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[2010] ZAGPPHC 29
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Des-O-Germ (Pty) Ltd v Citrus Growers Association (6350/10) [2010] ZAGPPHC 29 (30 March 2010)
IN THE HIGH COURT OF
SOUTH AFRICA
(
NORTH
GAUTENG HIGH COURT, PRETORIA
)
HANDED
DOWN: 30 MARCH 2010
NOT
REPORTABLE
CASE
No. 6350/10
In
the matter between:-
DES-O-GERM
(PTY) LTD
Applicant
and
CITRUS
GROWERS ASSOCIATION
First
Respondent
CITRUS
RESEARCH INTERNATIONAL
Second
Respondent
PAUL
HARDMAN
Third
Respondent
JUDGMENT
Van
der Byl, AJ:-
Introduction
[1]
In this matter the Applicant on 9 February 2010 obtained, on an
ex
parte
basis and as a matter of urgency, an interim order,
returnable on 30 March 2010, interdicting the Respondents and all
affiliated
employees of the First and Second Respondents from -
(a)
discussing the “
elimination of Des-O-Germ SP VEG and or
QAC’s in the dump tanks in pack houses until finalisation of
this application
”;
(b)
advising the First and Second Respondents’ members not to
make use of Des-O-Germ SP VEG and or any products containing
QAC’s
in any pack house dump tanks until finalization of this application;
(c)
publishing any and all material regarding the non use of Des-O-Germ
SP VEG and or any products containing QAC’s in
the dump tanks
of pack houses packing citrus for export until finalization of this
application.
[2]
The Respondents, having filed their opposing affidavits on 25
February 2010, elected, because of,
inter alia
, the broad
terms of the order obtained, to anticipate the return date and has
set the matter down for hearing on 2 March 2010 on
which date the
matter stood down by agreement until 4 March 2010 in order to afford
the Applicant an opportunity to file its replying
affidavit which it
indeed filed soon thereafter.
[3]
On having heard this matter on 4 March 2010 I reserved judgment
after the parties agreed to an interim order interdicting the
Respondents in narrower terms from publishing to any third party any
untrue allegations that state or imply -
(a)
that the use of the Applicant’s Des-O-Germ SP Veg product
creates a risk regarding the export of citrus fruit to markets
world
wide;
(b)
that citrus growers or pack houses should avoid the use of
Applicant’s Des-O-Germ SP Veg product.
Relevant
facts of the matter
[4]
The Applicant, a private company duly registered as such, is the
owner of various products, amongst which is a product called
“
Des-O-Germ SP VEG
” which is manufactured by it
and has been retailed to citrus farmers and pack houses in South
Africa for the last 12 years.
It is used as a post harvest wash in
the citrus industry for the past 10 years without any incidents
relating to residues, being
chemical traces left on citrus fruit
which are unacceptable to export markets.
[5]
The First Respondent, the Citrus Growers Association, is a section
21 company created to fill the void left by the demise of
the former
Citrus Board and is, broadly stated, responsible for,
inter alia
,
providing the industry with access to global markets and advising its
members, being, particularly, some 1400 growers of citrus
throughout
South Africa, of developments which may impact on the business of
growing and selling citrus. It is funded through a
compulsory
statutory levy on fresh citrus fruit intended for export imposed by
the Minister of Agriculture in terms of the Marketing
of Agricultural
Products Act, 1996 (Act 47 of 1996).
[6]
The Second Respondent, the Citrus Research International (Pty) Ltd,
is a private company. All the shares in the Second Respondent
are
owned by the Citrus Research Trust, the beneficiaries of which are
the citrus growers of Southern Africa, represented by trustees
who
are the board of directors of the First Respondent and works closely
with the First Respondent in the interests of the industry.
The aim
and core business of the Second Respondent are research and extension
services in the citrus industry. Its mission is to
maximise the long
term global competitiveness of the Southern African citrus growers
through the development, support, co-ordination
and provision of
research and technical services. The Second Respondent is,
furthermore, the publisher of circulars to its members
and various
interested parties called the “
Cutting Edge
”.
[7]
The Third Respondent is the Industry Affairs Manager of the First
Respondent.
