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[2016] ZACC 42
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Masstores (Pty) Limited v Pick n Pay Retailers (Pty) Limited (CCT242/15) [2016] ZACC 42; 2017 (1) SA 613 (CC); 2017 (2) BCLR 152 (CC); [2017] 1 CPLR 1 (CC) (25 November 2016)
Links to summary
Heads of arguments
CONSTITUTIONAL
COURT OF SOUTH AFRICA
Case CCT
242/15
In the matter
between:
MASSTORES (PTY)
LIMITED
Applicant
and
PICK N PAY
RETAILERS (PTY)
LIMITED
Respondent
Neutral citation:
Masstores (Pty) Limited v Pick n Pay Retailers (Pty) Limited
[2016] ZACC 42
Coram:
Nkabinde ADCJ, Froneman J, Jafta J, Khampepe J, Madlanga J, Mbha AJ,
Mhlantla J, Musi AJ and Zondo J
Judgments:
Froneman J (majority): [1] to [54]
Jafta J (minority):
[55]-[106]
Heard on:
30
August 2016
Decided on:
25 November 2016
Summary:
delict
— unlawful interference with contractual relations —
wrongfulness — contractual exclusivity — lease
agreement
— interdict requirements — third party interference —
category of delictual interference — Aquilian
liability
ORDER
On appeal from the
Supreme Court of Appeal (hearing an appeal from the High Court of
South Africa, Gauteng Division, Pretoria) the
following order is
made:
1. Leave to appeal is granted.
2. The appeal succeeds and the orders of the High Court and Supreme
Court of Appeal are set aside.
3. The High Court order is substituted with the following:
“The
application is dismissed with costs, including the costs of two
counsel.”
4. The respondent is ordered to pay the costs in this Court and the
Supreme Court of Appeal, including the costs of two counsel.
JUDGMENT
FRONEMAN J (Nkabinde
ADCJ, Khampepe J, Madlanga J, Mbha AJ, Mhlantla J, Musi AJ and Zondo
J concurring):
“I am not the first nor will I be the last to lament upon the
difficulty of determining the dividing line between lawful
and
unlawful interference with the trade of another. . . .”
[1]
Introduction
[1] This is a
case about alleged interference by the applicant (Masstores) with the
trade of the respondent (Pick n Pay).
The “trade”
Pick n Pay seeks to protect is not the run of the mill competitive
trade between equal participants
in a free market. It is an
exclusive contractual right to trade as a supermarket in a shopping
complex, granted to Pick n
Pay by its lessor (Hyprop) in a lease
agreement. Hyprop is also the owner of the shopping complex.
[2] Pick n Pay
does not seek enforcement of the contractual exclusivity right
against Hyprop, but against Masstores, who is
also a tenant in the
complex. There is no contractual relationship between Pick n
Pay and Masstores. Pick n Pay seeks
relief against Masstores
under the delict of “interference with contractual relations”.
[3] A
recognised form of that delict in our law is one where a third party
induces a party to a contract to breach its contract
with the
complainant. But Pick n Pay does not rely on any inducement
delict. The interference with the contract between
Hyprop and
Pick n Pay is said to lie in Masstores’s breach of its
own
lease with Hyprop. This conduct, in turn, allegedly
intentionally interfered with Pick n Pay’s contractual
exclusivity
rights in terms of its lease with Hyprop. Whether
our law recognises that kind of interference with contractual
relations
as actionable in delict lies at the heart of this dispute.
Background
[4] Hyprop
entered into separate lease agreements with Masstores (Masstores
lease) and Pick n Pay (Pick n Pay lease). The
Masstores lease
was entered into on 20 February 2006, before Pick n Pay appeared
on the scene. Masstores undertook not
to trade as a general
food supermarket in the shopping complex except where there was no
general food supermarket trading in the
shopping centre for 90
consecutive days.
[2]
At the time the Masstores lease was concluded it was aware of
another anchor tenant (Shoprite) having contractual exclusivity
rights to trade as a supermarket at the shopping complex. Under
the Pick n Pay lease, concluded on 11 May 2006, Hyprop undertook
not
to permit hypermarkets or supermarkets to be conducted at its
shopping centre, save for existing ones.
[3]
Masstores started trading as a general supermarket at the
shopping complex in 2013.
[4]
It only became aware of Pick n Pay’s contractual
exclusivity rights in May 2014.
[5] Pick n Pay
sought and obtained a final interdict in the High Court
[5]
that prevented Masstores from operating a general food supermarket at
the shopping centre, on the basis that doing so interfered
with the
contractual relations between Pick n Pay and Hyprop under the
Pick n Pay lease. It originally sought interdictory
relief
against Hyprop in the alternative, but that was later abandoned.
Hyprop is no longer a party to the proceedings.
[6] In view of
the differences in approach between this judgment and that of Jafta J
(second judgment), which I have
had the privilege of reading, it is
necessary to fully set out the basis of Pick n Pay’s claim for
relief against Masstores:
“61. . . . Masstores has been fully aware of the provisions of
the lease agreement between Hyprop and Pick n Pay, including
the
restraints contained therein, since at least 9 May 2014, when Hyprop
sent a letter of demand [to Masstores] . . . calling
[for
cessation].
. . .
63. Capegate’s [Masstores’s] unlawful conduct in
continuing to trade as a supermarket . . . in
the
face of these demands, and indeed in flagrant disregard of them, is
plainly intentional conduct designed to undermine and thus
interfere
with Pick n Pay’s contractual rights in respect of its lease
agreement with Hyprop.
64. Masstores continue to show a flagrant disregard for Pick n Pay’s
contractual rights.
65. Masstores in full knowledge that its conduct in operating a
supermarket . . . constitutes an unlawful interference with the
contractual relations which exist between Hyprop and Pick n Pay, is
nevertheless intentionally continuing to operate as such
notwithstanding
a clear and unequivocal indication from Pick n
Pay’s attorneys and from Hyprop’s attorneys that it is
not entitled
to do so. It is on this basis which Pick n Pay seeks
final interdictory relief against Masstores.”
In its answer
Masstores denied that it owed Pick n Pay any duty and thus denied
unlawfulness (wrongfulness) on its part. Pick
n Pay’s
reply does not take the matter any further. In its original
claim against Hyprop, Pick n Pay explicitly relied
on Hyprop’s
alleged breach of contract of its lease with Hyprop, in contrast to
its case against Masstores.
[7] Masstores
appealed to the Supreme Court of Appeal. That Court dismissed
the appeal and confirmed the High Court
order.
[6]
Masstores now seeks leave to appeal against that order.
Final interdict
requirements
[8] The remedy
sought and obtained by Pick n Pay was a final interdict and not a
claim for damages. The requirements
for a final interdict are
usually stated as (a) a clear right; (b) an injury actually committed
or reasonably apprehended; and
(c) the lack of an adequate
alternative remedy.
[7]
In order to succeed in obtaining the remedy of an interdict
against a third party like Masstores, Pick n Pay thus had to
show:
(a) that the contractual right it obtained from Hyprop protects an
interest that is also enforceable against third parties
outside the
contract (part of the “clear right” enquiry); (b) that
the third party, Masstores, unlawfully infringed
or threatened to
infringe that right (part of the “injury actually committed or
reasonably apprehended” enquiry); and
(c) that there was no
adequate alternative remedy.
[9] The second
judgment approaches these requirements differently. It proceeds
from the premise that Pick n Pay’s
papers do not say whether
its cause of action was grounded in delict or contract, but that it
was likely grounded in contract.
[8]
It then explores whether a claim based on contract has been
proved
[9]
and comes to the conclusion that it has.
[10]
It states that “[t]he proposition that a contract may not
be enforced against a person who was not a party to it finds
no
application here. This is because the relief sought is an
interdict and not specific performance or enforcement of the
contract. There is a clear difference between the two
remedies.”
[11]
On the basis that the facts show that Masstores was operating a
food supermarket, it finds that Masstores infringed Pick
n Pay’s
exclusive right and that Pick n Pay has established the requirements
for an interdict.
[12]
[10]
I fundamentally disagree with this approach. There is no
contract between Pick n Pay and Masstores. So the alleged
unlawful interference by Masstores cannot lie in a breach of contract
with Pick n Pay. The statement that “[t]he proposition
that a contract may not be enforced against a person who was not a
party to it finds no application here”, is a startling
one.
[13]
There is a fundamental distinction in our law between rights
in
rem
, protected against all the world, and rights
in personam
that carry protection only between immediate parties. Only one
of the cases referred to in the second judgment,
Godongwana
,
contradicts this distinction.
[14]
It was not followed in
Motloung
v Rokhoaena
[15]
and
Reddy v Decro Investments CC
,
[16]
and I consider it to have been wrongly decided.
I know
of no basis in our law, other than delict, that could found
unlawfulness in Masstores’s alleged interference in Pick
n
Pay’s contractual relations with Hyprop. That is the
basis upon which the case has been conducted by all throughout.
I
fail to discern any ground in the second judgment upon which the
alleged interference with Pick n Pay’s rights can
be said to be
unlawful. And I do not know how an interdict can be granted
where there is no actual or threatened unlawfulness
in the
infringement of a right.
Legal issues
[11] Masstores
contends that the Supreme Court of Appeal misinterpreted this Court’s
judgment in
Country Cloud
,
[17]
and in consequence gave the wrong decision. Pick n Pay argues
that its claim falls squarely within the established deprivation
category of interference cases recognised in
Country Cloud
,
and is therefore a case where wrongfulness does not need to be
established positively but can be presumed. Even without
that
initial presumption it contends that wrongfulness has nevertheless
been established.
