EDITOR NOTE
Please take note that this judgment consists of a Majority Judgment and a Dissenting Judgment. Scroll down to find the Majority Judgment.
IN THE SUPREME COURT OF SWAZILAND
JUDGMENT
Civil Case No.13/2015
In the matter between:
NUR & SAM (PTY) LTD
t/a BIG TREE FILLING STATION 1ST APPLICANT
NUISA INVESTMENTS (PTY) LTD
t/a SAKHULA FILLING STATION 2ND APPLICANT
And
GALP SWAZILAND (PTY) LTD RESPONDENT
Neutral citation: Nur & Sam (Pty) Ltd and Another vs. Galp Swaziland (Pty) LTD (13/2015) [2015]
[SZSC 04] (9th December 2015)
Coram: Dr. B.J. ODOKI JA,
S. B. MAPHALALA AJA,
M. D. MAMBA AJA,
N. J. HLOPHE AJA,
M. DLAMINI AJA,
Heard: 10th November 2014
Delivered: 9th December 2015
Summary:
Civil Procedure – Application for review of decision of the Supreme Court under Section 148 (2) of the Constitution – Principles applicable to review – Grounds or conditions for review – whether error in interpretation of contract is proper ground for review – whether new issues not raised in the Supreme Court can constitute grounds for review – Whether Applicants deprived of their property without compensation – No serious irregularity causing gross miscarriage of justice established – No jurisdiction for raising new issues – Application for review dismissed – Counter application by Respondent for review of judgment a single justice of Supreme court granting an order for stay of execution pending review under Section 149 (1) of the Constitution – Whether application involved determination of the cause or matter before the Supreme Court. – Single Judge has power to hear an application for stay of execution – Counter application dismissed.
DR. B. J. ODOKI JA.
[1] This is an application by Nur and Sam (Pty) Ltd. and Nuisa Investments (Pty) Ltd. (the Applicants) for review of the judgment of the Supreme Court delivered on 29 July 2015, allowing the appeal filed by the Respondents, Galp Swaziland (Pty) Ltd., against decision of the High Court. The Application is brought under Section 148 (2) of the Constitution.
[2] The Respondent brought a counter Application to review the judgment of a single judge of the Supreme Court granting a stay of execution of the judgment of the Supreme Court, the subject matter of this review.
[3] The Applicants brought this Application for reviewing, correcting and setting aside the following order of the Supreme Court in the judgment dated 29 July 2015:
1. The Respondents are ordered to vacate the sites at the Big Tree Filling Station and Sakhula Filling Station, as identified in the lease agreement relating sites, by not later than 31 August 2015.
2. In the event of failure of the Respondents to so voluntarily vacate the said sites by that date, the Appellants shall be entitled to evict the Respondents from those sites;
3. An order is issued that the Respondents shall hand over the keys of both sites to the Respondents’ Retail Manager (Ms. Welile Simelane) forthwith upon either the voluntary vacation by or the eviction from the premises of the Respondents:
4. Costs of the suit are awarded to the Appellant, such costs to include two Counsel.
[4] The Appellants prayed that the Respondents be ordered to pay costs, in the event they oppose the Application. They also prayed for such further and alternative relief as the court may deem fit.
[5] The Application was accompanied by the affidavit of Nurane Calu, a Director of the Applicants.
[6] The Respondent filed a counter-application for review of the judgment and order of Maphalala ACJ (as he then was) dated 23 September 2015, staying execution of the judgment of this court pending the determination of this review application. The Respondent prayed for an order in the following terms:
- the judgment and order of Maphalala ACJ dated 23 September 2015 under case number 13/2015, is reviewed and set aside, and substituted with an order dismissing the application for stay of execution, with costs to be paid by the Applicants jointly and severally, the on paying the other to be absolved, including the certified costs of senior and junior counsel.
2. the first and second Respondents are directed to pay the costs of the counter-claim jointly and severally, the one paying, the other to be absolved including the certified costs of senior and junior counsel.
[7] The counter-application was accompanied by affidavit of Fanie Matsenjwa, the Commercial Director of the Respondent.
BACKGROUND
[8] The Applicants are fuel retailers operating petrol stations in terms of franchise agreements with the Respondent, who is a wholesaler and supplier of fuel and fuel products.
[9] The 1st Applicant purchased its business as a going-concern for E5.5 Million. The 2nd Applicant was appointed a franchisee to operate the filling station business as Eveni and developed the business. The 2nd Applicant paid E1 Million to the Respondent.
[10] Both Applicants operated the businesses in terms of identical franchise agreements with the Respondent. A key Clause to these Franchise Agreements which is at the centre of dispute between the Applicants and the Respondent is Clause 6.1 which provides that.
“This agreement shall commence on the Commencement Date and shall endure for 3 years or until terminated in terms of either Clause 6.2 or 14 below or simultaneous with and upon termination for any reason of the Galp property lease agreement”;
[11] In March 2014 the Respondent advised the Applicants that their franchise agreements were expiring in a few months and that the Applicants had to express an interest to renew the agreements.
[12] A dispute ensued between the Applicants and the Respondent over whether the franchise agreement had expired. At the centre of the dispute was the interpretation of Clause 6.1 of the Franchise Agreement. The Respondent contended that the agreement had expired. The Applicants on the other hand had a different interpretation of the Clause. The Applicants interpretation of Clause 6.1 was that the term of the Franchise Agreements was to run simultaneously with the Respondent’s Property Lease Agreement. They based this on the reading of the Clause and the surrounding circumstances leading to the conclusion of the Franchise Agreement.
[13] The parties were unable to resolve the dispute and the Respondent insisted that the Franchise Agreement had terminated and required the Applicant to enter into a new Franchise Agreement which was materially different from the original Franchise Agreement. Apart from the difference in interpretation, this issue also became a focal point of dispute between the parties. The Respondent’s attitude was that if the Applicants did not sign the new Franchise Agreements then they would have to vacate the sites where they operate filling stations and the Respondent would take over.
[14] Upon realizing that the Respondent was not compromising, the Applicants approached the High Court seeking the following orders:
“3. Interpreting and declaring that the initial Franchise Agreement be effective until termination of the lease agreement as per Clause 6.1 of the Franchise Agreement and/or until the parties finalized their negotiation and enter into a new Franchise Agreement;
4. Interdicting Respondent from ejecting the Applicants from their operation sites pending finalization of this application and/or pending negotiations with Respondent on the terms of the new Franchise Agreement.
4.1 Interdicting the Respondent from allowing new franchisees and or anybody to take over the operations of the Applicants pending the finalization of this current application and/or finalization on the negotiation of the terms of the new Franchise Agreement;
4.2. Directing and ordering the Respondent to continue supply of fuel, petrol and their products and/or services to the Applicant pending the finalization of this current application and/or pending the finalization on the negotiation of the terms of the new Franchise Agreement;
4.3 Directing the Respondent to file and produce to this Honourable Court the Property Lease Agreement which the Respondent had with the Landlord(s) of the premises of the Applicants business operations;
4.4 Declaring that the deadline of the signatory of the new Franchise Agreement be on the 31st of January 2015, null and void;
4.5 That prayers 1, 2 and 4 herein above operate forthwith as an interim order pending finalization of the current application and/or pending the finalization on the negotiations of the terms of the new Franchise Agreement;
5. That prayers 1, 2 and 4 herein above operate forthwith as an interim order pending finalization of the current application and/or pending the finalization on the negotiations of the terms of the new Franchise Agreement;
6. That a rule nisi do hereby issue calling upon the Respondent to show cause on a date to be stated by the above Honourable Court why prayer 1 to 4 should not be made final;
7. That the Respondent pay costs of this application in the event that it is opposed;
8. Further and/or alternative relief.”
[15] The Respondent opposed the application and also counter applied for the ejectment of the Applicants from the filling stations. The basis for the counter application was that the Franchise Agreement had expired and the Applicants had no right to continue operating the filling stations.
