Shoprite Checkers (Pty) Ltd v Masstores (Pty) Ltd and Another (2356/2016) [2016] ZAECGHC 52; [2016] 3 All SA 926 (ECG) (12 July 2016)

IN THE HIGH COURT OF SOUTH AFRICA

EASTERN CAPE DIVISION, GRAHAMSTOWN

CASE NO:2356/2016

Dates heard: 23 and 24 June 2016

Date delivered:12 July 2016

In the matter between:

SHOPRITE CHECKERS (PTY) LTD Applicant

And

MASSTORES (PTY) LTD First Respondent

WHIRLPROPS 46 (PTY) LTD Second Respondent

JUDGMENT

LOWE, J

Introduction:

[1] This matter raises issues relevant to the Aquilian action available for the intentional interference with a contractual relationship by a third-party which has the effect that a contracting

party is deprived of obtaining the performance to which he is entitled as a matter of contract, or where contracting parties contractual obligations are increased. It also raises issues relevant to estoppel.

[2] Applicant in this matter ("Shoprite") seeks interim relief on an urgent basis:

2.1. Against First Respondent, Masstores (Pty) Ltd ("Game"), claiming an interim interdict restraining it from using its premises in the Mthatha Plaza ("the Plaza") to operate or trade as a supermarket by selling perishable foods, fruit and vegetables, pending the determination of legal proceedings to be instituted (relief sought by Shoprite as a result of its contention that Game is about to commit the delict of unlawfully interfering in Shoprite's contractual relationship with the landlord and thereby unlawfully competing therewith);

2.2. Against the Second Respondent, Whirlprops 46 (Pty) Ltd ("Whirlprops"), claiming an interim interdict directing Whirlprops to take all necessary reasonable steps to prevent Game from using any portion of the Plaza to operate or trade as a supermarket. by selling perishable foods, fruit and vegetables, put otherwise seeks an order enforcing specific performance of the contractual landlords' (Whirlprops) obligation to prevent Game from infringing Shoprite's exclusivity rights.

[3] Having regard to the nature of the relief sought, the proper approach to the affidavits is to consider the facts as set out by the Applicant together with any facts set out by the Respondents, which the Applicant cannot dispute, and to decide whether . with regard to the inherent probabilities and the ultimate onus, the Applicant should on those facts obtain final relief at the trial. The facts set up in contradiction by the Respondents should then be considered, and if they throw serious doubt on the Applicant's case, the latter cannot succeed.

[4] Game does not seriously- dispute the majority of the essential facts on which Shoprite's remedy is based, but raises a number of defences in its answering affidavit. These in the main relate to what Game contends is the consequence of its 2014 lease in terms of which Whirlprops granted it an unrestricted right to trade in food : in summary that Whirlprops' contractual obligation to Shoprite not to let any portion of the Plaza for use as a supermarket can no longer be enforced by Shoprite and that consequently Whirlprops' contractual obligation to Shoprite cannot be interfered with by Game; that Game is entitled in terms of its own lease to operate a supermarket and that there is no basis in delict for Shoprite to interdict it from doing so; that Game's unrestricted right of use flowing from the 2014 lease . is a real right which prevails over Shoprite's personal rights in its lease; and finally that the balance of convenience favours Game as ·its financial investment will not be realized, against Shoprite's claimed monopoly

in perishable foods.

[5] Whirlprops does not deny Shoprite's exclusivity rights or its obligation arising therefrom. Whirlprops (contrary to Game) alleges that the Game store has been trading in fresh food since at least 2010 and that Shoprite acquiesced therein. This it contends amounts to a waiver by Shoprite of its rights, alternatively is estopped from relying on them, alternatively that the enforcement thereof will be contrary to public policy or unreasonable. It contends in the further alternative that as result of the Game lease 2014, that specific performance of Whirlprops obligations in terms of the exclusivity provisions (in respect of Shoprite) can no longer be achieved.

The Relevant Background:

[6] As will have been appreciated from the above the dispute which arises relates to the leases which Shoprite and Game each have in the shopping centre, the Plaza ("the Plaza") in Mthatha. The landlord in each instance is Whirlprops.

[7] Shoprite and Game are both anchor tenants in the Plaza. In broad outline Game conducts business as a general merchandiser. Prior to 2010 its first lease being concluded in March 2006, as part of its usual merchandise it sold food and grocery products which included perishable items but which did not include fresh fruit and vegetables or fresh meat and poultry products. In 2010 Game began introducing the Foodco concept into it stores in the Republic of South Africa which entailed the introduction ·of fresh fruit and vegetables and fresh pre-packaged meat and poultry products. Game's current lease, was concluded in 2014 and amended in February 2016 to permit Game to sell any food, without limitation, in its premises at the Plaza. Construction is currently underway to increase the floor space of the Game store to accommodate a larger grocery section. In particular fresh food will be added to the Game store's current merchandise. Shoprite contends that in consequence the extended Game store will effectively become a supermarket.

[8] Shoprite's current lease, confers on Shoprite the right to operate a supermarket and certain specialized businesses in the Plaza - to the exclusion of any other tenant. This is clearly of vital importance to Shoprite's business model at the Plaza.

[9] I will set out more specifically the parties various lease entitlements only insofar as they are relevant to this dispute.

