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[1995] ZASCA 32
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CTP Ltd. and Others v Argus Holdings Ltd. and Another (418/93) [1995] ZASCA 32; 1995 (4) SA 774 (AD); [1995] 2 All SA 398 (A) (29 March 1995)
Case No 418/93
IN THE SUPREME COURT OF SOUTH AFRICA (APPELLATE DIVISION)
In the matter between:
CTP LIMITED First Appellant
TERRENCE DESMOND MOOLMAN Second
Appellant
NOEL MALCOLM COBURN Third Appellant
MEREDITH DAVID WILLIAM
SHORT Fourth Appellant
and
ARGUS HOLDINGS LIMITED First Respondent
ARGUS NEWSPAPERS LIMITED Second
Respondent
CORAM: CORBETT CJ, EM GROSSKOPF, SMALBERGER,
NIENABER JJA et NICHOLAS AJA
HEARD: 21 FEBRUARY 1995
DELIVERED: 29 MARCH 1995
JUDGMENT
/NIENABER JA
2
NIENABER JA:
The parties to this litigation are parties to a joint business venture. That
venture was the product of a catenation of agreements
of which two, one entered
into in 1980 and the other in 1985, are central to this litigation. Clause 2 of
the 1985 agreement which
is headed "Recordal and agreement" reads:
"2.1 The parties record
that:
2.1.1
they
are all intimately involved in the business of printing and
publishing;
2.1.2
they have all acquired and
will acquire considerable expertise in the business of printing and
publishing;
2.1.3
Caxton, Afmed, Modern Media,
Hortrio and Horpak [the appellant by its former name] are all closely associated
with The Argus [the
first respondent] and its subsidiary and associated
companies;
2.1.4
Moolman [the second
appellant] and Coburn [the third appellant] are the joint managing directors of
Caxton and Short [the fourth appellant]
is the chairman of
Caxton.
2.2 For these reasons the parties agree that it is fair and reasonably necessary
for the protection of their business and proprietary
interests that they should
be restrained from competing with each other in respect of the undermentioned
activities for a reasonable
period."
3
The issue in this litigation, brought by way of notice of motion, is whether
the publishing restraints which are contained in both
the 1980 and the 1985
agreements in substantially similar terms and which purport to bind the first
respondent in favour of the appellants
and certain other parties, are
enforceable at the instance of the appellants. The Court a quo (Goldstein J
sitting in the Witwatersrand
Local Division) decided that issue in favour of the
respondents. This is an appeal, with leave of the Court a quo, against that
Ending.
The second respondent was not a party to either of the agreements but
it was common cause that in 1988 it assumed all the rights and
obligations of
the first respondent under both agreements. The second respondent is described
in the papers as the wholly owned chief
operating subsidiary of the first
respondent. For purposes of this litigation nothing hinges on the separate
corporate identities
of the two respondents and I shall henceforth refer to them
simply as the respondents, even in respect of events preceding 1988.
The
respondents published nespapers. They had an indirect interest
4
in the Sunday Times, a weekly newspaper sold nationwide. They published The
Star, a daily newspaper sold and circulating mainly in
what was then known as
the PWV region, the Cape Argus, sold and circulating mainly in the Cape
Peninsula, and the Sunday Tribune
and the Natal Daily News, respectively a
weekly and a daily newspaper, sold and circulating mainly in the Durban
area.
Caxton Ltd ("Caxton"), in which the second and third appellants were
both substantial shareholders and directors, was the proprietor,
printer and
distributor of an assortment of publications described in the affidavits as
"knock and drop" free sheets. These are publications
in tabloid form consisting
chiefly of advertising, but containing also news items and features relating to
specific areas or suburbs,
which were distributed free of charge in those areas,
mainly by leaving them in private post boxes. There was a network of these
publications throughout South Africa and Namibia. Caxton also published what are
described in the appellants' affidavits as "local
newspapers". These were also
targeted at specific localities but were
5
distributed and sold in the ordinary course. The Sandton Chronicle was
referred to as a specific example. Caxton's main source of
revenue from both
types of publications came from advertising.
