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[2014] ZAGPJHC 380
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Urban Genesis Management (Pty) Ltd and Another v Jooste and Another (2014/05400) [2014] ZAGPJHC 380; 2015 BIP 454 (GJ) (7 March 2014)
REPUBLIC
OF SOUTH AFRICA
GAUTENG
HIGH COURT
JOHANNESBURG
LOCAL DIVISION
CASE
NO: 2014/05400
DATE:
07 MARCH 2014
In
the matter between:
Urban
Genesis Management (Pty)
Ltd
........................................
First
Applicant
Urban
Genesis Operations (Pty)
Ltd
.......................................
Second
Applicant
And
Johannes
Jacobs
Jooste
.............................................................
First
Respondent
Specialised Area
and Improvement
Districts (Pty)
Ltd
..................................................................
Second
Respondent
Judgment
Vally J
Introduction
1.
The
applicants approach this court on an urgent basis asking that their
non-compliance with the Uniform Rules of Court (the rules)
be
condoned and that the application be entertained in terms of rule
6(12)(a) of the rules. It bears mentioning that in this matter
only
the Respondents submitted heads of argument. The applicants seek to
interdict and restrain the respondents:
1.1.
for
a period of 18 months from utilising in any way the confidential
information regarding the first applicant’s unique business
model (including its database), it’s pricing structures and the
full details of the first applicant’s contracts with
all of its
customers, including the pricing in such contracts, the functions to
be performed by the first applicant and how long
the contracts have
still to run (prayer 2);
1.2.
from
soliciting business or attempting to solicit business, whether
directly or indirectly, from the applicants’ customers
(prayer
3).
2.
They
further seek an order from this court directing the respondents to
deliver to them all copies of the following documentation:
2.1.
the
database consisting of confidential property related information
about each of the areas in which the applicants business is
involved
which includes financial and planning information specific to each of
the applicants’ customers (prayer 4.1.1);
2.2.
all
fonts, letterheads, computer programmes and like documentation and/or
information utilized by the respondents to generate tenders
and/or
quotations to customers substantially similar to those generated by
the first applicant (prayer 4.1.2);
2.3.
all
financial and database information and documentation in their
possession relating to the first applicant’s business dealings
with the Main Marshall Improvement District, the Fashion Improvement
District and the South of Johannesburg Improvement District
(prayer
4.1.3) as well as all documentation and other information relating to
the first applicant’s 2013 tender for
work in respect of
the Orlando Ekhaya project (prayer 4.2)
Urgency
3.
The
respondents contend that the matter is not urgent. They rely on the
fact that by the applicants’ own version they were
aware of the
conduct they complain of in December 2013, that the incidents they
complain of occurred between November and December
2013, but took no
steps to enforce their alleged rights until February 2013. As a
result they lost the benefit of relying on the
provisions of rule
6(12). For this reason the respondents ask that the application be
struck from the roll for lack of urgency.
4.
It
is trite that while rule 6(12) allows for the court to entertain a
matter on an urgent basis. It is not open to an applicant
who so
seeks the assistance of the court to choose when s/he wishes to
approach a court. The applicant must justify a departure
from the
rules regarding normal time periods as such allows for a respondent
to appropriately address the case s/he is asked to
answer to. It also
allows the court to give careful consideration to the issues raised
by the parties before pronouncing on them.
This principle was first
laid down in
Luna
Meubels Vervaardigers (Edms) Bpk v Makin
[1]
and has since been incorporated into the Practice Directives of this
court.
[2]
It is captured in the
following terms in
Luna
Meubels
:
“
Undoubtedly
the most abused Rule in this Division is Rule 6(12) which reads as
follows:
“
12(a)
In urgent applications the court or judge may dispense with the forms
and service provided for in these rules and may dispense
of such
matter at such time and place and in such manner and in accordance
with such procedure (which shall as far as practicable
be in terms of
these rules) as to it seems meet.
(b)
in every affidavit or petition filed in support of the application
under para (a) of this sub-rule, the applicant shall set
forth
explicitly the circumstances which he avers render the matter urgent
and the reasons why he claims that he could not be afforded
substantial redress at a hearing in due course.
”
Far
too many attorneys and advocates treat the phrase ‘
which
shall as far as practicable be in terms of these rules
’,
in sub-rule (a) as simply
pro
non scripto
.
