Naylor and Another v Jansen; Jansen v Naylor and Others

• Jurisdiction: South Africa
• Judge: Scott JA, Cameron JA, Cloete JA, Heher JA and Mlambo JA
• Judgment Date: 31 May 2005
• Docket Number: 243/04 and 251/04
• Hearing Date: 06 May 2005
• Counsel: P J Pretorius and R M Robinson for the appellant. No appearance for the respondent. J E Joyner for the appellant. P J Pretorius and R M Robinson for the respondents.
• Court: Supreme Court of Appeal

Scott JA:

[1] It is convenient to dispose of both of these appeals in one judgment. The circumstances in which they arise are briefly as follows. On 24 October 2002 Mr Pieter Jansen, an incola of C Gauteng, applied for and was granted ex parte an order for the arrest of Mr Michael Naylor to confirm the jurisdiction of the High Court, Johannesburg, in an action for defamation which Jansen proposed to institute against Naylor and one other. It is common cause that Naylor is an Australian citizen and a peregrine of South Africa. The D order, which was granted by Coetzee J, provided that the arrest would fall away upon Naylor's furnishing security or showing cause why the arrest should be set aside. The question of the costs was ordered to stand over for later determination by the trial Court. The order was served on Naylor by the Sheriff who was accompanied by Jansen's attorney. Arrangements were immediately made for Naylor to put up E security, which he did, and he was not taken into custody. On 4 November 2002 Jansen instituted action for damages against Naylor as first defendant and Atomaer (RSA) (Pty) Ltd as second defendant. The latter, as its name suggests, is an incola of South Africa. The cause of action was an alleged defamatory statement of and concerning Jansen made by Naylor, acting in F the course and scope of his employment with the second defendant, at a meeting held at Vanderbijlpark, Gauteng, on 2 October 2002. In due course, the trial was held before Willis J who, on 31 October 2003, gave judgment in favour of Jansen with costs. The judgment, however, made no reference to the costs of the ex parte application granted by Coetzee J which had been ordered to G stand over. Subsequently, on 20 February 2004, Naylor filed an answering affidavit to the application for the arrest in which he alleged that there had been no need to incur the costs of the application since, to the knowledge of Jansen, he was a frequent visitor to South Africa and would have consented to the jurisdiction of the Court had he been asked to do so. On 3 May 2004 Willis J H granted Naylor and the second defendant leave to appeal to this Court against his judgment in the defamation case. I shall refer to this appeal as the 'defamation appeal'. On the same day, he ordered Jansen to pay the costs of the ex parte application. Because the Judge considered the costs order to involve a question on which there was no authority, he granted Jansen leave to appeal to this Court I against the order. He recorded in his judgment that both parties were in agreement that leave should be granted. I shall refer to this appeal as the 'costs appeal'. A somewhat unusual feature of the proceedings in this Court was that, while Jansen was represented by counsel in the costs appeal (in which he was the appellant), he was not J

Scott JA

represented in the defamation appeal (in which he was the respondent) and, A instead, elected to abide the judgment of the Court.

[2] It is convenient to deal first with the defamation appeal. Much of the evidence adduced at the trial was common cause. A brief summary will serve to assist in understanding the issues that require determination. Some time prior to October 2002, Naylor became the chief executive of an Australian company, Atomaer Holdings (Pty) Ltd, which B operates from Perth. He also became the chief executive of its various subsidiaries, one of which was the second defendant. The business of the group is process technology and involves the development and commercial application of, inter alia, processing units which are used in the processing of substances such as minerals, C metals and chemicals. Until his suspension on 30 September 2002 and subsequent dismissal, Jansen was a manager employed by the second defendant and the local person in charge of the group's operations in South Africa. Earlier in September 2002 another of the group's managers expressed concern about some of Jansen's activities. The group's secretary was sent to South Africa to conduct an investigation D and Naylor followed shortly thereafter. The investigation revealed that Jansen had breached his service contract in various respects. It appeared that he had failed to protect the group's intellectual property rights properly and had failed to conclude confidentiality agreements with various manufacturing companies that had been engaged by the second defendant to manufacture components which were E regarded by the group as a critical part of its intellectual property rights. More importantly for present purposes, it was ascertained that Jansen had a 45% interest in JFP Chemical Corporation CC ('JFP'), which was one of the entities engaged to do manufacturing work for the second defendant. This interest had not been disclosed F to the group as required by Jansen's conditions of service. (In passing, I mention that Jansen was not a director of the second defendant.) It appeared that regular payments had been made to JFP, but these had all been made against invoices submitted by JFP. There was no suggestion that JFP had been paid for work it had not done or services it had not rendered. G

