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[2017] ZASCA 113
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Costa NO and Others v Arvum Exports (Pty) Limited and Others (969/2016) [2017] ZASCA 113 (21 September 2017)
THE SUPREME COURT OF
APPEAL OF SOUTH AFRICA
JUDGMENT
Not
reportable
Case No: 969/2016
In
the matter between:
ZELDA
MARGARETHA COSTA NO
FIRST
APPELLANT
DANIEL
COETZEE NO
SECOND
APPELLANT
JOHANNES
NICOLAAS JACOBUS
VAN
DER WESTHUIZEN
NO
THIRD APPELLANT
[in
their capacities as trustees for the time
being
of the KLEIN BOTRIVIER TRUST,
IT852/2007]
ESTATE
OF THE LATE ALBERTO COSTA
FOURTH
APPELLANT
and
ARVUM
EXPORTS (PTY) LIMITED
(formerly
Unlimited Fruit (Pty) Ltd)
(Registration
Number 2000/013347/07) FIRST
RESPONDENT
UNLIMITED
FRUIT (PTY) LIMITED
(formerly
Arvum Exports (Pty) Ltd)
(Registration
Number 2008/028031/07)
SECOND RESPONDENT
ARVUM
FINANCE (PTY) LIMITED
(Registration
Number 2007/022356/07)
THIRD RESPONDENT
Neutral
Citation:
Costa
NO v Arvum Exports
(969/2016)
[2017] ZASCA 113
(21 September 2017)
Coram:
Lewis,
Leach and Saldulker JJA and Lamont and Schippers AJJA
Heard:
5
September 2017
Delivered:
21 September 2017
Summary:
Trust:
a resolution of trustees of a family trust, that authorized one
trustee to ‘sign all the documentation’, does
not
authorize the conclusion of two business agreements when read in
context; no ostensible authority arises where an agent, and
not the
principal, makes a misrepresentation as to authority.
Plant
breeders’ rights: rights not infringed where there is no
propagation of a fruit tree varietal.
ORDER
On
appeal from:
The
full court of the Western Cape Division of the High Court, Cape Town
(Savage and Yekiso JJ concurring and Veldhuizen J dissenting
sitting
as court of appeal).
The
appeal is upheld with the costs of two counsel. The order of the
court a quo is replaced with:
‘
1
The appeal is upheld with the costs of two counsel.
2
The application brought by Arvum Exports (Pty) Ltd, Unlimited Fruit
(Pty) Ltd and Arvum Finance (Pty) Ltd is dismissed with the
costs of
two counsel where so employed.’
JUDGMENT
Lewis
JA (Leach and Saldulker JJA and Lamont and Schippers AJJA concurring)
[1]
The late Mr Alberto Costa was a successful farmer, who ran a large
farming enterprise in the Western Cape that extended over
several
farms. He was murdered on 18 February 2011. The appellants are the
trustees of the Klein Botrivier Trust (the KB trust):
Mr Costa’s
widow, Mrs Zelda Costa, his former financial adviser, Mr Daniel
Coetzee, and Mr Johannes van der Westhuizen (the
latter was made a
trustee after Mr Costa’s death) and the estate of Mr Costa of
which Mrs Costa is the executor. The respondents
are three associated
companies, Arvum Exports (Pty) Ltd, Unlimited Fruit (Pty) Ltd and
Arvum Finance (Pty) Ltd, to which I shall
refer collectively as the
‘Fruit Group’.
Litigation
history
[2]
The litigation that preceded this appeal concerned the supply of
fruit by the KB trust to the Fruit Group. The principal question
at
issue is whether Mr Costa had authority, on behalf of all the
trustees, to enter into two agreements with the Fruit Group. Some
time after Mr Costa’s death in 2011, the trust advised the
Fruit Group that it disputed Mr Costa’s authority to conclude
the agreements (the basic details of which shall be set out later)
and refused to perform in terms of them. The Fruit Group responded
by
bringing an urgent application in the Western Cape High Court
declaring the agreements binding on the trustees, and for an order
for performance, and, in the alternative, if the agreements were not
binding, an order for the enforcement of rights in a variety
of plum
tree known as ‘Flavor Fall’ in terms of the Plant
Breeders’ Rights Act 15 of 1976.
