THE SUPREME COURT OF APPEAL OF SOUTH AFRICA

JUDGMENT

Case No:       771/2010

In the matter between:

DAVID WALLACE ZIETSMAN                                         APPELLANT

and

ELECTRONIC MEDIA NETWORK
LIMITED                                                                 FIRST RESPONDENT

MULTICHOICE AFRICA (PTY)
LIMITED                                                            SECOND RESPONDENT

Neutral citation: Zietsman v Electronic Media Network (771/2010) [2011]
ZASCA 169 (29 September 2011)

Coram:
Mthiyane, Van Heerden, Bosielo and Leach JJA and
Meer AJA

Heard:
13 September 2011
Delivered:
29 September 2011

Summary: Application for security for costs ─ s 17(2) of Patents Act 57
of 1978 ─ Earlier application dismissed on appeal to the SCA ─
Whether second application precluded by the operation of doctrine of
res judicata or issue estoppel.

_____________________________________________________________________

ORDER

On appeal from: Court of the Commissioner of Patents (Pretoria)
(Sapire AJ sitting as court of first instance):

The appeal is dismissed with costs.
___________________________________________________________
JUDGMENT

MTHIYANE JA (VAN HEERDEN, BOSIELO, LEACH JJA and
MEER AJA CONCURRING):

[1] This appeal is against the judgment of Sapire AJ sitting as a
Commissioner of Patents in the Court of the Commissioner of Patents of
the Republic of South Africa, in which the appellant was ordered to
furnish security for the costs of the first and second respondents jointly in
the amount of R100 000.

[2] The application that gave rise to this appeal is the second
application for security for costs. The appellant was previously ordered to
furnish security for the costs of the respondents in the amount of
R250 000 each. The appellant noted an appeal against that ruling and
succeeded. The judgment in that case is reported as Zietsman v Electronic
Media Network Ltd & others 2008 (4) SA 1 (SCA), (the SCA judgment).
The appellant’s answer to the respondents’ request for security for costs
was that, in light of the SCA’s judgment, the respondents were precluded

from seeking further security from the appellant as the matter was res
judicata.

The history of the matter
[3] It is necessary to describe briefly the background to the present
application. In December 2004 the appellant instituted action against the
first and second respondents and three other entities for the alleged
infringement of his South African patent number 92/9925. This action
(the main action) is pending in the court below.

[4] On 15 February 2005 the respondents requested security for costs
in terms of Uniform rule 47(1).

[5] The respondents thereafter brought the first application for security
for costs in the court of the Commissioner of Patents and the appellant
was ordered to furnish security. This order formed the subject of the
appeal in the SCA judgment.

[6] On 7 March 2008 the appellant’s appeal against the order on the
first application for security for costs was upheld and the order of the
Commissioner of Patents was altered to one dismissing the respondents’
application with costs.

[7] Although this court made findings adverse to the appellant’s ability
to satisfy an order for costs that may be given against him, it refused the
respondents’ application on the basis that they had not disclosed a
defence and because evidence relating to their defence and their prospects
of success in the main action had not been tendered.

[8] On 10 June 2008, the respondents again requested security for
costs in terms of Uniform rule 47(1). This time the notice under Uniform
rule 47(1) contained, inter alia, statements indicating that the respondents
had good prospects of success in their defence of the main action.

[9] The appellant refused to offer security for costs in response to the
respondents’ aforesaid (second) request and the respondents then
launched their second application for security for costs before the court a
quo on 28 August 2008.

The issue on appeal
[10] The issue for decision in this appeal is whether the second
application for security for costs should have been refused by the court a
quo because of the operation of res judicata or issue estoppel. The
underlying ratio of the doctrine of res judicata is that where a cause of
action has been litigated to finality between the same parties on a
previous occasion, a subsequent attempt by one party to proceed against
the other party on the same cause of action should not be permitted. The
constituent elements of this defence are: (a) an earlier judicial decision,
(b) which is final and definitive of the merits of the matter; (c) involving
the same parties; (d) where the cause of action in both cases is the same;
and (e) the same relief is sought.1

[11] Where a defendant raises the defence that the same parties are
bound by a previous judgment on the same issue, it has become
commonplace to refer to this defence as one of ‘issue estoppel’. The
essential requirements of issue estoppel are: (a) an earlier judicial

1 See Yellow Star Properties 1020 (Pty) Ltd v MEC, Department of Development Planning & Local
Government, Gauteng 2009 (3) SA 577 (SCA) para 21.

decision; (b) which is final and definitive of the merits of the matter; (c)
involving the same parties; and (d) which involves an issue of fact or law
which was an essential element of the judgment on which reliance is
placed.2

[12] The appellant’s primary submission is that this court has in the
SCA judgment ruled on the appellant’s liability to furnish security and
that the respondents are precluded from again approaching this court on
the matter in circumstances where the respondents have not introduced
any new evidence that was not available when the matter was first before
this court.