Some time before 1980 the
respondents resolved to increase their participation in that sector of the
advertising market. This was
accomplished through an intricate series of
manoeuvres, recorded in the 1980 agreement, involving the sale and exchange of
shares
in various companies, including Caxton, the outcome of which, somewhat
simplified, was that the second, third and fourth appellants
and the first
respondent became shareholders in a company, Afmed (Pty) Ltd ("Afmed"). Afmed
became the holding company of Caxton.
The respondents thus acquired, through the
first respondent's shareholding in Afmed, a substantial interest in Caxton's
business.
The 1980 agreement contained reciprocal restraints, the overall
purpose of which was to preserve, for each of the parties vis-à-vis
the
others, their separate spheres of operation within the Geld of printing,
publishing and distributing newspapers.
6
Clause 16 of the 1980 agreement provides in
particular:
"16.5 ARGUS undertakes and warrants that it shall not itself or through any
company controlled by it or through any third party except
with the written
consent of M&C [second and third appellants respectively] and AP
[Amalgamated Press (Pty) Ltd] -
16.6 Publish a separate free newspaper (i.e. a newspaper for which the recipient
does not pay) anywhere in the Republic of South
Africa or South West Africa;
or
16.7 Publish a local newspaper in the areas presently described as the
magisterial districts of Germiston, Elsburg, Boksburg, Benoni,
(including Petit
and Brentwood Park), Brakpan, Springs, Florida, Sasolburg, Meyerton,
Vanderbijlpark and Vereeniging, Roodepoort,
Krugersdorp and Randfontein
PROVIDED however that all the provisions of this Clause and its sub-clauses
shall not be interpreted as a restraint on the ARGUS
publishing a national or
regional daily newspaper, or a national or regional weekly newspaper, provided
that such regional newspaper
does not circulate only or mainly in the areas
described above in clause 16.7."
The restraints, it
is to be noted, are not limited in time. During the period 1980 to 1985 Caxton
continued to publish its free sheets
and, in the areas demarcated in clause 16.7
of the 1980 agreement, its
7
local newspapers. There were some exchanges between some of the parties about
some of the respondents' publishing activities but in
general the respondents
adhered to the restraints.
Early in 1985 there was, once more, a
rearrangement of the corporate kaleidoscope. Caxton sold its business to a
company Hortors Trio
Rand Limited ("Hortors Trio") "for the benefit of its
wholly owned subsidiary, Horpak ...". Horpak subsequently changed its name
to
CTP Limited. CTP Limited is the first appellant. Its business operations are
administered by the second and third appellants.
The second, third and fourth
appellants have substantial equity stakes in the business of the first
appellant. The first respondent,
through its shareholding in various other
companies, acquired control of 50% of the equity in the first appellant.
Some
of these developments are reflected in the 1985 agreement. The second and third
appellants as well as Afmed and the first respondent
who were all parties to the
1980 agreement were again signatories to the new agreement. Some of the other
original parties did not,
however, survive the
8
transition. The first and fourth appellants as well as Caxton and Hortors
Trio were introduced as new parties.
Clauses 1.2 and 1.3 of the 1985 agreement read as
follows:
"1.2 In terms of an Agreement between Moolman [the second appellant], Coburn
[the third appellant], The Argus [the respondents] and
various other parties
dated January 17, 1980, Amalgamated, Moolman and Cobum have given certain
restraints to The Argus and The Argus
has given certain restraints to Moolman
and Cobum.
1.3 The parties wish to extend these restraints in the manner set out
below."
Clause 2 of the 1985 agreement has been
quoted at the beginning of this judgment.
Clause 3.1, recording the restraints on the second, third and
fourth
appellants, reads:
"3.1 Moolman, Cobum and Short each undertake that they shall not either
themselves or through any company or otherwise except with
the written consent
of The Argus -
3.1.2 publish a national or regional daily or national weekly newspaper in the
Republic of South Africa as it was
constituted
9
on May 31, 1961, or in South West Africa/Namibia. 3.2 The restraints contained
in 3.1 shall apply individually to Moolman, Coburn
and Short from the effective
date until 5 years after the date on which each of them ceases to be employed by
Caxton, Hortrio or
Horpak or ceases to be a shareholder of Caxton, Modern Media
or Afmed, whichever is the later."
