IN THE HIGH COURT OF SOUTH AFRICA [WESTERN CAPE HIGH COURT, CAPE TOWN]
Case No: 18558/09
In the matter between:
TRIMEGA LABORATORIES LTD Applicant
and
REAL WORLD DIAGNOSTICS CC First Respondent
ASHLEY THURSTON UYS Second Respondent
TRIMEGA DIAGNOSTICS (PTY) LTD Third Respondent
JIUDGMENT DELIVERED: 06 JANUARY 2010
F OURIE, J:

[1] Applicant launched urgent motion proceedings on 27 August 2009. Seeking, by way of a rule nisi, an order against the first [REAL WORLD DIAGNOSTICS CC] and second [Ashley Uys] respondents for declaratory, interdictory and mandatory relief. In addition, applicant sought interim interdictory and mandatory relief pending the return day of the rule nisi.

[2] On 28 August 2009, Steyn AJ granted an order unopposed, incorporating a rule nisi and certain interim relief. On 31 August 2009, first [REAL WORLD DIAGNOSTICS CC] and second [Ashley Uys] respondents' launched an urgent application for the reconsideration of the order of 28 August 2009. The matter was enrolled for heating on l September 2009, when it was postponed to 3 September 2009, to allow applicant an opportunity to tile answering papers. Applicant filed its opposing papers timeously, but no replying papers were tiled by first [REAL WORLD DIAGNOSTICS CC] and second [Ashley Uys] respondents. Instead, first [REAL WORLD DIAGNOSTICS CC] and second [Ashley Uys] respondents withdrew the reconsideration application, which was consequently dismissed with costs.

[3] Notwithstanding service of the papers in the main application on first [REAL WORLD DIAGNOSTICS CC] and second [Ashley Uys] respondents during August 2009, they only filed their answering affidavits on 9 October 2009. two court days before the return day of the rule nisi. The rule was then extended to allow applicant to file replying papers and on 26 October 2009, Bozalek J extended the rule and postponed the matter to 10 December 2009 for hearing in the Fourth Division.

[4] The matter came before me on 10 December 2009. The last business day of the fourth term. After hearing argument. I indicated that in view of the obvious urgency of the matter and the resultant need for finality, I would attempt to deliver a judgment sooner rather than later, preferably during the December/January recess.

[5] Having considered the papers tiled of record and the oral arguments delivered on behalf of the parties, I have come to a Firm conclusion as to the order which I should make. However, due to time constraints, I do not intend traversing the respective allegations of the parries in arty great detail, but merely to summarise my Endings on the issues in dispute. The affidavits and annexures, including the reconsideration application, comprise approximately 450 pages and I accept that any person interested in this judgment is fully conversant with the contents thereof.

[6] I will firstly deal with certain in limine defences raised by first [REAL WORLD DIAGNOSTICS CC] and second [Ashley Uys] respondents, where after I will turn to the merits of the application.

DEFENCES IN LIMINE

Applicant's locus standi.

[7] First [REAL WORLD DIAGNOSTICS CC] and second [Ashley Uys] respondents dispute that the deponent to the applicants founding papers. Mr, Lasarow, has been duly authorised to bring the application on behalf of applicant. They allege that the lack of authority stems from the fact that the resolutions attached to the founding affidavit as annexures ALI and AL2, are HOT dated.

[8] In the founding affidavit, Lasarow. who is the managing director of applicant, confirms that he has been duly authorised by applicant to bring the application. He further explains, in the replying affidavit, that the resolutions were signed in the week of 21 August 2009 when he called for such resolutions. He states that the signed resolutions were forwarded to him by e-mail on 20 August 2009 by Ms. Heftel, who was the person charged with the task of arranging the resolutions. He furthermore attaches to his replying affidavit a copy of the e-mail addressed to him by Ms. Heftel, dated 21 August 2009, by which the resolutions were forwarded to him.

