Totalgaz Southern Africa v Solgas (Pty) Ltd and Another, Easigas (Pty) Ltd v Solgas (Pty) Ltd and Another (22007/2006, 2006/23048) [2008] ZAGPHC 170; 2009 BIP 347 (W) (13 June 2008)

IN THE HIGH COURT OF SOUTH AFRICA

(WITWATERSRAND LOCAL DIVISION)

CASE NO. : 22007/2006

In the matter between:

TOTALGAZ SOUTHERN AFRICA Appellant

and

SOLGAS (PTY) LTD First Respondent

EDUARDO PEREGRINO CASTRO Second Respondent

AND CASE NO. : 2006/23048

In the matter of:

EASIGAS (PTY) LTD Appellant

J U D G M E N T

JAJBHAY, J:

INTRODUCTION

[1] This is an appeal against a judgment in the court below (Van der Linde AJ) where the learned Judge dismissed the relief sought by the Appellants. The claims of the appellants, almost identical in their nature, were consolidated and dealt with as such.

[2] The appellants as applicants sought an order in the court below along the following terms:

“interdicting the first respondent from receiving or being in possession of steel pressurised liquid petroleum gas (“LPG”) cylinders bearing certain identification marks (prayer 1);

alternatively to 2.1 interdicting and restraining the first respondent from filling or distributing the applicant’s cylinders and permitting the applicant to attend and enter upon the first respondent’s premises on a weekly basis to collect cylinders (prayer 2);

ordering the first respondent to surrender on a weekly basis any of the applicant’s cylinders which may come into its possession, failing which the sheriff is authorised to do so (prayer 3);

ordering the respondent to return all the applicant’s cylinders presently in its possession (prayer 4).

[3] The appellant also sought against itself an order that:

it pay R150 plus Value Added Tax for each cylinder returned by the respondent to it; and

if the cylinder has been filled with LPG, it compensates the respondent in respect thereof at the prevailing rates at which the appellant supplies LPG to its distributors.”

BACKGROUND FACTS

[4] Liquefied Petroleum Gass (“LPG”) is predominantly a mixture of propane and butane which at normal temperatures and atmospheric pressure, are gasses, which like petrol, are obtained in the distillation process of crude petroleum. LPG is highly flammable. It is odourless and invisible. It is mixed with a substance known as Mercaptan to ensure that any leakage can be detected by means of its odour. Undetected leakage of LPG, when mixed with air and ignited will burn.

[5] LPG is used for cooking and heating. LPG is also used as an industrial fuel in industrial applications, as a motor vehicle fuel and for other domestic and commercial purposes.

[6] LPG cannot be economically stored and distributed without being converted to liquid form. This in turn, necessitates the use of containers called “pressure vessels” which are capable of withstanding the pressure that is required to keep LPG in a liquid form.

[7] LPG is transported at the instance of the major suppliers in bulk pressure vessels mounted to road vehicles, or railcars, to bulk depots of the major suppliers, or their distributors, or to other customers of the major suppliers who have been provided by the major suppliers with stationary bulk pressure vessels.

[8] A major segment of the market is the so-called “cylinder market” as opposed to the “bulk market”. In the cylinder market the LPG is conveyed by bulk road or rail transport to the depots of the major suppliers, or their distributors, where it is stored in bulk pressure vessels. The bulk pressure vessels at bulk depots of distributors are generally provided on loan by one of the major suppliers to whom the distributor concerned is contracted. The predominant purpose of bulk depots is to fill, store and distribute LPG importable pressure vessels, generally known as cylinders or bottles, sometimes with the prefix “gas”. These cylinders are also designed to withstand the vapour pressure exerted by LPG under normal atmospheric conditions.

[9] The design, handling, filling, regular maintenance and inspection of cylinders is a safety critical matter and is therefore covered by a code issued by the South African Bureau of Standards (“SABS”) and reinforced by regulations under the Occupational Health and Safety Act, 1993, as amended.