[3]
The application was heard by Binns-Ward J, who found that the Fruit
Group had established a prima facie right to the relief
sought, but
referred the questions whether Mr Costa had actual authority to
conclude the agreements, and the possible abuse of
the trust form by
Mr and Mrs Costa and Mr Coetzee, to oral evidence. Binns-Ward J also
granted an interim interdict against the
trustees, requiring them to
supply particular fruit to the Fruit Group in terms of the one
agreement pending the determination
of the application. His judgment
was handed down on 23 November 2012. Prior to that the Fruit Group
had sought an interim interdict
compelling the delivery of fruit, but
that fell away when Binns-Ward J handed down his judgment.
[4]
The KB trust complied with the order compelling it to supply fruit,
but the Fruit Group did not make any payment to the trust,
maintaining that it was entitled to set off the payment due against
payments due to it by the KB trust. It accordingly brought
an
application against the Fruit Group for an order that the agreements
had been validly cancelled as the Fruit Group was in breach
of the
agreements. The claim was conditional on a finding that the trustees
were bound by the agreements.
[5]
The two applications were heard together by Cloete J, who also heard
the oral evidence of Mrs Costa and Mr Coetzee for the KB
trust, and
the evidence of a former farm manager, Mr C Burger, who had worked
for Mr Costa, led by the Fruit Group. Cloete J sat
for several days
in October and November 2013, and handed down judgment in December
2013. She found that Mr Costa had had actual
authority to conclude
the agreements, and even if she were wrong in that respect, had
ostensible authority. She dismissed the application
by the KB trust
on the basis that because it was in breach of the agreements, it was
not entitled to cancel them even if the Fruit
Group were in breach
itself. Cloete J also found that the Fruit Group was entitled to
protection under the Act, and granted an
order interdicting the KB
trust and the trustees from transferring possession or control of any
of the fruit, trees, bud stock
or root; or disposing of, or
commercially exploiting or selling, any of the Flavor Fall variety to
any person other than the Fruit
Group. The interdictory relief
was granted despite the fact that it was sought only in the
alternative, in the event of the
agreements not being binding. Cloete
J gave the KB trust leave to appeal to a full court of the division
against her order.
[6]
A majority of the full court (Savage J, Yekiso J concurring) upheld
the decision of Cloete J, also finding that Mr Costa had
actual
authority (and if not, ostensible authority) to conclude the
agreements. Veldhuizen J dissented on the basis that Mr Costa
did not
have authority from the other trustees to conclude the agreements in
question, and could not enforce any plant breeder’s
rights as
the Fruit Group had not proved any actual or threatened infringement
by the trust. Special leave to appeal against the
judgment of the
majority of the full court was granted by this court.
The
background to the conclusion of the agreements
[7]
As indicated in the introductory paragraph, Mr Costa ran a large
farming operation on several farms. He had supplied fruit to
the
Fruit Group over a number of years. He wished to expand his orchards
and had discussed ways of doing this with the representatives
of the
Fruit Group over a couple of years. His father, Luigi Costa, had
formed a family trust, the Alberto Costa trust (the AC
trust), with
Mr Costa and other family members as trustees and income and capital
beneficiaries. The AC trust owned a farm ‘Boter
Kloof’
which was purchased by it in 2002.
[8]
In 2007 Mr Costa formed the KB trust, also designated as a family
trust. At that stage, the trustees of the AC trust were the
same as
those of the KB trust. The capital beneficiaries were Mr and Mrs
Costa, their children, and two farm managers, Mr Burger
and Mr M
Visagie. In March 2007, the trustees of the KB trust signed a
resolution authorizing the purchase by the KB trust of the
farm Klein
Botrivier. The farm was transferred to the KB trust in May 2007.
[9]
Mr N J Steenkamp, who deposed to the founding affidavit in the Fruit
Group’s application, said that Mr Costa had approached
him in
2007 with a request that the Fruit Group finance the development of
the farm Botterkloof, with fresh plantings. Mr
Steenkamp did not know at the time that Botterkloof actually
comprised two farms, Klein Botrivier, owned by the KB trust, and
portion of the farm Boterkloof, acquired by the AC Trust in May 2002.
