Tamarillo (Pty) Ltd v B N Aitken (Pty) Ltd

• Jurisdiction: South Africa
• Judge: Corbett JA, Miller JA, Trengove JA, Holmes AJA and Galgut AJA
• Judgment Date: 15 November 1981
• Citation: 1982 (1) SA 398 (A)
• Hearing Date: 21 September 1981
• Court: Appellate Division

Miller JA:

In this judgment I shall for convenience call the appellant 'Tamarillo' and the respondent 'Aitken'.

E During March 1976 the parties entered into a written franchise agreement in terms of which Tamarillo was granted by Aitken an exclusive license to carry on 'prescribed activities' within a defined area in Natal. The activities were defined in the agreement as being 'any activities whereby Juicy Lucy or Giant Size products are produced for or supplied to customers'. 'Juicy Lucy' was the name by which Aitken F marketed freshly squeezed fruit juices and 'Giant Size Burgers' the name by which large hamburgers were produced and sold by Aitken. It was recorded in the franchise agreement that Aitken 'owns the marks and names Juicy Lucy and Giant Size Burgers', that Juicy Lucy was registered as a trade mark and that an application for registration of Giant Size G Burgers as a trade mark was pending. The latter trade mark was subsequently registered. In consideration of the grant of the franchise Tamarillo was required to pay to Aitken a substantial sum as goodwill in respect of each 'outlet' or shop opened for sale of the products, and substantial royalties at stipulated rates. The agreement is lengthy - it occupies 59 pages of the record. Only such of its further provisions as H are necessary for proper understanding of the issues will in due course be mentioned.

In exercise of the rights conferred by the agreement Tamarillo opened several 'trading areas' in Durbanat each of which the products above referred to were sold under the registered names or marks. One of the outlets operated by Tamarillo was at the OK Hyperama, Durban, in premises leased to Tamarillo by a landlord other than Aitken. Towards the end of 1977 a problem arose from the circumstances that Aitken had given to one Hilcove certain rights in Pietermaritzburg, within what Tamarillo considered to be the area in

Miller JA

respect of which it enjoyed sole rights in terms of the franchise agreement. A letter was written, apparently on behalf of Tamarillo, in which it was said, inter alia, that Aitken's conduct in that regard was A in breach of the agreement. Reference was also made to communications between Aitken and one Mayet, which Tamarillo apparently regarded as being potentially inimical to its interests or rights. The letter was friendly in tone and it elicited from Aitken a reply, equally friendly in tone, in which explanations were offered in connection with the matters complained of and the hope expressed that the parties would

B 'continue in business in the same friendly atmosphere as has been the case in the past'.

It appears, however, that Tamarillo was not satisfied by Aitken's explanations, for shortly thereafter, during December 1977, Tamarillo's attorneys wrote to Aitken to the effect that the latter's conduct C concerning the Hilcove matters was regarded as a repudiation of the franchise agreement and that it was now for Tamarillo to elect whether to carry on with the agreement and claim damages for breach of contract or to accept the repudiation and thus put an end to the agreement. This letter was followed by one dated 14 February 1978 (annexure 'K') in D which Tamarillo's attorneys informed Aitken that the franchise agreement had 'fallen away as from its inception' because certain 'conditions precedent' had not been fulfilled. In consequence thereof (so the letter continued) Tamarillo was

'ceasing to deal in products in respect of which your company has any trade mark or other right and is vacating the premises in Ashley House'.

E The intention was also announced to claim repayment of all royalties and goodwill paid. In addition to the alleged failure of the 'conditions precedent' it was averred in the letter that Aitken had committed material breaches of the agreement, entitling Tamarillo to cancel such agreement and to claim damages. On 17 February 1978 Aitken's attorneys F replied to annexure 'K', denying that the franchise agreement was subject to the alleged conditions precedent and disputing the allegations of breach of contract. It was clearly stated in that letter that Aitken regarded Tamarillo's actions as reflected in annexure 'K' as 'unlawful repudiation of the franchise agreement', that Aitken accepted such repudiation and that it accordingly held Tamarillo liable

G 'for all damages suffered... consequent upon (the) said unlawful repudiation'.

