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[2018] ZAGPPHC 69
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Milkor (Pty) Ltd and Another v Africa Defence Group (Pty) Ltd and Others (3711/2018) [2018] ZAGPPHC 69 (20 February 2018)
REPUBLIC
OF SOUTH AFRICA
IN
THE HIGH COURT OF SOUTH AFRICA
GAUTENG
DIVISION, PRETORIA
CASE
NO: 3711/2018
Not
Reportable
Not
of interest to other judges
In
the matter between:
MILKOR
(PTY)
LTD
First Applicant
MILKOR
SPECIAL PRODUCTS (PTY)
LTD
Second Applicant
And
AFRICA
DEFENCE GROUP (PTY) LTD
First Respondent
KEYSTONE
SPECIAL PRODUCTS {PTY) LTD
Second Respondent
WILLIAM
ALBERT FARQUHAR
Third Respondent
JUDGMENT
Petersen
AJ:
Introduction
[1]
This matter came before me as an urgent application on 06 February
2018. On
07 February 2018, I handed down an order in the following
terms:
"This
application will be heard as one of urgency in terms of rule 6(12)
dispensing with the forms and service and time periods
applicable to
the bringing of applications."
The
relief sought
[2]
The relief sought with other ancillary relief is premised on an
alleged Restraint
of Trade Agreement entered into between the
applicants' and the third respondent, more particularly the
enforcement of a restraint
of trade with ancillary relief. The relief
sought is set out in the notice of motion as follows:
"2
Interdicting each the first, second and third respondents from
designing, developing, producing or assembling multiple grenade
launchers ("the weapon") in contravention of section 13 of
the National Convent ional Arms Control Act, 41 of 2002 ("the
Act");
3
Interdicting the third respondent, for a period of three years,
commencing on 1 October 2016; from:
3.1
directly or indirectly , for his own account or for and on behalf of
any business or undertaking or other entity
or person which competes
with the business of the applicants, canvassing any clients of the
applicants;
3.2
disclosing to anyone any information concerning the identity of the
clients of the applicants or the know-how, business
methods or any
other matters concerning the affairs of the applicants;
3.3
directly or indirectly being interested in or concerned with any
company , including the first and second respondents,
or other person
(whether as employee, profit sharer, associate or director) carrying
on a business in the Republic of South Africa
in the same field of
business as the applicants or any part of the business carried out by
the applicants ;
4
Interdicting the first and second respondents, for a period of three
years, commencing on 1 October 2016, from
employing the third
respondent, whether directly, or being associated with the third
respondent, to perform any duty or task in
the same field of business
as the applicants .
5
Pending the outcome of an action instituted in the Gauteng Division
of the High Court OF South Africa under case no
Case No.: 62833/17,
5.1
Interdicting and ordering the third respondents at all times to keep
confidential and not to disclose:
5.1.1
The applicants ' trade secrets, processes, customer and supplier
lists;
5.1.2
other confidential information of known practices in.regard to the
applicants' business;
and
5.1.3
any information whatsoever relating to the applicants' business;
5.2
Interdicting the first and second respondents from receiving and
making use of any confidential information
about the applicants'
business from the third respondent.
6
Ordering the first, second and/or third respondents forthwith to
deliver up to the Registrar of this Honourable
Court, in material and
electronic form, all designs, sketches, drawings, 3- dimensional
models or prints, prototypes, moulds, plates,
parasolid files of the
weapon; and to serve on the applicant and this Court, an inventory of
the items so delivered to the Registrar
within 5 days of the Order
herein;
7
Ordering the first, second and third respondents to pay the costs of
this application on the attorney and client
scale, jointly and
severally, the one paying the others to be absolved, including the
costs of two counsel;
8
Granting the applicants further and/or alternative (sic) relief."
The
relief sought in prayer 2 of the notice of motion is not persisted in
as ADG and Keystone have been certified in terms of the
National
Conventional Arms Control Act, 41 of 2002
.
Background
[3]
The applicants' ("Milkor") and the first and second
respondents'
("ADG" and "Keystone") are involved
in linked litigation with two ex-employees of Milkor, Messrs da Silva
and
Van Rensburg. The litigation is based on a weapon known as a
Multiple Grenade Launcher ("MGL"), which the applicant, as
one of many manufacturers worldwide, all seemingly with their own
design of the MGL, has designed, developed, manufactured , marketed
and sold over a number of decades. The applicant considers itself the
leader in this field, alleging that its detailed designs
are trade
secrets. Messrs da Silva and Van Rensburg resigned from the
applicants' employ at the end of November 2016; and took
up
employment either with ADG or Keystone. ADG has been a competitor in
the munitions industry in South Africa since January 2017
in
association with Keystone, seemingly in a similar scenario to Milkor.
