Aruba Construction (PTY) Ltd and Others v Aruba Holdings (PTY) Ltd and Others (1718/02) [2002] ZAWCHC 62 (12 November 2002)

About SAFLII
Databases
Search
Terms of Use
RSS Feeds
South Africa: Western Cape High Court, Cape Town
SAFLII
>>
Databases
>>
South Africa: Western Cape High Court, Cape Town
>>
2002
>>
[2002] ZAWCHC 62
|

|

Aruba Construction (PTY) Ltd and Others v Aruba Holdings (PTY) Ltd and Others (1718/02) [2002] ZAWCHC 62; 2003 (2) SA 155 (C); 2002 BIP 133 (C) (12 November 2002)

IN THE HIGH COURT OF
SOUTH AFRICA
(CAPE OF GOOD HOPE
PROVINCIAL DIVISION)
CASE NO.
1718/02
In the matter between:
ARUBA CONSTRUCTION
(PTY) LTD
1
st
Applicant
(1975/00604/07)
OLGA BASSON
2
nd
Applicant
ETIENNE ORMONDE
BASSON
3
rd
Applicant
and
ARUBA HOLDINGS (PTY) LTD
1
st
Respondent
(1998/017769/07)
LENO DE
VILLIERS
2
nd
Respondent
STEVEN JAFFE
3
rd
Respondent
STYROX CC
(CK
1999/070102/23)
4
th
Respondent
________________________________________________________________
JUDGMENT :
12 NOVEMBER 2002
________________________________________________________________
VAN
HEERDEN J
:
Introduction
This application concerns the rights and obligations of the
respective parties in relation to a building method (known as the
Aruba
Building System) utilising laterally spaced, vertically
extending expanded polystyrene (‘
EPS
’) panels attached to
spacers, with a cavity into which a cementitious mix is poured,
plaster thereafter being applied to the outer
surface of the
load-bearing core thereby formed.
The second applicant
(‘
Olga Basson
’) is married to the third applicant
(‘
Etienne Basson
’), and is also the sole director of the
first applicant (‘
Aruba Construction
’). The second
respondent (‘
De Villiers
’) and the third respondent
(‘
Jaffe
’) are directors of the first respondent (‘
Aruba
Holdings
’), De Villiers apparently being the chief executive
officer of such company, and both De Villiers and Jaffe are members
of the
fourth respondent (‘
Styrox CC
’)
Although wide-ranging
relief was originally claimed in the Notice of Motion dated
7 March 2002, this had
been narrowed down considerably by the time argument was concluded.
What remained as live issues at the end
of the case, was the relief
formulated as follows in the Notice of Motion:
‘
1. A declaratory
order that:
…
The trademark rights to
“Aruba”
are held solely by
First Applicant.
…
1.6 First Respondent is in breach
of the agreement, being annexure
“AC 2”
to the Founding
Affidavit (hereinafter
“the
agreement”
) by selling,
marketing, advertising, and otherwise conveying electronically,
digitally and in any other media the aforesaid products
under the
name and style of
“Styrox”
or
“Styrox Building
System”
.
First, Second, Third and Fourth Respondent or any other entities,
juristic or otherwise, of which they jointly or individually are
presently or may in the future be members of, or trading as, or
directors of, and/or their servants, employees or agents, are

interdicted and restrained from passing off, selling, tendering or
offering for sale, marketing or otherwise dealing with the aforesaid
products under any name or in any manner, save in that First
Respondent may market the products provided that this is done under
the name Aruba Building System until such time as the existing
aforesaid agreement between First Applicant and First Respondent
is
validly cancelled.
…
First,
Second, Third and Fourth Respondents or any other entities,
juristic or otherwise, of which they jointly or individually are
presently or may in the future be members of or trading as, or
directors
of and/or their servants, employees or agents, are
interdicted and restrained from holding out, in any manner
whatsoever, that a
valid Agrément Certificate has been issued in
respect of any product or building system utilising EPS other than
the Aruba Building
System.
6. First, alternatively, Second, alternatively Third,
alternatively Fourth Applicant [sic: Respondent] shall forthwith take
all steps
necessary, at their expense, to amend the existing Agrément
Certificate number 98/276 [sic: 98/267] and change the registered
name
(Title) from Styrox Building System back to Aruba
Building System and are further interdicted and restrained from
seeking to change
this name (Title) once the amendment is duly
affected.
7. Second and Third Respondents are interdicted and restrained
from:-
…
holding
out that the below listed entity(ies) have any rights and/or title
to the products irrespective of the name used to identify
said
products
…
…
7.3.1 Brother’s Brand Management
Corporation;
Brother’s Styrox;
Brother’s Innovation (Pty) Ltd;
Styrox Holdings (Pty) Ltd.
First, Second, Third and Fourth Respondents are interdicted and
restrained from holding out or conveying in any manner whatsoever,
including but not limited to digital publication on the internet,
that:
8.1 they, individually or collectively, created the Styrox
Building System;
there are such edifices as Styrox buildings;
tests have been carried out at the South African Centre for
Scientivic and Industrial Research (CSIR) on any product by the
name
of Styrox;
Agrément Certificate No. 98/276
[sic: 98/267]
was issued
to Styrox Holdings (Pty) Ltd;
First Respondent and its office bearers, employees, directors and
agents are interdicted and restrained from conveying or
communicating
in any manner to any other party that the existing
licensed manufacturer of the products produces these products on
their behalf.
Each
of First, Second, Third and Fourth Respondents are to give full and
complete details of all and any parties whom they have
approached in
any manner or form both in the Republic of South Africa and Namibia
since the agreement came into force and effect
and to whom they
identified the aforesaid products under any name other than Aruba
Building System within 14 days of the granting
of this order.
Respondents
jointly and severally pay costs on an attorney and client scale,
alternatively party-and-party scale.
Granting
Applicants such further and/or alternative relief as the above
Honourable Court deems fit to grant.’
Mr
Seale
submitted that,
irrespective of the outcome of these proceedings, the applicants
should be ordered to pay the costs relating to the
heads of relief
initially sought in the Notice of Motion and thereafter abandoned. I
will deal with this submission in due course.
Background
On 26
April 1989, a patent (No. 88/5940) was granted in terms of the
Patents Act 57 of 1978
to Olga and Etienne Basson in respect of a
building method utilising laterally spaced, vertically extending EPS
panels attached to
Calsica brick spacers, with a cavity into which a
homogenous cementitious mix could be poured to form a strong,
load-bearing core,
to the outer surface of which a plaster layer
could be applied (‘
the First Generation Aruba Building System
’).
This patent was subsequently superseded by Patent No. 94/1470,
granted on 30 November 1994 to Olga and Etienne Basson (in terms
of
Act 57 of 1978) in respect of a similar building system, the only
difference being the replacement of the Calsick brick spacers
with
lightweight spacers manufactured from high impact polystyrene (‘
the
Second Generation Aruba Building System
’). It appears to be
common cause that Mr and Mrs Basson did not come up with the original
idea of this building method, but that
they developed a building
method already existing overseas by effecting certain innovations
thereto. It is also common cause that,
despite threats to do so
(which threats were repeated by De Villiers in his opposing
affidavit), the respondents have not applied
for an expungement of Mr
and Mrs Basson’s patents numbered 88/5940 and 94/1470.
Agrément South Africa is an
independent organisation established by the Minister of Public Works
in 1969. It is internationally
affiliated through its membership of
the World Federation of Technical Assessment Organisations (WFTAO).
In terms of powers granted
to it by the Minister of Public Works,
Agrément South Africa technically appraises (on application) the
fitness-for-purpose and
compliance of non-standardised and/or
unconventional building/construction products with National Building
Regulations (through,
inter alia
, inspection of the
applicant's construction process and recently completed buildings;
assessment of documentation provided by the
applicant; and tests,
structural calculations and assessment of the applicant's quality
management system). The Board of Agrément
South Africa issues
certificates in respect of such products as comply with the criteria
set by the organisation. The validity of
any such certificate is
subject to continued participation by the certificate holder in the
post-certification assurance scheme of
Agrément South Africa, under
which scheme quality assurance surveillance is carried out by
Agrément South Africa representatives
on the certificate holder and
his or her licensees at regular intervals.
