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[2012] ZAKZDHC 68
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Futura Footwear Ltd v Salomon S.A.S (5459/2011) [2012] ZAKZDHC 68; 2012 BIP 169 (KZD) (30 October 2012)
IN THE KWAZULU-NATAL HIGH COURT,
DURBAN
REPUBLIC OF SOUTH AFRICA
CASE NO:5459/2011
In the matter between:
FUTURA FOOTWEAR LIMITED
..................................................................
Applicant
(First Defendant in the action)
and
SALOMON S.A.S
.....................................................................................
Respondent
(First Plaintiff in the action)
______________________________________________________________
JUDGMENT
______________________________________________________________
Delivered :30 October 2012
M PILLEMER, AJ:
[1] This is an application in which an
incola defendant seeks an order against a peregrine plaintiff for
security for the costs
that will be awarded to the defendant if it is
successful in its defence in the pending action. The applicant is the
First Defendant
in the pending action. The application is opposed by
the peregrine plaintiff on three principal grounds, one of which is
raised
in the answering affidavit, one raised in the heads of
argument submitted on its behalf and the third was raised for the
first
time by Mr Stokes SC, who appears for the peregrine plaintiff,
during the course of argument. All the grounds of opposition are
dealt with later in this judgment.
[2] The peregrine plaintiff describes
itself as a company duly incorporated and existing under the laws of
France, having a registered
address and principal place of business
at Lieudit Les Croiselets, 74370 Metz-Tessy, France. It pleads that
it is a national of
or has a real and effective industrial or
commercial establishment in a convention country as contemplated by
s35
of the
Trade Marks Act, 1993
. It is the respondent in this
application and in the main action it is the first of two plaintiffs.
It will be referred to in this
judgment as the peregrine plaintiff or
the First Plaintiff where that is appropriate.
[3] An incola is a person who is
resident or domiciled within the court’s area of jurisdiction.
A corporation is an incola
of the area of jurisdiction of the court
in whose area it has its principal place of business or where its
registered office is
situated. A peregrinus is the converse of an
incola, namely anyone who is not resident or domiciled within the
court’s area
of jurisdiction and for present purposes those who
are domiciled or resident outside the country. (LAWSA, Vol 11, Title:
Jurisdiction
para 327)
[4] It is common cause that the
peregrine plaintiff is a peregrinus, being a French corporation,
which is neither resident not domiciled
in the Republic of South
Africa.
[5] It is a general rule of practice
that a peregrinus should provide security for an incola’s
costs. (
Exploitatie- en Beleggingsmaatschappij Argonauten 11 BV
and Another v Honig
2012 (1) SA 247
(SCA) at para 18). The court
exercises a discretion in deciding whether or not to direct that
security be furnished. It involves
the weighing of the relevant
factors. As was explained in the
Honig
case the fact that a
defendant will have to proceed against the peregrine plaintiff abroad
if he obtains a costs order in his favour,
with the associated
uncertainty and inconvenience that would this would entail is one of
the fundamental reasons why a peregrinus
should provide security.
[6] If the peregrinus is impecunious
and alleges that he is not able to furnish security due to his own
impecuniosity then it is
left to the judicial discretion of the court
to decide, having regard to the particular circumstances of the case
as well as to
considerations of equity and fairness to both the
incola and the peregrinus, whether the latter should be compelled to
furnish,
or be absolved from furnishing, security for costs. (
Magida
v Minister of Police
1987 (1) SA 1
(A) at 14D – F and 15D –
E, where It was also stated that there is no justification for
requiring a court to exercise
its discretion in favour of a
peregrinus only sparingly.)
[7] The peregrine plaintiff in this
application does not make the case that it is impecunious and that if
ordered to furnish security
it will not be able to do so. Indeed on
the contrary it describes itself as “having a real and
effective industrial or commercial
establishment”, which, if
that is the case, it follows that it should be able to provide the
necessary security for costs
if ordered to do so.
[8] The grounds of opposition as I
indicated earlier are three fold. Firstly the peregrine plaintiff
contends that it has unencumbered
immovable property within South
Africa based on the allegation that it is the registered holder of
the trademark SALOMON (registered
trade mark No. 1982/01070). This is
the only ground of its opposition in the answering affidavit
delivered on its behalf. Secondly,
relying on the case of
Northbank
Diamonds Ltd v FTK Holland BV
2003 (1) SA 189
(NmS), because it
is one of two plaintiffs in the action and the second is a close
corporation which is an incola of the Republic
of South Africa, it
contends that the court should exercise its discretion against
directing that security be provided, because
the costs could be
recovered from the other plaintiff if the defence is successful. The
third ground relied upon, which was mentioned
for the first time from
the bar by Mr Stokes, was twofold namely that it was not in the
public interest to direct that security
be furnished because the
proceedings brought by the plaintiffs were for relief in terms of the
Counterfeit Goods Act, 1997
where the conduct was also a criminal
offence and, even if a stay was issued because security was not
provided, the action could
nonetheless proceed at the instance of the
incola plaintiff so it was a pointless exercise to make an order that
security be provided.
