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IN THE HIGH COURT OF SOUTH AFRICA

(CAPE OF GOODHOPE PROVINCIAL DIVISION)

REPORTABLE

CASE NO. 9289/2004

In the matter between:

THABANI WINES (PTY) LTD. 1^st Applicant

JABULANI NTHANGASE 2^nd Applicant

And

DARLING CELLARS (PTY LTD. 1^st Respondent

GROENKLOOF DRANKHANDELAARS

(EDMS) BPK 2^nd Respondent

SANDS TRADERS CC 3^rd Respondent

JUDGMENT DELIVERED ON 10 AUGUST 2005

DLODLO, J

INTRODUCTION

1. On 1 November 2004 the Applicants brought an urgent application for a Rule Nisi with immediate effect, restraining the Respondent from distributing wines bearing its logo or trade mark. On 5 November 2004 the Court granted an order returnable on 24 February 2005 containing the undertaking by the First and Second Respondents not to sell wines bearing the First Applicant’s logo. The purpose of the Application is therefore to obtain an interdict against the Respondents restraining them from distributing bottles of wine containing labels with a trade mark and distinctive logo registered in the name of and for the benefit of the Second Applicant’s business.

2. The Respondents in opposition to the applicant’s application contended inter alia, that the First Applicant was obliged to buy all the wines within the first year after their being bottled. The Respondents contended further that there existed the second agreement in terms of which the First Applicant would purchase all the wines within four weeks from the date of that agreement, namely 13 February 2004, failing which all the stock would be sold at a price that the First Respondent could get for it. Mr. Rautenbach appeared for the Applicants whilst Mr. MacWilliams appeared for the Respondents.

FACTUAL BACKGROUND

3. The First Applicant, Thabani Wines (Pty) Ltd., is a duly registered company under the company laws of the Republic of South Africa, having its registered address and main place of business at 6 Binneplein, Stellenbosch, South Africa. The Second Applicant, Jabulani Ntshangase, is employed as the Managing director of the First Applicant. One Mr. Trevor Steyn is both the Second Applicant’s partner and also a director of the First Applicant.

4. The First Respondent is Darling Cellars (Pty) Ltd., a duly registered company in terms of the company laws of the Republic of South Africa, having its place of business at Mamreweg, Darling, district Malmesbury. The Second Respondent is Groenkloof Drankhandelaars (Edms) Bpk, having its registered address and place of business at Mamreweg, Darling, district Malmesbury. The Second Respondent is the marketing arm of the first Respondent. The third Respondent is a duly registered Close Corporation with its head office at 34 Sipres Crescent, Eden Park, Cape Town.

5. The trademark in question is “Thabani vineyards and Winery” registered with the Registrar of Trade Marks for various classes of goods, evidenced by the certificates. During the year 2000 the Second Applicant negotiated on behalf of the First Applicant with the First Respondent and the Land and Agricultural Bank of South Africa Limited (the Land Bank). The negotiations culminated in the conclusion of an agreement between the parties on the following terms:

   1. The First Respondent would identify grapes and make wines on behalf of the First Applicant.

   2. Such wines would be bottled and labelled with the trade mark and logo by the First Respondent.

   3. The wines would be purchased as bottled and labelled by the First Applicant from the First Respondent, for resale into the wholesale or retail market.

   4. The Land Bank provided the Second Applicant with a line of credit in the sum of plus minus R8,5 million in terms of which, against delivery of orders of wines bottled and labelled by the first Respondent as aforesaid, the Second Applicant would pay by way of irrevocable letters of credit in the appropriate amounts charged by the First Respondent for wines delivered from time to time.

   5. Although the specific wines were not exclusively made for use by the first Applicant or second Applicant, and the First Respondent would be entitled under its own or any other label that it could lawfully use, to distribute such wine, as the exclusive holder of the trade mark and the copyright in the labels, the Second Applicant was entitled to determine the use of the trade marks in the trade.

   6. The First and Second Respondents had no right to use the trade mark or the copyrighted material in the label for any purpose other than to deliver bottled and labelled wines in terms of the above arrangement to the first Applicant.

6. In the winemaking industry it is common practice for wine cellars to agree with individuals or companies who wish to trade in wines under a trade mark or brand of their own choice, that wines will be made, bottled, labelled and delivered by the cellar to such a company or individual who does not otherwise have access to winemaking and bottling facilities. In such a case it is not uncommon for the cellar to make the wine for and at the instance of a number of brands or brand holders, and to deliver the wine in distinctive labelled bottles for the benefit of such brand holders. Such wine is then sold into the market by the brand holders without any way for the marketplace to identify the wines as being similar or identical to wines distributed under a different label.

