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REPUBLIC OF SOUTH AFRICA

IN THE HIGH COURT OF SOUTH AFRICA

GAUTENG DIVISION, PRETORIA

 

(1)           NOT REPORTABLE.

(2)           NOT OF INTEREST TO OTHER JUDGES.

(3)           REVISED.

CASE NO: 82577/2015

10/11/2017

 

In the matter between:

 

FUTURE PHAMBILI PETROLEUM (PTY) LTD                                                        Applicant

and

 
CHAMDOR SERVICE STATION CC                                                                            Respondent

 

JUDGMENT

TEFFO, J:

INTRODUCTION

[1]           This is an application for the eviction of the respondent and all those claiming occupation under it from the premises situated at no. 137 Main Reef Road, Krugersdorp (also known as consolidated stands no. 730 Main Reef Road, Lehisham District, Krugersdorp), ("the premises") from which the respondent conducts a fuel filling station.

[2]           For the sake of convenience, the parties in this judgment are referred to as follows:

(a)      The applicant as "Phambili ",

(b)      The respondent as "Chamdor".

(c)       The other parties as Caltex (Pty) Ltd "Caltex", Chevron South Africa (Pty) Ltd "Chevron" and the Department of Energy "The Department".

 

[3]           The eviction proceedings arise from a franchise agreement of the sale of fuel entered into between Chamdor and Caltex which later changed its name to Chevron. Chevron has ceded its rights in the agreement to Phambili, which now wants to evict Chamdor from the business premises.

[4]           Phambili also seeks an order condoning the late filing of its replying affidavit.

[5]           Both applications are opposed.

 

THE CONDONATION APPLICATION

[6]           In opposition of the condonaiton application Chamdor raised the following issues:

 

6.1     The replying affidavit was filed five months after the filing of the_ answering affidavit.

6.2     The application for condonation is not in accordance with Rule 27(1) of the Uniform Rules in that it was not done on notice and no good cause has been shown as prescribed by the Rules.

6.3     It is inappropriate for Phambili to make out a case for condonation in a replying affidavit.

6.4     The application for condonation is based on hearsay evidence. In the replying affidavit, the deponent, Mr Thando Masuku ("Masuku") states that the reason why the replying affidavit was not filed in time, was because Mr Ashraf Sadick (“Sadie”) suffered a heart attack on 16 November 2015 and was hospitalised. The supporting affidavit of Sadick was attached to the replying affidavit. Sadick does not confirm having read Masuku's replying affidavit in the supporting affidavit. He also does not confirm that he suffered a heart attack and/or was hospitalised.

6.5     Masuku further states in the replying affidavit that the Phambili's attorneys of record closed for the December 2015 recess period on 11 December 2015 and reopened on 11 January 2016. The replying affidavit was due at least two weeks prior to the closing of the firm. No explanation was given why the replying affidavit could not be filed before 11 December 2015. There is no confirmatory affidavit from Phambili's attorneys regarding the issue.

6.6     There was also an issue about counsel for Phambili not having been available at the time to deal with the matter.

6.7     Over and above this, there was an issue about a further replying affidavit filed by Phambili to Chamdor's affidavit opposing the condonation application.

 

[7]        The granting of the condonation application is in the discretion of the court. Phambili chose to include averments relating to the condonation application in the replying affidavit. It deprived itself of the opportunity to reply to the allegations made in the affidavit opposing the application for condonation. It cannot therefore be permitted to cure this defect by filing a further affidavit (the so-called " replying affidavit') to the Chamdor's affidavit opposing the application for condonation. This affidavit was also filed without an application for condonation or leave of the court. I agree that the Rules are there for the court and the parties are to comply and adhere to them. Leave to file the so-called replying affidavit to Chamdor's affidavit opposing the condonation application is therefore refused with costs.

[8]        As regards the application for condonation for the late filing of the Phambili's replying affidavit, it is my view that it is in the interest of justice that all issues should be ventilated. This finding should not be seen as allowing the parties to disregard court rules. I am inclined to award costs against Phambili on a punitive scale given the way this matter was handled.

