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[2020] ZASCA 118
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Former Way Trade & Invest (Pty) Ltd v Bright Idea Projects 66 (Pty) Ltd (1341/2018) [2020] ZASCA 118 (1 October 2020)
THE
SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case
no: 1341/2018
In
the matter between:
FORMER
WAY TRADE & INVEST (PTY)
LTD APPLICANT
and
BRIGHT
IDEA PROJECTS 66 (PTY)
LTD RESPONDENT
Neutral
citation:
Former
Way Trade & Invest (Pty) Ltd v Bright Idea Projects 66 (Pty) Ltd
(Case no 1341/2018)
[2020] ZASCA 118
(1 October 2020)
Coram:
WALLIS, ZONDI and MOCUMIE JJA, GOOSEN
and MABINDLA-BOQWANA AJJA
Heard
:
26 August 2020
Delivered
:
This judgment was handed down electronically by circulation to the
parties’ representatives via 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 1 October 2020.
Summary:
Application for
reconsideration of refusal of leave to appeal in terms of s 17 (2)
(
f
)
of
Superior Courts Act 10 of 2013
– applicant conducting
business as retailer of petroleum products - respondent obtained
order evicting applicant from premises
owned by it on expiry of
franchise agreement – High Court found no new franchise
agreement concluded and refused stay of
proceedings pending
arbitration – Leave to appeal refused by high court and this
court on petition - On reconsideration
no need to vary this
court’s order refusing leave to appeal – Order confirmed.
ORDER
On
application:
Reconsideration
of application for leave to appeal from KwaZulu-Natal Division of the
High Court, Pietermaritzburg (D Pillay J,
sitting as court of first
instance):- judgment reported
sub
nom Bright Idea Projects 66 (Pty) Ltd v Former Way Trade and Invest
(Pty) Ltd
2018 (6)
SA 86
(KZP); [2018] ZAKZPHC 29.
1. The order of this court dismissing the application
for leave to appeal is confirmed.
2. The applicant is ordered to pay the costs of the
application for leave to appeal and its reconsideration, such costs
to include
those consequent upon the employment of two counsel.
JUDGMENT
Goosen
AJA (Wallis, Zondi and Mocumie JJA and Mabindla-Boqwana AJA
concurring)
[1]
The respondent Bright
Idea Projects 66 (Pty) Ltd, trades as a wholesaler of petroleum
products under the name All Fuels. It is the
owner of a property
situated at 238 Albert Luthuli Street, Pietermaritzburg. Since about
February 2015, the applicant, Former Way
Trade & Invest (Pty) Ltd
(‘Former Way’), has conducted business on the property as
a Caltex service station under
the name Premier Service Station. When
the franchise agreement under which it was operating expired on 31
December 2017 Former
Way refused to vacate the property and it has
since then continued to operate the service station business. The
endeavours by All
Fuels to evict Former Way give rise to the present
application.
[2]
All Fuels launched an
application to evict Former Way from the property on 15 January 2018.
Former Way filed a counter-application
in which it sought to enforce
an agreement extending its tenure, alternatively an order staying the
high court proceedings pending
arbitration pursuant to
s 12B
of the
Petroleum Products Act, 120 of 1977 (‘the Act’). The
matter came before D Pillay J who, on 19 July 2018, dismissed
the
counter-application and granted an eviction order directing Former
Way to vacate property. She refused leave to appeal.
[3]
An application for
leave to appeal was dismissed by two judges of this court. Former Way
then applied for reconsideration of that
order in terms of s 17 (2)
(
f
)
of the
Superior Courts Act, 10 of 2013
. Navsa AP referred that
refusal of leave to appeal to this court for reconsideration and, if
necessary, variation. Upon reconsideration
the court hearing the
application is required to consider afresh whether leave to appeal
should be granted as provided for by
s 17
(1) of the
Superior Courts
Act.
[1
]
The merits of the appeal accordingly only fall to be considered for
purposes of determining whether prospects of success are established
to meet the requirements for granting leave to appeal.
The facts
[4]
On 1 January 2003,
Caltex Oil SA Pty Ltd (‘Caltex Oil’) entered into a
franchise agreement in terms of which it, as
franchisor, granted
Readyform 1030 CC (‘Readyform’) the right to operate a
Caltex service station on the premises situated
at 238 Albert Luthuli
Street, Pietermaritzburg (‘the premises’). In terms of
this agreement Caltex Oil leased the premises
to Readyform and
undertook to supply it with petroleum products for retail to
consumers. The agreement was for a period of five
years but included
two renewable option periods each of five years duration.
