MICROSURE (PTY) LIMITED First Applicant

Transcription

1 IN THE HIGH COURT OF SOUTH AFRICA NATAL PROVINCIAL DIVISION CASE NO. 4047/08 In the matter between : MICROSURE (PTY) LIMITED First Applicant MICROSURE 0001 (PTY) LIMITED Second Applicant MICROSURE 0002 (PTY) LIMITED Third Applicant MICROSURE 0004 (PTY) LIMITED Fourth Applicant MICROSURE 0005 (PTY) LIMITED Fifth Applicant MICROSURE 0006 (PTY) LIMITED Sixth Applicant MICROSURE 0013 (PTY) LIMITED Seventh Applicant and NET1 APPLIED TECHNOLOGIES SOUTH AFRICA LIMITED Respondent J U D G M E N T KOEN, J. [1] This is an application based on the mandament van spolie. The relief claimed by the applicants is in the following terms: 1. That this application be heard as one of urgency and that the Rules relating to the service of these papers be and are hereby dispensed with in terms of Rule 6(12). 2. That a Rule nisi be and is hereby issued calling on the Respondent to show cause on the day of MARCH 2008 at 09h30 or so soon thereafter as Counsel may be heard why an order in the following terms should not be granted : (a) That the Respondent be and is hereby ordered and directed to forthwith restore to the possession of the Applicants the equipment referred to in Clause 1.3 of the Agreements pertaining to the undermentioned branches of the Applicants, such to include but not limited to the re-activation of the point of sale terminals, bio-metric fingerprint scanners and merchant

2 2 cards: (i) Ladysmith, KwaZulu-Natal; (ii) Estcourt, KwaZulu-Natal; iii) Mkondeni, Pietermaritzburg, KwaZulu-Natal; iv) New Germany, KwaZulu-Natal; v) Dundee, KwaZulu-Natal. (b) (c) That the Respondent be ordered to pay the costs of this application, such to include the costs occasioned by the employment of two Counsel; That further or alternative relief be granted to the Applicants. 3. That the order set forth in paragraph 2(a) above operate as an interim interdict pending the final determination of this application. [2] At the hearing of argument, only the first, second, fourth and seventh applicants ( the applicants ) persisted with the claim for such relief. [3] The respondent has for some time been a successful contractor in respect of the payment of government pensions and grants in KwaZulu-Natal, the Northern Cape and North West Province. Pension monies due to pension beneficiaries are paid by the government to the respondent. Merchants, such as the applicants, enter into agreements with the respondent to utilise its services to facilitate access by beneficiaries to their funds through the merchants. The funds are accessed not only through these merchants but also at certain pension pay points where the respondent utilises its own system and equipment. [4] The salient features of the agreements concluded between the applicants and the respondent, are described by both the applicants

3 3 and the respondent. There is not much dispute, but where there are any factual disputes, the application must, on the authority of the decision in Plascon Evans Paints Ltd v Van Riebeeck Paints (Pty) Ltd 1984(3) SA 623 (A) be decided on the respondent s version. [5] In terms of the agreements between the parties, each of the applicants was inter alia: (a) entitled to use a point of sale terminal, a bio-metric fingerprint scanner and merchant cards supplied to them by the respondent; (b) the applicants had access to the respondent s server (computer) at its main place of business by way of an electronic on-line dial up by a Telkom line or a GPRS connection. [6] The practical implementation of the agreements entailed the following. Pension and grant payments take place on specified dates. A beneficiary will know his or her pension or grant date at a particular venue. On that date or thereafter, the beneficiary would be entitled to approach one of the approved merchants for the payment of the pension or grant. In terms of the agreement concluded between a particular merchant and the respondent, the beneficiary could, instead of approaching a pension pay-out point, approach one of the applicant merchants. The merchant will then cause a dial-up connection to be made to the main server of the respondent. Once a dial-up connection

