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[2016] ZAGPPHC 348
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Gerazounis and Others v Kokosiouli and Others (89098/2014) [2016] ZAGPPHC 348 (9 March 2016)
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IN
THE HIGH COURT OF SOUTH AFRICA
(GAUTENG
DIVISION, PRETORIA)
CASE
NO: 89098/2014
DATE:
09 March 2016
In the matter
between
MARCO
GERAZOUNIS
................................................................................................
First
Applicant
GEKO STUDIOS
(PTY)
LIMITED
...........................................................................
Second
Applicant
MLG GROUP
LIMITED
..............................................................................................
Third
Applicant
And
IRENE
KOKOSIOULI
................................................................................................
First
Respondent
PANAJOTIS
APOSTOLIS
KOKOSIOULI
...........................................................
Second
Respondent
IRENE KOKOSIOULI
N.O
......................................................................................
Third
Respondent
JUDGMENT
MALI AJ:
[1] This is an
application for a mandament van spo/ie and an interim interdict in
terms of which the applicants seek:
1.1 an order to have
the second applicant restored to its former position prior to it
being stripped of the tools of its trade so
that it can again conduct
business;
1.2 payment of a sum
of R90 527.87 by the first respondent to the c second applicant;
1.3 Interdictory
relief to conduct the business of the second applicant without
interruption pending the institution of further
proceedings by the
second applicant.
[2] The first
applicant is a director of the second applicant (“the company”
which was incorporated in terms of the
Companies Act 2008
. The third
applicant is a company incorporated in the British Virgin Island and
is a 50% Shareholder of the second applicant.
[3] The first
respondent is an adult female businesswoman, residing at 8 C…..
S….., C….. L……,
M…….
[4] The second
respondent is an adult male residing at 8 C…… S…….,
C…….. L…..,
M…….. He is the
husband of the first respondent.
[5] The third
respondent is trini Valentina Kokosiouli, cited in her capacity as
the trustee of the PI Industries Trust (“PI
Industries”),
registered with the Master of the High Court under trust number IT
1……… (‘the trust”).
[6] During June
2014, the third applicant, MLG Group Ltd, the third respondent and PI
Industries entered into a shareholders’
agreement in terms of
which they were to become equal shareholders in the second applicant,
previously known as Olicavista (Pty)
Ltd.
[7] Each of the
shareholders had to make a contribution to the second applicant. The
relevant terms of the agreement are as follows:
“2.11 Within
30 (thirty) days after signature of this agreement:
2.11.1 ...
2.11.2 The First
shareholder [PI Industries] shall subscribe by way of ceding,
assigning and transferring to and in favour of the
Company [Geko
Studios] all rights, titles and interest in all patents, rights to
inventions, copyright (including, but not limited
to copyright in the
programs known as ‘Salon Management Studio' and all its
additions, components, modules, sub components
and sub modules) and
related rights, trademarks, trade names and domain names, rights in
designs, rights in computer software,
database rights, rights in
confidential information (including know-how) and any other
intellectual property rights, in each case
whether registered or
unregistered and including all applications (or rights to apply), for
and renewals or extensions of, such
rights and all similar equivalent
rights or forms of protections which subsist or will subsist now or
in the future in any part
of the world and Goodwill attaching to,
associated with, or belonging to and its client list, contracts
(known as pink slips),
debtors book, investments and revenue
comprising of monthly income of approximately R150 000 belonging to
PI Industries Trust for
50% (Fifty Percent) shares in the capital of
the Company
2.11.2.1 [PI
Industries] agrees to do all such to do all such things and to take
all such steps as may be required to give effect
to the transfer of
all rights, titles and interest in all intellectual Property
including all patents, copyrights, Trademarks (whether
register, in
the process of being registered or not registered as the case may be)
and the all Goodwill to the Company [the second
applicant], and
expressly agrees to:
2.11.2.1.1 cause to
be delivered or made available to the Company all such additional
documents as the Company may reasonably require
to complete the
transfer of the Intellectual Property and Goodwill into the name of
the Company; and
2.11.2.1.2 do all
such other things as may be reasonably necessary to give full effect
to this Agreement.
2.11.3 The Second
Shareholder [MLG] shall subscribe in cash for 50% (Fifty
0Percent) shares in
the capital of the Company at R2 500 000.00 (Two Million Five Hundred
Thousand Rand) in the aggregate of which
50% of the above amount
shall be apportioned to the cost of this subscription and 50% as a
cash injection by [MLG].
