Ebisu Dealers CC and Another v Chevron South Africa (Pty) Ltd (35042/2016) [2017] ZAGPPHC 393 (23 June 2017)

IN THE HIGH COURT OF SOUTH AFRICA

GAUTENG DIVISION, PRETORIA

CASE NUMBER: 35042/2016

NOT REPORTABLE

NOT OF INTEREST TO OTHER JUDGES

NOT REVISED

In the matter between:

EBISU DEALERS CC First Applicant

CJ AND S K (PTY) LTD Second Applicant

and

CHEVRON SOUTH AFRICA (PTY) LTD First Respondent

THE REGISTRAR OF DEEDS, JOHANNESBURG Second Respondent

DOMESTIC AND FOREIGN TRADE CC Third Respondent

FUTURE PHAMBILI PETROLEUM (PTY) LTO Fourth Respondent

JUDGMENT

MOTHLE J

Introduction

1. In this matter there are two applications. The one application in convention is launched by the two Applicants while the second

application is an application in reconvention, launched by the First Respondent against the two Applicants in convention. Both

applications were heard together.

2. For the purposes of this judgment and where necessary, I will refer to the parties as follows:

2.1 The First Applicant is EBISU Dealers, the Second Applicant is CJ and SK;

2.2 The First and Second Applicants will collectively be referred to as the Applicants;.

2.3 The First Respondent is Chevron;

2.4 The Second Respondent is the Registrar ;

2.5 The Third Respondent is Foreign Trade;

2.6 The Fourth Respondent is Phambili; and

2.7 The Registrar, Foreign Trade as well as Phambili did not participate in this application.

3. In the convention application, the Applicants seek relief in the form of:

3.1 The removal of certain restrictive conditions registered against the title deeds of Erven 1415, 511 and 513 in the Kenmare Township;

3.2 That Chevron, at its expense, forthwith remove from Erf 1415 all of its movable property including underground tanks, pumps, equipment and insignia. Should Chevron not comply therewith within a period of 7 days, then the Applicants be authorised to do so.

4. In the reconvention application, Chevron seeks the following order:

4.1 It be declared that its registered trade marks, logos and names have been infringed by the Applicants;

4.2 Interdicting the First and Second Applicants from utilising any such registered name, mark or logo

4.3 Ordering and directing that Chevron be permitted to immediately remove its names, marks and logos from the premises situated at Cnr Terenure and Garrick Streets , Kenmare, Krugersdorp; and

4.4 A special cost order in respect of both applications (in convention and in reconvention), where the Applicants should be ordered to pay the costs on an attorney and own client scale.

Settlement in part

5. After the parties commenced with arguments on the day of the hearing, a settlement was reached between them. Counsel for Chevron informed the Court that instructions obtained to settle were confirmed by attorneys for both parties. that part of the matter be settled on the terms which were placed on record as follows:

" 1. The First respondent will remove from the premises of the first and second applicants all the pumps, underground tanks, names, marks, and logos that were situate thereat as at the time of the commencement of the application in convention, whether such be the property of the first respondent and/or fourth respondent.

2. The first applicant and the second applicant shall do all such things and take all such steps as shall be required to give effect to the provisions of paragraph 1 supra.

3. Against compliance with the provisions of paragraph 2 supra. the first respondent shall effect payment to the first applicant and second applicant in the sum of R40, 000.00. I perhaps pause to mention so that we are all clear that means one payment of R40 000.00 not two.

4. The payment in terms of paragraph 3 supra. shall be in full and final settlement of any and all rights that the first and second applicants may enjoy for whatever cause, and howsoever arising in respect of the relief sought in paragraph 3 of the notice of motion, including any purported lien and/or right to payment, and/or compensation in respect of all the pumps, underground tanks, names, marks, logos and their removal.

