Astral Operations Ltd v Nambitha Distributors (Pty) Ltd

• Jurisdiction: South Africa
• Judge: Gorven J
• Judgment Date: 15 October 2013
• Docket Number: 689/2013
• Court: KwaZulu-Natal High Court, Durban
• Hearing Date: 15 August 2013
• Citation: 2013 JDR 2340 (KZD)

Gorven J:

[1]

The overriding purpose of the Competition Act 89 of 1998 (the Act) is to promote and maintain competition. [1] It has two main focus areas. The first serves to exclude those practices which are inimical to competition and which are referred to in the Act as prohibited practices. The second concerns mergers. [2] A prohibited practice is defined to mean a practice prohibited in terms of Chapter 2. For this purpose, the Act establishes three specialist bodies; the Competition Commission (the Commission), the Competition Tribunal (the Tribunal) and the Competition Appeal Court (the CAC). These specialist bodies are the only ones entitled to deal with determining whether conduct complained of amounts to a prohibited practice under the Act. The functions of the Tribunal are set out in s 27 of the Act. Those relating to prohibited practices [3] provide that the Tribunal may:

'(a)

adjudicate on any conduct prohibited in terms of Chapter 2, to determine whether prohibited conduct has occurred, and, if so, to impose any remedy provided for in this Act…

and

(d)

make any ruling or order necessary or incidental to the performance of its functions in terms of this Act.'

[2]

The present two matters are closely related. The first concerns an exception taken by the plaintiff to the counterclaim entered by the

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defendant company (the company). The second concerns an application by the defendants, who are trustees of the Nambitha Trust (the trust), to amend their counterclaim. This is opposed on the basis that the counterclaim would be excipiable if it were amended as is proposed. The parties agree that if the proposed amended counterclaim would be excipiable, the application for amendment should be dismissed with costs. The averments in the counterclaim and proposed amended counterclaim are, for present purposes, identical. It was therefore agreed by the parties that the two matters should have the same outcome. They were argued together and it was also agreed that only one judgment should be prepared. I shall deal with the pleadings in the exception matter and refer to the parties as the plaintiff and the defendant respectively.

[3]

In each matter the plaintiff sues for goods sold and delivered pursuant to a written contract; in the first instance to the company and in the second instance to the trust. Apart from the parties, the terms of the contracts are identical as is the balance of the pleadings for present purposes. The parties agree that clause 11.5 of the contracts precludes the defendant from staying the action instituted by the plaintiff pending the adjudication of any counterclaim of the defendant. They also agree that clause 19 precludes the defendant from bringing any claim for damages against the plaintiff. I will assume this to be the case for the purpose of the exception without making any finding to this effect. It is not in issue that the goods in question were in fact sold and delivered. The plea raises certain defences unrelated to the exception which need not be dealt with.

[4]

The counterclaim alleges that the plaintiff engaged in three kinds of practices prohibited under the Act (the three issues). It goes on to allege that, in terms of s 58(1)(a)(vi) of the Act, the Tribunal has the power to

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declare the whole or any part of an agreement void and that it would be appropriate that it should do so in respect of clauses 11.5 and 19 of the contracts (the impugned clauses). It alleges that the three issues and the binding effect or invalidity of the impugned clauses are 'competition issues' and will require the court hearing the action to refer them to the Tribunal in terms of s 65(2)(b) of the Act.

[5]

The prayers to the counterclaim are as follows:

'A.

An order referring the competition issues to the Competition Tribunal for determination prior to the determination of any other issues between the parties;

B.

An order postponing the determination of the Plaintiff's claim against the Defendant and the counterclaim against the Plaintiff until the Competition Tribunal has completed its determination of the competition issues and all appeal or review processes relating thereto have been finally exhausted;

An order directing the Plaintiff to provide the Defendant with a statement and debatement of the account of the Defendant with the Plaintiff for the period from 31 January 2010 to 31 October 2011…;

D.

An order adjusting the account of the Defendant with the Plaintiff in accordance with the outcome of the statement and debatement so as to apply the most favourable prices and rebates to the account of the Defendant with the Plaintiff;

E.

Costs of suit.'

It is, in essence, the relief sought in prayers A and B which gives rise to the exception. It is accepted that unless the case is made out for the Tribunal to declare the impugned clauses to be void, no cause of action is disclosed in the counterclaim and the exception should be upheld.

[6]

Since this is an exception, the plaintiff must persuade me that, on every interpretation which the counterclaim can reasonably bear, no cause of action is disclosed. [4] I am to take as true the averments pleaded by the

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defendant and to assess whether they disclose a cause of action. [5] Neither party was able to refer me to any authority concerning the interpretation of the sections in question. I found few cases which deal with either s 58(1)(a)(vi) or s 65(2) of the Act. [6] It is therefore necessary to interpret them without much guidance from previous cases. The approach to interpreting documents was clarified recently in the following dictum: [7]

'The present state of the law can be expressed as follows: Interpretation is the process of attributing meaning to the words used in a document, be it legislation, some other statutory instrument, or contract, having regard to the context provided by reading the particular provision or provisions in the light of the document as a whole and the circumstances attendant upon its coming into existence. Whatever the nature of the document, consideration must be given to the language used in the light of the ordinary rules of grammar and syntax; the context in which the provision appears; the apparent purpose to which it is directed and the material known to those responsible for its production. Where more than one meaning is possible each possibility must be weighed in the light of all these factors. The process is objective, not subjective. A sensible meaning is to be preferred to one that leads to insensible or unbusinesslike results or undermines the apparent purpose of the document… The "inevitable point of departure is the language of the provision itself", read in context and having regard to the purpose of the provision and the background to the preparation and production of the document.'

At para 19 the learned judge continued:

'. . . from the outset one considers the context and the language together, with neither predominating over the other.'

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[7]

It is against this roughly sketched backdrop that the sections relied upon by the defendant must be interpreted. The initial one to consider is s 65(2). This section reads as follows:

'(2)

If, in any action in a civil court, a party raises an issue concerning conduct that is prohibited in terms of this Act, that court must not consider that issue on its merits, and-

(a)

if the issue raised is one in respect of which the Competition Tribunal or Competition Appeal Court has made an order, the court must apply the determination of the Tribunal or the Competition Appeal Court to the issue; or

(b)

otherwise, the court must refer that issue to the Tribunal to be considered on its merits, if the court is satisfied that-

(b)

otherwise, the court must refer that issue to the Tribunal to be considered on its merits, if the court is satisfied that-

(i)

the issue has not been raised in a frivolous or vexatious manner; and

(ii)

the resolution of that issue is required to determine the final outcome of the action.'

This section ousts the jurisdiction of a court to deal with the merits of an issue which has been raised concerning a prohibited practice. It is established law that there is a presumption against an ouster of the jurisdiction of a court. [8] Any provision seeking to do so must make it clear that this is what is intended. [9] As was said by Solomon CJ:

'It is a well recognised rule in the interpretation of statutes that, in order to oust the jurisdiction of a court of law, it must be clear that such was the intention of the Legislature.' [10]

Ouster clauses must, accordingly, be narrowly construed. [11] This is because an ouster is 'a result that would deviate from the general rule that judicial authority is vested in the courts'. [12]

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[8]

Under s 65(2), an ouster takes place if a certain kind of...