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[2010] ZAGPJHC 71
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STT Sales (Pty) Limited v Fourie and Others (09/50427) [2010] ZAGPJHC 71; 2010 BIP 299 (GSJ) (8 September 2010)
SOUTH GAUTENG HIGH COURT, JOHANNESBURG
CASE NO: 09/50427
DATE: 08/09/2010
In the matter between:
STT SALES (PTY) LIMITED
Applicant
and
FOURIE, THEUNIS FREDERICK JACOBUS
First Respondent
FOURIE, ANDRIES BENJAMEN
Second Respondent
TAT WATERPROOFING CC
Third Respondent
SPECPROOF (PTY) LIMITED
Fourth Respondent
DUNLOP BELTING PRODUCTS (PTY) LIMITED
Fifth
Respondent
DUNLOP INDUSTRIAL PRODUCTS (PTY) LIMITED
Sixth
Respondent
J U D G M E N T
LAMONT, J
:
[1] On 31 March 2009 the applicant instituted proceedings against
the first, second, third and fourth respondents. In those
proceedings the applicant sought urgently what is colloquially known
as an Anton Piller order and also in Part B of the proceedings
a
series of interdicts essentially directed to interdict the
respondents from using or dealing with a manufacturing plant which
was claimed to be a copy of the applicant’s plant and selling
or disposing of waterproofing material which was manufactured
using
certain of the applicant’s formulae.
[2] On 31 March 2009 urgent relief was afforded to the applicant.
That order provided for search, seizure and attachment of a
variety
of documents, authorised the inspection and measuring of the plant
and machinery. The photographing of the machinery, the
Sheriff was to
make an inventory.
[3] The order was executed. A variety of measurements and
photographs were made and documents attached.
[4] On 7 May 2009 the applicant brought an application seeking
permission to make copies of documents attached and removed by
the
Sheriff as also the right to make copies of photographs which were
taken.
[5] On 19 August 2009 Gildenhuys J handed down a judgment dismissing
the application. During the course of the proceedings the
documents
in which the applicant had a proprietary interest were returned to
the applicant. The application dealt only with those
documents and
items in respect of which the applicant had no proprietary interest.
[6] It was held that inasmuch as the applicant was not the owner of
the documents and as the object of an Anton Piller order was
not to
sanction a search for evidence which may or may not exist and which
may or may not go to found a cause of action but rather
to preserve
evidence which was known to exist that the applicant had no right of
discovery of the documents at that time.
[7] During the course of the judgment Gildenhuys J directed the
applicant’s attention to the fact that it might be able
to
obtain the documentation by way of discovery.
[8] On 24 November 2009 the applicant instituted proceedings against
the respondents seeking discovery of a variety of documents
in the
Sheriff’s possession and held by the Sheriff pursuant to the
Anton Piller order as well as the right to inspect and
examine the
measuring sketches, notes and photographs in the possession of the
Sheriff as also a right of inspection and examination
of the
manufacturing machinery and equipment in the possession of the
respondents. This application will be referred to as the
discovery
application.
[9] On 1 December 2009 the applicant instituted proceedings seeking
interlocutory relief in the form of a series of interdicts
directed
to prevent the respondents from disclosing any of the applicant’s
trade secrets, technical know-how, data drawings,
chemical formulae,
methods processes, and customer lists, marketing information and
other confidential information as well as preventing
the respondents
from using the manufacturing plant, equipment and machinery as also
the use of the trade secrets and other confidential
information and
also finally an interdict preventing the respondents from selling or
disposing of any waterproofing membrane manufactured
by the use of
the applicant’s formulae.
[10] The main application concerning the series of interdicts as
final relief has remained stationary in the interim. The only
papers
filed are the founding papers. There is no answer or reply.
[11] The applicant in the founding affidavit of the discovery
application indicated that the purpose of the discovery application
was to obtain evidence it wished to use to supplement the applicant’s
founding affidavit which it said in the affidavit had
to contain all
the evidence in support of the relief claimed. It was stated that it
was necessary for the documents to be discovered
as they were
relevant to the application and the relief sought by the applicant.
The affidavit seeks to make a case on the basis
that the sketches,
photographs, notes and an examination of the machinery itself would
result in it being conclusively established
that the machinery and
plant used by the respondents is in fact identical to and a copy of
the applicant’s plant. Insofar
as the documents are concerned
it was stated in the affidavit that the documents would reveal the
fact that the respondents had
used confidential information.