[10] The cylinder market is served by the supply of LPG in cylinders in predominantly standard sizes of 9 kg, 14 kg, 19 kg and 48 kg. The appellants together with other major wholesalers of LPG in South Africa enjoy a significant share of the cylinder market. The appellants make use of a distribution network throughout the country and hold numerous contracts for the supply and distribution of LPG. The appellants do not have a distribution agreement with the first respondent or any party on its behalf. Accordingly the appellants contended that there is no basis for the respondents to deal with the appellants’ cylinders.

[11] The appellants contended that they, together with the other major wholesale suppliers of LPG, sell LPG inter alia through what is called the “cylinder market” where they supply their products in a similar manner which allows them to retain ownership of their cylinders. When a customer or end-user purchases LPG from the major supplier or distributor for the first time, the customer does not purchase but pays a refundable deposit in respect of the gas cylinder which is R150 plus VAT whatever its size. The cylinders, which are marked with identification, appropriately identifying the supplier, remain the property of the supplier and the customer purchases only the contents of the gas cylinder. A customer may replace an empty cylinder from time to time by way of “exchange” that is returning the empty cylinder and thereafter being provided with a “full cylinder”, but charged only for the contents of the LPG in the cylinder. In practice, suppliers and distributors seldom service customers by refilling empty cylinders when they are returned, but usually provide the customers with a pre-filled cylinder. The empty cylinders returned by the customers are refilled later, but only by those authorised to do so, and thereafter supplied to another customer.

[12] For many years there existed a practice amongst the main suppliers to enable them to regain possession of their cylinders. When a supplier or distributor receives in exchange cylinders belonging to another supplier it returns them to that supplier, receiving in exchange such cylinders as the latter may have belonging to the former. Then, if a number of empty cylinders exchanged do not match, the recipient of the greater number will pay the current deposit price on the empty cylinders received which exceed those delivered by it.

THE RELEVANT REGULATIONS AND CODE OF PRACTICE OF SABS

[13] In terms of the Regulations promulgated by the Minister of Labour acting under sections 43 and 44 of the Occupational Health and Safety Act, 1993, the Code of Practice of the South African Bureau of Standards 019 of 2001 (“the Code”) applies to cylinders to be filled with LPG.

[14] Section 10(2) of the Code deals with “persons competent to fill containers”. Section 10.2.1(d) of the Code currently provides as follows:

“No person shall fill a portable container with gas unless he is competent to fill containers with the gasses he handles, and unless:

he is fully conversant with the relevant requirements of this standard,

he is satisfied that the container is suitable for the intended purpose,

the container is not due for periodic inspection or testing (see Table 9), and

(d) “permission to fill the container has been granted by the

owner of the container” (emphasis added)

[15] The Code specifically provides that these requirements are “solely for safety reasons, since the cylinder containment history is in certain circumstances an essential reference for correct filling. It is not intended as a commercial restraint”.

THE CASE FOR THE APPELLANTS

[16] The appellants as owners of their cylinders contended that they are entitled to prohibit the respondents from using them and to their return. The appellants further contended that the first respondent has not been granted the appellants’ permission under section 10.2.1(d) of the Code entitling the respondent to fill the appellants’ cylinders and the appellants are therefore entitled to prohibit the respondent from filling and therefore distributing the cylinders.

[17] In answer to the test regarding ownership, the first respondent relied upon what its deponent, the second respondent alleged to be a “trade usage, custom or practice” in the gas industry. The first respondent asserted that the trade usage or custom negates any claim that the appellants may have to ownership of the cylinders. In the alternative, the respondents contended that if the appellants retained ownership of their cylinders, the appellants’ claim to ownership may be refuted by reason of the usage, circumstances and manner in which customers come into possession of the cylinders.