Part of the proposal made by Mr Costa to Mr Steenkamp
was
that in return for financing, the Fruit Group would be appointed as
supply and marketing agents of the fruit grown on Botterkloof.
The
agreements that Mr Costa and the Fruit Group concluded
[10]
Negotiations between Mr Costa and the Fruit Group continued from 2007
until 2009. In July 2009 representatives of the Fruit
Group and Mr
Costa signed two agreements. One was named a ‘Production Loan
Agreement’ (PLA). It was between two companies
in the Fruit
Group and, on the face of it, ‘the trustees at the time being
of the Klein Botrivier Trust’, represented
by Mr Costa who was
said to be duly authorized. Mr G J Malan signed on behalf of the
Fruit Group and Mr Costa signed, again on
the face of it, for the KB
trust. I shall assume for the purpose of describing the agreement
that the KB trust was party to it.
In summary, the obligations of the
Fruit Group were to advance agreed sums to the KB trust over a number
of years as a ‘production
loan’, to enable the KB trust
to facilitate and improve production on the farm Botterkloof. In turn
the KB trust would simultaneously
conclude a ‘Supply and
Marketing’ agreement (SMA) in terms of which the KB trust
would, for a period of ten years,
supply fruit to the Fruits Group
which would sell and export the fruit.
[11]
The SMA was, as I have said, also concluded in July 2009. The parties
were ‘Fruits Unlimited’ (Unlimited Fruit,
the second
respondent), represented by Mr Steenkamp, and ‘The trustees at
the time being of the Klein Botrivier Trust’
‘Herein
represented by its duly authorized trustee Alberto Costa’. The
cover page of the SMA also stated that Alberto
Costa ‘warranted
his authority’ to enter into the agreement on behalf of the KB
trust. For some reason, Mr Steenkamp
had inserted in handwriting,
above the typed name of the KB trustees, the name ‘Alberto
Costa’.
[12]
The SMA made detailed provision for the type, cultivar, quality and
quantity of fruit to be supplied by the KB trust to the
Fruit Group.
As security for the amounts owed to the Fruit Group, the KB trust
granted a lien over the fruit, and ceded its rights
in the proceeds
to the Fruit Group. Both agreements were drafted by the Fruit Group’s
attorney, Basson Blackburn Inc.
[13]
Mr Steenkamp averred, and this was not controverted by Mrs Costa, who
deposed to the answering affidavit, that both agreements
were
implemented by the Fruit Group and the KB trust. The Fruit Group
advanced the sum of R733 354 to the KB trust under the PLA:
the money
was in fact paid by the Fruit Group to the nurseries that provided
the new fruit trees planted on Botterkloof. A significant
portion was
used for the planting of Flavor Fall trees in 2009. In turn, fruit
was supplied from the farm to the Fruit Group as
required under the
SMA. And even after Mr Costa’s death, fruit was supplied to the
Fruit Group in terms of the SMA. A farm
manager had been appointed to
take over Mr Costa’s work, and Mr Steenkamp had dealt with him
as the fruit producer.
[14]
Some months after Mr Costa’s death, Mr Steenkamp visited Mrs
Costa to condole with her about her husband’s death,
and they
had talked about the fruit production. Subsequently, in August 2011,
Mrs Costa advised Mr Marais, the technical adviser
of the Fruit
Group, that she wished to meet him with her co-trustee, Mr van der
Westhuizen. At the meeting, Mr Marais advised Mrs
Costa that she was
required to sign a non-propagation agreement in respect of the Flavor
Fall trees. She and Mr van der Westhuizen
had a number of queries
about this, and Mr Marais referred them to Mr Malan.
[15]
A meeting was held between Mr Malan and the two trustees on 20
September 2011, at the offices of Mr J Spamer, an attorney
representing the KB trust. Both the PLA and the SMA were discussed at
the meeting, and it is clear from an email sent by Mr Spamer
to Mr
Malan on the same day that the terms of the agreement were not
acceptable to Mrs Costa. Mr Spamer came away with the impression
that
Mr Malan was willing to amend some of the terms. Interestingly, he
stated that Mrs Costa’s commitment to the Fruit Group
was as
important to her as the Fruit Group’s ‘investment in the
Trust’.