Clause 4 contains a similar restraint on Caxton, Armed,
Modern
Media, Hortrio and the first appellant in favour of the
first respondent.
The crucial clause is clause 5. It reads:
"5.
Restraint on the
Argus
5.1 Subject to the provisions of 5.2, The Argus undertakes to each of the other
parties that it shall not from the effective date,
without the written consent
of the other parties, be interested or engaged, whether directly or indirectly
and whether as proprietor,
partner, shareholder or otherwise, in any company,
partnership, firm, business venture or undertaking which carries on the activity
of publishing a separate free newspaper (i.e. a newspaper for which the
recipient does not pay), a local newspaper or a magazine,
anywhere in the
Republic of South Africa as it was constituted on May 31, 1961 or in South West
Africa/Namibia or elsewhere, or from
continuing any business activity or
undertaking being carried on by
The
10
Argus or any of its subsidiaries at the effective date. 5.2 The restraints
contained in this clause shall not restrain The Argus from
publishing a national
or regional daily newspaper, or a national or regional weekly newspaper,
anywhere in the Republic of South
Africa as it was constituted on May 31, or in
South West Africa/Namibia, or elsewhere, or from continuing or recommencing any
business
activity or undertaking being carried on by The Argus or any of its
subsidiary companies at the effective date."
Clause 5 of the 1985 agreement is wider in scope than clause 16 of the 1980
agreement. It reincorporates the restraint on the publishing
of "separate free
newspapers" and broadens the restraint on the publishing of "local newspapers"
to cover the entire country instead
of certain designated areas only. But the
parties to the two agreements were not the same. The later restraint accordingly
did not
displace or novate the earlier one. Either could support a claim for
relief.
During 1990 to 1991 the respondents embarked on a new series of publications
with the cognomen "Focus". These were to be distributed
in conjunction with The
Star on a regular monthly basis. In May 1991 the
11
respondents distributed to potential advertisers a promotional letter
advising
them that:
"Over the years, The Star has regularly been asked to bring out special area
guides to focus on certain areas and allow local advertisers
to reach a
specifically targeted area. Until now the choice of advertising medium in
Sandton has been limited to local Caxton papers."
During July
1991 the following report appeared in the Argus News, an in-
house publication which was circulated to all Argus employees:
"June saw the launch of five regional supplements to The Star, which will
hopefully attract advertising from smaller retailers who
cannot afford to
advertise in the constantly growing newspaper ... [t]here has been an
enthusiastic reaction from advertisers to
the Western Focus, Northern Focus,
Eastern Focus, Southern Focus and Focus on Sandton. The copy for these
Caxton-like supplements
is being written by editorial staffers on a free-lance
basis ... The regional supplements are competition for the Caxton 'knock and
drops' ... and retailers are pleased with being offered an alternative ...
Supplements are obviously sent only to the region that
each covers. For example,
the Northern Focus goes only to the northern suburbs, and the Eastern Focus only
to Edenvale, Bedford View,
Germiston, Kempton Park, etc."
In the
edition of The Star of 31 July 1991 a paragraph appeared which
12 advised readers that copies of the Northern Focus could be obtained from
The Star newspaper itself at its address at Sauer Street,
Johannesburg if it was
not distributed in their area. A similar notice also appeared in the newspaper
of 28 August 1991. That issue
also contained an advertising extract which, inter
alia, read:
"June 1991 saw the launch of five Regional newspapers to The Star. This has
offered local retailers the opportunity of low cost advertising
directed at a
specific geographical area. Regional newspapers carried by SA's largest daily
paper give credibility and offers an
alternative to local free sheet
newspapers."
During this period different editions of The Star
included different inserts being the Northern Focus, Eastern Focus, Western
Focus,
Southern Focus and Sandton Focus. Each "Focus" was separately paginated
and contained, in tabloid form, news, features, and advertising
pertaining to
its particular area of distribution.
These events prompted the appellants,
through their attorneys, to address a letter dated 2 September 1991 to the
respondents demanding
an
13
undertaking that the respondents "immediately desist from publishing any
and
all of the newspapers referred to ... or any similar type newspapers",
failing
which they would move for an urgent interdict. In reply the respondents'
attorneys disputed that the inserts were
"either local newspapers or separate free newspapers, as claimed by you. The
publications are supplements to copies of The Star newspaper
which are delivered
or sold in specific geographic areas".
