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[2013] ZAECPEHC 52
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RGT Smart Operations (Pty) Ltd v Swanepoel and Another (1662/2013) [2013] ZAECPEHC 52 (15 October 2013)
IN THE HIGH COURT OF
SOUTH AFRICA
(EASTERN CAPE, HIGH
COURT, PORT ELIZABETH)
CASE NO: 1662/2013
Date heard
: 26
September 2013
Date delivered
: 15
October 2013
In
the matter between:
RGT
SMART OPERATIONS (PTY) LTD
...................................
Applicant
and
JUSTIN
STUART SWANEPOEL
...................................
First
Respondent
AVARTO
SOUTH AFRICA
.......................................
Second
Respondent
JUDGMENT
LOWE,
J:
Introduction
:
On 11 June 2013
applicant (“RGT”), which provides customer satisfaction
services within the motor industry, specifically
in respect of motor
body repairs, launched an urgent application against first
respondent (“Swanepoel”), a former
employee, and against
second respondent (“ASA”).
The application for some
reason not explained in the founding affidavit, was launched by
short form Notice of Motion affording
respondent no opportunity of
answering along the usual long form accepted process. The Notice of
Motion issued on 11 June 2013
sought that the matter be heard as one
of urgency seeking a Rule Nisi on the 14
th
June 2013,
calling upon Swanepoel and ASA to show cause on 2 July 2013 as to
why extensive interdictory leave should not be granted,
seeking that
paragraphs 2.1, 2.2, 2.3 and 2.4 of the Rule Nisi operate with
immediate effect, and calling upon Swanepoel and
ASA to give notice
of intention to oppose, should they wish to do so, by 28 June 2013.
Although clearly urgent
(at least against Swanepoel) there was no attempt to follow the
normally applicable Form 2 (a) procedure
which could (and should)
have been utilised albeit with truncated time periods.
The relief sought was
substantive and far ranging, interdicting both Swanepoel and ASA
from approaching motor body repairers or
motor manufacturers listed
in the application and from marketing the so called aCE System
operated by ASA, together with various
other ancillary relief.
I should make it clear
that the relief sought initially was immediate interim relief, the
Notice of Motion made it clear, on a
proper reading thereof, that on
the return day of the rule, final relief would be sought against
both Swanepoel and ASA. The
only aspect of the Notice of Motion
which was not intended to operate with interim immediate effect, was
paragraph 2.5 thereof
which sought that “…Costs of this
Application be reserved for decision in an action to be instituted
by the Applicant
against the Respondents, for an interdict and other
relief, within 60 court days of 7 June 2013.”
There was no other
indication that the remainder of the Notice of Motion would remain
as interim relief pending the determination
of an action.
In my view the Notice of
Motion clearly, save in respect of costs, was worded such as to lead
the respondents to believe that
on the return day final relief would
be sought, save for costs.
It should perhaps be
mentioned that in the founding affidavit and in reply, there was
certainly reference to interim relief, and
it is now common cause
that an action has been instituted against ASA, claiming
interdictory and other relief including damages.
The background to the
application was simply that Swanepoel, formerly employed by RGT, had
been responsible for administering
and marketing a customer
satisfaction product approved by certain motor manufacturers for use
by motor body repairers. Swanepoel’s
contract of employment
with RGT contained provisions protecting RGT’s customer
connections and its confidential information
and prohibited
Swanepoel from dealing with RGT’s customers and from marketing
competing products to RGT’s customers.
Swanepoel who had worked
for RGT for some time, resigned his employment with RGT on January
2013, immediately thereafter taking
up employment with ASA. It is
alleged by RGT that ASA did not compete with applicant at that time,
for the custom of RGT’s
customers in relation to the
particular product concerned.
RGT states that in June
2013 it came to its notice that ASA, with the aid of Swanepoel, was
launching a wide ranging and concerted
attack upon the RGT customer
base by means of a product which RGT contends is substantially a
copy of its own product.
Much of the above is
contested by ASA, but as will appear hereafter, it is unnecessary to
determine the various disputes of fact
which arise (were I able to
do so), on the papers in any event.
On 4 June 2013 under
case number: 1560/2013, RGT obtained an Anton Pillar type order
authorising it to search and attach evidence
relevant to the above,
and Swanepoel’s activities since leaving RGT, as well as an
iPad, cellphone and a laptop computer,
the property of RGT, which
Swanepoel had reported stolen shortly before resigning his
employment with RGT.
