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2021
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[2021] ZAGPJHC 143
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PCCW Vuclip (Singapore) PTE Ltd v E.tv (Pty) Ltd (37629/2021) [2021] ZAGPJHC 143; [2021] HIPR 181 (GJ) (24 August 2021)
IN
THE HIGH COURT OF SOUTH AFRICA
(GAUTENG
LOCAL DIVISION, JOHANNESBURG)
Case No: 37629/2021
REPORTABLE
OF
INTEREST TO OTHER JUDGES
REVSED
DATE:
24 August 2021
In
the matter between:
PCCW
VUCLIP (SINGAPORE) PTE
LTD
Applicant
and
E.TV
(PTY)
LTD
Respondent
JUDGMENT
WILSON
AJ
:
1
The central issue in this case is
the extent to which a licensor of intellectual property can expect a
licensee to secure the licensed
property.
The
licence agreements and the piracy
2
The applicant (“Vuclip”)
purchased a licence from the respondent (“eTV”) to
disseminate episodes of two
popular soap operas, “Scandal”
and “Imbewu”, (“the soap operas”) on its
video on demand platform
(“Viu”). The relevant terms of
the licence were that Vuclip would have the sole and exclusive right
to disseminate
an identified range of episodes of the soap operas on
Viu for 12 months from the first broadcast of those episodes on that
platform.
The right to broadcast the episodes was triggered by the
first broadcast of the episodes on eTV’s “linear channel”
in South Africa. The linear channel is essentially the terrestrial,
cable or satellite channel, ordinarily viewed on a television,
on
which eTV’s programmes are broadcast sequentially.
3
Two license agreements – one
for each of the soap operas – were entered into on 31 December
2019. They can be treated
as identical for the purposes of these
proceedings.
4
In March 2021, the soap opera
episodes licenced to Vuclip began to appear on an app that called
itself “Philosopher: Stream
Mzansi SA Soapies Free App”
(“the Philosopher App”). On 17 May 2021, Vuclip wrote to
eTV informing it of this.
Vuclip stated that it assumed that the
Philosopher App content had been pirated, and that eTV would want to
take steps to protect
its intellectual property in the pirated
episodes.
5
On 28 May 2021, eTV replied to the
e-mail. It stated that it had determined, after an investigation,
that “Viu’s system
and/or personnel are facilitating the
piracy of e.tv content to Philosopher”. This was said to be in
breach of clauses 6.1
and 9.3 of the licence agreements. The
reference to clause 6.1 of the agreement is hard to decipher, as that
clause merely confirms
Vuclip’s right to broadcast the licenced
episodes from half an hour after their first appearance on eTV’s
linear channel.
Clause 9.3 of agreement contains a list of
warranties. The relevant warranties in this case are contained in
subclauses c) and
d). Subclause c) records that Vuclip will “strictly
observe and comply with all of its representations, undertakings and
warranties” specified in the agreement. Subclause d) records
that Vuclip would not “make or authorise the use of”
the
licenced material for a purpose other than those authorised under the
agreement.
6
The letter of 28 May 2021 styled
itself as a notice of breach. It put Vuclip on terms to cure the
breaches it identified by ensuring
that all of eTV’s “content
is removed from the Philosopher App” within 30 days, failing
which eTV would cancel
the licence agreements.
7
There followed an exchange of
correspondence with which it is not necessary to deal in any detail.
Vuclip asserted that it had not
facilitated any piracy, and that it
was, in fact, eTV’s duty to take steps to eliminate the
Philosopher App’s infringement
of eTV’s property rights.
eTV adopted the position that the primary obligation to deal with the
Philosopher App lay on Vuclip,
since Vuclip was apparently the source
of the material which ended up on the App.
8
On 3 August 2021, eTV purported to
cancel the licence agreements. By that time, however, it had modified
the basis on which it claimed
the right to cancel. It still relied on
clause 9.3 of the agreement. It also suggested that Vuclip had,
contrary to clause 4.2
b) of the agreement, failed to render
assistance to eTV “in the elimination of piracy”.
9
Then eTV raised another contention.
It alleged that “it is an implied term of any content licence
agreement that the licensee
shall protect the content it is licensing
and prevent its unauthorised use”. It was this implied term –
not any breach
of clause 9.3 of the agreements, or of clause 4.2 b),
or of any other express term of the agreements – on which eTV
made
its case before me.
