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IN THE HIGH COURT OF SOUTH AFRICA

(TRANSVAAL PROVINCIAL DIVISION)

DATE: 08/02/2008

CASE NO: 19461/2007

UNREPORTABLE

In the matter between:

CALVERT, PETER DEREK APPLICANT

AND

MARAFIOTI, GIANCARLO GUALTIERO FIRST RESPONDENT

MARAFIOTI, NADEEMA SECOND RESPONDENT

BEHIND THE CURTAINS CC. THIRD RESPONDENT

MAHOGANY FURNISHRES CC FOURTH RESPONDENT

JUDGMENT

MAVUNDLA, J

[1] This matter came before me on urgent basis on the 5 June 2007. At the time I held the view that the urgency was self created and I then had the matter struck off the urgent court roll with costs. I however allowed the applicant to approach the DJP for the allocation of the matter on the opposed roll as soon as it was possible. The matter then came before me on the opposed roll on 20 June 2007, on which date I reserved my judgment.

[2] The applicant seeks an order interdicting and restraining:

2.1 the first respondent by himself or through his servants or agents from competing in any way with the fourth respondent in its business activities, being the design, manufacture, distribution and sale of wooden furniture.

2.2 the first respondent, the second respondent and the third respondent, by themselves or through their servants or agents, from manufacturing and or distributing and or offering for sale and or selling any of the items of furniture listed an annexure "A" (which is attached to the papers) or any items of furniture substantially similar thereto;

2.3 the first respondent, the second respondent and the third respondent, by themselves or through their servants or agents, from:

2.3.1 manufacturing, trading with, distributing or selling furniture bearing the names listed in annexure "A" or names substantially similar thereto.

2.3.2 passing off by way of manufacture, sale, distribution or otherwise, furniture bearing similar names to those reflected in annexure "a" or names substantially similar thereto.

2.3.3 manufacturing, distributing or selling any wooden furniture which is the same or substantially similar top the wooden furniture manufactured, sold and distributed by the fourth respondent;

2.3.4 passing off any furniture manufactured, distributed or sold as the fourth respondent's furniture marketed, distributed or sold by the fourth respondent;

2.3.5 passing off the business of the first respondent as and for that of the fourth respondent, or as being connected in the course of trade with that of the fourth respondent (Prayer 4 with its sub-prayers);

[3] Under prayer 5 the applicant seeks an order interdicting and restraining the first respondent, the second respondent and the third respondent, by themselves or through their servants or agents, from:

3.1 utilising the computer software program of the fourth respondent which contains the designs and other features of the fourth respondent's wooden furniture;

3.2 using the fourth respondent's catalogues and or brochure and or photographs relating to the fourth respondent's furniture range;

[4] The applicant prays in the alternative to the above stated prayers and pending the determination of these proceedings, alternatively of the proceedings to be instituted for the relief set out herein above, an interim order in terms of the above mentioned prayers be granted with immediate effect and the costs of this application be costs in the cause.

[5] In prayer 7 he seeks that the first respondent, the second respondent and third respondent be ordered to deliver to the applicant the fourth respondent's computer software program containing the designs of the fourth respondent's furniture, together with all copies thereto. In prayer 8 and 9 he seeks that first respondent be directed to sign the relevant CK2 document and any other necessary document required to effect the transfer of the first respondent's 50% membership in the fourth respondent to the applicant within five days of the date of the order and that in the event the first respondent refuses to sign the aforesaid mentioned documents, the sheriff be authorised to sign such documents to effect the 50% membership in the fourth respondent to the applicant on the first respondent's behalf.

[6] In prayer 10 the applicant seek that his attorneys of record be authorised to:

6.1 retain the sum of R200 000, 00, being part of the purchase price payable by the applicant to the first respondent for the purchase of the first respondent's 50% membership interest in the fourth respondent pending the finalisation of this application and any other action and or arbitration proceedings to be instituted by the applicant within thirty days of the date of this order;

6.2 deduct any amount found to be owing, either by way of costs or by way of a Court order by the first respondent to the applicant and or by the first respondent, either by way of an order for payment sounding in money, alternatively a costs order.