That this phrase deserves emphasis is apparent also from the judgment
of Rumpff, JA (as he then was) in
Republikeinse
Publikasies (Edms) Bpk v Afrikaanse Pers Publikasies (Edms) Bpk
1972 (1) SA 773
(AD) at p 782B. Once an application is believed to
contain some element of urgency, they seem to ignore (1) the general
scheme
for presentation of applications as provided for in Rule 6;
(2) the fact that Motion Court sits on Tuesdays through to Fridays;
(3) that, for matters to be on this roll on any particular Tuesday,
the papers must be filed with the Registrar by 12:00 noon on
the
preceding Thursday; (4) that the time of day at which the Court
commences its daily sittings is 10:00am. These practitioners
then
feel at large to select any day of the week and any time of the day
(or night) to demand a hearing. This is quite intolerable
and is
calculated to reduce the good order which is necessary for the
dignified functioning of the Court.”
[3]
5.
The
applicants agree that they were aware of the conduct which “
was
tainted with a degree of unlawfulness
”
as long ago as December 2013 and that they only instituted
proceedings on 18 February 2013. They claim that the reason they
did
not do so earlier is because the managing director (who deposed to
the affidavits on behalf of the applicants) believed that
the
respondents (first respondent in particular), would desist with their
alleged unlawful conduct, and was concerned that the
institution of
legal proceedings would impact negatively on the business of the
applicants. However, the respondents failed to
desist with their
alleged unlawful conduct but instead became more brazen and reached
an intolerable state when on 4 February 2014
the applicants became
aware that the respondents were successful in soliciting business
away from the applicants towards the respondents.
This conduct
resulted in the applicants fearing for the future of their business
which propelled them to institute proceedings
some 14 days later on
18 February 2014. The respondents furnish a bare denial in response
to these allegations and for that reason
cannot be taken as seriously
raising an irresolvable dispute of fact.
6.
The
respondents are correct to suggest that the applicants should have
instituted proceedings soon after learning of the alleged
unlawful
conduct in December 2013. The applicants however have to furnish a
reasonable and perfectly acceptable explanation for
not doing so. In
a word, they wanted to avoid engaging in litigation with the
respondents. Thus, the question that is raised by
these facts is
this: does the respondents delay in bringing this application mean
that they should be punished by having the portal
of court closed in
their faces? I think not. Their hope to avoid litigation, which is
costly and can be bruising, is commendable.
Unfortunately the
respondents persisted in the alleged unlawful conduct and the
applicants cannot be faulted for approaching court
after realising
that if they left matters as they stood the alleged unlawful conduct
would not cease. For this reason I believe
it is appropriate to
condone their failure to comply with the rules of court and to grant
them an urgent hearing in terms of rule
6(12)(a). Thus, the
respondents’ invitation to have this matter struck from the
roll for lack of urgency is declined.
7.
The
relief sought by the applicants is far reaching. They seek a final
interdict in various forms. To succeed they have to make
out an
explicit case in their founding affidavit
[4]
and have to show that they have a clear right, that they have been
injured or that they reasonably apprehend being injured and,
finally,
that they have no other satisfactory remedy.
[5]
Moreover, the interdict they seek can only be granted on the basis of
the facts averred by them which have been admitted by the
respondents
together with other facts averred by the respondents.
[6]
8.
In
prayer 2 the applicants seek to prevent the respondents for a period
of 18 months from utilising in any way the confidential
information
which consists of: the first applicant’s unique business model
(including its database), it’s pricing structures
and the full
details of the first applicant’s contracts with all of its
customers, the pricing in such contracts, the functions
to be
performed by the first applicant and how long the contracts have
still to run (the confidential information).
9.
Their
case is that the first respondent was in the employ of the first
applicant since 1 February 2010 in a very senior position
and that he
was employed by the first respondent’s predecessor since 2006
in the same position. As a result of his employment
he came to
acquire knowledge of the first applicant’s confidential
information and is now in the process of exploiting it
for his and
the second respondent, benefit to their detriment.
10.
The
first respondent’s employment contract contained the following
clause:
“
I
undertake that except in the proper course of my duties I shall keep
secret and shall not at any time (whether during my employment
with
the Company (the first respondent) or after the termination of my
employment with the Company for whatever reason) use for
my own or
another’s advantage, or reveal to any person, firm or company,
any trade secrets, business methods or information,
which I know, or
ought reasonably to know, to be confidential, concerning the business
or finances of any member of the Kagiso
Group (the “Group”)
or any of the Group’s dealings or affairs, including
information concerning the Group’s
clients, as far as they
shall have come to my knowledge during my employment.