10
The reason for this is plain enough.
There is no serious suggestion that Vuclip has actually authorised
the Philosopher App to make
the licenced material available. eTV’s
case is only that Vuclip is the source of the pirated material. In
other words, it
is a breach or defect in Vuclip’s systems that
has enabled the piracy to take place. Vuclip does not dispute this.
The questions
raised in this case must be determined on the basis
that it is Vuclip’s failure to maintain its systems in a manner
that
prevented the Philosopher App’s hack that is at issue –
rather than any active facilitation of piracy on Vuclip’s
part.
As Mr. Botha, who appeared for Vuclip before me, submitted, the
Philosopher App was at least as much a problem for Vuclip
as it was
for eTV. The unauthorised use of the material affected both its
licenced exclusivity, and eTV’s ownership of the
licenced
property. There could be no serious suggestion that Vuclip actually
intended the content to be pirated or was sanguine
in the face of
that result.
11
There can also be no serious
suggestion that Vuclip breached the agreements because it failed to
render assistance to eTV in addressing
the Philosopher App’s
piracy. eTV’s complaint excludes any such claim. eTV does not
say that Vuclip has failed to assist
it. eTV says that Vuclip bears
the primary responsibility to protect eTV’s content and prevent
its unauthorised use. Vuclip
takes the view that it has no such
responsibility. It contends that the agreements require the parties
to co-operate to detect
and eliminate piracy of the licensed content,
and that this was precisely what it was trying to do when it notified
eTV of the
Philosopher App’s reproduction of that content.
eVOD
12
Two days after it purported to
cancel the licence agreements, on 5 August 2021, eTV launched “eVOD”.
eVOD is eTV’s
own video on demand streaming service. It
operates in direct competition with Viu. Presumably because, by its
lights, eTV had brought
the licence agreements to an end, it placed
the soap operas on the eVOD platform, and began to broadcast them
itself.
13
Vuclip, on the other hand, contends
that the agreements were never validly cancelled, that its rights to
broadcast the soap operas
on Viu were not extinguished, and that
eTV’s placement of the soap operas on eVOD constitutes a breach
of the agreements.
The
urgent application
14
Characterising eTV’s
cancellation of the agreement as an unlawful repudiation, on 9 August
2021, Vuclip launched an urgent
application for interim relief
requiring eTV to continue to abide by the terms of the agreement
pending an arbitration to be launched
within 30 days of the interim
relief being granted.
15
The matter was placed on my urgent
roll, and argued on 20 August 2021. In addition to seeking the
effective reinstatement of the
agreement pending arbitration, Vuclip
also seeks orders directing eTV to remove from eVOD any episodes of
the soap operas over
which it has exclusive rights in terms of the
licence agreements.
16
eTV’s position is that it has
lawfully cancelled the licence agreements. Building on eTV’s
notice of cancellation, Ms.
Southwood, who appeared together with Ms.
Turner for eTV, contends that it was an implied or, at the very least
a tacit, term of
the licence agreements that both parties would
“secure the content of their respective platforms, which
includes the transmission
of such content to subscribers, against
unauthorised access”. This is the formulation of the term
contended for that appears
at paragraph 52 of eTV’s answering
affidavit. It was Vuclip’s breach of this term, Ms. Southwood
contended, on which
eTV was entitled to cancel.
17
Ms. Southwood also contended that,
even if eTV was not entitled to cancel, and the agreements fall to be
reinstated, eTV would still
be entitled to broadcast the licenced
material on the eVOD platform. This was argued to be so because,
properly construed, the
exclusivity granted in the licence agreements
does not extend to episodes of the soap operas broadcast on eVOD
before
they appear on eTV’s linear channel. The licence agreements
only grant exclusivity once Vuclip has broadcast them on Viu
for the
first time. Because Vuclip has not pleaded when it first broadcast
any of the episodes over which it claims exclusive rights,
it has not
made out a case against eTV for the removal of any episodes that
appear on eVOD
after
they have been broadcast on the linear channel either.