Pursuant to an application made to the
Board of Agrément South Africa during September 1997, Agrément
Certificate No. 98/267 was
issued in the name of Aruba Holdings (as
the ‘
Certificate Holder
’) in late 1998, in respect of the
‘
Third Generation
’ Aruba Building System, apparently a
further refinement of the First and Second Generation Aruba Building
Systems. Aruba Holdings
had been registered as a company on 6
September 1998, the shareholders of the company at the time of
registration being Olga Basson,
De Villiers and Jaffe. At the time
of issue of Agrément Certificate No. 98/267, the ‘
Title of the
Certificate
’ was reflected as ‘
Aruba Building System
’.
Further design modifications made by
Etienne Basson (possibly in conjunction with Olga Basson) to the
Third Generation Aruba Building
System resulted in the Fourth
Generation Aruba Building System, which is apparently known
nationally and internationally as the ‘
Aruba 2000 Series
Building System
’.
It is common cause that, commencing in
February 2000, an EPS product moulding company by the name of Automa
produces the EPS modules
utilised for the Aruba 2000 Series Building
System in terms of a manufacturing contract entered into and still
existing between Aruba
Construction and Automa. During 2001, Aruba
Construction applied to the Board of Agrément South Africa for the
evaluation of, and
the issue of an Agrément Certificate in respect
of, the Aruba 2000 Series Building System (the Fourth Generation
System), which
certificate was ultimately issued in the name of Aruba
Construction as the Certificate Holder - after the institution of the
present
proceedings - under Certificate No. 2002/291. (By agreement
between the parties, a certified copy of the said certificate was
furnished
to the Court by Mr
Maher
after the hearing of this
matter.)
On 23 August 2000, Aruba Construction
(represented by Olga Basson), as the
‘Licensor
’, and Aruba
Holdings (represented by Jaffe) as the
‘Licensee
’, entered
into a written Memorandum of Agreement, a copy of which is annexed to
the founding affidavit deposed to by Olga Basson
as ‘
AC 2
’.
The preamble to the agreement recorded that Aruba Construction ‘
is
the owner of the Aruba Building System, more fully described in
Agrément SA Certificate No. 98/267 … and the Aruba 2000 Series
Building System … (hereinafter called the
“GOODS” )
as
well as the trademark (hereinafter called the
“TRADEMARK”) …
but excludes the Agrément SA Certificate No. 98/267 and all
rights that flow therefrom
’. In addition, the preamble
recorded that the parties to the agreement wanted Aruba Holdings to
be ‘
permitted to market the GOODS and to use the TRADEMARK in
respect of the GOODS for which it has been registered
’, Aruba
Holdings to conform to the requirements and quality standards set out
in,
inter alia
, the Aruba Code of Practice, the Aruba
Structural Guidelines and the Aruba Quality Control Manual.
In terms of clause 1 of the agreement,
Aruba Construction warranted that ‘
it is the owner of the GOODS
and TRADEMARK (excluding the Agrément Certificate No. 98/267)
’
and that it ‘
is authorised to assign the use thereof to
’
Aruba Holdings, the agreement being ‘
based on such warranty
’.
Clause 2 provided that Aruba Construction granted to Aruba Holdings
‘
the Sole Marketing Rights to market the GOODS and utilise the
TRADEMARK
’ in South Africa and Namibia, as well as the
‘
Marketing Rights to market the GOODS world wide
’, with
the exception of certain countries listed in an annexure to the
agreement. The parties agreed expressly that no right granted
to
Aruba Holdings would be exercised to the exclusion of Aruba
Construction (clause 2).
Aruba Holdings agreed to pay a
consideration to Aruba Construction in the sum of 80 cents, inclusive
of VAT, ‘
per Aruba module
’ sold by Aruba Holdings, such
consideration to be recovered from Aruba Holdings by the manufacturer
at the point of sale and credited
to the account of Aruba
Construction (clause 3).
The ‘
right of permitted use of the
TRADEMARK and GOODS
’ by Aruba Holdings was to continue for an
initial period of 2 years from date of signature of the agreement
and, thereafter, on
a year-to-year basis subject to either party
giving to the other party 6 calendar months’ written notice of
intended termination
of the agreement (clause 6). On the termination
of the agreement Aruba Holdings was obliged forthwith to discontinue
‘
all use of the TRADEMARK and the marketing of the GOODS
’,
Aruba Holdings being entitled, however, to dispose of ‘
marked
and approved goods manufactured and packed or stored for distribution
prior to the notice of termination
’ of the agreement (clause
10).
In terms of clause 11, Aruba Holdings
was also obliged, on termination of the agreement, forthwith to
deliver to Aruba Construction
all marketing marketials (such as
technical manuals containing the Aruba Code of Practice, the Aruba
Structural Guidelines and the
Aruba Quality Control Manual),
photographs and all other documents having ‘
reference to the
Aruba TRADEMARK or the GOODS specified herein above
’. At the
same time, Aruba Construction would ‘
cease to have the right to
utilise the Agrément Certificate No. 98/267
’. Clause 12
further stipulated that Aruba Holdings would be obliged, ‘
when
the agreement terminates for whatever reason
’, to change its
name to a name ‘
which does not use the word
“ARUBA”
or
any similar word or name
’.
Finally, clause 8 of the agreement
provided as follows:
‘
The LICENSEE undertakes and binds itself not only for the
duration of this agreement, but at all times thereafter, never in any
way,
to put in issue or to challenge the validity of the TRADEMARK
and/or Copyrights or the LICENSOR’s sole and exclusive right
thereto,
and not at any time, by way of use of or by seeking
registration or otherwise to endeavour to establish title to the
TRADEMARK, GOODS
and/or Copyrighted material. The above provisions
shall apply
mutatis mutandis
to the LICENSOR
with reference to the Agrément Certificate No. 98/267.
’
On the
same date (23 August 2000) a further written agreement was entered
into between Olga Basson and Jaffe, in terms of which the
former sold
to the latter half of the total issued share capital in Aruba
Holdings, as also all amounts owing by Aruba Holdings to
Olga Basson
on loan account, as at date of signature of the
agreement, for a purchase price of R30
000.00. It would appear from this agreement (a copy of which is
annexed to the founding affidavit
as ‘
AC3
’), that Olga
Basson resigned as a director of Aruba Holdings, while Jaffe was
appointed as a director of such company, on date
of signature of the
agreement. Clause 11 of this agreement reads as follows:
‘
11.
LICENCE TO CONSTRUCTION (i.e. ARUBA CONSTRUCTION
(PTY) LTD)
(a) It is recorded that the COMPANY
[Aruba Holdings]
is the
holder of an Agrément certificate (
“the certificate”)
[Certificate No. 98/267].
THE COMPANY undertakes that it will license
CONSTRUCTION
[Aruba Construction]
to utilise the
certificate, without charge.
’
In
accordance with clause 11(b) of the abovementioned agreement between
Olga Basson and Jaffe (which agreement was signed by Jaffe
both in
his personal capacity as the purchaser and in his capacity as a
director of, and on behalf of, Aruba Holdings), Aruba Construction
was subsequently (on 29 September 2000) registered with Agrément
South Africa as the holder of a licence in respect of Agrément
Certificate No. 98/267, the ‘
Title
’ of such certificate at
that time being reflected on the license registration document as
‘
Aruba Building System
’.