It was accordingly denied
that "its action in publishing regional supplements
is unlawful or in breach
of the restraint agreement". The undertaking sought
was refused but a
concession was nevertheless made in these terms:
"Notwithstanding the above, and in view of the close relationship which exists
between your client and ours, our client will not,
without prejudice to its
rights, make the supplements available separately and free of charge to readers
at any CNA branches in Johannesburg."
Thereafter different
editions of Focus continued to be distributed in different areas as insertions
in The Star. In the "Northern
Star" of 12 September 1991, a copy of which had
been made available to this Court, the following notice to readers appears:
14
"
Northern Star is at your service
. There will be five new Stars in the
firmament by the end of this month. The first was the Sandton Star, which
launched the cluster
of 'stars' which will be appearing regularly in the suburbs
from now on. Now readers in the northern areas will have their own 'Northern
Star' twice a month.
We hope that the Northern Star, and the other regional Stars (Sandton, Southern,
Eastern and Western), will reflect the views of
the community. We want you to
talk to us and let us know what you think. We will try to see things from your
angle rather than from
Sauer Street".
According to this
announcement it was envisaged that each Focus might
adopt its own distinctive
approach, not necessarily in conformity with that
of the main paper.
The threat of litigation led to protracted negotiations between
the
parties in an endeavour to resolve this internecine dispute
but all efforts
ultimately proved to be unsuccessful and the present
proceedings ensued.
In it the appellants, as applicants, sought an order in paragraph 1 of
the
Notice of Motion that the respondents
"be interdicted and restrained from directly or indirectly publishing: 1.1 a
separate free newspaper (i.e. a newspaper for which
the recipient does not pay)
anywhere in the Republic of
South
15
Africa/Namibia;
1.2 a local newspaper
anywhere in the Republic of South
Africa/Namibia,
other than with the prior written
consent of the Applicants";
and in paragraph 2, an interdict against the publication of the
"'Southern Star/Focus', the 'Sandton Star', the 'Eastern Star/Focus', the
'Northern Star/Focus' and the 'Western Star/Focus', either
together with or
separately from The Star newspaper".
In each case the interdict
sought is unlimited in point of time.
On behalf of the respondents it was
contended that the appellants were not entitled to the relief sought:
1. because the restraints, if to endure in perpetuity, would be void for
offending against public policy; and if to endure for a
reasonable time, would
be void for vagueness;
2. because the Focus inserts were not (i) newspapers which were (ii) separate or
(iii) free or (iv) local.
I deal in turn with each
of these contentions.
16
The duration of the restraints
The 1980 restraint was silent as to its duration. As such it is
indefinite.
Whether the 1985 restraint is likewise indefinite depends on how
clause 2.2 thereof, quoted at the outset of this judgment, is to
be construed.
It refers to "a reasonable period". Is that a term of the agreement? Or is the
clause merely a preamble, a declaration
of how the parties themselves view the
respective restraints imposed upon them in the clauses to follow? If it is a
term it would
mean that the restraint, by agreement, is to endure for a
reasonable time. Then the issue would arise whether such a term is either
enforceable or void for vagueness.
In my opinion clause 2.2 was not intended
as a term in the sense referred to in Design and Planning Service v Kruger
1974
(1) SA 689
(T) 695C-F i.e. as a contractual provision constituting an
obligation. It is no more than a recordal, as its caption indicates, that
the
parties acknowledge in advance that the terms referred to in the body of the
agreement will not
17
be open to attack as being unreasonable. (The weight which may be
accorded to such an acknowledgement is not now germane (cf Magna Alloys
and Research (SA) (Pty) Ltd v Ellis
[1984] ZASCA 116
;
1984 (4) SA 874(A)
905B-C; Basson
v Chilwan and Others
[1993] ZASCA 61
;
1993 (3) SA 742
(A) 767J-768E)). That clause 2.2
is introductory and not declaratory also appears from the body of the
agreement where a distinction is drawn between restraints imposed
on
individuals (such as the second, third and fourth appellants) and
restraints
imposed on corporations (such as the first appellant and the first
respondent.)