[16]
Mr Malan responded the following day, indicating that he had agreed
to do no more than clarify terms and had not agreed to
change them.
He also asked Mr Spamer for the non-propagation agreement that Mrs
Costa had been requested to sign. Correspondence
ensued in respect of
the terms of the various agreements, as well as to rumours that
Botterkloof was going to be sold.
[17]
In May 2012, Mr Spamer wrote to Mr Malan explaining that it had taken
time for Mrs Costa to acquaint herself with the workings
of the AC
trust and the KB trust. He said that on investigation of the
agreements, of which the trustees had learned only after
Mr Costa’s
death, he had concluded that the agreements were invalid as Mrs Costa
and Mr Coetzee, the other trustees at the
time of their conclusion,
had not authorized Mr Costa to enter into them. Mr Spamer advised
that the resolution that Mr Costa had
furnished to the Fruit Group
before the signing of the PLA and SMA had been taken two years
previously, and did not authorize the
conclusion of the PLA and SMA
agreements in its terms.
[18]
While it is permissible for trustees to authorize one of them to act
on their behalf (
Nieuwoudt
& another NNO v Vrystaat Mielies (Edms) Bpk
2004 (3) SA 486
(SCA) paras 6 and 23) it is a question of fact
whether they have done so. The trust deed in this matter provided
(clauses 5.3 and
5.5) that unless otherwise provided in the trust
deed, decisions could be taken by a majority of the trustees present
at a meeting;
but a written resolution signed by all the trustees
would have the same effect as that taken by majority at a meeting.
There is
no doubt that the resolution on which the Fruit Group relied
was signed by all three trustees. The question is what meaning it
bore.
The
resolutions of the trust in issue
[19]
The records of the KB trust include two resolutions. The first –
and more important since it is the centre of the dispute
– is
reflected as an extract of the minutes of a meeting of the trustees
held on 8 March 2007. Mr Costa had sent it
by fax to Mr
Steenkamp before the agreements were signed. It read:
‘
Resolved
that:
a)
That
Alberto Costa in his capacity as trustee of the Klein Botrivier trust
852/2007 is hereby appointed and
authorized
to sign the necessary documentation.
’
(My
emphasis.)
I
shall refer to it as the first resolution for the sake of
convenience.
[20]
The second resolution, taken at the same meeting in respect of the
acquisition of the farm Klein Botrivier, is also signed
by the three
trustees. It stated (I shall not reproduce the format):
‘
Besluit
dat:
1
Die trust koop die volgende eiendom:
Die plaas Klein
Botrivier Nr 1022 in die Swartland Munisipaliteit, afdeling
Malmesbury, in die Wes-Kaap Provinsie;
Groot
198,4761 . . . hektaar
van
C G Smit Trust
vir
die bedrag van R5 700 000 . . . bekragtig.
2
Dat Alberto Costa in sy/haar hoedanigheid as ‘n trustee
gemagtig word om
alle
dokumente te onderteken wat nodig mag wees vir registrasie van die
oordrag van die bogenoemde eiendom aan Klein Botrivier Trust.
’
(My emphasis.)
[21]
There is no explanation as to what purpose the first resolution
served other than empowering Mr Costa to sign the documents
necessary
for the purchase and transfer. The second resolution did just that,
however. Both were made, and the extracts of the
meeting were signed,
at the very meeting at which the trustees of the KB trust resolved to
buy the farm, and which authorized Mr
Costa to sign the documentation
necessary for its transfer. Mr Costa may have believed that the first
resolution authorized him
to conclude the PLA and SMA with the Fruit
Group. And obviously Mr Steenkamp thought so too.
[22]
Cloete J in the court of first instance accepted that the resolution
was wide enough to empower Mr Costa to enter into those
contracts.
The majority of the full court agreed. Hence the finding that Mr
Costa had actual authority. And the Fruit Group contends
on appeal to
this court that they were correct. The KB trust argues otherwise.