[7] In prayer 11 the applicant seeks that the first respondent, second respondent and third respondent be ordered to pay the costs of this application. Under prayer 12 the applicant asks for an alternative relief.

[8] This matter was initiated as one of urgency. The notice of motion which was served upon the respondents on 21 May 2007, called upon the respondents to indicate their intention to defend the matter not later than 22 May 2007. It also afforded the respondents until 16h00 on 28 May 2007 time to file their answering affidavits. Indeed the relevant notice of intention to defend and answering affidavits were served in time on the applicant's attorneys. The matter was set down for hearing on the urgent roll of this Court on 5 June 2007. However, since I was of the view that the matter was not urgent, I struck the matter off from the urgent roll. I however allowed the parties to approach the Deputy Judge President to allocate them a preferred early trial date on the opposed motion roll. The matter was then set down before me on 20June 2007. The matter was then ventilated where after I reserved my judgment.

SUPPLEMENTARY AFFIDAVIT OF REPSONENT

[9] One of the first issue that I had to decide was whether the first respondent's supplementary affidavit should be allowed in these proceedings. It is common cause that Rule 6(5)(d)allows the filing of an answering affidavit. It is also common cause that the respondent must disclose his defence in full in his answering affidavit. The filing of supplementary affidavit can only be done with the leave of the Court, exercising its discretion, when such leave is sought. Where such leave is not sought on the papers, the Court can regard such supplementary as pro no scrip to ¹.

[10] In casu the first respondent is not seeking the leave of this Court leave to file its supplementary affidavit. It has howeVer in its supplementary affidavit stated, inter alia, that that due to time constrain in having to prepare his answering affidavit on urgent basis he "was not able to obtain all necessary documentation required to substantiate the statements made in his answering affidavit, nor was he able to obtain confirmation from various third parties that that many of the statements made by the applicant in respect of such third parties were in fact falls."

[11] In his answering affidavit, which consist of 42 typed pages, the first respondent deals comprehensively with the issues raised in the affidavit of the applicant. Nowhere does he complain of time constrains, nor indicate that he would seek the Court's indulgence to be afforded a further opportunity to buttress his affidavit in the form of supplementary affidavit. In his supplementary affidavit he does not seek the Court's indulgence to have this supplementary affidavit filed. There is no right to the filing of additional affidavits. The filing of an additional affidavit is not there for a take. Where the Court's leave is not sought, then there is no reason why the Court should bend over backwards to accommodate the respondent and pay lip service and allow his supplementary affidavit to become part of these proceedings. I am of the view that there is no reason why a punitive costs order should not be made against the first respondent in regard to this supplementary affidavit. In the premises I disallow the filing of the supplementary answering affidavit by the first respondent and I intend to make a punitive costs order against him in this regard.

LOCUS STANDI

[12] The applicant avers in his affidavit that he is bringing this application in his personal capacity and in his capacity as a member of the fourth respondent, on behalf of the fourth respondent. The applicant and the first respondent each hold 50% member's interest in the fourth respondent. On 6 October 2006 the applicant and the first respondent concluded a sale agreement in terms of which the applicant bought the 50% members interest belonging to the first respondent.

[13] It is common cause that, albeit the aforesaid agreement of sale, the transfer of the first respondent's 50% membership interest in the fourth respondent has not been effected² . The first respondent in fact concedes that he still remains a member in the fourth respondent. The first respondent contends that the applicant launched these proceedings in his personal capacity as a 50% shareholding member of the fourth respondent in accordance with the provisions of s42 read with s50 of the Close Corporation Act No. 69 of 1984. The respondents deny that the applicant has locus standi to launch the application in the manner he has, especially against the second and third respondents, who neither of them are members of the CC, but also against the first respondent.

[14] Section 50 of the Close Corporation Act provides that:

"(1) Where a member... is liable to the corporation­ –

(a) ...; or

(b) on account of

(i) the breach of a duty arising from the fiduciary relationship to the corporation in terms of s42; or

(ii) …;

Any other member of the corporation may institute proceedings in respect of any such liability on behalf of the corporation against such member after notifying all other members of the corporation of his intention to do so."

