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[2019] ZASCA 123
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Smith v Mountain Oaks Winery (Pty) Ltd and Another (1003/2018) [2019] ZASCA 123 (26 September 2019)
SUPREME
COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Not
Reportable
Case No: 1003/2018
In
the matter between:
MARION
SMITH APPELLANT
and
MOUNTAIN OAKS
WINERY (PTY) LTD FIRST
RESPONDENT
EIKENBOSCH FARM
(PTY) LTD SECOND
RESPONDENT
Neutral
citation:
Marion
Smith
v
Mountain
Oaks Winery (Pty) Ltd & another
(1171/18)
[2019] ZASCA 123
(26 September 2019)
Coram:
Navsa,
Swain, Zondi and Mokgohloa JJA and Dolamo AJ
Heard:
6
September 2019
Delivered:
26
September 2019
Summary
:
Interdict sought on the basis of injurious falsehood – elements
not proved - appeal upheld
ORDER
On
appeal from:
Western
Cape Division of the High Court, Cape Town (Boqwana J sitting as a
court of first instance)
1.
The
appeal is upheld with costs such costs to include costs of two
counsel.
2.
The
order of the court a quo is set aside and replaced with the
following:
‘
The
application is dismissed with costs’.
JUDGMENT
Mokgohloa
JA (Navsa, Swain, Zondi JJA and Dolamo AJA concurring):
[1]
The respondents brought an application in the Western Cape Division
of the High Court seeking an order directing the appellant
to retract
a false statement published on a website created and controlled by
the appellant, and to publish a statement setting
out what the
respondents claimed were the correct facts. The court a quo
granted an order and reformulated the retraction
sought by the
respondents. This appeal is against that order with leave of the
court a quo. The nature of what was published and
argued is set out
later. The background to the appeal is contained in the paragraphs
that follow.
[2]
The second respondent is the owner of Eikenbosch farm, which is an
organic farming operation. Its wines are produced and distributed
by
the first respondent. The wines are bottled and labelled under the
brand ‘Mountain Oaks’. Mark Stevens is the director
in
both respondents.
[3]
The appellant is a businesswoman resident at Elgin Ridge Farm, Elgin.
She is the creator and co-owner of the website
http://biodynamicorganicwine.co.za
registered on 9 March 2017. The website was launched and made
available for public access from 14 August 2017. Its purpose as
stated on the appellant’s home page is that:
‘
The
Biodynamic and Organic Wines of South Africa is an association of
certified Biodynamic and Organic wine producers. The association
was
created to form a platform for bringing together certified Biodynamic
and Organic wine producers to help consumers and media
to easily see
which wine producers are certified Biodynamic and organic in South
Africa.’
[4]
On 11 September 2016, the first respondent sent an email to Stevens,
explaining that she was interested in starting a register
of organic
and biodynamic wine producers. She enquired whether Mountain Oaks was
a certified organic or biodynamic wine producer.
Stevens
responded by email dated 13 September 2016 and stated that:
‘
Eikenbosch
farm is a certified organic farming operation and wine is one of our
outputs. We have been certified organic since 2005
and, although not
biodynamic, I am well connected with the biodynamic movement and use
their concepts to solve organic farming
issues.
Our wine was
marketed under the “Mountain Oaks” label, but this label
was the creation of my ex-wife, as she was a wine
maker with
assistance from Ross Gower, and now that she has left the farm, the
label will revert to “Eikenbosch”.’
On
the same day, the appellant sent another email in which she asked
Stevens to identify their certification body so that it could
be
added to their register. Stevens told her that it was SGS/ LACON.
[5]
On 15 August 2017, Stevens received a group email from SA Winery
Industry Information & Systems NPC (SAWIS), which is an
industry
body set up for the purpose of disseminating topical information of
interest to various stakeholders in the wine industry.