Milkor alleges that it received information, around mid-2017,
that
ADG and Keystone had developed an MGL which had reached the
manufacturing stage. The information is said to have been accompanied
by detailed drawings of the MGL designed by ADG and Keystone. It is
alleged that the detailed designs of Milkor had been used in
designing the ADG and _Keystone's weapon. Consequently Milker
launched an application to this court for Anton Pillar orders against
ADG, Keystone, da Silva and Van Rensburg. The Anton Pillar order was
granted by Janse van Nieuwenhuizen J, on 16 August 2017.
[4]
The return day of the Anton Pillar order which has been extended
since being granted , until 17 January 2018 when Milker became aware
of the alleged breach of a restraint of trade agreement into
between
it and the third respondent ("Farquhar"). Farquhar disputes
that he entered into a restraint of trade agreement
with Milkor. The
dispute which arises from the affidavits, brings the rule set out in
Plascon-Evans Paints Ltd v Van Riebeeck Paints (Pty) Ltd
[1984] ZASCA 51
;
1984
(3) SA 623
(A), squarely into focus.. This court is faced with
contradictory affidavits from Milkor and Farquhar on the restraint of
trade
agreement. The determination of the disputed restraint of trade
agreement could be dispositive of the other issues in dispute raised
in the papers. If this court does not reject the defence that the
restraint of trade is a forgery the matter must be referred for
oral
evidence or trial. In deciding this issue regard must be had to the
evidence on the papers and applicable case law.
[5]
In
a supporting affidavit deposed to by Farquhar in response to the
expert opinion of Milkers' expert in the linked litigation,
dated 8
January 2018, it comes to the fore that he was employed by ADG as the
chief designer of ADG's MGL.
[1]
On his account he has redesigned the MGL of ADG personally from
scratch.
[2]
In the respondents'
answering affidavit in the present application, deposed to by da
Silva on 1 February 2018, it is confirmed
that Farquhar started
working for ADG during January 2017
[3]
. The employment of Farquhar by ADG is said to have been on the very
premise that he was not bound by a restraint of trade agreement.
da
Silva further states
[4]
that
Farquhar did not sign the letter of appointment containing the
restraint of trade clause, he has no recollection thereof,
the
signature on the document differs from his signature and he will
accordingly seek leave from the court at the time the application
is
heard to place further evidence before the court in this regard.
Farquhar in a confirmatory affidavit similarly dated the 1
February
2018 confirms the content of the answering affidavit, insofar as it
relates to him.
[6]
Farquhar
places the following evidence before court on the disputed restraint
of trade agreement
[5]
:
"
8 .1. .. . that, during July 2007, Richard Potgieter of the
applicants ' advised him that the applicants wanted to offer
him a
fulltime position.
8.2.
Shortly after having been advised of the aforesaid he was handed an
unsigned copy of the
letter of appointment. He was not willing to
agree, to the following, namely - clause 5 - place of work; clause 6
- hours of work
and annexure "B" (the restraint of trade
agreement) and advised the applicants of this.
8.3.
He indicated the portions of the letter of appointment with which he
was not happy. Importantly
, he marked the restraint of trade
agreement with an "X" indicating that he wanted the entire
portion scrapped as he
was not willing to sign it.
8.4.
After he made the markings on the document, he had a meeting with Mr
Richard Potgieter
and/or Andries Piek of the applicants and he showed
them his marked up document and informed them verbally of the clauses
and portions
of the letter of appointment that were unacceptable. A
copy of the original agreement, which he kept after advising the
applicants
of what he was willing to agree to (and what was
unacceptable, is still in his possession. The original will be made
available
at the hearing and a copy is attached and marked as
annexure "AD5 ".
8.5.
. He recalls that after he had the aforesaid meeting there were
further attempts by the
applicants to get him to sign the letter of
appointment containing the restraint of trade agreement and that he
had refused to
sign the document. Promises were then made to him that
an amended letter of appointment would be sent to him to sign. Those
promises
however, never materialized and he never signed a letter of
appointment.
8.6.
