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[2016] ZAGPPHC 469
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Drywonder Propriety Ltd and Another v Carpet Dryclean and Others (75564/2015) [2016] ZAGPPHC 469 (27 May 2016)
IN
THE HIGH COURT OF SOUTH AFRICA
GAUTENG
DIVISION, PRETORIA
CASE
N0:75564/2015
DATE:
27 MAY 2016
NOT
REPORTABLE
NOT
OF INTEREST TO OTHER JUDGES
REVISED
In the matter
between:
DRYWONDER
PROPRIETARY
LIMITED FIRST
APPLICANT
ROY
SELWYN BERMEISTER SECOND APPLICANT
and
CARPET
DRYCLEAN CC
FIRST RESPONDENT
WAYNE
HALLIDAY
SECOND RESPONDENT
TWO OCEANS
MARKETING PROPRIETARY LIMITED THIRD RESPONDENT
JUDGMENT
RANCHOD J
[1] In this
opposed matter the applicants launched the application to be heard in
the urgent court in October, 2015. However, as
the application,
together with the counter-application by the respondents comprised of
some 732 pages and the hearing was expected
to last more than a day,
it was referred to the Deputy Judge President by the presiding Judge
for the allocation of a special date
for the hearing of the matter.
It was allocated to be heard as a special motion in the Third Motion
Court on the 28th and 29th
January 2016. Costs of the hearing in the
urgent court were reserved.
[2] The
applicants sought the following
interim
interdicts, to
restrain the respondents from:
"2.1
unlawfully competing with the first applicant by passing-off their
goods and services as being those of, or associated
with, the first
applicant or using any get-up which is confusingly or deceptively
similar to the first applicant's DRY WONDER get-up
as depicted in the
affidavit of Roy Selwyn Bermeister or the trade marks METSAN, DRY
WONDER and
SNOWMAN
DEVICE;
2.2
unlawfully competing with the first applicant by interfering
with its contractual relationships, including intentionally, and
without
lawful justification, inducing or enticing the third
respondent to breach its agreements with the first applicant;
2.3
infringing the first applicant's copyright in terms of
section
23
of the
Copyright Act 98 of 1978
by making unauthorised
reproductions and/or adaptations of the first applicant'sSNOWMAN
DEVICE and the first applicant's product
packaging as depicted in the
affidavit of Roy Selwyn Bermeister pending the final outcome of this
application or an action to be
instituted for final relief within 20
days from the date of the grant of this order."
[3] The
applicants also sought the following
final
interdicts:
"3.
Compelling the first and second respondent
( sic)
to comply
with their contractual obligations to the first applicant by
continuing to manufacture the DRY WONDER product referred
to in
paragraph 4.1 of the affidavit of Roy Selwyn Bermeister for a period
of 6 months, calculated from the date of the order requested.
4. Directing
first and second respondents to deliver to the first applicant the
19,936kg of DRY WONDER product that should be in
its possession and
which belongs to the first applicant,
alternatively
to compel
such respondents to manufacture it for the first applicant."
[4] However, at
the commencement of the hearing before me, Mr Michau SC, informed me
that the applicants were no longer seeking
the relief set out in
prayers 2.2 and 2.3 nor prayers 3 and 4 (the final interdicts).
Applicants seek an order in terms of prayer
2.1 only together with
costs.
[5] No relief is
sought against the third respondent save if it opposes the
application in which case costs are sought against it.
The third
respondent is not opposing the application, hence, for the sake of
convenience, where I refer to the first and second
respondents
jointly, they will be referred to as 'the respondents'. The third
respondent will be referred to as 'Two Oceans Marketing'.
[6] The first
respondent is a manufacturer of chemical products and, in particular,
carpet dry cleaning products. It has been operating
in this field
since 1992. Through the first applicant, the second applicant has
been the
de jure
distributor of a particular product
manufactured by the first respondent branded DRY WONDER.
[7] The
de
facto
distribution of the DRY WONDER product has, for the past
approximately 20 years been effected by Two Oceans Marketing. As of
November,
2014, the respondents have been dealing directly with Two
Oceans Marketing.
[8] The
applicants relied on an alleged oral agreement between the parties
for an order compelling the respondents to comply with
their
contractual obligations. The respondents produced a written agreement
signed by the parties in 1995 (the 1995 agreement)
which, they said,
governed the relationship between the parties.
[9] During the
hearing, when relief was now sought only in terms of prayer 2.1 of
the notice of motion the applicants' arguments
shifted, as I
understood them, to a denial that the 1995 agreement was the true
written agreement. It was contended that a draft
agreement had been
prepared - and the terms contained therein were what was agreed upon
between the parties based on the oral agreement.