In the one category the restraints are limited in time, in the
other not. So,
for instance, clause 3.2 binds the second, third and fourth appellants
"from the effective date until 5 years after the date on which each of them
ceases to be employed by Caxton, Hortrio or Horpak or
ceases to be a shareholder
of Caxton, Modem Media or Afmed, whichever is the later".
Clauses
4 and 5, by way of contrast, contain no similar limitation when it comes to the
first appellant or the first respondent. The
implication is that the first
appellant and the first respondent are bound by their respective
18
restraints for an indefinite and not merely a reasonable period. Properly
construed, clause 2.2 does not therefore mean that the restraints
are to persist
only for a reasonable time; and that being so it is not necessary to examine the
subsidiary question whether a term
to that effect would be void for
vagueness.
It was next argued on behalf of the respondents that a restraint
for an indefinite period is so far-reaching as perforce to clash
with public
policy. I disagree. The cases both here and in England suggest the contrary.
(See, for instance, for South Africa, Wilkinson
and Another v Wiggill
1939 NPD
4
, 16; Vermeulen v Smit
1946 TPD 219
, 222; Weinberg v Mervis
1953 (3) SA 863
(C), 870H-871A; Wohlman v Buron
1970 (2) SA 760
(C), 763D-F; and, for England,
Archer and Others v Marsh (1837) 6 Ad&E 959
[1837] EngR 9
; ,
112 ER 366
; Connors Brothers
Ltd and Others v Connors
[1940] 4 All ER 179
(PC), 195.) A restraint would be
adverse to public policy if its enforcement would be contrary to the public
interest. It would most
likely be contrary to the public interest if
unreasonable (Magna Alloys and
19
Research (SA) (Pty) Ltd v Ellis supra 898A-B). It would be unreasonable if
and to the extent that it does not seek to protect a legitimate
interest of the
one party; or if it does purport to protect an interest, such interest is
eclipsed by the interest of the other party
not to be so restrained (cf Basson v
Chilwan and Others supra 767G-I).
Whether a restraint is in conflict with the
public interest is to be assessed in the light of the circumstances prevailing
at the
time when it is sought to be enforced (Magna Alloys and Research (SA)
(Pty) Ltd v Ellis supra 898D). In the instant case the various
restraints were
reciprocal ones. They were agreed to between the parties concerned as part of
the consideration for the restructuring
of their respective businesses. Their
purpose was to preserve the commercial status quo. Each side sacrificed part of
its own competitive
edge as a hedge against attack from the other. Where the
restraints formed part of the overall consideration and were designed to
protect
comparable interests of the respective sides, they cannot be said to be mere
covenants against competition and as such to
run contrary
20
to the public interest.
The two sets of parties, although business
associates, were nevertheless in competition on opposite sides of the same line
of business.
The purpose of the reciprocal restraints was to define each side's
territory. Although the restraints binding the respondents are
indefinite, the
appellants conceded in argument that this purpose would be served only while the
parties continued to conduct their
respective businesses in association with
each other; differently stated, that their protectable interest would only last
for as
long as they remained so affiliated. In turn, the respondents conceded in
argument that as matters stood at the time when the Court
a quo considered them,
it could not be contended that the appellants lacked an interest worthy of
protection. (Different considerations
may of course apply if circumstances
should in future change.)
In short, the restraints, ostensibly indefinite in
time, will not necessarily operate in perpetuity; and judged on the strength of
the interests served by the restraints at the time when their enforcement was
sought,
21
cannot be said to be against the public interest and as such at variance
with
public policy.
Whether the Focus inserts were "newspapers"
On behalf of the respondents it was argued that the Focus
inserts
distributed as part of The Star were not "newspapers"
because they had not
been registered as such in terms of the Newspaper
Registration Act, 63 of
1971. The contention is formulated in the following terms in
the
respondents' answering affidavit:
"[t]he representatives of each of the parties knew and accepted that the term
'newspaper' would bear its ordinary grammatical meaning
in the industry
and that to qualify as a newspaper such publication would require registration
in terms of the Act. The term 'newspaper' did not
and was not intended to extend
to regional supplements in their present form." (My
underlining)
Registration is not part of the ordinary meaning of
"newspaper". The Oxford English Dictionary (1933 edition), for instance, defines
it as
"a printed, now usually daily or weekly, publication containing the news,
commonly with the addition of advertisements and other
matters of
interest".