[10] In July 2005 Shoprite concluded a lease agreement with Whirlprops in respect of premises at the Plaza. In terms of clause 8.1 of that lease, Shoprite is to use the premises leased by it for the purpose of carrying on the business of a supermarket, as well as allied and ancillary businesses thereto. Clause 8.2 of the lease provides that:

"The Lessor shall not let any portion of the Shopping Centre (inclusive of any future extensions thereof) for use as a supermarket and the Lessor acknowledges and agrees that this is the sole and exclusive right of the Lessee, save and except that the Lessee acknowledges that a portion of the Shopping Centre may be let to Rhino Cash and Carry. The Lessor further agrees that it will not let any portion the Shopping Centre (inclusive of any future extensions thereof) or permit any portion of the Shopping Centre to be used for the business of or to trade in the following specialist businesses: butchery, a bakery and a fruit & vegetable shop. The Lessor acknowledges that the right to conduct the said specialist businesses shall belong solely ... and exclusively to the Lessee..."

[11] In terms of clause 15 of its original lease concluded in 2006, Game's use of its leased premises was set out as follows :

"15.1 The tenant may use the premises for the purpose of a retail business being a business dealing in general merchandise and non-perishable food and all other ancillary and related businesses or for any other retail business. Subject to the qualification that the tenant will not tra.de as a general food supermarket (except in the circumstances described in clause 15.2), the tenant may, in its sole discretion, determine what products it will sell within its store..."

[12] On 22 April 2014 this lease agreement was cancelled by Masstores and Whirlprops and they concluded a new agreement of lease. Clause 12.1 of the 2014 lease provides as follows:

"12.1 The tenant shall use the premises for the purposes of a Game Style retail business being a business dealing in general merchandise of all types and all other ancillary and related businesses or for any other retail business. The tenant may, in its sole discretion, determine what products it will sell within its store, including retail liquor."

[13] In February 2016 Masstores and Whirlprops concluded a second addendum to the 2014 lease. Clause 10 of the addendum provides as follows:

"10. Use of premises

With effect from the signature of this Addendum, clause 12 of the Agreement of Lease to be amended as follows:

10.1 No restrictions on merchandise mix.

10.1.1 The Tenant shall use the premises for the purposes of a Game retail business being a business dealing in general merchandise of all types and food and all other ancillary and related businesses or for any other retail business. The Tenant may, in its sole discretion, determine what products it will sell within its store, including retail liquor and the Landlord, shall not on Its own or for the benefit of any third party, seek to limit the Tenant's ability to compete on the basis of its offering.

10.1.2 The Landlord warrants that it has not granted and will not grant any other Tenant or third party rights that will prevent the Tenant from exercising or otherwise limit its right to use the premises as provided for in this agreement."

[14] This 2016 addendum to the Game lease provided for an expansion of the Game premises from 4001 m2 to 440m2. It is this expansion which has precipitated Shoprite's application.

[15] On 15 March 2016 Shoprite informed Game of the exclusivity provisions in its lease.

[16] As against Game, Shoprite bases its case on the delict of unlawful interference with contractual relations, that is for the purposes of this judgment the case where C (Game) unlawfully interferes with the contractual relations between B (Whirlprops) and A (Shoprite).

[17] Whirlprops does not deny that clause 8.2 of the Shoprite lease is an exclusive trading provision or restraint of trade (which must be applied reasonably) in favour of Shoprite. What Whirlprops contends is that Shoprite surrendered or waived its right to exclusivity and in particular to be the only supermarket in the Plaza. It is submitted overall that given the history of the matter Shoprite is unreasonable in seeking to rely on its exclusivity clause to prevent Game from trading in fresh food. In the further alternative Whirlprops contends that given Shoprite's knowledge and acquiescence in Game's trading as a supermarket this plainly created the impression (to Whirlprops) that it no longer required the exclusivity provision provided for in clause 8.2 of its lease agreement, based hereon Whirlprops expressly permitting Game to trade unencumbered in the Plaza. Finally Whirlprops argues that Shoprite is

seeking specific performance of clause 8.2 of its lease from Whirlprops, this being subject to the discretion of the court, which

should not produce an unjust result, it arguing that there is a dispute whether Shoprite waived its exclusivity clause or is estopped

from raising it or would be acting unreasonably to enforce it and it would not be proper or appropriate to order specific performance before all the evidence on the issues has been canvassed. Whirlprops relies further on a public policy argument, contending that clause 8.2 of Shoprite's lease should be regarded as against public policy and its enforcement unreasonable and unconscionable.

