Omega Africa Plastics (Pty) Ltd v Swisstool Manufacturing Co (Pty) Ltd

• Jurisdiction: South Africa
• Judge: Trollip JA, Corbett JA, Hofmeyr JA, Miller JA and Klopper AJA
• Judgment Date: 15 May 1978
• Court: Appellate Division

Trollip JA:

This appeal is against the judgment of ELOFF J in the B Witwatersrand Local Division, awarding respondent ("Swisstool") the amount of R77 420 as damages against appellant ("Omega") for the infringement of the former's registered design. The judgment is now reported in 1977 (2) SA 605 (W). The main issue concerns the quantum of those damages. The subsidiary issues relate to costs. The relevant facts can be summarized as follows.

C (1) Swisstool carries on business in Johannesburg as a manufacturer and seller of plastic and other articles. It was started by one Sweizig. In 1969 he designed a type of plastic container with capacities for 5, 10, 20 and 25 litres. Only the latter two kinds are relevant to these proceedings. They will be referred to as the "20 1" and "25 1" containers. The design was registered on 8 January 1970 in Swisstool's name under the D Designs Act 57 of 1967 ("the Act"). The containers were known as polycans. Briefly they can be described as cylindrical in shape, with an enlarged recess, and a locating platform at the top to facilitate stacking (an important feature of the design), and a spout and handle. It was common E cause that they were very well made and of excellent quality. After registering the design Swisstool successfully manufactured and marketed these containers from 1970 onwards for, inter alia, the chemical, pharmaceutical, detergent, cosmetic, and motor trades throughout the Republic. According to Sweisig, Swisstool developed "a very large clientele".

F (2) Also carrying on business on the Witwatersrand at the relevant time as a manufacturer and seller of plastic and other articles on a very large scale was Van Leer SA (Pty) Ltd ("Van Leer"). It too manufactured and sold, inter alia, 20 1 and 25 1 plastic containers, known as rondotainers. Their design was not registered. They differed in design and appearance from Swisstool's containers, but they were sold and used for G substantially the same trade purposes. Hence it was common cause that Van Leer's rondotainers and Swisstool's polycans competed with one another in the market for containers.

(3) Omega was another manufacturer and seller of plastic and other articles, also carrying on business in Johannesburg. During 1973 and 1974 H it manufactured certain kinds of containers for Van Leer, including 20 1 rondotainers. The number of the latter units so manufactured was appreciable: 79 388 in 1973, 67 825 in 1974. In July 1971 one Watts joined the staff of Omega. He was put in charge of the marketing of its blowmoulded plastic articles. He was a person with considerable drive, energy, and enthusiasm. After investigating the market he decided, and Omega agreed, that it should try to penetrate and exploit the market for 20 1 and 25 1 plastic containers. He caused a suitable container to be designed. These Omega started manufacturing and selling from about June 1973. Due

Trollip JA

largely to Watts' salesmanship and the competitive prices at which Omega offered these containers for sale, the venture succeeded. Omega sold substantial quantities of them from June 1973 to June 1975.

A (4) On 16 August 1973 Swisstool instituted action against Omega, alleging that the latter's containers infringed its registered design thereby causing it damage. It claimed an interdict, delivery of any infringing containers still in Omega's possession for destruction, and an inquiry into its damages, or, alternatively, an account, debatement and payment of B the profits made by Omega through selling the infringing containers. Omega put in issue the validity of Swisstool's registered design, counterclaiming for the cancellation of its registration. It also denied any infringement.

(5) At the trial the parties agreed that the Court a quo should first hear and decide the issues of validity and infringement of the design. On 16 C May 1975 it gave judgment on those issues in favour of Swisstool, granting an interdict with costs against Omega, and postponing the issue of damages sine die. (The judgment is reported in 1975 (4) SA 379 (W).) In consequence Omega discontinued selling the infringing containers in June 1975. It noted an appeal against the judgment, but this was abandoned on 6 August 1975,

