Desert Oil Proprietary Limited v Griekwalandwes Korporatief Beperk t/a Vaalrivier Diensstasie (132/2020) [2020] ZANCHC 37 (22 June 2020)

IN THE HIGH COURT OF SOUTH AFRICA

(NORTHERN CAPE DIVISION, KIMBERLY)

Case No: 132/2020

Matter Heard: 12/06/2020

Delivered: 22/06/2020

In the appeal of:

DESERT OIL PROPRIETARY LIMITED

Applicant

(Registration Number: 2009/016827/07)

and

GRIEKWALANDWES KORPORATIEF BEPERK

Respondent

t/a VAALRIVIER DIENSSTASSIE

(Registration Number: 1997/022252/06)

JUDGEMENT

MAKOTI AJ

[1] The applicant came before court seeking urgent interim interdictory orders against the respondent. Initially the applicant asked for a Rule Nisi calling upon the respondent to show cause why the interdictory orders sought should not be made final. The application is opposed and the matter has since reached a state of development where the parties have filed their full sets of papers and have appeared in this court, albeit virtual court settings, to make their respective submissions.

[2] When the application came before court for the first time on 31 January 2020 it was postponed to 19 February 2020 by agreement

between the parties so as to enable the exchange affidavits and heads of argument in term of the order that was granted by Phatsoane J. In that court appearance the respondent undertook to not interfere with or remove the applicant’s underground storage tanks, which are installed on its (respondent’s) land. The application has been postponed several times since then, including for reasons associated with the national lockdown that was pronounced by the State President. By the time this application was heard the issue of the Rule Nisi had fallen away and the matter was dealt with in terms of the amended notice of motion.

[3] During their exchange of affidavits the parties raised a number of technical points against each other. However, when the matter came before me the parties had resolved that it would benefit the case and their respective interests if the application could be adjudicated on the merits, thus abandoning their respective technical points. Amongst the abandoned technical points was the question of urgency.

[4] The essence of this application is that the applicant requires a temporary interdict to be issued against the respondent pending the finalisation of action proceedings which the applicant intends to institute within a period of 30 days from the date of the order of this court. Paragraph 2.1 of the amended notice of motion now reads as follows:

“2.1 That the respondent be interdicted and restrained from handling, moving, interfering with and/or removing all or any of the underground storage tanks (“USTs”), pipelines and other equipment, belonging to the applicant and installed by or on behalf of Caltex Oil SA (Pty) Ltd on the premises of the respondent, known as Vaalrivier Diensstassie Erf 624, Douglas, District Herbert, Kimberley (“The equipment”), pending final determination of an action to be brought by the applicant against the respondent for declaratory and ancillary relief.”

Legal principles for interim interdicts

[5] Since the test was laid out in Setlogelo,[1] the requirements for interim interdicts have become settled in our law. The test continues to be a useful and ready tool to the bench and practitioners alike in the grant of interdicts. An interim interdict, it has to be emphasized, is an extra-ordinary remedy within the discretion of the court. An applicant seeking

interim interdict is required to show the existence of a prima facie right, which right deserves protection from the court.[2] It has become trite that prima facie right entails a right which, if not protected by an interdict, irreparable harm would ensue.[3]

[6] Before this court the parties further narrowed the issues in dispute. They were in agreement that the question to be answered was whether the applicant had discharged the requirement to prove the existence of a prima facie right. In similar vein, this court will deal with the application by considering whether the applicant has prima facie right protectable by interim interdict, or otherwise. If it is found that the applicant has shown the existence of a prima facie right, then the application will succeed as the parties were in agreement that that issue will be determinative of the dispute. Of course, the court will still have to consider and comment on the other requirements.

[7] In Ferreira v Levin NO; Vryenhoek v Powell NO,[4] an authority which found favour and application from the Constitutional Court, it was held by the court as follows:

“It has, up to now, been accepted that in order to establish a prima facie right entitling an applicant to an interim interdict, an applicant has to make out a case that he is entitled to final relief. If on the facts alleged by the applicant and the undisputed facts alleged by the respondent a court would not be able to grant final relief, the applicant has not established a prima facie right and is not entitled to interim protection.” (Emphasis added)

[7] The question whether the applicant has proven the existence of a prima facie right will be answered through consideration of the facts. As indicated above and as the law dictates, this requirement is to be considered alongside the others which are: (a) a well-grounded apprehension of irreparable harm; (b) that balance of convenience favours the granting of the relief sought; and (c) that the applicant has no alternative remedy other than the one presently sought.

