African Oxygen Ltd v STM Marketing and Agencies Ltd (C of A (CIV) BO.17 of 2000 CIV/APN/191/99 CIV/APN/270/99)

Case No: 
CIV/APN/191/99
Media Neutral Citation: 
[2000] LSHC 134
Judgment Date: 
1 October, 2000

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African Oxygen Ltd v STM Marketing and Agencies Ltd.


Summary


Appellant and respondent are competitors in the liquid petroleum gas trade. Appellant discovered that respondent was unauthorisedly filling appellant's cylinders with its (respondent's) own gas. This led to two applications by appellant in the High Court for an interdict against respondent and for certain ancillary relief. This matter came before Guni J who dismissed both applications with an order for attorney and client costs. An appeal was noted to this Court against the judgment of Guni J.


On the affidavits before the court a quo appellant was entitled to the relief sought in both applications. The appeal must accordingly succeed. It was, however, necessary to point out in the judgment that not only did Guni J reach the wrong conclusion, but in doing so she made unfounded and unwarranted findings of unlawful conduct against appellant in the most extravagant terms which this Court finds totally unacceptable.


For the reasons set out in the judgment of my brother Friedman, with which my brother Kumleben and I concur, the appeal succeeds and the orders made by Guni J are set aside and substituted with orders agreed upon by the parties' counsel as the orders which should have been granted in the event of the appeal succeeding, and which are set out in full in the judgment which I hand in .


C of A (CIV) BO.17 of 2000

CIV/APN/191/99

CIV/APN/270/99

IN THE COURT OF APPEAL OF LESOTHO


In the matter between:


AFRICAN OXYGEN LIMITED APPELLANT

and

STM MARKETING & AGENCIES LTD RESPONDENT


Held at Maseru


Coram: STEYN, P

FRIEDMAN, JA

KUMLEBEN, JA


JUDGMENT


FRIEDMAN, JA


Appellant is a company incorporated according to the company laws of South Africa, having its registered office at Bloemfontein. It carries on business as the seller and distributor of liquified petroleum gases (LPG). Respondent

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carries on business at premises in Maseru as a distributor of LPG for Elfgas

Southern Africa (Pty) Ltd (Elfgas), a competitor of appellant.


When LPG is purchased from a distributor, the customer pays a deposit of M75 on the gas cylinder. The cylinder remains the property of the distributor. Customers who wish to have a cylinder re-filled may go to any distributor, not necessarily the one from whom the first purchase was made. The practice in the trade is that the distributor will exchange the empty cylinder for a full cylinder of its own LPG.By agreement between the main suppliers, when a supplier is in possession of empty cylinders belonging to another supplier, it will return those cylinders to the latter supplier who will give, in exchange, those cylinders in its possession that belong to the other supplier.


In terms of Regulation 13 of the Regulations issued on 4 August 1997 in terms of section 17A of the Fuel Services Control Act, 1983, a wholesaler of LPG may not fill a LPG gas cylinder belonging to another wholesaler without the written consent of the latter.


Appellant contends that respondent is unlawfully competing with it by filling gas cylinder owned by appellant and clearly marked as such, with its own


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product. Accordingly, on 12 May 1999, appellant brought an urgent ex parte application in the High Court claiming inter alia an interdict to restrain respondent from filling with gas the cylinders owned by appellant and which carry the brand identification of appellant or any of its other businesses namely Mobil, Engen, Caltex, Homegas, Sonap/Sonarep, Trek and Socony.


On 14 May 1999 a rule nisi operating as a temporary interdict was issued. Respondent filed answering affidavits and appellant filed a replying affidavit. On 7 July 1999 a second application amplified in respect of certain new facts (referred to later) claiming essentially similar relief, was launched. This application was also opposed. The two applications were heard together. On 7 April 2000 Guni J, in a single judgment, discharged both rules nisi with costs on the attorney and client scale. This appeal lies against that judgment.


In support of its allegation that respondent was filling applicant's cylinders with its own LPG, appellant lodged two affidavits, one deposed by Johannes Lodewikus Erasmus and the other by Johan Goosen. Both deponents are employed by Private Detective Services.


