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[2018] ZAWCHC 21
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BDCE Staffing Solutions CC v Stober and Another (21517/17) [2018] ZAWCHC 21 (21 February 2018)
IN
THE HIGH COURT OF SOUTH AFRICA
(WESTERN CAPE
DIVISION, CAPE TOWN)
REPORTABLE
Case
Numbers: 21517/17
In
the matter between:
BDCE
STAFFING SOLUTIONS
CC
Applicant
(Registration
no. 2004/0140/014032/23)
and
SAMANTHA
NADINE STOBER (previously DUNCAN)
First
Respondent
MVG
RECRUITMENT SPECIALISTS
CC
Second
Respondent
JUDGMENT
DELIVERED 21 FEBRUARY 2018
Andrews
AJ
Introduction
[1]
This is the return date of a
rule
nisi
wherein Applicant seeks to
interdict and restrain First Respondent from conducting the
activities and performing the duties
of a recruiter of candidates or
a consultant or a manager or supervisor of a recruiter or consultant
with any other company, partnership,
close corporation trust or other
person or with any other entity that carries on the same or similar
activities as the applicant,
namely for appointment of candidates in
posts in the medical and pharmaceutical professions and industries in
South Africa for
a period of 18 months in the Republic of South
Africa.
[2]
The matter was argued on 13 February 2018. Adv. M
Verster appeared on behalf of Applicant and Adv. L Myburgh appeared
on behalf
of First Respondent. There were no appearances on behalf of
Second Respondent. The ruling in the matter was reserved until 21
February
2018.
Factual
Background
[3]
First Respondent was appointed by Applicant as a
senior recruitment consultant and specialist on 15 July 2013. First
Respondent
signed an employment contract on 2 August 2013 with
Applicant together with
inter alia
a secrecy undertaking and restraint of trade agreement. At the time
of First Respondent’s appointment, she was the subject
of an
interdict based on a restraint in her employment contract with her
previous employer which interdict expired at the end of
September
2013.
[4]
The salient terms of the restraint of trade
agreement included
inter alia
:
(a)
Intellectual property; trade secrets; potential
business opportunities; business contacts, clients, confidential
information which
the restrainee had acquired and or had had access
to and or may in the future acquire or have access to;
(b)
Precluding the restrainee from carrying on
activities that are in competition with the company’s business
or that would be
harmful to the company’s business and to
protect the confidential information and other proprietary interests
of the company.
(c)
That for a period of 18 months, the restrainee
would not conduct directly or indirectly any services constituting
the activities
specified namely:
‘
4.1 The restrainee will not,
and is restrained from, conducting the following activities for the
period: (the “activities”)
Perform duties as a Recruiter
whether in a consultant or in a management / supervisory role whether
directly or indirectly, and
whether individually or in any way
associated with any other company, partnership, closed corporation,
trust, or other person,
or with any other entity that carries on the
same or similar activities as the business.
4.2 It is specifically agreed that
in the event of any competent authority determining that such
activities are too wide, the activities
shall be amended and limited
to such activities as are acceptable.
4.3 Without derogating from the
above, the restrainee is restrained from, directly of (sic)
indirectly:
4.3.1 Carrying on any business or
activities that are in competition with that being carried on by the
company;
4.3.2 Being employed or contracted
in any way with any organisation that conducts the activities;
4.3.3 Being in any way interested
in the activities as principal, partner, director, agent,
shareholder, trustee, investor, and
consultant or otherwise in any
entity;
4.3.4 Financing or guaranteeing the
obligations of any person conducting the activities; or
4.3.5 Soliciting the business of
any person that is a client of the company.
5…
5.1 The restraint as referred to in
clauses 3 and 4 above shall apply and be limited to activities
conducted in the following geographical
areas: (the “area/s”):
-
i) within the province of Gauteng /
Western Cape / Northern Cape; or
ii) within a 300 (Three hundred)
kilometre radius of the physical address of the place of business or
the Company, or
iii) within the Republic of South
Africa, as constituted in terms of ACT 200 (sic) OF 1993)…’
[5]
First Respondent tendered her resignation on 2
October 2017 which was withdrawn thereafter. First Respondent again
tendered her
resignation on 31 October 2017 because she had received
an offer of employment from Second Respondent.