On 20 June 2001, a letter was addressed
by De Villiers, acting on behalf of Aruba Holdings, to Etienne
Basson, purporting forthwith
to terminate the Agrément Licences
(Nos. 98/267/12 and 98/267/13) registered in the name of Aruba
Construction (as Licensee) in
respect of the Agrément Certificate
No. 98/267. Although it would appear (
prima facie
) that, as
alleged by Olga Basson in the founding affidavit deposed to by her,
this purported cancellation was in breach of clause
11(b) of the
abovementioned agreement between her and Jaffe, this is denied by De
Villiers in the opposing affidavit deposed to by
him. In the
time-honoured words of Corbett JA (as he then was) in
Plascon-Evans
Paints Ltd v Van Riebeeck Paints (Pty) Ltd
[1984] ZASCA 51
;
1984 (3) SA 623
(A) at
634I-635C, this denial by De Villiers would, in my view, not seem to
‘
be such as to raise a real, genuine or
bona fide
dispute of fact
’; to my mind, Mrs Basson’s factual averment
in this regard would appear to be ‘
inherently credible
’
and this fact should therefore be included amongst those upon which I
determine whether the applicants are entitled to the final
relief
which they seek. However, as nothing really turns on this apparent
dispute of fact between the parties, I do not propose
to deal with
this aspect any further.
During January 2001, Olga Basson became
aware of the fact that Aruba Holdings had applied to Agrément South
Africa for an amendment
to the Agrément Certificate No. 98/267.
From correspondence which then passed between the attorneys
representing Aruba Construction
and those representing Aruba Holdings
(copies of which correspondence are annexed to Mrs Basson’s
founding affidavit), it would
appear that Aruba Holdings was at that
stage seeking to amend the said Agrément Certificate so as to
include the Aruba 2000 Series
Building System within the ambit
thereof.
The attorneys representing Aruba
Construction informed Aruba Holdings, by letter dated 16 January
2001, that the proposed amendment
would be in breach of,
inter
alia
, the agreement dated 23 August 2000 entered into between
Aruba Construction and Aruba Holdings. Although this was denied by
Aruba
Holdings through its attorneys, such attorney ultimately, by
letter dated 14 February 2001, indicated that ‘
so as to avoid –
at this stage anyway – costly and unnecessary litigation, our
client
[Aruba Holdings]
has agreed to cease seeking to
register the amendments to its Agrément Certificate so as to include
the Aruba 2000 Series Building
System.
’ However, on 27
February 2001, Aruba Holdings applied to Agrément South Africa to
have Agrément Certificate No. 98/267 amended
by changing the ‘
Title
of the Certificate
’ from ‘
Aruba Building System
’ to
‘
Styrox Building System
’. It would appear that the
certificate was indeed amended in this way during March 2001.
It is interesting to note that in the certificate as amended during
March 2001 (a copy of a portion of which is attached to the
respondents’
main opposing affidavit), the holder of the
certificate is reflected as ‘
Styrox Holdings (Pty) Limited
’.
In this opposing affidavit, De Villiers states that Aruba Holdings
‘
has now changed its name to
“Styrox Holdings (Pty) Ltd”
’
(par 4.39.5.4)
and that Aruba Holdings ‘
as Styrox
Holdings (Pty) Ltd is registered with the Registrar of Companies
’
(par 4.39.5.5). No mention whatsoever is made of
when
this
change of name was registered, and it would appear from a search of
the Companies Register conducted by Adams & Adams Attorneys
dated
15 January 2002 (a copy of which is annexed to Mrs Basson’s
replying affidavit as ‘
OB 4
’) that, at that date, no
corporate entity with the name Styrox Holdings (Pty) Ltd had yet been
registered with the Registrar of
Companies. It would thus seem that,
at the time Agrément Certificate No. 98/267 was amended during
March 2001 at the instance
of Aruba Holdings, the holder of the
certificate as reflected therein (Styrox Holdings (Pty) Ltd) did
not
exist as a registered corporate entity under that name.
In an article published in the Sunday
Argus of 13/14 October 2001 (a copy of which is annexed to the
applicants’ main founding affidavit
as ‘
AC 11
’), the
following appeared:
‘…
Brother’s
Innovation chief executive Leno de Villiers, whose company emerged
from the restructuring of Aruba Holdings earlier this
year, has said
it has been able to procure a number of large contracts in Namibia,
Botswana and Angola with its Styrox building system
…
The Styrox system consists of interlocking, hollow building
modules. After placing various layers in the perimeter of the
structure,
the cavity in the centre is filled with concrete, creating
an extremely strong wall that can be plastered …
De Villiers explained since its
restructuring, Brother’s Innovation had become a brand management
company, one of the first building
material companies to do so.
“We are the owners or developers of innovative products and manage
the various brands internationally – like Barlows or Microsoft.
We
appoint distributors and operating companies and we help with
supervision and training of workers,”
he said.
’
Once again, it is interesting to note
that, at the time of publication of this article, ‘
Brother’s
Innovation
’ apparently did
not
yet exist as a registered
corporate entity. It is clear from the papers before this Court that
the company by the name of Brother’s
Innovation (Pty) Ltd (Reg. No.
2002/004078/07) was only registered with the Registrar of Companies
on 22 February 2002. Furthermore,
the allegation by Olga Basson in
the applicants’ main founding affidavit that the house depicted in
the photograph published together
with the abovementioned article was
built using the Aruba 2000 Series Building System, is not denied by
the respondents. According
to De Villiers, ‘
the building was
constructed at approximately the time of the First Respondent’s
change of name and the construction now falls under
the Styrox
Agrément certificate…
’ (par 4.36.5) and ‘
the building
block aspects of the building systems employed by Applicants and by
First Respondent are identical. However, First Respondent
has chosen
to employ the name
“Styrox”
when referring to the building
system in question
’ (par 4.37.1). As indicated above, as the
change of name of the first respondent from Aruba holdings (Pty) Ltd
to Styrox Holdings
(Pty) Ltd was apparently only registered after 15
January 2002, and as the article in question was published on 13/14
October 2001,
the house depicted in the photograph certainly could
not
have been ‘
constructed at approximately the time of
the First Respondent’s change of name
’, as alleged by De
Villiers.
Respondents do not deny Mrs Basson’s
allegation that all except one of the photographs of building sites
and completed buildings
contained in a promotional pamphlet headed
‘
Brother’s Styrox Insulated Concrete Construction
’,
handed to Mrs Basson on 11 December 2001, depict sites and buildings
where the Third Generation Aruba Building System and the
Aruba 2000
Series Building System (the Fourth Generation System) were utilised.
This notwithstanding, the pamphlet states pertinently
that the
photographic illustrations contained therein are ‘
of Styrox or
related EPS methodologies
’. There is, however, no mention
whatsoever in this promotional pamphlet of the ‘
Aruba Building
System’.
The
respondents also admit the existence and the contents of a document
entitled ‘
Brother’s Styrox Insulated Concrete Construction
Quality Assurance Manual
’ (dated November 2001), a copy of
which is annexed to the applicants’ main founding affidavit. In
the respondents’ main opposing
affidavit, De Villiers contends that
this ‘
Quality Assurance Manual does belong to First Respondent
and was prepared in compliance with the Agrément SA Certificate
’
(par 4.39.2),and that it ‘
was produced by First Respondent and
its employees and was registered with the Agrément Board in order to
support the First Respondent’s
certificate
’ (par 4.39.3).
The cover page of this manual indicates that it is intended ‘
For
the application of the: Styrox Building System, Agrément
Certificate No. 98/267
’ and that it is ‘
Brought to you by:
Styrox Holdings (Pty) Ltd, a member of Brother’s Innovation (Pty)
Ltd, Reg No. 1998/017769/07
’. Moreover, under the heading
‘
Company Mission Statement
’, ‘
Brother’s Innovation
’
is described as ‘
a unique
company
’ and
reference is made to ‘
Brothers and its affiliated
companies
’
(emphasis added). At the time of publication of this manual
(apparently in November 2001), Reg. No. 1998/017769/07 was the
registration
number of Aruba Holdings (Pty) Ltd, which had
not
yet changed its name to Styrox Holdings (Pty) Ltd. Also, at that
time, Brother’s Innovation (Pty) Ltd did
not
exist, this
company only being registered (as indicated above) on 22 February
2002.