18
It is accordingly necessary for me
to determine two issues in this application. The first is whether eTV
is likely to be able to
demonstrate at arbitration that there is an
implied or tacit term in the licence agreements of the nature that
eTV contends. If
there is likely such a term, then eTV has thrown
serious doubt on any
prima facie
right to the interim relief Vuclip may have. If there is unlikely to
be such a term, then eTV was probably not entitled to cancel
the
agreement, and Vuclip has made out a strong case that its arbitration
claim will succeed.
19
The second issue only arises if I
decide the first issue in Vuclip’s favour. In that event, I
must decide whether Vuclip will
be able to demonstrate at arbitration
that the licence agreements, on their own terms, prevent eTV from
broadcasting the exclusively
licenced episodes of the soap operas on
the eVOD platform.
20
I address each of these issues, in
turn, below, before considering whether Vuclip has met the remaining
requirements for an interim
interdict.
The
obligation to secure the content of the Viu platform
21
Neither Mr. Botha nor Ms. Southwood
were able to point me to any authority that suggests that it is a
rule of law, or a normal term
of video on demand streaming licences,
that a licensee must secure its platform to a standard necessary to
prevent piracy of the
content placed on the platform. Ms. Southwood
acknowledged that eTV was effectively asking me to find that there is
a rule, grounded
in legal policy, that applies to all contracts of
this nature, even though such a rule has never before – at
least as far
as anyone before me has been able to tell – been
declared.
22
Mr. Botha argued that this
acknowledgement in itself militated strongly against a finding for
eTV. I accept that it is far from
ideal that a Judge in urgent court
should be asked to make new law in a complex and developing
commercial field. However, that
does not in itself mean that eTV is
not entitled to import the term it contends for. The circumstances in
which the law must develop
and adapt to commercial or social needs
are seldom those that Judges would choose for themselves. It is no
argument against eTV’s
contentions that they have been raised
in a context that deprives me of the opportunity to consider the
matter at the length I
would like. The judicial function remains the
same: to determine on the facts before me whether the law supports
the conclusions
eTV urges. Where there are no facts to support those
conclusions, or where the exploration of the policy issues reaching
those
conclusions entails is not possible on the facts adduced, then
the conclusions cannot be accepted. But that is not the same as
saying that a Judge in urgent court should decline to entertain the
arguments presented in favour of the relevant conclusions altogether.
The
implied term alleged
23
An implied term is a rule of law
that creates rights and obligations between the parties to a
particular class of contract, unless
those contracting parties agree
to exclude it. In other words, a court asked to formulate a new
implied term makes a new rule of
law which, at the very least, sets
the agreement to which the parties will default in the absence of a
contrary joint intention.
24
There are some implied terms that
may not be excluded by agreement, but that is not the sort of term
that eTV relies on.
25
To formulate a novel implied term is
to “make new law based on policy considerations” (
Anglo
Operations Ltd v Sandhurst Estates (Pty) Ltd
2006 (1) SA 350
(T) at 374F-H). The new rule of law eTV contends for
is that parties to a licence agreement to stream proprietary content
will
“secure the content of their respective platforms, which
includes the transmission of such content to subscribers, against
unauthorised access”.
26
The problem with this rule is that
it invites more questions than it answers. To what standard must the
parties’ platforms
be secured? Although Ms. Southwood submitted
that eTV does not contend for an absolute duty to prevent piracy of
licensed content,
that is the effect of the rule eTV identifies on
the facts of this case. Vuclip lost control of the licenced content
because of
a defect in its system. It wanted neither the defect nor
the loss of control. It was unable to prevent the Philosopher App
from
pirating the content within the 30 day period eTV afforded it.
Even if Vuclip had done everything naturally possible to secure its
platform, but had not been able to prevent the piracy, it would still
have been in breach of the implied term on which eTV relies.
27
There can be little doubt that the
technology available for the copying and dissemination of proprietary
content over the internet
is constantly developing. New internet
security measures, and new ways of evading those measures – not
just to protect proprietary
content, but to prevent a whole range of
hacking activities – are a constant, even banal, feature of
modern life. To impose
an absolute duty to prevent any loss of
proprietary content on parties to a licence agreement may well be to
make those agreements
a good deal less common. A licensee would take
on an almost impossible task: prevent any hack, from any source,
anywhere, or risk
the cancellation of the agreement. Few commercially
sensible licensees would assume such an obligation, unless the value
of the
licensed content were so high as to guarantee an instant
profit, whatever problems may later arise.