[18] In respect of Whirlprops' defence, Shoprite contends that it does not consider the current grocery section in the Game store to be a supermarket in the sense of a one-stop grocery store, as a grocery customer would still be required to purchase fresh food elsewhere. It contends that this approach corresponds with the judicial concept of a supermarket. Shoprite contends that all Whirlprops' defences must fail as a result of the fact that it has not laid any evidentiary basis therefore in its answering affidavit. This contention is based on the allegation that Whirlprops has provided no primary facts supporting an inference that Shoprite acquiesced in Game's extended trading, including fresh food (in addition to fresh fruit and vegetables). Perhaps more importantly Shoprite contends that Whirlprops' defences are based on the allegation that Shoprite acquiesced in the particular Game store trading also in fruit and vegetables and fresh food since at least 2010 and are clearly misdirected inasmuch as Game itself makes no such allegation and states that in 2010 it began introducing the Foodco concept into "certain of its stores". That concept involved introducing fresh pre-packaged meat and poultry products. Such fresh food, contends Shoprite, would require refrigeration or freezing equipment which is only at this stage still to be installed in the Plaza Game store and that neither Game nor Whirlprops denies that there is currently no such equipment stocked with food in the Game store. This contention is supported by a letter of 3 September 2015 addressed to Whirlprops by Game which makes it clear that at that time there were discussions that Game wish to enlarge the current store size to facilitate the introduction of a fresh merchandise range. It is clear then that that extension had to be completed before fresh food would be introduced. Shoprite's allegations are supported in this regard by witness accounts, one from its branch manager who has been at the Plaza since 2011. It would seem that on the proper approach to the affidavits that the landlord is incorrect in its allegation that Game has been selling fresh food since at least 2010, this appearing to arise from its misreading of Game's answering affidavit. The contention is that this incorrect understanding and unsupported allegation by Whirlprops inevitably negates the main defences put up.

[19] With this as background, I will deal with the issues which arise between Shoprite, on the one hand and Game on the other, and thereafter, finally with issues which arise between Shoprite and Whirlprops.

[20] I should mention, that I am fully aware, that this matter involves only interim relief and that the issues between the parties are far from the final and will be determined in the proceedings referred to in the Notice of Motion if Applicant is successful in the interim relief. I accordingly address the question as to whether the requisite prima facie case has been made out, and issues relevant to interim relief and its requisites, furnishing reasons for the orders 1 propose to make but without unnecessarily seeming to unduly influence the final outcome of the litigation.

The Legal Issues between Shoprite and Game:

[21] As I have already said it is generally accepted that our Aquilian action is available for the intentional interference with contractual relationships between a third-party which has the effect that a contracting party is deprived from obtaining the performance to which he is entitled arising out of the contract or where the contracting parties' contractual obligations are increased. See Country Cloud Trading CC v MEG Department of Infrastructure Development 2014 (2) SA 214 (SCA) 224-225; Country Cloud Trading v The MEG 2015 (1) SA 1 (CC)[27]-[32]; Masstores v Pick 'n Pay 2016 (2) SA 586 (SCA) [8] [19]-[23].

[22] In Masstores (supra) the court stated that our law has recognized such an action for more than a century, stating that where the outside parties conduct results in the contracting party not obtaining the performance to which it is entitled on the contract one, is concerned with the infringement of a personal right. The example of a typical case, said the court, was an instance where a former lessee holds over the leased premises well knowing that the incumbent lessee is in the process, being deprived of its contractual rights under the lease. A further example is where employees are induced by a competitor to breach their employment restraint conditions contractually agreed with a former employer, providing do/us {fault) was properly pleaded and proved. DanTex Investment Holdings (Pty) Limited this is Brenner and Others NNO 1989 (1) SA 390 (A) at 395F-G.

[23] In Masstores (supra) the trial court considered what it viewed as a somewhat novel question and that is whether the breach by an outside party of its lease obligations towards a contracting party can give rise to a delictual action by the other party to the contract in circumstances where the breach impacts directly on the latter and if it infringes upon its contractual rights. I should interpose that this is not on all fours with this matter where C (Game) unlawfully interferes with contractual relations between B (Whirlprops) and A (Shoprite).

[24] Of importance, however, is that the court dealt with the issue of wrongfulness with particular reference to the argument advanced on behalf of Masstores that inducement is a requirement for the claim. The court pointed out that our Jaw of delict has developed significantly over the last three decades as far as liability for pure economic loss is concerned. This development was necessary to counter what was referred to as "the spectre of limitless liability, an ever present threat in cases of liability for pure economic loss." Wrongfulness, the court pointed out, is determined by ascertaining whether there has been a breach of any duty. Conversely, it involves a determination of whether a subjective right has been infringed. This entails a determination of the objective reasonableness of the conduct of the person who acted in light of the prejudice he caused to another. Objective reasonableness is determined by the central legal convictions of society, which is a value judgment. At [21].

[25] In dealing with the issue of whether a claimant must prove an inducement in respect of this type of claim (the intentional deprivation of the benefit contracting party would otherwise have obtained from performance) the court referred to Lanco Engineering CC v Aris Box Manufacturers (Pty) Ltd 1993 (4) SA 378 (D) where it was held that inducement or enticement is not a requirement of a claim based on unlawful interference in a contractual relationship. In that matter the court held that it was perfectly true that most of the cases are cases where the contract concerned was breached as a result of an inducement by the defendant to do so, but pointed out that those cases had to be seen in their proper context. They related to contract of service where the most common form of interference was enticement or inducement, the English law influence leading to enticement or inducement being regarded as a yardstick in cases of that kind. The court went on to say that the development of our law on the subject showed that while an enticement or inducement constitutes an interference, conduct other than enticement or inducement may well constitute interference for the purposes of the lex aquilia.