[12] The issues that
arise from this are:
(a) Whether Pick n Pay’s claim falls within the alleged
recognition in
Country Cloud
of a second category of delictual
interference with contractual relations (narrow delictual enquiry).
(b) If it does not, a further issue may arise, namely whether
Masstores’s conduct, whilst not falling into the established
categories of the delict of unlawful interference with contractual
relations, nevertheless was actionable on an extended or analogous
application of the principles of the delict of unlawful competition
(extended unlawful competition enquiry).
Leave to appeal
[13] This Court has
jurisdiction to deal with these issues. They involve the
assessment of wrongfulness in delict. This
assessment raises
matters of policy, infused by constitutional values. This Court
has on a number of occasions held that
this is sufficient to found
constitutional jurisdiction.
[18]
[14] The delict that
takes the form of interference with contractual relations is a
relatively undeveloped aspect of our law. Its
application and
development is of broad concern not only for the parties but also for
commerce in general. It is in the interests
of justice to
obtain further clarity on this aspect of our law. In addition,
as I will attempt to show, there are reasonable
prospects of success.
Leave to appeal should thus be granted.
Merits
Narrow delictual enquiry
[15] In its judgment
the Supreme Court of Appeal sought to draw three propositions from
this Court’s judgment in
Country Cloud
.
[16] The first was
that this Court’s reference in
Country Cloud
to the
“usurpation of rights” that occurred in
Lanco
[19]
could be equated to the examples of “deprivation of interests”
in cases involving the delict of interference with contractual
relations given in the Supreme Court of Appeal’s own judgment
in
Country Cloud SCA
.
[20]
The Supreme Court of Appeal likened Pick n Pay’s claim to
one for the intentional deprivation of a contractual benefit,
a cause
of action which had been confirmed in those terms in
Country Cloud
SCA
,
[21]
and then stated that this was in turn confirmed by this Court in
Country Cloud
, “where the Constitutional Court referred
to it is ‘a usurpation of [a] right’.”
[22]
[17] This is an
overstatement of what Khampepe J actually stated in
Country Cloud
.
Referring to non-inducement cases, she stated:
[23]
“Liability has also been established in cases where A refuses
to vacate premises owned by B, which interferes with the lease
agreement between B and her tenant, C, causing C loss. Both
Dantex
and
Lanco
involved these circumstances. While
the plaintiff’s claim in
Dantex
failed because fault was
not alleged, the plaintiff in
Lanco
succeeded. But that
case is different from Country Cloud’s. The act of
interference in
Lanco
involved the holding-over of leased
premises.
The defendant there did not simply cause the
plaintiff to lose its right to occupy the premises. The
defendant usurped that
right, appropriating it for itself.
It
also did so in a manifestly ‘dishonest and mischievous’
way. The factual matrix in this case – where
the
defendant’s supposed act of interference is the cancellation of
an entirely different contract – is thus distinguishable
from
that which confronted the court in
Lanco
.”
[18] In
Country
Cloud
this Court did not equate the “usurpation of rights”
with a “deprivation of interest”. It did not
use
the latter phrase, but more importantly it characterised the
Lanco
decision as one that involved both the loss of the right to use the
premises
and
the taking over of that right,
[24]
not as similar or alternative losses. Whatever the merits of a
pure “deprivation” case may be, this Court’s
decision in
Country Cloud
cannot serve as authority that it is
a case where wrongfulness does not need to be established positively
but can be presumed.
[19] The second
proposition was that this Court in
Country Cloud
made a
twofold classification of delictual interference with contractual
relations cases, as consisting of one category where only
inducement
is required and others where a breach of a duty or infringement of a
subjective right is involved.
[25]
This could possibly be read as indicating that in “inducement”
delicts the breach of a legal duty or the infringement
of a
subjective right does not form part of the wrongfulness inquiry in
determining whether a delictual action lies. That
would be
unfortunate and wrong.
[20] This Court did
not say so in
Country Cloud
. It referred to the
“inducement” cases as a possible limited instance where
inducement “may arguably be
prima facie
wrongful”,
[26]
but earlier referred with approval to the statement in
Loureiro
that the wrongfulness enquiry is “based on the duty not to
cause harm – indeed to respect rights – and questions
the
reasonableness of imposing liability”.
[27]
[21] Ours is not a
law of separate and distinct torts; it is one where all forms of
delict must conform to the general requirements
of Aquilian
liability. This also has been authoritatively recognised in
relation to all the various forms of unlawful competition
in our
law.
[28]
As we will see, the right at stake in unlawful competition
cases is usually that of goodwill,
[29]
and “inducement” cases are no exception. Inducement
without harm to or infringement of the right to goodwill,
will not
usually be wrongful.
[30]
[22] The third
proposition was that because
Country Cloud
recognised
dolus
eventualis
as an appropriate form of fault in interference cases,
the presence of that kind of intention here would be sufficient to
constitute
an actionable delict on the part of Masstores.
[31]
[23] It is true that
in
Country Cloud
this Court recognised
dolus eventualis
as sufficient in relation to the element of fault in a delictual
claim. But the Court went further and dealt with the importance
of assessing the intensity of fault in the wrongfulness enquiry, as
opposed to the fault enquiry:
“The relevance of the nature of fault and fault-related
considerations in the wrongfulness enquiry has been recognised on
a
number of occasions by the Supreme Court of Appeal.
Summing up this trend, the Supreme Court of Appeal in
Roux
held:
‘Amongst
the considerations that may influence the policy decision whether or
not to impose liability, is the nature of the
fault that is proved,
as well as other fault-related factors. Accordingly, while
intentional conduct may sometimes attract
legal liability, the same
conduct may not be regarded as wrongful if the degree of fault
established was no more than negligence.
In other factual
situations conduct may not even be regarded as wrongful when it was
intentional, but only when it was accompanied
by a motive to cause
harm or by a particular awareness of the risk of serious harm that
may follow.’
And this approach makes sense. As is noted by the Supreme Court
of Appeal in the present case, the element of fault is satisfied
by
either intention or negligence. The form of fault is generally
irrelevant in the fault enquiry; proof of either form suffices.
It
can, however, be given weight under the wrongfulness enquiry. This
is not to conflate the elements of fault and
wrongfulness, or to
suggest that the establishment of fault is necessarily a prerequisite
for the establishment of wrongfulness.
Fault, like all other
delictual elements, must still be separately established. It is
merely recognition of the fact
that where fault rises to the level of
intention, and where other fault-related elements (such as motive to
cause harm) are present,
this may be relevant to establishing
wrongfulness.”
[32]
[24] So, in summary,
this Court’s judgment in
Country Cloud
is no authority
for the proposition that the deprivation of contractual rights in
delictual claims for interference with contractual
relations is
prima
facie
unlawful. Nor did it lay down that in inducement
cases the wrongfulness enquiry need not be concerned with the duty
not to
cause harm or the infringement of rights. And it
confirmed that the degree or intensity of fault may indeed play an
important
role in the wrongfulness enquiry in these kinds of claims.
[25] The limits of
this Court’s judgment in
Country Cloud
, as explained,
effectively disposes of Pick n Pay’s contention that
prima
facie
wrongfulness on the part of Masstores has been established.
A right can be deprived without usurping it. Holding-over
cases involve both, but the present case does not. Masstores’s
trading as a general supermarket does not deprive Pick
n Pay of its
entitlement to continue trading as a supermarket in the shopping
centre. There may have been a deprivation of
part of Pick n
Pay’s trading interest, namely its exclusivity, but Masstores
has not “usurped” that exclusivity.
Masstores did
not usurp any exclusive right of Pick n Pay and appropriate
it as its own. It claims no entitlement
to exclusivity. Nor
did the Supreme Court of Appeal enquire whether Masstores’s
degree or intensity of fault played
any role in the wrongfulness
enquiry.
[26] Masstores
submitted that this finding should be the end of the matter, because
Pick n Pay nailed its colours to a narrow mast.
In the papers
it did not make out a case for a finding of wrongfulness beyond the
confines of a legally presumed
prima facie
wrongfulness. It
had to establish wrongfulness
[33]
and should not be allowed to do it now for the first time on a more
general basis. This characterisation of Pick n Pay’s
pleaded case is not, however, entirely accurate. As we have
seen, the case pleaded was that of “intentional conduct
designed to undermine and thus interfere with Pick n Pay’s
contractual rights in respect of its lease agreement with Hyprop”.
[34]
This is an assertion that our law recognises a wider form of
delictual interference with contractual relations and that the
facts
of this case fall within that wider ambit.
[35]
Extended delict
of unlawful competition
[27] I then turn to
examine whether our law recognises an extended form of the delict of
unlawful competition under the common law.
This enquiry should
not be confused with the statutory regulation of unlawful competition
under the Competition Act.
[36]
[28] Recognition
that the
actio legis Aquiliae
underlies a claim for
patrimonial loss caused by unlawful competition has a venerable
ancestry in our law. It was so recognised
more than ninety
years ago in
Matthews v Young
,
[37]
where it was stated:
“In the absence of special legal restriction a person is
without doubt entitled to the free exercise of his trade, profession
or calling. . . . But he cannot claim an absolute right to do
so without interference from another. Competition often
brings
about interference in one way or another about which rivals cannot
legitimately complain. But the competition and
indeed all
activity must itself remain within lawful bounds. All a person
can, therefore, claim is the right to exercise
his calling without
unlawful interference from others. Such an interference would
constitute an
injuria
for which an action under the
lex
Aquilia
lies if it has directly resulted in loss.”