[12] The applicant’s thesis is that it would be capable of
discharging the
onus
resting on it to establish the right to
the relief sought by way of permanent interdict if the relevant
discovery and inspection
was permitted by it and an expert of
machinery, plant and equipment. A variety of undertakings were given
by the applicant not
to make disclosure of what was discovered to
third parties.
[13] Rule 35 of the Rules regulating the conduct of the proceedings
of the several Provincial and Local Divisions of the Supreme
Court of
South Africa (the Rules) provides in Rule 35(13) that the provisions
of the Rule relating to discovery apply
mutatis mutandis
to
applications. Only in exceptional circumstances is an order made
directing discovery in application proceedings. See
Saunders
Valve Co Ltd v Insamcor (Pty) Ltd
1985 (1) SA 146
(T) at 149;
Premier Freight (Pty) Ltd v Breathetex Corporation (Pty) Ltd
2003 (6) SA 190
(SE) at 196A-B. In the above two cases discovery was
allowed prior to the finalisation of the delivery of affidavits. The
exceptional
circumstances in each case that the respondent was
prejudiced in that it required discovery of documents in order to
enable it
to file its answer. Only if the applicant who had chosen
motion proceedings as the method by which it would proceed against
the
respondent in each case was directed to make discovery of the
documents would the respondents’ prejudice be alleviated.
Discovery was ordered prior to the equivalent of close of proceedings
in a trial. The right of a party in a trial to discovery arises
in
the ordinary course only after the close of pleadings by which time
the legal issues have been identified. The party who is
obliged to
make discovery has a right to specify documents which are privileged
and in respect of which he has a valid objection
to produce. The
documents which are to be discovered are documents relevant to an
issue and which may directly or indirectly enable
the party requiring
the discovery to advance his or her own case or damage the case of
the opponent. These documents are only ascertainable
after close of
pleadings. There is an additional complicity in the present matter.
Access is sought to documents discovered by
force as it were. The
respondents were compelled by the order to allow documents to be
taken and retained by the Sheriff. They
have no residual choice to
sift through the evidence and make decisions concerning its
discoverability.
[14] In trial proceedings once the pleadings are closed the legal
issues existing between the parties are apparent. That is the
purpose
of pleading. The factual issues are however not identified. The
factual issues can only become identified once the facts
in question
are produced. This takes place by way of production of documents and
by way of evidence given in court. The purpose
of discovery is to
enable the parties to become aware of documentary evidence that is
available and identify factual issues. In
addition discovery results
in the production of documents which can be used in the course of
interrogation of witnesses.
[15] Discovery is not intended to be used as a weapon in preliminary
skirmishes. See
The MV URGUP: Owners of the MV URGUP v Western
Bulk Carriers (Australia) (Pty) Ltd
1999 (3) SA 500
(C) at 513I.
The right to discovery is an easily abused right and must be properly
protected to ensure that it is used in the
context in which it was
designed for use.
[16] The essential feature of discovery is that a person requiring
discovery is in general only entitled to discovery once the
battle
lines are drawn and the legal issues established. It is not a tool
designed to put a party in a position to draw the battle
lines and
establish the legal issues. Rather it is a tool used to identify
factual issues once legal issues are established.
[17] It seems to me that if the provisions of the Rule were to be
applied to application proceedings that the Rule would in general
permit a demand for discovery only once the legal issues had been
identified. In application proceedings the legal issues are
only
identified once all the affidavits have been filed. In the same way
that a person seeking discovery in an action would not
be entitled to
fish or seek evidence to establish his case, in motion proceedings
the person seeking discovery would not be entitled
to seek an order
to obtain evidence to enable it to incorporate such in affidavits. If
a party does not have the evidence to bolster
the legal issue then,
if the principles of trial were applied that party would not be
entitled to require discovery until all the
affidavits have been
delivered as that is the time when the legal issues are identified.
To allow discovery in application proceedings
at that point would in
general be to invite chaos. The parties are likely to file further
affidavits, embrace new issues, and will
need to respond to each
other. The formula by which evidence is produced in motion
proceedings will surely mutate. This is undesirable.