4 4 has been made, the main server of the respondent would, by means of an electronic process, authenticate the merchant card. If the merchant card is authenticated and recorded as alive, the pension beneficiary would be able to undertake a transaction on the point of sales device. With the merchant smart card remaining at the point of sales terminal, the beneficiary would insert his or her beneficiary card into the device. The device would then request the insertion of the beneficiary s finger into the bio-metric fingerprint scanner, which then electronically verifies and authenticates the fingerprint with the cardholder s fingerprint stored on the beneficiary card. If the authentication process relating to the fingerprint is unsuccessful, no transaction can be concluded. If successfully authenticated, the main server of the respondent would cause the pension/grant entitlement to be reflected on the beneficiary s card. That would conclude the transaction. [7] In the event of the beneficiary requiring cash or purchases from the merchant, the beneficiary would insert his/her own card in the device and request a transaction, for example the withdrawal of a certain portion of his pension payout. Upon such a request being made, the point of sales device prompts the beneficiary to insert his or her finger into the bio-metric fingerprint scanner, at which stage there is an authentication of the beneficiary cardholder with the fingerprint requesting a withdrawal. If funds had been downloaded onto the

5 5 beneficiary card and are available, it is possible for the merchant to effect payouts to the beneficiary without having to go on-line to the respondent s server. Once the beneficiary has concluded a transaction, funds are transferred from the beneficiary card onto the merchant s card. The merchant utilises its own capital to effect payment to the beneficiary of the amount requested and approved. The equipment in the merchant s possession would enable it to continue processing cash withdrawals and sales, regardless of whether or not it had access to the respondent s server. [8] The merchant in turn is entitled, at an opportune time, to cause a further dial-up connection to be made to the main server of the respondent to obtain settlement from the respondent in respect of the monies paid to beneficiaries. Settlement takes place when requested on the device, with the data being forwarded to the main server of the respondent. A calculation is done and the total amount paid out by the merchant on behalf of the respondent, less the relevant commission payable by the merchant to the respondent, is then transferred to the bank account of the relevant merchant, usually within 48 hours. [9] A merchant therefore cannot settle its merchant card or load social grants onto beneficiaries smart cards if it does not have access to the respondent s server.

6 6 [10] It is not in dispute, or at least the version of the respondent, that: (a) the applicants are in possession of the equipment, being: (i) (ii) (iii) the point of sale terminal; a bio-metric fingerprint scanner; and a merchant card which was originally activated by the respondent; (b) the applicant had peaceful and undisturbed possession of the equipment; (c) the applicants were each provided with a merchant card, which was activated and which allowed access to the respondent s server; (d) the activation of a merchant card is a unilateral act by the respondent and it has the sole power to do so; (e) the point of sales terminal is operated, for certain specific purposes, when the activated merchant card is inserted therein; (f) the respondent authenticates the merchant card by means of an electronic process; (g) the applicant cannot settle a merchant card balance or load social grants onto beneficiary smart cards, if they do not have access to the respondent s server; (h) if a merchant card is not authenticated and recognized as such, no transaction can be authorised;

7 7 (i) the possession of an activated merchant card enables the applicants to access the respondent s server at its main place of business. [11] The respondent de-activated the merchant cards of the applicants at the respondent s premises, which then made it impossible for the applicants to access the respondent s computer. It is accepted by the parties that the act of de-activation did nothing physically to the applicants cards, but was simply a re-programming of the respondent s computer (server), which had the effect that the applicants cards were not recognized or authenticated by the respondent s computer. The consequence thereof was that the applicants no longer had access to and therefore use of the respondent s system. [12] The affidavits exchanged between the parties also deal, at some length, with various notices of termination of the agreements which had allegedly been sent, the arguments as to whether these were valid notices, whether the agreements had terminated or not, as well as issues of potential prejudice and damages suffered by the applicants. These aspects are all irrelevant to the debate whether the mandament van spolie should find application or not. [13] The mandament van spolie is, of course, not concerned with the

8 8 protection or restoration of rights at all. Its aim is to restore the factual possession of which the spoliatus has been unlawfully deprived Zulu v Minister of Works, KwaZulu and Others 1992(1) SA 181(D) at 187G. It has been described in Erasmus, Superior Court Practice pg E9 1 and also by Van der Merwe in Sakereg, pg 119 as having the characteristics that it is: (a) (b) (c) a possessory remedy; an extraordinary and robust remedy; a speedy remedy. All that the spoliatus has to prove, is possession of a kind which warrants the protection accorded by the remedy and that he was unlawfully ousted - Yeko v Qana 1973(4) SA 735 (A) at 739 (G). [14] In Painter v Strauss 1951(3) SA 307 (O) at 314 A B, Brink, J. held that : The mandament van spolie is employed to prevent people from taking the law into their own hands and it requires the property despoiled to be restored as a preliminary to any enquiry or investigation on the merits of the dispute. (my emphasis) [15] In several cases, such as De Beer v Zimbali Estates Association (Pty) Ltd 2007(3) SA 254 (N) at 258 B C, the requirements for obtaining a mandament van spolie were stated to have been met when : (a) a person has been deprived unlawfully of the whole or part of his possession of movables or immovables; and also