A search was conducted
of Swanepoel’s residence and the business premises of ASA, and
a cellur telephone and the iPad were
recovered and certain computer
information downloaded to be preserved as evidence.
This having been done,
this application was launched.
In this application
Swanepoel and ASA were represented by attorneys and counsel
separately.
When the matter was
argued, Swanepoel did not appear nor was he represented, the matter
having resolved itself into a continuing
opposed application between
RGT and ASA.
It was alleged by RGT
that at the time of the launch of the interim interdict application
(11 June 2013), a number of RGT’s
customers had switched their
custom to ASA it being alleged that this was mainly as a result of
Swanepoel’s influence,
these being customers with whom
Swanepoel had dealt on a daily basis when employed by RGT.
There were, so it is
alleged, threats by a number of customers to switch their custom to
ASA and it was anticipated that this
would impact severely on RGT.
(I should comment, again, that much of this is disputed by ASA).
Faced with the
application, Swanepoel represented by his legal team, and without
the concurrence of ASA concluded what has been
termed a
“comprehensive settlement”, consenting to the return of
RGT’s property, recovered in the Anton Pillar
proceedings, and
further to a final interdict enforcing RGT’s contractual
rights against Swanepoel.
The “Settlement
Agreement” addresses both the Anton Pillar application and the
present application.
To be more precise the
Anton Pillar application was dealt with by Swanepoel agreeing to
return the cellphone and iPad, and further
agreeing that RGT would
be entitled to inspect the “mirror copy” of the personal
laptop computer in the possession
of the Sheriff. In respect of this
application the first respondent agreed to applicant taking an order
in terms of the draft
order, annexed to the agreement, as permanent
interdictory relief, and recorded that applicant would not take any
further legal
action against Swanepoel, criminally or otherwise, and
that it would not claim costs against Swanepoel.
This “settlement
agreement” was signed by or on behalf of RGT and Swanepoel and
dated 13 June 2013. The “Draft
Order” referred to reads
as follows:
“
1.1
The First Respondent is interdicted and restrained from directly or
indirectly approaching any of the motor body repairers and
motor
manufactures listed on Annexures PDV17 and PDV18 annexed hereto, with
a view to securing approval of the aCE system, or with
a view to
securing the custom of any of the MBR’s so listed, or
persuading any of the entities listed to terminate their
contractual
arrangements with the Applicant, or their approvals of the
Applicant’s SQS system;
1.2 The First Respondent
is interdicted and restrained from marketing the aCE system of the
Second Respondent, or any system similar
to the Applicant’s SQS
system, to any of the entities referred to on Annexures PDV17 and
PDV18 hereto;
1.3 The First Respondent
is interdicted and restrained from persuading or attempting to
persuade, any employees of the Applicant
to leave the Applicant’s
employment and from offering employment to any of the Applicant’s
employees.
1.4 The First Respondent
is interdicted and restrained from copying, retaining, developing or
using the Applicant’s SQS or
SQS Lite systems.”
This settlement and
draft order impacted on the relationship between Swanepoel and ASA
(for whom Swanepoel now works), and particularly
in respect of the
marketing of the aCE System, was invasive of ASA’s product
marketing at the very least.
Having regard to the
settlement Swanepoel filed no papers in this application and did not
further oppose the proceedings brought
by RGT.
ASA, filed lengthy
papers opposing the interdict sought against it.
In reply RGT failed to
deal with the disputed issues between the parties, and referred
mainly to the settlement concluded with
Swanepoel. It was alleged
that at the time the original interdictory application was launched,
Swanepoel was the “key man”
in the ASA onslaught against
applicant’s customer base, and that following the settlement
with Swanepoel “…it
had become clear that the loss of
the Applicant’s customers had been effectively stopped by
neutralising the First Respondent.”
The reply stated that in
the circumstances proceeding with the application for an interdict
against ASA would amount to an academic
exercise “…as
the likelihood of harm has disappeared.” The reply went on to
contend that to the extent that
RGT might have been harmed this
would be dealt with in an action against ASA for a permanent
interdict and damages.
RGT stated further that
it had been advised not to take up the time of the court in pursuing
the interdict application. It was
said that this would have “…no
practical effect”.
RGT informed ASA in the
final paragraph of the replying affidavit that an order would be
sought in terms of Rule 41(4) that the
settlement agreement
(referred to as a consent order in applicant’s heads of
argument) would be sought, the application
against ASA to be
postponed sine die, costs to be reserved for the decision of the
trial court in case number: 2466/2013.