[16] Following a hearing of the matter, the High Court granted the following orders:
1. The parties expressly agreed, alternatively impliedly agreed, that the existing Franchise Agreement would be renewed, subject to the performance of the 1st and 2nd Applicant;
2. The period of renewal would be for a period of three years commencing on 1st July 2014, alternatively 31st January 2015, in accordance with the express or implied terms referred to above;
3. The renewal of the Franchise Agreement would be subject to the same terms and conditions as the existing Franchise Agreement, subject to such amendments as the Respondent was entitled to effect in terms of the aforesaid Franchise Agreement;
4. The Respondent’s counter application is dismissed with costs;
5. The Applicants are awarded the costs of their application;
6. All the cost orders referred to above shall include the costs of Counsel.
[17] The Respondent noted an appeal against the decision of the High Court and it is in this appeal that the Supreme Court granted the following orders, which are subject of the review:
1. The Respondents are ordered to vacate the site at the Big Tree Filling Station and the Sakhula Filling Station, as identified in the Lease Agreements relating to those sites, by no later than 31 August 2015;
2. In the event of the failure of the Respondents to so voluntarily vacate the said sites by that date, the Appellant shall be entitled to evict the Respondents from those sites;
3. An order is issued that the Respondents shall hand over the keys of both sites to the Respondents Retail Manager (Ms. Welile Simelane) forthwith upon either the voluntary vacation by or the eviction from the premises of the Respondents;
4. Costs of the suit are awarded to the Appellant, such costs include two Counsel.
ARGUMENTS OF THE APPLICANTS
[17] The Applicants submit that the main ground for reviews, in a nutshell, is that the Supreme Court inadvertently committed a fundamental and basic error by ordering the ejectment of the Applicants from the sites in which they operate the filling station business under the Respondent’s franchise because such order will occasion a manifest and gross injustice to the Applicants who stand to be deprived of their proprietary rights without compensation, in circumstances where this is unjustifiable from a contractual, constitutional and public policy view point. This they contend creates an exceptional circumstance in which this court exercising its review powers, is justified to interfere to protect the Applicant’s proprietary rights, from being unfairly expropriated by the Respondent.
[19] The Applicants amplified their grounds for review in their Heads of Argument and oral submissions in court. They pointed out that this court has powers to review any of its decisions and such grounds or conditions as may be prescribed by an Act of Parliament or by rules of court.
[20] The Applicants contended that this court has recently affirmed its powers of review and set out the parameters under Section 148 of the Constitution, and stated that it is not a jurisdiction that it would readily exercise except in exceptional circumstances, where the demands of justice make the exercise extremely necessary to avoid immediate harm to the Applicant. They relied on the decision of this court in President Street Properties (Pty) Ltd vs. Maxwell Uchechukwu Appeal case No. 11/2014
[21] The Applicants referred to the decision of the Supreme Court of Ghana in Merchanical Llyod vs. Narty [1987-88] 2 G.L.R. 598 which was quoted with approval in the President Street Properties case (Supra) to the effect that review is not an appellate jurisdiction, but a kind of jurisdiction held in reserve to be prayed in aid in exceptional circumstances where a fundamental and basic error may have been committed by the court, which error must have occasioned a gross miscarriage of justice.
[22] As regards the interpretation of the Franchise Agreement which was the main borne of contention in this case, the Applicants submitted that the Supreme Court erroneously interpreted words “shall endure for three (3) years” in isolation from the rest of the words used in the provision, and thereby came to wrong conclusion that the agreement was for three years. It was their contention that had the Supreme Court interpreted the agreement correctly, it would have come to the conclusion that the agreement would be subject to renewal based on performance, and that it would run simultaneously with Galp Property Lease for 9 years 11 months.
[23] The Applicants further argued that the Supreme Court committed a fundamental error to sanction their eviction and to leave their investments without compensation. It was the Applicant’s contention that they should have been given opportunity to sell or and recover the value of their investment.
[24] The Applicants submitted that the Supreme Court failed to protect and uphold their constitutional right not to be arbitrarily deprived of their property without compensation, and instead enforced the principle of freedom of contract or Pacta Sunt Servanda. The Applicants relied on Section 19 of the Constitution.
[25] The Applicants contended further that the Supreme Court is not entitled to give effect to contractual provisions which are contrary to public policy. They submitted that the law of contract must be subject to constitutional control. They relied on the decision of the Constitutional Court of South Africa in Barend Petrus Barikhuizen vs. Ronald Stuart Napier CCT 72/05 [2007] ZACC3. According to this decision, public policy imports the notions of fairness, justice and reasonableness, and that public policy would preclude the enforcement of a contractual term if its enforcement would be unjust or unfair or contrary to the public sense of justice of the community.
[26] It was therefore submitted by the Applicants that it would be contrary to good morals to allow a party who has an advantage in terms of the power relations, as the Respondent in this case, to enforce a bargain in terms of which it deprives the weaker party of its proprietary interest without compensation. In support of their submissions the Applicants referred to the case of Sasfin (Pty) Ltd. vs. Benks 1989 (1) SA 1 (A), Schierhout vs. Minister of Justice 1925 AD 417 and Bafana Finance Mabopane vs. Makwakwa and Another 2006 (4) SA 581.
[27] With regard to the Counter-Application against the order of stay by a single judge of this court, the Applicants submitted that a single judge had power to hear and determine the Application for stay of execution because it did not involve determining the matter in controversy.
[28] The Respondent submitted that the Applicants argue that the Supreme Court judgment should be reviewed under Section 148 (2) of the Constitution on the following grounds:
1. That the Supreme Court erred in its interpretation of clause 6.1 of the franchise agreement;
2. That the Supreme Court’s order has resulted in the arbitrary deprivation of the Applicant’s property rights in contravention of Section 19 of the Constitution,
3. That the Supreme Court erred in upholding the franchise agreement because it is contrary to public policy.
[29] It was the Respondent’s contention that there is no basis for this court to review its main judgment as none of the above grounds constitute sufficient grounds for review. The Respondent maintained that the grounds raised for review were nothing more than an attempt to appeal the judgment in the guise of review, and therefore the application should be rejected.
[30] The Respondent referred to Section 148 (2) of the Constitution and noted that to date no statute or rules of court have been enacted to regulate reviews under the Section.
[31] The Respondent submitted that under the common law Section 148 (2) provides for a special form of review which is an exception to the generally applicable principle of res judicata and the need for finality in litigation. As such it allows a review in exceptional circumstances only, where it is necessary to correct a manifest injustice caused by an earlier order in which there is no alternative remedy. Reliance for this proposition was placed on the of Vilane and Another vs. Lipney Investment (Pty) Ltd. Civil Case No. 78/2013 (SC) at Page 6.
[32] The Respondent maintained that Section 148 (2) of the Constitution does not apply in circumstances where an appellant simply seeks to reargue or to raise fresh arguments that were initially available to it but which it did not raise in the appeal itself. This would amount to nothing more than an attempt again to appeal the judgment in question and to obtain “a second bite at the cherry” as this was not the purpose for which the Supreme Court is granted powers of review. Reference was made to the decision of the Supreme Court in President Street Properties (Pty) vs. Maxwell Uchechukwu and others (supra) in support of this submission.
[33] Regarding the complaint was that the Supreme Court erred in its interpretation of clause 6.1 of the Franchise Agreement, the Respondent submitted that the court was correct in finding that clause 6.1 of the agreement provided that it terminated after three years.
[34] The Respondent submitted that the arguments that the Applicants raise in this application that clause 6.1 was ambiguous and regard must be had to the context and background including the special right to trade agreement were raised in the High Court and Supreme Court and the Supreme Court considered this argument regarding contractual interpretation and rejected it. It was the Respondent’s intention that the Supreme Court was clearly mindful that it was required to adopt a “sensible meaning” over an interpretation that would be insensible or “unbusiness like”, as the interpretation suggested by the Applicants would lead to absurd consequences.
[35] The Respondent maintained that consideration of public policy and sound administration of justice militate against allowing a dissatisfied party to an appeal to reargue issues by bringing a application for review as the process would have no end. This would not only burden this court unnecessarily with far heavier load, but would also underlimine the authority of the Supreme Court, as well as the vital need for certainly and finality in litigation The Respondent cited the decision of the Constitutional Court of South Africa in the Case of Van Vyk vs. Unitas Hospital and others 2008 (2) SA 472 Para. (31) where it was stated that “A litigant is entitled to have closure on litigation. The Principle of finality in litigation is intended to allow parties to get on with their lives”
[36] The Respondent submitted that the arguments by the Applicant that they have been arbitrarily deprived of their property was not raised before the Supreme Court on the previous occasion. It was the Respondents contention that it was not competent for the Applicants to seek to review the Supreme Court’s judgment on the basis of an argument not raised before it previously. The Respondent relied on the decisions of this court in President Street Properties Case (supra) and Commissioner of Police and Another vs. Dallas Dlamini and Others Civil Case No. 39/2011. The Respondent had not been given an opportunity to answer the issues, nor the Supreme Court to consider them, submitted the Respondent.
[37] The Respondent argued that in any case there had been no interference with the Applicants’ property rights because the 1st Applicant did not pay to the Respondent the E5.5 Million to take over the operation of the Big Tree Service Station, but it was paid to the previous owner, Mr. Dlomo. Moreover, it was contended by the Respondent that the Applicant failed to sign the renewal of their contract due to their own conduct. The Applicants also did not establish what “Good Will” they had been deprived of without compensation.
[38] The Respondent finally submitted that Section 19 of the Constitution does not apply to deprivation of property by individuals but by Government See Phoebus Apollo Avialin CC vs. Minister of Safety and Security 2003 2 SA 34 CC at Para. [4]
[39] With regard to the complaint that the Supreme Court erred in upholding the Franchise Agreement, because it is contrary to public policy, in that the agreement arbitrarily deprived them of their property rights, the Respondent submitted that this argument was raised for the first time in the Applicants’ Supplementary replying affidavit, and it therefore amounts to an attempt to appeal and not review the Supreme Court’s judgment.
