Meter Systems Holdings Ltd v Venter and Another

• Jurisdiction: South Africa
• Judge: Stegmann J
• Judgment Date: 24 June 1992
• Citation: 1993 (1) SA 409 (W)
• Hearing Date: 19 June 1992
• Court: Witwatersrand Local Division

Stegmann, J.:

A This is an opposed application which was launched as a matter of urgency on 3 June 1992.

The applicant is a company named Meter Systems Holdings Ltd, whose founding affidavit has been sworn to by their chairman, Mr Graham Nel.

The first respondent is Mr Mathys Christiaan Venter, known to his friends as Thys Venter. He graduated as a mechanical engineer and has a B master's degree in business leadership. He and Mr Graham Nel have known each other for many years. Early in their careers they both worked for the same employer. Their paths separated for a time. In 1987 they became associated once again. This time it was in the business which has subsequently become that of the applicant company.

C The applicant company was incorporated towards the end of 1989. The first respondent was its first managing director, effectively from the beginning of 1990. During the course of 1991 Nel and the first respondent fell out in circumstances which are now in dispute. Early in 1992 the first respondent's employment with the applicant company came to an end.

D The first respondent went on to establish the second respondent, a company named Tank Gauging SA (Pty) Ltd. There are various disputes between the parties. One of them is whether the second respondent is merely the first respondent's alter ego, or whether the second respondent also has other members, or beneficially interested persons, in addition the first respondent.

E What is quite clear is that the second respondent has been set up for the purpose of competing with a substantial part of the business of the applicant company. The applicant considers that the competition of the first and second respondents is unfair and unlawful, on both delictual and contractual grounds. The respondents are of the contrary view, that they F are doing no more than to exercise their right to compete fairly and lawfully with the applicant. The ultimate object of the present proceedings is to resolve that dispute.

The notice of motion, in terms of which these proceedings were instituted on 3 June 1992, indicated that the applicant would first seek temporary relief from 9 June 1992, and that on 16 June 1992 it would seek G final relief. On 9 June 1992 the matter came before Van Schalkwyk J. By then the respondents had prepared answering affidavits. The matter was not ripe for hearing. It was postponed to the opposed roll in the week of 16 June 1992 and it was argued before me on Friday, 19 June 1992. By then, the applicant had filed replying affidavits. The respondents sought leave H to hand up a fourth set of affidavits, the need for which was occasioned, they said, by the very short notice on which they had been required to react to the applicant's allegations.

After hearing the applicant's objections to my receiving at least a part of the fourth set, I ruled that they should be admitted, subject to the applicant's right to hand up further affidavits dealing with the fourth I set, if the applicant could do so before the end of the day. No fifth set of affidavits was tendered.

Mr Eloff has appeared on behalf of the applicant. He has accepted that, in the light of the disputes that are apparent from the affidavits, there can be no question of my ordering any final relief on the papers as they J now stand. He has accordingly asked only for the temporary relief which was

Stegmann J

A initially to have been sought on 9 June 1992. The essence of it is that, pending the outcome of further proceedings to resolve the dispute between the parties, the respondents should be restrained by an interim interdict which will:

1.

Generally prohibit both respondents from divulging or using the applicant's trade secrets and confidential information said to include in particular -

1.1

B the applicant's contract with Delft Instruments Tank Gauging BV (DITG) relating to orders already placed by the applicants and accepted and to be executed by DITG;

1.2

the terms of payment agreed between the applicant and DITG;

1.3

C the policies, strategies and targets of the business conducted by the applicant;

1.4

the names, addresses and contact persons of the 23 companies listed at p 59 which are customers of the applicant, and the subsidiaries of such companies;

1.5

D the requirements of such 23 companies and their subsidiaries relating to liquid measuring, fluid handling and tank gauging equipment;

1.6

the pricing structure of the applicant with respect to the supply, installation, commissioning, maintenance and repair of liquid measuring, fluid handling and tank guaging equipment.

2.

E Generally prohibit both respondents from using trade secrets and confidential information, the property of the applicant, of which the first respondent learnt whilst employed by the applicant.

3.