[9] In view of the aforesaid, lam satisfied that the evidence establishes that it is applicant which is litigating and not some unauthorised person on its behalf. First [REAL WORLD DIAGNOSTICS CC] and second [Ashley Uys] respondents are clearly unable to dispute what Lasarow has said about him being duly authorised to bring these proceedings on behalf of the applicant. See: Mall (Cape) (Pty) Ltd v Merino Ko-operasie Bpk 1957 (2) SA 347 (C) at 352/X.

[10] I accordingly find that there is no merit in this defence raised by first [REAL WORLD DIAGNOSTICS CC] and second [Ashley Uys] respondents. Alleged fraudulent service.

[11] Second respondent contends that applicant deliberately omitted to inform the court on 28 August 2009, that second respondent was in Germany, and acted fraudulently in serving the founding papers upon him by e-mail instead of at his home address, business address or chosen domicilium in South Africa. This conduct, second respondent alleges, amounts to grounds for dismissing the application with costs.

[12] There is clearly no substance in this defence, In paragraphs 184 and 205 of the founding affidavit, the court is informed that second respondent is in Germany until Monday 31 August 2009. Also. Service was effected electronically upon first [REAL WORLD DIAGNOSTICS CC] and second [Ashley Uys] respondents on 27 August 2009, to afford them an opportunity to oppose the application. During the course of the next morning, an attorney had been instructed on their behalf. This is borne out by the documents filed in the reconsideration application.

[13] It is m any event obvious that it would have served no purpose to serve the founding papers on second respondent at his home address, business address or chosen domicilium, while he was in Germany. The founding papers would then not have come to his attention at all.

[14] I conclude that applicant has not committed any irregularity in this regard.

The arbitration clause.

[15] First [REAL WORLD DIAGNOSTICS CC] and second [Ashley Uys] respondents contend that since applicant has initiated High Court proceedings, instead of by way of arbitration in terms of the arbitration clause (clause 13 of the co-operation agreement), the application falls to be dismissed.

[16] At the outset, it should be borne in mind that first [REAL WORLD DIAGNOSTICS CC] and second [Ashley Uys] respondents have. in their defence on the merits of the application, consistently assented that the co-operation agreement, which contains the arbitration clause, is void ab initio, This purported enforcement of the co-operation agreement by relying on the arbitration clause, and simultaneously asserting that the co-operation agreement is void ab initio, constitute the invoking of inconsistent remedies. As submitted on behalf of applicant, the said respondents cannot approbate and reprobate. In any event, our courts have rejected the possibility of an arbitration clause having a separate existence, even where this was specifically provided for in the main contract, and an arbitrator thus has no jurisdiction to consider the issue. See: Allied Mineral Development Corporation Pty Ltd v Gemsbokvlei Kwartsiet (Edms) Beperk 1968 (1) SA 7 (C) at l3E-l4B and Van Heerden en Andere v Senh-ale Kunsmis Korporasie (Edms) Bpk 1973 (1) SA l7 (A) ar27D-31C.

[17] Furthermore, it bears emphasis that second respondent is not a signatory to, nor is the relief sought against him in his personal capacity, predicated upon the cooperation agreement. The relief sought against him by applicant is based upon his breach of the fiduciary duties owed by him as director of the third respondent. Consequently second respondent cannot rely upon the arbitration clause in the co-operation agreement as a defence.

[18] Finally, even if the first [REAL WORLD DIAGNOSTICS CC] and second [Ashley Uys] respondents were able to rely on the arbitration clause as a defence, it does not constitute an automatic bar to legal proceedings in ordinary courts. It appears from the provisions of section 6 (l) of the Arbitration Act. No. 42 of l965_ and the relevant case law. that should a party institute proceedings in a competent court notwithstanding an arbitration clause in an agreement, the opposing party has two options. Such party can either apply for a stay of the proceedings in terms of section 6 (l) of the Arbitration Act, or may seek by way of a special plea, or raise as a defence on affidavit in the nature of a dilatory plea, a stay of the proceedings pending the final determination of the dispute by arbitration.

See: Yorigami Maritime Construction Company Ltd v Nissho-lwai Company Ltd 1977 (4) SA 682 (C) at 692 H and Stocks Construction (OFS) (Pty) Ltd v Metter-Pingon (Pty) Ltd 1978 (4) SA 35 (T) at 39B.

