Crown Cork & Seal Co Inc and Another v Rheem South Africa (Pty) Ltd and Others

• Jurisdiction: South Africa
• Judge: Schutz AJ
• Judgment Date: 20 May 1980
• Court: Witwatersrand Local Division

Schutz, AJ.:

This application raises an issue on which there appears to be no direct reported authority in South Africa, namely whether a Court may A place limitations upon a litigant's ordinary rights of untrammelled inspection and copying of documents discovered by his opponent where the opponent claims that the documents contain his trade secrets which may be misused, that is used for purposes other than the litigation, and in furtherance of unlawful competition.

B In the action the first plaintiff is an American company and the second plaintiff its South African subsidiary. It is a manufacturer of crown corks. The first defendant is a company in competition with the second plaintiff. It has been manufacturing crown corks during the last two to three years. Before the formation of the first defendant the second defendant was the general manager of the second plaintiff's operations. He C is now the general manager of the first defendant. The third and fourth defendants are employees of the first defendant. They were formerly the second plaintiff's chief sales manager and corporate secretary and financial controller respectively. In outline the case is this: Whilst they were employed by the second plaintiff the second, third and fourth D defendants acquired knowledge of the trade secrets of the two plaintiffs. They then conspired to acquire these for themselves, and pursuant to this they removed certain confidential documents relating, inter alia, to sales, quality control and standard cost procedures. There are further allegations which are not relevant to this application. The claim is for an interdict and damages. It is common cause that the action involves complex issues of a technical and legal nature.

E The application is one brought by the first to fourth defendants against the second plaintiff. They called upon the second plaintiff to discover. In his discovery affidavit the second plaintiff said the following:

F "The second plaintiff maintains that the documents listed in the second part of the first schedule should have a limitation imposed on the extent of their discovery in view of the confidential nature of these documents. The second plaintiff has no objection to the defendants seeing these documents and the limitation sought to be imposed is that copies thereof should only be made available to the defendants' legal advisors and experts, but not the defendants themselves."

G The list referred to consists of documents numbered 46 to 65, all of which remain relevant to this application except for items 48, 49 and 53. During argument it was made clear that both parties were interested in obtaining a decision on the principle whether a limitation of the kind sought to be imposed is competent in our law. This is so not only because of the H documents listed in the discovery affidavit but also in relation to a long list of further documents relating, inter alia, to the organisation and running of the second plaintiff's factory, in respect of which the four defendants have issued a notice under Rule 35 (3) which has not yet been answered. One of the purposes of this notice is clearly to assist in making a comparison of the two factories' manufacturing processes with a view to determining whether the first defendant is using and has used the second plaintiff's trade secrets in order to set up and run its factory.

What the four defendants seek is an order entitling them and their representatives to inspect the discovered documents and to make copies

Schutz AJ

for use by themselves, their experts and their legal advisers, that is in the normal way. The limitation sought to be imposed by the second plaintiff, as explained by Mr Kentridge, is this. The objection is to the A defendants and their employees obtaining copies of confidential documents. This applies also to such expert witnesses as may be employees of companies associated with the first defendant, particularly employees of its American associates among which are numbered some of the remaining defendants, which I have not mentioned before. They are not parties to B this application. There is no objection to any of these persons other than an expert employed by an associated company or the legal advisers or other experts, indeed to anyone who might normally be entitled to inspect with the exception mentioned, inspecting the documents at the premises of the plaintiffs' attorneys under the supervision of a clerk, and to making notes which do not amount to copies. There is also no objection to copies C being obtained by the defendants' legal advisers or by independent experts provided that they are not to make them available to the defendants or employees of associated companies. With regard to the proposed exclusion of experts employed by associated companies it is to be noticed that that proposal would lead to a hampering of such experts in their preparations, D the further suggestion being that the defendants can employ independent experts. It is contended that these restrictions will not prejudice the defendants in their preparations for trial, but that there will be no more than some inconvenience to them. It is pointed out that there has been full discovery. The second plaintiff has made a discovery affidavit, has listed and specified the documents in question, and has stated its grounds E for objection to untrammelled inspection and copying, namely that the documents are confidential property. All that is in issue is whether there should be some measure of control exercised over inspecting and copying. Confidentiality is the only ground of objection. The documents are F admittedly relevant and no question of privilege arises.

It will be seen at once that two principles are in conflict. The one relied upon by the second plaintiff is that it has property in confidential documents, confidential in the sense that they are not the subjects of public knowledge and such that a reasonable businessman might wish to keep to himself (cf Harvey Tiling Co (Pty) Ltd v Rodomac (Pty) Ltd G and Another 1977 (1) SA 316 (T) at 321 in fine) and that merely because there is an action in progress they should not be available to a competitor for possible misuse, but that its proprietary rights should be protected. The other principle, relied upon by the defendants, is that no limits should be placed upon their procedural rights in terms of the Rules to make full use of relevant documents in the second plaintiff's H possession in order to present their defence without being hampered at all. It is rightly emphasised how important the steps associated with discovery may be in an action. Indeed discovery is classified as a pre-trial step. It is the pre-trial on the documentary evidence. The object of discovery is thus admirably summed up by STEPHENSON LJ in Church of Scientology of California v Department of Health and Social Security (1979) 1 WLR 723 (CA) at 733C - E:

"The object of mutual discovery is to give each party before trial all documentary

Schutz AJ

material of the other party so that he can consider its effect on his own case and his opponent's case, and decide how to carry on his proceedings or whether to carry them on at all... Another object is to enable each party to put before the Court all relevant documentary evidence, and it A may be oral evidence indicated by documents,..."

Moreover, the public interest demands that the truth be discovered. As was stated by Lord DENNING MR in Riddick v Thames Board Mills Ltd (1977) 3 All ER 677 (CA) at 687:

"The reason for compelling discovery of documents in this way lies in the B public interest in discovering the truth so that justice may be done between the parties. That public interest is to be put into the scales against the public interest in preserving privacy and protecting confidential information. The balance comes down in the ordinary way in favour of the public interest of discovering the truth, ie in making full disclosure."

Mr Kriegler, for the four defendants, contends in the first instance that C confidentiality must always yield to a party's right to a fair trial, that there is no provision made in the Rules for the type of limitation proposed by the second plaintiff, although perhaps there ought to be, that it is not for the Court to promulgate new Rules, and, in short, that the proposed procedure simply does not exist in South African law.

D I have been referred to no reported South African decision giving direct support to the procedure proposed. Mr Kentridge relies mainly upon a line of English decisions, submits that it is open to our Courts to follow them, and further submits that justice dictates that that should be done. I shall now deal with certain of these decisions.

Church of Scientology of California v Department of Health and Social E Security (1979) 1 WLR 723 (CA) involved actions brought by the Church of Scientology against certain authorities for libel, the libels being that the plaintiffs were dangerous charlatans who gave inexpert treatment to mentally sick persons. The defendants objected to an inspection by the plaintiff itself of documents relating to persons treated by the plaintiff F or to informants who had given information adverse to...