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2024
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[2024] ZAECMKHC 108
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Triple S Holdings Proprietary Limited and Another v Pioneer Foods Proprietary Limited (Reasons) (3156/2024) [2024] ZAECMKHC 108 (10 October 2024)
IN
THE HIGH COURT OF SOUTH AFRICA
(EASTERN
CAPE DIVISION, MAKHANDA)
Case
No: 3156/2024
Date
Heard: 23 August 2024
Date
Delivered: 10 October 2024
In
the matter between:
TRIPLE
S HOLDINGS PROPRIETARY LIMITED
FIRST APPLICANT
INVUCOM
PROPRIETARY LIMITED
SECOND APPLICANT
and
PIONEER
FOODS PROPRIETARY LIMITED
RESPONDENT
REASONS
MULLINS
AJ:
[1]
On 23 August 2024 this matter, which came before me on an urgent
basis, was argued.
Although originally disputed, the Respondent
did not persist with its challenge to urgency and, as both sides
required a speedy
resolution to the dispute, on 27 August 2024 I
handed down an order, with reasons to follow.
[2]
The order reads as follows:
1.
The application is dismissed.
2.
The Applicants are ordered to pay the costs of the application, the
one paying,
the other to be absolved, on scale C, as agreed by the
parties.
3.
The reasons for the above order will follow.
[3]
The matter came before me in an unusual manner:
(a)
On 25 July 2024 the Applicants issued the application papers, to be
heard on Tuesday, 6
August 2024. As the 6
th
was a normal motion court day, although a certificate of urgency was
required, it was not necessary to place it (the certificate)
before
the duty judge in order for the judge to consider whether, based
solely on the certificate,
prima
facie
the matter was urgent and, if so, to issue directions as to the
further conduct of the matter, as required by the practise
directive;
[1]
(b)
The Respondent filed answering affidavits and the matter was duly
argued on the motion court
day set out in the notice of motion.
I am advised that only the question of urgency was dealt with and the
application was
struck off the roll by the learned judge due to the
unreasonably short time periods imposed by the Applicants for the
filing of
papers. The Applicants were ordered to pay the
Respondent’s costs;
(c)
Thereafter, on 16 August 2024, a “
Further Certificate Of
Urgency”
, alleging new grounds of urgency, was placed
before me. Based on the further information I was satisfied
that a
prima facie
case for urgency had been made out and
directed that the matter be heard before me on Friday, 23 August
2024.
[4]
The background facts may be summarised as follows:
(a)
The Respondent, which is a company based in Gqeberha, is a
manufacturer and wholesaler of
what is referred to as "
bread
products
”, which it markets throughout the Eastern Cape.
The Respondent, which is part of the Pepsico Inc. group of companies,
trades under the name Sasko Brito Bakery;
(b)
The Respondent delivers bread products in bulk to independent
contractors, who then distribute
the said bread products to retail
outlets within a specified area in accordance with what is referred
to as an Independent Contractor
Agreement;
(c)
During January 2023 the First Applicant and the Respondent concluded
a one year oral
contract for the distribution by the First Applicant
of bread products in the Port Alfred area (the “PA
Agreement”).
This contract was later reduced to writing,
back-dated to 1 January 2024;
(d)
During March 2023 the First Applicant and the Respondent concluded a
similar oral contract
for the distribution by the First Applicant of
bread products in the East London area (the “EL Agreement”).
This
contract was also subsequently reduced to writing, back-dated to
1 May 2023;
(e)
Save for the dates and the different locations the contracts are
similar in all material
respects (and will be referred to
collectively as the “Distribution Agreements”, unless it
is necessary to distinguish
them);
(f)
In addition to the two Distribution Agreements the First Applicant
and the Respondent
concluded two written lease agreements in terms of
which the First Applicant leased vehicles from the Respondent for the
purposes
of delivering the bread products in Port Alfred and East
London;
(g)
The Second Applicant also leased premises from the Respondent in East
London. This
was an oral contract and, according to the First
Applicant, is “
linked
” to the Distribution
Agreements;
(h)
The delivery of the bread products is divided into two categories:
the traditional
trade (referred to in the papers as “TT”)
and the modern trade (referred to in the papers as “MT”).
The important distinction between the two is that the bread products
delivered to the traditional trade is cash on delivery, whereas
the
modern trade is on a credit basis;
[2]
(i)
The monies collected by the First Applicant in respect of the
traditional trade
is either deposited into a machine called a
“
Deposito
” or directly into the Respondent’s
bank account;
(j)
It is in respect of the monies collected from the traditional trade
which is
at the heart of this dispute;
(k)
Every day the Respondent delivered a certain quantity of bread
products to the First
Applicant. The First Applicant in turn
delivered the bread products to the retail outlets (both TT and MT),
returning what
was not sold to the Respondent. Where there is a
discrepancy between what had been delivered to the First Applicant,
what
has been returned to the Respondent and the money deposited by
the First Applicant it is known as “
driver shorts
”;
(l)
A dispute arose between the First Applicant and the Respondent as to
the extent
of the driver shorts. There are major disputes of
fact as to how the system was supposed to operate and the extent of
the
driver shorts, which disputes I am unable to resolve on these
papers nor, due to the nature of the relief being claimed at this
stage, is it necessary to do so;
(m)
In accordance with clause 4 of annexure B of the Distribution
Agreements the parties had to do
a daily reconciliation of the bread
delivered and the monies deposited. Where a discrepancy occurs
which the parties are
unable to resolve the issue would have to be
referred to arbitration. Despite this clause the First
Applicant alleges, and
it is not denied, that the Respondent resorted
to “
self-help
” and unilaterally deducted what it
alleged was the extent of driver shorts. This has placed the
First Applicant, and
as an indirect consequence, the Second
Applicant, under huge financial pressure;
(n)
Coinciding with this dispute the parties were negotiating the
conclusion of new distribution
contracts, the PA Agreement having
terminated on 31 December 2023 and the EL Agreement on 31 March 2024,
both having been orally
extended on a month-to-month basis
thereafter;
(o)
Eventually (in the circumstances described below) the Respondent
terminated the Distribution
Agreements and refused to continue to
deliver bread products to the First Applicant, which refusal prompted
this application.