For the purposes of the present
proceedings, the following statements contained in the said Quality
Assurance Manual are also relevant:
‘
Styrox embarked on a wave of change in South Africa with the
creation of the Styrox Building System. Styrox consists of
lightweight
EPS building modules, press-fitted together, to form
permanent insulation and shuttering for concrete filled loadbearing
and non-loadbearing
walls in buildings. The walls are covered with
various claddings, generic or conventional sand/cement plasters …
Styrox has been developed over an extensive period and all
pertinent tests have been objectively carried out at the South
African
Centre for Scientific and Industrial Research (CSIR) under
the conditions and application standards set by the National Building
Regulations …
Agrément Certificate No. 98/276
[sic: obviously 98/267]
was issued to Styrox Holdings (Pty) Ltd by the Agrément Board of
South Africa in terms of the powers granted to it by the Minister
of
Public Works.
Agrément Certificate No. 98/276
[sic: 98/267]
is a technical document that
:
Describes
the Styrox Building System.
Lists
the use for which Styrox’s fitness for purpose has been assessed
…
States
which regulations Styrox satisfies.
Styrox Holdings (Pty) Ltd firmly believes in sharing its
technologically advanced building methods with all spheres of the
market
in order to manifest a regulated industry for the benefit of
all concerns
[sic] …
In view of the fact that Styrox is
produced by independent, Licensed manufacturers, the company shall
ensure that the same rigid Quality
Controls and Procedures are
implemented and adhered to at all times within the manufacturing
environment. Regular inspections at
the premises of the manufacturer
will be undertaken by Styrox Management and from time to time
Agrément South Africa representative
will do random visits and spot
checks to ensure that the Quality Assurance Controls and Procedures
are adhered to
’.
While,
on the face of it, many of the abovequoted statements contained in
the Quality Assurance Manual appear to be false, as alleged
by Mrs
Basson in the applicants’ founding affidavit, De Villiers, in the
respondents’ main opposing affidavit, denies that the
contents of
the said manual are false, giving,
inter alia
, the following
reasons for such denial:
‘
4.39.5.1 The Styrox building system, being the equivalent of
the Aruba 2000 Building System, was
“created”
by employees
at the time of, and for the benefit of, First Respondent while it was
still knows as Aruba Holdings (Pty) Ltd;
Buildings have been erected employing the
“Styrox
Building System”
and there are therefore
“Styrox
buildings”
;
As the
“Styrox product”
is the same as the Aruba
product, tests carried out by the CSIR on the Aruba product
apply, naturally, to the Styrox product;
The Agrément Certificate was issued to First Respondent then
known as
“Aruba Holdings (Pty) Ltd”
which has now
changed its name to
“Styrox Holdings (Pty) Ltd”
. The
statement is therefore factually correct;
First Respondent as Styrox Holdings (Pty) Ltd is registered
with the Registrar of Companies;
It is correct that the Styrox Building System is virtually the
same as the Aruba Building System and it is therefore equally

correct that assertions made with respect to the Aruba Building
System relating to its pedigree and registration with the
Agrément Board apply to the Styrox Building System;
In terms of the First Respondent’s Agrément Certificate,
First Respondent has an obligation to monitor quality and carry

out inspections of the buildings systems employed by our
licensees
’.
While
I will return to deal with these allegations below, it is perhaps
important to reiterate at this stage that, at the time when
the
Quality Assurance Manual was apparently published (November 2001),
the change of name of the First Respondent from Aruba Holdings
(Pty)
Ltd to Styrox Holdings (Pty) Ltd had
not
yet been registered
with the Registrar of Companies. Moreover, as also pointed out
above, the Agrément Certificate No. 98/267,
while it was indeed
issued in the name of Aruba Holdings (Pty) Ltd (as ‘
Holder of
the Certificate
’) on 2 September 1998, it seems to be common
cause that this certificate was issued in respect of the Third
Generation Aruba Building
System and did not, at the time of its
issue, include the Aruba 2000 Series Building System (the Fourth
Generation System) within
its ambit. It would, however, appear from
the papers before this Court that, subsequent to the issue of this
Agrément Certificate
No. 98/267, the Agrément Board, to the
knowledge of the applicants, allowed the first respondent and other
‘
licensees
’ of Aruba Construction to use the said
certificate in respect of the Aruba 2000 Series Building System. In
this regard, it must
be remembered that, as indicated above, the
Aruba 2000 Series Building System was submitted to the Board of
Agrément South Africa
for evaluation on 6 February 2001 and that,
subsequent to the launch of the current proceedings, Agrément
Certificate No. 2002/291
was issued to Aruba Construction in respect
of the said building system. In a letter dated 17 February 2001,
addressed by Aruba
Construction to a certain Mr Paul Erwee
(appointing him as Professional Engineer on projects in Botswana
utilising the Aruba 2000
Series Building System), Aruba Construction
stated that:
‘
In view of the fact that the Aruba 2000 Series has immense
structural advantages over the previous Aruba module evaluated under
Agrément
SA Cert. No. 98/267, the Agrément Board has conceded, for
the present, to permit Licensees the right to operate, using the
Aruba
2000 Series Building System, in compliance with the conditions
of Certificate No. 98/267.
After the evaluation of the Aruba
2000 Series has been completed and the relevant Agrément Certificate
has been granted to Aruba
Construction (Pty) Ltd, the Certificate
Holder, the concession as mentioned in the previous paragraph will be
rescinded
’.
On the
face of it, this letter (a copy of which is annexed to the
respondents’ main opposing affidavit as ‘
LDV 7
’) would
appear to support the allegation made by Mrs Basson (in the
applicants’ main replying affidavit) to the effect that,
as the
abovementioned Agrément Certificate No. 2002/291 has now been issued
in respect of the Aruba 2000 Series Building System
(the Fourth
Generation System), ‘
the concession granted by Agrément South
Africa has been rescinded
’ (par 67). However, it would appear
from documentation handed in by Mr
Seale
after the hearing of
this matter, at the request of the Court and with the consent of
applicants’ counsel, that the Board of Agrément
South Africa has,
despite the issue to Aruba Construction of Agrément Certificate No.
2002/291 in respect of the Aruba 2000 Series
Building System,
nonetheless continued to allow the first respondent to utilise
Agrément Certificate No. 98/267 in respect of the
said building
system.
The applicants’ founding papers also
comprise an affidavit in terms of the provisions of the Computer
Evidence Act 57 of 1983, deposed
to by one Mr S R Boyes, a director
of the applicants’ attorneys of record. Annexed to such affidavit
are certain computer print-outs
as defined in the Computer Evidence
Act, extracted from an internet website at
www.brothers.co.za
,
being a copy of the ‘
homepage
’ of the said website, a
copy of three pages from the said website commencing with the heading
‘
Who we are
’, and a copy of three further pages from the
said website entitled ‘
Brother’s Styrox Insulated Concrete
Construction
’. It would appear that all these pages were
printed out by computer on 25 February 2002. For the purposes of the
present proceedings,
the pages commencing with the heading ‘
Who
we are
’ contain the following statements:
‘
Operations began back in 1992, when the founding members
realised that it was imperative to introduce new vision and
technology into
the growing construction industry …
We began with one simple but
effective product, our Expanded Polystyrene (EPS) building block,
which is simply filled with concrete,
creating a building that is
tested to be stronger and superior than traditional methods.
However, with the added benefits of our
method of construction, we
are offering a complete product that competes with the best in the
world and betters it.
’
In the
applicants’ main founding affidavit, Mrs Basson also points out
that, if one enters the URL (uniform resource locator or
internet
address) for
www.aruba.co.za
or
www.styrox.co.za
, an internet link results in the opening
of the website
www.brothers.co.za
.