4. This agreement does not preclude:

4.1 The first respondent from seeking relief in its claim in reconvention including costs;

4.2 The applicant from seeking the final relief sought in paragraphs 1, 2 and 5 of notice of motion.

Put otherwise M'lord it resolves only the relief in prayers 3 and 4 of the claim in convention. "

6. The document evidencing the settlement was handed in. In essence, it dispense with the dispute concerning the removal of Chevron's

equipment from the premises of the properties. The question of the removal is part of the relief requested both in convention and

reconvention applications by both parties. I now turn to deal with the background to the factual matrix.

Background

7. During the 1980's, Chevron acquired ownership of two Erfs situated in Kenmare, Krugersdorp, these are: Erf 1415, currently being the primary Erf from which the petrol or fuel filling station is conducted. The second is two Erven 511 and 513 which are vacant lots adjoining Erf 1415, apparently for future development of shops and filling station restaurants.

8. Foreign Trade concluded a franchise agreement with Chevron, which included procurement of a license to operate a Caltex franchise

business. Foreign Trade thereafter acquired all three properties from Chevron. In terms of the agreement between those two parties, Foreign Trade agreed to include as a condition of the title to the properties that for a period of 25 years, determined from date of registration of transfer of the property, the property would not be utilised for any purpose other than the carrying on of a Caltex branded fuel service station.

9. On 1O February 2016 Foreign Trade made a demand on Chevron to remove the condition in the title deeds. The demand follows the acquisition by the Appellants of the properties and the business from Foreign Trade.

10. The Applicants, upon acquisition of the properties, have now joined the fray and also demand that the condition registered on the title deeds of the properties be removed.

THE APPLICATION IN CONVENTION

The condition registered on the title deed

11. The Applicants alleges in the affidavits that they apply from a position of the respective legal, proprietary and commercial

interests, which include the rights to the site (in respect of Ebisu Dealers) and retail (in respect of CJ and SK), licenses that have to be issued under the Petroleum Products Act as amended. The application is for an order removing or expunging a contractually

imposed restrictive covenant/condition in restrain of trade clause from the title deeds on the grounds that the condition is invalid or unlawful (prayers 1 and 2) and for orders effectively and formally removing the presence of Caltex (First Respondent) from their petrol station site.

12. The impugned condition reads as follows:

" 3 .....

AND

Subject further to the following:

(a) That for a period of 25 (twenty five) years reckoned from the date of the transfer, the erf shall not be utilised for any purpose other than

the purpose of carrying on the business of the "Caltex branded serving station" as herein under defined except as Chevron South Africa (Proprietary) Limited (hereinafter referred to as "Chevron") or its successors in title may direct in writing, provided that any portion or portions of the erf not so used as a "Caltex Branded Service Station" on date of this transfer shall not be used for the purpose of carrying on any of the businesses of a garage, filling station or service station for motor vehicles.

(b) DEFINITIONS:

The following definitions shall apply:-

1. The business of a Caltex Branded Service Station consists of all or any of the usual business of a garage, filling station and service station for motor vehicles, not excluding any specialised service occasionally offered by such a business, provided that such business must include:

(i) The storage and offering for sale of Chevron's petrol and petroleum products to the exclusion of all other petrol and petroleum products, save as Chevron may otherwise direct;

(ii) The display and advertisement of the Chevron's products to the exclusion of all other similar products , save as Chevron may otherwise direct;

(iii) The installation, operation and maintenance of structures, machines, containers and devices relating to the storage, sale, display and advertisement of Chevron's products to the exclusion of all other structures, machines , containers and devices serving the same or similar purposes, save as Chevron may otherwise direct."

13. The Applicants contend that the condition placed on the title deed did not qualify for registration in terms of Section 63(3) of the Deeds Registry Act. In support of this contention, the Applicant states as follows:

" Apart from not constituting or being capable of being construed as any kind of servitude or right, there is, in the main, no restriction to the exercise of land ownership rights and the notional power to dictate who might operate a retail "business" on the Erf, the condition, standing alone as it does, is not complimentary or otherwise ancillary to a registerable condition or right contained or conferred in or by the deed."

