Valkin and Another v Daggafontein Mines Ltd and Others

• Jurisdiction: South Africa
• Judge: Marais J
• Judgment Date: 25 November 1957
• Court: Witwatersrand Local Division

Marais, J.:

The two plaintiffs, who are partners in the business of general dealers and eating house proprietors on trading site 17, situate H on the farm Daggafontein No. 9, Springs, claim, as against Daggafontein Mines, Ltd., a company mining for gold on that farm, and a number of employees of the company, an order restraining them from carrying on on that farm - and more particularly in a certain mine compound belonging to the company - any trade or business which competes with the business of the plaintiffs, and, as against the company, damages in an amount of £1,500, and costs.

Marais J

It is alleged that the company, through its employees cited as codefendants, has been carrying on a trade or business in contravention of the prohibitions contained in Act 35 of 1908 (T) and Act 13 of 1910 (T) and that in so doing it has unlawfully been causing damage to the lawful business of the plaintiffs.

A At the trial the parties agreed that, if I found for the plaintiffs on the main claim, the amount to be awarded as damages in respect of the period ending at the date of summons was £650.

As is customary on the Reef, the defendant company houses its Native employees in so-called compounds, which are enclosed areas where the B workers, mostly single males, are housed, fed, hospitalised and schooled and where they have sporting and other entertainment facilities. The permanent population of such a compound seems to be relatively small; few employees stay on for more than 18 months at a time, but many return to the gold fields - not necessarily to the same mine or the same compound - after a visit of weeks, months or C years to their homes in the Native reserves, the High Commission Territories and countries and territories to the north and east of this country. Their 'working life' is said to begin at the age of 18 years and to extend seldom beyond the age of 32 years. Each gold mining company is responsible, through its compound managers, for the proper D administration of its compounds, but efforts seem to have been made to standardise compound organisation and administration methods and the nature and extent of the facilities and amenities provided for compound inmates throughout the Reef area, not only within any particular 'group' of companies - i.e. companies employing the same mining house as E secretaries - but also in all compounds falling within the 'jurisdiction' of the Gold Producers' Committee. The object appears to be to avoid giving any particular compound or mine an unfair advantage in attracting Native mine labour; the common denominator would be largely determined by the poorest mines. The mines endeavour to raise the standard of living and recreation in the compounds as high as possible in order to attract recruits and to increase labour productivity.

F One of the employers' aims in this regard is to enable and encourage the compound inmates to spend their spare time within the precincts of the compound - entirely in the interests of the Natives' health and personal safety - and to this end sports fields and bioscopes have been provided; and, latterly, also so-called 'social clubs'. This case is concerned with such a club.

G It is alleged that the gold mining companies are selling certain commodities to the Natives in those clubs in contravention of the law. The standardised methods of administration are the reason why this case has been referred to in Court as a 'test case'. The fate of the club in H question may affect the future of several similar clubs established elsewhere in Reef compounds.

Two compounds of the defendant company - the two together having one club - are relevant to the present dispute. The more important one, where the club premises are actually situate, is the South Compound, also known as No. 2 Compound. Its gate (a compound usually has only one gate for the use of the inmates, and it is usually under guard in order to keep out undesirable persons, contraband and stolen goods)

Marais J

is 725 yards, by footpath and road, from the business establishment of the plaintiffs.

The other compound is the North Compound, situate a matter of one and a half miles from the plaintiffs' shops and eating house.

Reference must be made to a third compound mentioned in the evidence, A namely, the East Daggafontein Compound, which belongs to a gold mining company other than the defendant in this case. It is situated close to the South Compound; it, too, has a club; and its gate is 840 yards from the plaintiffs' business premises.

