About SAFLII
Databases
Search
Terms of Use
RSS Feeds
South Africa: South Gauteng High Court, Johannesburg
SAFLII
>>
Databases
>>
South Africa: South Gauteng High Court, Johannesburg
>>
2018
>>
[2018] ZAGPJHC 579
|
|
Sugarless Company (Pty) Ltd v Quad Africa Energy (Pty) Ltd (25802/2018) [2018] ZAGPJHC 579 (19 September 2018)
REPUBLIC
OF SOUTH AFRICA
IN THE HIGH COURT OF SOUTH AFRICA
(GAUTENG LOCAL DIVISION,
JOHANNESBURG)
CASE NO: 25802/2018
25802/2018
In the matter
between:
THE
SUGARLESS COMPANY (PTY)
LTD
Applicant
and
QUAD
AFRICA ENERGY (PTY)
LTD
Respondent
JUDGMENT ON SECTION 18 (3)
APPLICATION
VAN
DER LINDE, J
:
Introduction
[1]
This is an application in
terms of
s.18(3)
of the
Superior Courts Act 10 of 2013
to declare
that the operation and suspension of a decision which is the subject
of an appeal is not suspended pending the appeal.
The
background is the following.
[2]
In July, during the last
week of the midyear recess, I heard an application in the urgent
court by the above applicant against the
above respondent for final
alternatively interim interdicts. The unlawful conduct on which
the applicant relied related to
alleged infringements of a registered
trade mark under
s.34(1)(a)
of the
Trade Marks Act 194 of 1993
, of
copyright in the applicant’s logo and artwork under the
Copyright Act 98 of 1978
, and of common law passing-off.
[3]
In the judgment that was
eventually handed down on 24 August 2018 I granted the major part of
the relief that the applicant had
sought. The orders that I made at
that time are set out in the final paragraph of my judgment,
incorrectly numbered [96] (should
have been numbered [100]).
[4]
Subsequently the
respondent brought an application for leave to appeal some of the
orders that I made. I heard that application
on 18 September 2018,
and granted it in all substantial parts. There was also a conditional
application for leave to cross-appeal,
and I granted that too. I
handed down a written judgment on both these applications on 19
September 2018. The parties brought to
my attention two patent errors
in the judgment, which I corrected in manuscript on the pdf versions,
and initialled.
[5]
Immediately thereafter on
that day I heard an application in terms of
rule 47(3)
that the
respondent had brought to stay this
s.18
application pending an order
directing the applicant to furnish security for the costs of this
application. I gave an
ex
tempore
judgment at
14h00 on the same day dismissing the application.
[6]
The applicant then began
addressing me on the
s.18
application, which I heard until 14h00 on
the next day, 20 September 2018. In the course of those submissions
the applicant handed
up a draft order setting out the relief it was
seeking.
[7]
By agreement between the
parties, I then adjourned the matter, affording the respondent leave
to complete its submissions in writing,
and the applicant then to
reply in writing. The respondent undertook that it would file its
remaining argument on Wednesday 26
September 2018. Both parties have
since filed written submissions, the applicant’s replying
submissions having been received
on 1 October 2018, and the
respondent thereafter filing further submissions the next day, 2
October 2018; and this is then the
judgment on the
s.18
application.
Background
[8]
The essential aspect of
the applicant’s case against the respondent was the following.
The applicant and the respondent
had been in a contractual
relationship whereby the respondent was distributing the applicant’s
product in the sugar free
retail confectionary market in South
Africa. That distributorship agreement was implemented for some years
and then terminated
by the respondent in May 2018.
[9]
The packaging in which the
confectionary was distributed, bore the applicant’s registered
trade mark, which included the lettering
“S.Sugarless.Confectionary”
in a particular arrangement. The packaging itself contained
artwork that the applicant
had designed, and which the applicant
described in its papers as the “
packaging
architecture
”.
[10]
What the respondent did,
commencing a week before its termination of the distributorship
agreement and thereafter, was to distribute
into the same market its
own sugar free confectionary product. The respondent’s
packaging presented in all respects,
including the artwork, the same
as the applicant’s packaging, except that instead of
“
S.Sugarless.Confectionery”
it bore a mark which had the words: “
S.Sugarlean
”,
and the “
S”
was inverted. This mark was not registered as a trade mark.
[11]
The packaging that was
first used by the respondent appears in photographs of the main
application at page 235 annexure “JJ22”.
Positioned in
profile, the respondent’s packaging, getup and (unregistered)
trade mark appears on the right-hand side and
that of the applicant
(except that its trademark was registered) on the left-hand side.