[18] In response to the appellants’ case where it relies upon section 10.2.1(d) of the Code, the first respondent claims that the appellants and all suppliers have “tacitly and/or impliedly, if not expressly, consented to the first respondent … filling its cylinders when requested to do so by customers in possession thereof and to return such filled cylinder to the customer”.

DISCUSSION OF THE EVIDENCE

[19] The essence of the appellants’ argument regarding the first respondent’s answers to the ownership may be summarised as follows. The evidence adduced by the first respondent does not establish a custom or trade usage as alleged by it. However, the appellants contended that if it is assumed that there is such a custom or trade usage, it would, at best for the first respondent, be a defence to prayer 1 but not to prayers 3 and 4. On the facts it was contended on behalf of the appellants that the first respondent failed to show any implied permission that denied the appellants’ rights as owners to claim the cylinders.

[20] The appellants set out their response to the first respondent’s answer regarding the appellants’ reliance upon the Code. It was contended that the relevant provisions of the Code are introduced expressly for the purposes of safety. Anything short of actual permission granted by the owner does not according to the appellants constitute compliance with section 10.2.1(d) of the Code. It was set out that while the conduct of the appellants and other suppliers may be such that others (but not the first respondent) may believe that a consumer has the right to use, abuse and even destroy the cylinders, there is not the slightest suggestion in that conduct that the end-consumer is empowered to grant permission on behalf of the owner under the relevant provision of the Code for cylinders to be refilled.

[21] In the present matter, the appellants seek an interdict in terms of prayers 2, 3 and 4 of the Notice of Motion. Therefore, it is necessary to determine not only the respective rights of the appellants and the first respondent, but also whether or not there has been and will be an infringement by the first respondent of those rights. In order to do so one must examine what is it that the first respondent has done and claims that it is entitled to do: Plascon Evans Paints Ltd v Van Riebeeck Paints (Pty) Ltd [1984] ZASCA 51; 1984 (3) SA 623 AD; Carrara & Lecuona (Pty) Ltd v Van der Heever Investments Ltd and Others 1973 (30 SA 716 (T). In the application of the test set out in Plascon Evans Paint Ltd, as well as the guidance offered in the Carrara matter, my view in the present matter is that this Court is able to grant a final order in the form of an interdict. I will demonstrate the reasons for my view that the respondents’ reliance on the establishment of a trade usage, as well as their reasons for maintaining that the Code is not applicable to them is simply untenable. This is clearly a matter where the implementation of a robust common sense approach is called for. The contention that this matter ought to have been initiated by way of action does not hold water.

[22] The practice which the first respondent claims exists (and that it is entitled to follow) is one where an end-user brings in a cylinder which bears the logo of a competitor for refilling, and if the supplier does not have sufficient stocks of its own pre-filled cylinders to exchange, the distributor is entitled to fill, on the spot, the cylinder even if it carries the competitor’s logo and return the cylinder to the customer.

[23] In terms of the practice alleged by the first respondent it is claimed that it is not always practicable to refill the cylinder on the spot. If a customer brings a cylinder for refilling, the retailer may instead of refilling the cylinder immediately provide the customer with an already refilled cylinder and retain the empty cylinder. If the cylinder belongs to another supplier it exchanges the cylinder on a like for like basis.

[24] The evidence indicates that the first respondent in fact does not limit itself to the refilling of cylinders for end-users. Not only does it refill the appellants’ cylinders for various dealers and distributors (as opposed to the end-users) but it also produces no evidence to show that when adhering to the alleged practice it invokes, the respondent is in fact complying with the condition it contends for, that is it has an absence of a sufficient stock of pre-filled cylinders. In my view, the conduct of the first respondent is not justified by the practices it alleges exist. This in turn, not only casts severe doubt as to the bona fides of the respondents but also their claim to the alleged practice.