[8] The contemplated
subscription of shares did not materialise. Instead, MLG and PI
Industries bought shares in the shelf company.
It is common cause
between the parties that the second respondent had been conducting
the business of rendering software services
to spa and salon owners
in the beauty industry through an entity called Salon Management
Studios (Pty) Ltd (“Salon Management”).
It is common
cause that the software programme which Salon Management used to
conduct business was owned by PI Industries.
[9] One of the terms
of the agreement was that PI Industries was going to cede the
software to the second applicant. It was also
agreed that the
customers which had been serviced by Salon Management would all be
transferred to the second applicant and that
Salon Management would
be wound up. The third applicant’s role was to contribute R2.5
million to the second applicant. The
third applicant paid a sum of R1
million as part payment into the second applicant.
[10] The second
applicant commenced business using the intellectual property of PI
Industries. However, shortly thereafter, a dispute
arose between the
first applicant and the first and second respondents. The first and
second respondents resigned from the second
applicant. The applicants
could not use the intellectual property of PI Industries.
[11] The issue for
determination is whether the applicants were despoiled and are
entitled to an interim interdict restoring the
status quo and
enabling the first applicant to continue conducting business pending
the trial which will determine the factual
disputes between the
parties.
SPOLIATION
[12] The requisites
for a spoliation order are trite and may be summarised as follows:
12.1 that the
applicant was in peaceful and undisturbed possession; and
12.2 that the
respondent deprived him of the possession forcibly or wrongfully
without his consent.
The above is
supported by case law. See: Yeko v Qana
1973 (4) SA 735
at 739.
[13] The cause for
the applicant’s possession is irrelevant. The question whether
that possession is wrongful or illegal is
also irrelevant and goes to
the merits of the dispute. An applicant has to show not that he was
entitled to be in possession but
that he was in de facto possession
at the time of being despoiled.
“It seems to
me that the remedy provided by spoliation permits very limited
defences. The only possible defences should be
in the form of a
response to the grounds stated above, namely the applicant was not in
peaceful and undisturbed possession alternatively
that the
deprivation was lawful.” See Knox and Another v Second
Lifestyle Properties (Pty) Ltd and another (CA 28/2011) [2012]
ZAGPHC
at 223.
[14] In Solar
Mounting Solutions ( Pty) Ltd v Engala Africa (Pty) Ltd and Others
(3717/2014), the following was stated:
75/ The mandament
van spolie is a possessory remedy. The essential characteristic of a
possessory remedy is that the legal process
whereby the possession of
a party is protected is kept strictly separated from the process
whereby a party's right to the property,
is determined. Spoliation
orders are granted so as not to allow any man to take the law into
his own hands. If he does so, the
court will summarily restore the
status quo ante as a preliminary step to any investigation into the
merits of the dispute.
See: Nino Bonino v
De Lanae
1906 TS 120
at 122;
Ivanov v North West
Gambling Board
2012 (6) SA 67
(SCA) at 75 B-E.
[6] As such, the
mandament van spolie is an extraordinary and robust remedy.”
[15] In Bon Quelle
(Edms) Bpk v Munisipaliteit van Otavi
1989 (1) SA 508
(A), It was stated:
“An
incorporeal right cannot be possessed in the ordinary sense of the
word. The possession is represented by the actual exercise
of the
right Consequently refusal to allow a person to exercise the right
will amount to a dispossession of the right In spoliation
proceedings
the applicant need not to prove that he has the right; what is
relevant is whether or not he has exercised the right"
[16] The act of
spoliation complained of in casu occurred during December
2014. According to
the applicants, they, through the first applicant, had electronic
access to the Company’s database and
other information
mentioned below:
16.1 the
administrative online log-in requirements, including user names and
passwords where applicable, for all accounts used by
the second
applicant in the conduct of its business, with the following service
providers: Infobip Africa (Pty) Limited, Hetzner
(Pty) Limited,
Hostgator.com LLC, Ozone Information Technology Solutions CC and
cPanel Inc;
16.2 all online
log-in details, including user names and passwords where applicable,
for every user-profile created by the respondents
for the accounts
referred to in paragraph 18.1 where such user-profile was used for
the conduct of the second applicants business;
16.3 All log-in
details, including user names and passwords where applicable, for all
SQL databases, Microsoft servers and licensing
servers utilised by
the second applicant in the conduct of the business;
16.4 the online
administrative user name and password used for logging into the
account at the Wordpress.com website where the second
applicant’s
webpage was hosted;
16.5 all documents,
files and paper removed by the respondents from the first applicant’s
office at the second applicant’s
premises;
16.6 all electronic
files which were hosted on the electronic Dropbox folder utilised by
the applicants’ business as they
stood on 28 November 2014;
& 16.7 all keys
and access tags to the second applicant’s office which may be
in the possession or under the control of
the respondents;
16.8 all license
keys for any software or hardware utilised in the conduct of the
second applicant’s business, and
16.9 all and any
property of whatsoever nature and kind belonging to the second
applicant which is in the respondents’ possession
or under the
respondent’s control.
