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[2019] ZAWCHC 20
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Big Catch Fishing Tackle proprietary Limited and Others v Kemp and Others (17281/18) [2019] ZAWCHC 20 (5 March 2019)
Republic
of South Africa
IN
THE HIGH COURT OF SOUTH AFRICA
(WESTERN
CAPE DIVISION, CAPE TOWN)
Case No:
17281/18
In
the matter between:
BIG
CATCH FISHING TACKLE PROPRIETARY
LIMITED
First
Applicant
DAVID
IAN CHRISTIE
N.O.
Second
Applicant
TAMMY
PATRICIA CHRISTIE
N.O.
Third
Applicant
ANDRÉ
MINNIË
N.O.
Fourth
Applicant
DAVID
IAN
CHRISTIE
Fifth
Applicant
vs
JUSTIN
MILES
KEMP
First
Respondent
RICHARD
WALE
Second
Respondent
UPSTREAM
FLY
FISHING
Third
Respondent
WARREN
GRIFFITHS
Fourth
Respondent
Hearing:
19, 20 February 2019
Judgment:
5 March 2019
JUDGMENT
De Waal AJ:
[1]
This is an application
for interim relief pending the final determination of an action
instituted by the Applicants under Case Number
12277/2018 (“
the
action
”).
[2]
The action was launched
on 11 July 2018. The Respondents have pleaded to the
Applicants’ particulars of claim
but due to the complex factual
and legal nature of the claims, the parties were
ad
idem
that the
matter is unlikely to go to trial soon, and certainly not within the
next year.
[3]
The present application
was brought as one of urgency on 19 September 2018 and set
down by the Applicants for 2 October 2018.
On that
day, the matter was postponed for hearing on the semi-urgent roll on
19 and 20 February 2019. I became
seized of the
matter via the early allocation system which was triggered by the
volume of the papers. I should record that
in adjudicating this
matter, I was greatly assisted by the heads of argument and
subsequent notes on argument, compiled by counsel
for the Applicants
and counsel for the Respondents.
[4]
The background is that
on 2 August 2014, the First Applicant (“
Big
Catch
”)
bought a business which was trading as a supplier of
inter
alia
fishing
tackle, specialist fishing and fly fishing equipment and apparel.
The First Respondent (“
Kemp
”)
and the Second to Fourth Applicants (“
the
Trust
”)
became 50/50 shareholders in Big Catch and Kemp and the Fifth
Applicant (“
Christie
”)
became the directors of Big Catch.
[5]
By the time that the
troubles started the business of Big Catch included the arrangement,
marketing and hosting of fishing and fly
fishing tours for customers
in international waters and foreign territories as well as to inland
and offshore locations in South
Africa. In respect of the
former, the Applicants alleged that Kemp was specifically mandated by
Big Catch during 2015 to
2016 to expand its offering to fishing and
fly fishing in international waters and to “
investigate
and develop business opportunities
”
in this regard.
[6]
On 15 March 2018
Kemp resigned as director and employee of Big Catch. The
reasons for his resignation are in dispute:
6.1.
The Applicants contend
that it was discovered on or about 13 March 2018 that Kemp
had been acting in breach of his duties
and obligations towards Big
Catch and that he was basically channelling some of the internal
fishing business away from the company
to himself and that he
received payments into his own personal bank account(s).
6.2.
Kemp denies these
allegations. His version is that he approached Christie during
February 2018 to tell him that the company
could no longer
afford substantial salaries for both of them and that one of them
must buy the other out. When Kemp did not
accept Christie’s
offer for his 50% shareholding, the latter accused him of all sorts
of wrongdoing. Under duress and
coercion caused
inter
alia
by the laying
of criminal charges against him, Kemp decided to resign.