THE ISSUES IN THE COURT BELOW

[25] The issues that the court below was required to determine were:

25.1 whether the appellants had established ownership;

25.2 if so, whether the first respondent could defeat that ownership by estoppel or by the implied licence or permission alleged to have been granted to the end-user;

25.3 whether there was a custom or trade practice as alleged by the first respondent and, if so, whether it constituted a defence to the claim; and

what answer, if any, there was to the appellants’ reliance on section 10.2.1(d) of the Code.

[26] The learned Judge in the court a quo correctly found that the ownership in the cylinders remained with the original supplier, in this case the appellants. He further correctly identified that the basis upon which the first respondent claimed to be entitled to fill (and therefore distribute) any of the appellants’ cylinders (and cylinders belonging to other suppliers for which it is not a distributor) was in terms of a trade practice upon which it relied. Then, he found that there was a trade practice which permitted the first respondent to fill cylinders belonging to the appellants (and other suppliers for which the first respondent is not a distributor). The learned Judge then enquired into trade usages which became tacit terms of a contract between parties and concluded that the respondents’ assertion justified a tacit term whereby the trade usage, including the exception referred to, entitled the first respondent to refill empty cylinders of the appellant on the spot and return them to the end-user.

[27] In arriving at his finding, the learned Judge in the court below erred in two material respects. Firstly, he failed to appreciate the distinction between a trade usage in the broad sense for which there are a number of requirements that he did not even consider, and a tacit term of a contract which arises as a result of a trade usage, incorrectly applying the test for the latter. And secondly, concluding that a trade usage could be a substitute for permission required under section 10.2.1(d) of the Code.

APPELLANTS’ OWNERSHIP

[28] It is not in dispute that the appellants in common with the other major suppliers do not sell the cylinder to others. They merely take deposit for the cylinders. Importantly, the cylinders bear the markings of the respective appellants and in the case of the other major suppliers, their markings. It is not really in dispute that there is in practice a system whereby cylinders that are returned empty to a supplier or distributor who is not the owner thereof, an exchange takes place as a result of which the appellants (in common with the other suppliers) receive return of the cylinders that belong to them. The respondents acknowledge this practice. Therefore, there can be no doubt that the appellants retain ownership of their respective cylinders.

CUSTOM OR TRADE PRACTICE ALLEGED BY THE FIRST RESPONDENT

[29] In our law there is no difference in nature between custom and a trade usage Catering Equipment Centre v Friesland Hotel 1967 (4) SA 336 (O); Tropic Plastic and Packaging Industry v Standard Bank of South Africa Ltd 1969 (4) SA 108 (D) at 119G-120A.

[30] The requirements for a custom, and also for a trade usage are that: it must have existed for a long time; it must have been uniformly observed by the community concerned; it must be reasonable; and it must be certain. Such a trade usage must be distinguished from a trade usage in the narrower sense of the expression, namely those that form a tacit term of a contract Van Breda v Jacobs 1921 AD 330; Catering Equipment Centre case at 338; Golden Cape Fruits (Pty) Ltd v Fotoplate (Pty) Ltd 1973 (2) SA 642 (C); LAWSA Vol 5 para 394 (p 336); 395 (p 336); Golden Cape Fruits (Pty) Ltd at 645G-H.

[31] Terms implied by trade usage need fuller examination. Although classified by Corbett AJA, in the passage from Alfred McAlpine & Son (Pty) Ltd v Tvl Provincial Administration 1974 3 SA 506 (A) 531 as terms implied by law they really occupy an intermediate position between terms implied by law and tacit terms. There will be no room to imply a term by trade usage if the question is covered by an express term. Corbett AJA stated at page 531

