Fluorovision (Pty) Ltd v Bloomberg Orthopaedics & Neurosciences (Pty) Ltd (5545/2005) [2006] ZAFSHC 76 (15 June 2006)

IN THE HIGH COURT

OF SOUTH AFRICA

(ORANGE FREE STATE PROVINCIAL DIVISION)

Case No. : 5545/2005

In the case between:-

FLUOROVIZION (PTY) LIMITED Applicant

and

BLOOMBERG ORTHOPAEDICS & Respondent

NEUROSCIENCES (PTY) LIMITED

_____________

HEARD ON: 11 MAY 2006

JUDGMENT BY: EBRAHIM

J

DELIVERED ON: 15 JUNE 2006

[1] This is an application to compel compliance with Rule 35(12) of the Uniform Rules of this Court. Rule 35(12) provides for the discovery and production of any document or tape-recording referred to by a party in its pleadings or affidavits for inspection and copying by the other party or parties to the litigation on request by the latter. The Rule further provides that the party failing to make such discovery is barred from using such documentation and recordings save with the leave of the Court in the subsequent litigation proceedings but the party requiring discovery may nevertheless use such documents in the proceedings.

[2] On 18 August 2005 the respondent in this matter, Bloomberg Orthopaedics & Neurosciences (Pty) Limited as applicant, launched proceedings in this Court by way of motion against Fluorovizion (Pty) Limited, as second respondent, requesting the issue of a rule nisi interdicting the second respondent from employing one, Marize Vermaak, a former employee of Bloomberg and the first respondent in those proceedings, who did not contest those proceedings. I shall refer to the interdict proceedings as the main application and to the parties in the present application in the manner in which they are referred to in the main application. Consequently I shall refer to Fluorovizion in the present application as the second respondent and to Bloomberg Orthopaedics as the applicant.

[3] A rule nisi was granted returnable on 15 September 2005 and thereafter extended on a number of occasions primarily due to a dispute having arisen between the parties over documents requested by the second respondent. That dispute culminated in the present application being delivered pursuant to a notice in terms of Rule 35(12) delivered by the second respondent to the applicant on 27 September 2005. The present application was launched on 6 December 2005 and in it the applicant seeks the production for inspection and copying of a product list referred to by the applicant in paragraph 32 of its founding papers in the main application and a business plan also referred to in that affidavit in paragraph 61.

[4] The applicant has refused to produce the documents on three main grounds:

(i) Firstly it alleges the product list does not exist;

(ii) Secondly the business plan is privileged information in that it contains confidential information; and

(iii) Thirdly that both documents are irrelevant at this stage of the proceedings in that the second respondent has filed its answering papers setting out its defence and accordingly the product list and business plan are not needed for the purposes of the interdict debate in the main application.

[5] On behalf of the applicant it was contended that a product list as such does not exist and that any reference thereto in the founding papers was a misnomer, as the only documents available was a pricelist which is a comprehensive document detailing all the applicant’s products with the prices those products are marketed and sold for. It would accordingly undermine the very nature and rationale of the main application, so it is contended, if such a list was to be provided to the second respondent. The applicant further argues that the second respondent has in any event been provided with details of its complete orthopaedic product range and this is conceded by the second respondent. As far as the business plan is concerned applicant alleges that it is prepared to make a qualified discovery by producing same for inspection and copying for the Court and the applicant’s legal representatives once again due to the confidential nature of the document. The applicant argues that this is an indication of its bona fides for to make the business plan available to the second respondent would unfairly prejudice the applicant in the conduct of its case and make a mockery out of the interim order.

[6] 6.1 In addition to these specific grounds raised by the applicant for its refusal to furnish the documents requested, the applicant raises a further ground, general in nature, namely that the second respondent is employing obstructive and delaying tactics in order to defray the interim order for costs made against it on 18 August 2005. The second respondent’s response to this accusation is that it does not employ the first respondent (Ms Vermaak), that it is not in competition with the applicant and that the applicant was reckless and negligent in launching the main application and therefore is not entitled to a costs order been made in its favour against the second respondent. I proceed to examine this ground of objection first.

6.2 Between 1 August 2005 and 18 August 2005 correspondence was addressed by the applicant’s attorneys directly to the second respondent requesting an undertaking that

(a) the second respondent will not employ the first respondent; and

(b) the first respondent would not take up employment with the second respondent.

6.3 During this time the applicant furnished the second respondent with details of its products, which it alleged the second respondent was directly competing with and second respondent undertook to reconsider the employment of the first respondent. When no such undertaking was forthcoming the applicant launched the interdict proceedings on 18 August 2005.