The second applicant
says the 1995 agreement was presented to him by a Mr Sean Rens whilst
he was preparing to catch a flight to
Australia and, under the
impression that it was essentially the same as the draft, he signed
it without realising that it was in
material respects different from
the draft. For this reason the relief in prayer 2.1 is sought on a
temporary basis, pending the
outcome of an action to be instituted
with leave of the Court, to determine
inter alia
the validity
of the 1995 agreement which is at the heart of the dispute between
the parties; and, if the 1995 agreement is valid,
whether it was
validly terminated.
[1O] The relief,
say applicants, is aimed at maintaining the status
quo,
being
the business relationship between the parties that has been in place
for the past 20 years.
[11] The first
applicant claims to be the proprietor of the DRY WONDER trade mark.
The respondents dispute this and allege that
the first applicant
assigned ownership of the DRY WONDER trade mark to the first
respondent in terms of the 1995 agreement.
[12] The question
here is whether the applicant is entitled to interim relief.
[13] The
respondents have filed a counter-application in which the following
relief is sought:
13.1
enforcement of a contractual restraint of trade against the
applicants for a period of 3 years;
13.2 an interdict
restraining the applicants from using the mark DRY WONDER (or any
mark similar thereto);
13.3 an interdict
(as provided for in the written agreement) restraining the applicants
from divulging the formula of the product;
an
interdict ordering the applicants to remove any
reference
to the mark from websites, company names,
advertising
material etc. and to transfer
the
domain
name
www.drywonder.co.za
to
the first respondent;
an
order directing the applicants to deliver all packaging,
advertising material etc. upon which the mark is represented and
an
order confirming cancellation of a written agreement between the
parties. [The 1995 agreement].
[14] It is apparent
that the counter application is based on the 1995 agreement.
[15] Counsel for
the applicants submitted that it was not necessary for me to
determine the issue whether the 1995 agreement is
valid or not. That
may be determined in the action to be instituted if this court grants
the interim interdict. However, during
the hearing the thrust of the
applicant's arguments were about whether the 1995 agreement was valid
or not as the respondents rely
on
inter alia
clause 5(e) of
the agreement, which provides:
'The parties
agree that at all time the trademark and/or patent in to the product
shall remain the ownership of the MANUFACTURER
and no rights in
respect of such patent or trademark and/or the formula shall vest in
the DISTRIBUTOR. In particular the DISTRIBUTOR
undertakes to ensure
that any knowledge which it may obtain in respect of the formula
relating to the product during the continuance
of this agreement,
shall remain strictly confidential, and it shall not be entitled to
divulge any information regarding the formula
or any portion thereof
to any other party whatsoever.'
[16] It was
submitted that it is apparent from the history of the relationship
between the first applicant and the first respondent
that the parties
have for the past 20 years conducted business as though the first
applicant is the proprietor of the DRY WONDER
trade mark.
[17] From the
papers it is evident that the applicant is the sole director of the
first applicant since 2 January 1994. He was
also a director of
first applicant's predecessor-in-title, Snowchem (Pty) Ltd (Snowchem)
since 9 January, 1973.
[18] The second
applicant is a party to the 1995 agreement in his personal capacity.
[19] The first
respondent was previously a close corporation which was converted to
a limited liability company and registered as
such on 8 September
1995 under the name Wayne Halliday Chemicals (Pty) Ltd. It was
re-converted to a close corporation on 15 May
2009.
[20] The second
applicant (Bermeister) says DRY WONDER was formerly known as METSAN
and METSAN DRY WONDER and was first developed
by Snowchem in 1984.
Snowchem was finally de-registered on 16 July 2010.
[21] Snowchem
applied for and secured registration of three trade marks viz. METSAN
in 1983 and DRY WONDER and SNOWMAN DEVICE in
1990. However, all three
trade marks have lapsed.
[22] Snowchem had
manufactured, distributed and sold METSAN DRY WONDER until about
1993, when its directors resolved to outsource
the manufacture and
distribution thereof to a third party, while Drywonder marketed,
distributed and sold DRY WONDER for the past
20 years in South
Africa.
[23] Mr
Bermeister says Snowchem appointed second respondent (Halliday) and a
Mr Sean Rens (Rens) to manufacture the METSAN DRY
WONDER in terms of
an oral agreement between Snowchem (represented by himself) and
Halliday and Rens who were former employees
of Snowchem and had been
involved in Snowchem's manufacturing of METSAN DRY WONDER.
[24] However, the
respondents aver that there were in fact two companies by the name
Snowchem (referred to as Snowchem 1 and Snowchem
2) and questioned
which of the two companies the applicant was referring to. Only in
the replying affidavit in the application
was it clarified which of
the two Snowchem companies was being referred to and that only after
the respondents raised the issue.