[8]
The evidence on the papers, particularly, the answering affidavit of
the Respondents on which this matter was argued by Mr.
Wagener SC who
appeared, together with Mr. Van Zyl, on behalf of the Applicant,
shows that citrus fruit, as it arrives at pack
houses from the
orchards, is put into containers called dump tanks which are large
vats filled with water which is treated with
chemicals which act as
disinfectants to remove dirt and organic substances and to keep the
water clean.
[9]
For this purpose either chlorine or Quaternary Ammonium Compounds
(“
QAC’s
”) can be used, but QAC’s are
generally favoured by pack house managers. Simply put, QAC’s
are ammonium based
compounds which help to keep the water clean which
also prevent secondary functions, such as, fungal infections, on the
fruit.
[10]
QAC is the name for a group of approximately 900 chemical compounds
which is ammonium based. Although similar, each compound
is different
and has unique properties.
[11]
In dump tanks in South Africa only two types of QAC’s are
used. The one is
Didecyl Dimethyl Am,monium Chloride (“
DDAC
”)
and the other is Alkyl Benzyl Ammonium Chloride (“ABAC
”)
which is also known as
Benzalkonium Chloride
(“
BAC
).
[12]
The Applicant produces a range of products some of which contain
DDAC, but Des-O-Germ SP Veg, however, does not contain DDAC.
[13]
Legislation and regulations in Japan, as in almost all countries in
the world market, require that citrus fruit entering the
country
should not have detectable DDAC or ABAC residues. QAC’s, such
as DDAC and ABAC have prior to July 2009 been used
in the South
African citrus market for approximately the last ten years without
any difficulties in the Japanese or other export
markets.
[14]
In July 2009, apparently as a result of a new test method, residues
of two substances forming part of QAC’s were detected
on
consignments of South African grapefruit which had been exported to
Japan which came to the attention of Japanese importers
who are
obliged to notify the Japanese health authorities with the
consequential prospect that the practice of using QAC’s
in the
way South Africa does might be deemed an unacceptable practice
leading to the rejection of the imported fruit regardless
of the
presence of residues.
[15]
One of these consignments came from a pack house which had used the
Applicant’s product, namely, Des-O-Germ SP Veg.
This resulted
in a furore and almost resulted in a proportion of the 1,5 million
cartons of South African citrus being withdrawn
from the market and
the other approximately million cartons that were then
en route
being rejected.
[16]
Because of these developments the Second Respondent published a
circular, written by the Third Respondent in the course of
his duties
as Industry Affairs Manager of the First Respondent in a publication
called the “
Cutting Edge
”, in which citrus
growers, pack house managers and exporters were advised as follows in
edition 87 of the publication:
“
Recent
feedback from commercial residue testing in Japan has raised a
possible concern with Quaternary Ammonium Compound (QAC’s)
residues in citrus. QAC’s are used globally in food processing
plants as disinfectant - one of the most common in South
Africa
citrus packhouses is
Didecyldimenthyl ammonium Chloride
(DDAC), the active ingredient in products such as Desogerme, Prasin,
Quattrokill, Sporekill and Terminator (used in fruit washing
systems
in packhouses), and any other QAC’s used throughout the food
chain to maintain appropriate hygiene on equipment used
to handle
fruit.
Despite
QAC’s having been used in South Africa for a number of years
now, this is the first instance where the residue tolerances
in an
importing country have been exceeded (Japanese MRL = Limit of
Determination). CGA/CRI are engaging with the distributors
of these
products, counterparts in Japan and the exporter and pack houses
involved to determine the likely cause of the MRL exceedances,
and
whether the Japanese Food Sanitation Laws actually prohibit the use
of of specific QAC’s Aspects of the investigation
include the
validation of the analytical results and determination of whether the
current residue analysis methods used in Japan
differentiate between
the (many) actives within the QAC group to isolate possible sources
of QAC residues.
Until
further details are available, packhouses managers packing fruit for
Japan should note this current situation and consider
reverting to
alternative chlorine-based cleaning systems (e.g. HTH powder of the
Buccaneer system). CGA/CRI will provide more information
as soon as
it is available ....
”.