[7]
Whether Kemp acting
improperly or unlawfully whilst he was a director of Big Catch and,
if so, the extent to which Kemp will have
to disgorge any profit he
made, are matters to be determined in the action. The present
matter relates to the question of
whether Kemp and the other three
Respondents should be interdicted, essentially from competing with
Big Catch, until the action
is finally determined. In this
regard I should mention that the Second Respondent was an employee of
Big Catch until 23 March 2019
and he is now working with
Kemp. The Third and Fourth Respondents are in the international
fishing and fly fishing business
and they are accused by the
Applicants of being used by Kemp for purposes of the allegedly
unlawful activities.
[8]
In the action, the
Applicants are suing the Respondents for:
8.1.
R3 689 231.14
in respect of past damages; and
8.2.
R20 119 589.42
for future damages;
based on allegations
(amongst others) of misappropriation of fishing and fly fishing
tackle, equipment and apparel; unauthorised
direct payments of
commission income to Kemp; unaccounted sales of stock at discounted
rates; reckless transactions and payment
to customers; unauthorised
donations and sponsorships; and future loss of profits.
[9]
Important for present
purposes, is that the Applicants are also seeking wide-ranging
interdictory relief in the action against First
to Third
Respondents. The final interdicts sought in the action can be
summarised as follows:
9.1.
Interdicting and
restraining First to Third Respondents from hosting or engaging in
fishing charters and/or tours for fishing, including
fly fishing;
doing business or selling fishing, including fly fishing, tackle,
equipment, apparel and ancillary products to Big
Catch’s
customers and services providers, including but not limited to
Alphonse Island, Ocean Active, Eden Island and Tsimane
Lodge;
9.2.
Interdicting and
restraining First to Third Respondents from misappropriation of Big
Catch’s business, business opportunities,
including but not
limited to the use of the registered name or any configuration of the
names “
Big
Catch
”, “
Big
Catch Fly
”
and “
Big Catch
Tours
” with
or without any devices or logos used to depict Big Catch’s
business; and
9.3.
Interdicting and
restraining First to Third Respondents from doing business with,
approaching for business, or making contact with
any of Big Catch’s
customers, service providers or suppliers with whom Kemp and the
Second Respondent had contact whilst
they were engaged with or in the
employment of Big Catch (the time period of such engagement /
employment is defined in the particulars).
[10]
It is not entirely
clear to me how interdictory relief and future damages can be claimed
in the same action given that the former
should prevent the latter
from occurring, but this is fortunately not an aspect with which I am
required to deal.
[11]
Apart from two
differences (additions), which I deal with below, the relief sought
before me are interim interdicts formulated in
similar terms as the
final interdicts sought in the action. The additions are that,
in the present application, the Applicants
are also seeking the
following interim relief against Kemp (as shareholder) in terms of
s 163 of the Companies Act 71 of 2008
(“
the
Companies Act
&rdquo
;):
11.1.
Interdicting and restraining
Kemp from exercising any rights, including voting rights in Big
Catch; and
11.2.
Interdicting and restraining
Kemp from interfering in, or participating in, the management of Big
Catch in any manner.
Narrowing down the
relief sought
[12]
At the hearing of the
matter it became common cause that there was no evidence that any of
the Respondents were misappropriating
or using the trade names of Big
Catch. This part of the relief originally sought was
accordingly not pursued.
[13]
Similarly, it was
accepted that Kemp was not interfering with the management of Big
Catch and this part of the relief was also abandoned.
[14]
At the hearing there
was some debate about whether Kemp could be interdicted from
exercising any rights, including voting rights,
for an interim period
under
s 163(2)
of the
Companies Act and
whether such relief will
have any practical effect given the 50/50 split in shareholding and
the resignation of Kemp as director.
I thought I understood
Mr Möller, who appeared for the Applicants together with
Mr Benade, to have indicated that
the Applicants do not persist
with this part of the relief as well. But I must have been
mistaken because this aspect was
resuscitated in a post-hearing note
from counsel and I will accordingly deal with this aspect below.