[40] It was the contention of the Respondent that the Applicants entered into the Franchise Agreement freely and voluntarily and the allegation of unequal bargaining power between the Applicant and the Respondent was raised for the first time in the current Applicant’s heads of argument. Moreover, the maxim pact sunt servarda expresses public policy requirement that contracts which have been entered freely and voluntarily should be honoured. Reference was made to the case of Barkhuizencase vs. Naper 2007 5 (SA) 323 in support of this principle. The Supreme Court was therefore correct to uphold the Franchise Agreement, the Respondent submitted.
[41] On the Counter-Application the Responded argued that Maphalala ACJ, sitting as a single judge, did not have the power to vary or stay the Supreme Court’s order under Section 149 (1) of the Constitution, because a single judge changed the decision of the Supreme Court which required three judges.
[42] The Respondent further argued that the Maphalala ACJ should have held that Section 145 (2) of the Constitution was applicable and that this view is confirmed by Section 149 (3) which provides that a Supreme Court bench of three judges can reverse a decision of a single judge. It was the Respondent further contention that it would procedurally be unacceptable and nonsensical on one hand to provide the safeguard that an order of a single judge can be varied by three judges but on the other hand to allow an order of three judges to be varied by a single judge.
[43] Lastly, the Respondent submitted that it is manifestly in the public interest for this court to decide the issue now, even if it will not have a direct impact on the parties in this case. The Respondent cited the case of MEC for Education, KwaZulu-Natal and Others v. Pilly 2008 (1) SA 474 (CC) at Para. [32], in support of his submission.
THE LAW
[44] The supervisory and review jurisdiction of the Supreme Court is provided in Section 148 of the Constitution as follows:
“(1) The Supreme Court has supervisory jurisdiction over all courts of judicature and over any adjudicating authority and may, in the discharge of that jurisdiction, issue orders and directions for the purpose of enforcing or securing the enforcement of its supervisory power.
(2) The Supreme Court may review any decision made or given by it on such grounds and subject to such conditions as may be prescribed by an Act of Parliament or rules of court.
(3) In the exercise of its review jurisdiction, the Supreme Court shall sit as a full bench.”
[45] The composition of the Supreme Court is provided for in Section 145 of the Constitution. The Section provides for the coram of the Supreme Court as follows:
“(2) The Supreme Court shall be duly constituted for its ordinary work by not less than three justices of the Supreme Court.
(3) A full bench of the Supreme Court shall consist of five justices of that court”
[46] The need for a full bench to deal with reviews seems an innovation as in many other jurisdiction, reviews are carried out by the same panel or number of judges who determined the previous decision in the Supreme Court. The purpose of a full bench may have been to give the process more serious consideration before reviewing the decision of the Supreme Court.
[47] The Supreme Court is also given power to depart from its previous decision under Section 146 (5) of the Constitution which provides,
“(5) While it is not bound to follow the decisions of other courts save its own, the Supreme Court may depart from its own previous decisions when it appears to it that the previous decisions was wrong. The decision of the Supreme Court on questions of law are binding on other courts.”
[48] The power to depart from its previous decisions is different from review power because it appears that it may be exercised only in a subsequent case, not the same one being reviewed. The provision is intended to liberalise the doctrine of precedent in the highest court to allow progressive development of local jurisprudence by departing from previous decisions where the interests of justice so demand. It is not provided that the exercise of this power requires a full bench, but this can be developed through court practice or court rules.
[49] It is common cause that the grounds and conditions upon which the Supreme Court may review its decisions have not been prescribed by Parliament, nor through the rules of court. It is high time such grounds and conditions were laid down to provide guidance on the matter. The Chief Justice could take the lead and make the necessary rules, having regard to the interest of justice and rules which have been in other jurisdictions with similar provisions or traditions. A similar call to the Chief Justice was made by Dlamini AJA in the case of President Street Properties (Pty) Ltd vs. Maxwell Uchechukwu and Others (supra)
[50] A number of decisions of this court have considered the purpose, scope and principles and grounds upon which the Supreme Court may exercise its review jurisdiction including President Street Properties case (supra) and Commissioner of Police, The Principal Secretary Ministry of Public Service and Others vs. Xolile Sukati Civil Case No. 45/2014 [2015] SZSC 38.
[51] In the President Street Properties Case (supra), Dlamini AJA discussed the importance and need of this new jurisdiction of the Supreme Court, and its relationship with the principles of functus officio and res judicata as follows:
“[26] In its appellate jurisdiction the role of this Supreme Court is to prevent injustice arising from the normal operation of the adjucicative system; and in its newly endowed review jurisdiction, this court has the purpose of preventing or ameliorating injustice arising from the operation of the rules regulating finality in litigation whether or not attributable to its own adjudication as a Supreme Court. Either way, the ultimate purpose and role of this court is to avoid in practical situations gross injustice to litigants in exceptional circumstances beyond ordinary adjudicative contemplation. This exceptional jurisdiction must be properly employed, be conducive to and productive of a higher sense and degree or quality of justice. Thus, faced with a situation of manifest injustice, irremediable by normal court processes, this court cannot sit back or rest on its laurels and disclaim all responsibility on the argument that it is functus offficio or the matter is res fudicata, or that finality in litigation stops it from further intervention. Surely the quest for superior justice among fallible beings is a never ending pursuit for our courts of justice, in particular, the apex court with the advantage of being the court of last resort.”
[52] After citing authorities from various jurisdictions, Dlamini AJA identified some of the conditions which might justify review as follows:
“[15] From the above authorities some of the situations already identified as calling for judicial intervention are exceptional circumstances, fraud, patent error, bias, presence of some most unusual element, new facts, significant injustice or absence of effective remedy.”
[53] I am of the view that the grounds identified by Dlamini AJA are a useful starting point for crafting grounds upon which review may be entertained. The decision will no doubt significantly contribute to the development of the jurisprudence of review in this country.
[54] It appears that Section 148 of the Constitution has similarity with Section 133 of the Constitution of Ghana, which provides for power of the Supreme Court to review its decisions on such grounds and subject to such conditions as may be prescribed by rules of court.
[55] As pointed out in the President Street Properties Case (supra) in 1966, the Supreme Court of Ghana made rules under this article prescribing the grounds and the procedure applicable. Rule 54 provides the following grounds for review:
“54 The Court may review any decision made or given by it in any of the following grounds:
- exceptional circumstances which have not resulted in miscarriage of justice;
- discovery of new and important matter or evidence which after exercise of due diligence was not within the applicant’s knowledge or could not be produced by him at the time the decision was given”
[56] However, “exceptional circumstances” have not been defined in the rules and therefore guidance can only be obtained from judicial pronouncements in cases that have come for review before the Supreme Court of Ghana.
[57] It has been held that what constitutes exceptional circumstances cannot be comprehensively defined. See Republic vs. Mimapair, President of the National House of Chiefs, ex parte Anneyah [2006] SC GLR 59.
[58] In Mechanical Lloyd Assembly Plant Ltd v. Nartey [1997 – 1998] 2 GLR 598, Taylor JSC, suggested some criteria indicative of exceptional circumstances which may necessitate review provided they resulted in gross miscarriage of justice. These were:
(a) Matters discovered after trial court, which will be relevant, exceptional and capable of tending to show that if they had been discovered earlier, their effect would have influenced the decision.
(b) Cases falling within the principle enunciated in Mosi v. Bogyina [1963] 1 GL 337, that is, where judgment is void either because it was not warranted by way of law or rule of procedure.
(c) The class of judgments which can legitimately be said to have been per-in curiam because of failure to consider a statute or a case of fundamental principle of procedure and practice relevant to the decision and which would have resulted in different decision.
(d) Mistake or error apparent on the face of the record which could be an error of fact or of law and which can be pointed out without long arguments.
(e) Any other sufficient reason.
[59] The Supreme Court of India is given power to review its decisions in Article 137 of the Constitution of India. The rules governing review jurisdiction are contained in order XI Rule 47 of the Supreme Court Rules. The Rule provides that an application for review may be brought on the following grounds:
(a) Discovery of new evidence which was not within the Applicant’s knowledge an under normal circumstances could not have been known at the trial. The evidence must be so important that it could have turned the judgment the other way.
(b) Mistake or error apparent on the face of the record which could be an error of fact or of law and which can be pointed out without long arguments.
(c) Any other sufficient reason.
[60] In Uganda, the Constitution does not provide for review jurisdiction of the Supreme Court as in Swaziland and Ghana, although the drafters of the Uganda Constitution 1995 had access to the Ghana Constitution. The power of review is contained in the Supreme Court Rules of 1966. The power is both inherent and statutory.
