---

REPORTABLE

SOUTH GAUTENG HIGH COURT, JOHANNESBURG

CASE NO: 2008/42000

DATE:22/10/2012

In the matter between:

TECHNICAL INFORMATION SYSTEMS (PTY) LTD.........................Applicant

and

MARCONI COMMUNICATION (SOUTH AFRICA)

(PTY) LTD......................................................................................First Respondent

TELKOM (SOUTH AFRICA) LTD …....................................Second Respondent

J U D G M E N T

SPILG, J:

INTRODUCTION

1. The plaintiff (TIS) instituted application proceedings against the first and second defendants (Marconi and Telkom respectively) in mid-2006 for interdictory and other relief, including a claim for damages to be determined. The plaintiff sought to have damages determined by way of an enquiry under section 24(1A) and 24(1B) of the Copyright Act 98 of 1978.

2. The claim was based on an alleged copyright infringement of the plaintiff’s telephone call management system and also on unlawful competition in relation to the continued use of the system. Aside from opposing the relief claimed the defendants brought a counter-application seeking a number of declaratory orders.

3. The application was heard by my brother Gildenhuys J who delivered judgment in March 2007. The court granted the plaintiff a final interdict restraining both defendants (then first and second respondents) from infringing the applicant’s copyright in its call management system. However it dismissed the relief sought to determine damages for the infringement. The plaintiff was awarded costs including the costs of the defendants’ unsuccessful counter applications and applications to strike out.

4. The Respondents were granted leave to appeal by Gildenhuys J. The appeal was to be heard before the Supreme Court of Appeal (SCA) on 19 August 2008. A few days before the hearing, on 15 August, the defendants withdrew their appeal and the SCA on the date of hearing ordered them to pay the costs of the appeal.

5. After the appeal was abandoned and in December 2008 the plaintiff proceeded under a fresh action for the damages allegedly occasioned to it by reason of the copyright infringement.

6. The particulars of claim relied expressly on Gildenhuys J’s (“the court a quo’s”) findings of copyright infringement in the earlier motion proceedings, averring that they were res iudicata.

7. In June 2009 the defendants gave notice under Rule 23 that the claim was vague and embarrassing. Twenty eight grounds were relied upon. The plaintiffs responded and the defendant then proceeded to the exception stage in respect of all but one of those grounds. They also raised substantive self standing exceptions alleging that the claim failed to disclose a cause of action in four fundamental respects. They included some of the grounds relied upon by the defendants in their current special pleas. Jordaan AJ dismissed the exceptions without reasons and none were sought.

8. The defendants pleaded in September 2009 and the plaintiff replicated in October 2009. The plaintiff did not raise the issue of res iudicata in its replication. The defendants then gave notice in May 2010 of their intention to amend the plea and introduced a series of special pleas. The amendment was not opposed.

9. The effect of the defendants’ plea as amended was to admit the contents of the earlier judgment and order of Gildenhuys J. The defendants also admitted abandoning the appeal against that decision but relied on a number of special pleas, including one relating to joinder, a denial that any damages had been or were continuing to be suffered and a denial that there had been a copyright infringement.

10. Leaving aside the joinder issue, the effect of the plea and special pleas are to place in issue that there was a copyright infringement and to contend that the plaintiff is precluded from pursuing a damages claim either because Gildenhuys J had found that the plaintiff had sustained no damages or because a determination of damages was sought in those proceedings and had been refused.

11. On 25 August 2010 the plaintiff gave notice of its intention to amend its replication in order to specifically raise the issue of res iudicata in response to the denials of copyright infringement. Subsequently in an affidavit the plaintiff averred that the amendments sought were not consequent upon the defendants’ amendment to their plea. Rather they arose on a reconsideration of the desirability to again raise res iudicata not as part a weapon of attack as it had done in its claim but also as a response to the defendants attempt to raise the denial of infringement as a triable issue. The defendants did not object under rule 28(2) to the proposed amendment but on 8 September 2010 and within the time allowed for objection gave notice under rule 30(1) that they opposed “the amendments”.