[15]
The Applicants further
conditionally trimmed the remainder of the interdictory relief they
seek in response to an objection from
the Respondents, who was
represented by Mr Dickerson SC, to the wide and vague terms
on which the interim interdicts
were sought. Without conceding
that the relief sought was overbroad, counsel for the Applicants
suggested that if this were
a concern, the interim interdicts could
be trimmed down to apply only to the Respondents’ conducting
business with certain
individuals who are known past customers of Big
Catch (and identified as such in the papers) and certain entities
which are
known service providers of Big Catch, more
particularly Untamed Angling SA (that operate the Tsimane Lodge in
Bolivia) and Alphonse
Fishing (that operates Blue Safari Destinations
and Alphonse Island Lodge Destinations
inter
alia
in the
Seychelles).
Approach to interim
interdicts
[16]
The requirements for
and the approach to interim interdicts
pendent
lite
are well
established.
[17]
An applicant for an interim interdict
normally has to satisfy the following requirements:
17.1.
a
prima facie
right to the relief sought in the main case (the action in the
present instance);
17.2.
a well-grounded apprehension of irreparable harm
if the interim relief is not granted and the ultimate relief is
eventually granted;
17.3.
a balance of convenience in favour of granting of
the interim interdict;
17.4.
the absence
of any other adequate ordinary remedy.
[1]
[18]
The
different requirements should not be considered separately or in
isolation but in conjunction with one another in order to determine
whether the Court should exercise its discretion in favour of
granting the interim relief sought.
[2]
[19]
At the interim interdict stage, less is
required from an applicant than at the final interdict stage. It
is sufficient for
an applicant to show a
prima
facie
case though open to some doubt.
[20]
With
regard to factual disputes, the Court should consider those facts set
out by the applicant together with any facts set out
by respondent
which the applicant cannot dispute. On those facts, it should
then be determined whether, having regard to
the inherent
probabilities, the applicant should (not could) obtain final
relief.
[3]
If serious
doubt is thrown on the case of the applicant he cannot succeed in
obtaining temporary relief, for his right,
prima
facie
established, may only be open to “
some
doubt
”.
[21]
The
test of a
prima
facie
case does not only apply in respect of disputed factual issues, but
also in respect of legal issues which are in dispute. Where
the
legal issues are complex or in urgent matters where decisions on
legal issues have to be made without time to arrive at a final
considered view, it is only necessary for the Court to form a
prima
facie
view on the legal issues.
[4]
[22]
It
has been held that a practical and sensible approach for the Court is
to refrain from making any final legal findings in proceedings
for
interim relief unless this would result in the final disposal of
either the matter as a whole or a particular aspect thereof.
Failing
that, the mere expression by the Court of a
prima
facie
view on a particular aspect is of academic interest only and does not
advance the matter any further towards finality.
[5]
The final determination of legal issues is ultimately for the Court
hearing the proceedings for final relief.
[23]
With
reference to the balance of convenience, the Courts have applied the
so-called “
sliding-scale
”
test. In terms of this test, the stronger the prospects of success,
the less the need for the balance of convenience to
favour the
applicant. Conversely, the weaker the prospects of success, the
greater the need for the balance of convenience
to favour the
applicant.
[6]
[24]
The
court possesses a general and overriding discretion whether to grant
or refuse an application for interim relief. Such discretion
must be
exercised judicially upon consideration of all the facts.
[7]
Prima
facie
right
[25]
Reference
is made in the Applicants’ founding papers to the use of “
trade
secrets
”
and “
confidential
information
”;
to “
unlawful
competition
”
as well as an unsigned contract of employment between Big Catch and
the Second Respondent, which contains a restraint of
trade for a
period of eight months.
[8]
[26]
However, during the
course of the hearing, the Applicants pinned the legal basis for the
interdictory relief sought to one cause
of action only. In this
regard, the Applicants disavowed any reliance on contractual
obligations (the unsigned restraint
of trade) or delictual wrongs
(unlawful competition) and restricted their case, as far as the
existence of a
prima
facie
right is
concerned, to future breaches of fiduciary duties by Kemp and the
Second Respondent, and the contention that such breaches
would be
facilitated by Third and Fourth Respondents.