[19] The first [REAL WORLD DIAGNOSTICS CC] and second [Ashley Uys] respondents have not applied for a stay of the proceedings in terms of section 6 (I ) of the Arbitration Act. nor have they in their answering affidavit, by way of a special plea or dilatory plea, sought a stay of the proceedings pending the final determination of the dispute by arbitration. By delivering its answering affidavit without a prayer for a stay, the first respondent (who is a signatory to the co-operation agreement) has taken a further step in the proceedings and is thus also precluded nom making an application for a stay in terms of section 6 (l ) of the Arbitration Act.

[20] In view of the aforesaid, l conclude that there is no merit in this defence relied upon by first [REAL WORLD DIAGNOSTICS CC] and second [Ashley Uys] respondents.

THE MERITS OF THE APPLICATION

[21] Applicant seeks final relief of motion. It is trite, that to succeed applicant has to establish: (a) a clear right;(b) an injury actually committed or reasonably apprehended; and (c) the absence of any other satisfactory remedy. See: Setlugelo v Setlngelo 1914 AD 221.

I now turn to deal with the issues pertaining to the merits of the application as same emanate from the respective affidavits of the parties. In the process of dealing with these specific issues 1 also consider whether applicant has made out a case for the final relief which it seeks on motion, Validity of the cu-operation agreement and annexures 4 and 5 thereto.

[22] The first [REAL WORLD DIAGNOSTICS CC] and second [Ashley Uys] respondents point out, correctly in my view, that in terms of the co-operation agreement it was not the intention of the parties to be held permanently bound, but that the possibility of the termination of the co-operation agreement was foreseen by all parties concerned. They do submit, however, that the co-operation agreement is void for vagueness cm the grounds that it is for an unspecified duration and silent as to a termination date.

[23] I do not agree with this submission. As explained in Trident Sales (Pty) Ltd v AH Pillman and Son (Ply) Ltd 1984 (l) SA 433 (W) at 436B, contracts of unspecified duration are not void for uncertainty, but perfectly valid.

[24] The applicable principles in this regard were stated as follows in Putco Ltd v TV & Radio Guarantee Company (Pty) Ltd 1985 (4) SA 809 (A) at 827H-l:
The Appellate Division also laid down the following principles with regard to the termination of such an agreement: Either party is entitled to give such notice for any valid commercial reason (832H); "reasonable" is a relative term and what is reasonable depends upon the circumstances of each case (830l); the notice must allow the person to whom it is given sufficient time in which reasonably to regulate his/her own affairs (S3lA-C); the notice of termination must be clear and unequivocal (830E).

[25] I accordingly conclude that the co-operation agreement is not void for uncertainty, but valid and enforceable, l t may, however, be terminated upon reasonable notice, as explained in the Putco-judgment. In regard to annexures 4 and 5 to the co-operation agreement* first [REAL WORLD DIAGNOSTICS CC] and second [Ashley Uys] respondents allege that same are invalid because they have not been signed by the third respondent. However, Lasarow denies that third respondent did not sign annexures 4 and 5. He asserts that he signed annexure 4 on behalf of both applicant and the third respondent, while in the case of anneXurei5, he signed the document twice, once on behalf of applicant and once on behalf of third respondent, I should add that in argument Mr. Arendse Acting on behalf of first [REAL WORLD DIAGNOSTICS CC] and second [Ashley Uys] respondents, confined his argument in this regard to the alleged invalidity of only annexure 4 and not annexure 5.

[26] Turning then to annexure 4, E1-st and second respondents point to clause 17.3 of the co-operation agreement which states that: "No addition to... this agreement ...shall be of any force or effect unless reduced to writing and signed by all the parties or their duly authorised representatives

They also rely on clauses 19.1 and 19.3 of the co-operation agreement. Clause 19,1 provides that "this agreement is signed by the parties on the dates and at the places indicated opposite their respective names. " Clause 19.3 states that the persons signing the co-operation agreement in a representative capacity, warrant their authority to do so.

