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IN THE HIGH COURT OF SOUTH AFRICA

(NORTH GAUTENG HIGH COURT, PRETORIA)

                                                                              
                                                        Case No: 21666/2018

28/11/2019

In the matter of:
L & G Tool & Machinery Distributers
Limited                                                          Plaintiff/Respondent

  And

Derrick Henry Hall                                          First Defendant /Excipient
Zunaid Saik                                                   Second Defendant / Excipient
D H Z Amanzi Suppliers
(Pty) Limited                                      Third Defendant / Excipient

                                          
JUDGMENT

Maumela J.

1.    In this matter the excipients who are the Defendants in the main matter, seek an order to the following effect.

1.1. That the Plaintiff`s particulars of claim be ordered to be
        struck out;
1.2. That the Plaintiff be afforded 10 (ten) days within which to
       amend its particulars of claim;
1.3. That Plaintiff be ordered to pay the costs of the exception.

BACKGROUND.

2.    On the 23^rd of March 2018, the Plaintiff instituted action against three Defendants, claiming a declaratory order. In line with the declaratory order, the Third Defendant is to be interdicted to discontinue operations of a piping business. The Plaintiff also seeks a declaratory order declaring that the Defendants are jointly and severally liable for the Plaintiff’s damages. Plaintiff contended that the Defendants conducted their practice wrongfully, unlawfully and that they engaged in an unfair competition.

3.    The Plaintiff further seeks an interdict the effect whereof will be to interdict the Defendants from acquiring, using and making use of any of its trade secrets and confidential information. It also seeks an order to the effect that in the event where the damages are not ascertainable, at the trial, then the aspect of quantum should be postponed.

4.    The Plaintiff further alleges that it employed the Second Defendant as a Technical Service Technician. It stated that in terms of his contract of employment, the Second Defendant had certain obligation as set out in the particulars of claim. Plaintiff alleges that according to implied terms of the contract of employment between him, the First and the Second Defendants, the First and the Second Defendants are obliged:
“4.1. …to faithfully and diligently serve the Plaintiff and the Plaintiff’s
          business for the benefit of the Plaintiff’s business;
 4.2. … not to use for their own benefit or the benefit of any third person,
          any confidential information they may have obtained of and
         concerning the Plaintiff’s business …;
 4.3. … not to sabotage the Plaintiff’s piping business but to act at all times
          for the benefit of the Plaintiff and not for the benefit of any of the
          Defendants and/or Third party.”

5.    In addition, it is alleged that the First and the Second Defendants owed a duty of care to the Plaintiff. It is further alleged that during the employment of the First and Second Defendants, they came into possession of confidential information relating to the Plaintiff’s business as is more fully set out in paragraph 16 of the particulars of claim.

6.    The Plaintiff alleges in the particulars of claim as follows: “17. That during or about 2015; alternatively 2016, the date being unknown to the Plaintiff, the First and Second Defendants, whilst still employed by the Plaintiff and whilst they still owed the Plaintiff a duty of care and good faith, wrongfully conspired with each other and the Third Defendant to commence a piping business in the name of the Third Defendant which will be in opposition and in competition with the Plaintiff’s business, which will cause a financial loss for the Plaintiff and a financial benefit for the Defendants and for that purpose agreed to …”

7.    It is further alleged that pursuant to the conspiracy, it was agreed that the Third Defendant would compete with the Plaintiff, that the First and the Second Defendants would be directors of the Third Defendant; and that the First and Second Defendants will provide the Third Defendant with technical skill, expertise and knowledge, and that the First and the Second Defendants would utilise their knowledge relating to the Plaintiff’s business for the purpose of furthering the interests and profitability of the Third Defendant. That it was also agreed that the First and the Second Defendants would use the Plaintiff’s trade secrets and confidential information relating to the Plaintiff’s pricing structures, profit margins, suppliers, etc. for the benefit of the Defendants.