28
It is seldom the function of the law
to import a rule that would set a standard so high as to effectively
debilitate the market
to which it is meant to apply. Sometimes the
state regulates markets in the public interest, and those regulations
can narrow the
scope of, or exclude altogether, certain kinds of
market activity in order to meet a pressing social need. That sort of
activity
is of course subject to judicial oversight, but it is on a
fundamentally different footing to what is contended for in this
case.
29
What eTV says is that a court
should, as a matter of law, give what appears to be an unprecedented
level of assurance to an owner
of intellectual property that, in
every licence agreement for streaming video on demand content that
owner enters into, the licensee
will be obliged to effectively
guarantee that the content will not be pirated by third parties
because of a breach in the licensee’s
systems, whether or not
the breach was the result of any identified oversight, negligence, or
other fault on the part of the licensee.
30
Although neither party dealt with
the matter on a constitutional footing, public policy is of course
determined, in the first instance,
by the Constitution, 1996. The
licencing of intellectual property online is increasingly important
to the exercise of the right,
guaranteed in section 16 of the
Constitution, to “freedom of expression, which includes freedom
of the press and other media;
freedom to receive or impart
information or ideas; freedom of artistic creativity; and academic
freedom and freedom of scientific
research”.
31
To impose an impossible – or
even a very high – standard of security on a licensee risks
significantly curtailing the
constitutionally protected exchange of
ideas that takes place when content is licenced and shared over the
internet. It does not
matter that, in this case, the content
concerned is popular entertainment, rather than, say, scientific or
political commentary.
I am asked to formulate a rule of more general
application than a licence to stream soap operas. The duty to secure
the content,
at the level eTV pitches that duty, is one that could
have a far-reaching impact.
32
This impact must, of course be
balanced against eTV’s property rights in the licenced
material. These are weighty and important.
But no property right of
any sort is absolute. Nor can it expect the law to provide it with
absolute protection. Section 25 of
the Constitution confirms this.
That provision does not enjoin the law to go to ever greater lengths
to protect intellectual or
other property rights. It rather provides
a framework within which property rights – intellectual or
otherwise – must
be weighed and balanced against other social
needs.
33
Whatever those needs are, a licensor
is obviously not required to sit back and placidly accept the
likelihood that its licensed
content will inevitably be pirated. It
can bargain for a warranty that the licensee’s systems will be
fit to prevent piracy.
If the licensee accepts a standard that it is
not naturally impossible to reach, then, at least from the licensor’s
perspective,
so much the better. A licensor can also bargain for a
licensee to have a specific set of measures in place to secure its
systems,
and even an appropriately crafted set of due diligence
standards that require those measures to be reviewed and updated. It
can
also bargain for a set of remedial measures to be taken by the
parties if piracy eventuates.
34
But it was accepted by both parties
that the licence agreements do not contain provisions –
express, implied or tacit –
of this nature, and eTV offered no
argument on how the implied term it urged me to import compared to
these less drastic alternatives.
This was no doubt because the
alternatives lie in the particular bargains that may be reached in
specific contexts. What eTV wants
instead is a general rule of law on
the terms it specifies.
35
I am not satisfied that eTV has a
realistic chance of establishing that there is such a rule at
arbitration. eTV licenced its intellectual
property to Vuclip. In
doing so, it assumed at least some risk that its content may be
pirated while under Vuclip’s control.
The question at
arbitration is really what level of assurance eTV was entitled to
that Vuclip’s systems could protect the
licenced content.
Instead of addressing this question, eTV bets the house on an implied
term that is so severe that it would have
to trump almost all of the
contrary policy concerns I have outlined above, and perhaps many more
that, in the context of this urgent
application, neither I nor the
parties have been able to consider.
36
I am not persuaded, in these
circumstances, that eTV’s arguments for the importation of the
implied term have thrown much
doubt on Vuclip’s right to
enforce the licence agreements.
The
tacit term alleged
37
Anticipating the possibility that I
would reach this conclusion, eTV argued, in the alternative, that
there is a tacit term in the
licence agreements in this case, of
exactly the same nature as the implied term it argues for.
38
A tacit term is “one so
self-evident as to go without saying”. It can be “actual
or imputed”. It is actual
if the parties thought about it but
did not “bother to declare their assent”. It is imputed
if the parties did not
consider it, but would have agreed to it had
it been present to their minds when the agreement was negotiated. The
onus of proving
that there is a tacit term of either type is on the
party alleging its existence (
Wilkins v
Voges NO
[1994] ZASCA 53
;
1994 (3) SA 130
(A) at 136H to
137B).