14. Section 63(1) of the Deeds Registry Act, properly interpreted, means that in order for a condition to be eligible for registration, it must not be a personal right and it must restrict the exercise of a right of ownership in respect of immovable property. The test to determine whether the condition is a real right is that the intention of the person creating the right must be to bind the successors in title and that such right or condition, must, upon registration, constitute a subtraction from the dominion of the land against which it is registered. See in this regard Willow Waters Home Owners v Koka NO[1] ; and Cape Explosive Works Ltd and Another v Denel (Pty) Ltd and Others[2].

15. The terminology used in the title deed in regard to this condition is clear. It provides for the transfer of the property to Foreign Trade including its successors in title or assigns. Properly interpreted, the condition on the deed does not impose any burden on the owner but on the property itself. Such condition , would be binding on any owner during the life span of its existence. In essence therefore, the condition is imposed in order to ensure that Foreign Trade or its successors in title who wish to use the property as a service station, it has to be a Chevron service station or not be used at all.

The effect of the PPAA on common law

16. The second line of attack by the Applicants is that the condition attached to the title deed has somehow been superseded by the provisions of the Petroleum Products Act, Act 120 of 1977 ("PPAA' ). The argument in essence being that the PPAA not only abolished common law rights but in fact endowed the retail license holders with rights, relying inter alia on Section 2A(5)(a) of the PPAA. This view was not entertained in the matter of Mighty Solutions tla Orlando Service Station v Engine Petroleum Limited and Another[3] where the Court commented that such argument, which was not placed before Court, was wisely abandoned. However, in the Gauteng Local Division, Johannesburg, in a matter involving the same parties in the Mighty Solutions case, the issue was argued and dealt with by Matthee AJ. See the Unreported Judgment under case number 20344/2013, delivered on 28 March 2014 in the matter of Engen Petroleum Limited v Mighty Solutions CC tla Orlando Service Station. In dismissing that argument, Matthee AJ stated the following:

"In reply Mr Savvas, who appeared for the respondent , did not join issue on this. In essence he argued that with the advent of the Petroleum Products Act, 120 of 1977 as amended, hereafter the Act, the whole new regime was brought into existence apropos inter alia lease arrangements as in the present case. In effect he argued that the Applicant was no longer able to rely upon common law as argued by Mr Van der Spuy as the Act had fundamentally changed the common law."

17. The Judge concluded by dismissing the argument on the basis that even adopting a general approach in the interpretation of the Act, there is no suggestion that the common law rights were affected by the PPAA. The Learned Judge made reference to another unreported judgment of Basha J in the matter of Engen Petroleum Limited v Gundu Service Station and Others where a similar argument had been rejected. The Gundu judgment was delivered on the 6 June 2013 under case number 16333/12 in the Gauteng Local Division, Johannesburg. In fact, attempts to mount an argument to the effect that the PPAA created real rights that supersedes any rights registered against title deeds was dealt with and dismissed in a number of judgments most of which were unreported. In this regard I refer to the following:

Chevron South Africa (Pty) Ltd and Investor Amalgam (Pty) Ltd v Kiribati Traders CC an unreported judgment of Makume J in the Gauteng Local Division under case number: 10295/2014; and Shell South Africa Marketing (Pty) Ltd v Exclusive Access Trading 431 (Pty) Ltd, an unreported judgment case number 5434/2014 delivered in the Gauteng Local Division Johannesburg; and Quebos Investments (Pty) Ltd v Camelot Holdings CC and Louis William van Lelyveld, Gauteng Division case No. 67081/14 delivered on 4 September 2015.

In this latter case, the Judge in dismissing Mr Savvas ' arguments on the impact of the Petroleum Products Act on common law said the following:

“(4) The main thrust of Mr Sawas ' argument was that the Petroleum Products Act brought about a change to the common law.... "

He further concluded as follows:

[13] I again find that the provisions of the Petroleum Products Act and the regulations thereunder do not purport, even by implication, to change the law in the fundamental respects that Mr Savvas ' arguments would require. I find that there is no prospect that another Court would come to a different conclusion in this regard."