 

BACKGROUND

[9]        During or about July 2001 Camdor and Caltex entered into a written franchise agreement (the "agreement'). The agreement included a base schedule, a lease, suretyship agreements, a confidentiality undertaking, a site management agreement and an equipment lease agreement.

[10]      The commencement date of the agreement was 1 August 2001 and provision was made for the agreement to endure for a period of 5 (five) years plus 2 (two) further option periods of 5 (five) years each, option 1 (one) commencing on 1 August 2006 and option 2 (two) on 1 August 2011. The agreement would finally terminate on 31 July 2016.

[11]      It is common cause that Chamdor is a licensed retailer and Caltex a licensed wholesaler of petroleum products as defined in the Petroleum Products Act, Act No. 120 of 1977 (“the Act”). The material terms of the agreement were as follows:

11.1   Caltex granted Chamdor a license for the duration of the contract to operate the franchise business from the premises. The license commenced from 1 August 2001 and endured subject to the provisions of the agreement for a period of 15 (fifteen) years divided into 3 (three) periods of 5 (five) years each.

11.2   Chamdor was obliged to meet the performance standards required in terms of the agreement and the Retail Outlet Standard Manual.

11.3  Chamdor shall purchase exclusively and directly from Caltex in terms of a Caltex invoice all Caltex petroleum products (including lubricants) which it may require.

11.4  Chamdor was liable for the costs associated with the franchise business, including but not limited to the costs of water, electricity, refuse , sewerage, increases in rates and taxes above the base level in effect at the commencement date of the agreement, levied in respect of the premises and any costs for the provision and/or use of any services associated with its use and occupation of the premises.

11.5  Caltex leased and Chamdor hired the premises. The rental payable was stipulated in the base schedule and the lease endured for a period of 15 (fifteen) years, divided into periods of 5 (five) years each.

[12]        On or about 15 August 2005, by special resolution, Caltex changed its name to Chevron South Africa (Pty) Ltd ("Chevron" ).

[13]       During or about September 2012, Chevron ceded and assigned its rights and obligations in terms of the franchise agreement, to Phambili in terms of a written assignment agreement (the “assignment agreement”) between Chevron and Phambili.

[14]        Over a period of time various disputes arose between Phambili and Chamdor.

[15]       In a letter from Chamdor's attorneys to Phambili dated 27 February 2015, annexure" FP18", Chamdor's attorneys raised some concerns which are evident that since Phambili took over from Chevron as a petroleum wholesalers there were problems in the relationship between Chamdor and Phambili. The disputes could not be resolved. Instead Phambili refused to supply fuel to Chamdor as it contended that Chamdor failed to order 38 000 litres of fuel in breach of the agreement. Chamdor contends that the withholding of Phambili's supply of fuel to it rendered its business operations to fail and this led to the invocation of the breach clause in the agreement.

[16]        Phambili also had concerns that Chamdor was buying fuel from third parties which allegations were disputed by Chamdor. On 20 April 2015 Phambili's attorneys addressed a letter to Chamdor's attorneys cancelling the franchise agreement and demanding that Chamdor should vacate the premises.

[17]        Chamdor disputed the Phambili's right to cancel the agreement and it remained in occupation of the premises, to date.

[18]        On 29 July 2016 Chamdor's attorneys addressed a letter to the Department requesting a referral of a dispute to arbitration in terms of section 128 of the Petroleum Products Amendment Act, 58 of 2003 (“the Amendment Act”).

[19]        On 8 March 2017 the Director for Commercial and Charter Compliance, Mr Kekana, from the Department replied to the letter from Chamdor's attorneys dated 29 July 2016. In the letter Mr Kekana advised Chamdor's attorneys that his office has noted the contents of their letter and that subsequent to its receipt, he also received correspondence from Phambili's attorneys. He invited the Chamdor's attorneys to reply to the representations made by the Phambili's attorneys.