[27] First [REAL WORLD DIAGNOSTICS CC] and second [Ashley Uys] respondents accordingly submit that, as applicant, first respondent and third respondent are parties to the co-operation agreement, all three of them had to sign any addendum thereto, For such addendum to be valid. They contend that as annexure 4 has not been signed by third respondent (in fact the name of the third respondent has not been inserted tor purposes of a signature). annexure 4 is invalid.

[28] It seems to me that the reliance by first [REAL WORLD DIAGNOSTICS CC] and second [Ashley Uys] respondents on the provisions of clauses 19.1 and 19.3 of the co-operation agreement, is misplaced. These clauses expressly refer to "this agreement", which phrase is defined in clause 1 as "the agreement as set out in this document and the appendices hereto This refers to the existing co-operation agreement which applicant, :first respondent and third respondent signed and executed on 28 July 2008. As appendices, it contained annexures 1 to 3, as well as certified copies of the identity documents of Lasarow and second respondent. Annexure 4 was not in existence on 28 July 2008, as it was only executed and signed on 9 February 2009. Clause 19.1 which states that "this agreement" is signed by the parties on the dates and at the places indicated opposite their respective names, can therefore only refer to the existing co-operation agreement and not to annexure 4 which only saw the light of day some six months later. The same applies to clause 19.3 which provides that the persons signing "this agreement" (i.e. the co-operation agreement and appendices in existence at 28 July 2009), in a representative capacity, warrant their authority to do so.

[29] I do, however, agree that the provisions of clause 17.3 of the co-operation agreement, apply to annexure 4. As indicated earlier, clause 17.3 provides that no addition to the co-operation agreement shall be of any force or effect unless reduced to writing and signed by all the parties or their duly authorised representatives. What' has to be determined, is whether, in executing annexure 4. there has been compliance with clause 17.3.

[30] Annexure 4 has been reduced to writing and the heading thereof reads as follows: "Addition to cooperation agreement between Real World Diagnostics and Trimega Laboratories & Trimega Diagnostics (Pty) ".This is a reference to the three parties who were the signatories to the co-operation agreement, namely applicant, first respondent and third respondent.

[31] In the preamble of annexure 4, reference is made to the visit of second respondent, on behalf of first respondent, on behalf of the first respondent, to Germany, which was funded by Lasarow "from Trimega Laboratories Ltd (applicant), also representing Trimega Diagnostics (Pty) (third respondent)". The preamble concludes that the visit presented numerous opportunities "detailed and agreed below as follows". This is followed by 12 numbered paragraphs which clearly show that annexure 4 intends to record an agreement between three parties, namely applicant, first and third respondents. Provision is, inter alia, made for the sharing of all revenues associated to the EIC] rapid test (paragraph 1), within the shareholding of third respondent (Le. equally between first and third respondents). Paragraph 2 provides that "the IP (intellectual property) of EtG will solely belong to Trimega Diagnostics (third respondent)".

[32] Two signatures appear at the end of annexure 4, namely that of second respondent and Lasarow. Under the printed name and signature of second respondent, the name "Real World Diagnostics" (first respondent) appears, while the name "Trimega Laboratories" (applicant) appears under the printed name and signature of Lasarow. In these circumstances, first [REAL WORLD DIAGNOSTICS CC] and second [Ashley Uys] respondents contend that third respondent did not sign annexure 4, as the name of the third respondent was not typed on the document in the space designated for signatures.

[33] I do not agree with this submission. As explained by Flemming DIP in Chisnall and Chissnall v Sturgeon and Sturgeon, 1993 (2) SA 642 (W). a single signature may, even when its form appears to refer to one capacity, be the assent of more than one patty. The indication at the signature about its function is just that, but does not in law exclude other indicia about the legal intent of the signatory and is therefore not conclusive. When interpreting the function of the signature, it is necessary to consider the document as a whole and evidence aliunde is admissible. if it is not tendered to alter or vary the terms of the agreement, but merely to indicate the function of the signature.

