Zietsman v Electronic Media Network Limited

In December 2004, the appellant (Zietsman) instituted action against the respondents for alleged infringement of his South African patent number 92/9925. The respondents brought a first application for security for costs which was granted by the Commissioner of Patents. Zietsman appealed successfully to the SCA, which dismissed the respondents' application on the basis that they had not disclosed a defence and had not tendered evidence relating to their prospects of success in the main action (reported as Zietsman v Electronic Media Network Ltd 2008 (4) SA 1 (SCA)). On 10 June 2008, the respondents made a second request for security for costs, this time including statements about their prospects of success in defending the main action. The appellant refused and the respondents launched a second application on 28 August 2008. The Commissioner of Patents (Sapire AJ) ordered Zietsman to furnish security for costs in the amount of R100,000. The appellant appealed, arguing that the second application was barred by res judicata or issue estoppel.

• Whether the second application for security for costs was precluded by the doctrine of res judicata
• Whether the second application was precluded by issue estoppel
• Whether the earlier SCA judgment was a decision on the merits or merely absolution from the instance
• Whether the causes of action in the two applications for security for costs were the same
• Whether the respondents were entitled to rely on new evidence not tendered in the first application

The appeal was dismissed with costs.

An earlier judicial decision refusing an application for security for costs on the basis that insufficient evidence was placed before the court amounts to absolution from the instance and not a decision on the merits. Such a decision does not give rise to res judicata or issue estoppel that would bar a subsequent application for security for costs where the applicant tenders new evidence that was not available or not tendered in the first application. For res judicata to apply, the earlier judgment must be final and definitive of the merits, and the cause of action must be the same. Where new evidence is tendered that cures the deficiency that led to the dismissal of the first application, the cause of action is different and res judicata does not operate to bar the subsequent application.

The court observed that while s 17(2)(b) of the Patents Act provides that the Commissioner 'may' have regard to prospects of success in considering security for costs applications, this is discretionary rather than obligatory. The court also commented that the matter did not justify the employment of two counsel as it did not raise complex or novel issues but essentially required consideration of whether the order for security for costs was liable to be set aside on the basis of res judicata. The court suggested that it may be open to a court, having once refused an application for security for costs, to entertain a subsequent one, but any subsequent application will obviously require new evidence (citing Shepstone & Wylie v Geyser NO 1998 (3) SA 1036 (SCA) at 1042H).

This case provides important guidance on the application of res judicata and issue estoppel in South African civil procedure, particularly in the context of successive applications for security for costs. It clarifies that a judgment that merely grants absolution from the instance (rather than deciding the merits) does not create res judicata. The case also establishes that where new evidence becomes available after an unsuccessful application for security for costs, a second application based on that new evidence is permissible and is not barred by res judicata because it involves a different cause of action. The judgment affirms the principle from Shepstone & Wylie v Geyser that a court retains power to entertain a subsequent application for security for costs provided new evidence is tendered. It also provides useful guidance on the interpretation of s 17(2)(b) of the Patents Act 57 of 1978 regarding the Commissioner's discretion in considering prospects of success when determining security for costs applications.