[15] Section 42 of the Close Corporation Act No. 69 of 1984 provides inter alia as follows:

"Fiduciary position of members.­

(1) Each member of a corporation shall stand in a fiduciary relationship to the corporation.

(2) Without prejudice to the generality of the expression:" fiduciary relationship", the provisions of subsection (1) imply that a member­

(a) shall in relation to the corporation act honestly and in good faith, and in particular­ -

(i) shall exercise such powers as he may have to mange or represent the corporation:

and

(ii) ...; and

(b) shall avoid any material conflict between his or her own interest and those of the corporation, and in particular­

(i) ...;

(ii) …; and

(iii) shall not compete in any way with the corporation in its business activities."

[16] In the matter of De Franca v Exhaust Pro CC (De Franca Intervening)³ the honourable Nepgen J said that:

"It is indeed so that s 50 of the Act relates to situations where a close corporation's own rights are at issue, but this has nothing to do with proceedings such as the present. It is quite clear that what is provided for in s 50 of the Act is that a member of a close corporation may institute proceedings on behalf of the close corporation in respect of another member's or a former member's liability to the close corporation where such liability arises on account of a breach of the duty flowing from the fiduciary relationship that exists or existed. Without going into any great detail in this regard, there can be little doubt that the comment in Cilliers and others Close Corporations Service para 4.21 that the remedy provided by s 50 of the Act to enable proceedings to be instituted on behalf of a close corporation against fellow members was devised in order to provide for a simple and effective means to protect the interests of the close corporation, thus avoiding 'the uncertainty inherent in the common law derivative action and the time-consuming and risky procedure envisaged by s 266 of the Companies Act'. (See generally in this regard Cilliers and others Corporate Law 2^nd ed at 292 para 19.7, 295 para 19.13—303 para 19.28.) Clear indications of what was intended by s 50 of the Act are to be found in ss (2) and (3) thereof, where there is specific reference to 'institution of such proceedings'; 'a withdrawal of the proceedings'; a 'settlement of the claim'; and to 'the defendant in question'. The statutory authority with which a member is vested where the provisions of s 50 of the Act are applicable is not unlimited authority. It is authority provided for the specific purpose of instituting the proceedings contemplated by s 50 of the Act. In my judgment the provisions of s 50 of the Act cannot, by any stretch of imagination, be interpreted in such a way that they vest a member of a close corporation with authority to oppose an application for its liquidation merely because another member, who is applying for its liquidation, has acted contrary to the duty arising from his fiduciary relationship and has thereby caused the close corporation to suffer a loss which in turn has resulted in him being liable to the close corporation therefore. I therefore conclude that the applicant's objection to the respondent's locus standi to act on behalf of the respondent in this matter is well taken. The result of this conclusion is that the application must be approached on the basis that there is no valid opposition thereto on behalf of the respondent. "

[17] In the matter of Cuyler and Another v Shiers and Another 1999 (3) SA 118 (WLD) the Court referred with approval to the above cited passage in De Franca v Exhaust Pro CC (De Franca Intervening) and concluded that the remaining member of a close corporation does have locus standi to bring an action on behalf of the closed corporation against the other former member who was allegedly in breach of his fiduciary duty.

[18] The applicant avers in its affidavit that the first respondent and the second respondent and the third respondent are acting in direct competition with the fourth respondent and that this would cause the fourth respondent financial ruin. The first respondent is not denying that he is in competition with the fourth respondent. In fact what he denies is the unlawfulness thereof⁴. He admits that he is involved in the manufacturing industry⁵.

[19] Whilst the first respondent is a share holder in the fourth respondent, so long as he has not signed off the shares he holds in the fourth respondent, his involvement in the manufacturing industry is , in my view, in direct conflict and in competition with the interest of the fourth respondent. The very fact that at one stage, on his own admission⁶, he advised Standard Bank not to extend any further credit to the fourth respondent has the potential of stifling fourth respondent in its trade once the account was frozen⁷. When the applicant left the fourth respondent he went to open up his own business to manufacture furniture⁸. When considering all these facts, taken together these demonstrate a breach of fiduciary trust on the part of the first respondent. It must be borne in mind that the fourth respondent can only speak through its members. In casu such members are at variance with each other. It can hardly be expected of the first respondent to protect the interest of the fourth respondent against his own economic activities that are in direct competition with those of the fourth respondent. In the interest of justice and fairness, it is proper that the applicant should be the one through which the fourth respondent speaks. I am of the view, and so conclude, that the applicant has locus standi to bring these proceedings against the first respondent⁹.

