Fluorovision (Pty) Ltd v Bloomberg Orthopaedics & Neurosciences (Pty) Ltd (5545/2005) [2006] ZAFSHC 76 (15 June 2006)

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[2006] ZAFSHC 76
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Fluorovision (Pty) Ltd v Bloomberg Orthopaedics & Neurosciences (Pty) Ltd (5545/2005) [2006] ZAFSHC 76 (15 June 2006)

IN THE HIGH COURT
OF SOUTH AFRICA
(ORANGE
FREE STATE PROVINCIAL DIVISION)
Case No. : 5545/2005
In
the case between:-
FLUOROVIZION
(PTY) LIMITED
Applicant
and
BLOOMBERG
ORTHOPAEDICS &
Respondent
NEUROSCIENCES
(PTY) LIMITED
_____________________________________________________
HEARD
ON:
11
MAY 2006
_____________________________________________________
JUDGMENT
BY:
EBRAHIM
J
_____________________________________________________
DELIVERED
ON:
15
JUNE 2006
_____________________________________________________
[1] This is an
application to compel compliance with Rule 35(12) of the Uniform
Rules of this Court. Rule 35(12) provides for the
discovery and
production of any document or tape-recording referred to by a party
in its pleadings or affidavits for inspection and
copying by the
other party or parties to the litigation on request by the latter.
The Rule further provides that the party failing
to make such
discovery is barred from using such documentation and recordings save
with the leave of the Court in the subsequent
litigation proceedings
but the party requiring discovery may nevertheless use such documents
in the proceedings.
[2] On 18 August 2005 the
respondent in this matter, Bloomberg Orthopaedics & Neurosciences
(Pty) Limited as applicant, launched
proceedings in this Court by way
of motion against Fluorovizion (Pty) Limited, as second respondent,
requesting the issue of a rule
nisi
interdicting the second respondent from employing one, Marize
Vermaak, a former employee of Bloomberg and the first respondent in
those proceedings, who did not contest those proceedings. I shall
refer to the interdict proceedings as the main application and
to the
parties in the present application in the manner in which they are
referred to in the main application. Consequently I shall
refer to
Fluorovizion in the present application as the second respondent and
to Bloomberg Orthopaedics as the applicant.
[3] A rule
nisi
was granted returnable on 15 September 2005 and thereafter extended
on a number of occasions primarily due to a dispute having arisen
between the parties over documents requested by the second
respondent. That dispute culminated in the present application being
delivered pursuant to a notice in terms of Rule 35(12) delivered by
the second respondent to the applicant on 27 September 2005.
The
present application was launched on 6 December 2005 and in it the
applicant seeks the production for inspection and copying
of a
product list referred to by the applicant in paragraph 32 of its
founding papers in the main application and a business plan
also
referred to in that affidavit in paragraph 61.
[4] The applicant has
refused to produce the documents on three main grounds:
(i) Firstly it alleges
the product list does not exist;
(ii) Secondly the
business plan is privileged information in that it contains
confidential information; and
(iii) Thirdly
that both documents are irrelevant at this stage of the proceedings
in that the second respondent has filed its answering
papers setting
out its defence and accordingly the product list and business plan
are not needed for the purposes of the interdict
debate in the main
application.
[5] On behalf of the
applicant it was contended that a product list as such does not exist
and that any reference thereto in the founding
papers was a misnomer,
as the only documents available was a pricelist which is a
comprehensive document detailing all the applicant’s
products with
the prices those products are marketed and sold for. It would
accordingly undermine the very nature and rationale
of the main
application, so it is contended, if such a list was to be provided to
the second respondent. The applicant further argues
that the second
respondent has in any event been provided with details of its
complete orthopaedic product range and this is conceded
by the second
respondent. As far as the business plan is concerned applicant
alleges that it is prepared to make a qualified discovery
by
producing same for inspection and copying for the Court and the
applicant’s legal representatives once again due to the
confidential
nature of the document. The applicant argues that this
is an indication of its
bona
fides
for to make the business plan available to the second respondent
would unfairly prejudice the applicant in the conduct of its case
and
make a mockery out of the interim order.
[6] 6.1 In addition to
these specific grounds raised by the applicant for its refusal to
furnish the documents requested, the applicant
raises a further
ground, general in nature, namely that the second respondent is
employing obstructive and delaying tactics in order
to defray the
interim order for costs made against it on 18 August 2005. The
second respondent’s response to this accusation is
that it does not
employ the first respondent (Ms Vermaak), that it is not in
competition with the applicant and that the applicant
was reckless
and negligent in launching the main application and therefore is not
entitled to a costs order been made in its favour
against the second
respondent. I proceed to examine this ground of objection first.
6.2 Between 1 August
2005 and 18 August 2005 correspondence was addressed by the
applicant’s attorneys directly to the second respondent
requesting
an undertaking that
(a) the second respondent
will not employ the first respondent; and
(b) the
first respondent would not take up employment with the second
respondent.
