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[2020] ZACCP 1
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Villa Crop Protection (Pty) Ltd v Bayer Intellectual Property GmbH (2005/00230) [2020] ZACCP 1; 2020 BIP 338 (CP) (3 September 2020)
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IN THE COURT OF THE COMMISSIONER OF PATENTS
FOR THE REPUBLIC OF SOUTH AFRICA
(1)
REPORTABLE:
YES/NO
(2)
OF
INTEREST TO OTHER JUDGES: YES/NO
(3) REVISED
3-09-2020
Case No: Patent 2005/00230
In the matter between:
VILLA CROP PROTECTION (PTY) LTD Applicant / Defendant
and
BAYER INTELLECTUAL PROPERTY GmbH Respondent / Plaintiff
JUDGMENT IN THE APPLICATION FOR LEAVE TO AMEND
AC
BASSON, J
[1] Bayer Intellectual Property GmbH, the plaintiff in the main action ("Bayer"), is the registered proprietor of South African patent 2005/00230 ("the 2005 patent") and, more in particular, in respect of a chemical substance referred to in these proceedings as "spirotetramat". In its particulars of claim, Bayer claims that the patent has at all material times been valid and in force.
[2] The action for the infringement of the 2005 patent was instituted on 12 March 2018 by Bayer Intellectual Property GmbH as the first plaintiff, together with Bayer AG as the second plaintiff, against Villa Crop Protection (Pty) Ltd as the defendant ("Villa Crop"). The second plaintiff has since withdrawn from the action. As a result, the summons and particulars of claim were amended on 5 November 2018 to reflect the changed position.
[3] In the action Bayer seeks protection for the substance spirotetramat used as an active substance in a plant protection product which is sold by Bayer in South Africa under the commercial name of "Movento". Bayer seeks to protect Movento from competition against Villa Crop's product "Tivoli", which also contains as an active ingredient spirotetramat. Bayer would protect Movento from competition against Villa Crop's product Tivoli, which also contains spirotetramat, by enforcing a monopoly in spirotetramat. This it sets out to achieve by enforcing the 2005 patent in the main action. It can only do so if spirotetramat has not previously been disclosed. Conversely, if spirotetramat was in the public domain before the priority date of the 2005 patent (11 July 2002), it cannot validly be protected by this South African patent.
[4] Spirotetramat - as a chemical compound - is a substance formed by different elements that bond together in a fixed ratio relative to each other. The ratio of the elements relative to each other is usually expressed by a chemical formula. The connectivity of atoms of the various elements in a substance is usually depicted by a structural formula that can be represented in more ways than one. The specific organic structure of spirotetramat is identified in Bayer's particulars of claim. Although a patent can conceivably protect more than one active substance, this case revolves around the substance spirotetramat (with its own particular chemical organic structure) which is the active ingredient used in the commercial product Movento that is sold in South Africa.
Plea and counter-claim
[5] Villa Crop disputes that the patent has at all material times been valid and pleads that the patent is therefore incapable of being infringed. Villa Crop claims that it is liable to be revoked in terms of section 61(1)(c) read with sections 25(1),(6) and (7) of the Patents Act[1] in that the invention as claimed by Bayer is not new in that it formed part of the state of the art immediately before the priority date of the invention and that the patentee knew, alternatively, reasonably ought to have known the patent is not new.
[6] In its plea and counter-claim Villa Crop sets out the grounds on which it contends that the 2005 patent is invalid and claims to revoke the patent, inter alia, on the grounds of the alleged lack of novelty and lack of inventiveness of the invention claimed in the 2005 patent. The issue of novelty is to be decided in the main action.
[7] Villa Crop further claims that the South African patent is liable to be revoked in terms of section 61(1)(g) of the Patents Act in that the prescribed declaration lodged in respect of the application for the patent contains a false statement or representation which is material and which the patentee and its predecessors in title knew or ought reasonably to have known to be false at the time when the statement or representation was made.
[8] In support of the allegation that Bayer knew or ought reasonably to have known at the time that the statements or representation (the prescribed declaration) was false, reference is made (inter alia) to European patent number 0 915 846 ("the basic patent") and the fact that Bayer Crop Science AG would shortly after the making of the declaration apply for the relevant regulatory approval in various countries of the European Commission to permit the commercial product containing this compound - spirotetramat - to go to market. This chemical compound is disclosed in EP O 915 846 as a new substance to be used in plant protection.
