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[2016] ZAWCHC 104
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Environ Skin Care (Pty) Ltd v National Pride Trading 31 CC t/a Touch of Skincare And Concept Skincare and Another (21137/14) [2016] ZAWCHC 104 (22 August 2016)
THE
HIGH COURT OF SOUTH AFRICA
(WESTERN
CAPE DIVISION, CAPE TOWN)
In
the matter between
Case No: 21137/14
ENVIRON
SKIN CARE (PTY) LTD
APPLICANT
And
NATIONAL
PRIDE TRADING 31 CC t/a TOUCH OF SKINCARE AND CONCEPT SKINCARE
FIRST
RESPONDENT
CRAIG
MITCHELL
SECOND
RESPONDENT
Coram
:
ROGERS J
Heard:
2 AUGUST 2016
Delivered:
22 AUGUST 2016
JUDGMENT
ROGERS
J:
Introduction
[1]
The applicant
instituted these proceedings in November 2014 for final interdicts
against alleged trade mark infringement, passing-off
and injurious
falsehoods. Opposing and replying affidavits were filed in February
and March 2015. In February 2016 the matter was
set down for hearing
on 25 May 2016.
[2]
The applicant did not
file heads of argument. On 18 May 2016 the respondents’
counsel, Mr Dickerson SC and Ms Vaughan, filed
their heads.
[3]
On 19 May 2016 the
applicant delivered a postponement application on the grounds that
its attorneys had only learnt of the set-down
on 4 May 2016, leaving
them insufficient time to engage the advocate who previously assisted
them. The postponement application
was opposed. After hearing
argument Sher AJ postponed the case to 1 August 2016, directing the
applicant to pay the wasted costs
including the costs of two counsel.
[4]
On 6 July 2016 the
applicant’s counsel, Mr Eloff SC, filed his heads. On the same
day the applicant delivered interlocutory
applications for leave to
file supplementary evidence and to amend its notice of motion so as
to seek interdicts in respect of
further alleged falsehoods. Mr
Eloff’s heads were based on the success of the interlocutory
applications.
[5]
On 1 August 2016 the
interlocutory applications, which were opposed, and the main case
served before me. By that stage the applicant
no longer persisted in
claiming trade mark and passing-off relief. Counsel agreed that if I
were to grant the interlocutory applications
the main case would have
to be postponed to afford the respondents an opportunity to amplify
their provisional response to the
supplementary evidence. I thus
directed that counsel should argue the interlocutory applications
together with the fate of the
main case if I were to refuse the
interlocutory applications.
Factual
background
[6]
The applicant
manufactures skincare products under the name Environ. These products
are sold locally and internationally by approved
distributors.
[7]
The second respondent
(‘Mitchell’) controls the first respondent (‘NPT’).
NPT previously conducted business
under the name First for Skin. I
shall refer to this business as B1. NPT was not an approved
distributor. This did not preclude
its buying Environ products from
approved distributors and on-selling them. According to Mitchell, the
retail price of Environ
products abroad is considerably higher than
the domestic retail price. He alleges that the applicant engages in
price-fixing to
achieve this result. The applicant denies this. Be
that as it may, Mitchell saw a business opportunity in the price
differential.
Through NPT he sold domestically sourced Environ
products to customers abroad. This was an online business. I shall
refer to its
website, conducted under the name First for Skin, as W1.
[8]
In 2009 the applicant
launched proceedings in England against certain parties, including
Mitchell and NPT, for injunctions in respect
of alleged trade mark
infringement and passing-off. Mitchell claims that this was part of a
campaign to prevent his lawfully exploiting
the price differential.
Although he did not regard the English proceedings as justified, he
could not afford to oppose. The result
was that on 28 July 2009 an
injunction by default was granted by the Chancery Division of the
High Court in England.
[9]
The applicant’s
case is that in consequence inter alia of the Chancery order Mitchell
has since 2010 conducted the same business
first under the name Touch
of Skincare and subsequently Concept Skincare. For convenience I
shall refer to the businesses conducted
under these two names as B2
and B3 and the websites by means of which their online businesses
were or are conducted as W2 and W3.
The applicant asserts that one or
both of the respondents are responsible for the allegedly false
statements proclaimed on W2 and
W3.