22
The Act itself, incidentally, defines a newspaper as
"a periodical publication published at intervals not exceeding one month and
consisting wholly or for the greater part of political
or other news or of
articles relating thereto or to other current topics, with or without
advertisements, and with or without illustrations,
but does not include any
publication not intended for public sale or public
dissemination".
In terms of this definition the Focus inserts are
newspapers.
If the underlined phrase "in the industry" in the passage cited
from the respondents' answering affidavit was intended to suggest
that the
parties had a special or technical meaning in mind, the suggestion must fail for
lack of any evidence to support it (cf
Richter v Bloemfontein Town Council
1922
AD 57
, 70).
In my opinion it cannot be said that the inserts were not
newspapers for purposes of the two agreements.
Whether the Focus inserts were
"separate"
According to the appellants the Focus inserts although
enfolded in and distributed as part of The Star were nevertheless "separate
newspapers";
23
according to the respondents they were merely supplements to The Star and
hence not separate. The Court a quo held that they were
not separate inasmuch as
they were not "separately published", which is the terminology used in the
restraint clauses. Perhaps it
would be more accurate to say that they were not
"separately distributed". Physically each insert was, of course, not separated
or
detached from the rest of the paper as it would have been if a copy had
separately been handed over to a buyer at the same time as
The Star itself. In
my opinion it is nevertheless arguable that, contextually at any rate, each
Focus was a separate publication.
It is in tabloid form whereas The Star is a
broadsheet; it is separately paginated; it has its own approach, news items and
advertising;
and it is capable of being distributed as a separate entity, as
indeed happened before the respondents undertook to discontinue such
distribution. But it is not, for present purposes, necessary to pursue this
topic in view of the conclusion which I have reached
on the next issue viz.
whether these publications, distributed as part of The Star, were "free".
24
Whether the Focus inserts were "free"
In both the 1980 and the 1985
agreements "free" is defined as "a newspaper for which the recipient does not
pay". It is the intention
of the recipient which is important. When a recipient
purchases The Star, in which the publication in question is enfolded, he pays
for a single article consisting of different parts. Even if the Focus may
conceptually be regarded as a separate paper it is still
part of the merx and
thus part of the bargain. The recipient in effect gets two papers for the price
of one - as he will in the rare
instance where he is anxious to acquire a Focus
rather than a Star. In either case he pays for both. Neither is free (cf
Minister
of Mineral and Energy Affairs v Lucky Horseshoe (Pty) Ltd
1994 (2) SA
46
(A) 53A-J).
The onus on this leg of the restraints is on the appellants to
prove that the respondents contravened the restraint clauses. To succeed
the
appellants had to show that the Focus inserts complied with all three of the
requirements mentioned i.e. that the inserts were
separate and free and
newspapers. Failure to prove any one of these requirements would be fatal.
25
The appellants proved that the inserts were newspapers; I am prepared to
assume that they were separate; but by no stretch of the
imagination can they be
said to be free.
But that is not the end of the matter. There is still the
other leg of the restraints. Even if the appellants should fail to prove
that
the Focus inserts were free newspapers, the restraints would apply if the
appellants could show that the inserts were "local"
newspapers. Then it would
not matter whether the disputed publications were distributed free of charge.
Whether the Focus inserts qualified as "local" newspapers
The
restraint clauses in the two agreements draw a distinction between different
categories of publications - some the respondents
are permitted to publish and
distribute, others not. Those categories are:
(i) national newspapers, the distribution of which is not prohibited;
(ii) regional newspapers, likewise permitted;
(iii) separate free newspapers, the distribution of which is prohibited
throughout South Africa and Namibia; a contrario the distribution
of
26
such a publication is not prohibited if the newspaper concerned is neither
separate nor free, unless its distribution is prohibited
under any of the
categories to follow;
(iv) local newspapers under the 1980 restraint: their distribution was
prohibited within the designated areas only. Outside those
areas a local
newspaper could still be distributed but not if it took place free of charge. In
that event such publication could
run counter to (iii) above;
(v) local newspapers under the 1985 restraint: the prohibition was now extended
countrywide. Under that category it no longer matters
whether the distribution
is free. The only question is whether a newspaper which is not regional is
local. If it is, it offends against
the 1985
restraint.