[6]
In First Respondent’s letter of
resignation, she requested a relaxation of her restraint from 18
months to 12 months. First
Respondent, in motivation explained that
Second Respondent serviced the three large Private Hospital Groups
(i.e. Netcare, Mediclinic
and Life Health Care), Pharmaceutical,
Managed Healthcare and Medical Devices Companies nationally. First
Respondent indicated
that she intended to focus on Pharmaceutical,
Managed Healthcare and Medical Devices Companies. First Respondent
furthermore undertook
not to approach or attempt to do business with
any of Applicant’s clients that were not already also the
clients of Second
Respondent.
[7]
In terms of First Respondent’s letter of
appointment with Second Respondent, she is required to do successful
placement of
medical, pharmaceutical and technical staff nationally
in South Africa. Applicant claims that First Respondent has openly
acted
in breach of her undertaking with it. In amplification hereof,
Applicant alleges that deleted lists of names of candidates were
discovered on the computer of First Respondent. According to
Applicant, the discovery of the deleted lists constituted conclusive
proof that First Respondent intended to continue work which she
started while she was in Applicant’s employ as she made a
list
of names of candidates whose CV’s she sent to clients in
October 2017 which list was deleted. The list furthermore shows
the
names of clients she contacted about the candidates and the dates
when she sent the CV’s to those clients. Applicant
alleges that
First Respondent needed the list in order to follow up on placements
of the candidates.
[8]
In this regard, some of the breaches alleged to
have been committed by First Respondent included
inter
alia
:
(a)
First Respondent, on 30 October 2017 undertook to
assist one Ilze Holtzkamp (a candidate) who enquired about a
pharmaceutical post.
Based on the e-mail correspondence exchanged it
is evident that First Respondent had given this undertaking when she
knew she was
going to resign. Applicant avers that First Respondent
intended to assist Ms Holtzkamp after her termination of employment.
(b)
Similarly, on the same date, First Respondent
gave a candidate, one Zaahira Hamid, an undertaking that she would be
contacting pharmaceutical
companies and hospitals over the next few
weeks to enquire about opportunities. Applicant avers that First
Respondent clearly intended
to do so after termination of employment.
(c)
Applicant avers that First Respondent was in
contact with at least six clients during 2017 with a view of placing
one Munyaradzi
Gambakwe who enquired about a pharmacist post.
(d)
Applicant
also discovered
that First Respondent was in contact with one Iqbal Tarmahomed about
a pharmacist post after her contract of employment
ended with
Applicant.
(e)
Applicant
also claims that
First Respondent placed at least four advertisements on PNet by
Second Respondent for posts for newly qualified
pharmacists.
Applicant was aware that prior to First Respondent leaving their
employ, she was working on commserve pharmacists
on the basis of
lists which Applicant bought from SAPC on 28 July 2017.
Applicant claims that First Respondent is continuing
to do work which
she started whilst employed with Applicant. Additionally, there are
advertisements which indicate that First Respondent
is working on
pharmaceutical placement, according to Applicant, as her initial
appear at the bottom of the advertisement.
(f)
According to Applicant, the First Respondent’s
LinkedIn profile lists the industries she is recruiting in on behalf
of Second
Respondent.
Applicant’s
Principal Submissions
[9]
The restraint which Applicant seeks to enforce is
contained in the restraint of trade agreement, more specifically
clause 4.1 which
covers the performance of the duties of a recruiter
in several roles by the employee and which is not limited to any
field. However,
Applicant submits that it is not seeking to fully
restrict First Respondent’s activities but is limiting the
restraint only
to recruiting in the medical and pharmaceutical
industries.
[10]
Applicant
submitted that the
restraint is reasonable as it covers a limited market segment on
which Applicant has invested effort, time and
money to develop when
First Respondent was in its employ. Applicant does not apply for an
interdict which covers the entire field
of recruiting in which
Applicant is actively engaged.
[11]
Applicant contends that the protectable interest
is a segment of the market share which was developed by First
Respondent and which
she was in the process of developing. In this
regard, Applicant submitted that First Respondent was responsible as
its employee
for placements in the medical and pharmaceutical
industries. According to Applicant, First Respondent became the face
of the business
in the development of these markets.
[12]
As Applicant funded the development, it contends
that the market share and potential market share of it in these two
industries
are worthy of protection, even if it was still in the
process of being developed. Applicant submitted that the investment
into
the industries was developed over time. In this regard,
Applicant argues that what it has invested may be lost to Second
Respondent
should First Respondent be allowed to exploit the very
market she was instrumental in developing while she was employed at
the
Applicant. Furthermore that the customer goodwill which First
Respondent established has become an asset of the business and as
such, the restraint clause will extend to protect potential business
opportunities as well.