[17]
The
Cutting Edge
is disseminated by email to all persons on
the First and Second Respondents’ mailing list. There are
approximately 950 members
of the First Respondent on the mailing
list. Also on the First Respondent’s mailing list are 167
people who are stakeholders
in the industry but who are not members
of the First Respondent, such as, agents, chemical suppliers to the
citrus industry, citrus
buyers, officials in the Department and the
like. The Second Respondent’s mailing list comprises about 300
export agents,
chemical company representatives, researchers,
students and technical managers on citrus farms.
[18]
According to the Respondents, as is apparent from the answering
affidavit, after edition 87 of the
Cutting Edge
was
dispatched, the sole director of the Applicant phoned the Third
Respondent and informed him that SP Veg did not contain DDAC
as was
stated in the edition in question and demanded that the error be
retracted. The Third Respondent accepted that he had made
a mistake.
According to him it had arisen due to a misunderstanding between
himself and one Keith Lezar of the Second Respondent
as he had asked
him for a list of products containing DDAC but he had understood his
request as being for a list of products with
QAC’s. On this
basis he immediately sent out an email to all members on the
Cutting
Edge
mailing list in which it is stated as follows:
“
Cutting
Edge 87 send out this morning refers.
Please
note that Desogerme does not have Didecyldimethyl ammonium Chloride
(DDAC) as an active ingredient, but does form part of
Quaternary
Compund (QAC’s) group. The QAC group is the subject of the
Cutting Edge 87 cautionary.
”.
[19]
The Applicant also caused a letter,
Annexure M, record p. 119
,
to be addressed to the First Respondent on 20 July 2009 demanding,
indicating that the Applicant is because of the statement published
in the
Cutting Edge No, 87
is “
causing financial
loss
” for the Applicant, that the Third Respondent issue
within three days a new
Cutting Edge
circular “
wherein
it was made abundantly clear that no proof that the active
ingredients of Des-O-Germ have left any residues and that Des-O-Germ
may be used in pack house dump tanks for the washing of citrus that
is to be exported to Japan and elsewhere in the world
”,
failing which appropriate action will be taken against the
Respondents for urgent relief.
In
response to this letter the Respondents’ attorneys addressed a
letter,
Annexure N, record p. 122
, to the Applicant’s
attorney on 23 July 2009 in which the request was in effect declined.
The reason for this attitude was
explained as follows:
“
Our
client has an obligation to advise its members of any development
which may impact on the business of growing and selling citrus.
The
Cutting Edge no. 87, was issued by our client based on information
provided by parties in Japan.
Our
client’s communication did not contain a statement that
‘members of your Association must use our client’s
products’.
The
communication pointed out that there was a ‘possible concern
with regard to QAC residues on citrus’. DDAC was referred
in
the communication as one of the most common active ingredients in
various products but the communication applied equally to
othe QAC’s
used in the food chain.
The
communication pointed out that that this was the first instance where
residue tolerances had been exceeded and that our client
was engaging
with the authorities in Japan to clarify the situation.
Our
client did not direct packhouse managers to take any particular
action but suggested that they ‘consider’ reverting
to
chlorine based cleaning systems.
It
was incumbent upon our client to provide this information to its
members.
Based
on your client’s contact with our client, a notice was sent out
on the same day stating that Des-O-Germ does not have
DDAC as an
active agreement and does form part of the QAC Group and that it is
the QAC Group which is the subject of the earlier
cautionary. This
was not, as you categorised it, an attempt by Mr. Hardman to correct
this information. It pointed out unequivocally
that your client’s
product does not contain DDAC and is a clear and effective
rectification of the earlier notification.
”.
I
can immediately say that this was in my view an unsatisfactory and
unreasonably approach to a reasonable request by the Applicant.