[20]        On 15 March 2017 Chamdor's attorneys received a notice of set down for the eviction application. They then addressed a letter to the Phambili's attorneys advising them that they have requested the Department to refer the matter to arbitration. The letter further stated that ever since they had received a letter from the Department dated 8 March 2017 advising them to reply to the representations from Phambili's attorneys, they have not received the representations. Chamdor's attorneys further indicated that the application was prematurely set down for 18 April 2017 as the Department has not made a decision regarding their request. They also requested Phambili's attorneys to provide them with their representations which were submitted to the Department.

[21]        The Phambil'is attorneys replied to Chamdor's attorneys' letter dated 22 March 2017 on 24 March 2017 wherein the following were stated:

" 3.       We place the following on record:

3.1     the Notice of Motion which forms the subject matter of the proceedings set down for 18 April 2017 was issued as long ago as 14 October 2015, and

3.2      your client's Answering Affidavit was served on our office on 20 November 2015.

4.       Our representations are before the High Court under Case Number 82577/2015.

5.       Your request for Arbitration was in any event, only submitted on 16 July 2016.

6.       Your client has no grounds to apply for arbitration in terms of section 128 which, you should have realised by now, the controller is not at liberty to refer the matter to arbitration, by virtue of the fact that there is pending litigation and the matter is therefore sub judice.

7.       Based on the aforesaid we are once again of the view that your actions are disingenuous and that you are purposefully attempting to delay this matter.

8.       We will proceed on 18 April 2017 and any request for a postponement will be met with a virilis defensio.

9.       Our client's rights remain strictly reserved.

 

Yours faithfully

VENN & MULLER

J M KOTZE

 

jmurrayk@vodamail.co.za

 

COPY TO:     Department of Energy

MrN Kekana

Nguako.kekana@energy.gov.za

 

MrB Ncanywa

Bulelani.ncanywa@energ y.gov.za"

[22]        At the commencement of the hearing, I granted leave for the filing of a Supplementary Answering Affidavit by Chamdor which sought to introduce documents which were common cause between the parties.

THE ISSUES

[23]        Whether the application must be stayed pending finalisation of the disputes at arbitration.

[24]        Whether the respondent ought to be evicted from the premises.

 

THE LAW

[25]        Section 128 of the Act ("128") re ads:

 

" Arbitration". -

 

(1)     The Controller of Petroleum Products may on request by a licenced retailer alleging an unfair or unreasonable contractual practice by a licenced wholesaler, or vice versa, require by notice in writing to the parties concerned, that the parties submit the matter to arbitration.

(2)     An arbitration contemplated in subsection (1) shall be heard -

 

(a)       by an arbitrator chosen by the parties concerned; and

 

(b)       in accordance with the rules agreed between the parties.

 

(3)       If the parties fail to reach an agreement regarding the arbitrator, or the applicable rules, within 14 days of receipt of the notice contemplated in subsection (1) -

 

(a)     the Controller of Petroleum Products must upon notification of such failure, appoint a suitable person to act as arbitrator; and

 

(b)       the arbitrator must determine the applicable rules.

 

(4)       An arbitrator contemplated in subsection (2) or (3) -

(a)     shall determine whether the alleged contractual practices concerned are unfair or unreasonable and, if so, shall make such award as he or she deems necessary to correct such practice; and

(b)     shall determine whether the allegations giving rise to the arbitration were frivolous or capricious and, if so, shall make such award as he or she deems necessary to compensate any party affected by such allegations.

 

(5)      Any award made by an arbitrator contemplated in this section shall be final and binding upon the parties concerned and may, at the arbitrator's discretion, include an order as to costs to be borne by one or more of the parties concerned."

 

[26]        One of the purposes of the Amendment Act is set out in its preamble and is, amongst others, "to promote transformation of the South African petroleum and liquid fuels industry''. Schedule 1 to the Amendment Act goes on to introduce an industry charter "on empowering historically disadvantaged South Africans in the petroleum and liquid fuels industry''. Unequal bargaining power in the petroleum industry is pervasive even in more developed countries such as our common law comparator, England, whose history of inequality pales in comparison with our own ( see The Business Zone 1010 CC t/a Emmarentia Convenience Centre v Engen Petroleum Limited and Others [2017] ZACC 2, para 47, "The Constitutional court case of Business Zone").