[38]
[29] Much
development in our law has taken place since then, but for present
purposes we need only go to this Court’s own
jurisprudence that
brings these common law principles in line with our constitutional
framework. In
Phumelela
Langa CJ stated:
“The delict of unlawful competition is based on the Aquilian
action and, in order to succeed, an applicant must prove
wrongfulness.
This is always determined on a case by case basis
and follows a process of weighing up relevant factors, in terms of
the
boni mores
now to be understood in terms of the values of
the Constitution.
Any form of competition will pose a threat to a rival business.
However, not all competition or interference with property
interests will constitute unlawful competition. It is
accordingly accepted that it is only when the competition is wrongful
that it becomes actionable. The role of the common law in the
field of unlawful competition is therefore to determine the
limits of
lawful competition. This determination, which takes account of
many factors, necessitates a process of weighing
up interests that
may in the circumstances be in conflict. Fundamental to a
determination of whether competition is unlawful
is the
boni mores
or reasonableness criterion. This is a test for wrongfulness
which has evolved over the years.
The Bill of Rights protects the right to property, and also promotes
and protects other freedoms, notably in this case, the right
to
freedom of trade. The consequence of the right to freedom of
trade is competition.
The question is whether, according to the legal convictions of the
community, the competition or the infringement on the goodwill
is
reasonable or fair when seen through the prism of the spirit, purport
and objects of the Bill of Rights. Several factors
are relevant
and must be taken into account and evaluated. These factors
include the honesty and fairness of the conduct
involved, the morals
of the trade sector involved, the protection that positive law
already affords, the importance of competition
in our economic
system, the question whether the parties are competitors, conventions
with other countries and the motive of the
actor.”
[39]
“In its judgment, the Supreme Court of Appeal noted that
goodwill is a valuable asset in the sphere of competition. The
Bill of Rights does not expressly promote competition principles, but
the right to freedom of trade, enshrined in section 22 of
the
Constitution is, in my view, consistent with a competitive regime in
matters of trade and the recognition of the protection
of competition
as being in the public welfare.”
[40]
[30] The development
of the law of unlawful competition must thus be accomplished in terms
of the general principles of Aquilian
liability. In general
this involves conduct in the form of an unlawful and culpable act or
omission that causes damage in
the form of economic loss to
another.
[41]
It is not the conduct itself that establishes unlawfulness, but
its harmful result.
[42]
In the case of an interdict, as here, actual loss need not
necessarily be shown, only potential impending or continuing
harm.
[43]
There is no general right not to be caused pure economic
loss,
[44]
but in unlawful competition cases, as this one is, our courts have
recognised that the loss may lie in the infringement of a right
to
goodwill or in the legal duty to respect the right to goodwill.
[45]
[31] The focus in
this case is on the element of wrongfulness, but this should not
obscure the fact that in other cases that may
shift to the other
elements necessary to establish Aquilian liability.
[46]
[32] The right to
goodwill is a convenient starting point. Without the existence
of the right there can be no breach of the
duty to respect it and no
infringement of the right. In order to consider the necessity
for the development of the delict
of unlawful competition it will be
helpful to investigate whether an analogous extension of wrongfulness
may be drawn from existing
precedent involving the protection of the
right to goodwill.
[47]
[33] The protection
of the general right to goodwill is recognised by our law, but it is
not this general right that Pick n Pay
seeks to protect, it is its
exclusive
right to trade in terms of its lease with Hyprop,
that it seeks protection for. Our law does not usually
recognise this kind
of exclusive right as worthy of general
protection. The reason lies in the fact that the underlying
purpose of the law of
unlawful competition is to protect free
competition, not to undermine it by making it less free.
[48]
Our courts have often acknowledged the need for protection of
free competition as an important policy consideration when
assessing
the unlawfulness of competitive conduct by confirming the need for
free and active competition or by taking into account
that by
prohibiting competition an unlimited monopoly will be bestowed upon
the complainant.
[49]
[34] In
Taylor &
Horne,
[50]
the appellant sought to interdict a competitor who was distributing a
product for which the appellant had earlier obtained (from
a foreign
manufacturer) the exclusive contractual right to market and
distribute in South Africa. In the course of dismissing
the
appeal Van Heerden JA stated:
“It has often been said that competition is the life blood of
commerce. It is the availability of the same, or similar,
products from more than one source that results in the public paying
a reasonable price therefor. Hence competition as such
cannot
be unlawful, no matter to what extent it injures the custom built up
by a trader who first marketed a particular product
or first ventured
into a particular sphere of commerce.”
[51]
“In the result it seems clear that the appellant must stand or
fall by the contention that because of the existence of the
exclusive
supply agreement between it and ESPE [the foreign manufacturer],
nobody may lawfully market Impregum in the Republic
in competition
with the appellant.
Acceptance of this contention would
certainly lead to startling consequences. It would mean that
for as long as the sole agency
endures the appellant would enjoy a
monopoly, akin to that derived from a patent, in regard to the
commercial distribution of Impregum
in this country. It would
also mean that the agreement that created purely contractual rights
between the parties thereto
would in effect bind would-be competitors
no matter from what source or however honestly they obtained supplies
from Impregum.
A further result would be to impose an
unwarranted restriction on the right of ownership of a person who
legitimately acquired
supplies of Impregum.
”
[52]
[35] Restraint of
trade cases exhibit the same tendency. It is generally accepted
that a restraint “will be considered
to be unreasonable, and
thus contrary to public policy, and therefore unenforceable, if it
does not protect some legally recognisable
interest of the employer,
but merely seeks to exclude or eliminate competition”.
[53]
[36] As a general
proposition then, there is no legal duty on third parties not to
infringe contractually derived exclusive rights
to trade. Do
the particular circumstances of this case justify a different
finding?
[37] Pick n Pay
sought that justification by an application of the “deprivation
of contractual rights” principle it
argued was established in
Lanco
and
Country Cloud
. I have already stated
that I do not agree that these cases established any general
principle to that effect. There
is also no compelling reason to
rely on these cases to establish an analogous general “deprivation
of contractual rights
principle” as the underlying basis for
contractual interference cases based on unlawful competition.
Lanco
was not an unlawful competition case.
Country Cloud
did
not, in any event, establish any new extension of the law of delict.
Lanco
served to protect the underlying right of
possession to property and might well have been differently decided
if a contractual remedy
against the lessor was available. The
lesson to be learnt from these cases is not that the mere
interference or deprivation
of a contractual right by a third party
is sufficient to establish the wrongfulness of interference, but that
the nature of the
interest protected by the contractual right is of
crucial importance. If the nature of the interest is of the
kind that commands
protection against the whole world, and not only
the protection afforded to the contracting parties themselves by the
provisions
of the contract, interference by third parties is more
likely to be found wrongful than otherwise.
[38] It is a
relevant and material factor in the wrongfulness enquiry that the
interest Pick n Pay seeks to protect is an exclusive
one – in
effect one to restrict competition – in the first instance
enforceable against the contracting party who agreed
to it, Hyprop.
Why should Pick n Pay not enforce the right at its origin, in
contract? Or at least be required to show
that Hyprop breached
the contract and that its breach could not be remedied by using
ordinary contractual remedies?
[39] Pick n Pay
contended that in other contractual interference cases priority for
claiming in contract first, or showing actual
breach and no remedy in
contract, is not required.
[40] Reference was
made to restraint of trade cases where not only the contractually
bound employee, but also the new employer,
may be interdicted,
without complying with these requirements. Yet the analogy is
not apt. Those cases establish the
principle that reasonable
restraints are binding on the contracting parties themselves and that
third parties are only secondarily
liable as accessories to the
contractual breach.
[54]
And, as seen above, if the contractual restraint is a bare
restriction on competition, not linked to protectable interests
like
goodwill, it will not be enforced against either the contacting party
or the third party who assisted or induced the breach.
Here the
enforceability of the exclusivity clause in the lease between
Pick n Pay cannot be challenged by Masstores,
because it is
not a party to that contract.
[41] In other
“inducement to breach contract” cases, there is also no
requirement that the breach must in fact have
happened, or that the
contractual remedies for the breach must have been exhausted before
relief is granted against the third party.
The explanation,
however, lies in the fact that in those cases there is a breach of a
generally recognised right –
to goodwill in unlawful
competition cases
[55]
and to other aspects of property in non-competition cases
[56]
− which is sufficient to establish wrongfulness, while that is
not the case in contractually created exclusive trade cases.
[42] This is not a
case where the issue of a concurrence of actions against the same
party is at stake. But similar policy
reasons for restricting
Pick n Pay’s claim to the private source of its exclusive right
to trade exist. By excluding
Hyprop from the dispute, Masstores
is excluded from relying on any deficiencies that may exist in
relation to the contract that
is the origin of Pick n Pay’s
right to trade exclusively. What policy or other reasons
justify holding a third party
liable for infringement of a right that
arises solely from contract, if that right cannot be enforced
contractually? In
Country Cloud
it was stated that “the
law should hesitate before scrubbing out the lines [contracting
parties] have laid down by superimposing
delictual liability. That
could subvert their autonomous dealings”.