On 30 March 1999 Erasmus and Goosen drove to respondent's premises


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where they handed an empty 9 kg Afrox cylinder with serial no CI55699 to an

attendant with a request that it be exchanged for a full one. They were handed an Afrox cylinder with serial no C103205 T in exchange. It was sealed with a plastic transparent seal. The following day they repeated the exercise. This time they handed the attendant an empty 18kg Afrox cylinder with serial no TL371 and received in exchange another 18kg Afrox cylinder with serial no. F 16963 8. They made video recordings of the empty cylinders as well as the full ones they received. In the founding affidavit by Giles William Parker (Parker), appellant's branch manager for Bloemfontein, it was stated that the video recordings would be made available at the hearing should they be required.


In the second application Parker stated that on 29June 1999 he received a report from a sales representative who had seen approximately 1000 silver and grey cylinders with the distinctive Afrox marking on them at an unmarked warehouse on the road from Mafeteng to Maseru. Parker himself went to the warehouse where he also saw the Afrox cylinders. He suspected the warehouse to be that of respondent. On 2 July 1999 in order to confirm his suspicion he sent one L.F. Mopeli (Mopeli), appellant's sales manager for Lesotho, to buy gas at the warehouse.


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On 3 July 1999 Mopeli deposed to an affidavit in which he stated that on 2 July 1999 he went to the warehouse taking with him an empty Afrox cylinder and requested that it be filled. He paid R50 for which he received a receipt. He was asked to hand the receipt to a worker at the warehouse who gave him a full Afrox gas cylinder. The worker took the serial number of the Afrox cylinder, wrote it on the back of the receipt and signed it. Mopeli also noticed about 1000 silver Afrox cylinders with the distinctive Afrox markings on them.


Parker explained that appellant's complaint was that by keeping a large number of appellant's cylinders at the warehouse, respondent was keeping appellant's capacity out of circulation. He stated -


"The less Afrox cylinders there are in circulation amongst customers, the less LPG Afrox can sell. It impedes the availability of cylinders to fill with LPG. Furthermore, by using the Afrox cylinders to fill with respondent's LPG, the respondent did not need the capital outlay to purchase his own cylinders and put it in circulation. He did not need capital outlay to purchase capacity - containers to fill. He uses Afrox


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cylinders to raise his own capacity. By so doing, he also can sell LPG at a lower price, having had lesser capital outlay. He then takes away the Afrox LPG market by unlawfull competition."


These are the new facts which gave rise to the second application. In the second application appellant did not seek an interdict; it confined the relief sought to orders in terms of which appellant's cylinders at the warehouse, were to be returned to it.


In his answering affidavit Selai Mokete (Mokete), respondent's managing director, raised a number of points in limine.


Firstly, he said that appellant had failed to disclose material facts, namely that each of the parties had in the normal course of trade, exchanged empty gas cylinders belonging to the other and that this had continued until shortly before the first application was launched.


Secondly, as the parties had been exchanging gas cylinders as aforesaid, there was no reason for appellants to have brought the application as a matter of urgency.


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Thirdly, appellant's application was mala fide and appellant had not approached the Court with clean hands. Respondent alleged that it has an agreement with Elfgas in terms of which it is authorised to distribute Elfgas in Lesotho. Appellant is a competitor of Elfgas and what it is attempting to do is to frustrate Elfgas in the distribution of LPG in the whole region of Southern Africa.


Respondent alleged, further, that appellant has at its various depots in the Republic of South Africa, filled its own product into gas cylinders clearly marked as the property of Elfgas.


In support of this allegation respondent filed an affidavit by one Johan Stephen Scott, a private investigator of Bloemfontein. Scott testified that at appellant's depots at Newcastle, Pietersburg, QwaQwa, Ladysmith, Zebedelia, Tzaneen and Duiwelskloof he had purchased LPG in cylinders belonging to Elfgas.


In an affidavit deposed to by Robin Brian Lord (Lord), the sales manager of Elfgas it is stated that appellant makes a practice of approaching courts on an urgent basis without notice for similar relief without disclosure of its own conduct. He referred, in this regard, to three cases in South Africa.


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Finally, Mokete stated that applicant had, in contravention of the liquefied Petroleim Gas (Trade and Handling) Regulations, removed a number of respondent's cylinders out of Lesotho into South Africa.


Fourtly. respondent alleged that appellant had no locus standi as it has not established that it is licenced in terms of section 3 of the Liquified Petroleum Gases (Trade and Handling) Regulations of 1997 to sell or deal in LPG in Lesotho.


With regard to the affidavits of Erasmus and Goosen, Mokete stated that the video recording was not made at respondent's premises and that the attendant did not fill the empty Afrox cylinders with its own gas; what the attendant gave them were full Elfgas cylinders. He denied that respondent was keeping sealed Afrox cylinder at its premises.