Categories (iii) and (iv) might have overlapped but
they were not coextensive. In (iii) the emphasis was on the conditions of
distribution
("separate, free"), in (iv) on the area of distribution of the
publication in
27
conjunction with its focus of attention (a particular locality). A
non-regional newspaper could therefore escape both restraints -
under (iii)
because it was, for example, not free; under (iv) because it was published and
distributed outside the designated area.
But once the restraint was broadened in
1985 to cover the whole country the distinction between the two types of
restraint became
largely irrelevant. Thereafter the restraint of (iii) could
only function if the paper complained of was free and separate and neither
regional (permitted under (ii)) nor local (prohibited under (v)). But if "local"
ends where "regional" begins (an issue to which
I shall return in a moment),
category (iii) no longer has its own sphere of operation. Its function would
then have been usurped
by (v).
The Court a quo held that the restraint
clauses referred to in (iv) and (v) could not be enforced since it is impossible
to determine,
as a matter of interpretation, where the exact line lies between a
region (and hence a regional newspaper, which is not prohibited)
and a locality
(and hence a local paper, which is). The learned judge proceeded to say,
28
"The papers before me attempt at some length to show how the parties themselves
understood and applied the terms I have just interpreted.
I do not intend
referring to the evidence in this regard in detail since the factors contained
in such evidence and favouring my
interpretation are at least as strong, and
probably stronger, than those against it."
The reasoning, if I
understand it correctly, is that the Court a quo considered the criteria in the
clauses to be incapable of application;
consequently, that this aspect of the
restraint clauses was void for vagueness.
With respect I disagree. Viewed in
vacuo the precise line between the concepts "regional" and "local" is doubtless
difficult to define.
But does that make the restraint clauses void for
vagueness? Three points need to be made. One, the words in a contract must not
be interpreted in the abstract and out of context (cf Swart en 'n Ander v Cape
Fabrix (Pty) Ltd
1979 (1) SA 195(A)
, 202C). Two, a restraint which in general
terms may be unduly wide or imprecise can be trimmed to fit the common
understanding and
perceptions of the parties in the light of the circumstances
prevailing at the time of its enforcement (cf Magna Alloys and Research
(SA)
(Pty) Ltd v Ellis
[1984] ZASCA 116
;
1984 (4) SA 874
(A), 896A-E, 898D). Three, a conclusion of
29
invalidity will only be reached as a last resort (cf Haviland Estates (Pty)
Ltd and Another v McMaster
1969 (2) SA 312
(A) 337H; Lewis v Oneanate (Pty)Ltd
and Another 1992(4) SA 811 (A), 819E-J).
The parties to the respective
agreements were men knowledgeable and experienced in the business of printing
and publishing newspapers;
they were in the process of re-arranging and
re-aligning their existing businesses; and there were in existence at the time
publications
conforming to the descriptions "national", "regional" and "local"
used in the agreements. Those publications fell easily into the
various
categories mentioned in the restraint clauses. In my view there can be little
doubt that when drafting the agreements concerned
the parties had in mind, when
referring to national newspapers, newspapers such as the Sunday Times; when
referring to regional newspapers,
newspapers such as The Star, the Cape Argus
and the Natal Daily News; and when referring to local newspapers, newspapers
such as
those published by Caxton. In that sense local newspapers would be
newspapers that were not national or regional. Of course, one
can conceive
30
of circumstances where these guidelines as to what the parties had in
mind
might give rise to insuperable difficulties of application. But this, in
my
opinion, is not such a case. In Hira and Another v Booysen and Another
1992 (4) SA 69
(A) 77B-H Nicholas AJA said:
"The territory which lies between in public on the left side and in private on
the right is largely uncharted, and it is difficult
to define the position of
the boundary between them. Clearly a mass public meeting (or publication in a
large-circulation newspaper)
is located on the left and a conversation between
two people (or a private written communication) is located on the right. At what
stage does in public become in private? The problem is of a recurrent and
familiar kind. (See the discussion on 'drawing the line'
by R E Megarry in
Miscellany at Law at 121.) In Boyse v Rossborough
[1856-57] 6 HLC 3
at 46
(10 ER
1192
at 1210) the Lord Chancellor had to consider whether the alleged testator
was a person of sound mind at the time of the execution
of a will. He
said:
'...[T]he difficulty to be grappled with arises from the
circumstances that the question is almost always one of degree. There is
no
difficulty in the case of a raving madman or of a drivelling idiot, in saying
that he is not a person capable of disposing of
property. But between such an
extreme case and that of a man of perfectly sound and vigorous understanding,
there is every shade
of intellect, every degree of mental capacity. There is no
possibility of mistaking midnight for
31
noon; but at what precise moment twilight becomes darkness is hard to
determine.'