[5]
On 30 August 2005, the
franchise agreement between Caltex Oil and Readyform was ceded and
assigned to Shantyrien Service Station
CC (‘Shantyrien’),
which thereafter operated the retail business as franchisee. In
October 2005 Caltex Oil changed
its name to Chevron South Africa
(Pty) Ltd (‘Chevron’).
[6]
On 1 February 2011, the
franchise agreement between Chevron and Shantyrien was ceded and
assigned to Tomdia Service Station CC (‘Tomdia’).
Tomdia
thereafter traded as the franchisee under the style Premier Service
Station.
[7]
On 23 December 2011,
Chevron and All Fuels concluded an agreement, referred to as a Retail
Assignment Agreement in terms of which
All Fuels purchased the
immovable properties owned by Chevron, on which a number of retailers
conducted retail businesses as retailers
of petroleum products. This
agreement also ceded and assigned the agreements in terms of which
these retailers operated from the
properties to All Fuels. Chevron
and All Fuels also concluded a Branded Marketer Agreement which
conferred upon All Fuels the right
to market and sell Chevron
products as wholesaler in the Southern Kwa-Zulu Natal region. The
effect of these two agreements was
that All Fuels effectively stepped
into the shoes of Chevron in relation to the retailers of Chevron
products in that region. It
is common cause that one of the
properties acquired by All Fuels was the premises from which Tomdia
conducted business as Premier
Service Station. It is also common
cause that the original franchise agreement concluded between Caltex
Oil and Readyform was extended
for each of the two renewal periods at
the option of the relevant retailer. The date of termination of the
franchise agreement
was 31 December 2017.
[8]
In February 2015,
Tomdia sold the Premier Service Station business to Former Way. The
sale was conditional upon the written approval
of All Fuels as
provided for in the franchise agreement. It is common cause
that on 26 February 2016 Tomdia, All Fuels and
Former Way signed a
cession and assignment agreement in respect of the franchise
agreement. The effective date of the agreement
was 1 March 2015, from
which date Former Way had occupied the premises. The franchise
agreement conferred no right or option to
renew upon Former Way. It
was scheduled to terminate on 31 December 2017.
[9]
Clause 11 of the
franchise agreement provided, inter alia, that:
‘
Upon termination of this Contract, for
whatever reason:-
11.1.1
the
licence / franchise herein granted together with the right of
occupation of the Premises will cease to be of any force and effect;
11.1.2
the
FRANCHISEE and its permitted assigns, heirs and executors will
forthwith surrender possession of the Premises to the FRANCHISOR,
which Premises shall be in such repair and condition as prescribed in
the lease agreement and, if applicable, the Retail Outlet
Standards
manual;’
[10]
Clause 8 of the cession
contained a ‘whole agreement’ clause which provided that
it was the entire agreement between
the parties and that,
‘
None of the parties relies in entering into
this agreement upon any warranties, representations, disclosures, or
expressions of
opinion which have not been incorporated into this
agreement;’
[11]
On 30 June 2017 All
Fuels forwarded to Former Way a notice of termination of the
franchise agreement outlining the consequences
of termination as set
out in clause 11 of the franchise agreement. Mr Lee Bentz, on
behalf of Former Way, acknowledged receipt
of the notice on 4 July
2017. Former Way failed to vacate the premises upon expiry of the
franchise agreement.
The eviction proceedings
[12]
All Fuels commenced
eviction proceedings on 15 January 2018. They were opposed on two
related grounds. The first was that Former
Way had concluded an
enforceable ‘renewal agreement’ with All Fuels. This was
a misnomer as the agreement described
in the replying affidavit was
unrelated to the franchise agreement between All Fuels and Tomdia
that had been ceded and assigned
to Former Way on 26 February 2016.
It was an agreement allegedly concluded between December 2014 and 27
February 2015 for a new
franchise agreement to replace that
agreement, and to endure for five years, with an option to renew
thereafter for a further five
years. The second contention was that
the failure by All Fuels to provide Former Way with this franchise
agreement as agreed had
been the subject of a request for arbitration
in terms of s 12B of the Act. Since the envisaged arbitration would
deal with All
Fuels’ failure to honour its obligation to
provide Former Way with a franchise agreement, the high court
proceedings ought
to be stayed pending such arbitration. By the time
the eviction application was heard in the high court there had been a
referral
to arbitration pursuant to the request. It was contended
before us that this resulted in a complete ouster of the high court's
jurisdiction.
