IN THE HIGH COURT OF SOUTH AFRICA
(WESTERN CAPE HIGH COURT, CAPE TOWN)
In the matter between:
Case No.23347/09

and

							(Mr G van Niekerk)

						(C de Riego de Dios)

	

IN THE HIGH COURT OF SOUTH AFRICA 
(WESTERN CAPE HIGH COURT, CAPE TOWN)
								
In the matter between:

							Case No. 23347/09

and

BINNS-WARD J:

[1] The applicants are a New Zealand based company which trades internationally in frozen food products, especially meat, fish and vegetables, and its South African subsidiary.
[2] At all times material to the matters in issue the first respondent was an executive director of the South African subsidiary and managed the applicants' business in this country.

[4] The third respondent is a South African company to which the applicants had supplied frozen food products in large volumes for a significant period of time. It was one of the applicants' significant customers in South Africa. The relief sought against the third respondent in terms of the notice of motion is to be stood over for later determination and, by agreement between the parties, I made an order to that effect in chambers on 22 February 2010.

[5] The first respondent gave notice at the end of September 2009 of her intention to resign from the second applicant. She made it known at the time to the applicants' management that it was her intention to remain actively involved in the frozen meat business - an area of enterprise in which she had in fact been engaged for many years before she was initially employed by the first applicant in Australia in 2002. It was agreed that her resignation would become effective at the end of November 2009, and that she would assist in an orderly transfer of her functions on behalf of the applicants in the South African market. It seems that the directors of the first applicant were uncertain whether or not it would be necessary to appoint a permanent replacement for the first respondent, or whether the South African business could instead be conducted remotely from outside the country.

[6] As a consequence of what, to it, were disconcerting indications in the marketplace, the first applicant's management decided to investigate the operation of the Argentinean office in the period surrounding the resignation of Furlong and Ortuno. The computers used by these two former employees were brought to New Zealand and forensically examined. The first applicant obtained the results of this examination on or about 26 October 2009. The information indicated that the two employees had been engaged in setting up and operating the second respondent for several weeks before their resignation. Of more central relevance to the current case, it also indicated that the first respondent had been intimately involved in these endeavours and suggested that she had been party in this regard to the misappropriation by, or for the benefit of the second respondent of corporate opportunities that would otherwise have accrued to, or been available to the first or second applicants; and that there had been a misuse of the applicants' confidential information in this connection.

'Need from you the template's (sic) for:-   Costing sheets
	COS - you will do COP's in Argentina
	Fax / email logo
I am getting my IT guys to come and wipe off all my information before returning all their equipment'
The content of the emails uncovered in the forensic investigation showed on the face of it that the first respondent had been directly party to the correspondence in many instances, either as sender or addressee, and demonstrated her direct involvement in assisting with and furthering the establishment and business of the second respondent.

[8] The applicants instituted motion proceedings in which they claimed (i) an Anton Piller order and (ii) interdictory relief directed at prohibiting unlawful competition by the first and second respondents using the applicants' 'confidential information'. Relief was also sought against the third respondent, as an alleged joint wrongdoer in the acts of unlawful competition alleged by the applicants.

The Anton Piller relief

[9] As ordinarily happens in such matters, the Anton Piller order was sought in an application to a judge in chambers, without notice to the affected respondents. The claim that the applicants alleged that they intended to institute against the first and second respondents, against whom they sought the Anton Piller relief, was described in a somewhat non-committal fashion in the founding affidavit. The action that was in fact later instituted was one for damages for lostcorporate opportunities, and I have therefore assumed that to be the claim that the deponent to the founding affidavit sought to identify in the founding affidavit as the cause of action in respect of which Anton Piller relief was sought. In paragraph 11 of the founding affidavit the deponent confirmed that the purpose of the Anton Piller application was to preserve and protect evidence in the claim that the applicants sought to prosecute. The application was brought as a matter of alleged urgency in terms of rule 6(12).