7. It is common cause that the Second Applicant was actively engaged on behalf of the First Applicant in creating and promoting the brand attaching to the trade mark which is the subject of this application. These entitled huge financial expenditures and many hours spent in perfecting the design of the logo and in conceiving the trade mark Thabani. The Second Applicant negotiated with and instructed the production department of the first Respondent to commission the production of labels. The labels were designed by artists and the artwork signed off by the Second Applicant every time a new batch of labels were ordered and printed for labelling the wines of the First Applicant. The purpose of the quality control is to ensure that labels conformed to the requirements of the first Applicant and in particular to conform to the prescripts inherent in the trade mark itself registered with the Registrar of Trade Marks.

8. The Second Applicant contends that it is an integral aspect of the marketing strategy of the First Applicant’s wines that the wines are marketed to consumers as a relatively upmarket wines. These wines are presently served by the Arabella Sheraton Hotel in Cape Town in their restaurants at approximately R70.00 a bottle, a price deemed of sufficient quality. Thus the image attaching to the brand has been regarded as sufficiently upmarket to induce an upmarket institution such as the Arabella Sheraton to serve the wine to their predominately upmarket customers.

9. In the wine industry many factors go into the determination of the price of a wine in the wholesale or the retail market. The price of the ingredients and the labour used in manufacturing the wines are not the sole or even very important determinants of the price in the majority of cases. The price of wines is determined in the first place by the assessment of the wine by connoisseurs in the marketplace in terms of the wine’s quality as well as the accompanying branding of the wine identifying it as a wine of a specific status in the marketplace.

10. On Monday 25 October 2004 the Second Applicant received information from one Mr.Emile Bootsma of the Arabella Sheraton Hotel that he and his wife had purchased bottles of the First Applicant’s wine (the Sauvignon Blanc 2002) from the Canal Walk branch of Aroma Drop Inn, a liquor outlet in Century City, Cape Town, for the sum of R14.99 per bottle. This was shocking news to the Second Applicant because in terms of the strategic pricing structure of the First Applicant, the same wines are sold to the Arabella Sheraton for the sum of R26.00, which then retails the wine to its customers on the tables of its restaurants for approximately R70.00. The Second Applicant immediately realised that the only source of the wines could have been the First Respondent or, as its marketing arm, the Second Respondent. Neither the First Applicant nor the Second had supplied any wines to any retailer at any price that would have enabled it to sell it at the retail price of R14.99. Aroma Drop Inn was never a customer of the First Applicant. The availability of the First Applicant’s wines at Aroma Drop Inn Canal Walk and the pricing thereof was subsequently confirmed and established as the truth.

11. Attorneys instructed by the Second Applicant forwarded a telefax to the First Respondent placing on record the alleged infringement of the trade mark and demanding that an undertaking be given and certain other relief in order to protect the interest of the First Applicant. This telefax resulted in the receipt by such attorney from JS Spamer and Associates (Attorneys acting for the First Respondent) of the following response:

“Our client does not intend to debate the agreement between itself and your client, or any terms thereof, through correspondence, save to say that your client has breached the agreement and as result our client has exercised its rights under the same …………..Our client however denies that it has acted in contravention of section 34 of the Trade Marks Act or that it acted unlawfully in any way.

Under the circumstances our client will not be providing you with the confirmation as requested by yourself nor will it account to your client as requested.”

THE APPLICANTS’ CASE

(12) The founding affidavit filed on behalf of the Applicants was deposed to by Mr.Jabulani Ntshangase, the Second Applicant and the Managing Director of the First Applicant.

He contended that the response to the Applicants’ attorneys from the First Respondent’s attorneys makes it obvious that the First Respondent:

1. Did not deny that it had distributed bottles of the First Applicant’s wines to the marketplace, which ended up on the shelves of Aroma Drop Inn.

2. That such wines contained labels of the First Applicant as contended in the Applicant’s letter of 27 October 2004.

3. That the wines were distributed to parties other than the Applicants.

(13) Mr. Ntshangase further averred that the First Respondent’s failure and/or refusal to grant an understanding sought by the First Applicant made it obvious that the former did not intend ceasing and/or desisting from the practice of distributing wines labelled for and on behalf of the First Applicant which contain the latter’s distinctive logos and trade mark. In the views of Mr.Ntshangase the inference which is reasonable is that the First Respondent intends continuing with the distribution of wines containing labels with the relevant trade marks and logos to the marketplace.