[13]
Counsel for Former Way
accepted that the ceded franchise agreement, in terms of which it had
occupied the premises owned by All
Fuels, had terminated on 31
December 2017. Any right of occupation beyond termination of
the franchise agreement would need
to be determined on the basis of
whether the evidence established the existence of an agreement
conferring such right of occupation.
In this respect Former Way was
saddled with an onus to prove such right of occupation.
[2]
A new franchise agreement
[14]
Former Way’s case
insofar as the conclusion of a franchise agreement was concerned was
the following. In 2014 when Former
Way was engaged in discussions
with Tomdia to purchase the business it was aware of the limited
duration of the existing franchise
agreement. Tomdia was then seeking
payment of a purchase price of R8 million. Former Way therefore
sought assurance that it would
secure a further period as franchisee.
When it was established that All Fuels would consider a further
franchise agreement upon
payment of a brand fee or royalty payment of
R3.25 million, a reduction in the purchase price was negotiated.
[15]
On 22 December 2014 All
Fuels wrote to Former Way to confirm acceptance of its application
for appointment as a retailer in substitution
of Tomdia. In this
letter All Fuels stipulated as a condition of such acceptance that
Former Way sign a cession of the existing
franchise agreement. Mr
Bentz acknowledged receipt and acceptance of these stipulated terms
on 31 December 2014. The letter made
no reference to a franchise
agreement for five years with the option to renew for a further five
year period.
[16]
According to Mr Bentz,
however, it was agreed that a franchise agreement would be concluded
for a period of five years with an option
to renew and that Former
Way would pay to All Fuels an amount of R3.25 million plus VAT as a
royalty. Former Way was required to
sign a cession of the existing
franchise agreement. A letter dated 27 February 2015 written by Ms
Maria Watson, General Manager
of All Fuels, to Mr Bentz recorded that
All Fuels was prepared to conclude a franchise agreement for five
years with an option
to renew, upon the previously stipulated
conditions which included that Former Way sign a cession of the
existing franchise agreement.
The letter enclosed an invoice
for payment of the royalties. Mr Bentz did not sign the letter
as required and did not pay
the royalty fee.
[17]
Upon being presented
with a cession agreement on 30 July 2015 he refused to sign ‘until
… favoured with the contemplated
franchise agreement’.
He maintained this position when a further cession agreement was
presented in October 2015, since it
referred to a ‘future
franchise agreement’ and made provision for a non-refundable
royalty payment. In an email addressed
to All Fuels on 23 November
2015 Mr Bentz explained the delay in responding to the request to
sign the cession agreement on the
basis that he had sought legal
advice. According to the email he was advised not to sign the cession
agreement. He suggested that
a standard cession agreement be signed
and that in due course a new franchise agreement for five years with
an option to renew
be signed. Upon signature, he stated, the royalty
fee would be paid.
[18]
On 22 February 2016 All
Fuels sent a notice of termination of the franchise agreement to
Former Way. This occurred prior to
the signature of the
cession, but when Former Way was already in occupation of the
premises and trading therefrom. In a letter
of the same date the
circumstances giving rise to the notice of termination were set out
in the following terms.
‘
Prior
to agreeing to sign a Cession of Franchise Agreement, you requested
our client to guarantee to you that it will be extending
the
Franchise Agreement, to be ceded and assigned to you by the
Franchisee. Our client considered this request and informed you
that
it was prepared to extend the Franchise Agreement subject to certain
conditions.
Our client
has been unable to reach an agreement with you on the aforesaid basis
and we are instructed to inform you that our client
hereby revokes,
with immediate effect, any acceptance, agreement and / or offer of
whatsoever nature, contained in any correspondence,
document or
communication to you and from you, our client or any third party in
regard to the Cession of the Franchise Agreement
and Extension of the
Franchise Agreement.’
[19]
The letter went on to
state that in order for Former Way to continue as dealer at the
Premier Service Station until termination
of the franchise agreement,
it was required to sign an accompanying cession of the franchise
agreement. It is this cession which
was signed by Former Way on 26
February 2016.