6.3 During this time the
applicant furnished the second respondent with details of its
products, which it alleged the second respondent
was directly
competing with and second respondent undertook to reconsider the
employment of the first respondent. When no such undertaking
was
forthcoming the applicant launched the interdict proceedings on 18
August 2005.
6.4 Notice of opposition
to these proceedings was delivered by second respondent’s attorneys
of record on 16 September 2005. On
27 September 2005 the second
respondent delivered a notice in terms of Rule 35(12) of the Rules of
this Court. Thereafter the present
application was launched on 6
December 2005 and answering papers thereto were delivered on 22
December 2005. At that point no answering
papers in the main
application had been delivered. These, however, were served on the
applicants on 14 February 2006 prior to the
present application being
argued.
6.5 On this history it
was contended for by the applicant that the only reason for the
bringing of the present application was to
defray the costs of the
main application as the second respondent has no real defence to the
interdict proceedings. I fail to see
how this can possibly be
correct in view of the following allegations in the replying
affidavit in the present proceedings. At paragraph
8.1 thereof the
deponent to the replying affidavit Gert Furstenberg states the
following
“
The
mere fact that Fluorovizion markets and sells medical equipment for
arthroscopy does not mean that it competes with BO&N.
This is a
highly specialised field, and it can be that there are different
products
used
in the same medical procedure, that are sourced from different
suppliers, without these suppliers being direct competitors.
The
second respondent’s business is to provide these products together
with the second respondent’s services during surgical
procedures to
the surgeon. The second respondent has been doing so for the past
seven years. It is for this reason that it is insufficient
for BO&N
to have alleged in a letter that it is engaged in the business of
both consumables and capital equipment for orthopaedics
and
neurosciences.
Such general
statements do not establish that BO&N and Fluorovizion are
competitors.
”
6.6 I am therefore not
persuaded that the underlying reason for the bringing of the present
application is rooted in
mala
fides
on the part of the second respondent. In fact, to me, on the present
facts the opposite appears to be the case, viz, that the answering
affidavits were delivered prior to the present application being
heard precisely to avoid an accusation of dilatoriness on the part
of
the second respondent and to show its
bona
fides
in opposing the main application.
[7] I deal now with the
three specific grounds of objection to the production of the
applicant’s product list and the business plan.
7.1 In paragraph 4 of the
founding affidavit to the present application the deponent, the
attorney of record for the second respondent,
furnishes the following
reason for requesting production of the documents:
“
During the course of consultation
counsel to settle the second respondent’s answering affidavit in
the main application, it emerged
that there were certain documents
referred to in the applicant’s founding affidavit that are required
by the second respondent
in
order to finalize the answering affidavit
.”
7.2 The object of Rule
35(12) is to give a litigant an opportunity of inspecting and copying
documents mentioned in his opponent’s
pleadings or affidavits.
This entitlement arises at any time
before
the hearing of the relevant proceedings. Consequently, in my view,
the fact that the second respondent has persisted in its request
for
discovery of the documents mentioned after filing its answering
papers to the interdict proceedings, is of no import and does
not
impact negatively on its claim
per
se
for
the documents as the second respondent may request such discovery at
any time
before
the hearing
.
7.3 In this matter the
second respondent has pinned its request to a specific purpose,
namely that of preparing its answering affidavits
and its defence.
The precise wording used is “in order to finalise its answering
affidavit”. Applicant argues that once the
second respondent’s
defence has been set out on paper, as it has in the answering
affidavits, and particularly in light of the
fact that such a defence
does not contain any reference to the documents requested reflecting
a reliance on those documents for the
purposes of the stated defence,
the rationale for the production of the documents requested must fall
away as the second respondent
is no longer in need of those documents
for the preparation of its defence.
7.4 This argument appears
to be based on some sort of waiver, not raised on the papers. There
may well be an answer to this argument
and it is speculative to make
an adjudication on an issue not properly raised and pleaded. It is
in any event, open to second respondent
to request general discovery
to be made in terms of Rule 35(12) at any time before the hearing
even if such a request is made after
the close of pleadings and I
dare say that in application proceedings such as the present, such a
course would also be open to the
second respondent. I conclude
therefore that the applicant’s refusal to produce the documents
requested, cannot be justified on
this ground.
[8] I deal now with the
objection relating to the production of the product list. Here the
applicant alleges that no such list exists.
It contends that the
only list it has in its possession is a price list which is a
comprehensive document detailing all of the applicant’s
products
with the prices that those products are marketed and sold for. It is
argued on behalf of the applicant that it would undermine
the very
rationale of the application if this price list were to be provided
to second respondent’s attorneys. Applicant further
argues that
this information is confidential and is not relevant to the
proceedings. It is my considered view that I cannot go behind
the
oath without any evidence to the contrary that a product list does in
fact exist. This ground of objection must accordingly
be upheld.
See
GORFINKEL
v GROSS, HENDLER & FRANK
1987 (3) SA 766
(C).
[9] 9.1 I deal finally
with applicant’s objection to produce the business plan on grounds
of its confidentiality and privilege.