(14) Mr. Ntshangase averred further that it appears from the First Respondent’s response that the latter contends that it was entitled to sell bottles of wine containing the labels referred to above, for reasons flowing from an alleged breach of contract. Mr. Ntshangase in his affidavit hastens to deny that he is guilty of any such breach of contract. In his knowledge neither did the First Applicant commit such breach. Mr. Ntshangase contended that certainly the actions of the Respondents constituted a breach of section 34(1) of the Trade Marks Act No. 194 of 1993 in that he never authorized the use of the trade marks in the course of trade such as in the instant case. Explaining further, Mr. Ntshangase categorically stated that “the only purpose, for which the trade mark could be used by the Respondents, was to sell bottles labelled on behalf of the First Applicant directly to the First Applicant, and to no one else”. He concluded that therefore the actions of the Respondents also constituted breach of the First Applicant’s rights as exclusive licensee of the copyright in the logo.

(15) Mr.Ntshangase emphasised that the sale of the wine bottles labelled and bearing the trade mark of the First Applicant to Aroma Drop Inn directly or through an intermediary has resulted in, and will continue to result in, huge detriment to the distinctive character and repute of the registered trademark. In his view, the impression is created in the marketplace that the wine being sold to the public at the ridiculously low sum of R14.99 is in fact a cheap wine. He contended that the consequence is that many consumers in the marketplace who had correctly built up a perception of the First Applicant as representing a relatively upmarket wine, will, consequent to the First Respondent’s actions, no longer hold that perception and that will result in potentially massive losses to the First Applicant. The losses will potentially run to hundred of thousands of rands. Mr. Ntshangase, by way of illustration mentioned that the First Applicant’s trade amounted to approximately R1 000 000.00 turnover per year, an amount which hopefully must be increased.

(16) Dealing with the question of prejudice, urgency and alternative remedies, Mr. Ntshangase averred that in an endeavour to contain the damage flowing from the unlawful actions of the Respondents, he pursued a strategy of telephoning branches of Aroma Drop Inn in the Western Cape in order to establish from them whether they carried the label. He gathered from Aroma Drop Inn in Claremont, Cape Town, that it was no longer offering any of the First Applicant’s wines for sale. Mr. Ntshangase gathered an explanation from the Aroma Drop Inn Claremont that sales of these wines had been “frozen” and that there was “a problem” with selling the wines to the public.

(17) The Aroma Drop Inn (Pty) Ltd. gave an undertaking not to sell the First Applicant’s wines. Consequently Aroma Drop Inns (Pty) Ltd is not party to these proceedings. Because the First Respondent refused to grant an undertaking requested, contended Mr. Ntshangase, it cannot be assumed that delivery of wines will be made to Aroma Drop Inn only. There are countless different businesses and outlets offering liquor for sale in this Province and that, according to Mr. Ntshangase, renders it impossible to predict to whom the First Respondent would cause these wines containing the offending trade mark and label to be delivered. In Mr. Ntshangase’s view the Applicants thus had no alternative remedy but it had to approach this Court on urgent basis.

(18) He stressed that had it not been for a very good relationship he have with the Arabella Sheraton Hotel, in whose hotel foyer he conducts a liquor outlet under the trade name of Grand World of Wines (an entity owned by a separate Close Corporation), the Applicants would very well have been ousted from the Arabella Sheraton Hotel. This he says because the Arabella Sheraton Hotel purchases wine directly from the First Applicant for offering same to its customers/clients. Mr. Ntshangase had to hold important business discussions with the relevant managers at the Arabella Sheraton Hotel in order to remove any distrust arising out of the action of the First Respondent. This he had to do in order to prevent the Hotel from discontinuing stocking the Applicants’ wines. His fear, however, is that it would not be possible to do so indefinitely and in respect of all possible outlets because it is impossible to anticipate where wines labelled with the First Applicant’s distinctive logo and trade mark would be offered for sale as a result of the intended actions of the First Respondent in future. Mr. Ntshangase stressed that the First Respondent intends to proceed with its actions of distributing wines containing the offending labels to the marketplace. These actions of the First Respondent will in due course complete the process of destruction of the good name and reputation attaching to the trade mark built up so carefully over time, concluded Mr. Ntshangase in this regard.

