Glaxosmithkline Consumer Healthcare South Africa (Pty) Ltd v Colgate-Palmolive (Pty) Ltd (A2/19) [2019] ZAGPPHC 425 (29 August 2019)

REPUBLIC OF SOUTH AFRICA

IN THE HIGH COURT OF SOUTH AFRICA

(GAUTENG DIVISION, PRETORIA)

CASE NO: A2/19

29/8/2019

IN THE MATTER BETWEEN:

GLAXOSMITHKLINE CONSUMER HEALTHCARE

SOUTH AFRICA (PTY) LTD

Appellant

AND

COLGATE- PALMOLOIVE (PTY) LTD

Respondent

JUDGMENT

KOLLAPEN J (MABUSE J et MUNZHELELE AJ concurring)

Introduction

1. This appeal comes before the Full Bench as an automatic appeal by way of Section 18(4) of the Superior Courts Act No 10 of 2013 (‘the Act”) following an order granted by the Court a quo in terms of Section 18(3) of the Act to enforce an earlier order granted by it in the urgent court on the 5 September 2018. .

Background facts and the litigation history.

2. The following background facts provide the context within which the appeal is to be adjudicated.

3. The Appellant and Respondent are competitors in the toothpaste market. While the Appellant has a number of brands, these proceedings relate to its AQUAFRESH brand of toothpaste and has its foundation in the use of a claim by the Appellant on the packaging of its AQUAFRESH toothpaste products – that claim is ‘24h sugar acid protection’

4. The Respondent lodged a complaint with the Advertising Standards Authority (“ASA”) in May 2016 regarding the claim in

respect of AQUAFRESH. Ultimately and on the 1 May 2017 the ASA upheld the claim and found that the Appellant could not substantiate

the claim. It then directed the Appellant to withdraw the claim. The order of the Final Appeal Committee of the ASA reads as follows :-

(c) ‘The claim must be withdrawn in accordance with the provisions of Clause 15.5 of the Procedural Guide of the Code of Advertising Practise within three months of this Ruling.’

5. The Appellant did not withdraw the claim but says that following advice received , it changed the claim to include the following

endorsement ‘ follow a healthy diet and brush twice daily for cavity protection.‘ The Respondent then lodged a complaint with the ASA in which it submitted that the amended claim was in breach of the ASA Ruling of 1 May 2017. This complaint was also ultimately upheld by the Final Appeal Committee of the ASA on the 15 May 2018 who ordered as follows :-

‘The Appellant is directed to take steps , no later than 5 working days from the date of this Declaratory, to implement Order ( c ) referred to above of the 1 May 2017 Ruling of the Final Appeals Committee. ‘

6. Following disagreement as to the interpretation of the Order of the 15 May 2018 and in particular when the withdrawal was to be effected, the Chairman of the Final Appeal Committee confirmed that the withdrawal was to be completed within 3 months of the date of the Order and that date was by agreement between the parties fixed as 22 August 2018.

7. On the 24 August 2018 the Respondent initiated urgent proceedings out of this Court against the Appellant contending that the Ruling of the Final Appeal Committee of the ASA had not been complied with. It sought interdictory and other relief including an order that the Appellant comply with the Rulings of the Final Appeal Committee of the ASA of the 1 May 2017 and 15 May 2018 and also that the Appellant be ordered to:-

a) Uplift all toothpaste in circulation in the offending packaging from any stores that the Appellant had distributed to ;

b) Over-sticker all toothpaste in the offending packaging at any stores that the Appellant had distributed to by removing the phrase ‘ 24h sugar acid protection’

8. The Appellant opposed the urgent application and in its answering affidavit disputed urgency and raised a number of points in limine including that of non-joinder of the wholesale and retail outlets where the Appellants AQUAFRESH toothpaste was sold. On the merits it placed in dispute that it was in breach of the Ruling of the Final Appeal Committee of the ASA and contended that it had complied with the Ruling.