6.4 Notice of opposition to these proceedings was delivered by second respondent’s attorneys of record on 16 September 2005. On 27 September 2005 the second respondent delivered a notice in terms of Rule 35(12) of the Rules of this Court. Thereafter the present application was launched on 6 December 2005 and answering papers thereto were delivered on 22 December 2005. At that point no answering papers in the main application had been delivered. These, however, were served on the applicants on 14 February 2006 prior to the present application being argued.

6.5 On this history it was contended for by the applicant that the only reason for the bringing of the present application was to defray the costs of the main application as the second respondent has no real defence to the interdict proceedings. I fail to see how this can possibly be correct in view of the following allegations in the replying affidavit in the present proceedings. At paragraph 8.1 thereof the deponent to the replying affidavit Gert Furstenberg states the following

“The mere fact that Fluorovizion markets and sells medical equipment for arthroscopy does not mean that it competes with BO&N. This is a highly specialised field, and it can be that there are different products used in the same medical procedure, that are sourced from different suppliers, without these suppliers being direct competitors. The second respondent’s business is to provide these products together with the second respondent’s services during surgical procedures to the surgeon. The second respondent has been doing so for the past seven years. It is for this reason that it is insufficient for BO&N to have alleged in a letter that it is engaged in the business of both consumables and capital equipment for orthopaedics and neurosciences. Such general statements do not establish that BO&N and Fluorovizion are competitors.”

6.6 I am therefore not persuaded that the underlying reason for the bringing of the present application is rooted in mala fides on the part of the second respondent. In fact, to me, on the present facts the opposite appears to be the case, viz, that the answering affidavits were delivered prior to the present application being heard precisely to avoid an accusation of dilatoriness on the part of the second respondent and to show its bona fides in opposing the main application.

[7] I deal now with the three specific grounds of objection to the production of the applicant’s product list and the business plan.

7.1 In paragraph 4 of the founding affidavit to the present application the deponent, the attorney of record for the second respondent, furnishes the following reason for requesting production of the documents:

“During the course of consultation counsel to settle the second respondent’s answering affidavit in the main application, it emerged that there were certain documents referred to in the applicant’s founding affidavit that are required by the second respondent in order to finalize the answering affidavit.”

7.2 The object of Rule 35(12) is to give a litigant an opportunity of inspecting and copying documents mentioned in his opponent’s pleadings or affidavits. This entitlement arises at any time before the hearing of the relevant proceedings. Consequently, in my view, the fact that the second respondent has persisted in its request for discovery of the documents mentioned after filing its answering papers to the interdict proceedings, is of no import and does not impact negatively on its claim per se for the documents as the second respondent may request such discovery at any time before the hearing.

7.3 In this matter the second respondent has pinned its request to a specific purpose, namely that of preparing its answering affidavits and its defence. The precise wording used is “in order to finalise its answering affidavit”. Applicant argues that once the second respondent’s defence has been set out on paper, as it has in the answering affidavits, and particularly in light of the fact that such a defence does not contain any reference to the documents requested reflecting a reliance on those documents for the purposes of the stated defence, the rationale for the production of the documents requested must fall away as the second respondent is no longer in need of those documents for the preparation of its defence.

7.4 This argument appears to be based on some sort of waiver, not raised on the papers. There may well be an answer to this argument and it is speculative to make an adjudication on an issue not properly raised and pleaded. It is in any event, open to second respondent to request general discovery to be made in terms of Rule 35(12) at any time before the hearing even if such a request is made after the close of pleadings and I dare say that in application proceedings such as the present, such a course would also be open to the second respondent. I conclude therefore that the applicant’s refusal to produce the documents requested, cannot be justified on this ground.

[8] I deal now with the objection relating to the production of the product list. Here the applicant alleges that no such list exists. It contends that the only list it has in its possession is a price list which is a comprehensive document detailing all of the applicant’s products with the prices that those products are marketed and sold for. It is argued on behalf of the applicant that it would undermine the very rationale of the application if this price list were to be provided to second respondent’s attorneys. Applicant further argues that this information is confidential and is not relevant to the proceedings. It is my considered view that I cannot go behind the oath without any evidence to the contrary that a product list does in fact exist. This ground of objection must accordingly be upheld. See GORFINKEL v GROSS, HENDLER & FRANK 1987 (3) SA 766 (C).