“In legal parlance the expression ‘implied term’ is an ambiguous one in that it is often used, without discrimination, to denote two, possibly three, distinct concepts. In the first place, it is used to describe an unexpressed provision of the contract which the law imports therein, generally as a matter of course, without reference to the actual intention of the parties. The intention of the parties is not totally ignored. Such a term is not normally implied if it is in conflict with the express provisions of the contract. On the other hand, it does not originate in the contractual consensus: it is imposed by the law from without. Indeed, terms are often implied by the law in cases where it is by no means clear that the parties would have agreed to incorporate them in their contract. Ready examples of such terms implied by law are to be found in the law of sale, e.g. the seller’s implied guarantee or warranty against defects; in the law of lease the similar implied undertakings by the lessor as to quiet enjoyment and absence of defects; and in the law of negotiable instruments the engagements of drawer, acceptor and endorser as imported by secs. 52 and 53 of the Bills of Exchange Act 34 of 1964. Such implied terms may derive from the common law, trade usage or custom, or from statute. In a sense ‘implied term’ is, in this context, a misnomer in that in content it simply represents a legal duty (giving rise to a correlative right) imposed by law, unless excluded by the parties, in the case of certain classes of contracts. It is a naturalium of the contract in question.”

[32] If the trade usage is known to both parties their knowledge will be one of the surrounding circumstances indicating that the trade usage ought to be incorporated in their contract as a tacit term. The implication will not be made by law but the term will be incorporated into the contract because of the presumed common intention of the parties to include a term customarily included to the knowledge of both of them (even if one party may later deny his knowledge or intention): ABSA Bank Ltd v Blumberg and Wilkinson [1995] 4 All SA 379 (W). But if one party cannot prove that the other knew of the trade usage it will nonetheless be incorporated as an implied term in the contract if, in addition to other requirements, it is so universal and notorious that the party’s knowledge and intention to be bound by it can be presumed: Bertelsmann v Per 1996 (2) SA 375 (T). The proper inquiry must be whether the party professing ignorance has so conducted himself that the other party, on the principle of quasi-mutual assent, is entitled to assume that he knew of the trade usage and intended to incorporate it tacitly in the contract.

[33] In Barloworld Capital (Pty) Ltd v Napier 2005 (1) SA 57 (W) an insured refused to enter into a tripartite agreement with the owner of the property insured, so the proof of a trade usage that insurers will pay owners in certain circumstances gave the owner no right to claim payment. The usage could not operate except in a contractual setting. The circumstances in which a trade usage of which one party has no knowledge will be implied in a contract were fully examined by Krause J in Crook v Pedersen Ltd 1927 WLD 62 and summed up at 71:

“(1) The implication must be a necessary and not merely a reasonable one.

“(2) Where the implied term relied on is based upon a usage or custom, the evidence must be clear and consistent.

“(3) The custom or usage must be long-established, reasonable, have been uniformly observed and certain.

“(4) Generally speaking no one is bound by a term in a contract of which he had or could have had no knowledge.

“(5) Where, however, a custom is universal and notorious a person may be presumed in certain circumstances or cases to have had knowledge of such custom and to have intended to include such custom in his contract.

“(6) Circumstances which might lead to such a presumption are, where a principal deals or employs a person to deal on his behalf with other persons, in a particular market, or where the transaction is peculiar to a particular locality, or where the persons engaged in such transactions belong to a particular class, who, for the better conduct of their business, are subject to certain customs and rules, or where the transaction itself is of a special or peculiar nature.”

An equally clear summary is given by Corbett J in Golden Cape

Fruits (Pty) Ltd v Fotoplate (Pty) Ltd 1973 (2) SA 642 (C) 645G:

“At the trial it appeared that appellant – through its director, Ashworth, who contracted upon its behalf – had no knowledge of the alleged trade usage. This was accepted by the magistrate and his finding in this regard was not challenged on appeal. Accordingly, this is not a case where the trade usage could be said to have been incorporated by the parties as an implied term of the agreement. Nevertheless, despite its ignorance, appellant would be bound by – and the contract in question would be subject to – the alleged trade usage provided that it is shown to be universally and uniformly observed within the particular trade concerned, long-established, notorious, reasonable and certain, and does not conflict with positive law (in the sense of endeavouring to alter a rule of law which the parties could not alter by their agreement) or with the clear provisions of the contract.”