[8] Ms Davis emphasised that, for instance, the applicant will indeed suffer irreparable harm should the court not come to its rescue to temporarily interdict the respondent from removing its USTs and other equipment from the premises. Mr Gillilland for the respondent did not argue strongly on this issue. I will briefly revisit this question after considering whether the facts support a conclusion that the applicant has proven the existence of a prima facie right.

Summary of facts

[7] The applicant predicated this matter on the terms of a written contract that was concluded on 1 March 2000 between Caltex Oil South Africa (Pty) Ltd (‘Caltex’) and Johannes Wilhelmus Oldewage (‘Oldewage’). In term of the agreement Caltex was awarded the exclusive rights to supply oil and petroleum products to Oldewage at the premises mentioned in the above quoted excerpt, which is known as the Vaal River Service Station situated at Erf 624 Douglas (‘the premises’).

[8] The existence of the agreement between Caltex and Oldewage is a matter of common cause between the parties. Also, the parties are ad idem about the material terms of the agreement, and their implications. Save as it may become necessary, therefore, I will not belabour this judgement by repetition of the full spectrum of the material terms of the agreement. What is in dispute is whether the agreement remains extant and whether it is binding on the parties is this matter. Expectedly, the applicant contends that the agreement still exists and that it binds the parties, while the respondent argues that there is not contract between them.

[9] Without mentioning specific dates, the applicant alleged that the rights and obligations in terms of the agreement were ceded by Caltex to itself and by Oldewage to the respondent. Although the respondent does not gainsay that Caltex ceded its rights in terms of the agreement to the applicant, it disputes that Oldewage ever ceded his right and obligations to itself. Through the denial of a cession from Oldewage to the respondent, a material dispute of facts has arisen between the parties. That appears to be the reason why the applicant intends to follow action proceedings, which are still to be issued. This court does not have to deal with the question whether the cession is in existence as it is the trial court will be required to grapple with and resolve that issue. There is enough evidence for this court to determine the issue(s) at hand.

[10] The parties are in agreement that the original term of the agreement, together with the extension for a period of five years, have already elapsed by effluxion of time. The applicant relies on the provisions of clause 1(b) of the agreement in its contention that the agreement continues to exists. The relevant clause 1(b) reads as follows:

“(b) At the end of the period specified in paragraph (a) above or any extension thereof, the terms of this Agreement shall continue to be of full force and effect provided that, at or after that time, either of the parties hereto may finally terminate this Agreement after giving thirty (30) days’ written notice thereof to the other.” (Emphasis added)

[11] The applicant’s case is that the 2000 agreement continues to exist between the parties in line with clause 1(b), supra, in that none of the parties ever took steps to finally terminate it. From the opposite side the respondent contends that the purported

agreement never existed between the parties and, as a result, it is legally impossible that there could have been any extension.

[12] In the course of time from 2012 till early in 2019 the parties have been in discussions to extend the agreement. Several letters of intent have been exchanged between the parties, however, only one of them dated 16 January 2014 (‘the 2014 Letter of Intent’) was signed to evince acceptance of its specific terms. Apart from the terms of the agreement, the applicant also relies on the contents of this letter to advance its case. This is so because it is this letter which first made reference to the existence of a cession between Oldewage and the respondent. Further, this letter reveals that the parties considered themselves bound by the full terms of the agreement. This can be discerned from the third unnumbered paragraph of the letter, which stipulates that:

“Further to the communication sent to you by Desert Oil on 18 November 2013 concerning the new Regulatory Accounting System to be adopted by the Department of Energy, and the terms of your existing contract with Desert Oil, Desert Oil proposes to enter into a new supply agreement (the New Agreement) with you, the Operator, for purposes, inter alia, of the continued supply by Desert Oil of Chevron petroleum products to the Operator, the replacement by Desert Oil of the existing underground storage tanks (“USTs”) as well as certain additional capital expenditure to be undertaken by Desert Oil at the Property. This New Agreement shall be concluded between the Operator and Desert Oil within 60 (sixty) days of the signature by the parties of this

Letter of Intent.”

