Special New Fruit Licensing Limited and Others v Colours Fruit (South Africa) (Pty) Limited and Others (6811/16) [2019] ZAWCHC 83; [2020] 1 All SA 523 (WCC) (8 July 2019)

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[2019] ZAWCHC 83
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Special New Fruit Licensing Limited and Others v Colours Fruit (South Africa) (Pty) Limited and Others (6811/16) [2019] ZAWCHC 83; [2020] 1 All SA 523 (WCC) (8 July 2019)

IN THE HIGH
COURT OF SOUTH AFRICA
(WESTERN
CAPE DIVISION, CAPE TOWN)
CASE
NO: 6811/16
In the matter
between:
SPECIAL NEW
FRUIT LICENSING
LIMITED
First
Plaintiff
ANDREW JAMES
PEAR
N.O.
Second
Plaintiff
MICHAEL
STEPHEN ELLIOT SOLOMONS
N.O.
Third
Plaintiff
SPECIAL NEW
FRUIT LICENSING (SOUTH AFRICA)
(PTY)
LTD
Fourth
Plaintiff
and
COLOURS FRUIT
(SOUTH AFRICA) (PTY) LIMITED
First
Defendant
RE: INC
INNOVATION (PTY)
LIMITED
Second
Defendant
ADRIAAN
REEDER VAN
WYK
Third
Defendant
LIEZEL
KRIEGLER
Fourth
Defendant
VOOR-GROENBERG
KWEKERY
CC
Fifth
Defendant
OLYVENBOOM
BOERDERY (PTY)
LIMITED
Sixth
Defendant
BOSMAN ADAMS
(PTY) LTD LIMITED
trading as
LELIENFONTEIN
NURSERY
Seventh
Defendant
DE FYNNE
KWEKERY
CC
Eighth
Defendant
WESTCAPE
BIOTECH (PTY)
LIMITED
Ninth
Defendant
Court
:
Acting Justice CS Hendricks
Heard
:
11, 12, 13, 14, 18, 19 March 2019 and 3 May 2019.
Delivered
:
8 July 2019
JUDGMENT
INTRODUCTION:
[1]
The plaintiffs claim by way of action
declaratory and interdictory relief against the first, second and
third defendants the ownership
and plant breeders’ rights in
respect of certain plant materials.
[2]
The plaintiffs contend that the disputed
plant materials belonged to Vitis Limited (“Vitis”), a
company registered in
the United Kingdom and which was subsequently
liquidated. The first plaintiff, Special New Fruit Licensing Limited
(“SNFL”),
acquired the rights to the disputed plant
materials from Vitis in terms of an asset sale agreement concluded
with the second and
third plaintiffs, the duly-appointed liquidators
of Vitis.
[3]
According to the first, second and third
defendants, the disputed plant materials were not created in terms of
an agreement between
Vitis and first defendant (“Colors SA”).
Instead, the disputed materials
were
created by Colors SA for its own account and benefit since the
service agreement with Vitis was non-exclusive and because the

service agreement was varied during January 2011.
[4]
The fourth defendant, Liezel Kriegler,
agreed to an order in terms of which she acknowledged the validity of
the plaintiffs’
claims. The fifth to ninth defendants did not
oppose the plaintiffs’ claim.
RELEVANT
BACKGROUND:
[5]
The first plaintiff is a company
registered and incorporated under the laws of England and Wales.
[6]
The fourth plaintiff, Special New Fruit
Licensing South Africa (Proprietary) Limited (“SNFL (SA)”),
is a wholly-owned
subsidiary of Special New Fruit Licensing (SNFL)
registered in South Africa. SNFL is a wholly-owned subsidiary of MM
(UK) Limited
(“MM (UK)”), a company also registered and
incorporated under the laws of England and Wales, which in turn is a
wholly-owned
subsidiary of AMC Group Fresh & Juices S.A.
(formerly AMC Grupo Alimentaciὁn Fresco y Muñoz S.A)
(“AMC”),
a company registered and incorporated under the
laws of Spain.
[7]
Vitis was incorporated as a
special-purpose vehicle for a joint venture between SNFL and another
UK-based company, Colors Fruit
(UK) Limited (“Colors UK”)
for the purpose of breeding, developing, testing and exploiting new
table-grape varieties
(“the Vitis breeding programme”),
for which Vitis acquired the grape-breeding programmes of Schachar
Karniel (“Karniel”),
an Israeli breeder of grapes, as
well as the rights to use certain plant material from the so-called
“Sheehan varieties”.
[8]
SNFL and Colors UK each held 50% of the
issued share capital in Vitis and each was entitled to appoint two
directors to the board
of Vitis. Although Colors UK was not
associated with Colors SA, it was not disputed that the third
defendant, Mr Riaan Van Wyk
(“Van Wyk”) was the principal
directing mind behind Colors UK.
CENTRAL
ISSUES FOR DETERMINATION:
[9]
The
issues that arose for determination were: first, whether
the
disputed plant materials, being projects 7 to 9 were produced in
terms of a Vitis breeding programme and for the benefit of
Vitis or
whether it was produced for Colors SA’s own account and benefit
with the knowledge and approval of Vitis and SNFL;
and secondly, the o
wnership
of the disputed plant materials and all intellectual property rights
attached to it.
[1]
[10]
Depending on which of the above
competing contentions ultimately prevailed, the court has to
pronounce on the first and second defendant’s
conditional
counterclaims, alternative counterclaims of unjustified enrichment
and the plaintiffs’ special plea of prescription.
THE EVIDENCE:
[11]
I will first set out what was common
cause and thereafter deal with the evidence relevant to the central
issues in dispute.
[12]
Vitis and
Colors SA concluded a sub-licence
agreement in terms of which Colors SA would render table-grape
breeding and related services to Vitis
and recharge the costs for such services to Vitis. The grape
breeding, in its essence, entailed
the producing of plant material in
the form of seedlings from crosses. In terms of the aforesaid
agreement Colors SA conducted
breeding projects for the benefit of
Vitis. The rights granted by Vitis to Colors SA entailed:
(a)
an exclusive
right (to the exclusion of both AMC and any third party) “to
obtain from AMC all the propagating samples of all
new vegetative
material bred and/or developed by Sheehan Genetics and received by
AMC from time to time, so that Colors Fruit may
(i) test, plant and
cultivate them; (ii) obtain their products; and (iii) secure their
statutory protection in the form of registration
of plant breeders'
rights in the name of Sheehan Genetics within the defined territory
(“Planting and Cultivation Rights”);
and
(b) a
non-exclusive right to use the intellectual property rights of which
Sheehan Genetics was the proprietor, to market and distribute
the
products in the agreed distribution territory (“Marketing and
Distribution Sub-Licence”).
[13]
It was common cause that the plant
material produced during projects 1 to 6 and DAFB belongs to Vitis.
The plant material produced
by Colors SA during projects 7 to 9
formed the subject matter of these proceedings.
[14]
It is the plaintiffs’ case that a
tacit agreement existed between Vitis and Colors SA on,
inter-alia
,
the following terms:
(a)
Colors SA
agreed to carry out breeding and render related services in South
Africa on behalf of Vitis and recharge the costs incurred
to Vitis;
(b)
All plant
material used in or produced as a result of the South African
breeding programme (“the South African plant materials”),

including therefore all plant material of the Sheehan varieties used
as “parent plant” material for breeding purposes
and all
plant material bred from such ultimate “parent plants”,
would be owned by Vitis;
(c)
All
intellectual property rights, including the right to file
applications for plant breeders’ rights in South Africa and

elsewhere, attaching to the South African plant materials, would be
owned by Vitis;
(d)
Colors SA would protect, maintain and
not alienate the South African plant materials;
(e)
Colors SA would account to Vitis
inter-alia
in respect of the location of the South African plant materials, the
parent plants of the South African plant materials and the
source of
such parent materials and all and any other records of any nature
pertaining to the breeding of such plant materials;
(f)
Colors SA would give all necessary
assistance to Vitis and its agents to apply for and obtain the
appropriate intellectual property
registration and/or protection for
the South African plant materials in any jurisdiction in the world in
which Vitis in its absolute
discretion required such registration
and/or protection;
(g)
In the event of the tacit agreement’s
termination or of Colors SA no longer providing services to Vitis for
the purposes of
the South African breeding programme, Colors SA would
return all the South African plant materials and breeding records to
Vitis.
[15]
I propose firstly to summarize what I
regard as the relevant evidence and to evaluate certain of the
witnesses in question. In doing
so I must emphasise that such
assessments have been made after a consideration of all the evidence
heard and in the light of the
arguments advanced by counsel in
relation to the probabilities and credibility of their respective
witnesses.
Plaintiffs’
Case:
[16]
Plaintiffs led the evidence of Ian
Duncan Macintyre (“Macintyre”) and James Nelson
(“Nelson”). Macintyre
holds a degree in Horticulture from
the University of Strathclyde, Glasgow. He became a director of SNFL
during 2004 and a director
of Vitis in 2006. He was also a director
of Sheehan Genetics LLC from 2007 to 2014. At the time of the hearing
he occupied the
position of chairman of the board of managers of
Sheehan Genetics LLC. I understand under Californian law a company
may either
have a board of directors or a board of managers.
According to him a board of managers is essentially the same as a
board of directors.
[17]
Nelson was initially appointed as
commercial manager and later progressed to commercial director of
Colors UK around early 2009.
He became a director of Vitis on 1 March
2011 and resigned on 9 June 2014. Liezel Kriegler (“Kriegler”)
became a director
of Vitis on 9 June 2014 and she resigned on 14
January 2015. Gerrit Nieuwoudt (“Nieuwoudt”) later
replaced Kriegler.
[18]
Nelson explained that the reason behind
having a Colors entity registered in the UK was threefold. Firstly,
the idea was to take
control of the shipping, the UK cost centre and
supply chain. Secondly, to lodge any intellectual property or brand
value in the
UK and thirdly to manage sales and monies within the UK.
Nelson confirmed that Colors UK is ultimately owned by the Jersey
based
Re: Inc Trust and that the beneficiaries of that trust include
the shareholders of Colors Holdings.
[19]
Macintyre broadly described the
different phases of grape breeding which include
hybridisation,
crossing, evaluation and ultimately commercial exploitation. It was
not in dispute that plant material was bred in
California, USA. It
was then dispatched as small pieces of Budwood directly from
California or via Spain to Colors SA.
Colors
SA would receive, plant, monitor and evaluate the plant material in
South African growing conditions. Colors SA performed
these services
in terms of the abovementioned
sub-licence agreement and was effectively a
service provider to Vitis. Macintyre
confirmed that he was the main person who acted on behalf of Vitis
during the meetings with
Colors SA when the proposed grape-breeding
projects were discussed. Either Van Wyk, Deon Coetzee (“Coetzee”)
or Barbara
Malan (“Malan”) attended meetings on behalf of
Colors SA. Although there were other persons, Van Wyk was the main
person
acting for Colors SA.
[20]
Under the sub-licence agreement Colors
SA contracted with third parties to provide certain services to it.
Genetwister was one of
the service providers who provided services in
respect of projects 1 and 6 and although they also provided services
in respect
of project 7, Colors SA averred that those services were
for its own account and not that of Vitis. Colors SA was expected to
prepare
monthly accounts for expenses incurred on behalf of Vitis and
present same for payment to the latter.
Clause 4.2 of the sub-licence agreement
provides that the sub-licence would last only for as long as the head
licence agreement
between Sheehan and
AMC existed.
[21]
According
to
Macintyre
the head licence was terminated on 3 December 2010
because
Sheehan could no longer provide the services.
[2]
He confirmed the acquisition by SNFL of Sheehan’s interest in
Sheehan Genetics LLC.
[3]
On
21
January 2011 Macintyre informed Mr Ian
Carstens
(“Carstens”), the then CEO of Colors SA, that the head
licence had terminated and that that event automatically
led to the
termination of the sub-licence.
[4]
The salient parts of the letter reads:
“
As you
know, AMC Grupo Alimentacion, Fresco y Zumos, S.A. (“AMC”)
has served notice of termination, based on irredeemable
breach by
Sheehan Genetics LLC, of the head licence dated 10th May 1998 between
AMC and Sheehan Genetics governing the commercialisation
of Sheehan
Genetics plant varieties.
When the head license terminates,
which will be on 3rd March 2011, this will automatically terminate
the sub license dated 10th
March 2003 that Colors has with AMC
.
Sheehan
Genetics recognises the support provided by Colors in the development
of our plant varieties in South Africa.
We are now considering
proposals as to how our two companies may work together in the future
although it is not our plan to offer
any exclusive licenses for
planting and cultivation rights in the territory
.
On the
termination of the sub license on 3rd March 2011
Sheehan Genetics
needs to be ready to take on the responsibility of controlling all
the plant material and rights that it owns in
South Africa and
Namibia
. To do this we will need Colors to work with us over the
next few weeks…….
I can also
confirm that SNFL Ltd was successful in its negotiations with the
estate of the late Tim Sheehan and has now acquired
the estate’s
shareholding – SNFL Ltd now owns 100% of Sheehan Genetics LLC
…”
(own emphasis).
[22]
Macintyre
stressed that they neither had knowledge of Colors SA breeding for
its own account nor did they approve that Colors SA
might do so. He
denied having given approval personally or through SNFL. According to
him, the only company that was legally entitled
to use Sheehan
material was Vitis. On 3 March 2011 he reminded Colors SA of the
termination stating:
[5]
“
As
previously advised, the sub licence dated 10th March 2003 between AMC
and Colors, terminates today, 3rd March 2011.
As of today,
please make sure that any matters to do with Sheehan Genetics
varieties are addressed to me at Sheehan Genetics, including