[18] The submission was made that inasmuch as the applicant had
commenced motion proceedings seeking final relief and inasmuch
as in
those proceedings the applicant required evidence which if produced
would result in incontrovertible facts being provided
which would
dispose of the application is in my view to approach the matter on
the wrong basis rather like seeking to pin the donkey
to the tail
than the tail to the donkey. It seems to me that it is improper to
commence with the premise that an applicant who
has chosen a
particular course which results in prejudice to him is entitled to
maintain that course and to seek relief to alleviate
the prejudice
notwithstanding general principles prohibiting such relief.
[19] If the prejudice the applicant claims it suffers can be
alleviated by any other method before unusual relief is granted to
it
such other method should be used. The applicant could elect to
proceed for final relief by way of action rather than by way
of
application (which it concedes to be the customary procedure by which
this type of relief is sought). Once the issues have been
established
the applicant will be afforded every opportunity to require discovery
and inspection in the ordinary course. The only
“exceptional
circumstance” in the present matter is the applicants
determination to follow a course which causes it
prejudice.
[20] Insofar as the application to inspect physical articles is
concerned the rule which provides for such inspection in trial
proceedings is Rule 36. That rule unlike Rule 35 does not have a
subsection enabling it to be made of application to motion
proceedings.
The Rule accordingly applies to trial proceedings only.
As I am not empowered by the Rule to allow inspection of articles I
must
seek the power elsewhere. It was submitted that this Court has
inherent jurisdiction to control its own proceedings and that I
should exercise my inherent powers to overcome a
lacuna
in the
legislation. The inherent power I have to regulate proceedings
otherwise than in accordance with the Rule should be sparingly
used.
I shall assume in favour of the applicant that the test in the case
of documents and articles is the same namely that exceptional
circumstances must be shown warranting a deviation from the normal
practice. For the same reasons I found no exceptional circumstances
to exist in that case I find none in this.
[21] The above findings dispose of the discovery application matter.
I deal with the sale of completeness with certain other submissions
which were made.
[22] It was submitted that at the time the Anton Piller order was
granted the judge contemplated the proceedings in respect of
which
the articles were to be preserved to be those proceedings contained
within Part B of the original application. The order
(paragraph 7)
permitted the Sheriff to keep removed items in his custody until the
applicant authorised the release thereof to
the respondents or the
court otherwise directed and in paragraph 10 permitted the
applicant’s representative and applicant’s
attorneys to
inspect removed items to assess whether they provided evidence
relevant to “
the present application or to the further legal
proceedings envisaged in the application
”.
[23] It was submitted that I should read the order and interpret it
to mean that the documents and articles were retained with
a view to
allowing the applicant after inspection to use them to further the
main application.
[24] I decline to accept the invitation to interpret the order in
this fashion. It appears to me that all that the order did was
to
direct that the documents and articles be retained
pendente lite
some
lis
not the particular
lis
.
[25] The submission was made that there are exceptional
circumstances in the present matter in that the documents and
articles
are required to provide evidence of the facts which the
applicant requires to prove and that they are in the exclusive
possession
of the respondent. This submission is coupled with a
further submission that should the inspection be allowed the result
will
be decisive of the matter in that irrefutable evidence will be
obtained.
[26] As far as the second submission is concerned it is of course is
purely speculative.
[27] As far as the first submission is concerned the applicant
commenced proceedings by way of application well-knowing that it
had
insufficient evidence assuming that to be the case and well-knowing
that in application proceedings the applicant is required
to set out
not only the legal matters but also all the evidence upon which it
relies in the founding affidavit so that the respondent
can produce
its evidence and the resultant legal and factual issues be identified
in an orderly and appropriate manner.
[28] The applicant has an election to proceed by way of action even
at the present stage. If it has insufficient evidence it
must take
that course.
[29] It is my view accordingly that the application seeking
production and inspection of documents and articles should be
dismissed
with costs.
[30] It remains to deal with the interlocutory application for
interdicts pending proceedings, be they the application in Part
B of
the main application or some other proceedings which the applicant
launches. The applicant has furnished appropriate undertakings
and
the interlocutory application must be seen in the light thereof. I
need not detail them as it is common cause that they are
appropriate.
[31] By reason of the fact that another court in due course will
consider much the same evidence in the context of the applicant’s
quest for a final interdict I do not propose to detail the evidence
and make any findings in relation thereto save in the sense
of
prima
facie
findings on what appear to me to central issues.