9. On the 4 September 2018 the matter came before Sardiwalla J in the urgent court. The following is the account of the parties as to what occurred :-

a) In a discussion in the chambers of the judge presiding it was indicated that the Court would first hear and consider the question of urgency before considering, if that became necessary, the merits of the application.

b) During the argument on urgency the merits of the application were traversed in so far as it related to the issue of urgency but that at all times the parties were clear in their understanding that only the question of urgency was at that stage before the Court. There is some disagreement as to the extent to which the merits were canvassed in the urgency argument but the parties are in agreement that they had not been called upon to address the Court on the merits and had not in fact done so save for the above.

c) Following the conclusion of the argument on urgency, the hearing was adjourned and the Court indicated that it would deliver its ruling the next day.

d) On the next day, 5 September 2018, the judge made an order in which he found the application to be urgent and, in addition, granted the orders in respect of the merits largely in line with what was sought in the Notice of Motion. No reasons accompanied the order but were furnished later.

10. On the 7 September 2018 the Appellant applied for leave to appeal and requested written reasons for the Order while on the 11 September

2018 the Respondent launched an application in terms of Section 18(3) of the Act. Written reasons were furnished on the 20 September 2018. The application for leave to appeal as well as the application in terms of Section 18(3) , both of which had become opposed, came before Sardiwalla J on the 10 October 2018 on which date the parties largely argued the point as to whether the order of the 5 September 2018 constituted an irregularity and, if so, what its consequences were, in the light of the assertion that the Court did not hear the parties on the merits of the urgent application but nevertheless granted relief in respect of the merits.

11. The argument in respect of both applications resumed on the 28 November 2018 and on the 14 December 2018, the Court gave judgment in both matters. The application for leave to appeal was dismissed and the application in terms of Section 18(3) for the enforcement of the order of the 5 September was granted.

12. The Appellant then petitioned the Supreme Court of Appeal for leave to appeal following the dismissal of its application for leave to appeal by Sardiwalla J and that application has been referred to an oral hearing.

13. The proceedings before this Court relate therefore to the automatic appeal against the Order of the Court a quo of the 14 December 2018 which in effect put into operation the interdictory and other relief granted on the 5 September 2018.

The case advanced in respect of the appeal

14. The appeal is advanced on a number of grounds and they include :-

a) that the interdict was granted without the Court having heard argument on the merits. While in narrow terms the interdict is not the subject of this appeal (leave having being refused) it is contended that the s 18(3) order which is the subject of this appeal is the enforcement of the interdict granted and this Court is therefore entitled to consider, if not the merits of the interdict granted, but whether its grant was tainted by any procedural irregularity that vitiated it;

b) that no exceptional circumstances existed to justify the granting of the s 18(3) Order;

c) that the Respondent did not establish that it would suffer irreparable harm if the Section 18(3) Order was not granted;

d) that the Order granted in the Section 18(3) application was not the order that was sought by the Respondent.

15. The Respondent opposes the appeal in its entirety and has raised the issue of mootness, contending that the decision sought on

appeal will have no practical effect or result as contemplated in s 16(2)(a)(i) of the Act and should therefore be dismissed on this ground alone .

16. Given that much if not all of the argument before this Court dealt with the alleged procedural irregularity as well as the question of mootness, I will proceed to deal with those issues and then move on to the other issues in the appeal if that becomes necessary.

The case in respect of the ground that the order was granted without a hearing

The jurisdictional point raised

17. At the very outset Mr Michau for the Respondent advanced the submission that given that leave to appeal was refused by the Court a quo and that that issue was now before the Supreme Court of Appeal this Court in determining the merits of the s 18(4) appeal was precluded from pronouncing on the validity or otherwise of the interdict granted and should therefore confine itself to the merits of the s 18(3) Order.