[27]      In South African Forestry Co Ltd v York Timbers Ltd 2005 (3) SA 323

(SCA), the court said the following at 338H-339D:

"This implied term, as formulated by SAFCOL, was said to have imposed an obligation on York to act in accordance with the dictates of reasonableness, fairness and good faith when SAFCOL exercised its rights in terms of clause 3.2 and 4.4 of the contracts.

 

York's answer to these contentions, which found favour with the court a quo, was that they were in conflict with the judgments of this court in Brisley v Drotsky 2002 (4) SA 1 (SCA) paragraphs [21] to [25] and [93] to [95] and Afrox Healthcare Bpk v Strydom 2002 6 SA 21 (SCA) in paragraphs [31] to [32]. In these cases it was held by this court that although abstract values such as good faith, reasonableness, fairness are fundamental to our law of contract, they do not constitute independent substantive rules that courts can employ to intervene in contractual relationships. These abstract values perform creative, informative and controlling functions through established rules of the law of contract. They cannot be acted upon by the court directly. Acceptance of the notion that judges can refuse to enforce a contractual provision merely because it offends their personal sense of fairness and equity will give rise to legal and commercial uncertainty. After all, it has been said that fairness and justice, like beauty, often lie in the eye of the beholder. In addition, it was held in Brisley and Afrox Healthcare that - within the protected limits of public policy that the courts have carefully developed, and consequent judicial control and contractual performance and enforcement - constitutional values such as dignity, equality and freedom require that courts approach their task of striking down or declining to enforce contracts that parties have freely concluded, with perspective restraint."

 

[28]        At paragraph 57 of his judgment in the Business Zone 1010 CC t/a Emmarentia Convenience Centre and the Controller of Petroleum Products [2014] 3 All SA 94, which was upheld by the Constitutional Court, "The High Court case of Business Zone", the learned Prinsloo J remarked as follows:

"I find myself in respectful agreement, by and large, with detailed submissions made in this regard by counsel for the applicant in their comprehensive heads of argument, which I briefly summarises: 128 introduced the concepts ('abstract values' in the words of the learned Judge of Appeal in York) of fairness and reasonableness into the contractual relationship between licensed fuel retailers and wholesalers. The legislature felt compelled to intervene in the relationship between retailers and wholesalers. Prior to March 2006 (when the Amendment Act came into operation) the contractual relationship between a fuel retailer and a fuel wholesaler would have been governed by the common law and in accordance with the law of contract.

 

The legislature appears to have concluded that it was necessary to regulate agreements between fuel retailers and fuel wholesalers to prevent the parties from treating one another unfairly or unreasonably, and to address the historical imbalance between the various stakeholders in the fuel industry.

 

Generally, fuel retailers are individuals (conducting business in their personal capacity or through the vehicle of a corporate entity). The fuel wholesalers on the other hand, are generally large multinational corporations which are in a position to dictate terms (often of a Draconian nature) of the agreements concluded with the fuel retailers. The agreements concluded are generally all-encompassing and far­ reaching. The Lease and Operation of Service Station Agreement in this matter prescribes to the applicant terms relating to a myriad of subjects. Engen reserves the right to terminate the supply of fuel to the applicant in the event of the latter failing to comply with any of the terms of the agreement. 128 provides the parties to such an agreement with a forum to ventilate any disagreements arising out of their relationship.

 

Importantly, it is submitted by counsel for the applicant, and I agree with them, that the forum provided by 128 has not been established in order to determine contractual disputes between the parties. The courts are already vested with this power.

 

The forum has been established under 128 to determine 'unfair or unreasonable contractual practices' which may include unfair or unreasonable implementation of contractual terms or the inclusion of unfair or unreasonable contractual terms in the agreement.