[27]
In this regard the
Applicants contend that the fiduciary duties of Kemp towards Big
Catch, flowing from his position as director,
and the fiduciary
duties of Second Respondent towards Big Catch flowing from his
position of employee, did not cease to exist when
Kemp resigned on
15 March 2018 and when the Second Respondent left the
employ of Big Catch on 23 March 2018.
The Applicants
contend that the fiduciary duties survived and that Kemp and the
Second Respondent may be interdicted from
breaching them by doing
business with known customers of Big Catch and known service
providers of Big Catch, as described above.
[28]
I should add that it is
common cause that both Kemp and Second Respondent owed fiduciary
duties to Big Catch before their resignation.
The question
relates to what happens to these duties
after
resignation or termination of employment.
[29]
The Applicants
essentially contend that a director or employee may not appropriate
any business opportunities of his former employer,
even after
resignation.
[30]
The Respondents accept
that certain features of the fiduciary duty of a director and an
employee survive the termination of employment
but contend that they
merely prevent the appropriation of business opportunities acquired
through the use of trade secrets or confidential
information; or
client lists or customer connections; or through the violation of
another interest of the former employer which
is worthy of
protection. Furthermore, the value of confidential information
diminishes over time and with it wanes the employer’s
interest
in preventing such information from being used by former directors or
employees. The Respondents contend that in
the post-resignation
period, the fiduciary duty is only breached when confidential
information is used whilst being commercially
useful. In this
regard, I was referred to the concept of “
springboarding
”
which entails not starting at the beginning in developing a technique
but using as a starting point the fruits of someone
else’s
labour. The Respondents contend that the “
springboard
”
conferred by confidential information is always limited in time. It
will almost never be longer than it will take
to gather the
information for one self.
[31]
In order to assist me
with choosing between what appears to be a fundamental difference in
approach, I was referred to a plethora
of cases by counsel for the
Applicants and the Respondents.
[32]
The Applicants referred
me to
dicta
in cases such as
Sibex
Construction (SA) (Pty) Ltd and Another v Injectaseal CC and Others
1988 (2) SA 54
(T)
at 66D-F;
Cyberscene
Ltd v i-Kiosk Internet & Information (Pty) Ltd
2000 (3) SA 806
(C) at paragraph 31;
Da
Silva v CH Chemicals (Pty) Ltd
[2008] ZASCA 110
;
2008 (6) SA 620
(SCA) at paragraphs 18 – 21;
Industrial
Developments Consultants v Cooley
[1972] 2 All ER 162)
at 175 a-c and 176 b-c. These were cited
in support of submissions that a strict ethic pervades this area of
law which
ethic disqualifies a director or senior officer from
usurping for himself or diverting to another person or company with
whom or
which he is associated a business opportunity even after his
resignation.
[33]
The Respondents also
rely on
Sibex, Da
Silva
and
Cyberscene
,
but further referred me to
Atlas
Organic Fertilizers v Pikkewyn Ghwano
1981 (2) SA 173
(T) at p193A-194A and 198C to 199D;
Bell
& Another v Lever Bros & Others
[1931] UKHL 2
;
1932 AC 161
(HL) at 195;
Meter
Systems Holdings Ltd v Venter & Another
1993 (1) SA 409
(W) at 426G to 432D and 428G-429A;
SA
Historical Mint (Pty) Ltd v Sutcliffe & Another
1983 (2) 84 (C) at 90D to 91B and
Symington
& Others v Pretoria-Oos Privaat Hospitaal Bedryfs (Pty) Ltd
[2005] 4 All SA 403
(SCA);
Multi
Tube Systems v Ponting & Others
1984
(3) 182 (D) at 189F to 190B;
Speith
& Another v Nagel
[1997] 3 All SA 316
(W) at 322 and
Knox
D’arcy Ltd & others v Jamieson & Others
1995 (2) SA 579
(W) at 613G to I. The Respondents further relied on
the work of Saner,
Agreements
in Restraint of Trade in South African Law
,
at pages 7-53 to 7-54.