This packaging of the respondent is referred
to as “
the
first packaging”
in the judgment. The first packaging was distributed at retailers in
the applicant’s unique stands. The respondent did not
dispute
this conduct.
[12]
The respondent, after
demands by the applicant to desist, then adapted its packaging; an
example of its adapted packaging appears
at page 337 annexure “JJ34”
of the papers in the main application. What it did was to put at the
top of its packaging
an oblique purple header, but for the rest the
resemblance between the respondent’s packaging and
(unregistered) trade mark,
and the applicant’s packaging and
registered trade mark, was still substantial. In particular, the
prominent inverted “
S”
was still present. This packaging was referred to in the judgment as
“
the new
packaging.”
The
applicant contended that the new packaging still infringed all of its
rights, just as before.
[13]
In due course the
respondent then changed its packaging again, announcing that this was
the packaging it would be using in the future.
An example of
this packaging, which is referred to in the judgment as “
the
future packaging”
,
is reflected on page 629 and following, annexure “BB7” of
the main application papers. If annexure “BB7”
is
held in landscape, the respondent’s packaging appears on the
right and that of the applicant on the left. The notable
feature –
for present purposes - of “
the
future packaging
”,
was that the inverted “
S
”
now no longer appeared as part of the respondent’s
(unregistered) trade mark.
The
main judgment
[14]
I found that the
similarity between the respondent’s first packaging, and the
respondent’s new packaging, and the applicant’s
packaging, was substantial, and I granted the relief under the
Trade
Marks Act, the
Copyright Act, the
common law, and the
Counterfeit
Goods Act 37 of 1997
.
[15]
I held however that the
respondent’s unregistered trade mark on the future packaging
did not infringe the applicant’s
registered trade mark, mainly
because the prominent inverted “
S”
no longer appeared. I consequently did not grant trade mark relief in
respect of the future packaging, nor any copyright relief
in respect
of the logo.
[16]
I held however that the
respondent’s first packaging, its new packaging, as well as its
future packaging, all constituted
an infringement of the applicant’s
copyright in the artwork which formed the basis of the packaging
architecture. I
therefore granted copyright relief in respect
of all three forms of packaging.
[17]
The applicant had also
preferred a cause based on passing-off and I held that in the case of
all three forms of packaging, the respondent
was passing off its
product as that of the applicant, thereby unlawfully gaining for
itself access to the applicant’s customers.
I granted
interdictory relief against the passing-off in respect of the first
packaging, the new packaging, and the future packaging.
I also
granted relief under the
Counterfeit Goods Act but
that aspect does
not feature in this judgment.
[18]
I held that the applicant
was entitled to final relief and was critical of the respondent’s
conduct and affidavit version.
In the penultimate paragraph of my
judgment I said:
“
The respondent’s
conduct has been surreptitious and in flagrant disregard of the
applicant’s rights. The bland denials
of the deponent, coupled
with his assertions of innocence, are unconvincing; the undertakings
that were given but breached show
the slip. In my view the
respondent’s version can be rejected on the papers and final
relief in favour of the applicant is
justified, as is a special costs
order.
”
[19] One of the aspects that was
important in this criticism of the respondent was that as late as 20
July 2018 the respondent’s
delivery vehicle was still painted
in the applicant’s full registered trade mark, showing that the
respondent was continuing
to infringe the applicant’s trade
mark in brazen disregard of its own undertaking.
[20] There is another feature that fed
into the negative impression that the respondent’s conduct
created, referred to in
paragraph [54] of the judgment:
“
It is a matter for comment
that the respondent does not make clear why it is essential for its
business to continue to rely so heavily
on the likeness with the
applicant’s packaging. Having regard to the clear
similarity with the applicant’s getup
so evident in the
respondent’s first and new packaging, the inference is
unavoidable that the respondent still now seeks
the lift of the
springboard created by those first two offerings.
”
What
the respondent does not appeal
[21] It will be helpful now to make
plain what portions of my original order did not form the
subject-matter of the respondent’s
application for leave to
appeal my original order, nor of the leave to appeal that I granted.
[22] The first packaging, and all of
the causes of action which the applicant brought against the
respondent flowing from the unlawful
conduct in respect of the first
packaging, do not form the subject-matter of the respondent’s
discontent nor of any order
granting leave to appeal. In other
words, the respondent does not deny that the first packaging
infringed the applicant’s
trademark; it does not deny
that the first packaging infringed the applicant’s copyright
both as regards the trade
mark and as regards the artwork of the
packaging; it does not dispute the applicant’s case based
on passing-off (including
the relief sought and granted in terms of
paragraphs 8 and 9 of the applicant’s notice of motion in the
main application);
and it does not dispute the conclusion that the
first packaging constituted counterfeit goods.