12. The plaintiff claimed that it was entitled to ignore what it considered to be a defective notice and called on the defendants to withdraw their notice. They did not, the plaintiff proceeded to deliver the amended pages to its replication and the defendants responded on 11 October with a fresh rule 30(1) notice raising an objection that the amendment was irregular. The plaintiff then informed the defendants that the notice was vexatious and on 14 October 2010 the defendants brought an application under rule 30(1). The defendants in the person of their legal representative, Messrs Llewellyn Parker claimed in their founding affidavit that this was a back-door attempt to deliver a replication to the amended plea when it was “ipso facto barred” from doing so under rule 26 by reason of the expiry of the 15 day period provided for in rule 25(1). Mr Parker contended that the plaintiff ought to have followed the provisions of rules 27(1) to (3) and should have sought the defendants’ agreement to amend out of time, failing which to have brought an application for condonation to remove the bar.

13. It was contended by the defendants’ legal representative that the prejudice to the defendants as a result of the course followed by the plaintiff “is manifest”. Aside from this bald statement no evidence of actual prejudice was identified as one would expect where the particulars of claim expressly rely on res iudicata as the foundation of the plaintiff’s cause of action. It is noted that the very issues had been raised in the exceptions and rejected by Jordaan AJ.

14. Accordingly the defendants’’ legal representatives could have been under no misapprehension that they would effectively have to prepare on the basis of the case which Jordaan AJ had found had been competently set out in the claim. This included the issue of res iudicata being relied upon to sustain the cause of action, with the necessary corollary that, if correct, it would render nugatory any defence seeking to go behind Gildenhuys’ judgment of copyright infringement. It is unlikely that a practitioner would run the risk of ignoring Jordaan AJ’s judgment when preparing for trial even if no reasons were given or sought.

15. On 15 November 2010 the defendant brought another rule 30(1) application. This time the irregularity relied upon was the late filing of the amended pages pursuant to the notice of intention to amend. One might be forgiven for considering that if the fist application was sound that there would be no reason for the second and if not sound that there could be no prejudice to the late filing of the amended pages. Nonetheless the two rule 30(1) applications spawned another 170 pages of affidavits and attachments.

16. By this stage the parties had already been allocated a trial date for 3 March 2011. A pre-trial conference was held in mid-January of that year. The plaintiff sought agreement to separate the five special pleas and also the new issues raised in the amended plea. The plaintiff contended that the new issues constituted an impermissible re-opening of the decision by Gildenhuys J that the defendants had infringed the plaintiff’s copyright and that such decision was a final determination by reason of the withdrawal of the appeal before the SCA.

17. The defendant responded that the proposed separation was inappropriate on the grounds that the special pleas required the hearing of evidence and that the regularity of pleading a denial to copyright infringement was inextricably interwoven into the fabric of the other issues to be determined in the main case.

18. The parties were however agreed that on the allocated trial date they would seek a hearing of the rule 30(1) applications and an application for a separation of the matters previously mentioned. If a separation was granted the parties also agreed that the issues forming the subject matter of the separation would be argued and that the remaining trial issues, including damages, would be postponed.

19. The defendants subsequently withdrew the rule 30(1) applications and tendered the costs. Accordingly the matter before me is confined to whether there ought to be a separation of any of the issues identified by the plaintiff and if so to make the necessary determination.

SEPARATION

20. The issues which the plaintiff contends can be conveniently separated are each of the five special pleas raised by the defendant and also the denials of copyright infringement introduced into the amended plea which the plaintiff contends are res iudicata by reason of Gildenhuys J’s decision becoming final

21. The five special pleas are;

1. Mis-joinder and non-joinder on the grounds that the First Defendant had sold its business prior to institution of the trial action (the “First Special Plea” at para 1of the plea);

2. Plaintiff’s claim for damages is res iudicata since it was dismissed by Gildenhuys J when in the interdictory proceedings heard by him on motion (the “Second Special Plea” at para 2 and also referred to in para 53.2);

3. The plaintiff is precluded by res iudicata from claiming as damages the actual attorney and own client costs incurred in successfully securing the interdict (the “Third Special Plea” at para 3);

4. The so called “once and for all rule” precludes the plaintiff from now claiming damages in a separate action since it did not cross-appeal Gildenhuys J’s decision that it was not competent to seek an enquiry into damages in motion proceedings by reason of the wording of section 24(1B) of the Act (the “Fourth Special Plea” at paras 4 and also referred to in paras 82.2, 82.3, 84.2 and 84.3 of the plea );

5. The damages claim is precluded by the Copyright Act and the Competition Act because it amounts both to an abuse of copyright (thereby entitling the defendants to raise a denial of copyright infringement) and to unlawful competition(the “ Special Plea 4A” at paras 4.1A and 4.2A).