[20] The second respondent is the wife of the first respondent. She is a former employee of the fourth respondent. She is the sole member of the third respondent. She avers that the relief sought by the applicant as against herself and the third respondent is incompetent due to his lack of locus standi. It is common cause that the applicant is bringing these proceedings in his own capacity as well as in his capacity as a member of the fourth respondent. The applicant alleges in his papers that the first respondent and the second respondent have embarked on a campaign to destroy the fourth respondent¹⁰. Both the first and the second respondent deny such allegations. Both the first respondent and the second respondent are former employees of the fourth respondent, although the first respondent has a dual relationship with the fourth respondent as member thereof as well. It must also be borne in mind that the third respondent was registered on 23 January 2007. At the time of the registration of the third respondent, the first respondent and the second respondent were each 50% holder of the members interest in the third respondent¹¹. It is also important to have regard to the fact that the first respondent and the second respondent, are married to each other, as well as the fact that they are both involved in the business of manufacturing of furniture and are therefore in direct competition with the fourth respondent. The second respondent is the sole member of the third respondent, through which she is conducting the same business as that conducted by the fourth respondent. It can therefore be safely assumed that the second' respondent is through the third respondent competing with the fourth respondent. Having regard to the above, in particular the relationship of the first respondent and the second respondent, I am therefore of the view, and so conclude, that the applicant does indeed have locus standi, to bring these proceedings on behalf of the fourth respondent against the second respondent as well as the third respondent. In the premises the objection raised by all the respondents but the fourth respondent is dismissed with costs.

Background facts

[21] It is common cause that the applicant and the first respondent are each holders of 50% members interest in the fourth respondent, which is a duly registered Close corporation (CC). It is common cause that first respondent is married to the second respondent. The first respondent was until 30 September 2006 in the employ of the fourth respondent, although the capacity in which he 'Nas so employed remains in dispute. It is also common cause that second respondent, is the only member in the third respondent Behind the Curtain CC. It is also common cause that the second respondent was in the employ of the fourth respondent as a sales manager, according to the applicant until September 2006 and according to the second respondent until July 2006.

[22] It is also common cause that the applicant and the second respondent entered into a sale agreement on 6 October 2006. The terms of the said agreement were, inter alia, that the applicant purchased all the 50% member interest of the first respondent in the fourth respondent. The relevant agreement is annexed to the applicant's founding affidavit as annexure A4. It is common cause that the agreed purchase price is an amount of R600,000,00. The payment of the aforesaid purchase price was to be effected as follows:

13.1 R200,000,00 directly to the first respondent upon signature of the agreement;

13.2 R200, 000, 00 on or before close of business on 30 November 2006, directly to the first respondent;

13.3 The balance of R200, 000, 00 to be paid by way of the delivery of furniture to that value, of which delivery will take place on or before close of business on 28 February 2007. Such furniture would be chosen by the first respondent at his sole and absolute discretion, from the current range of the company and the price would be determined from the lists price, less 20%.

[23] The applicant further avers that it was a further term of the agreement that the purchase of Waiter Marafioti's 50% member interest includes "all assets, both movable and immovable, without exception, stock, trading cash flows, tolls, furniture and fittings, plan and equipment, debtors or creditors and liabilities, without exclusion. The applicant states that this clause refers to the assets of the CC. The applicant further avers that in terms of the agreement the upon signing of the agreement, the first respondent would sign all documents necessary to transfer his interest in the fourth respondent's loan account (if any) to the applicant so as to enable the latter to register transfer of the said membership interest. A further term of this agreement was that in the event of the a material breach of the agreement, the aggrieved party could seek specific performance, alternatively cancel the agreement, only after affording the defaulting party 14 days within which to remedy the breach and that any dispute arising between the parties to the agreement (the applicant and the first respondent) would be resolved by way of arbitration.