[23] It should be added that given
these concessions as to the principle relating to the first
packaging, the respondent also does
not dispute any of the sequential
relief granted in respect of the first packaging.
[24] There is another respect in which
the respondent has no cavil with the original order I made, and that
relates to certain aspects
of the new packaging. The first aspect of
the new packaging in respect of which the respondent offers no
discontent, is the conclusion
that the new packaging constitutes a
trade mark infringement.
[25] The second aspect relating to the
new packaging in respect of which the respondent has no cavil, is the
declaration that the
new packaging constituted an infringement of the
applicant’s copyright, but limited to the applicant’s
copyright in
the rendition of the applicant’s trade mark, as
opposed to the artwork as appeared on the new packaging. In other
words,
the respondent does not accept that its artwork on the new
packaging infringes the applicant’s copyright in the
applicant’s
artwork on the applicant’s packaging.
[26] For the rest, the respondent
disputes the conclusions to which I came, which included that the new
packaging constituted passing-off,
including the view that I
expressed in my judgment, that the contents of prayers 8 and 9 of the
applicant’s notice of motion
in the main application were
aspects of the larger delict of passing-off.
[27] In other words the respondent
disputes that the applicant is entitled to relief against it in terms
of prayers 8 and 9 of applicant’s
original notice of motion,
whether those prayers are viewed as part of the passing-off delict or
whether they are stand-alone delicts.
It should be added that
it is the applicant’s submission that prayers 8 and 9 of its
notice of motion in the main application
refer to stand-alone delicts
and do not form part of the larger notion of passing-off.
[28] In my judgment on the
applications for leave to appeal, I refused the respondent’s
application to appeal the orders of
delivery-up relief for the
copyright infringements in respect of the new and future packaging.
Leave was sought in respect of the
finding that the respondent’s
new and future packaging artwork infringed the applicant’s
copyright in its packaging
artwork, and I granted that leave. It
would follow logically that any copyright relief that I granted in
respect of the respondent’s
artwork on its new and future
packaging should follow the same route.
[29] But the leave to appeal that I
refused does not concern the copyright infringements of the
applicant’s packaging artwork.
It concerns my finding that the
respondent’s first and new packaging infringed the applicant’s
copyright in its trade
mark, and the delivery-up relief I granted
pursuant to that finding.
[30] In particular, the respondent
argued in the leave to appeal that I should not have granted the
delivery-up relief because it
could always achieve a non-infringing
result by simply over-stickering the offending inverted “S”
on its first and
new packaging. Over-stickering obviously does not
apply to the future packaging because there is no offending inverted
“S”
on the future packaging. I refused the leave sought
because I concluded that over-stickering was not dealt with in the
main application
and therefore not in my main judgment either.
[31] The respondent cannot
over-sticker the artwork on its future packaging, and there is no
offending inverted “S”
in its trade mark of that
packaging to over-sticker. It can potentially only over-sticker its
new packaging (it concedes all the
relief granted in respect of the
first packaging, as pointed out above) if the copyright orders –
including the delivery-up
relief - I made (and in respect of which I
granted leave) in respect of the artwork of its new packaging are
ordered in terms of
s.18(3)
not suspended pending the appeal.
Section
18
of the
Superior Courts Act
[32
] With that background it is
appropriate now to consider
s.18(1)
to
section 18(3)
of the
Superior
Courts Act. They
provide as follows:
“
18. Suspension of decision
pending appeal
(1)
Subject to
subsections (2) and (3), and unless the court under exceptional
circumstances orders otherwise, the operation and execution
of a
decision which is the subject of an application for leave to appeal
or of an appeal, is suspended pending the decision of
the application
or appeal.
(2)
Subject to
subsection (3), unless the court under exceptional circumstances
orders otherwise, the operation and execution of a decision
that is
an interlocutory order not having the effect of a final judgment,
which is the subject of an application for leave to appeal
or of an
appeal, is not suspended pending the decision of the application or
appeal.
(3)
A court may only
order otherwise as contemplated in subsection (1) or (2), if the
party who applied to the court to order otherwise,
in addition proves
on a balance of probabilities that he or she will suffer irreparable
harm if the court does not so order and
that the other party will not
suffer irreparable harm if the court so orders.
”
The
applicant’s submissions
[33] Given that my judgment was final
and not interlocutory,
s.18(1)
applies and unless in this application
I order otherwise, my orders are suspended pending the appeal. Ms
Southwood for the applicant
relied on the judgment in Regal Beloit
Corporation & Two Others v Brian Gregory Campbell & two
others (unreported judgment
of the Gauteng Division of the High
Court, Johannesburg, under case number 2016/16120 by Opperman AJ
(then) on 9 November 2016)
for the proposition that even if leave to
appeal is granted against only certain portions of an order made by a
court, then still
all of the orders made by that court are suspended
pending the appeal.