[9]
The international filing date of the
basic patent is 23 July 1997 with an earliest priority date of 5
August 1996. The term of the
Lieb et
al patent expired 23 July 2017.[2]
Although the term of the basic patent also came to an end on that
date, Bayer obtained in various countries in the European Communities
("EC") an extension for a
)
Supplementary Protection Certificate (“SPC”)
to the term of expected protection for spirotetramat for a further
6
years, namely until 23 July 2022. South African patent number
1997/06915 (referred to as ''Lieb et
al) Is equivalent to the basic
patent and granted Bayer a monopoly for spirotetramat in South
Africa. This patent has a filing date
of 1 July 2003.
Application to amend
[10] Villa Crop has now filed an application for leave to amend its plea by inserting a special plea in limine. Initially there were four proposed amendments before court. Bayer has now conceded the amendments sought in C, D, and E of the Notice of Intention to Amend. Only the amendment sought in "A" of the Notice of Intention to Amend the plea by including a special plea in limine, remains in issue.
[11] The essence of the only remaining plea in limine is that Bayer (the respondent in this application), in advancing the litigation in the main action, and in relying on the patent in suit (the "2005 patent") is -
(i) approaching this court mala fide , dishonestly, and with unclean hands;
(ii) in breach of its duty of good faith as patentee;
(iii) abusing the process of this Court; and
(iv) depriving the defendant of its right to a fair trial under section 34 of the Constitution.
[12] With this application for amendment, Villa Crop is therefore seeking to introduce a plea based on the so-called principle of “unclean hands”, abuse of process and breach by the patentee (''Bayer'') of its duty of good faith. It is argued by Villa Crop that this court should, if it finds in favour of Villa Crop on the issues pleaded in the application for leave to amend, refuse to entertain Bayer's demands for the relief sought in the main action and to dismiss the action.
Arguments in the application to amend
[13] In its special plea, Villa Crop relies on the fact that Bayer made certain representations during proceedings in the EC when It applied for a SPC with reference to the active substance spirotetramat in respect of which Bayer now seeks to impose a monopoly in the pending action. According to Villa Crop, Bayer represented in those proceedings that spirotetramat (which forms the basis of its commercial product Movento) "loops back" to the 1997 patent (the basic patent). The point of the "unclean hands" argument is that Bayer itself made representations to the relevant authorities in a large number of countries in the EC to demonstrate that spirotetramat has been in the public domain and that it has been described and disclosed, well before the priority date of the 2005 patent. This was done to afford Bayer an extension to the protection given to spirotetramat under patent EP 0 915 846 (the "basic patent"). In order to obtain a SPC, it must be shown that the basic patent protects the particular active substance.
[14] Villa Crop points out that, in advancing its case in support of obtaining an extended term of patent protection (via application for the SPCs), Bayer made the following representations to countries in the EC concerning spirotetramat:
(i) the active substance (spirotetramat) is protected by the basic patent;
(ii) spirotetramat is specifically described and disclosed at example I - 1 - c - 4 p32 of the basic patent;
(iii) spirotetramat has the following chemical structure and formula:
[See PDF and RTF versions for image]
(iv) spirotetramat, as disclosed in and protected by the basic patent, is sold as Movento, for which Bayer obtained regulatory approval in a number of countries in the EC.
[15] Villa Crop argues that, having regard to the above, it is immediately apparent that, on Bayer's own version, spirotetramat as disclosed in and protected by the basic patent, is identical to spirotetramat as described in paragraph 17 of the particulars of claim. If this is so, then, on the basis of those representations , it can then never be true that there was a novel disclosure in the 2005 South African patent. Those representations (made in the EC proceedings) therefore directly contradict and undermine the case advanced by Bayer in this court in respect of the same product (namely spirotetramat). Villa Crop therefore urges this court (in the event the amendment is allowed) to come to a conclusion that the two versions advanced by Bayer should be found to be mutually exclusive as both cannot be true: To restate: If, as Bayer told the European authorities, spirotetramat is disclosed in the basic patent, it cannot now argue that it was not so disclosed and advance a case in its particulars of claim in the pending action that spirotetramat is novel in the 2005 patent. The representation made in the particulars of claim must therefore to its knowledge, be false. Villa Crop consequently contended that, having identified spirotetramat as disclosed by the basic patent, Bayer cannot honestly contend, in the pending action, that it has not been so disclosed. It should not be permitted to advance an evidently dishonest case. This, according to Villa Crop, constitutes an abuse of the South African Patent System and the South African legal system.