[34] As mentioned earlier, it is apparent from the context of annexure 4 as a whole, that the parties intended, by their signatures. to bind the applicant, first respondent and third respondent. This is confirmed by the express statements of Lasarow in the founding and replying papers, who also points to the introductory paragraph of annexure 4 which confirms that he was acting on behalf of both the applicant and third respondent, and that he signed annexure 4 on behalf of applicant and third respondent. As mentioned earlier, what applicant has to show, is that annexure 4 was executed in accordance with clause 17.3 of the co-operation agreement, which requires an addition to he in writing and signed by all the parties or their duly authorised representatives. There are no other formal requirements prescribed for the valid execution of an addition to the co-operation agreement.

[35] For the reasons mentioned, I find that annexure 4 was also signed by Lasarow on behalf of applicant and third respondent, while being duly authorised thereto. I therefore conclude that annexures 4 and 5 are valid and enforceable.

Purported termination of the co-operation agreement

[36] The allegation of first respondent, that the co-operation agreement has been terminated, is denied by applicant. First respondent accordingly bears the onus of proving such termination.

[37] As mentioned before, it is common cause that the co-operation agreement was not intended to continue indefinitely. As held in the Putco-case, it is therefore terminable on reasonable notice, which notice must be clear and unequivocal. At 831A-C, the Appellate Division held that in order for such notice to be considered reasonable, it must allow the person to whom it is given, sufficient time in which to reasonably regulate his/her own affairs.

[38] I agree with the submission on behalf of the applicant. That first respondent has furnished insufficient details to support the allegation of prior termination and, in particular, to show that reasonable notice of such purported terminated has been given. Nor has the first respondent provided a valid commercial reason for termination. There is, in my view, much to be said for the submission of applicant that the true reason for the purported termination is that the first respondent is attempting to evade its contractual obligations.

39] There is accordingly, in my opinion, no evidence to support a valid prior termination of the co-operation agreement nor does the purported termination thereof in the answering affidavit, amount to a valid termination in accordance with the principles laid down in the Putco-case. I therefore conclude that the co-operation agreement remains valid and enforceable. Proprietorship of the intellectual property residing in the EtG rapid test

[40] What the applicant seeks to protect is the intellectual property in the form of the confidential information, technical know-how and trade secrets relating to the production of the EtG Rapid Test prototype, which vest in third respondent by virtue of the provisions of the co-operation agreement and annexure 4 thereto, It is important to bear in mind that applicant does not seek to protect intellectual property rights in the EtG antibody clones themselves, as it is not disputed by applicant that Von Minden is the license holder of the EtG antibody clones.

[41] Applicant accordingly seeks a declaratory order to the effect that third respondent is the owner of this intellectual property relating to the EtG Alcohol Rapid Test and that same vests exclusively in the third respondent, In this regard it is important to bear in mind that first [REAL WORLD DIAGNOSTICS CC] and second [Ashley Uys] respondents do not dispute that the intellectual property in the form of specifications, technical process and know-how, including the materials, methods, process, development and production protocols and formulae, relating to the production of the EtG Rapid Test, are capable of application in trade or industry or that it has economic value. It therefore qualifies as a trade secret worthy of protection, if it is shown that it is, objectively speaking, only available and known to a restricted number of people or a closed circle and not public knowledge or property. See: Van Heerden-Neethling, Unlawful Competition, Second Edition, page 215.

[42] On the basis that the co-operation agreement and annexure 4 thereto. are valid and binding, applicant seeks interdictory relief to protect the aforesaid trade secrets of third respondent against exploitation. Applicant alleges that such exploitation constitutes a wrongful breach by first respondent of its contractual obligations in terms of the co-operation agreement and annexure 4 thereto, while the exploitation by second respondent constitutes a breach of his fiduciary duty as a director of the third respondent.