The
interpretation of the first resolution
[23]
The plain wording of the resolution empowers Mr Costa to sign the
‘necessary documentation’. The obvious question
that
springs to mind is ‘necessary for what’? The meaning is
obscure. And so one must look to the context in which
the resolution
was taken in order to ascertain what the trustees’ intention
was.
[24]
In my view, the clear context was the acquisition of the farm Klein
Botrivier. The trustees, having resolved to purchase and
take
transfer of the farm, authorized Mr Costa to sign all documentation
necessary for that purpose. They did not confer upon him
the
authority to conclude business agreements with other parties. The
conclusion of business contracts, as opposed to the day-to-day
administration of a trust, is not something that trustees may
delegate to a person. They must decide what contracts to conclude.
Mrs Costa and Mr Coetzee denied that they were aware of the PLA and
the SMA, and thus could not have authorized them. Since the
dispute
was determined by way of application, Mrs Costa’s version must
be accepted:
National
Director of Public Prosecutions v Zuma
[2009] ZASCA 1
;
2009
(2) SA 277
(SCA) para 26.
[25]
That two issues were referred to oral evidence does not change the
fact that proceedings were brought by way of application:
Lekup
Prop Co No 4 (Pty) Ltd v Wright
2012 (5) SA 246
(SCA) para 32. The referral of issues to oral
evidence, as opposed to a referral to trial, means that the
affidavits stand as evidence.
In any event both Mrs Costa and Mr
Coetzee persisted when giving oral evidence in their denial of any
knowledge of the PLA and
SMA before Mr Costa’s death. There is
no reason to disbelieve them in the light of what is discussed later.
[26]
There are other indicia that Mr Costa was not authorized to conclude
the agreements by the other trustees, and that he had
in fact
contracted in his personal capacity. The KB trust was not a business
trust. Its sole function was to hold the farm. Indeed,
there was a
lease between Mr Costa and the KB trust in terms of which he hired
the farm. The trustees met annually and it is common
cause that there
was no contract other than the purchase of the farm Klein Botrivier
authorized by the trustees. The insertion
of Mr Costa’s name
above that of the trustees in the SMA, by Mr Steenkamp, leads to the
inference that even the Fruit Group
knew that it was contracting with
him in his personal capacity. Mr Steenkamp did not testify so no
other plausible explanation
is available.
[27]
The financial records of Mr Costa reveal that all payments by the
Fruit Group were made to his personal account. None was paid
by him
to the KB trust in turn. And the advances made in terms of the PLA
were paid directly to the nurseries that propagated the
fruit trees
planted on Botterkloof. Tellingly, the Fruit Group’s
attorney, Mr Blackburn, when faced with the statement
by Mr Spamer
that Mr Costa was not authorized to conclude the agreements, reacted
in such a way as to leave no doubt that his view
was that the
resolution did indeed not give Mr Costa authority for that purpose.
Moreover, when commenting on a draft of the SMA
as far back as
February 2008, Mr Blackburn had indicated that the first resolution
that Mr Costa had sent to the Fruit Group to
show his authority to
contract on behalf of the KBT was dated – it was taken ‘lank
gelede’. He did not, however,
comment on the adequacy of the
first resolution for the purpose of concluding the agreement.
[28]
While advising Mr Spamer that the Fruits Group had bona fide believed
that Mr Costa was authorized to conclude the agreements,
and had
performed in terms of them, Mr Blackburn in a letter dated 28 June
2012 said the following:
‘
For
present purposes, and if accepted that no resolution existed
authorizing Mr Costa to enter into the [PLA], such agreement was
indeed void
ab
initio
.
.
. .
As
far as the SMA is concerned we also accept the fact that no
resolution exists authorizing Mr Costa to enter into such an
agreement
on behalf of the Trust. That would then potentially also
lead thereto that the agreement be void
ab
initio
.’
[29]
Mr Blackburn assumed that Mr Costa had added his own name as a party
to the SMA. That was not so as Mr Steenkamp had made the
insertion.