[13] As indicated the parties signed this 2014 Letter of Intent, which is loaded with information, including: (1) that there is an already existing agreement; (2) it is a supply agreement for petroleum products from the applicant to the respondent; and (3) the intention of the parties was to move away from the past by concluding a new agreement for their continued relationship. Cession or no cession from Oldewage to the respondent, that the parties were in some form of contractual relationship is a matter that is common cause. What is in dispute pertains to nature of their relationship and whether it was governed in terms of the agreement. Our law recognises contracts, whether written or oral. If there exists a valid agreement of whatever form, the court, likewise the parties, should give it its intended effect.

[14] Clause 1.1 of the 2014 Letter of Intent suggests that the parties’ existing agreement, in whatever form, was to terminate on the day the new (intended) agreement was to take effect. The respondent sought to undermine the meaning and effect of this letter by suggesting that the signatory did not know if there was an existing agreement between the parties. This suggests that its signatory, one Mr Du Plessis, irresponsibly appended a signature on the Letter of Intent without ascertaining the truthfulness of its contents. I struggle to understand this explanation, taking into consideration the seniority of Du Plessis as a General Manager.

[15] What comes across from the evidence is that the parties believed, at least for some time, that their relationship was governed in terms of the agreement. The 2014 Letter of Intent makes this clear. With that understanding the parties continued to relate with each other in accordance with the provisions of the agreement. Crucially, the respondent also considered it bound not to purchase petroleum products from any other supplier, apparently due to Caltex having exclusive rights to supply such products. This ostensible obligation was fully given effect to by the respondent, for a number of years since the beginning of the year 2012.

[16] After many years of discussions failed to yield a long-term agreement between the parties, the respondent began courtship with another supplier of petroleum products, to which I shall refer only as TOTAL. On 11 March 2019 the respondent addressed a letter to the applicant titled ‘TERMINATION NOTICE: SUPPLY OF FUEL (DIESEL AND PETROL)’. In this letter the respondent informs the applicant that the business relationship is terminated with immediate effect for reasons inter alia that they did not have a written agreement. Prior to that there is no indication that the respondent ever disputed that the parties were governed in terms of the agreement. This letter is further confirmation of the existence of a contractual relationship, which, amongst others, precluded the respondent from purchasing petroleum supplies from a company other than the applicant.

[17] What stands out from the termination notice is that the respondent had already secured a supply agreement with TOTAL, though it is not mentioned in the letter, which was prepared to offer favourable rates. This led to the applicant contending that it be accorded its right of first refusal in terms of clause 9(c) of the agreement. As alluded to earlier, the respondent’s case is that it was not bound by the terms of the agreement as it was not a party to it. Thus, it contended that the right of first refusal in terms of clause 9(c) of the agreement was not applicable to it. The propriety of the right of first refusal is a matter to be dealt with by the trial court, if the action is eventually instituted.

[18] To bolster its contention, the respondent made reference to a different Letter of Intent that was addressed to it from the

applicant dated 25 May 2018. The submission was that, because this 2018 Letter of Intent does not make reference to the agreement, the court should conclude that it was common cause between the parties that the agreement was not applicable nor binding to them. I found nothing in the letter to disavow the understanding that the parties had expressed in the 2014 Letter of Intent. In any event, the respondent never accepted the conditions set out in the 2018 Letter of Intent.

[19] One of the indicators of the contractual status between the parties is conveyed in the email correspondences exchanged between Vivien Viviers (‘Viviers’) and Cathy Athatakis (‘Athatakis’) on 12 June 2018. In the earlier email Viviers states that to his knowledge there was no signed contract between the parties and requested Athatakis to confirm if that was correct. The response only indicated that the applicant has taken a cession from Caltex/Chevron. In a shift from what was stated in the 2014 Letter of Intent, the applicant did not mention the existence of a cession of rights and obligations from Oldewage to the respondent. It seems that as early as June 2018 there was some doubt as to the existence of a cession of Oldewage’s rights and obligations to the respondent. Nonetheless, that alone is not an indicator that the parties did not wilfully adopt or embrace the terms of the agreement. In my view, the parties acted with the requisite animus contrahendi and considered themselves bound by the terms of the agreement.