[13]
Applicant contends that by limiting the relief
sought only to the medical and pharmaceutical industries, First
Respondent would
be free to recruit in any other industry and will
not render her economically inactive as she would be at liberty to
practise her
chosen profession in any other field.
[14]
Applicant further contends that in view of First
Respondent’s experience in making placements in other fields,
it should not
be difficult for her to find work at a generalist
agency as she had done when she was previously placed under restraint
at the
commencement with her employment with the Applicant.
[15]
Applicant motivated its rationale for the 18
month period it seeks as being the reasonable period to find a
replacement in First
Respondent’s post to train and gain the
necessary experience in order to do the work. It was argued that a
new recruiter
would not be able to effectively take over within a
shorter period.
[16]
Applicant contented that the area of restraint in
the medical and pharmaceutical field cannot be limited to any city or
province
or smaller area as clients are spread out over the entire
country. Applicant essentially has a market share in the entire
country
which it seeks to protect which interest includes candidates
and clients in the medical and pharmaceutical fields.
[17]
A
pplicant furthermore submits that an undertaking
by an ex-employee before or after interdict proceedings have been
lodged that she
will not act in breach of the restraint does not
carry much weight and is inadequate because it cannot prevent the
employer from
enforcing the restraint agreement entered into by way
of an interdict.
[18]
Applicant argued that on First Respondent’s
own version she is acting in breach of her restraint as she admitted
that she
is in contact with candidates on Applicant’s database
while she was employed at Applicant. Applicant contends that First
Respondent is mistaken to argue that the restraint does not prohibit
her from doing so. Applicant argued that the breach by First
Respondent is serious as work began by an employee should be left for
the employer to continue with. In this regard, the employee
is
precluded from taking work she commenced with at Applicant with her
to her new employer, the Second Respondent, and continue
with the
placement of the candidates. The fact that First Respondent deleted
the list from her computer is indicative that she
did not wish to
leave the particulars of the candidates with Applicant for
continuation of the follow up and placement. According
to
Applicant this is a clear violation or breach of the restraint
agreement at least insofar as the continued work with Mr Tarmahomed
on First Respondent’s own admission.
[19]
In the circumstances, Applicant contends that it
will be reasonable to interdict the respondent as claimed in the
notice of motion.
First
Respondent’s Principal Submissions
[20]
First Respondent stated that when she received
the offer of employment with Second Respondent she disclosed that she
was bound by
a restraint of trade agreement. According to First
Respondent, Second Respondent’s offer to employ her contained a
list of
the Second Respondent’s existing clients that First
Respondent had contact with or made placement with. First Respondent
contends that she deemed it wise to not disclose the identity of all
Applicants’ clients to Second Respondent as she regarded
this
as a breach of confidentiality.
[21]
First Respondent contends that she had tendered
an undertaking not to make contact with or do business with any of
Applicant’s
clients but no agreement was reached between the
parties as according to her, Applicant required an undertaking that
she would
not place any candidate who is on their database. First
Respondent submits further that the candidates typically list their
names
with a number of placement agencies. It is contended that due
to the nature of the industry, candidates do not fall within the
ambit of a protectable interest because they are listed with many
different agencies. Notwithstanding, First Respondent undertook
not
to have any dealings with any candidates who appeared on Applicant’s
database.
[22]
First
Respondent acknowledged
that there was a small overlap in the market share of Applicant and
Second Respondent and had given Applicant
an undertaking not to
encroach on Applicant’s market share.
[23]
First Respondent contends that her undertaking to
work in Second Respondent’s market share in the fields of
medical manufacturing,
scientific and managed healthcare complies
with the limited enforcement envisaged by the Applicant as she
undertook not to continue
to work in the market segment where the
protectable interest of the Applicant is vested. This indulgence
would allow First Respondent
to remain economically active, whilst
protecting the interest of Applicant.
[24]
First Respondent contends that should she be
required to find employment with a generalist recruitment agency it
would prejudice
her ability to generate an income. It should be born
in mind that she is a senior recruiter and generalists, according to
First
Respondent usually are appointed in junior positions. Her
concerns in this regard are that she may have to accept a salary
reduction.