[8] When Mr Stokes commenced his
address in reply to the argument presented by counsel for the
applicant, he asked for time to take
instructions with regard to a
supplementary affidavit his client may wish to furnish and on a
potential application for leave to
do this. The matter stood down and
thereafter application was made from the bar for an adjournment of
the proceedings to enable
the peregrine plaintiff to provide evidence
of the value of the trade mark and/or of the financial strength of
the incola plaintiff
in the action. I used the term “and/or”
because counsel was noncommittal on whether either or both would be
advanced
but said he gave the assurance that at least one of them
would be. The application for the adjournment was opposed. I
indicated
that I would rule on the application in this judgment, but
that I required the matter to be argued on the merits on the papers
as they presently stand so I could decide the matter finally if I
decided to refuse the application for the adjournment.
[9] The value of the trademark, if
considered relevant, could and should have been provided in the
answering affidavit. No explanation
was provided as to why this was
not provided earlier and why it was only now that there was a
possibility that this evidence would
be put before the court. The
purported relevance of the trademark and its value lies in the fact
that unless a peregrinus has within
the area of jurisdiction of the
Court immovable property with a sufficient margin unburdened to
satisfy any costs order, the general
rule is that security has to be
furnished. The submission is made that the trademark is immovable
property. I consider that in
the context of an application for
security for costs against a peregrinus the immovable property
contemplated is land of which
the peregrinus is the registered owner.
A trademark is not land and accordingly not immovable property for
present purposes. No
argument was presented by Mr Stokes in support
of the submission that it was. All that is said in this regard is to
be found in
the answering affidavit where the deponent after alleging
that the peregrine plaintiff is the proprietor of the registered
trademark
states “ which is, per the Supreme Court of Appeal,
considered immoveable property”. Although in certain
circumstances
it has been said that a registered mark is akin to
immovable property in that a trade mark registered in the country is
territorial
and cannot be exported (
Oilwell (Pty) Ltd v Protec
International Ltd and others
2011 (4) SA 349
(SCA) at 400A), this
is a far cry from equating a trade mark to immovable property of the
kind that would not require a peregrinus
to provide security.
[10] I am not satisfied that there are
good grounds to permit the peregrine plaintiff to supplement its
affidavit to deal more fully
with the trademark and its value,
because it has not provided an adequate reason as to why the evidence
was not furnished originally
and, in any event, the trade mark is not
immovable property as contemplated in proceedings such as these so
there is no point in
allowing additional evidence of its value.
[11] The Namibian case of
Northbank
Diamonds Ltd v FTK Holland BV
2003 (1) SA 189
(NmS), was a case
in which a number of plaintiffs sued and where security for costs was
sought against all of them, most because
they were corporations and
against one because it was a peregrinus of Namibia. The court was
sitting as a court of appeal which,
in relation to the exercise of a
discretion by the lower court, has a limited right of interference.
The lower court had held that
the pooled resources of the plaintiffs
in that action would easily be able to pay the costs of the
successful defendant. It held
that a costs order would be most likely
be made against the plaintiffs jointly and severally and, on the
facts in that case which
came to court as an application, exercised
its discretion to refuse to make an order to provide security. The
appeal court did
not interfere and upheld the decision. The judgment
took into account a decision which held that even where there are two
plaintiffs
where only one could be ordered to provide security, it
was perfectly legitimate to seek security from that one for so long
as
it remained a plaintiff. (
Kruger Stores (Pty) Limited and
Another v Kopman and Another
1957 (1) SA 645
(W) at 648G-H). On
the facts of the case however it found that the lower court had taken
relevant material into account and it
could not interfere. The
judgment is certainly not authority for the proposition that whenever
there are two or more plaintiffs
where one is an incola security does
not have to be provided by the others who are not.
[12] The financial strength of the
second plaintiff, if this was considered to be a relevant
consideration should have been dealt
with in the answering affidavit.
No detail was given in the application for the adjournment as to what
evidence of the financial
position of the second plaintiff would be
led or why it was not available when the answering affidavit was
deposed and why it was
raised for the first time when counsel was on
his feet to address the court in reply to the address of the
applicant. Of importance
too is the feature, alluded to earlier, that
there was no firm commitment to providing that evidence in any event.