8.    It is alleged that from approximately 2016, the First, Second and Third Defendants started soliciting business for and on behalf of the Third Defendant. It is alleged that they concluded contracts which should have been for the benefit of the Plaintiff, but were diverted to the Third Defendant. That through the business which the First and second Defendants should have obtained for the Plaintiff, they imported more than 230 containers containing piping and piping accessories from China for the business that the Defendants. In that way, they were unlawfully conducting business in competition with the Plaintiff[1].

9.    The Plaintiff further alleges that the Third Defendant’s business competed with its business and that the First and the Second Defendants have:

“9.1. Used and are continuing to use the Plaintiff’s confidential information
         and trade secrets relating to the Plaintiff’s piping business;
 9.2. Breached the terms of their contracts of employment and
 9.3. That the Third Defendant has continued to compete unlawfully
         with the Plaintiff’s business.”

10.  The Plaintiff alleges further as follows:

10.1. “By reason of the assistance and information wrongfully given by the
            First and second Defendants to the Third Defendant in pursuance of
            the conspiracy, including the assistance and information given by
            the First and second Defendants in breach of their duties and
            contractual obligations to the Plaintiff as more fully set out above,
           the Third Defendant’s competition with the Plaintiff’s piping business
           is wrongful, unlawful and unfair;”

11.  In the notice of exception of the Defendants dated the 29^th of May 2018, they allege that: “… the Plaintiff failed to include a concise statement of facts which will be material to sustain the cause of action and the damage in that …”.[2] It is further alleged that the Plaintiff failed to include a concise statement of fact to sustain the conclusion that the Defendants indeed conducted business which can be defined as unlawful competition.

12.  Applicant submits that there is no merit in the objections raised, because its particulars of claim clearly set out all the elements of the unlawful competition and the facts relating to the unlawful competition alleged. It submits that in order to assess the complaint relating to the disclosure of a cause of action, the Defendants had a duty to satisfy the Court that the conclusion of law pleaded by the Plaintiff cannot be supported by any reasonable interpretation of the particulars of claim.[3] It is trite that for the purpose of a consideration of an exception, the facts pleaded in the particulars of claim must be accepted as correct.[4]

13.  The Plaintiff pleaded that the First and second Defendants wrongfully and unlawfully conspired to sabotage the business of the Plaintiff by floating a company which is the Third Defendant. The Plaintiff contends that the Defendants are now making use of the confidential information that they obtained from the Plaintiff’s business; not only to sabotage the Plaintiff’s business, but also to benefit the business they are conducting through the Third Defendant.

14.  Plaintiff contends that all elements relating to unlawful competition have been covered by the allegations in the particulars of claim. It seeks an order that the exception be dismissed with costs. Rule 6 (15) provides for striking out and it reads as follows: “The Court may on application order to be struck out from any affidavit any matter which is scandalous, vexatious, or irrelevant with an appropriate order as to costs, including costs as between attorney and client. The court shall not grant the application unless it is satisfied that the applicant would be prejudiced in this case if it be not granted.”

15.  In the case of Anderson and Another v Port Elizabeth Municipality[5]; at page 309, the court stated the following: “Suffice it to say this procedure was never intended to be utilized to make technical objections of no advantage to anyone and just increasing costs.” In the case of Steyn v Schabort en Andere NNO[6], at page 697, the court stated: “Dit moet egter in gedagte gehou word dat Hofreel 6 (15) op aansoeke om te skrap ingestel is. Dit volg nie dat dit so vertolk of toegepas moet word dat dit ‘n applikant wat ansoek doen om, bv, irrelevante of hoorse beweerings en stukke wat hom nie in sy saak benadeel te hulp te kom nie, al word die koste ook daardeur selfs ernstig opgeja. Onnodige koste aangegaan om deurhalingsprosedure verkeerdelik toe te pas sal nie geduld word nie.”

16.  In order to succeed, an applicant for an order to strike out has to properly identify what he or she seeks to be struck out. He or she also has to set out the grounds on which he or she seeks the order for striking out. Such an applicant also has to properly indicate how the portions in the replying affidavit and annexures will prejudice him or her in the further conduct of his or her litigation.