[5]
It would be more convenient to reproduce the relevant portions of the
notice of motion
rather than to paraphrase it:
“
1.
…
2.
The Respondent is directed, with effect from the date of this Order,
to:
2.1.
continue to utilise the services of the First Applicant as its
service provider for the delivery
and sale of its bread products to
existing and/or future customers within the delivery area of Port
Alfred on the same terms and
conditions as provided for in the
written agreement between the First Applicant and the Respondent, a
copy of which is annexed
to the founding affidavit of Dylan Phillips
(“the founding affidavit”) marked FA1, save as to the
term thereof and
as is otherwise directed in terms hereof, at the
rates for the provision of service and on the routes as were
applicable between
the First Applicant and the Respondent as at 1 May
2024;
2.2.
continue to lease to the First Applicant the delivery vehicles as
were utilised by First Applicant
as at 1 May 2024 on the same terms
and conditions as provided for in the vehicle lease agreement between
the First Applicant and
the Respondent.
3.
The Respondent is further directed, with effect from the date of this
Order,
to:
3.1.
continue to utilise the services of the Second Applicant as its
service provider for the delivery
and sale of its bread products to
existing and/or future customers within the delivery area of East
London on the same terms and
conditions as provided for in the
written agreement between the First Applicant and the Respondent, a
copy of which is annexed
to the founding affidavit marked FA2, save
as to the terms thereof and as is otherwise directed in terms hereof,
at the rates for
the provision of services and on the routes as were
applicable between the Second Applicant and the Respondent as at 1
May 2024;
3.2.
lease to the Second Applicant the delivery vehicles as were utilised
by First Applicant as at
1 May 2024 on the same terms and conditions
as provided for in the vehicle lease agreement between the First
Applicant and the
Respondent, a copy of which is annexed to the
founding affidavit marked FA4.
4.
In implementing the Orders in paragraphs 2 and 3 above, the
Respondent is directed
to commence with a clean slate and is
precluded from making any deductions from service fees or other
amounts due to the Applicants
without having complied strictly with
the terms of the aforesaid agreements as to reconciliations and other
procedures or as are
provided in the agreements.
4a.
The Respondent is interdicted from terminating the services of the
First and/or Second Applicants
provided in terms of paragraphs 2 and
3 above on the basis of the clause referred to in paragraph 5.3
below.
5.
The Orders in paragraphs 2 to 4 above serve as interdicts binding on
the Respondent
pending the final outcome of an action; alternatively,
arbitration proceedings to be instituted by the Applicants within 30
days
of the date of this Order for substantiating the following
relief:
5.1.
It is declared that:
5.1.1. during or
about February 2024 an oral agreement was concluded between the First
Applicant and the Respondent in terms
of which the First Applicant
will provide to the Respondent delivery services of bread products
within the Port Alfred delivery
area for a period of 3 years with
effect from 1 May 2024 and on the terms and conditions set forth in
the agreement referred to
in 2.1 above (annexure FA1) (subject to the
further declaratory relief in 5.3 below);
5.1.2. during or
about February 2024 an oral agreement was concluded between the
Second Applicant and the Respondent in terms
of which the Second
Applicant will provide to the Respondent delivery services of bread
products within the East London delivery
area for a period of 3 years
with effect from 1 May 2024 and on the terms and conditions as the
agreement referred to in 2.2 above
(annexure FA2) (subject to the
further declaratory relief in 5.3 below);
5.2.
The Respondent is directed to perform specifically its obligations in
terms of the agreements
referred to in paragraphs 5.1.1 and 5.1.2
above.
5.3.
It is declared that to the extent that the Respondent seeks to rely
on a provision in any of
the agreements concluded between it and the
First and Second Applicants to the following effect:
“
Either party
may terminate this agreement by giving the other no less than 1
months written notice of its intention to do so, which
termination
shall take effect after the expiry of the said 1 month notice period”
is
contrary to public policy and is void and invalid accordingly.
5.4.
The Respondent is directed:
5.4.1. within 30
days of the date of this order to deliver to the First Applicant an
account (including daily reconciliations)
in respect of the written
and oral agreements concluded between the Respondent and the First
Applicant for the provision of bread
product delivery services in the
Port Alfred area, for the period from 1 January 2023 to the date of
delivery of the account;
5.4.2. within 15
days of the date of delivery of the account as aforesaid, to debate
the account with the First Applicant;
5.4.3. within 15
days of the completion of the debatement as aforesaid, to pay to the
First Applicant such amount as is due
to it pursuant to the
debatement;
5.5.