[43] The main argument put forward on behalf of first [REAL WORLD DIAGNOSTICS CC] and second [Ashley Uys] respondents. is that the intellectual property rights. in the nature of trade secrets, do not vest in third respondent, but in the first respondent. Their contention can be summarised as follows:

The second respondent developed the EtG Rapid Test on behalf of the first respondent in Germany. Thereafter negotiations ensued between applicant and first respondent in regard to profit sharing and a vehicle for co-operation on the EtG Rapid Test project, which led to the applicant and first respondent negotiating and signing annexure 4 to the co-operation agreement. In terms of annexure 4, ownership of the intellectual property would vest in third respondent. However, first [REAL WORLD DIAGNOSTICS CC] and second [Ashley Uys] respondents contend, that as annexure 4 is not a binding agreement, for want of third respondents signature. the intellectual property rights in the EtG Rapid Test prototype were not transferred from first respondent to third respondent.

[44] In view of my finding that the co-operation agreement and annexure 4 thereto, are valid and enforceable, this line of defence cannot succeed. It is, in any event, also inconsistent with the undisputed correspondence and documents annexed to the affidavits tiled on behalf of the parties. As submitted on behalf of applicant. references to the EtG project as that of the third respondent. by all persons involved. Including the second respondent, are so consistent and oft repeated so as to render the first [REAL WORLD DIAGNOSTICS CC] and second [Ashley Uys] respondents' contrary version inherently improbable. See, for example, annexure AL54 at page 218 of the record, which contains e-mail correspondence between second respondent and Lasarow, dated 1 April 2009.

[45] In his e-mail Lasarow requested the following from second respondent:

"Also in relation to the IP (intellectual property) for EtG-could you confirm that the protocols and associated methods etc will belong to TD (third respondent). Could you also confirm that this will be documented and not in your brain so it protects TD.... If we don't have the IP protected for EtG then the other stuff might not happen, meaning EtG is all we have at the moment."

[46] Second Respondent replied as follows:

"No problem Avi (Lasarow)... Yes I agree that the IP of the EtG will belong to TD, and I will disclose everything in EtG production so that this line can continue if anything happens to me."

[47] The aforesaid correspondence and documentation also illustrate that there is no merit in second respondent's averment that the EtG Rapid Test project was conducted in Germany on behalf of first respondent and not the third respondent. The papers clearly show that it was conducted on behalf of third respondent, with the result that the intellectual property rights residing in the EtG Rapid Test, are the property of the third respondent. This is continued by the provisions of clause I 1.8 of the co-operation agreement and annexure 4 to the co-operation agreement, the latter providing that the intellectual property tights vest in the third respondent, being the vehicle utilised by applicant and first respondent for co-operation on the EtG Rapid Test project.

[48] First [REAL WORLD DIAGNOSTICS CC] and second [Ashley Uys] respondents further argued that, in any event, the co-operation agreement, and in particular annexure 4 thereto, does not make it clear that it refers to the EtG Rapid Test. M I understand this argument, it is based on clause 2 of annexure 4, which reads:

"The IP of EtG will solely belong to Trimega Diagnostics."

First [REAL WORLD DIAGNOSTICS CC] and second [Ashley Uys] respondents point to the common cause fact, namely that Von Minden is the licence holder of the EtG antibody clones (public property element). and argue that clause 2 of annexure 4 should be interpreted to be a reference to the intellectual property in the EtG antibody clones, of which Von Minden is the license holder--and not the EtG Alcohol Rapid Test.

[49] I am of the view that there is not merit in this alternative defence. Annexure 4 should be interpreted by having regard to the document as a whole and against the background of the negotiations and correspondence between the parties. Holistically interpreted, it is abundantly clear that the references to "EtG" in annexure 4, are meant to be references to the EtG Rapid Alcohol Test In fact, the very wording of annexure 4 supports this interpretation. By way of an example, reference can be made to the preamble of annexure 4, in which the purpose of the trip to Germany is described as follows: "The sole purpose of the trip was to develop an alcohol test known as EtG testing in urine, saliva and sweat. " This shows that the reference to EtG in annexure 4. is not a reference to EtG in general, but a specific reference to the Rapid Alcohol Test. In fact, in clause l of annexure 4, the following is recorded: "All revenues associated I0 EIG Rapid Testing in the matrices saliva, urine and sweat will be shared equally within the shareholding of Trimega Diagnostics (Pty) Ltd regardless of country."