[20]
This description of
events demonstrates that All Fuels never provided Former Way with the
proposed franchise agreement on a five
plus five years basis,
although it was always willing to accept a cession and assignment of
the existing franchise agreement. The
stumbling block appears to have
been the refusal to pay the 'brand fee' or royalty payment until
after the new franchise agreement
had been produced and signed. The
reason given was that this would be 'non-refundable' although it is
difficult to see how that
could ever be the case given that the
quid
pro quo
for such
payment was the franchise agreement. A refusal to conclude the latter
would not leave Former Way without a remedy. Ordinarily
the refusal
to conclude the agreement would make the fee recoverable under one or
other of the
condictiones.
[21]
In any event, it is
apparent that the terms of the agreement contended for had not been
resolved and that both parties intended
that the agreement would be
reduced to writing. This accorded with Former Way's frequent demand
to be provided with a franchise
agreement and the terms of its
request for arbitration, which was based on All Fuels' failure to
provide Former Way with a franchise
agreement.
[3]
The email Mr Bentz sent to All Fuels on 23 November 2015 after
seeking legal advice is telling. In explaining why Former Way was
unwilling to pay the royalty fee until the signature of the proposed
franchise agreement he dealt with the protection of Former
Way's
interests 'if we do not agree on the next FA[franchise agreement]'.
It could hardly be clearer that agreement on the terms
of the new
franchise agreement and signature of the document were required for
any contract to come into force.
[4]
[22]
All Fuels' position
that there was no binding agreement in relation to the proposed new
franchise was made clear in correspondence
before signature of the
cession of the existing franchise agreement. Former Way nonetheless
signed the latter and continued to
occupy the premises under it,
without taking any steps to establish or enforce its alleged rights
under the alleged new franchise.
[23]
Counsel argued that
notwithstanding these difficulties confronting Former Way's case
there was a sufficient dispute of fact for
the judge in the high
court to have been obliged to refer the case for the hearing of oral
evidence on this issue. This argument
does not hold water. It ignored
the fact that the onus rested on Former Way to justify its continued
occupation of the premises
despite the expiry of the original
franchise agreement. It also ignored the fact that no request had
been made to the judge to
exercise her discretion to refer the case
for the hearing of oral evidence.
[24]
Largely for these
reasons the high court held that Former Way had not established a
right of occupation of the premises as against
All Fuels. There is no
reasonable prospect of this court taking a different view of the
evidence. Accordingly, there is nothing
in this argument justifying a
departure from the original view taken by the two judges of this
court to dismiss the application
for leave to appeal.
The effect of the s 12B referral
[25]
The request for
referral to arbitration was submitted on 22 December 2017, shortly
before the expiry of the franchise agreement.
It set out in some
detail, by way of background, contentions in terms similar to those
advanced in defence of the application before
the high court. The
request commenced with a reference to the agreement by which Former
Way purchased the Premier Service Station
from Tomdia, alleging that
this agreement was subject to All Fuels entering into a franchise
agreement with Former Way. It
then stated that an agreement was
reached between All Fuels and Former Way that upon payment of an
amount of R3,25 million plus
VAT All Fuels would ‘give Former
Way a franchise agreement for a period of 5 years from the 1
st
March, 2015 with an option of a further 5 years’. This was the
agreement, albeit incorrectly termed a ‘renewal agreement’
before the high court, upon which Former way founded its right to
continued occupation of the premises.
[26]
The request proceeded
to record Former Way’s refusal to make payment of the royalty
fee on the basis that the franchise agreement
would only be concluded
at the expiry of the existing franchise agreement. This was
unacceptable since the royalty payment was
non-refundable whereas the
terms of the franchise agreement to be concluded were unknown and
potentially prejudicial to Former
Way. The failure by All Fuels
to provide it with a franchise agreement and the insistence by All
Fuels upon payment of the
royalty fee amounted to unfair and
unreasonable contractual practices as envisaged in s 12 B of the Act.
This was the principal
dispute referred to arbitration, although the
request outlined several related disputes.
[27]
The Controller issued a
notice referring the disputes to arbitration on 21 February 2017
after the eviction proceedings had commenced.
The notice framed the
disputes as follows:
‘
5.1 The failure by All Fuels to provide
[Former Way] with a Franchise Agreement as agreed and their
insistence on the non-refundable
payment of royalties of R3,250,000
plus VAT payable upfront; and the failure to provide [Former Way]
with the balance of the Franchise
Agreement ceded to it, all amount
to unfair and unreasonable contractual practice.