[25] During 1995,
says Bermeister, Halliday and Rens expressed their desire to
formalise the manufacturing agreement with Drywonder
which prepared a
draft agreement for their consideration. The applicants have attached
a copy of the alleged draft agreement as
annexure 'RB17' to the
founding affidavit. It reflects the parties to the agreement as
Drywonder and W.H Chemicals CC. In terms
of the draft agreement W.H
Chemicals was to manufacture METSAN DRY WONDER for Drywonder and that
the proprietor of the trade marks
METSAN, DRY WONDER and a SNOWMAN
DEVICE as well as the product formula for METSAN DRY WONDER was
Drywonder.
[26] Bermeister
says the draft agreement was provided to Halliday and Rens who said
they wished to make a few minor amendments to
it. On 6 September 1995
he was preparing to fly to Australia when he was contacted by Rens
who requested that the agreement be
formalised before he (Bermeister)
left. He says he was presented with an agreement of which, Rens
assured him, the material terms
were the same as the draft agreement.
Bermeister says he was not informed by Rens of the significant
changes he and Halliday had
made. He signed the agreement presented
by Rens (the 1995 agreement) without reading through it diligently
and accepting in good
faith that there had been no changes and thus
did not notice the significant amendments which had been made. Even
after signing
it he did not read through it again as there was never
a need to.
[27] The 1995
agreement was not referred to again or consulted by the parties until
20 years later when a dispute arose between
them. This was, says
Bermeister, because nothing changed in the manner in which the
business was conducted after the signing of
the 1995 agreement and
the parties had continued as before on the basis of their oral
agreement.
[28] Bermeister
says the 1995 agreement misrepresented and sought to change the
entire basis of what, in essence, had already been
agreed upon.
[29] The respondents
emphatically dispute most of the allegations made by the applicants -
particularly those made by the second
applicant. The respondents are
adamant that the 1995 agreement governed the relationship between the
parties over the years. The
factual disputes are numerous.
Allegations have also been thrown by the parties at each other about
perjury, insult and defamation.
I deem it prudent not to detail all
the disputes of fact raised by the respondents in their answering
affidavit nor the further
factual disputes raised in the replying
affidavit (in the main application) and those in the
counter-application as I am unable
to determine on the papers whether
the oral agreement relied on by the applicants or the 1995 agreement
relied on by the respondents
is the valid one.
[30] In the
application the founding affidavit comprises of 55 pages and 229
pages of annexures thereto. The answering affidavit
is 86 pages long
with 71pages of annexures. The replying affidavit is 85pages in
length with 24 pages of annexures. Then follows
the replying
affidavit in the counter-claim by the respondents which is 46 pages
long with 102 pages of annexures. All told, the
application and
counter-application together comprise 730 pages. The applicant's
heads of argument were 29 pages while that of
respondent 68 pages.
[31] In
VENMOP
275
(Pty) Ltd and Another v CLEVERLAD PROJECTS (Pty) Ltd and
Another 2016(1) SA 78 GJ
at 86 para [12] Peter AJ referred to the
tendency by litigants to confuse facts and argument and the
cluttering up of affidavits
with argumentative matter and inclusion
of unnecessarily prolix and repetitive material.The result is that a
judge has to trawl
through the papers and it leads to substantial
delay - more so in this Division of the High Court which is one of
the busiest if
not the busiest in the country. To make matters worse,
in casu
I was informed only at the commencement of the hearing
that the applicants were abandoning a substantial part of their
claim.
[32] The
applicants have not established the requisites for the granting of an
interim interdict as there is serious doubt (not
'some' doubt)
whether they have a
prima facie
right in the face of the 1995
agreement which has been signed by the second applicant. Furthermore,
the applicant's attorneys seemingly
accepted the validity of the 1995
agreement when they relied on its provisions relating to whether the
respondents had given proper
notice of termination or cancellation of
the agreement. The applicants do have another satisfactory remedy,
i.e. a claim for damages
if it is eventually found that the oral
agreement relied on by the applicants is the valid one and not the
1995 agreement.
[33] It follows
that the counter-application cannot be granted as the final relief
sought therein is based on the 1995 agreement,
which, as I said, is
in dispute.
[34]In the
circumstances, the following order is made:
1. Both the
application and the counter-claim are referred to trial.
2.The
notice of motion stands as a simple summons. A declaration shall be
filed within 15 days of date of this order and thereafter
the Uniform
Rules dealing with pleadings and the conduct of trials will apply.
3.Costs
of the application and the counter-application as well as those
reserved in the urgent court on 13 October 2015 are reserved.
Appearances:
Counsel on
behalf of
Applicants : Adv R. Michau SC
Instructed
by: Spoor &
Fisher
Counsel on
behalf of first and second Respondents
:
Adv
0.
Salmon (SC)
Adv
M.
Freed
Instructed
by: Rademeyer Attorneys
Date
heard: 28 & 29 January 2016
Date
delivered: 27 May 2016