THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Case No:  354/11
(Not reportable)
In the matter between:
PRIMEDIA (PTY) LTD t/a PRIMEDIA INSTORE                                    Appellant
and
RADIO RETAIL (PTY) LTD                                                       First Respondent
RADIO RETAIL FOR SPAR (PTY) LTD                               Second Respondent
ZaPOP (PTY) LTD                                                                   Third Respondent

Neutral citation:   Primedia v Radio Retail (354/2011) [2012] ZASCA 32
(29 March 2012).
Coram:
Mthiyane DP, Cloete, Cachalia, Malan, Leach JJA
Heard:
15 March 2012
Delivered:
29 March 2012

Summary:  Unlawful competition – appellant enforcing rights in terms of
pre-existing contracts – no unlawful competition proved.

________________________________________________________________

ORDER
________________________________________________________________
On appeal from:  Western Cape High Court, Cape Town (Henney AJ sitting as
court of first instance):

1.
The appeal is upheld. Save as set out in para 2, the respondents are
ordered to pay the costs of the appeal, including the costs of two counsel.
2.
The appellant is to pay the costs of the appeal against the dismissal of its
counter-application including the costs of two counsel.
3.
Paras 3 and 5 of the order of the court a quo are set aside and the
following order is substituted:
‘The main application is dismissed with costs, including the costs of two
counsel.’

________________________________________________________________

JUDGMENT
________________________________________________________________

CACHALIA JA (Mthiyane DP, Cloete, Malan, Leach JJA concurring):

[1] This is an appeal against a judgment of the Western Cape High Court
(Henney AJ) – with its leave – granting the respondents final interdictory relief
against Primedia, the appellant in these proceedings. The high court found that
Primedia had unlawfully interfered with the contractual relationships between the
respondents and 330 retail franchisees associated with the well-known Spar
Group. It also dismissed Primedia’s counter-application for an interdict restraining
the respondents from unlawfully interfering with its contractual relationship with
110 of these franchisees.

[2] As is evident the parties compete in the retail in-store industry in the area
of product marketing. They do so inter alia by providing media types to attract the
attention of customers who patronise these stores. Stores that use these
services enter into agreements with service providers, such as the parties in this
case, who market, sell and install the media types.

[3] The three respondents have since early in 2009 collaborated in marketing
their services to Spar franchisees, and have entered into exclusive agreements
with 330 franchise stores to provide in-store promotions for their media types.

[4] The present dispute began when Mr Riaan Labuschagne, the managing
director of ZaPOP, learnt that Primedia’s representatives had visited two of the
stores with whom the respondents had exclusive agreements to promote its
products. So he wrote to Mr Graham Bouwer, Primedia’s chief executive officer,
on 6 August 2010 to request Primedia to stop promoting the respondents’
identified media types or similar media types at any of the 330 stores in question,
and to remove any such products from the stores where they had been installed.

[5] In response, Mr Bouwer distributed a notice on 19 August 2010 to
suppliers of the Spar Group. It read thus:

‘TO OUR VALUED CUSTOMERS
It has come to my attention that ZaPOP [the third respondent] have announced that they
have been awarded rights to provide instore media services in Spar Group stores.
The announcement is creating confusion in the market place and I consequently want to
reaffirm that Primedia Instore remains the official and exclusive provider of instore media
services for the Spar Group (Super Spars, Spars, Kwikspar and Tops).
Mike Prentice (Group Marketing Executive – Spar) and Julian Evans (Group
Merchandising Manager – Spar) have endorsed this communication. If anyone is still
unclear concerning the above status, you can contact Mike or Julian on 031 7191900 or
myself on my cell, 082 451 2307 (graham@primeinstore.co.za).
I trust that this letter serves to remove all confusion.’