[57]
In the case of third parties the danger is that the effect of
“their autonomous dealings” is extended to others
who
have no autonomous say at all. And to make matters worse, the
alleged delictual duties of the third party may then be
different and
more onerous from the allocation of duties agreed between the
contracting parties themselves.
[43] These
considerations might also justify another basis for rejecting Pick n
Pay’s claim for an interdict. The third
requirement for
an interdict is that no alternative remedy be available. Pick n
Pay has an alternative remedy in contract
available against Hyprop.
[44] In
Country
Cloud
it was stated that where a party has taken, or could have
taken, steps to protect itself from or to avoid loss suffered, this
is
an important factor counting against a finding of wrongfulness in
pure economic loss cases.
[58]
If Pick n Pay sought protection of its exclusive
right against the whole world, and not only from its opposing
contracting party, it could have negotiated for a real right, like a
negative personal servitude, not merely a personal right.
This
would have given notice to all later lessees that their usage of
their leased premises is limited.
[45] Pick n Pay also
sought assistance in the case of
Howorth
,
[59]
a matter where a farmer was prohibited from selling goods on the
farm, where the exclusive right to do so had been granted by the
Municipality to his neighbour. The judgment is rather sparse,
but it seems to have been a material factor that the alleged
interference with the right involved trespass of the neighbour’s
property.
[60]
In addition, the original source of the exclusive right was a
grant from the Municipality in terms of its public powers.
[61]
Publicly sourced rights to exclusive trade involve different
considerations from purely privately negotiated rights.
[62]
Neither trespass – an invasion of property – nor a
statutorily-sourced kind of monopoly is at stake here.
[46] Our law has
often sought guidance in English law in cases involving some kind of
commercial interference in the trade of another,
because “the
analysis of the problem to be found in English cases is often
illuminating and can be of assistance to solving
the problem of how
to apply the principles of our own law to the facts of a particular
case”.
[63]
This must of course be done both with the general caution
expressed by this Court of comparable context and text,
[64]
and the particular caution that here those cases must be reconciled
with Aquilian principles.
[65]
In English law two distinct torts have been recognised in this
field, namely the “procurement of breach of contract”
[66]
and “unlawful interference with economic interests”.
[67]
The first probably inspired our own inducement form of delict,
but it is the latter that is relevant in deciding whether
extension
for another form is called for in our law. In
OBG Ltd
the House of Lords in effect held that the means used by the third
party to prevent performance must be independent of the normal
means
used in contractual interference cases.
[68]
Transposed here, it would mean that something more than
Masstores’s breach of its own lease with Hyprop is required:
the unlawfulness of that breach
vis-a-vis
Hyprop does not
automatically translate into delictual wrongfulness as against Pick n
Pay.
[47] So analogous
reasoning from existing authority does not yet make a compelling case
for extension. That may be an indication
that none should take
place, or perhaps that it should rather be sought in general
principles.
[48]
Phumelela
is authority for the proposition that the
boni mores
or
reasonableness criterion must be used to establish wrongfulness in
cases not covered by existing precedent. That test
has recently
been refined by decisions in this Court and the Supreme Court of
Appeal in matters that did not involve the delict
of unlawful
competition.
[69]
The refinement probably lies in the recognition that,
ultimately, the wrongfulness enquiry “questions the
reasonableness
of imposing liability”.
[70]
Recognising that reality, however, does not necessarily assist
in determining when it is reasonable to do so.
[49] In unlawful
competition cases it has been suggested that the
boni mores
or
reasonableness criterion on its own is often too vague to provide a
rational yardstick for the delimitation of the right to
goodwill in
the wrongfulness enquiry.
[71]
Van Heerden and Neethling
[72]
suggest that the particular concretisation of the
boni mores
test may be found in what they term the “competition
principle”:
“The competition principle is therefore that the competitor who
delivers the best or fairest (most reasonable) performance,
must
achieve victory, while the one rendering the weakest (worst)
performance, must suffer defeat.”
[73]
“Victory over a rival may be obtained in two ways: either by
offering the same performance at a lower price, or by bettering
performance at the same price.”
[74]
[50] Van Heerden and
Neethling recognise that this principle can be properly applied only
where the activities of the competitors
are comparable, or expressed
differently, where the playing fields are even.
[75]
Where the playing fields are even, or in their terms, where
there is “performance (merit) competition”, competitive
conduct by a rival will in principle be lawful.
[76]
[51] Applying this
“competition principle” to the facts of this case, the
same conclusion is reached, namely that as
a general proposition
there is no legal duty on third parties not to infringe contractually
derived exclusive rights to trade.
The underlying rationale
too, is the same: exclusive trading rights make the competitive field
uneven.
[52] Is there
nevertheless room for a delictual claim to be found elsewhere? Yes,
possibly. The justification for the
claim would then not,
however, lie in the direct infringement of Pick n Pay’s
contractual exclusive trade rights, or a breach
of the duty to
respect them, but in the possibly unreasonable manner Masstores used
or exercised its own rights. Liability
in these kinds of
circumstances has been variously described as being grounded in
malice,
[77]
or as an abuse of rights,
[78]
or where the level of intention and other fault-related elements such
as “motive to cause” are highly relevant in
establishing
wrongfulness.
[79]
But to extend Pick n Pay’s pleaded case to this kind of
situation would be a step too far. Despite the challenge
to the
alleged unlawfulness of its conduct by Masstores, Pick n Pay did not
seek to widen it. It is an issue that needs to
wait for another
day.
[53] In the result
the appeal must succeed with costs, including the costs of two
counsel.
Order
[54] The following
order is made:
1. Leave to appeal is granted.
2. The appeal succeeds and the orders of the High Court and Supreme
Court of Appeal are set aside.
3. The High Court order is substituted with the following:
“The
application is dismissed with costs, including the costs of two
counsel.”
4. The respondent is ordered to pay the costs in this Court and the
Supreme Court of Appeal, including the costs of two counsel.
JAFTA J:
[55] I have had the
benefit of reading the judgment prepared by my colleague Froneman J
(first judgment). Regrettably I do
not support the order
proposed in it.
[56] In the first
place I am not persuaded that leave to appeal should be granted.
The case does not raise any constitutional
issue. On the
contrary it involves an enforcement of commercial rights sourced from
contract by way of an interdict. It
has long been settled in
our law that the granting of an interdict is discretionary.
[80]
The remedy of the interdict itself has been described as unusual.
[81]
[57] This remedy is
termed discretionary in the sense that a court may not grant an
interdict in circumstances where there is an
alternative remedy
available to an applicant for an interdict and which may
satisfactorily safeguard the right sought to be protected.
Put
differently the discretion of the court is bound up with the question
whether the rights of the party complaining can be protected
by an
alternative and ordinary remedy.
[82]
[58] In view of the
analysis of the delict of unlawful competition outlined in the first
judgment, it appears that there is no alternative
remedy for an
effective protection of Pick n Pay’s right to exclusively trade
as a supermarket at the Capegate Shopping Centre.
This shows that the granting of an interdict may have been justified
if the other two requisites were also met, even if the High
Court
incorrectly applied relevant principles.
[59] Therefore,
assuming that Masstores establishes that this Court has jurisdiction
and that it is in the interest of justice to
grant leave, the appeal
can only succeed if it is shown that the order issued was not
supported by the facts on record and the
application of the relevant
law to them. A decision of a court is not overturned merely
because wrong reasons were invoked
to support it. In our law no
appeal lies against reasons in a judgment.
[83]
Instead, the appeal lies against an order. Hence it often
occurs that an appeal is dismissed but for reasons different
from
those advanced by the lower court whose judgment is the subject of an
appeal.
[60] In short I am
not persuaded that, when the correct principles are applied to the
present facts, the interdict ought not to
have been granted. An
enquiry into this issue leads us into determining whether Pick n Pay
as the applicant for an interdict,
has established the requisites of
this remedy. A proper assessment of the issue requires
consideration of the facts.
Facts
[61] Hyprop
Investments Limited (Hyprop) is the owner of the
Capegate Shopping Centre. As owner, it has given
permission
to various businesses to trade at the centre.
Despite trading licences which these businesses may have attained
from the
relevant authorities, their operation from the centre is
regulated mainly by lease agreements concluded with Hyprop and which
entitle
them to be in the centre. This means that even if a
particular trader’s licence covers a wider scope of business,
that
trader is not automatically entitled to operate the full scope
of its business, if there are limitations in the lease concluded
with
Hyprop. This is because the licence to trade does not empower
the holder to trade specifically at the Capegate Shopping Centre,
without Hyprop’s permission.
[62] Hyprop as owner
of the centre was free to determine the extent of trading rights to
be exercised by each trader on its property.
In this context,
Hyprop granted Pick n Pay and Checkers exclusive rights to
trade in food items as supermarkets.
In contrast Masstores was
afforded less rights which excluded operating a supermarket.
All these rights were contractual
in nature. They were sourced
from the leases concluded separately with Hyprop. The lease
between Masstores and Hyprop
was concluded on 20 February 2006 and
the one between Pick n Pay and Hyprop on 11 May 2006.
[63] In 2013
Masstores in breach of clause 12 of its lease commenced trading as a
supermarket. Clause 12 stipulated that Masstores
would not
trade as a general supermarket and could operate only as a “general
food supermarket” in the centre if for
a period of 90
consecutive days, there was no general food supermarket trading
there. On the facts this provision was not
activated.