[24] The applicant further avers that the first respondent has breached the agreement of sale in that, inter alia, he has failed to sign those documents necessary to effect the transfer of his 50% membership interest in the fourth respondent to him. He further avers that the obligation of the first respondent to sign the documents is not dependent on the receipt of the full payment of the purchase price. He further avers that demand to have the said documents signed was made to the first respondent that he sign these within 14 days, but still the first respondent has failed to do so.

[25] According to the applicant, subsequent to the sale agreement the first respondent initially informed him that he intended to start a business which would manufacture picture framing moulds. The applicant indicated that he would support this business and buy such moulds for the use in the picture framing business operated by Fill the Gap. Later the first respondent informed him that he intended to manufacture laminated wood blocks used for turning and that he has since bought a machine for this purpose in Tzaneen. He further says that at no time did the first respondent indicate to him that he intended to conduct business on competition with the business conducted by the fourth respondent.

[26] According to the applicant, as part of the payment of the purchase price in respect of the first respondent's 50% member interest in the fourth respondent, the applicant undertook to supply the first respondent with furniture to the value of R200 000, 00, which price would be determined at 20% less than selling price of the fourth's furniture. During the period 18 October 2006 until November 2006 furniture to the value of R111 000,00 was supplied to the first respondent, and this regard the applicant has attached invoices marked annexure A5. The applicant further avers that unbeknown to him the first respondent supplied the fourth respondent's furniture to certain clients of the fourth respondent. He says that these included Coco Republic and UFO. The furniture was supplied to such clients as if it was furniture of DA Vinci business.

[27] The applicant further avers that he subsequently came to learn that the first respondent had offered a job as a lathe operator to one of the fourth respondent's supervisor, Jeffrey Imbasa. He confronted the first respondent about this allegation who however denied this. He has attached a confirmatory affidavit of Jeffrey Imbasa as annexure A6. He also came to learn that the first respondent has offered a job to one of the assemblers employed by the fourth respondent, by the name of Amos Tshabalala. He also learnt that the first respondent has started up a manufacturing furniture which is similar to that manufactured by the fourth respondent. The applicant avers that the first respondent owed fiduciary duty to the fourth respondent because he was still a member of the fourth respondent. And he was therefore in unlawful competition with the respondent. A letter in this regard was addressed to the first respondent, calling upon him to remedy the breach within 14 days failing which an application would be launched.

[28] The applicant further avers that during December 2006 and early January 2007 he together with Tanya Calvert received numerous telephone calls from the various established and existing clients to the effect that they have been approached by Nadeema Marafioti, who offered to sell to such clients identical furniture to that which is manufactured by the fourth respondent, but at lower price. On 20 April 2007 the fourth respondent received by fax, a copy thereof attached as annexure AS, an order from Bedelia's directed to Da Vinci as the supplier. He says further that it appears that Da Vinci business is using precisely the same product names for the furniture range which is it is selling and Bedelia's is clearly confusing the Da Vinci business and or furniture with that of the fourth respondent's business and or furniture. Tanya was contacted by one Freddy of Behind the Red Door who informed her of having been contacted by Nadeema Marafioti, who inquired from him whether Behind the Red Door wished to purchase furniture from her (Nadeema Marafioti) and first respondent's new company, and also advised him that they would close the fourth respondent. In support of this averment he has attached a copy of a letter from Behind the Red Door. As annexure A9 as well as the confirmatory affidavit of Tanya Calvert. I deem it not necessary to refer to every client the applicant has made mention in these papers, in particular at subparagraphs 9.5.3 to 9.5.12.of paginated pages 20-34.