[34] That served as a foothold for her
argument that it was wrong – or at least suspicious - of the
respondent to have declined
the applicant’s invitation to
undertake to comply with those portions of my order in the main
application in respect of which
the respondent did not apply for
leave to appeal.
[35] Since the respondent declined to
give such an undertaking, so went the argument, it was appropriate
that I should order now
that those orders be put in operation pending
the appeal. Ms Southwood stressed that the
s.18
application has to be
viewed in the context of the respondent’s prior dishonest
conduct, dishonest conduct which was being
perpetuated in the present
s.18
application.
[36] Here she referred to the
unreliable undertakings which the respondent had given in the main
application; the respondent’s
brazen competing with the
applicant by means of both the first and the new packaging; and now
the respondent’s attitude in
over-stickering the new packaging
by placing a black round sticker over the inverted “
S”
and contending that in this way the new packaging should be seen as
akin to the future packaging. It will be remembered that the
future
packaging was held not to infringe the applicant’s trade mark
or copyright in the logo.
[37] Ms Southwood referred to and
relied on University of the Free State v Afriforum and Ano, 2018(3)
SA 428 at paragraphs [9],
[10] and [13]; Mogale City Municipality and
Others v Fidelity Security Services
2017 (4) SA 516
(GJ) at
paragraphs [23] and [30], Incubeta Holdings (Pty) Ltd and Another v
Ellis and Another,
2014 (3) SA 189
(GJ) at paragraphs [25] and [27],
and the judgment in Regal Beloit Corporation at paragraphs [9], [10],
[14.2], [16], [22.2] and
[22.3].
[38] Her argument was that if I did
not make an order placing into operation my original order then the
applicant will lose irreparably
the benefit of my order; and that
this was the test, namely losing the benefit of the order, as opposed
to irreparable harm in
a more expanded financial sense.
[39] Ms Southwood submitted that the
over-stickering was not in compliance with my order as stickers can
be pulled off or can come
off. But most importantly, she
submitted that even if the stickers could not be pulled off or did
not come off, then still
over-stickering was not in compliance with
my order. On that basis she submitted that the applicant was
entitled to have
put into operation all the orders I made in relation
to the trade mark infringement, the copyright infringement, and the
passing-off
interdicts. She handed up a draft order which she
proposed I make.
[40] As to the respondent’s
alleged potential harm, she pointed to the tender which the applicant
had made in its replying
affidavit at page 174 paragraph 5, to pay to
the respondent such damages as the respondent may prove to have
suffered as a result
of the grant of the relief sought in the
s.18
application, should the respondent be successful in the appeal.
[41] She submitted that the applicant
clearly has assets within the Republic. She submitted that the
respondent’s harm is
not quantifiable and pointed to page 46
paragraph 17 in this regard. She argued that as appears from
pages 424 and 425 paragraph
37 of the main application, the
respondent has been in the market effectively only since 19 July
2018.
[42] As to whether the respondent was
entitled at all to be secured against damages in the event of my
order being put into operation,
the applicant argued that
rule 49(12)
found no application because it referred was concerned only with a
money judgment. Ms Southwood submitted that where in admiralty
cases
that principle applied, the bar was high and she referred to Imperial
Marine Company v Pasquale della Gatta; Imperial Marine
Company v
Filippo Lembo (638/10)
[2011] ZASCA 131
(15 September 2011) at
paragraph [19] in this regard.
[43] But she attacked in any event the
respondent’s version of its alleged prejudice as set out on
page 43 paragraph 16 and
its subparagraphs. She said that the
nine employees could be redeployed in other parts of the respondent’s
business
and that two of those nine employees were in any event
directors of the respondent company. Also the vehicles could be
redeployed
in other parts of the respondent’s business.
[44] She submitted that as concerns
stock levels, the applicant does not seek delivery-up of the
respondent’s stock pending
the appeal. She submitted that the
invoices attached at paragraphs 16.3 and 16.4 predate the time when
the respondent actually
commenced its business on 19 July 2018 and
therefore could not relate to the future packaging. They must
have related to
the infringing first packaging and new packaging.
[45] Ultimately she submitted that the
figures upon which the respondent relied for its alleged prejudice in
paragraph 16 of its
answering affidavit are unreliable and
overstated. If the respondent has established potential
prejudice, the amounts are
likely much less. And, in any event,
as she has submitted, the applicant has assets locally to meet any
such claim if it
were legitimate.
