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[2013] ZAWCHC 188
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Arvum Exports (Pty) Ltd and Others v Costa N.O. and Others (19206/12) [2013] ZAWCHC 188 (12 December 2013)
Republic
of South Africa
IN
THE HIGH COURT OF SOUTH AFRICA
(WESTERN
CAPE DIVISION, CAPE TOWN)
Case
No: 19206/12
DATE:
12 DECEMBER 2013
In
the matter between:
ARVUM
EXPORTS (PTY)
LTD
.........................................................................
First
Applicant
(Formerly
Unlimited Fruit (Pty) Ltd)
(Registration
Number 2000/013357/07)
UNLIMITED
FRUIT (PTY)
LTD
...................................................................
Second
Applicant
(Formerly
Arvum Exports (Pty) Ltd)
(Registration
Number 2008/028031/07
ARVUM
FINANCE (PTY)
LTD
........................................................................
Third
Applicant
(Registration
Number 2007/022356/07)
And
ZELDA
MARGARETHA COSTA
N.O.
.........................................................
First
Respondent
DANIEL
COETZEE
N.O.
.......................................................................
Second
Respondent
JOHANNES
NICHOLAAS JACOBUS
VAN
DER WESTHUIZEN
N.O.
.................................................................
Third
Respondent
(In
their capacities as trustees for the time being of the
Klein
Botrivier Trust, Number IT852/2007)
ESTATE
OF THE LATE ALBERTO
COSTA
...........................................
Fourth
Respondent
Court:
Judge J Cloete
Heard:
28, 29, 30 and 31 October 2013, 4, 5, 6, 7, 21 and 22 November 2013
Delivered:
12 December 2013
JUDGMENT
CLOETE J:
Introduction
[1]
The applicants are associated sister-companies which, broadly
speaking, carry on business as fruit supply managers, agents and
exporters. For ease of reference the applicants are hereinafter
collectively referred to as ‘Fruits’.
[2]
The Klein Botrivier Trust (‘the KBT’) is a family trust
founded in March 2007 by the late Alberto Costa (‘Alberto’).
Alberto, along with his wife the first respondent (‘Zelda’)
and the second respondent (‘Coetzee’) were
the trustees
of the KBT from its inception until Alberto was tragically murdered
in February 2011. Thereafter the third respondent
(‘Van der
Westhuizen’, also known as ‘Klip’) replaced Alberto
as a trustee with effect from 8 March 2011,
from which date the first
to third respondents (hereinafter collectively referred to as ‘the
respondents’) have been
the trustees of the KBT. Zelda is also
the executor of Alberto’s estate. I will return to the workings
of the KBT hereinbelow.
[3]
Relief is only sought against the fourth respondent if it is found
that Alberto breached his warranty of authority in concluding
the
agreements with Fruits which form the main subject matter of the
dispute.
[4]
Fruits and Alberto had enjoyed a productive business relationship
since about 2004. On 12 July 2009 Fruits concluded two agreements
with the trustees for the time being of the KBT, represented by
Alberto. The agreements reflect that Alberto explicitly warranted
his
authority to enter into them; this is also the version of Fruits.
During the course of the hearing of oral evidence it emerged
that a
resolution of the trustees of the KBT, at least purportedly
authorising Alberto to represent the trust, was telefaxed from
Alberto’s home (which he shared with Zelda) to Fruits when he
was asked by them to provide proof of his authority. The two
agreements, which were expressly inter-related, were:
4.1
A production loan agreement (‘the PLA’) in terms of which
Fruits were to advance amounts totalling not more than
R881 000 to
facilitate and enhance production on the farm Botterkloof, which was
to be repaid inter alia by set-off against amounts
which became due
by the KBT in terms of the other agreement. The advances were to be
effected by payment either to the KBT or to
its suppliers.
4.2
A supply and marketing agreement (‘the SMA’) in terms of
which Fruits was appointed as the export, marketing and
sale agent in
respect of fruit crops (including the Flavor Fall variety of plum) on
Botterkloof, as more fully described in a crop
forecast signed by the
parties at the time, and referred to in the SMA. The KBT was obliged
to deliver this produce to Fruits.
[5]
The agreements were duly implemented, without demur, both prior to
and after Alberto’s death, until May 2012, shortly
after the
end of the 2011/2012 fruit season. Indeed, in September 2011 Zelda,
through her attorney, had expressed the wish to amend
certain terms
of the SMA. However, on 17 May 2012 Zelda asserted, for the first
time, that the agreements were void for alleged
lack of authority on
Alberto’s part to bind the KBT. Since that date the KBT has
refused to perform under the agreements.
[6]
Subsequent attempts to resolve the impasse failed. On 5 October 2012
Fruits launched these proceedings (‘the main application’)
in which they sought two distinct categories of relief:
6.1
First, declaratory orders aimed at establishing that the two
agreements executed by Alberto on behalf of the KBT are binding
on
it, together with orders enforcing performance thereof (‘the
first relief’); and
6.2
Second, interdictory relief to preserve, or prevent, the
contravention of their plant breeder’s rights in respect of the
Flavor Fall variety of fruit (‘the second relief’).
[7]
The main application was opposed by the KBT on the following grounds:
7.1
In respect of the first relief, that Alberto lacked actual or
ostensible authority to sign the agreements on behalf of the KBT,
and
that it is accordingly not bound thereby. It is unclear whether
specific performance of the agreements was resisted on any
other
grounds, although Zelda seemed at a point to contend for some form of
impossibility of performance, on the basis that the
KBT was not the
owner of Botterkloof, and is not involved in the farming operation
which was Alberto’s sole domain until
his death, whereafter
Zelda (as executor of his estate) in March 2011 transferred the
farming operation to another family trust,
namely the Alberto Costa
Trust (‘the ACT’). The trustees of the ACT have at all
material times been the same individuals
who served as trustees of
the KBT.
7.2
In respect of the second relief, not that the respondents or the KBT
have any rights under the Plant Breeder’s Rights
Act No 15 of
1976 (‘the PBR Act’) to harvest or exploit the Flavor
Fall variety, but rather that the applicants lack
locus standi to
enforce plant breeder’s rights cognisable under that Act in
relation to Flavor Fall.
7.3
There were consequently four issues before Binns-Ward J who heard the
application, namely:
7.3.1
In relation to the first relief: (a) whether Alberto had actual or
ostensible authority to sign the agreements on behalf of
the KBT,
and/or whether the KBT was bound by operation of the Turquand¬-rule;
(b) if not, whether the KBT should nevertheless
be bound by the
agreements by reason of any pertinent abuse of the trust form by
Alberto, Zelda and/or Coetzee; and (c) if the
KBT is bound by the
agreements, whether facts have been established which excuse it from
specific performance.
7.3.2
In relation to the second relief, whether Fruits have a sufficient
legal interest in plant breeder’s rights registered
under the
PBR Act to afford them locus standi to enforce the Act.
[8]
The main application was heard over three days from 30 October to 2
November 2012. On 23 November 2012 Binns-Ward J handed down
judgment
in which it was held that Fruits had established a prima facie right
to the relief sought. He found however that there
were material
disputes of fact in relation to whether Alberto was authorised to
conclude the agreements on behalf of the KBT and,
if not, whether the
KBT should nevertheless be bound thereby as a result of an abuse of
the trust form. These two issues were referred
to oral evidence and a
limited interim interdict was granted, requiring the KBT to deliver,
or procure the delivery, to Fruits
of nectarines and Flavor Fall
fruit produced on Botterkloof. The nectarines and Flavor Fall fruit
produced on Botterkloof represent
only about 30% of the fruit crop
previously delivered to Fruits from Botterkloof in terms of the SMA.