[10]
The respondents deny
that they conducted B2 or that they now conduct B3. They do not name
the proprietor of B2. To the extent that
such a person existed, I
shall identify same as X. The respondents allege that B3 is a
business conducted by Concept Skincare LLC
(‘CSC’), an
American company of which they are not shareholders or directors.
Mitchell says that in consequence of
the English proceedings NPT
stopped its business of selling Environ products directly to
customers online and instead confined
its operation to that of a
wholesaler, buying Environ (and other) products from distributors and
selling them inter alia to X and
now to CSC. The respondents deny
responsibility for any alleged false statements on W2 and W3 (I will
refer to this as the link
issue). They in any event deny the falsity
of certain of the impugned statements and say that CSC has made
corrections in respect
of any statements which may have been
inaccurate.
The
interlocutory applications
[11]
The supplementary
evidence which the applicant wishes to introduce concerns (i) the
alleged link between the respondents and
W2 and W3; (ii) further
allegedly false statements ‘recently’ identified on W3.
The application to amend the notice
of motion depends on the granting
of the second leg of the supplementary evidence.
[12]
The general principles
governing the interlocutory applications are trite. Ordinarily only
three sets of affidavits are allowed
in motion proceedings. The
general rule must not be applied rigidly. There is a measure of
flexibility, controlled by the judge’s
discretion, bearing in
mind that a litigant who tenders an affidavit late and out of its
ordinary sequence is seeking an indulgence,
not asserting a right
(
James Brown &
Hammer (Pty) Ltd v Simmons
1963
(4) SA 656
(A) at 660E-H;
Standard
Bank of SA Ltd v Sewpersadh
2005
(4) SA 148
(C) paras 9-10). It has been said that the question is
ultimately one of fairness to both sides (
Milne
NO v Fabric House (Pty) Ltd
1957
(3) SA 63
(N) at 65A). The factors the court will take into account
in assessing whether to allow a supplementary affidavit include (i)
the
reason why the evidence was not produced timeously; (ii) the
degree of materiality of the evidence; (iii) the possibility
that it may have been shaped to ‘relieve the pinch of the
shoe’; (iv) the balance of prejudice to the parties;
(v) the need for finality in judicial proceedings; (vi) whether
the additional evidence was omitted through inadvertence
or whether
the party previously elected not to place it before the court because
he thought it unnecessary (
Nick’s
Fishmonger Holdings v Fish Diner in Bryanston CC
2009
(5) SA 629
(W) at 642 B-D).
The linking
evidence
[13]
The supplementary
linking evidence comprises an affidavit by a computer expert, one
Ahlers. He says that an internet user logging
onto W2 is
automatically redirected to W3. This is uncontroversial. A similar
allegation was made in the founding papers. Mitchell’s
response
to it was that B2, which was conducted through W2, ran into financial
difficulties. Rather than leaving customers stranded,
B2 (ie
the unidentified proprietor X) redirected its customers to another
supplier, B3 (CSC).
[14]
More controversially,
Ahlers says that through various technical investigations he has
ascertained that one Michael James is the
registrant of domain names
incorporating the words Touch of Skincare and Concept Skincare.
Mitchell is the registrant of certain
other unrelated domain names.
However these apparently unconnected websites, registered to James on
the one hand and Mitchell on
the other, share a single Google
Analytics tracking code, being a code which allows the code’s
‘owner’ to collect
and analyse internet traffic data on
the owner’s websites and to effect search optimisation
strategies. Ahlers infers from
this that James and Mitchell are the
same person or that there is at least a close association between
them.
[15]
In a provisional
response the respondents, and their computer expert, one Ziffo, deny
Ahlers’ logic. The respondents continue
to deny being the
persons behind W2 and W3. Ziffo says that it is wrong to assume an
association between websites merely because
they share a Google
Analytics tracking code. Each code can track up to 50 websites. A
single Google Analytics account enables an
IT service provider to
track multiple websites in order to provide analytic reports to the
owners of the websites. Google Analytics
work is usually performed by
persons who have the necessary skills such as marketing digital
agencies and web developers. Business
owners rarely have the
necessary skills.