When Masstores commenced trading as a food supermarket, there were
two supermarkets operating in the centre, namely,
Checkers and Pick n
Pay.
[64] Checkers sought
and obtained an interim interdict against Masstores in the Western
Cape Division of the High Court (High Court).
But the dispute
between them was later settled and the interdict was discharged.
This turn of events meant that Pick n Pay’s
exclusive
right was again exposed to interference by Masstores.
Pick n Pay engaged Hyprop for protection to no
avail.
Litigation
background
[65] When it became
clear that Hyprop was not willing to take urgent steps to protect
Pick n Pay’s rights against interference
by Masstores, Pick n
Pay instituted an application for an interdict in the High Court.
It sought relief in these terms:
“That a final interdict be granted in terms of which
[Masstores] is prohibited from interfering in the contractual
relationship
between [Pick n Pay] and [Hyprop] by operating a
supermarket; and/or a store having a food department or departments
which have
an aggregate square meterage exceeding 100 (one hundred)
square metres; and/or a grocery shop; and/or a fruit and vegetable
shop
at the Capegate Shopping Centre in Brackenfell in the Western
Cape.”
[66] In the
alternative Pick n Pay sought an interim interdict that was
formulated as follows:
“Alternatively, that an interim interdict be granted in terms
of which [Masstores] is prohibited from interfering in the
contractual relationship between [Pick n Pay] and [Hyprop] by
operating a supermarket; and/or a store having a food department
or
departments which have an aggregate square meterage exceeding 100
(one hundred) square metres; and/or a grocery shop; and/or
a fruit
and vegetable shop at the Capegate Shopping Centre in Brackenfell in
the Western Cape, pending the outcome of action proceedings
which are
to be instituted by [Pick n Pay] against [Masstores] within twenty
court days of the judgment and the order in this matter.”
[67] Pick n Pay
cited as respondents both Masstores and Hyprop. In the further
alternative it sought a mandamus directing
Hyprop to initiate legal
proceedings to secure relief which would protect Pick n Pay’s
exclusive right. However the
claim against Hyprop was abandoned
in the High Court before the matter was heard.
[68] In the founding
affidavit, Pick n Pay pleaded the case against each of them
separately. The case against Masstores was
formulated in these
words:
“Masstores’ ‘expanded operations’ at the
Capegate Game, whether described as a ‘
Game Foodco
’
or otherwise, plainly fall within the scope of the exclusivity
provisions contained in clause 10 of the lease agreement
of
Masstores’ operation at the Capegate Shopping Centre is in
clear breach of Pick n Pay’s rights in terms of clause
10 of
the lease agreement.”
[69] Having asserted
that Masstores’s conduct breached its exclusive right,
Pick n Pay alleged in conclusion:
“Masstores in the full knowledge that its conduct in operating
a supermarket, a store having a food department in excess
of 100 (one
hundred) square metres, a grocery and fruit and vegetable shop at the
Capegate Game constitutes an unlawful interference
with the
contractual relations which exist between Hyprop and Pick n Pay,
is nevertheless intentionally continuing to
operate as such
notwithstanding a clear and unequivocal indication from Pick n Pay’s
attorneys and from Hyprop’s attorneys
that it is not entitled
to do so. It is on this basis which Pick n Pay seeks final
interdictory relief against Masstores.
If, however, for any
reason the court is not satisfied that it can grant final relief on
the papers before it, Pick n Pay seeks
interim relief pending the
outcome of action proceedings which it will institute against
Masstores within twenty court days of
the date of the grant of
interim relief.”
[70] The papers do
not say whether this cause of action was grounded in delict or
contract. But a reading of the two statements
together suggests
that it was based on contract. In the first statement Pick n
Pay averred that the conduct complained of
amounted to a breach of
its contractual exclusive right. However, it is possible that
the same statements may support a claim
in delict.
[71] As I see it, in
present circumstances the application may be dismissed only if both
claims cannot succeed. In a case
such as the present where the
applicant has not explicitly nailed its colours on a delictual claim,
it will not be fair to dismiss
the entire application on the ground
that a claim in delict was not established, without exploring whether
a claim based on contract
has been proved. It appears to me
that the correct approach would be the one usually adopted in
rescission of judgment applications
in circumstances where the
applicant does not specify whether the application is brought under
rule 31 or rule 42 of the Uniform
Rules of the High Court or in terms
of the common law. Whilst there may be overlapping, each of
these avenues has its own
requirements. Ordinarily a court
would consider whether a case has been made out in respect of any one
of them before dismissing
the application.
[84]
[72] I can think of
no reason why that approach should not apply here. This is more
so if the fact that the case was brought
against both Masstores and
Hyprop is kept in mind. There could be no basis for pursuing a
delictual claim against Hyprop
because the delict was committed by
Masstores. Yet the converse is not true. A claim for an
interdict based on a contract
could be pursued against Hyprop and
Masstores.
[73] What requires
attention is the question whether Pick n Pay has established the
requisites for a final interdict. These
are a clear right,
injury actually committed or reasonably apprehended and the absence
of another satisfactory remedy.
Clear right
[74] The phrase
“clear right” connotes a legal right that has been
sufficiently established on a balance of probabilities.
[85]
In the leading case of
Setlogelo
, Innes CJ said:
“The requisites for the right to claim an interdict are
well-known; a clear right, injury actually committed or reasonably
apprehended and the absence of similar protection by any other
ordinary remedy. Now the right of the applicant is perfectly
clear. He is a possessor, he is in actual possession of the
land and holds it for himself. And he is entitled to be
protected against any person who against his will forcibly ousts him
from such possession.”
[86]
[75] It is important
to note that the court of first instance in
Setlogelo
had
refused to grant an interdict on the ground that, as a black person,
the applicant was prohibited by statute from holding,
leasing or
purchasing the land in respect of which he sought the respondent to
be restrained from entering. On appeal Innes
JA had no
difficulty in recognising the applicant’s right as worthy of
protection in law. And also accepting that the
right had been
adequately proved in evidence. This plainly suggests that the
source and the nature of the right are not material
to the enquiry.
What is important, instead, is whether the applicant has a right
recognised in law and has established its
existence by way of
acceptable evidence.
[76] Consistent with
this approach Eksteen J in
De Villiers
accepted that a clear
right for a final interdict was shown where the applicant had
asserted that in terms of the concessions issued
to him, he had the
sole right to purchase aloe juice in Transkei and Ciskei. The
applicant sought an interdict against the
respondent who held a
similar concession to the ones the applicant had. In dealing
with the issue of the clear right the
Court stated:
“It is common cause on the papers that the applicant has the
concessions he contends for and that he therefore has a clear
right
to be protected against any infringement of that right. It is
also common cause that during January 1973 the respondent
had bought
two cans of aloe juice near Butterworth in the Transkei in ignorance
of the fact that at that time too the applicant
held a similar
concession to the one he now holds.”
[87]
[77] However, in
that case a final interdict was not granted on the ground that the
applicant had failed to establish a reasonable
apprehension of harm,
in light of the undertaking by the respondent that he would not buy
aloe juice in Transkei and Ciskei.
Notably, the Court did not
consider the applicant’s exclusive right which extended to
cover the whole of Transkei and Ciskei
as undermining free
competition and not worthy of protection by way of an interdict.
[78] In my view the
same approach should be followed here. There can be no doubt
that Hyprop has granted Pick n Pay the right
to operate a general
food supermarket on its property, to the exclusion of other traders,
including Masstores. This right
has been sufficiently
established on a balance of probabilities. In addition,
Masstores has voluntarily agreed in the lease
between it and Hyprop
that it will not carry on the business of a general food supermarket
on the relevant premises. Therefore,
the question of
undermining competition does not arise in relation to Masstores.
Nor are we here concerned with the case
of competing rights because
Masstores has waived its right to operate a general food supermarket
in the Capegate Shopping Centre.
[79] But the
question that arises for consideration is whether the clear right on
which the applicant for an interdict relies may
be sourced from a
contract. None of the authorities say this may not be done.
However, what emerges from cases like
Setlogelo
and
De
Villiers
is the fact that a two-stage enquiry is followed.
At the first stage, it must be determined whether the right sought to
be
protected exists in law. If it does, then the enquiry moves
to the second stage which is about whether on the facts that right
has been established on a balance of probabilities. If both
questions are answered in the affirmative, then a clear right
is
taken to have been established.
[80] In
V&A
Waterfront Properties
,
[88]
both the High Court and the Supreme Court of Appeal had no difficulty
in holding that a lessor had proved a clear right for purposes
of an
interdict, by showing that the lessee was in breach of the lease.
There, in breach of the lease, the lessee had declared
that it would
continue operating its business from the leased premises, despite an
order issued by the relevant authority prohibiting
it.
[81] On the question
whether an applicant for an interdict may rely on contract the
Supreme Court of Appeal in
V&A Waterfront Properties
said:
“It remains to mention that a good deal of time was devoted in
the appeal to the question whether the appellants were, by
interdict
proceedings, really seeking contractual relief in the form of
specific performance and, if so, whether they needed to
fulfil the
requirements for a final interdict. In reliance on the views of
Professor R H Christie
The Law of Contract
4th ed at
618 - 9, they argued that there was no such need. One may
indeed say that had the prayer been expressly for specific
performance many of the same issues may have arisen as have arisen.
However, an interdict having been sought, and the requirements
for it having been met, it is unnecessary to decide whether the
appellants’ argument was right.”
