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[2016] ZAGPPHC 475
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Trustco Group International (Pty) Ltd and Others v Hahn & Hahn Incorporated (78757/2014) [2016] ZAGPPHC 475; 2016 BIP 57 (GP) (20 June 2016)
REPUBLIC OF SOUTH
AFRICA
IN
THE HIGH COURT OF SOUTH AFRICA
GAUTENG
DIVISION, PRETORIA
CASE
NO.:78757/2014
20/6/2016
Reportable:
No
Of
interest to other judges: No
Revised:
Yes
In
the matter between:
TRUSTCO
GROUP INTERNATIONAL (PTY)
LTD First
Plaintiff
TRUSTCO
FINANCIAL SERVICES (PTY)
LTD Second
Plaintiff
TRUSTCO
MOBILE MAURITIUS (PTY)
LTD Third
Plaintiff
TRUSTCO
GROUP HOLDINGS
LTD
Fourth
Plaintiff
and
HAHN
& HAHN
INCORPORATED Defendant
Date
heard: 13 June 2016
Date
delivered: 20 June 2016
JUDGEMENT
DE
VOS J:
[1]
The plaintiffs have sued the defendant for damages following from
various alleged negligent acts by the defendant. The defendant,
Hahn
& Hahn Incorporated, is an intellectual property firm of
attorneys. The plaintiffs allege that the defendant's negligence
caused the first plaintiff's patent to lapse and delayed the
restoration of the patent. The lapsing of the patent as well as an
infringement thereof (assuming it had not lapsed) is alleged to have
caused the plaintiffs damage.
[2]
The defendant contends that at the heart of the case is the validity
of the patent as well as the alleged infringement thereof.
Without a
finding that the first plaintiff's patent was valid (or could have
been valid
had it been restored)
and in fact infringed, the
plaintiffs would have no claim. It is common cause that the patentee
(registered proprietor) of the patent
in question was the first
plaintiff. The remaining plaintiffs are, seemingly, potential
licensees of the patent in question.
[3]
The defendant has excepted to the particulars of claim on two
grounds. Firstly, it contends that the particulars of claim do
not
contain any allegations which would indicate that the plaintiffs will
be able to demonstrate that they could successfully have
sued any
party for patent infringement. The defendant contends that without
such allegations, the plaintiffs cannot include - as
a head of
damages - losses allegedly suffered as a result of an inability to
sue for infringement. Secondly, it is contended that
this court lacks
jurisdiction because the
Patents Act 57 of 1978
ousts the
jurisdiction of the high court to determine the validity and
infringement of the patent as well as the extent of damages.
[4]
The first ground of exception in terms of Uniform
rule 23
against the
plaintiffs' particulars of claim is aimed against the wording of the
amended para 31.6 of the particulars of claim,
and states that the
particulars of claim lack averments which are necessary to sustain a
cause of action. Paragraph 31.6, as amended,
reads as follows:
"The losses suffered
by the plaintiffs as a result of their inability to sue Vodacom,
Regent Insurance Company Ltd, and/or
other parties not presently
known to the plaintiffs who may be infringing or have infringed the
patent . . .".
The
defendant contends that it is not certain what is meant by the word
'may',
and whether the identified parties have, as a matter of
fact, infringed the patent or whether these allegations are simply
speculative
in that regard. In support of their contention,
defendant's counsel argued that the plaintiffs' particulars of claim
contain neither
any allegations as to what conduct of Vodacom, Regent
Insurance Company Ltd, and/or other parties is said to have infringed
the
patent in question, nor which claims of the patent have been
infringed or
'may'
be infringed. No details regarding the
alleged infringing conduct are pleaded, and the defendant further
holds that no allegations
which demonstrate that the plaintiffs could
successfully have sued the parties referred to on the basis of patent
infringement
are pleaded. In the result there are no allegations
indicating that the patent would as a matter of fact be infringed,
had it been
validly registered, and that the plaintiffs therefore
suffered damages. In the result, the defendant contends that the
plaintiffs'
failure to allege and prove that the patent would be
valid and infringed, lacks the necessary averments to disclose a
cause of
action.