[16] Bayer objects to the proposed amendment based on "unclean hands" on the basis that the point raised in the special plea would enjoin the court to determine the validity of the patent, which is impermissible because the validity of the patent is something that should be considered by the court during the trial when it considers Villa Crop's defence and counterclaim. Bayer further submitts that, to the extent that Villa Crop in its reply has focussed on the special plea as being one in terms of the doctrine of "unclean hands", the question whether or not Bayer has approached this court with "unclean hands", can, in any event, only be determined after the court has made a finding that the 2005 patent lacked novelty in light of Lieb et al.
[17] Villa Crop disputes this and contends that Bayer's objection fundamentally misconstrues the nature of the plea of "unclean hands": The plea of "unclean hands" confines the enquiry to a comparison of the representations made by Bayer in support of the SPCs versus its representations in its particulars of claim in the pending action that spirotetramat has never been disclosed before and that it does not therefore form part of the prior art. The point is simply that Bayer must be held to its own representations in Europe: It must not be permitted to "speak with a forked tongue" in approaching this Court.
[18] In support of its argument, Villa Crop embarked on a detailed and lengthy analysis of the representations made by Bayer in various EC jurisdictions (namely the United Kingdom, France, Belgium, Switzerland and Germany). In doing so Villa Crop points out in its analysis that Bayer's representations made in the various EC jurisdictions must be analysed and understood in the context of the regulatory framework concerning extended patent protection for plant protection products in that region. With reference to these jurisdictions, Villa Crop argues that Bayer represented in these jurisdictions that there is an "umbilical cord" between the basic patent and the chemical compound (spirotetramat), and by doing so it represented that chemical substance spirotetramat is the basic patent spirotetramat as disclosed in 1998, many years before the priority date of the 2005 patent.
[19] Bayer contends that the SPCs and the documents on which it relied to obtain them, are irrelevant to the issues in the pending action. This, so it argues, is because the SPCs were obtained pursuant to applications made in terms of the law in foreign jurisdictions eight years or more after the priority date of the 2005 patent, namely 11 July 2002.
[20] Villa Crop disagrees: The fact that the SPC applications in the various European countries were made after the priority date of the 2005 patent is entirely irrelevant to the special plea. What is relevant is what Bayer said in support of the SPC applications in relation to spirotetramat as disclosed in the basic patent. Bayer therefore, as it was submitted, makes an error when it characterises the special plea as relating to the validity of the 2005 patent in the light of Lieb et al and submitted that Lieb et al is irrelevant to the special plea. What is relevant is Bayer's representations in its SPC applications that spirotetramat was disclosed in the basic patent. The fact that the representations have been made in other jurisdictions, is irrelevant - it is a question of fact: What was represented was that the structure of the active substance is the same with a "loop back" to the 1997 patent. The special plea is therefore confined to the issue that Bayer is approaching this court with "unclean hands" and, by doing so, is attempting to hide its dishonesty from this court. Villa Crop, so it argues, is not attempting to prove the invalidity of the 2005 patent by applying the test for novelty to the 2005 patent.
The application to amend
[21] A special plea raises some special defence which has as its object either to delay the proceedings, or to object to the jurisdiction of the court or to "quash" the action altogether.[3] The authors Herbstein & Van Winsen explains:
"These pleas do not concern the merits of the action. They merely seek to interpose some defence not apparent on the face of the pleadings up to the time when they are raised."[4]
And further -
"Special pleas on the other hand do not appear ex facie the pleading.”[5]
[22] The principles regarding amendments are set out in the judgment of Commercial Union Assurance Co Ltd v Waymark NO.[6] These principles are well-known and it is not necessary to quote the relevant parts of the judgment in full. Suffice to restate that the discretion to grant or refuse an amendment falls within the discretion of the court with due regard to certain basic principles. The circumstances set out in Waymark in which amendments will generally be granted, has been echoed by the Constitutional Court in Affordable Medicines Trust and Others v Minister of Health and Others as follows:[7]
"The principles governing the granting or refusal of an amendment have been set out in a number of cases. There is a useful collection of these cases and the governing principles in Commercial Union Assurance Co Ltd v Waymark NO. The practical rule that emerges from these cases is that amendments will always be allowed unless the amendment is ma/a fide (made in bad faith) or unless the amendment will cause an injustice to the other side which cannot be cured by an appropriate order for costs, or 'unless the parties cannot be put back for the purposes of justice in the same position as they were when the pleading which it is sought to amend was filed'. These principles apply equally to a notice of motion. The question in each case, therefore, is, what do the interests of justice demand?"
