Masstores (Pty) Ltd v Pick 'n Pay Retailers (Pty) Ltd and Another

• Jurisdiction: South Africa
• Judge: Maya DP, Leach JA, Theron JA, Majiedt JA and Zondi JA
• Judgment Date: 25 November 2015
• Docket Number: 20711/14 [2015] ZASCA 164
• Hearing Date: 13 November 2015
• Counsel: SA Cilliers SC (with K Green) for the appellant. DA Unterhalter SC (with GD Marriot) for the respondents.
• Court: Supreme Court of Appeal

Majiedt JA (Maya DP, Leach JA, Theron JA and Zondi JA concurring): G

Introduction

[1] This case concerns the alleged unlawful interference with a H contractual relationship. In the Gauteng Division of the High Court, Pretoria, JW Louw J granted a final interdict restraining the appellant, Masstores (Pty) Ltd (Masstores), from unlawfully interfering in the contractual relationship between the first respondent, Pick 'n Pay Retailers (Pty) Ltd (Pick 'n Pay), and the second respondent, Hyprop Investments Ltd I (Hyprop). The interference was alleged to relate to Masstores operating a general food supermarket at the Capegate shopping centre in Brackenfell, Western Cape (Capegate). This appeal is with the leave of the court a quo. Although Pick 'n Pay had joined Hyprop as a second respondent, and notwithstanding the fact that the latter had filed answering papers, no relief was sought in the court a quo against J Hyprop.

Majiedt JA (Maya DP, Leach JA, Theron JA and Zondi JA concurring)

Factual matrix A

[2] The salient facts are largely common cause or not seriously disputed and can be summarised as follows. Hyprop is the successor in title to the Capegate Regional Centre Joint Venture (the JV), the owner of Capegate. On 20 February 2006 Masstores entered into a lease agreement with the JV in terms whereof it leased part of the shopping centre from the JV. The B lease provision at the centre of the dispute is clause 12, which reads:

'12.

THE TENANT'S USE OF THE PREMISES

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 C 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 this lease, for a period of 90 consecutive D 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] On 11 May 2006 Pick 'n Pay concluded a lease agreement with the JV in respect of premises situated at Capegate. The salient part of the lease agreement is clause 10.1, which contains the following provisions: E

'10.

EXCLUSIVITIES AND LETTING RESTRICTIONS

10.1

Save for the SUPERMARKET and Checkers, the LESSOR shall not permit the following businesses to be conducted in the SHOPPING CENTRE or on the PROPERTY:

10.1.1

a hypermarket or supermarket; or F

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 café or delicatessen which sells fresh fish or meat; or

10.1.4

a grocery, fresh fish shop, butchery, bakery or fruit and vegetable shop.' G

[4] Masstores, which also trades as Game, traditionally conducted its business as a general merchandise retailer. I shall refer to it herein interchangeably as 'Masstores' or 'Game'. Its products excluded food, but just before 2010 it began selling on a limited scale non-perishable food and grocery items. During late-2010 or 2011 Masstores introduced H the Foodco concept in some of its Game stores. This entailed the introduction of fresh fruit and vegetables and fresh prepacked meat products, which complemented its existing non-perishable food and grocery lines. In the Western Cape, Foodco was first introduced in two large shopping malls, N1 City and Canal Walk. I

[5] On 19 September 2013 Foodco was introduced in Masstores' Game store at Capegate. Hyprop informed Checkers, which also traded at Capegate, of Masstores' intentions about the Foodco introduction. But Pick 'n Pay was not afforded the same courtesy. In response Checkers, whose lease contained exclusivity provisions similar to that of Pick 'n Pay, obtained an interim interdict restraining Masstores from operating J

Majiedt JA (Maya DP, Leach JA, Theron JA and Zondi JA concurring)

A a Foodco at Capegate, pending the institution of an action for final relief. Pick 'n Pay became aware of the Checkers interdict, but, in view of the interim restraining order obtained by Checkers, elected not to take any action to protect its right to exclusivity.

