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IN THE HIGH COURT OF SOUTH AFRICA

(GAUTENG DIVISION, PRETORIA)

DELETE WHICHEVER IS NOT APPLICABLE

(1) REPORTABLE: V~ I NO.

(2) OF INTER.EST TO OTHER JUDGES: ~I NO.

Of REVISED. /

b / 11{ .ao ,.., • DATE

~/ti/~017

Case Number: A203 I 2016

In the matter between:

FOSKOR (PROPRIETARY) LIMITED Appellant

and

OMNIA GROUP (PROPRIETARY) LIMITED Respondent

JUDGMENT

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POTTERILL J

[ 1] The respondent, Omnia Group ( Pty) Ltd [Omnia] in the appeal before us, brought

an application in the court a quo for an order declaring that the appellant, Foskor

( Pty) (ltd) [ Foskor] was in breach of an order handed down by the Competition

Tribunal. This order read as follows: UThe triblJnal hereby confirms the settlement I

agreement annexed hereto, marked A, as well ss the amendment to the settlement

agreement marked as annexure B and a further addendum to the consent order

marked as annexure C". The court a quo granted Omnia the relief it sought. Foskor

was granted leave to appeal pursuant to a petition filed to the Supreme Court of

Appeal.

[ 2] The background to the matter is undisputed. Omnia is the largest South African

purchaser of Foskor' s phosphoric acid. Omnia produces fertilizers and needs

phosphoric acid to do so. Omnia buys about 50 percent of the acid from Foskor in

South Africa. In December 2007 a complaint was laid with the Competition

Commission that Foskor' s pricing of phosphoric acid was excessive and to the

detriment of consumers.1 Foskor conceded that its price for phosphoric acid was too

high. Settlement negotiations resulted in the consent order referred to as A. The

second addendum, "C", to the consent order encapsulates the reason for the

excessiveness of the pricing :

1 Section S(a) of the Competition Act

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(i) Foskor admits that it's [sic} pricing to August 2008 included a notional

transport cost not related to the supply of phosphoric acid to local

customers. This transport cost, unilaterally determined by Foskor,

comprised 75 % of the freight rate for shipping acid to India; I I

(ii) " I I

In practice it thus meant that Foskor was charging local customers the export price

for the phosphoric acid; i.e. the price included the export costs.

[3] The competition tribunal was unhappy with the wording of clause 5.4 in the consent

order that Foskor would not "revert to its past pricing policy." This resulted in the first

addendum [B] being incorporated in the consent agreement substituting clause 5.4

with the following:

" The Competition Commission and Foskor hereby agree to the following

amendment:-

The substitution of clause 5.4 of the Consent Agreement with the following:-

5. 4 Foskor undertakes not to revert to its past pricing policy for the sale

of phosphoric acid, phosphate rock, MAP and OAP. This policy

comprised of an import parity benchmark for phosphoric acid which

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included notional freight charges to India. Henceforth, Foskor will

charge a price based on the FOB Richards Bay Port in respect of

Phosphoric acid. "

In oral argument before us Foskor abandoned its submission in the grounds of

appeal that the unsigned third addendum formed part of the order.

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[ 4] The crux of the appeal before us should be whether the court a quo correctly

interpreted clause 5.4 and specifically "FOB Richards Bay Port'~ The court a quo in

a nutshell interpreted it as follows:

"[18] The excessive pnce [charged by Foskor to domestic customers for its

phosphoric acid] was remedied by the removal of the ?5% CFR India

freight charge. It is exactly what the Competition Commission and

Foskor wanted to achieve. It requires Foskor to desist from charging

any additional charges to the FOB price.

[ 19] Foskor it seems has placed itself in a straightjacket, as it were, in the

domestic market as to how the price of phosphoric acid is to be

determined. Clause 5. 4 places an obligation upon Foskor and

requires obedience. The allegation in the papers that Foskor charged

the FOB price for three years subsequent to the order are [sic] not

s

seriously disputed. It is certainly compelling evidence of the

understanding of the consent order by Foskor and its obligations in

terms thereof. n

The court thus found that "FOB Richards Bay Port° is the published export price

minus the CFR costs.

,,

[ 5] Foskor is now submitting that the price based on the FOB Richards Bay Port means

a price that is competitive and reasonably related to the economic value of

phosphoric acid. Foskor also submitted that clause 5.4 admits of ambiguity and

therefor the interpretation that should be preferred should be the commercially

sensible interpretation and not one which results in unbusinesslike results.

[6] In Natal Joint Municipal Pension Fund v Endumeni 2012 (4) 593 (SCA) the

, · Supreme Court of Appeal set out the approach to the interpretation of documents as

inter alia: "Where more than one meaning is possible, each meaning must be

weighed In the light of the factors set out in paragraph 2 1.2 The process is

objective and not subjective. A sensible meaning is to be preferred to one that

leads to unsensible results ... "

In Eke v Parsons 2016 (3) SA 37 (CC) the court with specific reference to how a

court order should be interpreted found as follows:

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" Here is the well-established test on the interpretation of court orders:

The starting point is to determine the manifest purpose of the order. In

interpreting a judgment or order, the court's Intention Is to be ascertained

primarily from the language of the judgment or order in accordance with the

usual well-known rules relating to the intf!rpretation of documents. As in the

case of a document, the judgment or or~~' and the court 's reasons for giving

it must be read as a whole in order to ascertain its intention. " z

[7] The interpretation of "w/11 charge a price based on the FOB Richards Bay Port in

respect of phosphoric acid' Foskor argued could not be, as found to be, the export

or international price less the freight costs because clause 5.4 is ambiguous. There

simply is no ambiguity in clause 5.4; the only interpretation of FOB Richards Bay

Port as price guide is the export price of phosphoric acid minus the freight costs.