5.2 Should All Fuels contention be correct, which is disputed by
[Former Way], that it is not bound by the 5 year (with 5 year
renewal
option) concluded with [Former Way] , then it is contended that it is
obliged to treat [Former Way] as Chevron would.
5.3 The understanding that the agreement between Chevron and their
Branded Marketers which includes All Fuels contains a clause
which
states that Branded Marketers are not allowed to treat their
retailers differently from the way Chevron treats their retailers.
Currently Chevron allows its retailers the opportunity to sell their
businesses where there is no extension of the agreement. All
Fuels
allowed Tomdia to sell its business to [Former Way] but now will not
allow [Former Way] to sell.
5.4 The claiming of an excessive royalty by All Fuels is also a huge
departure from the norm where oil companies simply extend
the
retailers tenure in the business without requesting capital if they
were happy with their performance. If oil companies are
not willing
to renew the relationship, they allow the business to be sold by the
existing retailer to the incoming retailer.
5.5 Additionally, All Fuels’ failure to keep
the property and relevant equipment in an optimal functioning order
is contrary
to Chevron standards and has caused the retailer to
suffer financial loss.’
[28]
The reference to
arbitration was relied upon before the high court to move for a stay
of the eviction proceedings. Before this court
Former Way contended
that the effect of a referral to arbitration was to oust the high
court’s jurisdiction. Before turning
to the merits of this
argument I wish to highlight an important concession made by counsel
for Former Way, namely that Former Way
was not seeking an equitable
order at arbitration by which the arbitrator would fashion a
franchise agreement for the parties.
Instead the arbitrator would be
required to make a factual determination regarding the existence of
the new franchise agreement.
This concession, given the discussion of
the new agreement defence above, effectively disposes of reliance
upon the argument for
a stay of proceedings. That is so because there
is little or no prospect of success of establishing the factual
defence at the
arbitration.
[29]
What remains then is
the question whether the referral to arbitration in terms of s 12 B
of the Act ousted the high court’s
jurisdiction. In developing
the argument counsel relied upon the language of s 12B and placed
great store on the Constitutional
Court judgment in
Business
Zone 1010 CC t/a Emmarentia Convenience Centre v Engen Petroleum
Limited and others
(‘
Business
Zone’
).
[5]
[30]
The relevant portions
of s 12B read as follows:
‘
(1) The Controller of Petroleum Products
may on request by a licensed retailer alleging an unfair or
unreasonable contractual practice
by a licensed wholesaler, or
vice
versa
, require, by notice in writing to
the parties concerned, that the parties submit the matter to
arbitration.
…
(4) An arbitrator contemplated in subsection (2) or (3) –
(a) shall determine whether the alleged contractual practices
concerned are unfair or unreasonable and, if so, shall make such
award as he or she deems necessary to correct such practice; and
(b) shall determine whether the allegations giving rise to the
arbitration were frivolous or capricious and, if so shall make such
award as he or she deems necessary to compensate any party affected
by such allegations;
(5) Any award made by an arbitrator contemplated
in this section shall be final and binding upon the parties concerned
and may,
at the arbitrator’s discretion. Include any order as
to costs to be borne by one or more of the parties concerned.’
[31]
It was submitted that
the word ‘shall’ in subsections (4) and (5) pointed to
the peremptory nature of the arbitral proceedings.
In particular, the
fact that an award was ‘final and binding’ suggested that
once a matter had been referred to arbitration
the arbitration
outcome was definitive, to the exclusion of what may flow from court
proceedings, save to the extent that the award
may be subject to
review. This latter was a weak point since all arbitrations under the
Arbitration Act are final and binding unless
set aside on review.
[32]
The Act contains no
provision which, in unequivocal terms, ousts the jurisdiction of a
court of law. Whether it does indeed oust
the court’s
jurisdiction is therefore a matter of construction and
interpretation. In deciding whether the legislative
provision
ousts the court’s jurisdiction, all circumstances must be
considered to determine whether the necessary implication
arises that
its jurisdiction is either wholly or partially excluded.
[6]
[33]
The circumstance relied
upon in this instance related to the purpose of the provision and the
general purpose of the Act, namely
to foster transformation of the
petroleum products industry. It was submitted that the Act fostered
transformation of the petroleum
industry by introducing a standard of
reasonable and equitable conduct in dealings between wholesalers and
retailers of petroleum
products. This equitable standard was to be
applied in the resolution of disputes via arbitration. When viewed in
this light, so
it was argued, the machinery for dispute resolution
created by the Act applied exclusively. It was suggested that this
was the
ratio
of the judgment in
Business
Zone.