[26] The judgment in Masstores, referring to this, held that this approach was confirmed in Country Cloud (CC) at [31) where the Constitutional Court referred to the "usurpation of a right". In dealing with the argument that having regard to the passage in Country Cloud (CC) that stated that the cases where conduct may arguably be prima facie wrongful, was limited and involves the situation where third-party A (Defendant), intentionally induces a contracting party B, to breach his contract with the claimant C, without lawful justification for doing so, the court in Masstores went on to point out that in stating the above the court did not seek to restrict the cause of action to inducement cases only but on the contrary the court especially recognized those cases where a "right is usurped", or what had been referred to in the SCA as the "deprivation of a benefit . In so referring, the court relied on Neetling et al

h

Delict Lexis Nexis, 6th ed at 282 where the authors state that "Interference with contractual relationships is also present where a contracting party does not obtain the performance to which he is entitled ex contractu, but without breach of contract taking place or the conduct amounting to enticement (Inducement)". The court went on to hold "There are therefore two types of delictual action in interference cases, namely those where inducement or enticement feature and others where there is a breach of a legal duty or the infringement of a subjective right. The present matter falls into the latter category.”

[27] It is clear from Masstores and Country Cloud (CC) having regard to the need for intention that dolus eventualis would suffice as far as intent is concerned in a claim such as was considered in Masstores. Indeed this must be so in both types of action referred to above in interference cases and subject to foreseeability that interference

would cause loss, coupled with a reconciling with the unforeseen consequences, sufficient to sustain such a claim. At [23], and

Country Cloud (CC) [36].

[28] Against this background, of course, the requisites of the delict must in each instance be satisfied. Once the requisites have been satisfied, the delict is established, in this matter provided that the requirements for an interdict have been met, the wronged party being entitled to an order restraining unlawful conduct.

[29] Turning to wrongfulness in more detail. As pointed out in Country Cloud (CC), wrongfulness as an element of delictual liability, functions to determine whether the infliction of culpability causing harm justifies the imposition of liability or whether the social, economic and other costs are just too high to justify the use of the law of delict for the resolution of the particular issue [20] - [26]. The court referred to Loureiro and Others v lmvula Quality Protection (Ply) Ltd 2014 (3) SA 394 (CC).

[30] Endorsing these developments, Country Cloud CC referred to the fact that Loureiro recently articulated that the wrongfulness enquiry focuses on -

""the [harm-causing) conduct and goes to whether the policy and legal convictions of the community, constitutionally understood, regard it as acceptable. It is based on the duty not to cause harm - indeed to respect rights - and questions the reasonableness of imposing liability."

It went on to state that:

"The statement that harm-causing conduct is wrongful, expresses the conclusion that public or legal policy considerations require that the conduct, if paired with fault, is actionable. And if conduct is not wrongful, the intention is to convey the converse: 'that public or legal policy considerations determine that there should be no liability; that the potential defendant should not be subjected to a claim for damages', notwithstanding his or her fault.

[22] Wrongfulness is generally uncontentious in cases of positive conduct that harms the person or property of another. Conduct of this kind is prima facie wrongful. However, in cases of pure economic loss - that is to say, where financial loss is sustained by a plaintiff with no accompanying physical harm to her person or property - the criterion of wrongfulness assumes ·special importance. In contrast to cases of physical harm, conduct causing pure economic loss is not prima facie wrongful. Our law of delict protects rights and, in cases of non-physical invasion, the infringement of rights may not be as clearly apparent as in direct physical infringement. There is no general right not to be caused pure economic loss.

[23] So our law is generally reluctant to recognise pure economic loss claims, especially where it would constitute an extension of the law of delict. Wrongfulness must be positively established. H has thus far been established in limited categories of cases, like intentional interferences in contractual relations or negligent misstatements, where the plaintiff can show a right or legally recognised interest that this defendant infringed.

[24] In addition, if claims for pure economic 'loss are too freely recognised, there is the risk of 'liability in an indeterminate amount for an indeterminate time to an indeterminate class'. Pure economic losses, unlike losses resulting from physical harm to person or property.

'are not subject to the law of physics and can spread widely and unpredictably, for example, where people react to incorrect information in a news report, or where the malfunction of an electricity network causes shut-downs, expenses and loss of profits to businesses that depend on electricity'.

[25] So the element of wrongfulness provides the necessary check on liability in these circumstances. It functions in this context to curb liability and, in doing so, to ensure that unmanageably wide. or indeterminate liability does not eventuate and that liability is not inappropriately allocated. But it should be noted • and this was unfortunately given little attention in argument • that the element of causation (particularly legal causation, which is itself based on policy considerations} is also a mechanism of control in pure economic loss cases that can work in tandem with wrongfulness.

[26] This case is manifestly one of pure economic loss. Would it be reasonable to impose liability on the department in the circumstances? Although there is no 'checklist' of relevant considerations, the enquiry does not call for an 'intuitive reaction to a collection of arbitrary factors but rather a balancing against one another of identifiable norms'."

The Constitutional Court then pointed out that in respect of the delict of intentional interference with contractual relations, the cases where conduct may arguably be prima facie wrongful are limited. The court went on to hold [30]:

"They involve a situation where a third party, A, the defendant , intentionally induces a contracting party, B, to breach his contract with the claimant, C, without lawtul justification for doing so. But the department did not induce iLima's breach in the relevant sense. In these circumstances this would require an act of persuasion directed at iLima with the intent that it dishonour its agreement with Country Cloud. The defendant wrongdoer thereby becomes an accessory to the primary wrong: the breach of contract. The act of persuasion, paired with intent, establishes this accessory liability. Jn Pikkewyn Ghwano, for example, the defendant wrongdoer induced an employee of the plaintiff to breach his employment contract by assisting him to sell a competitor's product and by writing the orders for the product for the employee. By contrast iLima's breach of the loan agreement with Country Cloud was simply a consequence of the department's conduct in cancelling the completion contract. There was no act of persuasion.