(19) Mr. Ntshangase averred that he gave an undertaking to the to the First Respondent that he would honour his obligations under the agreement to purchase the existing quantity of wines bottled and labelled at the instance of the First Applicant. He stated that in any event the First Respondent had adequate security for these wines being sold in that once wine is bought by Mr. Ntshangase from the First Respondent, an irrevocable letter of credit can simply be obtained from the Land Bank in terms of the credit facility provided by the Land Bank in the sum of approximately R8, 5 million. He is of the view that the balance of convenience favours the Applicants. Refuting the suggestion by the First Respondent’s attorneys about the existence and breach of an agreement by himself, Mr. Ntshangase stated:

“At no stage did the parties come to any arrangement as to specific quantities of wine which had to be delivered and purchased by myself at any specific dates. For obvious reasons it was not possible to determine the exact quantities and dates for the delivery of wine.”

Mr. Ntshangase re-iterated that the only agreement in existence requires of the First Respondent to keep in storage the wines until such time as delivery is required.

THE RESPONDENTS’ CASE

(20) The Opposing Affidavit on behalf of the First Respondent was deposed to by one Kenneth John Sheppard, its chief executive officer. According to Mr. Sheppard the first Applicant, represented by the Second Applicant, and the First Respondent represented by Mr. Sheppard himself, entered into the agreement in the same terms as averred by the Second Applicant but subject to the proviso that the whole quantity of wine bottled and labelled by the First Respondent for the First Applicant would be ordered by the First Applicant within a year after the said wine was bottled. According to Mr. Sheppard contrary to the aforesaid proviso after approximately two and half years since the wine was bottled for the First Applicant, the First Respondent was still in possession of a vast number of bottles of Sauvignon Blanc and Cabernet/Merlot wine, some labelled and some unlabelled, awaiting the confirmation of orders from the First Applicant for shipment thereof. In support of this contention Mr. Sheppard referred the Court to an e-mail dated 29 January 2004 (marked “1”).In this e-mail Mr. Sheppard expressed some concerns about the progress with the First respondent’s wines particularly those bottled for the First Applicant but which were allegedly still in stock in bulk. In this e-mail Mr. Sheppard also conveyed the following to the Second applicant:

“We will therefore have to hold you liable for the full costs should we have to pull the corks and decant the wine. The only other alternative for us would be for us to find a buyer on the local market at a substantially discounted price to cover our costs and get rid of it this way.”

(21) This e-mail further refers to a meeting Mr. Sheppard and Mr. Ntshangase would have had regarding these wines wherein the latter would have told the former to draw up an invoice for all the bottled stocks on hand and forward same to him. An allegation is made in the e-mail that Mr. Ntshangase would liaise with the Land Bank in order to arrange a guarantee for the full amount. Mr. Sheppard averred in the e-mail that Mr. Ntshangase never reverted back to him in this regard.

Mr. Sheppard averred further that on 10 February 2004 he forwarded a second e-mail to the Second Applicant which read:

“I have heard nothing from you regarding my previous e-mail dated 29 January regarding the Thabani wines stocks that we still hold….. We are going to have to look at alternative ways of recovering our investment in the very near future as we cannot continue to hold this stock at our cost. In addition, I have a potential buyer for the 2003 Sauvignon Blanc and unless I hear from you to the contrary before lunch tomorrow I am going to go ahead and offer this wines to the buyer…………..”

(22) According to Mr. Sheppard the aforesaid e-mail resulted in the discussions between the First applicant and the First Respondent represented by the Second Applicant and Mr. Sheppard himself respectively. This discussion culminated to an agreement (“the second agreement”). The terms of the second agreement were that:

1. First Applicant would remove and pay for all the stock, labelled and unlabelled within four (4) weeks counted from 13 February 2004;

2. Any stock remaining after the expiry of the four (4) week period would be sold by the First respondent to defray the costs;

3. First Respondent would offer any remaining stock to the trade at whatever price it could get for it.

(23) Mr. Sheppard averred further that subsequent to the conclusion of the second agreement he sent an e-mail to the Second applicant confirming the agreement. Mr. Sheppard contended that the Second Applicant received the said e-mail but did not dispute the correctness of the contents thereof.

According to Mr. Sheppard the Applicants did not remove and pay for any of the remaining stock despite the terms of the second agreement. The consequence was thus that the Second respondent on behalf of the First respondent then sold the stock for the best price to one Mr. Neels Truter in compliance with the second agreement. Mr. Sheppard contended further that the sale was a once-off transaction the purpose being to get rid of the wines.