[10] The purpose of the Anton Piller procedure is to secure the preservation of evidence in proceedings already instituted,, or to be instituted by the applica Shoba v Officer Commanding, Temporary Police Camp, Wagendrift Dam, Maphanga v Officer Commanding, SA Police Murder & Robbery Unit, Pietermaritzburg 1995 (4) SA 1 (A); [1995] 2 All SA 300 (A)

(1)		That he, the applicant, has a cause of action against the respondent which he intends to pursue;
(2)		that the respondent has in his possession specific (and specified) documents or things which constitute vital evidence in substantiation of applicant's cause of action (but in respect of which applicant cannot claim a real or personal right); and
(3)		that there is a real and well-founded apprehension that this evidence may be hidden or destroyed or in some manner be spirited away by the time the case comes to trial or to the stage of discovery.'

'36      Limitation of rights
(1) The rights in the Bill of Rights may be limited only in terms of law of general application to the extent that the limitation is reasonable and justifiable in an open anddemocratic society based on human dignity, equality and freedom, taking into account all relevant factors, including-
(a the nature of the right;
(b) the importance of the purpose of the limitation;
(c) the nature and extent of the limitation;
(d) the relation between the limitation and its purpose; and
(e) less restrictive means to achieve the purpose.
(2) Except as provided in subsection (1) or in any other provision of the Constitution, no law may limit any right entrenched in the Bill of Rights.'
Anton Piller KG v Manufacturing Processes Ltd & Ors  

Article 8 of the ECHR, which in material respects entrenches the rights to privacy entrenched by s 14 of the South African Bill of Rights. Article 8 of the Convention (which in paragraph 2 contains its own limitation provision analogous to that in s 36 of the South African Constitution) provides:

'1 Everyone has the right to respect for his private and family life, his home and his correspondence.
2 There shall be no interference by a public authority with the exercise of this right except such as is in accordance with the law and is necessary in a democratic society in the interests of national security, public safety or the economic well-being of the country, for the prevention of disorder or crime, for the protection of health or morals, or for the protection of the rights and freedoms of others.'

 

[21] The order made in this case authorised a search at the first respondent's office and home for the documentary material described in annexure A to the order. Annexure A to the order went as follows:

1.	All and any lists, spreadsheets or other documents recording and/or reflecting all and any details of the applicants' suppliers.
2.	All and any lists, spreadsheets or other documents recording and/or reflecting all and any details of the applicants' customers.
3.	All and any lists, spreadsheets or other documents recording and/or reflecting all and any details of the second respondent's suppliers.
4.	All and any lists, spreadsheets or other documents recording and/or reflecting all and any details of the second respondent's customers.
5.	All and any emails, letters, faxes or other written documentation recording and/or reflecting all and any communications between the applicants or either one of them, the first respondent and/or the second respondent with any of: -

5.1. the applicants' suppliers;
5.2. the applicants' customers;
5.3. the second respondent's suppliers; and/or
5.4. the second respondent's customers.

6.	All and any emails, letters, faxes or other written documentation recording and/or reflecting all and any communications between the first respondent and/or the second respondent and any/or all of Messrs Furlong, Ortuno and De Groot.
7.	All and any invoices, waybills, receipts, electronic fund transfers, delivery notes, shipping documents and/or other similar documentation recording and reflecting the transaction of business between the applicants or either one of them, the first respondent and/or the second respondent with any of: -

7.1. the applicants' suppliers.
7.2. the applicants' customers;
7.3. the second respondent's suppliers; and/or
7.4. the second respondent's customers.

9.	All and any company or close corporation documentation in relation to the second respondent, including but not limited to: -
9.1. any pre-incorporation contracts or agreements;
9.2.  its memorandum and articles of association;
9.3. any association and/or shareholder and/or membership agreements;
9.4. relevant extracts from CIPRO.