39
A tacit term is unlikely to be
imported into an agreement unless it is to some extent entailed by
the express terms (
Hamlyn & Co v
Wood & Co
[1891] 2 QB 488
at 491).
The meaning of the express terms must be interpreted, where
appropriate, in the light of the purpose and contents of the
agreement as a whole, and in light of the circumstances in which the
agreement was made (
Natal Joint
Municipal Pension Fund v Endumeni Municipality
2012 (4) SA 593
(SCA) at para 18).
40
The exercise is not merely
linguistic. This is classically illustrated by the officious
bystander test. If an officious bystander
peered over the shoulders
of the parties to the agreement during their negotiations, and asked
them whether they intended the tacit
term argued for to be part of
the agreement, they would, if the tacit term was truly part of the
agreement, have said so. They
would further have told the officious
bystander that he was being officious: that the term is so obvious
that they need not make
it explicit.
41
The licensing agreements in this
case are not entirely silent on what is to be done in case of the
licenced content being subject
to piracy. Clause 4.2 of the
agreements deals with infringement of the copyright held over the
licenced material. That clause places
the primary obligation to deal
with those infringements on eTV, although Vuclip is under a duty to
render reasonable assistance
when eTV calls upon it to do so. It is
on the basis of Clause 4.2 that Mr. Botha argued that it was eTV that
was required to pursue
the Philosopher App, albeit with Vuclip’s
assistance.
42
Ms. Southwood argued that clause 4.2
does not apply to the situation in which the parties find themselves.
The target of the tacit
term that Ms. Southwood argued for was not
copyright infringement at all, but the integrity of the systems that
the parties put
in place to prevent the content being pirated by
third parties. Clause 4.2 applies only where there is actually an
infringement
– presumably one unrelated to a defect in Vuclip’s
systems. In that case eTV must use its reasonable endeavours to
address such an infringement. But, as I understood the argument,
where the infringement results from a defect in Vuclip’s
systems, the tacit term requiring the parties to secure those systems
applies to the exclusion of clause 4.2.
43
The problem with this argument is
that is assumes its own premises. It interprets clause 4.2 as if the
tacit term is already part
of the agreement. It is not really an
argument in favour of an interpretation that favours the importation
of the tacit term. On
its face, apart from any term that may be
imported into the agreement, clause 4.2 appears to me to require eTV
to take the lead
in combatting the Philosopher App’s piracy,
assisted where necessary by Vuclip. It does not entitle eTV to cancel
the contract
merely because the piracy emanated from a defect in
Vuclip’s systems. While the standard of reasonable endeavours
is quite
vague, and does not provide eTV with the level of assurance
it says it needs, that is what the agreements say.
44
This fact is relevant to eTV’s
argument that there is a tacit term in the agreements that requires
the parties to “secure
the content of their respective
platforms, which includes the transmission of such content to
subscribers, against unauthorised
access”. While such a term
does not directly contradict the infringement regime set up in clause
4.2, it does narrow the
scope of that regime significantly. The
effect of the tacit term eTV contends for is that, where a copyright
infringement results
from piracy made possible by Vuclip’s own
systems, it can either cancel the contract, or trigger the
infringement regime
in clause 4.2.
45
This sets up a conflict between the
express terms of the agreement, and the tacit term eTV argues for.
The tacit term carves out
a special set of circumstances in which the
express infringement regime will not apply.
46
I have some doubt about whether eTV
can contend that the obligation to secure Vuclip’s systems to
prevent the interception
and piracy of the licenced content is so
obvious as to be necessarily implied in face of an agreement that
accepts that the content
may fall into the hands of third parties,
and sets out that it is eTV that must take the lead combatting any
resultant copyright
infringement in co-operation with Vuclip when it
does.
47
I need not finally decide the
matter, since the question of whether there is a tacit term of the
sort contended for is likely to
be one of the principal issues in the
arbitration that is contemplated. I have not heard the evidence
necessary to finally decide
whether there is such a tacit term, and I
do not think it would be appropriate to express a final view in those
circumstances.