[13] The respondents submit that the appellant has failed to discharge
the onus of proving the sustainability of the defence of res judicata or
issue estoppel. They accept that the SCA judgment has the following
elements in relation to the judgment of the court a quo: (a) an earlier
judicial decision; (b) which involves the same parties; and (c) where the
same relief was sought. The respondents however, dispute that the SCA
judgment is a final and definitive judgment on the merits of the first
application for security for costs and aver further that the causes of action
in both applications for security for costs are not the same.

[14] In order for the defence of res judicata to be sustained it must be
shown that the earlier judicial decision on which reliance is placed was a
decision on the merits. It has been said that, ‘it is not the form of the order
granted but the substantive question (did it decide on the merits or merely
grant absolution?) that is decisive in our law and that what is required for

2 Yellow Star Properties para 22.

the defence to succeed is a decision on the merits.’3 The respondents
submit that the SCA judgment was one of absolution from the instance.
As indicated above they submit further that the causes of action in both
applications for security for costs are not the same.

[15] On an analysis of the SCA judgment (especially paras 19 and 20),
it is clear that the ratio for the decision was that insufficient evidence had
been placed before the court and the respondents had not disclosed a
defence.4 Neither the respondents’ defence, nor their prospects of success
in the main action were dealt with in the first application. This caused this
court to hold that it would place an unjust impediment on the appellant’s
constitutional right in terms of s 36 of the Constitution were the court to
direct the appellant to furnish security for costs. The respondents’
application for security for costs was thus dismissed.

[16] In my view the effect of the SCA judgment is that it only granted
absolution from the instance. It clearly did not deal with the merits. It is
simply not so as contended by the appellant that the merits were
considered in detail. Accordingly, the doctrine of res judicata cannot be
relied on by the appellant to prevent adjudication of the respondents’
second application for security for costs.

[17] As already indicated above, one of the elements underlying the
defence of res judicata is that the earlier judicial decision relied on must
be in respect of the same cause of action. In the respondents’ second
application for security for costs the respondents have not only relied on
essentially the same facts on which the SCA judgment is based, but have

3 See MV Wisdom C: United Enterprises Corporation v STX Pan Ocean Co Ltd 2008 (3) SA 585 SCA
para 9.
4 Zietsman supra para 19 at 9J-10J.

in addition tendered new evidence. This new evidence deals with the
respondents’ prospects of success in the main action and cures the
deficiency that resulted in the respondents being non-suited in the first
application. The evidence now shows that the respondents have good
prospects of success in the main action and that there is therefore a good
prospect of an adverse costs order being made against the appellant at the
termination of the main action.

[18] The evidence now tendered relates to the respondents’ application
in terms of s 51(10) of the Patents Act 57 of 1978 which identifies 15
grounds for the setting aside of the amendment which was made by the
appellant to his patent. If this application succeeds, the appellant’s patent
may become wholly or partially invalid. It is important to note that this
application was made only after the first application for security of costs
had been instituted. So too, the affidavit deposed to by the respondents’
expert, Mr Hanrahan, had only become available during the course of the
previous proceedings for security for costs.

[19] The further evidence tendered by the respondents shows, at least
prima facie, that the respondents could not have infringed the appellant’s
patent. This evidence was not before the court in the first application.
Clearly, the second application is premised on a cause of action which is
different from the cause of action in the first application.

[20] On this basis the doctrine of res judicata (as such or in the form of
issue estoppel) is inapplicable. There was therefore no reason for the
Commissioner of Patents, Sapire AJ, not to entertain the respondents’
application. His approach finds support in the dictum of Hefer JA in
Shepstone & Wylie & others v Geyser NO 1998 (3) SA 1036 (SCA) at

1042H where the court said in relation to refusal of an application for
security for costs:
‘It may be that the Court, having once refused an application, retains the power to
entertain a subsequent one. But any subsequent application will obviously require new
evidence.’

