Montle and Neo Transport Services and another v Engen Petroleum Limited and another
| Jurisdiction | http://justis.com/jurisdiction/166,South Africa |
| Judge | Van Zyl AJ |
| Judgment Date | 18 August 2023 |
| Citation | 2023 JDR 3104 (WCC) |
| Hearing Date | 18 August 2023 |
| Docket Number | 20420/2022 |
Van Zyl AJ:
Introduction
The applicants, in their notice of motion, seek wide-ranging relief against the respondents.
Against the first respondent the applicants seek, amongst ancillary relief:
an “upliftment” of the suspension of a distribution agreement concluded between the parties in 2015;
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an order that the distribution agreement be reinstated;
an order that would place the applicants in the same position that they would have been prior to the suspension of the distribution agreement;
compensation to the applicants for loss of profit and income, and
an order that the first respondent be directed to make a complete record available of the state of the first respondent’s investigation into the applicants’ activities while the distribution agreement was still operative.
Against the second respondent the applicants seek an order, pending the finalisation of the present matter, staying an application brought by the second respondent in the Gauteng Local Division of the High Court. In that application the second respondent seeks, inter alia, a monetary judgment against the first applicant, as well as orders perfecting a special and general notarial bond, all arising from a loan agreement concluded between the applicants and the second respondent in 2018.
Both respondents have opposed the relief sought against them.
The applicants seek final relief on motion. The rule in Plascon Evans [1] therefore applies. Where there are disputes of fact, the version of the respondents prevails. This is subject only to the qualification that their version will not be accepted if it contains “bald or uncreditworthy denials, raises fictitious disputes of fact, is palpably implausible, far-fetched or so clearly untenable that the court is justified in rejecting them merely on the papers”.
This qualification does not, in my view, apply to the respondents’ respective versions in the present matter.
Apart from the other avenues that a Court may follow in the exercise of its discretion
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should there be material disputes of fact on the papers, the Court may dismiss an application if the disputes disclosed by the papers should have been anticipated by the applicants. [2]
Also relevant for present purposes is the approach that application proceedings are generally inappropriate for the resolution of matters where fraud is alleged, as it is undesirable to resolve, on paper, disputed issues which largely depend on considerations not only of probability, but also of credibility. [3]
I consider the merits of the application in this context.
Background
On 25 January 2015 the first applicant and the first respondent entered into a distribution agreement. The distribution agreement essentially provided for the first applicant to transport and deliver, by road, the first respondent’s petroleum products, “as and when requested” by the first respondent.
Clause 5.2 of the agreement provides as follows: “Notwithstanding anything to the contrary contained in this agreement, Engen may at any time terminate this agreement on ninety days written notice to the Contractor”. [4]
The agreement also contains a breach clause. Clause 22 provides for instances in which the first respondent may cancel the agreement as a result of the breach by the first applicant of its obligations under the agreement. It is, for the purposes of determination of the dispute between the parties, not necessary to set out the provisions of clause 22, save to note that clause 22.1 makes it plain that nothing in the agreement or in the rest of clause 22 would limit or derogate from the first respondent’s rights to cancel the agreement either in terms of the common law or in accordance with other remedies.
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On 10 August 2021 one of the first applicant’s trucks rolled, with the resultant loss of product belonging to the first respondent. This is referred to in the papers as the “truck roll-over incident”. On 17 August 2021 the first respondent informed the first applicant that it was suspending the operation of the distribution agreement pending an investigation into the incident. The suspension was lawfully done because the first respondent was, on the express terms of the agreement, under no obligation to place a minimum number of orders with the first applicant at any given time.
On 20 October 2021 the first respondent gave 90 days’ written notice to the first applicant of the termination of the agreement: “In terms of clause 5.2 of the Agreement, we hereby exercise our right to, and hereby, terminate the Agreement on ninety days’ notice to your client”. The legal effect of the termination letter was that by 31 January 2022 the agreement had automatically been terminated.
The termination of the agreement is the main bone of contention between the parties.
The relief sought against the second respondent
On the day of the hearing, at the outset of his argument, the applicants’ counsel indicated that the applicants no longer pursued their claim against the second respondent.
This was a wise decision because this Court clearly has no jurisdiction to interfere with the pending proceedings in Johannesburg, and with the inherent jurisdiction of that Court to regulate its own process. The applicants should have brought their application to stay in that court (they have, in fact, applied for a stay in their answering affidavit delivered in the Johannesburg Court). The applicants have not made any allegations to support a case that this Court has, in the particular circumstances of this matter, jurisdiction over the second respondent in terms of section 21 of the Superior Courts Act 10 of 2013, or the power to interfere with pending proceedings which were set down for hearing in another division.
The second respondent set out in its heads of argument delivered in anticipation of the hearing in this Court that the applicants had, in any event, not satisfied the
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requirements for the stay of the Johannesburg application. Given the applicants’ stance I no longer have to consider this argument.
I shall return to the applicants’ interactions with the second respondent in relation to the issue of costs.
The relief sought against the first respondent
I have referred above to the nature of the applicants’ claims against the first respondent. The relief sought as regards the permanent reinstatement of the distribution agreement is pivotal because, if such an order is not granted, there is no basis for the grant of the remaining relief sought against the first respondent.
The termination of the agreement
It is common cause that the first respondent gave the applicants 90 days’ written notice of termination on 20 October 2021 in terms of clause 5.2 of the agreement. The permanent reinstatement of the agreement would thus require this Court to find such termination to have been legally invalid.
The applicants’ founding papers are largely devoted to an attack on the suspension of the agreement when it was still in existence (following the truck roll-over incident in August 2021). As regards the subsequent termination in January 2022, the applicants speculate that there were two grounds on which the first respondent terminated the agreement, namely the truck roll-over incident and the first applicant’s failure to comply with certain health and safety regulations. The applicants dispute the breach of the agreement in either of those respects, and contend that the grounds for termination of the agreement were thus invalid.
The problem facing the applicants is that they fail to distinguish between termination by notice (in terms of clause 5.2 of the agreement) and cancellation due to breach (which is regulated by clause 22 of the agreement). Termination by notice does not require cogent reasons for its validity, but simply that the procedural requirements for such termination were met. In the present case, clause 5.2 of the agreement required
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90 days’ written notice. There was no other requirement for termination by notice. The first respondent’s motive for termination is therefore irrelevant. The termination notice did not refer either to the truck roll-over incident or to health and safety requirements. It referred simply to the provisions of clause 5.2 of the agreement.
In Bredenkamp and others v Standard Bank of South Africa Ltd [5] the bank suspended the appellants’ credit facilities and thereafter closed their accounts. The Supreme Court of Appeal held as follows as regards the bank’s reasons for doing so:
The bank sought to justify its right to terminate its relationship with the appellants on two grounds. The first was that it had the right in terms of an express term of its contracts to close the accounts with reasonable notice. It also relied on an implied term with the same effect, namely that an indefinite contractual relationship may be terminated with reasonable notice. . . .
The bank did not initially inform the appellants of its reasons for termination. One would assume that in the ordinary course of events the motive of a party in exercising a right - contractual in this case - is irrelevant. (A possible exception could be the abuse of rights.)
. . .
The appellants . . . accepted that the agreement with the bank entitled either party to terminate the relationship on reasonable notice for any reason and that this clause or the implied term did not offend any constitutional value. It was accordingly valid. They also accepted that due notice had been given and that a reasonable time had been allowed.” [Emphasis added.]
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