Financial Mail (Pty) Ltd and Others v Sage Holdings Ltd and Another

• Jurisdiction: South Africa
• Judge: Corbett CJ, Van Heerden JA, Kumleben JA, Goldstone JA and Howie AJA
• Judgment Date: 18 February 1993
• Citation: 1993 (2) SA 451 (A)
• Hearing Date: 24 August 1992
• Court: Appellate Division

C Corbett, CJ.:

The parties concerned in this litigation are the following: (1) Financial Mail (Pty) Ltd, first appellant and first respondent in the Court a quo, which is the proprietor of a weekly magazine, registered as a newspaper and known as the Financial Mail; (2) Times Media Ltd, second appellant/second respondent, which publishes the Financial Mail; (3) Mr D Michael Coulson, third appellant/third respondent, who at the time of the proceedings in the Court a quo was the acting editor of the Financial Mail (in the absence of the editor, Mr Nigel Bruce, abroad); (4) Mr James (Jim) Jones ('Jones'), fourth appellant/fourth respondent, who at all relevant times was employed by the first appellant as a financial journalist and the senior assistant editor of the Financial Mail; (5) KNL Publishing (Pty) Ltd, fifth appellant/fifth respondent, the printer of the Financial E Mail; (6) Sage Holdings Ltd ('Sage'), first respondent and first applicant in the Court a quo, which is a South African corporation listed on the Johannesburg Stock Exchange and carries on business from its principal place of business in Johannesburg as a holding and investment company; and (7) Mr Hyme Louis Shill ('Shill'), second respondent/second applicant, the F chairman of and a substantial shareholder in Sage.

At the time of the proceedings in the Court below Sage had two operating subsidiaries, Sage Financial Services Ltd ('Sage Financial') and Sage Property Holdings Ltd ('Sage Property'), both of which were listed companies. They, together with various other subsidiaries, formed the Sage G group of companies. Sage Financial was engaged in the business of life assurance, mutual fund services, trust company and financial planning services and investment services. It held what were termed 'strategic investments' in the Allied Group Ltd ('Allied') and in the Rand Merchant Bank Ltd ('Rand Bank'). Sage Property headed a large property group which H managed or controlled assets totalling approximately R1 billion. Sage and its subsidiaries employed about 3 000 persons and was said (in the founding affidavit) to have 'a 25-year-old record of strong long-term profit growth, financial stability and business integrity'. More than 50 per cent of the shares in Sage were owned by the Mines Pension Fund, the Rembrandt Group and Shill.

I On Tuesday, 11 September 1990, the respondents launched an urgent application in the Witwatersrand Local Division seeking interdicts restraining the appellants from publishing, disclosing or disseminating certain information concerning Sage and its business activities which was derived from sources said to be unlawful; and from publishing in the J Financial Mail a certain article written by Jones concerning Sage and its

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A business activities. The matter came before Joffe J who, having heard argument on 11, 14 and 17 September, delivered a judgment on 25 September granting final interdicts, with costs. This judgment has been reported: see Sage Holdings Ltd and Another v Financial Mail (Pty) Ltd and Others 1991 (2) SA 117 (W). With leave of the Judge a quo, appellants now come on appeal to this Court, seeking a reversal of the decision of the Judge a B quo.

In the two years which have intervened since the granting of the interdicts, the information and the draft article which was the subject-matter of this litigation have ceased to be pertinent or topical. The appeal is nevertheless being pursued because of the important legal C issues which it raises, and also, I need hardly add, because of costs.

The facts of the matter may be stated as follows. On 17 August 1990 an article entitled 'Reading Between the Lines' and written by Jones appeared in the Financial Mail. It is a wide-ranging and critical commentary upon D the financial position of Sage and three of the themes to which it gives prominence are the possibility that Sage could be, or become, short of ready cash (or 'cash-hungry', as the article puts it); the relationship between Sage and Allied; and a business venture in the United States of America embarked upon by Sage through the medium of an American subsidiary, Independent Financial Services ('Independent'). In accordance with what is termed 'normal Financial Mail policy' a draft of the proposed E article was submitted before publication to Shill and a Mr B Nackan ('Nackan'), an executive director of Sage, for comment. Discussions took place, certain corrections were made and comments were incorporated in the article.