[7]
[34]
Business Zone
however, concerned a problem quite
different to the matter before this court. In that matter the
Controller had refused a request
to refer a dispute regarding the
cancellation of an agreement to arbitration. What was at issue was
whether a single act of cancellation
could constitute an unfair
contractual practice within the meaning of s 12B. The court was
accordingly called upon to interpret
the section having regard to the
purpose sought to be achieved thereby and by the Act in general. The
Constitutional Court found
that an act of cancellation could
constitute an unfair contractual practice. The Controller could
therefore refer the termination
of an agreement to arbitration and
should have done so.
[35]
That finding is not
itself relevant to the present case, but the Constitutional Court's
view of what constitutes a contractual practice
for the purpose of
the Act is important. It made it clear that although the arbitrator
in an arbitration under s 12B applies
a standard informed by
fairness and reasonableness, which foreshadows the possibility that
they may invalidate conduct that strictly
speaking is permitted by
the contract, their jurisdiction does not extend to making a contract
for the parties other than the one
they actually concluded. This
emerges from the following passage in the judgment:
[8]
‘…
the arbitrator’s remedial
powers can go no further than correcting the contractual practice in
question. The interests of
third parties are protected in the section
12B arbitration process, the subject matter of which is limited to a
“contractual
practice”. This presumes that remedying the
dispute lies squarely within the contractual rights and obligations
of the parties
to the contract.’
[36]
This finding no doubt
informed the concession referred to above and disposed of an issue
that was unclear from the request for arbitration
and the reference
itself, as well as the heads of argument. This was whether Former Way
was contending that the arbitrator could
in the exercise of their
jurisdiction order All Fuels to conclude a franchise agreement on
terms determined by the arbitrator,
if as a matter of fact the
parties had not concluded such an agreement, but had a non-binding
understanding or arrangement falling
short of a binding contract.
[9]
Whether or not that was what Former Way and its advisers had in mind
when the request for arbitration was made, the Constitutional
Court
has made it clear that the powers of an arbitrator are to be
exercised within the framework of the contractual relationship
between the parties and do not extend to making a contract for them.
[37]
Counsel’s
reliance on the judgment was based on the Constitutional Court’s
treatment of the introduction of a normative
equitable standard in
arbitral proceedings under s 12B of the Act. The reliance was
misplaced. The Constitutional Court dealt with
the notional
‘conflict’ between court adjudication of disputes and
arbitral dispute resolution based on an equitable
standard with
reference to an assessment of similar developments under the
Labour
Relations Act 66 of 1995
and
Rental Housing Act 50 of 1999
. The
Constitutional Court concluded that no such conflict arises since
there is no reason why a normative equitable standard
should not also
apply to court adjudication.
[10]
[38]
This conclusion
militates against a finding that arbitration proceedings provided for
in s 12B of the Act serve as an exclusive
forum for the adjudication
of disputes arising between wholesalers and retailers of petroleum
products. That such arbitral proceedings
do not constitute an
exclusive mechanism for dispute resolution appears from the following
passage in the Constitutional Court’s
judgment.
‘
Section 12B arbitration presents an
additional route for licensed retailers and wholesalers alike to have
their disputes adjudicated
quicker within rules and processes of
their own design. Section 12B offers a statutory guarantee of a
mechanism that has become
ubiquitous in contract, which may otherwise
not exist possibly due to the unequal bargaining position retailers
vis a vis wholesalers
find themselves in. Reliance on the section 12B
arbitration procedure can more accurately be understood as
arbitration is ordinarily
in contract: it suspends the institution of
court litigation. In turn the section 12B arbitral mechanism is
insulated from
becoming a mere preliminary, strategic step to court
litigation in that section 12B (5) speaks to the finality of such an
award.’
[11]
[39]
Counsel for Former Way
sought to suggest that the reference to arbitration ‘suspend(ing)
the institution of court litigation’
pointed to an ouster of
jurisdiction. This contention was unsound. The footnote to that
passage in the judgment of Mhlantla J refers
to
s 6
of the
Arbitration Act 42 of 1965
and the power of a court to stay judicial
proceedings in favour of arbitration. Those provisions are applicable
to statutory arbitrations
by virtue of
s 40
of the
Arbitration Act.