The Respondent is directed:
5.5.1. within 30
days of the date of this order to deliver to the Second Applicant
[3]
an account (including daily reconciliations) in respect of the
written and oral agreements concluded between the Respondent and
the
Second Applicant for the provision of bread product delivery services
in the East London area, for the period from 1 May 2023
to the date
of delivery of the account;
5.5.2. within 15
days of the date of delivery of the account as aforesaid, to debate
the account with the Second Applicant;
5.5.3. within 15
days of the completion of the debatement as aforesaid, to pay to the
Second Applicant such amount as is due
to it pursuant to the
debatement.
5.6.
Pursuant to the orders in 5.3 and 5.4 above,
[4]
the First and Second Applicants (or either of them) shall be entitled
to approach this Court to seek such further or amended relief
as may
be necessary to ensure compliance therewith and for such purposes to
amend their pleadings as may be necessary.
5.7.
The Respondent is to pay the costs of the Applicants, including the
costs of counsel on scale
C as contemplated in Rule 69(7) of the
Rules.
6.
The Respondent is to pay the costs of the Applicants in this
application, including
the costs of counsel on scale C as
contemplated in Rule 69(7) of the Rules.”
[6]
Paragraph 4a was introduced by way of an amendment, which amendment
was not opposed
by the Respondent.
[7]
The relevance of the Second Applicant requires some explanation.
While both
the PA and EL Agreements were concluded with the First
Applicant (as were the lease agreements for the vehicles and the
lease of
premises in East London), when the parties commenced
negotiating the renewal thereof it was agreed that the EL Agreement
would
be concluded with another entity, referred to as a “
shelf
company
” to be identified in due course, the company so
identified being the Second Applicant.
[8]
Notwithstanding the dispute over the extent of the driver shorts the
parties entered
into negotiations for the renewal of the Distribution
Agreements. It is the Applicants’ contention that those
negotiations
culminated in the conclusion of binding agreements,
hence the extensive relief sought in the notice of motion. It
is the
Respondent’s contention that the negotiations were no
more than that and no new agreements were in fact concluded.
[9]
That the parties were engaging with each other is common cause, not
only in respect
of the renewal of the Distribution Agreements, but
also as to how to resolve the driver shorts dispute. The two
issues were
intertwined. In this regard Mr Dayalan Phillips
(“Phillips”), on behalf of the Applicants, states in the
founding
affidavit:
“
31.
During or about February 2024 the issue of the renewal of the
Agreements came up for discussion.
I met with Mr Brugh on 2
February 2024. The meeting dealt with two discrete matters,
namely the renewal of the Agreements
(and in particular, their
duration) and the issue of “driver shorts”.”
[10]
I interpose to comment that the two issues were certainly not
discrete, particularly insofar
as the Respondent was concerned, as is
evidenced below.
[11]
Pursuant to these discussions, on 14 February 2024 Brugh, on behalf
of the Respondent, sent Phillips
the following email:
“
I trust this
letter finds you well. I am writing to remind you of our
previous communication regarding the submission of essential
company
documents.
[5]
I am writing
to follow up on our recent meeting held on February 2, 2024,
[6]
where we discussed the crucial matter of submitting essential company
documents for the completion of the
3
years contracts
that will be used for your loan application.
It has been
7
working days
since our meeting, and unfortunately, we have
not received any correspondence or the required documentation.
I must stress
the urgency of this matter, as the delay is now
impacting the processing of the contract renewal and your loan
application and
jeopardizing the timely execution of the associated
contracts, which are vital for your business. Additionally, I
want to
reiterate our serious concern regarding the outstanding debt
of
R2,186,915.00
. Considering the lack of
progress in both matters, we find it imperative to inform you that
the company as discussed requires
full payment of the outstanding
debt
30 April 2024
. Regrettably due to the
prolonged delay, we are at great risk that this date will not be met
and I remind you the Bakery
is unable to consider any payment terms
or instalment plans.
We remind you again of
the discussion
:
·
The company will not enter into a term payment for the outstanding
amount.
·
The company will offer a 3-year contract that can be used to raise
the
funds inform of a loan to settle the outstanding debt.
·
The debts need to be settled on 30 April 2024.
·
Spilt
[7]
of the two debts between two individual companies and contracts will
be adjusted in accordance.
Time is of the essence,
and we kindly request your immediate attention to this matter.
Please ensure the prompt submission
of the required documents and the
initiation of the settlement process for the outstanding debt.
Should you have any
questions or need further clarification, do not hesitate to contact
me directly. We appreciate your urgent
cooperation in resolving
these matters and expect a prompt response.” (The
highlighted portions are as per the original).
[12]
The reference to an “
outstanding debt
” is to what
the Respondent alleged was the amount owed in respect of the driver
shorts.
[13]
On 4 March 2024 the Second Applicant’s details were forwarded
to the Respondent, although
the Respondent was apparently not
satisfied with the information provided.