There is no doubt that there
is an obligation on the applicant to produce the business plan under
the Rule 35(12) notice issued
and that the onus is upon it to set up
facts relieving it of this obligation. See
GORFINKEL
v GROSS, HENDLER & FRANK
,
supra
.
The applicant has sought to do this by arguing that the second
respondent is seeking to obtain information in applicant’s business
plan which is allegedly of a confidential nature in that it gives
insight into the applicant’s business and that accordingly, in
the
ordinary course, second respondent would not be entitled to such
information. Applicant has, however, tendered a qualified and
limited disclosure of this document.
9.2 Confidentiality in
itself is not a ground of privilege. In
SA
NEON ADVERTISING (PTY) LTD v CLAUDE NEON LIGHTS (SA) LTD
1968 (3) SA 381
(W), Colman J held at p. 385 A – C:
“
It was pointed out, on behalf of
the respondent, that the applicant is its trade competitor, and that
disclosure of what is relevant
to the action may also involve
disclosure of confidential information, which the respondent does not
want its competitor to see.
The respondent would, I was told, rather
abandon part of its claim than make such information available to the
applicant. I have
some sympathy for the respondent in that regard,
but I am unable to assist it. It need disclose nothing that is not
material; but
what is material, in the wide sense which that word
bears in relation to the duty to make discovery, must be disclosed,
whatever
the commercial consequences may be, unless, of course, the
relevant item in the claim has been formally abandoned so that the
entries
and documents have ceased to have any materiality to anything
still in issue between the parties.”
9.3 In
CROWN CORK &
SEAL CO INC AND ANOTHER v RHEEM SOUTH AFRICA (PTY) LTD AND OTHERS
1980 (3) SA 1093
(WLD) Schutz AJ (as he then was) sanctioned the
English practice of placing limitation upon a litigant’s ordinary
rights of untrammelled
inspection and copying of confidential
information discovered by the opponent in order to avoid the very
real danger which exists
that if this is not done an unlawful
appropriation of property will be made possible because litigation is
in progress and litigants
are entitled to see documents they would
otherwise not have access to. At p. 1100 A – C he stated:
“
No less in South Africa than in
England does the conflict arise between the need to protect a man's
property from misuse by others,
in this case the property being
confidential information, and the need to ensure that a litigant is
entitled to present his case
without unfair halters. And, although
the approach of a Court will ordinarily be that there is a full right
of inspection and copying,
I am of the view that our Courts have a
discretion to impose appropriate limits when satisfied that there is
a real danger that if
this is not done an unlawful appropriation of
property will be made possible merely because there is litigation in
progress and because
the litigants are entitled to see documents to
which they would not otherwise have lawful access. But it is to be
stressed that care
must be taken not to place undue or unnecessary
limits on a litigant's right to a fair trial, of which the discovery
procedures often
form an important part. I trust that by holding what
I have I have not opened a new door to interlocutory litigation or to
a flood
of ill-founded objections on grounds of confidentiality.
Practitioners would do well to remember that the normal rule is full
inspection.”
Schutz AJ then went on to
allow a limited disclosure of the confidential information in those
proceedings in order to avoid indiscriminate
copying and circulation
thereof.
9.4 In
UNILEVER
plc AND ANOTHER v POLAGRIC (PTY) LTD
2001 (2) SA 329
(C) at p. 341 D – F Thring J opined his
reservations towards limited discovery and inspection of documents as
follows:
“
It is unwise, in my view, unless
very special circumstances exist, to create a situation in which the
legal advisers or experts of
a party to opposed litigation may find
themselves in possession of information which may be highly relevant
to the litigation but
which they are precluded from communicating to
their client. What are they to do with such information? How are they
to obtain instructions
in relation thereto? How are they to advise
their client on the further conduct of the litigation or on whether
it should be proceeded
with at all? These, it seems to me, are some
of the questions which can arise and which, in this case, could
potentially place the
respondent's legal advisers and experts in an
invidious and even untenable position. Serious ethical questions
could arise. The interests
of the respondent could be prejudiced by
the fact that it is unable to receive proper advice based on all the
relevant facts.”
I am in respectful
agreement with these views and I have accordingly decided to exercise
my discretion against imposing any qualification
on second
respondent’s right to inspect and copy the applicant’s business
plan. I conclude therefore that full inspection of
this document by
second respondent is warranted in the circumstances.
[10] The following order
is made:
The applicant is
ordered to produce for inspection and copying by second respondent
its business plan referred to in paragraph
61 of its founding
papers to the main application within 60 days of the date of this
order.
10.2 The costs of this
application are reserved for determination at the hearing of the main
application.
_____________
S. EBRAHIM, J
On
behalf of applicant : Adv. J.C. van Rhyn SC
Instructed
by:
Lovius
Block
BLOEMFONTEIN
On
behalf of respondent: Adv. P.U. Fischer
Instructed
by:
McIntyre
& Van der Post
BLOEMFONTEIN
/sp