The idea of establishing social clubs did not originate with the mine B Natives. The initiative came from the gold mining companies. Their motive in embarking on such a plan appears to have been a threefold one: firstly, to increase mine-controlled trading in the mine compounds in order to forestall anticipated legislation increasing the scope of trading by outsiders within the compounds; secondly, to enable the inmates to purchase their 'day to day requirements' within the compound C at reasonable prices, thus removing the necessity of their leaving the compound to buy such requirements outside and, at the same time, reaping a profit, which could be employed towards financing sporting and other entertainment activities for the inmates; and, thirdly, to create, by means of communal spare time activities, an esprit de corps amongst the D inhabitants of a compound and to encourage the useful spending by workers of their leisure time.

There is no reason whatever for believing that the mines established these clubs for a profit motive and with a view to using the profits expected from the trading done at the club canteens to replace the E subsidies normally paid by the mines to football clubs, dance clubs, and the like, organised by Native mine workers, which are activities subsidised from mine funds. The probabilities are all the other way.

It will be convenient to deal now with some of the legal provisions and principles which apply in the present case.

Trading on proclaimed land or land held under mining title, except by F special permission of the authorities, was prohibited before 1908, with the sole object of ensuring the orderly development of mining ground (Mullins & Meyer v Pearlman, 1917 T.P.D. 639 at p. 644), and there is no reason for believing that that was not the principal reason for the re-enactment of the prohibition in secs. 96 and 97 of the Transvaal Gold G Law, Act 35 of 1908, and in sec. 2 of Act 13 of 1910 (T). According to Mullins' case, supra, the Transvaal legislation of 1908 and 1910 intended the prohibition to operate also in favour of the trading site shopkeepers, who obtain limited monopolies of trading under somewhat onerous conditions.

Sec. 96 of the 1908 Act provides that any person who 'shall carry on any H trade or business' on proclaimed land is, except under certain exemptions, guilty of an offence. Sec. 97 reads in part:

'Any person who carries on mining and is at the same time interested, directly or indirectly, in a business (i) the premises of which are on the ground on which such mining is carried on; and (ii) for which a general dealer's licence is required shall be guilty of an offence'.

Sec. 2 of Act 13 of 1910 provides that

'no person shall upon ground held under mining title, carry on any trade or business, except . . . (c) upon a trading site'.

Marais J

From the foregoing it is clear, firstly, that the present plaintiffs, having a limited monopoly of trading on a trading site on land held under mining title, namely, trading site No. 17 on the farm Daggafontein, are entitled to invoke the prohibition against trading by A others and to sue for an interdict if the prohibition is flouted; and, secondly, that the defendants would, if they engage in 'carrying on a trade or business', be committing an offence.

Now, ostensibly, that is what the defendants are doing. They are transforming possession of certain commodities to members of the public B against the payment of money, and the transfer takes place with the intention of permitting the 'buyers' to consume those commodities. Such transactions would ordinarily be called sales, and normally a series of sales would amount to the carrying on of a trade of business.

The defendants say that they are not 'selling' the commodities but are C merely distributing to individual 'club members' the stock of goods jointly owned by all the members of the club. The payment of money is required in terms of the rules of the club in order to maintain equality of property between the members of the club, some of whom buy for less value than others.

This proposition, sometimes called a startling proposition, was first D laid down in the case of Graff v Evans, (1882) 8 Q.B. 373. It was there held that when the management of an unincorporated members' club, which is not a legal persona and therefore has no existence apart from its constituting members, purports to sell an article in the club rooms to one of the members, it does not amount to what the law would regard E as a sale. The stock of goods from which the required article is taken, does not belong to the club as such, for the club cannot own anything; the ownership cannot reside anywhere except in all the members jointly of the club, and therefore also in the member who is 'buying' the article. One cannot, so the reasoning goes, buy one's own property. Therefore, despite appearances, not a sale but a distribution of common F property takes place. And, it is added, without sales there can be no trading.

The application of the principle thus laid down has been extended to an enterprise which but faintly resembles the notion of a club. In Wurzel v Atkinson & Others, 1937 (1) K.B. 380, it was alleged that a vehicle G had been used unlawfully for the carriage of goods 'for hire or reward'. The facts were that employees of a coal mine, who periodically...