 

As appears from York, a court generally has no power to determine the fairness or reasonableness of a contractual term or the fairness and reasonableness and good faith of the implementation of a contractual practice and the courts are not vested with any remedial power in terms of 128. The 128 arbitrator, on the other hand, has extensive remedial powers and is vested with the discretion to make an award which he or she deems necessary to 'correct such practice'. - 12B(4)(a)."

 

[29]        Paragraph 58 of the Constitutional Court judgment in Business Zone reads :

 

"Section 12B arbitration presents an additional route for licensed retailers and wholesalers alike to have their disputes adjudicated quicker within rules and processes of their own design. Section 12B offers a statutory guarantee of a mechanism that has become ubiquitous in contract, which may otherwise not exist possibly due to the unequal bargaining position retailers vis-a-vis wholesalers find themselves in. Reliance on the section 128 arbitration procedure can more accurately be understood as arbitration is ordinarily in contract: it suspends the institution of court litigation ..."

 

[30]      This will of course depend on the specific contractual provisions agreed upon between the contracting parties. However, the general position is stated in section 6 of the Arbitration Act 42 of 1965, which provides that:

 

"Stay of legal proceedings where there is an arbitration agreement -

(1)       If any party to an arbitration agreement commences any legal proceedings in any court (including any inferior court) against any other party to the agreement in respect of any matter agreed to be referred to arbitration, any party to such legal proceedings may at any time after entering. appearance but before delivering any pleadings or taking any other steps in the proceedings, apply to that court for a stay of such proceedings.

 

(2)       If on any such application the court is satisfied that there is no sufficient reason why the dispute should not be referred to arbitration in accordance with the agreement, the court may make an order staying such proceedings subject to such terms and conditions as it may consider just."

 

THE PARTIES' CONTENTIONS

 

THE RESPONDENT

 

Points in limine

 

[31]        Chamdor raised the following points in limine:

31.1      In its application for eviction, Phambili requests the court to look at the agreement. Clause 20.6 of the agreement states that the parties should refer their disputes to arbitration.

31.2      At the time the application was launched, the agreement was still in force and effect. Phambili went against the agreement and launched eviction proceedings. The proceedings should be stayed pending the finalisation of the arbitration. It has initiated the arbitration proceedings by referring the matter to the Department in terms of section 128 of the Amendment Act. I was referred to the Constitutional Court judgment in Business Zone and asked to look at how the court dealt with the effect of a referral to arbitration in terms of section 128.

31.3      It was contended that the issues raised in this matter are the same as those raised in the Business Zone matter. Phambili in this matter refuses to supply it with petroleum products while it contends that it has failed to buy a specific quantity of the product and therefore it has cancelled the agreement, so it was accordingly argued.

31.4       In challenging Phambili's contention that there is no contract and therefore no need to go to arbitration, I was further referred to paragraph 77 of the Constitutional Court judgment in Business Zone. The paragraph reads:

 

"77        Nevertheless, the fact that the dispute relating to the validity of the termination of the contract is pending in the Johannesburg High Court is not a ground for the Controller to refuse a referral in terms of section 12B of the Act. The interpretation advanced by Engen, that a Controller may not refer a dispute where a contract has been cancelled, would defeat the purpose of arbitration under section 128. In that case, the retailers would be unable to access their right of referral as Engen or similar wholesalers would oust the jurisdiction of the arbitrator by cancelling the contracts. Wholesalers like Engen would hold dealers to ransom under the threat of cancellation."

 

31.5        I was also referred to annexure FP 18, which I mentioned earlier in the judgment.

31.6       It was further contended that Chamdor has been conducting the operation at the premises for over 40 years. It has built a name for itself in the retail industry. It found a buyer who in terms of the agreement, if approved, would enable it to sell to it. The buyer was approved by Phambili. Chamdor was going to benefit, but Phambili reneged on the contract.

31.7       The application involves many issues which Chamdor submits this court is not best placed to deal with.

31.8       The fact that the agreement has lapsed due to effluxion of time was as a result of Phambili who decided to come to court.