[22] There is, in my judgment, considerable cogency in the first respondent's complaint that the content of annexure A ranged too wide. I find it impossible to conceive that lists, spreadsheets or other documents recording and/or reflecting all and any details of the applicants' suppliers or customers were material - even less, 'vital' - to the claims that the applicants indicated it was their intention to institute based on the alleged misappropriation of corporate opportunities. The interdict application to prohibit the misappropriation of confidential information was already pending, having been instituted simultaneously with, and in the same notice of motion, as the Anton Piller proceedings. There was no indication given in the interdict application papers of any desire by the applicants to obtain discovery - in any event an exceptional procedure in motion proceedings, requiring the leave of the court - and the opportunity to supplement their founding papers on the basis of any such discovery. The first respondent was at the time of the execution of the Anton Piller search an executive director of the second applicant and it would be neither surprising, nor in any way untoward were she to be found in possession of such lists or spreadsheets. Why it should be necessary or important to preserve them for the trial of the applicants' intended claim for damages for lost corporate opportunities is nowhere explained in the founding papers. The only lists and spreadsheets of relevance on the basis of the founding papers that might have been found would, in the context of the indication given in the email the applicants had in their possession in which the first respondent stated her intention to make copies to retain after the effective termination of her employment, be such as by their nature could be established to have been recently made. Even those would be relevant only to support the interdictory relief sought by the applicants and, on the material which the applicants already had, could hardly be categorised as being vitally important to their claim.

[23] It is also unexplained why lists of the second respondent's suppliers and customers in the first respondent's possession would be necessary evidence in the intended action for lost corporate opportunities. There is also no, or insufficient, basis in the founding papers as to the likely existence of such lists or spreadsheets, or of the need to preserve them.

.

[26] The first respondent also alleged that the service of the order was defective; in particular she alleges that annexure A to the order (the schedule particularising the subject matter of the authorised search and seizure operation) was not drawn to her attention. In my view this allegation does not bear scrutiny.

[27] The service and execution of the Anton Piller order occurred, as is the practice, in the presence of a supervising attorney, being an officer of the court with no connection with the applicants and with no interest in the merits of the dispute. The requirement that there be an independent supervising attorney is one of the in-built protections against abuse of the Anton Piller procedure and is intended to afford a measure of protection to the party who is subject to the invasiveness of a search and seizure order. In the discharge of his/her functions in the Anton Piller procedure a supervising attorney acts solely in the capacity of an officer of the court; and is required to account to the court by way of report. In the current case the supervising attorney was a senior practitioner with 22 years' experience as a litigating attorney, who happened at the time of the hearing before me to be serving as an acting judge of this court.

[29] The sheriff, who is also an officer of the court with no personal interest in the matter, has made an affidavit confirming that annexure A to the notice of motion was served by him on the first respondent. An attorney from the supervising attorney's office who accompanied the search party to provide a female presence, having regard to the first respondent's gender, has also made an affidavit confirming that the first respondent's attention was drawn to annexure A.

[30] In the circumstances I reject the first respondent's allegation that she was unaware of the content of annexure A to the notice of motion before the search occurred.

[31] The search party authorised by the court to undertake or be present during the search and seizure operation first attended at the first respondent's office in Camden Street, and when being informed by a domestic worker there that the first respondent was not present and probably at her place of residence, it then proceeded to the first respondent's apartment, where the first part of the search operation was carried out. It was only after the completion of the search at the first respondent's apartment that the search party, accompanied by the first respondent herself, returned to the premises where the office was situated and, in the presence of an attorney who had by that stage agreed to represent the first respondent, carried out a further search.

[32] Paragraph 2 of the notice to the respondent served on the first respondent in accordance with the requirements of the applicable practice note stated, insofar as relevant:

'When these documents are handed to you, you are entitled, if you are an employee of the respondents or either one of them or in charge of the premises, to contact the respondents or either one of them immediately and you or the respondents or either one of them are entitled to contact an attorney and have him/her come to the premises to advise you. The attorney must be called and must arrive without delay, and the supervising attorney must inform you as to how long the search can be delayed so as to have the attorney present....'
The first respondent contends that the service of the order was not compliant with the provisions of this paragraph because the domestic worker at the office was not afforded the opportunity to contact ,her. There is no merit in this contention. The provisions of paragraph 2 of the notice would have applied only in the event of the search party having sought to carry out the search at the office in the first respondent's absence. That did not happen.