[34]
In my view, the default position is that
an executive director or a senior employee may not carry on business
activities which fall
within the scope of his company’s
business during the time when he serves as director or works as
employee. The default
position however changes on resignation.
Then, in the absence of some special circumstance (restraint of
trade; use of confidential
information, etc.) the director or
employee does not commit a breach of his fiduciary duty merely
because he takes steps to ensure
that, on ceasing to be a director or
employee, he can continue to make a living even by setting up a
business in competition with
his former company or by joining a
competitor and then pursuing opportunities similar in nature to those
targeted by his former
company. This is how the legal position
is described in the seminal work of Blackman
et
al
Commentary on the
Companies Act
(Vol
2 at p. 8 –
180 – 1).
[35]
The description of the default by Blackman
et al
must be correct
because otherwise a director or senior employee would effectively
have to change careers every time he leaves a
company. I say
this because the position contended for by the Applicants would mean
that the director or employee would not
be able to continue working
in the same line of business after leaving his company. That
cannot be right. If that was
the general principle, there would
be no need for restraints of trade and the extensive jurisprudence
developed by our Courts in
order to ascertain whether such restraints
are reasonable. The common law fiduciary duties would have the
same effect as
a restraint. Moreover, if the Applicants are
correct, the law would sanction a very drastic invasion of a former
director
or employee’s s 22 constitutional right to
professional freedom.
[36]
I agree with the Respondents’
submissions that whilst the fiduciary duties of a director and
employee survive the termination
of the relationship with a company,
the content of that duty does not remain the same after resignation.
The duty will only
be breached after resignation if it involves the
use of confidential information or violates an interest of the
company that is
worthy of protection in some other way.
[37]
I further do not believe that the cases
referred to by the Applicants support the proposition they contend
for.
[38]
In
Sibex
Construction
, Goldstone J held at p. 66D
– E that a director or senior officer of a company is precluded
from usurping for himself
or diverting to another person or company
with whom he is associated a “
maturing
”
business opportunity which his company is “
actively
pursuing
”, even after his resignation,
where the resignation “
may fairly be
said to have been prompted or influenced by a wish to acquire for
himself the opportunity or where it was his position
with the company
rather than a fresh initiative that led him to the opportunity which
he later acquired
”. This
indicates that the fiduciary duty after resignation relates to
commercially valuable, confidential, information
obtained whilst the
person was director or senior employee.
[39]
It is so that in
Cyberscene
the Court held at paragraph 31 that the common law fiduciary
duty of directors subsists even after the appointment has ceased.
But the Court then went on to state that a director only acts in
breach of his fiduciary duty when he sabotages the company’s
contractual opportunities
or when he uses
confidential information
to advance the interest of a rival concern or his own business or to
prejudice the company. At paragraph 32 the Court
reiterates the principle established in
Sibex
and held that the fiduciary duty means that a director may not
interfere with
existing contracts
of his company or the “
maturing business
opportunities accruing to it
”. It
is not contended in the present case that Kemp and the other
Respondents are to be interdicted from appropriating
such existing
contracts or maturing business opportunities until the action is
heard and determined. Some may have been appropriated
but, as I
shall explain below, these relate to past events for which there is
no remedy other than disgorgement of profits. An
interdict
would not serve to prevent any harm to the Applicants as far as these
past events are concerned.
[40]
In
Da
Silva
the SCA held
at paragraph [20] that if a corporate opportunity is not one of
which the director became aware of whilst performing
his duties as
director but only arose after his resignation, he is at liberty in
the absence of explicit contractual restraints
to exploit it to the
full even though it falls within the scope of the company’s
business activities. The SCA recorded
in this paragraph that it
must be “
emphasised
that the expertise and experience acquired by a director during his
period of employment with the company and in general
even the
personal relationship established by him during that period belong to
him and not to the company
”.
The SCA also referred, in this regard, to
s 22
of the Bill of
Rights and the principle that all persons should in the interests of
society be productive and be permitted to engage
in trade and
commerce with their professions. For this reason, the SCA
stated that “
The
general policy of the courts is accordingly not to impose undue
restraints on post-resignation activities
”.