[6] A week later Mr Labuschagne sent another letter to Mr Bouwer
complaining that this notice contained several false and misleading statements: it
suggested, he said, that ZaPOP had no right to provide media services to Spar
stores despite the respondents having written agreements to do so; it implied that
the Radio Retail was creating ‘confusion’ in the market by announcing that it had
rights to provide these services when it did not, and it asserted untruthfully that
the appellant was the ‘official and exclusive’ provider of these services to stores
of the Spar Group. The letter called upon Primedia to retract the notice within 14
days. A copy of this letter was sent to Mr Prentice and Mr Evans, the two Spar
officials mentioned in the notice.

[7] The respondents’ attempts to secure a retraction of the notice failed. On
7 September 2010 Primedia’s attorneys responded to the letter maintaining that
the notice was intended only for suppliers of the Spar Group, and not the
franchisees. They also requested proof, on behalf of Primedia, that the
respondents had in fact entered into exclusive agreements with the franchisees.

[8] On 10 September 2010 the respondents’ attorneys made an extract of an
agreement with the relevant exclusivity provisions available to Primedia’s
attorneys and reiterated their demand that Primedia remove ‘all media types’
installed in any of the 330 stores.

[9] Primedia’s attorneys responded by letter on 21 September. They
questioned the validity of the exclusivity agreement, asserted that the media
types installed by Primedia were ‘markedly different’ from those of the
respondents and declared that in the absence of the respondents being able to
demonstrate a clear right to provide services to the franchise stores exclusively,
Primedia would not accede to the request to remove its media types from the
stores in question.

[10] On 8 October 2010 the respondents instituted interdictory proceedings
against Primedia seeking urgently to restrain it from competing unlawfully with
them by interfering with their contractual rights with the franchisees. They alleged
that Primedia was marketing, selling and installing media types similar to theirs in
those stores. They also sought to prevent Primedia from making false
representations, allegedly of the kind in Mr Bouwer’s notice of 19 August 2010,
concerning them.

[11] The application was initially set down for hearing on 15 October 2010.
Two days earlier Primedia’s attorneys had written to their counterparts and had
undertaken, on behalf of their client, not to make any false representations about
the respondents. The parties then agreed on a timetable for the filing of further
affidavits.

[12] In its answering affidavit, filed on 28 October 2010, Primedia reiterated its
earlier undertaking not to make false representations about the respondents. It
also offered three defences to the relief claimed: first, it took issue with the
validity of the contracts that the respondents had allegedly concluded with the
franchisees by asserting that the respondents had not proved their contractual
rights; second and importantly, it asserted that it had pre-existing agreements
with 110 franchisees, which entitled it to provide its media services to them – this
assertion also formed the basis of the counter-application in which Primedia
alleged that the respondents were interfering with its rights under these pre-
existing agreements; finally, Primedia alleged that its media types were not the
same as those for which the respondents sought protection.

[13] When the matter proceeded in the high court the respondents sought final
relief, and the matter was argued on this basis. They therefore had to satisfy the
well-known requirements for the grant of an interdict: a clear right, reasonable
apprehension of irreparable harm to their contractual relationships with the

franchisees with whom they had contracted and the absence of any alternative
remedy to protect their rights.

[14] The learned judge found that the respondents had satisfied these
requirements and granted the respondents all the relief they had asked for. He
found that the contracts that the respondents had entered into with the
franchisees were valid; that by circulating the notice on 19 August 2010, and
dealing with the franchisees in question, Primedia had unlawfully interfered with
the respondents’ contractual relationships; and he dismissed Primedia’s
assertion that it was merely exercising its pre-existing contractual rights. As I
have mentioned the judge also dismissed Primedia’s counter-application.

[15] When the matter came before us Mr Gautschi, who appeared for
Primedia, abandoned his client’s appeal against the dismissal of the counter-
application. He, however, persisted with all the defences that Primedia raised
before the high court. Because of the approach adopted by Mr Gautschi, it is not
necessary to deal with defence concerning the validity of the respondents’
exclusive agreements.