enquiries from growers who were licensed by Colors for either
commercial production or trials.
Also
please confirm that you no longer hold or control any Sheehan
Genetics plant material and that you have handed over all the

information that you have on the development of the varieties and the
information on the steps that you have taken to protect the

intellectual property in the varieties
”
(own emphasis).
[23]
Macintyre
referred
to a chart
[6]
dated November 2011 wherein reference was made to project 7. He
confirmed that the plant material referred to in the chart belonged

to Sheehan which Vitis provided to Colors SA. Macintyre identified a
further chart relating to project 8 and confirmed that the
crosses
were either 100% Sheehan or 50% Sheehan.
[7]
The aforementioned evidence was not challenged by the defendants. In
Macintyre’s view at some stage an employee of Colors
SA, Gerrit
Nieuwoudt, (“Nieuwoudt”) was working with Sheehan and
Vitis material unlawfully. Macintyre stressed that
projects 7 to 9
were simply a continuation of projects 1 to 6 and DAFB and that
genetics constituted a key element linking all
the projects.
[24]
Macintyre conceded during cross
examination that the Sheehan sub-licence and the Vitis agreement were
not linked to each other.
He further
conceded
that Colors SA also embarked upon other breeding projects that were
not linked to the sub-licence. Macintyre further confirmed
that the
decision to partner with Colors SA was influenced by the fact that
Colors SA operated in a country with the right climate
and had the
right staff with the ability and skills for grape-breeding. Macintyre
conceded that no written service level agreement
was concluded in
terms of which Colors SA would become a service provider to Vitis. To
his mind the parties had an “
understanding”
and he understood that to be an agreement.
[25]
The witness conceded that the crossings
done in respect of project 7 could not have started before the
judgment of Davis J on 16
September 2011. However, according to
Macintyre, the planning for project 7 would have started before that
date. Macintyre also
conceded that, insofar as it relates to the
judgment of Davis J and the appeal judgment of Griesel J, project 7
to 9 were not relevant.
As I understood the concession, the witness
confirmed that those judgments did not concern the plant material
used in projects
7 to 9. The witness also confirmed that the
arbitration dispute in the UK was principally about the cancellation
of the Sheehan
sub-licence. It did not concern projects 7 to 9.
[26]
According to Macintyre, the reference to
non-exclusive right to the intellectual property in the sub-licence
agreement meant that
the intellectual property rights had to be
registered in the name of Sheehan. To the question whether it was his
understanding
that Colors SA would breed exclusively for Vitis,
Macintyre responded: “
I do not
believe the word exclusively was used, it may well have been
understood.”
[27]
Macintyre denied that the sub-licence
was cancelled in order to take Colors SA out of the market insofar as
it related to Sheehan.
According to the witness the late Tim
Sheehan’s knowledge and experience in terms of growing the
varieties and getting the
best out of them was irreplaceable. He
disagreed with the proposition that the termination of the
sub-licence could have been interpreted
by Van Wyk as a breach of
trust between Colors SA, Vitis and the AMC Group. Macintyre denied
the averment that Van Wyk informed
him on 6 February 2012 that Colors
SA was conducting grape breeding for its own account. In his words:
“
If
that is true, and I have no recollection of this, then almost
certainly, there would have been a number of questions about what

that breeding programme involved, what the parental material being
used in it was, and it would almost certainly, because Mr Barber,

although he gets a few things wrong, is quite a diligent note taker,
and I do not see in the minutes of the meeting”.
[28]
Macintyre impressed as an honest and
credible witness. He was consistent in his testimony and unshaken
during cross-examination.
Where necessary he made the appropriate
concessions and where he could not remember something, he was candid.
At the stage when
the plaintiffs closed their case his credibility
remained intact.
[29]
Nelson corroborated Macintyre’s
version that neither Van Wyk nor Kriegler, who were directors of
Colors SA and Colors UK at
various times, informed him that Colors SA
embarked upon grape-breeding programme for its own account. He was
not aware of any
Vitis
board
resolution
to that effect. He wrote to
Macintyre,
copying Van Wyk,
on 22 December 2011,
stating:
“
As
Colors is a partner and financial investor in the Vitis programme,
we’ve had a
report
on how the programme has progressed
in the last 12 months
every year as
well as a
budget
that we have used in our accounts to justify the long-term valuation
of the breeding programme. To this end I wonder if you and
Deon could
update Colors and indeed the Vitis board on how things are going?
”
(own emphasis).
[30]
Nelson emphasized
that Van Wyk
was a director of Vitis from
1 March 2011 until its liquidation during 2015 and that Van Wyk never
informed the Vitis board that
Colors SA had embarked on project 7 for
the benefit of itself
rather than Vitis. He further confirmed
that he attended the meeting at the Bridge in the UK during February
2012 and could not
recall that it was ever brought up during that
meeting that Colors SA was breeding for its own account. The witness
testified that
it raised doubt that project 7 was not a Vitis project
if one considered the content of paragraph 4(i) of the 6 February
2012 minutes
stating that “
the existing
varieties to be split between Colors and MM (UK) (1/ 2, 3/4, 5/6, 7
etc)”.
It was put to Nelson that the
reference to project 7 in the sequence was a mistake.
[31]
Nelson conceded that projects 7 to 9 were
not in plots as at 21 February 2012 when the parties discussed
proposals to take Vitis
forward. Thus, the split of genetic plant
material that was proposed in the proposal of 21 February 2012 did
not concern projects
7 to 9. Nelson disagreed with the proposition
that projects 7 to 9 were not varieties because they were not
classified as varieties
at the time when the parties discussed their
respective proposals. According to Nelson, “
a
variety is a biological entity at whatever stage, it becomes a named
variety when it is named so
….”
He also testified and referred to various correspondence and notes of
discussions about the splitting or
sharing of assets. The
discussions, as he understood it, were intended to form the basis for
an agreement on how the parties should
proceed.
[32]
There was nothing in the demeanour of
Nelson to suggest that he was being untruthful. My impression was
that he was giving honest
evidence based on the best of his
recollection from his engagements with the defendants. When he
testified about matters within
his direct knowledge his evidence was
clear and credible. His evidence was concise and I have no hesitation
in accepting it in
full. The contradictions between his and
Macintyre’s versions were not material. There is no reason to
find that he was not
a credible witness.
Defendants’
Case
:
[33]
Van Wyk
studied law at
Stellenbosch University and practised as an attorney for 13 years.
Family farming operations presented him with an
opportunity to make a
career change and he started out planting plums and citrus fruits. He
started Colors SA with four friends
during 1997 and their first
export of fruit to the UK occurred during October 1997. Colors SA
soon became involved in a number
of breeding programmes which
included apples, pears, pomegranates, figs and passion fruit. Colors
SA, in addition, acted as intellectual
property managers for breeders
around the world on products such as peaches, nectarines and plums.
[34]
Colors SA sought to focus on top-end
supermarkets in the UK and then later across the world. During 1998
one of their UK customers
gave Van Wyk the names Alvaro Muñoz
(“Muñoz”) and David Haresign (“Haresign”)
as persons
to contact to get South African citrus into the UK
markets.
A meeting was
arranged with
Muñoz and Haresign
which culminated into an agreement in terms of which Colors SA
commenced supplying their company with
fruit from 1998 until 2011.
T
he
business with MM (UK), as they were later called, was very lucrative
for Colors SA. The UK sales value of the fruit that Colors
SA
exported over the years was in the region of R1.8 billion.
[35]
During 2002 Muñoz invited Van Wyk
to travel with him to the USA to look at a breeding programme called
Sheehan Genetics which
was funded by the Muñoz’s group.
They travelled to the USA and met up with Tim Sheehan. The idea was
to add grape
breeding to the portfolio of Colors SA. Van Wyk
understood that, once one had Sheehan varieties, one had access to
the best customers
in the world. The programme provided Colors SA
with the right to supply Sheehan and also the right to supply other
standard varieties
which supermarkets around the world wanted.
[36]
Having observed the breeding programme,
which was still in its infant stage, a decision was made to commit an
investment of $20
000 per annum. Van Wyk confirmed that Sheehan
Genetics issued AMC the head licence to exploit Sheehan varieties and
that AMC then
concluded a sub–licence agreement with Colors SA.
[37]
The breeding in South Africa commenced
during 2008. Kriegler was responsible for the research and
development and Deon Coetzee (“Coetzee”)
was responsible
for table-grape breeding. The sub-licence allowed Colors SA to
receive Sheehan plant material in South Africa,
take it through
quarantine, plant it in trial plots, evaluate the varieties, convince
producers to plant these varieties on their
farms and market those
varieties around the world. Colors SA would draft budget or
management accounts and issue invoices for services
rendered on
behalf of Vitis who would in turn reimburse Colors SA for such
services. These were all expressly agreed terms of the
agreement.
[38]
The last invoice which Colors SA
presented to Vitis for services rendered was delivered during late
February 2011.  Invoices
submitted after February 2011 to Vitis
were unrelated to the services rendered under the sub-licence because
it concerned expenses
incurred on the Karniel varieties.  The
sub-license agreement did not include the Karniel varieties. Over the
years the Sheehan
varieties proved to be very good on a local and
international scale.
[39]
Tim Sheehan stopped breeding during
2000, filed for bankruptcy during 2004 and passed away during 2009.
Muñoz initially bought
a 49% shareholding of Sheehan Genetics
LLC and when Tim Sheehan passed away acquired the other 51% shares
from the deceased estate.
During September or October 2010 Muñoz
told Van Wyk that they wanted to buy back their sub-licence on the
Sheehan varieties.
No price for the proposed buy-back was discussed.
Van Wyk informed Muñoz that he intended to advise the board of
Colors
SA not to sell and Muñoz lost his temper in response
thereto.
[40]
AMC Group served its notice of
termination based on the irredeemable breach by Sheehan Genetics LLC
of the head licence. Van Wyk
described the turn of events as “
being
stabbed in the back
” and being
“
betrayed”
.
The cancellation of the head licence and the sub-licence presented a
total breakdown of trust between the AMC Group and the Colors
Group.
The termination meant losing the Sheehan export of varieties and
losing access to certain top-end retailers. According to
Van Wyk,
Colors SA lost a lot of money. The termination brought about the loss
of the opportunity to supply fruit to MM (UK) which
translated to
R3.6 million in commission. Colors SA further lost a strategically
important part of its business operations.
[41]
On 12 June 2013 Muñoz and his
team visited South Africa to discuss how the parties were going to
deal with the Sheehan and
other Vitis varieties and the proposed new
entity styled,
New Vitis
or
New Generation Vitis
.
The parties managed to produce a document which represented a
settlement proposal with regard to the Sheehan varieties and a
further document dealing with other Vitis varieties. Those
settlements were co-signed by Van Wyk and Muñoz. The idea was