[89]
[82] This conclusion
illustrates clearly that the fact that the applicant for an interdict
in cases like
Taylor & Horne
[90]
and
Atlas
Organic Fertilizers
[91]
relied on the delict of unlawful competition, does not mean that a
claim for an interdict cannot be grounded in contract.
It seems
that the source of the right sought to be protected by an interdict
is immaterial to the question whether an interdict
should be
granted. If the applicant has established all the requisites of
an interdict, a court may grant the remedy, regardless
of whether the
applicant relied on contract, delict or legislation.
[83] As mentioned,
here Pick n Pay did not label the right it sought to protect as a
delictual right or a contractual right.
It merely pleaded and
advanced evidence showing the exclusive right to trade and that
Masstores, having waived its own right, interfered
with Pick n Pay’s
exclusive right. It was the High Court which labelled the right
as delictual and the Supreme Court
of Appeal approached the matter on
the same footing. There appears to have been a mistaken
assumption because a delictual
right was not available against Hyprop
which was also cited as a respondent. There is nothing on the
record showing that
Pick n Pay invoked different rights against
Masstores and Hyprop. As against Hyprop, Pick n Pay could only
seek an interdict
to protect a contractual right.
[84] The question is
whether Pick n Pay could obtain an interdict to protect the same
contractual right against Masstores.
The issue being that
Masstores was not a party to the lease between Pick n Pay and
Hyprop. I am not aware of any authority
that says Pick n Pay
could not.
V&A Waterfront Properties
is
distinguishable on the basis that the applicant and the respondent
were parties to the lease.
[85] But I can think
of no reason in principle that militates against the granting of an
interdict to a party like Pick n Pay to
restrain conduct of a third
party like Masstores from interfering with its contractual rights.
Take for an example a case
of someone who has a problem of people
entering a farm he leases to erect illegally residential structures.
It can hardly
be argued that the lessee in those circumstances cannot
seek an interdict against the invaders because they were not parties
to
the lease between him and the farmowner. It would be odd to
recognise his right to claim an interdict based on a delictual
cause
of action but deny him an interdict based on the lease.
[86] The proposition
that a contract may not be enforced against a person who was not a
party to it finds no application here.
This is because the
relief sought is an interdict and not specific performance or
enforcement of the contract. There is a
clear difference
between the two remedies. Specific performance requires the
respondent to perform a positive act in terms
of an obligation
arising from the contract. This is not what a prohibitory
interdict like the one sought by Pick n Pay seeks
to achieve.
On the contrary, the prohibitory interdict is designed to put a stop
to actions of a third party which interfere
with the contractual
rights of the applicant.
[87] If the
conduct complained of is illegal or is not justified in law, then the
interdict may be granted to protect the
applicant’s rights.
Nobody is entitled to violate another person’s rights if the
law does not authorise the breach.
[88] The sole
difference between this and the first judgment lies in whether, for
purposes of a prohibitory interdict, Pick n Pay
had to show that the
contractual right it relied on was enforceable against Masstores
which was not a party to the agreement.
And whether as a third
party, Masstores had unlawfully infringed or threatened to infringe
that right. The first judgment
says Pick n Pay must have
established that the contractual right was enforceable against
Masstores.
[92]
But the first judgment cited no authority for this novel requirement
for an interdict. No authority exists in our law
which supports
the proposition that if the applicant for an interdict against a
third party relies on a contractual right, it must
in addition to
establishing a clear right, show that the right was enforceable
against the third party.
[89] Central to the
reasoning of the first judgment is the distinction between real and
personal rights derived from the Roman procedural
distinction between
actions
in rem
and actions
in personam
.
[93]
The central pillar of the distinction is that the real rights are
absolute in the sense that they are enforceable against
the whole
world whereas a personal right is relative in that it can be enforced
against a particular person. However, this
distinction is
irrelevant to the claim for an interdict. It makes no
difference whether the right is real or personal.
All that is
required is proof of a clear right, in order to satisfy one of the
three requirements for the granting of a final interdict.
[90] The fact that a
personal right is relative in the sense that only a particular person
is directly bound by it does not mean
that third parties may violate
the right with impunity. This is not a controversial
proposition. It is also not disputed
that a personal right may
be relied on for purposes of seeking an interdict.
V&A Waterfront
has settled that. What is in
dispute between this judgment and the first one is whether the same
right may be used in seeking
an interdict against a third party.
Apart from the irrelevant distinction between the real and personal
rights, the first
judgment advances no reason for holding that the
interdict may not be granted.
[94]
[91] While I accept
that an intentional interference with contractual rights by a third
party may give rise to a delictual claim,
I do not support the view
that a prohibitory interdict may only be granted if the applicant
establishes the essential elements
of a delict. Our law on
interdicts does not require this and there is no legal basis for
introducing this additional requirement.
[92] In the instance
where a third party deliberately interferes with contractual rights,
two remedies are available to the party
whose right is violated.
That party may pursue a delictual claim or seek an interdict, if the
violation continues.
If the claim for an interdict is
preferred, the applicant is not restricted to grounding the claim in
delict. He may base
it in contract. If the interdict is
founded on delict, it is necessary to show that the conduct sought to
be interdicted
amounts to a delict. But if reliance is placed
on contract, this is not necessary. In this instance, the
applicant
need only show that the requirements for issuing an
interdict are established.
[93] This choice was
affirmed in
Godongwana
where van Coller J stated:
“Apart from the delictual remedy, the interdict can also be
invoked to protect both real and personal rights. The interdict
is ‘allowed where a person requires protection against an
unlawful interference, or threatened interference, with his rights’.
Baker, Erasmus and Farlam
The Civil Practice of the Magistrate’s
Courts in South Africa
7th ed at 67. In order to
succeed with an interdict it is not necessary to prove that the
respondent acted intentionally
or negligently. See
Setlogelo
v Setlogelo
1914 AD 221
at 227 and
Regal v African Superslate
(Pty) Ltd
1963 (1) SA 102
(A) at 106. If respondent had not
taken actual occupation of the site, but had threatened to do so, it
seems to me that appellant
would have been entitled to an interdict
to prevent him from doing so. All the requisites for the right
to claim an interdict,
namely a clear right, an injury reasonably
apprehended and the absence of similar protection by any other
ordinary remedy, would
be present. It is often stated that a
real right is enforceable against the world at large and that a
personal right is enforceable
only against a particular individual on
the basis of a special legal relationship such as contract, delict or
some other cause.
Appellant can consequently only claim
possession against the authorities who granted the certificate, and
not from the respondent.
In bringing an interdict against the
respondent, under the hypothetical circumstances referred to, he
would, however, not
be claiming possession from respondent, but only
protection against a threatened unlawful invasion of his rights.”
[95]
[94] It is apparent
from
Godongwana
that the appellant had relied on a contractual
right that was not enforceable against the respondent. Yet the
Court concluded
that the appellant could obtain an interdict to
prevent the respondent from taking occupation of the site. The
Court said:
“In the present case it is alleged that the respondent is
already in unlawful occupation of the property. Appellant
should likewise be entitled to protect his personal right with an
interdict against the respondent. I can see no reason why
the
fact that appellant is entitled to claim from the grantor of the
certificate compliance with his obligations should preclude
him from
interdicting respondent against violating and interfering with his
rights. In a claim against the grantor, appellant
would be
enforcing his contractual rights, and in interdicting respondent,
appellant would be protecting those rights.”
[96]
[95] Similarly, here
Pick n Pay sought to enforce its contractual right against Hyprop but
later abandoned the claim. But
in interdicting Masstores, Pick
n Pay sought to protect its right to exclusive trading as a
supermarket. On the strength
of this statement and the
authorities cited in it, I conclude that Pick n Pay was entitled to
rely on its contractual right for
an interdict against Masstores and
that it was not necessary for it to prove that Masstores committed a
delict.
[96] The first
judgment concludes that
Godongwana
was wrongly decided only on
the ground that it was not followed in
Motloung
[97]
and
Reddy
[98]
without furnishing any reasons why it was not followed. A
judicial decision does not become wrong purely because it was not
followed by the courts on which it is not binding. In that
instance there may be many reasons which motivate a different
approach. For example in
Motloung
the Court granted
ejectment in favour of the applicant on the basis that the
certificate of occupation had created a real right
that passed from
the seller to him in terms of contract. Therefore, it was not
necessary for him to base the claim for ejectment
on the contractual
right.
[97] In
Reddy
the issue was whether the applicant, an ordinary lessee without
possession of the leased property, had
locus standi
to seek
ejectment of a trespasser. The Court held that such a lessee
had no
locus standi
and declined to follow
Godongwana
.
The reason advanced was not that
Godongwana
was wrongly
decided but that the Court was bound by two Full Bench decisions of
the same division.
[99]
Both these decisions held that a lessee to whom possession has not
yet been given cannot sue a trespasser for ejectment.
[98]
Bodasingh
was criticised by Cooper in these terms:
“Because the Court in
Bodasingh
’s case made both
the lessor-owner’s and the lessee’s right to eject a
trespasser dependent upon possession, it
fell into the further error
of accepting that the lessor-owner and the lessee could not both have
a right to eject a trespasser.
Had the Court adopted the
correct approach to the problem before it, it would have held that
both the lessor owner and the
lessee had the right to eject a
trespasser from the property.”
[100]
[99] It is apparent
that the decisions in
Motloung
and
Reddy
were not based
on the proposition that the distinction between real and personal
rights be preserved. As mentioned, this distinction
is
immaterial to the granting of an interdict because an interdict may
be issued to protect both the real and personal right.