9 9 (b) a person has been deprived unlawfully of his quasi possession of a movable or immovable incorporeal. [16] The distinction between the proper application of the mandament van spolie and instances where an applicant simply seeks specific performance of a contractual obligation has enjoyed much debate in our case law and also in academic circles see for example Van der Walt Toepassing van die Mandament van Spolie op Onroerende Sake 1986 TSAR 223, De Beer v Zimbali Estate Management Association (supra); Zulu v Minister of Works, KwaZulu (supra). As stressed in Telkom SA Ltd v Xsinet (Pty) Ltd 2003(5) SA 309 (SCA) at para [12], the answer depends on the facts of each case. [17] The onus to prove the pre-requisites for a mandament van spolie on a balance of probabilities, by virtue of the fact that a mandament is in the form of a final court order on either admitted or undisputed facts, is on the applicants see Nienaber v Stuckey 1946 AD 1049 at [18] Less difficulty is experienced in the application of the remedy of a mandament where unlawful deprivation of possession of a corporeal is involved. Jones, A.J.A. in Telkom SA Ltd v Xsinet (Pty) Ltd (supra) at 312 paragraph [9] remarked that : Originally, the mandament only protected the physical possession of

10 10 movable or immovable property. But in the course of centuries of development, the law entered the world of metaphysics. A need was felt to protect certain rights (tautologically called incorporeal rights) from being violated. The mandament was extended to provide a remedy in some cases. Because rights cannot be possessed, it was said that the holder of a right has quasi-possession of it, when he has exercised such right. Many theoretical and methodological objections can be raised against this construct, inter alia, that it confuses contractual remedies and remedies designed for protecting real rights. However, be that as it may, the semantics of quasi-possession has passed into our law. This is all firmly established. [19] Our Courts have cautioned against widening the category of incorporeals properly capable of protection by the mandament, understandably so, given the robust nature of the relief where no enquiry into the merits of the particular dispute will be entertained. [20] In Telkom SA Ltd v Xsinet (Pty) Ltd (supra), where the respondent interrupted the bandwidth and telephone services supplied to the premises of which the applicant had occupation and control, it was found: (a) that the use of the bandwidth and telephone services did not constitute an incident of the applicant s possession and control of the premises occupied by it such as to entitle it to the mandament van spolie. It had the use of the services at its premises, but this could not be described as an incident of possession in the same way as the use of water or electricity installations may in certain circumstances be deemed an incident of occupation of residential premises; (b) nor did the disconnection deny Xsinet access to the beneficial

11 11 use of its equipment, as there was no evidence that Xsinet was ever in possession of any of the mechanisms by which its equipment was connected to the Internet. In this regard it was specifically remarked that it was not as if Telkom had entered the premises and removed an item of Xsinet s equipment in order to effect the disconnection. It was commented that it would be both artificial and illogical to conclude on the facts that Xsinet s use of the telephones, lines, modems or electrical impulses constituted possession of the connection of its corporeal property to Telkom system; (c) nor, in the alternative, could the denial of actual use (daadwerklike gebruik) of the services constitute a spoliation required to be restored by the mandament van spolie. In this regard it was said that the actual use of the the telecommunication service was a mere personal right. The order clothed as one for spoliation was essentially to compel specific performance of a contractual right in order to resolve a contractual dispute. [21] In casu, a reading of the papers would not suggest dispossession of any corporeals, such as the point of sale terminals, bio-metric fingerprint scanners or the merchant cards. To that extent the first part of the relief claimed in paragraph 2(a) was not competent. The issue, prima facie, appeared to be whether the de-activation of the