[32] The first and second respondents were employed by the applicant
for an extended period. At the time that the “copied”
machinery in question was constructed they were in the employ of the
applicant. Consequent to the Anton Piller order a variety
of
documents including those which contain recipes were discovered in
their hands.
[33] The first and second respondents have qualifications which
enable them to repair machinery and perhaps design machinery.
Their
qualifications do not extend to the chemistry involved in
manufacturing and inventing chemical formulae. On the face of
it
their explanation that the formulae were obtainable on the net and
that they obtained such there is doubtful in the light of
the
evidence produced by the expert that:
The local material used as an input material is different to the
overseas material and hence specially adapted formulae are required
to make the product.
The formulae which the first and second respondents claim were
available on the net and which could be used willy-nilly and without
more to produce the product are not so available.
[34] Insofar as the machinery is concerned on a superficial
examination of the plant the plant appeared to be identical to the
applicant’s plant. The plant produces an identical product to
the product produced by the applicant save that the plant
has the
ability to add an additional layer. On the face of it this being so
the plant is identical. It looks the same and produces
the same
product. The claims that the observations made were inadequate in
that the persons making the observations were only
able to make
observations at a distance and for a short period of time appear to
me on the face of it to fail as the persons making
the observations
were trained persons skilled in relation to the plant, persons who
were knowledgeable about the plant and who
were able on a relatively
cursory inspection to determine that the plant was the same. Once the
fact that the plant produces the
exact product at a point in the
process is added to this matrix of fact it seems to me that on the
face of it that copying is established.
[35] On the face of it the inference to be drawn from the continued
presence of the first and second respondents in the employ
of the
applicant at the plant of the applicant while the construction of the
other “copy” plant was underway is that
the respondents
were in the process of copying the plant.
[36] It appears to me then as to both formulae and plant that the
first and second respondents fall to be interdicted and those
persons
involved in the use of the plant and the sale of the product should
be interdicted pending the finalisation of the main
application and
the applicant’s entitlement to final relief. Such persons were
joined to the application.
[37] Once these interdicts are in place the effect of the other
interdict sought in relation to the distribution of the product
to
the applicant’s customers carries a much less significance. On
the face of it, it appears to me that there was contact
with
customers whose identity is not on the net. The claims made by the
respondents that such customers were obtained by searching
the net on
the face of it appear unfounded. In addition there is the fact that a
variety of documents were discovered in the hands
of the respondent
which originally were in the applicant’s possession and which
showed a variety of customers which the applicant
on oath claimed
were its customers. The submissions made that the documents were in
the name of a different entity and hence that
the claim by the
applicant under oath that the customers were its customers and were
confidentially kept as such are claims which
can determined in the
main action. On the face of it, it appears to me that the information
was confidential and protected by the
applicant and would not have
been removed to the possession of those respondents who possessed it
from reason.
[38] In my view the applicant has established a
prima facie
right although open to some doubt. The
prima facie
right is
infringed by the respondents.
[39] The balance of convenience favours granting temporary
interdicts. The first and second respondents are qualified and well
able to proceed with an economic activity notwithstanding the
interdicts in relation to the plant and product.
[40] There is no other satisfactory remedy available to the
applicant to protect its rights. The overriding discretion which
I
have to allow the respondents to carry on with their infringements
should in my view not be exercised in favour of the respondents
having regard to their conduct which if established is patently
unlawful and patently infringes the rights of confidentiality of
the
applicant. The applicant has furnished an appropriate and acceptable
undertaking should it lose the proceedings in due course.
[41] Subsequent to the hearing the applicant delivered a draft order
setting out more limited relief than it originally claimed.
Insofar
as the other respondents are concerned there does not seem to be any
contest to their being liable to the interdict in
the event that I
grant it against the first, second and third respondents.
[42] I accordingly make an order in terms of the draft order
Annexure “A” hereto.
[43] The interlocutory application for discovery and inspection is
dismissed with costs including the costs of two counsel.
_____________________________
C G LAMONT
JUDGE OF THE SOUTH GAUTENG
HIGH COURT, JOHANNESBURG
Counsel for Applicant : Adv. L.J. van der Merwe Sc
Attorneys for Applicant : Gerings Attornyes
Counsel for Respondent : Adv. T. Beckerling SC
Adv. D. Williams
Attorneys for Respondent : Malherbe Rigg & Ranwell
Date of Hearing : 10 August 2010
Date of Judgment : 8 September 2010