The learned judge also ordered
that Zelda and Coetzee were to testify
at the hearing of oral evidence.
[9]
On 19 November 2012 Davis J granted an interim interdict in case no:
22095/2012 against the respondents, effectively requiring
that they
deliver the fruit described in the crop forecast to Fruits, pending
the determination of the main application. Costs
were ordered to be
costs in the cause in the main application. Binns-Ward J (who had
been apprised of the application under case
no: 22095/2012) expedited
his judgment in the main application, which then overtook the
interdict granted by Davis J.
[10]
Pursuant to the interim order granted by Binns-Ward J in the main
application, the KBT caused nectarines and Flavor Fall produced
on
Botterkloof to be delivered to Fruits in the 2012/2013 season, which
ended in approximately April 2013. Zelda contends that
the KBT ‘made
arrangements with the ACT’ for this delivery to Fruits ‘in
order to ensure the KBT’s compliance
with the court order’.
[11]
Fruits contends that it dealt with and accounted for these deliveries
in accordance with the PLA and the SMA. These agreements
provide for
the set off and retention of amounts accruing under the SMA against,
inter alia, amounts due to Fruits under the PLA.
Consequently, no
payments were made to the KBT. However on 6 May 2013 the KBT sought
to cancel the SMA and PLA on the ground that
Fruits had failed to
make payment to the KBT, which the KBT claimed was due to it. Fruits
denied any obligation to make such payment.
This resulted in the
respondents launching an application (‘the second application’)
under the same case number as
the main application on 14 June 2013,
in which they sought the following urgent relief:
11.1
A declaratory order that the SMA and PLA had been validly cancelled
and ‘are no longer of force and effect’;
11.2
That the interim order made by Binns-Ward J ‘has lapsed’;
11.3
Alternatively, if the interim order had not lapsed, varying it inter
alia to order Fruits to pay to the ACT an amount of R749
270 in
respect of the fruit delivered pursuant to the interim order, to
provide security for payment of future deliveries, and
to effect
payment of amounts ‘determined in the SMA, without applying any
set off’.
11.4
Also sought were orders directing Fruits to furnish the KBT with
security for its costs in the main application (this relief
was
subsequently abandoned) and that Fruits pay the costs of the second
application.
[12]
The relief sought by the respondents in the second application and
was the subject of a plethora of factual disputes. The second
application was ostensibly brought on behalf of the KBT by Zelda. It
was unsupported by affidavits from either Van der Westhuizen
or
Coetzee, and the oral evidence revealed that there was no meeting or
resolution as required by the KBT’s trust deed authorising
either the purported cancellation of the two agreements or the second
application. Zelda claimed that she was authorised to act
in terms of
the written authority granted to her by Coetzee in March 2011, but
this merely authorised her to act on Coetzee’s
behalf in
relation to the affairs of the trust.
[13]
Fruits brought a counter-application in the second application for
inter alia an order that the registrar be directed to enrol
the main
application for the hearing of oral evidence on the first available
date on the semi-urgent roll, because, since April
2013, attempts by
Fruits to enrol it in accordance with the order of Binns-Ward J had
allegedly been thwarted by the respondents.
The counter-application
was opposed until 22 August 2013 when the respondents consented to an
order enrolling the main application
for the hearing of oral evidence
on 28 October 2013.
[14]
The second application was heard by Dolamo J on 19 and 20 September
2013. In judgment handed down on 10 October 2013 the learned
judge
held that the second application was not urgent, and it was postponed
for hearing simultaneously with the main application.
It was also
ordered that the costs of the second application be determined by the
court hearing the main application. The matter
then came before me.
The
Klein Botrivier Trust (KBT)
[15]
The capital and income beneficiaries of the KBT include the late
Alberto, Zelda, their children, the ACT and two former farm
managers
of Botterkloof, namely Mr Christiaan Burger and Mr Matthys Visagie.
The only asset of the KBT is the farm Klein Botrivier.
[16]
Zelda was the designated custodian of all of the KBT’s
documents and records, which she kept in her office at home, although
Coetzee’s evidence was that a few trust documents were kept at
his office as well.
[17]
Clause 5 of the KBT trust deed allows for only two modes of valid
decision making by the trustees. The first is by way of a
majority
decision of the trustees at a properly convened meeting, of which a
proper minute must be kept. The second is by way of
a written
resolution signed by all of the trustees.
The
Alberto Costa Trust (ACT)
[18]
The ACT is also a family trust, established by Luigi Costa, Alberto’s
father. The late Alberto (along with Zelda and
their children, and
Luigi’s other children) are both income and capital
beneficiaries of the ACT. With effect from 3 December
2007 the
trustees of the ACT were the same persons who served as trustees of
the KBT, namely Alberto, Zelda and Coetzee. Until
Zelda transferred
the late Alberto’s farming operation into the ACT, this trust
had only been a property owning entity.
[19]
Although no Master’s letter of authority or other documents to
support this were produced, according to Zelda and Coetzee,
Van der
Westhuizen was appointed as a trustee of the ACT after Alberto’s
death. Consequently the trustees of the ACT have
at all material
times been the same persons who serve as trustees of the KBT. Zelda
was similarly the custodian of all of the documents
and records of
the ACT.
[20]
Clause 28 of the ACT trust deed allows for only the same two modes of
valid decision making by the trustees. The first is by
way of a
majority decision of the trustees at a properly convened meeting, of
which a proper minute must be kept. The second is
by way of a written
resolution signed by all of the trustees.
The
farm Botterkloof
[21]
In 2007 Alberto approached Fruits with a request for finance to
develop new plantings on a farm which he described as ‘Botterkloof’.
This was part of a proposal involving Fruits’ appointment as
the supply and marketing agent for Botterkloof’s fruit
production.
[22]
Representatives of Fruits also visited Botterkloof with Alberto,
inter alia to inspect the proposed location of new plantings
to be
financed by the loan agreement and, subsequently, to inspect the new
plantings which had been effected. These were all on
Botterkloof.
[23]
Unbeknown to Fruits at the time, Botterkloof consisted of two
properties, namely: (a) Portion 10 of the Farm 851 named ‘Boter
Kloof’, which had been transferred to the ACT in 2002 and of
which it was the owner; and (b) Portion 0 of the Farm 1022 ‘Klein
Botrivier’, which had been acquired by the KBT in 2007 and was
registered in its name.
[24]
Alberto, however, simply referred throughout to ‘Botterkloof’,
and this was the “farm” that was in
turn referred to in
the two agreements. Although they were two properties, they were
farmed as one under Alberto’s control
and that of his two
managers, Burger and Visagie. The crop forecast which forms part of
the agreements signed by the parties referred
specifically to the
farm Botterkloof. It reflects crops planted on both Klein Botriver
and Boter Kloof, the majority of which are
on the latter. In
addition, the crop estimate does not list all of the varieties of
fruit on Botterkloof. It must therefore be
accepted that Botterkloof,
which formed the subject matter of the agreements, constituted both
components of the property. It is
also clear that the crop estimate
was not intended to, and did not, contain a list of all the fruit
grown on Botterkloof, which
explains why, even before Alberto’s
death, fruit was also delivered to other agents. It is also plain
that those living and/or
working on the farm regarded Klein Botrivier
as part of Botterkloof. Burger for example, who lived on the Klein
Botrivier component,
described his residential address as
‘Botterkloof Farm’.