[5]
The plaintiffs allege that they are unable to quantify their damages.
Accordingly the plaintiffs have adopted a bifurcated procedure
and
seek -
a)
an
order declaring the defendant liable to plaintiffs' on specified
grounds; and
b)
an
order directing that the quantification of the plaintiffs' damages
stand over for later adjudication, subject to directions regarding
the exchange of pleadings, discovery, inspections, and other
procedural matters as the court may direct.
[6]
The plaintiff contends that it is entitled to have the issue of
liability determined before embarking on the quantification
of its
claim. The plaintiffs rely on the provisions of
s 21(1)(cJ
of the
Superior Courts Act 10 of 2013
, and the decisions of
Anglo-Transvaal
Collieries Ltd v South
African
Mutual Life
Assurance Society
1977 (3) SA 631
(TPD) at 635F, Cadac
(Pty) Ltd v Weber-Stephen Products Co and Others
2011
(3) SA 570
(SCA),
and
Harvey Tiling
Co
(Pty)
Ltd v
Rodomac
(Pty) Ltd and Another
1977
(1) SA 316
(T) at 328A-329F
for their approach.
Section 21(1
)(c)
provides:
"(1)
A division has jurisdiction over all persons residing or being in,
and in relation to all causes arising and all offences
triable
within, its area of jurisdiction and all other matters of which it
may according to law take cognisance, and has the power
-
(a)
…
(b)
…
(c)
in its discretion, and at the instance of any interested person, to
enquire into and determine any existing, future or contingent
right
or obligation, notwithstanding that such person cannot claim any
relief consequential upon the determination".
In
Cadac
(Pty) Ltd
Harms DP held in para 13:
'I
cannot see any objection why, as a matter of principle and in a
particular case, a plaintiff who wishes to have the issue of
liability decided before embarking on quantification, may not claim a
declaratory order to the effect that the defendant is liable,
and
pray for an order that the quantification stand over for later
adjudication. It works in intellectual property cases, albeit
because
of specific legislation, but in the light of a court's inherent
jurisdiction to regulate its own process in the interest
of justice -
a power derived from common law and now entrenched in the
Constitution (s 173) - I can see no justification for refusing
to
extend the practice to other cases. The plaintiff may run a risk if
he decides to follow this route because of the court's discretion
in
relation to interest orders. It might find that interest is only to
run from the date when the debtor was able to assess the
quantum of
the claim. Another risk is that a court may conclude that the issues
of liability and quantum are so interlinked that
it is unable to
decide the one without the other'.
Plaintiffs'
counsel contends that the defendant will be liable to pay the
plaintiffs' damages if the defendant is found to have
been negligent.
The ability to sue for infringement of the patent is a question which
is relevant to the quantum of damage, not
the liability to pay
damages (whatever the quantum might ultimately be). It is conceded
that if the plaintiffs were required to
give full particularity of
their damages at this first stage of the bifurcated procedure (where
only a declaration of liability
is sought), the defendant's first
exception would succeed. However, this is not what is required. See
in this regard
Harvey Tiling Co (Pty) Ltd.
[7]
In this action the sole question is whether the defendant complied
with his instructions to reregister the patent. The validity
of the
patent itself is irrelevant. The relief sought is, however, sought
under the common law ie to determine whether the defendant
was
negligent in the performance of its duties. This issue is based on
the breach of a contract between the parties and falls outside
the
provisions of
s 18(1)
of the
Patents Act. Accordingly
the first
exceptions must fail. See
Precismeca Ltd v Meleo Mining Supplies
(Pty) Ltd
2003 (1) SA 664
(SCA).
[8]
The defendant's second exception is based on the provisions of
s
18(1)
of the
Patents Act, which
reads as follows:
'18. Proceedings before
commissioner.-(1) Save as is otherwise provided in this Act, no
tribunal other than the commissioner shall
have jurisdiction in the
first instance to hear and decide any proceedings, other than
criminal proceedings, relating the any matter
under this Act'.