48
It is enough that eTV bears the onus
of establishing the existence of such a term, and there is some room
for doubt about whether
that onus can be discharged. As such, I am
not persuaded that eTV has established that it is so likely to be
able to import the
tacit term it argues for that it has thrown
serious doubt on Vuclip’s
prima
facie
right to enforce the licence
agreements.
eVOD
and the express terms of the agreement
49
I now turn to consider whether
Vuclip is entitled to an order directing eTV to remove the
exclusively licenced content from its
eVOD platform.
50
eTV’s eVOD platform has two
features of relevance to this case. The first is the “Fast
Forward” feature. The second
is the “Catch-up”
feature. The Fast Forward feature allows users to view episodes of
the soap operas before they are
broadcast on eTV’s linear
channel. The Catch-up feature makes them available after they are
broadcast.
51
Ms. Southwood argued that, even if
Vuclip had demonstrated that eTV lacked the right to cancel the
license agreements, it was not
entitled to an order directing eTV to
remove the episodes of the soap operas to which Vuclip had exclusive
rights under the license
agreements.
52
In respect of the Fast Forward
function, it was argued that Vuclip’s exclusivity only kicks in
after
the
relevant episode is broadcast on eTV’s linear channel. But, Ms.
Southwood argued, it is in the nature of the Fast Forward
function
that episodes of the soap operas become available
before
they appear on the linear channel.
53
The answer to this is that neither
the Fast Forward function, nor eVOD itself, existed at the time the
license agreements were entered
into, and so could hardly have been
in the contemplation of the parties when the terms of Vuclip’s
exclusivity were negotiated.
Ms. Southwood submitted that the express
terms of the agreement nonetheless definitively exclude any right on
the part of Vuclip
to exclusivity before linear transmission.
54
I do not have the comfort of that
certainty. It seems to me artificial to give an agreement a meaning
that no-one would have contemplated
at the time it was entered into.
eVOD did not exist at the time the agreement was entered into, and
the circumstances in which
the agreement was concluded are clearly
relevant to its interpretation, unless the words used are
dispositive. Given that the words
used in the agreement do not
address the possibility of eVOD – or any like service –
coming into existence, they cannot
be dispositive, and Vuclip has an
arguable case that it has the exclusive right to broadcast the
relevant episodes, the Fast Forward
function notwithstanding.
55
As to the Catch-up function, it
seems to me that the impact of that function – which, again,
was not in existence at the time
the agreements were entered into –
is something to be determined at arbitration. Vuclip has at least an
arguable case that
its exclusivity rights are not affected by eVOD,
whether or not it has alleged the date on which it first broadcast
the relevant
episodes.
The
requirements for interim relief
56
Vuclip has accordingly demonstrated
at least a
prima facie
right to an interdict enforcing the agreement pending arbitration in
the terms sought in its notice of motion. In my assessment,
eTV’s
arguments that the licence agreements contain the implied or tacit
terms it alleges do not throw “serious doubt”
on Vuclip’s
case at arbitration (
Webster v Mitchell
1948 (1) SA 1186
(W) at 1189).
57
It is clear to me that Vuclip has
also met all of the other requirements for an interim interdict. On
the test of irreparable harm,
it is harm enough, in my view, that
Vuclip is losing the value of what it bargained for, and that this
loss in ongoing. The broadcast
of the soap operas is central to
Vuclip’s South African business. There was no serious
submission to the contrary emanating
from eTV.
58
I am not satisfied that damages are
an adequate surrogate for the specific performance that Vuclip seeks
in this case. There was
virtually no argument to the contrary. Vuclip
has no realistic remedial alternative to an interdict.
59
As to the balance of convenience,
this is not a case where, as Ms. Southwood framed matters, eTV is
being asked to sit back and
allow its intellectual property to be
pirated because of a weakness in Vuclip’s systems. Vuclip’s
and eTV’s interests
are aligned in this respect. It helps
neither of them to allow the piracy to continue, and there is no
reason why Vuclip does not
have at least as potent an incentive to
address the issue as eTV, at least for so long as the agreements
subsist. I was informed
during argument that Vuclip’s latest
efforts to prevent the unauthorised reproduction of the soap opera
episodes on the Philosopher
App appear, for the time being, to have
been successful. There is no reason why that success will not endure,
especially if the
parties co-operate to maintain it.