This allegation is admitted by the respondents, despite repeated
allegations by De Villiers in the respondents’ main opposing
affidavit to the effect that, as the name Aruba had become associated
with certain failed projects, the respondents wanted and intended
to
‘
distance
’ themselves from the Aruba name and brand; not
to make use of the Aruba name or of the description of the building
system as utilised
by the applicants; not to be associated with the
Aruba name; and to distinguish themselves, ‘
their
’
product and ‘
their
’ business from that of the applicants.
De Villiers admits that the year
reflected in the Brother’s website, as at 25 February 2002, as the
year in which ‘
operations began
’ (ie 1992) is incorrect
but alleges that this is simply ‘
an inadvertent error
’
(par 4.48). Further computer printouts from the Brother’s website
dated 22 July 2002, annexed to the applicants’ main replying
affidavit, reveal that the date of commencement of operations has now
been amended to 1997, but that the Brother’s website still
contains
repeated references to the ‘
Styrox
’ Building System,
stating,
inter alia
, that ‘
Styrox has been extensively
tested under SABS standards
’; that Styrox ‘
has an Agrément
Certificate
’, and that Styrox is ‘
the leading Brother’s
brand
’.
It is
common cause that, in terms of clause 6 of the abovementioned
agreement entered into on 23 August 2000 between Aruba Construction
and Aruba Holdings, the latter has given the former six calendar
months’ written notice of the intended termination of the
agreement,
and that the agreement will therefore terminate on the
expiry of the initial two year period on 22 February 2003.
Furthermore, according
to the respondents’ main opposing affidavit,
Brother’s Innovation (Pty) Ltd ‘
has been set up as the overall
holding company which delegates the management and marketing of
verious brands in a number of unrelated
industries
’ (par
4.50.1); Styrox Holdings (Pty) Ltd (previously Aruba Holdings (Pty)
Ltd – the first respondent) ‘
has been appointed as the entity
in charge of the Styrox brand
’ (par 4.50.2); Styrox CC (fourth
respondent) ‘
is involved in the direct trading of the Styrox
product
’ (par 4.50.3); the first and the fourth respondents
‘
will, on termination of the agreement, continue to lawfully
market the Styrox Building System
’ (par 4.22.5); the fourth
respondent (Styrox CC) ‘
is already marketing the building system
as the Styrox building system and is not waiting for determination of
the agreement
(“AC 2”)
’
(par 4.34.1)
; ‘an
independent manufacturer has been contracted by First Respondent to
manufacture the EPS component of the Styrox Building
System designed
by John Smit
’ (par 4.42.1 -- in this regard, the applicants
allege in their main replying affidavit (par 175) that the said John
Smit, at the
time the managing director of a company called KTS Foam
(Pty) Ltd, produced the moulds for the said EPS components according
to the
applicants’ specifications and the relevant designs had been
submitted by the applicants to Agrément SA two years before, in
September
1997); and that the respondents are presently (
viz
during the currency of the agreement) buying the EPS components used
for the building system from a manufacturer by the name of ‘
Automa
’
(Automa Multi Styrene (Pty) Ltd), which manufacturer produces these
components under the auspices of an agreement between itself
and
Aruba Construction) and are selling the building systems built using
these components under the name ‘
Styrox Building System
’
(par 4.42.2).
According to the respondents, this
conduct is not unlawful – ‘
Respondents are buying
unidentifiable items (there is no brand name printed on the item nor
any other identifying mark on the items
produced by Automa), are
paying Applicants a royalty and are selling the goods under a
different name. This is not unlawful
’ (par 4.42.4). Finally,
the respondents concede that ‘
it is correct that the First and
Third Respondents intend to utilise the names as referred to by
Applicants
[
viz
Brother’s Brand Management Corporation,
Brother’s Styrox, Brother’s Innovation (Pty) Ltd and Styrox
Holdings (Pty) Ltd]
in order to market and sell the buildings
systems products which First and Third Respondents have named and
styled the Styrox Building
System
’ (par 4.45.1).
Although, in the papers before the
Court, there appeared to be a dispute between the parties as to
whether or not Aruba Holdings had,
since February 2002, been paying
royalties to Aruba Construction in terms of clause 3 of the
abovementioned agreement concluded on
23 August 2000, Mr
Maher
conceded at the commencement of the hearing before this Court that
such royalties were indeed being paid.
Discussion
As
indicated above, one of the heads of relief still sought by the
applicants is a declaratory order to the effect that ‘
the
trademark rights to
“Aruba”
are held solely by First
Applicant
’ (prayer 1.4 of the Notice of Motion).
The only allegations made in the
applicants’ main founding affidavit in relation to the existence of
‘
trade mark rights
’ are the references to certain
provisions of the abovementioned agreement entered into between Aruba
Construction and Aruba Holdings
on 23 August 2000 (annexure ‘
AC
2
’ to the main founding affidavit). As indicated above, the
preamble to this agreement provides that the ‘
Licensor
’
(Aruba Construction) ‘
is the owner of the Aruba Building System
[Third Generation]
… and the Aruba 2000 Series Building
System
[Fourth Generation]
…
(hereinafter called the
“GOODS“)
as well as the trade mark
(hereinafter
called the “TRADE MARK”
)
marked
annexure
“
C”
hereto
’
(emphasis added). Neither Annexure “C”, nor
any of the other annexures referred to in the abovementioned
agreement, form part
of the papers before this Court. The preamble
to the said agreement also provides that ‘
it is the desire of
the LICENSOR and the LICENSEE that the LICENSEE should be permitted
to market the GOODS
and to use the TRADEMARK in respect of
the GOODS for which it has been registered
’ (emphasis
added). From this preamble, it would appear that the trade mark
referred to was intended by the parties to be a registered
trade
mark, and the other references in the agreement to the ‘
TRADEMARK
’
do not in my view detract from this impression.
Section 29
of the
Trade Marks Act 194
of 1993
provides as follows:
‘
(1) When an application for registration of a trade mark has
been accepted and advertised in the prescribed manner and either –
the
application has not been opposed and the time for notice of
opposition has expired;
the
application has been opposed and has been granted,
the registrar shall register the trade mark as on the date of the
lodging of the application for registration, and that date shall,
subject to the provisions of
section 63
, for the purposes of this Act
be deemed to be the date of registration
…
Section
33 of the said Act makes it clear that registration of a trade mark
is a condition precedent to an action for infringement
of a trade
mark, brought in terms of section 64 of the Act, subject to the
proviso that ‘
nothing in this Act shall affect the rights of any
person, at common law, to bring any action against any other person
’.
As is pointed out by De Villiers in the
respondents’ main opposing affidavit, the applicants failed to
provide any details whatsoever
in their founding affidavit in respect
of the alleged trade mark, more specifically with reference to the
Trade Marks Act (which
governs the registration of trade marks), the
agreement relied upon by the applicants apparently envisaging a
registered trade mark.
It is only in the annexures to their main
replying affidavit (deposed to by Olga Basson) that the applicants
provide proof of the
application (dated 26 April 2000) for the
registration of the trade mark representation ‘
ARUBA
’, as
also proof (in the form of a letter dated 17 April 2001 from the
Department of Trade and Industry to Aruba Construction) of
the change
in the name of the applicant from Aruba Holdings to Aruba
Construction. However, as stated in the applicants’ main
replying
affidavit, the final registration of such trade mark had not been
granted as at 23 July 2002 (the date on which the opposing
affidavit
was signed). There are no – or insufficient – allegations in the
papers before me to support a reliance by the applicants
on common
law trade mark rights of the kind envisaged in section 33 of the Act,
and an order based on statutory trade mark infringement
cannot be
obtained in respect of a trade mark which has been applied for but
not yet registered (see Morley
et al ‘Trade Marks
’
in
LAWSA
Volume 29 (first reissue, 2001) par 1). I accordingly
agree with Mr
Seale
that the relief sought by the applicants
in prayer 1.4 cannot be granted.