It is
also plain that both judgments did not address the requirements for
granting an interdict.
[100]
Godongwana
was cited with approval in
Lanco
[101]
which is a decision of the same Court that later decided
Reddy
.
In
Reddy
, the Court did not hold that
Lanco
was wrongly
decided but merely distinguished
Reddy
from it.
[102]
Therefore, it can hardly be correct to say only because
Godongwana
was not followed in
Reddy
and
Motloung
, it was
wrongly decided. This brings me to the second requisite for an
interdict.
Injury actually
committed or reasonably apprehended
[101] In the context
of interdicts, the word “injury” carries a meaning wider
than physical harm contemplated in delicts.
It includes any
infringement, invasion or interference with a right.
[102] In
V&A
Waterfront Properties
Howie P defined the injury requisite in the
following terms:
“The argument is founded on neither authority nor principle.
The leading common-law writer on the subject of interdict
relief used
the words ‘eene gepleegde feitelijkheid’ to designate
what is now in the present context, loosely referred
to as ‘injury’.
The Dutch expression has been construed as something actually done
which is prejudicial to or
interferes with, the applicant’s
right. Subsequent judicial pronouncements have variously used
‘infringement’
of right and ‘invasion of right’.
Indeed, the leading case,
Setlogelo
, was itself one involving
the invasion of the right of possession. Of course it is hard
to imagine that a rights invasion
will not be effected most often by
way of physical conduct but to prove the necessary injury or harm it
is enough to show that
a right has been invaded. The fact that
physical means were employed or physical consequences sustained is
incidental.”
[103]
[103] With regard to
unlawfulness, Pick n Pay has sufficiently shown that its contractual
right was violated by Masstores in circumstances
where the latter was
not legally entitled to do so. It will be recalled that in its
lease, Masstores had agreed to a term
that prohibited it from trading
as a supermarket. Therefore, it had no right to trade as a
supermarket on the leased premises.
It was its prohibited
trading which violated Pick n Pay’s rights to exclusive
trading. On all accounts this was unlawful
conduct which
warranted an interdict.
Other
satisfactory remedy
[104] Since a final
interdict is taken to be a drastic remedy, our law affords courts a
discretion to grant or refuse it.
A court is likely to refuse
an interdict if there is an ordinary remedy which may give the
applicant adequate protection.
[104]
The mere existence of other remedies is not enough to tilt the scale
against the granting of an interdict. The other
remedy which
must be ordinary, should afford protection that is equally or more
effective to the one provided by an interdict.
On this topic
the Supreme Court of Appeal in
V&A Waterfront Properties
said:
“Coming to the third and final requirement, the respondents
submitted that an interdict was not the only appropriate remedy.
It
was said that the first appellant could sue for damages or cancel the
lease. This argument cannot prevail. The
first appellant
is entitled to enforce its bargain: to obtain the lessee’s
promised rental while preventing the latter from
conducting itself in
a manner that involves breaking the law. The only ordinary
remedy which provides it with the necessary
protection is an
interdict. Cancellation would be quite the opposite of that to
which the first appellant is entitled. And
damages would be
difficult to prove, if possible to prove at all. Lessors of
commercial complexes stipulate for provisions
like those in issue
because they want, understandably, to maintain the standing or repute
or safety or appeal of their properties.
However, whether a
particular lessee’s contraventions of the law, and consequent
breaches of its lease, have led to
financial loss because aspirant or
even existing tenants do not want, in view of the contraventions, to
be involved in the complex,
could be exceedingly problematic to
prove.”
[105]
[105] Similarly here
too a claim for delictual damages may be almost impossible to prove.
This much is plain from the first
judgment which holds that a
delictual claim of unlawful competition is not available to Pick n
Pay.
[106] In the
circumstances an interdict proves to be the only satisfactory remedy
for Pick n Pay. Accordingly, I hold that
Pick n Pay has
established all the requirements for an interdict and this entitled
it to the interdict granted by the High Court.
In the result I
would dismiss the application for leave either for the reason that
jurisdiction of this Court is not engaged or
for lack of prospects of
success.
For the Applicant: S
A Cilliers SC, K Green instructed by Cliffe Dekker Hofmeyer Inc
For the Respondent:
D N Unterhalter SC, G D Marriott, A Coutsoudis, X
Hilita instructed by Nortons Inc
[1]
Van Dijkhorst J in
Atlas Organic Fertilizers (Pty) Ltd v Pikkewyn
Gwhano (Pty) Ltd
1981 (2) SA 173
(TPD); (
Atlas Organic)
at
186E.
[2]
Clause 12 of the lease agreement, which contained a restriction on
Masstores’s use of the property, provided that:
“12.1 The tenant may use the premises for the purposes
of a retail business being a business dealing in general merchandise
and non-perishable food and all other ancillary and related
businesses or for any other retail business. Subject to the
qualification that the tenant will not trade as a general food
supermarket (except in the circumstances described in clause 12.2),
the tenant may, in its sole discretion, determine what products it
will sell within its store.
12.2 If, at any time during the lease, for a period of 90
consecutive days, there is no general food supermarket trading in
the shopping centre, the tenant may expand the tenant’s
business to include trading as a general food supermarket.”
[3]
Clause 10 of the agreement (the exclusivity clause) contained a
number of restrictions on the letting of the premises.
Notably, the lessor undertook towards Pick n Pay not to “permit”
the following business to be conducted in the centre:
“10.1.1: a hypermarket or supermarket;
10.1.2: a store with either a single or several food
departments, the aggregate square meterage of which exceeds
100 (one
hundred) square metres; or
10.1.3: a cafe or delicatessen which sells fresh fish
and meat; or
10.1.4: a grocery, fresh fish shop, butchery, bakery or
fruit and vegetable shop.”
[4]
Masstores disputed that it traded as a general supermarket, but the
High Court found that it did and the Supreme Court of Appeal
confirmed that finding on appeal. There is no ground for this
Court to interfere with the factual finding.
[5]
Pick n Pay Retailers (Pty) Ltd v Masstores (Pty) Ltd
[2014]
ZAGPPHC 769.
[6]
Masstores (Pty) Ltd v Pick n Pay Retailers (Pty) Ltd
2015
[ZASCA] 164;
2016 (2) SA 586
(SCA) (
Masstores SCA
).
[7]
Setlogelo v Setlogelo
1914 AD 221
at 227.
[8]
Second judgment at [70].
[9]
Id at [71].
[10]
Id at [95].
[11]
Id at [86].
[12]
Id at [106].
[13]
Id at [86].
[14]
Godongwana v Mpisana
1982 (4) SA 814 (Tk).
[15]
1991 (1) SA 708 (W).
[16]
2004 (1) SA 618 (D).
[17]
Country Cloud Trading CC v MEC, Department of Infrastructure
Development, Gauteng
[2014] ZACC 28
;
2015 (1) SA 1
(CC);
2014
(12) BCLR 1397
(CC) (
Country Cloud
).
[18]
Loureiro v Imvula Quality Protection (Pty) Ltd
[2014] ZACC 4
;
2014 (3) SA 394
(CC);
2014 (5) BCLR 511
(CC) (
Loureiro
) at
paras 34-5;
Steenkamp NO v Provincial Tender Board
[2006]
ZACC 16
;
2007 (3) SA 121
(CC);
2007 (3) BCLR 300
(CC) at para 19;
Phumelela Gaming and Leisure Limited v Gründlingh
[2006]
ZACC 6
; 2007 SA (6) 350 (CC)
[2006] ZACC 6
; ;
2006 (8) BCLR 883
(CC) (
Phumelela
)
at para 23;
K v Minister of Safety and Security
[2005] ZACC
8
;
2005 (6) SA 419
(CC);
2005 (9) BCLR 835
(CC) at para 19.
[19]
Lanco Engineering CC v Aris Box Manufacturers (Pty) Ltd
1993
(4) SA 378
(D) (
Lanco
).
[20]
Country Cloud Trading CC v MEC, Department of Infrastructure
Development
[2013] ZASCA 161
;
2014 (2) SA 214
(SCA) (
Country
Cloud SCA
).
[21]
Masstores SCA
above n 6 at para 22: “Turning from the
general to the specific – in the present instance the claim is
based on the
intentional deprivation of a benefit a contracting
party would otherwise have obtained from performance under a
contract.
Such a cause of action has again been confirmed
recently in [
Country Cloud SCA
].”
[22]
Id at para 22: “This was confirmed in
Country Cloud Trading
CC v MEC, Department of Infrastructure Development
where the
Constitutional Court referred to it as a ‘usurpation of [a]
right’.”
[23]
Country Cloud
above n 17 at para 31.
[24]
Id: “The defendant there did not simply cause the plaintiff to
lose its right to occupy the premises. The defendant
usurped
that right, appropriating it for itself.”
[25]
Masstores SCA
above n 6 at para 22:
“But by that the court did not seek to restrict the cause of
action to inducement cases only. On the contrary, as
stated,
the court expressly recognised those cases where a ‘right is
usurped’, or what this court referred to as
the ‘deprivation
of a benefit’. There are therefore two types of
delictual action in interference cases, namely
those where
inducement or enticement feature and others where there is a breach
of a legal duty or the infringement of a subjective
right. The
present matter falls into the latter category
.
”
[26]
Country Cloud
above n 17 at para 30.
[27]
Id at para 21 and
Loureiro
above n 18 at para 53.
