Summary of Judgment

Introduction

The proceedings were brought as a motion application in the Gauteng Local Division, Johannesburg, in which the applicant sought interdictory and ancillary statutory relief aimed at preventing and addressing alleged trade mark infringement and dealing in counterfeit goods. The application was framed with reference to registered trade marks and the statutory enforcement mechanisms created by the counterfeiting legislation.

The applicant was A&D Spitz (Pty) Ltd, described as the South African proprietor of various registered trade marks incorporating the mark “Carvela”, registered under the Trade Marks Act 194 of 1993. The first respondent was Blessed Miracle Wholesalers and Retailers CC, described as a retailer or wholesaler of formal men’s apparel, including men’s shoes. The second respondent was Samuel Mekonen Hamza, identified as the sole member of the first respondent. The third respondent was the Minister of Police, cited in connection with the seizure of goods by the South African Police Service.

The procedural history, as reflected in the judgment, was that the parties ultimately reached agreement on the substantive relief recorded in a draft order, with the dispute narrowing to the question of costs only. The court therefore did not traverse the merits in full, but confined its reasons to the costs determination and the limited background necessary to decide costs.

The general subject-matter concerned the protection and enforcement of trade mark rights and the statutory remedies relating to counterfeit goods, including an interdict against dealing in counterfeit goods and a statutory direction compelling provision of information under the Counterfeit Goods Act 37 of 1997.

Material Facts

The court accepted as common cause that the applicant is the proprietor in South Africa of various registered trade marks incorporating the mark “Carvela”, registered in terms of the Trade Marks Act 194 of 1993. The judgment further proceeded on the basis that the applicant applies these trade marks to handcrafted Italian footwear, which was treated as constituting protected goods as contemplated in section 1 of the Counterfeit Goods Act 37 of 1997.

It was alleged by the applicant that the first respondent had been trading in counterfeit Carvela products, and that this conduct occurred at the direction of the second respondent as the first respondent’s sole member. The judgment did not resolve these allegations by factual findings on the merits because the substantive order became agreed, and the reasons were directed to costs.

A material factual feature for the costs enquiry was the history of the parties’ attempts to settle the form of order. The first and second respondents resisted, in particular, the relief initially sought in prayer 2 of the notice of motion, which invoked section 10(1)(d) of the Counterfeit Goods Act 37 of 1997 and sought an order directing the respondents to provide specified information within their knowledge or control. The first and second respondents’ position was that they were not involved in the sale of counterfeit products and were therefore unable to provide the supplier-related information sought.

At the hearing, the court raised a concern about whether it could reject the respondents’ version that the relevant information was not within their knowledge. In response, the applicant indicated it would accept an order directing provision of the information insofar as it was within the respondents’ personal knowledge or under their control, and the first and second respondents indicated they would consent to that formulation.

The parties thereafter presented a draft order to court reflecting agreement on all relief other than costs. The respondents opposed an adverse costs order on the basis that they had previously tendered to consent to substantially similar relief (which, they contended, should have limited the applicant to unopposed costs) and on the further basis that the employment of two counsel was unwarranted.

Two documents were relevant to the costs debate. The first was a tender dated 29 July 2022, prior to the answering affidavit, in which the first and second respondents consented to certain relief subject to variations but recorded their position that they did not have details of the information sought. The second was a further tender dated 18 August 2022, which mirrored the earlier tender but included an undertaking to attempt to trace certain telephone numbers via a cell phone provider and to seek assistance from the second respondent’s brother. The court treated these tenders as demonstrating cooperation but not as consenting to an order compelling disclosure of information within knowledge or control.

Legal Issues

The central legal questions were confined to costs. The court was required to determine whether, given the respondents’ earlier tenders and the eventual agreement on the substantive order, the applicant was entitled to costs on an opposed scale or only on an unopposed scale.

A further legal question, also in the costs domain, was whether the applicant was entitled to recover the costs of two counsel, which required an evaluative assessment of the nature, complexity, and importance of the matter as presented to the court.