that their respective lawyers would draft and present the parties
with the “
legal documents
”
for signature. The parties understood that the two documents
co-signed by them were still subject to final agreements. The
final
agreements were never finalized and signed.
[42]
During September 2013, the majority
shareholders in the Colors Group appointed additional external
directors as well as an independent
chairman to the board, Manie
Marais (“Marais”). For reasons irrelevant to these
proceedings, Van Wyk and Marais could
not see themselves working
together and Van Wyk asked Marais to facilitate an exit package for
him. Van Wyk stepped down as CEO
and informed Marais that he would no
longer be part of Colors SA. Van Wyk left and a number of people
resigned and left soon thereafter.
According to Van Wyk, Colors SA
was in chaos, as he put it, “
it
was the beginning of the end...”.
[43]
In response to Van Wyk’s departure
and with reference to the provisional agreements concluded of 12 June
2013, the attorneys
of SNFL informed Colors SA that Van Wyk’s
departure amounted to a material breach of his duty to act in good
faith and a
destruction of the goodwill. SNFL expressed the view that
they did not have confidence that the new management under Marais had

the necessary relationship with the growers or that they would be
able to provide the necessary technical support to the joint
venture
as initially envisaged. Van Wyk understood that the two settlement
agreements were cancelled as a result of him leaving
Colors SA.
[44]
Following Van Wyk’s departure Colors
SA were looking for buyers for the Sheehan varieties. Kriegler, Van
Wyk and his family
trust did not have enough money to buy the Sheehan
assets from Colors SA. Proceeding from one of the proposals that the
parties
would agree to split ownership of the Sheehan rights by
giving 50% to the AMC Group and 50% to the Colors Group, AMC offered
to
pay Colors SA R20 million for their 50%. Van Wyk confirmed that it
was understood that on receipt of the payment of R20 million,
he and
Colors SA would have no further rights or license to the Sheehan
varieties. AMC Group paid the R20 million. However, Van
Wyk stressed
the point that this sale did not include projects 7 to 9. Van Wyk was
willing to sell the 49% shares, which included
projects 7 to 9 and
other varieties, to the AMC Group for a further consideration of
R980 000.00 The latter proposed sale
never materialised.
[45]
Van Wyk referred to a final meeting held
at Cluver and Markotter Attorneys, Stellenbosch. According to Van Wyk
all that was left
was to decide whether AMC was going to invest and
buy 49% of the proposed new entity, which would include projects 7 to
9 and whether
the parties would transfer Vitis from England to South
Africa. Muñoz, Haresign, Kriegler and Van Wyk attended the
meeting.
Van Wyk was informed that the due diligence exercise
performed by Macintyre was unsuccessful and that Muñoz were no
longer
interested in doing business with the Colors Group. According
to Van Wyk he subsequently acquired the 49%.
[46]
Insofar as the counterclaim is concerned,
Van Wyk testified that during the period 2011 to 2014, Colors SA
incurred costs amounting
to R3 560 635 in performing the breeding and
related services. The amount represented the total cost that Colors
SA spent on projects
7 to 9. The expenses included research,
development, grape breeding, grape-breeder salaries and overhead
salaries. Van Wyk instructed
his financial manager, Mariechen Van Eck
(“Van Eck”), a qualified accountant, to calculate the
costs. She used their
Pastel program which was set up to
differentiate between grape breeding and other types of breeding. She
produced a full list of
costs and Van Wyk, Kriegler and Nieuwoudt
worked through it. They applied their minds and decided where the
respective costs should
be allocated.
[47]
Regarding the alternative claim based on
unjust enrichment, Van Wyk testified that Colors SA incurred a
portion of the costs totalling
an amount of R2 825 531 during the
period 2011 to 23 July 2014 in the
bona fide
but mistaken belief that Colors SA was the owner of the disputed
plant materials. He explained that over the period 1 May 2014
to 30
April 2016 Re: Inc incurred costs amounting to R1 137 481 in
performing breeding and related services in respect of the disputed

plant materials. The composition of that cost was set out in annexure
CC2.
[48]
I will deal with the assessment of the
probabilities and Van Wyk’s overall evidence later hereunder.
DISCUSSION:
The
pleadings
:
[49]
It
is apposite to preface the consideration of the evidence on the claim
and counterclaims with reference to the basic principles
applicable
to pleading. The law in this regard is fairly settled. The Supreme
Court of Appeal in
Minister
of Safety and Security v Slabbert
[2010] 2 All SA 474
(SCA)
at para [11] held as follows:
[8]
“
A
party has a duty to allege in the pleadings the material facts upon
which it relies. It is impermissible for a plaintiff to plead
a
particular case and seek to establish a different case at a trial. It
is equally not permissible for the Trial Court to have
recourse to
issues falling outside the pleadings when deciding the case.”
[50]
This
dictum has been cited with approval by the Constitutional Court in
Molusi
v Voges
2016 (3) SA 370
(CC)
at paragraph 28. See also
Lipshitz
and Shwartz, NNO v Markowitz
[9]
where
the court remarked as follows:
“
A
litigant cannot, as it were, throw a mass of material contained in
the record of an enquiry at the Court and his opponent, and
merely
invite them to read it so as to discover for themselves some cause of
action which might lurk therein, without identifying
it. If this were
permissible, the essence of our established practice which is
designed and which still evolves as a means of accurately
identifying
issues and conflicts so that the Court and the litigants should be
properly apprised of the relevant conflicts, would
be destroyed.”
[51]
A
party must be properly informed of the case he has to meet.
Consequently, a party has a duty to allege in his pleadings the
material
facts upon which he relies.
[10]
[52]
It is unfair to ambush one’s
opponent at trial by facing him with a case different to the one
presented in the pleadings.
Rule 22(2) of the Uniform Rules of Court
provides: “
The defendant shall
in his plea either admit or deny or confess and avoid all the
material facts alleged in the combined summons
or declaration or
state which of the said facts are not admitted and to what extent,
and shall clearly and concisely state all
material facts upon which
he relies
.” If a party has no
knowledge of assertions made by his opponent, he is not in a position
to either admit or deny the averments.
Hence, he may plead that he
does not admit certain facts. If a party pleads in this manner, he
must in terms of rule 22(2) of the
Uniform Rules of Court “
clearly
and concisely state all material facts upon which he relies
.”
[53]
I
will, nevertheless, evaluate defendant’s pleadings with a
measure of permissiveness and I accept that parties are not strictly

bound to it where it may prevent me from fully investigating the
facts.
[11]
[54]
The defendants
in
casu
submitted a list of admissions
shortly before the trial commenced which narrowed the issues in
dispute. It became common cause
that an agreement between Vitis and
Colors SA existed in terms of which the latter conducted grape
breeding in South Africa on
behalf of Vitis and that the parties did
not affix a timeframe to such an agreement. It was also no longer
disputed that the plant
materials relating to projects 1 to 6 and
DAFB and the rights thereto belonged to Vitis.
[55]
In light of the defendants’ list
of admissions, plaintiffs’ counsel submitted that the
defendants’ case, unavoidably
so, had to be that the agreement
had been terminated. As such, so the argument goes, it was incumbent
on the defendants to satisfy
the Court that the agreement was indeed
terminated and that the defendants failed to discharge that onus. The
plaintiffs further
submitted that the pleadings and evidence
presented on behalf of the defendants were inconsistent and
contradictory as to whether
the agreement was terminated by way of
consensus between Vitis and Colors SA, or by Colors SA on the basis
of material breach.
The evidence was further contradictory as to what
the material breach was on which Colors SA relied and whether the
breach was
committed by Vitis as a party to the agreement or by a
non-contracting party.
[56]
It
is well established that the purpose of permitting a party to call
for further particulars for trial is to prevent surprise.
[12]
In this case the plaintiffs made use of the opportunity to call for
further particulars long before they received the defendants’