The email
read:
‘
The
Biodynamic and Organic Wines of South Africa
The association was
created to form a platform for bringing together certified Biodynamic
and Organic wine producers to help consumers
and media to easily to
see which wine producers are certified Biodynamic and organic in
South Africa.
Click here to read
more <http:/biodynamicorganicwine.co.za/>’
[6]
He followed the link which took him to the appellant’s website.
The website contained a page entitled ‘Organic Wine
Producers’.
This page gave a brief explanation of what organic wine production
entails and stated that ‘the wine producers
on this site are
all certified organic’. This was followed by a table prepared
by the appellant which gave the certification
status of various wine
producers. This table had an entry for Mountain Oaks Winery and in
the notes column, Stevens noted that
the appellant had written the
following words in bold and red ‘no
longer
organic’ (my
emphasis). Following his demand, the website was subsequently altered
and the entry relating to Mountain Oaks
was removed entirely.
[7]
The respondents alleged that the statement that Mountain Oaks Winery
is no longer organic is entirely false because every vintage
that
Eikenbosch produced enjoyed full certification to the highest
possible international standards for organic wine production.
They
contended that they were the first wineries in the Cape to be
certified for organic wine production.
[8]
The appellant conceded that she published the alleged statement on
her website for 48 hours. She insisted that the statement
was true
because the respondents failed to provide any evidence that they were
certified for organic wine production at the time
when the
publication was made. According to her, and from her investigations,
the certificate from LACON only relates to wines
made from organic
grapes and not organic wines. Therefore the respondents were not
certified to produce organic wine. The significance
of the
distinction alluded to will be apparent in due course.
[9]
In their founding affidavit, the respondents relied on their clear
right to have the reputation and goodwill of the brand ‘Mountain
Oaks’ protected. They alleged that the right not to have one’s
reputation tarnished is well established and goodwill
is a recognised
asset having commercial value. On the injury committed or reasonably
apprehended, the respondents stated that the
entire South African
wine industry community and observers are likely to have sight of the
false statement published by the appellant.
They stated further that
the nature of the industry is such that, consumers rely on the
reputation of an organic wine producer,
as a high degree of trust is
required to ensure that products that are marketed as ‘organic’
are actually organic.
[10]
Dealing with these facts, the court a quo found that the statement by
the appellant was a misrepresentation, the publication
of which would
have been injurious to the reputation and goodwill of the respondents
who had traded and marketed their wines as
organic since 2005. It
found further that the appellant was the respondents’
competitor and that there was no reason why
the respondents should
not succeed on the basis of unlawful competitive trading.
[11]
On defamation, the court held that the appellant has not been able to
show that her conduct was not wrongful, or that it was
justified in
any respect. The court found that she had no reason to publish a
statement that Mountain Oaks Winery was no longer
organic
particularly because that was not the purpose of the website. The
court rejected the appellant’s version that she
had no
intention to injure and found that that was not supported by the
facts. It further found that there was no reason not to
accept that
the respondents, by virtue of the certification as producers of
organic wine that they held since 2005, had built a
reputation and
goodwill over time which needed to be protected. The court then found
that the respondents have succeeded in proving
defamation and it
granted an interdict.
[12]
The appellant’s counsel argued that the court a quo erred in
its findings in that first, the respondents had failed to
prove that
the statement complained of is defamatory. Second, that the
respondents claimed that they were entitled to the relief
sought on
the basis that they had made out a case for an interdict founded on
unlawful competition and injurious falsehood when
in fact the
statement complained of was true. Before us, counsel for the
respondents was constrained to limit the basis of justification
to
the interdict to injurious falsehood.
[13]
That being the case, the issue is whether the respondents succeeded
in proving the essential elements of injurious falsehood
which are:
(a) that the appellant by word or conduct, or both, made a false
representation to others concerning the respondents;
(b) the
appellant knew that the representation was false; (c) the respondents
suffered damages as a result of the presentation
through for example,
loss of business; and (d) the false representation was the cause of
such loss
[1]
.
[14]
I deal with each of these requirements in turn.