It
is therefore apparent that Mhlantla J had in mind the conventional
situation where a party may seek a stay of litigation pending
arbitration, not an automatic stay of litigation in favour of
arbitration under
s 12B.
That is also clear from the following
statement in para 56 of that judgment:
'Forum-shopping between these two
different systems of law applied in different institutions will
disappear. Instead, what remains
is only the choice of arbitration
rather than adjudication in the courts, a procedure well known to our
law.'
[40]
There are accordingly
no circumstances which warrant a finding that a referral to
arbitration under s12B of the Act ousts the court’s
jurisdiction to adjudicate a dispute. Where, as in this instance, the
referral to arbitration occurred after commencement of the
litigation
it fell within the discretion of the court below to stay proceedings
pending the arbitration. The judge in the high
court exercised her
discretion in refusing a stay. It was not argued that she misdirected
herself in doing so or that her decision
was so patently flawed that
we were free to depart from it. There was no basis for a stay pending
the arbitration under s 12B.
The issue in the arbitration turned
out to be the very same issue as that before the high court, namely
whether the parties had
concluded a binding agreement in regard to a
new franchise agreement for a period of five years from 1 March 2015,
with an option
of renewal for a further five years. That was an issue
where Former Way bore the onus in the high court and failed to
discharge
it. In essence they were seeking to reargue the same issue
in another forum. That was the very kind of forum shopping that the
Constitutional Court said did not arise under s 12B.
[41]
Other than the issue
relating to the alleged new franchise agreement none of the issues
raised in the arbitration concerned Former
Way's entitlement to
remain in occupation of the premises. In the high court it failed to
discharge the onus of proving a right
to remain in occupation
enforceable against All Fuels. Its continued occupation without a
legal right to do so infringed All Fuels’
constitutionally
protected right not to be deprived of property except in terms of a
law of general application. The reference
to arbitration under the
Act did not alter that situation or give it a right that it did not
otherwise enjoy. There is accordingly
nothing in the referral to
arbitration argument justifying a departure from the original view
taken by the two judges of this court
to dismiss the application for
leave to appeal
.
Conclusion
[42]
As noted at the outset
this matter concerned the reconsideration of a refusal, on petition,
to grant the applicant leave to appeal
the order of the high court.
The merits of the appeal were considered only for purposes of
determining whether there was
a reasonable prospect of success. For
the reasons set out no such reasonable prospect exists. There are
also no compelling circumstances
why leave to appeal should be
granted. It follows therefore that after reconsideration of this
court’s decision to refuse
leave to appeal there is no need to
vary it and it should be confirmed.
[43]
In the result:
1. The order of this court dismissing the application
for leave to appeal is confirmed.
2. The applicant is ordered to pay the costs of the
application for leave to appeal and its reconsideration, such costs
to include
those consequent upon the employment of two counsel.
________________________
GOOSEN AJA
ACTING JUDGE OF APPEAL
Appearances
For
appellant: B G Savvas
Instructed
by:
K
Swart & Company, Durban
Honey
Attorneys, Bloemfontein
For
respondent: G D Harpur SC (with him D Ramdhani SC)
Instructed
by:
Norton
Rose Fulbright, Durban
Webbers
Attorneys, Bloemfontein
[1]
See
Notshokovu v S
[2016] ZASCA 112
para [2].
[2]
Chetty v Naidoo
1974
(3) SA 13
(A) at 20A;
Airports Company
South Africa Limited v Airport Bookshops (Pty) Ltd t/a Exclusive
Books
2017 (3) SA 128
(SCA) para 25.
[3]
Goldblatt v Freemantle
1920 AD 123
at 129;
Wood v Walters
1921 AD 303
at 305.
[4]
See
Pillay and
Another v Shaik and Others
2009 (4) SA
74
(SCA) para 50 and the authorities cited therein.
[5]
Business Zone 1010 CC t/a Emmarentia
Convenience Centre v Engen Petroleum Limited and others
[2017] ZACC 2
;
2017 (6) BCLR 773
CC.
[6]
South African Technical; Officials’
Association v President of the Industrial Court and Others
1985 (1) SA 597
(A) at 613A-E.
[7]
Business Zone
(above
fn 5).
[8]
Business Zone
para
92.
[9]
Cf.
Consolidated
Frame Cotton Corporation Ltd v Minister of Manpower and others
1985
(1) SA 191
(D) at 197H-199H.
[10]
Business Zone
para
52.
[11]
Business Zone
p
ara
58.