First Respondent argues that generalist recruitment
agencies seek to make placements in all areas which includes
placement in private
hospitals or pharmaceutical retail.
Consequently, First Respondent claims that Applicant will be better
protected should Second
Respondent commit to recruiting in the
segments of the market as proposed by her, which excludes any
placement in competition with
the Applicant.
[25]
First
Respondent argued that her right to practise her chosen profession as
entrenched in the constitution should be narrowly interpreted
in
relation to the limitations of the rights listed in the Bill of
Rights insofar as it relates to the promotion of the values
that
underlie an open and democratic society, based on human dignity,
equality and freedom.
[1]
In
relation to the narrow interpretation, First Respondent argued that
the prohibition should be limited to her doing work for
private
hospitals and Pick n’ Pay retail pharmacies. It was submitted
that freedom to practise a chosen profession should
therefore only be
limited to the extent necessary to protect the interests as
stipulated in the restraint of trade agreement.
It was further
submitted that a restraint of trade agreement should not result in a
significant reduction in earning potential
for the sake of enforcing
the letter of agreement where the spirit of the agreement between the
parties has the potential of being
honoured without such reduction in
earning potential. It was further mooted by First Respondent that
there are less restrictive
means available to achieve the purpose
sought by Applicant.
[26]
It was also argued that an undertaking by First
Respondent not to place candidates in the market segment held by the
Applicant
or to obtain an order of court to this effect, would
achieve the same purpose, namely to protect Applicant from losing its
market
share to the Second Respondent, or the First Respondent in her
personal capacity should she decide to open her own business or other
recruitment agency employing the First Respondent, without
restricting the earning potential of the First Respondent as well as
her right to practise her chosen profession.
[27]
First
Respondent submits that
it will not take 18 months for a new recruiter to effectively take
over. She also undertook to honour her
undertakings for the full
period of 18 months from the date of termination of her service with
the Applicant. First Respondent
indicated that she does not seek to
place a geographical limit on her undertaking not to recruit in
private hospitals or pharmaceutical
retail. In this regard, she
accepted and agreed that the clients in these segments of the market
are national and cannot be limited
geographically.
[28]
First Respondent, in an attempt to secure future
earning capacity for herself stated that she never intended to
compete with Applicant
and proposed a list of market segments where
she would seek to make placements, none of which overlap with the
business of the
Applicant which may compromise Applicant’s
market share. It was argued that First Respondent has demonstrated
her
bona fides
throughout the process by disclosing the existence of the restraint
agreement to her prospective employer.
[29]
Second Respondent has contractually excluded
First Respondent from working on any of Second Respondent’s
clients which are
also common to Applicant. It was mooted that this
is an indication that Second Respondent does not wish to take
advantage of any
information or trade connections that the First
Respondent gained from her employment with the Applicant. Both First
and Second
Respondents, it was argued, have made a
bona
fide
attempt to avoid breaching the restraint
agreement entered into between Applicant and First Respondent.
[30]
First
Respondent explained
that the list she had printed was in order to comply with an
instruction to provide statistics in the form
of a monthly report to
the Applicant at the end of each month. She further explained that
she deleted the list as soon as she completed
the statistics for the
month and that she never intended to use the list of candidates for
herself in future. First Respondent
submits that she has not
attempted to hide her plans or activities since leaving the
employment of the Applicant.
[31]
First Respondent also endeavoured to explain that
the nature of the industry is such that candidates do not remain on
the database
of an agency for long periods of time as they generally
seek to find employment as soon as possible and lists of candidates
that
date back six months for example, will not hold any economic
value for any recruitment company. Additionally, First Respondent
intimated that it would not be possible for her to continue work that
she started with the Applicant anywhere else, as she would
not have
access to the clients where placements were sought by the candidates.
[32]
First Respondent submitted that Applicant has
failed to show that it has a protectable interest in the market
segments where First
Respondent proposes to make placements on behalf
of the Second Respondent. First Respondent proposed that an order be
obtained
prohibiting First Respondent from making any placement for
Private Hospitals or Pharmacists for a period of 12 months. It was
argued
that this restraint will be sufficient to protect the interest
of Applicant.
Legal
Principles
[33]
Every
citizen has the constitutional right to choose their trade,
occupation or profession freely. However, the practise of a trade,
occupation or profession may be regulated by law.
