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REPUBLIC OF SOUTH AFRICA

IN THE HIGH COURT OF SOUTH AFRICA,

GAUTENG LOCAL DIVISION, JOHANNESBURG

CASE NO: 2015/27508

Reportable: YES

Of interest to other judges: YES

Revised.

29 November 2016

In the matter between:

NDEBANTLHE BUSINESS ENTERPRISES CC                                                       Plaintiff

and

VODACOM (PTY) LTD                                                                                          Defendant

 

JUDGMENT

 

LAMONT, J:

[1] This is an exception brought by the defendant to the plaintiff’s particulars of claim. The exception is brought on the basis that the plaintiff’s particulars of claim do not disclose a cause of action.

[2] The plaintiff alleged that:-

2.1. it created and developed a solution to a problem and that as such it was the owner of the solution;

2.2 it disclosed the solution to the defendant;

2.3 it negotiated with the defendant to obtain a contract which would enable it to implement the solution;

2.4 no contract was concluded;

2.5 the defendant implemented “a re-purposed version of the solution” known as airtime advance;

2.6 airtime advance was a solution which excluded the plaintiff as a proposed participant;

2.7 the conduct of the defendant was wrongful and negligent in that the defendant:

2.7.1 should have acknowledged that airtime advance was the plaintiff’s property;

2.7.2 should have provided the plaintiff with reasons for refusing to agree to certain amendments which the plaintiff proposed in respect of a proposed contract between plaintiff and defendant;

2.7.3 should have expressly informed the plaintiff that it had no intention of implementing the plaintiff’s solution at all or in the manner suggested by the plaintiff;

2.7.4 should have informed the plaintiff of its intention to repurpose the solution;

2.7.5 should have adequately compensated the plaintiff and/or sought plaintiff’s consent before repurposing the solution and/or appropriating the solution as its own;

2.7.6 should have afforded the plaintiff an opportunity to participate in the launch implementation ongoing development and growth of the airtime advance;

2.7.7 should not have misrepresented to the public that airtime advance was its own creation.

2.2 The plaintiff alleged that in terms of the common law section 10 and section 25 of the Constitution of the Republic 1996 the defendant owed the plaintiff duties:

2.2.1 to act bona fide and with Ubuntu in all its dealings with the plaintiff;

2.2.2 to respect and protect the plaintiff’s inherent dignity;

2.2.3 to acknowledge the plaintiff’s role as creator and developer of the solution;

2.2.4 to meaningfully involve the plaintiff in matters related to the implementation and repurposing of the solution;

2.2.5 to respect the plaintiff’s rights in the solution;

2.2.6 not to deprive the plaintiff of its property;

2.2.7 not to use the solution without the plaintiff’s consent;

2.2.8 to compensate the plaintiff for the use of the solution.

2.3 These allegations I construed as an allegation that there is an obligation on the defendant not to use the plaintiff’s idea to the exclusion of the plaintiff.

2.4 The plaintiff then alleged that by reason of the omissions of the defendant in following its legal duties, the defendant should have known and/or knew that its conduct would have the consequence of:

2.3.1 depriving the plaintiff of its proprietary rights in respect of its solution especially the plaintiff’s fee;

2.3.2 resulting in the plaintiff losing its use and enjoyment of the solution including the right to exploit the solution for profit;

2.3.3 the plaintiff being unable to receive funding in order for it to develop and grow the solution;

2.3.4 the plaintiff being unable to implement that portion of the solution in respect of which it offered to repair, replace and upgrade certain instruments and accessories.

2.4 The plaintiff finally alleged that by reason of the defendant’s conduct the plaintiff suffered damages equivalent to the monies the plaintiff would have earned had it been a participant in the airtime advance scheme.

[3] The aforegoing allegations have been distilled from long convoluted particulars of claim which rambles lengthily as to fact and law and on the face of it appears to be vague and embarrassing.

[4] These matters are of no concern to the present.  The only issue is whether or not the plaintiff’s allegations disclose a cause of action.

[5] The plaintiff’s claim is framed in delict.

[6] The plaintiff’s cause of action is dependent upon it establishing the requirements necessary for delictual liability to arise.

[7] The plaintiff saw a commercial opportunity, in conjunction with the defendant, to exploit an idea he had. This opportunity was dependent not only on the idea but the defendant concluding a contract with the plaintiff to achieve that end. This appears to me to be a causation issue but was not raised in that form in the exception.