[61] Rule 2 (2) of the Supreme Court Rules provides for the inherent power of the Supreme Court as follows:
“(2) Nothing in these Rules shall be taken to limit or otherwise affect the inherent power of the court and the Court of Appeal, to make such orders as may be necessary for achieving the ends of justice or to prevent abuse of the process of any such court, and that power shall extend to setting aside judgments which have been proved null and void after they have been passed, and shall be exercised to prevent an abuse of the process of any court caused by delay.”
[62] Rule 35 provides for correcting errors in what is known as the “slip rule” as follows:
“(1) A clerical or arithmetrical mistake in any judgment of the court or any error arising in it from an accidental slip or omission may at any time, whether before or after judgment has been embodied in an order, be corrected by the court, either of its own motion or on the application of any interested person so as to give effect to what was the intention of the court when judgment was given.
- An order of the court may at any time be corrected in the court either on its own motion or on the application of any interested person, if it does not correspond with the order of a judgment it purports to embody or where the judgment has been corrected under sub rule (1) of this rule, with the judgment corrected.”
[63] In Orient Bank Ltd. v. Frederick Zaabwe and Another Civil Application No. 17/2007 [2008] UGSC 1 the Supreme Court dismissed an application for review holding that the Applicant proposed to ask the Supreme Court to reverse its findings not because they resulted in accidental slip or omission but because, in view of the Applicant, the findings were erroneous. The court observed
“It is trite law that a decision of this court on any issue of fact or law is final; so that the unsuccessful party cannot apply for its reversal. The only circumstances under which this court may be asked to revisit its decision are set out in Rules 2 (2) and 35 (1) of the Rules of this court.”
[64] In British American Tobacco Uganda Ltd. vs. Mnijabuko and Others, MISC. Application No. 07/2013 [2014] UGSC 15, the Supreme Court dismissed an application for review of its judgment holding that in none of the grounds of appeal in the previous case had the application challenged the decision of the Court of Appeal for failure to consider the issue of part-payment made by the Applicant to the Respondent’s advocate, nor was the matter raised in the Supreme Court during the hearing of the appeal, and therefore the issue could not be considered on review.
[65] In an earlier decision of the Court of Appeal for East Africa, in Lakhamski Brothers vs. R. Raja and Sons [1966] EA 313 at Page 314, Sir Charles Newbold P. emphasized the importance of the principle of finality of judgments in the administrating justice as follows:
“There is a principle which is of the very greatest importance in the administration of justice and that principle is this: it is in the interest of all persons that there should be an end to litigation. This Court is now the final court of appeal and when this court delivers its judgment that judgment is so far as the particular proceedings are concerned the end of the litigation. It determines in respect of the parties to the particular preceding their final legal position, subject as I have said to the limited application of the slip rule. This court being the Final Court of Appeal in the legal system of this country cannot be asked to sit on appeal against its judgment.”
[66] While the Supreme Court of Uganda has not enacted specific rules to set out the grounds for review, it is clear that it will only permit review in exceptional circumstances under its inherent power in accordance with rules 2 (2) and 35 (1) of the Rules of the Court. The general trend is not to allow appeals disguised as reviews.
CONSIDERATION OF GROUNDS
[67] The first ground upon which the Applicant sought to review the previous decision of the Supreme Court was that the Supreme Court erred in its interpretation of clause 6.11 of the Franchise Agreement.
[68] The Supreme Court made its finding on this issue in para [80] of the judgment where it stated,
“9. We accordingly find that the Franchise Agreements between the Appellants and the Respondents terminated by affluxion of time in their specific terms after a period of 3 (three) years from the effective date of each of those agreements and that in the absence of the parties having signed the proposed New Franchise Agreement, no valid and binding agreement exists between the parties.”
[69] I am unable to fault the conclusion reached by the Supreme Court. I agree with the Supreme Court that the words in clause 6.1 of the Franchise Agreement are clear and unambiguous and set out clearly the three different scenarios of termination. Nowhere in the Franchise Agreement is it provided that there is any automatic right of renewal of that agreement after the expiry of the initial period of three years but that renewal would be based on performance. There is evidence that the Applicants were offered a renewal for one year lease which they did not take up. If they had done this they would have had time to reorganize their business by selling their good will or otherwise. If this offer will exist they should take it.
[70] The interpretation placed on clause 6.1 by the Applicants seems to have risen from their misconception that there was a lease agreement between the Applicants and the landlords and thus they sought to link the lease agreements with the Special Rights Agreement which was only applicable to the 2nd Applicant.
[71] It is my view therefore that the Supreme Court did not err in its interpretation of the Franchise Agreement.
[72] Even if the Supreme Court had erred in its interpretation of the Franchise Agreement, I do not think that this would have constituted an exceptional circumstance to constitute a ground for review; considering the principles which have been discussed earlier in this judgment. It seems that the Applicants wanted to have “a second bite at the cherry” by disguising what appears as a second appeal as a review.
[73] In the case of Vilane N. O. and Another vs. Lipney Investment (Pty) Ltd Civil Case No. 78/2013, the application for review was rejected on the ground that the court had misdirected itself in law and in fact, as an attempt to reargue the case as if it were another appeal.
[74] In the Principal Secretary, Ministry of Public Service and Others vs. Xolile Sukati, Civil Appeal Case No. 45/2014 in dismissing an application for review, the Court stated that the cause of action regarding the validity of the Respondent’s appointment had been duly argued, and therefore the court could not be allowed it to resuscitate in subsequent proceedings. In para. [21] Nkosi AJA stated,
“It is thus competent to rationalize Section 148 (2) as an exception to the res judicata doctrine. The Section must as of necessity be applied with caution as it goes against the underlying principle that the court must prevent the recapitulation of the same action and must always to put a limit to needless litigation. It must ensure that certainty is maintained in cases which have been decided by the courts. Therefore, where any cause of action has been prosecuted to finality between the same parties, any attempt by one party to bring the matter to the court on the same cause of action should not be permitted.”
[75] The second ground upon which review was sought was that the Supreme Court decision has resulted in the arbitrary deprivation of the Applicant’s property in contravention of Section 19 of the Constitution.
[76] Section 19 of the Constitution provides,
“(1) A person has a right to own property either alone or association with others.
(2) A person shall not be compulsorily deprived of property or any interest in or right over property of any description except where the following conditions are justified:
(a) the taking of possession or acquisition is necessary for public use or in the interest of defence, public order, public morality or public health;
(b) the compulsory taking of possession or acquisition of the property is made under any law which makes provision for-
(i) prompt payment of fair compensation and a right of access to a court of law by any person, who has an interest in or right over the property,
(ii) a right of access to a court of law by any person who has an interest or right over the property;
- the taking of possession or the acquisition is made under a court order”
[77] It is clear to me that Section 19 of the Constitution does not apply to this case. The Respondent rightly submitted that it applies to public acquisition by the State or public institutions and not by private persons like the Respondent.
[78] Even if the Section applied and was not complied with, it would not have constituted a ground for review because it would be a new matter which was not raised in the earlier proceeding, when the Applicants had opportunity to do so. It would be unfair to require the Respondent to face a new case on review which the Applicants could have raised in earlier proceedings. The Applicants would have a remedy to bring fresh action against the Respondent.
[79] The third ground for review was that the Supreme Court erred in upholding the Franchise Agreement because it was contrary to public policy. This is a new argument which was not raised in earlier proceedings. No reasons were given why the agreement was contrary to public policy when it was a normal commercial or business contract entered into freely and voluntarily between the parties. The fact that disagreements have arisen between the parties does not render the franchise agreements contrary to public policy. The Applicants ought to have made sure that they understand the terms of the Agreement and ensure that their interests are fully protected on termination of the Franchise Agreement.
[80] As I have observed above, the Applicants should take up the offer made by the Respondent for renewal of the Franchise Agreement for one year upon such terms as both parties will agree. It is in the interest of both parties that they should pursue this option which will enable the Applicants to reorganize their business having regard to the relationship with the Respondent.
[81] For the reasons I have given, the application for review has no merit and must be dismissed with costs.
[82] As regards the counter application challenging the power of a single judge of the Supreme Court from entertaining an application for stay of execution, Section 149 of the Constitution provides,
“(1) subject to the provisions of subsection (2) and (3) a single judge justice of the Supreme Court may exercise power vested in the Supreme Court not involving the determination of the cause or matter before the Supreme Court.
(2) ……………………………………………………………………..
(3) In Civil matters, any order, direction or decision made by a single justice may be varied, discharged, or reversed by the Supreme Court of three justices at the instance of either party to that matter.”
[83] It was submitted by the Respondent that a single justice of the Supreme Court has not power to vary a decision of the Supreme Court. In the first place, the operating words in Section 149 (1) are “not involving the determination of the cause or matter” before the court. This in effect means that a single justice has power to deal mainly with “interlocutory matters”. Such matters do not involve the determination of the matter before the court, for instance an appeal or review. A stay of execution does not vary a decision of any court but merely postpones its execution.