[16]
Ziffo also denies the
logic behind Ahlers’ apparent assumption that if one website
redirects a user to another website the
websites have a common owner.
[17]
The applicant did not
deal with Ziffo’s provisional views in reply.
[18]
The relationship
between the respondents on the one hand and B2/W2 and B3/W3 on the
other was always going to be contentious. At
least on the applicant’s
version, the respondents – following the English proceedings –
sought to ‘put
daylight’ between themselves and the
online business by changing its name and conducting it through new
websites. It was
thus important for the applicant from the outset to
establish the link. The applicant did indeed attempt to offer some
such evidence
in its founding papers, through an affidavit by one
Potter who conducts intellectual property investigations. He
established that
W1 redirected users to W2 (Mitchell seems not to
dispute this) and that the domain names for W1 and W2 were registered
through
a domain name registrar in the USA (which also seems not to
be controversial).
[19]
The applicant may be
concerned that Potter’s affidavit does not take them very far.
However, if the applicant was concerned
about the strength of its
evidence, it should have caused further investigations to be
undertaken before launching the main case.
[20]
In the founding
affidavit in support of the interlocutory application the applicant’s
deponent, Ms Carstens, said that following
the execution of her
replying affidavit on 18 March 2015 she ‘discovered additional
evidence’ linking the respondents
to B3/W3. Later she said that
Ahlers had ‘recently’ conducted investigations into the
ownership of various domain names.
Although the interlocutory
applications were only served on 6 July 2016, her affidavit was dated
30 June 2016 and Ahlers’
affidavit 1 July 2016.
[21]
The respondents
challenged the adequacy of this bald explanation. In reply Carstens
provided the sort of detail I would have expected
to find in her
founding affidavit. She referred to settlement negotiations which
took place in the latter part of 2015 and which
came to an end in
February 2016. In the meanwhile during December 2015 the applicant
engaged Ahlers’ company to conduct an
audit of the applicant’s
‘digital brand assets’. This was unrelated to the
litigation. During April/May 2016
Ahlers ‘flagged’
various sites as being harmful to the Environ brand because they
disseminated misinformation. W3 happened
to be one such site. Ahlers
suggested that through various techniques he might be able to extract
more concrete information about
the ownership of W3. He got the
go-ahead and gave Carstens an ‘initial report’ on 23 May
2016. The report was made
available to the applicant’s
attorneys who required Ahlers to provide a ‘more comprehensive
analysis’. This ‘eventually
culminated’ in Ahlers’
affidavit of 1 July 2016.
[22]
This is unsatisfactory.
I would have expected the applicant, a
well
resourced
entity, to
have sought information from an appropriate digital expert before
launching the main case. Even if Carstens’ explanation
were
sufficient, she should have given her full explanation in the
affidavit made in support of the interlocutory application and
not
left it for reply.
[23]
The applicant
anticipated as early as ‘April/May 2016’ that Ahlers
might be able to link the respondents to B3/W3. By
23 May 2016 the
applicant had Ahlers’ initial report. More than six further
weeks were allowed to pass before the interlocutory
applications were
delivered. Particularly since the applicant would be seeking an
indulgence, it needed to act with due expedition.
The applicant has
not disclosed Ahlers’ initial report. The affidavit he
subsequently filed is not so detailed and complex
as to have
justified the six-week delay.
[24]
There is a further
aspect which troubles me. The applicant launched its postponement
application on 19 May 2016. It is a reasonable
inference from
Carstens’ explanation in the interlocutory applications that by
this date she was awaiting a report from Ahlers
which would hopefully
shore up the applicant’s case. Yet no mention was made of
Ahlers’ investigation in the postponement
papers. By the date
the postponement application was heard the applicant actually had
Ahlers’ initial report. While I have
no reason to doubt that
the applicant’s attorneys only learnt of the set-down at a late
stage, it is difficult to resist
the conclusion that the applicant
expected that if a postponement were granted it would have an
opportunity to adduce Ahlers’
evidence. There should have been
frank disclosure so that Sher AJ could properly assess the
applicant’s bona fides in seeking
a postponement.
[25]
The respondents’
provisional response to Ahlers’ proposed evidence (to which the
applicant did not reply) suggests that
his evidence is unlikely to be
conclusive and that to assess its true weight there would have to be
oral evidence from the experts.