[14]
Parallel with the discussions referred to above there was a
continuous, and somewhat acrimonious,
exchange of emails between one
Mr Kristen Ravichandran Naidoo (“Naidoo”) of the
Respondent and Phillips, dating from
mid-May 2024 to the end of June
2024, dealing with the driver shorts. It is clear that the
parties could not see eye-to-eye
on this issue and it was never
resolved. On 19 May 2024 Naidoo sent the Phillips an email
which reads as follows:
“
As discussed with
Dayalan,
[8]
10 days’
notice to remedy the breach of contract and comply with the required
conditions set out below has been confirmed
and will end as at
17:00
on Friday, 24
th
May 2024
.
This notice is based on
the following conditions:
1.
ALL
cash due to Sasko needs to be banked in the relevant
Depositas (in East London) and Sasko’s bank account (for Port
Alfred)
from today onwards
WITHOUT EXCEPTION
. Failure to
adhere to this condition will result in Sasko immediately taking over
the operations of the East London Depot.
The Port Alfred routes
will be serviced from Sasko Brito’s Bakery in Port Elizabeth.
2.
No allowances will be made for any cash due to Sasko to be used
for filling diesel or any other business expenses from TODAY onwards
.
3.
A workable (and suitable) commitment on how the outstanding
money
will be paid back to Sasko Bristo’s and how you will ensure
that your drivers’ account balances will not increase
during
this payment period to be submitted by no later than
17:00 on
Friday, 24
th
May 2024
. Acceptance
of the debt payment commitment is subject to the approval of Sasko
Head Office.
Failure to timeously
comply with the required conditions stipulated above will result in
stop supply to Triple S Holdings.
Sasko will take over the
operations of the East London Depot and the Port Alfred routes will
be serviced from Sasko Brito’s
Bakery in Port Elizabeth.
@Dayalan Phillips
@Shereen Phillips please confirm receipt of this email and the
conditions set out in this email by
no later than 06:00 on Monday,
20
th
May 2024
.” (The
highlighted portions are as per the original).
[15]
There were a number of further emails in similar vein. On 31
May 2024 Phillips sent Naidoo
a lengthy email disputing much of what
he (Naidoo) had alleged and raising a number of other issues.
[16]
The response to Brugh’s email (referred to in paragraph [11]
above) is set out by Phillips
in the Applicants’ founding
affidavit:
“
39.
As regards the email of 14 February 2024 (annexure FA6), the First
Applicant has never accepted that
the “driver shorts”
amounted to R2,186,915.00. In this regard:
39.1. At
least 60% of the above amount is made up of rental for the trucks and
rental for the East London premises as
well as diesel supplied by the
Respondent. Initially, the Respondent failed to invoice the
First Applicant of these rentals
with the results that when it
eventually did so only during or about September 2024 the First
Applicant was facing significant
(but once-off) arrears;
39.2. Having
regard to what I say above and, in any event, according to the
Respondent the extent of the Applicants
indebtedness has risen to
R6,156,841.00 but once the case deposits amounting to R8,516,859.65
have been cleared by the Respondent,
it will be indebted to the
Applicants for at least R2,360,018.65.”
[17]
The Respondent certainly did not see it that way because on 1 July
2024 it sent the Applicants
an email, the covering page of which
reads as follows:
“
Please see
attached formal notice indicating that the IDC agreements for the
Sasko Port Alfred and Sasko East London Bread Depots
will not be
renewed with Triple S Holdings.
Please note that the
Triple S Holdings’ final delivery into the respective Sasko
Port Alfred and Sasko East London Depots’
delivery areas will
be on Wednesday, 31
st
July 2024.
Also take note of the
condition listed below and which appears in the formal notice as
well.”
[18]
The attached formal notice, which is dated 29 June 2024, reads in
part as follows:
”
As you are aware,
the Independent Contractor Agreements (IDC Agreements) for the Sasko
Port Alfred and Sasko East London Bread Depots
have expired as of
30
th
April 2024, respectively, resulting in these
contracts being managed on a month-to-month basis.
We, hereby, wish to place
on record that Pioneer Foods will not renew the IDC Agreements for
both abovementioned Sasko Bread Depots
with Triple S Holdings.
Therefore, this letter serves as the formal 30-day notice that your
last delivery date into the Port
Alfred and East London delivery
areas will be on the 31 July 2024.
Pioneer Foods confirms
that during the 30-day notice period, Triple S Holdings shall ensure
that all deliveries are made in full
and on time to the customers
being serviced by the Sasko Port Alfred and Sasko East London Depots,
as well as the daily banking
of ALL cash owed to Sasko. Failure
to abide by either and/or both conditions will result in the
immediate termination of
your services without any further
engagement.”
[19]
The balance of the letter deals with the driver shorts issue and the
amounts in respect of which
the Respondent is alleged was due to it
by the First Applicant.
[20]
The First Applicant failed to abide by the conditions imposed
(according to the Respondent) and
on 12 July 2024 the Respondent
cancelled the contracts “
with immediate effect
”.