[9]
Plaintiffs' counsel submits that the second exception based on the
lack of jurisdiction is also without merits. The Court of
the
Commissioner of Patents has exclusive jurisdiction at first instance
over proceedings which relate to any matter under the
Patents Act.
While
it may be that the inquiry into damages, or some portion of it,
will need to be referred to the Court of the Commissioner of Patents,
it does not mean that this court lacks jurisdiction to determine
whether the defendant was negligent. If the plaintiffs, for whatever
reason, choose not to rely on patent infringement as a head of
damages, the jurisdiction of the Court of the Commissioner of Patents
will never be triggered. It is therefore plaintiffs' contention that
both grounds for exception should be dismissed.
[10]
It is clear from the provisions of
s 21(1)(c)
of the
Superior Courts
Act that
it falls within this court's discretion to enquire into and
determine any existing future or contingent right or obligation. It
is clear from the particulars of claim that the plaintiff is merely
seeking to determine the issue of liability before embarking
on the
quantification of its claim. The determination of negligence is a
purely factual enquiry. In deciding an exception a court
is bound by
the factual allegations contained in the pleading excepted against.
For the purpose of deciding an exception, a court
must take the facts
alleged in the pleading as correct. See
Mamey
v Watson
and Another
1978 (4) SA 140
(CPD) at 144.
The
plaintiffs' particulars of claim as it is formulated contain
sufficient allegations of fact to enable the defendant to plea
to the
liability issue. In my view the particulars contained in the
particulars of claim are sufficient to the extent that the
defendant
knows adequately what the plaintiffs' case is. Accordingly, the first
exception must fail.
[11]
I now turn to the second exception. Applying the principles regarding
the jurisdiction of the high court as set out in
Makhanya v
Univetslty of Zululand
2010 (1) SA 62
(SCA) at 80G-I
it
is clear that the claim before this court is a matter of fact -
firstly whether the defendant was negligent to perform in terms
of
the contract between himself and the plaintiffs, which is based on a
contract of mandate, see
Mort NO v Henry Shields-Chiat
2001
(1) SA 464
(C),
and secondly that the given claim cannot be
converted into another kind of claim of a different kind by the mere
use of language.
The fact that the execution of the mandate involves
the laws of patent and the regulations thereto, does not exclude the
jurisdiction
of the high court to adjudicate the contractual dispute
between the parties. The fiduciary obligations and the meaning and
scope
of such fiduciary duty (if in dispute) must be proven as a
separate issue to determine the attorney's liability. Other issues,
for example the amount of damages, not forming part of the issue
before the court, cannot be determined by this court simply because
the issue of damages is not before the court and cannot be
adjudicated upon. The liability of an attorney to its client for
damages
resulting from an attorney's negligence is based on breach of
the contract between the parties. An attorney is required to exercise
skill, adequate knowledge and diligence.
Section 18(1)
of the
Patents
Act does
not exclude the high court's jurisdiction to determine
whether an attorney exercised the necessary skill, knowledge and
diligence
in executing his mandate. The second exception, based on
the lack of jurisdiction, must therefore also fail. This finding will
however not prevent the defendant from filing a special plea based on
the same grounds in his pleadings. In conclusion both exceptions
are
dismissed. It follows from the aforegoing that the normal rule
regarding costs should be applied.
I
THEREFORE MAKE THE FOLLOWING ORDER:
1.
Both
exceptions to the particulars of claim are dismissed and the
defendant is ordered to pay the costs of this application counsel.
____________________
DE
VOS J
JUDGE OF THE GAUTENG
DIVISION
OF THE HIGH COURT OF
SOUTH AFRICA
APPEARANCES:
For
the plaintiff:
Adv. G Hoffman SC
Adv. KD Iies
Instructed by Adams &
Adams Attorneys
For
the first and second defendants:
Adv. R
Michau SC
Instructed by Gildenhuys
Malatji Incorporated