[25]
After conclusion of the two agreements, over the ensuing period from
July 2009 until May 2012, both agreements were implemented
in
relation to fruit on Botterkloof as a whole. Some R730 000 was
advanced by Fruits in terms of the PLA; pursuant to the SMA roughly
65 000 cartons of fruit produced on Botterkloof were delivered to
Fruits and dealt with in terms of the agreements; and Fruits
paid out
approximately R2.5 million under the SMA in respect of fruit.
[26]
More than half of these deliveries and payments made in respect
thereof were effected after Alberto’s death during the
2011/2012 season, which extended from the 43rd week of 2011 (i.e.
roughly the end of October) to the 8th week of 2012 (i.e. 24
February). This was whilst the KBT was under the management and
control of the respondents.
[27]
The only contracts or agreements in existence with Fruits in relation
to Botterkloof were those referred to above. The oral
evidence
revealed that there are no other agreements between Fruits and the
late Alberto or the ACT. Zelda’s contention,
in
cross-examination, that there was an oral, implied or tacit agreement
between Fruits and the ACT, the terms of which were entirely
unclear,
cannot be accepted. It seems to have been more of an afterthought in
response to the proposition that deliveries of fruit
by the ACT to
Fruits in the absence of any agreement to that effect was highly
unlikely, given the stance adopted by the respondents
in this
litigation. Coetzee certainly knew nothing about such an agreement.
The
effect of findings of Binns-Ward J
[28]
Binns-Ward J made it clear that his factual findings were provisional
only. The parties agreed that they had been made within
the context
of determining: (a) whether the dispute on the papers in the main
application was such that certain issues required
referral to oral
evidence; and (b) whether Fruits was entitled to interim interdictory
relief.
[29]
The scope of the enquiry involving testimony is limited to those
issues referred to oral evidence (Drummond v Drummond
1979 (1) SA 161
(A) at 170H), but it is also open to the court to which the matter
has been referred to hold that it is unnecessary to hear oral
evidence and decide the matter on the papers (Wallach v Lew Geffen
Estates CC
[1993] ZASCA 39
;
1993 (3) SA 258
(A) at 263G-H).
[30]
It was accordingly agreed that, in determining whether Fruits is
entitled to final relief in the main application, this court is
at
large to make its own factual findings in relation both to the two
issues referred to oral evidence, and any other material
facts.
The
status of the affidavits in the main application and the applicable
evidential test
[31]
The proceedings in the main application retain their status as an
application, despite referral to oral evidence on specific
issues
(Combrink v Rautenbach
1951 (4) SA 357
(T) at 359G-H).
[32]
In Lekup Prop Co No 4 (Pty) Ltd v Wright
[2012] 4 All SA 136
(SCA) at
para [32] it was held that:
‘…
A
referral to trial is different to a referral to evidence on limited
issues. In the latter case, the affidavits stand as evidence
save to
the extent that they deal with dispute(s) of fact; and once the
dispute(s) have been resolved by oral evidence, the matter
is decided
on the basis of that finding together with the affidavit evidence
that is not in dispute.’
(See
also Du Plooy and Another v Du Plooy and Others
[2012] 4 All SA 239
(SCA) at para [20].)
[33]
In relation to the second application, where there has been no
referral to oral evidence, the material facts fall to be determined
solely on the basis of the Plascon-Evans test. [Plascon-Evans Paints
Ltd v Van Riebeeck Paints (Pty) Ltd
[1984] ZASCA 51
;
1984 (3) SA 623
(A) at
634E-635C.]
The
issues to be determined
[34]
Subject to what is set out below, the issues to be determined, as
agreed between the parties and contained in the case management
directives dated 28 October 2013, are:
34.1
Whether Alberto had actual or ostensible authority to enter into the
two agreements on behalf of the KBT.
34.2
If it is found that Alberto was not duly authorised, whether the KBT
is nonetheless bound by the agreements as a result of
an abuse of the
trust form.
34.3
If Alberto was not authorised and the KBT is not bound, whether
Alberto breached his warranty of authority.
34.4
If it is found that the KBT is bound by the agreements, whether the
agreements have been validly cancelled by the KBT or should
be
enforced as claimed by the applicants.
34.5
If the SMA is void or not binding on the KBT, whether the applicants
are entitled to the interdictory relief in respect of
the removal,
delivery and/or destruction of the Flavor Fall varietal.
34.6
Costs, including reserved costs in the main and second applications.
In this regard, on 31 October 2013 Fruits delivered a
notice advising
of its intention to seek a special costs award against the trustees
of the KBT (in their representative capacities)
jointly and severally
with Zelda and Coetzee de bonis propriis, and on the scale as between
attorney and own client.
[35]
It is self-evident that if I find that Alberto had actual or
ostensible authority to enter into the agreements on behalf of
the
KBT, it is not necessary to consider the issues relating to an abuse
of the trust form, or whether Alberto breached his warranty
of
authority. Most of the interdictory relief sought in respect of the
Flavor Fall varietal would ordinarily follow if the KBT
is indeed
bound, as well as the further relief sought by Fruits, namely that
when the SMA ceases to be binding on the KBT, the
latter is to remove
and deliver to them, alternatively to destroy, all vegetative matter
or material of the Flavor Fall variety.
[36]
Just before the hearing of oral evidence, the respondents recorded
that they also disputed that the two agreements are otherwise
valid,
and counsel informed me that this was apparent from the papers.
Counsel undertook to direct me to the relevant passages
but those he
referred me to did not assist the respondents. Nothing significant
emerged on this issue in Zelda’s testimony,
and it was not
canvassed with Coetzee during his evidence. It is accordingly not
necessary to deal further therewith.
The
oral evidence
[37]
The only witnesses who testified were Burger, who was called by the
applicants, and Coetzee and Zelda, who were called by the
respondents
in terms of the order of Binns-Ward J.
[38]
The hearing ran for a number of days, largely due to the unfortunate
manner in which both Coetzee and Zelda testified. However,
at the
conclusion of evidence the following material facts were common
cause, or were no longer seriously disputed by the respondents,
and
as such were resolved in favour of Fruits.
[39]
Prior to Alberto’s death there was only one KBT resolution of
general import, signed by all three trustees on 8 March
2007. This
resolution authorised Alberto to ‘sign the necessary
documentation’. It was the same resolution relied upon
by
Fruits and which had been telefaxed to them from the home shared by
Alberto and Zelda when they had asked him to provide proof
of his
authority to contract on behalf of the KBT shortly prior to the
conclusion of the two agreements. Mr van Rooyen, senior
counsel for
the respondents, rightly conceded during argument that it must be
accepted that it was Alberto himself who had despatched
this
resolution to Fruits, given Zelda’s vigorous denial that she
had done so.
[40]
On its plain language the resolution evidences authority for Alberto
to sign documents on behalf of the KBT without limitation.
Coetzee
acknowledged as much. Zelda eventually conceded that the authority
conferred by the resolution did not restrict Alberto
to signature of
specific documents; and that Alberto had seemingly used the
resolution to hold himself out to Fruits as being authorised
to
contract on behalf of the KBT. The resolution had furthermore never
been revoked by the trustees.
[41]
Alberto was clearly the “controlling mind” of the KBT
during his lifetime. He was the one who made the decision
to acquire
Klein Botrivier in 2007; to harness the KBT as a vehicle for this
acquisition; and to utilise this vehicle – clearly
for maximum
tax relief and estate planning purposes – to enhance the value
of Botterkloof by new plantings to be financed
by Fruits.
[42]
The evidence revealed that there are no separate minutes or
resolutions by the trustees pertaining to various important
transactions
and decisions involving the KBT, notably the alleged
lease between the KBT and Alberto personally, in respect of what the
respondents
referred to as his personal farming operation conducted
on Botterkloof as well as other farms.