[2]
It is settled law that the right may be limited by agreement.
Additionally, it is trite that restraint of trade agreements are
regulated by the law of contract. There is no
numerous
clauses
in terms of interests which are regarded as protectable.
[3]
The matter of
Magna
Alloys and Research (SA) (Pty) LTD v Ellis
[4]
is
instructive in relation to the principle considerations in respect of
restraint of trade agreements more specifically whether
the
enforcement of the restrictive condition would be contrary to public
policy.
[5]
[34]
In
considering the reasonableness of the restraint of trade in relation
to whether the employer has a protectable interest, Conrade
AJ, as he
then was, referred to the trite principles in
Petre
& Madco (Pty) Ltd t/a T-Chem v Sanderson-Kasner and Others
[6]
that a covenant would only be valid ‘…
unless
the applicant had an interest which the law protects. An Applicant’s
interest (which must be a proprietary interest
in what is really an
asset of his business) operates in time and area. If the covenant
purports to restrain the covenantor over
an area or for a time which
is not co-extensive with the interest, it is said to be unreasonable
and therefore against public policy.
This makes it void.’
[35]
The
protection of potential business opportunities as well as the
commodity in the form of customer goodwill is also a protectable
interest. In this regard, Nestadt JA stated in
Rawlins
and Another v Caravantruck (Pty) Ltd
[7]
,
that ‘
[e]ven
though the persons to whom an employee sells and whom he canvasses
were previously known to him and in this sense “his
customers”,
he may nevertheless during his employment, and because of it, form an
attachment to and acquire an influence
over them which he never had
before. Where this occurs, what I call the customer goodwill which is
created or enhanced, is at least
in part an asset of the employer. As
such it becomes a trade connection of the employer which is capable
of protection by means
of a restraint of trade clause.’
[36]
The matter
of
Den
Braven SA (Pty) Ltd v Pillay and Another
[8]
offers
guidance as to the considerations in relation to the period of
restraint. In this regard, Wallis AJ stated that ‘…
the
period of the restraint should not be any longer than is necessary to
enable the applicant to place a new salesperson in the
field, enable
them to become acquainted with the products and the customers and to
make it plain to the latter that they are now
the person with whom to
deal on behalf of the applicant…’.
This judgment was however criticised in
Mozart
Ice Cream Franchises (PTY) LTD v Davidoff And Another
[9]
,
but
was however applied in
Experian
South African (PTY) LTD v Hayes And Another
[10]
.
[37]
In
considering an undertaking made by an employee
in relation to the
enforcement of the restraint of trade agreement Malan AJA stated in
Reddy
v Siemens Telecommunications (Pty) Ltd
[11]
that:
‘
Public policy requires
contracts to be enforced. This is consistent with the constitutional
values of dignity and autonomy. The
restraint agreement in this
matter is not against public policy and should be enforced. Its terms
are reasonable. What Reddy is
required to do is to honour the
agreement he entered into voluntarily and in the exercise of his own
freedom of contract. While
it is correct that his employment with
Ericsson will be restricted, it remains a breach of his contractual
undertaking. It follows
that it is no answer to suggest that an
undertaking would be sufficient to protect Siemens’ interests
and that less restrictive
means could therefore achieve the same
purpose as enforcing the restraint….It follows that the
Judge a quo was correct
in holding Reddy to his contractual
undertaking…’
[12]
Evaluation
[38]
First
Respondent acknowledged
that the restraint of trade agreement entered into between herself
and Applicant is a valid agreement and
as such is in principle
enforceable. First Respondent submitted that both she and Second
Respondent have acted in good faith at
all times and that First
Respondent undertook not to compete with Applicant for the remainder
of the restraint period.
[39]
Applicant and First Respondent entered into a
contractual agreement. First Respondent was aware of the limitations
through the restraint
clauses. Applicant was aware of the terms of
the agreement and had to have understood the terms. In this regard,
First Respondent’s
version is that Second Respondent never
wished for her to breach the restraint agreement and as such the
offer to employ her contained
a list of the Second Respondent’s
existing clients that first Respondent had contact with or made
placement with. How would
Second Respondent have a list of the
Appliant’s existing clients that First Respondent had contact
with or made placement
with? The only plausible explanation would be
that First Respondent provided her client list to Second Respondent
which is supported
by Applicant’s version that information was
deleted from the computer. From this alone, the First Respondent
appears to have
breached her restraint agreement.