The
respondent’s submissions
[46] For the respondent Mr Michau, SC
stressed that the respondent had no problem with the orders regarding
the first packaging
nor with a part of the orders (identified above)
regarding the new packaging. He referred to page 47 paragraph 20 and
page 48 paragraph
21 of the respondent’s answering affidavit.
He submitted that Regal Beloit Corporation was clearly wrong and that
I
should not follow it.
[47] He pointed to the fact that the
prospects of success on appeal are now an important consideration in
applications of the present
kind. He argued also that on the Plascon
Evans-principle the respondent’s version in the present matter
cannot be rejected
on affidavit. He submitted generally that the
applicant had failed to put up any facts that would discharge the
onus of showing
exceptional circumstances.
[48] He stressed that the respondent
was arguing very strongly for an order compelling the applicant to
put up security for damages,
if I should order the implementation
pending the appeal of portions of my order. The undertaking
which the applicant gave
was not good enough without any actual
security to back it up. He relied firmly on
rule 49(12).
[49] The applicant he said was an
Australian company which has been in steady financial decline. He
attacked the assets on which
the applicant relied, submitting that at
best the value was in the R250 000 cash. He submitted that
it might be so that
the applicant’s declining fortunes were
related to the fact that the respondent was appropriating the
applicant’s customers,
but on his submission the respondent was
acting lawfully in doing so.
[50] He submitted that if the order
were placed into operation, the respondent would have to embark upon
establishing brand new
packaging and if it did this, there would be
no point later - after the appeal – then to revert to the
future packaging which
it was currently using: a customer connection
with the brand new packaging will have been established by then.
[51] This notional brand new
packaging, referred to by Mr Michau as “
the changed
packaging
”, would impose an impossibly high burden upon the
respondent just for an interim period, given that the respondent’s
appeal may be successful. He pointed out that it would take
approximately four months for the respondent to establish its
changed
packaging.
[52] He criticised the applicant’s
proposition that the counterfeit goods order should be made operable,
because the applicant’s
design was then to attend on the
retailers and to threaten them with the continued carrying of the
respondent’s stock on
the basis that it was counterfeit goods.
[53] He submitted also that there was
no evidence at all that the respondent had in fact sold offending
packaging to retailers after
30 June 2018. The fact that
offending packaging was found on 10 July 2018 was a drag-effect of
earlier sales made by the
respondent to the retailers. The respondent
could not be blamed for that.
[54] He submitted that the invoicing
argument of Ms Southwood was unsound because the main application
illustrates at page 423 paragraph
33 that by 16 May 2018 the future
packaging had already been decided upon. He submitted that the
respondent’s losses
as set out at page 43 paragraph 16 had to
be accepted. He did not dispute that the respondent did have other
business aspects as
appears from page 45 paragraph 16.6 and page 105
Annexure “AA6”. But he said there was nothing on
the affidavits
to illustrate that it would be possible for the
respondent to redeploy employees and vehicles to other divisions of
the respondent
company.
[55] Concerning over-stickering he
referred to page 48 paragraphs 22 and following and page 123 and
following. He submitted that
over-stickering was in compliance with
my order which directed the respondent to remove the infringing
material. He submitted
that it was not the province of this
Court to say whether or not page 123 was not in compliance with the
order it made; it might
be the business of a contempt of court
application.
[56] He submitted that there was a
tension inherent in the respondent being granted leave to appeal on
the passing-off findings,
and yet to hold that the respondent should
not be afforded leave to appeal against the delivery-up order
relating to the over-stickering.
[57] As to exceptional circumstances,
he pointed to page 10 paragraph 41 of the founding affidavit and
submitted that this requirement
went well beyond considerations of
balance of convenience. He stressed that there were no factual
assertions of exceptional
circumstances.
[58] As to the criticism that the
applicant could not take the respondent at its word, he submitted
that there were interdicts against
the respondent and the respondent
was not asking that it be taken at its word. He submitted that
in Incubeta was inapplicable
to the facts of the present matter.
The
parties’ further written submissions
[59] In his further written argument,
Mr Michau stressed his submission that the common law was not that
despite only part of an
order being appealed against, the whole order
is suspended. He submitted that Regal Beloit Corporation at [15] to
that effect was
unreasoned, stated without reference to authority,
and clearly wrong.
[60] In passing, it is perhaps
superfluous to do so, but one should be reminded of the context of
this point: the applicant submits
that this court should put into
operation those parts of its order that are not being appealed
against, because the respondent
has declined giving an undertaking
that it will adhere to them. The respondent in turn says the
undertaking is not called for,
because the orders continue to apply,
since they are not appealed.