12 12 merchant cards constituted a dispossession of an incorporeal right. [22] Not so, however argued Mr Roberts SC (with him Mr van der Walt) on behalf of the applicants. They argued that the present is not the spoliation of an incorporeal right, but rather the disturbance of a right of possession (my underlining). [23] The analogy advanced was that of possession of a pen with a refill, where a spoliator interrupts the flow of the ink. The pen is then useless for the purpose for which it was give possession of. Likewise, it was argued, the merchant cards had been rendered useless due to the de-activation, as they now do not allow access to the server. Accordingly, it was submitted, that the case is distinguishable from the judgment in Telkom SA Ltd v Xsinet (Pty) Ltd (supra), not only because the applicants do not rely on an incorporeal right, but also because of there being a tangible object, namely the merchant card, which has now been rendered useless. It was submitted that the merchant card conveys a bundle of rights and it is the de-activation of the card, which deprived the applicants of possession of an operative card, and rendered operation of the equipment partially impossible. [24] To distinguish the judgment in Telkom SA Ltd v Xsinet (Pty) Ltd from the facts in casu, the applicants referred to portion of the judgment

13 13 at 314 E where it was said that there is no evidence that Xsinet was ever in possession of any of the mechanisms by which its equipment was connected to the Internet. The implication being that in casu the applicants were in possession of the merchant card. The rest of that paragraph must however also be read where Jones, A.J.A. held at page 314 F that : It is not as if Telkom had entered the premises and removed an item of Xsinet s equipment in order to effect the disconnection. In these circumstances it is in my opinion both artificial and illogical to conclude on the facts before the Court that Xsinet s use of the telephones, lines, modems or electrical impulses gave it possession of the connection of its corporeal property to Telkom system. [25] Notwithstanding Mr Roberts s disavowal of reliance on the notion of quasi possession of an incorporeal, the present instance is not, in my view, one of dispossession of a corporeal. The merchant card in unaltered physical form is still, together with the other equipment, in the possession of the applicants. What has occurred is the deprivation of certain rights, which were previously exercised through the mechanism controlled in the respondent s premises, of an electronic authenticating process, in which process a key or preliminary step to the exercise of such rights was merely facilitated by possession of a corporeal (the merchant card). [26] The merchant card was only one key in a sequence of electronic events, which might afford the applicants access to a variety of

14 14 contractual rights, which they would not have had, but for the conclusion of the agreements. To that extent, the merchant card is similar to a smart card issued in respect of a digital satellite television decoder or a sim card in a cell phone. Such an analogy appears appropriate. Just as a smart card or a sim card do not give access to the range of DSTV programmes or cell phone services to the holder thereof until some connectivity is established by M-Choice or the relevant cell phone provider in Gauteng, the merchant card did not give access to the respondent s system. [27] But, the argument went, whatever initially had to be done to establish connectivity, the fact was that the applicants were in possession of and used what were called valid merchant cards, allowing access to the respondent s main frame computer or system, and that this is what had been despoiled i.e. a valid operative merchant card. [28] The papers are silent as to what this merchant card is presumably it is something like a smart card or a credit card, possibly with a magnetic strip or some other encoded or encrypted access control. Such a type of card is, per se, a meaningless piece of plastic or similar compound, with little or possibly no economic value and significance. But depending on the underlying agreement between the

15 15 parties, such a type of card once connected by the service provider and used in conjunction with a range of electronic interfacing, which needs to be established (the connection), enables access to: a) a particular cell phone package (for example business, weekender or call more) in the case of a sim card in a cell phone; b) the full range of DSTV video and sound channels, or a more limited bouquet, in the case of a smart card in a DSTV decoder; c) the ability to access the respondent s server and to execute certain functions, as with a merchant s card; d) a particular range of bank services, in the case of a bank automatic teller machine card. It does not, in my view, insofar as access offered by a particular card is concerned, matter that in casu the point of sales device was leased by the applicants, whereas an automatic teller machine is owned by the bank. The issue is the range of services offered to which access is facilitated by the particular card, which depends on the underlying agreement. [29] The mere fact that there is a tangible merchant card, does not in my view distinguish the facts of this case from those in Telkom SA Ltd v Xsinet (Pty) Ltd (supra).