[84] It should be noted that Section 149 (3) provides a safe-guard in civil matters where a party who is not satisfied with the decision of single justice may refer the matter to a bench of three justices of the Supreme Court. The Respondent should have utilized this procedure instead of applying for review.
[85] Consequently the counter application for review must be dismissed.
[86] In the result, I make the following orders:
(a) The Application for review is dismissed with costs.
(b) The Counter-Application for review is dismissed with costs for two counsel.
(c) The Applicants are free to take up the offer by the Respondent to review the Franchise Agreement for one year upon such terms as the parties will agree.
This option should be exercised within one month from the date of this judgment.
________________
DR. B.J. ODOKI
JUSTICE OF APPEAL
I agree ____________
M.D. MAMBA
ACTING JUSTICE OF APPEAL
For the Applicants: Mr. M. Magagula
For the Respondent: M. P. Kennedy SC
THE SUPREME COURT OF SWAZILAND
JUDGMENT
Held in Mbabane Civil Appeal Case No. 13/2015
In the matter between:
NUR & SAM (PTY) LTD
t/a BIG TREE FILLING STATION 1st Applicant
NUISA INVESTMENTS (PTY) LTD
t/a SAKHULA FILLING STATION 2nd Applicant
v
GALP SWAZILAND Respondent
Neutral Citation: NUR & Sam (Pty) Ltd & Another v Galp Swaziland (13/2015) [2015] SZSC 40 (9th December 2015)
Coram: B. J. ODOKI JA, S.B. MAPHALALA AJA, M. D. MAMBA AJA, N. J. HLOPHE AJA, M. DLAMINI AJA
For Appellant: M. Magagula
For Respondent: P. Kennedy SC
Heard: 10th November 2015
Delivered: 09th December 2015
___________________________________________________
JUDGMENT
MAJORITY
___________________________________________________
BY: M. DLAMINI AJA (S. B. MAPHALALA AJA & N. J. HLOPHE AJA
CONCURRING; B. J. ODOKI JA & M. D. MAMBA AJA DISSENTING)
I have carefully read the judgment of my brother Dr. B. J. Odoki JA. I intend to respectfully differ on the merits of the case in so far as the applicants’ case is concerned for reasons which are apparent in this judgment.
Review application
[1] I subscribe to the call for the Chief Justice to set out Rules on grounds for review by the Supreme Court. I may also add another ground to be considered in this exercise. I need not re-invent the wheel as the South African drafters of the Constitution eloquently coined this ground.
“...if the (Supreme Court) grants leave to appeal on the ground that the matter raises an arguable[1] point of law[2] general public importance[3] which ought to be considered by the court.[4]
[2] Borrowing from the Rules of the Supreme Court of Ghana, M. J. Dlamini AJA[5] laid out inter alia “exceptional circumstances which have resulted in miscarriage of justice”.[6] Expatiating further on the ground, the learned Justice cited Adede JSC as follows:
“....the mere fact that a judgment can be criticized is no ground for asking that it should be reviewed. The review jurisdiction is a special jurisdiction to be exercised in exceptional circumstances. It is not an appllicate jurisdiction. It is a kind of jurisdiction held in reserve, to be prayed in aid in the exceptional situation where fundamental and basic error may, have inadvertently been committed by the court, which error must have occasioned a gross miscarriage of justice. The review jurisdiction is not intended as a try-on by a party after losing …, nor is it on automatic next-step…., neither is it meant to be resorted to as an emotional reaction to an unfavourable judgment.” (Mechanical Lloyd v Narty [1987-88] 2 GLR 598) (Yebisi, page 43) (my emphasis)
[3] Which is this fundamental and basic error inadvertently been committed which might reasonably result in gross miscarriage of justice in casu, if any?
[4] Before I attend to this question, it is apposite to deal with a point in limine taken by respondents. As correctly pointed out by my brother herein, respondent submitted that:
“With regard to the complainant that the Supreme Court erred in upholding the Franchise Agreement, because it is contrary to public policy, in that the agreement arbitrarily deprived them of their property rights, the Respondent submitted that this argument was raised for the first time in the Applicant’s Supplementary replying affidavit, and it therefore amounts to an attempt to appeal and not review the Supreme Court’s judgment.”
[5] On a similar submission by respondent, Ngcobo J[7] wisely pointed out:
“The mere fact that a point of law is raised for the first time on appeal is not in itself sufficient reason for refusing to consider it. If the point is covered by the pleadings, and if its consideration on appeal involves no unfairness to the other party against whom it is directed, this Court may in the exercise of its discretion consider the point.”
[6] His Lordship continued to highlight on “unfairness” in relation to a new point of law raised on appeal:
“Unfairness may arise where for example a party would not have agreed on material facts or on only facts stated in the agreed statement of facts had the party been aware that there were other legal issues involved. It would similarly be unfair to the other party if the law point and all its ramifications were not canvassed and investigated at trial.”
[7] Innes J[8] had eloquently propounded on new points of law taken for the first time on appeal.
“But where a new law point involves the decision of questions of fact, the evidence with regard to which has not been exhausted, or where it is possible that if the point had been taken earlier it might have been met by the production of further evidence, then a Court of Appeal will not allow the point to prevail. Because it would be manifestly unfair to the other litigant to do so. The rule has been thus stated by Lord Watson (Connecticut Fire Insurance Co. vs Kavanagh, Ac., 1892, p.481): When a question of law is raised for the first time in a Court of last resort, upon the construction of a document, or upon facts, either admitted or proved beyond controversy, it is not only competent, but expedient, in the interest of justice, to entertain the plea. The expediency of adopting that course may be doubted when the plea cannot be disposed of without deciding nice questions of fact, in consideration of which the Court of ultimate review is placed in a much less advantageous position than the Court below. But their Lordships have no hesitation in holding that the course ought not, in any case, to be followed, unless the Court is satisfied that the evidence on which they are asked to decide establishes beyond doubt that the facts, if fully investigated, would have supported the new plea.” (my emphasis)
[8] While Galgut AJA[9] stated on the same point:
“It is the duty of an applicant tribunal to ascertain whether the Court below came to a correct conclusion on the case submitted to it. For this reason the raising of a new point of law on appeal is not precluded provided that certain requirements are met. If the point is covered by the pleadings and if its consideration on appeal involves no unfairness to the party against whom it is directed, a Court, in an appeal can deal with it.(my emphasis)
[9] In casu, there are no material disputes on facts. The matter turns on point of law viz. interpretation of clause 6.1 of the agreement. Following the above principle of our law, there was nothing wrong by respondent raising the points of law on appeal more so as they were pleaded in their heads of argument filed in this court.
Freedom of contract
[10] Exponents of this doctrine pacta sunt servanda state:
“Elementary and basic general principles that it is in the public interest that contracts entered freely and honesty by competent parties should be enforced.”[10]
[11] In Collen v Rietfontein Engineering Works,[11] their Lordships held:
“The problem for a court of construction must always be so to balance matters that without violation of essential principle, the dealings of a man may as far as possible be treated as effective, and that the law may not incur the reproach of being the destroyer of bargains.”
[12] According to Van der Merwer[12] et al wrote:
“Freedom of Contract, for instance, means that an individual is free to decide whether, with whom, and on what terms to contract”.
[13] They add:
“The principle of pacta servanda sunt, in turn, requires exact enforcement of contractual obligations created in circumstances which are consistent with freedom of contract and consensuality.”[13]
Case law on interpretation of contract
[14] The case of Worman v Hughes and Others,[14] point out:
“It must be borne in mind that in an action on a contract, the rule of interpretation is to ascertain, not what the parties’ intention was, but what the language used in the contract means, i.e. what their intention was as expressed in the contract.” (my emphasis)
[15] Solomon J[15] put it with more precision:
“The intention of the parties must be gathered from their language, not from what either of them may have had in mind.” (my emphasis)
[16] Brian CJ[16] reasoned:
“...that the intent of a man cannot be tried, for the devil himself knows not the intent of a man.”
[17] Lord Elden once grumbled that his duty was not: “to see that both parties really meant the same thing, but that both gave their assent to that proposition which, be it what it may, de facto arises out of the terms of their correspondences.” (my emphasis)
[18] How then do courts determine the parties assented proposition?
In Merwe v Viljoen[17] the court held:
“Where a certain clause in the contract was ambiguous and capable of more than one meaning and that consequently evidence of surrounding circumstances might show the meaning which parties intended.” (my emphasis)
[19] Coopers and Lybrand and Others v Bryant 1995 (3) SA 761. The facts of the case were that on 20th December 1991 the respondent (Mr. Bryant) sued the appellant, a firm of Chartered Accountants and Auditors, for damages as a result of a breach of a verbal contract alternatively for negligent misrepresentation for an advice on the financial soundness of a business trading as Henco.