Liability has also been established in cases· where A refuses to vacate premises owned by B, which interferes with the lease agreement between B and her tenant, C, causing C loss. Both Dantex and Lanco involved these circumstances. While the plaintiff's claim in Dantex failed because fault was not alleged, the plaintiff in Lanco succeeded. But that case is different from Country Cloud's. The act of interference in Lanco involved the holding-over of leased premises. The defendant there did not simply cause the plaintiff to lose its right to occupy the premises. The defendant usurped that right, appropriating it for itself. It also did so in a manifestly 'dishonest and mischievous' way. The factual matrix in this case - where the defendant's supposed act of Interference is the cancellation of an entirely different contract - is thus distinguishable from that which confronted the court in Lanco. The department's responsibility for Country Cloud's loss is very different.

So Country Cloud's claim is not on a par with the cases considered above. Nor were we referred to any other similar case in which a delictual remedy was provided. But I did not take Country 'Cloud to dispute this. In its submissions it acknowledged that recognition of liability in this case would be novel and an extension of the law of delict. In the light of this the wrongfulness of the department's conduct must be established positively. It is to this enquiry - and to the competing considerations that must be weighed under it - to which I now turn."

[31] The court went on to hold that it was correct to state that the department had intention in the form of dolus eventualis, which is satisfied where a wrongdoer foresees the possibility of a consequence . eventuating as a result of her conduct but reconciles herself with that fact and proceeds anyway. In this regard it was pointed out that the relevance of the nature of fault and fault - related considerations in the wrongfulness inquiry has been recognized on a number !occasions. Referring to Supreme Court of Appeal authority with approval the court recognized that amongst the considerations that may influence the policy decision of whether or not to impose liability is the nature of the fault that is proved as well as other fault related factors. Accordingly intentional conduct may attract legal liability whilst the same conduct might not be regarded as wrongful if the degree of fault established was no more than negligence. Even motive to cause harm or particular awareness of the risk of serious harm that may follow is relevant to wrongfulness. It was emphasized in that matter that until the court was satisfied that the department wronged Country Cloud, its claim did not get off the ground.

[32] Returning to Masstores, which raised the so-called novel question that arises and that is whether the breach by an outside party of its lease obligations towards a contracting party can give rise to a delictual action by the other party to the contract in circumstances where the beach impacts directly on the latter and infringes upon its contractual rights. That is of course, a somewhat different question to the one which must be answered here, and that is whether the conclusion of a contract of lease by C, or the amendment of an existing lease with the landlord B, which has the effect of prejudicing an outside parties' contractual relationship of lease (A) with a particular entitlement as to what it may sell coupled with B's undertaking not to allow another party to trade to the same extent in the same manner, can give rise to a delictual action by A to the contract as against C, in circumstances where the breach impacts

directly on its contractual entitlement and infringes upon its contractual rights with B.

[33] In that instance, the three requirements that must be met in such a claim are: an unlawful act; which constitutes interference in the contractual relationship; and which is committed with some form of dolus.

[34] Having regard to the parties' arguments put up by their respective counsel, with great skill and at times illuminating, I wish to stress the elements of delict of wrongful interference with rivals contractual relationships.

[35] As already set out above in considering this category of action in the law of delict, the requirement of an unlawful act requires a wrongful act. This requirement of wrongfulness is simply to limit cases involving liability for pure economic loss determined by legal and public policy considerations. In this matter it must be considered whether there has been a breach of a legal duty or, in the alternative, as the constitutional court put it in Country Cloud (CC) at [26] there must be a determination of whether a subjective right has been infringed. This requires a determination of the objective

reasonableness of the conduct of the person who acted in the light of the prejudice he caused to another. Objective reasonableness is determined by the general legal convictions of society, a value judgment [21]. In matters such as this, we deal with the second

category being the intentional deprivation of the benefit a contracting party would otherwise have obtained from performance under a contract. Country Cloud (CC) [26].

[36] In Country Cloud (CC) [30] as pointed out above, the court referred to cases where the Defendant intentionally induced a contracting party to breach his contract with the claimant with no lawful justification for doing so. It continued to refer to a second type of case with the defendant usurped that right" appropriating it for itself, referring in that matter to doing so in a manifestly dishonest and mischievous way. In considering that the claim in that matter did not fall into either category the question arose simply as to whether this category novel extension of the rule in delict was justified. The court found that Country Cloud must persuade it that the department was responsible for the loss suffered, put otherwise "Until we are satisfied that the

department wronged Country Cloud, its claim does not get off the ground.”

[37] In Masstores it was argued that inducement was a requirement for the claim. In this matter. it is argued for Game that there are only two ways in which the delict can be committed - the first the inducement form where the Defendant with intention actively induces or persuades the third party to breach his contractual obligations to claimant, and the second that the Defendant by use of unlawful means prevents·

the third party from performing its contractual obligations to claimant. It refers to this as the "prevention form". It is argued that both forms of this delict have as their essence and requirement that the Defendant interferes with the contractual

obligations of the third-party towards claimant and causes (whether by inducement or prevention) the third-party not to perform its obligations to claimant.