22. The denials of copyright infringement contained in the defendants’ amended plea which the plaintiff contends were finally determined by Gildenhuys J relate to;

1. The substantive denials of copyright infringement contained in paras 43.1, 48.1, 54 and 55 of the plea;

2. The claim of a licence entitling the defendants to reproduce as set out in para 43.1 of the plea;

3. The denial that there was a substantial reproduction or adaptation of the works which Gildenhuys J held were subject to the copyright as set out in paras 43.2, 58 and 68.2 ; and

4. The “fair use” defences relied upon in sections 12(1), 13 and 15(1) and (4) of the Copyright Act raised in paras 48.5, 53.4 and 56.2 of the plea

SEPARATION OF ISSUES

23. Rule 33(4) of the Uniform Rules provides that a court may direct mero motu that a decision regarding any question of law or of fact which “may conveniently be decided either before any evidence is led or separately from any other question” is dealt with separately. It will be recalled that the Rules were specifically amended so as to oblige a court to order separation in cases where a party applies for it “unless it appears that the question cannot conveniently be decided separately”. The intention of this proviso is therefore clear. See also Edward L Bateman Ltd v CA Brand Projects (Pty) Ltd 1995(4) SA 128 (T) at 132C.

24. The defendants opposed the separation on the grounds that their special plea and the various grounds pleaded denying infringement of copyright were “inextricably interlinked with the remainder of the issues in the action”.

25. Although not expressly raised, it is also to be born in mind that the plaintiff sought the final determination of both the special pleas and the infringement defences on the basis that no evidence was necessary. In my view the defendants’ objection implicitly asserts that one or more of the issues sought to be separated cannot be determined without hearing evidence. If regard is had to the pre-trial agreement on how the issue of separation is to be dealt with it is evident that the issues identified for separation were to be treated as legal exceptions to the pleadings. Accordingly if the outcome of any of the issues for separation might be disturbed by extrinsic evidence then its separation cannot be ordered. It is therefore necessary to first establish whether the determination of each of the issues is exclusively a matter of law.

26. The facts relied upon by the defendants to support each of the first four special pleas are not in dispute. These are respectively;

1. mis-joinder of the first defendant and the non-joinder of Ericssons;

2. the damages claim being res iudicata ,

3. the claim for attorney and own client costs as part of the damages claim is res iudicata on the additional ground that the issue of costs had been determined in the application;

4. the “once and for all rule precludes the plaintiff from claiming damages in the present action since they were claimed in the earlier application.

27. The first four special pleas are legal issues which the defendants raised as self standing pleas quite apart from challenging the merits of plaintiff’s case. They therefore are pre-eminently matters that can conveniently be dealt with and should be dealt with separately. The determination of issues which might be destructive of the plaintiff’s entire case or dispose of a substantive defence before any witnesses are called will result in the more efficient determination of the case in a cost effective and time saving manner without prejudice to either party’s fair trial rights.

28. That leaves special plea 4A for consideration. This special plea relies on the damages claim amounting to an abuse of copyright and also to unlawful competition. The defence however requires that the abuse is such as to provide a shield against the consequences of copyright infringement. For reasons set out when dealing with this special plea, I am satisfied that the issue resolves itself into purely one of law the outcome of which cannot be disturbed by evidence.

29. Finally, and save in one respect, the defences raised in the amended plea that there was no infringement of copyright were either disposed of finally in ratio of Gildenhuys J’s judgment when granting final interdictory relief or they were not. What was not considered at all in those proceedings, since they were not raised, are the fair use defences raised under sections 12(1), 15(1) and (2) read with section 13 of the Copyright Act.

30. Moreover the fair use defences are do not raise a purely legal issue. It is to be accepted that evidence may determine the outcome of this defence and that such evidence is umbilically linked both to the issue of causality and to the quantum of actual damages suffered and legitimately claimable. .

31. Accordingly I am satisfied that the defendants’ fair trial rights would be prejudiced if this issue was to be separately determined from the remaining issues that are referred to trial. I am also satisfied that it would be more convenient for the trial court to have the advantage of determining both the question of causality and extent of damages and to what extent claimable by reference to its own finding of whether and to what extent the fair use defence impacts on the assessment of damages.