Nothing much can turn on this, particularly as Mr Steenkamp did not
give evidence to explain why he had inserted the
name after the
agreement had been typed. Mr Blackburn then asserted as a fact that
the relationship ‘in respect to the SMA
was between Unlimited
Fruit and Alberto Costa personally. All payments were made to Mr
Costa directly into his bank account and
there was no question of the
involvement of the Trust at all.’ He suggested that there were
various legal permutations –
that the estate of Mr Costa was
bound, or that the KB trust was liable to an enrichment claim.
[30]
Mr Blackburn sought to retract these admissions in an affidavit
attached to the replying affidavit of Mr Steenkamp. He said
that
prior to making them he had not yet taken instructions from the Fruit
Group. That is plainly far-fetched, and in the absence
of a better
explanation (which he might have proffered had he given oral
evidence) can safely be ignored under the
Plascon-Evans
rules as to the assessment of evidence in application proceedings.
[31]
Thus if one interprets the first resolution in context, having regard
to the meeting at which it was passed, the fact that
the trustees had
agreed at the same time to purchase and take transfer of the farm
Klein Botrivier, the nature of the trust, the
fact that all payments
under the SMA had been made to Alberto directly, that Mr Costa had
himself invoiced the Fruit Group, and
Mr Blackburn’s conclusion
that it had not authorized the conclusion of the PLA and the SMA,
there can be little doubt that
it was not intended to deal with any
contract other than the purchase of the farm. Even the wording of the
resolution is such that
it cannot be construed as a general
authorization to enter into contacts: it is no more than an
authorization to sign documents
for a particular purpose – the
purchase and acquisition of Klein Botrivier. Nothing else, in the
context of the meeting of
8 March 2007, was anticipated by the
trustees. I conclude therefore that Mr Costa did not have actual
authority to conclude the
PLA and SMA on behalf of the KB trust.
Ostensible
authority
[32]
That brings me to the question whether the Fruit Group was entitled
to rely on a representation that he did have such authority
even if
it had not actually been given. Both Cloete J in the court of first
instance and the majority in the full court found that
if actual
authority had not been given, there was at least ostensible
authority. Relying on
NBS Bank Ltd v Cape Produce (Co) (Pty) Ltd
2002 (1) SA 396
(SCA), Cloete J said that the requirements for
ostensible authority are that there must be a representation, by
words or conduct,
by the principal, that the agent had the authority
to act; that the representation must be in a form that the principal
should
have accepted that third parties might reasonably rely on it;
actual reliance by the third party and resultant prejudice. (See also
Glofinco v Absa Bank Ltd t/a United Bank
paras 12 and 13 where
the requirements are repeated.)
[33]
Cloete J concluded that the requirements for establishing ostensible
authority had been satisfied: Mrs Costa and Mr Coetzee
left Mr Costa,
‘armed with the resolution’ to have free reign over the
business affairs of the [KBT]. And the
Fruit Group had
reasonably relied on that representation. However, in my view, the
Fruit Group could not reasonably have relied
on a vague resolution,
passed some two years prior to the conclusion of the agreements, and
which did not refer to any contract,
but only to ‘the necessary
documentation’.
[34]
The majority of the full court, finding apparently that Mr Costa had
himself made the representation that he was duly authorized,
was
clearly wrong in that he was not the principal, but merely the agent
of the other trustees. Only if Mrs Costa and Mr Coetzee
had
represented to the Fruit Group, by their words or conduct, that Mr
Costa was duly authorized, would ostensible authority have
possibly
been found. The Fruit Group has not shown any conduct on
their part that would lead to that conclusion.
[35]
I consider, therefore, that Mr Costa had neither actual nor
ostensible authority to enter into the PLA and the SMA and that
they
are not enforceable.
Abuse
of the trust form
[36]
Although no claim was made by the Fruit Group that the trustees were
to be held liable under the PLA and SMA, Binns-Ward J,
when the
application was first considered, considered that a possible basis
for liability was that the peculiar facts of the case
justified the
façade of the trusts being disregarded. He referred this
question to oral evidence, citing his decision in
Van
der Merwe NO & others v Hydraberg Hydraulics CC & others; Van
der Merwe NO & others v Bosman & others
2010 (5) SA 555
(WCC) in support of the principle that where a
trustee conducts the affairs of a trust, ignoring the distinction
between his personal
capacity and that of his capacity as a trustee,
the trustee might himself be liable for the apparent liability of a
trust.