(24) Save for denying that the Applicants are entitled to be granted an interdict against the First and Second Respondents, Mr. Sheppard does admit the allegations contained in paragraphs 1 to 9 of the founding affidavit. There is also no dispute on other allegations made in connection with the copyright relative to the labelling and the fact that the Second Applicant is the exclusive licensee for use of the logo in the trade. Mr. Sheppard, however, denied that the First and Second Respondents had no right to use the trademark or the copyright material in the label for any purpose other than to deliver bottled and labelled wines in terms of the arrangement between the First Applicant and the First Respondent. Mr. Sheppard in disputing the above relied on the second agreement which, according to him, entitled the First Respondent to sell the remaining stock to a third party.

(25) Mr. Sheppard admitted the receipt of the letter from the Second Applicant’s attorneys (marked “JN11”) but averred that the First Respondent was not entitled to an undertaking because there existed the second agreement. It was admitted by Mr. Sheppard that the First Respondent distributed bottles of the First applicant’s wine to the marketplace and that such wines contained labels of the First applicant. In Mr. Sheppard’s view the First Respondent did all this on the strength of the second agreement.

THE REPLYING AFFIDAVIT

(26) Mr. Ntshangase in reply denied that there was an agreement to the effect that the whole quantity of wine bottled and labelled by the first Respondent for the First applicant would be ordered by the latter within a year after the wine was bottled. Mr. Ntshangase stated categorically that the parties never agreed as to the time period within which the wine had to be ordered or sold. He re-iterated that it was a clear term of the agreement that the First Respondent would not sell the wine bottled for the First Applicant to any party other than the First Applicant. Mr. Ntshangase admitted that he received the e-mail of 29 January 2004 to which Mr. Sheppard referred but that he took the view that Mr. Sheppard was merely concerned about the ageing of the wine expressed in the e-mail and that such ageing was at the very least overstated and at worst not justified.

(27) Mr. Ntshangase totally denied that he was liable to provide an invoice for the entire quantity of wine without receiving any orders from the retail or the wholesale market. He re-iterated that the agreement was that he would be liable to purchase wines for which he received orders in the marketplace. He, however, admitted that he undertook to approach the Land Bank with the request to provide a guarantee for the full outstanding amount of the purchase price of the wines as a solution to what he called the looming dispute between the parties. Mr. Ntshangase denied that he did not respond to the aforementioned e-mail. According to him he was in constant telephonic contact with Mr. Sheppard.

(28) Mr. Ntshangase admitted that he attended a meeting on 13 February 2004 but he emphatically denied that there was any agreement reached in the terms mentioned by Mr. Sheppard. According to Mr. Ntshangase there was therefore no second agreement between the First Applicant and the First Respondent. Mr. Ntshangase further averred that he received a copy of an e-mail on 16 February 2004 which enumerated certain points which were indeed discussed but there was no agreement concluded on those points at all. It is correct, that Mr. Sheppard in the meeting of 13^th February 2004 expressed the desire for the outcome set out in this e-mail but Mr. Ntshangase on the other hand pointed out that the parties had a different arrangement.

(29) Whilst Mr. Ntshangase did not dispute the correctness of the content of the e-mail insofar as they set out the First Respondent’s position, he, however, denied that it was agreed (expressly or tacitly) that such contents had to become an agreement between the parties. Mr. Ntshangase averred that the First Respondent was indeed putting pressure on him because the wine (understandably) was not moving in the marketplace at the rate that the parties had hoped for or as anticipated.

(30) It was established that Aroma Drop Inn branches had obtained Thabani wines from the Third Respondent and the latter had in turn bought the wines from the First Respondent. A copy of a telefax (marked “A”) from Sands Traders and Exporters shows that these wines were offered to them “via Neels Truter” and in turn Sands Traders CC offered the wines to Aroma Drop Inn. Mr. Ntshangase commenting on this illegal apparent free flow of the Thabani Wines caused by the First Respondent stated as follows:

“It had at all times been made clear to the Respondents that the Applicants were concerned about its reputation in the marketplace, and about the price received for wines. This was the main reason why there was a provision in the agreement between the parties that wines would not be sold to any party other than the Applicants.”

Mr. Ntshangase remarked that it was strange that the First Respondent in their letter in response to the letter written by the First Applicant’s attorneys, never mentioned and/or even referred to any “second agreement”. According to Mr. Ntshangase the Applicants fear that there remains a significant danger that the Respondents may sell the wines to parties other than the Applicants. He emphatically denied that the Applicants knew that the remaining wines would be sold by the Respondents to parties other than the Applicants.

CONSIDERATION OF THE ISSUES BETWEEN THE PARTIES

(31) On behalf of the Respondents it was submitted by Mr. MacWilliams that the applicants relied for the relief sought on an alleged infringement of the second applicant’s trade mark in terms of Section 34 of the Trade Marks Act, No. 194 of 1993 (“the Trade Marks Act”).