[23] Where a special plea is introduced and, if allowed, will bar an action, regard must be had to what is stated by the court in GMF Kontrakteurs (Edms) Bpk & another v Pretoria City Council:[8]
"The granting or refusal of an application for the amendment of pleadings is a matter for the discretion of the Court, to be exercised judicially in the light of all the facts and circumstances of the case before it. The principles relating to the exercise of that discretion are well settled. They were exhaustively reviewed in Zarug v Parvathie NO 1962 (3) SA 872 (D). At 876A - D the following principles were set out:
1. That the Court will allow an amendment, even though it may be a drastic one, if it raises no new question that the other party should not be prepared to meet.
2. With its large powers of allowing amendments, the Court will always allow a defendant, even up to the last moment, to raise a defence, such as prescription, which might bar the action.
3. No matter how negligent or careless the mistake or omission may have been and no matter how late the application for amendment may be made, the application can be granted if the necessity for the amendment has arisen through some reasonable cause, even though it be only a bona fide mistake.
An amendment cannot however be had for the mere asking. Some explanation must be offered as to why the amendment is required and if the application for amendment is not timeously made some reasonably satisfactory account must be given for the delay. Of course, if the application to amend is ma/a fide or if the amendment causes an injustice to the other side which cannot be compensated by costs, or, in other words, if the parties cannot be put back for the purposes of justice in the same position as they were in when the pleading it is sought to amend was filed, the application will not be granted.
The fact that the allowing of an amendment to a plea might be to defeat the plaintiff's claim is not what is meant by "prejudice" which cannot be remedied by an appropriate order as to costs There may, however, be cases where no terms could overcome the prejudice which the amendment would cause to the other party: see Heeriah and Others v Ramkissoon 1955 (3) SA 219 (N) at 221 - 222. In South British Insurance Co Ltd v Glisson (supra) MILLER J, in the exercise of his discretion, refused an application to amend a plea on this ground. In discussing the question of prejudice to the other party, the learned Judge said this (at 296A – C):
'I do not think that when considering prejudice in this context the Court is limited to a consideration of only those factors which affect the pending litigation between the parties now before the Court. Prejudice, in this context, has a wider connotation than that and embraces prejudice to the rights of a party in regard to the subject-matter of the litigation, provided there is a causal connection which is not too remote between the amendment of the pleading and the prejudice to the other party's rights. Whether the prejudice which respondent will suffer by losing the 'security' afforded by the MIA is prejudice of the sort which will found an estoppel, or not (a question which I have discussed but left open elsewhere in this judgment), it is surely prejudice of a sort which the Court is fully entitled to take into account in weighing up considerations of fairness and justice for purposes of exercising its discretion whether to grant the amendment or not'.
Overall, therefore, is the vital consideration that no amendment will be allowed in circumstances which will cause the other party such prejudice as cannot be cured by an order for costs and, where appropriate, a postponement. Where there is a real doubt as to whether or not prejudice or injustice will be caused to the other party if the amendment is allowed, it should be refused, but not merely to punish the party seeking the amendment for his neglect. See Trans Drakensberg Bank Ltd v Combined Engineering 1967 (3) SA 632 (D) at 638 – 639.
I do not propose to deal with the interesting legal questions raised in the plaintiffs' first two grounds of opposition to the granting of the amendment, because I have come to the conclusion, in the exercise of my discretion, that the amendment ought to be refused for reasons which I now propose to set out."