[29] The applicant further avers that the first respondent and the second respondent have embarked on a campaign to destroy the business of the fourth respondent by copying the furniture manufactured by the fourth respondent unlawfully by, inter alia, using the software program of the fourth respondent, specifically targeting and attempting to entice employees of the fourth respondent to become employed by the Da Vinci business; marketing the furniture of the Da Vince business by using a brochure which is identical to that of the fourth respondent, save for the cover page. In this regard he has attached as annexure A 13 a copy of the marketing brochure, which he says that it is identical to annexure A2, by using a product list which is identical to that of the fourth respondent; by utilising the identical product codes for furniture to that of the fourth respondent; by targeting clients of the fourth respondent and offering identical furniture at a reduced prices, which are not realistic. He say that the average mark-up on any item of the furniture by Da Vinci works out between 15% and 20%. The prices offered by the Da Vince business are not market related and are being offered to destroy the client relationships which the fourth respondent enjoys with its clients; is approaching clients of the fourth respondent who operate in small towns with threats that should such clients not purchase furniture from the Da Vinci business, identical furniture would be sold at lower prices to their competition, thereby threatening exclusivity which the fourth respondent has offered to such clients;

[30] According to the applicant, Da Vinci is also using precisely the same invoicing software program as that used by the fourth respondent. He says that it would seem that the first respondent and the second respondent substituted the name of the fourth respondent with that of Da Vinci business and invoice customers thus casing confusion amongst such clients. Da Vince sold furniture to a client to whom the fourth respondent previously sold furniture to, De Factori. The latter erroneously sent an order via e-mail to the fourth respondent. A copy of this order is attached as annexure A 14. The order should have been addressed to Behind the Curtain. He further avers that it would seem that Behind the Curtain is being used as a vehicle to operate the Da Vinci business. The ordering codes contained in the De Factori order are identical to those used by the fourth respondent. Thereafter Da Factori made payment of the sum of R16 516, 60 into the banking account of the fourth respondent, which payment was a day after reversed.

[31] The applicant further complains of the first respondent having on 2 December 2006 caused the Standard Bank account of the fourth respondent to be frozen ¹² although he was no longer a signatory thereto and that such conduct was unlawful and a deliberate attempt to disrupt the business of the fourth respondent. The applicant further states that the intent of the first respondent is malicious. He says that he received various faxes and SMS messages from the first respondent wherein, inter alia, the latter said:

"Becose¹³ you are arrogant, stupid and a thief, I have decided now to take all your customers. Watch Waiter and Nadeema pay you back to all the shit you been." prepare to find a jobL..Love Waiter", This message he received on 17 April 2007.¹⁴

[32] The applicant further avers that the fourth respondent is suffering financial harm as a result of the conduct of the first respondent and the second respondent. He says that during the previous year the fourth respondent sold a total of R419 313, 93 worth of furniture and that to date (sic-of signing of the affidavit) it has only sold R 15 048,00 worth of furniture. A considerable of other clients have reduced their orders which they place with the fourth respondent or have simply stopped ordering and that the employment of about 60 employees is also threatened.

[33] The applicant has detailed the names of the fourth respondent's employees who he says that they have been approached by the first respondent and offered higher salaries, and those who have been enticed to leave the fourth's employment. He says that the only purpose for approaching these employees is to disrupt the business of the fourth applicant.

[34] The applicant says that two of the fourth's employees who had been enticed away went to work for the Da Vinci business have since returned, and these are Magaskin and Smith. He says that these two have had access to the software used by the Da Vinci business and that they have confirmed that the aforesaid software is identical to that used by the fourth respondent. In this regard he has attached confirmatory affidavits of both these employees as annexure A 18 and A 19.

[35] He further states that the above mentioned incidents demonstrate that Naddema Marrafioti and Waiter Marafioti have embarked on unlawful conduct deliberately designed to destroy the business of the fourth respondent and thus constitute unlawful competition. Waiter Marafioti is not only unlawfully competing with the fourth respondent but also contrary to the provisions of section 42 of the Act. He further states that both the first respondent and the second respondent have unlawfully appropriated confidential information belonging to the fourth respondent, in particular the are software of program used for the production of the furniture, and they are using same to copy the furniture range of the fourth respondent and thereby spring-board off such confidential information. He says further that they have also passed off the furniture alternatively the business of Da Vinci as being the furniture or business of the fourth respondent. He further accuses them of having unlawfully copied the furniture manufactured, distributed and sold by the fourth respondent.