This contention is indeed true regard being had on the contents of paragraphs 51, 52, 54, 55, 56, 57, 58, 59, 60 and 61 of the founding affidavit filed in support of the Applicants’ application. However, Section 34(2) (d) of the trade Marks Act makes provision that the registered trade mark is not infringed by the sale or offering for sale in the Republic of South Africa of goods, to which the trade mark has been applied with the consent of the proprietor thereof. It is common cause in these proceedings that the Applicants consented to the trade mark being applied to the wine bottled and labelled with the trade mark and logo, for resale. The Applicants have wisely, in my view, abandoned reliance on the infringement in terms of Section 34 of the Trade Marks Act. This position is clearly demonstrated in the heads of arguments filed on behalf of the Applicants as well as from the oral submissions made before me on 24 February 2005.

(32) It was further submitted on behalf of the Respondents that the Applicants did not base their application for the relief sought against the Respondents on the alleged breach of contract. In support of this submission I was referred to Swissborough Diamond Mines v Government of the RSA 1999(2) SA 279 (T) on 323G - 324A where the Court stated the following:

“It is trite law in motion proceedings the affidavits serve not only to place evidence before the Court but also to define the issues between the parties. In so doing the issues between the parties are identified. This is not only for the benefit of the court but also, and primarily, for the parties. The parties must know the case that must be met and in respect of which they must adduce evidence in the affidavits. In Hart v Pinetown Drive Inn Cinema (Pty) Ltd. 1972(1) SA 464(D) it was stated at 469 C-E that:

‘Where proceedings are brought by way of application, the petition is not the equivalent of the declaration in proceedings by way of action. What might be sufficient in a declaration to foil an exception, would not necessarily, in a petition, be sufficient to resist an objection that a case has not been adequately made out. The petition takes the place not only of the declaration, but also of the essential evidence which would be led at a trial and if there are absent from the petition such facts as would be necessary for determination of the issue, in the petitioner’s favour, an objection that it does not support the relief claimed is sound.’

An applicant must accordingly raise the issues upon which it would seek to rely in the founding affidavit. It must do so by defining the relevant issues and by setting out the evidence upon which it relies to discharge the onus of proof resting on it in respect thereof.”

(33) I fully associate myself with the above reasoned sentiments. This is indeed the true statement of our law in this regard. But in the instant matter the Applicants also relied heavily on the agreement concluded between the First Applicant and the First Respondent. This agreement is dealt with quite extensively in the founding affidavit filed in support of this application. Interestingly the First Respondent does not deny the existence of the said agreement save for averring that there was a second agreement reached between the parties. The terms of the agreement relied on by the applicants allegedly breached by the First Respondent, are well documented in the founding affidavit. Strangely the First Respondent apart from not denying the existence of such agreement went further and set out in its Answering Affidavit the terms of such an agreement. The terms as set out by the First Respondent in the answering affidavit are materially similar to the terms set out by the Applicants in the founding affidavit. It cannot, therefore, in my view be contended that the Applicants have so failed to define the issues between the parties such that the Respondents have been precluded from knowing what the issues are between them and the Applicants. In my view the Applicants have in the founding affidavit demonstrated sufficiently that it sought to place reliance on the breach of agreement between the parties apart from relying on the provisions of Section 34 of the Trade Marks Act (the latter reliance was abandoned by the Applicants in the argument of this matter).

(34) It was submitted on behalf of the Respondents that the Applicants have not asked for any factual disputes to be referred for oral evidence as provided for by Rule 6(5) (g). According to the last submission made on behalf of the respondents, the latter had in any event sold the remaining wine, bearing the Second Applicant’s trade mark during a once-off transaction and with no other purpose than to get rid of the remaining wines. It is contended that it was never the intention of the First and/or the Second Respondent to distribute wine containing the trade mark and logo of the Second Applicant, other than in terms of the second agreement. I intend to deal fully with the above submissions later on in this judgment.

(35) The Respondents contended that there was a second agreement concluded between the parties. In terms of the said second agreement, the First Applicant would purchase all the wines within four (4) weeks from the date of that agreement, failing which all the stock would be sold at a price that the First Respondent could get for it. The Applicants dispute the existence of the second agreement. The Applicants contend that what the Respondents now call the second agreement was in fact a proposal put on the table by the First Respondent. These proposals were, however, never accepted by the Applicants. According to the Applicants the Respondents were merely assured that the former would continue to remove wine on order in terms of the original agreement. The parties according to the Applicants hoped that this would resolve the problem in due course.