[34] The evidence required was fully considered by Corbett J in Golden Cape

Fruits above at 646-647:

“Generally speaking the Courts require convincing evidence of a trade usage conforming to the requirements listed above. In Van Breda’s case [1921 AD 330] Solomon JA, speaking of the establishment of a custom having the force of law and having referred to the views of Voet [1.3.34] that a turba of witnesses (not fewer than ten) was required in order to do so, remarked (at p. 333) –

‘I think we should refrain from laying down any fixed rule on the subject, as the requisite number of witnesses might very well vary with their character and with the nature of the custom which is set up. Much must in every case be left to the discretion of the Court, which, however, must be satisfied beyond any reasonable doubt that the alleged custom does in fact exist. It is desirable, however, to add that it is better for him who sets up a custom to err on the side of calling too many rather than too few witnesses.’

In Catering Equipment Centre v Friesland Hotel [1967 (4) SA 336 (O)] Erasmus J held that (at p. 340) –

‘In order to prove such a trade custom, the same degree of proof is required as is necessary to prove the existence of a custom in our law. . .’

The same view was adopted in Tropic Plastic and Packaging Industry v Standard Bank of SA Ltd 1969 (4) SA 108 (D) at p 119. In Barnabas Plein & Co v Sol Jacobson and Son, 1928 AD 25 at pp 30-1, however, Stratford JA doubted whether a trade usage had to be as strictly proved as a custom in order to have the force of law. In Crook v Pedersen Ltd [1927 WLD 62] Krause J stated that (at p 70) –

‘The evidence must amount to something more than mere opinion; it must establish the fact of the existence of the usage, and provide instances of the usage having been acted upon, otherwise the testimony will be of little weight.’

[35] In the present case, the first respondent does not claim the existence of any contract between it and the appellants or a tacit or implied term in respect thereof. The custom or trade practice that the second respondent, on behalf of the first respondent, claims to exist has simply not been established. In particular the practice which the second respondent claims in his affidavit exists, has not been uniformly observed, is not reasonable, and is definitely not certain.

[36] In this regard the evidence of De Wet is to the effect that usually suppliers have agreements with distributors and retailers.

He sets out that in terms of those agreements there will be an acknowledgment by the distributor or retailer of the suppliers’ ownership in gas cylinders. The retailer and distributor will also be prohibited from refilling gas cylinders belonging to other suppliers. Therefore, although he was of the view that in the absence of an agreement between the distributors or retailer on the one hand, and the end-user on the other, the end-user would be free to fill the gas cylinder at any supplier. In his experience this does not normally occur.

[37] There are two important features of De Wet’s evidence which contradict the practice claimed for by the second respondent. Firstly, there is usually an agreement between the supplier and the distributor or retailer which prohibits the distributor or retailer from refilling gas bottles belonging to other suppliers. And secondly, it is not normal that the end-user will refill a gas cylinder at a supplier other than that whose cylinder it is.

[38] More importantly, the very existence of agreements between suppliers, on the one hand and distributors and retailers on the other, which prohibit them from filling gas bottles of other suppliers establishes that the practice which the second respondent seeks to invoke is not consistently applied. More often than not it is not applied at all because it is prohibited by agreement. Here, the evidence of De Wet clearly departs from the claims of the second respondent. This in itself indicates the absence of certainty as to what the alleged practice is.

[39] Trade usage, like a custom, acquires essentially the status of law as a result of its consistent use over a substantial period of time and in order to prove its existence the person asserting it must show facts to establish this. The mere opinion expressed by a person as to the conclusion as to what that practice is, without any evidence to support that opinion, is insufficient. LAWSA Vol 5(2) paras 389-396; Catering Equipment Centre v Friesland Hotel 1967 (4) SA 336 (O).