LEGAL REQUIREMENTS

[36] It needs mention that the respondents are denying substantially most of the allegations made by the applicant. They deny, inter alia, that they are competing unlawfully with the fourth respondent, they deny that they have unlawfully appropriated confidential information belonging to the fourth respondent.

[37] The approach to be adopted in motion proceedings where there are dispute of facts and a final interdict is sought or in the alternative an interim interdict is sought, is succinctly stated, inter alia, by Friedman JP in the matter of Manousakis and Another v Renpal Entertainment CC¹⁵ as follows:

"The applicant alleges that second respondent is infringing the goodwill which was purchased by it and that he is seeking to exploit his former association with the clientele of Lord Montague which was "sold" to the applicant as part of the goodwill.

As the facts alleged by the applicant are disputed, the matter falls to be decided on the test laid down in Plascon-Evans Ltd v Van Riebeeck Paints (Pty) Ltd 1984 (3) SA 633 (A) at 634-5. Thus a final interdict may be granted only if the facts averred in the applicant's affidavit which have been admitted by the respondents, together with the facts alleged by the respondents, justify such an order." ¹⁶ In this regard vide also the judgment of Mokgoathleng AJ, as he then was, in Du Preez v NWK Ltd.¹⁷ Friedman JP further states that: "In the absence of a restraint clause, even the seller of a business is not precluded from competing with the business which he sold. Thus he may not directly solicit his former customers as that would be tantamount to regaining without consideration the goodwill which he had disposed of for value. See A Becker and Co (Pty) Ltd v Seeker and Others 1981 (3) SA 406 (A) at 417 19.”¹⁸ Friedman JP continued to say: "In an application for a temporary interdict it is sufficient for the applicant to establish a prima facie right though open to some doubt. The approach to be applied where there is a dispute of facts is to take the facts set out by the applicant, together with any facts set out by the respondent which the applicant cannot dispute, and to consider whether, having regard to the inherent probabilities the applicant should on these facts obtain final relief at trial. See LF Boshoff Investments (Pty) Ltd v Cape Town Munipality, Cape Town Municipality v LF Boshoff Investments (Pty) Ltd 1969 (2) SA 256 (C) at 267E-F; ¹⁹ In this regard vide also in the matter of Johannesburg Municipal Pension Fund v City of Johannesburg²⁰. I shall also have to bear in mind what Friedman JP further stated: "The purchaser of goodwill may not, even by means of a contractual restraint agreed to by the seller, eliminate competition as such. See Basson v Chilwan and Others [1993] ZASCA 61; 1993 (3) SA 742 (A) at 7710.”²¹

[39] In this matter, there are various issues which, in my view, for purposes of a final order to be granted, cannot be decided on the strength of the affidavits but would require that oral evidence be heard²². For instance, but to mention only a few, the applicant is relying, inter alia, on what:

(a) some of its clients informed Tanya and the applicant about having been approached by Nadeema Marafioti who offered to sell to them identical furniture as that manufactured by the fourth respondent, but at a lower price, which allegation is denied by the first respondent and the second respondent;

(b) Amos Tshabalala,Jeffrey Imbasa informed him individually of the first respondent having approached them and offered them employment, the first respondent denies that he approached these employees and states that the employees approached him seeking employment with him because they were unhappy in the manner which the applicant operated the fourth respondent;

(c) Wilbur Smith who left the employ of the fourth respond for Oa Vinci and subsequently returned to the fourth respondent's employ and Fabian Magaskin also a former employee of Da Vinci now in the employ of the fourth respondent, both informed the applicant about their access to the software program used by Da Vinci to manufacture furniture similar to that manufactured by the fourth respondent and that the said software program is identical to that of the fourth respondent, and this is disputed by first respondent and the second respondent on the basis that it is hearsay evidence.

[40] The respondent is highly contesting that the furniture manufactured by the applicant, is being exclusively designed by the applicant. He denies the uniqueness of the designs and the names of the furniture produced by the applicant. He has also attached brochures of Wetherleys for the period of 2000 and 2001 and states that the designs which the applicant alleges to be unique to the fourth respondent are identical to those of Wetherleys. For the Court to resolve the issue whether the furniture manufactured by the fourth applicant, is exclusively unique to the fourth respondent, it would require that oral evidence and expect evidence must be heard.