The
strike out applications, the application to introduce further
affidavits and costs
60
In response to eTV’s
formulation of the alleged implied or tacit term on which it relied
in its answering affidavit, Vuclip
introduced new facts in reply
about its ongoing efforts to secure its systems against piracy. That
was met by eTV with an application
to strike out and an affidavit
pleading over, to which Vuclip then replied. I am asked to deal with
the striking out application,
and the applications to file the
supplementary affidavits.
61
The rule against new matter in reply
is not absolute. A court may consider new matter in a replying
affidavit if it is just to do
so, having regard, in particular to
“(i) whether all the facts necessary to determine the new
matter raised in the replying
affidavit were placed before the court;
(ii) whether the determination of the new matter will prejudice the
respondent in a manner
that could not be put right by orders in
respect of postponement and costs; (iii) whether the new matter was
known to the applicant
when the application was launched; and (iv)
whether the disallowance of the new matter will result in unnecessary
waste of costs”
(
Mostert v
Firstrand Bank
2018 (4) SA 443
(SCA) at
para 13).
62
In this case, neither party has
suggested that there is any prejudice to the new matter that would
not be cured by the admission
of the supplementary affidavits. Much
of the new matter deals with facts that have only recently come into
existence. There is
no suggestion that there is anything more to be
said, at this stage, about whether Vuclip can secure its systems
against piracy.
The situation is fluid, and the question is really
about what standard it can be held to, rather than what it is in fact
doing
to prevent piracy.
63
In these circumstances, the
application to strike out will be dismissed, and the applications to
introduce further affidavits will
both be granted. The costs in both
matters will be costs in the main application.
Costs
in the main application
64
Vuclip says that the cancellation of
the agreements was contrived to permit the licenced content to be
placed on the eVOD platform,
which was launched shortly after eTV
purported to cancel the agreements. As a result, Mr. Botha submitted,
eTV should pay the costs
of the application on the attorney and
client scale.
65
However, I do not have the evidence
on the papers necessary to endorse this conclusion, and cannot make a
punitive costs order at
this stage. Mr. Botha asked, in the event
that I took this view, that I order costs to be reserved for
determination at the arbitration,
or that they be costs in the
arbitration itself.
66
If eTV was entitled to cancel the
agreement, then it did not matter why it did so. If, on the other
hand, eTV was not entitled to
cancel the agreement, it may be
relevant to the scale of costs in the arbitration whether it did so
to frustrate Vuclip’s
rights, or was simply mistaken about
Vuclip’s obligations towards it. In these circumstances, it
seems to me that the question
of costs is so tightly bound up in the
merits of the claim at arbitration, that costs in this application
should follow the outcome
of the arbitration.
Order
67
For all of these reasons, I make the
following order –
67.1
The forms, service and time periods
prescribed by the Uniform Rules of Court are dispensed with and this
application is heard as
one of urgency in terms of Rule 6 (12).
67.2
The application to strike out is dismissed.
67.3
Both parties’ applications to file
supplementary affidavits are granted.
67.4
Pending the final determination of an
arbitration to be launched within one month of this order –
67.4.1
the video on demand licence agreements
between the applicant and the respondent in relation to the drama
series “Scandal”
and “Imbewu” (“the
agreements”) are reinstated and declared to be in full force
and effect;
67.4.2
the respondent is directed to comply with
all of its obligations under the agreements; and
67.4.3
the respondent is ordered to remove from
its e-Video-on-Demand platform (“eVOD”) any episodes of
“Scandal”
and “Imbewu” identified in the
agreements as having been purchased by the applicant on an exclusive
basis and which
fall within the exclusive period as defined in the
agreements.
67.5
The costs in this application will be costs
in the arbitration.
S
D J WILSON
Acting
Judge of the High Court
This
judgment was prepared and authored by Acting Judge Wilson. It is
handed down electronically by circulation to the parties or
their
legal representatives by email and by uploading it to the electronic
file of this matter on Caselines. The date for hand-down
is deemed to
be 24 August 2021.
HEARD
ON:
20 August 2021
DECIDED
ON:
24 August 2021
For
the Applicant:
A Botha SC
Instructed
by Webber
Wentzel Attorneys
For
the Respondent:
F Southwood SC
K
Turner
Instructed
by Rosengarten & Feinberg
Attorneys