[17] The applicants
further state that, when the relationship broke down between the
parties, the respondents purported to reclaim
the abovementioned
materials and software which PI Industries was supposed to have ceded
to the second applicant. The respondents,
by purporting to reclaim
the software, spoliated them as they were in peaceful and undisturbed
possession of same. They further
raise the issue of mala tides on the
part of the respondents because they failed to inform the applicants
that there was no cession.
[18] The first
respondent states that the applicants had access only to the folders
hosted by Hetzner (Pty) Ltd and could be accessed
through this
particular server. The said server was accessed through the use of a
user name and a password via KonsoleH. The second
respondent was the
only one who had possession of KonsoleH. The user name and
- password for
accessing the software were never at any point furnished to the
applicants.
[19] It was further
submitted on behalf of the respondents that, during January
2015, Hetzner (Pty)
Ltd blocked the second respondent from access to their servers and
console. The said blocking of access resulted
in the respondents
being unable to log into any of the servers to access information
stored, including the user names and passwords
being sought in this
application.
[20] The second
respondent was the only person who could activate the programme in
order to make it work and allow the customer
the use thereof. This is
because the second respondent was the only person who ever had
possession of the intellectual property
to generate the registration
and serial numbers, which were necessary to activate the
0 programme, so that
the customer could make use of them. The programme could not be
activated without the said registration and
serial numbers, which
intellectual property remained with the second respondent
exclusively.
[21] The first
respondent further stated that, in good faith and in anticipation of
the third applicant complying with its obligations
in terms of the
shareholder's agreement, the third respondent allowed the second
applicant the use of its intellectual property.
However, it was only
the second respondent who would have control of the programme and be
able to conduct the second applicant’s
business.
[22] According to
the second respondent, the source code, which constitutes the heart
of the programme, was stored on a private
folder and encrypted in
such a way that access thereto could only be gained by the second
respondent. At page 238 paragraph 40
of the respondents’
answering affidavit, the respondents admit to the second applicant’s
submission but state the following:
"this property
was never formally ceded as both th$ Second Respondent and I became
increasingly suspicious of the on-going
failure to invest the
remaining R1 500 000.00.m
[23] The above
statement by the respondents is irrelevant. The issue is whether the
applicants were ever in possession of the login
details, passwords
and any other material allegedly despoiled.
[24] To the
submissions made by the respondents, the applicants do not provide
any clear explanation or evidence as to whether they
indeed have
access to the passwords, user names and login details. The applicants
maintain that they had use of the intellectual
property. According to
them, how they accessed it is irrelevant. I do not think so; in the
notice of motion the applicants are
seeking passwords, login details
etc. They do not dispute that they were not provided same; however,
they want restoration of something
they never possessed, contrary to
the law of spoliation.
[25] The first
applicant states in his affidavit that the second applicant made
software available to customers for a fee. However,
he does not
address the respondents' submission that the exercise of control of
the software was only through the second respondent.
The possession
is represented by the actual exercise of the right. See Zulu v
Minister of Works KwaZulu Natali992 (1) SA 181 (N).
The use of
something is not an incident of possession. See Telkom SA Ltd v
Xsnet(Pty) Ltd
2003 (5) SA 309
(SCA).
[26] By the
applicants’ own admission, once one is told the user name and
password, it is known. It is a piece of information
which can be used
at will to obtain access. From the above, it is apparent they were
never in possession of passwords and access
to the programmes
complained of. The applicants would not have been seeking any redress
if they had been given passwords. They
would have proceeded with the
use of the said login details. The respondents admit to removing the
electronic folder access which,
according to them, is insignificant
to the running of the business. The applicants could not gainsay the
respondents’ submissions.