Although the substantive relief included statutory disclosure under section 10(1)(d) of the Counterfeit Goods Act 37 of 1997, the court did not decide a contested interpretive question about the reach of that provision on the merits. Instead, the court addressed the practical concern that the disclosure order should be framed so as to require information only insofar as it was within the respondents’ personal knowledge or control, and then decided the costs consequences of the respondents not having earlier provided a sufficiently definitive consent to such an order.

In character, the dispute was predominantly about the application of established costs principles to the procedural facts of settlement tenders and the narrowing of issues, together with a discretionary or value-laden assessment regarding the reasonableness of briefing two counsel.

Court’s Reasoning

The court explained that, because the parties had reached agreement on the terms of the substantive order (save for costs), it was unnecessary to deal with the merits beyond what was required to explain the costs outcome. The reasons therefore focused on whether the respondents’ pre-answering affidavit tenders were sufficient to justify limiting the applicant to unopposed costs and whether the employment of two counsel was justified.

On the first costs ground, the respondents contended that an early tender amounted to agreement in substance with the eventual order, and that the applicant should therefore recover only unopposed costs. The court examined the tender dated 29 July 2022 and found that, while it reflected consent to some relief and proposed certain variations, it did not include a tender to provide the information sought under the statutory disclosure prayer, even limited to information within the respondents’ knowledge or control. Instead, it recorded the respondents’ position that they did not have details of the requested information, which the court treated as materially different from consenting to a disclosure order qualified by knowledge or control.

The court also considered the later tender of 18 August 2022, which added an undertaking to attempt to trace telephone numbers and seek assistance from a family member. The court again characterised this as cooperative conduct but not as a definitive undertaking coupled with consent to an order directing disclosure of information within the respondents’ knowledge or control. The court reasoned that if such a definitive consent to an appropriate disclosure order had been provided earlier, the further costs incurred in the matter “would undoubtedly have been avoided”. On that basis, the court concluded that the applicant was entitled to its costs on an opposed basis.

On the second costs ground, relating to two counsel, the court made an evaluative finding that the nature of the matter, the complexity of the issues, and the importance of the matter to the applicant warranted the employment of two counsel. The court therefore allowed costs inclusive of two counsel where so employed.

Outcome and Relief

The court granted an order, by agreement on the merits but with a determination on costs, interdicting and restraining the first and second respondents from conduct relating to the importation, manufacture, distribution, sale, or use of marks identical or confusingly similar to the Carvela trade marks in relation to specified goods and circumstances as described in the founding papers.

The court directed the first and second respondents, in terms of section 10(1)(d) of the Counterfeit Goods Act 37 of 1997, to provide specified information to the applicant insofar as it was within their personal knowledge or under their control, including details of sources or suppliers and transaction documentation.

The court further made provision for a potential contempt application in the event of non-disclosure within 10 days of service of the order, and directed delivery-up of counterfeit goods under section 10(1)(a) of the Counterfeit Goods Act 37 of 1997, including authorisation for the applicant to take possession of goods seized by SAPS on 8 June 2022 at the respondents’ business premises.

On costs, the court ordered the first and second respondents to pay the costs of the application on an opposed basis, including the costs of two counsel where so employed.

Cases Cited

No cases were cited in the judgment.

Legislation Cited

Trade Marks Act 194 of 1993.

Counterfeit Goods Act 37 of 1997.

Rules of Court Cited

No rules of court were cited in the judgment.

Held

The court held that, although the parties ultimately agreed on the substantive relief, the respondents’ prior tenders did not constitute a sufficiently definitive consent to an order directing disclosure of information (appropriately limited to information within their knowledge or control) so as to justify limiting the applicant to unopposed costs. The court further held that the nature, complexity, and importance of the matter justified the employment of two counsel, and it therefore awarded costs on an opposed basis inclusive of two counsel where used.

LEGAL PRINCIPLES

Costs are determined with reference to the practical and procedural reality of what was tendered and when, and whether earlier definitive consent to the relief ultimately granted could have avoided further litigation steps and expense. Where a party’s earlier tender demonstrates general cooperation but does not amount to consent to the particular order ultimately required, the court may conclude that the matter remained effectively opposed for costs purposes.

The recoverability of the costs of two counsel is an evaluative matter dependent on considerations such as the nature of the matter, the complexity of the issues, and the importance of the litigation to the party seeking those costs, as assessed on the record before the court.