18. This argument concerning the impact of the Petroleum Products Act on common law was also considered in the matter of Engen Petroleum Limited and Sage Wise 1068 CC t/a Kutloano Filling Station and Another, Case No. 47215/12 in the Gauteng Local Division Johannesburg delivered on 13 March 2015. In that matter, Sutherland J concluded as follows:

" I have read the sections to which I have been referred and I am unable to detect from the provisions in the least degree an intention which is aimed at undermining the common law possessory regime. What I do read from these sections and from the PPA as a whole is the intention of the legislature to introduce a very expensive regulatory regime in regard to trading in petroleum, including a regulation , not only of its distribution but also of the places from which it may be sold. I do not see a basis provided for in the PPA to support the contentions of the respondents."

19. The argument that the PPAA has removed the common law principles has also been raised with me in this case. As with the Judges who presided in the matters quoted above, I am unable to find any merit in the contention as well as the arguments advanced. What is of concern is that this argument seems to be raised by the same counsel in different matters, with the hope that another Judge might find differently. It seems to me that it is time that this argument is put to bed as it appears clearly from the remarks in the Constitutional Court as well as the other unreported judgments that the prospects of a different interpretation have diminished. The contention is accordingly rejected.

Constitutional rights

20. The Applicant further relies on Sections 22 and 25(1) of the Constitution of the Republic of South Africa Act, 1996 . Section 22 concerns the citizen's right to choose their trade, occupation or profession freely. Section 25(1) on the other hand deals with a prohibition that no one may be deprived of property except in terms of the law of general application, and no law may

permit arbitrary deprivation of property.

21. Simply put, this argument seems to be a clutching of straws. The condition attached and registered against the title deed does not encroach on any right to exercise free trade or profession nor does it deprive the Applicants of their property. The Applicants purchased the property being well aware of the condition attached and accepted such condition.

22. There is thus no merit in this argument and it stands to be dismissed .

23. In regard to the second argument concerning the removal of the underground tanks, this seems to have been superseded by what was agreed to between the parties in the removal of those tanks.

Restraint of Trade

24. The Applicants further contend that the restrictive condition on the title deed amounts to a restraint of trade and is thus void and invalid. Contracts of restraint of trade are recognised and enforceable in our law. I can do no more than refer to the matter of Experian South Africa (Pty) Ltd v Haynes and Another[4]. On the facts of this case, there is no indication that the condition on the title deed unduly restrains trading activity of any particular legal entity. This view is supported in the matter of Venter v Minister of Railways[5] where the Court held thus:

"Generally speaking, the rules as to contracts in restraint of trade cannot be applied to praedial servitudes. The essence of a contract held to be unduly in restraint of trade is that it restrains the trading activity of a particular person. The restraint created by the servitude in the present case restricts the user of a particular piece of property and not the activity of a particular person." See also Bedford Square Properties (Pty) Ltd v Erf 179 Bedfordview (Pty) Ltd[6].

25. In casu, as correctly submitted by Chevron, the condition restricts the user of the Erf irrespective of who the owner is. Section 2A(7) of the Petroleum Products Amendment Act does not provide anywhere nor can it be construed to read that it prohibits monopoly by giving a retailer the exclusive right to choose which company it wants to deal with. All it says in essence is that a licensed retailer shall only purchase petroleum products from a· licensed wholesaler or a licensed manufacturer or both.

Repudiation

26. The Applicants further argue that Chevron has repudiated the agreement in the sense that it has assigned to Phambili the rights

and obligations expressed in Annexure "FA14" to the Founding Affidavits and it was tardy in the failure to remove certain

underground tanks at the primary Erf.

27. There is also no merit in this contention. In the first instance, the supply agreement entered into between Chevron and Foreign Trade allows for a cession or assignment delegation in Clause 6. Chevron has the right to assign its rights and cede and delegate his duties without having to procure any consent from Foreign Trade. It is thus permissible in terms of the agreement to do so.

28. At the hearing of this matter, counsel for the Applicant abandoned the attack on repudiation and nothing more needs to be said in that regard.