31.9       Phambili relies on the addendum that was not signed by Chamdor.

31.10     Chamdor has been insistent that the matter should be referred to a round table or arbitration but Phambili decided to come to court.

31.11     Phambili must continue to supply Chamdor with fuel and the application should be stayed pending arbitration, alternatively it should be dismissed.

 

THE APPLICANT

[32]        Phambili made the following submissions:

32.1       It is common cause between the parties that there is no agreement. The parties agree that the contract has come to an end. Chamdor must therefore vacate the premises.

32.2       The fact that it insists on the eviction order, does not take away the Chamdor's right to refer the matter to arbitration.

32.3       All the complaints raised in FP 18 can still be dealt with at arbitration.

32.4       The difference between this matter and the Business Zone Constitutional Court case is that in that matter, there was a second cancellation by Engen and the court held that the second cancellation may also be dealt with at the arbitration.

32.5       The rights of Chamdor are not taken away if it is evicted. It does not have any right to be at the premises.

32.6       In terms of the provisions of section 6 of the Arbitration Act Chamdor does not have an absolute right to refer the matter to arbitration.

32.7       The section 128 was only served a day prior to the lapsing of the contract.

 

ANALYSIS

[33]        Annexure "FP 18" is a letter dated 27 February 2015 from Chamdor's attorneys to Phambili and it reads:

 

"CHAMDOR SERVICE STATIONIFUTURE PHAMBILI PETROLEUM (PTY) LTD

 

We refer to our email of 24 February 2015 to which we have not received the courtesy of a response.

 

We confirm our instructions as follows:

 

1.       That your conduct throughout the entire time you had introduced yourselves to our client, you have not conducted yourselves in the spirit of the franchise agreement which our client has with Chevron in that you:

 

1.1   have failed to attend to the maintenance of the premises despite numerous request by our client to yourselves.

 

1.2   have failed to attend to the repairs of the compressor despite numerous requests by our client to yourselves.

 

1.3   have failed to reimburse our client for the generator installed at the instance and specifications of the franchisor, unless such is for the franchisor and not for yourselves.

1.4   have failed to reimburse our client for charges on the property which our client was not liable for.

 

1.5   have on more than one occasion, unreasonably, prevented our client from selling his rights to the franchise by unreasonably asking a ridiculous price, to which you are not entitled.

 

1.6   unilaterally amended or attempted to amend the franchise agreement which our client has with the franchisor and have used bullying tactics to invoke such amendments without negotiation.

 

2.        You are now applying bullying tactics against our client by withholding its supplies of fuel, thereby rendering its business to fail and leading yourselves to make the breach clause of the agreement for failure to operate the station and bringing the franchisor's brand into disrepute.

 

3.        The above conduct would then lead to our client being removed from operating the filling station.

 

4.       You have failed to carry out your duties on behalf of the franchisor specifically to ensure that the needs of the franchisee to operate the station and uphold the franchisor's brand are affected.

 

Kindly note that your failure to confirm and deliver fuel to our client is a breach of the franchise agreement and you are accordingly requested to correct same within 48 hours herein, failing which our client reserves its rights to pursue the matter further.

 

We are also instructed to enquire from yourselves the reasons why you have prevented the sale of the station to our client's recent buyer.

 

We now urgently await to hear from you.

Yours faithfully

M S Attomeys

M Seleke"

 

[34]        Annexure "A" attached to the Supplementary Answering Affidavit filed by Chamdor dated 29 July 2016 reads:

 

" ATTENTION:          TSELISO MAQUBELA

THE DEPARTMENT OF ENERGY

PER EMAIL:              Tseliso.Mqubela@ene rgv.gov.za

CC:                             GOSETSEONE LEKETI

THE DEPARTMENT OF ENERGY

PER EMAIL:              Gosetseone.Leketi@energy.gov.za

CC:                             WELA MNIKl

CHEVRON SOUTH AFRICA

PER EMAIL:              Wmni@chevron.com

 

Dear Sir

 