[61] Mr Michau submitted, with
reference to The Admiralty Regulation Act 105 of 1983 and the
judgment in MV Ais Mamas Seatrans Martime
v Owners, MV Mamas &
Another,
2002 (6) SA 150
(C) at 156 I to 157 C, that the notion of
“exceptional circumstances” in s.18(3) should be
interpreted to signify “
Something out of the ordinary and of
an unusual nature; something which is accepted in the sense that the
general rule does not
apply to it; something uncommon, rare or
different”
.
[62] On his argument, the applicant
has not advanced any facts, as distinct from legal argument or
unsubstantiated allegations,
that would warrant a conclusion that
exceptional circumstances exist. Mere assertions are not evidence, he
submits, relying on
AM Moolla Group Ltd and others v The Gap, Inc.
and others
2005 (6) SA 568
(SCA) where Harms, JA said at [31]:
“
Affidavits in application proceedings must do more than
make bald allegations; they must, in addition, provide the facts
which support
the allegations”
.
[63] He submitted that Incubeta is no
authority for the proposition that exceptional circumstances exist,
because that case was
concerned with a contractual restraint of trade
that self-evidently was constrained by an expiry date. Mr Michau
submitted that
rule 49(12) encapsulates the common law on the topic.
With reference to Prest, The Law and Practice of Interdicts, he
submitted
that an undertaking by the applicant to make good a damages
claim should the respondent succeed on appeal, is hollow unless it
sounded in money.
[64] Relying on Chopra v Sparks
Cinemas (Pty) Ltd & another
1973 (4) SA 372
(D) at p379D –
E, and Ndauti v Kgami & others 19
48 (3) SA 27
(W) at p37, he
submitted that it would be appropriate for this court to fix an
amount of money which the applicant should put up
as security.
[65] As for over-stickering, he
submitted that this was in direct compliance with the court order.
The submission is that the court
order was that the delivery-up
obligation applies only if the removal of the infringing trade mark
cannot be achieved.
[66] In its written reply, the
applicant submitted that Regal Beloit Corporation was supported by
Helen Suzman Foundation and another
v Minister of Police and others,
[2017] 3 All SA 253
(GP) at [17]. Ms Southwood submitted that in any
event where, as here, the orders are interlinked the orders are all
suspended
pending an appeal.
[67] She submitted that although the
respondent says it will only use the future packaging, it also says
it will overs-sticker.
She submits that over-stickering is not in
compliance with my order as it is not removal; it is only temporary,
thus undermining
the order to effect the removal of the mark and so
restrain use of the mark.
[68] Relying on Minister of Social
Development Western Cape & Others v Justice Alliance of South
Africa & Another 2016 [JOL]
35612 (WCC), she submitted that the
court retains a wide general discretion to grant or refuse leave and,
if leave be granted,
to determine the conditions upon which the right
to execute is to be exercised.
[69] She submitted that “
the
life of a trademark depends on the promptitude with which it is
vindicated. This applies equally to the distinctiveness of the
applicant’s packaging. It is likely that if the interdicts in
relation to trademark infringement and passing off are not
enforced,
these registered and common law rights will be completely eroded by
the time that an order in the appeal is granted.”
[70] In further written submission on
2 October 2018, Mr Michau explained that the respondent intends
over-stickering the new packaging,
not the first packaging.
Discussion:
the correct approach
[71] An application such as the
present is determined with reference not only to the affidavits in
the application itself, but also
with reference to the affidavits in
the main application. Apart then from the primary hurdle that
confronts an applicant, that
of showing the presence of “
exceptional
circumstances”
, the applicant has to “
prove on a
balance of probabilities”
that it will suffer irreparable
harm if the relief is not granted, and that the respondent will not
suffer irreparable harm if
the relief is granted.
[72]
The notion of establishing proof on balance of probabilities in
motion proceedings introduces a challenge, should there be
factual
disputes, not normally encountered in motion proceedings. Normally,
motion proceedings are not designed for determining
probabilities.
This proposition was put thus by the Supreme Court of Appeal in
National
Director of Public Prosecutions v Zuma (573/08)
[2009] ZASCA 1
(12
Jan 2009) at [26] (emphasis supplied): “
Motion
proceedings, unless concerned with interim relief, are all about the
resolution of legal issues based on common cause facts.
Unless the
circumstances are special they cannot be used to resolve factual
issues because they are not designed to determine probabilities
.
It is well established under the Plascon-Evans rule that where in
motion proceedings disputes of fact arise on the affidavits,
a final
order can be granted only if the facts averred in the applicant's (Mr
Zuma’s) affidavits, which have been admitted
by the respondent
(the NDPP), together with the facts alleged by the latter, justify
such order. It may be different if the respondent’s
version
consists
of bald or uncreditworthy denials, raises fictitious disputes of
fact, is palpably implausible, far-fetched or so clearly
untenable
that the court is justified in rejecting them merely on the papers.