29. Considering the findings of the Court in respect of each and every one of the grounds of attack by the Applicants, they have not succeeded to prove a case against Chevron. Their application falls to be dismissed. I will revert to the question of costs later in this judgment.

30. I now turn to deal with the application in reconvention launched by Chevron.

THE RECONVENTION APPLICATION

31. As stated under "Introduction" above, Chevron, in its application in reconvention, seeks relief as against the Applicants in a form of a declarator, an interdict and access to the premises to remove its names, marks and logos.

32. Chevron, together with Chevron Intellectual Property LCC ("CIP'J , previously brought an application against the Applicants in convention. Before setting out the history of that application, it is apposite to state that as at the time this matter was argued, certain developments had already taken place. Firstly, CIP had withdrawn its counter-application. This occurred following an objection by the Applicants that CIP is not party to the application in convention and therefore leave of the Court must be obtained prior to their inclusion in these proceedings. Secondly, Chevron withdrew the counter- application against Foreign Trade and Phambili cited in this application as Third and Fourth Respondents respectively.

33. The declaratory order sought by Chevron is premised on the allegation that Chevron's registered trade marks, logos and names have been infringed by the Applicants. Conseq uently, the second relief sought is to interdict and/or prevent the perpetuation of that conduct and thirdly an order permitting or giving access to Chevron to remove its names, marks and logos from the premises.

34. As already recorded, the parties have reached an agreement in regard to the third prayer on the morning of the hearing of both

applications. The parties agreed that Chevron may gain access to remove his names, logos situated on the premises. This aspect having been settled, there will be no need for this Court to deal with this prayer in this judgment except within the context of determining the question of costs. This leaves the two prayers of trade mark infringement and interdict prohibiting any continuation of such infringement.

35. In this reconvention application, Chevron contends that the Applicants are conducting operations of a fuel service station branded as Caltex Service Station together with Techron Branding from the premises. In conducting such operations, Chevron further contends

that the Applicants are utilising its registered trademarks and that it has not granted any license for the use of those trademarks. It concludes by contending that such conduct in utilising the trademarks is an infringement thereof in terms of the Trade Marks Act, 194 of 1993.

36. In particular, Section 34 of this Act provides that infringement of rights acquired by registration of trade marks lies in the unauthorised use, in the course of trade, in relation to goods or services, in respect of which the trade mark is registered, of an identical mark or of a mark so nearly resembling it, so as to be likely to deceive or cause confusion. Chevron contends that in this instance the unauthorised use is a direct infringement of its identical marks.

37. In support of its application, Chevron contends that it, together with CIP, are the proprietors of certain registered trade marks which include the name "Chevron;” the Caltex Kaleidoscope Corporate Colour Logo, the Techron Clean and Five Star Fuel Logo. These trade marks are registered in Class 01; 04; 37 and 42 by the Registrar of Trade Marks. The classifications include lubricants, fuels, artificial fuels, servicing, maintenance and repair of motor vehicles and service stations for vehicles, restaurant, self-service restaurant, snack bars, cafeteria and the like. These are the general goods and services usually found and offered at various fuel stations.

38. Chevron further contends that in this particular instance, the Applicants are utilising the trade marks in question in pursuit of their business at the service station. This is in the form of motor service and fuelling station under the banner of Caltex Branding, the Caltex sign, the Caltex colours, the Caltex name, the Techron branding, the Techron colours, the Techron logo or the Techron name. In support of this contention, Chevron attaches to its founding affidavit pictures of these trade marks as located on the premises. The essence of the infringement is that members of the public are being deceived into believing that Caltex products and services are being dispensed from the premises.

39. Considering the provisions of Section 34 of the Trade Mark Act, Chevron has only to prove that it is the proprietor of the registered

trade mark and that there has been unauthorised use of that trade mark, which use manifests in relation to goods and services in

respect of which the trade marks are registered and that such use occurred in the course of trade. I am of the view that Chevron has met these requirements. This view is supported by the fact that the Applicants have failed to place in dispute any of these allegations save to say that they invited Chevron to remove these trade marks which it failed to do. However, Chevron contends that in fact it did offer to do so but could not proceed to remove these trade marks as the Applicants placed conditions seeking agreement to the issues raised in the application in convention for removal of the trade marks.