[37]
As I see it, even if that is a principle generally recognized in
South African law, which this court need not determine here,
it is
only Mr Costa who would be held personally liable. And since he had
died, that is not possible. That argument need not detain
me any
longer.
[38]
I accordingly consider that the KB trust was not bound by either the
PLA or the SMA. The second application, brought by the
KB trust for a
declaration that the agreements had been validly cancelled, need not
therefore be considered.
The
Fruit Group’s claim to protection under the Plant Breeders’
Rights Act
[39]
The Fruit Group asserts a right to a ‘variety of inter-specific
plum’ called Flavor Fall. The proprietor of the
relevant Plant
Breeders’ registration for Flavor Fall is a Californian based
company, Zaiger’s Inc Genetics, which
is not a party to the
proceedings. Zaiger’s plant breeders’ rights in
respect of Flavor Fall are registered under
the Act in terms of a
certificate issued by the registrar under that Act. The South African
Plant Improvement Organization Trust
(SAPO) was licensed by Zaiger’s
to propagate Flavor Fall plum trees, and SAPO had in turn, in 2007,
licensed the Fruit Group
to exploit the variety. Flavor Fall trees
were planted on Botterkloof. The Fruit Group argued that if the PLA
and SMA were not
binding, then the KB trust was precluded from
dealing with the plums unless by agreement with the Fruit Group. The
argument before
the courts a quo was that the KB trust was not
entitled to ‘propagate’ the fruits.
[40]
On appeal to this court, the Fruit Group contends that ss 23 and 23A
of the Act preclude the KB trust from producing, marketing
or selling
Flavor Fall plums other than by way of prior licence under ss 25 or
27 of the Act. The SMA had authorized the KB trust
to produce and
supply Flavor Fall plums: once that agreement was not enforceable,
the KB trust is not so authorized. And the plums
can be supplied only
to the Fruit Group.
[41]
Before the courts a quo, the KB trust contested the Fruit Group’s
rights as licensees. Veldhuizen J, in his dissenting
judgment in the
full court, concluded that the mere presence of the trees on
Botterkloof did not constitute an infringement of
the Fruit Group’s
rights. There was no evidence of any infringement, actual or
threatened.
[42]
In this court, the Fruit Group contended that the KB trust was not
entitled to grow, harvest or otherwise commercially exploit
Flavor
Fall plums. The failure by it to give an undertaking not to breach
plant breeder’s rights amounted to an infringement
of that
right. The KB trust argues that the failure to give any undertaking
is irrelevant. The business of the trust was not that
of propagation
– the breeding of the varietal. Growing and supplying of the
fruit itself did not entail any breach of the
plant breeder’s
rights under the Act. That seems to me to be correct.
[43]
The Act deals with the propagation – the reproduction –
of plants. Section 23 deals with the reproduction of a
plant, not
with its fruit. Section 23A, which deals with infringement of a plant
breeder’s right, prohibits various acts
that entail
propagation. The Fruit Group has not demonstrated that the KB trust
at any time attempted, or intended, to propagate
Flavor Fall trees.
There was thus no act of infringement on the part of the KB nor any
threat apprehended. The Fruit Group was
accordingly not entitled to
the interdict that it sought.
[44]
In the circumstances the appeal is upheld with the costs of two
counsel. The order of the court a quo is replaced with:
‘
1
The appeal is upheld with the costs of two counsel.
2
The application brought by Arvum Exports (Pty) Ltd, Unlimited Fruit
(Pty) Ltd and Arvum Finance (Pty) Ltd is dismissed with the
costs of
two counsel where so employed.’
_______________________
C H Lewis
Judge
of Appeal
APPEARANCES
For
the Appellants:
W R E Duminy SC (with him I Joubert)
Instructed
by:
Spamer Triebel, Bellville c/o Kritzinger & Co, Cape Town
Symington
& De Kok Attorneys, Bloemfontein
For
the Respondents:
J G Dickerson SC (with him D van Reenen)
Instructed
by:
Basson Blackburn Inc, Paarl c/o De Klerk & Van Gend, Cape Town
Honey
Attorneys, Bloemfontein