Evaluation
[24] Villa Crop states in the application to amend that the issue before the court is· 'a "simple factual issue": An assessment of the facts must be made by comparing what was represented during the SPC proceedings in respect of spirotetramat with what is now advanced in the pleadings in the main action. If the factual issue is decided in favour of Villa Crop, namely that the representations made in application for the SPC's are destructive or contradictory to what is now advanced in the pending action, then the court must come to a conclusion that Bayer is approaching this court with "unclean hands", and dismiss the action.
[25] I do not agree that the issue is that simple: In paragraph 2 of the earlier plea, it is stated that the 2005 patent is invalid for lack of novelty (anticipation) in light of European patent number EP 0 915 84 6. Reliance is placed on the ESP's as a novelty destroying document. The patent is thus open to be revoked in terms of sections 61(1)(c) read with sections 25(1), (6), and (1) of the Patents Act in that the invention claimed does not involve an inventive step and would have been obvious to a person skilled in the art.
[26] In the application to amend, Villa Crop has now transformed its previous reliance on the ESP as a novelty destroying document into a reliance on the very same SPC but in support of a special plea in terms of which it is contended that the disclosures made in these SPC's are indicative of the fact that Bayer is approaching this court with "unclean hands" warranting the dismissal of its entire action. To this end, large parts of the application to amend comprise of material relating to processes in foreign jurisdictions relating to the SPC's that were filed in various EC jurisdictions (the United Kingdom, France, Belgium, the Netherlands, Germany and Switzerland). Each of the processes are jurisdiction specific. A large part of the founding affidavit also contains a detailed discussion of the South African Patent System which is a depository system and a discussion of the shortfalls of this system. The affidavit also discusses the European Patent Office and European examination procedure, the abuse of the South African patent system and a discussion of the Intellectual Property Policy.
[27] With reference to all of these documents, Villa Crop therefore invites a court to make a factual comparison: What was factually disclosed in European jurisdictions regarding spirotetramat and compare that with what Bayer is advancing in support of its pending action. Villa Crop, as already pointed out, submits that the two versions are mutually destructive and consequently requests the court to conclude that Bayer is dishonest in its conduct before this court.
[28] It may well be that a court, after having conducted an in-depth investigation into the different disclosures in the foreign jurisdictions, may come to the conclusion that, factually some of the statements made in those jurisdictions contradict the case advanced by Bayer in this court. However, for this exercise to yield in a reliable and accurate finding, a court will be required to undertake an in-depth enquiry into the manner in which each of the various foreign jurisdictions deal with SPC applications in accordance with, not only the sovereign patent laws applicable in each jurisdiction, but in accordance with commercial and other policy considerations of an applicant for a patent.
[29] This is a complicated enquiry and would, in my view require expert and technical evidence to explain to a court the law and process applicable in the different jurisdictions in respect of the applications for SPCs. This will, in my view, inevitably result in the trial to be dragged out unnecessarily. Even if such a conclusion is reached, the main issue in dispute, namely the validity of the South African patent, will remain alive. The validity of the 2005 patent is not for Bayer to prove, it is for Villa Crop to do so.
[30] It is not in my view, in the interest of justice to embark on such a protracted inquiry particularly as it detracts from the real issue in dispute in the action: The trial court will be required to determine in respect of the alleged anticipation (lack of novelty) of the 2005 patent in light of the disclosure in patent EP 0 915 846, whether patent EP 0 915 846 contains an enabling disclosure of the invention claimed in the 2005 patent.
In order to do so the court would be required to compare the two documents. Embarking on a detailed enquiry on what was disclosed in the various SPC's to which Villa Crop refers and relies upon, will largely be irrelevant in considering the main issue in dispute (namely the alleged lack of novelty of the South African 2005 patent) in the action.
[31] For these reasons, I am therefore not prepared to exercise my discretion in favour of granting the amendment now sought in this application.
[32] Because of the basis upon which I have decided this application, it is, in my view, not necessary to engage in a detailed discussion of whether the doctrine of "unclean hands" should be applied in the field of patent law in the same manner that it has primarily been applied to the field of unlawful competition.[9] I therefore leave the question open.
[33] The application to amend is therefore dismissed. In respect of costs, the applicant (Villa Crop) should pay the costs. Such cost to include the cost of two counsel. I do not hold the view that a punitive cost order is warranted.
Application to strike out: Application to amend
[34] Bayer brought an application to strike out portions of Villa Crop's application. Villa Crop in turn brought an application to have Bayer's application to strike out, struck out.