[20] Despite that there might not be a cession, in August 2014 the applicant spent an amount of R750,000 installing new underground

tanks and upgrading its equipment. In doing so it seems to have relied on the representations or confirmation that was made by the respondent in the 2014 Letter of Intent of the existence of a cession from Oldewage. The conduct of the parties, from 2012 until 2018, reveals that they operated with the bona fide understanding that they were bound by the terms of the agreement. When evaluating the conduct of the parties, the court is entitled to proceed from the premise that they were dealing with one another in good faith.[5]

[21] The parties’ conduct does not accord with the averments made by the respondent in its answering affidavit, that the nature of the agreement was simply that of purchase and sale, and nothing more. Something induced the applicant to upgrade the underground tanks and equipment to the tune of R750,000. I do not see how the applicant would have invested such amount of money if it had not been satisfied that the parties were governed by the terms of the agreement.

[22] The simple facts and the evidence in this matter point to the existence of a tacit agreement between the parties, to be bound by the terms of the agreement. Not only did parties make reference to the only written agreement, they acted as if they were bound by its terms. In such instances the court is called on to search through the full spectrum of the evidence for manifestation of conduct by the parties that are unequivocally consistent with consensus on the issue that is the root of the agreement. Also, the court investigates any contrary indication which cannot be reconciled with the existence of an agreement between the parties. At the conclusion of that exercise, if the party placing reliance on such an agreement is to succeed, the court must be satisfied, on a conspectus of all the evidence, that it is more probable than not that the parties were in agreement, and that a contract between them came into being in consequence of their agreement.[6]

[23] At the very least, the applicant was led into believing that the parties were indeed bound by the terms of the agreement. In this regard clause 1.1 of the agreement was quite telling in asserting that the existing agreement shall terminate on the commencement of a new contract that was intended to be concluded within 60 days. The existing agreement meaning none other than the agreement that was concluded in 2000 between the Caltex and Oldewage. The respondent’s contention in essence was that, since both parties had laboured under the assumed but mistaken impression that the contract was binding upon them, there was no animus contrahendi between them and the court should find in its favour. This argument must be rejected.[7] Not only did the parties embrace the agreement, they also acted in concert with its terms.

[24] Concerning the existence of tacit agreement, the court held in SA Ltd v Ocean Commodities Inc[8] as follows:

“In order to establish a tacit contract it is necessary to show, by a preponderance of probabilities, unequivocal conduct which is capable of no other reasonable interpretation than that the parties intended to, and did in fact, contract on the terms alleged. It must be proved that there was in fact consensus ad idem.”

[25] I am mindful that the authorities also state that a tacit contract should not be inferred unless there was proved unequivocal conduct capable of no other reasonable interpretation than that the parties intended to, and did in fact, contract on the terms alleged.[9] In this case it was not just conduct, but the parties made known their understanding of the fact that their business relationship was founded in the contract which they sought to terminate on commencement date of the new agreement. The attempt by the respondent

to disavow the meaning and effect of the 2014 Letter of Intent must be rejected out-rightly.

[26] Mr Gillilland for the respondent pointed to clauses 26 and 27 of the agreement and submitted that, when Oldewage’s lease terminated, that spelled an end to the agreement. Paragraph 27 specifically state that:

“It is furthermore recorded that the principal lease between the OPERATOR and the OWNERS of the premises, Messrs GWK Beperk, is renewable

annually and should the said lease be cancelled for any reason whatsoever or not be renewed, this Agreement will automatically be cancelled and be of no force and effect.”

[27] According to the respondent that should spell the end of the case because the lease between Oldewage as operator and GWK Beperk came to an end early in 2012. I part company with the respondent on this point. This is because despite the clear terms of clause 27 of the agreement, by 16 January 2014 the parties still considered themselves to be bound by its full terms. Not only that, but they continued to act in accordance with the terms of the agreement. It is clear that the argument pertaining to the provisions of clause 27 of the agreement is an afterthought. The parties did not consider the agreement to have been terminated in line with that clause.

[28] The existence of the Star Card Agreement does not change anything. So is the contention that the agreement could not apply in perpetuity. The terms of the agreement, which the parties embraced, entitled the parties to finally terminate it on notice. That was not done and, in line with the provisions of clause 1(b), the agreement would continue until one of the parties decided to finally terminate it by giving the requisite notice.

[29] I am satisfied that the applicant has shown the existence of a prima facie right that deserves protection. That the applicant failed to mention the agreement in the 2018 Letter of Intent does not negate

the fact that the parties’ conduct pointed to the existence of the agreement.

Further considerations

[30] The applicant has alleged that it is likely to suffer irreparable harm of the court does not grant the interim interdict. This is because the respondent has already indicated that it was going to remove the applicant’s underground storage tanks and equipment from the premises. That would pave way for TOTAL to install its storage tanks and equipment in furtherance of the newly formed contractual relationship with the respondent.