The reply refers to the
fact that this suggestion, having already been made by
correspondence, had been rejected by ASA who insisted
that the
matter proceed, alternatively be withdrawn by RGT with a costs
tender.
Consistent with the
above RGT on 25 June 2013 filed a “Notice in terms of Rule
41(4)”, giving notice of its intention
to apply at the hearing
of the matter for an order in terms of the draft annexed to the deed
of settlement. This notice was not
supported by affidavit and is
presumably what is referred to in the final paragraph of the
replying affidavit. I wish to make
it clear that the order actually
to be sought (pages 20 – 21: Application) in terms of Rule
41(4)) related simply to interdictory
relief against Swanepoel and
did not in any way deal with the proceedings between RGT and ASA. It
does however clearly impact
on the aCE System of second respondent.
At a late stage on 25
September 2013, ASA filed an answering affidavit in the Rule 41(4)
“application”, resisting
the relief sought in the Rule
41(4) notice and advising that it did not regard it as competent for
such relief to be either sought
or granted. ASA went further however
and stated that it was a materially interested party in the
settlement, which was in any
event fundamentally flawed, or so it
was contended.
ASA contended in its
papers and in argument:
34.1 That procedurally
Rule 41(4) required an application supported by affidavit in terms of
Rule 6 (1) and (2) of the Rules of
Court;
34.2 That ASA was a
materially interested party and that the matter could not simply be
settled without its concurrence;
34.3 That the settlement
did not relate to the proceedings as a whole or provide closure, and
thus was incompetent;
34.4 That the settlement
agreement in any event amounted to the offence of compounding and was
contrary to public policy.
The Rule 41(4)
Issue
:
When the matter was
called, counsel for RGT informed me that, having regard to the late
filing of the answering affidavit in the
Rule 41(4) application, he
sought a postponement thereof in order to file replying affidavits
and further to consider applicant’s
position.
This postponement was
resisted by counsel for ASA on a number of bases, but principally
that, not only was there no application
before the court which was
capable of being postponed, it being procedurally flawed, but that
having regard to the various issues
raised by ASA in the answering
papers, the postponement would simply serve no purpose whatsoever.
Whilst the applicant’s
counsel initially contended that he would need time to deal with the
procedural objection, in reply
he stepped back from this position,
stating that while still seeking a postponement in order to reply,
that he had made such
submissions on the procedural issue as were
relevant thereto.
Having regard to the
conclusion that I have reached relevant to the Rule 41(4) matter, it
is unnecessary to deal with the issues
applicable to the merits
thereof as opposed to the procedural points raised.
Rule 41(4) reads as
follows:
“
Unless
such proceedings have been withdrawn, any party to a settlement which
has been reduced to writing and signed by the parties
or their legal
representatives but which has not been carried out, may apply for
judgment in terms thereof on at least 5 days’
notice to all
interested parties.”
It is trite that a
settlement may, on notice, be made an order of court. See
Massey
- Ferguson (South Africa) Ltd
v
Ermelo Motors (Pty) Ltd
1973
(4) SA 206
(T)
.
Rule 41(4) does not
apply to a formal consent to judgment under Rule 31 (1). See
Estate
Huisman and Others v Visse and Others
1967 (1) SA 470
(T)
.
Confession to relief sought in the Notice of Motion would, by virtue
of the definition of “civil summons” in the
rules,
nevertheless still fall under the Rule 31(1) provision. Further a
consent to judgment need not follow the rules, but may
be given in
terms of the common law. See
Ntlabezo and Others v MEC for
Education, Culture and Sport, Eastern Cape
2001 (2) SA 1073
(TkH) at
1080
. Under the common law, application on notice to the
defendant is required to be made to the court, relevant to a
settlement being
made an order of that court.
In this matter the
attempt to have the order (attached to the deed of settlement), made
an order of court was brought clearly
with the provisions of Rule
41(4) in mind, and not by way of a confession to judgment or in
terms of the common law.
In my opinion, the
reference in Rule 41(4) to the entitlement to “apply for
judgment” requires application on notice
to all relevant
parties, as stipulated in the Rules.
Such an application is
again, in my opinion, not interlocutory to be dealt with in terms of
Rule 6(11), but is a substantive application
as envisaged in Rule
6(1).