[8] The idea conceived by the plaintiff which is not alleged to be novel can be framed in simple terms. The defendant was to sell airtime which is normally sold for cash to the plaintiff on credit. (This airtime is known as prepaid airtime). The plaintiff would sell the airtime and render certain services to his customers. The customers would become obliged to pay the plaintiff. In the event the customers did not pay the plaintiff the defendant would be obliged to refuse to sell prepaid airtime to such customers either for cash or at all, until their debt due to the plaintiff had been paid.

[9] There is no allegation that:

9.1 at the time the plaintiff disclosed the scheme (which plaintiff calls a solution) to the defendant there was an obligation requiring the defendant to conclude the contract proposed by the plaintiff either on different terms or at all;

9.2. there is any contractual obligation on the defendant to retain the information confidential;

9.3 the information was confidential.

[10] The allegation of the plaintiff that there was an obligation on the defendant not to use the plaintiff’s idea to the exclusion of the plaintiff rests squarely on an allegation that such obligation arises at common law and by reason of Section 10 and 25 of the Constitution of the Republic of South Africa 1996 (“the Constitution”). If there is no such obligation the claim must fail.

[11] For purposes of the exception I accept the allegation that the idea and the sole right to use of the idea are the same concept although they are not alleged to be the same.

[12] The relevance of the distinction between the two is that the defendant’s conduct is not alleged to have removed the idea from the plaintiff. The plaintiff retains his idea. After disclosure he is not the only person in possession of the idea. The conduct of the defendant has an impact on the plaintiff’s right of use of his idea.

[13] Once the defendant refuses to contract with him and once the defendant commercially exploits the idea itself, the plaintiff is unable to use his idea in conjunction with the defendant. He remains free to use his idea with others with whom he may contract.

[14] The plaintiff has alleged that the obligations of the defendant are to be found in the common law, sections 10 and 25 of the Constitution of the Republic of South Africa 1996.

[15] The plaintiff is a company. Section 10 of the Constitution enshrines the right to dignity in the following terms:

“Human dignity.  Everyone has inherent dignity and the right to have their dignity respected and protected.”

Human dignity is a matter concerning humans and not juristic persons. See Investigating Directorate Serious Economic Offences v Hyundai Motor Distributors (Pty) Limited [2000] ZACC 12; 2001 (1) SA 545 (CC) at para [18].  The plaintiff submitted that as the juristic person consisted of an individual (one person) therefore the dignity of that person and the juristic person were synonymous.  I do not agree.  It appears to me that section 10 of the Constitution is not relevant.

[16] Section 25 of the Constitution provides:

“25  Property

(1) No one may be deprived of property except in terms of law of general application, and no law may permit arbitrary deprivation of property.

(2) Property may be expropriated only in terms of law of general application

(a) for a public purpose or in the public interest; and

(b) subject to compensation, the amount of which and the time and manner of payment of which have either been agreed to by those affected or decided or approved by a court.

(3) The amount of the compensation and the time and manner of payment must be just and equitable, reflecting an equitable balance between the public interest and the interests of those affected, having regard to all relevant circumstances, including

(a) the current use of the property;

(b) the history of the acquisition and use of the property;

(c) the market value of the property;

(d) the extent of direct state investment and subsidy in the acquisition and beneficial capital improvement of the property; and

(e) the purpose of the expropriation.

(4) For the purposes of this section

(a) the public interest includes the nation's commitment to land reform, and to reforms to bring about equitable access to all South Africa's natural resources; and (b) property is not limited to land.

(5) The state must take reasonable legislative and other measures, within its available resources, to foster conditions which enable citizens to gain access to land on an equitable basis.

(6) A person or community whose tenure of land is legally insecure as a result of past racially discriminatory laws or practices is entitled to the extent provided by an Act of Parliament either to tenure which is legally secure or to comparable redress.

(7) A person or community dispossessed of property after 19 June 1913 as a result of past racially discriminatory laws or practices is entitled, to the extent provided by an Act of Parliament, either to restitution of that property or to equitable redress.

(8) No provision of this section may impede the State from taking legislative and other measures to achieve land, water and related reform, in order to redress the results of past racial discrimination, provided that any departure from the provisions of this section is in   accordance with the provisions of section 36 (1).

(9) Parliament must enact the legislation referred to in subsection (6)”.

[17] The submission on the part of the defendant was that section 25 concerns conduct by the State which results in a person being deprived of property. Hence so it was submitted that the section does not apply to conduct involving individuals. See Port Elizabeth Municipality v Various Occupiers [2004] ZACC 7; 2005 (1) SA 217 (CC) at 15 where the following was said:

“The blatant disregard manifested by racist statutes for property rights in the past makes it all the more important that property rights be fully respected in the new dispensation, both by the State and private persons.”