However, before this could happen
further supplementary answering and replying papers would have to be
filed, calling for a second
postponement. There has already been one
postponement at the applicant’s cost. The respondents complain
that they are facing
a well-heeled litigant with deep pockets for
litigation.
[26]
In summary, I do not
think there is a satisfactory explanation why the evidence was not
produced timeously. The explanation ultimately
advanced was not
contained, as it should have been, in the founding affidavit in
support of the interlocutory application. While
the supplementary
evidence, if true, might be material, its correctness will probably
require oral evidence, which is not the norm
in motion proceedings.
There has already been one postponement and the need for finality
thus assumes particular significance.
In my discretion I thus decline
to receive the supplementary linking evidence.
The further
alleged falsehoods
[27]
The falsehoods alleged
in the founding papers were set out in annexure “X” to
the notice of motion. They were grouped
under four headings.. The
applicant wishes to substitute the said annexure with a new annexure
“Y”. The only change
is the addition of some further
alleged falsehoods in respect of the first heading (the additions
comprising items (iii) –
(xvi) of “Y”).
[28]
I shall deal later in
more detail with the falsehoods alleged in the founding papers. What
I note at this stage is that the additional
alleged falsehoods do not
seem to me to travel materially beyond the original complaints. If
the respondents were interdicted from
perpetuating the falsehoods
alleged in annexure “X”, they would also be precluded
from making the statements which
the applicant wishes to insert by
way of annexure “Y” because those statements would
contain the same essential falsehoods.
[29]
In justifying the late
application to supplement the evidence on the injurious falsehoods,
Carstens said that it has been ‘continuously
necessary’
for the applicant to examine the respondents’ websites to deal
with queries from customers who are confused
or misled. In conducting
a ‘recent examination’ of the websites, she discovered
‘misleading product specific
claims’ additional to those
mentioned in the founding papers.
[30]
Mitchell responded by
saying that Carstens’ assertions were ‘demonstrably
untrue and misleading’. He noted that
she had ‘avoided’
disclosing the date on which the applicant supposedly discovered the
new false statements. He said
that the statements in question had
been known to Carstens for more than a year, pointing to the fact
that all but one of them
were contained in annexure “VDC56”
to Carstens’ founding affidavit in the main case. According to
Mitchell, the
product-comparison table from which the applicant
extracted items (vi) – (xvi) of annexure “Y” had
been on W3
since at least 19 May 2014. Ziffo, using an internet
archive which stores the historical content of webpages, retrieved
and annexed
the relevant part of W3 as it existed on 19 May 2014, 9
November 2014 and 18 December 2014. The table is to be found in each
iteration
of W3.
[31]
Mitchell concluded by
stating that, in the light of the applicant’s vigilance in
monitoring W3, it must have known of the
‘new’ statements
since at least December 2014 if not earlier.
[32]
Carstens’ reply
is distinctly lame. She says that Ziffo’s annexures only
provide ‘snapshots’ at specific
points in time. While
that may be true, Carstens does not say or provide any evidence that
the product-comparison table disappeared
between the various dates
for which Ahlers was able to retrieve archive information. She also
says that although annexure “VDC56”
might contain ‘much
of the same information’, the statements are not identical and
that there have been some ‘minor
alterations’. This does
not detract from the point, however, that in substance the statements
in question were known to the
applicant when it launched the main
case.
[33]
Carstens then refers to
a letter dated 10 June 2015 which the respondents’ attorneys
addressed to the applicant’s attorneys.
They stated inter alia
that the ‘misleading statements’ complained of in the
main case had been addressed by changes
to W3, even though in the
respondents’ view the statements were not misleading. Carstens
says that following the receipt
of this letter the applicant was
under the impression that the misleading statements either had been
or would be addressed. It
was this impression which prompted the
applicant to enter into settlement discussions. In the ‘midst’
of the settlement
negotiations, in October 2015, she noticed that the
misleading statements had not yet been removed. However because
settlement
negotiations were ongoing the applicant did not introduce
the supplementary evidence at that stage.
