Pratsch t/a Caltex Mooi River v Rasmussen (10369/2004) [2007] ZAKZHC 56; 2008 (2) SA 243 (N) (7 June 2007)

IN

THE HIGH COURT OF SOUTH AFRICA

NATAL

PROVINCIAL DIVISION

CASE NO. 10369/2004

In the matter between:

THEODOR HANS PRATSCH t/a

CALTEX MOOI RIVER Plaintiff

and

DESMOND RASMUSSEN Defendant

J

U D G M E N T

Delivered on : 7 June 2007

KOEN, J.

[1] The plaintiff has instituted action against the defendant for payment of the sum of R220 478-05, being the alleged balance outstanding in respect of certain diesel, petrol and oil sold to the defendant during the period from March to November 2004.

[2] Defendant has raised the following Special Plea to this claim:

“(a) The Plaintiff’s claim is based on an oral agreement for the sale and supply of petroleum products as defined in the Petroleum Products Act 1977 (Act No. 120 of 1977) (“the Act”), by the Plaintiff, as re-seller, to the Defendant, on terms that amount to a credit sale.

(b) In terms of Section 4(1)(a) of Regulation R2298 governing the sale and/or supply of petroleum products as published in Government

Gazette GG9962 of 11 October 1985, as amended, no petroleum products (petrol or diesel oil) shall be supplied by a re-seller to a consumer other than against payment in cash.

(c) The contravention of the above regulation, read with the provisions of Sections 2(1)(d) and 12(1A) of the Act, imposes a criminal sanction for non-compliance with the regulation.

(d) Accordingly, the agreement relied upon by the Plaintiff is contrary to law, void and therefore unenforceable.

WHEREFORE the Defendant prays that the Special Plea be upheld and that judgment be granted in the Defendant’s favour with costs”.

[3] An order was granted on 28 February 2007 that the Special Plea

be determined separately in terms of Rule 33(4). The costs of that application were directed to be costs in the cause of the main action.

[4] The minute of the pre-trial conference records:

“1. The parties agreed that the sole issue to be dealt with on 30/5/07 arising from the Special Plea is the following :

2. If the Court finds in favour of the Plaintiff then the Special Plea will be dismissed and the matter will then proceed later on the Plea on the merits and the Counter-claim.

3. If the Court finds in favour of the Defendant, the matter will be adjourned and will proceed thereafter on the determination of the extent to which Plaintiff’s claim is affected by the Special Plea.

4. No evidence will be led at this stage on the Special Plea.”

[5] The Petroleum Products Act No 120 of 1977 (“the Act”):

defines this “Act” as including “any regulation, notice and licence issued or given in terms of this Act”;

prescribes certain offences and penalties in section 12, which section, prior to its substitution by section 12 of the Petroleum Products Amendment Act No. 58 of 2003 which came into operation with effect from 17 March 2006, read:

“(1) If any person contravenes or fails to comply with any provision of this Act, and such contravention or failure is not elsewhere in this Act declared an offence, or hinders an inspector in the exercise of his powers or the performance of his duties under this Act, he shall be guilty of an offence and liable on conviction to a fine not exceeding two thousand rand or to imprisonment for a period not exceeding two years or to both such fine and such imprisonment

(1A) Any person who –

contravenes any prohibition referred to in section 2(1)(d), 2(1)(e) or 4A;

fails to comply with the provision of a regulation or a notice referred to in section 2(1)(d), 2(1)(e) or 4A,or commits an act in contravention of such a regulation or provision,

shall be guilty of an offence and liable on conviction to a fine not exceeding seven thousand rand or to imprisonment for a period not exceeding seven years or to both such fine and such imprisonment.”

[6] Neither the Act nor the regulations expressly provides that a contract concluded in contravention of regulation 4(1) shall be null and void.

[7] The issue is accordingly whether such an intention, that is that the legislature intended that such a contract shall be considered to be null and void, can be imputed to the legislature from the wording of the Act and the regulations.

[8] Invalidity cannot simply in all instances be read into a statutory prohibition, where this was not stipulated by the legislature, and where it is not required by necessary implication to prevent frustration of the object sought to be achieved by the legislation – see Pottie v Kotze 1954(3) SA 719 A at 725 to 727. In certain instances, greater inconvenience and impropriety will result from the rescission of what was done, than would follow from the unlawful act itself.

[9] Whether a contract in contravention of regulation 4(1) is enforceable, was also the issue for determination in W J Smith v Louw’s Garage, an unreported judgement of Van Zyl J with whom Traverso J (as she then was) concurred in the Cape Provincial Division on 13 May 1994 under Case No. A1362/93. Although the wording of regulation 4(1) which featured in that decision, is not identical to the wording of regulation 4(1) presently under consideration, in substance the terms thereof are similar. In my view the wording is not so different as to affect the reasons for the conclusions reached in that judgment. That court held that on a proper construction of the legislation, it could not be said that it was intended by the legislature that contracts in contravention of Regulation 4(1) should be invalid. I am not bound by that decision, but it is obviously of highly persuasive value – see Hahlo and Kahn The South African Legal System and its Background pages 254 to 255.

[10] The reasoning in Smith v Louw’s Garage (supra) for arriving at the conclusion that such an agreement would not be invalid, included the following:

(a) according to the long title to the Act, it seeks to provide inter alia for measures in the selling of petroleum products;

(b) it is significant that both the acts of supplying and of receiving petroleum products, are penalised in terms of the penalty provisions;

(c) if such transactions were to be unenforceable, a re-seller of petroleum products would suffer an additional penalty, being the inability to recover any payment for the petroleum products provided, over and above the penalty incurred for contravening the regulation. This is such an inequitable consequence that it is unlikely to have been intended by the legislature. It is further not a consequence that advances the stated objectives of the Act.

[11] I do not intend repeating the comprehensive analysis of the relevant legal principles undertaken in Smith v Louw’s Garage. I fully associate myself with the views expressed therein which I find compelling.

[12] It follows that the issue separated for determination must be decided in favour of the Plaintiff.

[13] In accordance with the agreement between the parties, the matter is to be adjourned to proceed later on the plea on the merits and the counter-claim.

[14] The plaintiff has applied, in the event of the issue for determination being decided in his favour, that the defendant be ordered to pay the costs relating to the hearing. I was also asked, notwithstanding the order at the time of the separation of the Special Plea providing that the costs of that application be costs in the cause of the main action, to direct that the defendant should also be ordered to pay those costs.

[15] Although the issue raised in the Special Plea could conveniently be separated for determination, the hearing on the Special Plea would be academic if the plaintiff does not succeed with its claim. That issue will only finally be determined once the trial on the merits has been concluded. I am accordingly not disposed to making a costs order in regard to the hearing of the separated issue, but to reserve such costs for determination after the conclusion of the main action. I would, in any event, not be disposed to consider any variation of the costs order granted on 28 February 2007, in the absence of very special circumstances.

[16] I grant the following order:

(a) The sale of petroleum products by the plaintiff to the defendant during the period from March to November 2004 in contravention of regulation 4(1) of the regulations

promulgated under Act 120 of 1994, is enforceable;

(b) the costs of the issue separated for determination is reserved for determination by the Court hearing the main action;

(c) the action is in all other respects adjourned sine die.