[31] Should that happen, the applicant’s interest in the business will be adversely and irreversibly affected. The respondent did not put up any strong contention to dispute that the applicant is likely to suffer irreparable harm. In City of Tshwane Metropolitan Council v AFRIFORUM and Another[10] the court held in relation to irreparable harm that:

“[59] Irreparable implies that the effects or consequences cannot be reversed or undone. Irreparable therefore highlights the irreversibility or permanency of the injury or harm. That would mean that a favourable outcome by the court reviewing allegedly objectionable conduct cannot make an order that would effectively undo the harm that would ensue should the interim order not be granted.” (Emphasis added)

[32] The authorities have made it clear that an interdict is appropriate where future injury is apprehended.[11] That is the case in this matter, as the applicant’s equipment is still installed in the premises. It is the removal of the underground storage tanks and the equipment that the applicant seeks to interdict in this application.

[33] On the question of balance of convenience one of the points that the respondent has raised in this regard is that this court should be given a guarantee that the applicant will be in a position to enter into an agreement with the respondent if it is given the terms of the TOTAL agreement. I am not able to fathom how this helps the case that the respondent seeks to make. Weighing the interests of the parties, I am satisfied that the applicant will suffer more if the interdict is not granted that what the respondent will suffer if the orders sought are granted. I find that the harm that the respondent is likely to suffer will be ameliorated by the fact that the applicant will still be supplying it with petrol and diesel products. On the flip side, should the interdict be refused, it will be ‘curtains’ for the applicant.

[34] In any case, the respondent did not put up any strong opposition to the applicant’s related allegations.

[35] Concerning the absence of an alternative remedy the applicant averred that the respondent has refused to give an undertaking that it will desist from the threatened removal of the underground storage tanks and equipment. Should the removal take place, the applicant will suffer the costs attendant for the removal. Additionally, there is threat to environmental damages that would not be reversible. The last issue that the applicant made mention of is the protection of the business relationship, which will be permanently lost should the storage tanks be removed and the business relationship between the respondent and TOTAL go ahead.

[36] In similar vein, the respondent did not put up any convincing rebuttal of these allegations. The applicant has further shown that an attempt to find amicable resolution of the matter drew blanks. This points to the absence of an alternative remedy for the applicant.

[37] The court is satisfied that the applicant has satisfied the requirements for interim relief. In light thereof, the application

must succeed. I am mindful that the applicant must be protected for a fair and reasonable length of time to allow it to issue the intended court action without unduly burdening the respondent. Thus, should the applicant fail to issue the action as ordered, the orders granted in this judgement shall automatically lapse.

[38] I accordingly make the following order:

“[1] The application succeeds; and

[2] The draft order marked “X” and attached hereto is made an order of the court.”

__________________________________

MAKOTI, MZ

ACTING JUDGE

NORTHERN CAPE HIGH COURT

KIMBERLEY

Representation:

For Applicant: Adv D M Davis SC

Cape Town

Briefed by: S G Korber Attorneys

For Respondent: Adv Gillilland

Bloemfontein Chambers

Briefed by: Van Der Waal Incorporated

[1] Setlogelo v Setlogelo 1914 AD 221.

[2] Kaputauza v Executive Committee of the Administration of the Hereros 1984 (4) SA 295 (SWA).

[3] National Treasury and Others v Opposition to Urban Tolling Alliance and Others 2012 (6) SA 223 (CC) at par [50].

[4] 1995 (2) SA 813 (W) at 817I-818B, 824I-J.

[5] South African Forestry Co Ltd v York Timbers Ltd 2005 (3) SA 323 (SCA) para 32.

[6] Joel Melamed and Hurwitz v Cleveland Estates (Pty) Ltd [1984] ZASCA 4; 1984 (3) SA 155 (A) at 164G-165G.

[7] Van Huyssteen N.O and Another v Milla Investment and Holding Company (593/16) [2017] ZASCA 84 (2 June 2017) at par 16.

[8] 1983 (1) SA 276 (AD) at p 292 B - C.

[9] Van den Berq v Tenner 1975 (2) SA 268 (AD), at 276 H - 277 B.

[10] City of Tshwane Metropolitan Municipality v Afriforum and Another 2016 (6) SA 279 (CC).

[11] Mandela v Falati 1995 (1) SA 251 (W) at 256I-257B.