[9] 9.1 I deal finally with applicant’s objection to produce the business plan on grounds of its confidentiality and privilege. There is no doubt that there is an obligation on the applicant to produce the business plan under the Rule 35(12) notice issued and that the onus is upon it to set up facts relieving it of this obligation. See GORFINKEL v GROSS, HENDLER & FRANK, supra. The applicant has sought to do this by arguing that the second respondent is seeking to obtain information in applicant’s business plan which is allegedly of a confidential nature in that it gives insight into the applicant’s business and that accordingly, in the ordinary course, second respondent would not be entitled to such information. Applicant has, however, tendered a qualified and limited disclosure of this document.

9.2 Confidentiality in itself is not a ground of privilege. In SA NEON ADVERTISING (PTY) LTD v CLAUDE NEON LIGHTS (SA) LTD 1968 (3) SA 381 (W), Colman J held at p. 385 A – C:

“It was pointed out, on behalf of the respondent, that the applicant is its trade competitor, and that disclosure of what is relevant to the action may also involve disclosure of confidential information, which the respondent does not want its competitor to see. The respondent would, I was told, rather abandon part of its claim than make such information available to the applicant. I have some sympathy for the respondent in that regard, but I am unable to assist it. It need disclose nothing that is not material; but what is material, in the wide sense which that word bears in relation to the duty to make discovery, must be disclosed, whatever the commercial consequences may be, unless, of course, the relevant item in the claim has been formally abandoned so that the entries and documents have ceased to have any materiality to anything still in issue between the parties.”

9.3 In CROWN CORK & SEAL CO INC AND ANOTHER v RHEEM SOUTH AFRICA (PTY) LTD AND OTHERS 1980 (3) SA 1093 (WLD) Schutz AJ (as he then was) sanctioned the English practice of placing limitation upon a litigant’s ordinary rights of untrammelled inspection and copying of confidential information discovered by the opponent in order to avoid the very real danger which exists that if this is not done an unlawful appropriation of property will be made possible because litigation is in progress and litigants are entitled to see documents they would otherwise not have access to. At p. 1100 A – C he stated:

“No less in South Africa than in England does the conflict arise between the need to protect a man's property from misuse by others, in this case the property being confidential information, and the need to ensure that a litigant is entitled to present his case without unfair halters. And, although the approach of a Court will ordinarily be that there is a full right of inspection and copying, I am of the view that our Courts have a discretion to impose appropriate limits when satisfied that there is a real danger that if this is not done an unlawful appropriation of property will be made possible merely because there is litigation in progress and because the litigants are entitled to see documents to which they would not otherwise have lawful access. But it is to be stressed that care must be taken not to place undue or unnecessary limits on a litigant's right to a fair trial, of which the discovery procedures often form an important part. I trust that by holding what I have I have not opened a new door to interlocutory litigation or to a flood of ill-founded objections on grounds of confidentiality. Practitioners would do well to remember that the normal rule is full inspection.”

Schutz AJ then went on to allow a limited disclosure of the confidential information in those proceedings in order to avoid indiscriminate copying and circulation thereof.

9.4 In UNILEVER plc AND ANOTHER v POLAGRIC (PTY) LTD 2001 (2) SA 329 (C) at p. 341 D – F Thring J opined his reservations towards limited discovery and inspection of documents as follows:

“It is unwise, in my view, unless very special circumstances exist, to create a situation in which the legal advisers or experts of a party to opposed litigation may find themselves in possession of information which may be highly relevant to the litigation but which they are precluded from communicating to their client. What are they to do with such information? How are they to obtain instructions in relation thereto? How are they to advise their client on the further conduct of the litigation or on whether it should be proceeded with at all? These, it seems to me, are some of the questions which can arise and which, in this case, could potentially place the respondent's legal advisers and experts in an invidious and even untenable position. Serious ethical questions could arise. The interests of the respondent could be prejudiced by the fact that it is unable to receive proper advice based on all the relevant facts.”

I am in respectful agreement with these views and I have accordingly decided to exercise my discretion against imposing any qualification on second respondent’s right to inspect and copy the applicant’s business plan. I conclude therefore that full inspection of this document by second respondent is warranted in the circumstances.

[10] The following order is made:

The applicant is ordered to produce for inspection and copying by second respondent its business plan referred to in paragraph 61 of its founding papers to the main application within 60 days of the date of this order.

10.2 The costs of this application are reserved for determination at the hearing of the main application.

_____

S. EBRAHIM, J

On behalf of applicant : Adv. J.C. van Rhyn SC

Instructed by:

Lovius Block

BLOEMFONTEIN

On behalf of respondent: Adv. P.U. Fischer

McIntyre & Van der Post

/sp