In a replying affidavit Parker admitted that similar applications had been brought in South Africa. Some were still pending while others were settled on the basis that the orders prayed for were granted. He stated that it was contrary to company policy for other distributors' cylinders to be filled with Afrox LPG and the company tried its best to prevent this from happening. He attached a copy of


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a circular sent to all Afrox depots warning employees that if they breached this instruction that they would be liable to dismissal. With regard to the allegation that appellant was not licenced, he annexed a copy of appellant's licence which was valid until 31 January 2000.


Mokete's allegation that appellant had, in contravention of the LPG regulations, removed gas cylinders of the respondent from Lesotho to South Africa, was denied by Parker.


Before dealing with the merits of the two applications it is necessary to consider the points in limine taken by respondent as these points were upheld by the court a quo.


In regard to the alleged non-disclosure of material facts Guni J found that appellant had failed to disclose that the parties had participated in the customary exchange of cylinders and that had appellant done so it would not have been entitled to an order compelling respondent to return the Afrox cylinders which were in its possession. I cannot agree with this reasoning. Appellant made it clear in the founding papers what the trade practice was. The fact that the parties were continuing to give effect to that practice while respondent was, on appellant's


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version, unlawfully filling appellant's cylinders with its own LPG, did not in any way detract from appellant's case. The fact that appellant did not expand on the extent to which the trade practice was being utilised prior to the application cannot be described as the non-disclosure of a material fact justifying the dismissal of the application.


The second point in limine, namely that because the parties had been exchanging cylinders there was no need for appellant to have brought the application on an urgent basis, is without merit. On appellant's version of the facts, the urgency was, in my judgment, established.


The third point in limine was that the application was mala fide and that appellant had not approached the court with clean hands. This allegation was dealt with in the replying affidavit, the salient facts of which have been summarised above. Suffice it to say that in the light of the answers furnished by appellant, there is no substance in this point in limine.


Equally, there is no merit in the fourth point in limine, namely that appellant had no licence. The copy of the licence annexed to the replying affidavit disposed of this point.

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I turn now to the merits of the application.


The gravamen of applicant's applications was the allegation that respondent was making use of appellant's cylinders to fill and sell its own gas. Guni J found that "There has so far been no evidence to support this allegation."


The evidence placed before the court a quo by appellant was that of Erasmus and Goosen. Guni J appears to have dismissed their evidence on the ground that the video recordings which they took, were not produced. The learned judge stated that respondent denies that the two detectives were given full Afrox cylinders and denies that the video recordings were made at its premises. Guni J said: "Perhaps that is why appellant decided after all not to produce the video tapes." Appellant said the video tapes would be produced if necessary. There is no suggestion that either the court or respondent asked for them to be produced. But even in the absence of the videos there was evidence which called for an answer and none was forthcoming except for a bald denial. The deponent, Mokete, who made the denial, does not state that he had personal knowledge of the incidents deposed to by Erasmus and Goosen. He stated that the attendant sold Elfgas LPG to Goosen and Erasmus, but there is no affidavit from the attendant. In any event there is no answer to the allegations in the second application


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regarding the affidavit of Mopeli as to the events that took place at the warehouse.


This whole episode was not dealt with in respondent's answering affidavit. Nor was it even referred to in the judgment of the court a quo.


Respondent's bald denials were insufficient to create a dispute of fact which would have warranted the dismissal of the applications. A respondent in motion proceedings cannot defeat the applicant merely by bare denials such as might be employed in a pleading. See Room Hire Co. (Pty) Ltd v Jeppe Street Mansions (Pty) Ltd 1949 (3) SA 1155 (T) at 1163.


See also Plascon-Evans Paints Ltd v Van Riebeeck Paints (Pty) Ltd 1984 (3) SA 623 (A) at 6341 - 635C where the approach to be adopted where there is a dispute of fact on the papers is set out as follows:


"In certain instances the denial by respondent of a fact alleged by the applicant may not be such as to raise a real, genuine or bona fide dispute of fact (see in this regard Room Hire Co (Pty) Ltd v Jeppe Street Mansions (Pty) Ltd 1949 (3) SA 1155 (T) at 1163-5; Da Mata v Otto NO 1972 (3) SA 858 (A) at 882D-H). If in such a