list of admissions. Whilst I accept that the defendants’ list
of admissions curtailed the need for evidence on certain issues,
it
was filed shortly before the trial commenced. The plaintiffs would no
doubt have prepared their evidence and witnesses in accordance
with
the many issues disputed on the pleadings. The window to call for
particulars was long gone and the admissions raised more
questions
about the exact basis of the defendants’ defence. The
defendants’ litigation strategy ultimately had a bearing
on my
evaluation of costs.
[57]
Insofar as it related to the service
agreement that existed before January 2011 between Vitis and Colors
SA, defendant’s counsel
argued that the service agreement was
varied subsequent to February 2011 so that it subsequently had
limited application which
did not encompass conducting plant-breeding
activities on behalf of Vitis.
That
stance, according to plaintiff’s counsel, was also inconsistent
with when exactly the agreement was terminated as well
as the
suggestion that the agreement was terminated in part only. As an
alternative argument, defendant’s counsel submitted
that Vitis
released Colors SA from its primary obligations in terms of the
service agreement and that the service agreement was
terminated, save
for measures aimed at winding up the Vitis breeding activities.
[58]
Van Wyk could not explain why the
existence of the agreement that Colors SA would provide services to
Vitis was not specifically
pleaded and why it was not admitted. Van
Wyk said he relied on his attorneys to draft the pleadings. On being
reminded that the
denial of the agreement would have come from him
and not his attorneys, Van Wyk repeated the response that he relied
on his legal
team. Van Wyk could also not explain why the express
agreement which he testified about was not pleaded. The conclusion of
the
head licence was at all material times within Van Wyk’s
personal knowledge. Yet, it was pleaded that defendants had no
knowledge
of the head licence.
[59]
The defendants’ difficulty on the
pleadings was that they did not admit that an agreement existed.
There could thus be no
averment of termination. On the point that a
termination of an agreement must at the very least be communicated to
the other party,
Van Wyk replied that he was not a legal expert.
Blame was thus shifted to his legal team. Van Wyk’s response to
how he terminated
the service agreement was telling:
“
We did
not speak to them at all. We did not send them invoices of any kind.
We did not discuss with them the breeding parents that
we should use
for the next year. We did not send them a budget for the next year.
We did not send them management accounts. We
did not send them any
reports at the end of every month….”
[60]
I understood Van Wyk to aver that the
agreement was terminated by conduct. Having practiced as an attorney
for 13 years, Van Wyk’s
responses to questions relating to why
his evidence in court contradicts the pleadings did not impress. When
pushed during cross-examination
to deal with how and when the
termination was communicated, the witness took a mendacious approach.
His responses were evasive
and at times suggestive of an
afterthought.
[61]
I
am required to
evaluate
the credibility of Macintyre, Nelson and Van Wyk with reference to
their reliability, consistency and the probabilities.
[13]
I consider such evaluation to be necessary because the issue of
credibility is inextricably bound up with the consideration of
the
probabilities. To the extent that the respective parties’
evidence gave rise to two mutually conflicting versions of
the facts,
the proper approach to deciding which to prefer is that described in
the oft cited analysis by Nienaber JA in
Stellenbosch
Farmers’ Winery Group Ltd and another v Martell et Cie SA and
others.
[14]
[62]
I take from the above
dicta
that where versions collide, the three aspects of credibility,
reliability and probability are intermixed. All three must be
examined
to find the truth of what transpired. I got the impression
that Van Wyk struggled to reconcile his evidence with the pleaded
case.
The pleadings caused Van Wyk to give contradictory and highly
unsatisfactory evidence. On the other hand, there was nothing
inherently
improbable about the evidence of the plaintiffs’
witnesses and in respect of core aspects they corroborated each
other. I
deal with some of the core aspects next.
The tacit
agreement between Vitis and Colors SA
:
[63]
In
our law, there are currently two supposedly conflicting tests for
determining the existence of a tacit contract. The one is the
“
no
other reasonable interpretation test
”
and the other the “
preponderance
of probabilities
test
”.
The “
no
other reasonable interpretation
test”
was established in the
Ocean
Commodities
[15]
case where Corbett JA stated:
“
In
order to establish a tacit contract it is necessary to show, by a
preponderance of probabilities, unequivocal conduct which is
capable
of no other reasonable interpretation than that the parties intended
to, and did in fact, contract on the terms alleged.
It must be proved
that there was in fact consensus ad idem.”
[64]
Subsequent
to criticism that that test created a higher standard of proof than
the usual standard in civil cases, in
Joel
Melamed
[16]
,
Corbett JA suggested the preponderance of probabilities test,
stating:
“
[A]
court may hold that a tacit contract has been established where, by a
process of inference, it concludes that the most plausible
probable
conclusion from all the relevant proved facts and circumstances is
that a contract came into existence.”
[65]
In
the judgment of
Nurcha
[17]
,
the Supreme Court of Appeal held that the two supposedly conflicting
tests could be reconciled. The test to be applied is whether
the
party alleging the existence of the tacit contract “
has
shown on a balance of probabilities unequivocal conduct
”
on the part of the other party that proves that it intended to enter
into a contract with it.
[66]
In this case there is no dispute as to
the sequence of events leading up to the conclusion of the head
licence and subsequent sub-licence.
Although the defendants denied
the existence of a tacit agreement in their plea, Van Wyk
contradicted the pleading by averring
that an express agreement had
in fact been concluded between Vitis and Colors SA during a Vitis
meeting on 1 September 2008. According
to Van Wyk the express
agreement continued until at least February 2011.
[67]
The parties were thus
ad
idem
as to the existence of an
agreement and that the issue of duration was never discussed. Van Wyk
in fact conceded that the service
agreement would have endured for a
lengthy period and that it would have remained in place until it was
terminated. It follows
that either party could have given reasonable
notice of termination as long as such notice was given in a clear and
unequivocal
manner.
[68]
But for emphasizing the point that the
agreement between Colors SA and Vitis only lasted until February
2011, Van Wyk did not dispute
the plaintiffs’ pleaded terms.
One of the terms were that Colors SA would return all the South
African plant materials and
breeding records to Vitis if and when the
tacit agreement was terminated or if Colors SA no longer provide
services to Vitis for
the purposes of the South African breeding
programme. It is common cause that the agreement was terminated by
plaintiffs and that
the consequent dispute settled. The evidence of
the two witnesses who testified about the existence of the tacit
agreement was
not seriously challenged in cross-examination.
[69]
Defendants further failed to prove that
they terminated the tacit agreement and that ownership of the plant
material had been transferred
to Colors SA. No factual or legal basis
on which a termination of the agreement could be based was alleged.
[70]
On a conspectus of all the evidence I
find that the plaintiffs have shown, on a balance of probabilities,
unequivocal conduct on
the part Colors SA that proves the existence
of a contract on the terms and conditions pleaded by plaintiffs.
[71]
In my view the plaintiffs proved the
existence of an agreement between Vitis and Colors SA on the pleaded
terms.
The
defendants’ submissions relating to the “
exclusivity
term
”
:
[72]
I agree with defendant’s counsel
that Colors SA, prior to the conclusion of the sub-licence agreement
and subsequent to its
termination, conducted various breeding
projects. It was common cause that Colors SA’s portfolio of
breeding projects included
apples, pears, pomegranates, figs and
passion fruit. The idea of accompanying Muñoz to the USA
during 2002 was to look at
the Sheehan grape-breeding program and to
consider adding grape breeding to Colors SA’s existing
portfolio. Thus, as I understand
it, the other breeding programs
continued in conjunction with the added Vitis grape-breeding program.
[73]
Having carefully considered the content
of the sub-licence agreement, I find that there is no merit in the
submission that, because
the agreement did not contain an exclusivity
term obliging Colors SA to exclusively breed for Vitis, Colors SA
could simply decide
to breed for its own account with Vitis plant
material. Such a submission is not borne out by the pleadings and it
is further at
odds with how the parties conducted their affairs under
the sub-licence from 2003 until the letter of termination was
dispatched.
[74]
I accept Macintyre’s evidence that
Colors SA did not have a grape-breeding programme of its own and
would not have had the
rights to breed with any Sheehan material
except through the Vitis breeding programme. Vitis had permission to
use Sheehan and
Colors SA was appointed as the service provider who
conducted the breeding on behalf of Vitis.
The
defendants’ submissions relating to the variation of the
agreement
:
[75]
Defendant’s counsel submitted that
the agreement between the parties was varied subsequent to the
cancellation of the sub-licence.
It was argued that the service
agreement was varied during January 2011 and/or June 2011 to the
extent that Colors SA no longer
bred on behalf of Vitis, but was only
co-responsible for the maintenance of the existing Vitis assets and
plant material, being
projects 1 to 6 and DAFB. According to the
defendants, the variation relieved Colors SA from the obligation to
provide breeding
services to Vitis.
[76]
No variation of the service agreement
was pleaded. This omission should have been addressed by an
appropriate amendment. On the
pleadings it was not disputed that the
plant material used in projects 1 to 6 and DAFB at all times belonged
to Vitis. Paragraphs
40 to 48 of plea makes no reference to a
variation.
[77]
The argument of a variation is in any
event improbable in circumstances where Van Wyk’s evidence did
not dispute that:
“
All
plant material used in or produced as a result of the South African
breeding programme (‘the South African plant materials’),

including therefore all plant material of the Sheehan varieties used
as ‘parent plant’ material for breeding purposes
and all
plant material bred from such ultimate ‘parent plants’
would be owned by Vitis.”
[78]
And further that:
“
All
intellectual property rights, including the right to file
applications for plant breeders’ rights in South Africa and

elsewhere, attaching to the South African plant materials, would be
owned by Vitis.
”
[79]
The plaintiffs pleaded that between June
2008 and January 2014 Colors SA performed breeding services on behalf
of Vitis. The plaintiffs
pertinently referred to “
all
plant material used in or produced as a result of the South African
breeding programme
” and “
all
intellectual property rights
”
and this could only have meant the plant material used in projects 1
to 6, DAFB and 7 to 9. I find the plaintiffs’
version to accord
with the probabilities. There was no variation that altered the
contractual consequences of the pleaded tacit
agreement.
[80]
Furthermore,
the letter penned by Van Wyk’s attorneys on 24 October 2014,
makes no reference to a variation of the agreement
as contended by
the defendants during argument.
[18]
Having considered the correspondence exchanged between the parties
after February 2011, I agree with the plaintiffs that they were
led
to believe that the purported passing of ownership of the disputed
plant material from Vitis to Colors SA was premised on a
termination
and not a variation of the agreement. The defendants’ written
correspondence is largely incompatible with the
assertion that the
parties continued with their initial arrangement regarding grape
breeding, albeit in a varied manner.
[81]
During Van Wyk’s testimony he
stressed that the cancellation of the sub-licence agreement led to a
total breakdown of trust.
It was put to Van Wyk that the pleadings
contained no allegation that it was a term of the agreement between
Vitis and Colors SA
that if a breakdown in trust occurred, Colors SA
could terminate the agreement with Vitis. Van Wyk at first accepted
the proposition
by responding that “
there
was no tacit or implied or express terms that if we lose faith M’Lord
that we could walk away
”. Van
Wyk subsequently altered his response stating that “
[t]here
was no express term that we could walk away, whether there could be a
tacit or implied term M’Lord that is for you
to decide”.
It was those and similar responses that brought Van Wyk’s
credibility into question.
[82]
In support of its variation argument the
defendants,
inter-alia
,
referred to the testimony of Macintyre that (during the early part of
2011) there was a change in circumstances and accordingly
the
“
arrangement”
had
to
change.
According
to Macintyre, Colors SA no longer had the staff
to continue with
the breeding programme.
Macintyre
testified that
the inevitable change was that Coetzee and Malan,
who were the
experts, would continue to do what they did while
they were employed at
Colors SA. They would henceforth receive
their “
paychecks”
from SNFL.
The
defendants’ argument for variation was based on some of the
aforementioned occurrences.
[83]
The
defendants’ counsel also referred me to
Van
As v Du Preez
[19]
as authority for the following principle:
“
A
variation entails an alteration of the legal consequences of the
contract by mutual agreement of the parties ….”
84.
Whilst the
general principal relied on by defendants’ counsel may be
correct, I find that authority to be of no assistance
to the
defendants
in casu.
I
agree that the parties may have reached an agreement that only
certain of its contractual provisions would continue. In our law
this
would be regarded as either a variation of the existing contract or
as a termination of the existing contract in its entirety
and its
substitution by a new contract. On the one hand Van Wyk testified
that the service agreement came to an end during January
2011 but on
the other hand he averred that the evaluation part of the breeding
stopped during June 2011 and that the maintenance
continued until the
liquidation of Vitis during 2015. This was not sensible evidence.
85.
The case
of
Clemans
v Russon Brother (Pty) Ltd
[20]
do not support defendant counsel’s proposition that “
it
is not a requirement for the defendants to have specifically pleaded
a variation of the service agreement to be successful
”.
The defendant in
Clemans
in
fact pleaded the factual basis for relying on a variation of a
written agreement of lease. The plaintiff in that case clearly
knew
the case it was called on to meet.
[86]
I conclude that the variation of the
service agreement was not proved by Van Wyk through reliable
evidence.
The
defendants’ pleaded case based of knowledge and/or approval
:
[87]
Colors SA pleaded that it undertook the
breeding programme associated with projects 7 to 9 for its own
benefit “
with the knowledge and
approval of Vitis and SNFL
”.
That constituted a material part of defendant’s case. As
alluded to above, the sub-licence agreement was between
Colors SA and
Vitis. As such, whether or not SNFL had knowledge is irrelevant. SNFL
could not give approval to Colors SA if the
latter in fact sought
such approval.  A contracting party would ordinarily not request
another contracting party’s “
approval
”
if such approval is not required.
[88]
In answering the plaintiffs’
request for further particulars on the issue of
knowledge
and approval, the defendants replied that both Vitis and SNFL
acquired knowledge at a board meeting of Vitis
held on 6 February 2012. According to
Van Wyk, the approval was given on behalf of Vitis and SNFL by
Macintyre, Haresign, Barber and Muňoz.
To the question of how Vitis and SNFL expressed their approval the
defendants replied
that “
Vitis
and SNFL expressed their approval expressly, alternatively, tacitly.”
This was not cleared up during the trial.
[89]
Van Wyk confirmed during
cross-examination that the breeding relating to projects 7 to 9
started during October–November 2011.
Thus, on defendants’
own version Colors SA commenced breeding for their own account some
four months before there was any
knowledge and/or approval
by Vitis.
[90]
The
parties compiled minutes of the meeting of 6 February 2012.
[21]
The minutes contain no disclosure or discussion relating to the fact
that Colors SA was breeding for its own account and
that it
accordingly sought approval or some acknowledgement of that fact.
[91]
As indicated above, the 50% shareholder
in Vitis was Colors UK and not Colors SA. I understood that the
parties focussed their energies
on the attempt to resolve certain
issues within Vitis and that the proposals therefore came from SNFL
on the one hand and Colors
UK on the other hand. I find it unlikely
that
Colors SA, being a different legal
entity, would have raised and discussed such an important issue at
that meeting without anybody
commenting or recording it in writing.
According to Van Wyk, he attended as representative of both Colors UK
and Colors SA.
The minutes of the meeting contain no such
indication. In any event, Van Wyk’s evidence was that Colors SA
did not require
the permission of Vitis or any other party to breed
with the Vitis and Sheehan varieties.
[92]
Macintyre testified that he had no
recollection of a disclosure that Colors SA was breeding for its own
account. According to him,
if it was true that the disclosure was
made, he would have had a number of questions about the breeding
programme. I prefer Macintyre’s
version of what transpired
during the meeting to that of Van Wyk. Macintyre’s version is
corroborated by the minutes of the
meeting and the correspondence
that ensued. Macintyre and Haresign were only two of the four Vitis
directors who could have provided
approval. There would have been a
record of the decision and resolution to that effect. No evidence of
such was presented. In my
view it is highly improbable that Vitis
would simply have handed over commercially valuable plant material to
Colors SA for free.
[93]
Macintyre has substantial experience in
the breeding business. It seems to me that Macintyre’s evidence
as to why he would
not have approved Colors SA breeding for their own
account with Vitis plant material are eminently sensible and logical.
It is
improbable that, in the face of the very real and obvious
financial implications, Macintyre would have consented or approved
that
Colors SA may breed for its own account with Vitis plant
material.
[94]
On
the question of knowledge and approval, I find that no disclosure was
made to the effect that Colors SA was breeding for its
own account at
the meeting of 6 February 2012. Van Wyk had a fiduciary duty to make
the disclosure. The hallmark of a fiduciary
relationship is trust and
confidence. It extends not only to actual conflicts of interest but
also to those which are a real and
sensible possibility.
[22]
Colors
SA’s right to use varieties in its lawful possession
:
[95]
It was submitted on
behalf of the defendants that they were entitled to use the Sheehan
varieties for their own breeding program
because they were in
“
lawful
possession”
of the varieties as envisaged by section 23(6) of the
Plant
Breeders Rights Act, Act 15 of 1976 (“the Act”). Section
23(6) of the Act reads as follows:
“
(6)
Notwithstanding the provisions of section 23A (a), a person
who
procured any propagating material of a variety in a
legitimate
manner shall not infringe the plant breeder’s
right in respect of the variety if he or she —
(a)
resells
that propagating material;
(b)
subject
to the provisions of subsection (2), sells any plant,
reproductive
material or product derived from that propagating
material for
purposes other than the further propagation or
multiplication
thereof;
(c)
uses
or multiplies that propagating material in the development
of a
different variety;
(d)
uses
that propagating material for purposes of bona
fide research;
(e)
uses
that propagating material for private or non-commercial
purposes;
or is a farmer who on land occupied by him or her uses harvested
material obtained on such land from that propagating
material for
purposes of propagation: Provided that harvested material obtained
from the replanted propagating material shall not
be used for
purposes of propagation by any person other than that farmer”
[96]
It was further submitted that Colors SA
legitimately obtained the Sheehan and Vitis varieties in terms of its
“
independent licences and
rights
” and created the
disputed plant material, as it was allowed to do in terms of section
23(6)(c) of the Act.
[97]
Defendants’
counsel argued that the decision of the full bench of appeal in
Voor-Groenberq
Nursery CC and Another v Colors Fruit South Africa (Pty) Ltd
[23]
were
distinguishable from the matter
in
casu.
Writing
for the full bench, Griesel J, with Fortuin J and Samela J
concurring, considered whether Colors SA was entitled to possess
and
exploit plant materials originally bred and developed by Sheehan
Genetics in terms of and to the extent allowed by those provisions