REQUEST FOR ARBITRATION IN TERMS OF SECTION 128 OF THE PETROLEUM PRODUCTS AMENDMENT ACT 2003 (ACT 58 OF 2003)

 

FUTURE PHAMBILI PETROLEUM (PTY) LTD t/a CALTEX NORTH WEST MARKETER, SELLING OF CALTEX CHAMDOR SERVICE STATION FRANCHISE OPERATIONS AND COLLECTING PURCHASE PRICE DUE TO THE OUTGOING RETAILER

 

We confirm that we act on behalf of Chamdor Service Station CC, a retailer of Caltex and/or Future Phambili Petroleum (Pty) Ltd t/a Caltex North West branded marketer.

 

We confirm our instructions as follows:

 

1.       Our client has been operating the franchise business as a Caltex (Chevron) Retailer for a period of over 40 years.

 

2.      Our client has been offered and accepted the purchase price from Zain Adams as far back as 2014.

 

3.       The branded marketer approved the purchaser, according to the agreement, however, refused to grant Zain Adams the lease and subsequent to that, it appears that the branded marketer has now on its own offered Zain Adams the lease and franchise at another site.

 

4.       It must be noted that Zain Adams has a valid agreement with our client.

 

5.       The branded marketer has unfairly treated our client in that it has:

 

5.1      Breached the contract to supply fuel to our client;

 

5.2      Failed to maintain amongst others, the premises, the equipment, cameras, smart fuel card systems, resulting in our client suffering losses.

6.       The branded marketer has failed to correct its conduct despite numerous requests to do so.

 

7.       The branded marketer and/or Chevron has been informed of this conduct, to no avail.

 

8.       The branded marketer has acted maliciously against our client on numerous occasions.

 

We have now been instructed to request your intervention in the form of arbitration. The branded marketer has indicated to our client that it will not renew the agreement on 31 July 2016, nor has it offered our client its value for the business.

 

We now await to hear from you.

 

Yours faithfully

 

M S Attorneys

M Seleke"

 

[35]        Clause 20 of the agreement provides:

"20.1   Should any dispute arise between the parties concerning this agreement, the dispute shall be resolved in terms of the procedures set out in this clause.

 

20.2     The parties shall first try and resolve the dispute by negotiation. This process entails that one party invites the other in writing to meet and attempt to resolve the dispute within 7 (seven) days from the date of the written invitation.

 

20.3      If the dispute is not resolved by negotiations within the 7 (seven) day period or such further period as the parties may agree, either party shall submit the dispute to the Arbitration Foundation of South Africa ('AFSA') for mediation by a single arbitrator upon terms set by the AFSA Secretariat.

 

20.4     In the event that the dispute is not resolved within a period of 21 (twenty one) days from the date of submission or in the event that the mediator certifies in writing, prior to the expiry of the 21 day period, that he is unable to resolve the dispute, it shall, if arbitrable in Jaw, be resolved by a single arbitrator in accordance with the AFSA Rules for expedited arbitration.

 

20.5     It shall be competent for the arbitrator to issue an order of specific performance compelling either party to comply with its obligations in terms of this agreement.

 

20.6     In the event of the Franchisor instituting legal collection proceedings or eviction proceedings out of a court of law against the franchisee and the franchisee filing with such court a notice of its intention to oppose such proceedings, either party shall be entitled to apply to such court for a stay of such proceedings pending resolution of the dispute by means of arbitration as envisaged in sub-clause 4 above.

 

20.7      In the event that the franchisee fails or refuses to vacate the premises pending the determination of a dispute concerning the cancellation of this agreement by the franchisor, the franchisee shall, pending resolution of the dispute in terms of this clause, pay to the franchisor all money payable in terms of this agreement and observe all the other terms and conditions of this agreement as if the agreement was still in force.

 

20.8     The provisions of this clause shall not prevent either party from seeking urgent relief from any competent court.

