
result
in a failure of a black economic empowerment initiative as Beadica
would have it. On the contrary, Sale’s Hire’s
election to
uphold the franchise agreement would have the effect of sustaining
the empowerment initiative. Moreover, I fail to
see how, in the
context of the facts of this case, the enforcement of the clauses
invoked by Sale’s Hire would be unreasonable
or unjust to a
degree that would render it contrary to public policy for a court to
enforce the clauses in question. On this score
it is as well to
remember that Beadica does not in any way impugn the terms of the
clauses in issue. Its case is, in essence, that
these clauses ought
not to be enforced because Sale’s Hire seeks to invoke them for
an unlawful purpose. Accordingly, it
was incumbent upon Beadica to
establish the unlawfulness alleged. As I see it, even if Sale’s
Hire’s alleged unlawful
conduct were established, nothing would
preclude Sale’s Hire from enforcing the franchise agreement for
the lawful purpose
– about which there is no dispute between
the parties – that it was meant to achieve. It is also not
without significance
to note that the order granted by the Full Court
cannot on any stretch of the imagination be construed to be a licence
to Sale’s
Hire to unlawfully gain confidential information of
or otherwise compete unlawfully with Beadica.
[49]
Whatever justification there might be for thinking that in certain
respects the franchise agreement operated harshly as against
Beadica
in that its terms favoured Sale’s Hire is neither here nor
there. On a reading of the franchise agreement one gains
the
impression that Sale’s Hire sought to protect its interests to
the fullest. But unfortunately for Beadica, courts are
not empowered
to modify the terms of a contract or afford the complaining party
equitable relief. (See in this regard:
South
African Warehousing Services (Pty) Ltd and Others v South British
Insurance Co Ltd
1971 (3) SA 10
(A);
[1971] 3 All SA 186
(A)
at 18F-19A.)
[50]
I have also considered Beadica’s argument based on cases like
Pridwin Prepratory
School
(SCA);
Barkhuizen
(CC)
and
Brisley v
Drotsky
2002 (4) SA
1
(SCA) and the principles set out in those decisions with reference
to the power of a court to refuse to enforce a contract if to
do so
would be unconscionable or contrary to public policy. I do not
propose to analyse those cases in this judgment. Suffice it
to say
that having regard to the circumstances disclosed in the papers, I
consider Beadica’s argument that is predicated
on those
decisions to be untenable.
[51]
Moreover, I do not think that Beadica had a lawful basis to deny
Sale’s Hire its contractual rights of inspection
purely
because the latter’s representatives or agents supposedly went
beyond the parameters of the inspection rights for
which the
franchise agreement provides. If Beadica believed that Sale’s
Hire was abusing its rights in order to gain access
to its sensitive
confidential information and trade secrets, it should and could have
applied, by way of a counter-application
in this instance, for an
order restraining Sale’s Hire from abusing its inspection
rights. It also goes without saying that
if Beadica established the
unlawful conduct of which it complains it could just as well have
elected to cancel the franchise agreement.
In both of these
instances, the onus would squarely rest on Beadica to establish its
case. One ting though is beyond question,
which is this. It was not
open to Beadica to undermine Sale’s Hire’s election to
exercise its contractual rights. Beadica’s
tactic of adopting a
‘tit for tat’ stratagem to stymie the exercise by Sale’s
Hire of its rights was ill-conceived.
[52]
As to the existence of special circumstances that merit a further
appeal in this Court, it was contended that the BEE initiative
serves
important policy objectives that are underpinned by the Constitution
to redress the legacy of the past. Thus, Beadica submits,
if the
judgment of the Full Court were allowed to stand, it would have the
effect of ‘permitting Sale’s Hire to enforce
its
contractual rights in a manner that undermines the effective
implementation of a BEE initiative financed with public funds’
through the NEFT. For the reasons already stated, this submission is
plainly unsustainable. Significantly, the envisaged appeal
does not
raise a substantial point of law. Whilst it might be of importance to
Beadica, its importance does not transcend the natural
interests of
the parties to this litigation. Nor am I convinced that the refusal
of special leave to appeal would, in the context
of the facts of this
case, result in a manifest denial of justice. And, as already
indicated, Beadica has effective legal remedies
that it could have
invoked to address Sale’s Hire’s alleged unlawful
conduct. In these circumstances, I am not persuaded
that Beadica, who
is after all seeking special leave, has come anywhere near to
establishing the existence of special circumstances
to warrant
special leave being granted.
[53] Accordingly, the substance of the reasoning
underpinning the judgment of the Full Court can hardly be faulted.
