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IN THE HIGH COURT OF SOUTH AFRICA

KWAZULU-NATAL LOCAL DIVISION, DURBAN

                                                                                     Case No: 8948/2009                                      

In the matter between:

Iain Richard Fisher                                                                           First Applicant

Basfour 3519 (Pty) Limited                                                            Second Applicant

Rosati Manufacturing CC                                                                Third Applicant

and

Contribsystems Vertriebs GmbH                                                      Respondent

 

Judgment

 

Lopes J

[1]     This is an application in terms of rule 33(4) of the Uniform rules of court for the separation of issues in a trial.

 

[2]     The first, second and third applicants in this application are the second, third and fourth defendants in the action under the above case number. The respondent in this application is the plaintiff in the action. The first defendant in the action is Amadwala Trading 51 CC (‘Amadwala’), which has been placed into liquidation. I shall refer to the other parties as the plaintiff, ‘Mr Fisher’, ‘Basfour’ and ‘Rosati’. 

[3]     The background to the action may be summarised as follows:

(a)     The plaintiff is an Austrian company and the owner of certain proprietary rights in a stadium seating system, referred to by the parties as ‘the seatboxes’. The seatboxes consist of tiers of seats which are mechanically stored in, or extended from, shipping containers, and which can be stacked one upon the other in order to provide mobile grandstands.

(b)     During 2007, the plaintiff, seeking to benefit from the upcoming 2010 Football World Cup in South Africa, sought to sell seatboxes and seats to entities in South Africa, alternatively to provide one or more companies in South Africa with the right to produce the seatboxes and seats to be used at the World Cup.

(c)      To that end, on the 9^th January 2007 the plaintiff concluded a non-disclosure and non-use agreement with Basfour (‘the Basfour agreement’). 

(d)     The purpose of the Basfour agreement was to enable Mr Fisher, who was a director and shareholder of Basfour, to view confidential information relating to the production of the seatboxes and seats in order to determine whether Basfour was interested in becoming involved in the manufacture thereof. The Basfour agreement sought to protect the plaintiff against Basfour and/or Mr Fisher disclosing any of the plaintiff’s proprietary information to third parties, or using such information for their own benefit without the express consent of the plaintiff.

(e)      On the 3^rd April 2007 the plaintiff caused a sample of the seatboxes and seats to be delivered to Basfour. 

(f)       On the 7^th May 2007 the plaintiff consented, in terms of what has been referred to as ‘the Umhlanga agreement’, to the sample being shown to Amadwala (then trading as Umzanzi Event Solutions) with a view to that corporation examining the sample and determining whether it could, itself, manufacture the seatboxes and seats. The transfer of the sample seatbox to Amadwala was governed by the terms and conditions of the Basfour agreement. Mr Fisher was a member of Amadwala.

(g)     On the 11^th September 2007 what is referred to as ‘the Amadwala agreement’ was concluded, in terms of which the plaintiff agreed to sell to Amadwala 30 000 seats in configurations to be determined from time to time. The conditions of confidentiality continued to apply as contained in the Basfour agreement.

(h)    What the plaintiff alleges happened is that its proprietary rights in and to the design and manufacture of the seatboxes and seats was appropriated by Mr Fisher and/or Basfour and/or Amadwala and/or Rosati and seatboxes and seats were manufactured and sold, and the proceeds accrued to one of more of those entities.

(i)      On the 25^th June 2009 the plaintiff instituted action against Amadwala, Fisher, Basfour and Rosati.

(j)      On the 6^th January 2011 a final liquidation order was confirmed against Amadwala, and it has played no further part in the action.

(k)     The action has dragged on for the last ten years with various interlocutory applications having been heard, each party blaming the other for the delay in finalising the action. The latest of those is this application by Fisher, Basfour and Rosati.  They maintain that by separating the issues the matter could be determined if the separated issues are resolved in favour of Fisher, Basfour and Rosati. This would obviate a long and expensive trial between the parties. 

 

[4]     The plaintiff’s claims as set out its particulars of claim may be summarised as follows:

(a)              An interdict sought against Mr Fisher and Basfour arising out of their breaches of the Basfour and Amadwala agreements.

(b)             As an alternative to the first claim, for an interdict against Mr Fisher and Amadwala arising out of the unlawful use and/or disclosure by Mr Fisher and/or Basfour of the confidential information belonging to the plaintiff.

(c)              An interdict relating to passing-off by Amadwala.  This claim is no longer relevant because of the insolvency of Amadwala.

(d)             A damages claim against Mr Fisher for €6.8 million in respect of 68 148 mobile seats which were illegally constructed and sold for the profit of Mr Fisher and/or Basfour and/or Rosati. 