The signature appearing on the letter of appointment attached to the
applicants' founding
affidavit differs from the signature of the
third respondent...
8.6.1
...
8.6.2
...
9.
When the third respondent started working for the first respondent
during
January
2017, the first respondent asked him whether he was bound by a
restraint of trade. He immediately responded that he had
no restraint
of trade in his employment contract."
The
contents of paragraph 8.6.1 to 8.6.2 constitute an inadmissible
opinion by da Silva.
[7]
The
employment contract relied on by Milkor incorporating the restraint
of trade agreement
[6]
, both of
which are initialed and signed on behalf of Milkor and by Farquhar
differs materially in respect of the employment contract
produced by
Farquhar containing a different date of commencement, different
initials on each page and the absence of signatures.
As background to
the employment of Farquhar by ADG, the evidence shows that he
"retired" from the employ of Milkor on
05 September 2016,
premised on an inability to reach an agreement on his employment
package.
[7]
The retirement of
Farquhar was short lived as he took up employment with ADG within at
least three months.
[8]
In
Fakie NO v CCII Systems
(Pfy)
Ltd
[2006] ZASCA 52
;
2006 (4) SA 326
(SCA), the approach to contradictory affidavits was clarified:
"That
conflicting affidavits are not a suitable means for determining
disputes of fact has been doctrine in this court for
more than 80
years. Yet motion proceedings are quicker and cheaper than trial
proceedings and, in the interests of justice, courts
have been at
pains not to permit unvirtuous respondents to shelter behind patently
implausible affidavit versions or
bald
denials (my emphasis).
More than 60 years ago, this Court determined that a Judge should not
allow a respondent to raise 'fictitious'disputes
of fact to delay the
hearing of the matter or to deny the applicant its order .
There
had to be "a
bona fide
dispute of fact on a
material matter". This means that an uncreditworthy denial, or a
palpably implausible version. can be
rejected out of hand. without
recourse to oral evidence (my emphasis). In
Plascon-Evans
Paints Ltd v Van Riebeeck Paints (Pty) Ltd,
this Court
extended the ambit of uncreditworthy denials. They now encompassed
not merely those that fail to raise a real, genuine
or
bona
fide
dispute of fact but also allegations or denials that
are so far-fetched or clearly untenable that the Court is justified
in rejecting
them merely on the papers. Practice in this regard has
become considerably more robust, and rightly so. If it were
otherwise, most
of the busy motion courts in the country might cease
functioning. But the limits remain, and however robust a court may be
inclined
to be, a respondent's version can be rejected in motion
proceedings only if it is "fictitious" or so far-fetched
and
clearly untenable that it can confidently be said, on the papers
alone, that it is demonstrably and clearly unworthy of credence."
[9]
In
Wightman v Wightman t/a JW Construction v Headfour (Pty) Ltd
and Another
[2008] ZASCA 6
;
2008 (3) SA 371
(SCA), it was said at paras 12 and
13:
"12
Recognising that the truth almost always lies beyond mere linguistic
determination the courts have said that an applicant
who seeks final
relief on motion must in the event of conflict, accept the version
set up by his opponent unless the latter's allegations
are, in the
opinion of the court, not such as to raise a real, genuine or
bona
fide
dispute of fact or are so far-fetched or clearly untenable
that the court is justified in rejecting them merely on the papers:
Plascon-Evans
Paints Ltd v Van Riebeeck Paints (Pty) Ltd
[1984] ZASCA 51
;
1984 (3) SA
623
(A) at 634E-635c...
13
A real, genuine and
bona fide
dispute of fact
can exist only where the court is satisfied that the party who
purports to raise the dispute has in his affidavit
seriously and
unambiguously addressed the fact said to be disputed. There will of
course be instances where a bare denial meets
the requirement because
there is no other way ooen to the disputing party and nothing more
can therefore be expected of him. But
even that may not be sufficient
if the fact averred lies purely within the knowledge of the averring
party and no basis is laid
for disputing the veracity or accuracy of
the averment. When the facts averred are such that the disputing
party must necessarily
possess knowledge of them and be able to
provide an answer (or countervailing evidence) if they be not true or
accurate but, instead
of doing so, rests his case on a bare or
ambiguous denial the court will generally have difficulty in finding
that the test is
satisfied (my emphasis). I say 'generally' because
factual averments seldom stand apart from a broader matrix of
circumstances
all of which needs to be borne in mind when arriving at
a decision. A litigant may not necessarily recognise or understand
the
nuances of a bare or general denial as against a real attempt to
grapple with all relevant factual allegations made by the other
party. But when he signs the answering affidavit, he commits himself
to its contents, inadequate as they may be, and will only
in
exceptional circumstances be permitted to disavow them. There is thus
a serious duty imposed upon a legal adviser who settles
an answering
affidavit to ascertain and engage with facts which his client
disputes and to reflect such disputes fully and accurately
in the
answering affidavit. If that does not happen it should come as no
surprise that the court takes a robust view of the matter
(my
emphasis)".