[40]
Applicant’s concerns in relation to First
Respondent’s non-compliance with the Restraint of trade are not
without merit.
First Respondent offers no good explanation for the
breaches. She offers the justification that the lists were required
for statistical
purposes. The deletion thereof remains ominous
especially if First Respondent purportedly acted in good faith. There
is every indication
that she breached the agreement which includes
her admission that she continued servicing the clients after she left
the employ
of Applicant. She admitted that she was in contact with
candidates to make placement for them. The only conclusion is that
she
wished to continue with old candidates at her new employer, the
Second Respondent.
[41]
For First Respondent to say that the list does
not contain all the clients of Applicant and that the First
Respondent had contact
either or made placements with, as those
clients whose names appear on the list are not clients of Second
Respondent, appear to
be nonsensical. Those candidates as rightfully
pointed out by Applicant do not belong to anyone. Even First
Respondent did not
disclose Applicant’s complete client list to
Second Respondent, nothing precludes her from accessing that
resource.
[42]
Applicant contends that First Respondent’s
undertaking not to compete in private hospitals is not clear as the
undertaking
does not cover all the hospitals on which she worked when
she was in the employ of Applicant. On First Respondent’s own
version
she is in breach of the restraint. Applicant should have
continued rendering the services to the clients First Respondent was
servicing
prior to her leaving.
[43]
First
Respondent made several
attempts to come to an agreement with Applicant on whether or not she
should be able to take up employment
with Second Respondent and how
this may be done without compromising the interest that Applicant
seeks to protect. Of paramount
importance is the fact that the core
business of the Second Respondent’s market share is in the
fields of medical manufacturing,
scientific and managed healthcare.
The restraint of trade agreement specifically precludes First
Respondent from operating in these
sectors, yet she accepted
employment, notwithstanding her limitation which she was fully aware
of.
[44]
For First Respondent to claim that she laboured
under the impression that she could still engage with candidates is
not probable
as the clause in the restraint agreement is prefaced by
“without derogating from above”.
[45]
First Respondent argued that interdicting her
from being employed by Second Respondent will not in any way protect
the interests
of the Applicant, but will prejudice her as she would
have to seek employment with a generalist agency where she will earn
substantially
less. This will in turn impact her right to practise
her chosen profession which right is firmly entrenched in the
Constitution.
First Respondent argued that this limitation is not
reasonable.
[46]
I am of the
view that the guiding factors set out in Section 36 of the
Constitution
[13]
is of
assistance to this court in making a determination which is fair,
just and equitable in the circumstances. These factors
include
whether the restriction is reasonable and justifiable having regard
to the nature and extent of the limitation; the purpose
of the
limitation; the nature of Applicant’s and First Respondent’s
right(s); the impact on the dignity of First Respondent;
equality;
freedom and whether there are any other less restrictive means to
achieve this purpose. This court is enjoined to promote
the values
that underlie an open and democratic society based on human dignity,
equality and freedom.
[14]
[47]
Inasmuch as effect should be given to a contract,
which approach has been met with approval through various
authorities, I am of
the view that a rigid approach disregards
fundamental constitutional considerations to the detriment of people
like First Respondent
who will essentially be rendered unemployed for
a period of 18 months because she cannot choose her area of trade.
When weighing
up the competing interests regard must be had to the
considerations above in order to strike a balance which is fair and
equitable.
I am of the view that restrictions should be put in place
to protect Applicant’s vested interest, but it should not be so
restrictive as to render First Respondent unproductive or unemployed
to the point where her human dignity is impaired in an open
and
democratic society. Inasmuch as Applicant appears to be generous in
“allowing” First Respondent to operate as a
generalist
recruiter, the restrictions it insists on would essentially mean that
she may have to seek alternative employment as
a generalist recruiter
elsewhere.
[48]
This matter must be decided on its own merits.
The
de facto
position
is that First Respondent is in the employ of Second Respondent. Based
on the terms of the contract First Respondent entered
into with
Second Respondent, she is essentially caught between a rock and a
hard place, proverbially speaking as the
proviso
recorded in the “Offer of Employment” to First Respondent
stipulates:
‘
The Employee has informed
the Employer that she is subject to a restraint of trade. She has
undertaken to obtain the necessary agreement
from her former employer
to accept employment with the Employer, MVG Recruitment Specialist.