23(6) of the Act. The Full Court found, with reference to sections
23(6) and 23A(a), that the provision “
refers
to persons who perform certain infringing acts without a licence
obtained from the plant breeder in question”
and
that Colors SA was not such a person because it obtained the plant
material pursuant to a valid licence. The full bench further
found,
like estoppel, section 23(6) is meant to be utilised as a shield, not
as a sword. According to the defendants, the aforementioned
case was
distinguishable because the plant material
in
casu
was “newly bred” material.
[98]
Whilst it is true that the defendants
made no reference to section 23(6) in its plea and that Van Wyk did
not pertinently rely on
the statutory provision to assert ownership
of the disputed material, in my view, defendant’s counsel
referred to the section
mainly to make the point that the plant
material in that case differed from those
in
casu.
Thus, as I understand the
defendants’ submission, the issue of ownership of the disputed
material remained undecided.
[99]
It was not disputed that the plant
material used in projects 7 to 9 included plant material of the
Sheehan varieties. Van Wyk conceded
that, but for the fact that after
February 2011 Colors SA was no longer breeding on behalf of Vitis,
the ownership of the disputed
plant materials would have remained
with Vitis. On the critical question of whether Colors SA was
entitled to breed for its own
account with Sheehan variety plant
materials, Van Wyk testified that Colors SA had been advised by its
attorneys that it was entitled
to do so, and did not require any
additional permission to do so.
[100]
Macintyre testified that in
circumstances where a specific variety was bred by Vitis, with the
appropriate permission from Sheehan,
the new variety would be a Vitis
variety. When a breeder used Sheehan genetic or plant material when
making crosses, the breeder
would have to go back to Sheehan and work
out what percentage of the royalties was payable to Sheehan. The need
to go back to Sheehan
to quantify the payment of royalties was not
disputed. Inasmuch as Van Wyk did not dispute that he used Sheehan in
projects 7 and
8, it was rather strange that he did not proffer any
reasons why Colors SA would be exempted from the payment of such
royalties.
This factor militates against the veracity of the Colors
SA’s version.
[101]
I find Colors SA’s reliance on
section 23(6) of the Act to be unfounded in the circumstances of this
case.
Acquisition
of ownership through specification and the settlement agreements
:
[102]
Insofar
as it relates to ownership of the disputed plant material, the
defendants’ counsel argued that unless the breeding
was done in
terms of an agreement to the contrary, the starting point is aIways
that the breeder (Colors SA) was the owner of the
plant material. In
this respect, I was referred to the following extract from Silberberg
& Schoeman
[24]
in support
of the aforementioned proposition:
“
Acquisition of
ownership by specification takes place by the ‘working up thing
[belonging to another] into a new product.
Specification, as defined
by our common-law writers, takes place by the giving of a new form to
or the manufacture of a new species
out of the material of another,
provided the material used ceased to exist as such and cannot be
restored to its original form,
and provided further, according to
some authorities, that the manufacturer (specificans) was under the
impression that the material
in question belonged to him or her. That
is to say, the manufacturer (specificans) who creates the new product
- whether by his
own labour, of, if he is an employer of labour, by
that of others - becomes owner of the thing he has manufactured, his
title being
independent of that of any previous owner’”.
[103]
It was not in dispute that Colors SA
asserted ownership of the disputed plant material. Van Wyk’s
e-mail to Macintyre on 1
August 2014 made its stance clear:
“…
The
ownership to the physical part of material and intellectual property
vests in Colors and it was never agreed that same will
be transferred
to Vitis.”
[104]
The intention to acquire and to pass
ownership is a factual, not a legal, issue. Neither the head licence
nor the sub-licence deals
pertinently with the ownership of the
physical plant material. Plaintiffs’ counsel argued that the
absence of a clause in
the sub-licence dealing with the transfer of
ownership or the reservation of ownership was therefore a strong
factor in favour
of Vitis.
[105]
The
passages in the record
[25]
to
which defendant’s counsel referred me firstly addressed the use
of different varieties, with permission, and the acknowledgement
that
royalties may have to be paid. Secondly, it dealt with Van Wyk’s
understanding of the International Union for the Protection
of New
Varieties of Plants (UPOV) legislation and what he knew about plant
breeders’ rights.  Neither Macintyre nor
Van Wyk suggested
in those sections of their evidence that, unless the breeding was
done in terms of an agreement to the contrary,
the starting point
would always be that the breeder (Colors SA) was the owner of the
plant material.
[106]
Colors SA did not plead that it acquired
ownership of the disputed material through way of specification.
Counsel for the defendants’
argument of acquisition by
specification was thus not foreshadowed by the pleadings. The
argument was neither properly substantiated
by the evidence. Colors
SA received Sheehan and Vitis plant material in terms of an agreement
it had with Vitis. I did not understand
Macintyre and Van Wyk’s
evidence to suggest that a “new product” was created by
Colors SA subsequent to February
2011. Both witnesses agreed that it
takes several years of monitoring, evaluation, testing and selecting
before a new variety will
emerge from those selections that can be
launched into the market. Van Wyk’s evidence was that the
process may take even
up to 15 years.
[107]
On the facts of this case, nothing had
happened to the disputed plant material to make it difficult to
identify as the plant material
provided by Vitis. That is so because
Colors SA itself identified the genetic make-up of the plant material
used in projects 7
and 8. Put differently, the “new product”
can be genetically identified with the old. I have not heard evidence
that
the disputed plant material lost its identity or that it can no
longer be identified. No evidence of a
nova
species
was presented. Van Wyk testified that
Colors SA usually made the crossers and thereafter provided bunches
to Genetwister. He confirmed
that Colors SA and Vitis would know who
the parents of the plants were. Genetwister would not know the
parents of the plant material
because it constitutes, in Van Wyk’s
words: “
intellectual property and you
cannot show that to everybody, otherwise somebody else will make
those crosses and then be a competition
to you”.
[108]
I am
of the view that the rule of non-reducibility is dependent on
contemporary technological expertise and knowledge. Neither party
led
expert evidence. I am further not convinced that the reducibility
rule finds application when one deals with objects of natural
growth.
This is because virtually everything that grows is irreducible, and
applying the rule mechanically would almost always
give ownership to
the
specificans.
[26]
[109]
I find that acquisition of ownership
through specification did not take place in this case.
[110]
Even
if I am wrong on the issue of specification, there is still another
reason why Colors SA’s claim of ownership is unsustainable.
It
is common cause that Colors SA, first plaintiff and a host of other
parties concluded a settlement agreement
[27]
on 12 July 2013. It is necessary to quote the most salient terms of
that agreement:
“
2.3.1.6 Colours
irrevocably acknowledges that to the best of its knowledge and belief
all plant variety and breeders’ rights
relating to Sheehan
Varieties, including but not limited to the plant variety and
breeders’ rights that Colors has applied
for in RSA on behalf
of SG LLC, have been correctly applied for and are valid applications
or granted rights, whichever is applicable.
AMC and SG LLC
warrants that to the best of its knowledge and belief the plant
variety and breeders’ rights that Colours
has applied for in
RSA on behalf of SG LLC, have been correctly applied for and are
valid applications or granted rights, whichever
is applicable.
2.3.1.7 The Colors
irrevocably accept that all Sheehan Variety plant material in RSA and
Namibia, with the exception of any plant
material that has been
incorporated into the vines and sold to growers, is owned by SG LLC;
2.3.1.8 Colors
undertakes that it shall not make any attempt, and shall not procure
or otherwise assist any other party to make
any attempt, to revoke,
invalidate or otherwise challenge any intellectual property rights
registered in the name of SG LLC or
AMC relating to the Sheehan
Varieties including, without limitation, the plant breeders’
rights registered and/or pending
registration in RSA and the plant
patents registered in the USA.  AMC and SG LLC warrants that to
their best knowledge and
belief, all intellectual property rights
registered in the name of SG LLC or AMC relating to the Sheehan
Varieties including, without
limitation, the plant breeders’
rights registered and/or pending registration in RSA are lawfully
owned by SG LLC and AMC,
respectively;
2.3.1.9 The Parties
irrevocably accept, in so far as they are parties to them, that the
Head Licence and the SLA are now terminated,
and that no term of the
Head Licence or the SLA survives the execution of this Agreement;
2.3.1.10 This
agreement is in full and final settlement of all and any claims and
dispute between the relevant Parties, whether
in contract, common
law, tort or their equivalent, in any jurisdiction arising from the
RSA Action, the Costs Award, the US Action,
the Asset Purchase or the
Arbitration and/or the performance or termination of the Head Licence
and/or the SLA, and no Party has
any claims against the other arising
from their actions taken in respect of or dealings with the Sheehan
Varieties prior to the
Signature Date.”
[111]
The settlement agreement represents the
outcome of the dispute between Colors SA, AMC and Sheehan Genetics
LLC in the UK regarding
the termination of the sub-licence agreement.
The settlement agreement envisaged the setting up of a joint venture
and an attempt
to try to deal with the breeding and propagation of
grapes going forward. The proposals in that settlement did not come
to fruition
and the parties concluded a further agreement on 7 March
2014 (“the assignment agreement”).
[112]
The assignment agreement provides that
Colors SA agreed to sell, cede and assign the Sheehan rights to SNFL
for a purchase consideration
of R20 million. The Assignment agreement
describes Colors SA as the seller and SNFL as the purchaser. It
further defines Sheehan
rights as:
“
Any and all
rights, title and interest of any nature whatsoever, including legal,
beneficial, contingent and / or vested rights,
title and interest
that the seller may have in and to the Sheehan variety at the
signature date, including but not limited to the
right to test, plant
and cultivate the Sheehan varieties in South Africa and Namibia and
the right to market the fruit produced
from the Sheehan varieties, it
shall include the goodwill symbolised by the Sheehan varieties, that
will go to trademarks. Such
rights further include any application
for any registration that anywhere in the world of any nature,
including but not limited
to plant variety rights, plant breeders’
rights and trademarks in respect of the Sheehan varieties.”
[113]
The term Sheehan varieties is also defined
as:
“
the grape
varieties owned by Sheehan Genetics on the signature date, including
all registered and unregistered rights.”
[114]
It is common cause that SNFL paid the R20
million. As I understand Van Wyk’s evidence, projects 7 to 9
did not form part of
the sale and the possible acquisition of those
projects was still subject to a due diligence exercise.
Significantly, neither settlement
agreements drew a distinction
between the plant material used in projects 1 to 6, DAFB and that
used in projects 7 to 9. On a sensible
reading of the agreements the
parties did not intend to draw such a distinction. The agreements
refer to
all plant
variety and breeders’ rights relating to Sheehan varieties as
well as
all rights
,
title and interest in and to the Sheehan varieties in South Africa
and Namibia respectively. I accordingly reject Van Wyk’s