(36) The second agreement was allegedly concluded on 13 February 2004. Despite the provision contained in the disputed second agreement that wines not removed within four (4) weeks calculated as at the date of the agreement, strangely no wines appear to have been sold into the marketplace until October 2004. The question that comes to mind is even if the second agreement existed, were the Respondents still acting in terms of the said agreement when they sold/released the wines into the marketplace in October 2004? Calculation shows that from 13 February 2004 to October 2004 a period of approximately five (5) months had gone past. I do not have the benefit of a written agreement. The e-mail which the First Respondent sent to the Second Applicant purporting to record the terms of the second agreement read as follows:

“I would like to confirm below the points discussed………………As discussed you will remove and pay for all this stock, labelled and unlabelled, within the next four (4) weeks. Any stock remaining after this date will be sold by us to defray the costs already incurred by us on your behalf. We will have to offer this wine to the trade at whatever price we can get for it.”

The e-mail does not mention that there was any agreement reached. It merely refers to the discussions. This is probably a question of interpretation. But the fact remains that this e-mail says nothing to be construed as an agreement concluded between the parties.

(37) It is common cause that the Applicants caused a letter of demand to be sent out to the Respondents. It is equally common cause that the Respondents responded by writing a letter. The Respondents’ letter mentions nothing about the second agreement. From their letter it is apparent that they relied on a breach of the original agreement. They also relied on the right they had to sell the wines in terms of the original agreement. In motion proceedings such as the present dispute may arise but a bare denial of the Applicant’s version does not create a genuine dispute of fact, nor does a version which is far-fetched or clearly untenable (See cases such as Room Hire Co. (Pty) Ltd v Jeppe Street Mansions (Pty) Ltd 1949 (3) SA 1155 (T); Plascon-Evans Paints Ltd v Van Riebeeck Paints (Pty) Ltd [1984] ZASCA 51; 1984 (3) SA 623 AD etc.). Indeed a Court is not permitted to decide the matter on a mere balance of probabilities where there are genuine or real disputes of fact on material issues. In the case of disputes of fact, an applicant can only succeed if the facts as stated by the respondent, together with those facts in the applicant’s affidavit which have been admitted by the respondent, justify the order sought. The matter is, in other words, essentially decided on the respondent’s version. This has come to be known as the Plascon-Evans approach. It is trite law that in certain suitable cases the Court will adopt a “robust, common sense approach” to the dispute of fact. However, it is our law that, where the court is unable to decide the application on papers there are three (3) avenues open to it, namely:

1. It may dismiss the application;

2. It may refer the application for the hearing of oral evidence;

3. It may refer the application to trial.

In my view there is no genuine or real dispute of facts in this matter. There is therefore no necessity for the referral of this matter for hearing of oral evidence nor is it necessary to refer this application to trial. The existence of the second agreement is nothing but a clear after-thought on the part of the First Respondent. From the First Respondent’s version it is more than apparent that the issues raised in his e-mail were but issues which were purely the subject of discussion between the parties. In other words these issues “discussed” had not yet crystallized into an agreed set of issues at all. The First Respondent itself is very careful and does not in the e-mail refer to the issues as “agreed” or “in terms of the second agreement”. The silence in the Respondent’s response to the letter of demand, with regard to the existence of the second agreement speaks louder than words. That response actually says there was never any second agreement.

(38) Turning to Mr. MacWilliams’ last submission, the question that comes to mind is how are the Applicants to know for a fact that the wines complained of were sold to the open market in a once-off transaction by the First Respondent? How are the Applicants to know what the First Respondent intended? Experience tells us that once trust has been corroded between the two (2) corporate entities, each entity ordinarily tends to be suspicious of the other. It would therefore in my view not be unreasonable for the Applicants to take steps to safeguard their business interests under such circumstances. It would also be unfair and unreasonable to expect that the Applicants under such circumstances would not have an apprehension of irreparable harm for their business interests.

(39) In order to succeed the Applicants must make out a case which:

1. Makes out a prima facie case even though open to some doubt.

2. Demonstrates that the balance of convenience favours the Applicants.

3. Demonstrates that there is no alternative remedy for the Applicants to achieve the same result.

See Webster v Mitchell 1948(2) SA 1186 at 1189

Gool v Minister of Justice and Another 1955(2) SA 682 C at 688 A-E; Director of Education v Wilkinson 1930 TPD 471 at 492.

