Liberty Group Limited v Mall Space Management CC t/a Mall Space Management

The respondent, Mall Space Management CC, acted as agent for the appellants (collectively Liberty Group, comprising property owners and a managing agent) to facilitate contracts with exhibitors for rental of mall space and exhibition courts at four shopping centres. The parties never signed a written agreement. Mall Space prepared a draft agreement in April 2013 which it contended governed the relationship. Initially Mall Space invoiced exhibitors and paid over to Liberty Group, but from May 2015/March 2016 onwards the invoicing function was progressively taken over by the fifth appellant, Excellerate Brand Management (Pty) Ltd, which concluded a formal marketing service level agreement with Liberty Group effective 1 January 2017. Mall Space fell into arrears, owing Liberty Group and co-owner Pareto over R4 million by February 2017, for which acknowledgements of debt were signed. Some of Mall Space's employees left to join Excellerate. On 29 August 2017, Liberty Group gave Mall Space five days' notice that its services would no longer be required effective 4 September 2017. Mall Space responded claiming the termination was unconstitutional and unlawful, and launched an urgent application seeking orders: (a) granting it access to rental court space; (b) interdicting termination of the agreement for six months; and (c) restraining Excellerate from competing unlawfully.

• Whether a principal under a contract of mandate is obliged to give reasonable notice (specifically six months) before terminating the mandate
• Whether the termination of a mandate must be infused with constitutional values of Ubuntu, fairness and dignity
• Whether Excellerate's assumption of Mall Space's mandate constituted unlawful competition
• Whether the requirements for a final interdict were met

The appeal was upheld with costs including costs of two counsel where employed. The order of the high court was set aside and replaced with an order dismissing the application with costs.

Under the common law, a contract of mandate is in general terminable at the will of the principal without notice to the agent. Constitutional values such as Ubuntu, good faith, fairness and equity are not self-standing substantive rules that courts can employ to directly intervene in contractual relationships; rather, they perform creative, informative and controlling functions through established rules of contract law. It is against public policy to coerce a principal into retaining an individual as his agent when he no longer wishes to retain him as such. Where a principal lawfully terminates a mandate, the assumption of the agent's former role by a successor does not constitute unlawful competition. An applicant for a final interdict must establish: (i) a clear right; (ii) an injury actually committed or reasonably apprehended; and (iii) the absence of similar protection by any other remedy - and where the agent has a damages remedy, interdictory relief is inappropriate.

The court observed that if Mall Space had incurred any expense or suffered any damage or was entitled to be paid commission before the revocation, it would have been entitled to be indemnified because such rights would have arisen while the mandate existed. The court emphasized that imprecise and nebulous statements about the role of good faith, fairness and equity, which would permit idiosyncratic decision-making on the basis of what a particular judge regards as fair and equitable, are dangerous as they lead to uncertainty and a dramatic increase in often pointless litigation and unnecessary appeals. The court noted approvingly that 'palm-tree justice cannot serve as a substitute for the application of established principles of contract law'. While acknowledging that in some instances constitutional values of equality and dignity may prove decisive where the issue of parties' relative power is at stake, the court found no evidence that Mall Space's constitutional rights to dignity and equality were infringed in this case.

This case is significant in South African contract law for clarifying the limits of applying constitutional values directly to contractual relationships. It establishes that: (1) the common law principle that a mandate is terminable at the will of the principal remains good law and cannot be overridden by direct application of Ubuntu and fairness; (2) constitutional values of good faith, fairness and equity operate through established contract law rules and are not self-standing grounds for judicial intervention; (3) courts must exercise 'perceptive restraint' in striking down or refusing to enforce freely concluded contracts; and (4) it is against public policy to compel a principal to retain an agent against his will. The judgment reinforces legal certainty in commercial relationships and rejects 'palm-tree justice' based on what individual judges regard as fair. It also clarifies the requirements for establishing unlawful competition claims.