It
is in my view apparent from a reading of the contents of the
Cutting
Edge No. 87
that, apart from referring to developments in Japan,
the request or advice that packhouse managers should consider
revering to
alternative chlorine based cleaning systems was clearly
based on the admittedly incorrect perception that Des-O-Germ SP Veg
contains
DDAC. Why the Respondents were not prepared to publish a
circular in a new issue of the
Cutting Edge
, being the
publication in which the incorrect information was initially
published, is not clear if not mind boggling. A reasonable
and
regular reader of the
Cutting Edge
, whether or not he or she
became aware of the email forwarded to members on 6 July 2009,
Annexure C, record p. 94
, must clearly be left with the
impression that the caution, coming from an organization representing
his or her interests, that
he or she should, at the financial loss of
the Applicant, rather revert to a chlorine based cleaning system. The
Respondents in
my view had insufficient or no grounds (and as it
turned out still have no such grounds) for having extended such a
caution to
its members.
The
Respondents could have and should have adhered to the Applicant’s
request and refrained irresponsible in doing so. Had
they done that
the Applicant would have had no reason to have launched this
application.
According
to the Respondents the Japanese were at the time unsure whether to
define QAC’s as a food additive or an agricultural
chemical.
The difficulty arose because the Japanese practice is that any
product applied to the fruit post harvest constitutes
a food additive
and agricultural chemicals are seen as only those substances applied
pre-harvest can be viewed a agricultural chemicals.
Thus, because
QAC’s are applied to the fruit after they have been picked, the
Japanese regulatory approach tended towards
categorizing them as food
additives with the consequential prospect that all South African
citrus treated with QAC post harvest
disinfectants be removed from
the market. Such a directive from the Japanese would, so it is
contended by the Respondents, would
have had a devastating effect on
the South African citrus market. At the time the issue arose there
were approximately 1,5 million
cartons of citrus in the Japanese
market with another one million
en route
. The fruit in Japan
at that time was woth approximately R100 million alone. An
unsuccessful marketing campaign in Japan would also
have adversely
affected the returns to growers in other grapefruit markets. The
Respondents’ main objective was to ensure
that the trade in
South Africa citrus was not stopped they engaged extensively with the
Japanese trying to convince them that South
African citrus was safe
and not dangerous to consumers and that although QAC’s were use
post-harvest they were not used as
food additives but were in the
nature of agricultural chemicals.
[20]
This seems to be the reasons why the Respondents caused the
following follow-up to be published in the
Cutting Edge
89
under the heading “
Quaternary Ammonium Compound residue
cautionary
” in which the following is stated,
inter alia
-
“
Early
in the engagement process MHLW (ie., the Japanese Department of State
charged with the function of controlling the import
of fruit and
food) made it very clear that any transgression of the
Food
Additives
legislation would be seen as a violation of
Japanese Food Safety Law. The consequence of a violation is the
immediate recall of
fruit already in the market and the prohibition
of sale of any fruit suspected to have been treated with an
unauthorized chemical.
The use if QAC’s as a
disinfectant
does however create a unique situation and the status of DDAC in this
context has been the subsequent focus of the engagement with
the
Japanese
.......
Feedback
received from Japan on 13
th
July 2009 indicate that the
decision on whether DDAC should be deemed a Food Additive (by
Japanese definition) or disinfectant
has been deferred to MHLW head
office. If seen as a disinfectant MHLW will also consider what the
applicable tolerance should be
In
conclusion, until a final decision has been reached by MHLW it
remains critical that packhouse managers understand the potential
risks. It is hoped MHLW will view this situation with reason and
allow fruit already in the pipeline to be released onto the market,
but it seems unlikely that treated-fruit that has not yet been
shipped will be permitted.
”.
[21]
Eventually the Japanese Importers’ Association announced to
importers in an email dated 18 January 2010 that fresh fruits
with
DDAC would not be allowed to be imported into Japan in 2010.
[22]
On 8 February 2010 the Applicant was informed by the Second
Respondent that it intended informing stakeholders in the citrus
industry at a meeting then to be held on 9 February 2010 as follows:
“
During
the 2009 citrus season DDAC residues were detected on South African
citrus fruit in Japan.
...................
Japan
has not made a final decision on classification of DDAC as Agric
Chemicals or Food Additives
Japanese
importers have advised that use be suspended until clarified
................................
It
is not known if use of other QAC’s will result in detectable
residues and what the implications thereof would be
The
Japanese situation applies to other markets as well.
”.