[50] In view of the aforesaid, I conclude that third respondent is the owner of the intellectual property residing in the EtG Rapid Test and has the right to be protected against the unauthorised use of its confidential information and trade secrets in regard thereto.

Unlawful competition by first [REAL WORLD DIAGNOSTICS CC] and second [Ashley Uys] respondents?

In terms of clause 3.1, read with sub-clauses 3.1.1 and 3.1.4, of the co-operation agreement, applicant and first respondent undertook to collaborate and co-operate exclusively with each other in relation to the establishment of "the Trimega Diagnostics project and not to compete with each other or enter into any arrangement with any person or organisation or body in relation to the Trimega Diagnostics projects. In clause 6.1 of the co-operation agreement, it is recorded that no party shall engage in any activity related to the Trimega Diagnostic Projects other than in association with the other party and in accordance with the terms and conditions of the co-operation agreement.

[52] In clause 1.1.14 of the co-operation agreement. "Trimega Diagnostics project" are defined as the projects to be conducted by the parties through Trimega Diagnostics (third respondent) as set out in annexure 1 to the co-operation agreement. Annexure 1 lists as one of the Trimega Diagnostics projects:

"Drug and Alcohol Testing by way of any medium, application or platform and related services excluding Alpha Pharmacy, Drug Rehabilitation Centres, South African Breweries and Chevron."

[53] Reference may also be made to clauses 10.2, 10.3 and 10.3.1 of the cooperation agreement. in terms of which the parties undertook that they would not, directly or indirectly, during the currency of the co-operation agreement and after the termination thereof, use for their own benefit, or the benefit of any other entity, any confidential information, nor derive for their own benefit any profit from any informational knowledge in relation to the business or affairs of the other party, acquired by reason of the parties' relationship established in terms of the co-operation agreement and/or any trade secret or confidential information of the other party.

[54] The proprietor of a trade secret is entitled to the exclusive use. enjoyment, disposal and exploitation thereof Consequently. Any unauthorised use or misappropriation thereof by another party, "is prima facie unreasonable or contra bonos mores, and infringement of the right to the trade secret, therefore unlawful in principle." See: Van Heerden-Neethling, Unlawful Competition, supra at 217-219.

[55] It is common cause, or at least not disputed by first [REAL WORLD DIAGNOSTICS CC] and second [Ashley Uys] respondents, that they have and continue attempting to exploit the EtG Rapid Test at the expense of third respondent. In this regard it is not disputed that, while in Germany, the second respondent, on behalf of first respondent, engaged in separate discussions with Dima to develop the EtG Rapid Alcohol Test and other products, to the exclusion, and at the expense. of third respondent. Second Respondent has furthermore been pursuing a course to manufacture the EtG Rapid Test to supply to Dima and/or Von Minden. It is also not disputed by first [REAL WORLD DIAGNOSTICS CC] and second [Ashley Uys] respondents, that second respondent, on behalf of first respondent, has entered into negotiations with CBT for funding to set up a manufacturing plant in the Republic of South Africa to produce the EtG Rapid Test and to take economic advantage of the EtG Rapid Test and the relationship with Dima and Von Minden, who are in a market position to fully exploit the EtG Rapid Test internationally.

[56] It is common cause that second respondent flew to Germany to work directly with Dima and Von Minden on the development of the EtG Rapid Test during the period 25 August 2009 to 31 August 2009, This was done at the expense of Von Minded to complete a mini-production run of 1000-3000 EtG Rapid Tests on behalf of first respondent, without informing third respondent or the applicant. Nor is it disputed that this production run made use of the very same antibodies and antigens ordered by third respondent for its own planned production run.

[57] In view of the aforesaid, I conclude that this conduct of first [REAL WORLD DIAGNOSTICS CC] and second [Ashley Uys] respondents amounts to an unlawful misappropriation of the trade secrets and confidential information of third respondent. which is expressly protected in terms of the co-operation agreement and annexure 4 thereto. This entitles applicant to take steps on behalf of third respondent to prevent such an infringement of the rights of third respondent.