[43]
Coetzee’s testimony showed that he knew very little, if
anything, about Alberto’s de facto farming and related
operations. His role was to advise Alberto from time to time on
matters of tax and accounting, which is his chosen profession,
and to
attend to the preparation of the annual financial statements of
Alberto, the KBT and the ACT. Coetzee was to all intents
and purposes
a complicit passenger in the business affairs of the KBT, to the
extent that he did not even know that Alberto had
concluded the two
agreements with Fruits on behalf of the KBT. Zelda’s evidence
revealed that she too went along with Alberto’s
modus operandi
– for example, she herself had no hesitation in forwarding the
self-same resolution to ABSA bank for an entirely
different purpose
during 2009.
[44]
As a result of this shared attitude of all three trustees, Alberto
himself appears to have believed that he was authorised
to do as he
pleased in relation to the business of the KBT merely by producing
the resolution. He was the one who decided to contract
with Fruits on
behalf of the KBT. An outsider such as Fruits with less intimate
knowledge of the inner workings of the KBT could
hardly have been
expected to know better.
[45]
Fruits and Alberto had a business relationship going back to 2004.
The consensus was that Alberto was a man of his word. There
was
nothing to indicate that Fruits would or should have had any reason
to suspect that the position would be any different if
Alberto chose
to divert one of his business interests through a different vehicle
for purposes of tax relief or estate planning.
Equally, Alberto
clearly trusted and respected the relevant representatives of Fruits
and wished to further a business relationship
with them, given that
it was he who approached them during 2007, leading ultimately, after
almost two years of negotiations, to
the conclusion of the
agreements.
[46]
Burger, who was employed as senior manager on the farm he described
as ‘Botterkloof’ from 2006 until 2010, testified
as to
the acquisition by Alberto of the property known as Klein Botrivier.
He also gave evidence about Alberto’s plans for
the improvement
thereof by entering into an arrangement with Fruits for the provision
of trees for new plantings in return for
the delivery of fruit; the
farming of the original ‘Boter Kloof’ farm and ‘Klein
Botrivier’ as one unit
utilising the same employees and
equipment; the delivery to Fruits of fruit produced on both
components of the farm; and the introduction
of both himself and
Visagie into the KBT trust deed as income and capital beneficiaries
on the basis that they were to share in
5% of what could only have
been, in the circumstances, the KBT’s profit from farming
operations on Klein Botrivier.
[47]
Burger also testified that, although he had not seen them, Alberto
had told him of the agreements with Fruits, and that until
his
resignation in 2010 there were no problems with deliveries to Fruits
or with payment arrangements. As regards Burger’s
testimony
that he and Visagie were to receive 5% of the KBT’s farming
profits, this was corroborated both by Coetzee in his
evidence and by
the content of the KBT trust deed including (in particular) clause
14.2 thereof. Burger was a credible, reliable
and patently honest
witness, and there is no reason to question his testimony which was
largely unchallenged.
[48]
Consistent with the approach adopted by Alberto, Zelda and Coetzee to
the affairs of the KBT, there are no minutes or resolutions
authorising the plethora of transactions and decisions involving the
ACT, a number of which were evidently taken by Alberto acting
on his
own, and thereafter by Zelda on her own, for example, in relation to:
(a) an alleged lease between the ACT and Alberto (for
the same
purpose as that between the KBT and Alberto); (b) Alberto’s
purchase, on behalf of the ACT, of Klein Botrivier in
December 2006;
(c) Alberto’s subsequent cancellation, on behalf of the ACT, of
that agreement of sale to enable the property
to be purchased by the
KBT; (d) the ACT’s purported acquisition of the farming
enterprise from Alberto’s estate, seemingly
for no
consideration; and (e) the ACT’s alleged arrangement with the
KBT to deliver the fruit required by the order of Binns-Ward
J.
[49]
That Zelda stepped into the shoes of Alberto after his untimely
passing and conducted the affairs of the KBT in similar vein,
is
evidenced by the fact that there are no minutes, resolutions or other
documents authorising any of the following, namely: (a)
Zelda’s
attempt to amend the terms of the SMA in September 2011; (b) the
KBT’s express notification to Fruits in May
2012 that it did
not consider itself bound by the agreements; and (c) the KBT’s
purported cancellation of the agreements
in 2013.
[50]
Van der Westhuizen was a trustee of both the KBT and the ACT from
March 2011. There is no evidence that Van der Westhuizen
ever
attended a properly constituted meeting of trustees in the KBT, or
was involved in passing any proper resolutions. There is
thus no
evidence that he properly authorised any of Zelda’s actions as
outlined above. The extent of Van der Westhuizen’s
non-involvement in the affairs of the KBT is illustrated by a general
power of attorney that he executed, together with Coetzee,
on 9 June
2011 in Zelda’s favour, authorising her ‘om namens ons op
te tree in alle en enige dokumente namens ons te
mag teken, met
betrekking tot enige aangeleentheid van genoemde trust’.
Coetzee’s evidence showed that he was to all
intents and
purposes in the dark about Zelda’s actions.
[51]
As previously stated the two issues referred by Binns-Ward J to oral
evidence both concern matters within the knowledge and
domain of the
respondents, and in particular the inner workings of the KBT, the ACT
and their interaction with Alberto. Although
Van der Westhuizen was
appointed as a trustee after Alberto’s death, he could surely
have testified and cast light on issues
germane to the question of
Alberto’s authority to contract with Fruits on behalf of the
KBT (given the KBT’s outward
acceptance thereof until May
2012), as well as any abuse of the trust form. There is thus merit in
the contention of Fruits that
an adverse inference should be drawn
against the respondents for their failure to call Van der Westhuizen
to testify: see Humphreys
v Laser Transport Holdings Ltd and Another
1994 (4) SA 388
(C) at 400C-E.
[52]
Zelda’s claim that she did not have access to, or could not
find, the KBT’s copy of the resolution until May 2012,
seems to
have been contrived to explain the otherwise damaging failure of the
respondents to dispute the validity of the agreements
until that
date. This is because, on the respondents’ own version, Van der
Westhuizen had received a copy of the agreements
as well as the
resolution at the beginning of September 2011; and the probabilities
are that Zelda had the resolution in her custody
all along, given
that she had also faxed a copy of it to ABSA bank for an unrelated
purpose on 29 August 2009.
[53]
Despite the unfortunate quality of her evidence and her demeanour in
the witness box, Zelda’s testimony that she had
not been aware,
at least prior to his death, that Alberto had telefaxed the
resolution to Fruits on behalf of the KBT, had the
ring of truth. She
appeared shocked and angry that Alberto had not told her, but the
impression that I gained was that this had
more to do with her
personal relationship with him than with the affairs of the KBT. It
cannot be seriously disputed that Alberto
chose the KBT as the entity
to contract with Fruits, and not the other way around, given that
Fruits, in light of their prior relationship
with Alberto, had no
reason to have insisted on contracting with a separate and distinct
entity.
Alberto’s
authority to contract on behalf of the KBT
[54]
Authority to contract is determined by the principles of agency, and
may be actual or ostensible. These principles apply equally
in the
context of a trust. In Nieuwoudt and Another NNO v Vrystaat Mielies
(Edms) Bpk
2004 (3) SA 486
(SCA) at para [23] the Supreme Court of
Appeal put it as follows:
‘
The
fact that trustees have to act jointly does not mean that the
ordinary principles of the law of agency do not apply. The trustees
may expressly or impliedly authorise someone to act on their behalf
and that person may be one of the trustees. There is no reason
why a
third party may not act on the ostensible authority of one of the
trustees, but whether a particular trustee has the ostensible
authority to act on behalf of the other trustees is a matter of fact
and not one of law.’