This, in my view, can only mean that a company that wishes to prevent
a director or employee from competing with
it after resignation
should either do so by way of imposing a reasonable restraint of
trade or it will have to persuade a Court
that it has an interest
worthy of protection, such as confidential information, client lists
or connections, that justifies an
interdict. In this regard,
counsel for the Respondents, correctly in my view, contended that, in
the absence of a restraint
of trade, the onus shifts to the
director’s former company to justify the interdict both in law
and in fact.
[41]
Turning to the
authorities referred to me by Respondents, I found the principles,
with respect, well explained in
Atlas
at p. 193, where Van Dijkhorst J reiterated that an
employee, upon termination of his employment, is free to draw upon
his knowledge, experience, memory and skill, howsoever gained,
provided he does not use, disclose or impinge upon any of the secret
processes or business secrets of his former employer.
Bell
,
referred to Van Dijkhorst J at p. 198 of
Atlas
,
referred to the principle in English law that a director may even
become a director of a rival company as long as he does not
disclose
information obtained confidentially by him as a director of the first
company. If that is what an
existing
director may do in English law, a resigned director should at least
be able to do the same.
[42]
In
Meter
Systems
, Stegmann J
undertook a comprehensive analysis of what constitutes unlawful
competition as far as the use of confidential
information is
concerned. The categories of information qualifying for
protection were set out and discussed. At 426J,
Stegmann J
held that when a fiduciary relationship is not based in contract, it
is “
necessary
to look to the law of delict, and in particular to the principles of
aquilian liability, in order to ascertain the extent
of the legal
duty to respect the confidentiality of information imparted or
received in confidence
”.
[43]
In
SA
Historical Mint
,
Van den Heever J held at 90J that “
there
is not and cannot be a general duty burdening an employee, whether
humble or at ‘top management’ level, not to
compete with
the company that formerly employed him
”.
It was further held that in the process of competing, the former
director may not “
steal
”
what is the company’s property, i.e. its trade secrets or
confidential internal business information or its energy
expended in
research efforts. Whether the former director is
misappropriating the rights of the company or merely using his
own
skill and knowledge or using general information is a factual
enquiry.
[44]
Multi Tube
deals with the question of when the
benefit of the “
springboard
”
or head start conferred by confidential information abates and
ultimately disappears. Broome J held at 189G that
the
unfair advantage of a head start is usually of limited duration and
that there must come a time when the matters in question
are no
longer secret and an interdict will then no longer be warranted.
[45]
Turning to the facts of
the present matter, the Applicants have referred in their papers,
read with the annexures to the papers,
to three instances where Kemp
has arranged international fly fishing trips for persons alleged to
be Big Catch customers to destinations
/ lodges operated by Big Catch
service providers. At least one of these opportunities appears
to have arisen prior to the
resignation of Kemp on 15 March 2018.
However, the problem for the Applicants in respect of these trips are
that
they have already taken place and if Kemp acted unlawfully, the
only remedy against him in respect of these trips is the disgorgement
of profits, which is what is sought from him in the trial. An
interdict cannot undo that which has already taken place.
[46]
The Applicants could
not point to a single trip to be undertaken by Kemp or any of the
other Respondents in the future which amounts
to a business
opportunity that accrued to Big Catch whilst Kemp was a director or
whilst Second Respondent was an employee.
The Applicants
further did not rely on the use of confidential information; trade
secrets; client lists or customer connections
as a ground for
protecting Big Catch against competition from Kemp. This, in my
view, is not surprising given that any head
start or “
springboard
”
conferred by such confidential information would have dissipated by
now, given that it is now almost a year after Kemp resigned.
After all, one is dealing in the present matter with the arrangement
of fly fishing tours to well-known destinations. In
my view, it
is unlikely in the extreme that knowledge about these destinations
(service providers) and customers interested in
visiting them cannot
be gained over a period of a year.
[47]
I now turn to deal
briefly with two other grounds on which the Applicants sought the
interdicts against the Respondents.