[20] The applicant raised a special plea to the effect that respondent’s claim was subject to a deed of cession dated 16th April 1985 between him and Standard Bank (the bank). The deed document read:
“I/We, the undersigned, Rolf Anthony Bryant, do here pledge, cede, assign and transfer into and in favour of the bank all my/our/company’s right, title and interest in and all book debts, and other debts, and claims of whatsoever nature, present and future, due and to become due to me/us/the company and to all rights of action arising thereunder, as a continuing covering security for all sums of money which I/we/the company may now or at any time hereafter owe or be indebted to the bank...”
[21] Reading the entire deed document, Joubert JA noted that “the words between square brackets” were not deleted and initialed by Mr. Bryant as he should have done since he did not act on behalf of a company. He did, however, delete and initial the word: “Director” below his signature.
[22] This deed document was described by Joubert JA as:
“The above deed of cession is in securitatem debiti to provide the Bank as cessionary with continuing security for allowing Mr. Bryan, as cedent, banking facilities. As consideration for all sums of money which he owed or may owe the Bank he undertook to cede, pledge or transfer to the Bank all his ‘right’ title and interest in and to all book debts and other debts and claims of whatsoever nature, present and future, due and to become A due to me and to all rights of action arising thereunder.”
[23] The issue before court was whether the deed of cession covered the present claim by Bryant against the applicant. It was contended on behalf of Bryant that the intention of the parties in the cession by the words “and other debts and claims whatsoever nature, like the book debts” only referred to trading business of Mr. Bryant and not the claim against the applicant. Joubert JA[18] wisely propounded:
“The matter is essentially one of interpretation. I proceed to ascertain the common intention of the parties from the language used in the instrument. Various canons of construction are available to ascertain their common intention at the time of concluding the cession. According to the ‘golden rule’ of interpretation the language in the document is to be given its grammatical and ordinary meaning, unless this would result in some absurdity, or some repugnancy or inconsistency with the rest of the instrument.” (my emphasis)
[24] The learned Judge also stated:
“The mode of construction should never be to interpret the particular word or phrase in isolation (in vacuo) by itself. The correct approach to the application of the ‘golden rule’ of interpretation after having ascertained the literal meaning of the word or phrase in question is, broadly speaking, to have regard:
- to the context in which the word or phrase is used with its interrelation to the contract as a whole, including the nature and purpose of the contract, as stated by Rumpff CJ supra;
- to the background circumstances which explain the genesis and purpose of the contract, ie to matters probably present to the minds of the parties when they contracted.
- to apply extrinsic evidence regarding the surrounding circumstances when the language of the document is on the face of it ambiguous, by considering previous negotiations and correspondence between the parties, subsequent conduct of the parties showing the sense in which they acted on the document, save direct evidence of their own intentions.” (my emphasis)
[25] The honourable judge proceeded to consider content, background and extrinsic evidence. He considered that Mr. Bryant also held a personal account with the bank and that he had used it for his marriage settlement, for a claim to recover a legacy under a will and also to recover his private assets. That in the analysis of a book debt, the cession referred to his business account with Standard Bank. The court then held that the claim against the applicants was a private one and not relating to Mr. Bryant’s trade and therefore the special plea raised by applicants could not be sustained against Mr. Bryant.
Case in casu
[26] The document to be interpreted in casu is the “Galp Franchise Agreement” (The Franchise Agreement). It is particularly clause 6.1 which stipulates:
“This agreement shall commence on the commencement date and shall endure for 3 years or until terminated in terms of either clauses 6.2 or 14 below or simultaneously with and upon termination for any reason of the Galp Property Lease Agreement (Schedule ....) (my emphasis)
[27] Clause 6.2 and 14 do not apply in casu by reason that they are suspensive condition clauses which never transpired and therefore not subject of the dispute. The question for interpretation is, when according to clause 6.1 cited above, was the Franchise Agreement to terminate? Was it at the end of three years or upon termination of the Franchise Property Lease Agreement which was nine years and eleven months and fifteen years with respect to the Big Tree and Sikhula sites?
[28] Surely there is ambiguity in clause 6.1. I have already demonstrated the position of the law on what ought to happen where a clause in the contract is ambiguous. The court must apply what I would term “the tripartite” approach (that is, content, background and extrinsic) which was well defined by Joubert JA above. [19]
[29] Joubert JA enquired as to the circumstances under which the deed of cession was entered or the background circumstances which explains the genesis and purpose of the contract. He learnt that Mr. Bryant had loan facilities with the Bank. In order to secure the loan facilities the cession deed was then concluded. Similarly in casu, under what circumstances was the “The Franchise Agreement” entered into in casu.
[30] The applicants purchased the business filling station from Mr. Dlomo for the sum of E5.5 million as a going concern. At that time the filling station was operating under Shell (Pty) Ltd franchise. The applicants held lease agreements with the landlord. Respondent commenced business in Swaziland and took over from Shell (Pty) Ltd. It appears that when respondent took over the business in Swaziland, unknown to applicants, negotiated with the landlords. Applicants were then informed to direct monthly rentals to respondent. Applicants and second respondent then concluded an agreement which reads:
“1. The Franchisor has agreed to appoint the Franchisee as the operator of the new Galp service station at Eveni along Mantjolo road, on Plot 6 and 7 of Farm 1118 Mbabane.
2. On or prior to the date of the signing of this agreement, the parties shall conclude a Galp Standard Franchise Agreement whose initial duration is for three years subject to a further renewal based on performance. (my emphasis)
2.1 In this regard it is agreed:
2.1.1 That the Franchise shall immediately pay to the Franchisor a lump sum amount of ............ being sign-on fee covering the duration of the lease of 9 years 11 months effective 1st September 2011.
2.1.2 the sign-on fee being a rental part-payment will allow for the Franchisee to secure an initial preferential rental rate of .............per month escalating at 7.5% per annum which date is agreed to be the April of each year.
2.1.3 should the agreement terminate earlier than envisaged, the Franchisee will be entitled to a prorated refund for the remaining period of 9 years 11 months.
2.1.4 The Franchisee is deemed to have chosen and elected to participate and be bound by the Galp Standard Franchise Agreement which is the main agreement on which the performance of business is measured.
2.1.5 The Franchisee shall not be entitled to mortgage, pledge, grant a lien, or grant or permit any encumbrance of whatsoever nature over the service station for the duration of this agreement.
Signed at Matsapha on the 11th July 2011.”
[31] Few days after viz. 20th July 2011, the parties entered into the Franchise Agreement of which I have cited the relevant clause.[20] This agreement was concluded by respondents and first applicant. The commencement date was said to be 1st July 2011.[21]
[32] I must point out that under the first agreement, that is, the Agreement on a Special Right to Trade (The Trade Agreement), the applicant paid the sum of E1 million to the respondent in terms of Clause 2.1. This is confirmed by respondent at follows:
“38.6 In terms of the “Special right to trade” agreement, Mr. Calu paid E1 million to the Respondent upfront as a sign-on fee (clause 2.1.1) which the Respondent used to cover the construction costs of the site. The sign-on fee was a rental part-payment, which entitled Mr. Calu to a preferential rental rate for ten years (clauses 2.1.1 – 2.1.2)”
[33] The respondents argue that the Trade Agreement signed on 11th July 2011 was subject to the Franchise Agreement. Once the Franchise Agreement was concluded, the Trade Agreement novated. Respondent relies on clause 2 of the Agreement on Trade Agreement which reads:
“2. On or prior to the date of the signing of this agreement, the parties shall conclude a Galp Standard Franchise Agreement ‘whose’ initial duration is for three years subject to a further renewal based on performance.” (my own emphasis)
[34] We know for a fact that at the time of signing of the Trade Agreement, the Franchise Agreement was not in place. From reading of this clause, it unequivocally reads that the Franchise Agreement. “whose initial duration is for three years subject to further renewal based on performance.” “Whose” refers to the Franchise Agreement. In other words, even though the Franchise Agreement was not before the parties when the Trade Agreement was concluded, it is clear that the parties already formulated a condition under the Franchise Agreement. That condition was that the Franchise Agreement would have a duration of initial period of three years subject to renewal based on performance. From this clause, it is clear that the parties intended that the agreement to be formulated later would give an initial period of three years subject to renewal depending on performance. In casu, it is common cause that the parties have no qualms over performance.
[35] The Franchise Agreement further defines another scenario upon which the sum of E1 million would cover. This is the period of nine years eleven months, referred to by respondent in their heads as ten years. The clause reading 2.1.3
“2.1.3 should the agreement terminate earlier than envisaged, the Franchisee will be entitled to a prorated refund for the remaining period of 9 years 11 months.”
[36] Clause 2.1.3, as cited above, is very much expected in the above situation. It envisages that the Franchise Agreement would provide for an initial three years duration to be renewed on condition of performance. Should the appellant fail to perform according to Franchise standard, the Agreement would be terminated after the initial period of three years. It is for this reason therefore, that the respondent undertook to refund a prorated fee to set off the remaining period from the ten years.