17.  The Defendants contend that the Plaintiff failed to factually particularise its particulars of claim and does not substantiate a cause of action in that it provides no certainty about what conduct on the part of the Defendants can be considered to be offending so that it substantiates the cause of action. It is for that reason that the Defendants raised an exception.

18.  The Defendants submit that Rule 18(4) of the Rules of Court requires of all pleadings to contain clear and concise statements of the material facts upon which a pleader relies. It is required that same be with sufficient particularity in order to enable the opposing party to reply thereto. The court will then, premised on the established facts, apply the rules of law and draw the conclusions as regard the rights and obligations of the parties and give judgement.

19.  In the case of Makgae v Sentraboer (Kooperatief) Bpk[7] the court stated the following in respect of allegations required in order to establish a cause of action: “…. ten einde te verseker dat besonderhede van vordering nie eksepieerbaar is op grond daarvan dat dit ‘bewerings mis wat nodig is om die aksie te staaf’ nie, moet toesien dat die wesenlike feite (dit wil sê die facta probanda en nie die facta probantia of getuienis ter bewys van die facta probanda nie) van sy eis met voldoende duidelikheid en volledigheid uiteengesit word dat, indien die bestaan van sodanige feite aanvaar word, dit sy regskonklusie staaf en hom in regte sou moet laat slag t.a.v. die regshulp of uitspraak wat hy aanvra”.

20.  The court referred to Rule 20(2) which stipulates the following in respect of declarations: “The declaration shall set forth the nature of the claim, the conclusions of law which the Plaintiff shall be entitled to deduce from the facts stated therein, and a prayer for the relief claimed.” In the case of Buchner & Another v Johannesburg Consolidated Investment Company Ltd[8] on page 217 D – G; the court held as follows “This is an expression of the respondent’s [Johannesburg Consolidated Investment Company] opinion, of its conclusions, as to the fact of the matter and as to the legal consequences of those facts. The relevant facts which must be set out are not only that the contract was concluded, but also that certain terms were agreed upon in that contract.  The conclusion that the appellants [Buchner] are liable can only be reached or justified if those terms support the conclusion set out in the summons.  Those material facts were not set out in the respondent’s summons and it follows that the summons does not contain a cause of action.”

21.  The claim in the Buchner case was set out in the following terms: “payment of the sum of R1 353 216.89, being the sum which its subsidiary companies, Lonehill Estates (Pty) Ltd and Glenny Buchner Investments (Pty) Ltd, are obliged to pay to the First National Bank of Southern Africa Ltd in terms of certain suretyship and which sum, together with interest thereon at the rate of 20,25% per annum from 30 April 1992 to the date of payment, the Defendants are liable to reimburse the Plaintiff pursuant to the provisions of an agreement between the Plaintiff and the Defendants dated 26 June 1987 and which the Defendants have failed, notwithstanding due and lawful demand, to pay to the Plaintiff.”

22.  The Court found that the particulars of claim did not disclose a cause of action. The reason was that the material facts which were set out in the summons could not justify a conclusion that the Appellants are liable to make payment in terms of the contract. To put it differently, it was required of them to have pleaded the facts and the substance of the agreement in order to provide evidence in support of the relief sought.

23.  It is trite that in pleading, a party is required to include the facts, (facta probanda), which will provide evidence to substantiate the conclusions made; being conclusions in terms of which he/she is entitled to the relief sought. The Court will then, premised on these facts, consider whether the pleader can rely on these facts in order to secure the relief sought. The Court has to apply the rule of law on the facts to see if it suffices to support the conclusions required for the relief sought to be granted.  

24.  The Defendants contend further that the Plaintiff failed to include factual allegations in support of its conclusions. They charge that the Plaintiff merely advances its conclusions and opinions, as opposed to material facts on which those conclusions are premised. The Defendants submit that for that reason, the Plaintiff’s case is defective and does not disclose a cause of action.