Applicant’s
submissions
[23]
Mr Wagener on behalf of the Applicant submitted that, particularly,
the contents of the circular published in edition 87 in
the
Cutting
Edge
, in edition 89 of the
Cutting Edge
and in the email
of 18 January 2010 and the information intended to be communicated to
stakeholders at the meeting convened for
8 February 2010 are all
factually incorrect in that,
inter alia
-
(a)
the feedback from commercial residue testing in Japan did not raise
a possible concern with QAC’s residues on citrus,
except with
only one of about 900 QAC’s known as DDAC;
(b)
the Japanese authorities had in fact made a decision, as appears
from an email dated 18 January 2010,
Appendix X
, announced
that fresh fruits with DDAC are not allowed from 2010;
(c)
there is no evidence that supports the contention that the Japanese
situation applies to other markets as well.
[24]
Instead, so the argument furthermore went, the Respondents have, as
appears from the intended meeting to be held on 8 February
2010,
escalated a DDAC issue in Japan to a QAC problem world wide,
notwithstanding the fact that the Japanese Government announced
that
only fresh fruits with DDAC will not be allowed to be imported into
Japan in the year 2010, by having stated that Japanese
importers have
advised that “
use be suspended until clarified
”
and that “
it is not known if use of other QAC’s will
result in detectable residues and what the implications thereof would
be
”.
[25]
In the circumstances the Applicant’s product is, so it was
submitted, clearly at the receiving end of the failure to
mention
that DDAC’s have in fact been banned for import into Japan for
1010 and of groundless speculation that other QAC’s
may perhaps
also be affected that the world wide market has the same attitude as
Japan.
[26]
In fact, so it is contended, -
(a)
the Applicant’s product, Des-o-Germ, is a well-known and
widely product that does not contain DDAC;
(b)
that, as such, it stands to gain a material market share when all
the other products that do contain DDAC are no longer used
for fruit
intended for export to Japan, being s substantial portion of the
market;
(c)
that, however -
(i)
a groundless cautionary that all QAC’s may somehow be affected
by the decision regarding DDAC;
(ii)
advice that chlorine-based products should rather be used;
(iii)
baseless allegations that the Japanese situation applies to other
markets as well,
will
obviously negatively affect the Applicant’s product.
Respondents’
submissions
[27]
Apart from criticizing the Applicant for bringing this application
on an
ex parte
basis where, so it is contended, no basis
existed for dispensing with notice to the Respondents and it
disregarded its obligations
to make full disclosure of all facts, for
having prayed and obtained an order that is over-broad and vague and
for, having done
that, having impermissibly infringing the
Respondents’ constitutional rights of freedom of expression and
to impart information
or ideas on, particularly, scientific research,
it is, broadly speaking, the Respondents’ case that they have
never advised
their members not to use the Applicant’s product,
but has simply cautioned them of the dangers of doing so when
exporting
to the Japanese market.
Evaluation
of the parties’ respective cases
[28]
In so far as the Applicant is criticized for having launched the
application on an
ex parte
basis, that is an issue dealt with
by the Judge who granted the Rule
nisi
and the interim
interdict and who obviously in his discretion regarded the
allegations made in the founding papers sufficient to
justify it be
granted on an
ex parte
basis.
In
my opinion there is no basis or reason for me to comment or make any
findings thereon.
[29]
As far as the over-breath and vagueness of the interim order is
concerned, it would seem that the parties were in agreement,
at least
for the interim, that the order granted be narrowed down in the terms
to which I have already referred to.
[30]
Having read the founding papers I have no reason to believe that the
Applicant deliberately failed to disclose relevant facts
or deposed
to any falsehoods. In view of the conclusion I have reached in this
matter I do not regard it necessary to deal with
the contentions on
both sides on the alleged non-disclosures and falsehoods.
[31]
As is apparent from the aforegoing, the infringement complained of
by the Applicant is the contents of edition 87 of the
Cutting Edge
in which it was incorrectly stated that DDAC is an active ingredient
in,
inter alia
, “
Desogerme
” and pack house
managers should consider reverting to “
chlorine-based
cleaning systems
”.