[37] Turning to the Franchise Agreement. As I have cited clause 6.1, we know that the condition which was so succinctly defined as to be incorporated to this agreement (Franchise) of an “initial period of three years depending on performance” was now absent. Instead of it reading “initial period of three years” it simply reads “3 years.” However the second clause which was present under the Trade Agreement which refers to the Galp Lease Agreement (2.1.3 of Trade Agreement) was incorporated under the Franchise Agreement. This is the clause reading “simultaneous with and upon termination for any reason of the Galp Property Lease Agreement.”
[38] From the above analysis, reasoning suggests that both parties intended that their agreement should last for nine years eleven months and fifteen years respectively, being the period of the lease agreement between respondent and the landlord or on termination of the lease agreement.
[39] This conclusion in fact finds support from the respondent’s submission. Respondent as clearly evident from its pleadings pointed out that the sum of E1 million paid as cover fee by applicants would cover the period of nine years eleven months. The termination prior to this period referred to in the Agreement was one following a breach of the agreement as per clause 14 and or change of the Franchise specification in product and should applicants dislike Franchise changing its product as per clause 6.2 or should Franchise terminate its lease agreement with its landlord for whatever reason.
[40] Secondly, respondent has submitted that it is willing to refund the applicants the prorated balance from E1 million. This condition is not found in the Franchise Agreement but in the very Trade Agreement which respondent argued that it terminated upon signature of the Franchise Agreement. This is a clear indication that in the minds of both parties before court that the Franchise Agreement could not be interpreted in isolation to the Trade Agreement. The Trade Agreement was still applicable and binding. At any rate, this conclusion is fortified by the Franchise Agreement which was concluded after the Trade Agreement and it reads:
“Definitions:
“Agreement” this agreement together with all applicable Schedules attached to or referred to in this Agreement including any other existing and valid Retail Business Agreement.”(my emphasis)
[41] The above clause demonstrates clearly that the Franchise “document” did not on itself form an agreement. There were other documents which, together with the Franchise document formed the Agreement. This “other” refers to the Trade Agreement. In fact, in casu, all the parties refer to two documents signed and no other namely, Trade Agreement and Franchise Agreement.
[42] It is therefore not clear how respondent on one hand appreciates that the period of nine years and eleven months or fifteen years has not lapsed and therefore is willing to refund the applicants and has only lapsed for purposes of trade.
[43] The respondent contended in its Heads of Argument before the Supreme Court that the reason they signed the Trade Agreement with Mr. Caru, deponent in applicants’ founding affidavit was:
“37.3 In order to assist Mr. Caru recoup the E5.5 million which he had paid to Mr. Dlomo, the Respondent elected not to exercise its remedies for breach of contract, but instead to allow Mr. Caru the option of entering into a franchise agreement with it in relation to the Big Tree service station. Mr. Caru opted to do so. Thus he was contractually obligated to operate the Big Tree service station subject to the terms and conditions of the franchise agreement with the Respondent.” (my emphasis)
[44] One wonders as to how in an economy such as Swaziland would respondent have “recoup” a sum of E5.5 million within three years. The period of nine years and eleven months and fifteen years respectfully appears to be reasonable by any standard, or should I say fair, reasonable and just.
[45] The wise words of J. De Villiers JP[22] must always be remembered when interpreting clauses in contracts. It was contended before the learned Judge that the wording “the day when the sum of Pounds 60 is paid in full and not until then, the company should view the land sold” meant that there was no deed of sale until the said amount was paid. The learned Judge holding that the deed of sale was concluded on the date of signature and that the suspensive clause did not determine the date of conclusion of the contract. He then stated:
“Courts of law do not hesitate to strip transaction of disguise and reveal their true nature”[23] (my emphasis)
[46] In casu, the true nature of the contract between the parties was that applicants should trade for a period running with the lease. In the totality of the above, appellants’ review ought to succeed.
Public Policy
[47] The applicants contend that the interpretation given by the court is contrary to public policy. The respondent, on the other hand, argue that the interpretation was in line with public policy. Brand AJ[24] stated:
“Elementary and basic general principle that it is in the public interest that contracts entered into freely and honestly by competent parties should be enforced.”
[48] Van Heerden JA[25] eloquently pointed out:
“...if there is one thing which more than another public policy requires is that men of full age and competent understanding shall have the utmost liberty of contracting and that their contracts when entered into freely and voluntarily shall be held sacred and shall be enforced by court of justice.”
[49] Van der Merwe[26] having emphasized the importance of pacta servanda sunt quickly expanded:
“Important though the notion of autonomy and the principles derived from it may be fort the law of contract, they are not applied absolutely. The fact that an obligation is recognised by the law and receives its effect through the agencies of the state, necessarily implies that contracting parties, when exercising their private autonomy are subject to the values of society.” (my emphasis)
[50] The author proceeds:
“The very principles of morality or socio-economic expediency, which will in many circumstances support a policy favouring the exact enforcement of contracts freely entered into by consenting parties, may in particular circumstances, require that less weight be attached to the ideals of individual autonomy and freedom of action. The rules of the law of contract reflect the attempts in the legal system to achieve a balance between relevant principles and policies so as to satisfy prevailing perception of justice and fairness, as well as economic, commercial and social expediency. For this reason, the law of contract has a dynamic and changing nature.”
[51] In other words, the court must strike a balance between pacta sunt servanda and public policy. Before discussing the guidelines to striking the balance, it is apposite to define public policy. Ngcobo J[27], writing a majority decision in the Constitutional Court stated on public policy:
“All law, including common law of contract is now subject to constitutional control. The validity of all law depends on their consistency with the provisions of the constitution and the values that underlie our constitution. The application of the principle pacta sunt servanda is therefore subject to constitutional control.”
[52] At paragraph 35 the learned Judge emphasises the point as follows:
“No law is immune from the constitutional control. The common law of contract is no exception. And courts have a constitutional obligation to develop common law, including the principles of law of contract, so as to bring in line with the values that underlie our constitution.”
[53] He then highlights:
“When developing the common law of contract, courts are required to do so in a manner that prompts the spirit purport and object of the Bill of Rights.”
[54] At paragraph 28 the learned Judge explains:
“Public policy represents the legal convictions of the community; it represents those values that are held most dear by the society.”
[55] He further explains[28]:
“73. Public policy imports the notions of fairness, justice and reasonableness. Public policy would preclude the enforcement of a contractual term if its enforcement would be unjust or unfair. Public policy, it should be recalled ‘is the general sense of justice of the community, the boni mores, manifest in the public opinion.” (my emphasis)
[56] He then continues:[29]
“74. The contentions by the parties on the question whether clause 5.2.5 is enforceable regardless of how unfair or unjust this might be in a given case, raises difficult and complex questions concerning the development of the common law of contract, in particular, the need to extend the application of the common law legal principles that seek to achieve justice and fairness to time limitation clauses.”
[57] At paragraph 30 the honourable Judge hits the nail on the head when he writes:
“This approach leaves space for the doctrine of pacta sunt servanda to operate, but at the same time allows courts to decline to enforce a contractual terms that are in conflict with the constitutional values even though the parties may have consented to them.”
[58] I do not lose sight of what the learned Judge says at paragraph 57:
“The first question involves the weighing-up of two considerations. On the one hand, public policy, as informed by the Constitution, requires, in general, that parties should comply with contractual obligations that have been freely and voluntarily undertaken. This consideration is expressed in the maxim pacta sunt servanda which, as the Supreme Curt of Appeal has repeatedly noted, gives effect to the central constitutional values of freedom and dignity. Self-autonomy, or the ability to regulate one’s own affairs, even to one’s own detriment, is the very essence of freedom and a vital party of dignity. The extend to which the contract was freely and voluntarily concluded is clearly a vital factor as it will determine the weight that should be afforded to the values of freedom and dignity. The other consideration is that all persons have a right to seek judicial redress. These considerations express the constitutional values which must now inform all laws, including common law principles of contract.” (my emphasis)
[59] He then, with much precision, state a very important principle of our law which I also endorse:[30]
“It follows in my judgment, that the first inquiry must be directed at the objective terms of the contract. If it is found that the objective terms are not inconsistent with public policy on their face, the further question will then arise which is whether the terms are contrary to public policy in the light of the relative situation of the contracting parties. In Afrox, the Supreme Court of Appeal recognized that unequal bargaining power is indeed a factor which together with other factors, plays a role in the consideration of public policy. This is a recognition of the potential injustice that may be caused by inequality of bargaining power. Although the court found ultimately that on the facts there was no evidence of an inequality of bargaining power, this does not detract from the principle enunciated in that case, namely, that the relative situation of the contracting parties is very relevant consideration in determining whether a contractual term is contrary to public policy. I endorse this principle. This is an important principle in a society as unequal as ours.” (my emphasis)
[60] Turning to the case in casu, applying this principle of our law, I now intend to hold, as per Ngcobo J supra, an enquiry on the bargaining power of the parties. In casu, I need not the eye of an eagle or a microscopic device to ascertain the bargaining power of the parties. The respondent has summarized the position very well in its heads of argument.[31] It outlined:
“37.1 Mr. Caru paid E5.5 million in order to take over the operation of the Big Tree service station from the previous franchise, Mr. Dlomo. Thus Mr. Caru did not pay the E5.5 to the Respondent but to the previous franchise of the Big Tree service station, Mr. Dlomo.