[34]
Carstens says that
settlement negotiations terminated in January 2016. Following such
termination (presumably in early 2016) the
applicant discovered that
W3 no longer reflected the misleading statements and it was thus
assumed that they had been removed.
She claims that throughout the
‘negotiating period’ and up to April/May 2016 the
applicant conducted only ‘ad
hoc investigations’ of the
respondents’ websites. The applicant was thus not aware that
the respondents’ unlawful
conduct had continued. The issue only
reached a ‘critical mass’ when the information discovered
by Ahlers in May 2016
was communicated to the applicant.
[35]
According to Carstens,
the applicant and its attorneys then conducted ‘thorough
investigations’ of the websites and
discovered that the
misleading statements that form the subject of the interlocutory
application had been republished. This was
discussed in consultation
with senior counsel on 15 June 2016 and a decision was made to
supplement the applicant’s evidence.
[36]
Once again, we have
here an explanation in reply which should have been contained in the
founding affidavit in support of the interlocutory
applications. The
replying affidavit paints a very different picture to the bald
explanation in the founding affidavit. The respondents
have not had
an opportunity to comment on the ‘re-publishing’ thesis.
In any event the explanation in reply is unsatisfactory.
One still
does not know why the complaints which the applicant now seeks to
introduce were not included as part of the main case.
There was also
no justification for the applicant to have waited for Ahlers’
affidavit. The application to adduce supplementary
evidence of
alleged falsehoods is quite distinct from the application to adduce
supplementary linking evidence.
[37]
Although the
respondents were not able to respond to the explanation in the
replying affidavit, their counsel in argument said that
Carstens’
description of settlement negotiations was overblown. The
‘negotiations’ comprised: (i) the respondents’
attorneys letter of 10 June 2015, mentioned above, in which they
invited the applicant to withdraw the application; (ii) a
response on 11 August 2015, setting out an unacceptable
counter-offer; (iii) a further letter from the respondents’
attorneys dated 3 September 2015 with a further proposal; (iv) a
rejection from the applicant’s attorneys on 26 January
2016,
almost five months later.
[1]
The ‘ongoing settlement negotiations’ asserted by
Carstens thus comprised two exchanges of correspondence ‘with
intervening periods of complete inertia on the part of the applicant’
(counsel’s words).
[38]
Once again, therefore,
one has an unsatisfactory explanation for the failure to adduce the
evidence at an earlier time and a failure
to advance such explanation
as there was in the founding papers in support of the interlocutory
application. The evidence lacks
materiality – it is not a real
advance on the falsehoods alleged in the original papers. If the
evidence were allowed there
would need to be a further postponement
to allow the respondents to deal with it substantively. Together with
the balance of prejudice
and the need for finality, these
circumstances impel me to reject the requested indulgence.
The main
case
[39]
This being my decision,
I proceed to consider the fate of the main case without regard to any
of the material contained in the interlocutory
applications.
[40]
Mr Eloff did not argue
that the respondents’ denial that they were the persons behind
W2 and W3 was so far-fetched or untenable
that I could reject it on
the papers (cf
Fakie
NO v CCII Systems (Pty) Ltd
[2006] ZASCA 52
;
2006
(4) SA 326
(SCA) paras 55-56). What he submitted is that there was
reason to doubt the truthfulness of the respondents’ version.
Particularly
since this concerned matters peculiarly within their
knowledge, it would be just to require Mitchell to be cross-examined
and to
require the respondents to make discovery on the link issue
before such cross-examination. He did not ask for a general referral
of the link issue to oral evidence.
[41]
In support of this
proposed course Mr Eloff referred me inter alia to
Moosa
Bros & Sons (Pty) Ltd v Rajah
1975
(4) SA 87
(D). I do not think that
Moosa
is of assistance.
It deals with the circumstances in which a court may, at the instance
of a respondent, require a deponent for
the applicant to be
cross-examined, even though the respondent cannot deny what the
deponent says. This is situation (d) of the
four situations
identified by Murray AJP in the well-known case of
Room
Hire Co (Pty) Ltd v Jeppe Street Mansions (Pty) Ltd
1949
(3) SA 1155
(T) at 1163. Unlike situations (a), (b) and (c),
situation (d) does not raise a genuine or real dispute of fact and
the court is
entitled to determine the case on the papers. There is,
however, a discretion to require the deponent to be cross-examined.