[55]
Actual authority may be express or implied. It is express when it is
given by express words, such as when a resolution is passed
by a
board of directors or trustees authorising one of their number to
sign documents. It is implied when it is inferred from the
conduct of
the parties and the circumstances of the case, such as when a board
of directors or trustees appoints one of their number
to manage
affairs: see NBS Bank Ltd v Cape Produce Co (Pty) Ltd and Others
2002
(1) SA 396
at para [24], citing with approval Denning MR in
Hely-Hutchinson v Brayhead Ltd and Another
3 All ER 98
at 102A-E.
[56]
Thus, in Land & Agricultural Bank of SA v Parker and Others
2005
(2) SA 77
(SCA) it was held at para [37.2] that:
‘
The
inference may in appropriate cases be drawn that the trustee who
concluded the allegedly unauthorised transaction was in fact
authorised to conduct the business in question as the agent of the
other trustees… Such an inference may in a suitable case
be
drawn from the fact that the other trustees previously permitted the
trustee or trustees in effective charge of affairs free
reign to
conclude contracts. A close identity of interests between
trustee-beneficiaries, as in most family trusts, may make it
possible
for the inference of implied or express authority to be more readily
drawn.’
[57]
As a general rule ‘the law concerns itself with the external
manifestations, and not the working of the minds of parties
to a
contract’: see Sonap Petroleum SA (Pty) Ltd v Pappadoqianis
[1992] ZASCA 56
;
1992 (3) SA 234
at 238I-239A. The exception to the general rule
relates to where there is alleged dissensus, which is not relevant
here.
[58]
It is common cause that on 8 March 2007 the three trustees of the KBT
all signed and certified, as a true extract from the
minutes of a
meeting of trustees, that it had been resolved ‘That Alberto
Costa in his capacity as a trustee of the Klein
Botrivier Trust IT
852/2007 is hereby appointed and authorised to sign the necessary
documentation’.
[59]
In terms of clause 5.5 of the KBT trust deed this document is binding
on the trust. (Insofar as it purports to be an extract
from a minute
of a meeting attended by all three trustees, it is equally binding
under clauses 5.3 and 5.4.)
[60]
The evidence showed that it was accepted by the trustees that Alberto
could sign documentation on behalf of the KBT generally;
Alberto
himself probably believed that he was authorised to sign the
agreements with Fruits on behalf of the KBT; and that Alberto
or
Zelda were at liberty to use the resolution whenever they so
required.
[61]
The authority conferred by the resolution did not restrict Alberto to
signature of particular documents. Alberto used the resolution
to
hold himself out as authorised to contract on behalf of the KBT.
There was no other resolution of general import authorising
the
signature of documents or conclusion of transactions on behalf of the
KBT which came into existence prior to Alberto’s
death.
[62]
The resolution was never revoked by the trustees, and would therefore
have remained of full force and effect in 2009 when the
agreements
were concluded with Fruits. Burger’s evidence showed that the
acquisition of Klein Botrivier was for the purpose
of building up the
farm by entering into agreements with Fruits. It is thus not
surprising that, armed with the 2007 resolution
authorising him to
sign documentation on behalf of the KBT, Alberto had no hesitation in
producing it to Fruits.
[63]
Against this background, the probabilities are that Alberto had
actual authority to contract on behalf of the KBT with Fruits.
However, for the reasons that follow, I am in any event satisfied
that, at the very least, ostensible authority has been established.
[64]
Ostensible or apparent authority is the authority of an agent as it
appears to others. It may coincide with actual authority,
but
sometimes ostensible authority may exceed actual authority: see NBS
Bank Ltd v Cape Produce Co (Pty) Ltd and Others at para
[24]. Thus,
if a board of directors or trustees appoint one of their number as a
manager, they invest him not only with actual
implied authority but
also with ostensible authority to do all things that fall within the
ambit of that role. Ostensible authority
thus flows from the
appearance of authority created by the principal.
[65]
The requirements for ostensible authority are: (a) representation by
words or conduct by the principal that the agent had authority
to act
as he did; (b) that such representation was made in a form in which
the principal should reasonably have expected that
outsiders would
act on the strength of it; (c) reliance by the other party on the
representation; and (d) the reasonableness of
that reliance with
resultant prejudice: see NBS Bank Ltd v Cape Produce Co (Pty) Ltd at
para [26].
[66]
It is my view that all of these requirements have been satisfied.
Zelda and Coetzee left Alberto, armed with the resolution,
to have
free reign over the business affairs of the KBT. It is now accepted
that it was Alberto who produced the self-same resolution
to Fruits
when asked to furnish proof of his authority to contract on behalf of
the KBT. It was conceded by both Zelda and Coetzee
that they could or
should reasonably have expected an outsider such as Fruits to have
acted on the strength of it. There is no
doubt that Fruits acted
reasonably on that representation. The prejudice suffered by Fruits
as a result, subsequent to May 2012,
is self-evident.
[67]
It thus follows that I find that the KBT has at all material times
been bound by the two agreements. In light of this finding
it is not
necessary to consider the Turquand-rule.
Cancellation
of the agreements by the KBT
[68]
The KBT has thus been in breach of the two agreements since at least
May 2012, given its repudiation thereof as well as its
refusal to
deliver to Fruits all of the fruit that it was required to deliver in
terms of the SMA.
[69]
These breaches have never been purged and are ongoing. The interim
order of Binns-Ward J merely required – as an interim
measure –
that some of the fruit (about 30%) required by the SMA be delivered,
and the KBT has persisted with its refusal
to deliver the remainder.
[70]
The KBT has thus been in mora since at least May 2012 when it
declared itself not bound by the agreements and repudiated them;
and
failed and/or refused to deliver the majority of the fruit required.
Indeed, were it not for the interim order of Binns-Ward
J, on the
respondents’ own version, none of the fruit would have been
delivered.
[71]
As is clear from the main application Fruits sought to enforce the
agreements, and rejected the KBT’s repudiation. The
KBT’s
opposition in the main application evidences its continuing breach
and mora.
[72]
A party in breach and in mora may neither exact performance by the
other, nor cancel, until it has cured its breach. Van der
Merwe et al
in Contract: General Principles (5th Edition) at 323 puts it as
follows:
‘
If
a contractant repudiates his duty to perform the repudiation affects
the outstanding counter-duties of his co-contractant even
where the
latter elects not to “accept” the repudiation, in other
words chooses to uphold the contract. These special
consequences of
repudiation are twofold in nature. In the first place, due to his
co-contractants repudiation, the innocent contractant
is excused from
any steps that must be taken in preparation for his own performance…
In the second place, the innocent contractant
is also excused from
any duty to tender his own performance unless he can perform without
the co-operation of the guilty party.’
[73]
Accordingly, from the date when the KBT repudiated the agreements,
Fruits was, as a matter of law, excused from making any
performance
which would require the co-operation of the KBT. As a result the
contractual obligations owed by Fruits to the KBT
prior to the
interim order were limited in nature, given that all of their major
obligations rested squarely on the KBT’s
delivery of all of the
fruit required in terms of the SMA.
[74]
The basis of the declaratory relief sought by the respondents in the
second application in relation to the agreements rests
on the
contention that they were validly cancelled on 6 May 2013 because
Fruits had not made payment as required pursuant to the
interim
order. The issue of whether Fruits had breached the agreements as
alleged must be decided on the papers in the second application
in
accordance with the Plascon-Evans test.
[75]
The interim order specifically provided that, in respect of fruit
delivered in terms thereof, Fruits were to account for that
fruit in
terms of the PLA and SMA. The order states that the fruit supplied is
‘to be marketed and accounted for by [Fruits]
in accordance
with the loan and supply agreements…’.