[16] The thrust of his submission before us was this. Primedia and ZaPOP are
competitors. The competition between them is lawful. Of the 330 franchisees with
whom ZaPOP has agreements – assuming their validity, which was not
conceded – Primedia has pre-existing agreements with 110. ZaPOP’s exclusive
agreements relate to certain media types only. Primedia has its own media types,
which are not the same as ZaPOP’s. By virtue of its pre-existing agreements
Primedia is entitled to market, sell and install its media-types in any of the 110
stores. There is no suggestion in the papers that Primedia has been entering
these stores for a purpose other than to promote its own products. And there is
no evidence that Primedia was inducing any of the franchisees to breach their
contracts with the respondents, or that it was otherwise unlawfully competing with
them.

[17] In Schultz v Butt1 this court stated the general rule relating to unlawful
competition thus:
‘[E]very person is entitled freely to carry on his trade or business in competition with his
rivals. But the competition must remain within lawful bounds. If it is carried on unlawfully,
in the sense that it involves a wrongful interference with another’s rights as a trader that
constitutes an injuria for which the Aquilian action lies if it has directly resulted in loss . . .
In order to succeed in an action based on unfair competition, the plaintiff must establish
all the requisites of Aquilian liability, including proof that the defendant has committed a
wrongful act. In such a case, the unlawfulness which is a prerequisite for Aquilian liability
may fall into a category of clearly recognised illegality . . .’

[18] One such category is inducing or procuring a breach of a contract: an
action for damages, or where appropriate, an interdict will lie against any person
who intentionally and without justification induces or procures another to breach
a contract made with any other person. Where interdictory relief is sought, as in
this case, it is not necessary to prove actual injury, ie an actual breach of
contract. Proof of reasonable apprehension will suffice.2

[19] Although the judge found that Primedia’s conduct had caused the
franchisees to breach their exclusive agreements with the respondents, there
was no evidence of any such breach. And before us the respondents did not
contend that there was. Their cause of action was that Primedia had been
unlawfully competing with the respondents by interfering with their contractual
rights with the franchisees – hence their claim for interdictory relief. The
respondents therefore had to show that Primedia was intentionally and without
justification interfering with their contractual rights.

[20] In this regard Mr Olivier, on behalf of the respondents, contended that they
were not seeking to prevent Primedia from entering the stores with which the

1 Schultz v Butt 1986 (3) SA 667 (A) at 678.
2 V & A Waterfront Properties v Helicopter & Marine Services 2006 (1) SA 252 (SCA) paras 20-
22.

respondents had exclusive agreements, or from promoting its own media types in
those stores. The relief sought was, he argued, much more narrowly framed and
aimed only at restraining Primedia from: (a) interfering with their contractual
relationships with franchisees in question by soliciting them to unlawfully breach
or to sever their agreements with the respondents; and (b) marketing, selling or
installing the respondents’ media types and diverting corporate opportunities, to
which the respondents were entitled in terms of their agreements, to itself.

[21] Concerning the diversion of corporate opportunities, Mr Olivier properly
conceded that there was no such evidence. The high-water mark for the other
relief claimed by the respondents, as Mr Olivier put it, is contained in the
founding affidavit of Mr Mark Finestone, the general manager for Radio Retail
and Radio Retail for Spar. As most of the relief claimed hinges upon the following
extract of the evidence in the affidavit, it is necessary to reproduce it in full. It
reads thus:

‘The confusion caused by Primedia’s conduct
1.
It is evident that considerable confusion has been created by Primedia’s
aforestated notice and actions. Some of the stores are of the impression that
they are obliged to contract with Primedia or to allow its activities in-store, given
the latter’s “status” with the Spar Group as suggested in the aforestated notice.
Primedia has further exacerbated the situation by sending representatives to
stores, with which the Applicants’ have exclusive agreements, and insisting upon
installing media services there. I mention a few examples.
1.1
Mr Hein Bakkes of the Paarl East Superspar in Paarl reported to me that
Primedia had on two separate occasions since 1 August 2010 wanted to place
advertising and media products on his shop’s trolleys contrary to our contract
with him. The representative was at his store on about 18 August 2010 and again
on 25 August 2010, whereupon Mr Bakkes called me to confirm whether the
Primedia representative was allowed to install the media on his trolleys. He was
concerned that he would be acting in breach of his contract with Radio Retail for
Spar if Primedia was allowed to do so. I advised Mr Bakkes not to have the
media installed on his trolleys. Mr Bakkes informed me on 15 September 2010