[38] The limitation, in this instance, to so-called named and the only recognized delict in this context of inducement or prevention is in my view incorrect in principle. What must be recognized is that the concepts and limitations of wrongfulness guide, and limit, the cases in which there will be liability in this kind of delict in respect of wrongful interference with rivals contractual relationships. What the Supreme Court of appeal held in Masstores, which is perfectly consistent with Country Cloud in the constitutional court, is simply that one must look at wrongfulness in either of the two relevant contexts. the beach of a

legal duty or the determination of whether a subjective right has been infringed utilizing objective reasonableness in determining the general legal convictions of society - a value judgment. One such claim is the intentional deprivation of a benefit a contracting party would otherwise have obtained from performance under a contract. In a case involving intentional infringement upon a party's subjective right to exclusivity to operate a supermarket, the court rejected the contention that claimant had to prove the Inducement of the landlord by the Defendant in that regard. On the contrary, the court held that inducement or enticement is not a requirement of the claim based on unlawful interference in a contractual relationship, the development of our law showing that while enticement or inducement certainly does constitute an interference, "conduct other than enticement or inducement may well constitute an interference for the purposes of the lex aquilia" . The court pointed out that this much has been confirmed in Country Cloud (CC) the court referring to the action arising ·from a usurption of a right.

[39] In fact, the court commented in Masstores that the Constitutional Court had not sought to restrict the causes of action to inducement cases only but expressly recognized cases where a right was usurped or what the Supreme Court of Appeal had referred to as the "deprivation of a benefit". In commenting that there are two types of delictual action in interference cases (inducement or enticement being the one) the court said: "... And others where there is a breach of a legal duty or the infringement of a subjective right" this opens the door to non-inducement/enticement cases to a broader category, limited by wrongfulness involving the beach of a duty or the infringement of a subjective right. In my view, this is incorrectly described and limited by counsel in arguing for Game as the prevention form. I say this in the context that I understood the argument that the second prevention form, requires the Defendant to have used unlawful means to prevent the third-party from performing his contractual obligations to claimant, this requiring interference, and this being absent, so it was argued.

[40] I agree with Shoprite's counsel that there is no limitation on the category of wrongful conduct which can together with the other elements of the delict constitute same. While our case law recognizes that to persuade a contracting party to breach its contract with the innocent party or where a third party usurps or deprives the innocent party of a contractual benefit, neither inducement or persuasion is a prerequisite - limitations being created by wrongfulness not by terminology. I agree that in this matter, in any event, Shoprite's case against Game falls within the usurption of a right or deprivation of a benefit category which is clearly in our law prima facie wrongful. Accordingly, even if it can be argued that inducement has been shown, it is unnecessary for Shoprite to go that far, if it is shown that there is a deprivation of the benefit. The question is whether the deprivation of that benefit would, having regard to the community's legal convictions, be countenanced.

[41] I do not understand the Constitutional Court to have referred to the Defendant in having usurped a right or appropriated it for itself to have added a requirement that it must have been done in a manifestly dishonest and mischievous way. In this regard I agree with Olsen J in the Spa Group Limited v The Synergy Income Fund Limited and three others: case number 8021/201, that it was not intended to convey in Country Cloud that the label "dishonest and mischievous”·must be attached to the conduct of an interfering Defendant as a requirement

for wrongfulness.

[42] I agree that Country Cloud (CC) did not purport to hold that our law limits itself to the two categories referred to above. Why would it have done so when the inquiry is one concerning wrongfulness, recognized categories raising a prima facie inference of wrongfulness whilst others, as yet unrecognized, require an original application of the applicable principles thereto.

[43] I hasten to add that counsel for Applicant did not abandon the inducement argument, contending that whilst it was unnecessary to determine this, this was In any event established on a proper approach to the papers it being overwhelmingly probable, so it was argued, that Game did induce or persuade Whirlprops to conclude a new lease with the landlord containing its competing use rights.

[44] Game argued, as I understood it, that it acquired and holds a real right to trade as it wishes in the premises it leases from Whirlprops. As I understand it the right obtained by Game once it took possession under the lease was a limited right to the property of another for the duration of the lease. The restriction on trading imposed on the property is not mere collateral terms of the lease. In my view, this is an issue having regard to the conclusions which I reached which can be dealt with in another appropriate case,

I having reached the factual conclusion that Game had prior notice of the Applicant's rights with respect to the restricted trading

activities. I agree in this regard with the judgment of Olsen J in the Spar Group [24] - [27].

[45] The above constitutes a careful analysis of the relevant legal issues as a background to analyzing the relevant facts on the proper approach to the papers.

The Analysis:

[46] Flowing from the above and in considering the three requirements which must be met for a successful claim based on the unlawful interference in a contractual relationship it is necessary to consider:

(i) whether there was a wrongful act;

(ii) which constitutes an interference in the contractual relationship; and

(iii) which is committed with some form of dolus.

[47] As pointed out in Country Cloud (CC) the answer to the question as to whether the Game is liable in delict to Shoprite rests on whether Game's conduct, in this matter, in particular, in concluding the 2014 lease and its subsequent addendum, is wrongful. Put otherwise, before it gets out of the starting blocks, Shoprite must demonstrate that Game wronged it. The question is whether the policy and legal convictions of the community, constitutionally understood, regard Game's harm causing conduct as acceptable.

[48] As set out in Country Cloud (CC) the statement that harm causing conduct is wrongful expresses the conclusion that the public or legal policy considerations require that the conduct, if paired with fault, is actionable.