As regards the relief sought by the
applicants in prayer 1.6 of the Notice of Motion (viz a declaratory
order to the effect that Aruba
Holdings is in breach of the written
agreement entered into on 23 August 2000 between Aruba Construction
and Aruba Holdings), Mr
Seale
submitted in his Heads of
Argument that no consequential relief pursuant to this declaratory
order was sought and that the Court
will not decide abstract,
academic or hypothetical questions.
I disagree with this submission made by
Mr
Seale
. Section 19(1)(a) of the Supreme Court Act 59 of
1959 expressly provides that this Court has the power
‘
(iii) 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.
’
According to the South African case
law, the Court may indeed, in the exercise of its discretion under
this provision, decline to
grant a declaratory order where there is
no actual dispute between the parties or if it regards the question
raised before it as
hypothetical, abstract or academic (see, in this
regard, Erasmus et al
Superior Court Practice
(1994, with
looseleaf updates) A1 – 34, Van Winsen et al
Herbstein & Van
Winsen : The Civil Practice of the Supreme Court of South Africa
(4
ed, 1997) 1054 – 1055, and the other authorities cited by such
writers). In my view, none of these principles applies to the
present case – not only
is
there a ‘
real and pertinent
dispute between the parties
’ regarding the interpretation of
the written agreement, but also the applicants
do
in fact seek
relief consequential upon such declaratory order (see prayer 2 of the
Notice of Motion).
While, in their main opposing
affidavit, the respondents admitted the wording of the written
agreement entered into between Aruba
Construction and Aruba Holdings,
De Villiers submitted that -
‘…
as there is neither patent nor design protection relating
to the
“Aruba Building System”,
whether it be in respect
of the third or fourth generation systems, it is open to any
participant in the market to produce these systems
and to market and
sell the same without Applicants’ consent. Applicants have no
exclusive rights to the production and marketing
of these systems
’
(par 4.14.1).
According to De Villiers, Aruba
Holdings entered into the agreement dated 23 August 2000 with Aruba
Construction on the basis of misrepresentations
made by the
applicants regarding,
inter alia
, the existence of statutorily
protected intellectual property rights in respect of the buildings
systems in question (the Third and
Fourth Generation Aruba Building
Systems). De Villiers submits further that Aruba Holdings, in
entering into the said written agreement,
relied upon
misrepresentations made by Aruba Construction to the effect that the
‘
First Respondent was in fact gaining rights which it would not
have possessed had the agreement not been entered into
’ (par
4.14.4). As Aruba Construction could, according to De Villiers, have
produced and marketed the Third and Fourth Generation
Aruba Building
Systems ‘
free of any hindrance by the Applicants
’, there
was in fact no need for it to have entered into the said agreement.
Mr
Seale
contended that the said
written agreement does not – and cannot be interpreted as having
been intended to – take away any rights
from Aruba Holdings. On
the contrary, the agreement purported to give to Aruba Holdings
rights which it would not otherwise have
had, but for the agreement.
In fact, however, the agreement granted to Aruba Holdings nothing
that it would not have had – in
terms of intellectual property
rights – without the agreement as, according to Mr
Seale
,
any person is free to produce, manufacture, market and sell the
buildings systems in question. Mr
Seale
thus argued that
Aruba Holdings was not in breach of the written agreement as alleged
in the founding papers.
Concerning the alleged
misrepresentation by Aruba Construction with regard to the existence
of statutorily protected intellectual
property rights in respect of
the building systems in question, it is abundantly clear from the
documents annexed to the respondents’
main opposing affidavit that,
as early as 19 February 1999, De Villiers knew that neither of the
existing patents (No. 88/5940 and
No. 94/1470) included within their
ambit any versions of the Aruba Building System subsequent to the
Second Generation System. De
Villiers’ own allegations illustrate
that he and Jaffe both participated fully in the negotiations leading
up to the conclusion,
on 23 August 2000, of the abovementioned two
agreements (between Aruba Construction and Aruba Holdings, and
between Olga Basson and
Jaffe, respectively). On the balance of
probabilities, therefore, Jaffe also knew that the existing patents
did not provide protection
in respect of the Third Generation and
subsequent Aruba Building Systems. De Villiers’ statement in the
respondents’ main opposing
affidavit (signed on 20 June 2002) to
the effect that ‘
I have
recently
established
that this is in fact incorrect and there are no patents or registered
designs covering the Third Generation System
’ (par 4.10.3,
emphasis added) thus appears to be untrue. It must also be
remembered that, as pointed out by Mr
Maher
, none of the
respondents has taken any steps whatsoever by way of application,
counter application or otherwise either to
have the existing patents expunged or
to set aside the agreement between Aruba Holdings and Aruba
Construction, despite their allegations
about the patents having been
improperly obtained and the agreement having been induced by
misrepresentations made by the applicants.
In support of his argument that, in the
absence of protection under the relevant statutes (ie the
Patents Act
57 of 1978
, the
Copyright Act 98 of 1978
, the
Designs Act 195 of 1993
and the
Trade Marks Act 194 of 1993
), any person or entity is free to
produce, manufacture, market and sell the building systems in
question (
viz
the Third and Fourth Generation Aruba Building
Systems), Mr
Seale
relied heavily on the decision of the
Appellate Division (as it then was) in
Premier Hangers CC v
Polyoak (Pty) Ltd
[1996] ZASCA 119
;
1997 (1) SA 416
(A). According to Mr
Seale
,
this case is authority for the proposition that, in a situation where
there is no statutory protection, copying by a competitor
is quite
legitimate,
viz
where statutory protection can be claimed, but
is not, or where statutory protection expires or is lost, anyone is
free to copy (see
the judgment of Plewman JA in the
Premier
Hangers
case (
supra
) at 423A-424I). In the
Premier
Hangers
case, Plewman JA also pointed out that –
‘…
in
most foreign systems where unfair competition rules apply there
appears to be a search where relief is to be given for some special
unfairness in that which has been done. This, all too frequently, is
a difficult task because it is hampered in a case such as the
present
by the vast differences in the amount of effort and skill which is
called for in the design of articles which would warrant
statutory
protection
’ (at 424G).
In the learned Judge of Appeal’s
view, it was considerations such as these which gave rise to the
decision by Nicholas AJA in the
case of
Schultz v Butt
1986
(3) SA 667
(A). According to Plewman JA, the finding in the
Schultz
v Butt
case (
supra
) was that copying
per se
was not
unlawful and that only the existence of extraneous factors rendered
unlawful the conduct of the unsuccessful party in that
case (at
424H-I).
I agree with Mr
Seale
that the
Premier Hangers
case (and the
Schultz v Butt
case
relied upon fairly extensively by Plewman JA in the former case) does
indeed constitute authority for the proposition that,
in the absence
of statutory protection, copying by a person of a competitor’s
product does not
per se
constitute actionable unlawful
competition in South African law. It is not, however, necessary for
purposes of the present case,
to decide whether or not the
Premier
Hangers
case is also authority for the wider proposition that, in
a situation where there is no statutory protection, copying by a
competitor
is automatically to be regarded as legitimate. In my
view, the judgment of Plewman JA in the
Premier Hangers
case
does not alter the approach to be followed where a South African
court is called upon to deal with conduct which does not fall
under
one of the clearly recognised, existing categories of unlawful
competition,
viz
that regard must be had to the
boni mores
criterion and the general sense of justice of the community in order
to judge the fairness and honesty of the conduct complained
of (see
Schultz v Butt
(
supra
) at 679B-D) and that, '
while
fairness and honesty are relevant criteria in deciding whether
competition is unfair, they are not the only criteria … questions
of public policy may be important in a particular case, eg the
importance of a free market and of competition in our economic
system
’ (at 679E). (See also the
Premier Hangers
case
(
supra
) at 421G-422J.)
