Cerebos Food Corporation Ltd v Diverse Foods SA (Pty) Ltd and Another

• Jurisdiction: South Africa
• Judge: Boshoff JP, Van Dijkhorst J and O'Donovan J
• Judgment Date: 25 May 1984
• Court: Transvaal Provincial Division
• Citation: 1984 (4) SA 149 (T)

Van Dijkhorst J:

This application was brought before STEGMANN AJ ex parte and as a matter of urgency for what was called an Anton Piller order to obtain possession of specified documents belonging to the applicant and alleged by the applicant to be of a highly confidential nature and of great importance to the applicant.

STEGMANN AJ ordered that the application be heard in camera since he was of the view that the facts disclosed in the papers B justified a departure from the provisions of s 16 of the Supreme Court Act 59 of 1959, which prescribes that the proceedings be carried on in open Court. Because of conflicting decisions about Anton Piller orders and the fact that he regarded the matter as one of considerable public importance, C he discontinued the hearing of the matter and referred it, under and by virtue of the provisions of s 13 (1) (b) of that Act, to this Court for hearing. He ordered that the matter be dealt with in camera unless and until this Court ordered otherwise.

The facts as they appear from the applicant's founding papers are these.

D The applicant is a company which operates as a producer and distributor of food products, and has in the past supplied large quantities of such products to the South African Defence Force (SADF), particularly in processed form. The contracts for the supply and delivery of these products were the result of successful tenders submitted to the SADF by the applicant.

E The second respondent was prior to 19 October 1983 employed by the applicant, initially as an industrial representative and thereafter as its national sales director (industrial).

On 31 August 1983, the applicant submitted a tender No G4192P to the Chief Director of State Purchases for the supply and delivery to the SADF of certain prepacked food parcels (patrol F packs) for a period of three years from 1 April 1984 to 31 March 1987. The tender documents, obtained from the State Tender Board, the tender and all supporting information and documents were compiled and submitted in total confidentiality by the applicant and treated as such by the Director of State G Purchases and the SADF. On obtaining the tender documents from the State Tender Board, the second respondent made an official declaration of secrecy which was retained by the State Tender Board. The managing director of the applicant also signed a formal declaration of secrecy.

H The tender requirements of the SADF included certain conditions to be complied with by the tenderer particularly with regard to the actual contents of each patrol pack, the minimum shelf life for all components contained therein, hygiene requirements with respect to handling and packaging, the nutritional analysis of food components and other specifications in respect of items other than food included in all patrol packs.

I Prior to submitting its tender, the applicant conducted an intensive research project into all aspects of the proposed tender, including, inter alia, the following: all steps necessary to meet the nutritional analysis, shelf life and packaging requirements for all components; investigations of various components available from different suppliers

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A and testing of such components to establish the acceptability thereof in respect of the nutritional analysis, shelf life and packaging requirements; detailed costing exercises to establish the economic viability of the tender, and the prices at which it would have to tender for the supply and delivery of the patrol packs, having regard to the detailed scientific, B nutritional and other requirements set out in the tender. The financial and other calculations are mostly contained on notepaper, inter-office memos typed on roneoed notepaper and telexes between the applicant and its various potential suppliers.

All information and data collated and assimilated by the applicant through its investigations and research are contained C in a comprehensive set of documents, the highly confidential nature of which the applicant has at all stages impressed on all its employees. The results of the research were obtained by the employment of highly skilled scientific and financial methods, and at great cost to the applicant. The information was fundamental to the submission of the tender by the applicant to the SADF.

D When this research project was carried out, the second respondent was employed by the applicant as its national sales manager (industrial). This position he held until 19 October 1983, on which date he tendered his resignation, and joined the staff of the first respondent. While with the applicant he was E responsible for liaison with the SADF, the research and development teams of the applicant, and suppliers, so that a viable tender in respect of the patrol packs could be presented. He was intimately involved with the research project and had access to all relevant documents. In fact several sensitive and highly confidential documents were entrusted to F his custody while all other copies thereof were destroyed. He was one of the signatories to the actual tender eventually submitted to the State Tender Board.

On 26 September 1983 the applicant heard informally that the tender had been awarded to the first respondent. Thereafter, in a letter dated 19 October 1983, the date on which the second respondent resigned, the Chief Director of State Purchases G formally advised the applicant that the tender of the first respondent had been accepted.

The conduct of the second respondent, in abstracting, using and retaining the aforementioned confidential documents of the applicant, has given rise to the present application.

H Stiekema, the managing director of the applicant, came to know about the second respondent's conduct under the following circumstances. On 7 February 1984, he attended a meeting with one Degenaar, the managing director of R & R Foods (Pty) Ltd and his assistant, Mrs Hope. R & R Foods (Pty) Ltd acts mainly as broker between various government departments, including the SADF, and suppliers, in respect of tenders and other agreements I for the supply of food products to such government departments. At this meeting Degenaar told him that towards the end of 1983, after his resignation, the second respondent got in touch with him and advised him that he had resigned from the applicant and had joined the first respondent. He also told Degenaar that the tender for the supply and delivery of patrol packs had been awarded to the first respondent and that it was

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experiencing some difficulty in obtaining the various A components from certain suppliers. The second respondent then requested Degenaar to attend a meeting at Johannesburg to discuss ways in which Degenaar could act on behalf of the first respondent to contact various suppliers and to obtain the necessary components. At that meeting he told Degenaar that he personally had invented the patrol pack, that he had not been B recognized or rewarded sufficiently by the applicant and for that reason he regarded all the information in respect of the patrol pack as his property. He also showed Degenaar a complete set of photocopied documents saying that such documents were copies of the documents of the applicant, containing all the scientific research into the whole patrol pack tender, all the financial research carried out by and on C behalf of the applicant during the period while the second respondent was still employed with the applicant and all the information in respect of provisional agreements between the applicant and its potential suppliers, containing, inter alia, unit prices, payment terms and details in respect of delivery. Degenaar then agreed to act on behalf of the first respondent D for the purposes of obtaining the necessary supplies.

As a result of information subsequently obtained from certain potential suppliers, Degenaar became suspicious about the circumstances under which the first respondent had submitted its tender. He thereupon confronted the second respondent, who stated that he had "set Cerebos up", and confessed that while E still employed by the applicant, he had completed the tender on behalf of the first respondent, using the confidential documents of the applicant, but modifying the tender in such a way that the similarity between the tenders of the applicant and the first respondent would not be immediately apparent. At that stage Degenaar advised the first and second respondents that he was severing all ties with them and that he wanted to F have nothing further to do with them.

At the meeting which Stiekema had with Degenaar, Degenaar undertook to assist the applicant in obtaining redress. A meeting was arranged in Johannesburg on 13 February 1984 which was attended by Stiekema, Degenaar and attorney Van Staden of a local legal firm. At this meeting Degenaar confirmed the G correctness of the aforementioned information. Degenaar could not recall all the dates of the various meetings, which were listed in his diary which he had left in Cape Town. It was therefore agreed that Van Staden would visit him in his office in Cape Town on 16 February 1984 to obtain from him all the H information which was to be incorporated in an affidavit to be used in support of the present application. Van Staden went to Cape Town as arranged but Degenaar was by then not prepared to sign an affidavit. He adopted the attitude that by signing the affidavit he would severely jeopardize the position of his company as brokers, inter alia, by "closing doors in the army which they had opened with a lot of trouble over the last five years".

I Stiekema states that it is his honest belief that the sole reason for the success of the tender of the first respondent is the fact that it was able to supply scientific information which it did not produce, and which it obtained unlawfully and was able to...