[49] In pure economic loss cases wrongfulness must be positively established but has thus far been established in the limited category of cases one of which is the intentional interference in contractual relations. As pointed out in Country Cloud (CC) the legal category is narrow and includes situations where the Defendant intentionally induces a contracting party to breach its contract with claimant without lawful justification for doing so but is extended to cases where the Defendant usurped a subjective right appropriating this for itself. As I have said this need not be manifestly in a dishonest or mischievous way to qualify.

[50] In my view, Shoprite's claim is on a par with the cases in which the intentional interference with contractual relations falls into the established, yet limited categories of cases where wrongfulness is inferred, providing it is demonstrated that Game intentionally usurped Shoprite's entitlement to a personal right, appropriating this for itself.

[51] In this regard, it is clear from the papers that the conclusion of its new lease in 2014 was in circumstances where the introduction of the Foodco concept had elicited opposition from Shoprite in the Western Cape, and there can be no argument that Game knew of Shoprite's exclusive use rights at the Plaza at that time. I say that inasmuch as in these proceedings Gounder, the Game property

manager, does not assert that Game is not aware that it is not uncommon for anchor tenants such as supermarkets to require some form of exclusivity from the lessor which accounted for the standard use provisions in the Game lease. Indeed this is clear from Game's submission to the Competition Tribunal in 2015 that its wish to expand its offering to include the supply of what is described as fresh groceries, vegetables, meat, dairy and bakery products alongside its general merchandise and non-perishable grocery offering, went against the protection afforded by historical exclusivity provisions in the lease agreements at shopping malls in favour of the incumbent retailers. Indeed I do not consider, on the proper approach to the papers, that Game has effectively disputed that since at least 2013 it had knowledge of Shoprite's exclusivity right.

[52] It follows, that in the context of the wrongfulness inquiry and having regard to the fact that this matter falls into a recognized category of wrongful conduct, Game has acted unlawfully and wrongfully by at least usurping Shoprite's exclusivity entitlement to conduct the business of a supermarket or put otherwise, in obtaining a use clause from Whirlprops in 2014 and by way of its addendum in 2016 which entitled Game to trade with no restrictions on merchandise mix and being entitled to sell "food"

with all other ancillary and related businesses. This was a clear change from the original 2006 lease which limited Game's entitlement

to sell food as to "non--perishable." And which included a use restriction that it would not trade as a general food

supermarket. There can be no doubt that this successive change in use terms in Game's favour extended its entitlement well into Shoprite's exclusivity in respect of it including a butchery, bakery and fresh fruit and vegetable products. It is consequently in my view unnecessary to decide, whether this also constituted Game's Plaza store as a supermarket in competition with Shoprite having been originally the only supermarket in the Plaza.

[53] In the result, this constitutes a usurpation of exclusivity entitlement, its personal right, to sell the extended food mix. As stated Game became aware of Shoprite's exclusivity use and product entitlement in at least 2013. but nevertheless. set itself up to trade in fresh food threatening the supermarket category of store contrary to the above and in knowledge of the fact that this infringed upon Shoprite's entitlements in the Plaza. It further continues to do so in defiance of a demand from Shoprite on 15 March 2016 that it desist from doing so.

[54] In my view. the legal convictions of the community would not countenance such conduct.

[55] In turning to intent and it being clear that dolus eventualis suffices insofar as Intent is concerned in such matters it is clear that Game had a general idea at least of Shoprite's exclusivity entitlement as a supermarket, which included it as a sole seller of fresh food at the Plaza, at least from 2013 and more specifically it having been informed in March 2016 in writing of that exclusivity, Game failed to heed this, being conduct clearly constituting direct Intent or at the very least dolus eventualis.

[56] In the result, at least a prima facie right has been established as an unlawful/wrongful act by Game which constitutes interference in the contractual relationship between Shoprite and Whirlprops and which has been committed with the necessary form of intent. This satisfies the requirements that must be met for a successful claim based on the interference in contractual relationships in the context of the usurption of a right. Whilst it is not necessary 'to do so having regard to my findings above.. I agree with counsel for Shoprite that. in any event, it is clear from the facts and from the state of mind that Game had from 2013 forward. that the changes brought about to its lease successively, referred to above, is such to indicate at least prima facie that it induced and indeed persuaded Whirlprops to afford it use rights which breached Shoprite's exclusivity entitlement as analyzed above, and that this action fell. in any event, into the category of interference with contractual relationships. It is clear that Game intended to sell an extensive range of perishable fresh food which undoubtedly infringed upon Shoprite's exclusivity provisions with Whirlprops. I have no doubt at all that Shoprite as an anchor tenant supermarket required that exclusivity in the lease agreement for good reason it being an essential basis of its tenancy and an integral entitlement to the right of occupancy which it committed itself to.

[57] As to the balance of convenience, it seems to me that the balance is in Shoprite's favour, more especially having regard to the nature of the right it has established. Shoprite has a clear exclusivity right and has traded and continues to trade accordingly. It has a clear income stream therefrom which, if Game commences retailing fresh food would undoubtedly be prejudiced. Game in turn would simply be prevented from utilizing its expanded section for the sale of fresh food, and it would continue trading as it has always done without that fresh food. The extended floor space would be unused for that purpose, but could be re-purposed. As Game has not traded in fresh food and fruit up to now it will not lose its established customer base, the contrary with Shoprite.