25.  The Plaintiff indicated facts demonstrating that there is a fiduciary duty upon the Defendants. It provided the ambit and scope of the duties in respect of the First and Second Defendants. However, the Defendants charge that the Plaintiff failed to plead facts pertaining to the breach of the duty from which accountability arises. They state that the Plaintiff further failed to indicate the loss it suffered and/or the basis on which this loss stands to be calculated. Plaintiff also alleged a conspiracy theory in-between the three Defendants, designed to compete with it. They contend that the Plaintiff failed to provide particulars of the unlawful competition, and how the conspiracy caused it to suffer loss. That it also failed to provide particulars on how it suffered loss due to acts of unlawful competition allegedly perpetrated by the Defendants.

26.  In paragraph 19 of the particulars of claim, the Plaintiff concluded that the Defendants solicited business for and on behalf of the Third Defendant. It alleged that the defendants concluded contracts for the sale of business which would otherwise have been concluded for its benefit, and diverted its business, to the Third Defendant. For that reason, the Defendants view that the Plaintiff only pleaded conclusions without alleging the facts or evidence to support the said conclusions so that the court can be enabled to determine whether such conclusions were correct.

27.  The Defendants make the point that in paragraph 19.4 the Plaintiff alleges the only facts or evidence which can be found in the particulars of claim. In that regard, it indicated that 230 containers of piping and piping accessories were imported from China and/or India for the business of the Defendants. However, the Defendants point out that the Plaintiff did not allege that this brought prejudice to bear against it. They state that the Plaintiff also failed to indicate the loss it suffered as a result. They contend that the facts do not support the conclusion to the effect that Plaintiff is entitled to the relief sought. They argue that for that reason, the claim ought to be dismissed.  

28.  The Defendants further contend that the Plaintiff made further allegations of breach of trust and unlawful competition without pleading evidence which outline ways in which the Defendants breached their duty of trust. They state that the Plaintiff did not indicate the particulars of the business which was referred to the Third Defendant; as opposed to the Plaintiff. They point out that neither was any consequent loss suffered indicated.

29.  The Plaintiff indicated that but for the unlawful competition, the business of the Third Defendant would have taken at least 3 years longer to be established. It claims that it is entitled, in the alternative to a perpetual interdict or to an interdict spanning over a period of 3 years. The Defendants argue that in this regard as well, the Plaintiff failed to advance any facts in order to substantiate this conclusion.

30.  The Defendants advanced their plea in the form of a blunt denial. They submit that this is because no facts were advanced which disclose the cause of action. They make the point that as a result, they structure their defence to the action. They submit that the claim made by the Plaintiff should be struck out.

31.  Concerning allegations of breach of fiduciary duty; in order to sustain a cause of action, Plaintiff will be required to allege facts indicating a fiduciary duty on the Defendants associated with a duty to protect the interests of the Plaintiff to the extent that they should not make a secret profit at the Plaintiff’s expense, or put them in a position where their fiduciary duties will be in conflict with their personal interests. See: Da Silva v C H Chemicals (Pty) Ltd[9].

32.  In the case of Du Plessis No v Phellps[10], Friedman JP stated the following: “Where damages are claimed for a breach of a fiduciary duty, the position is different. In such a case, even though the claim is not based on fault, it is necessary for the company to allege and prove the causal connection between the damages claimed and the breach of a fiduciary duty giving rise thereto…… For liability to arise on a claim of that nature, it is essential that the alleged breaches by the defendant of his fiduciary duties should have caused the loss claimed by the company. To succeed in this claim Plaintiff would have to allege and prove a causal connection between the alleged breaches and the loss sustained by Plaintiff.”

33.  In this case, the Plaintiff made factual allegations from which a fiduciary duty can be deduced, together with the scope and ambit of the duties. The Defendants state that the Plaintiff then concluded that the acts alleged against the Defendants constitute breaches however, the Plaintiff did not give particulars on which accountability is founded. Put differently, the Defendants aver that the Plaintiff alleged the establishment of a company, the involvement of First and Second Defendants as directors and he then, (in the absence of facts substantiating these), submits that these, per se, entitle Plaintiff to the relief sought.