Foskor never submitted what other meaning could be attributed to these words.

Foskor can only go as far as submitting that the court has to read in a meaning into

this phrase; no ambiguity. If there is no ambiguity in the clause then the court

cannot resort to adapt a more businesslike, commercially sensible approach and this

contention is rejected.

2 Par 31

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[ 8] Foskor never argued what the court should have found a price based on the FOB

Richards Bay Port in fact means. Its only argument is that the pricing should be

competitive and reasonably related to the economic value of phosphoric acid. This

interpretation could never be read into "FOB Richards Bay Porf~ It is common

cause that FOB means Free on Board and no other interpretation can be attached to

it. Richards Bay Port is only relevant to export~ I and therefore relates to the export

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price ex Richards Bay Port. It was undisputed that the pricing could also be

expressed as CFR (cost and freight) India export price less the freight costs. The

FOB price is thus the CFR price for India which is published in international

publications every week less the freight charge to India. This is the only

interpretation that can be ascribed to clause 5.4 and the court a quo was correct in

· concluding so.

[ 9] The appellant is however via the backdoor appealing the court's order by latching

onto the court a quo 's remark that Foskor placed itself in a straightjacket; which it

seemingly did. However Foskor cannot now lament that the result of clause 5.4 is

that Foskor is confined to charging the international price rendering it helpless to

determine its own price. The further complaint of Foskor is that Foskor could not be

confined to the international price irrespective of its alleged cost of production,

particularly when the cost of production was higher than the international price.

Lastly Foskor bemoans the fact that it is now tied to the international price in

·.

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perpetuity. Foskor agreed to this clause and so settled the dispute incorporating this

clause to be made an order of court.

[10] The question thus in fact raised is whether any of these grounds set out in par 9

above, allows for the settlement agreement and the order of court to be set aside.

This was however not the issue before the c<;>urt a quo and the agreement of I

compromise creates new rights and obligations ~s a substantive contract that exists

independently from the original cause. 3 The purpose of a settlement agreement is

twofold: (a) to bring an end to existing litigation and (b) to prevent or avoid

litigation.4 Once a settlement agreement is embodied in an order of court this court

order brings finality to the /is between the parties and it becomes res judicata. 5 The

endorsement of the settlement agreement in the court order changes the settlement

agreement to an enforceable court order. Any litigation pursuant to such a court

order can only relate to non-compliance and not the underlying dispute .

. [ 11] Foskor. could only raise these submissions if the consent agreement was obtained

by means of fraud or justus provided the mistake vitiated true consent and did not

merely relate to motive or to the merits of the dispute, or mistake common to the

parties.6 None of these grounds exist. A unilateral mistake on the part of one party,

3 Road Accident Fund v Ngubane (2007] ZASCA 114; 2008 {l) SA 432 {SCA) para 12 4 Veno v Port Elizabeth Divisional Council 1933 EDL 75 at 87 5 Go/loch&. Gomperts 919670 (Pty) Ltd v Universal Mills & Produce Co (Pty) ltd & others 1978 {l) SA 914 (A) at 922C . 6 Slabbert v MEC for Health and Social Development, Gouteng (432/2016) (2016] ZASCA 157 (3 October 2016)

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· that does not flow from a misrepresentation by the other, does not allow for the

former party to resile from a settlement agreement.7 It seems that Foskor consented

to this clause and now regret the results, this however is not a ground to set aside

the settlement agreement and court order.

[ 12] In summary the court a quo correctly interpreted the meaning of clause 5.4 of the

settlement agreement made an order. There are no grounds upon which Foskor can

resile from the agreement and accordingly the order of court. This finding however,

as conceded by counsel for Foskor, does not leave them without a remedy as they

have a review application open to them.

[ 13] I accordingly make the following order:

The appeal is dismissed with costs, including the costs of two counsel.

JUDGE OF THE HIGH COURT

7 Botha v Road Accident Fund (2016) ZASA 97 para 9

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I agree

I agree

L.M. MOLOPA

JUDGE OF THE HIGH COURT

JUDGE OF THE HIGH COURT

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CASE NO: A203 / 2016

HEARD ON: 16 August 2017

FOR THE APPELLANT: ADV. N.A. CASSIM SC

ADV. A.GOVENDER

ADV. Y. ALLI

INSTRUCTED BY: Shaheem Samsodien Attorneys

FOR THE RESPONDENT: ADV. J.P. VORSTER SC

ADV. P. FARLAM SC

INSTRUCTED BY: Falcon and Hume Inc c/ o Friedland Hart Solomon & Nicolson

DATE OF JUDGMENT: 6 November 2017