[48]
The first is a
shareholders agreement dated 8 April 2016 between Kemp and
Christie. In terms of this shareholders
agreement the two
undertook to spend an equal amount of time and effort in the business
and furthermore that they would endeavour
to try to ensure that the
one is in the shop if the other is away on leave to ensure the proper
and smooth running of the business.
Both parties would get an
equal salary based on each holding a 50% share in the business.
At the end of the agreement the
following is recorded:
“
The
shareholders shall at all times during the subsistence of this
agreement and their relationship to the company, bear to each
other
the utmost faith as is required by law to be borne to partners, the
one to the other.”
[49]
The Applicants relied
on this shareholders agreement, which they say have not been
cancelled, for the proposition that Kemp continues
to be bound to act
towards Christie as one partner must do to another partner.
[50]
In my view, this
argument fails at two levels:
50.1.
Firstly, the
shareholders agreement appears to me to deal with the relationship
between Kemp and Christie whilst they are both actively
running the
company. This is why the agreement records that the two shall
treat each other as partners during the subsistence
of the agreement
and
their
relationship to the company
.
Just as the duty to pay Kemp the same salary as Christie cannot
survive the termination of the relationship between Kemp
and the
company, the duty of Kemp to treat Christie as a partner, cannot
outlast the termination of the former’s working
relationship
with the company. When Big Catch is no longer paying him why
should Kemp continue to take business to the company?
50.2.
Secondly, it is in any
event not contended that Kemp and the other Respondents were
appropriating the business opportunities of
Christie. The
Applicants’ case has always been that the business
opportunities of Big Catch were being taken by Kemp
et
al
. The
shareholders’ agreement deals with the relationship between
Kemp and Christie and not with the relationship between
Kemp and Big
Catch. It is irrelevant in respect of the latter relationship,
which is the subject matter of the present dispute.
[51]
Finally, reliance was
placed on
s 163
of the
Companies Act. As
stated above, I
understood that it was accepted at the hearing of the matter that the
temporary relief sought on the basis of this
section in paragraph 2.2
of the notice of motion was not persisted with. However, even
if it was not abandoned, I do
not believe that there is any
justification for a temporary deprivation of a shareholder’s
rights under
s 163(2)
of the
Companies Act in
the present
matter. No facts were pleaded by the Applicants which
demonstrate that Kemp was even exercising his voting rights,
let
alone exercising those rights in a manner harmful to Big Catch.
Given this, I fail to see on what basis I should temporarily
deprive
Kemp of his voting rights.
[52]
It is tempting to
conclude with reference to the above analysis that the Applicants
have no prospects to obtain the final interdicts
they contend for in
the action. However, on reflection, I decided that it would not
be appropriate for me to make a final
determination on this aspect.
All the facts and the evidence are not before me and the
Applicants may still make out some
or other exceptional case for the
interdictory relief they seek at trial.
[53]
It suffices to say that
the Applicants’ prospects are in my view extremely weak insofar
as they seek interdictory relief against
future breaches of fiduciary
duties on the basis contended for in the application before me.
Irreparable harm;
no alternative remedy and the balance of convenience
[54]
In the circumstances of
the present matter the remaining three requirements for an interim
interdict may be considered together.
The main difficulty faced
by the Applicants in respect of all three requirements is that it
will be relatively easy for them to
claim their loss of profits due
to the appropriation of business opportunities with their known
customers and known service providers
at trial. The Applicants
will be entitled to require the Respondents to discover the details
of their trips with the known
customers and/or service providers of
Big Catch and if successful in the action, to disgorge the profits
made from those business
activities. This means that the
Applicants will not suffer irreparable harm if the interdicts are not
granted. They
also have an alternative remedy to recover their
losses.
[55]
The balance of
convenience weighs decisively against the Applicants. In this
regard it was correctly contended on behalf of
the Respondents that
they will not be able to recover any losses they will suffer as a
result of the granting of the interim interdict.