Breach by second respondent of his fiduciary duties?

[58] Second respondent does not dispute that, qua director of third respondent, he owed the third respondent certain fiduciary duties, inter alia, not to place himself in a position in which his personal interests conflict with his duties to third respondent; not to misuse confidential information belonging to third respondent: not to compete with third respondent; and to deal openly and in good faith with the third respondent.

[59] The second respondent, however, contends that he did not consider the co-operation agreement to be valid. alternatively, as third respondent does not own the intellectual property rights to the EtG Alcohol Test, he has not breached any fiduciary duties by acting in the manner aforesaid.

[60] In view of my finding that the co-operation agreement is valid and enforceable and that third respondent owns the intellectual property rights in the EtG Rapid Alcohol Test. the second respondent, on his own version, has acted in breach of his fiduciary duties as a director of third Respondent. On his own version, he has breached the duty not to take corporate opportunities to the detriment of third respondent; not to misuse confidential information and trade secrets belonging to third respondent and not to compete with third respondent.

[61] Finally, in this regard, second respondent contends that this issue is merely academic. as he has resigned as at director of third respondent, which resignation has been accepted. However, as explained in Lawsa. Volume 4, Part 2, paragraph 135, read with footnote 31. "a director cannot divest himself/herself of his/her duty by resigning from the company. Where a director's resignation is influence by a wish to acquire for himself/herself an opportunity, or where his/her position with the company, rather than a fresh initiative, led him/her to the opportunity, he/she remains precluded from taking it".

[62] I therefore conclude that applicant. on behalf of third respondent. Is entitled to relief to prevent second respondent from unlawfully breaching his fiduciary duties owed to third respondent. Declaratory and interdictory relief?

[63] In view of my findings regarding the validity of the co-operation agreement and annexure 4 thereto, as well as the fact that the validity of annexure 5 thereto is no longer in issue, the applicant is entitled to the declaratory order sought in paragraph 2.l of the Notice of Motion.

[64] In view of my findings in regard to the ownership of the intellectual property relating to the EtG Alcohol Rapid Test, applicant is similarly entitled to a declaratory order in terms of paragraph 2.2 of the Notice of Motion.

[65] This brings me to the interdictory relief sought by applicant. As I have already held the provisions of the co-operation agreement, together with annexure 4 thereto. clearly establish the third respondents ownership of the intellectual property residing in the EtG Rapid Test. As well as the fiduciary obligations owed to third respondent by the second respondent. I am accordingly satisfied that applicant has established a clear right to restrain first [REAL WORLD DIAGNOSTICS CC] and second [Ashley Uys] respondents from conducting their business and regulating their affairs on the basis that the co-operation agreement and annexures 4 and 5 thereto, are of no force and effect, In particular. a clear right has been established to prevent first [REAL WORLD DIAGNOSTICS CC] and second [Ashley Uys] respondents from unlawfully exploiting the third respondents rights of ownership of the intellectual property relating to the EtG Alcohol Rapid Test.

[66] The conduct of first [REAL WORLD DIAGNOSTICS CC] and second [Ashley Uys] respondents. referred to above, clearly constitutes an unlawful infringement of the rights of third respondent to the ownership of the intellectual property of the Etg Rapid Alcohol Test. I am also satisfied that. for the reasons put forward in paragraphs 194 to 197 of the founding affidavit. which have not been gainsaid by first [REAL WORLD DIAGNOSTICS CC] and second [Ashley Uys] respondents. the applicant has shown that the third respondent has no other adequate remedy than to apply for interdictory relief.

Costs

[67] It was submitted on behalf of applicant that, having regard to the untenable defences raised by first [REAL WORLD DIAGNOSTICS CC] and second [Ashley Uys] respondents, as well as their general conduct, a punitive costs order is justified. I do not agree that the conduct of the said respondents can be described as reckless or reprehensible to the extent that a punitive costs order is justified. I am, however, satisfied that this is a matter which justified the employment of two counsel.

Order