18. While it may well be so that the Supreme Court of Appeal is currently seized with the refusal of the application of leave to appeal, my view is that if a gross procedural irregularity has occurred in the granting of the interdict (which is the case for the Appellant), then it would be both necessary and desirable for the court to consider the argument concerning the alleged procedural irregularity. The contention that the alleged procedural irregularity in the granting of the interdict should be insulated from consideration of the appeal against the s 18(3) Order is not sustainable – the latter owes its existence and viability to the former. If the interdict granted was bad in law and was granted in the face of a gross procedural irregularity then this Court would be obliged, in my view, to pronounce on that in the course of these proceedings with the attendant consequences that would go with it. Not to do so would, if a fatal procedural irregularity has been established, countenance an irregularity of a serious nature. The interests of justice must surely militate against such a formalistic proposition.

Granting an order without a hearing

19. I have already made reference to the facts that underpin this argument and if regard is had to the transcript of the interdict proceedings then it is evident that while all the parties traversed some or other feature of the merits of the application, what was before the Court was an argument on urgency with the expectation that the Court would first rule on urgency and then, if necessary, deal with the merits. In this appeal while counsel for the Respondent contended that he had said most of what he had wished to say on the merits in the interdict proceedings, the record will show that at the conclusion of his argument he said: ‘that is our submission on urgency .. ‘is clearly indicative that he had only concluded his argument on urgency. He also recorded in these proceedings that counsel for the Appellant did not have the opportunity to advance its case on the merits in the interdict hearing, save for what was said in the urgency argument.

20. In the light of this I do not believe it is helpful to attempt to minutely analyse the record of the interdict proceedings and attempt to quantify what portion of the merits were canvassed in the urgency argument. The simple reality is that the Court did not call upon the parties to deal with the merits. What was before the Court was confined to an argument on urgency and the expectation of the parties was certainly that they would have the opportunity to argue the merits later if indeed the Court found that the matter was urgent. This did not happen.

21. In Brian Kahn Inc v Samsuddin 2012 (3) SA 310 (GSJ), the Full Court observed that it was a fundamental principle that every litigant should be given a fair opportunity of addressing the court. It went on however to caution that the mere failure to hear argument is not necessarily an irregularity or fatal to the proceedings. The Court then proceeded to cite examples of a failure to hear a party that did not constitute an irregularity or were not fatal to the proceedings and this included where there was a duty on the part of the aggrieved litigant to speak and where a party was aware of his rights but made no attempt to exercise them. None of these examples would apply to the facts on hand in this appeal.

22. On the other hand the Court in Brian Kahn also provided instances of where the failure to hear a party, whether intentional or per incuriam, was fatal to the proceedings. They included a failure to hear argument in mitigation before sentence, a failure to hear defendant’s

attorney on the merits after dismissing an application for postponement and then granting judgment.

23. In the context of the appeal before it the Court a quo in Brian Kahn had upheld a point in limine without hearing argument on the matter. The Full Court observed that the omission to hear argument deprived the Court of the benefit of oral argument ‘ in which counsel can fully indulge their forensic ability and persuasive skill in the interest of justice and their clients’ as referred to in Transvaal Industrial Foods Ltd v BMM Process (Pty) Ltd 1973(!) SA 627 (A) at 628(G). It further remarked ( at para 9 ) that :-

‘It seems clear that there was no reasonable opportunity for counsel to debate the matter with the court a quo, and they cannot be said to have rested supine when the order was granted. Any argument placed before the court that has already pronounced on the issue is not on the same footing as argument presented while the matter is open , In my view the failure to hear counsel amounted to an irregularity fatal to the proceedings , and the appeal must thus succeed.’

24. Similar sentiments were expressed by the Full Court in S Mamela Taxi Association v Mamela Taxi Rank (Pty) Ltd 2012 JDR 0809 (ECM) at para 23 of the judgment :-

‘The power of the court to grant judgments and issue orders is not unlimited; it is limited by law and judicial constraints. One of the basic tenets of the Rule of law and the interests of justice is the right to a fair trial, and this is recognized by the Constitution as a fundamental right (s.34). A trial or legal proceedings can only be fair if, inter alia, the persons against whom the order is made are parties to the litigation, the material issues are adequately canvassed in the papers, ventilated by the evidence and addressed during argument by the parties to the litigation. It follows that the judgment or order must be confined to these issues. If not, it results (in the words of Harms DP in the case of Zuma to which I shall shortly refer) “…

…in a judgment by ambush (which) is not permitted,….” and therefore is an unfair trial.”