This is so
because the interdict will protect the Applicants from any claim from
the Respondents. In this regard it is significant
that the
Applicants have not provided the Respondents with an undertaking that
if the interim interdicts are not confirmed in the
action, they will
make good any losses that the Respondents have suffered. It is
in any event not clear how the Respondents
are to quantify these
losses. Their claim will be based on a guess of how many trips
they lost as a result of the interim
interdict.
[56]
For the reasons set out
above I do not believe that a proper case was made out for interim
interdictory relief.
Costs
[57]
I considered the
Applicants’ argument that costs in the present matter should
stand over for determination in the action.
I am however
disinclined to defer the task of determining the issue of the costs
of the present application to the presiding Judge
at trial. He
or she will then again have to trawl through the voluminous papers
filed in the present matter, which may well
be unrelated to the
issues to be decided in the trial, merely in order to determine the
issue of costs in the present proceedings.
[58]
Although costs remain
in the discretion of the Court, our courts have tended to award costs
against an applicant if an application
for interim relief is refused
whereas costs normally stand over if interim relief is granted.
There is no reason why this
should not apply in the present case.
[59]
For these reasons, I
have decided that the Trust and the Fifth Applicant shall be liable,
jointly and severally, to pay the Respondents’
costs in respect
of the present matter. I have not made an award of costs
against the First Applicant, as such an order would
obviously affect
the First Respondent as well, given that he is a 50% shareholder in
the First Applicant.
Orders
(i)
The application is
dismissed and the Second to Fourth Applicant, as trustees, and the
Fifth Applicant are liable to pay the Respondents’
costs,
jointly and severally.
______________
H J DE WAAL AJ
Acting Judge
of the High Court
Cape Town
5 March 2019
APPEARANCES
Applicants’
counsel: Advs
Möller
& Benade
Applicants’
attorneys: A Posthumus, Cape Town
Respondents’
counsel: Adv Dickerson SC
Respondents’
attorneys: Bowman Gilfillan Inc., Cape Town
[1]
Olympic
Passenger Service (Pty) Ltd v Ramlagan
1957 (2) SA 382
(D) at 383E-G;
Knox
D'Arcy Ltd and Others v Jamieson and Others
[1996] ZASCA 58
;
1996
(4) SA 348
(A) at 372E – G
[2]
Camps Bay
Residents and Ratepayers Association and Others v Augoustides and
Others
2009 (6) SA 190
(WCC) at para 9
[3]
Webster v
Mitchell
1948 (1) SA 1186
(W) at 1189 read with
Gool
v Minister of Justice
1955 (2) SA 682
(C) at 688 where the Court stated the following
regarding
Webster
v Mitchell:
“
With
the greatest respect, I am of opinion that the criterion prescribed
in this statement for the first branch of the inquiry
thus outlined
is somewhat too favourably expressed towards the applicant for an
interdict. In my view the criterion on an applicant's
own averred or
admitted facts is: should (not could) the applicant on those facts
obtain final relief at the trial. Subject to
that qualification, I
respectfully agree that the approach outlined in Webster v Mitchell,
supra, is the correct approach for
ordinary interdict applications.”
[4]
Tony
Rahme Marketing Agencies SA (Pty) Ltd v Greater Johannesburg
Transitional Metropolitan Council
1997
(4) SA 213
(W) at 215C-216C;
Ward
v Cape Peninsula Ice Skating Club
1998 (2) SA 487
(C) at 497B-498H;
Zulu
v Minister of Defence
[2005] ZAGPHC 16
;
2005 (6) SA 446
(T) at 459I-461G.
[5]
Geyser
v Nedbank
Ltd
2006 (5) SA 355
(W) at 359-360
[6]
Eriksen Motors
(Welkom) Ltd v Protea Motors, Warrenton
1973 3 SA 685
(A) at 691F – G
[7]
Camps Bay
Residents and Ratepayers Association and Others v Augoustides
(supra)
at
para 9
[8]
Even if the
contract was enforceable (which is doubtful) the restraint would
have expired by 22 November 2018 and would
accordingly not
have assisted the Applicants.