[3] A meeting was held on 30 September 2002, at which Jansen was confronted with what the investigation had revealed. He was less than frank regarding his interest in JFP. He denied it at first, but thereafter said he had relinquished it in July of the previous year, which was not the case. He later conceded that he had acquired H the interest in JFP to supplement his income after the group had declined to give him an increase in salary. As I have indicated, he was suspended.

[4] There existed, at that stage, an ongoing business relationship between the second defendant and Iscor Ltd, which had I as its object the joint development of a 'gas scrubbing process'. This involved not only research but also test work and trials which were being conducted at Iscor's facilities at Benmore Park. The parties had previously entered into a confidentiality agreement, but each appeared to be somewhat wary of the other regarding their respective intellectual property rights arising J

Scott JA

out of the development. Jansen had been involved in negotiations with Iscor in connection with A the gas scrubbing process since late 2000 and had developed a good relationship with its management. Naylor had met with representatives of Iscor in June 2002. Sometime in September a meeting was arranged for 2 October 2002, to be held at Iscor's premises at Vanderbijlpark. Because of his suspension, Jansen did not attend. B

[5] The meeting was chaired by Mr Bezuidenhout, who was employed by Iscor as its engineering manager at Vanderbijlpark. Some eight representatives of Iscor were present, including Mr Du Toit who was responsible for taking minutes. Both Bezuidenhout and Du Toit gave evidence at the trial. This evidence was by agreement omitted from the C record, presumably because it was no longer disputed. The minutes of the meeting recorded the following:

'Mr Naylor informed the meeting that Mr Jansen of the South African local office had been suspended from his position because he had misappropriated Atomaer funds to a company of which he holds a directorship.' D

Du Toit confirmed the correctness of the minutes. Bezuidenhout, too, was adamant that the words attributed to Naylor in the minutes had been uttered by him. Bezuidenhout said that Naylor's statement came as a 'bombshell' and had a profound effect on the meeting.

[6] In their plea, the defendants denied that the words complained of (ie that Jansen had misappropriated Atomaer funds E to another company of which he was a director), had been uttered by Naylor and, in the alternative, denied that they were defamatory of him. Neither denial was maintained in this Court and, in my view, rightly so. The word 'misappropriate' is defined in the OED as meaning: 'to appropriate to wrong use; chiefly, to apply dishonestly F to one's own use (money belonging to another)'. The Encarta World English Dictionary gives the following definition: 'to take, especially money, dishonestly, or in order to use it for an improper or illegal purpose'. In my view, the use of the word 'misappropriate' in conjunction with the words 'to a company of which he held a directorship' would be understood by the ordinary G person hearing the words to mean that Jansen had been stealing money from the second defendant by diverting it to a company in which he had an interest. This was clearly defamatory of Jansen.

[7] Proof that the words were uttered gives rise to two presumptions: first, that the publication was unlawful and, second, that the statement was made with the intention to defame. (See H eg Joubert and Others v Venter 1985 (1) SA 654 (A) at 696A.) It is now settled that the onus on the defendant to rebut one or other presumption is a full onus; it must be discharged on a balance of probabilities (Mohamed and Another v Jassiem 1996 (1) SA 673 (A) at 709H - I). I might just add, at this stage, that the second defendant's alleged liability was based I upon the principles of vicarious responsibility and that it was common cause that, if Naylor were liable to Jansen, so was the second defendant.

[8] The defendants denied in their plea both that the statement complained of was unlawful and that it was made animo injuriandi J

Scott JA

Before considering the grounds upon which these denials were based, it is necessary to refer to a feature of the plea A which has a bearing on a ruling which the Court a quo made regarding the cross-examination of Jansen, to which I shall revert later, and also on the question of Naylor's state of mind. In para 6.1 of the plea it was denied that Naylor had uttered the words alleged. In para 6.2, his version of what he said at the meeting is set out. It B reads:

'6.2

The first...