version that the agreements excluded projects 7 to 9 as improbable.
In my view the content of the agreements materially corroborates
the
plaintiff’s case.
[115]
I agree with plaintiff’s counsel
that Van Wyk’s own evidence regarding the “express”
agreement and its terms
are sufficient to establish that Vitis own
the plant materials in projects 7 to 9. Defendants contend that, if
the owners of the
parent plant material are aggrieved by the use
thereof, the appropriate recourse would be to bring an action or
application to
interdict the alleged infringement of their plant
breeder rights in terms of the Plant Breeders Rights Act. I can see
no reason
why the plaintiffs’ ownership claim must be delayed
or referred to another forum. Further delays on the issue would not
be
in the interest of justice.
[116]
I find SNFL to be the lawful owner of all
the plant materials used in or produced as a result of projects 7 to
9. It follows that
Colors SA’s purported cession and assignment
from Colors SA to Re: Inc was invalid because it was not possible for
Colors
SA to cede that which it did not own.
The
defendants’ conditional claims in reconvention and the
plaintiffs’ special plea of prescription:
[117]
The first and second defendants raised two
conditional claims in reconvention. Colors SA claims payment of
R3 056 635
for certain costs incurred, alternatively,
payment of R2 825 531 based on unjustified enrichment. The
second defendant
claims payment of R1 137 481 for costs
incurred in performing breeding and related services.
[118]
According to Colors SA its main and
alternative claim arose during the period 2011 to December 2014. The
claim in reconvention was
served on the plaintiffs on 29 June 2016.
The plaintiffs argued that Colors SA’s claim prescribed in
respect of any amounts
allegedly payable to Colors SA prior to 29
June 2013. It was further submitted that, since Colors SA failed to
distinguish the
claim that arose before 29 June 2013 from that
portion of its claim subsequent to 29 June 2013, the effect of
prescription defeated
the whole of the claim for that year. No
authority for the aforementioned proposition was presented. The
plaintiff, in addition,
submitted that neither Colors SA nor the
second defendant established the quantum of their respective claims.
[119]
On the pleadings, the plaintiffs
specifically pleaded that neither Colors SA nor the second defendant
made out a case in law for
a claim in unjustified enrichment, more
particularly, in that the allegations that have been made were
insufficient to sustain
any
condictio.
The
correctness of the computation of the claimed amounts was disputed on
the pleadings. The plaintiffs admitted that the second
defendant was
under no obligation to incur costs on behalf of Vitis or any other
plaintiff. Colors SA and the second defendant
did not file a
replication to the plaintiffs’ aforementioned averments.
[120]
I deal with the quantification issue first
since, in my view, my finding in this regard is dispositive of the
prescription defence.
Colors SA’s claim reads as follows:
“
Over the period
of 2011 to December 2014, Colors SA incurred cost amounting to R3 056
635 in performing breeding and related services
in respect of the
disputed plant materials, the composition of such costs being set out
in annexure “CC1” hereto.”
[121]
Colors SA pleaded in
the alternative that it incurred part of the costs in the main claim
totalling R2 825 531, during the period
2011 until 23 July 2014 in
the bona fide but mistaken belief that it was the owner of the
disputed plant materials. Colors SA,
further in the alternative,
sought to base its claim on enrichment pleading that it would be
impoverished in the amount of R2 825 531.
[122]
The quantification
of the main and alternative claims was set out in annexure CC1 to the
counterclaim which presented as follows:
Summary
of expenses on grape-breeding projects 7 – 9 by Colors
Before
24 July 2014
After
24 July 2014
2011
2012
2013
2014
2014
Expense
type
General
and overhead expenses
32,427
166,356
195,723
306,894
48,834
Research,
Development and Innovation
2,685
24,880
29,458
26,734
10,267
Specific
grape breeding expenses
14,706
160,759
191,516
415,160
2,755
Grape
breeder salaries
43,591
246,451
391,896
97,974
104,400
Overhead
salaries
42,264
199,739
203,307
33,011
64,848
Total
135,673
798,185
1,011,900
879,773
231,104
Total
per period
2,825,531
231,104
Grand
total Colors
3,056,635
[123]
According to
annexure CC1 Colors SA incurred expenses in respect of projects 7 to
9 categorized as “general and overhead expenses,
research,
development and innovation, specific grape breeding expenses, grape
breeder salaries and overhead salaries” in
the amount of R3
056 635, alternatively, R2 825 531 on the grounds pleaded.
[124]
The second defendant’s main claim
reads:
“
Over the period
of 1 May 2014 until 30 April 2016, Re: Inc incurred costs amounting
to R1 137 481 in performing breeding and related
services in respect
of the disputed plant materials, the composition of such costs being
set out in annexure ‘CC2’
hereto.”
[125]
The quantification of the second
defendant’s main and alternative claims was set out in annexure
CC2 presenting as follows:
Summary
of expenses on grape-breeding projects 7 – 9 by Re: Inc
Before
24 July 2014
After
24 July 2014 until 30 April 2016
2014
2014
2015
2016
Expense
type
General
and overhead expenses
-
1
-
-
Research,
Development and Innovation
15,943
33,231
123,595
54,610
Specific
grape breeding expenses
832
26,115
42,944
14,507
Grape
breeder salaries
69,600
139,200
404,400
94,976
Overhead
salaries
-
21,882
59,580
36,065
Total
86,375
220,429
630,519
200,158
Total
per period
86,375
1,051,106
Grand
total Re: Inc
1,137,481
[126]
The
second defendant alleged that it incurred costs totalling R86 375
during the period 1 May 2014 until 23 July 2014 in circumstances

where it was under no legal or natural obligation
vis-à-vis
the plaintiffs to do so. It incurred further costs totalling R1 051
106 in the
bona
fide
but mistaken belief that it was at the time the owner of the disputed
plant material, alternatively, in circumstances where it
was under no
legal or natural obligation vis-à-vis the plaintiffs to do so.
The second defendant also advanced an alternative
claim based on
enrichment.
[127]
Van
Wyk did not compile annexures CC1 and CC2. It was compiled by Ms
Mariechen Van Eck (“Van Eck”), a chartered accountant
and
financial manager of Colors SA at the time.  Van Eck was not
called to testify. There was no suggestion that she was not
available
to be called as a witness. Material parts of the evidence attributed
to her thus remained hearsay. They were material
witnesses to the
quantification, yet the defendants failed to call them. It is a
well-established principle of our law that failure
to produce a
witness who is available and able to testify and give relevant
evidence, may lead to an adverse inference being drawn.
[28]
[128]
The counterclaim, as I understood it, was
based on actual expenses incurred during the grape-breeding projects
7 to 9. Van Wyk explained
that Van Eck would have relied on
underlying source documents such as invoices. Those source documents
were loaded on to Pastel.
Although the original documents were
destroyed those loaded on Pastel were still available at the time Van
Wyk testified. The source
documents were not discovered.
[129]
Van Wyk conceded that the underlying
calculations for determining the pro rata amounts were not before the
Court. Van Wyk denied
the suggestion that annexures CC1 and CC2
comprised of rough calculations. According to him the calculations
were made over many
weeks.
[130]
In
Mkwanazi
v Van der Merwe
[29]
,
Van
Winsen AJA said:
“
Die algemene
benadering dat die hof met die getuienis tot sy beskikking sy bes
moet doen om die bedrag van gelede skade te bereken
is aan dergelike
voorbehoud onderhewig gestel in die saak van Klopper v Mazoko
1930
TPD 840
op bl. 865, waar Reger Tindall opgemerk het dat:
‘
... when a
plaintiff is in a position to lead evidence which will enable the
court to assess the figure he should do so and not
leave the court to
guess the amount.’”
[131]
In
Esso
Standard SA [Pty] Ltd v Katz
[30]
the
Court stated the following:
“
Whether or not
a plaintiff should be non-suited depends on whether he has adduced
all the evidence reasonably available to him at
the trial…The
critical question then is whether the plaintiff… has produced
all the evidence that he could reasonably
have produced to enable the
court to assess the quantum of damage.”
[132]
See
also
Aaron’s
Whale Rock Trust v Murray & Roberts Ltd and Another
:
[31]
“
Where damages
can be assessed with exact mathematical precision, a plaintiff is
expected to adduce sufficient evidence to meet this
requirement.
Where, as is the case here, this cannot be done, the plaintiff must
lead such evidence as is available to it (but
of adequate
sufficiency) so as to enable the Court to quantify his damages and to
make an appropriate award in his favour. The
Court must not be faced
with an exercise in guesswork; what is required of a plaintiff is
that he should put before the Court enough
evidence from which it
can, albeit with difficulty, compensate him by an award of money as a
fair approximation of his mathematically
unquantifiable loss.”
[133]
The extent of expenses incurred is solely
within the knowledge of the defendants. No one was called to support
the reasonableness
of the costs reflected in annexures CC1 and CC2.
Applying the principles enunciated in the abovementioned cases, my
view is that
the defendants had a duty to prove the expenses which
they incurred but they made little effort to place available evidence
before
this Court. Their claim is not one for damages, where it might
be sufficient to place the best available evidence before the Court.