that Primedia nevertheless continued with media installations in his store, and
that he was not sure when this would be removed. He accordingly wanted
clarification as to by when can he expect the placement of ZaPOP media in-
store, and the removal of the Primedia products. Mr Bakkes concluded an
exclusive agreement with Radio Retail on 30 March 2010.
2.
Mr Shawn Paulsen of the Lakeside Spar in Lakeside sent an e-mail message to
the Spar Western Cape Distribution Centre on 27 August 2010 for clarification
regarding the interrelationship between ZaPOP’s and Primedia’s activity in-store.
I telephoned him on the same day to explain the situation to him. On
16 September 2010 Mr Paulsen confirmed to me that Primedia is currently still
active in his store, with its representatives coming and going as they please.
They do not announce themselves or their activity in his store. Mr Paulsen has
recently received a “quarterly cheque” from Primedia pursuant to media
installations in his store. Mr Paulsen concluded an agreement with Radio Retail
on 31 March 2010, with effect from 1 August 2010. However, he confirms that he
is confused due to Primedia still acting in-store. He has allowed them to continue,
but needs clarity. Until the situation is resolved, he will continue to collect his
quarterly payments from Primedia. I annex hereto . . . a copy of an email sent by
Mr Paulsen to a representative of Spar Western Cape . . ..
3.
Mr Yusuf Banderker of the Westerford Kwikspar in Rondebosch, who concluded
an agreement with the Applicants on 18 March 2010, informed me on
17 September 2010 that a Primedia representative was in his store some weeks
ago with advertising material, and that he (Mr Banderker) had to request the
representative to remove the Primedia products from his store.
4.
Ms Bernadette Visser of the Kraaifontein Superspar reports that Primedia
representatives are very active in her store, and come and go in an ad hoc
fashion. They do not announce themselves upon arrival, and place or remove
media materials in the store at their own discretion, contrary to the terms of the
agreement with us. Primedia has recently contacted the store to request the
creation of an invoice to Primedia for the period April to June 2010 for media
which had previously been installed for campaigns in this period. Ms Visser feels
uncomfortable about the situation, as her store does not wish to become involved
in a dispute between the Applicants and Primedia. The Kraaifontein Superspar
concluded an agreement with the Applicants on 31 March 2010.

5.
Mr Andre van Rensburg of the Kuilsriver Superspar, who concluded an
agreement with the Applicants on 18 November 2009, reported that Primedia
representatives had been in his store in the week of 17 September 2010. They
come in on an ad hoc basis and show him what they will be putting up in store,
and which will be in breach of his contract with us. Mr van Rensburg is confused
as to what the impact of his agreement with the Applicants is on the situation. He
has requested confirmation that Primedia “must go” and ZaPOP must “come in”.
He does, however, still collect quarterly rebates from Primedia for previous media
installations and campaigns in-store. I annex, marked . . . a copy of a letter dated
18 January 2010 from Primedia to the Kuilsriver Spar, in which various
promotions conducted in the store by Primedia for the period July to September
2009 are set out. It is evident from the description of the media types used in
respect of each supplier, that those media types are similar to the ones offered
by the Applicants.
6.
Ms Mari Meyer of the Sonstraal Superspar, who concluded an agreement with
the Applicants on 31 March 2010, stated on 17 September 2010 that Primedia
representatives come into her store approximately every two weeks, without
announcing themselves to her. They simply install their products, in breach of the
terms of the agreement with us, and leave. She does not know how to handle the
situation.
7.
Ms Annalize Putter of the Bellville Kwikspar reported that Primedia was in her
store on 17 September 2010, asking her for an invoice for previous media
supporting campaigns installed in their store. Primedia had given her a letter . . .
from which she had to create the invoice. Ms Putter requires confirmation as to
when the Primedia products must be removed from her store. She concluded an
agreement with the Applicants on 20 May 2010.’

