CTP LTD v Argus Newspapers Ltd

• Jurisdiction: South Africa
• Judge: Marais JA
• Judgment Date: 29 November 1996
• Docket Number: 215/95
• Court: Appellate Division
• Hearing Date: 11 November 1996
• Citation: 1997 JDR 0044 (A)

Marais J A:

On 29 March 1995 this Court substituted on appeal for an order made by the Witwatersrand Local Division an order interdicting and restraining Argus Holdings Limited ("Argus Holdings") and Argus Newspapers Limited ("Argus Newspapers") from directly or indirectly publishing their newspapers known as the "Southern Star/Focus", the "Sandton Star", the "Eastern Star/Focus", the "Northern Star/Focus", the "Western Star/Focus", or any newspapers substantially similar in nature and circulation. The successful appellants were CTP Limited ("CTP"), one Moolman, one Coburn, and one Short. However, leave was granted at the same time to Argus Holdings and Argus Newspapers to apply jointly or severally to the Witwatersrand Local Division for an order rescinding or varying the interdict "on good cause being shown that circumstances have materially changed".

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Marais JA

Argus Newspapers lost no time in so applying, citing as respondents CTP, Moolman, Coburn, Short and Omni Media Corporation Limited. Omni Media Corporation Limited is the name to which Argus Holdings had in the meantime changed its name. For ease of reference and because it was referred to in the earlier judgment of this Court as Argus Holdings, I shall continue to refer to it by that name. The application was launched two days after this Court had delivered its judgment. In the result the matter was heard on 11 April 1995 and the Court a quo (Heher J.) rescinded the interdict and ordered CTP, Moolman, Coburn and Short jointly and severally to pay the costs, including the costs of two counsel. It is against those decisions that CTP, Moolman, Coburn and Short now appeal, leave to do so having been granted by the Court a quo.

The circumstances which existed when this Court

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Marais JA

concluded in March 1995 that the granting of the interdict was appropriate and justified are set out in the judgment of the court which has been reported (1995 (4) SA 774), and I shall not repeat them. The gravamen of that part of the judgment which is relevant to the present appeal was that Argus Holdings and Argus Newspapers had contracted not to do that which they were interdicted from doing and that the attack made by them upon the enforceability of those contractual undertakings as being in unreasonable restraint of trade because they were to endure in perpetuity, had to fail. More specifically, this Court held that the restraints in question were reciprocal and part of the consideration given by each of the parties to them for the restructuring of their respective businesses; that their purpose was to preserve the commercial status quo; that they were designed to protect comparable interests of the respective parties to the

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Marais JA

restructuring by recognising and defining the areas in which each held sway and by prohibiting each from encroaching upon the other's "territory"; and consequently that they were not "mere covenants against competition", and thus not contrary to the public interest. It was said that "(e)ach side sacrificed part of its own competitive edge as a hedge against attack from the other" (at page 784 D). A factor which had a material influence upon the outcome of the appeal was that the parties to the litigation were business associates in the sense that they were so positioned vis-a-vis one another by virtue of shareholdings that each faction stood to benefit by the trading success of companies in which they were jointly interested, yet they were also in a position to compete with one another unless restrained from doing so. (See page 784 E). The only ground upon which the enforceability of the restraints had been attacked as being contrary to

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public policy, was their indefinite duration. Having indicated earlier in its judgment that that alone would not be inimical to public policy (at page 783 I), the Court later returned to the issue and said at page 784 E:

"The two sets of parties, although business associates, were nevertheless in competition on opposite sides of the same line of business. The purpose of the reciprocal restraints was to define each side's territory. Although the restraints binding the respondents are indefinite, the appellants conceded in argument that this purpose would be served only while the parties continued to conduct their respective businesses in association with each other; differently stated, that their protectable interest would only last for as long as they remained so affiliated. In turn, the respondents conceded in argument that as matters stood at the time when the Court a quo considered them, it could not be contended that the appellants lacked an interest worthy of protection. (Different considerations may of course apply if circumstances should in future change.)

In short, the restraints, ostensibly indefinite in time, will not necessarily operate in perpetuity; and judged on the strength of the interests served by the restraints at the time when their enforcement was sought, cannot be said to be against the public interest and as such at variance with public policy."

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Marais JA

The present application rested in broad upon the assertion that this Court had held, with binding effect upon the parties, that the continued enforceability of the restraints would exist only for as long as the parties conducted their respective businesses in association with one another or remained affiliated in the way in which they were at that time; that they were no longer so affiliated by reason of Argus Holdings having sold its entire shareholding in Argus Newspapers to a third party who had no desire to maintain the business association which had existed between Argus Newspapers and the appellants; and that it followed that circumstances had changed materially within the meaning of this Court's order so that good cause had been shown for the discharge of the interdict.

Contrary to the view taken by the Court a quo, I do not understand the passage quoted from this Court's earlier judgment to

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amount to a definitive and binding finding by the Court that absent any such affiliation to one another and regardless of the circumstances in which that might occur, there would be no legitimately protectable interest which could justify the enforcement of the restraints. The concessions which it thought had been made were not concessions of fact but concessions of law. They were not the subject of any argument before the Court. (Indeed, it was common cause in the Court a quo that no such concession had been made.) The Court was not called upon to consider precisely what changes in the association between the parties to that case would render continued enforcement of the restraints repugnant to public policy, nor was it called upon to consider whether a change in affiliation would have that result irrespective of the circumstances in which it occurred. The Court referred to the concessions of law thought to have been

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Marais JA

made, merely to reinforce its primary conclusion that there was nothing objectionable to public policy in a perpetual restraint as long as the then existing circumstances prevailed, that if circumstances did change, a reappraisal of the changed situation might result in the continued enforcement of the restraints being regarded as contrary to public policy, and that, if that were to occur, the restraints would not operate perpetually. All of which was no more than a logical consequence of the principle laid down in Magna Alloys and Research (SA) (Pty) Ltd v Ellis 1984 (4) SA 874 (A) at 898 D that the question whether a contractual restraint of this kind is in conflict with the public interest is to be assessed in the light of the circumstances prevailing at the time when it is sought to be enforced.

It is important to emphasise that in attacking the enforceability of the restraints when that issue was first before this

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Marais JA

Court, Argus Holdings and Argus Newspapers had not contended that there was no interest legitimately deserving of protection. It was common cause that there was. The attack was confined to the contention that the perpetual duration of the restraints was contrary to public policy. That was the only issue which had to be...