Nordbak (Pty) Ltd v Wearcon (Pty) Ltd and Others

• Jurisdiction: South Africa
• Judge: Levenberg AJ
• Judgment Date: 12 February 2009
• Citation: 2009 (6) SA 106 (W)
• Docket Number: 343028/2008
• Hearing Date: 11 February 2009
• Counsel: PF Louw SC (with him PJ Jooste) for the applicant. A du Plessis SC for the respondents.
• Court: Witwatersrand Local Division

Levenberg AJ:

This is an application in which the applicant seeks an J order interdicting the respondents who are competitors of the applicant

Levenberg AJ

from utilising the applicant's trade secrets unlawfully. A

The applicant and the first and second respondents produce certain chemical-based compounds that are used in mining and industry to protect surfaces of installations such as conveyer belts, pulleys, crushers and the surfaces of ore-bearing motorised and railway trucks.

The third respondent was employed by the applicant and after his B resignation he established the first two respondents.

1. Summary of the facts

Up to 2006 the respondents merely acted as agents of another producer, Cutlass. In 2006 they started marketing their own products. These C products were similar to products that the applicant had developed some years before. The applicant suspected the respondents had come into possession of the applicant's formulations and that the respondents were using these formulations to compete with the applicant.

Prior to that, during August 2006, there was a break-in at the offices of D the applicant and only three computers out of the eight on the site were stolen. These were coincidentally the computers that contained the applicant's secret formulations. These were not in fact new computers and not of any great intrinsic value in themselves.

During March to April 2007 Mr H Gardener, the managing director of E the applicant, learnt that the first two respondents were now manufacturing 'Wearcoat TL', a directly competing product of the applicant's 'Nordtile'. Although suspicious, the applicant could not prove that the respondents had the applicant's new epoxy technology.

During the first few months of 2007 the first and second respondents F brought several new, directly competing, products onto the market, all with names that the applicant contends were clearly intended to present themselves as related to the applicant's products.

The applicant also employed a Mr J Venter. He resigned on 2 May 2007 and took up employment with the second respondent in June 2007. G

Mr Venter resigned from the second respondent. On 28 September 2007, after his resignation, he deposed to an affidavit concerning his knowledge of the conduct of the respondents. Venter stated that one Combrinck, whilst employed with the applicant, had stolen some of the applicant's secret formulations. He allegedly copied the stolen formulations. H The products now being manufactured by the respondents were, according to Mr Venter, based upon the applicant's written formulations. The respondents' copies thereof were contained on the computers of the third respondent, E Vorster and H Hamman, which had been stolen from the applicant. I

On 10 October 2007 the applicant applied for and obtained an Anton Piller order (the Anton Piller order) in the Transvaal Provincial Division (the TPD), inter alia, to preserve the evidence contained on the respondents' computers. At the same time the applicant applied for an interim interdict to restrain the respondents from unfairly competing against it (the interim interdict application). J

Levenberg AJ

A Although not directly relevant, it was explained to me by counsel for the applicant during the course of argument that the application was brought in the Transvaal Provincial Division, because the Anton Piller order sought contemplated that searches would be conducted, not only within the area of jurisdiction of the WLD, but also within the area of jurisdiction of the TPD.

B On 10 to 12 October 2007 the applicant's computer expert, a Mr P Furber, duly authorised by the Anton Piller order, made mirror copies of the computer hard drives of the third respondent, E Vorster and N Hamman (the Anton Piller subjects), which were retained (as per the Anton Piller order) in the possession of the third respondent.

C The Anton Piller subjects were ordered by the sheriff not to access the said computers at all, if they took them home on 10 October 2007. They agreed to this and then took the computers home.

It emerged from the examination subsequently conducted by the D applicant's computer expert that, when the Anton Piller subjects took these computers home, they deleted the incriminating information on the hard drive. However, technology being what it is, the computer expert was able to determine what had been deleted, so that ultimately the attempt to destroy the evidence done in the face of an Anton Piller order failed.

E During October 2007 the applicant laid a complaint of theft with the South African Police Service (SAPS) against, inter alia, the respondents. The SAPS were advised that the sheriff was in possession of preserved evidence.

In the light of the opposing affidavits filed in the interim interdict F application, the applicant launched an application under rules 35(12) and 35(14) in that proceeding. Ultimately, that application was unsuccessful.

During November 2007 the applicant also instituted action against the G respondents and Mr Combrinck in Johannesburg for final interdictory relief, passing off, trademark infringement and damages (the Johannesburg action).

Those of the respondents who are defendants in that action have, along with the other defendant, Mr Combrinck, filed their pleas. The plea H (which was filed before discovery of the information that had been deleted from the hard drive) contains a bare denial of the applicant's claims. In other words, there is a bare denial that the applicant owns confidential information and that the respondents have in any way utilised the applicant's confidential information.

I On 12 November 2007 the respondents delivered an opposing affidavit in the interim interdict application. The respondents there denied being in possession of applicant's formulations and stated that Venter was a liar and that they had developed all their product formulations themselves. They presented no documentary evidence in support of their position. It was as a consequence of that denial that the applicant brought the J application under rules 35(12) and 35(14) for further documents.

Levenberg AJ

Based upon the undisputed evidence of what subsequently occurred, it A is evident that the respondents filed false affidavits under penalty of perjury in the interim application.

The SAPS then caused a s 205 subpoena to be served by the sheriff to produce the preserved evidence. The SAPS also requested Mr Furber, the computer expert, to analyse the copied hard drives during February B 2008.

It appears from the founding papers that the respondents, Vorster and Hamman, were unco-operative in making their expert available to meet with Mr Furber, and that is the explanation for the delay in analysing the hard drives. In fact, from my perspective in this application it is irrelevant C whether there is a valid excuse for that delay or not.

As alluded to above, Mr Furber found that the third respondent had deleted numerous formulations and data from his computer hard drive during the night of 10 October 2007. Mr Furber retrieved them and handed copies thereof to the SAPS. D

It was during April 2008 that the respondents delivered their pleas in the action.

The outcome of Mr Furber's findings on behalf of the SAPS was not made available to the applicant. The respondents' expert did not have to E be present at the SAPS investigation, but, as it was a SAPS investigation, Mr Furber could not make those results available to the applicant.

Accordingly it was only on 25 April 2008 that Mr Furber was able to meet with the respondents' expert and investigate the computer hard drives with the respondents' expert pursuant to the Anton Piller order. F

Definite matches were found in four products of the respondents as compared to four of the applicant's products. The respondents' attorneys were present and they noted the comparisons. The deletions were again retrieved. No hard copies of the respondents' formulations were provided to the applicant.

Starting at p 32 of the applicant's founding affidavit, the applicant has G compiled impressive schedules reflecting the comparative information that resulted from Mr Furber's search. On those schedules the applicant has analysed the name of the applicant's product and the name of the competing product of the respondents. The applicant has then analysed the comparative chemical components of these products. I have looked H at the...