[21]
This prompted a response from the First Applicant’s attorney,
inter alia
, stating (and I paraphrase):
(a)
The Respondent had been “
persistently and consistently
”
in breach in respect of the driver shorts issue;
(b)
There is a dispute in respect of the amount owed, or not owed, with
regard to driver shorts
and the Respondent had unilaterally deducted
monies owed to the First Applicant in breach of clause 4 of annexure
“B”
of the Distribution Agreements (the arbitration
clause);
(c)
During or about February 2024 the parties had concluded new contracts
for three years
effective from 1 May 2024, subject to the driver
shorts issue being resolved which, due to the Respondent’s
refusal to co-operate,
had not occurred;
(d)
In the circumstances the First Applicant denied that the parties were
on a month-to-month
basis, the termination letter in any event being
a nullity because it was sent (and received) on 1 July 2024;
(e)
The Respondent was given until 15 July 2024 to honour the contracts
(referred to in (c)
above) and to immediately cease unilaterally and
unlawfully deducting driver shorts, failing which the First Applicant
would approach
the High Court for urgent relief.
[22]
Not surprisingly, the Respondent did not comply, as a result of which
the Applicants launched
this application on an urgent basis.
[23]
The Respondent’s case can be summarised by quoting the
following paragraphs from the answering
affidavit:
“
32.
The first and second applicants were required to fulfil the
conditions set out in paragraphs 17 and
18 above before the
conclusion of the proposed new three-year agreements between the
applicants and the respondent.
33.
The applicants failed to fulfil the conditions set out in paragraphs
17 and 18 above on
or before the deadline of 30 April 2024 and the
parties continued to fulfil their obligations under the
month-to-month EL and PA
Agreements.
34.
Accordingly, the applicants and the respondent never concluded the
proposed new three-year
agreements in respect of the distribution of
bakery goods in the Port Alfred and East London regions.
35.
As a result, the first applicant and the respondent continued to
contract on the same terms
and conditions reflected in the PA
Agreement and the EL Agreement on a month-to-month basis until the
respondent terminated both
Agreements, in terms of the Termination
Clause on 1 July 2024.”
[24]
The reference to paragraphs 17 and 18 (in the quoted paragraphs 32
and 33 above) are to (a) the
alleged failure to provide the Second
Applicant’s company documentation / details to the Respondent’s
satisfaction
and (b) the alleged failure by the First Applicant to
settle its indebtedness to the Applicant based on the driver shorts.
[25]
The Respondent also takes issue with the Applicants’ compliance
with the requirements for
an interim interdict and contends that:
(a)
As no Distribution Agreements had been concluded and the
month-to-month extension of the
existing contracts had been
terminated the First Applicant had not established a
prima facie
right, let alone one open to some doubt;
(b)
The fact that the Respondents were suffering financial hardship will
only in exceptional
circumstances be a well-grounded apprehension of
irreparable harm;
(c)
As the conduct of the First Applicant had been unlawful and dishonest
the balance
of convenience was not in its favour, particularly as it
(the Respondent) is out of pocket to the tune of millions of
rands;
[9]
(d)
The Applicants have another satisfactory remedy, namely to seek new
business.
[26]
The Applicants filed a very brief replying affidavit which amounted
to no more than a denial
of the Respondent’s allegations.
However, a supplementary affidavit, which dealt with events
subsequent to the matter
being struck off the roll on 6 August 2024
was filed by the Applicants. It is based on the supplementary
affidavit that the
Further Certificate of Urgency was placed before
me.
[27]
The Respondent did not object to the supplementary affidavit and
filed a response thereto.
[28]
What the First Applicant alleges in the supplementary affidavit is
that, whereas it was in financial
distress when the application was
originally launched, as a result of the Respondent making no further
deliveries of bread products
to it and the withholding of payment of
monies alleged to be owed to it the following is stated:
“
With no income or
any prospects of new business, the Applicants have closed their doors
and ceased trading.”
[29]
In addition to dealing with the allegations in the supplementary
affidavit, the Respondent used
the opportunity to bolster its case.
It stated that the relief being sought by the Applicants would result
in:
(a)
The court interfering with the Respondent’s right to freedom to
contract;
(b)
The court amending a contract between two commercial entities;
(c)
The Respondent being held hostage in circumstances where the trust
relationship had
broken down.
[30]
With regard to the changed circumstances the Respondent stated that
the Applicants had placed
no proof before the court of its financial
woes which had resulted in the First Applicant having to close its
doors, but that,
in any event, it was “
a natural consequence
of the termination of any commercial agreement.
”
[31]
What emerges from the papers is that the parties cannot even agree
that there are contracts in
place, let alone the terms thereof.
Based on the exchange of correspondence I cannot conclude that the
meeting of 2 February
2024 resulted in the conclusion of contracts,
let alone the terms thereof. At best there was a commitment,
provided certain
conditions had been complied with, to conclude
contracts at a future date. Those conditions, according to the
Respondent,
were never complied with. According to the
Applicants they were still trying to resolve them. Either way
the parties
were never
ad idem
as to the terms of contracts
that they were busy negotiating.
[32]
The high watermark of the Applicants case is that the meeting of the
2 February 2024 was concluded
based on a “
handshake
”
and that the contracts would be concluded once certain outstanding
issues had been resolved. In this regard, on behalf
of the
Applicants, Naidoo states in the founding affidavit:
“
41.