In my view, to order relief of no
practical value is of no use.
[27] The other act
of spoliation complained of is the allocation of R90 527.87 by the
respondents. The said money, which was supposed
to have been paid to
the second applicant, was paid into the account of Salon Management
on the first’s respondent’s
instruction. By the
applicants’ own admission, the amount in question was never in
the second applicant’s possession.
The applicants have failed
to prove that they were in peaceful and undisturbed possession of the
said monies.
[28] Having regard
to the above, there is no evidence that the applicants were
spoliated.
INTERIM INTERDICT
[29] The interim
relief sought in casu is as follows:
29.1 an order
interdicting the respondents from directly or indirectly taking any
step or action to divert money owed by any person
to the second
applicant to any person or banking account other than the banking
account of the second applicant;
29.2 an order
interdicting the respondents from directly or indirectly soliciting
the custom of any client serviced by the second
applicant or
previously serviced by Salon Management;
29.3 an order
interdicting the respondents from directly or indirectly providing
any client serviced by the second applicant or
previously serviced by
Salon Management any of the services provided by the second
applicant;
29.4 an order
interdicting the respondents from directly or indirectly interfering
with the operations of any software, or any component
or database
thereof, operated by the second applicant or provided by the second
applicant to any customer or client;
29.5 an order
interdicting the third respondent from taking any steps pursuant to
the purported cancellation of the shareholders’
agreement
entered into between MLG and the PI Industries Trust; and
29.6 an order
directing the third respondent to comply with its obligations in
terms of the cession in favour of the third applicant
as contained in
clause 2.11.2 of the shareholders’ agreement entered into
between the third applicant and the third respondent.
[30] The following
requirements for an interim interdict are laid down:
“the
requirements for the granting of an interim interdict; namely that
the applicant
must show
(a) that the right
which is the subject of the main action and which he or she seeks to
protect by reason of the interim relief
is only prima facie
established though open to some doubt;
(b) that if the
right is only prima facie established, there is a well-grounded
apprehension of irreparable harm to the applicant
if the interim
relief is not granted and he or she ultimately succeeds in the
establishing of his or her right;
(c) that the balance
of convenience favours the granting of interim relief;
(d) that the
applicant has no other satisfactory remedy ”
See Erasmus Superior
Court Practice at B1-330- B1-330A. The above is supported by the case
law. See Ndauti v Kgami & Others
1948 (3) SA 27.
[31] The applicants'
argument is that they have established a prima facie right and that
there is apprehension of reasonable harm.
This is because the
applicants will not be in a position to pay any amount of damages as
they depend on the amount of R60 000.00
per month drawn from the
second applicant. There is also apprehension of the liquidation of
the company as a result of the respondents’
actions, which will
lead to the employees of the company losing jobs. The further basis
for the applicants submission is that the
shareholders' agreement
between the parties gives rise to obligations of the first and second
respondents. The said respondents
no longer have any relationship
with the second applicant. Thus, they cannot direct the manner of
payment in respect of the second
applicant. They are neither entitled
to service the customers of the second applicant and have no right to
interfere with the software.
[32] I am not
persuaded by the above submissions. There are allegations by both
parties about the fulfilment and or non-fulfilment
of the
shareholder’s agreement. The said allegations cannot be decided
on papers. The harm apprehended by the applicants
is reparable; there
remains the right to damages. The right includes the right to
institute a claim for payment of R90 527.87 by
the respondents.
COUNTER
APPLICATION
[33] The respondents
seek a declaratory order that the shareholders’ agreement is
cancelled. From the submissions by both
parties, I find that there
are various disputes of facts which the respondents should have
foreseen. As it stands the issue cannot
be resolved on the papers.
ORDER
[34] In the result
the following order shall issue:
34.1 The applicants’
application is dismissed with costs;
34.2 The
respondents’ counter application is dismissed with costs.
NP MALI
ACTING JUDGE OF
THE HIGH COURT, GAUTENG DIVISION
DATE HEARD ON: 15
OCTOBER 2015
DATE HANDED DOWN:
03 MARCH 2016 APPEARANCES
For the
applicants: Adv M A Chohan SC
Instructed by:
MacRobert Attorneys
For the
respondents: Mr C Bollo (Attorney)
Instructed by:
Biccari Bollo Mariano Inc