“
Incidental
to an application” (in Rule 6 (11)) means “subordinate
or accessory to, while at the same time being distinct
from”
the main proceedings. See
Massey
- Ferguson (supra)
;
Antares
(Pty) Ltd v Hammond
1977 (4) SA 29
(W) at 30 D.
Interlocutory
applications do not require notice by way of a Notice of Motion. All
that is required is a notice to the other side
that an application
will be brought on the date assigned by the registrar or directed by
a judge.
There is no indication,
in my view, in Rule 41(4) which stipulates in any sense that such an
application is interlocutory. Such
applications must be brought in
terms of Rule 6 (1) by way of Notice of Motion, supported by
affidavit.
That a settlement
agreement disposes of the main proceedings (providing all relevant
parties are joined), is clear and accordingly
the making of such
settlement agreement an order in terms of Rule 41(4), is clearly not
incidental to those proceedings and more
especially as the rule
requires that for Rule 41(4) to be relevant, the settlement
agreement must be one “…which
has not been carried
out…”.
In the result, I
conclude that the purported application in terms of Rule 41(4) was
initially doomed to failure having regard
to its incorrect
procedural basis by way of notice and it not being supported by an
affidavit, and further failed to comply with
the provisions of Rule
6(1) or the requirements of the common law relevant to consent
judgments.
In the circumstances, I
conclude that the purported application in terms of Rule 41(4) is no
application at all, and that it would
serve no purpose accordingly
to grant applicant a postponement relevant thereto.
In seeking the dismissal
of the “application” in terms of Rule 41(4) counsel for
ASA sought no order as to costs.
It seems inevitable then
that the purported application falls to be dismissed with no order
as to costs as appears in the order
hereafter.
The determination of
this aspect of the matter does not however dispose of the entire
application.
The Application for
Interdictory Relief
:
Faced with various
difficulties pertaining to the draftsmanship and effect of the main
Notice of Motion, counsel for applicant
was driven to seek an
amendment to paragraph 3 thereof, which I granted, by agreement, in
the following terms:
“
3.
Paragraphs, 2.1, 2.2, 2.3 and 2.4 above shall operate with immediate
effect as interim interdicts and orders, pending final determination
of the action referred to in paragraph 2.5.”
Whilst this immediately
converted the original application for final relief on the return
date, into one for interim relief, the
fact remains that Swanepoel
and ASA were entitled to and in fact did oppose the relief sought on
a final basis, until the time
of this late amendment.
By the time argument was
heard on the application, and as pointed out quite correctly by
applicant, the entire application had
been overtaken by events
insofar as RGT was concerned, RGT having obtained what it sought
from Swanepoel.
Clearly RGT had no wish
to proceed further in the application against ASA, it seeking to
avoid same (and a costs order) by virtue
of its resorting to Rule
41(4).
Precisely what the RGT
had in mind in this regard, remains to me somewhat unclear. Clearly
on the replying papers the alleged
reasonable apprehension that the
continuance of the alleged wrong would cause irreparable harm (by
ASA) to RGT, if it had ever
been established, had in any event
fallen away.
Even had RGT been
successful in the Rule 41(4) proceedings, this would still have left
RGT’s proceeding against ASA largely
unaffected, RGT having
sought wide ranging relief against ASA which it had failed to
withdraw or abandon.
It was not surprising
that ASA took the stance which it did and persisted in seeking
either that RGT withdraw against it tendering
costs, alternatively,
that the application be determined (it having been initially for
final relief), inclusive of a costs order.
In argument when faced
with these difficulties counsel for RGT simply sought an order in
terms of the redrafted paragraph 3 of
the Notice of Motion referred
to above.
In the face of its own
attitude and reply that the relief sought in this regard was no
longer required and effectively that it
no longer required interim
protection against ASA, and further the express statement that it
would seek only the issue of the
“consent order”
proceeding, it hardly lies in RGT’s mouth to now seek relief
in terms of the redrafted paragraph
3 of the Notice of Motion, and
in any event in the face of its concessions and reply, such an order
would not only be inappropriate
but unnecessary, and on the
requirements applicable could not be granted.
Counsel for ASA sought
dismissal of the main application, not only having regard to RGT’s
attitude in reply, but maintaining
in any event that this had been
fatally procedurally flawed, having been brought on the wrong form
and by way of incorrect procedure.