”
[7]
11.
That
this clause obliges the first respondent to respect and protect the
confidential information of the first applicant is beyond
question.
There is, however, no time limit to the obligation imposed upon him.
The applicants show that during the course of his
employment with the
first applicant the first respondent was privy to the confidential
information it seeks to protect. The first
respondent does not deny
this.
12.
The
first respondent resigned from the employ of the first applicant on 4
November 2013. Immediately thereafter he commenced working
for the
second respondent in direct competition with the first applicant. He
is the brains behind the second respondent. In fact,
he established
the second respondent solely for the purpose of competing with the
first applicant. Within a month of leaving the
employ of the first
applicant and commencing work as a competitor to it, he succeeded in
luring some very important employees of
the first applicant to resign
from their positions and to take up employment with the second
applicant.
13.
It
is submitted on behalf of the respondents that the applicants do not
allege that any of the respondents actually possess this
information.
Nor do they advance any facts to show that the respondents have this
information. Further, the respondents claim,
they do not show that
the information is of any economic value.
14.
There
is, in my view, no substance to the respondents’ claim. This is
so for the following reasons:
14.1.
The
applicants claim that during his employment with the first applicant
the first respondent was one of the most important employees
in the
first applicant’s business and that there were only two other
employees that were as involved in its business as he
was. The first
respondent merely denies that he was the main employee. He claims
that the other two employees more senior than
himself that were also
in the first applicant’s business and that they were more
crucial than himself to the business. This
however, does not raise a
serious dispute of fact on the issue before court. The first
respondent does not deny that he was crucial
to the first applicant’s
business and that his involvement was central to the its business and
as such was he in possession
of confidential information such as it
pricing structure, its tendering processes, its contracts, its inner
workings and all the
contracts its had concluded during his tenure.
14.2.
Furthermore,
the first respondent admits that upon his resignation he submitted a
“
close-out
report
”.
This, essentially, is a report about all the projects he was involved
in at the time of his resignation. The projects remain
pending. The
report show without more, that the first respondent was privy to the
contracts of the first applicant and was centrally
involved in its
operations,
14.3.
The
information referred to above is something that is private to the
first applicant. It is part of its business. It is not something
that
is known to the general public. Nor can it be obtained by anyone not
involved in the first applicant’s business.
14.4.
It
certainly has value to the first applicant who, after all, is a
commercial entity engaged on a daily basis in commercial activity.
In
my view the information certainly has value to its competitors and
even to its contracting parties engaged, and continue to
engage, in
commercial negotiations with the first applicant
15.
There
can, therefore, be no doubt that the first respondent was privy to
the confidential information of the first applicant. As
he
established the second respondent (whose sole purpose is to engage in
the same commercial enterprise as the first applicant)
and is central
to its operations it cannot be doubted that the second respondent,
too, has access to this confidential information.
16.
The
respondents’ counsel submitted that the first respondent cannot
be held to account for his breaching of this clause because
to hold
him accountable would be to prevent him from taking advantage of his
skill and knowledge which has been acquired over time.
In support of
this contention the respondents rely on the principle that an
employee cannot be restrained from utilising knowledge
he acquired
through the course of time as a result of his own skill and by the
exercise of his own mental faculties.
[8]
This, however, does not assist the respondents. The confidential
information that the applicants seek to protect is not general
knowledge that can be acquired through the use of individual skill
and by the exercise of individual mental faculties by anyone
not
privy to the information. It is knowledge about the intimate business
dealings and operations of the first applicant. It is
unique to the
business of the first applicant. It is, therefore, protectable
knowledge or information.
17.
Finally,
it bears emphasising that the respondents did not raise the customary
defences of the clause being
contra
bonos mores,
unfair, unlawful or unenforceable as it violates the first
respondent’s constitutional right to engage in economic
activity
in order to ensure his own and his family’s survival.
18.
In
the result, the applicants have shown that they have a protectable
interest deserving of this court’s protection in the
form of an
interdict enforcing the obligations on the first respondent in terms
of his employment contract with them. In a word,
the applicants have
made out a case for the relief sought in prayer 2 and are entitled to
an appropriate order in that regard.
19.
As
far as prayer 3 is concerned the applicants furnish no facts
establishing that they have a right to prevent the respondents from
soliciting or attempting to solicit any business from any of their
customers. Their case is that the first respondent was employed
by
them for a lengthy period and as such had access to the information.
But this does not show that he has kept copies in soft
or hard form
of the said confidential information. As they cannot show that he has
such copies they cannot ask for their return.