The claim is a contractual one that requires precise calculation.
[134]
The defendants, in any event, failed to
satisfy the requirements for the application of the best-evidence
rule. That rule finds
application where damages cannot be assessed
with certainty or precision or are difficult to estimate. It does not
apply where
a party has failed to adduce evidence, even though such
evidence could have been adduced. Indeed, the Court in
Esso
Standard
went on to say exactly that:
“
The critical
question then is whether the plaintiff, having successfully proved
that he has suffered damage through loss of petrol
and that that
damage was caused by the defendant,
has
produced all the evidence that he could reasonably have produced to
enable the Court to assess the quantum of damage
”
(own emphasis).
[135]
In a
leading case of this division the following was said in regard to
best evidence:
[32]
“
Where damages
can be assessed with exact mathematical precision, a plaintiff is
expected to adduce sufficient evidence to meet this
requirement.
Where, as is the case here, this cannot be done, the plaintiff must
lead such evidence as is available to it (but
of adequate
sufficiency) so as to enable the Court to quantify his damages and to
make an appropriate award in his favour. The
Court must not be faced
with an exercise in guesswork; what is required of a plaintiff is
that he should put before the Court enough
evidence from which it
can, albeit with difficulty, compensate him by an award of money as a
fair approximation of his mathematically
unquantifiable loss.”
[136]
Annexures CC1 and CC2 are by no stretch
certificates of balance or sufficiently detailed to allow for a
reliable quantification. There
were no detailed appendices to
the two annexures furnishing a full breakdown of the claims.
The annexures were not supported by documentary
evidence. Macintyre testified about a dispute over invoices for
services during
the latter part of the service agreement. Whether the
issues raised by Macintyre over those invoices were justified or not,
the
point is that the plaintiffs were afforded the opportunity to
interrogate the invoices and source documents. Since no source
documents
were discovered and Van Eck was not called to testify, the
plaintiffs were at a distinct disadvantage in the presentation of
their
case. Van Wyk did not rely on estimates. On his own evidence
the expenses relied upon were “
precisely
”
calculated.
[137]
During
cross-examination Macintyre was referred to exhibit B62 being a
“
typical
monthly invoice that Colors SA would send to Vitis
”.
The witness was asked whether he was able to produce similar invoices
for the period February 2011 to July 2013. Macintyre
testified that,
although his finance director requested the invoices on a number of
occasions, he had none to show. The letter
from Nelson to Van Wyk
dealing with the issue of unpaid invoices read:
[33]
"Vitis is holding
invoices back from payment at the moment, as Duncan Macintyre has
some queries on them. Re, travel expenses,
was the journey all Vitis
business, et cetera. And then the salary questions re Deon and
Barbara. As either of you are aware of
this, and if so, do you know
the answers? Who do I need to talk to get them cleared, resolved?
Bill said he would dig them out
to show me, but I want to know if
anyone in Paarl is aware that they are on hold.”
[138]
Macintyre was concerned that Vitis was
being charged for expenses incurred by Colors SA which were not
fairly attributable to Vitis.
Van Wyk confirmed the issues regarding
the disputed invoices were not resolved at the time of the hearing.
Nelson also testified
about queries on Colors SA invoices and said
that some invoices were corrected and that he was still trying to
locate credit notes
on others. Queries were also raised regarding
VAT, travel expenses, salaries and certain rental charges on
invoices.  Nelson
referred to a credit invoice issued because
Colors SA only invoiced 50% of the expenses it incurred on behalf of
Vitis. This occurred
during August and October 2012 and according to
Nelson Colors SA was not entitled to do so because it was work done
under the Vitis
program and the cost split was done in the UK.
According to Van Wyk, each of the respective parties was doing their
own thing and
that is why only 50% of the invoice was paid. The split
was affected at Colors SA level and not Colors UK level. It was put
to
Nelson that the invoice concerned the Karniel varieties and that
there were already “
two separate
programs
” operating at that stage.
Nelson disagreed. Van Wyk subsequently corrected the proposition by
agreeing that the full amount
should have been reflected on the
invoice.  Van Wyk credited Nieuwoudt with the mistake. It is
noteworthy that Colors SA knew,
before this action was instituted,
that its right to retain and breed with Sheehan and Vitis material
was being challenged and
that it may have to surrender it. It
continued nevertheless.
[139]
In my view, considering scant particulars
and the manner in which the defendants pleaded their counterclaims,
it is not possible
to form a realistic view of the counterclaims’
merits in the absence of reliable evidence.
[140]
First and second defendant failed to place
sufficient evidence before me to determine the quantum of the main
and alternative counterclaims
in reconvention.
[141]
Colors
SA and Re: Inc raised, in the alternative, claims based on
unjustified enrichment. To assess their claims, one has to consider

whether the following general enrichment elements were present:
[34]
(a) whether SNFL had been
enriched;
(b) whether Colors SA and
Re: Inc had been impoverished;
(c) whether SNFL's
enrichment was at the expense of Colors SA and/or  Re: Inc;
(d) whether the
enrichment was unjustified.
[142]
The enrichment action must consequently
embrace an inquiry not only into SNFL’s enrichment, but also
into the Colors SA and
Re: Inc’s impoverishment.
[143]
Neither defendants identified the specific
condictio
on which
they rely and neither party referred me to specific authority
underpinning their respective submissions. These omissions
are not
critical.
[144]
It seems to me that reliance was placed on
a general action of unjustified enrichment. The facts of this case
are not on all fours
with the requirements of a general action of
enrichment.
[145]
On the facts of this case, I am asked to
calculate claims for unjust enrichment in the context of the
provision of services and
the incurring of expenses. I have addressed
the deficiencies in the evidence relating to the services and
expenses above. As a
starting point, there was no evidence on the
objective values of the services allegedly rendered. In this case the
plaintiffs disputed
both services and expenses. Further, it must be
established whether the expenses incurred by the Colors SA and Re:
Inc were reasonable
and necessary. A residual question, which only
arises if the first questions are positively decided, is the precise
quantum of
such expenses.
[146]
Whilst I am mindful that the calculation
of the claimed amount must be done according to unjustified
enrichment principles, which
differ from contractual principles, the
lack of evidence prevents me from exercising my judicial discretion
in favour of Colors
SA and Re: Inc. Where there was no proven
impoverishment in the form of necessary breeding and related services
expenses, there
could have been no question of corresponding
enrichment. It is incumbent on a party who alleges unjust enrichment
to establish
it by means of credible and reliable evidence. It was
not done in this instance.
[147]
The defendants’ counterclaims and
alternative claims fall to be dismissed. In light of this finding, I
do not consider it
necessary to make a finding on the issue of
prescription save to state that plaintiff’s defence is not
without merit.
Withdrawal
of the defendants’ special plea of
lis alibi pendens and
costs:
[148]
The common cause facts leading up to the
withdrawal of the special plea of
lis alibi
pendens
were that the plaintiffs instituted
action proceedings in the High Court of Justice, Chancery Division
(“the derivative action”).
On 6 July 2016 SNFL’s
attorneys addressed correspondence to defendant’s attorneys
placing on record that their client
will not be requesting leave of
the UK court to reopen derivative action proceedings. The
aforementioned undertaking was only given
on behalf of SNFL UK. On 13
July 2016 defendant’s attorneys replied stating that Colors
SA’s special plea will only
be withdrawn if the derivative
action was withdrawn by SNFL and a tender for costs is made.
[149]
The defendants’ current attorneys
came on record on 23 August 2018. On 5 October 2018 the defendants’
attorneys suggested
to the plaintiffs that they withdrew the
derivative action and tender the defendants’ costs,
alternatively, only withdrew
the derivative action. On 12 October
2018 the defendants’ counsel proposed that the defendants would
withdraw its special
plea if the plaintiffs provided a written
undertaking not to continue with the derivative action in the UK.
[150]
On 15 October 2018 the plaintiffs
confirmed in writing that:
“
The purpose of
this letter is to hereby confirm that Special New Fruit Licensing
Limited, the claimant in the derivative action,
has to date, not
taken any steps to apply to have the stay in the derivative action
lifted or approached the court for any other
relief as provided for
in the consent order, nor does it have any intention of doing so in
future
.”
[151]
On 16 October 2018 the defendants withdrew
its special plea.
[152]
The plaintiffs argued that the undertaking
of 6 July 2016 was within a week of the defendant’s special
plea and that there
was no material difference between the 6 July
2016 undertaking and the one given on 15 October 2018. Van Wyk sought
to distinguish
the two letters by stating that the undertaking given
on 15 October 2018 was made an order of Court. According to Van Wyk
his new
attorneys were unaware of the 6 July 2016 undertaking. In my
view the refusal to consider SNFL’s first undertaking had
nothing
to do with the fact that it was not made an order of Court.
[153]
Van Wyk testified that a decision was
taken between the legal representatives in the UK that the derivative
action would be stayed
because plans were afoot to liquidate Vitis.
The current proceedings were instituted subsequent to the agreement
to stay the UK
proceedings. Van Wyk testified that they had already
spent approximately R1.6 to R1.7 million on the UK proceedings. It is
also
common cause that the defendants also tendered the plaintiffs’
wasted costs for the postponement of this case on 6 September
2018.
[154]
I cannot conclude that, in the context
of this case and the circumstances preceding it, the defendants’
special plea was unreasonable.
I do not intend to go into all the
criticisms which each side levelled at the other. Both parties could
and should have done more
to resolve the
in
limine
defences timeously. The
defendants’ conduct before the withdrawal of their special plea
does not warrant a punitive cost
order. It is true that Defendant
could have reverted sooner to plaintiffs’ undertaking. I
however cannot find that that omission
in itself was vexatious or
unscrupulous.
[155]
On a consideration of all relevant
circumstances, justice and fairness would best be served if each of
the parties were ordered
to pay their own costs in relation to the
cost reserved for the special plea of
lis
pendens
and the subsequent
withdrawal thereof.
[156]
It
is a trite principle of our law that a court considering an order of
costs exercises a discretion. In
Norwich
Union Fire Insurance Society Ltd v Tutt
[35]
,
Holmes AJA
said in relation to the determination of an award of costs:
“
[T]he
basic principle is that the Court has a discretion, to be exercised
judicially upon a consideration of the facts of each case,
and in
essence it is a question of fairness to both sides.”
[157]
Equally
trite is the principle that where the costs order sought includes the
costs for the employment of two counsel, here too,
the court
exercises a discretion. In
Geerdts
v Multichoice Africa (Pty) Ltd
[36]
it was said:
“
In
awarding costs on the attorney and client scale, the Court has a
discretion, to be exercised judicially upon a consideration
of all
the facts. As between the parties, it is a matter of fairness to both
sides. Vexatious, unscrupulous, dilatory or mendacious
conduct on the
part of an unsuccessful litigant may render it unfair for his
opponent to be out of pocket in the matter of his
own attorney and
client costs
….”
[158]
In
this case Colors SA had experience in acting as intellectual property
managers for breeders around the world. Colors SA could
therefore not
have misunderstood its legal obligations when dealing with plant
material belonging to another. In considering whether
to award
attorney-client costs against a party, Stegmann J
[37]
concluded that the defendant in that case had conducted the
litigation “
in
a tricky way
”,
a way calculated to make the plaintiff’s case “
extremely
difficult to prove and uncertain in its outcome”
.
The Judge further commented that the “l
ow
level of commercial morality
”
displayed by the defendant in its contractual dealings with the
plaintiff deserved the court’s condemnation.
[159]
Similar criticisms can be levelled at
the defendants in the present case.
ORDER:
[160]
In the result, the following order will
issue:
i.
SNFL is declared to be the lawful owner
of all plant materials used in or produced as a result of projects 7
to 9;
ii.
SNFL is declared to be the lawful owner
of all intellectual property rights vesting in the aforesaid plant
materials, including
but not limited to the right to apply for plant
breeders’ rights in respect of any of the said plant materials;
iii.
It is declared that the said plant
materials located at Lelienfontein Nursery, Voor-Groenberg Nursery,
De Fynne Nursery and West
Cape, or at any other location, are held on
behalf of SNFL;
iv.
It is directed that the said plant
materials be delivered to SNFL in the following manner:
a)
by Colors SA, Re: Inc, and Van Wyk
providing peaceful and undisturbed possession of the plant materials
to SNFL (SA) as the duly-authorised
agent of SNFL;
b)
by Colors SA, Re: Inc, and Van Wyk
providing SNFL with a detailed account of all breeding conducted by
Colors SA and/or Re: Inc
as part of the South African breeding
programme;
c)
by Colors SA and Van Wyk providing SNFL
with details regarding the specific parent varieties used in such
breeding, the number of
grape bunches, and details of the plant
materials that have resulted from such breeding; and
d)
by Colors SA and Van Wyk providing SNFL,
alternatively the liquidators, with an itemised whereabouts of all
such plant materials.
v.
It is directed that Colors SA account to
SNFL in respect of the location of the aforesaid plant materials, the
parent plants of
such plant materials and the source of such parent
materials and all and any other records of any nature pertaining to
the breeding
of such plant materials;
vi.
It is directed that Colors SA, Re: Inc,
and Van Wyk are hereby
restrained and
interdicted from transferring possession or control or disposing of,
or in any other manner dealing with, the aforesaid
plant materials;
vii.
The deed of cession and assignment
entered into on 24 July 2014 between Colors SA and Re: Inc and the
purported transfer pursuant
thereto is hereby declared to be invalid,
void and of no force and effect;
viii.
It is directed that each party pay its
own costs in relation to defendant’s special plea of
lis
pendens
and the subsequent
withdrawal thereof;
ix.
First and second defendant’s
conditional
counterclaims is dismissed
with costs;
x.
It is directed that first to third
defendants shall pay plaintiffs costs of suit on
a
scale as between attorney and client,
jointly
and severally, the one paying the others to be absolved, including
the costs consequent upon the engagement of two counsel.
HENDRICKS
AJ
Appearances:
For
the plaintiffs: E Fagan SC, with him S Fergus
Instructed
by Adams & Adams Attorneys
For
the defendants: A De Villiers, with him M De Wet
Instructed
by Van Wyk Van Heerden Attorneys
[1]
Colors SA do not expressly state in its plea that it is the owner of
the project 7 to 9 plant materials. Colors SA simply averred
that
ownership is in dispute.
[2]
EXHIBIT A, page 339
[3]
EXHIBIT A, page 308
[4]
EXHIBIT A, pages 340-341
[5]
EXHIBIT A page 348
[6]
EXHIBIT A, page 560 H
[7]
EXHIBIT A, page 560 J
[8]
Minister of Safety and Security v Slabbert (668/2009) [2009] ZASCA
163; [2010] 2 All SA 474 (SCA)
[9]
1976 (3) SA 772
(W) at 775-6
[10]
Minister of Safety and Security v Slabbert 2010 2 All SA 474 (SCA)
475
[11]
As the Appellate Division said in
Shill
v Milner
1937 AD 101
at 105: “[t]he importance of pleadings
should not
be
unduly magnified
. See also
Butters v Mncora
[2014] 3 All SA
259
(SCA) at para 107:
were the Court held that: “
Pleadings
are for the Court and the Court is not for Pleadings. A Court is
bound to consider the substantial issues between the
parties”.
[12]
In Ruslyn Mining and Plant Hire Ltd v Alexcor Ltd
[2012] 1 All SA
317
(SCA) at para [18] Heher JA gave the following exposition
regarding further particulars for trial:
“
To
deal first with the principle, the case as cited by the learned
Judge all deal with applications to amend pleadings. Further