The inevitable
consequence of this conclusion is that the order of
this Court granted on 15 August 2018, in terms of which the
applicant’s
application for special leave to appeal against
that judgment was refused, was correct. In the result the following
order is made:
The application for the reconsideration and, if
necessary, variation of the order of this Court, granted on 15 August
2018, dismissing
applicant’s application for special leave to
appeal, is dismissed with costs.
________________________
X M PETSE
DEPUTY
PRESIDENT
Appearances
For
appellant: G Quixley
Instructed
by: M E Mohammed Attorney-at-Law, Cape Town
Honey
Attorneys, Bloemfontein
For
Respondent: S Rapaport
Instructed
by: De Klerk & Van Gend Inc., Cape Town
McIntyre
van der Post, Bloemfontein.
[1]
The order is couched in these terms:
‘
1. The decision of the court dated
15/08/2018 dismissing the applicant’s application for leave to
appeal with
costs is referred to the court
for reconsideration and, if necessary, variation.
2. The application for special leave to appeal is
referred for oral argument in terms of
s 17(2)(d)
of the
Superior
Courts Act 10 of 2013
.
3. The parties must be prepared, if called upon to do so, to address
the court on the merits.
4. For this purpose the applicant is to file 6 copies of the initial
application for leave to appeal and six copies of the application
in
terms of
s 17(2)(f)
of the
Superior Courts Act 10 of 2013
, within
one month of the date of this order and thereafter, to comply with
the rules of this Court relating to the conduct of
appeals by filing
the record in terms of
rule 8
within three months of this order and
both parties are to comply with all the remaining rules relating to
the prosecution of
an appeal.
5. If the applicant does not proceed with the application, the
applicant is to pay the costs relating to the application for
leave
to appeal.’
[2]
This court’s order erroneously makes
reference to ‘leave to appeal’ when what the applicant
had applied for
was ‘special leave to appeal’.
[3]
Plascon-Evans Paints Ltd v Riebeeck Paints
(Pty) Ltd
[1984] ZASCA 51
;
1984 (3) SA 623
(A);
[1984] 2 All SA 366
(A)
.
[4]
The NEFT is registered with the Master of the
High Court, Pretoria under the Trust Property Act 57 of 1988 and was
established
in terms of the
National Empowerment Fund Act 105 of
1998
.
[5]
See in this regard:
Setlogelo
v Setlogelo
1914 AD 221
at 227.
[6]
Plascon-Evans Paints Ltd v Riebeeck Paints
(Pty) Ltd
[1984] ZASCA 51
;
1984 (3) SA 623
(A);
[1984]
2 All SA 366
(A) at 634E-635C.
[7]
National Director of Public Prosecutions v
Zuma
2009
[2009]
ZASCA 1
; (1) SACR 361 (SCA) para 26.
[8]
Wright t/a J W Construction v Headgear (Pty)
Ltd and Another
[2008] ZASCA 6
;
2008 (3) SA 371
(SCA)
para 13.
[9]
Compare:
Burnkloof
Caterers (Pty) Ltd v Horseshoe Caterers (Green Point) (Pty) Ltd
1976
(2) SA 930
(A) at 938A-B.
[10]
See para 48 of the Full Court judgment.
[11]
See para 24 above.
[12]
See para 62 of A/A, Vol 1:119.
[13]
See para 17 of A/A, Vol 1:105.
[14]
Section 17(2)
(f)
reads:
‘
The decision of the majority of the judges
considering an application referred to in paragraph
(b)
,
or the decision of the court, as the case may be, to grant or refuse
the application shall be final: Provided that the President
of the
Supreme Court of Appeal may in exceptional circumstances, whether of
his or her own accord or on application filed within
one month of
the decision, refer the decision to the court for reconsideration
and, if necessary, variation.’
[15]
At 564H-565A-E.
[16]
Plascon-Evans
at
634H-I.
[17]
Res inter alios acta
is a common law doctrine which, inter alia, is to the effect that
someone who is not a party to a contract between others is
not
supposed to concern themselves with that contract. A free
translation thereof means: a matter between others is not our
business.
[18]
The Constitution of the Republic of South Africa
Act 108 of 1996.
[19]
Barkhuizen v Napier
[2007] ZACC 5
;
2007 (5) SA 323
(CC) para 87.
[20]
Barkhuizen
para
57.
[21]
See in this regard:
A B and Another v Pridwin Preparatory School
and Others
CCT294/18
[2020] ZACC 12
(17 June 2020).
[22]
Paragraph 82.
[23]
Para 83.
[24]
Paras 86-87.
[25]
Paras 88-90.
[26]
Para 69.