At best the
court was informed that it may or may not be provided,
but either that or the value of the trademark or both would be dealt
with
in the further affidavits that the peregrine plaintiff sought an
opportunity to file. This is hardly a satisfactory basis for an
adjournment. No reason for not putting up the evidence originally was
given, no assurance that there is such evidence was given,
no
indication of the evidence other than in general noncommittal terms
was given, and on top of that I do not consider the second
plaintiff’s financial strength to be of particular importance
on the basis of the
Kruger
case referred to above. The
security is after all sought from the peregrine plaintiff and so the
financial strength of a co-plaintiff
is in my view of little moment.
All the evidence there is of the second plaintiff is that it is
described in the particulars of
claim as a close corporation and as
the representative of the first plaintiff. Having regard to the
nature of the case that is
made in the particulars of claim which are
dealt with below, the relief sought by the incola plaintiff is
limited to a delivery
up of the seized goods to it as the peregrine
plaintiff’s authorised representative, and so why it should be
saddled with
a joint and several costs order that is not even sought
in the plea, is not evident.
[13] I am accordingly disinclined to
grant the adjournment because of the lateness of the application, the
fact that the evidence
may not even be available or provided if it is
and because in any event on the basis of the
Kruger
case the
financial strength of a co-plaintiff is not a particularly
significant factor in the weighing of the discretion to order
security.
[14] The nature of the proceedings was
the third string to the bow of the argument against the application
for security. The fact
that the conduct that gave rise to the cause
of action is also an offence was said to be important to the exercise
of the discretion
and a reason in itself not to order security as a
matter of public policy. The relief sought in the civil action is for
an order
declaring the goods seized from the First Defendant were
counterfeit within the meaning of the
Counterfeit Goods Act, 1997
,
for an order that the seized goods be delivered up to the second
plaintiff as the first plaintiff’s authorised representative
in
terms of the said Act, for an order declaring that the defendant has
infringed the First Plaintiff’s copyright and an
order that the
defendant deliver up to the plaintiffs all adaptations and
reproductions of the First Plaintiff’s works, an
interdict
against infringement of the First Plaintiff’s stich design
trademark and for damages and costs. Nothing in the
cause of action
is such as to give rise to some special public interest issue in not
ordering the provision of security for costs.
The case is not
qualitatively different from any other civil proceedings justifying a
special and different approach.
[15] The
Kruger
case referred
to above effectively deals with the issue of whether it is pointless
to direct that the peregrine plaintiff provide
security if the incola
plaintiff can continue anyway. However the relief sought by the
plaintiffs in the action is not identical
and there is relief that is
specific to the First Plaintiff. I accordingly reject the argument
that there is a public policy reason
to absolve the peregrine
plaintiff from providing security on the basis of the pleadings and
the nature of the proceedings.
[16] There is every indication that
the peregrine plaintiff, which describes itself as having a real and
effective industrial or
commercial establishment, is able to put up
security if so ordered. The merits of the litigation are not
considered at this stage
of proceedings otherwise than in cases where
it is alleged the defence is vexatious and that is not the case in
these proceedings.
[17] In the result I have come to the
conclusion that the application for an adjournment of the proceedings
should be refused and
that I should exercise my discretion to require
the First Plaintiff to provide security for the costs of the
defendant in defending
the action against it. I am swayed largely
when I exercise my discretion by the fact that the defendant will
have to proceed against
the First Plaintiff abroad if he obtains a
costs order in his favour against it, with the associated
uncertainty, increased expense
and inconvenience that this will
entail. Ordering security against a peregrinus plaintiff is the usual
practice and I am not satisfied
that any of the grounds relied upon
as to why security should not be ordered are valid.
[18] I make the following order: The
First Plaintiff, Salomon S.A.S., is ordered to provide security for
the costs of the First
Defendant in the action under case no.
5459/2011 in an amount to be determined by the Registrar. The First
Plaintiff is also ordered
to pay the costs of the application for
security for costs.
_______________________
M PILLEMER, AJ
Counsel for the First
Defendant/Applicant : I Joubert
First Defendant’s/Applicant’s
Attorneys: D M Kisch Inc (Pretoria)
care of Maree Inc
Counsel for the First Plaintiff/
Respondent: A Stokes SC
First Plaintiff’s/Respondent’s
Attorneys:
Tate, Nolan &
Knight Inc
Date of hearing
: 26 October 2012
Date of Judgment
: 30 October
2012