16 16 [30] What the applicants seek to achieve is specific performance of contractual obligations they were allegedly entitled to and facilitated by the merchant card. This they cannot achieve in spoliation proceedings. Their position is indistinguishable from a contract customer in respect of a DSTV contract or a cell phone seeking to comply continued service provision or access via their cards, in circumstances where their right to receive such service may have been validly terminated. That debate is one for the law of contract, not property. [31] I have been referred to the judgment of Msimang, J. in Zulu v Cell-C (Pty) Ltd Case No. 639/04. In that case it was held that the removal of lines in a phone container provided by Cell-C amounted to a spoliation. Insofar as the spoliated act involved the removal of physical lines to the container, it probably did constitute a spoliation as it destroyed the actual use of the container facility. The mere disconnection of communication along physical telephone lines in an exchange, would however not in my view amount to a spoliation. That is a matter for the law of contract. If the lines were not physical telephone lines, but cell phone connections through sim cards and the like, then I respectfully differ from the conclusion of the learned Judge, as the mere disconnection or rendering inoperative of the sim cards by the performance of some act in the cell phone provider s computer centre, would not in my view constitute spoliation.

17 17 [32] If reconnection was to be ordered and a dispute arose as to the extent or range of services to be restored, then the terms of the underlying agreement would be the only true source to establish the exact parameters of the applicants entitlement. That takes these kinds of disputes out of the range of possessory remedies and places them squarely within the sphere of contact. [33] A number of well meaning jurists appear to have encouraged the extension of the application of the mandament van spolie to instances of quasi possession of incorporeals. That is undesirable and could possibly even be detrimental to economic and commercial activity. No argument requiring such an extension of the common law, was advanced. It must also not be forgotten that a denial of the mandament van spolie would not leave the applicants remediless. They have other remedies, in contact and possibly also delict. [34] I concur with the submissions by Mr Rall SC on behalf of the respondent that: (a) the right which the applicants seek to protect, is no more than a personal contractual right to utilise services provided by the respondent in terms of the various agreements; (b) the applicants are seeking to enforce a contract by way of a mandament van spolie;

18 18 (c) (d) the applicants merchant cards are not mechanisms; where rights have been regarded as capable of being protected by the mandament, these are in the nature of servitudal rights, for example: (i) the right to obtain water for the purpose of irrigating plots - Painter v Strauss (supra) at 318 E H; (ii) the right to lead water over a farm by exercising die bevoegdhede van n serwituuthouer Bon Quelle (Edms) Bpk v Munisipaliteit van Otavi 1989(1) SA 508 (A) at 516 G; iii) servitudal rights Nienaber v Stuckey (supra) at 1056; iv) a right of way over a farm Van Wyk v Kleynhans 1969(1) SA 221 (GW); v) the right to use water from a canal Sebastian & Ors. v Malelane Irrigation Board 1950(2) SA 690 (T) at ; vi) the right to have a name on a wall regarded as occupation Shapiro v SA Savings and Credit Bank 1949(4) SA 985 W at ; vii) water supply to a building Forman v Herbmore Timber and Hardware 1984(3) SA 609 W at [35] I agree with the sentiments expressed by the learned Judge in Zulu v Minister of Works, KwaZulu (supra) where it was held, in the context of the cutting off of the water supply to a dwelling, that to hold that the mandament van spolie finds application would in effect

19 19 mean that the Court would grant an order for specific performance of a contractual obligation in proceedings where the respondent is precluded from adducing evidence to disprove the existence of the obligation. [36] On the authority of De Beer v Zimbali Estate Management Association (supra), with which I agree, it seems that even where rights are protected, there must be an element of possession, and not merely possession of the card or entry disc which would only facilitate access, whether it be to an estate (as in the De Beer case) or to a computer server as in casu. [37] The respondent has also opposed the application on the basis that in delaying the launching of the application, the applicants should not have brought the application as one of urgency. A punitive costs order was therefore sought. [38] The fact however is that full affidavits were exchanged, albeit under strict time constraints and the matter was fully ventilated before me. I am not, in exercising my discretion, disposed to granting a special costs order. [39] In my view the applicants have not made out a case for the relief

20 20 claimed. The application is accordingly dismissed with costs, such costs to include the costs occasioned by the employment of two counsel where applicable. Date of Hearing : 28 March 2008 Date of Judgment : 22 April 2008 Counsel for Applicant : G. Roberts SC G.G. van der Walt Instructed by : Botha & Olivier Inc. Counsel for Respondent : A. Rall SC R van Rooyen Instructed by : Smit Sewgoolam Inc.