It is specifically recorded
that, should her former employer take legal action against her, the
Employer shall not assist
her in any way whatsoever, but will
retain the right to terminate her employment with immediate effect,
should that be in the best interest of the
Employer.’
[49]
The reality is that First Respondent accepted the
terms of this offer with Second Respondent, well knowing that
Applicant rejected
her undertaking. In other words First Respondent
took a risk by accepting the offer subject to the
proviso
contained therein. First Respondent should be allowed to continue
being in the employ of Second Respondent until the restraint
is
lifted however, First Respondent was fully aware that the refusal by
Applicant to relax the restraint would potentially render
her
unemployed.
[50]
First
Respondent will however
be at liberty to explore employment as a generalist recruiter during
the restraint period, should Second
Respondent decide to terminate
her employment. I am of the view that First Respondent is the author
of a self-created restriction
of her right to choose where she wishes
to work by agreeing to the terms of the offer of employment and
deciding to seek employment
at a competitor of Applicant.
Conclusion
[51]
The crisp issues to be decided are whether the
interest that is sought to be protected is an interest that needs
protection; whether
the restraint is reasonable in the context of
whether the enforcement of the restraint would be against public
policy if regard
is had to the developing jurisprudence and
constitutional imperatives.
[52]
I am of the view that the restraint is not purely
aimed at restricting the First Respondent. She was employed to
develop the market.
Applicant invested in First Respondent and sent
her around the country to develop what Applicant termed to be a very
special market.
Applicant did so in order to tap into the potential
that the market had to offer in the sphere. The issue here is the
terms of
the restraint and the protectable interest that Applicant
has in the form of existing and future business. I am mindful of the
fact that Second Respondent is privy to confidential information with
regards to the Applicant, relating to, amongst others, strategies
and
contacts within the market because of her experience, training,
expertise, name and face in the industry. It is so that Applicant
does not own the candidates or clients. Applicant simply wishes to
protect a certain market segment in which it invested.
[53]
I am
ad idem
with Applicant in relation to First Respondent down-playing the value
of the investment that Applicant made in order to develop
the market
throughout South Africa. Applicant identified a protectable interest
in the market and has succeeded in developing the
market to the point
where it has made significant inroads nationally. In this
regard, First Respondent accepted and agreed
that the clients in
these segments which Applicant seeks to restrict are national in the
Republic of South Africa and cannot be
reduced geographically. I find
this to be reasonable in the circumstances.
[54]
Although First Respondent indicated that she has
complied with the limited interim order obtained by Applicant on 13
December 2017,
I agree that it was necessary for Applicant to protect
its market share. I am of the view that the enforcement of the
limited restraint
which Applicant seeks is reasonable as the agreed
restraint is limited to the medical and pharmaceutical industries. I
am persuaded
that Applicant succeeded to show that it has an
interest deserving of protection.
[55]
Based on the fundamental principles referred to
in the Rawlins’s case, I am of the view that Applicant does
have an asset
worthy of protection. This asset is a proprietary
interest which encapsulates
inter alia
customer goodwill as well as potential business throughout the
Republic of South Africa.
[56]
I am satisfied that the restraint will not leave
the First Respondent unproductive or destitute as she would still be
able to operate
in many other spheres as a generalist recruiter which
market remains available to her to exploit and in which she has
previous
experience.
I am of the view that this
court should encapsulate an order which allows First Respondent to
remain economically active, whilst
protecting the interests of the
Applicant.
[57]
Finally, on a conspectus of the evidence, I am of
the view that the interest that is sought to be protected is an
interest that
needs protection; that the restraint is reasonable and
not contrary to public policy. However I am not persuaded that the
time
period sought by Applicant is reasonable, and should therefore
be shortened.
Costs
[58]
Applicant contends that it is entitled to the
costs of this application, including the costs occasion on 30
November 2017.Applicant
contends that malice is not a requirement in
order to decide on costs. Applicant was not only entitled to approach
the court for
relief but also obliged to seek relief in view of the
breaches committed by First Respondent, notwithstanding First
Respondent’s
undertakings. On the other hand, First Respondent
made every effort to part ways with Applicant amicably which is borne
out by
the content of her resignation letter and subsequent
correspondence between her and Applicant. The authorities are clear
that an
undertaking does not stop an applicant from approaching a
court and does not take away Applicant’s right to obtain an
interdict.