[76]
It is clear that the PLA and SMA must be read together (as was found
by Binns-Ward J). The PLA and SMA are linked and cross-reference
each
other. Clause 13 of the PLA provides inter alia as follows:
‘
Notwithstanding
the aforesaid the parties confirm that this agreement is to be read
in conjunction with the provisions of the SMA.
Should there in this
regard be found to be any conflict between the two agreements the
provisions of this agreement, as far as
it pertains to the subject
matter here, will prevail…’
[77]
In terms of these agreements:
77.1
Fruits would advance amounts to the KBT totalling approximately R881
000 as a production loan. Repayment of this loan was to
commence in
the 2012 season and would be completed during the 2016 season.
77.2
The KBT appointed Fruits to market and sell produce listed in
Annexure B to the SMA for a period of 10 years (i.e. terminating
in
2019).
77.3
The KBT would deliver to Fruits produce of the type, cultivar,
quality and quantity as set out in Annexure B to the SMA, including
the Flavor Fall variety.
77.4
The KBT granted Fruits a lien over all fruit and ceded rights in the
fruit and the proceeds thereof to Fruits.
[78]
Clauses 8 and 9 of the PLA entitle Fruits to deduct the amount of
R183 289,30 each year commencing in 2012, which amounts are
for the
repayment of the loan advanced in terms of the PLA.
[79]
Clause 11 of the PLA provides that should the KBT for any reason fail
to deliver produce as set out in the crop forecast, and/or
terminate
the SMA prior to 2015, then penalties will be payable as set out in
the PLA.
[80]
The SMA has a number of provisions which deal with set-off and the
entitlement of Fruits to retain funds. These are clauses
11.3, 13,
19.1 and 19.7, and effectively provide that Fruits is entitled to
apply set-off against amounts owing to the KBT against
amounts owing
by the KBT to Fruits.
[81]
It is common cause that the KBT failed to deliver the fruit as set
out in the crop forecast. The version of Fruits is that
they were
aware of this but did not initially enforce the penalty provision out
of goodwill towards the late Alberto. The PLA and
SMA both contain
non-waiver clauses, and the failure by Fruits to immediately invoke
the penalty is thus of no legal significance.
However in 2012 the
penalty was indeed invoked, and in terms of the PLA the KBT is thus
obliged to pay to Fruits the amount of
R1 135 651.91.
[82]
It is also the version of Fruits that, in keeping with the terms of
the SMA and PLA, it accounted for fruit delivered under
the interim
order by the set-off of amounts which were owing to the KBT with
amounts which were owed by the KBT to Fruits. The
interim order
explicitly required Fruits to deal with and account for those amounts
in terms of the PLA and SMA. In essence, therefore,
it is the version
of Fruits that the loan capital was repaid by operation of set-off
but the penalty was triggered because of non-performance
on the part
of the KBT.
[83]
Given that the Plascon-Evans test applies, the relief sought may only
be granted if those facts averred in the KBT’s
affidavits which
have been admitted by Fruits, together with the facts alleged by
Fruits, justify such an order. During argument
the respondents’
junior counsel, Ms Joubert, produced a series of schedules with
calculations of amounts allegedly owing
by Fruits to the KBT. These
schedules ultimately served to highlight the extent of the factual
disputes. These, together with the
affidavits, have led me to
conclude that the version of Fruits is not so far-fetched or clearly
untenable that I am justified in
rejecting it merely on the papers;
nor am I persuaded that the facts alleged by the KBT which have been
admitted by Fruits, together
with the facts alleged by Fruits,
justify an order for the relief sought. They consequently do not
justify a finding in favour
of the KBT that Fruits breached the
agreements as alleged.
[84]
It is thus my view that the purported cancellation by the KBT was not
valid because: (a) there was no proven breach by Fruits;
and (b) the
KBT, having been in mora since at least May 2012, was not entitled to
cancel the agreements.
[85]
It remains to consider whether there is any basis on which
enforcement of the agreements can be avoided by the KBT.
[86]
In Haynes v King Williamstown Municipality
1951 (2) SA 371
(A) at
378F-G it was stated that:
‘
It
is… settled law… that although the Court will as far as
possible give effect to a plaintiff’s choice to claim
specific
performance it has a discretion in a fitting case to refuse to decree
specific performance… The discretion which
a Court enjoys
although it must be exercised judicially is not confined to specific
types of cases, nor is it circumscribed by
rigid rules. Each case
must be judged in the light of its own circumstances.’
[87]
In Benson v SA Mutual Life Assurance Society
1986 (1) SA 776
(AD) at
783C-F, it was said that:
‘
This
does not mean that the discretion is in all respects completely
unfettered. It remains, after all, a judicial discretion and
from its
very nature arises the requirement that it is not to be exercised
capriciously, nor upon a wrong principle. It is aimed
at preventing
an injustice – for cases do arise where justice demands that a
plaintiff be denied his right to performance
– and the basic
principle thus is that the order which the Court makes should not
produce an unjust result which will be
the case, eg, if in the
particular circumstances, the order will operate unduly harshly on
the defendant. Another principle is
that the remedy of specific
performance should always be granted or withheld in accordance with
legal or public policy…
Furthermore, the Court will not decree
specific performance where performance has become impossible.’
[88]
The onus is on the party resisting the claim for specific performance
to place evidence before the court to persuade it to
refuse specific
performance: see Tamarillo (Pty) Ltd v B N Aitken (Pty) Ltd
1982 (1)
SA 398
(A) at 442B-443F.
[89]
For the reasons that follow the respondents have failed to persuade
me that I should refuse specific performance. First, their
submission
that Fruits should instead institute a damages claim is no answer.
Second, there seems to be a contention that the KBT
does not have
possession or control over any fruit and that the ACT now has control
of the fruit which is the subject matter of
the SMA. This argument is
artificial and is not borne out by the facts. The KBT owns the
property on which 18.28 hectares of orchards
are located, all of
which produce varieties listed in Annexure B to the SMA. The
respondents have failed to produce any evidence
to show that they
have divested the KBT of control of that fruit or property, other
than the bald allegation that the KBT has leased
its property to the
ACT. Third, the respondents do not allege that it would be impossible
for the KBT to perform under the SMA
and procure delivery of the crop
from Botterkloof. They would have been ill advised to do so. The ACT
– which they now claim
is the entity conducting the farming
enterprise – comprises exactly the same individuals who are the
trustees of the KBT
and who plainly have a common purpose and
objective.
[90]
What this contention has however alerted me to is the distinct
possibility that, if specific performance is ordered only against
the
KBT, the respondents may well attempt to pursue this line in order to
avoid their obligations. The history of this litigation
shows that it
is one of those unusual cases where wider relief, in order to ensure
compliance with this court’s order, is
warranted. To my mind,
the appropriate manner in which to deal with this aspect would be to
order not only the KBT but each of
the respondents personally to
ensure performance under the agreements. It is possibly for this
reason that, during argument, Fruits
sought to amend its relief
(without objection) to extend the ambit of any order made by this
court to include each of the respondents
in their personal
capacities. I intend to make such an order.
Plant
breeder’s rights in respect of Flavor Fall
[91]
Flavor Fall is a variety of inter-specific plum, and a ‘protected
variety’ within the meaning of the PBR Act.
[92]
Burger Van Dyk, the business unit manager of Product Development of
the South African Plant Improvement Organisation Trust
(‘SAPO’),
deposed to an affidavit on behalf of Fruits. According to Van Dyk,
SAPO produces certifiable propagation
plant materials, and is
responsible for their phyto-sanitary and genetic improvement; and
SAPO is the licensee, under s 25 of the
PBR Act, of the registered
holder of plant breeder’s rights in respect of the Flavor Fall
variety.