In the light of the approach followed
in the
Premier Hangers
case, it may well be so that, in the
absence of the agreement entered into on 23 August 2000 between Aruba
Construction and Aruba
Holdings, one or more of the respondents
would
be able lawfully to ‘
copy
’
the Third and Fourth
Generation
Aruba Building Systems (and more particularly, the
EPS components constituting the
‘
building block aspects
’
of such building systems); to have such building systems
manufactured by their ‘
own
’ manufacturer, and then to sell
the building systems thus copied and manufactured for them under a
name different to ‘
Aruba
’. This is
not
, however,
what the respondents are in fact doing in the case before me.
It appears to be common cause that
Aruba Holdings (now known as Styrox Holdings (Pty) Ltd) is purchasing
the EPS components constituting
the ‘
building blocks
’ of
the Third and Fourth Generation Aruba Building System from Automa,
which company manufactures these components under the auspices
of a
‘
licensing agreement
’ entered into between it and Aruba
Construction. For each of the components thus purchased, Aruba
Holdings apparently pays to
Aruba Construction (via Automa) the
royalty required in terms of the agreement dated 23 August 2000.
However, instead of selling
the building systems constructed using
the said EPS components under the name ‘
Aruba
’ (either the
Third Generation Aruba Building System or the Aruba 2000 Series
Building System (the Fourth Generation System), as
the case may be),
Aruba Holdings and Styrox CC are advertising, marketing and selling
the building systems under the name ‘
Styrox
’. What is
more, in so doing, Aruba Holdings is utilising a ‘
Quality
Assurance Manual
’ (Annexure
‘AC 13
’ to the
applicants’ main founding affidavit) containing certain facts which
(as indicated above) are demonstrably (and, in my
view deliberately)
untrue.
This Quality Assurance Manual also
contains certain statements which to my mind are deliberately aimed
at creating a false impression
in the mind of the reader. Thus, for
example,as it is common cause that the original versions of the
building systems in question
were ‘
created
’ (or, at the
very least, adapted and introduced)
in South Africa
by Olga
and Etienne Basson, (from about mid 1987) under the name ‘
Aruba
’,
the statement that ‘
Styrox
embarked on a wave of
change in South Africa
with the
creation
of the Styrox Building System
’ is, to say the least,
misleading. Similarly, as it is common cause that the tests carried
out at the CSIR in respect of the building
systems in question
related to the ‘
Aruba Building System modules
’, the
statement that ‘
Styrox has been
developed over an
extensive period
and
all pertinent tests
have been objectively carried out
at the South
African Centre for Scientific and Industrial Research (CSIR) under
the conditions and application standards set by the
National Building
Regulations
’ also creates a misleading and false impression.
As a final example, as the EPS components used by the respondents in
the ‘
production
’ of the building systems marketed and sold
under the name ‘
Styrox
’ are, in fact, manufactured by
Automa under license with Aruba Construction, the statement that
‘
Styrox is produced by independent, Licensed manufacturers
’
is also misleading.
Moreover, it must be remembered that
all the above statements, being contained in a publication dated
November 2001, were ‘
made
’ at a time when no company by
the name of Styrox Holdings (Pty) Ltd or by the name of Brother’s
Innovation existed as a legally
recognised entity. The attempts made
by De Villiers, in the respondents’ main opposing affidavit, to
explain and justify,
inter alia
, the abovequoted statements in
the Quality Assurance Manual (paras 4.39.5.1 to 4.39.5.6, quoted in
full above) are disingenuous and
unconvincing. The same applies in
respect of the ‘
explanation
’ by De Villiers of the
incorrect and misleading statements contained in the abovementioned
article published in the Sunday Argus
of 13 and 14 October 2001
(Annexure ‘
AC 11
’ to the applicant’s main founding
affidavit), which statements have been dealt with in greater detail
above.
As regards the contents of the
www.brothers.co.za
internet website (discussed above), as also the ‘
internet
link
’ between the
www.aruba.co.za
internet address and the said ‘
Brothers
’ website, many of
the statements contained in the ‘
Brothers
’ website are
false and misleading in the same way as the similar statements
contained in the first respondent’s Quality Assurance
Manual. In
addition, the existence (with the full knowledge of the respondents)
of the said internet link is irreconcilable with
the respondents’
oft-repeated desire and intention (as set out in their main opposing
affidavit) to ‘
distance
’ and ‘
distinguish
’
themselves from the Aruba name and brand.
On the evidence as a whole, I agree
with Mr
Maher’s
contention that the conduct of Aruba
Holdings and of Styrox CC as set out above, as also the admitted
participation in such conduct
of De Villiers and Jaffe (as directors
and members of Aruba Holdings and of Styrox CC, respectively) amounts
to a ‘
direct adoption
’ of the applicants’ product, a
‘
filching of the fruits of another’s skill and labour
’
(see
Taylor & Horne (Pty) Ltd v Dentall (Pty) Ltd
1991 (1)
SA 412
(A) at 421F), a parasitic attempt by the respondents to ‘
reap
where they have not sown
’ (see the majority decision of the
United States Supreme Court in
International News Service v The
Associated Press
[1918] USSC 194
;
(1918) 248 US 215
at 239-240, as cited by
Nicholas AJA in the
Schultz v Butt
case (
supra
) at
681F-682A; see also the
Taylor & Horne
case (
supra
)
at 420J-421C). To my mind, this conduct is indeed contrary to
‘
public policy …
[to]
the general sense of justice of
the community, the
boni mores
, manifested in
public opinion
’ (see
Atlas Organic Fertilizers (Pty) Ltd v
Pikkewyn Ghwano (Pty) Ltd & Others
1981 (2) SA 173
(T) at
188H-189A; further, the
Schultz v Butt
case (
supra
) at
678F-679E,
Bress Designs (Pty) Ltd v G Y Lounge Suite
Manufacturers (Pty) Ltd & Another
1991 (2) SA 455
(W) at
473F-H and 474J-476A,
Interflora African Areas Ltd v Sandton
Florist & Others
1995 (4) SA 841
(T) at 847F-848F; see also
Neethling & Potgieter
Unlawful Competition
(1995) 243-246
and the authorities cited by these writers). Put differently, such
conduct
is
in my view contrary to ‘
the general
considerations of justice, equity, reasonableness, good faith and
public policy which underlie the value judgment required
of a Court
when it is called upon to establish whether or not a competitor has
indulged in unfair or unlawful competition
’ (see
Payen
Components SA Ltd v Bovic Gaskets CC & Others
1994 (2) SA 464
(W) at 474H-I, and generally at 473J-476H).
I disagree with Mr
Seale’s
contention that, on the papers before me, there is no or insufficient
evidence of an existing market for the ‘
Aruba product
’
,
as distinct from the EPS products available in general. This is
belied by,
inter alia
, the issue of Agrément Certificate No.
98/267 with the title ‘
Aruba Building System
’, which title
was only amended during March 2001 to ‘
Styrox Building Systems
’
’
(at a time when the ‘
new
’ holder of the certificate as
amended (Styrox Holdings (Pty) Ltd) did not yet exist as a registered
entity); the evaluation by
Agrément South Africa of the Aruba 2000
Series Building System (the Fourth Generation System) and the
subsequent issue of Agrément
Certificate No. 2002/291 in the name of
Aruba Construction with the title ‘
Aruba
TM
2000 Series Building System
’; the attempts by the respondents
(as detailed above) to ‘
appropriate
’ for themselves, under
the name ‘
Styrox
’, the background and history of the Aruba
Building Systems in question; and, in particular, the content of the
agreement entered
into on 23 August 2000 between Aruba Construction
and Aruba Holdings, at a time when (as pointed out above) Aruba
Holdings, De Villiers
and Jaffe knew that there were no registered
patents in respect of the Third and Fourth Generation Aruba Buildings
System forming
the main subject matter of the agreement.