[18] It appears to me that section 25(1) has been framed to require that  treatment of people would be the same in terms of laws of general application i.e. that there may not be a law passed permitting arbitrary deprivation of property. The harm which is to be prevented is the harm created by a person who creates laws. It provides for a law which is created by the lawmaker to be of general application and not to permit arbitrary deprivation.  The person who makes laws is Parliament. It accordingly appears to me that the section is designed to prevent the State from doing certain things as opposed to citizens of the State from doing certain things. This interpretation is consonant with the remaining subsections in section 25.  I am accordingly of the view that the obligation which is alleged to have been created by section 25 of the Constitution does not create the obligations alleged by theft to exist in the present matter.

[19] The remaining question is whether or not the common law creates the obligation.  The plaintiff’s idea was an idea concerning the way in which the defendant would do business with it, the plaintiff.  It had no manifestation of the issues concerning how it would be implemented as these were never resolved and no contract was concluded. The defendant has the right of freedom of contract. It can decide whether or not to contract and on what terms. The Constitution values the rights of freedom and dignity. See Paulsen and Another v Slip Knot Investments 777 (Pty) Limited 2015 (3) SA 479 (CC) para [126] to [127]. If the defendant chose, as he did ultimately, not to conclude the contract with the plaintiff and chose not to conduct business with the plaintiff in a particular way there is no obligation on it once having heard the idea to contract. The disclosure of the idea and a way to achieve it did not create a corresponding obligation on the recipient of the idea to contract.

[20] The plaintiff submits that the defendant’s conduct is dishonest. There is no such allegation bluntly made in the particulars. There are a set of allegations alleging the existence of obligations. This set of allegations amounts to an allegation alleging that the defendant was not entitled to commercially exploit the plaintiff’s idea to the exclusion of the plaintiff. It is this obligation which must find an existence in the common law. It is fallacious reasoning to assume the obligation exists then to characterize the defendant’s conduct as being dishonest as that dishonesty is dependent upon finding the existence of a prior step namely that the obligation exists.

[21] I was referred to Schultz v Butt 1986 (3) SA 667 (AD) at 683. That case concerns the copying of the physical manifestation of an idea by using the physical manifestation to produce an exact copy which the copier then used. That case is distinguishable from the present in that there never was a physical manifestation of an idea.

[22] The plaintiff itself copied his idea by revealing it to the defendant in circumstances where the defendant was not obliged to use the idea by contracting with the plaintiff nor prevented from using what was then no longer confidential (assuming it ever was) information.

[23] The plaintiff’s idea is retained by the plaintiff. His disclosure results in it not being novel and being in the public domain. An idea in copyright law is not protectable. The idea of the plaintiff is not confidential information and is not alleged to be such.

[24] The plaintiff sets out no common law source of law founding his allegation that the obligation exists.

[25] The final submission on the common law was that it should be developed. Section 39 of the Constitution requires the common law to be developed in certain circumstances. See Mighty Solutions t/a Orlando Service Station v Engen Petroleum Ltd and Another 2016 (1) SA 621 (CC) para 34 and following.

[27] It was submitted that as this duty falls on the trial judge who must possess all relevant factual and legal information that if this allegation was made no exception could lie. The exception, so it was submitted, would if upheld be upheld on incomplete factual information and on information assumed correct (due to the nature of the exception procedure). Hence, so it was submitted, there could be no exception to a situation which does not exist as the common law has not yet been developed. There seems to be some merit in these submissions. However, these issues do not arise, as there is no allegation in the particulars of claim that the common law as it stands needs development.

[29] I do not deal with the exception to the formulation of damages due to my view on the primary issue.

[30] In my view the plaintiff has failed to establish the obligation it claimed existed. In these circumstances the exception must be upheld. The plaintiff did not seek an opportunity to amend. In these circumstances the claim falls to be dismissed.

[31] I made the following order:-

1. The exception is upheld.

2. The plaintiff’s claim is dismissed.

3. The plaintiff is to pay the costs.

 

___________________________________________

C G LAMONT

JUDGE OF THE HIGH COURT OF SOUTH AFRICA

GAUTENG LOCAL DIVISION, JOHANNESBURG

 

COUNSEL PLAINTIFF:                                     Adv D. Ehrlich

PLAINTIFF’S ATTORNEYS:                              Mbana Inc

COUNSEL FOR DEFENDANT:                         Leslie Cohen & Associates

DEFENDANT’S ATTORNEYS:                          Adv R.A. Solomon SC

DATE OF HEARING:                                         14 November 2016

DATE OF JUDGMENT:                                     29 November 2016

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