[10]
Having regard to the evidence on the papers regarding the restraint
of trade agreement, against
the relevant authorities, I hold the view
that the relief sought against Farquhar in prayers 3 and 4 of the
notice of motion, which
finds itself inextricably linked to the
issues in the litigation involving ADG, Keystone, da Silva and Van
Rensburg should be referred
to trial in that matter. Farquhar should
be joined as party in those proceedings and the relief sought against
him on the restraint
of trade agreement should be formulated against
him in those proceedings.
[11]
The relief sought in prayer 5, with due regard to the fact that the
relief sought in prayers
3 and 4 is to be referred for trial, is on a
somewhat similar footing to that which was sought and granted against
da Silva and
Van Rensburg in the Anton Pillar application. The
interim relief granted in that application was in the following
terms:
"1.
Pending the finalization of an action for final interdicts and
damages against the respondents, to be issued out of this
Honourable
Court:
1.1.
the first and second respondents (da Silva and Van Rensburg - my
insertion) are interdicted and restrained
from divulging or
disclosing to any third party or from applying/utilizing same for any
purpose whatsoever:
1.1.1
any information whatsoever relating to the applicants' business;
1.1.2
all the applicants' trade secrets, processes, customer and supplier
lists; and confidential information
relating to the applicants'
practices in regard to the applicants' business;
1.1.3
any confidential information relating to the business secrets of the
applicants', including
technical and design specifications of the
applicants' products, as contained in data packs or parasoid files,
drawings, diagrams
or any other form.
1.2.
The third and fourth respondents (Keystone and ADG - my insertion)
are interdicted and restrained
from utilizing any information
confidential to the applicants' of whatsoever nature imparted to it,
or to be imparted to it in
future , by the first and second
respondents; pertaining to the manufacture or marketing of a multiple
grenade launcher..."
[12]
The
question is whether similar relief should be extended in respect of
Farquhar
in the
present application. The attorneys
for the respondents ' in correspondence
addressed to the attorney for
Milker dated 26 January 2018
[8]
referred to the retrenchment of Farquhar at the end of November 2017,
indicating that:
"2.1.3
For the time being, the third respondent has stopped designing and
manufacturing any of the weapons (Multi Grenade Launchers,)
which
form the subject of the present application. That project which
precipitated this litigation is, for the moment, not being
continued
with. In the event of our client deciding in the future to continue
with the project, we will give you written notice
in order that your
client may act in a manner as advised.
3.
Furthermore, we hold instructions to give an undertaking that the
first respondent and the second respondent will not employ
or make
use of the services of the third respondent to design multi grenade
launchers."
[13]
In reply to the correspondence from the respondents' attorneys,
Milkers' attorney
responded as follows:
"We
note the undertakings tendered in par. 3 of your letter under
reply. Given the
undertakings
tendered and the circumstances of the litigation between the parties,
we are instructed to propose, in order to avoid
the hearing of the
matter on 6 February 2018 and the concomitant wastage of costs, that
your clients consent to orders being taken
in terms of paragraphs 2
to 5 of our Notice of Motion. The balance of the relief, including
the issue of costs, sought in our Notice
of Motion may then be heard
in the ordinary course or together with the Anton Pillar matter which
is pending."
[9]
This
proposal was rejected on 31 January 2018.
[14]
It
is clear from the affidavit deposed to by Farquhar in response to
Milkers' expert, the correspondence from Farquhar's attorneys
and the
answering affidavit that he has been designing an MGL for Milkers'
competitor. Farquhar was retrenched by ADG at the end
of November
2017 in terms of a Mutual Separation and Settlement Agreement, with
the prospect of re-employment "... if a posting
opens which fits
the skills set of the Employee within a period of six months from the
date of retrenchment."