[22] Primedia answered these allegations by stating that in respect of all of the
franchisees mentioned above, except Mr Bardenker’s Westerford Kwikspar in
Rondebosch, it had pre-existing contracts with which its representatives were
lawfully exercising Primedia’s rights under these agreements. The judge,
however, rejected Primedia’s answer on the basis that its contracts were, unlike
those of the respondents, not exclusive. And he appeared to attach some

significance to the fact that some of the franchisees had been uncomfortable and
confused for having to deal with Primedia’s representatives while they also had
exclusive agreements with the respondents.

[23] It is understandable that some of the franchisees found it awkward in
having to deal with two competitors with whom they had contractual
arrangements. But the fact that some of the franchisees were not sure how to
manage their relationship with the two parties can hardly be laid at Primedia’s
door. There is no suggestion from any of them that Primedia’s representatives
were doing anything other that enforcing the terms of their contracts with the
franchisees in question.

[24] I can see no reason why the fact that these were not exclusive
agreements had any bearing on Primedia’s right to enforce them. In two of the
seven examples of unlawful interference that the respondents mention –
Lakeside Spar and Kuilsrivier – the franchisees specifically say that they
continued to collect their fees or rebates for Primedia’s media installations –
obviously because of their existing agreements with Primedia. In not one of the
remaining examples is there even a vague suggestion that Primedia’s
representatives were attempting to induce any of the franchisees to breach or to
terminate their contracts with the respondents unlawfully. Nor is there evidence
to suggest that any of the media types that Primedia’s representatives were
marketing, selling and installing were the same as those of the respondents.

[25] In the case of Mr Bardenker of Westerford Kwikspar Rondebosch – the
only instance where Primedia does not appear to have an agreement – he
requested Primedia’s representatives to remove their products from the store.
The judge considered this to be a case of ‘clear interference’. But I respectfully
disagree. Mr Bardenker does not say that the representatives refused to remove
their products from the store or that they in any other way behaved in a manner
that suggested that they were intentionally interfering with his agreement with the

respondents. And the papers come nowhere near permitting any inference to be
drawn that this was the case.

[26] This brings me to the only remaining relief that the respondents sought –
that Primedia be interdicted from making false representations about the
respondents. The basis for this relief was the notice that Mr Bouwer distributed to
the Spar suppliers on 19 August 2010. But once Primedia, two days before the
respondents had launched their application, and later again in their answering
affidavit, had given an undertaking not to disseminate false statements about the
respondents, the respondents could have had no reasonable apprehension that
Primedia would repeat the statements – assuming that they were unlawful. An
interdict is not granted for past invasions of a right; it is concerned only with
future infringements,3 and there was no evidence to suggest that the
respondents had a legitimate fear in this regard. There was therefore no longer
any ground to interdict the further dissemination of false representations. So the
high court ought not to have granted the respondents this relief.

[27] To conclude, I stated at the outset that the parties to the present dispute
are competitors. To succeed in its application for final relief, the respondents had
to prove that Primedia was competing unlawfully with them. The interdict could
have been granted only if the facts stated by Primedia in its answering affidavit,
together with the admitted facts in the respondents’ affidavits, justified this
finding.

[28] In all but one of the seven examples that the respondents cited as
evidence of unlawful interference with their contractual relationships with the
franchisees in question, Primedia asserted, as a fact, that they were merely
enforcing their pre-existing contacts with those franchisees, as they were entitled
to do. That this may have caused some discomfort and uneasiness among of the

3 National Council of SPCA v Openshaw 2008 (5) SA 339 (SCA) para 20; Simonlanga & others v
Masinga & others 1976 (4) SA 373 (W) at 375H-376A.

franchisees does not mean that Primedia was not entitled to enforce their
contracts, and there was no proper basis for the high court to have rejected
Primedia’s claim that this is what it was doing. In the only case where Primedia
did not have a pre-existing agreement – Westerford Kwikspar Rondebosch –
there was simply no evidence that Primedia unlawfully interfered with the
respondents’ exclusive contract. Finally, for the reason already given, there were
no grounds to interdict Primedia from making false statements about the
respondents.