[93]
The registered holder of the Flavor Fall plant breeder’s rights
is Zaiger’s Inc. Genetics, a company incorporated
in
California. The Flavor Fall variety of plum was developed by
Zaiger’s, and registered by it as US Plant Patent No. 1 1990
in
the United States.
[94]
Van Dyk stated that in 1982 SAPO was licenced by Zaiger’s Inc
to import and commercially exploit a wide range of stone
fruit
varieties in respect of which the latter had plant patents, including
the Flavor Fall variety. This agreement constituted
a licence in
terms of s 25 of the PBR Act.
[95]
Acting under this licence, SAPO first imported the Flavor Fall
variety into South Africa on 13 January 1997 and began experimental
plantings in about 2000. These experimental plantings produced
favourable results, and in approximately 2007 SAPO decided to engage
in full-scale commercial exploitation of the Flavor Fall variety.
Pursuant to a tender process, the exclusive right to commercialise
the Flavor Fall variety was awarded to Fruits in terms of a written
agreement concluded in 2007.
[96]
Van Dyk explained that obtaining registration of plant breeder’s
rights under the PBR Act is a lengthy and complicated
process. This
process was commenced by SAPO on behalf of Zaiger’s, in about
2006. Pending this application, SAPO/Zaiger’s
procured
provisional protection in respect of Flavor Fall under ss 14 and 15
of the PBR Act. The application for registration of
Zaiger’s
plant breeder’s rights in respect of Flavor Fall was finally
granted in May 2008, when a certificate of registration
was duly
issued by the Registrar of Plant Breeder’s Rights in terms of s
20 of the PBR Act. Van Dyk annexed a copy of the
certificate of
registration.
[97]
Van Dyk also explained that once a plant breeder’s rights in
respect of a variety have been acquired under the PBR Act,
ownership
of the genetic material of that variety remains with the holder of
the rights, irrespective of whether such vegetative
materials are in
the possession of the licensor or licensee, or a sub-licensee.
Ownership does not pass to a licensee or sub-licensee
when vegetative
materials leave the hands of the licensor. The relationship between
the licensor and licensee, or sub-licensee,
dictates that the
licensor cannot, and does not, retain possession of the plant
materials used for propagation.
[98]
In January 2007 SAPO licensed the first applicant in terms of a
written agreement (‘the SAPO licence agreement’)
exclusively to propagate, distribute and exploit the
commercialisation rights of the Flavor Fall variety. A copy of the
relevant
licence was annexed to Van Dyk’s affidavit. The SAPO
licence agreement was subsequently amended on 7 April 2010 and again
on 11 June 2010 in terms of agreements which are similarly annexed to
Van Dyk’s affidavit.
[99]
In terms of the aforementioned agreements the first applicant
acquired the exclusive cultivation and commercialisation rights
of
the Flavor Fall variety within the Republic of South Africa. In July
2009, by concluding the SMA, the first applicant (as it
was entitled
to do) effectively sub-licensed the KBT to farm 5 hectares of Flavor
Fall.
[100]
Thereafter, in 2010 and as part of Fruits’ group restructuring,
the first applicant’s rights and obligations under
the SAPO
license agreement were duly ceded and assigned to the second
applicant. SAPO had authorised the first applicant to do
so, and a
copy of the agreement to this effect is also annexed to Van Dyk’s
affidavit.
[101]
At the time when this occurred the second applicant had full
knowledge of, and accepted, the KBT’s entitlement to farm
Flavor Fall trees and crops in terms of the agreement which it had
concluded with the first applicant in 2009. It is the contention
of
Fruits that, but for that agreement between the first applicant and
the KBT, the latter would have had no right, license or
other
entitlement to grow, harvest or otherwise commercially exploit Flavor
Fall trees or crops.
[102]
The KBT’s response to these allegations was, effectively, to
put Fruits to the proof of its locus standi to enforce
its plant
breeder’s rights. It did not produce a shred of evidence to
counter these allegations.
[103]
During argument Ms Joubert informed me that the respondents do not
deny that ‘a registration’ exists, but that
it is the
‘scope of the registration’ that is disputed. She
submitted that further evidence should have been produced
by Fruits
in order to establish its locus standi. She argued that Fruits have
not provided ‘the best evidence’ as to
the existence of a
license agreement between Zaiger’s and SAPO or, in fact, any
evidence at all which could substantiate
Van Dyk’s ‘claims’.
She contended that Zaiger’s should have been joined as a party;
and that Zaiger ‘on
the face of it’ remains unaware of
this litigation.
[104]
As far as I am concerned, the last submission was patently incorrect.
Annexed to a further affidavit of Van Dyk filed in reply
in the main
application is a letter from Zaiger’s, the content of which
reads as follows:
‘
To
whom it may concern:
PLANT
BREEDER’S RIGHTS IN RESPECT OF “FLAVOR FALL”
VARIETY IN SOUTH AFRICA
1.
SAPO Trust (previously known as “The South African Plant
Improvement Organization, ‘SAPO’) are our agent in
South
Africa for varieties imported prior to July 2000. We hold plant
breeder’s rights in respect of the ‘Flavor Fall’
variety in terms of the Plant Breeder’s Rights Act (15 of 1976)
(‘the PBR Act’) in South Africa.
2.
We have authorized SAPO to commercially exploit the “Flavor
Fall” variety in South Africa and undertake the activities
referred to in Section 23 of the PBR Act.
3.
SAPO has in turn made an agreement with Arvum Exports (Pty) Ltd
(formerly Unlimited Fruit (Pty) Ltd) and Unlimited Fruit (Pty)
Ltd
(formerly Arvum Exports (Pty) Ltd) to commercially exploit and
promote the “Flavor Fall” variety in South Africa.
We
were informed that growers were nominated, with approval of SAPO, to
cultivate the “Flavor Fall” variety in South
Africa.
4.
We authorize and support any steps taken to protect our rights and
those of the parties mentioned above in respect of the “Flavor
Fall” variety.’
[105] The
respondents argue that there are technical and procedural hurdles
imposed by the Act for the granting of a license, which
Fruits have
not shown that they have overcome. However, on the plain language of
s 23 read with s 25 of the PBR Act, all that is
required is written
authority which – in the case of Fruits – has been
demonstrated by way of the SAPO licensing agreement;
and as
previously stated, SAPO in turn is the South African agent of
Zaiger’s.
[106] The
respondents also argue that: (a) the plant breeder’s rights
have not been shown to exist; (b) there is no evidence
to demonstrate
that SAPO would have been entitled to sub-license rights to Fruits in
terms of the PBR Act; (c) the court is not
in a position to assess
the scope of the plant breeder’s rights which it is requested
to enforce, as there are insufficient
details of the plant variety
protected; and (d) there is no evidence that the KBT is in possession
of any plant material falling
within the scope of the plant breeder’s
rights.
[107] However:
(a) a certificate of plant breeder’s rights has been produced
by Fruits which clearly originates from the registrar
of plant
breeder’s rights and which constitutes prima facie evidence of
the matters specified in that certificate in terms
of s 5(2) of the
PBR Act; (b) the PBR Act does not restrict the nature of an agreement
which may be concluded between a licensee
(in terms of s 25 of the
PBR Act) and other parties; (c) the Flavor Fall variety has been
referred to by the respondents extensively
and is clearly known to
them, and there is accordingly no dispute regarding the variety
referred to by Fruits; and (d) the respondents
on their own version
confirm that the KBT owns property on which all the Flavor Fall trees
on the farm known as Botterkloof are
planted.