40. The main issue in reconvention is whether it should be declared that since the Applicants took occupation of the premises until the settlement agreement reached in Court for the removal of the trade marks, there was an infringement thereof

41. The Applicants do not deny that they conducted trade with the trade marks present on the premises. They do not dispute that there has been no authorisation for them to trade as such and that their conduct in fact amounts to an infringement. I am thus of the view that the claim in reconvention should succeed.

COSTS

In relation to the claim in convention:

42. As already found by this Court, the Applicant's application stands to be dismissed for reasons set out earlier in this judgment. Counsel for Chevron contends, with reference to the number of decisions where the issues of law raised by the Applicants were considered and settled, that the application was frivolous and a punitive cost order should be granted.

43. It seems to me that the Applicant's legal representatives brought forth this application in the face of several other unsuccessful

applications that had been brought in the past by the same legal representatives, raising the same points of law all which were

dismissed. Counsel for the Applicants should have realised that the issues of law contended for in this application had been previously

settled in matters where he personally appeared. In particular, the question whether the condition attached to the title deed amounts to a real or personal right has been argued and settled by the courts and it is now trite.

44. Similarly, there is no support for the contention that PPAA has replaced the common law as they argued. Counsel for Applicants has been the participant in most of the cases I was referred to, where he unsuccessfully argued the same point of law. I am thus of the view that he entered into this litigation with the hope that he would get a different result after not being successful in several previous attempts.

45. Further, counsel for the Applicants has also been warned[7] of the intemperate language that he has used in the affidavit as well as in his reference to legal representatives of the opposition. In that particular case he was mulcted with cost de bonis propris. There is no doubt in my mind that he has not learned anything from those cases in which he particularly participated as he continued with that conduct even in this case. His tendency to resort to the use of innuendo and direct insulting language to the opposition seems to define his style of litigation. This Court, as with previous other Courts, has to demonstrate its displeasure with this kind of conduct. Counsel for the Applicants has to carry the costs that follow the dismissal of the application in convention.

In relation to the application in reconvention

46. This Court has found that there is merit in the application in reconvention and the costs should follow the success of this

application.

47. In the premises I make the following order:

1. The application in convention is dismissed.

2. Counsel for the Applicants is order to pay the costs de bonis propris and on an attorney and client scale, including costs of two counsel for the First Respondent.

3. The application in reconvention succeeds.

4. It is declared that the Applicants have infringed Chevron's trademarks as prayed.

5. An interdict is issued prohibiting further or continued infringement of such trade mark.

6. Abase Dealers CC and CJ and C K (Pty) Ltd (the Applicants) are ordered to pay the costs of the reconvention application, including costs of two counsel.

S P MOTHLE

Judge of the High Court.

Gauteng Division, Pretoria.

For the Applicants: Adv.Savvas

Instructed by: Venn & Muller Attorneys

105 Club Avenue Waterkloof Heights

Pretoria

For the First Respondent: Adv. Sawma SC

Assisted by: Adv D Williams

Instructed by: Wright and Rose Innes

c/o Mackintosh Cross & Ferguson

834 Pretorius Street

Arcadia

PRETORIA

[1] 2015 (5) SA 304 (SCA) at paragraph 16.

[2] 2001 (3) SA 569 (SCA) at paragraph 12.

[3] 2016 (1) SA 621 (CC).

[4] 2013 (1) SA 135 (GSJ) at 139H-140B.

[5] 1949 (2) SA 178 € at 185.

[6] 2011 (5) SA 306 (SCA) at paragraph 11.

[7] Unreported judgment of Gauteng Local Division, Johannesburg, in Shell South Africa Marketing (Pty) Ltd v Exclusive Access Trading

431, case 5434/2014, from paragraph 47.