particulars for trial are not pleadings. The opportunity to request
them arises after the close of pleadings: Uniform Rule 21
(2). They
are limited to obtaining information that is strictly necessary to
prepare for trial. They do not set up a cause of
action or defence
by which a party is, in the absence of amendment or tacit
concurrence, bound and by which the limits of his
evidence are
circumscribed. Nor can they change an existing cause of action or
create a new one (as the trial Judge appears to
have believed). The
purpose of particulars for trial is to limit waste of time and costs
by providing the other party with additional
insight into the case
which has been pleaded, thus avoiding, where possible, delays or
postponements to seek evidence to meet
a case. See for example,
Thompson v Barclays Bank DCO
1965 (1) SA 365
(W) at 369 D – E
… Such particulars are only required if and when the other
party asks for them and what will be
furnished is to a large extent
dependent on the skill and foresight adopted in the formulation of
the request. Because they are
not pleadings they do not limit the
scope of the case being made by the party that supplies them. A
party has a right to rely
on all and any evidence that is admissible
and relevant to his pleaded cause and defence and, save within the
parameters set
by the purpose of such particulars insofar as
ensuring a fair trial is concerned, no stultification of that right
should be permitted.
Thus, unless
there is
clear evidence of
bad faith in furnishing of the original further particulars or in
the withholding of the intention to change
the thrust of the
evidence or irremediable prejudice to the other party caused by
reliance on incorrect or insufficient particulars
furnished by his
opponent relevant evidence which goes beyond the terms of
particulars for trial should be admitted subject to
a postponement,
if necessary and an appropriate award of costs to clear the element
of surprise.”
[13]
In National Employers General Insurance v Jagers
1984 (4) SA 437
(E)
at 440 D – G the approach of determining credibility in
isolation from probabilities was dealt with as follows:
“
It
does not seem to me to be desirable for a Court first to consider
the question of the credibility of the witnesses as the trial
Judge
did in the present case, and then, having concluded that enquiry, to
consider the probabilities of the case, as though
the two aspects
constitute separate fields of enquiry.  In fact, as I have
pointed out it is only where a consideration
of the probabilities
fails to indicate where the truth probably lies, that recourse is
had to an estimate of relative credibility
apart from the
probabilities.”
[14]
2003 (1) SA 11
(SCA
“
The
technique generally employed by courts in resolving factual disputes
of this nature
[i.e. where there are two irreconcilable
versions]
may conveniently be summarised as follows. To come
to a conclusion on the disputed issues a court must make findings on
(a) the
credibility of the various factual witnesses; (b) their
reliability; and (c) the probabilities. As to (a), the court’s

finding on the credibility of a particular witness will depend on
its impression about the veracity of the witness. That in turn
will
depend on a variety of subsidiary factors, not necessarily in order
of importance, such as (i) the witness’s
candour and
demeanour in the witness-box, (ii) his bias, latent and
blatant, (iii) internal contradictions in his evidence,

(iv) external contradictions with what was pleaded or put on
his behalf, or with established fact or with his own extracurial

statements or actions, (v) the probability or improbability of
particular aspects of his version, (vi) the calibre
and cogency
of his performance compared to that of other witnesses testifying
about the same incident or events. As to (b), a
witness’s
reliability will depend, apart from the factors mentioned under
(a)(ii), (iv) and (v) above, on (i) the
opportunities he had to
experience or observe the event in question and (ii) the
quality, integrity and independence of
his recall thereof. As to
(c), this necessitates an analysis and evaluation of the probability
or improbability of each party’s
version on each of the
disputed issues. In the light of its assessment of (a), (b) and (c)
the court will then, as a final step,
determine whether the party
burdened with the onus of proof has succeeded in discharging it. The
hard case, which will doubtless
be the rare one, occurs when a
court’s credibility findings compel it in one direction and
its evaluation of the general
probabilities in another. The more
convincing the former, the less convincing will be the latter. But
when all factors are equipoised
probabilities prevail
” See
also e.g. Dreyer and another NNO v AXZS Industries (Pty) Ltd
2006
(5) SA 548
(SCA) at para 30 and National Employers’ General
Insurance Co. Ltd v Jagers
1984 (4) SA 437
(E) at 440D-H.)
[15]
Standard Bank of South Africa Ltd v Ocean Commodities Inc [1984]
ZASCA 2; 1983 (1) SA 276 (A)
[16]
Joel Melamed and Hurwitz v Cleveland Estates (Pty) Ltd; Joel Melamed
and Hurwitz v Vorner Investments (Pty) Ltd 1984 (3) SA 155
(A);
[1984] 2 All SA 110 (A)
[17]
Buffalo City Metropolitan Municipality v Nurcha Development Finance
(Pty) Ltd
[2018] ZASCA 122
[18]
EXHIBIT A, page 965
[19]
1981 (3) SA 760
, at 764 H
[20]
1970 (3) 686 (ECD), at 690C.
[21]
EXHIBIT
A, page 494
[22]
Heher JA in Phillips v Fieldstone Africa (Pty) Ltd
2004 (3) SA 465
(SCA) See also Companies’ 4(2) LAWSA para 116): “
Directors
may not: (a) exceed their powers; (b) exercise their powers for an
improper or collateral purpose; (c) fetter their
discretion; or (d)
place themselves in a position in which their personal interests
conflict, or may possibly conflict, with
their duties to the
company.”
[23]
Voor-Groenberg Nursery CC Colors Fruit South Africa (Pty) Ltd
(A21/12)
[2012] ZAWCHC 157
(23 August 2012), also Exhibit A 521
[24]
Silberberg & Schoeman: The Law of Property in South Africa; 5th
Edition at pp 156- 159
[25]
Transcript 310 to 312; and 644
[26]
See Metzger, E. (2004) Acquisition of living things by
specification. Edinburgh Law Review, 8 (1). pp. 112-115. ISSN 1364-

9809 - http://eprints.gla.ac.uk/3107/
[27]
EXHIBIT A, page 608
[28]
Tshishonga v Minister of Justice and Constitutional Development and
Another
2007 (4) SA 135
(LC); Elgin Fireclays Ltd v Webb
1947 (4) SA
744
(A); ABSA Investment Management Services (Pty) Ltd v Crowhurst
[2006] 2 BLLR 107
(LAC)
[29]
1970 1 SA 609 (AD) 631H
[30]
1981 (1) SA 964
(A) at 970 E-H
[31]
1992 (1) SA 652
(C) AT 655 H – J
[32]
Aaron’s Whale Rock Trust v Murray & Roberts Ltd and
another
1992 (1) SA 652
(C) at 655H-J.
[33]
EXHIBIT B, page 64
[34]
Kudu Granite Operations (Pty) Ltd v Caterna Ltd 2003 (5) SA 193
(SCA)
[35]
1960 (4) SA 851 (AD) 854
[36]
Geerdts v Multichoice Africa (Pty) Ltd (JA88/97) [1998] ZALAC 10
[37]
Lovemore Mining Pty Ltd v International Shipping Co (Pty) Ltd
1987
(2) SA 149
(W) at 216-217