32. .In the result all the issues set out in paragraphs 21 and 22 above, with the exclusion of the statutory defences of fair use, justified separate adjudication before this court. I should add that the parties elected to argue the question of separation and simultaneously make submissions on the merits of each. This was likely to avoid undue repetition and would allow a more holistic understanding of issues relevant to the question of separation per se. The matter was argued on that basis save in one respect where argument on the point had been exhausted and in order for the case to progress a separate determination was made during the course of the hearing. I will revert to this later.

33. I propose to deal with the merits of each of the separated issues in the following sections although that was not necessarily the order in which Mr Bester on behalf of the plaintiff argued that matter.

FIRST SPECIAL PLEA - MIS-JOINDER AND NON-JOINDER

34. The first special plea is procedural by nature but with significant consequences due to the lapse of time. The defendants contend that there has either been a mis-joinder of the first defendant or a non-joinder of Ericsson (Pty) Ltd Ericssons). Ericssons had purchased the first defendant as a going concern approximately a year after the interdict had been granted against it.

35. The unchallenged facts pleaded by the first defendant are that its business was purchased as a going concern, inclusive of all its rights and liabilities, by Ericssons during March 2008 and that consequently it no longer trades. The nub of the special plea is that the wrong party has been sued.

36. It was however conceded in the defendants’ particulars for trial that the defendant remains a registered company in South Africa and a copy of the Companies’ Offices search was attached. The first defendant did not suggest that any contrary evidence would be led.

37. However in its trial particulars the first defendant claimed that the nature of the takeover was to be characterised as a “merger and acquisition”. In argument Ms Jansen , who represented each of the defendants, contended that whether a business is sold, taken over or merged into another entity the result is the same; the “ entity which has been sold, taken over or merged with another ceases to exist in that it can no longer conduct business in its own right .”

38. This is a somewhat startling proposition particularly to those involved in structured finance agreements and in particular black empowerment transactions. A company does not cease to exist until it has been de-registered.

39. It is evident that the special plea relies on the disposal by the First defendant of all its assets and liabilities as a going concern rather than the acquisition of its entire share capital or a controlling interest by Ericssons. The disposal of the underlying business as a going concern is a well recognised means of acquisition without the necessity of transferring shares of the company in which the business is conducted or which itself may also hold shares in subsidiary companies.

40. The argument advanced by the first defendant is with respect disconnected. In the case of the “purchase” by Ericssons of the first defendant’s business as a going concern, which is the averment pleaded, the first defendant as seller transferred its business in return for receiving a consideration in the form of either shares or cash or both. This consideration would then be an asset in its books and which may or may not have been paid out to its shareholders in the form of dividends or otherwise. However this cannot inform us as to who is liable to the plaintiff for copyright infringement should it prove its damages. That party remains the first defendant whether it still holds the proceeds of the disposal of its business or is a mere shell. As long as it remains in existence as a legal persona the plaintiff is entitled to pursue its claim for copyright infringement against the first defendant. The internal arrangement as to how any contingent liability is to be determined or adjusted as between the first defendant and Ericssons is of no legal consequence to the plaintiff unless of course it becomes party to that arrangement. But that is not the case pleaded. .

41. Ms Jansen also submitted that any analysis of “... the legal structure and the consequences of the transaction in issue is a matter for evidence to be raised in the context of the adjudication of that special plea “. Firstly that is not so. The special plea is clear and the explanation in the trial particulars confirms that the transaction took the well recognised form of a going concern takeover.

42. Even if the first defendant is not to be held to its pleading there also appears to be some confusion as to the relevance, for the purposes of the present case, of the distinctions between a merger, the sale of a business as a going concern or other form of takeover where the target company, in this case the first defendant, remains in existence.

43. While there may be consequences as between the parties concluding a take-over or merger transaction, as between the plaintiff and the first defendant the only consideration which is relevant is that the first defendant still exists and that plaintiff relies on a judgment by the court a quo which found that the first defendant infringed the plaintiff’s copyright. Whether it is an empty shell stripped of all its assets or not may be relevant should the plaintiff ultimately be successful in its claim, but then only for purposes of execution. It is irrelevant for the purpose of whether the correct party has been sued unless the plaintiff consented to replacing the first defendant with Ericssons. The first defendant does not contend that the first defendant as registered in the original proceedings changed its name or that the present first defendant does not bear the same company registration number as that of the first respondent sued in the original motion proceedings.

44. Accordingly there is no legal or factual principal raised which suggests that however the transaction was structured, liability arising from a non-contractual wrong would not require the concurrence of the claimant before it can be bound to exercise its right against someone other than the party allegedly responsible for causing the damages sustained.