25. It must therefore follow that when the court a quo in these proceedings granted the interdictory and other relief it did on the 5 September 2018 , it did not hear the parties on the merits of the application ( except for those aspects of the merits that were traversed during the urgency argument). That this was indeed so is in large measure evident from the judgment of the court a quo in granting the s 18(3) application and dismissing the leave to appeal application where the following remarks would suggest that the failure to hear oral argument did have far reaching consequences.

26. At paragraph 10 of that judgment the Court correctly records that ‘extensive argument was heard in relation to urgency and the interpretation of the May 2018 Breach Ruling‘. While that is correct the complaint of the Appellant is firstly that those arguments were heard in the context of urgency only and in any event the judgment would suggest that as far as the merits were concerned it was confined to the interpretation of the May 2018 ruling.

27. In addition the Appellant points out that the issue of non- joinder was raised on the papers but that because the merits were never argued, it never had the opportunity to argue the same. It points out that despite this oversight the Court a quo concluded that ‘non-joinder was not raised in the urgent application ‘. This was clearly incorrect and its stance is that had it been afforded the opportunity to argue the merits of the application, it would have advanced the non-joinder argument and the Court would have had the opportunity to consider it and rule upon it. None of this happened.

28. Of course at this stage this Court is not required to consider the merit or otherwise of the issues that the Appellant contends should have been the subject of the oral hearing on the merits. It was the oral hearing that would have been the forum for the ventilation of the issues and the argument and persuasion that invariably goes with it.

I must accordingly o n this aspect, and for the reasons given, conclude that :-

a) the interdict proceedings on the 4 September 2018 proceeded on the basis that the Court would first hear and determine the question of urgency and then, depending on the ruling on urgency, the Court would hear argument on the merits;

b) both parties in their arguments on urgency made reference to the merits of the application but at no stage was there any indication (either from the Court or counsel in the matter) that the urgency argument had expanded to include the merits as well;

c) when the urgency argument was concluded, the parties expected a ruling on urgency only and not on the application in its entirety;

d) the parties were not afforded the opportunity to fully address the Court on the merits of the application nor can it be said that the parties were at any stage, before the order was handed down on the 5 September 2018, in a position to alert the Court to this as they did not expect the court to rule on any matter other than the urgency of the application; and,

e) the failure to hear the parties on the merits of the application constituted a serious irregularity and one that I accept occurred per incuriam. That notwithstanding, it was an irregularity of the kind that went to the heart of a fair hearing. Under these circumstances if the hearing was so fatally flawed, then the order made as a result of it should not have any consequences.

29. On this ground alone, the interests of justice, underpinned by the right to a fair hearing must lead to the conclusion that the order granted without a hearing on the 5 September 2018 was accompanied by a fatal irregularity. It must accordingly follow that the s 18(3) order which enforced the order of the 5 September 2018 cannot stand and the appeal should ordinarily succeed. As I have indicated the s 18(3) order is inextricably intertwined with the order of the 5 September 2018 and the viability of the former is linked to the validity of the latter.

30. A complicating factor however has arisen and the Respondent, takes the position that even if it could be said that an irregularity of a fatal kind occurred, the appeal should be dismissed as the issue which the appeal deals with has become moot and any order issued by this Court will not have any practical effect. Reliance is placed on s 16(2)(a)(i) of the Act which provides that :-

‘When at the hearing of an appeal, the issues are of such a nature that the decision sought will have no practical effect or result, the appeal may be dismissed on this ground alone.’

31. In this regard it argues that the offending claim which was the subject of the interdict proceedings appeared on packaging of AQUAFRESH

toothpaste which the Appellant indicated in its Answering Affidavit in the s 18(3) proceedings would in all likelihood have sold out before the 4 March 2019. This assessment by the Appellant was based on historical sales data as well as market intelligence, promotional activities, competitor information, customer information and advertising.