On 31 August 1990 Jones sent a copy of a further draft article which it F was proposed would be published in the Financial Mail during the course of the week commencing Monday, 3 September 1990. According to Shill, much of the information and many of the statements contained in this draft article (which I shall refer to by its exhibit number, 'LS4') were inaccurate, untrue and defamatory and were calculated to have the effect of injuring the business status, reputation and goodwill of Sage. Shill was also G 'intrigued and disturbed' by the fact that certain of the information contained in the article was of the kind that would not ordinarily be available to the public or capable of being obtained by financial journalists through normal channels.

After Shill had consulted with Sage's attorney, a meeting was arranged H between him (accompanied by his attorney) and Jones and Bruce, representing the Financial Mail. During this meeting it transpired that Jones had used information gleaned from a confidential document which had been prepared by certain members of the management of Allied and had been submitted to the executive committee of Allied, but rejected by it ('the I Allied document'). The document never came before Allied's board and Allied never gave permission for it to be disclosed to third parties, apart from Shill, to whom a copy was sent in confidence. The Allied document was evidently critical of the relationship between Allied and Sage and recommended that this be terminated. It was marked 'Strictly private and confidential'.

J Shill informed Jones and Bruce of the confidentiality of the Allied

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A document and pointed out to them that the use of 'unsubstantiated information' of this nature would be severely damaging to Sage. The parties failed to agree upon a postponement of the publication of the article. Sage's attorney thereupon informed Bruce that unless first appellant undertook not to publish the article the Court would be approached for an urgent interdict to restrain publication. Bruce B indicated that he wished to consult first appellant's legal representatives.

Immediately thereafter both sides, through their respective attorneys, consulted counsel and certain further negotiations took place between the parties and their legal representatives in counsel's chambers. During the course of these negotiations an additional source of information utilized C by Jones in his article emerged. First appellant's counsel disclosed that his client was in possession of certain tape recordings of telephone conversations between Nackan and various third parties. Subsequent investigation revealed that an eavesdropping or tapping device had been secretly and unauthorisedly installed in the basement of Sage's premises which enabled conversations on the telephone line used by Nackan to be D intercepted and tape-recorded. No other lines had been tapped. It is stated by Bruce and Jones that the appellants were in no way party to the making of these tapes and did not solicit them. According to Jones, they were made available to him by a 'confidential source' whose identity he was not prepared to divulge. At a certain meeting between the parties E Bruce suggested (on hearsay information) a reason for the tapes having been made, but this was not substantiated. Be that as it may, the telephone-tapping was a reality and Jones candidly conceded (in an affidavit filed by appellants) that some of the information in the article LS4 was derived from these tapes.

F According to Shill, he was concerned and surprised by these revelations of how Sage's 'privacy and confidentiality' had been breached and by the fact that the appellants wished to exploit these sources of information for the benefit of their publication and to the detriment of Sage's business status, reputation and goodwill. He also realized that Jones had 'substantially misunderstood and misconstrued' certain 'delicate negotiations' and other transactions which may have been referred to G 'intermittently and cryptically' during the course of these tapped telephone conversations.

In the negotiations which followed this latest revelation, counsel expressed Shill's wish to have full access to Jones's next draft of the article in order to approve and vet it in all respects, including both fact and opinion. The Financial Mail representatives were not prepared to H permit such approval rights and late on the afternoon of 3 September negotiations broke down.

Later that evening, and after reconsidering the matter, Shill indicated that he would be prepared to accept the position that

'. . . the applicants would approve the article only in order to see that I its answers and views were fairly represented'.

In the result an agreement in principle was arrived at by the parties that evening.

On the following morning (4 September) the agreement was reduced to writing in the form of a handwritten document ('LS5') and thereafter the J substance of LS5, with certain minor alterations, was incorporated in a

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A letter dated 4 September 1990 and addressed by Sage's attorneys to appellants' attorneys ('LS6'). This letter reads:

'This serves to confirm the following arrangement between Sage Ltd and the Financial Mail.

1.

Financial Mail will not publish the draft article shown to Sage.

2.

B Sage (Mr L...