[59]
It is trite
that the issue of costs lies in the unfettered discretion of the
court. In the matter of
Ball
v Bambelela Bolts (Pty) Ltd & Another
[15]
the Labour Appeal Court held that:
‘…
the enforcement of a
restraint, technically, involves a constitutional issue. Restraints
of the kind being considered, constitute
a limitation on a citizen’s
right, in terms of s 22 of the Constitution, which, arguably,
requires justification…In
constitutional matters, the general
rule that costs follow the result does not apply. In such matters
costs orders are generally
eschewed out of concern that they may
produce a “chilling effect”, in that litigants may be
deterred from approaching
a court to litigate concerning an alleged
violation of their constitutional rights for fear of being penalised
with costs if they
are unsuccessful.’
Order
[60]
In the result, after considering the submissions
made by Counsel on behalf of both parties and after considering
the documents
filed on record, the following orders are made:
1.
That the First Respondent is interdicted and
restrained from conducting the activities of performing the duties of
a recruiter of
candidates; or a consultant; or a manager or
supervisor of a recruiter or consultant, whether directly or
indirectly, or individually
or associated with any other company,
partnership, close corporation, trust or other person or with any
other entity, that carries
on the same or similar activities as the
applicant namely for appointment of candidates in posts in the
medical and pharmaceutical
professions and industries in South
Africa, which interdict will apply for a period of 12 months in the
Republic of South Africa,
calculated as from the date of termination
of the First Respondent’s employment being 31 October 2017.
2.
I
make no order as to costs.
________________________
P
ANDREWS, AJ
Acting
Judge of the High Court
IN
THE HIGH COURT OF SOUTH AFRICA
(WESTERN CAPE DIVISION, CAPE TOWN)
REPORTABLE
Case
no: 21517/2017
In the matter between:
BDCE STAFFING
SOLUTIONS
CC
Applicant
(Registration no.
2004/0140/014032/23
and
SAMANTHA NADINE
STOBER (previously DUNCAN)
First
Respondent
MVG RECRUITMENT
SPECIALISTS CC
Second
Respondent
RESTRAINT
OF TRADE
JUDGE:
Andrews AJ
JUGDMENT
DELIVERED BY:
Andrews AJ
FOR
APPLICANT:
Adv. M Verster
INSTRUCTED
BY:
De Lange Attorneys
FOR
RESPONDENT:
Adv. L Myburgh
INSTRUCTED
BY:
Greenberg & Associates
DATES
OF HEARING:
13 FEBRUARY 2018
DATE
OF JUDGMENT:
21 FEBRUARY 2018
[1]
Sections 22,
36 and 39 of The Constitution of the Republic of South Africa, of
1996.
[2]
Section 22
of Act 108 of 1996.
[3]
Saner J
‘
Agreements
in Restraint of Trade in South African Law’
(LexisNexis)
at 6-30.
[4]
[1984] ZASCA 116
;
1984 (4) SA
874
(A) at 875G-I.
[5]
See also
J
Louw and Co (Pty) Ltd V Richter and Others
1987 (2) SA 237
(NPD) at 243A.
[6]
1984 (3) SA
850
(W) at 858D.
[7]
[1992] ZASCA 204
;
1993 (1) SA
537
(A) at 542G-H.
[8]
2008 (6) SA
229
(D) at 263E-F.
[9]
2009(3) SA
78 (C).
[10]
2013 (1) SA
135 (GSJ.
[11]
2007 (2) SA
486
(SCA)at 500E-G and 501C.
[12]
See also
IIR
South Africa BV (Incorporated in the Netherlands) t/a Institute for
International Research v Tarita and Others
2004 (4) SA 156
(W) at 166H-167C ‘…
The
restraint is accordingly enforceable and should be enforced for what
limited time remains…’
.
[13]
’
36
(1) The rights in the Bill of Rights may be limited only in terms of
law of general application to the extent that the limitation
is
reasonable and justifiable in an open and democratic society based
on human dignity, equality and freedom, taking into account
all
relevant factors, including –
(a)
the nature of the right;
(b)
the importance of the purpose of
the limitation;
(c)
the nature and extent of the
limitation;
(d)
the relation between the limitation
and its purpose; and
(e)
less restrictive means to achieve
the purpose.’
[14]
Section 39
of Act 108 of 1996.
[15]
(2013) 34
ILJ 2821 (LAC).