2004 (2) SA 633 (SCA) at para. [3].)

Service on the second respondent

[39] Turning now to the interdictory relief sought by the applicants against the first and second respondents. The first respondent denies that she is a member of or part of the second respondent. She also denies that her office address in Camden Street, Cape Town, at which service of the application was ostensibly effected by the sheriff on the second respondent, is the address of the second respondent. Despite the clear indications in the email exchanges between the first respondent and Messrs Furlong and Ortuno that the first respondent intended to join forces with them under the FOB banner and despite the indications in that correspondence that the first respondent may have been party to securing corporate opportunities for the business conducted by Furlong and Ortuno under the name of FOB, I am not satisfied on the papers that an office of FOB has yet been established in Cape Town, or that the first respondent's office address has been established as FOB's business address in this jurisdiction. I am accordingly not satisfied that service of the interdict application has been effected on the second respondent.

The striking out application by the first respondent based on the impropriety of the employment by the applicants of evidence obtained pursuant to the release of material seized in the execution of the Anton Piller order

[40] In the circumstances I have entertained the interdict application only insofar as it concerns the first respondent. It is necessary in this connection to refer again at the outset to the application brought by the applicant for the release of the computer hard drive information held by the sheriff consequent upon the execution of the Anton Piller order. The applicants discovered certain email correspondence in the hard drive information which they have employed as new matter in their replying affidavits in the interdict application to further support the relief sought by them. The first respondent has applied to strike out those parts of the replying papers in which this recently obtained material is utilised.

[41] In an application, brought on one week's notice to the first respondent, the applicants sought an order that the sheriff be authorised and directed to advise the applicants' representatives, with reference to the copies of the hard drives described in annexure A4 to the supervising attorney's report in the Anton Piller proceedings, which copy was a copy of the hard drive on the second applicant's laptop previously in the possession of the first respondent; and authorising the applicants' representatives, under the supervision of the sheriff, to make a copy of and take into possession such copy. This application was brought and determined before the return date of the Anton Piller order, which, by agreement between the parties, had been postponed to suit the first respondent's convenience.

[42] The reason given in the founding affidavit in support of this application for extraordinary access to material seized in the execution of an Anton Piller order was that 'the information stored on such hard drive [was] essential to the conduct of the applicants' business in South Africa and the applicants [would] be severely hampered in the conduct of such business should they have to wait for the release of copies of the hard drives (sic) in February 2010 or later'. The affidavit proceeded to describe at some length, and in great detail, various aspects of the applicants' business operation that would be prejudiced if access to the information were not afforded. The founding affidavit also described how the first respondent had agreed to return the laptop computer containing the information subject to having first removed her 'personal information'. When the laptop was returned it was discovered, however, that all the information on the drive had been indiscriminately removed. (There were allegations that the information had been deleted with a sinister motive. Why that should have been the case is not apparent to me having regard to the fact that first respondent would presumably have been aware that a mirror image of the entire content of the drive was being retained by the sheriff, but nothing turns on that for present purposes.)

[43] The first respondent did not oppose the application; at least not in a conventional way. She contented herself with the filing of a very brief affidavit, which stated in the material part:

'4. I confirm..., for the reasons set out in the letter marked "Y", that I do not intend opposing the above application, without prejudice to my rights to deal with the contents of the affidavit and the relief sought therein, in due course when I file my opposing affidavit in the Anton Pillar (sic) application and in the main application.
5. I accordingly abide by the decision of the above Honourable Court in the current application.'
[44] The letter marked 'Y' referred to in the passage from the first respondent's affidavit just quoted had been addressed by the first respondent's attorney in the Anton Piller proceedings to the applicants' attorneys of record. Its most material part advised as follows:

'3.3     Our client is prepared to consent to an order in terms of prayer 2 of the Notice of Motion, namely that the Sheriff advise yourselves (and ourselves) which of the hard drives described in annexure "A4" is the laptop hard drive which was previously in the possession of our client.
3.4	Once this laptop has been identified, our client is furthermore prepared to consent to your client obtaining a printout or taking into its possession in some other manner that information contained on the relevant laptop, which falls under schedule "A" to the Anton Pillar (sic) order, and is the property of your clients, and is indeed urgently required by your clients for purposes of their business, and is information which is not otherwise available to them or in their possession.
3.5	Our client would require the making available of this circumscribed information to be done once again under the auspices of the supervising attorney who supervised the execution of the Anton Pillar (sic) order, or some other Court appointed supervising attorney, and in the presence of the writer.
3.6	In this manner we are of the view that strict compliance with the Anton Pillar (sic) order could still be preserved, while at the same time catering for your clients' alleged needs to have access to their information urgently for the purposes of conducting their business....while ensuring that our client's constitutional right to privacy.are recognised.'
[45] It was badly advised of the first respondent not to expressly draw attention in the body of her affidavit to the content of the passage in the annexed letter that I have highlighted above. It is well established that it is undesirable to expect the court or the other litigant to look for the points that a party intends to rely on in annexures to affidavits. The deponent is required to identify in the body of the affidavit what it is in the annexure on which he or she intends to rely. I was advised by the respondent's counsel from the bar that the application for access to the hard drive came before one of the duty judges on the enlisted motion roll during the first week of the December-January recess. It is apparent from the court file that in addition to the 88 pages of paper in the access application, the papers in the Anton Piller application, which appear at that stage to have run tomore than 850 pages, were also placed before the judge. It seems probable from the fact that the order made by the duty judge in accordance with the draft submitted to her, which had been prepared in accordance with the notice of motion, that the learned judge was not astute to the qualifications to which the first respondent, albeit rather ineptly, had sought to indicate any relief granted should have been made subject. I say this because the qualifications subject to which the first respondent elected not to oppose the application for access were eminently appropriate.

[46] The grant of access to the seized material for purposes other than that intended in terms of the Anton Piller remedy should have been approached with considerable circumspection. The obtaining of unrestrained access in the circumstances to the hard drive material undoubtedly occurred in a piggy-backed manner on the Anton Piller order, even if it is accepted, as I do, that the effect was incidental rather than by design. The result demonstrates how amenable to abuse, in the sense of creating consequences outside the limited ambit of the intended procedural relief, the Anton Piller remedy can be if the utmost care is not taken by all concerned, particularly legal practitioners, to avoid these.

The basis of the rule is an implied undertaking to the court to that effect. It is therefore accepted that in appropriate circumstances the court may release the party receiving discovery from its implied undertaking or modify the extent of the undertaking.

[51] The other basis on which the applicants' counsel argued that the evidence obtained from the hard drive should be admitted was because it was proprietary to the applicants, or information in respect of which the first respondent had in any event been bound to account to the second applicant, as her employer. That might be so; but the constraints applicable as a result of the means of obtaining the evidence are the more pressing consideration in the context that I have just described.

[52] I am acutely conscious that by excluding the evidence, which on the face of it is damning of the first respondent's conduct, I am perhaps allowing what may appear to be procedural formality to stand in the way of getting to the truth of the matters in issue. In my judgment, however, the importance, as a matter of policy, of strictly regulating procedure in regard to Anton Piller orders and matters closely incidental thereto must, as a matter of general principle, prevail. (It should be clear from what I have said earlier that there is no reason why the applicants should not be able to apply, notwithstanding the discharge of the Anton Piller order, for leave to employ the evidence in the pending delictual action, should the first respondent not make discovery thereof in the ordinary course in those proceedings.)

[53] The result is that the first respondent's application to strike out succeeds to the extent to be set out in the order made at the end of this judgment.