[35] The application to amend comprises of 917 pages. As already indicated, large parts of the applicant's papers consist of documents pertaining to the SPC's in various foreign countries.
[36] The application to strike out is comprehensive and I do not intend dealing with each and every point in detail.
[37] Although I am of the view that parts of Villa Crop's papers should be struck, I am not persuaded that the entire application to strike out should be granted. I am in agreement that those parts of the application that contain documents in a foreign language for which no sworn translations have been provided, must be struck out. I am also in agreement that Part D of Du Tait's affidavit should be struck as being irrelevant. I am not persuaded that the affidavits of Mr Michael Nelson and Mr Verdoorn be struck on the basis that it amounts to hearsay, an expression of opinion which the witness is not qualified to express, irrelevant or vexatious.
[38] Villa Crop in turn brought an application setting aside the notices of application to strike out and to pay the costs. I have considered the submissions in arriving at a decision that only parts of the papers of Villa Crop should be struck. In respect of this application, Villa Crop is likewise only partially successful.
[39] Both applications are therefore partially successful but not to the extent that an adverse costs order should be made against either party. I therefore make no order as to costs regarding the application to strike out and the application that the application to strike out should be struck.
The following order is made:
1. Villa Crop's application to amend the plea is dismissed with costs, such costs to include the costs occasioned by the appointment of two counsel.
2. Bayer's application to strike out partially succeeds in respect of documents in a foreign language for which no translations have been provided and Portion D of Du Toit's affidavit. There is no order as to costs.
3. Villa Crop's application to strike out the notices to strike partially succeeds in respect of the affidavits by Mr Nelson and Mr Verdoorn and the remainder of Du Toit's affidavit. There is no order as to costs.
AC BASSON, J
JUDGE OF THE HIGH COURT
For the applicant / defendant
RM Robinson SC Adv PDVTR Moll
Instructed by:
For the respondent/ plaintiff
L BOWMAN SC
BRAHM DU PLESSIS SC
Instructed by:
[1] Act 57 of 1978.
[2] Patent protection in Europe typically lasts 20 years. The protection period may be extended, for example, for plant protection products (as in this case) for a maximum of 20 years.
[3] Herbstein & Van Winsen The Civil Practice of the High Courts of South Africa (5th ed) at 598.
[4] Ibid. See also Brown v Vlok 1925 AD 56 at 58.
[5] Herbstein & van Winsen at 600.
[6] Commercial Union Assurance Co Ltd v Waymark NO 1995 (2) SA 73 (TK) at 76 - 77.
[7] [2005] ZACC 3; 2006 (3) SA 247 (CC) para 9.
[8] 1978 (2) SA 219 (T) at 222-223.
[9] See in general: Zyp Products Coy, Ltd v Ziman Bros, Ltd 1926 TPD; Tullen Industries Ltd v A De Sousa Costa (Pty) Ltd and others 1976 (4) SA 218 (T); Goqi v City of Cape Town & another; City of Cape Town v Mgoqi and another 2006 (4) SA 355 (C): "[140] The so-called defence of unclean hands appears to have been imported into our law from English law. It has been applied primarily in the field of unlawful competition and its effect is that relief is refused to a competitor who is guilty of unlawful conduct. It seems clear, however, that the relief is restricted to instances where there has been fraud, dishonesty or ma/a fides on the part of a claimant. See Van Heerden and Neethling Unlawful Competition at 183- 5. In Cambridge Plan AG and Anotherr v Moore and Others 1987 (4) SA 821 (D) at 842F - H it was put thus: 'Thirdly, and in any event, I am of the view that illegality of the type alleged in the contract is not of such a nature that it would disentitle the applicants to relief The principle relied upon by the respondents, which is referred to in trade mark law as "the doctrine of unclean hands" has been considered in several cases in this country, most of which are conveniently collected in the judgment of Tullen Industries Ltd v A de Sousa Costa (Pty) Ltd and Others 1976 (4) SA 218 (T). As was made clear in that case, it is not enough to disentitle a party to relief that the conduct whereby he acquired the requisite reputation was illegal: such illegality must have taken the form of fraud or, at the very least, dishonesty. (See at 221H.) The conduct of the second applicant in concluding the contracts in question cannot, in my view, be stigmatised as fraudulent or even dishonest."