[42]
In the present case the
party seeking cross-examination is the applicant. There is a dispute
of fact of the kind contemplated in
Murray AJP’s situation (a).
On behalf the respondents, Mitchell – a person with direct
knowledge of the facts –
denies that he or NPT are the persons
behind W2 and W3. The question is whether, because of this dispute of
fact, I should dismiss
the application or whether I should allow some
form of oral evidence.
[43]
If the question
depended solely on whether there is reason to doubt the truthfulness
of Mitchell’s version, I would have felt
little difficulty in
allowing oral evidence. If Mitchell were providing such evidence for
an applicant, a respondent’s deponent
might with some
justification say that, although she does not have direct knowledge
of the facts, Mitchell’s version is untruthful
or biased or
unreliable. The case would then fall within Murray AJP’s
situation (c) or perhaps (d).
[44]
The circumstances which
call Mitchell’s version into doubt include the following:
(i) that W2 started shortly after the
Chancery order was
granted; (ii) that W3 started shortly after the applicant’s
attorneys foreshadowed legal steps in
respect of W2; (iii) the
similarities between W1, W2 and W3; (iv) that when W1 was
discontinued users were automatically redirected
to W2 and that when
W2 was discontinued users were automatically redirected to W3;
(v) that Mitchell has not disclosed X’s
identity;
(vi) that Mitchell has not disclosed the identity of the persons
in control of CSC, despite the fact that NPT is
CSC’s only or
major supplier of Environ products; (vii) the implausibility
that first X and then an American company
would, without close input
from Mitchell, become major online suppliers of a South African
product with a sales pitch very similar
to that which Mitchell had
deployed on W1 and with the risk that they might be pursued by the
applicant; (viii) the implausibility
that Mitchell would have
been prepared to share his margin first with X and then with CSC in
circumstances where they could have
contributed little by way of
expertise and product information; (ix) that the American
attorney who has made an affidavit
inter alia regarding the existence
of CSC has not disclosed the identity of its controllers or said that
Mitchell is not the person
to whom he looks for instructions; (x) the
facts revealed by two test purchases, both of which show that
products ordered
via W2 and W3 were dispatched to foreign buyers from
South Africa; (xi) that proceedings directed at the respondents
have
apparently brought about alterations to W3.
[45]
However the test is not
whether I have reason to doubt the truthfulness of Mitchell’s
version. It is the applicant which chose
to seek final relief on
motion. On its thesis the respondents are not honourable people. The
applicant could not reasonably have
expected Mitchell to admit that
he was behind W2 and W3. Unless the applicant had virtually
irrefutable proof, its proper course
was to issue summons so that it
could obtain discovery and reap the advantages of oral evidence. In
this respect the position of
an applicant is very different from a
respondent who through no choice of his own is embroiled in motion
proceedings and thus denied
the benefits of a trial action.
[46]
The application was not
urgent and was not brought as such. If there was need for urgent
protection, the applicant could have sought
an interim interdict
pending the outcome of an action. The applicant would then have
needed to address the question of irreparable
harm and balance of
convenience. As will appear from my brief discussion below on the
question of harm, the applicant might have
battled to show
irreparable harm but this does not affect the principle.
[47]
In deciding whether to
accede to the request for Mitchell’s cross-examination preceded
by discovery, I think it permissible
and appropriate to take into
account the scale of the harm against which the applicant is seeking
to protect itself. The more real
the harm and the greater its impact,
the more one might incline to allow the oral evidence (though this
would not be decisive).
Of course apprehended or actual harm, in the
sense of infringement of a right and resultant prejudice, is an
independent requirement
for a final interdict (
LAWSA
2
nd
Ed Vol 11 para 398). But even if an applicant passes this threshold,
the infringement and prejudice might be adjudged insufficient
in all
the circumstances to justify extending the life of the application by
way of oral evidence.
[48]
Since the applicant
seeks final relief and since there is no request to refer the issues
relating to infringement and prejudice
to oral evidence, I must
assess the question of harm on the basis of the respondents’
version where it differs from the applicant’s.