45. The first special plea is therefore bad in law.

SECOND SPECIAL PLEA - DAMAGES AND RES IUDICATA

46. The defendants’ proposition is straight forward; the plaintiff sought an order for an enquiry into damages which was dismissed by Gildenhuys J. The judgment became final in effect because the plaintiff did not appeal that part of the order.

47. In substantiation of their contention that Gildenhuys J had given a substantive decision when dismissing the relief sought for an enquiry into damages the defendants argued that the plaintiff had “conspicuously failed to prove any damage suffered by it” in the application proceedings. The defendants also argued that the plaintiff had sought and obtained an interdict which is the antithesis of a damages claim. If the plaintiff had been capable of adequately recovering damages then the interdict would not have been granted. In addition it was contended that there must have been some other reason why the court refused to grant an enquiry in damages since it is “... commonplace for courts to grant a prayer in motion proceedings for an enquiry into damages”.

48. Finally the defendants argued that the plaintiff seeks additional damages which do not entail an enquiry into damages.

49. I pause to mention that the matter was set down for two days based on the defendants’ estimate contained in the practice note although the plaintiff believed that one and a half days would suffice. It became evident at the commencement of the second day that a further day’s hearing would be required. It also became evident during the first session of that day’s hearing that the defendants continued to repeat the same argument that the judgment of Gildenhuys J relating to the dismissal of the application for an enquiry into damages constituted a final judgment on the merits. Moreover the defendants were unable to point to any ratio contained in the judgement to support their submissions. On the contrary Ms Jansen’s during argument informed the court that both parties had accepted that the proper procedure, and the one which the courts had adopted over the past 20 years since the introduction of the relevant amendment to the Copyright Act , was for an applicant to proceed on motion and make the same allegations as the plaintiff had in its application for interdictory relief and that a court would either order such an enquiry and give directions or would determine that an enquiry ought not to be held into damages.

50. Ms Jansen further informed the court that it came as a surprise that the learned Judge had considered that motion proceedings were inappropriate to seek an enquiry into damages; a position which she confirmed had been effectively overruled in the subsequent and unrelated decision of Cadac v Weber-Stephen [2010] ZASCA 105. That being so most of Ms Jansen’s submissions fell by the wayside: If both parties were taken by surprise when the judgment was delivered it confirmed that the ratio of the decision not to direct an enquiry into damages was understood by the parties as having nothing to do with the paucity of evidence concerning damages or the clearly untenable view that one cannot stop the continued invasion of a right without forfeiting the right to sue for such damages as may ultimately be proven.

51. What remains of the defendants’ argument is readily resolved by the only passage in the judgment dealing with the reason to dismiss the relief sought for an inquiry into damages. The learned judge expressed himself as follows in para [80] of the judgment:

“If the enquiry referred to is intended to be an enquiry by the court, as seems to be the case, it must in my view be initiated by an action, not by an application … The relief is akin to a claim for damages. Section 24(1A) refers to an award in favour of a ‘plaintiff’, which indicates that the legislature must have had an action in mind.”

The order itself emphasis this. It reads;

“The application for a directive to hold an enquiry under section 24(1A) and (1B) of the Copyright Act is dismissed.”(Emphasis added)

Moreover no consequential costs order was made against the plaintiff. On the contrary the present defendants were held jointly and severally liable for all the costs of the application.

52. It is also evident that the defendants well understood the import of the judgment. In para 2.1 of their application for leave to appeal they submitted that:

“The learned Judge erred in granting final interdict relief in circumstances where the requirements for a final interdict were clearly not met. In particular, the Applicant’s evidence relating to damages or a reasonable apprehension of damage was sketchy and speculative and it did not prove any actual damage suffered or support “... a reasonable apprehension that it might well be happening”. In this regard, the only reference to damages in the entire judgment is based on their highly speculative allegation that the Respondents are selling the new TETRACE SOHO Y06.01 version of the computer program to new end-users”.

53. When granted leave to defend the learned judge identified those issues that were reasonably arguable before another court. They included whether the plaintiff had satisfied the requirements for a final interdict by demonstrating that it had suffered actual damages or that they were reasonably apprehended. This again puts to bed any suggestion that the decision was based on anything other than the adoption of the incorrect process by reason of the wording of section 24(1B) of the Copyright Act. Cadac held that this view was wrong.