Aitken thereafter lost little time in commencing proceedings in the Durban and Coast Local Division against Tamarillo by way of notice of motion. Two others, Mr J R Goldberg and Mrs S M Giladi were cited, H respectively, as second and third respondents. They were signatories of the franchise agreement but neither of them is a party to this appeal. The relief claimed against the three respondents was an order (I summarise):

(a)

... (not relevant to the appeal),

(b)

interdicting the respondents from being interested directly or indirectly in any business which prepares or in any way deals with freshly squeezed fruit juices for sale (in a defined area) for a period of 18 months,

Miller JA

(c)

interdicting the respondents from using the trademark 'Juicy Lucy',

(d)

A ordering and directing the first respondent to assign to the applicant the existing lease in respect of the premises situate in the O K Hyperama Store, Durban,

(e)

ordering and directing the first and second respondents to procure the assignment to the applicant of the leases in respect B of... (other premises at which Juicy Lucy products were being sold),

with costs against the three respondents. Affidavits in support of the application and in opposition to it were filed and the matter was in due course heard by SHEARER J, who dismissed the application with costs. The C learned Judge canvassed in his judgment the facts and the several defences raised by the three respondents and came to the ultimate conclusion that because on the papers before him there were material disputes in regard to facts, which Aitken, the applicant, ought to have foreseen, the relief claimed ought not to have been sought by way of notice of motion and the application therefore fell to be dismissed. D Aitken thereupon noted an appeal to the Full Bench of the Natal Provincial Division (JAMES JP, MOSTERT J and HEFER J) which upheld the appeal in part, set aside the order of SHEARER J and substituted therefor an order granting Aitken only the relief sought in prayer (d) of the notice of motion, awarding Aitken the costs of appeal and E one-half of Aitken's costs in the Court of first instance and directing Aitken to pay the second and third respondents' (Goldberg's and Giladi's) costs of appeal as well as their costs in the Court of first instance. With leave of the Full Bench, Tamarillo now appeals against the whole of the order made against it.

In the Court a quo Aitken's counsel apparently conceded that prayers F (b), (c) and (e) could not properly be granted on the papers because they depended upon facts which were the subject of real dispute, but contended that that was no bar to the grant of prayer (d) if, upon facts which were common cause or not disputed, it appeared that Aitken was entitled to the relief claimed in that prayer. The Court a quo, per G HEFER J, accepted that that was the proper approach. Before us, however, Mr Dison, for Tamarillo, contended that the Court a quo was at fault in so approaching the matter. I have difficulty in understanding why. A litigant is entitled to seek relief by way of notice of motion. If he has reason to believe that facts essential to the success of his claim will probably be disputed he chooses that procedural form at his H peril, for the Court in the exercise of its discretion might decide neither to refer the matter for trial nor to direct that oral evidence on the disputed facts be placed before it, but to dismiss the application. (Room Hire Co (Pty) Ltd v Jeppe Street Mansions (Pty) Ltd 1949 (3) SA 1155 (T) at 1168.) But if, notwithstanding that there are facts in dispute on the papers before it, the Court is satisfied that on the facts stated by the respondent, together with the admitted facts in the applicant's affidavits, the applicant is entitled to relief (whether in respect of all his claims or one or more of them) it will make an order giving effect to such finding,

Miller JA

with an appropriate order as to costs. (Cf Stellenbosch Farmers' Winery Ltd v Stellenvale Winery (Pty) Ltd 1957 (4) SA 234 (C) at 235; Burnkloof Caterers (Pty) Ltd v Horseshoe Caterers (Green Point) (Pty) Ltd 1976 (2) SA 930 (A) A at 938.) The Court does not exercise a discretion in motion proceedings whether or not to grant claims established by the admitted or unidsputed facts; except perhaps in very extraordinary circumstances the applicant has a right to an order in respect of such established claims. (Room Hire case at 1166.) It appears to me that much of Mr B Dison's argument in this particular connection rested upon an assumption that the Court had a discretion to refuse to grant prayer (d) (quite apart from its discretionary powers in respect of a claim for specific performance), even if such claim was established by admitted facts, because motion proceedings were not appropriate having regard to C the disputed facts generally. I am unable to fault the Court a quo in its approach in this respect. The inquiry is therefore whether the Court a quo correctly concluded that claim (d) was established on the papers, without reliance on facts other than those that were common cause or not disputed, but always bearing in mind that the claim was one for specific performance.

D The genesis of prayer (d) is to be found in clause 13 (6) (d) of the franchise agreement. It reads as...