[10]
Notably da Silva was retrenched with the same undertaking. The
aforementioned agreement at face value contradicts the undertaking
of
ADG and Keystone that they will not employ Farquhar, albeit that the
proposal has been withdrawn, whether to design MGL's or
any other
weapons for that matter. Counsel for Milkor refers to
Mcilongo
NO v Minister of Law and Order
1990
4 SA 181
(E) at 186 A-B, where Jennet J said the following in respect
of an undertaking instead of an interdict, namely the issue:
"is
not whether appellant is adequately protected by an undertaking as he
would be by an interdict but whether it would be
reasonable for the
man in the position of the appellant to nevertheless apprehend injury
despite the undertaking or assurance by
the respondents' that the
alleged infringements of the appellants' rights will not recur."
[15]
The facts in this
application demonstrate that the applicant has demonstrated a clear
right and well-grounded apprehension of irreparable
harm if interim
relief , at the very least is not granted in respect of Farquhar's
association with ADG and Keystone, in respect
of prayers 3 and 4.
[16]
The submissions in respect of prayers 5 and 6 is premised on the
defence of confidentiality. Both the applicants'
and ADG and Keystone
contend that their designs are confidential. The issue of the design
of the MGL is one of the main issues
in dispute in the pending
litigation. Without derogating from the comprehensive submissions put
forward by counsel for the applicants'
and respondents in this
regard, it is not open to this court to pronounce on this issue. I am
not convinced that the relief sought
in prayer 6 should be granted.
[17]
I am satisfied that the relief sought in prayers 3, 4 and 5 should be
granted as interim
relief.
[18]
In the result:
1.It
is declared that the matter is urgent and the applicants' failure to
comply with the requirements of the time periods is condoned;
2.The
applicant is to ensure that steps are taken, within 30 (thirty) days
of this order, to join the third respondent as a party
in the pending
action against the first and second respondents', and da Silva and
van Rensburg; with the relief sought against
the third respondent
formulated accordingly.
3.pending
the outcome of the action under Case No. 62833/17 in the Gauteng
Division of the High Court, Pretoria ("the action")
the
third respondent is interdicted for a period of three years
commencing on 1 October 2016, from:
3.1
directly or indirectly, for his own account or for and on behalf of
any business or undertaking or other
entity or person which competes
with the business of the applicants, canvassing any clients of the
applicants;
3.2
disclosing to anyone any information concerning the identity of the
clients of the applicants or the know-how,
business methods or any
other matters concerning the affairs of the applicants;
3.3
directly or indirectly being interested in or concerned with any
company, including the first and second
respondents, or other person
(whether as employee, profit sharer, associate or director) carrying
on a business in the Republic
of South Africa in the same field of
business as the applicants or any part of the business carried out by
the applicants;
4.
pending the outcome of the action, the first and second respondents
are interdicted for a period
of three years, commencing on 1 October
2016, from employing the third respondent, whether directly or
indirectly, or being associated
with the third respondent , to
perform any duty or task in the same field of business as the
applicants;
5.
pending the outcome of the action, the third respondent is
interdicted and ordered, at all times to keep
confidential and not to
disclose:
5.1
the applicants' trade secrets, processes, customer and supplier
lists;
5.2
other confidential information of known practices in regard to the
applicants' business; and
5.3
any other information whatsoever relating to the applicants'
business;
6.
pending the outcome of the action, the first and second respondents
are interdicted from receiving and making
use of any confidential
information about the applicants' business from the third respondent;
7.
the costs of this application are costs in the action.
AH
PETERSEN
ACTING
JUDGE OF THE HIGH COURT OF SOUTH AFRICA
Appearances
For
the Applicants': PF Lauw SC with him D Vetten
For
the Respondent': R Michau SC with him L Uys
Date
Heard: 07 February 2018
Date
of Judgment: 20 February 2018
[1]
Page 95 Para 14 of the Supporting Affidavit
[2]
Page 111 Para 34.5 of the Supporting Affidavit
[3]
Page 316 Para 9 of the Answering Affidavit
[4]
Page 316 Para 8 of the Answering Affidavit
[5]
Paras 8.1 to 8.6 of the Answering Affidavit
[6]
Page 113 to 119
[7]
Page 215 Notification of Retirement
[8]
Page 277 Letter from BOK Attorneys to Edward S Claasen and
Associates
[9]
Page 284 Letter from Edward S Claasen and Associates to BOK
Attorneys
[10]
Page 371 Mutual Separation and Settlement Agreement