[41] It is apposite to cite what Friedman further said in the Manousakis and Another v Renpal Entertainment CC²³: "As a general rule, every person is entitled to carry on trade or business in competition with his rivals. However, the competition must remain within lawful bounds. If it does not, an Aquilian action lies if it has resulted in patrimonialloss. In order to succeed in an action based on unlawful competition, the plaintiff must establish all the requisites of Aquilian liability, including proof that the defendant has committed a wrongful act. In the context of unlawful competition, wrongfulness is an elastic concept in judging which fairness and honesty are relevant, but not the only criteria. In judging of fairness and honesty regard must be had to boni mores and to the general sense of justice of the community. See Schultz v Butt 1986 (3) SA 667 (A) at 678--9 and the authorities there referred to. "

[42] For the applicant to succeed in an action against the first respondent and the second respondent he would have to prove, inter alia, a wrongful act. I have no doubt that the very fact that the first respondent is competing with the fourth respondent whilst he is a member of the fourth respondent, goes against the grain of boni mores of business, the fairness and honesty of the transaction of sale, especially where, as in casu, he sells that very entity to another person and fails to transfer that very interest he has sold. The dictates of equity and fairness, in my mind, demand that the first applicant should release all his member's interest from the fourth respondents and not compete with it to the disadvantage of its new owner.

[43] It needs, however, to be borne in mind that the relevant deed of sale does not contain any restraint clause. Had it contained a restraint clause, I would have been inclined to grant a final relief. Mr. South has however urged me to grant an interim order. I shall therefore proceed to investigate whether enough has been done to warrant that I should grant such an interim relief.

[44] The first respondent admits that he is married with the second respondent; he admits that he is still a member of the fourth respondent; he admits that the applicant has paid to the first respondent' attorneys of record an amount of R200 000,00 as part payment towards the purchase price; he admits that he is involved in the manufacturing of furniture business; he admits that he has not signed the transfer documents for his members interest to be transferred to the applicant; he admits that he gave instructions to Standard Bank to stop the banking account facility of the fourth respondent²⁴. His reasons for having given such instructions is that he was concerned that the applicant had not secured his (the first respondent's) release as surety at Standard Bank in respect of the fourth respondent, as well as with various other creditors. He denies that there was any malicious intent on his part in doing so; he admits that the applicant generally does not sell his furniture to the public but to retailers; The first respondent does not, in fact it cannot, deny that what was sold to the applicant was a going concern in the form of the fourth respondent, lock stock and barrel. This would therefore include the design soft ware which was being used by the fourth respondent to manufacture the furniture. The first respondent admits that the existence of the design software, he however denies the uniqueness thereof and that it was confidential material. He does not deny that some the employees²⁵ of the fourth respondent ended up working for him, he denies that he enticed them away from the fourth respondent. However, one must see this in the backdrop of the first respondent having caused the bank account of the fourth respondent having to be closed. This leaves one with the impression that the intention of the first respondent was to financially strangulate the fourth respondent.

[45] After all set and done, I am of the view, and so conclude, that for purposes of an interim order to be granted, the applicant has marshalled sufficient evidence to make one conclude that the balance of convenience justify the granting of an interim relief.

[46] With regard to costs, I see no reason why the first respondent, the second respondent as well as the third respondent should not be held liable for the costs of this application, jointly and severally, the one paying the other to be absolved and such an order will be made. There is a draft order marked C to which is attached annexure "A3" with its pages numbered 93, 94, 95, 96 and 97 which I shall therefore make an order of this Court.

[47] In the premises, the draft order marked "c" together with annexure "A3" with its pages numbered 93, 94, 95, 96 and 97, are made an order of this Court.

N.M. MAVUNDLA

JUDGE OF THE HIGH COURT

HEARD ON THE: 20 JUNE 2007

DATE OF JUDGMENT: 08 FEBRUARY 2008

APPLICANT'S ATT: MR. W SCROOBY

APPLICANT'S ADV: MR. A G SOUTH

RESPONDENT'S ATT: MR. G PAINTER

RESPONDENT'S ADV: MR. E B CLAVIER

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