34.  The Defendants argue that the Plaintiff should have alleged the facts indicating such breach, which would have caused First and Second Defendants to have, amongst others, made a secret profit. It has to be proved that the making of such profit was to its prejudice; (prejudice of the Plaintiff). Plaintiff was therefore required to advance particulars on the alleged breach. They contend that the Plaintiff should have indicated the manner in which the Defendants made a secret profit at its expense.

35.  The Defendants state that the Plaintiff simply made mere allegations of First and Second Defendants having used confidential information and trade secrets of the Plaintiff, and based its conclusion in law on that. They make the point that the Plaintiff failed to indicate what confidential information, what trade secrets were used and what secret profit was made as a result. In lieu hereof, no finding in respect of a secret profit will be indicated. They argue that as a necessary result, no facts will be at hand to enable the Court to find that Plaintiff is entitled to the relief sought. The Defendants contend that no cause of action was pleaded in respect of any breach of fiduciary duty.

36.  Concerning allegations of unlawful competition, the Defendants submit that every person is entitled to freely carry on his/her trade or business in competition with his/her rivals, provided that this competition remains within its lawful bounds.  Once it involves wrongful interference with someone else’s rights, it becomes unlawful and it is actionable under the lex Aquilia if it results in loss. See: Schultz v Butt[11].

37.  The Plaintiff has to establish all requisites of an aquilian action, together with proof that the Defendants committed a wrongful act. In this case, wrongfulness will be indicated by a lack of fairness and honesty. In order to judge fairness and honesty, one has to have regard to the ‘boni mores’ and the general sense of justice in the community.

38.  From the particulars of claim, it is evident that Plaintiff relied on the fact of the existence of the Third Defendant and the fact of it conducting business to conclude that its business dealings constitute a wrongful interference with Plaintiff’s right to trade, which resulted in a loss for the Plaintiff. They contend that the Plaintiff, however, failed to plead facts which will indicate that the Third Defendant wrongfully interfered with the Plaintiff’s business which gives rise to a claim for damages.

39.  Regarding damages, the following was said in respect of damages claimed in terms of an Aquilian action: “[22] The element of damage or loss is fundamental to the Aquilian action and the right of action is incomplete until damage is caused to the Plaintiff by reason of the Defendant’s wrongful conduct ….” See: Jowell v Bramwell-Jones & Others[12]. The Defendants argue that in this case, the Plaintiff failed to allege any facts indicating that damages were suffered as a result of the unlawful competition. They submit that the Plaintiff established no cause of action in that regard. They submit that no cause of action can be found to have been established.

40.  The Plaintiff also seeks an interdictory relief against the Defendants. In order for Plaintiff to be entitled to an interdictory relief, the Defendants argue that the Plaintiff is required to allege facts indicating it to have a clear right, an injury actually committed or reasonably apprehended to be committed and the absence of any other satisfactory remedy available.

41.  Plaintiff also has to prove the following: “The second requisite for obtaining a final interdict is proof of an injury actually committed or reasonably apprehended; in other words, proof of some act actually done showing interference with the applicant’s right, or a well-grounded apprehension that acts of the kind will be committed by the respondent.  The word ‘injury’ …. meaning an act of interference with, or an invasion of, the applicant’s right and resultant prejudice.” See: Erasmus: Superior Court Practice, Interdicts.

42.  The Plaintiff did not produce proof of the allegations it made against the Defendants. For that reason, there is no basis upon which to accord to the Plaintiff the interdictory relief it seeks. On the basis of the above, the court finds that the Plaintiff is not entitled to the interdictory relief that it seeks.

43.  In the result, the court makes the following order:  

ORDER.  

1. The Plaintiff`s particulars of claim is struck out;

2. The Plaintiff is afforded 10 (ten) days within which to
    amend its particulars of claim;

3. The Plaintiff is ordered to pay the costs of the exception.






T.A. Maumela.
Judge of the High Court of South Africa.

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