37.2 In addition, the agreement between Mr. Caru and Mr. Dlomo was in breach of Mr. Dlomo’s franchise agreement with the Respondent, in terms of which the right to operate the franchise could not be ceded or sold without Respondent’s permission.
37.3 In order to assist Mr. Caru to recoup the E5.5 million which he had paid to Mr. Dlomo, the Respondent elected not to exercise its remedies for breach of contract, but instead to allow Mr. Caru the option of entering into a franchise agreement with it in relation to the Big Tree service station. Mr. Caru opted to do so. Thus, he was contractually obligated to operate the Big Tree service station subject to the terms and conditions of the franchise agreement with the Respondent.” (my emphasis)
[61] In adjudicating on the case of Barend Petrus Barkhuizen (op. cit.) the learned Judge having highlighted what I have just demonstrated above also took time to enquire on good faith – bona fide. Wessels[32], states of good faith:
“...in accordance with what the community as such considered acting in good faith in the specific circumstance to be.”
[62] Jansen JA[33] pin points:
“This means that in respect of the so-called negotia bona fide the court had wide powers of complementing or restricting the duties of parties, of implying terms, in accordance with the requirements of justice, reasonableness and fairness.[34]
[63] He further states:
“...’the community standards of justice and equity...’ may change with times”[35]
[64] In light of that the requirements of bona fide underlies our law of contract, could it be said that a party who asserts that the reason it entered into a contract with the applicants is because it wanted it to “recoup” its E5.5 million. The applilcants and Mr. Dlomo had breached its (respondent’s) franchise agreement. This intention by respondent for applicants to “recoup” its E5.5 million is not highlighted in any of the two agreements presented in court nor does it allege that such intention was communicated to applicants. Surely there was no good faith in such a transaction. It is my considered view that had respondent communicated its intention to applicant, applicant would have been better informed on concluding the contract. He would have exercised his right of choices accordingly.
[65] That as it may, in fact, this is exactly what the applicants are seeking for in this court. They are saying a term of nine years eleven months and fifteen years is reasonable for them to “recoup” their investment. This term is there in the first contract (Trade Agreement) and also the second contract (Franchise Agreement). It stands to reason that it should be given effect more so in light of respondent’s submission that its intention of entering into an agreement with applicants was for applicants to “recoup” its investment. Respondent demonstrated this intention by providing in the contract that the agreement would run with the lease agreement.
[66] I think public policy imposes a duty upon court to interpret contractual transactions between parties in line with what the public perceive as sense of justice and fairness and in accordance with the business efficacy. I mention business efficacy because respondent still appreciates that the sum of E1 million paid for its franchise would only give value in a period of nine years eleven months. It is for that reason that even during the hearing of this matter before this court it is still willing to refund the prorated balance from nine years eleven months. It is therefore surprising that the same party (respondent) would submit that the value of E5.5 million would be recovered within three years only. This reasoning to me, with due respect, is absurd. Absurdity is incompatible with public policy which promotes sense of justice in the community or “the bonis mores” [36].
[67] What exacerbates the position by respondent is that respondent narrates the circumstances upon which the sum of E1 million was paid to it by applicants. It stated that Galp issued an expenditure freeze instruction (capex freez) at the time when Sakhula site was under construction. Applicants negotiated with Galp and offered the sum of E1 million in order for the construction to proceed as applicant was desirous to trade without any hindrances after all applicants had paid for the goodwill of the business as well.
[68] This sum of E1 million was used to finance the construction at Sakhula site. It was agreed between the parties that the applicants would recover the sum of E1 million by respondent deducting rentals from it. The anticipated period was nine years eleven months.
[69] It is, in all honesty gross miscarriage of justice for a person who: (i) was found running a business as a going concern with a lease agreement under its name; (ii) after paying for the same, an amount of E5.5 million and I must emphasis that this is a very significant amount by our standard; (iii), where respondent takes over from Shell (Pty) Ltd and is expected to do construction in order to change the face of the business from Shell to Galp outlook, fails to do so for reasons not attributed to the first applicants; (iv) the first applicant then foot the bill for construction so that the business complies with Galp specifications; is suddenly told within a short period (three years) to pack and go. Total disregard is paid to its investment. Surely, applicants in the eyes of justice, are entitled to enjoy the fruit of their toil (investment).
[70] I must end by pointing out that this sense of justice did not only operate in the mind of respondent as I have demonstrated above,[37] as it appreciated from the onset that respondent ought to recoup its investment, but also in my brother who wrote the majority judgment. I say this because, in his judgment, he repeatedly called for the parties to go back to the negotiation table and he wisely concludes:
“It is in the interest of both parties that they should pursue this option which will enable the applicants to reorganise their business having regard to the relationship”
[71] I must point out our axiom, “Justice should not only be done but should manifestly and undoubtedly be seen to be done.”[38] In casu, justice can best be seen to be done by upholding the interpretation to their term of contract, clause 6.1 which was operating in all parties’ mind at each time they set to conclude the two sets of the contracts. This is that they intended their agreement to bind them for a period equivalent to the lease agreement.
[72] In the above circumstances, I hereby make the following order:
1. The Applicants application succeeds.
2. The Judgment of the Supreme Court is in this regard set aside
in its entirety and substituted with the following one;
2.1 The Franchise Agreement between the Applicants and the Respondent, forming the subject of these proceedings is declared to be in force and to be terminable when the Galp Property Lease Agreement between the Respondent and the Landlord in each such situation terminates.
3. The Respondent’s counter application be and is hereby dismissed.
4. Each party is to pay its own costs.
_________________________
M. DLAMINI
ACTING JUDGE OF APPEAL
_________________________
I agree S. B. MAPHALALA
ACTING JUDGE OF APPEAL
_________________________
I agree N. J. HLOPHE
ACTING JUDGE OF APPEAL
[1] “in the sense that there is substance in the argument advanced “ see Beatley & Co. v Pandor’s Trustees 1935 TPD 365 at 366
[2] Must have prospect of success.
[3] “It must transcend the narrow interest of the litigants and implicate the interest of a significant part of the general public.” See paragraph [26] of Andre Francois Paulsen & Another v Slip Knot Investment 777 (Pty) Ltd ZACC 5 [61/14] (24 March 2015)
[4] See Section 167 (3) (b) (ii) of Constitution of South Africa- Seventh Amendment Act 72 of 2012 (my own emphasis)
[5] President Street Properties (Pty) Ltd v Maxwell Uchechukwu and 4 Others (11/2014) [2015] SZSC 11 (29th July 2015)
[6] See page 12 paragraph 18 supra.
[7] (Barend Petrus Barkhuizen v Ronald Stuart Napier (72/2005) ZACC 5 [2007] (4th April 2007) at paragraph 39
[8] Cole versus Government of the Union of South Africa 1910 AD 263 at 273
[9] Bank of Lisbon and South Africa Ltd v The Master and Others 1987 (1) S.A. 278 at 290.
[10] Brand AJ in Afrox Healthcare BPR v Strydom 2002 (6) S.A. 21 at 26
[11] 1948 (1) S.A. 413 (A) at 428
[12] Contract: General Principle 3rd Ed. Page 11
[14] 1948 (3) SA 495 at 505 AD
[15] Van Pletsen v Henning 1913 AD 82 at 99
[16] Saambou-Nationale Bouvereniging v Friedman 1979 (3) SA 994
[17] 1953 (1) SA 99 at 125 t
[19] Page 768 Coopers supra
[20] At para ..............supra
[21] See page 71 of book of pleadings
[22] Provident Land Trust Ltd v Union Government (Minister of Mines) 1911 AD 615
[24] Afrox Health care BPR v Strydom 2002 SA 21 at 26
[25] In Benlou Properties (Pty) Ltd v Vector Graphics (Pty) Ltd 1993 (1) SA 179 at 187
[27] Barend Petrus Barkhuizen v Ronald Stuart Napier (72/2005) [2007] ZACC 5 (4TH April 2007) at paragraph 15
[28] At paragraph 73 supra
[32] Law of Contract paragraphs 1997 1980 (1) 645
[33] In Tuckers Land and Development Corporation v Hovis
[36] See Lorma Productions and Others v Dallas Restaurant 1981 (3) SA 1129 at 1153
[38] The Chairman of the Liquor Licensing Board v Joshua Mkhonta & 3 Others 01/2013 at page 15