[49]
One should bear in mind
that in general the respondents, whether as suppliers of CSC or as
the persons actually conducting CSC’s
business, have no reason
when selling Environ products to badmouth them.
[50]
I deal first with para
2 of annexure “X”. The applicant complains that W2 and W3
incorrectly state that the applicant’s
Roll-CIT range involves
the puncturing of the epidermis with micro-needles. The applicant has
provided evidence that this is not
so. In the answering affidavit
Mitchell was content to accept the applicant’s version but said
that the offending statement
has been removed from W3. There is no
evidence that the statement has been repeated. Furthermore Mitchell
provided compelling evidence
to support his assertion that what was
said on W2 and W3 was a reasonable interpretation of what the
applicant itself had said,
inter alia in a presentation made by the
applicant’s founder in Paris in March 2010.
[51]
I deal next with para 4
of annexure “X”. The impugned statement was contained not
on a website but in an email promotion,
the author purporting to be
one ‘Amy’ of CSC. In the email she said that C-Boost had
‘long been a favourite of
mine’ and that CSC was very
excited to launch ‘an exciting new upgrade – the DermaFix
ACC Vitamin C!’.
As a ‘loyal customer’, the
recipient of the email would get an exclusive chance ahead of
everyone else to buy the new
product. The promotional email ended:
‘Using C-Boost? Upgrade today. You’ll LOVE the NEW
DermaFix ACC Vitamin C’.
It is common cause that C-Boost is an
Environ product and that ACC is not. The applicant complains that
these statements falsely
proclaimed that Environ manufactures ACC and
that it is an upgrade from C-Boost.
[52]
In respect of this
complaint the respondents might plausibly have had reason to proclaim
a falsehood, since they were promoting
a competing product. However
Mitchell said in his opposing affidavit that the email campaign was a
limited historical promotion
which ran its course and the content of
which was not reused (the promotion was in September 2014). There is
nothing to gainsay
this. The statements in question have apparently
never appeared on W2 or W3.
[53]
Mitchell also said that
CSC did not claim in the email that ACC was an Environ product; CSC
was merely recommending ACC to customers
who had previously used
C-Boost. This explanation is disingenuous. The word ‘upgrade’
clearly conveys that the later
product is a new and improved version
of the earlier one. Recipients may well have been misled into
thinking that ACC was an Environ
product. Nevertheless the falsehood
appears now to be of historic interest only. Furthermore the
statements would only need to
be slightly modified in order to convey
that which CSC and the respondents could legitimately say, namely
that in their view ACC
is a better product and that users of C-Boost
should switch to ACC.
[54]
This leaves the
statements in paras 1 and 3 of annexure “X”. Since they
are related I take them together. In various
ways W2 and W3 contain
statements to the following effect: (i) that Environ’s AVST
range was essentially a 2008 repackaging
of Environ’s earlier
‘first-generation’ Original range; (ii) that Environ
had launched the AVST repackaging
to raise the range’s price
points, resulting in a 30% price increase which was unjustified;
(iii) that the 2008 AVST
range had in turn been superseded by
Environs’ 2012 ‘second generation’ A+ Original
range which provided a complete
skincare program; (iv) that
erstwhile AVST users who wanted to take their regime ‘to the
next level’ could alternatively
(ie in the alternative to using
the A+ Original range) ‘upgrade directly’ to Environ’s
Ionzyme CQuence range,
which was Environ’s ‘gold standard
product’.
[55]
All of the products
which the respondents were promoting by way of these statements are
Environ products.
[56]
The applicant says that
the AVST range has not been superseded by the so-called A+ Original
range and that applicant has never produced
anything called ‘A+’
Original. Carstens says that the AVST range is different from, and in
some instances superior
to, the Original range. There is no
‘second-generation’ Original range. Carstens also says
that it is a ‘blatant
untruth’ to say that a customer’s
skin regime would be taken ‘to the next level’ by
switching from AVST
to Ionzyme.
[57]
In response Mitchell
says the following. The AVST brand was introduced in 2008. It is an
export-only product. The applicant’s
own documents show that it
was targeting a price for AVST midway between the Original and
Ionzyme range. The minutes of an Environ
conference held in 2007
indicate that the AVST branding was the applicant’s attempt to
deal with the fact that online sales
to foreign customers, which
exploited the price differential between the domestic and foreign
pricing of Original products, were
eroding the approved distributors’
foreign turnover.