54. Accordingly the judgment of Gildenhuys J did not purport to nor was it understood by the parties to have finally disposed of the damages claim, only that the procedure adopted was improper.

55. During the first session of the second day it was evident that the defendants were not adding anything further to this aspect of the argument. Counsel continued to repeat what had been exhaustively argued previously. In order for argument to be completed within the extended period allowed it was necessary to cut the Gordian knot and make a decision on this aspect before proceeding further with the other issues.

56. Accordingly prior to the morning tea-break I confirmed that I had decided on this issue and was satisfied that the learned judge did not make a finding on the merits of any damages claim but that on a straight forward reading of the judgment the order made simply related to motion proceedings being an incompetent procedure to apply for an enquiry into damages. The matter then proceeded onto the other issues.

THIRD SPECIAL PLEA - LITIGATION COSTS AND RES IUDICATA

57. The plaintiff’s claim under one of its heads of damages the legal costs incurred in mitigating its damages by applying for the final interdict. These costs would include the actual costs of consulting with its legal representatives and so forth in order to bring the earlier application.

58. The defendants contend that the plaintiff prayed for and obtained a costs order in the application proceedings and accordingly this claim was determined and is now res iudicata.

59. Aside from any other considerations I am of the view that costs of litigation, however formulated remain to be determined as a cost issue incurred in the protection of a right through the courts and are to be dealt with under the ordinary rules. Otherwise it would undermine the policy considerations which determine why an unsuccessful party is not obliged to pay all the legal costs incurred by his opponent save in cases where attorney and client, or attorney and own client, costs are by the application of discretionary but well established principles awarded.

60. . The legal costs it now wishes to claim under mitigation of damages were incurred in seeking the interdict and the plaintiff there elected to seek only ordinary party and party costs which it successfully obtained. The subject matter remains the same and is between the same parties. If the plaintiff intended to hold the defendants liable for all the legal costs incurred in protecting its copyright then it should have sought them in an appropriately worded costs order suitably motivated. The attempt to classify it as expenses incurred in mitigating damages only puts it within a classification for damages purposes but does not alter its substance as costs incurred in litigating through the courts in order to protect a right.

61. In the result the defendants’ third special plea is successful. Unfortunately there was an oversight in the order I originally made which did not deal with the consequences of not upholding this special plea. I have now corrected this patent error by ordering that the plaintiff is not entitled to that part of the expenses incurred under paragraph 68 of the claim which relate to the actual legal fees expended and which are more fully described in paragraph 68.2 of the claim.

FOURTH SPECIAL PLEA - THE “ONCE AND FOR ALL” RULE

62. This special plea compliments the res iudicata issue raised regarding the plaintiff’s damages claim.

63. In theory it is attractive. It is trite that a plaintiff should not be allowed to litigate piecemeal. However in practice the question of whether damages should be claimed separately or not has taxed our courts and the response has not been consistent. The difficulty is to marry the entitlement a party has to the determination of a right or to prevent its infraction or breach on the one hand and their pecuniary consequences on the other. The invasion of a right can be met by proceeding on motion, generally with some degree of urgency, either for final or interim interdictory or mandatory relief. However motion proceedings cannot be utilised to resolve unliquidated damages claims.

64. To preclude a litigant from approaching the courts on motion in order to protect a right undermines the fundamental principle of our law that accords an appropriate and effective remedy for the infringement of a right. See Minister of the Interior and Another v Harris and Others 1952(4) SA 769 (AD) at 781A to D. However that is precisely what would occur if he were obliged to proceed by way of action for interdictory relief in order not to forfeit his right to recover unliquidated damages- a most untenable situation that could not be intended to be covered by the finality of litigation principles. These principles appear to have as their foundation concerns both for fair trial process and avoidance of double jeopardy through a multiplicity of actions relating to the same subject matter.

.

65. Similarly in action proceedings for cancelation of an agreement and return of property on a failure to pay, it is not possible to obtain a final order for damages until the property has been returned and sold. Some courts have insisted that the claim for damages must be separated from the claim for cancelation (and return of the goods) and pursued in a subsequent and separate action. Clearly our procedures allow for the issue of damages to be postponed in the same proceedings for subsequent assessment once the property has been recovered and disposed. Indeed the National Credits Act envisages precisely this. The cost to ultimately the debtor in requiring the creditor to initiate two separate actions repeating all but a few of the allegations in the subsequent proceedings would not satisfy the requirements of the overriding considerations of the interests of justice let alone its efficient and effective administration.