D (6) On 27 August 1975, by arrangement between the parties, the issue of damages was set down for hearing on 3 November 1975. (The following events in chronological order are also narrated here since they have a bearing on the subsidiary issues of costs.) By now Swisstool had apparently abandoned E its alternative claim for an account of Omega's profits, etc. On 25 September 1975 it requested further particulars for trial, including those relating to the number, sizes, purchasers and prices of the infringing containers sold by Omega. At a pre-trial conference on 29 September the parties agreed that Omega would supply this information under an auditor's certificate within four days. This it failed to do. The information was F only supplied on 15 October in the form of a report by a chartered accountant. This was referred to in the evidence as "the Shrage report". On 17 October Swisstool filed a report of the evidence that its expert witness, Mr Hislop, a practising chartered accountant, would give at the trial. He expressed the opinion therein that Swisstool's damages "could G amount to R177 000" for its loss of profits, but he gave no details about how he arrived at that figure. On 17 and 23 October Omega asked Swisstool to disclose the figures which he used in computing the amount of R177 000. At a further pre-trial conference on 29 October Swisstool furnished it with detailed calculations substantiating an amount of R163 000.

(7) On 3 November, the trial date, Omega paid R75 000 into Court under H Rule of Court 34 (2) without prejudice and by way of an offer of settlement of Swisstool's claim for damages and tendered to pay Swisstool's taxed costs to the date thereof. In terms of Rule 34 (9) (a) this payment and tender were not disclosed to the learned trial Judge until after he had given judgment. Swisstool did not accept the offer.

(8) The trial was crowded out from 3 to 5 November. Omega then applied for a postponement on the ground, according to the judgment, "of a want of information as to what (Swisstool's) claim really is, and how it is computed". Swisstool opposed the postponement, but it was granted

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and the costs thereof were reserved. In his reasons, furnished on 27 November, the trial Judge held that the mere claim for the inquiry into damages was by itself far too vague and inadequate in terms of the usual procedural rules to enable him to determine the quantum of damages. He A consequently ordered Swisstool to file particulars of its claim for damages and Omega to plead thereto.

(9) Thereafter Swisstool filed detailed particulars of its claim, supported by schedules compiled by Hislop and based largely on the Shrage report. The claim was for the loss of profits sustained by it in respect B of the infringing containers sold by Omega. The other claims need not be mentioned here - they were dropped at various stages along the litigious road that this closely contested case followed. The sole claim persisted in was the main claim. Omega's plea was in substance a general denial of the claims and facts alleged in support of them. This form of plea and C Omega's conduct of its defence at the trial were criticized by the trial Judge - this will be adverted to later.

(10) After granting judgment in Swisstool's favour for R77 420, the trial Judge was informed of the payment into Court of the R75 000. After argument he made the following orders as to costs: (a) that the costs of the postponement granted on 5 November were to be costs in the cause; (b) D that Swisstool's application that Omega should pay its costs of the trial of the damages issue on the attorney and client scale be dismissed; (c) that Omega should pay those costs on the ordinary party and party scale, including those relating to the employment of two counsel. Omega has appealed to this Court against the quantum of damages and the orders of E costs in (a) and (c). There was no cross-appeal by Swisstool.

I turn now to consider first the main issue in the appeal, the quantum of damages.

According to s 15 (1) of the Act the registered proprietor of the design is entitled to the exclusive right in the Republic to make, use, or vend F the articles embodying the design. It can exercise this right, of course, for the purpose of gain. Indeed, s 4 (5) prohibits the registration of designs for articles that are not intended to be multiplied by an industrial process. In terms of s 24 the proprietor is entitled to enforce that exclusive right, if infringed, by obtaining damages from the infringer in court proceedings. The measure of damages is not mentioned, in the Act. Since the wrong is a species of delict, the measure will be delictual; it will be aimed at compensating the proprietor for his G patrimonial loss, actual or prospective, sustained through the infringement. As the proprietary, statutory right is income earning, the measure of damages can obviously include any loss of profits that the proprietor has sustained in respect of those infringing articles that he could and would himself have made and sold but for the sales of the H infringing articles effected by the infringer. See, for example, The United Horse-Shoe and Nail Co Ltd v John Stewart & Co (1888) 13 App Cas 401. That is the measure of damages Swisstool claimed and the Court a quo awarded in these proceedings.

In this regard, however, it is necessary to refer to and discuss certain dicta of the trial Judge before considering the facts. He correctly held that the onus of proving such damages rested throughout the proceedings on Swisstool. See at 608D of the reported judgment supra (1977 (2) SA

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