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case the respondent has not availed himself of his right to apply for the deponents concerned to be called for cross-examination under Rule 6 (5) (g) of the Uniform Rules of Court (cf Petersen v Cuthbert & Co Ltd 1945 AD 420 at 428; Room Hire case supra at 1164) and the Court is satisfied as to the inherent credibility of the applicant's factual averment, it may proceed on the basis of the correctness thereof and include this fact among those upon which it determines whether the applicant is entitled to the final relief which he seeks (see eg Rikhoto v East Rand Administration Board and Another 1983 (4) SA 278 (W) at 283 E-H). Moreover, there may be exceptions to this general rule, as, for example, where the allegations or denials of the respondent are so far-fetched or clearly untenable that the Court is justified in rejecting them merely on the papers (see the remarks of Botha AJA in the Associated South African Bakeries case, supra at 924A)."


Guni J has clearly overlooked these principles. In her judgment she made


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findings and reached conclusions adverse to appellant, based merely on respondent's bare denials buttressed by allegations made by respondent which were denied by appellant. In doing so she used extravagent language to describe appellant's actions which was entirely unwarranted on the affidavits before her. The following passages from the judgment illustrate the lengths to which she went in her search for reasons to justify the dismissal of the application.


In regard to the critical issue as to whether respondent was filling applicant's cylinders with its (respondent's) LPG, Guni J stated:


"The applicant did not only withold true facts which would have indicated to this court clearly, the attitude of the respondent, but lied, that the respondent fills applicant's cylinders with Elf gas which is distributed by the respondent. Strangely enough applicant claimed that it distributes ELFgas and obtained the court order which even though respondent is ELFgas distributor it was restrained from receiving ELFgas cylinders which are, in fact respondent's own cylinders."


Respondent (Appellant in this Court) neither lied nor made any of the claims


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attributed to it in this passage. If anything this passage suggests that the learned

judge was under a misconception as to the nature of appellant's complaint and the relief it was seeking.


The learned judge went on the add :


"It was not only the witholding of true facts, there were also some false allegations."


What these so-called false allegations are is not spelt out in the judgment. In the light of the evidence, how Guni J could have found that appellant "lied" and made "false allegations" is beyond comprehension.

In regard to the fact that the video tape was not produced, the learned judge said:


"If there were video tapes, showing the refilling or filling of applicant's cylinders it was not done by or at the respondent's premises."


This finding was unjustified in the face of the ineffectual denial by respondent. However, the learned judge went on to state:


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"The applicant decided not to produce the said video tape after all. There may have been no video tape after all. The reasons for the applicant's failure to prove those allegations that the respondent was committing unlawful acts are best known to this applicant only. They were not put before this court. The lack of scruples seems to characterise the applicant. Its main objective was to obtain that undeserved rule nisi. It is most unfortunate that the said rule nisi was obtained by deception."


Later with reference to the applicant's failure to deal with the recent exchange of cylinders, the learned judge expressed herself as follows:


"In order to obtain my sympathy, (and I did feel sympathetic towards the applicant), lies were told. Deliberate and carefully calculated omission were made. It is a lie that the respondent fills or refills the applicant's cylinders with respondent's own LPG. It was a deliberate and carefully calculated omission to


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fail to mention that these two parties, participate fully, as often as anyone of them feels the need to do so, in that trade customary exchange of their cylinder. It was malicious to obtain by deception honerous and prejudicial interim order without notice to the respondent, more particularly, when recent exchanges had taken place and more exchanges could take place anytime as applicant wanted."


Dealing with the allegation that appellant had unlawfully removed respondent's cylinders from' Lesotho to South Africa (which was denied by appellant), the learned judge said


"The failure by the police to make arrest could be due to various reasons including corruption."


This was a totally unfounded and unwarranted supposition. The learned judge went on to state:


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The applicant's attitude regarding the respect for the law, and its manipulation of courts, are clear indicators that it is very contemptuous of both. While in the process of committing offences the law and courts were used to tie the hands of law abiding citizens who are falsely being accused of committing those crimes."


Her conclusion was that -


"In the light of the conduct of the applicant in these two applications, its business tactics are not only unethical. They are unlawful. This kind of business should not be allowed in this Kingdom."


It is clear from what has been set out above, that none of these findings is justified. In view of the gravity of these strictures, it is regrettable that they should have been made at all. What is worse is the extravagant and irresponsible language used, when, without due cause, the learned judge accuses the appellant inter alia of mala fides, "manipulation of courts" "contemptuous" conduct, corruption and "committing criminal offences." The judgment demonstrates a


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degree of judicial intemperance and irresponsibility which is unacceptable from

any judicial officer and the more so from a judge of the high Court.