[40] The practice which the respondents claim to exist does not meet the requirements of reasonableness. This practise sanctions the use by one competitor, of the assets and investment of another, to compete with the latter and thereby to derive an unfair advantage. The respondents in fact admit that unscrupulous distributors can take advantage of the exchange system. This in fact impacts on the enormous capital expenditure involved in purchasing new cylinders and the ongoing capital expenditure of maintaining the cylinders. A firm’s strategy is fundamentally about its competitive position vis-à -vis its rivals. This position is due partly to the environment within which it operates in terms of access to inputs, its cost structure and so on, and is partly determined by its decisions. Here, I cannot find that the appellant’s conduct in precluding the first respondent from filling the cylinders of the appellant constitutes unlawful competition. The contention that the appellant’s true motive is to prevent lawful competition is simply incorrect.

[41] The practice contended for by the respondents is unreasonable. The respondents contend that the profit derived from the sale of LPG is made on the sale of LPG and not the cylinders. This allegation is flawed as the provision of cylinders, especially at a deposit of less than cost, represents a cost of making sales. Costs of sales are manifestly relevant when calculating profit from sales. A party such as the first respondent which makes use of a competitor’s cylinder, to sell its own LPG, will necessarily derive an unfair advantage since its cost of sales is reduced in relation to a competitor utilising exclusively its own cylinders. The prejudice to the party making the greater investment in the cylinders, i.e. the appellants, is manifest since the appellants are also deprived of the use of their own cylinders to sell the appellants’ LPG. Their cylinders are being used by their competitors.

PERMISSION UNDER SECTION 10.2.1(d) OF THE CODE

[42] The Code which has been incorporated by reference into Regulation 10 of The Vessels Under Pressure Regulations promulgated in terms of section 43 of the Occupational Health and Safety Act, Act 55 of 1993, by notice R1625 published by the Minister of Labour on 4 October 1996, and which is common cause applies to the appellants’ cylinders, provides for the basic design, manufacture, use and maintenance of cylinders. I have already stated that the court below correctly found that the appellants remain owners of the cylinders after parting with possession thereof. I have also expressed my view that the conduct of the appellant does not constitute unlawful competition.

[43] The respondents asserted that the first respondent’s conduct in filling and distributing the appellants’ cylinders does not constitute a breach of the Code by virtue of the practice or trade usage in terms of which the appellants (and indeed all suppliers) have tacitly or impliedly, and expressly (during June 2005), consented to the first respondent and other competitors filling their cylinders when requested to do so by customers in possession thereof. This contention loses sight of the important fact that the conduct relied upon may establish an entitlement on the part of an end-user to abuse and even destroy a cylinder but does not establish that the end-user is appointed as the owners’ representative to grant the permission to fill, as is required under section 10.2.1(d) of the Code. The ordinary language of section 10.2.1(d) of the Code, and the purpose of the Code as a whole, which is one of safety, renders the respondents’ claim in this regard unsound.

[44] It is trite that the delict of unlawful competition is based on the Aquilian action and, in order to succeed, an applicant must prove wrongfulness. This is always determined on a case by case basis and follows a process of weighing up relevant factors, in terms of the boni mores now to be understood in terms of the values of the Constitution. Any form of competition will pose a threat to a rival business. However, not all competition or interference with property interests will constitute unlawful competition. It is accordingly accepted that it is only when the competition is wrongful that it becomes actionable. The role of the common law in the field of unlawful competition is therefore to determine the limits of lawful competition. This determination, which takes account of many factors, necessitates a process of weighing up interests that may in the circumstances be in conflict. Fundamental to a determination of whether competition is unlawful is the boni mores or reasonableness criterion. This is a test for wrongfulness which has evolved over the years: Phumelela Gaming and Leisure Limited v Grundlingh and others [2006] ZACC 6; 2006 (8) BCLR 883 CC;

Atlas Organic Fertilizers (Pty) Limited v Pikkewyn Ghwano (Pty) Limited and Others 1981(2) SA 173 (T); Payen Components SA Ltd v Bovic Gaskets CC and Others [1994] 3 All SA 221 (W).