[6] On 15 April 2014, for reasons not germane here, the interim interdict B granted to Checkers was discharged by agreement. From that time Game operated a Foodco at Capegate. This prompted Pick 'n Pay to launch the application in the court a quo. It sought a final interdict against Masstores, restraining it from interfering in the contractual relationship between Pick 'n Pay and Hyprop by carrying on a business C exclusively granted to Pick 'n Pay in terms of the latter's lease agreement. As alternative relief Pick 'n Pay sought an interdict in similar terms, pending the outcome of an action to be instituted against Masstores. It is not necessary to deal with the relief sought in the alternative against Hyprop because, as stated, that relief was abandoned at the hearing in the court a quo. Some argument was addressed concerning Pick 'n Pay's D change in tack in its application papers — that aspect will be considered shortly.

[7] The court a quo upheld Pick 'n Pay's contentions that Game was trading as a general food supermarket at Capegate in breach of its E obligations in clause 12.1 of its lease agreement. By intentionally continuing to do so after having been made aware of Pick 'n Pay's exclusive rights in terms of its lease agreement, held the learned judge, Game was unlawfully preventing Pick nPay from obtaining the performance it was entitled to in terms of its contractual exclusivity right. A final interdict was consequently issued against Game.

The central issue F

[8] Our law has recognised for more than a century that a delictual action lies in instances where an outside party knowingly deprives a person of his rights under a contract with another. [1] The outside party's G conduct results in the contracting party not obtaining the performance to which it is entitled on the contract, or where a contracting party's obligations under the contract are increased. In the first-mentioned instance one is concerned with the infringement of a personal right. [2] These types of case typically occur in instances where a former lessee H holds-over the leased premises well knowing that the incumbent lessee is, in the process, being deprived of its contractual rights under the lease, [3] and in instances where employees are induced by a competitor to breach their employment restraint conditions contractually agreed with a former

Majiedt JA (Maya DP, Leach JA, Theron JA and Zondi JA concurring)

employer. [4] The somewhat novel question that arises here is whether the A breach by an outside party of its lease obligations towards a contracting party can give rise to a delictual action by the other party to the contract, in circumstances where the breach impacts directly on the latter and infringes upon its contractual rights. Before I consider the first question, namely whether the court a quo was correct in its finding that Game was B in breach of its lease agreement with Hyprop by trading as a general food supermarket, I deal first with Masstores' contentions regarding the manner in which Pick 'n Pay has pleaded its case.

The pleadings

[9] Masstores' counsel argued strenuously that Pick 'n Pay had shifted C its ground on the papers as far as the pleaded cause of action is concerned. While this is true, there is a sound explanation for the change. Pick 'n Pay had approached the court a quo on an urgent basis. It founded its case on the fact that Masstores was well aware that its conduct (operating a general food supermarket at Capegate) D contravened clause 10 of the lease agreement between Pick 'n Pay and Hyprop. Pick 'n Pay pleaded further that '(n)otwithstanding this knowledge, Masstores has recklessly and intentionally continued [with its conduct]'. I accept the explanation given by Pick 'n Pay's counsel that, when Masstores' answering papers were received and Masstores' agreement's provisions became known, Pick 'n Pay had amended its notice of motion E without objection and averred in its replying affidavit that Masstores was in breach of its own restraint, which constituted unlawful interference in the contractual relationship between Pick 'n Pay and Hyprop. Quite apart from the fact that no objection had been raised by Masstores at that time (in fact it availed itself of the indulgence to file further affidavits) F and no prejudice had been caused to it (nor has any been suggested), the point was not raised at all in Masstores' heads of argument. This argument is plainly an ill-considered afterthought.

Is Masstores operating a general food supermarket? G

[10] On the evidence and on the plain, ordinary grammatical meaning of the word 'supermarket' the answer to this question should be bereft of complexity. But on this aspect Masstores adduced expert evidence, maligned the photographic evidence presented by Pick 'n Pay as 'misleading' and produced photographs of its own which purported to present a more accurate and balanced picture. And its counsel went to H great lengths to dispel any initial view one may have had regarding the uncomplicated nature of the word. In the process more obfuscation than enlightenment ensued.

[11] As always, regard must first be had to the word itself. Masstores' I counsel contended that the word...