Interdictory relief against the first respondent

[54] Returning then to the interdictory relief that is sought. The order was eventually sought in the following terms:

That the first and second respondents be interdicted and restrained from, in any way, either directly or indirectly, utilising, copying, distributing or in any other way disseminating the applicants' confidential information being:
1.	Lists of the applicants' customers, their contact details and/or their requirements;
2.	Lists of the  applicants'  suppliers,  their contact details and/or their requirements.
[55] It is well established that, absent an enforceable restraint of trade agreement, it is unexceptionable for an employee after the termination of his/her employment to compete with his/her erstwhile employer and in that regard to utilise the business knowledge and experience gained during the period of the previous employment. The erstwhile employee is also, in general, permitted to canvas business from the customers and connections of the erstwhile employer. The erstwhile employee is not, however, permitted to compete unlawfully with his/her former employer. Using the former employer's confidential information for the purpose of competing in business with him/her would constitute unlawful competition; and the former employer would be entitled to obtain an interdict prohibiting such conduct.

[57] I am satisfied on the papers that the applicants have established a reasonable apprehension that the first respondent may use their customer and supplier lists for the purposes of competing with them.

"268. To this end I indicated to Furlong that I would need to start packing up the office (Applicants having already informed me that they would be moving the office of second Applicant to new premises in Liesbeeck Park.)

270. This was done on the expectation that MIL could have accepted my resignation with immediate effect at the time.
271. I thought of doing a spreadsheet of clients' requirements which M-Trade could have used going forward and communicated this intention to Furlong. I however never proceeded with this.

273. This was intended to refer to my personal information, such as photographs and private correspondence as well as business information of M-Trade, which was on the lap top and all other computer devices.
274. I point out that I was permitted to use the lap top for personal purposes.
275. After my resignation, I was still under the impression that the Acer lap top (the one I personally used) belonged to me (alternatively M-Trade). I recall that the insurance policy, although a business one, was in my name. This is despite whether or not MIL paid for the premiums of the insurance policy. Having this doubt, I requested from MIL an asset register for the business in South Africa. To date I have not received one.
276. Having resigned, and on the basis that I would be required to hand back my lap top to MIL on termination of my services, (if it was proven that the said lap top was indeed MILs) I intended taking steps to delete my personal information from the lap top, and other computer devices and handing same back to my employer with the employer's information however still on it.
277. This was also not done - as late as 5 November 2009, more than a month after the e-mail was sent, when Applicants obtained and served their Anton Piller order this had still not been done.
278. I asked Furlong for templates for the various documents he would require were M-Trade to do work for him. This was also done on the basis of my not being required to work out the notice period which I had tendered.
279. Once again, this was not proceeded with."
[59] In my judgment the explanation offered by the first respondent does not bear scrutiny and is so untenable that it may safely be rejected on the papers. The correspondence discovered on the computers uplifted from Buenos Aires clearly demonstrates, when read together, the intention of the first respondent to join Furlong and Ortuno in business in competition with the applicants. The correspondence clearly indicates an intention that the parties with whom the individuals concerned had been used to doing business should be persuaded that it would be business as usual, just under a different label. The correspondence also reflects a certain animus by the first respondent against the applicants. I have been left in no doubt that in making or intending to make the files referred to, the first respondent intended to copy or draw on documents and information that the applicants could legitimately regard as confidential and containing information concerning their suppliers and customers.

Costs

[62] In view of the mixed success with which the various applications before the court have been prosecuted and opposed, it is desirable that some guidance be given for the assistance of the taxing master in relation to the costs orders that are to be made. In respect of the hearing on 18 February 2010, I consider that it would be reasonable to apportion time spent as to 40 per cent on the Anton Piller order; 40 per cent on the interdict application and 20 per cent on the striking out application. In regard to the preparation of heads of argument, I consider that it would be reasonable to apportion the fees allowed in the same proportions.

[63]   In the result the following orders will issue:

(i) The Anton Piller order made on 5 November 2009 is discharged and, subject to the provisions of paragraph (ii) of this order, the Sheriff is directed to return to the first respondent the material seized in the execution of the provisional order.

Para.s 7-8; para. 11; para.s 13-16; para.s 18-34; para.s 36-40; para.s 43-46; para.s 49-58; para.s 60-81; para. 91.3; and para. 132.6.

(vii)The first respondent is ordered to pay the applicants' costs of suit in the interdict application, including the costs of two counsel, where such were employed.

ANNEXURE A

the first respondent has deleted any information thereon considered by her to be personal to her.