Notwithstanding that Mr Brugh (who subsequently resigned to take up a
position with another company)
in February 2024 had stressed the
urgency of the matter, the Respondent has not produced draft
agreements for the Applicants to
sign. Nevertheless, each of
the Applicants has concluded oral “handshake” agreements
(as were the case in the
beginning of 2023) with the Respondent for
Port Alfred and East London respectively which remain in place until
the Respondent
presents the formal written contracts to the
Applicants for signature (“the New Agreements”).
42.
As of 1 May 2024, being the first day of the terms of the New
Agreements, the services have
been provided on the common
understanding of the parties that the written contracts will be
substantially similar to the old Agreements
but the “
ball is
in the Respondent’s court”
to produce the written
instruments. However, having regard to the subsequent actions
of the Respondent, this seems most unlikely.
That
notwithstanding, until the written contracts are produced by the
Respondents, the Applicants tender to provide their services
on the
basis of the New Agreements agreed upon in February 2024 (save for
what I say below regarding the “
termination of convenience”
clause.”
[33]
Apart from the improbability of this assertion it suffers from
difficulties both of which are,
in my view, fatal to the relief the
Applicants seek.
[34]
Firstly, it is inherently contradictory. One cannot, on the one
hand, allege a binding
contract and at the same time, on the other
hand, allege that it was subject to the resolution of certain
outstanding issues.
There was either an agreement, or there
wasn’t. Period.
[35]
Secondly, the law with regard to an oral contract which parties
intend to reduce to writing in
due course is a murky area and appears
to have been dealt with by the courts on a case by case basis,
depending on the facts peculiar
thereto. Kerr
[10]
says the following (footnotes omitted):
“…
if
parties are negotiating a contract and either or both mention(s) a
written document, one must ask what the speaker meant (or,
if an
apparent contract is in question, what a reasonable man would have
understood the speaker to have meant). He may, broadly
speaking, have meant any one of the following three things: (1)
“I am not committing myself at the present stage.
I will
only do so when the provisions we have discussed are reduced to
writing (whether in a single document or in an exchange
of documents)
and signed.” (2) “I am not committing myself until
I see in writing all the provisions we have
discussed. I may
then commit myself even though I do not sign the document.”
(3) “I am prepared to
commit myself orally but I would
like (or, I require) all or part of the provisions which we agree
upon to be set down afterwards
in a memorandum.”
[36]
In the present matter, as I understand the position, while the
Applicants allege that an oral
contract was concluded, which merely
had to be reduced to writing, the Respondent’s case is that
there were a number of outstanding
issues and pre-conditions that had
to be complied with before contracts could be concluded, which
outstanding issues were never
resolved, nor were the conditions
complied with.
[37]
The requirements for an interim interdict are trite and were
formulated as far back as the landmark
decision of
Setlogelo
v Setlogelo
,
[11]
and approved (albeit slightly refined) over the years, most recently
by the Constitutional Court.
[12]
[38]
In
Eskom
Holdings SOC Ltd v Vaal River Development Association
[13]
the
following was stated (footnotes omitted):
“
[65]
What the standard requires has given rise to no
small measure of difference. According to
Webster
v Mitchell
, as qualified
in
Gool
, the
test is whether the applicant has furnished proof which, if
uncontradicted at trial (here in the review), would entitle
the
applicant to final relief. The Court will then consider the
case of the respondent to decide whether it casts serious
doubt on
the case of the applicant. If it does, the standard is not met.
In
Ferreira
, a
majority of a Full Court considered this test to be too exacting.
It held that the prospects of success of the claim
for the principal
relief, albeit weak, may nevertheless suffice. This is so
because other requirements for the grant of an
interim interdict
may be strongly grounded and hence compensate for the weakness as to
prospects. This, it was thought,
better chimed with the holding
in
Eriksen Motors
. More
recently,
this Court, in
Economic Freedom
Fighters
held that—
“
before
a court may grant an interim interdict, it must be satisfied that the
applicant for an interdict has good prospects of success
in the main
review
. The claim for review must
be based on
strong grounds
which
are likely to succeed. This requires the court adjudicating the
interdict application to
peek into
the grounds of review raised in the main review application and
assess their strength
. It is
only
if a court is convinced that the review is likely to succeed that it
may appropriately grant the interdict
.”
(Emphasis added.)
[66]
What all of these cases make clear is that to secure
interim relief, an applicant must establish their prospects of
success
of obtaining final relief to the required standard. Without
that showing, there is no basis upon which a respondent can be
required to endure the strictures of an interim order, pending the
final determination of the case for final relief
. And even
if the standard is satisfied and the applicant is granted an interim
order, the order is generally subject to the
following condition. If
the applicant ultimately fails in the main action, they will be
liable for the damages that the respondent
may have suffered as a
result of the imposition of the interim order. This is a
further demonstration of the manifest
connection between the grant of
interim relief and the likely outcome of the proceedings that will
finally determine the matter.”
(Underlined for emphasis).
[39]
Given the exchange of correspondence referred to above how can I
conclude that the parties were
ad idem?
In his 2
February 2024 email Brugh refers to the “
discussions
”,
not an “
agreement
”. This is the same email
that Naidoo relies upon for the formation of binding contracts.
Even the Applicant’s
attorney is equivocal in this regard.
In his letter of demand he refers to the conclusion of new contracts,
subject to
the driver shorts issue being resolved, which he
concedes never was.