The court below did not have regard to these propositions
and instead
decided the case on probabilities without rejecting the NDPP’s
version.”
[73] Here the legislature has
expressly ordained that the resolution should be on a balance of
probabilities, the usual civil standard
of proof in trials. It seems
to me that it has thereby override the Plascon Evans – rule in
applications such as this: reference
to trial or evidence is not
envisaged in these applications, given their interlocutory nature and
the automatic right of appeal
as a matter of extreme urgency.
[74] It appears to me then that Mr
Michau’s reliance on Plascon Evans to cement the respondent’s
version about its own
prejudice does not avail. I suggest too that
even in considering the absence or presence of exceptional
circumstances, the court
will do so on a balance of probabilities,
and not apply the Plasco Evans – rule. Otherwise the two parts
of the application
will be determined on different bases, a result
which is too absurd for it to have been intended by the legislature.
[75] This court therefore has to
decide the application on the material stated, and must view the
factual assertions made in the
affidavits through a probability lens.
Into that consideration go the prospects of success on appeal as
well, as appears from what
follows.
The prospects of success on appeal
and “
exceptional circumstances”
[76]
Originally,
in
Incubeta Holdings (Pty) Ltd v Ellis,
2014 (3) SA 189
(GJ) at 196C to
197C, the court expressed the view that the merits of the case were
not pertinent to an enquiry under section 18(3):
“
The
considerations that are valuable presuppose a bona fide application
for leave to appeal or an actual appeal. No second-guessing
about the
judgment per se comes into reckoning.
”
[77] This approach was not followed by
Justice Alliance of South Africa, which held in paragraph [27] that
the court’s assessment
of the prospects of success in the
appeal remained a relevant factor in the consideration of
applications such as the present.
[76] Specifically, that court said the
following at paragraph [28]:
“
Sutherland J appears to have
considered that the prospects of the appeal do not form part of the
consideration because leave to
appeal inherently carries with it an
acceptance that there was a reasonable prospect the appeal might
succeed. That is indeed
so in most cases, but even in such
matters there is scope for degrees of conviction on the likelihood of
such prospect being realised.
”
[77] This approach of the full court
was approved by the Supreme Court of Appeal in Afriforum, in which
the SCA held that it was
apparent that the requirements introduced by
s.18(1) and (3) were more onerous than those of the common law. At
paragraph [15]
the SCA expressly held that the prospects of success
in the appeal are relevant in deciding whether or not to grant the
exceptional
relief under s.18(3).
[78] Turning to a consideration of the
prospects of success on appeal, the real issue for me lies in whether
the respondent’s
future packaging will be held, probably, to
have offended either common law passing-off, or the applicant’s
copyright in
its packaging artwork. In this respect the following
feature of this case weighs.
[79] The respondent has in a short
period of time, as a newbie, entered the sugar free confectionary
market. It explains in its
answering affidavit the extent of the
financial harm it will suffer if it were prevented, pending the
appeal, from using the future
packaging; and the expense that would
be involved if it were compelled to establish “the changed
packaging.”
[80] It is necessary though to reflect
for a moment about the manner in which it planned and achieved its
entry into this market.
Its first step was the unlawful distribution
of what was a virtually identical copy of the applicant’s
registered trade mark,
copyright and packaging. My finding in the
main application to that effect is now expressly accepted by the
respondent, who therefore
did not seek to challenge that finding on
appeal.
[81] That conduct persisted until
after demand the respondent adjusted its packaging, in my view only
slightly, by adding the oblique
purple header, but for the rest
unlawfully perpetuating its copy of the applicant’s registered
trade mark by means of the
respondent’s new packaging. My
finding in the main application that that conduct was also unlawful
is not challenged by the
respondent, and it did not apply for leave
to appeal it. That conduct, too, continued until eventually the
respondent introduced
its future packaging.
[82] By the time of the respondent’s
introduction of the future packaging, the customers in that niche
retail market will
– as a matter of probability - already have
associated the respondent’s packaging and trade mark (aka logo)
(unregistered),
with the applicant’s registered trade mark and
packaging artwork. The respondent had thus unlawfully
established for
itself a solid base, a foundation, on which to build
its future packaging.
[83] The future packaging now no
longer displayed the prominent inverted “
S
” as
part of its unregistered trade mark/logo, but still presented with
artwork which – although it had been adapted
– had (in my
judgment) sufficient of the look and feel of its predecessors, being
the new packaging and before it, the first
packaging. That lineage
had been authoritatively established, from the respondent’s
perspective.