Applying the technique of
interpretation of written contractual documents consistently adopted
by the South African courts (as summarised
by Joubert JA in
Coopers
& Lybrand & Others v Bryant
[1995] ZASCA 64
;
1995 (3) SA 761
(A) at
767E-768E) to the abovementioned agreement, I am of the view that, in
exercising its rights (as ‘
Licensee
’) to market the
products (the ‘
goods
’), being the Third Generation Aruba
Building System and the Aruba 2000 Series Building System (the Fourth
Generation Aruba Building
System), Aruba Holdings is not only obliged
to pay to Aruba Construction (as the ‘
Licensor
’) a royalty
per Aruba module sold, but is also obliged to market and sell such
products under the name ‘
Aruba
’. This being so, by
selling, marketing, advertising, and otherwise conveying
electronically, digitally or in any other media,
the said products
under the name of ‘
Styrox
’ or ‘
Styrox Building
Systems
’, Aruba Holdings is indeed breaching the provisions
(and the spirit) of the said agreement. It follows that I am of the
view that
the applicants are entitled to an order in terms of prayer
1.6 of the Notice of Motion.
In view of my conclusion regarding the
nature of the obligations of Aruba Holdings
vis à vis
Aruba
Construction in terms of the agreement dated 23 August 2000, the
other three respondents (De Villiers, Jaffe and Styrox CC),
by
intentionally assisting and supporting Aruba Holdings in,
inter
alia
, marketing and selling the products under the name ‘
Styrox
’,
are intentionally interfering with the contractual relationship
between Aruba Construction and Aruba Holdings. In this manner,
they
are unlawfully competing with Aruba Construction (see, in this
regard, Van Heerden & Neethling
op cit
257-260 and the
authorities there cited).
To my mind, the applicants have
succeeded in establishing, on the requisite balance of probabilities,
not only that they have a ‘
clear right
’ which is being
infringed by the conduct of the respondents, but also that (as argued
by Mr
Maher
) the conduct of the respondents has created (and
continues to create) a reasonable apprehension of injury on the part
of the applicants.
As contended by Mr
Maher
, by failing to
comply with its contractual obligations to market the products in
question under the name ‘
Aruba
’, Aruba Holdings is
effectively reducing (or at the very least potentially reducing) the
penetration and recognition of the products
in the South African
market place. Although it is not necessary for me to decide the
matter of motive one way or the other, it would
appear that the
respondents’ motive is to utilise the products in question so as to
establish a ‘
Styrox identity
’ for a building method
utilising EPS components so that, when the agreement comes to an end,
they will be in a position to copy
the EPS components presently
manufactured by Automa under license to Aruba Construction and then
to market and sell building systems
utilising such copied components
under an already established name and identity – this despite the
provisions of clause 12 of the
ageement, as quoted above. In my
view, the respondents’ conduct can certainly not be regarded as
fair, honest and in line with
‘
the general sense of justice of
the community
’.
I also agree with Mr
Maher
that
the applicants do not have another adequate remedy open to them.
Having regard to the nature of the prejudice actually or potentially
sustained by the applicants, the applicants will in my view not be
able to obtain adequate redress by instituting an action for damages
against the respondents, whether damages for breach of contract or
Aquilian damages. It also appears to be established law that,
in
order to obtain relief in the form of an interdict against the
respondents, the applicants do not have to prove fault on the part
of
the respondents, either in the form of intent or in the form of
negligence (see, for example,
Elida Gibbs (Pty) Ltd v Colgate
Palmolive (Pty) Ltd
(1)
1988 (2) SA 350
(W) at 355F-359A;
see also Van Heerden & Neethling
op cit
194-195 and the
other authorities cited by these writers). The applicants have
therefore, in my view, established the requirements
for the granting
of a final interdict (see, in this regard, Harms ‘Interdict’ in
LAWSA
Volume 11 (first reissue, 1998) paras 307-313, and the
other authorities there cited). I am accordingly satisfied that the
applicants
are entitled to relief along the line of that sought in
prayers 2, 7.2, 8 and 9 of the Notice of Motion.
I am not, however, prepared to grant
the relief sought by the applicants in prayers 5 and 6 of the Notice
of Motion. This relief
relates to the Agrément Certificate No.
98/267 issued (and subsequently amended) by the Board of Agrément
South Africa. Agrément
South Africa is not a party to these
proceedings and I am not prepared to make orders of this kind without
this organisation having
been given the opportunity to ‘
put its
case
’ before the court.
I am also not prepared to make an order
along the lines of that sought by the applicants in terms of prayer
10 of the Notice of Motion.
Whilst the information required by the
applicants in terms of this prayer might well be important should the
applicants ultimately
institute an action for damages against one or
more of the respondents, such detail can be obtained by the
applicants at that stage
by making use of the process of discovery
provided for in the Uniform Rules of Court. It is, to my mind, both
unnecessary and inappropriate
for such an order to be made at this
stage.
As indicated above, Mr
Seale
argued that, irrespective of the outcome of these proceedings, the
applicants should be ordered to pay the costs relating to the
heads
of relief initially sought in the Notice of Motion and thereafter
abandoned. In my view, however, it is not at all practical
to
attempt to disaggregate the costs incurred in respect of the various
different heads of relief and, if regard is had to the papers
as a
whole, it seems to me that it would be equitable in the circumstances
to hold the respondents jointly and severally liable for
payment of
the applicants’ costs. While the applicants seek costs on an
attorney and client scale, it is trite law that an award
of costs is
a matter for the Court’s discretion and, in the exercise of such
discretion, I am not convinced that the circumstances
of these
proceedings justify a departure from the general rule that a
successful litigant will be awarded costs as between party
and party.
In the circumstances, I make the
following orders:
It
is hereby declared that the first respondent is in breach of the
agreement entered into on 23 August 2000 between the first applicant
and the first respondent (being Annexure ‘AC 2’ to the
applicants’ main founding affidavit – hereinafter
‘
the
agreement
’)
by selling,
marketing, advertising, and otherwise conveying electronically,
digitally or in any other media the products knows as
the Aruba
Building System (Third Generation) and the Aruba 2000 Series
Building System (Fourth Generation) (hereinafter
‘
the
products
’
) under the
name and style of
‘
Styrox
’
or
‘
Styrox
Building System
’.
The
first, second, third and fourth respondents, or any other entities
(juristic or otherwise), of which they jointly or individually
are
presently, or may in the future be, shareholders, members or
directors, and/or any other entities (juristic or otherwise) which
they jointly or individually are presently, or may in the future be,
trading as, and/or their servants, employees or agents, are
interdicted and restrained from selling, tendering or offering for
sale, marketing or otherwise dealing with the aforesaid products
under any name or in any manner, save that the first respondent may
market the products provided that this is done under the name
‘
Aruba
Building System
’
until
such time as the agreement is validly terminated.
The
first, second, third and fourth respondents are interdicted and
restrained from holding out that the following entity/entities
have
any rights and/or title to the products, irrespective of the name
used to identify such products:
Brother’s
Brand Management Corporation;
Brother’s
Styrox;
Brother’s
Innovation (Pty) Ltd; or
Styrox
Holdings (Pty) Ltd.
The
first, second, third and fourth respondents are interdicted and
restrained from holding out or conveying in any
manner whatsoever, including but not limited to digital
publication on the Internet, that:
they,
individually or collectively, created the
‘
Styrox
Building System
’
,
to the extent that the building system
referred to is one or more of the products;
there
are such edifices as
‘
Styrox
Buildings
’,
to the
extent that the buildings referred to are or were built using the
products; and
tests
have been carried out at the South African Centre for Scientific
and Industrial Research (CSIR) on any products by the name
of
‘
Styrox
’,
to the extent that the tests referred to were
carried on one or more of the products.
5. The first and fourth respondents, their office bearers,
shareholders, employees, directors, members and agents are
interdicted
and restrained from conveying or communicating in any
manner to any party that the existing licensed manufacturer of the
products
produces such products on their behalf.
6. The first, second, third and
fourth respondents are ordered to pay the costs of the applicants in
these proceedings, jointly and
severally, the one paying the other to
be absolved.
………………………………
B
J VAN HEERDEN