32. Thus while there is no certainty that at the time of this hearing ( some 5 months after the 4 March 2019 timeline) stock bearing the offending claim will have been sold out, I am not of the view that absolute certainty is not what is required in applying the provisions of s 16. The assessment of stock being cleared by the 4 March 2019 is that of the Appellant and accepted by the Respondent. Given that there is no reason to doubt its accuracy, if there is the strong likelihood that all the offending stock is no longer in retail stores, whether on 5 March 2019 or any time thereafter, then it would follow that in such circumstances the appeal would have no practical effect.

33. Our Courts have consistently expressed the view that ‘ a court hearing an appeal would not readily accept an invitation to adjudicate on issues which are of such a nature that the

decision will have no practical effect or result’. See The President of the Republic of South Africa v Democratic Alliance and others (664/17[2018] ZASCA 79(31 May 2018)

34. The Court however still retains the discretion to hear the appeal in such instances and the reference to may as opposed to shall or will is indicative that the section does not create an absolute prohibition on considering the appeal on its merits. There are instances where, even in the face of mootness, the interests of justice or the risk of further prolonged litigation may require the court to nevertheless consider such an appeal. Mootness therefore does not constitute an absolute bar to justiciability.

In Minister of Mineral Resources v Sishen Iron Ore Co (Pty) Ltd and Another 2014 (2) SA 603 (CC) the Court recognised this in the following terms :-

‘This court has made it clear that, when it is in the interests of justice to do so, it may hear and determine a dispute that has become moot. It may be so if the parties agree that a court must resolve the dispute. although it may not have a practical effect ; or when the resolution of the dispute is in the public interest ; or when the failure to decide the matter may spawn further prolonged and costly litigation.’

35. I do not understand the above citation to represent a closed list of instances where a court may well intervene and hear and determine a dispute that has become moot. My view is that a fair hearing in an open court is so inextricably linked to the interests of justice that this Court must in the face of the irregularity that has occurred pronounce on it and reverse its consequences. Not to do so will have the undesirable effect of allowing an order that was obtained following a serious and fatal irregularity to stand and that can only have negative consequences for the interest of justice.

36. My view therefore is that despite the matter being moot in the sense I have described, the interests of justice that are inextricably linked to fair hearing necessitate the Court considering and dealing with the appeal.

37. Given this conclusion it is accordingly not necessary to consider and deal with the other grounds of appeal to which reference has been made.

Costs

38. The Appellant sought punitive costs in the event of the appeal succeeding contending that the conduct of the Respondent in seeking to enforce an order that, to its knowledge was irregularly obtained, justified the sanction of the Court in imposing a punitive costs order. While it is so that the Respondent accepted in these proceedings that the Appellant never had the full opportunity to argue the merits of the interdict, its approach was that such a failure did not taint the proceedings in the urgent Court and the order granted was not fatally flawed. Given that I am not satisfied that the conduct of the Respondent, even though it may have been incorrect, demonstrated evidence of vexatiousness or recklessness that warrants a punitive costs order. I do not intend awarding punitive costs.

39. For the reasons given the appeal against the order of the 14 December 2018 which in turn enforced the order of the 5 September 2018 must succeed.

40. Accordingly we make the following order:-

The appeal is upheld with costs including the costs of two Counsel.

N KOLLAPEN

JUDGE OF THE HIGH COURT

PM MABUSE

M MUNZHELELE

ACTING JUDGE OF THE HIGH COURT

APPEARANCES

DATE OF HEARING

: 31 JULY 2019

DATE OF JUDGMENT : 29 AUGUST 2019

APPELLANTS’ ATTORNEYS : SPOOR & FISHER

APPLELLANTS COUNSEL :

O SALMON SC and F SOUTHWOOD

RESPONDENT’S ATTORNEYS : WEBBER WENTZEL INC.

RESPONDENTS COUNSEL : R. MICHAU SC and L HARILAL