66. In Cadac the SCA had no difficulty in confirming that an enquiry into damages can be postponed for subsequent adjudication even if raised in motion proceedings (at paras 11 to 14). Each day our courts grant interim orders on motion pending the final determination of action proceedings which may include a claim for damages. No one has suggested that the once and for all rule applies in such situations yet the substance of what occurs is no different to the present case. The requirement of absence of prejudice is readily satisfied as the plaintiff had sought to pursue an enquiry into damages but was blocked from doing so by an interpretation of the provisions of the Copyright Act. The court a quo held that the procedure adopted for that leg of the relief was incompetent but was competent for the other relief sought. How therefore is a party to proceed to claim damages if it is not entitled to utilise a suitable procedure to secure its remedy?

67. In the present case section 24(1A) and (1B) of the Copyright Act expressly affords a remedy and if a court of law precluded its pursuit because the wrong process was adopted then absent prescription its enforcement through another legal process cannot prejudice the other party. Nor can the party claim that its entitlement to finality in litigation has been compromised: A claim for damages is always open irrespective of whether the injured party separately seeks protection by way of motion against the breach or invasion of the right and damages consequent upon it.

68. The fourth special plea is therefore bad in law.

SPECIAL PLEA 4A RELATING TO ABUSE OF COPYRIGHT

69. The point taken is that a copyright holder who has misuses his copyright loses protection against an infringer.

70. In the present case the defendants contend that the plaintiff ‘s tie-in of its maintenance services to the first defendant and the second defendant’s lawful use of its software constitutes an abuse of a dominant position because during the currency of the agreement upgrades to software and updates of telephone call cost tables were not charged but when the first defendant refused to enter into a new “licence” agreement with the plaintiff the latter then sought to extract an exorbitant fee for upgrades and the call cost tables.

71. In developing the argument Ms Jansen on behalf of the defendants referred to the boni mores which underlies the defence of abuse relied upon. It was contended that the boni mores should be informed by the provisions of the Competitions Act relating to abuse of dominance including that created by market power where an excessive price charged which is detrimental to consumers is expressly prohibited by section 8(a) as are other related activities complained of (under section 8(d)

72. I was referred to an article by Troy Paredes entitled “Copyright Misuse and Typing; Will Courts Stop Misusing Misuse” and a number of other articles on copyright abuse. The author also referred to a number of American cases dealing with the subject. I was also referred to Laddie, Prescott and Vitoria “The Modern Law of Copyright and Design” 2^nd ed Vol1. At p 831 relating to abuse in regard to software modification and the provisions of section 50 of the United Kingdom’s Copyright Designs and Patents Act of 1988.

73. I am of the view that the defendants seek to raise the issue of abuse to a substantive safe harbour defence to a claim of copyright infringement. The plaintiff is not pursuing a claim for damages on the basis of unlawful competition. It claims damages based on a statutory liability under the Copyright Act. In our law there was a breach and the court a quo confirmed this. The only question is the appropriate determination of damages having regard to the extent of the infringement.

74. Special defence 4A is bad in law.

THE DEFANDANTS DENIAL OF INFRINGMENT AND RES IUDICATA

75. The plaintiff contends that the defendant is precluded from disputing that they had infringed the plaintiff’s copyright because Gildenhuys J finally pronounced on that issue. Gildenhuys J’s reasons for his decision expressly held that;

1. There was an infringement of plaintiff’s copyright;;

2. The defendants did not have a licence entitling them to reproduce;

3. The defendants had substantially reproduced or adapted the works which Gildenhuys J held were subject to the copyright.

76. Accordingly in regard to these aspects the judgment was based on the same ground on the same issues and between the same parties to the current action. as that now sought to be raised.

77. Not so the “fair use” defences under sections 12(1), 13 and 15(1) and (4) of the Copyright Act raised. The plaintiff however seeks to rely on Consol Ltd t/a Consol Glass v Twee Jong Gezellen (Pty) Ltd and another (2) 2005 (6) SA 23 (C) at paras 47, 50 and 52 to the effect that a party is not permitted to open the same subject of litigation in respect of matter which might have been brought forward as part of the subject in issue but which was not. Accordingly res iudicata will apply not only to the points expressly raised by the parties but also to every point which properly belonged to the subject of litigation and which the parties exercising reasonable diligence might have brought forward at the time. In short it was now the turn of the plaintiff to rely on the “once and for all rule”

78. I am not satisfied that Consul can be applied in a case which effectively is a continuation of earlier litigation. Had the matter been allowed to continue under the same case then it is difficult to envisage a court not granting an amendment to allow the defendants to introduce these new defences. Once again the requirement of prejudice will not be satisfied and it is difficult to appreciate why the same consideration would not apply.