[29] It follows that the appeal must succeed and the respondents must pay the
costs of the appeal. Primedia belatedly abandoned its appeal against the
dismissal of its counter-application. So it will have to pay the costs of the appeal
in this regard. We were concerned in this appeal only with the orders at paras 3
and 5 of the order of the high court (which concerned the relief sought in the
main application). It follows that those are the only orders that fall to be set aside.

[30] The following order is made.
1.
The appeal is upheld. Save as set out in para 2, the respondents are
ordered to pay the costs of the appeal, including the costs of two counsel.
2.
The appellant is to pay the costs of the appeal against the dismissal of its
counter-application including the costs of two counsel.
3.
Paras 3 and 5 of the order of the court a quo are set aside and the
following order is substituted:
‘The main application is dismissed with costs, including the costs of two
counsel.’

____________
A CACHALIA
JUDGE OF APPEAL

APPEARANCES

For Appellant:
A Gautschi SC (with him L Hollander)

Instructed by:

J Sweidan Attorneys c/o Walkers Inc, Cape Town

Symington & De Kok, Bloemfontein

For Respondent:
S Olivier SC (with him P S van Zyl)

Instructed by:

Werksmans Attorneys, Cape Town

McIntyre & Van der Post, Bloemfontein
THE SUPREME COURT OF APPEAL
OF SOUTH AFRICA

MEDIA SUMMARY – JUDGMENT DELIVERED IN THE
SUPREME COURT OF APPEAL
MEDIA SUMMARY – JUDGMENT DELIVERED IN COURT OF
29 March 2012

STATUS: Immediate

Primedia v Radio Retail 354/2011

Please note that the media summary is intended for the benefit of the media and
does not form part of the judgment of the Supreme Court of Appeal

The Supreme Court of Appeal (the SCA) today upheld an appeal from the Western
Cape High Court, Cape Town interdicting Primedia (Pty) Ltd t/a Primedia Instore
from unlawfully interfering in the contractual relationships between ZaPOP (Pty) Ltd
and 330 franchisees associated with the well-known Spar Group.

The parties are competitors in the retail in-store industry in the area of product
marketing. The three respondents (Radio Retail (Pty) Ltd, Radio Retail for Spar (Pty)
Ltd and ZaPOP) marketed their services to 330 Spar franchisees with which they
had exclusive agreements for in-store promotions. Primedia, however, was also
promoting its products in some of the stores that the respondents had exclusive
agreements with. The respondents alleged that the Primedia was marketing, selling
and installing media types similar to the respondents’ in these stores. The
respondents instituted interdictory proceedings against the appellant to restrain it
from competing unlawfully with them by interfering with their contractual rights, with
the franchisees. They also sought to prevent Primedia from making false
representations about them.

The high court found that the appellant had unlawfully interfered with the contractual
relationships between the respondents and the Spar franchisees in question. The
high court therefore granted the respondents the interdictory relief against Primedia
that they sought.

On appeal, the issue before the court was whether Primedia’s conduct in promoting
its own products based on its pre-existing agreements with some of the franchisees
with which the respondents also had exclusive agreements, constituted an
inducement for the franchisees to breach their contracts with the respondents.

The SCA held that to obtain an interdictory relief on inducement to breach a
contract, proof of reasonable apprehension was necessary. Based on a factual
enquiry, the SCA held that there was no evidence to suggest that Primedia’s
conduct caused the franchisees to breach their exclusive agreements with the
respondents nor was there any evidence to suggest that the products marketed by
the appellant were the same as those of the respondents. All Primedia had been
doing, the SCA held, was to lawfully enforce their own contracts with the
franchisees, which they were entitled to do.

The SCA held further that since the appellant had given an undertaking not to
disseminate false statements about the respondents, the respondents could not
have any reasonable apprehension that the appellant would not adhere to this
undertaking; hence, there was no ground to interdict the further dissemination of
false representations.

Primedia’s appeal was consequently upheld with costs.

-- ends --