It was on the basis of these findings that an award of attorney and client costs was ordered against appellant. Needless to say, this was not justified and Mr Phafane, who appeared for respondent, quite rightly did not support that order.


To sum up, in my judgment, appellant was entitled to appropriate relief in both applications. Mr Fischer, who appeared for appellant, conceded that the orders sought in the notices of motion were framed too widely in certain respects. This is a consideration which in the nature of things could not have arisen in the court a quo for the reason that the rule was discharged. Counsel were in agreement as to the terms in which the orders should be framed in the event of the appeals succeeding. These terms will be incorporated in the orders made in this judgment.


As appellant has been substantially successful in the appeal, there is no reason why the costs of the appeal should not follow the result. Similarly, in regard to the costs of the applications, as the extent to which the orders sought have, by agreement, been abridged, is not significant, there is no basis for


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2.2 The sheriff is directed to take possession of any of the cylinders referred to in paragraph 1 above which are found by the sheriff in the possession of the respondent at the respondent's premises at Ha Mabote, Main North Road, Maseru or which are found by the sheriff on any vehicles which are identified as those of the respondent, or which are being used to convey any such cylinders for or on behalf of the respondent, presently or in the future, and whether such cylinders contain gas or not. To give effect to this order, the sheriff is authorised to enter on and search upon such premises or vehicles, and if entry or search is resisted, to engage the assistance of the Lesotho police.

2.3 The sheriff is authorised to employ the assistance of a suitably qualified and duly authorised representative of appellant to identify any such cylinders if the sheriff is in doubt as to their identity.


2.4 The appellant shall pay to the respondent from whom the applicant or the sheriff, as the case may be, receives any such cylinders, an amount equal to the deposit of M75.00 together with such further amount relating to the cost of the contents of the cylinder in the event


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of such cylinder having been filled by the respondent.


2.5 The sheriff is directed to hand any cylinder of which he has taken possession to the applicant to be kept within the jurisdiction of this court, until compliance by the applicant with paragraph 2.4 above.


2.6 Paragraph 2.1 above shall be binding on the respondent for so long as it deals directly or indirectly in liquid Petroleum gas.


2.7 Respondent is to pay the costs of this application.


In CIV/APN/270/99 it is ordered that:


1. The sheriff is directed to seize and take possession of any of the type of cylinders specified hereunder (whether they contain gas or not), which we found in the possession of respondent at the green arched corrugated warehouse, situated at the left hand side next to the road leading from Mafeteng to Maseru, at the Roma T-junction (in the vicinity between residential area Mazenod and Masianokeng), namely steel pressure designed gas cylinders with a gas mass of 9 kg, 14kg, 19kg and 48kg which are the property of the applicant and


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which carry the brand idenfication of one of the following brands:


African Oxgen

Acetylene Company

AOL

Engen

Caltex

Homegas

Sonap/Sonarep

Trek

Socony


  1. To execute order 1 the sheriff is authorised to engage the assistance of any member of the Lesotho police and to enter on and search the abovementioned premises. If the respondent or any of its managers and/or employees and/or any person on the premises do not obey or do obstruct the sheriff in the execution of this order, such person may be arrested by the member or members of the Lesotho police to be charged with contempt of court.


  1. The sheriff is authorised to employ the assistance of a suitably


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qualified and duly authorised representative of applicant to identify any such cylinders if the sheriff is in doubt as to their identity.


  1. To execute order 1 the sheriff is authorised to engage the assistance of the Registrar of this court and members of Gray Security Services.


  1. The applicant shall pay to the respondent from whom the applicant or the sheriff, as the case may be, seized or received any such cylinder, an amount equal to any deposit subject to a maximum amount per cylinder of M75,00 together with such further amount relating to the cost of the contents of the cylinder in the event of such cylinder having been filled by respondent.


  1. The sheriff is directed to hand any cylinder of which he has taken possession to the applicant, to be kept within the jurisdiction of this court, until compliance by the applicant with 5 paragraph above.


  1. Paragraph 1 shall be binding on the respondent for as long as it deals directly or indirectly with liquid petroleum gas.


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  1. Respondent is to pay the costs of this application."


Delivered at Maseru this........day of October 2000


G. FRIEDMAN

JUDGE OF APPEAL


I agree


J.H. STEYN

PRESIDENT


I agree


M.E. KUMLEBEN

JUDGE OF APPEAL