[84] The foundations of the
respondent’s business were therefore egregious, unlawful
misappropriations of another’s
conception, investment and
effort, as I found in the main application. I did grant the
respondent leave to appeal, to be sure,
but that judgment and order,
and the prospects of success on appeal, must be viewed in the context
of what the respondent did not
seek to appeal.
[85] The respondent’s acceptance
(only now) of my judgment concerning the trade mark and copyright
infringements of the applicant’s
trade marks and copyright in
the applicant’s trade marks by means of the respondent’s
first and new packaging; the
respondent’s acceptance (only now)
of unlawful passing off by means of its first packaging; and the
respondent’s common
cause brazen use of the applicant’s
trade mark on the respondent’s delivery vehicle on 20 July
2018; all confirm that
the respondent had neatly, but egregiously and
unlawfully, with complete disdain of the applicant’s rights,
built for itself
a springboard into this business. In my view, this
conduct constitutes “
exceptional circumstances”
for the purposes of this s.18 application.
Who
will probably suffer irreparable harm?
[86] In my view, on a balance of
probabilities, the applicant will suffer irreparable harm if my
orders were suspended, and the
respondent will not suffer irreparable
harm if my orders were not suspended. My reasons are essentially
these.
[87] The applicant had an established
business, an established clientele, and an established product in
this country. It took time,
effort, investment, intellectual skill,
and drive to achieve that asset. It now has an order protecting that
asset. If it wins
the appeal, that order will be affirmed. If in the
meantime the respondent were permitted to act as if there were no
orders, the
applicant will have lost completely the benefit of the
protection of its rights. It will have two court orders in its
favour, one
of which will have been given on appeal, but despite this
fact, its rights will have been rendered meaningless. That harm is
irreparable.
[88] If the respondent wins the appeal
but in the meantime the orders are not suspended, its harm is
represented by time, cost and
effort it will take to change the
future packaging to the changed packaging. This is an endeavour on
which the respondent has embarked
at least twice before: when it
changed its first packaging to its new packaging, and when it changed
its new packaging to its future
packaging. And it appears to have
done so seamlessly, in the course of continuing to conduct this
aspect of his business.
[87] Even if a measure of harm is
established should the appeal go substantially its way, the measure
must accordingly be temporary,
slight, and not irreparable. It is
represented only by whatever is required simply to change its
packaging away from being associated
with the first packaging, the
new packaging, the future packaging, and the applicant’s
packaging. If it is able to show that
in doing this a loss is
incurred despite all reasonable efforts to mitigate it, it will claim
the loss from the applicant. Potential
difficulty in executing a
local judgment in other jurisdictions does not, in my view,
constitute irreparable harm.
Conclusion
[88] There remains the issue of
whether the orders not appealed should be declared not suspended, and
the judgment in Regal Beloit
Corporation. In my view the answer is
that where, as here, the orders are really intertwined, given
particularly the way in which
– as a common cause fact –
the respondent had set up its competing business, all of the orders
are suspended.
[89] Rule 46(12) provides: “
If
the order referred to in subrule (11) is carried into execution by
order of the court the party requesting such execution shall,
unless
the court otherwise orders, before such execution enter into such
security as the parties may agree or the registrar may
decide for the
restitution of any sum obtained upon such execution. The registrar's
decision shall be final.”
[90] Since rule 49(11) has been
repealed, I am not convinced that rule 49(12) still applies. But
assuming it does, in view of the
facts and conclusions to which I
have come concerning the presence of “exceptional
circumstances” and “irreparable
harm”, decided to
direct that the applicant need not provide security for the execution
of the orders.
[91] In the result I make the
following order:
(a) An order issues in terms of the
draft handed up by the applicant, which I have initialled, marked
“X”, and dated.
(b) It is directed that the applicant
need not provide security in terms of rule 49(12) for the execution
of the orders.
WHG van
der Linde
Judge,
High Court
Johannesburg
Date argued: 18, 19 September
2018, with further submissions on 26 September 2018 and 1 and 2
October 2018.
Date of judgment: 8 October 2018
For the applicant: Adv F
Southwood
Instructed by:
Schindlers Attorneys
Applicant’s attorneys
2
nd
Floor, 3 Melrose
Boulevard
Melrose Arch
Tel: (011) 448 9600
Fax: (011) 325 5314
Ref: Mr Van der Merwe
Email:
vandermerwe@schindlers.co.za
For the respondent: Adv R
Michau, SC
Instructed by:
A J Attorneys
Respondent’s attorneys
1
st
Floor, Unit 15
Eastwood Office Park
11B Riley Road
Bedfordview
Johannesburg
Email:
info@ajstone.co.za and abriestone@gmail.com
abrie@ajstone.co.za
and cara@ajstone.co.za