Prohibit both respondents from communicating with, or soliciting business from -

3.1

F the 23 companies listed at p 59, and their subsidiaries;

3.2

the suppliers referred to in para 4.7 of Nel's affidavit, viz DITG; the Civacon (Europe) Group in Holland, Tokico of Japan; Silea of Italy; and the unnamed manufacturers or suppliers of EM4 electronic registers, additive injection systems, on-board truck computers, control valves, depot automation systems, G truck information systems and articles described as 'various other fluid handling equipment'.

I should mention that 3.2, relating to suppliers, did not appear in the original notice of motion; and that Mr Eloff added it in during the course of the hearing, without objection from Mr Heher.

H Mr Heher appeared on behalf of both respondents. He submitted that the applicant had failed to make out a case for the interim relief for which Mr Eloff had asked. Mr Heher submitted that the application should be dismissed.

I turn to consider whether the applicant has established each of the I requirements for the interim interdicts it seeks. The requirements, as formulated by the learned author of the title 'Interdicts' in Joubert (ed) Law of South Africa vol 11 para 323, are:

(a)

a prima facie right;

(b)

a well-grounded apprehension of irreparable harm if interim relief should be refused and if the applicant should afterwards be found J to have been entitled to relief;

Stegmann J

(c)

A that the balance of convenience should favour the granting of an interim interdict; and

(d)

that the applicant should have no other satisfactory remedy.

Before making a decision about these elements, I propose first to summarise the essential propositions that are common cause, and the disputes.

B The nature of the applicant's business is common cause. Their business is that of importing, supplying, installing and maintaining liquid measuring, fluid handling and tank gauging equipment. Liquid measuring equipment consists of meters which measure a flow of liquid, such as the meter on a petrol delivery lorry, and a meter on a petrol pump. Tank C gauging equipment is evidently today rather more sophisticated than the simple dipstick. It is designed to take account of the fact that volume varies with temperature, and to enable the user to calculate with some precision the quantity of fluid in a tank, taking account of temperature variations. Fluid handling equipment evidently includes various devices for the convenient transfer of fluids from storage tanks to transport D vehicles and so on. Hardly any of this equipment is manufactured in South Africa. Most of it has to be imported from foreign manufacturers and suppliers. One of the foreign suppliers featuring importantly in these proceedings is a company with its principal place of business in Delft, Holland. It is named Delft Instruments Tank Gauging BV. I shall refer to E it as DITG. The equipment which it supplies is distinguished by the trade name 'Enraf'. The officer of DITG mentioned principally in this matter is one Jacobus or Jaap De Hoog.

Other foreign suppliers of equipment dealt in by the applicant include a group of Dutch companies described as Civacon (Europe) Group; an Italian F company named Silea; a Japanese company named Tokico; and the unidentified manufacturers and suppliers of articles described as EM4 electronic registers, additive injection systems, computers to be installed on trucks, control valves, depot automation systems, truck information systems and other fluid handling equipment.

The number of users of this type of equipment in South Africa is G apparently not very great. They tend to be large companies which refine imported oil, or which manufacture locally oil, petrol and other organic fluids, and other liquid chemicals, from coal and other raw materials, and which distribute their products all over the country. The applicant has disclosed a list of their major customers at p 59. It comprises 23 H companies, most of which are very large concerns with substantial networks of subsidiary companies.

In November 1987 the first respondent was the managing director of a division of Howden Group SA Ltd, referred to as 'Howden Energy Systems'. At that time Nel and the first respondent discussed the terms on which first respondent would leave Howden Energy Systems and join a company I called Meter Systems Ltd controlled by Nel. They agreed that the first respondent was to become a part-owner of the enterprise, to enable him to share in its profits and the benefits of its growth. To that end the first respondent was to receive 200 000 shares in Meter Systems Ltd, constituting some 21/2% of the equity of that company. In addition, the first respondent's salary was to be the same as Nel's or as that of any J other

Stegmann J

A major shareholder. On those two principal inducements the first respondent left Howden Energy Systems and accepted employment with Meter Systems Ltd with effect from 1 March 1988.

During March 1988...