(40) It is my view that regard being had to the evidence and circumstances attendant to this matter, the Applicants have indeed made out a strong prima facie case, even if same may be perceived to be open to some doubt, that they have a right in terms of their contract with the First Respondent, to restrain the latter from selling the wines into the marketplace.

(41) Paragraphs 55 to 67 of the founding affidavit deal extensively with the Applicants’ contention that they will suffer irreparable harm and that they are being favoured by the balance of convenience. In response the Respondents have chosen not to deny these allegations. The Respondents have instead chosen to allege that all the wines have been lawfully disposed of by them in terms of the second agreement. The First Respondent admittedly still have an unspecified quantity of wine of the First Applicant in its possession. In this regard Mr. Rautenbach contended on behalf of the Applicants that in essence the latter will suffer irreparable prejudice in that its brand, residing in the trade mark and logo of “Thabani Wines”, will irreparably be destroyed in that its character and reputation as an upmarket brand representing wines selling for approximately R50 per bottle on the shelf, will permanently be destroyed. Such harm, in Mr. Rautenbach’s view, would be irreparable because there is and cannot be any suggestion that a carefully nurtured and built-up brand such as that of the Applicants could be restored and repaired in any meaningful way. In the Applicants’ case adequate security exists in favour of the First Respondent for as long as the wine is bought by them. In terms of the original agreement the terms of which are not disputed by the Respondents as long as the Applicants order the wine and remove it, the Respondents will be paid for it as agreed.

Mr. Rautenbach finally submitted that there is no suggestion on the part of the Respondents that they would suffer irreparable harm simply because they may have to wait to be paid their money over a longer period, longer than had previously been anticipated by them or, for that matter, both parties.

(41) In making a determination in the above regard, I will ordinarily also be guided by the remarks made by Stegman J in Knox D’Arcy Ltd. And Others v Jamieson and Others 1996(4) SA 348(A) at 603 G – 604 A:

“In the very nature of things the temporary regulation of the situation often denies to both disputants the enjoyment of the full extent of the rights claimed by each of them respectively. When the dispute is finally determined by the decision of a Court it can then be seen that the successful party suffered a truncation of his rights during the period that the dispute and decision were pending and were regulated by the interlocutory interdict. Inevitably that period of the truncation of the rights of the ultimately successful party is irreversible and to that extent final. However, that is not in itself a sufficient reason for refraining from making an interlocutory order or for treating interlocutory relief as if it were final relief.”

I am fully in agreement with these illusive observations made by Stegman J.

(42) It is very clear that the original agreement between the parties was tailored such that it fully protected the character and reputation of the wines branded and labelled “Thabani wines”. This protection ensured that these “Thabani Wines” remain upmarket brand destined to achieve only the highest price determined according to its quality. This protection was to be lost certainly if the Respondents were to be allowed to escape their liabilities under the contract purely because the bargain in which they had entered into did not appear to be such a commercial success as they might have hoped for at the onset. The parties are bound by their agreements. In any event, the relief sought in these proceedings is of an interim nature. That by its very nature enables the parties to fully and finally exhaust the remedies they may have at the second stage of the proceedings.

It is my view that the balance of convenience in the instant matter favours the Applicants. That there is a well-grounded apprehension of irreparable harm to the Applicants cannot be doubted at all in the circumstances of this matter.

COSTS

(43) The general rule is that a successful party is entitled to its costs. In the instant matter there is no justification for departing from this rule.

ORDER

(44) In the circumstances I make the following order:

Pending the final resolution of an action instituted by the Applicants against the Respondents in case number 1708/2005 for damages and other reliefs a Rule Nisi is granted in the following terms:

1. Interdicting and restraining the Respondents from using in the course of trade in relation to goods and services in respect of which the Second Applicant’s trade mark “Thabani Vineyards and Winery” (“the trade mark”) is registered, a mark or marks which are identical to the trade mark and/or logo in annexure “A” or a mark or logo so nearly resembling the trade mark or logo as to be likely to deceive or cause confusion.

2. It is ordered and directed that the Respondents are immediately to discontinue the use of the trade mark or log and any labels and other packaging material in respect of wines containing the trade mark Thabani or any derivative, or the logo in annexure “A”, other than to deliver wines bottled and labelled at the specific instance and request of the First Applicant.

3. It is ordered that the Respondents are hereby restrained from selling or distributing bottles or other containers of wines containing the trade name and/or logo to any party other than the First Applicant.

4. The Respondents are to pay the Applicants’ costs jointly and severally.

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DLODLO, J

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