79. I am not prepared to non-suit a party where a new defence arises which, if valid and provided there is no prejudice which cannot otherwise be compensated for, may be either an absolute answer to the claim or affect the issue of damages, an issue that in any event was not adjudicated upon.

80. Accordingly the fair usage defence is legitimately raised. However the other denials referred to earlier were all matters which were finally adjudicated upon in the decision of Gildenhuys J and may not be reintroduced because they are res iudicata.

COSTS

81. The plaintiff argued that the manner in which the defendant has conducted the proceedings justified a special costs order. The nub of the argument is that the defendants have sought to out-litigate the plaintiff by taking every conceivable point, but resurrecting issues on which they had already sought decisions and by generally delaying the finalisation of the matter.

82. An illustration is the abortive rule 30(1) application, the salient features of which were sketched in the first section. Moreover the defendants could have been under no misapprehension about the final effect of the court a quo’s judgment and its binding nature.

83. There are however certain respects in which the defendants succeeded before me which entitled them to have challenged the plaintiff.

84. I am concerned however that a stage may be reached where the conduct of the defendants will be construed as obstructive and vexatious to the degree where special orders for costs will become justified even if they are successful to some degree.

85. As a mark of the court’s displeasure with the conduct of the defendants in arguing to a fair degree the untenable, they will not be entitled to any of the costs in respect of those issues which have been decided in their favour. The plaintiff however will not be entitled to the full costs. In the exercise of my discretion it is appropriate that the plaintiff is entitled to tax 80% of its party and party bill.

ORDER

86. On 22 February 2012 I granted the following order which now includes the amendment referred to earlier:

1. The Plaintiff’s application under Rule 33(4) to separate;

1. the First, Second, Third and Fourth Special Pleas and Special Plea 4A, and

2. the pleas contained in paragraphs 43.1, 43.2, 48.1, 54, 55, 58 and 68.2 of the defendants’ Amended Plea (in respect of the alleged res iudicata issues relating to a denial of infringement , alleged right to reproduce and a denial of a substantial reproduction or adaption)

is granted.

2. The Plaintiff’s application under Rule 33(4) to separate ;

the defences raised in paragraphs 48.5, 53.4 and 56.2 of the amended Plea, namely the statutory defences of fair use raised under sections 12(1), 15(1) and15(4) read with section 13 of the Copyright Act;

is dismissed.

3. First and Second Defendants’;

1. First Special Plea (para 1 of the Amended Plea),

2. Second Special Plea(para 2 and para 53.2 thereof),

3. Fourth Special Plea (para 4 and paras 82.2, 82.3, 84.2 and 84.3 thereof),

4. Special Plea 4A ( paras 4.1A and 4.2A thereof); and

5. defences raised in paragraphs 43.1, 43.2, 48.1, 54 and 55, 58 and 68.2 relating to a denial of infringement , a licence to reproduce, and a denial of substantial reproduction or adaptation,

are struck out.

4. The Defendants are afforded fifteen days from the date of delivery of the written reasons for judgment to amend.

5. The Defendants Third Special Plea is upheld and

1. paragraph 68.2 of the Plaintiff’s Particulars of Claim is struck out;

2. the Plaintiff is not entitled under the head of mitigation of damages to that part of the expenses incurred under paragraph 68 of the claim which relate to the actual legal fees expended

6. The First and Second Defendants are to pay 80% of the Plaintiff’s costs jointly and severally the one paying the other to be absolved

7. The remainder of the issues in the action and those set out in paragraph 2 above are postponed sine die

DATES OF HEARING: 29, 30 and 31 August 2011

DATE OF ORDER: 22 February 2012

DATE OF JUDGMENT (REVISED): 22 October 2012

LEGAL REPRESENRTATIVES:

FOR PLAINTIFF: Adv B Bester SC

RADEMEYER ATTORNEYS

FOR DEFENDANT: Adv M JANSEN SC

Adv A van Vuuren

BOWMAN GILFILLAN

---