[40]
On the papers before me, at best for the Applicants, there are
irreconcilable disputes of fact
which cannot be resolved on the
papers, alternatively, at worst no new Distribution Agreements were
ever concluded.
[41]
The First Applicant makes much of the fact that the month-to-month
contracts, which required
one months’ written notice of the
termination thereof, were not validly terminated. In this
regard the First Applicant
relies on the fact that the notice was
received only on the 1
st
of July and thereafter, a few
days later, the month-to-month contracts were summarily terminated
with immediate effect.
[42]
The Interpretation Act, 33 of 1957 defines a “month” as a
calendar month. Thus,
notice of termination would have had to
reach the Applicants
before
the commencement of the month of
July. It didn’t. Similarly, there is no provision
in the contracts for “
immediate
termination
”.
[43]
The Applicants are actually correct in this regard. But where
does that take the matter?
In the first place, more than a
month had elapsed by the time the application was launched, so the
issue had become academic.
In the second place, the Respondent
could simply issue a fresh cancellation notice, which would have
extended the contracts for
another month, but not resolve the
underlying irreconcilable issues.
[44]
Furthermore, the fact that the Respondent did not comply with a term
of the contracts and is
in breach thereof does not necessarily mean
that the Applicants are entitled to an interim interdict.
Breaches of contract
are an everyday reality, usually giving rise to
an action for damages, although not exclusively so.
[45]
Which brings me to another argument raised by the Respondent, namely
that the trust relationship
between the parties has broken down.
[46]
Where a breach of contract is alleged one of the remedies available
to the aggrieved party is
a claim for specific performance.
Dealing with an employment contract Innes CJ stated the following in
Schierhout
v Minister of Justice
[14]
(at
p. 107):
“
Now, it is a well
established rule of English law that the only remedy open to an
ordinary servant who has been wrongfully dismissed
is an action for
damages. The Courts will not decree specific performance
against the employee, nor will they order the payment
of the
servant’s wages for the remainder of his term. Macdonell
(
Master and Servant
, 2
nd
ed., p. 162) however,
points out that Equity Courts did at one time issue decrees for
specific performance.
But the practice has long been
abandoned, and for two reasons; the inadvisability of
compelling one person to employ another
whom he does not trust in a
position which imports a close relationship; and the absence of
mutuality, for no Court could by its
order compel a servant to
perform his work faithfully and diligently. The same practice
has been adopted by South African
Courts, and probably or the same
reason
.” (Underlined for emphasis).
[47]
That, however, is no longer the legal position. In
Haynes
v King Williams’s Town Municipality
[15]
De
Villiers AJA stated (at p. 378F-H):
“
It is, however,
equally settled law with us that although the Court will as far as
possible give effect to a plaintiff’s choice
to claim specific
performance it has a discretion in a fitting case to refuse a decree
specific performance and leave the plaintiff
to claim and prove his
id quod interest
. The discretion which a Court enjoys
although it must be exercised judicially is not confined to specific
types of cases,
nor is it circumscribed by rigid rules. Each
case must be judged in the light of its own circumstances.
As examples of the
grounds on which the Courts have exercised their discretion in
refusing to order specific performance, although
performance was not
impossible, may be mentioned: (a) where damages would
adequately compensate the plaintiff; (b) where
it would be difficult
for the Court to enforce its decree; (c) where the thing claimed can
readily be bought anywhere; (d) where
specific performance entails
the rendering of services of a personal nature.”
[48]
Notwithstanding the shift away from the inflexible rule espoused in
Schierhout
the starting point, as it were, appears still to be that the courts
are loathe to order specific performance where contracts of
employment / service are concerned. See:
Santos
Professional Football Club (Pty) Ltd v Igesund and Another
[16]
(at p. 701B – E) and
Nationwide
Airlines (Pty) Ltd v Roediger and Another
[17]
where Horn J stated (at paras 17
et
al)
:
“
[17]
Where it concerns a contract of employment it has been held that
a court will in the exercise of its discretion not normally
grant
specific performance
. However, the tendency to regard this rule
as one cast in stone, that is, that specific performance of an
employment contract would
never be granted, was shown not to be a
hard-and-fast rule.
[18]
…
[19]
From this it is apparent that it is a misconception to say without
qualification that specific
performance of an employment agreement
will never be permitted. There are numerous situations where specific
performance may
be ordered where various factors may play a
determining role in coming to such a decision.
[20]
Such factors may, for example, be:
1. The
particular relationship between the employer and the employee.
2. The
nature of the employment contract.
3. The
nature of the service or work which is to be performed in terms of
the contract.
4. The
prejudice or hardship to be suffered by the innocent party should
specific performance not be ordered, compared
to the prejudice that
will be suffered by the employee, should it be granted.
[21]
The general rule should still be that where a party wrongfully
breaches a contract it should
entitle the innocent party to enforce
the contract, and that should no less be so even in employment
contracts.” (Underlined
for emphasis).
[49]
Although these cases refer to employment contracts, the situation in
the present matter is akin
thereto. The Applicants were
employed, albeit as independent contractors, to render a service to
the Respondent.
[50]
The cases quoted above dealt with a situation where the contract in
question was common cause.
In the present matter whether or not
there are contracts in place is hotly contested by the Respondent.