I add, that the final relief
originally sought could in no circumstances have been granted having
regard to the usual test applicable
to final interdictory relief and
in the existence of deep disputes of fact that could not in any
circumstances in my view, have
been resolved on the papers. That
there must exist disputes of fact, which could not be resolved on
affidavit, should have been
foreseen by RGT at the outset, and to
seek final relief was not only inappropriate, but incompetent.
It is trite that all
applications, other than those brought ex parte must be brought on
Notice of Motion as near as possible in
accordance with the
prescribed Form 2 (a). See
Waltloo Meat and Chicken SA (Pty)
Limited v Silvy Luis (Pty) Limited
[2008] ZAGPHC 136
;
2008 (5) SA 461
(T)
;
Patcor
Quarries CC v Issroff
1998 (4) SA 1069
(SE)
;
Gouws v Scholtz
1989 (4) SA 315
(EC)
.
In fact it appears from
the papers that RGT abandoned its original stance relevant to almost
immediate interim relief affording
ASA until 23 August 2013 to file
its answering papers.
Neither counsel found it
necessary to address me on the merits of the application itself
although these were dealt with by ASA
in extensive heads of
argument.
Indeed, ASA submitted in
its heads that the inescapable conclusion was that RGT was
attempting to extricate itself from the proceedings
against ASA,
with costs to be reserved for the decision of the trial court in due
course.
In the face of
applicant’s attitude to the matter, ASA seeks that I dismiss
the application, ordering costs against applicant
on the scale as
between attorney and client.
In my view, applicant
launched this application on a procedurally flawed basis, seeking a
Rule Nisi, which on the return date,
would be transformed into final
relief.
Not only was it
inevitable that there would be deep disputes of fact between the
parties applicable to the usual final relief
test (which RGT should
have foreseen), but applicant misconceived the procedure upon which
it could launch such an application
and persisted in the application
nevertheless.
Embarrassed by the
vigorous response, and having reached an agreement with Swanepoel,
applicant attempted then to extricate itself,
seeking that costs be
determined by the trial court in due course, attempting to delay the
day of reckoning in this regard.
I have no doubt that the
application in this matter against ASA falls to be dismissed on
procedural grounds, as contended for
by ASA.
The only question which
remains is one of costs.
The only thing that can
be said for applicant’s argument in respect of costs is that
in due course, at the trial, facts
may be disclosed which are such
as to point a finger at ASA and which may, so the argument goes,
persuade a judge in due course
that having regard to issues
surrounding the original allegations made and the alleged abuse by
ASA of Swanepoel’s knowledge
of RGT’s operations and
customers, point to bad faith on the part of ASA, and that this is
relevant to costs.
It may also be, in my
assessment, that in due course having regard to ASA’s
submission, that it should have its costs on
an attorney and client
basis, that matter disclosed at the trial in due course may impact
on this aspect of the relief sought.
Certainly on what is
before me in the application, and from what has transpired between
the parties, there are issues which I
cannot decide which may bear
on which party should pay the costs, and the level at which costs
might be awarded, and which may
well be able to be determined more
accurately at trial once all has been disclosed and tested before
the trial judge.
In the result, I am of
the view, that in respect of the submissions made as to costs by
counsel for both RGT and ASA, there is
good reason to suppose that
the trial judge in due course will be in a better position than I to
determine who should pay whose
costs and on what scale, having heard
the evidence relevant.
In the result I propose
to reserve the costs of the application for determination at the
trial in case number: 2466/2013.
In the circumstance the
following order issues:
The application for
postponement of the Rule 41(4) proceedings is refused, with no order
as to costs;
The application in terms
of Rule 41(4) is dismissed, with no order as to costs;
The application under
case number: 1662/2013, as against second respondent, is dismissed
with costs;
The costs of the
application in case number: 1662/2013 are reserved for decision of
the trial court in case number: 2466/2013,
in respect of second
respondent.
LOWE J
JUDGE OF THE HIGH COURT
Appearances
:
For the Applicant
:
Adv. R.P. van Rooyen SC
Spilkins Attorneys
3
rd
to 5
th
Floor
15 Rink Street
Central
PORT ELIZABETH
6001
For the Second
Respondent
: Adv. J.P.V McNally SC &
Adv. J.P. Slabbert
Pagdens
Pagdens Court
18 Castle Hill
Central
PORT ELIZABETH
6001
Instructed by:
Webber Wentzel
10 Fricker Road
Illovo Boulevard
Illovo
JOHANNESBURG