[45] In cases such as the present several factors are relevant and must be taken into account and evaluated. These factors include the honesty and fairness of the conduct involved, the morals of the trade sector involved, the protection that positive law already affords, the importance of competition in our economic system, the question whether the parties are competitors, conventions with other countries and the motive of the actor. These factors have not been addressed by the respondents and in their absence, I cannot make a finding that the conduct of the appellant constitutes unlawful competition.

[46] In imposing safety considerations the Code is also necessarily concerned with accountability for such safety which it achieves by providing for proper handling, storage, transportation and use; requiring all distributors to identify their cylinders as belonging to them and there is no dispute in this regard; and requiring corporate colours to be registered.

[47] The Code provides for different types of inspections and safety tests of cylinders, including routine inspection, testing and repair, changing of valves and restoring external appearances of cylinders. The Code prohibits the refilling of cylinders which are overdue for inspection and testing. If end-users were allowed to refill cylinders at will without obtaining the express permission of the owner, such owner would have no way of monitoring as to when any of its cylinders were filled, how many times they had been filled, whether the cylinders had ever been overfilled, whether the cylinders had ever needed repairs, how such repairs were carried out, and importantly whether it had been filled when it was overdue for an inspection or test.

[48] Permission of the owner to fill LPG cylinders is expressly required and accordingly, for the reasons set out in the Code, such permission must be that of the owner. This is consistent with the purpose of the legislation. In my view, such an interpretation accords with the various theories of interpretation in the common law tradition LAWSA Vol 25 Part 1 paras 302-307 pages 282-288.

[49] It will be contrary to the objectives sought to be achieved by the Code if the permission could be inferred from the conduct relied upon by the respondents. The owner (i.e. the appellants in this case) would have absolutely no way of monitoring whether safety considerations and measures have previously been implemented by end-users. Here, the actual permission of the owner (in this case the appellants) is what is required under section 10.2.1(d) of the Code. Some uncertain conduct that may or may not lead a person to believe that he has such permission is wholly inadequate.

[50] The notion of express permission is consistent with the appellants’ modus operandi of appointing authorised fillers and distributors of its cylinders where it can monitor with certainty the history of its cylinders. The appellants allege that there is no distribution agreement between them and the first respondent. This is not disputed by the first respondent. Both the plain language and the purpose of section 10.2.1(d) of the Code require that actual permission must be given by the owner, in this case the appellants before any person may fill a cylinder.

[51] The trade usage for practice as found by the court a quo, namely one that constitutes a tacit term to an agreement, would exclude the operation of a statutory instrument such as the Code, which simply cannot be correct.

[52] The learned Judge in the court below erred in affording the first respondent permission to fill or distribute the appellants’ cylinders. Therefore the present appeals must succeed with costs.

CONCLUSION

[53] In all of the above circumstances I make the following order:

The present appeals are upheld with costs including the costs of two counsel.

The determination made in the court below is set aside and replaced with the following:

“An order is granted in terms of prayers 2.1, 3, 4and 5 of the Notice of Motion dated 4 October 2006 under Case No. 22007/2006. The same relief is granted to the applicant under Case No. 23048/2006. The respondents are ordered jointly and severally to pay the applicants’ costs of the application.”

__________________________

M JAJBHAY

JUDGE OF THE HIGH COURT

I agree:

_________________________

B H MBHA

________________________________

MNGQIBISA ACTING JUDGE OF THE HIGH COURT

DATE OF HEARING : 3 June 2008

DATE OF JUDGMENT : 13 June 2008

COUNSEL FOR APPELLANTS : Adv. Van Berk SC

Adv. Strathen

Instructed by : Robert Mitchell

Attorneys

COUNSEL FOR RESPONDENTS : Adv.Hoffman SC

Adv. Wentzel

Instructed by : Lennard Cowan