[58] I should mention. in respect of all the relief sought in this matter, that during argument of this matter Shoprite tendered an undertaking that in the event of the interim interdict be granted against First Respondent and not being made final in substantially the same terms. the Applicant would pay to the First Respondent all damages, if any, which the First Respondent may prove it has suffered as a result of the operation of the interim interdict. As against First Respondent, this seems also to me, to dictate that the balance of convenience for substantially in Shoprite's favour.

[59] In my view, accordingly, it follows from the above and is clear that the prerequisites for an interim interdict, at the very least, have been met by Shoprite.

[60] Not only is there, at the very least, a prima facie right established relevant to Shoprite's exclusivity entitlement in the sense set out above. but it is clearly established that in weighing the prejudice to Shoprite if the interim relief is not granted against the prejudice to the Respondent if it is taking into account the strong prospects of success, substantially favours Shoprite.

Second Respondent:

[61] Whirlprops' first special defence is said to be Shoprite's waiver of its right to exclusivity. That means the waiver of Shoprite's entitlement to trade exclusively as a supermarket, put otherwise to sell fresh perishable food.

[62] I agree completely with counsel for Shoprite's argument that properly analyzed on the appropriate test Whirlprops has failed to lay any evidentiary foundation herefor. Further, and in any event, as pointed out in argument Shoprite could not have acquiesced in the alleged conduct by Game which did not exist at the relevant time. This allegation is premised upon the factual foundation that the Plaza Game store traded in fruit and vegetables and fresh food since at least 2010. Not only does Game itself not make such an allegation, but, as pointed out above, Game commenced introducing the Foodco concept into certain of its stores in 201o

which included fresh pre­ packaged meat and poultry products, it being clear on the affidavits that this allegation does not expressly relate to the Plaza game store and there are none of the required refrigeration freezing equipment to facilitate the above event at the present time. Further, on 3 September 2015, and is also pointed out above, Game and Whirlprops communicated in writing about the need to introduce fresh merchandise into that store. This will only occur once the extensions have been completed. That there is no fresh fruit and food currently in the Game store as is established, in my view, on the papers Whirlprops' allegations in this regard seems to be premised on it's misreading of Game's answering affidavit.

[63] It is patently clear, accordingly, that neither waiver nor estoppel has been or can be, established on the part of Shoprite in Whirlprops' favour

[64] I have given careful thought to Whirlprops last-ditch attempt at a defence being the public policy argument. This does not, in my view, even get out of the starting blocks.

[65] In my view, and again at the very least. Shoprite has established a prima facie right as against Whirlprops and has strong prospects of success in obtaining final relief. Further I consider there to be no merit in Whirlprops' remaining arguments and certainly no reason why specific performance should not operate. Further in my view, the balance of convenience clearly favours Shoprite.

The Result:

[66] At the end of argument, the parties were in agreement that paragraph 2.1 and 3.1 of the Notice of Motion should read "a supermarket, trading in fresh foods" in place of the concept of selling perishable food.

[67] In the result, the application succeeds, there to be an order in terms of paragraphs 2 to 5 of the Notice of Motion as amended, in accordance with the order below:

A1. The First Respondent is interdicted and restrained from using any portion of the shopping centre situated at 35 Nelson Mandela Drive, Mthatha, known as the Mthatha Plaza Shopping Centre ("the Plaza") to operate or trade as:

1.1. a supermarket trading in fresh foods;

1.2. a fruit and vegetable shop,

pending the determination of legal proceedings to be instituted by the Applicant in which it seeks similar final interdictory and/or related relief against the First Respondent.

2. The Second Respond is directed to take all necessary reasonable steps to prevent the First Respondent from using any portion of the Pfaza to operate or trade as:

2.1. a supermarket trading in fresh foods;

2.2. a fruit and vegetable shop,

pending the determination of arbitration proceedings to be instituted by the Applicant in which it seeks similar final and/or related relief against the Second Respondent.

3. The Applicant is directed to institute, within ten days of the date of this order:

3.1. the legal proceedings against the First Respondent referred to in paragraph 1 above;

3.2. the arbitration proceedings against Second Respondent referred to in paragraph 2 above.

4. First and Second Respondents are directed to pay the costs of the application, Jointly and severally, the one paying the other to be absolved, such costs to include the costs of two counsel.

B. This order is subject to the following undertaking by Shoprite in favour of Game:

"The Applicant undertakes that, in the event of any interim interdict granted in this application against the first respondent not being made final in substantially the same terms in the ultimate decision in an action to be instituted within 10 calendar days of any interim order, the applicant will pay to the first respondent all damages, if any, which the first respondent may prove to have suffered, as a result of the operation of the interim interdict."

______________________

M.J. LOWE

JUDGE OF THE HIGH COURT

Counsel for the Applicant:

Adv Muller SC and Adv H.L Du Toit

Instructing Attorneys:

Wheeldon Rushmere and Cole Inc.

119 High Street

GRAHAMSTOWN

Counsel for the First Respondent: Adv SA Cilliers SC and Adkv K Green

Instructing Attorneys:

NetteItons

118A High Street

Counsel for the Second Respondent: Adv A de Wet SC and Adv E Bezuidenhout

Instructing Attorneys :

Neville Borman & Botha

22 Hill Street

Borman & Botha