[108] Ms
Joubert relied on a passage from Weltevrede Nursery v Keith Kirsten’s
(Pty) Ltd and Another
2004 (4) SA 110
(SCA) at para [8]. However in
Weltevrede the Supreme Court of Appeal had to consider, in
particular, whether the plant breeder’s
rights claimed had been
properly granted. This thus involved a consideration of whether the
rights had been properly registered.
The respondents do not contend
that the rights have not been properly granted but rather that this
court is not in a position,
on the basis of the evidence produced by
Fruits, to assess whether Fruits has plant breeder’s rights at
all.
[109] The
Plascon-Evans test does not require of Fruits to have produced ‘the
best evidence’. The respondents have been
unable to
meaningfully refute any of Van Dyk’s allegations.
[110] On
the essentially uncontroverted facts, Zaiger’s is the
registered holder of plant breeder’s right in respect
of Flavor
Fall under the PBR Act; SAPO as its authorised agent and licensee has
the exclusive right to exploit this variety in
South Africa; and SAPO
in turn has granted the exclusive right to do so to Fruits.
Accordingly, in terms of s 23 of the PBR Act,
Fruits are entitled
inter alia to undertake production, sale, export, stocking and other
activities in relation to Flavor Fall.
[111] S
23 read with s 23A of the PBR Act precludes the KBT (or any other
person) from inter alia from producing, marketing or selling
Flavor
Fall other than by way of prior license under s 25 or s 27 of the PBR
Act. Since Fruits hold the exclusive license from
SAPO in South
Africa, this would require the KBT to be licensed by Fruits, hence
the provisions of the SMA.
[112] Fruits,
as authorised persons who are allowed by the holder of the plant
breeder’s rights, clearly have a legal interest
in Flavor Fall.
As such they have a sufficient interest to found their locus standi
to interdict the KBT from conduct which contravenes
this legislation:
see Herbstein and Van Winsen: The Civil Practice of the High Courts
of South Africa 5th Edition Volume 2 at p1476-1478.
[113] On
application of the Plascon-Evans test, I am persuaded that Fruits
have established their locus standi for the following
reasons:
113.1 Zaiger’s
plant breeder’s rights in respect of Flavor Fall are registered
under the PBR Act in terms of a certificate
issued by the Registrar
under that Act.
113.2 S
5(2) of the PBR Act provides inter alia that: ‘(a) certificate
by the Registrar to the effect that an entry has or
has not been made
in the register or that any other thing authorised by this Act to be
done, has or has not been done, shall be
prima facie evidence of the
matters specified in that certificate’.
113.3 In
addition, s 5(1) of the PBR Act records that the register is prima
facie evidence of all matters directed or authorised
by the Act to be
noted therein.
113.4
SAPO has at all material times been licensed by Zaiger’s to
import and commercially exploit, inter alia the Flavor Fall
variety.
SAPO has been importing Flavor Fall into South Africa since 1997, was
responsible for the registration of Zaiger’s
plant breeder’s
rights under the PBR Act and has been engaged in the exploitation of
this variety since at least 2007.
113.5 In
2007 SAPO granted the first applicant the exclusive rights to exploit
the Flavor Fall variety in South Africa, and these
rights were
subsequently ceded by the first applicant to the second applicant
with SAPO’s approval.
113.6 As
previously stated, the KBT has never asserted a right to exploit the
Flavor Fall variety, notwithstanding that 5 hectares
of Flavor Fall
is being farmed on Klein Botrivier.
[114]
I accordingly find that Fruits has the necessary locus standi to
enforce its plant breeder’s rights. It follows that
Fruits is
entitled to the interdictory relief sought in respect thereof. For
the reasons I have already given in relation to specific
performance
under the agreements, it is similarly my view that the interdictory
relief should be extended to include the respondents
personally.
Costs
[115]
In light of my findings, there is no reason why costs should not
follow the result. As previously stated, Fruits now seeks
a punitive
costs order against the KBT as well as Zelda and Coetzee in their
personal capacities. However, in the exercise of my
discretion I am
not inclined to grant such an order. The clear impression that I
gained, at least from Zelda’s testimony,
is that she, and by
all accounts Coetzee to the limited extent that he involved himself
in this litigation, relied on legal advice
provided to them. I do not
believe that it would be appropriate to punish them for following the
advice that they received.
Conclusion
[116]
In the result I make the following order:
1.
It is declared that the following agreements executed on 12 July 2009
are binding on the Klein Botrivier Trust (Reg. No: IT 852/2007)
as
represented by its trustees for the time being (‘the KBT’),
and on the First to Third Respondents (‘the Respondents’),
both in their representative and personal capacities:
1.1
the Production Loan Agreement (‘the PLA’) by and between
the First Applicant, Third Applicant, and the KBT, a copy
of which is
annexed to the Applicants’ founding affidavit marked ‘H’;
1.2
the Supply and Marketing Agreement by and between the First Applicant
and the KBT (‘the SMA’), a copy of which is
annexed to
the Applicants’ founding affidavit marked ‘I’;
2.
The KBT and each of the Respondents personally are interdicted and
restrained from:
2.1
transferring (or allowing the transfer of) possession or control of
any of the fruit, trees, bud stock, root stock or other
vegetative
matter of the Flavor Fall variety to any person or entity other than
the First and Second Applicants; or
2.2
disposing (or allowing the disposal) of any of the fruit, trees, bud
stock, root stock or other vegetative matter of the Flavor
Fall
variety to any person or entity other than the First and Second
Applicants; or
2.3
otherwise commercially exploiting or selling (or allowing the
exploitation or sale of) any of the fruit, trees, bud stock, root
stock or other vegetative matter of the Flavor Fall variety (other
than by sale to or through the agency of the First and Second
Applicants).
3.
The KBT and each of the Respondents personally are directed to
deliver to the Applicants, or to procure the delivery of, the
fruits
of the Flavor Fall varietal, nectarines, and plums produced on the
farm Botterkloof (comprising the farms currently held
under deeds of
transfer T036273/2002 and T000041238/2007) and described in the SMA
read with Annexure ‘B’ thereto in
respect of the
2013/2014 stone fruit season and subsequent seasons for the full
duration of the SMA to be marketed, accounted and
paid for by the
First Applicant and the Third Applicant in accordance with the PLA
and the SMA.
4.
The KBT and each of the Respondents personally are interdicted and
restrained from selling, delivering or otherwise dealing with
the
plum or nectarine stone fruits of the type referred to in Annexure
‘B’ to the SMA unless and until they have effected
delivery of the full quantities and description of such fruit
described in Annexure ‘B’ to the First and/or Second
Applicants.
5.
If the SMA is terminated , or ceases to be binding on the KBT, the
KBT and each of the Respondents personally shall:
5.1
remove from the Botterkloof farm all trees, fruit, bud stock, and
other vegetative matter or material of the Flavor Fall variety;
and
5.2
deliver to the Second Applicant all trees, fruit, bud stock and other
vegetative matter of the Flavor Fall variety in the KBT’s
direct or indirect possession or control, alternatively destroy the
same and furnish proof to the Applicants of such destruction.
6.
The Applicants’ costs in these proceedings, including the
reserved costs of all interlocutory and related applications
under
this case number and case no: 22095/2012 shall be borne by the KBT on
the scale as between party and party. Such costs shall
include:
6.1
the costs of two counsel where employed;
6.2
the costs of the hearings before Davis J, Binns-Ward J and Dolamo J;
and
6.3
the qualifying and expert fees and expenses of Mr Burger Van Dyk.
J
I CLOETE