Harnischfeger Corporation and Another v Appleton and Another

• Jurisdiction: South Africa
• Judge: Flemming DJP
• Judgment Date: 29 April 1991
• Citation: 1993 (4) SA 479 (W)
• Court: Witwatersrand Local Division

Flemming, DJP.:

First applicant is a company incorporated in the United States of America where it manufactures machinery. Second applicant, a South African company controlled by first applicant, manufactures and distributes the same machinery and parts therefor.

H Second respondent is a company which achieves the manufacture of parts usable on the Harnischfeger machines produced by applicants. Applicants say that second respondent also achieved infringement of copyright and unlawful competition.

I will record applicants' case in very broad outline. First respondent was employed by second applicant until 1989. He is now in control of the I activities of the second respondent. At the beginning of 1991 a hired investigator heard from Mr Pierce of Mitre Engineering that Mitre had in its possession Harnischfeger drawing 1N1110 and was in the process of manufacturing an intermediate hoist gear 'from that drawing'. The investigator heard from Mr Bruce of Eclipse Foundry that Eclipse was in J possession of Harnischfeger drawing 4J139. Both Pierce and Bruce said

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A that first respondent telefaxed the drawings to them. This happened in a setting where second respondent contracted work out to such an extent that respondents' counsel even argued that it is wrong to say that second respondent 'manufactured' parts. (This contention was related to the argument that second respondent is not a party who committed a breach of B copyright.)

Applicants fear a repetition of respondents' behaviour. They infer that first respondent took copies of many drawings when he left second applicant's employ and that he is using those copies in advancing the second respondent's business. This is denied. This denial must be the basis of my decision because of the conflict of fact and because credence C is given to the reliability of the denial by statements by first respondent during a portion of 150 hours of telephone conversations which were eavesdropped and then transcribed and used to advance applicants' case. Respondents do not deny the telefaxing, but claim that drawings of Harnischfeger parts are freely available and were obtained from sources D other than applicant. They also claim that manufacturing was done without using drawings created by or for applicants. It is said that, inter alia, 'reverse engineering' was done - which is lawful since legislation was amended in 1988, the parts having a utilitarian purpose and being made by an industrial process.

In view of these and other disputes applicants were forced to press also E for relief pending action which is to be instituted. Relevant to this relief is, inter alia, an undertaking which was offered in the opposing affidavits. The undertaking would bind respondent not to use any of 'the applicants' drawings' in order 'to procure the manufacture of or make parts' which are parts 'for Harnischfeger machines'. But respondent F persists with the intent to make such parts (a) for customers who supply drawings; (b) by reverse engineering; and (c) from drawings made by anyone else, including an American company known as Pyramid. Whether there is a breach of the undertaking will mainly depend upon what the correct meaning is of the phrases which I have quoted. Do they refer to drawings of which applicants are the owners? Or of which applicants own copyright? Or do the G phrases refer to all drawings which tally fully with drawings which were created by or for applicants? Or to drawings which refer to Harnischfeger parts?

Respondents argued that, on applicants' own case, the application ought to be dismissed and that factual disputes are therefore unimportant. H Applicants reached the other extreme and, inter alia, argued that it is common cause that illegitimate copies were made by telefaxing drawings to two firms.

I turn first to determining what evidence may be taken into account.

I The first aspect is law-dominated and law-denominated, but the outcome is heavily dependent upon sound judicial discretion. In terms of s 3(1)(c) of the Law of Evidence Amendment Act 45 of 1988, the Court may admit hearsay evidence if this is appropriate in the interests of justice, having regard to the nature of the proceedings; the nature of the evidence; the purpose for which the evidence is tendered; the probative value of the evidence; the reason why the evidence is not given by the person upon whose credibility the probative value of such evidence J depends; prejudice

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A to a party which may be caused by the admission of the evidence; and 'any other factor which should in the opinion of the Court be taken into account'. It is clear that the interests of justice are paramount. It may be correct to admit evidence even if each of the prescribed factors in itself has little weight. I will record express comment on only some of the factors.

Favouring admission would be the ideal to allow a party to put his full B case before the Court; not to require him to proceed without relevant evidence because direct evidence is not available or can only be produced at the price of subjecting the party to delay, costs and other practical hindrances. Here there is a practical hindrance in that Bruce and Pierce would normally be called as witnesses by respondents and not by C applicants. They make their living from work, inter alia, from the respondents. They will prefer to avoid antagonising the respondents. They may also fear the consequences of their part in breaching applicants' copyright.

The major factor against admitting hearsay evidence is normally the harm D or risk of harm to the process of reaching an accurate conclusion if the objecting party cannot test the reliability of the hearsay information. Respondents in this case show no real reason to dispute the reliability, or even to test either the reliability of the evidence of the investigator or the truth of what he was told. The possible unfairness of admitting the hearsay statement is also effectively negatived as respondents did have an opportunity to produce rebutting evidence on the point. Respondents, E probably without pressure, decided not to produce evidence from Bruce and Pierce.

On an overall view, the accurate adjudication of the truth is not at risk if the hearsay evidence about Bruce and Pierce is admitted. Exclusion of the evidence will only achieve exposing applicants to dismissal of the F application or to a postponement with all the prejudice in its wake, and additional costs.

In regard to a second important category of evidence, I again mention only the most important factors. Firstly, the decision about admitting or excluding evidence is taken after all evidence is in and it is known what the case of each party on the pertinent point is. Taking into account what G the respondents' evidence does not pretend to suggest, the indication also here is that objection is made not in order to obtain greater factual certainty in the judicial process (because reason for denying does exist), but in the interests of creating a gap in the applicants' case. It is true that respondents have reason to hope that they can dent the hearsay evidence. But I must look at what they demonstrate as reasons for H disputing its veracity or cogency. If the indications are that the Court can with adequate safety rely thereon, it is preferable to admit the evidence rather than to apply a strict approach which, in the name only of the most desirable way of convincing a court, leaves the applicant either without justice or burdened or hampered in his attempts to obtain justice. Although some rules find their justification in the interests of good I order, the rules of evidence are normally only principles arrived at as a result of long periods of actual experience which produces sound insights. Experience also teaches about when there is adequate safety in acting upon evidence which normally calls for caution. It is in the interests of consistency and as a matter of correct jurisprudence often necessary and J correct to apply a

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A common-sense lesson which has become a rule even when the reason for the rule appears to be absent in the particular case or when the incentives to doubt its soundness are inviting. However, the 1988 statute intends the hearsay rule to shake off its application merely because the underlying reasons for its existence are sound or simply because the rule exists. It B intends that the principle against hearsay evidence should not be a shield of defence against facts. It should not apply where it does not promote the better administration of justice and does not assist the objecting party to avoid being burdened by what does not actually exist. The latter possibility is absent in this case because respondents have really put no reason before this Court for disbelieving or doubting the facts C purportedly proved by hearsay evidence.

The second...