[32]
After having been informed by the Applicant that Des-O-Germ SP Veg
does not contain DDAC and, having admitted he made a mistake,
the
Third Respondent forwarded an email to all members on the
Cutting
Edge
mailing list informing them that “
Desogerme
”
does not have DDAC as an active ingredient, but nevertheless
indicated that the product does form part of the QAC’s
group
which is the subject of the “
Cutting Edge 87 cautionary
”
and, in so doing, persisted, notwithstanding a reasonable request, as
I have already indicated, to issue a circular in the
Cutting Edge
to make it clear that there is no proof that Des-O-Germ left any
residues and that it may be used in pack house dump tanks, with
the
advise given in
Cutting Edge
87 to pack house managers to
rather reverse to chlorine-based cleaning systems.
[33]
The Respondents persistence with the caution and subsequent
circulars and the meeting to be held on 8 February 2010 seems
clearly
to be found in the uncertainty in Japan whether to define QAC’s
as a food additive or an agricultural chemical.
[34]
They have, as is apparent from the slides prepared for the intended
meeting of 8 February 2010, so persisted notwithstanding
an
indication on 18 January 2010 that fresh fruits with DDAC would not
be allowed to be imported into Japan in 2010.
[35]
It is now this persistence which is the subject matter of the
Applicant’s claim and its insistence on relief.
[36]
There is in my view, whether or not there is uncertainty in Japan
whether to define QAC’s as a food additive or an agricultural
chemical, no need or basis for persisting with a caution in terms
where members are advised to revert to chlorine-based systems,
to
advise pack house managers to consider reverting to other cleaning
systems and to have refused or failed to publish in a new
issue of
the
Cutting Edge
a circular as requested by the Applicant.
[37]
That, however does not mean that the Respondents should be debarred
from informing their members of the true factual developments
in
Japan or elsewhere on the use of QAC’s or compounds of QAC’s.
[38]
I am accordingly of the opinion that the Applicant’s rights
are, because of the persistence to advise members to revert
to
chlorine-based systems, infringed, not only on a single once and for
all occasion, but on a continuous basis and that it is,
therefore,
entitled to be protected from such infringement (see:
National
Council of Societies for the Prevention of Cruelty to Animals v
Openshaw
[2008] ZASCA 78
;
2008 (5) SA 339
(SCA)
at
347F, para [22]
).
[39]
For these reasons I make the following order:-
1.
The Respondents are interdicted from suggesting, recommending or
advising any person in any manner whatsoever to revert from
using the
Applicant’s Des-O-Germ SP Veg product to any alternative
cleaning system for use in water of dump tanks in South
African
citrus pack houses or not to make use of Des-O-Germ SP VEG for that
purpose for as long as the use of Des-O-Germ SP Veg
is not prohibited
by any legislation whether in South Africa or elsewhere.
2.
The Respondents are ordered to publish within 15 days as from the
date of this order a circular in the
Cutting Edge
informing
members that Des-O-Germ SP Veg does not contain DDAC and retracting
the following words contained in the last paragraph
of the
Cutting
Edge 87
"
“
Until
further details are available, packhouses managers packing fruit for
Japan should note this current situation and consider
reverting to
alternative chlorine-based cleaning systems (e.g. HTH powder of the
Buccaneer system).
”.
3.
The Respondents are ordered to pay the Applicant’s costs
incurred in respect of this application.
...............................
P
C VAN DER BYL
ACTING
JUDGE OF THE HIGH COURT
ON
BEHALF OF APPLICANT
ADV S D WAGENER SC
ADV
H VAN ZYL
On
the instructions of:- SMITH & VOSLOO ATTORNEYS
C/o
NIEMANN & SWART INC
804
Terblanche Street
RIETFONTENIN
PRETORIA
Ref
: N F Myburgh/ Correspondent
(012)
662 4129/39
ON
BEHALF OF RESPONDENTS ADV G E MORLEY SC
ADV
A M ANNANDALE
On
the instructions of: SHEPSTONE & WYLIE
C/o
STEGMANS INC
1
st
Floor, Celtis Plaza
South
Block
1085
Schoeman Street
Hatfield
PRETORIA
Ref:
GW562/10/K J ROBINSON
Tel:
(012) 342 6430
DATE
OF HEARING 4 March 2010
JUDGMENT
DELIVERED ON 30 March 2010