(e)              An interdict against Rosati to prevent any further manufacture of the seating units.

(f)               A rei vindicatio against Amadwala for return of the sample seatbox which was originally sent to Basfour.  This claim is also no longer relevant because of the insolvency of Amadwala.

 

[5]     Mr Stokes SC who appeared for Mr Fisher, Basfour and Rosati, together with Mr Bingham, submitted that the plaintiff was not entitled to pursue its claims:

(a)              Against Mr Fisher and Basfour in respect of the contractual and alternative delictual interdicts.

(b)              Against Mr Fisher for damages of €6.8 million in respect of the 68 148 mobile seats.

(c)              Against Rosati for an interdict preventing it from manufacturing copies of the plaintiff’s mobile seatboxes and seats. 

 

[6]     Mr Stokes referred to the allegations in the founding affidavit regarding the right of Basfour and/or Amadwala to manufacture the seatboxes and seats in South Africa, or purchase them from the plaintiff. This was referred to as a ‘licensing agreement’ concluded on the basis that Amadwala would pay an amount of €5 million to the plaintiff and agree to purchase 50 000 seats from the plaintiff which had been manufactured elsewhere in exchange for the right to manufacture seatboxes and seats in South Africa.

 

[7]     It is common cause that:

(a)     The licensing agreement was concluded.

(b)     The terms and the extent of compliance with the licensing agreement by Amadwala is a matter of dispute

(c)      The plaintiff lodged a claim with the liquidators of Amadwala for, inter alia, payment of the sum of €5 million for the licence fee, and €3 750 000 for failing to order 15 000 of the originally agreed 30 000 seats in terms of the agreement of the 11^th September 2007.

 

[8]     Mr Stokes submitted that having pursued relief against Amadwala in liquidation, the plaintiff could not pursue the relief sought in the above claims. Mr Stokes pointed out that there was no reference to the licensing agreement in the particulars of claim. As the plaintiff’s claim in the action was premised on the fact that Amadwala, Mr Fisher, Basfour and Rosati had no legal right to manufacture the seatboxes and seats, the claims were contradicted by the proving of claims in respect of the licensing agreement with the liquidators. That conduct was destructive of any claim based on the licencing agreement.

 

[9]     This was because specific performance had been pursued (against the liquidator) for the licensing agreement and in addition the plaintiff had sold the sample seatbox and seats to Amadwala, and given it a license to manufacture them. Accordingly, the plaintiff could not sue for any damages as a result of the conduct of Mr Fisher or Basfour or Rosati in the absence of a licensing agreement.  He pointed out further that in the pleadings the plaintiff alleged that seatboxes and seats had been manufactured by a company referred to as Broleigh and that Rosati had obtained this information and continued to manufacture seatboxes and seats. 

 

[10]   Mr Stokes submitted that the two remedies sought by the plaintiff were mutually exclusive, and the plaintiff’s suggestion that the defendants were unable to manufacture the seatboxes and seats prior to paying the licensing fee, is something which had to be tested.  It makes no difference what the terms of the licensing agreement were because the agreement itself determines the relationship between the parties and not the Basfour agreement. Mr Stokes submitted that this reasoning prevents the plaintiff from pursuing the claims it makes and it could only have asked for the balance of the licensing fee which the liquidator had been unable to pay. 

 

[11]   Mr Kemack SC who appeared for the plaintiff, submitted that the plaintiff’s action was not premised on the lack of a licence to manufacture given to the defendants.  What the plaintiff alleges is that its design was stolen, its sample reverse engineered, and that it had been misled by the defendants with regard to the ongoing manufacture of the seatboxes and seats without the permission of the plaintiff.

 

[12]   Mr Kemack submitted that the licensing agreement envisaged that Amadwala could only manufacture the seatboxes and seats once it had paid the license fee and purchased the 50 000 seats referred to.  Mr Kemack referred to emails in the application papers which clearly demonstrate that that was the plaintiff’s stance, which was never contradicted by Mr Fisher.  All Mr Fisher did was to make reference to the €5 million license fee and ignore the other requirement of the purchase of 50 000 seats.  In any event, Amadwala did not pay the €5 million, and failed to pay for any seats in respect of that agreement.

 

[13]   Mr Kemack submitted that the liquidator of Amadwala had accepted that a licensing agreement had been concluded during July 2007, and had made partial payment to the plaintiff. This did not have the consequence, as was suggested by Mr Stokes, that a license to produce was somehow retrospectively bestowed upon any of the defendants. In any event if a license to produce had been sold and paid for, that was only in the respect of Amadwala and not the other defendants. Mr Kemack pointed out that the defendants had not relied in their defence on the fact that they had manufactured seatboxes under license.