In the circumstances
it would be unwise to order specific
performance, even on an interim basis. In the exercise of my
discretion I decline to
do so.
[51]
In a bizarre twist the Applicants also seek an order, to operate with
immediate effect, that
the clause providing that either party may
terminate the contracts in writing on 30 days calendar notice be
declared contrary to
public policy.
[52]
I have already referred to this clause above. The motive behind
this relief is obvious.
If I grant the relief the Applicants
seek and order the continuance of the relationship, it would still be
open to the Respondent
to terminate on 30 days’ calendar
notice. This would defeat the very purpose of the application.
[53]
Thus, not only do the Applicants seek the implementation of the
alleged contracts in order to
prove the conclusion thereof in due
course, the very conclusion of which is in dispute, they expect the
court to amend the terms
thereof by declaring a particular clause
contra bonis mores
.
[54]
It is trite that the court will not make a contract for the parties.
In
Sasfin
(Pty) Ltd v Beukes
[18]
the
court refused to do so in that:
“
It is in my view
that not open to parties to a contract to say to a court
‘
Take our
agreement, such as it is, excise from it all that is bad, and retain
what is good, and provide us with a contract which
is legal and
enforceable, even though it may not be what we originally had in
mind’”
[55]
Even if it were competent for a court to make such an order at this
stage, other than based on
the vaguest of allegations, the Applicants
make out no case as to why a contractual term that either party may
terminate the contracts
on 30 days’ notice is against public
policy. The fact that the one party (the Respondent) may be in
a much stronger
bargaining position than the other party (the
Applicants) is not a ground for declaring the term to be against
public policy.
This will be the case in the vast majority of
cases. In any event, the Applicants were not forced into
contracting with the
Respondent. If they did not like this term
they should not have concluded the contract. In addition, both
parties are
afforded the same right of termination so they are on a
level playing field, as it were. It is not as if the term
operates
in favour of the Respondent only.
[56]
In addition, although the notice of motion refers to the Distribution
Agreements concluded between
the Applicants and the Respondent,
granting an order declaring the relevant clause contrary to public
policy will create a precedent.
One can just imagine the
consternation it will cause. It will throw hundreds, if not
thousands, of contracts into doubt.
Thus, even if I was
inclined to grant the rest of the relief, I would decline to declare
the relevant clause contrary to public
policy and therefore void and
invalid.
[57]
The final nail in the Applicants’ coffin emerges from the
supplementary affidavit which
was the basis for the renewed case for
urgency. In paragraph 10 thereof Phillips states that as a
result of the Respondent’s
refusal to deliver bread products to
the Applicants they have had no income and:
“
With no income or
any prospects of new business, the Applicants have closed their doors
and ceased trading.”
[58]
It is trite that an interdict is not a remedy for a past invasion of
rights, but is concerned
with present or future infringements.
On its own version the harm that the Applicants sought to avoid has
already occurred.
There is thus no longer any point in granting
the relief sought in the notice of motion.
[59]
From the aforegoing it is evident that the Applicants failed to make
out a case for the relief
sought and it is for this reason that I
handed down the order referred to in paragraph [2] above.
NJ
MULLINS
(ACTING
JUDGE OF THE HIGH COURT)
REPRESENTATION
:
Obo
the Applicants:
Adv. G. Gajjar
Instructed
by:
RUSHMERE NOACH INC.
5 Ascot Office Park
Conyngham Road
Greenacres
GQEBERHA
c/o NETTELTONS
ATTORNEYS
118A High Street
MAKHANDA
Obo
Respondent:
Adv. D. De la Harpe SC
Instructed
by:
NORTON ROSE FULBRIGHT SA INC.
34 Fredman Drive
Sandton
JOHANNESBURG
c/o WHEELDON RUSHMERE
AND COLE INC.
119 High Street
MAKHANDA
[1]
Eastern Cape
Joint Rules of Practise: Rule 12.
For a comprehensive
explanation of the purpose of the certificate of urgency (in the
Eastern Cape Division) see the judgment of
Rossi AJ in
MV Tai
Harmony: Sure Success Steamship SA v MV Tai Harmony and Others
2024 (4) SA 640
(ECGq) at paras [30] – [41].
[2]
The
traditional trade is made up of small retailers, such as cafes and
spaza shops, whereas the modern trade consists of supermarkets.
[3]
This must
surely have been intended to read
First
Applicant.
[4]
This must
surely have been intended to read 5.4 and 5.5.
[5]
This is a
reference to the Second Applicant’s company details.
[6]
Referred to
in paragraph [9] above.
[7]
It should
read “Split”.
[8]
Phillips
[9]
Which, to be
fair, is in dispute.
[10]
Kerr: The
Principles of the Law of Contract; 6
th
Ed; pp. 140 – 141
See also Christie:
The Law of Contract in South Africa; 5
th
Ed; pp. 105 –
109
[11]
1914 AD 221
at 227
[12]
See
Economic
Freedom Fighters v Gordhan and Others
2020 (6) SA 325
(CC) at para [21]
[13]
2023 (2) SA 325
(CC)
[14]
1926 AD 99
[15]
1951 (2) SA 371
(AD)
[16]
2002 (5) SA 697
(CPD)
[17]
2008 (1) SA 293 (W)
[18]
1989 (1) SA 1
(A)
at 16H - I