[58]
In regard to the Origin
range, Mitchell says that it was repackaged and rebranded in
2011/2012. This is what W2 and W3 were referring
to as the
‘second-generation’ Origin range. The prefix ‘A+’
was based on the applicant’s own advertising.
Mitchell annexed
a copy of an advertisement in which tubes of the repackaged Original
products are displayed beneath the words
‘A+ Brilliant
Skincare’. However, and in apparent recognition that the
repackaged range is not actually called ‘A+
Original’, W3
has been corrected.
[59]
As to the
second-generation Origin range having superseded the AVST range,
Mitchell says that the applicant’s own authorised
distributors
have a chart which furnishes the (second-generation) Original
equivalents of the AVST range (eg AVST ‘mild’
= Original
Debut etc).
[60]
Regarding the advice to
customers that they could, as an alternative, switch to the Ionzyme
range, Mitchell alleges that the applicant’s
own marketing
material says of this range (i) that it is one of the ‘most
advanced skincare systems in the world’:
(ii) that it
enables users to achieve results ‘that were previously
considered impossible to achieve’; (iii) that
it is
Environ’s ‘premium range of skin care products’;
(iv) that this ‘improved range is the most
luxurious
environment home treatment available’.
[61]
In reply Carstens
acknowledges that the Original range underwent ‘some
alterations’ between 2011/2012, ‘mostly
limited to its
packaging’. She says that the concentration of vitamin A and
antioxidants remained the same. Later she says
the only changes were
‘cosmetic’ (pun perhaps not intended). In regard to the
AVST/Original conversion chart, she says
it is ‘out of date’
and in any event limited to a comparison of vitamin A concentrations.
She notes the respondents’
removal of the reference to the
Original range as ‘A+’ but says there is no assurance
that there will not be a repetition.
[62]
As to the Ionzyme range
taking users to the ‘next level’, she says that the
applicant has no reason to promote one range
above another whereas
the respondents have a motive to downplay AVST: because AVST is an
export-only product, the respondents cannot
acquire it locally for
sale abroad and thus might wish to promote products like Original and
Ionzyme as preferable to AVST. While
this might be true, it may also
be true that the applicant has a reason to promote AVST abroad in
circumstances where it is not
in truth superior to the lower-priced
and differently branded Original products.
[63]
I am not in a position
to decide whether AVST is in fact superior to the current Original
range in any material respects. While
the applicant may dislike what
the respondents say about Environ’s pricing strategy for AVST,
I cannot on the papers find
that those statements are false (which is
not the same as saying that they are true). The reference to A+ in
describing the current
Original range has been explained and
corrected. The impugned statements regarding Ionzyme do not appear to
me to be inconsistent
with what Mitchell says is the applicant’s
own marketing material.
[64]
In short, in the
absence of a more detailed investigation into competing product
claims, which could only be achieved by oral evidence
(which the
applicant does not seek), I do not think that on the papers the
applicant has established that any material falsehoods
are being
perpetuated or that serious prejudice is being suffered by the
applicant.
[65]
For these reasons I
have come to the conclusion that I should not accede to the request
for oral evidence in any form, even limited
to Mitchell’s
cross-examination. It follows that the main application fails.
Conclusion
[66]
I accordingly make the
following order:
(a) The interlocutory applications dated 6 July
2016 are dismissed with costs, including those attendant on the
employment
of two counsel.
(b) The main application is dismissed with costs,
including those attendant on the employment of two counsel.
ROGERS
J
APPEARANCES
For
Applicant
Mr
CM Eloff SC
Instructed
by
Adams
& Adams
28
th
Floor, 1 Thibault Squar
Cnr
Long Street & Hans Strijdom Avenue
Cape
Town
For
Respondents
Mr
JG Dickerson & Ms BJ Vaughan
Instructed
by
Bernadt
Vukic Potash & Getz
11
th
Floor, 1 Thibault Square
Cnr
Long Street & Hans Strijdom Avenue
Cape
Town
[1]
This correspondence was part of the previous
postponement application.