 

[14]   In reply Mr Stokes submitted that the conclusion of the licensing agreement rendered the production of seatboxes and seats by the defendants lawful.  He submitted that an investigation into the terms of the licensing agreement would decide whose contentions in this regard are correct. 

 

[15]   In my view there is a sharp distinction between the conclusion of an agreement and performance by the parties thereto pursuant to the agreement.  There is no dispute that the licensing agreement was concluded.  This is because it was recognised by the liquidator of Amadwala, and a proportion of the license fee was paid by the liquidator consistent with the distribution to creditors. That the right to produce seatboxes and seats pursuant to the concluded licensing agreement depended upon payment of the €5 million and purchase of the 50 000 seats, is evident from the contents of the emails put up in the application papers.  When Amadwala failed to pay in terms of the licensing agreement, it was in breach of the agreement. It accordingly had not attained any legal right to disclose information regarding the seatboxes and seats to anyone, and no right to manufacture them. There is no basis for suggesting that the claim made to the liquidators gave rise to any right to manufacture on the part of Rosati.

 

[16]   The contents of the emails annexed to the plaintiff’s answering affidavit extend from the 1^st August 2007 until May 2008 demonstrate clearly that Mr Fisher fully appreciated that neither Amadwala, nor anyone else,  would acquire any right to manufacture until there had had been compliance with the payment of  €5 million and the purchase of 50 000 seats. These items are not dealt with in the plaintiff’s particulars of claim because they were dealt with in the liquidation proceedings.

 

[17]   It may well be that the emails may be subject to interpretation and that oral evidence on the terms of the licensing agreement may be relevant, but those are issues for the trial. 

 

[18]   There are several defences of estoppel raised in the plea. As submitted by Mr Kemack, they are all premised on the fact that the plaintiff is estopped from denying the conclusion of the licensing agreement, the liquidator’s purchase of seats and the liquidator’s purchase of the Basfour agreement sample. But there is no representation allegedly made by the plaintiff, nor yet one relied upon by the defendants who, believing in the truth of the representations, did so to their prejudice. In my view these estoppels disclose no defences.

 

[19]   I have been referred to a number of authorities on the principles regarding the separation of issues.  I do not deal with those principles in any detail because it is sufficient in this matter that there is neither a question of law nor of fact which may be conveniently decided separately from the other matters in the trial.  There is therefore no warrant in me making an order directing the disposal of any such question of law or fact as a separate issue. In my view the application for a separation has no basis.

 

[20]   Nor do I believe that separating the issues will facilitate the convenient and expeditious disposal of the action. I accept in this regard that I am obliged to grant an order of separation unless it appears to me that the questions cannot conveniently be decided separately.  In my view the issues in the action cannot conveniently be decided separately as suggested by Mr Stokes. In so far as the element of convenience per se is concerned, this action has now dragged on for a period in excess of ten years.  Without apportioning blame to either party for the delays in ensuring that the action is timeously decided, it would be convenient to have the matter heard and decided as soon as that can reasonably be done.  I can see no advantage in separating the issues.

 

[21]   The problem for the defendants lies in the fact it does not follow that simply because the plaintiff made a claim against the liquidator in respect of the licensing agreement, the relief sought by the plaintiff in the action is somehow precluded.  That relief is different. It relies upon agreements other than the licensing agreement. The stance of pursuing a claim in the liquidated estate and pursuing the claims reflected in the action is neither contradictory nor illogical. It will be up to the plaintiff to demonstrate that it is entitled to the interdicts and damages which it claims. The fact that Mr Fisher, Basfour and Rosati may seek to rely upon the existence of the licensing agreement to allege some right to manufacture appears to have little prospect of success given the emails, and does not raise a cogent argument for a separation of issues.

 

[22]   I am accordingly of the view that the application for the separation of issues must fail.  With regards to the questions of costs, there is no reason why they should not follow the results.

 

[23]   In all the circumstances I make the following order:

(1)     The application for a separation of issues in terms of rule 33(4) of the Uniform rules of court is dismissed.

(2)     The second, third and fourth defendants (the applicants in the application) are to pay the costs of the application, such costs to include those consequent upon the employment of senior counsel.

 

 

Lopes J

 

Date of hearing:                                           17^th February 2020                  

Date of Judgment:                                       20^th  February 2020

Counsel for the 2^nd, 3^rd and 4^th Applicants:    A Stokes SC, with M Bingham (instructed by Van Wyk Law).

Counsel for the Respondent:                      A Kemack SC (instructed by Werthschrӧder Inc).

 

 

 

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