[28]
Phumelela
above n 18 at para 31 and cases referred to in
Loubser “Principles and Policy in Unlawful Competition: An
Aquilian Mask?”
(2000) 40
Acta Juridica
167
at fn 22.
[29]
Neethling
Van Heerden-Neethling Unlawful Competition
2 ed
(LexisNexis, Durban 2008) at 106.
[30]
Id at 129.
[31]
Masstores SCA
above n 6 at para 23:
“In
Country Cloud
the Constitutional Court agreed with
the findings of this court that
dolus eventualis
would
suffice as far as intent is concerned in a claim such as the present
one. It held that subjective foreseeability
that interference
would cause loss, coupled with a reconciling with the foreseen
consequences, is sufficient to sustain such
a claim. In the
present instance Masstores was asked in writing on 9 May 2014 by
Hyprop to desist from conducting a supermarket
at Game, Capegate.
Masstores failed to heed this and other demands issued by
Hyprop and Pick n Pay. Masstores’[s]
conduct clearly
constitutes direct intent or, at the very least,
dolus
eventualis
.
The requirements of the delictual action
had therefore been proved by Pick n Pay, as the court a quo
correctly found
.”
[32]
Country Cloud
above n 17 at paras 39-40.
[33]
Id at para 23.
[34]
Masstores SCA
above n 6 at para 6.
[35]
In motion proceedings the affidavits serve as pleadings of both fact
and law.
Minister of Land Affairs and Agriculture and
Others v D & F Wevell Trust
[2007] ZASCA 153
;
2008 (2) SA
184
(SCA) at para 43. Also see Peté et al
Civil
Procedure, A Practical Guide
2 ed (Oxford University Press, Cape
Town 2011) at 122-4.
[36]
89 of 1998.
[37]
1922 AD 492.
[38]
Id at 507.
[39]
Phumelela
above n 18 at para 31.
[40]
Id at para 36.
[41]
Neethling et al
Law of Delict
7 ed (LexisNexis, Durban 2015)
305-13; and Loubser n 28 at 173.
[42]
H v Fetal Assessment Centre
[2015] ZACC 34
;
2015 (2) SA 193
(CC);
2015 BCLR 127
(CC) at paras 53-5.
[43]
See [10] above. Also see Neethling et al
Law of Delict
above n 41 at 269.
[44]
Country Cloud
above n 17 at para 22.
[45]
Phumelela
above n 18 at para 36.
[46]
Compare
Country Cloud
above n 17 at para 25.
[47]
See generally Price “The Contract Delict Interface in the
Constitutional Court” (2014) 25
Stellenbosch Law Review
501-10.
[48]
See
Workforce Group (Pty) Ltd v Bezuidenhout
[2008] ZAFSHC 8
;
Payen Components SA Ltd v Boric CC
[1995] ZASCA 57
;
1995 (4) SA 441
(A) at
453B-C;
Union Wine Ltd v Edward Snell & Co Ltd
1990 (2)
SA 189
(C) at 203D-E;
Bress Designs (Pty) Ltd v GY Lounge Suite
Manufacturers (Pty) Ltd
1991 (2) SA 455
(W) at 473H;
Schultz
v Butt
[1986] ZASCA 47
;
[1986] 2 All SA 403
(A) 679E;
Lorimar
Productions Inc v Sterling Clothing Manufacturers (Pty) Ltd, Lorimar
Productions Inc v OK Hyperama Ltd, Lorimar Productions
Inc v Dallas
Restaurant
1981 (3) SA 1129
(T) at 1154G and 1155A-B.
[49]
Premier Hangers CC v Polyoak (Pty) Ltd
[1996] ZASCA 119
;
1997
(1) SA 416
(SCA);
[1997] 1 All SA 134
(A) at 423A-424F.
[50]
Taylor & Horne (Pty) Ltd v Dentall (Pty) Ltd
1991 (1) SA
412
(A) (
Taylor & Horne
).
[51]
Id at 421J-422B.
[52]
Id at 422H-J.
[53]
Automotive Tooling Systems (Pty) Ltd v Wilkens
[2006] ZASCA
167
;
[2007] 4 All SA 1073
(SCA);
2007 (2) SA 271
(SCA) at para 8.
Also see Neethling
Unlawful Competition,
above n 29 at 20 at
fn 46; and Saner
Agreements in Restraint of Trade in South
African Law
(Butterworths, Durban 2005) at 7-4 and 7-5.
[54]
Wespoint Trading 91 CC t/a SkinPhd
v Annelize Carolynn
Smit
[2016] ZALCJHB 251;
Basson v Chilwan
[1993] ZASCA
61
;
1993 (3) SA 742
(A);
Magna Alloys and Research (SA) (Pty) Ltd
v Ellis
[1984] ZASCA 116; 1984 (4) SA 874 (A).
[55]
Neethling
Unlawful Competition
above n 29 at 106.
[56]
Compare
Dantex Investment Holdings (Pty) Ltd v Breener NO
[1988]
ZASCA 122
;
1989 (1) SA 390
(A) (
Dantex
) and
Lanco
above n 19.
[57]
Country Cloud
above n 17 at para 65.
[58]
Id at paras 51-7.
[59]
Howorth v Fox & Hart
(1906) 20 EDC 276.
[60]
Id at 279.
[61]
Id at 276.
[62]
See Unterhalter “The abuse of dominance” in Brassey (ed)
Competition Law
(Juta, Cape Town 2011) 194 for a discussion
of statutory monopolies, licences, permissions, patent rights and
trademarks that
function within a statutory framework of
exclusivity.
[63]
Weber-Stephen Products Co v Alrite Engineering (Pty) Ltd
1990
(2) SA 718
(T) at 734-5.
[64]
See, for example,
S v Makwanyane
[1995] ZACC 3
;
1995 (3) SA
391
(CC);
1995 (6) BCLR 665
(CC) at para 39;
H
above n 42 at
paras 28-31.
[65]
Weber-Stephen Products Co
above n 63 at 734.
[66]
Since the case of
Lumley v Gye
[1853] 2 E&B 216.
[67]
OBG Ltd & Others v Allan & Others
[2007] 4 All ER 545
(HL) (
OBG Ltd
).
[68]
Id at paras 8, 40, 278 and 320.
[69]
Country Cloud
above n 17 at paras 20-1.
[70]
Id quoting
Loureiro
above n 18.
[71]
Neethling
Unlawful Competition
above n 29 at 127.
[72]
Id at 128-133.
[73]
Id at 129.
[74]
Id at 129 at fn 83.
[75]
Id at 132-3.
[76]
Id at 132.
[77]
Atlas Organic
above n 1 at 179G-H.
[78]
Neethling
Unlawful Competition
above n 29 at 134-9.
[79]
Country Cloud
above n 17 at para 40.
[80]
United Technical Equipment Co (Pty) Ltd v Johannesburg City
Council
1987 (4) SA 343
(T);
Burger v Rautenbach
1980 (4) SA 650
(C) and
Grundling v Beyers
1967 (2) SA
131 (W).
[81]
Transvaal Property Investment Co v SA Townships Mining and
Finance Corp
1938 TPD 521.
[82]
Id at 351.
[83]
Pretoria Garrison Institutes v Danish Variety Products (Pty)
Limited
1948 (1) SA 839
(A);
Western Johannesburg Rent
Board v Ursula Mansions (Pty) Ltd
1948 (3) SA 353 (A).
[84]
Mutweba v Mutweba
2001 (2) SA 193
(TkH) at paras 10-2;
Nyingwa v Moolman NO
1993 (2) SA 508
(Tk);
Bakoven Ltd v
GJ Howes (Pty) Ltd
1992 (2) SA 466 (E).
[85]
Free State Gold Areas Ltd v Merriespruit (OFS) Gold Mining Co
1961 (2) SA 505
(W) at 515.
[86]
Setlogelo
above n 7 at 227.
[87]
De Villiers v Soetsane
1975 (1) SA 360
(E) at 360H-361B.
[88]
V&A Waterfront Properties (Pty) Ltd v Helicopter Marine
Service
[2005] ZASCA 87
;
2006 (1) SA 252
(SCA) (
V&A
Waterfront Properties
).
[89]
Id at para 25.
[90]
Taylor & Horne
above n 50.
[91]
Atlas Organic Fertilizers
above n 1.
[92]
First judgment at [8].
[93]
See Van der Merwe “Theoretical distinction between real and
personal rights” in
LAWSA
(2014) vol 27(2) at para 60
and Van der Merwe
The Law of Things
(Butterworths, Durban
1987) at para 42.
[94]
First judgment at [10].
[95]
Godongwana
above n 14 at 817C-G.
[96]
Id at 817H.
[97]
Motloung
above n 15.
[98]
Reddy
above n 16.
[99]
Bodasingh’s Estate v Suleman
1960 (1) SA 288
(N);
Jadwat and Moola v Seedat
1956 (4) SA 273 (N).
[100]
Cooper
Landlord and Tenant
2 ed (Juta & Co Ltd, Cape Town
1973) at 251-2.
[101]
Lanco
above n 19 at 384 A-D.
[102]
Reddy
above n 16 at 626.
[103]
V&A Waterfront Properties
above n 88 at para 21.
[104]
Peri-Urban Health Board v Sandhurst Gardens (Pty) Ltd
1965
(1) SA 682
(T) at 684.
[105]
V&A Waterfront Properties
above n 88 at para 23.