 

20.9       The provisions of this clause shall survive termination of this agreement.

 

[36]        It appears from the papers that there was never any attempt to resolve the disputes in terms of clause 20 of the agreement. Phambili launched an application for eviction without invoking the provisions of clause 20 despite the fact that Chamdor requested a round table discussion or a referral of the disputes to arbitration. A reading of FP 18 shows that there was a prior letter dated 24 February 2015 which Phambili failed to reply. Now Phambili contends that because the contract between the parties has lapsed, Chamdor has to surrender the premises to it and that its right to refer the matter to arbitration is not taken away if it is evicted.

[37]        I do not agree with Phambili in that the issue of eviction emanates from the ongoing disputes between the parties. It cannot therefore be separated from the disputes that Chamdor requests should be referred to arbitration. I further agree with Chamdor's contention that Phambili cannot rely on the lapse of the agreement. When the eviction application was launched, the agreement was still in force.

[38]        Clause 20 of the agreement makes provision for resolution of the disputes that arose from the agreement through negotiation and arbitration. It was never followed. Chamdor has now, prior to the matter being adjudicated in a court of law, referred the matter to arbitration under s 128 of the Amendment Act. It has made allegations of unfair or unreasonable contractual practice by Phambili, a licensed wholesale,r to the Controller of Petroleum Products. I agree that a referral in terms of s 128 is not absolute, however, the purpose of s 126 as highlighted earlier in the judgment cannot be ignored. In the Business Zone matter where the same issues were raised, the court was clear that the inherent value of section 128 enabling a party to resolve a dispute through arbitration rather than court proceedings must be recognised. Sight should not be lost that courts generally have no power to determine the fairness or reasonableness of a contractual term or the fairness, reasonableness and good faith of the implementation of a contractual practice. They are not vested with any remedial power in terms of section 128. The section 128 arbitrator has extensive powers and is vested with the discretion to make an award which he or she deems necessary to "correct such practice" (see s 128(4)(a), Business Zone 1010 CC t/a Emmarentia Convenience Centre and the Controller of Petroleum Products,

the High Court matter, para 56).

[39]        There is no merit in the contention by Phambili that the controller is not at liberty to refer the matter to arbitration in terms of section 128 because there is pending litigation (see Business Zone CC 1010 tla Emmarentia Convenience Centre v Engen Petroleum Limited and Others [2017] ZACC 2).

[40]        Chamdor has stated in its answering affidavit (paragraph 16 on page 230 of the papers) its intention to refer the dispute to arbitration and after referring the dispute under s 128, Phambili set the matter down for hearing. This in my view is an attempt to defeat the purpose of arbitration under section 128.

[41]        The agreement between the parties has an arbitration clause (clause 20). Chamdor has referred the disputes in terms of section 128. There is no harm in staying the proceedings to give effect to the section 128 proceedings to run its course.

[42]        It was submitted on behalf of Chamdor that Phambili should continue to supply the petroleum products to it. It is more than a year that Chamdor has not been getting any supply of fuel from Phambili. This dispute is part of the disputes that will be before the arbitrator. The arbitrator is best placed to deal with the matter. I am under the circumstances not inclined to entertain the eviction application but to rather to stay the proceedings pending the outcome of the s 128 of the arbitration proceedings.

[43]        In the result I make the following order:

43.1     This application is stayed pending the outcome of the s 128 arbitration proceedings.

43.2    The applicant is ordered to pay the wasted costs of the application for the late filing of its replying affidavit on a scale as between attorney and client.

43.3     Leave of the filing of a further affidavit by the applicant in reply to the affidavit of the respondent opposing the condonation application is dismissed with costs.

43.4     The costs of the entire application are reserved pending the outcome of the s 128 of the arbitration proceedings.

 

 

 

 

M J TEFFO

JUDGE OF THE HIGH COURT

GAUTENG DIVISION, PRETORIA

 

APPEARANCES

 

For the Applicant                            Adv C Harms

Instructed by                                   Venn & Muller Attorneys

For the Respondent                        Adv T Moretlwe

Instructed by                                  Motlatsi Seleke Attorneys

Date heard                                      20 April 2017

Date handed down                         10 November 2017

 

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