Did
the appellant make a false representation to others concerning the
respondents?
[15]
Stevens alleged in his founding affidavit that the first respondent
produced organic wine annually from the 2005 vintage up
to and
including the 2012 vintage. He caused the 2011 and 2012 vintage to be
destroyed in the presence of SARS officials. Since
then, the first
respondent has not produced wine and the youngest wine it produced is
from the 2010 vintage.
[16]
The complaint by Stevens in my view is contrived. In terms of the
European Union Rules for Organic Wine Production, since 1991
and
therefore prior to August 2012 wines could be labelled as ‘made
from organic grapes’, whatever the subsequent wine
making
process might have entailed because that was the acceptable standard
set by the EU. However, after 1 August 2012 the EU
standards and
regulations changed and a new standard was set. In terms of these
regulations, a wines producer was limited to the
use of the label
‘wine from organic grapes’ and not ‘organic wine’
if the wine making process was not wholly
organic for example
chemicals were introduced or the wine was not otherwise wholly
organically produced. It was for that reason
that the website stated
that the wine was no longer organic as there is no proof or
acceptable certification to that effect. Therefore,
the appellant’s
statement that the respondents’ wine is no longer organic is
not false. That should be the end of the
matter. For completeness I
however deal with the remaining requirements.
Did
the respondents prove that the appellant knew that the representation
was false?
[17]
In disputing the falsity of the publication the appellant stated the
following in her answering affidavit:
‘
[44] As
neither Mountain Oaks nor Eikenbosch has made wine since 2011, they
have never produced a certified organic wine within
the meaning of
the EU standards and regulations for the production of organic wine .
. . .
[62] As I have
stated previously, before 1 August 2012 wine was certified as “wine
made from organic grapes”. From 1
August 2012 organic wine per
se had to be made under strict organic conditions and only those
wines made under those conditions
could be certified as organic.
. . . .
[67] At the risk of
repeating myself, according to the EU standards and regulations for
certification from 1 August 2012, Mountain
Oaks or Eikenbosch did not
produce organic wine.’
The
respondents’ reply to this was a bare denial.
Nowhere in
the papers did they allege specifically that the appellant knew that
the publication was false. Furthermore, and based
on the Plascon
Evans’ rule
[2]
, I cannot
find that the appellant’s version is so farfetched or clearly
untenable that it should be rejected. Knowledge of
falsity must be
alleged specifically.
[3]
Furthermore, the respondents had to prove that the appellant had
subjective knowledge that her statement was false. This, the
respondents failed to prove.
Did
the respondents suffer damages as a result of the representation?
[18]
The respondents alleged that they
are not in a position to quantify the damages that will be suffered
as such damages will only
become apparent as their reputation and
business relationships are affected. This therefore means that the
respondents could not
prove that they suffered damages as a result of
the representation.
[19]
In the light of the conclusions made, it follows that the court a quo
erred in granting the order as it did. Accordingly, such
order falls
to be set aside.
[20]
In the result, the following order is made:
1. The appeal is
upheld with costs such costs to include costs of two counsel.
2. The order of the
court a quo is set aside and replaced with the following:
‘
The
application is dismissed with costs’.
___________________
FE
Mokgohloa
Judge
of Appeal
APPEARANCES:
For
Appellant: A Sholto Douglas
F
Landman
Instructed
by: Michael Ward Attorneys, Wynberg
Honey
Attorneys, Bloemfontein
For
Respondent: F J Gordon – Turner
Instructed
by: Andrew Miller and Associates
McIntyre
van der Post, Bloemfontein
[1]
Geary &
Son (Pty) Ltd v Gove
1964
(1) SA 434
(A) at 441C to D
[2]
Plascon –
Evans Paints v Van Riebeeck Paints
1984 (3) 620
(AD)
[3]
Breedt
v Elsie Motors (Edms
.
)
Bpk
1963(3) SA 525 (A) at 529B–529H.