In Hobbs v London and South Western Rail Co
(1875) LR 10 QB
111
, Blackburn J said at 121:
'It is a vague rule, and ... it is something like having to draw a line between
night and day; there is a great duration of twilight
when it is neither night
nor day; but on the question now before the court, though you cannot draw the
precise line, you can say
on which side of the line the case
is.'
Lord Coleridge CJ expressed himself similarly in The Southport
Corporation v Morriss
[1893] 1 QB 359
at
361:
'The Attorney-General has asked where we are to draw the line. The answer is
that it is not necessary to draw it at any precise point.
It is enough for us to
say that the present case is on the right side of any reasonable line that could
be drawn.'"
Here too the Focus newspapers, inserted
into The Star and comparable to the Caxton publications in appearance and
content, were clearly
local and not regional, although distributed in selected
localities together with and as part of a regional paper. It mattered not
that a
publication like the Western Focus was distributed in 38 areas in which only
five of the first appellant's publications circulated.
The mere fact that a
publication of the respondents covered a considerably wider area than one of the
first appellant does not
32
make the respondents' publication a regional rather than a local one. What
does matter is that the Western Focus and other like newspapers
were distributed
by the respondents in substantially smaller geographical areas than The Star,
which by common consent is a regional
publication. It is in that sense that the
Western Focus and its sister Focus publications can properly be described as
"local newspapers"
for purposes of the restraint clauses. As such their
publication and distribution offended against the second leg of the restraints
referred to above.
In my view the Court a quo was accordingly wrong in refusing the appellants
any form of relief.
The form of the relief
The order sought in the notice of motion is not limited in time or in
circumstance. For the reasons mentioned above, more particularly
under the topic
"The duration of the restraint", the appellants are not entitled to an interdict
in the form of a declarator operating
in perpetuity. Things change. The
interests of the appellants which the restraints seek to protect might no
33
longer be worthy of protection in future; or the circumstances of the
respondents might so alter as to necessitate a review of the
terms of the order.
It would therefore be prudent to build a qualification into the proposed order
permitting the respondents to
approach the Court below for an amendment of its
terms should the equilibrium in the respective interests of the competing
parties
undergo a significant change.
The appeal is accordingly allowed with costs including the costs of two
counsel. The order of the Court a quo is set aside. Substituted
for it is the
following order:
1) The respondents are interdicted and restrained from directly or indirectly
publishing their newspapers known as the "Southern
Star/Focus", the "Sandton
Star", the "Eastern Star/Focus", the "Northern Star/Focus", the "Western
Star/Focus" or any newspaper substantially
similar in nature and
circulation.
2) Leave is granted to the respondents, jointly or severally, to approach the
Court, on due notice to the other parties, and
on
34
good cause being shown that circumstances have materially
changed, for an order rescinding or amending the above
order.
3) The respondents are ordered to pay the applicants' costs,
jointly
and severally, the one paying the other to be absolved,
such
costs to include the costs of
two counsel.
P M Nienaber Judge of Appeal Corbett CJ ) EM Grosskopf JA) Concur Smalberger
JA ) Nicholas AJA )