20.
The
question though is that do they have a right to prevent the
respondents from competing with them. Whether or not they have such
a
right is a matter of substantive law.
[9]
The first respondent is not subject to any restraint preventing him
from competing with the applicants for business. Nor is he
breaking
any law from competing with the applicants for the custom of their
clients. The second respondent, which according to
the applicants is
the vehicle created by the first respondent to solicit business from
their customers, is not breaking any law
or assisting the first
respondent from breaching any restraint of trade agreement he is
bound to. Thus the applicants fail to show
that they have a right to
the interdict they seek in prayer 3 of their notice of motion. They
merely wish to eliminate the competition
offered by the respondents
to the market they operate in. The law allows the respondents to
offer such competition. In fact, it
encourages it.
[10]
As the applicants fail to make out a case for the relief sought in
prayer 3 their application in this regard stands to be dismissed.
21.
With
regard to prayer 4 too, it has to be said that the applicants do not
present any real facts to show that the respondents are
in possession
of their confidential information in the form of having it stored on
a database or in the form of a hard copy. There
is not a single
averment in the founding affidavit stating that the respondents
actually have such copies. There are many averments
about the central
role played by the first respondent in the first applicant’s
business during his tenure there but none
of them show that he kept
copies of any of the confidential information they want returned. At
best for the applicant’s they
are able to show that he had
access to confidential information, but as they cannot show that he
or anyone else linked to the second
respondent actually possess
copies (whether in soft or hard form) of the confidential information
they do not make out a case for
the relief sought in this prayer.
Further, the respondents deny possessing such copies and there is
nothing before the court to
say that this denial is disingenuous or
misleading.
22.
For
this reason the relief sought in prayer 3 has to be refused.
Conclusion
23.
In
conclusion then, the applicants are only entitled to the relief
sought in prayer 2. As they have been successful in this regard
there
is no reason to deny them the costs they have incurred by having to
vindicate their rights. They may not have succeeded in
the other
prayers they sought, but their success in securing prayer 2 is
substantial enough to warrant them being granted their
costs.
Order
24.
Accordingly,
the following orders are made
1
The
applicants non-compliance with the Rules of Court relating to service
and the time periods is condoned and the matter is treated
as urgent
in terms of Rule 6(12)(a).
2
The
first and second respondents are interdicted and restrained for a
period of 18 months from utilising for their or for any other
person’s advantage or revealing to any person, firm or company,
any trade secrets, business methods or information concerning
the
business or finances of the applicants’ or any of the
applicants’ dealings or affairs, including information
concerning
the applicants’ clients.
3
The
respondents are to pay the costs of this application.
Vally J
Gauteng
High Court, Johannesburg Local Division
Appearances:
For the
applicants : Adv S. Bunn
Instructed by :
Garrat Hugo and de Souza
For the first
respondents : Adv L M Spiller
Instructed
by : Keith Sutcliffe & Associates Inc
Date of hearing :
28 February 2014
Date
of judgment : 7 March 2014
[1]
1977
(4) SA 135
(W).
[2]
Gauteng
Local Division Urgent Applications Practice Directive 9.22
[3]
Luna
Meubels
(
op
cit
)
at 136
[4]
Lipschitz
& Swatrz NNO v Markowitz
1976 (3) SA 772
(W) at 775H-776A;
Triomf
Kunsmis (EDMS) v AE&CI BPK EN ANDER
1984 (2) SA 261
at 267G-269H;
Titty’s
Bar & Bottle Store (Pty) Ltd v ABC Garage (Pty ) Ltd &
Others
1974 (4) SA 362
(T) at 369A-B;
Bowman
NO v De Souza Roldao
1988 (4) SA 326
(T) at 327E-H.
[5]
Setlogelo
v Setlogelo
1914 AD 221.
[6]
Plascon
Evans Paints Ltd v Van Riebeeck Paints (Pty) Ltd
[1984] ZASCA 51
;
1984
(3) SA 623
(A) at 634H-635I.
[7]
Application
Bundle p 50 (Annexure “SS2”)
[8]
See
Atlas
Organic Fertilizers (Pty) Ltd v Pikkewyn Ghwano (Pty) Ltd
1981 (2) SA 173
(T) at 193F-194A
[9]
Schultz
v Butt
1986 (3) SA 667
(A) at 687H. See also CB Prest:
Interlocutory
Interdicts
at 47.
[10]
See:
The
Competition Act 89 of 1998