[21] During argument the question arose as to whether it was open to
the respondents to rely on evidence which they did not raise in the first
application, when they had the opportunity to do so. The appellant
submitted that they were not entitled to do so. The respondents offered
two reasons why the evidence was not tendered in the first application.
First, the evidence in question only came into their possession after the
first application had been lodged. Second, the respondents did not
consider themselves under any obligation, at that stage, to incur the
additional expense of tendering evidence on their prospects of success.
The appellant’s allegations of patent infringement were considered to be
without any merit and the respondents did not consider it necessary to
investigate (in the appellant’s words) ‘all aspects regarding the patent,
possible infringement and possible invalidity, of the claims’ before
applying for security for costs at the earliest possible opportunity. At that
stage, given their view of the strength of the respondent’s case, this would
have been unduly expensive and time-consuming. In terms of s 17(2)(b)
of the Patents Act, the Commissioner of Patents is not obliged to have
regard to the prospects of success of any party in considering whether
security should be furnished. The section reads as follows:
‘The Commissioner may have regard to the prospects of success or the bona fides of
any such party in considering whether such security should be furnished.’ (Emphasis
added.)

[22] In my view the respondents have provided a satisfactory
explanation as to why evidence regarding their defence and their
prospects of success was not tendered in the first application. The
appellant argued that the respondents’ failure to disclose their defence in
the first application amounts to an abuse of the process of court. I do not
agree that any abuse has been established and the submission to that
effect falls to be rejected.

[23] In sum the plea of res judicata cannot be upheld and was correctly
rejected by the Commissioner of Patents.

[24] As to costs I do not think that the matter justified the employment
of two counsel. The appeal did not raise complex or novel issues. In
essence, this court simply had to consider whether the order for security
for costs given by the court a quo was liable to be set aside on the basis of
res judicata.

Order
[25] In the result the following order is made:
The appeal is dismissed with costs.

______________________

K K MTHIYANE

JUDGE OF APPEAL

APPEARANCES

For Appellant:

AGS Galgut

Instructed by:

Galgut & Galgut, Johannesburg

McIntyre & Van der Post, Bloemfontein

For Respondent:

P Ginsburg SC (with him F Southwood)

Instructed by:

Adams & Adams, Pretoria

Honey Attorneys, 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
APPEAL
29 September 2011

STATUS: Immediate

ZIETSMAN V ELECTRONIC MEDIA NETWORK (771/2010) [2011]
ZASCA 169 (29 SEPTEMBER 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 dismissed an appeal with costs from
the Court of the Commissioner of Patents, Pretoria.

The appellant, Zietsman, was previously ordered to furnish security for costs of the
respondents, Electronic Media Network and Multichoice Africa in an action the
appellant instituted against the respondents for alleged infringement of his South
African patent number. The appellant’s appeal against the order was upheld by the
SCA in an earlier judgment on the basis that the respondents had not disclosed a
defence and evidence relating to their prospects of success in the main action had
not been tendered. The respondents again requested security for costs with
statements indicating that the respondents had good prospects of success in their
defence of the main action but the appellant refused to offer such security.

The issue on appeal was whether the second application for costs should have been
refused because of the operation of res judicata or issue estoppel. The doctrine of
res judicata provides that where a cause of action has been litigated to finality
between the same parties before, another attempt by one party to proceed against
the other party on the same cause of action should not be permitted.

The SCA stated that for the defence of res judicata to succeed, it must be shown
that the earlier judicial decision on which reliance is placed was a decision on the
merits. The SCA held that the earlier SCA judgment was based on the lack of
insufficient evidence placed before the court and for that reason, the earlier
judgment granted absolution from the instance and did not deal with the merits.

The SCA in dealing with whether the earlier judgment and the current appeal were
the same cause of action for the plea of res judicata to succeed stated that the
respondents relied on the same facts but tendered new evidence dealing with the
respondents’ prospects of success in the main action. Accordingly, the SCA held
that the cause of action in the second application is different from the first
application.

On the facts of the case, the SCA held that the respondents could rely on evidence
they did not raise in their first application and on this basis, the doctrine of res
judicata or issue estoppel was not applicable.