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[2015] ZAGPJHC 7
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New Reclamation Group (Pty) Ltd v Davies and Another (A5033/2014) [2015] ZAGPJHC 7 (30 January 2015)
REPUBLIC OF SOUTH
AFRICA
IN THE HIGH COURT OF
SOUTH AFRICA
GAUTENG LOCAL DIVISION,
JOHANNESBURG
CASE NO: A5033/2014
DATE: 30 JANUARY 2015
In the matter between:
THE NEW RECLAMATION GROUP (PTY)
LTD
.................................
Appellant
And
NEIL
DAVIES
.................................................................................
First
Respondent
WEST RAND SCRAP (PTY)
LTD
............................................
Second
Respondent
J U D G M E N T
THE COURT:
[1] This is an appeal against the
judgment of Tsoka J handed down on 20 March 2014, leave to appeal
having been argued and granted
by him on 4 June 2014. The matter
concerns the enforcement of a contractual restraint of trade and
confidentiality undertakings
given by the First Respondent, a former
employee of the Appellant, in favour of the Appellant. The Second
Respondent is cited
merely because it might have an interest in the
outcome hereof as the First Respondent is in its employ.
[2] The Appellant seeks an order
against the First Respondent preventing him from being employed by or
from carrying on a business
either solely or jointly or as an agent
of the Second Respondent or any other competitor of the appellant up
to and including 5
February 2015 in the Republic of South Africa and
Botswana. The appellant further seeks an order against the First
Respondent
preventing him from disclosing the confidential
information and trade secrets of the Appellant. No relief is sought
against the
Second Respondent and it has not opposed the application.
[3] The operation of the restraint of
trade agreement was instigated by the First Respondent’s
dismissal from his employment
with the Appellant. His expulsion was
pursuant to charges of fraud and misappropriation of funds allegedly
executed by him against
the Appellant. The charges culminated in the
institution of disciplinary proceedings against him during which he
was found guilty
and subsequently sacked.
[4] The factual background is that the
First Respondent qualified as an accountant in 1997. He joined his
father’s company,
Midway Metals (Pty) Ltd, at the beginning of
1997. Midway Metals thereafter traded as West Rand Recycling. The
First Respondent
was employed in the business as an accountant. In
November 1998 the Appellant’s predecessor in title “The
Reclamation
Group” (which was then Lexshell 246 (Pty) Ltd)
acquired West Rand Recycling.
[5] Shortly after the acquisition of
West Rand Recycling, in November 1998, the first respondent was
appointed as a Financial Manager
of the West Rand Division of The
Reclamation Group. In 2003, the First Respondent left The
Reclamation Group to begin his own
plastic recycling business. When
his business did not do well, he was then re-employed by the
Appellant as a trader in non-ferrous
metals on 12 May 2008.
[6] At the time when the First
Respondent re-joined the Appellant in 2008, he was employed as a
trader in non-ferrous metals based
at the appellant’s head
office. At that time, he concluded the 2008 restraint agreement. In
2009, the First Respondent was
promoted to the position of Branch
Manager of the Appellant’s West Rand Branch. In this position,
the First Respondent’s
functions and responsibilities included
the following:
6.1 Servicing the Appellant’s
customer base;
6.2 Dealing with problems and queries
which arose from time to time;
6.3 Ensuring sales budget targets were
met;
6.4 Submitting tenders for long-term
contracts;
6.5 Liaising with the Appellant’s
Chief Operating Officer and Chief Executive Officer and finance
department; and
6.6 Attending branch manager meetings
at which the Appellant’s strategies were discussed.
[7] In 2010, the First Respondent was
appointed as Manager of the appellant’s Botswana operation and
as a Director of ReclamBotswana
(Pty) Ltd. Here the First Respondent
was responsible for the appellant’s entire Botswana operation.
In this role, he reported
back bi-weekly to senior management. At the
meetings, the following matters were traversed:
7.1 The Appellant’s international
operations;
7.2 Pricing related matters;
7.3 Recruitment of new staff;
7.4 Training of staff;
7.5 Opening of new bucket shops;
7.6 Performance reviews of the
Appellant’s different branches; and
7.7 The nature and extent of scrap
supply.
[8] During early 2011, the First
Respondent was promoted within the South African business to
Divisional Head. In this position,
he had overall responsibility for
twelve of the Appellant’s branches, including the West Rand.
His duties included negotiating
with third parties to secure premises
to be leased and acquired by the appellant; overseeing the
administrative support for the
operation on Botswana; and providing
security related advice to prevent potential hijacking risks for
copper scrap.
[9] From 23 June 2011, he was appointed
to a management committee within the Appellant and in this role, he
had unrestricted access
to all strategic and financial information
relating to the business of the Appellant, as well as information
relating to the Appellant’s
suppliers and customers.
[10] On 1 July 2011, the first
respondent signed a second restraint agreement. This agreement was
signed by the First Respondent
but not by the appellant. The only
material difference between the 2008 and 2011 agreements is that
under the 2008 agreement,
the period of the restraint was three years
and under the 2011 agreement, the restraint period was two years.
[11] We turn now to the nature of the
businesses of the Appellant and the Second Respondent. It is common
cause that the Appellant
and the Second Respondent are competitors in
their respective areas of business. The difference between them,
however, is that
the Appellant’s operations extend throughout
the country and in some instances, across neighbouring countries.
The Second
Respondent, on the other hand, operates a similar business
at a smaller scale. It runs its business largely at one depot albeit
that it has the capability to reach out to suppliers and customers
all over the country.
[12] The businesses of both parties
involve the purchase, sale and processing of ferrous and non-ferrous
scrap metal. Processing
involves cleaning, grading, sorting,
stripping, cutting, shredding and any other beneficiation (chemically
or otherwise) of ferrous
and non-ferrous metals into any form whether
as a finished or a semi-finished product.
[13] Both parties purchase scrap metal
from third parties including industrial companies, the informal
sector and merchants that
conduct business within and outside South
Africa. The scrap metal is then graded, sorted and processed for
onward sale to consumers
of either ferrous or non-ferrous scrap
metal. The processing which is carried out is dependent on the needs
of each customer and
the nature of the material.
[14] The varying sources and types of
supply and the changing customer needs for scrap metal entails
knowledge of who the suppliers
are, where they are located, what
scrap they supply, in what quantities and at what price they are
willing to sell their scrap.
Similarly, knowledge of the customers
and their specific scrap requirements at any point in time is a
critical requirement of running
a successful scrap business.
[15] When the matter served before the
court a quo, the Appellant had founded its case on the basis of the
2011 restraint of trade
agreement. The Respondent argued that the
2011 agreement was not enforceable because it was signed by the First
Respondent alone
and not the Appellant. Apart from the aforesaid,
the First Respondent also asserted that the 2011 agreement could not
be the applicable
agreement as the 2008 agreement contains ‘a
no variation except in writing clause’. The Appellant then
filed a supplementary
affidavit wherein it sought to rely on the 2008
agreement in the event that the court a quo came to the conclusion
that the 2011
agreement was not valid and enforceable.
[16] The court a quo ruled that the
2011 agreement constituted an offer which was not accepted by the
First Respondent and accordingly
held that the 2008 agreement was
applicable. When the matter came before this court, however, the
need to decide which of the
two agreements was valid was rendered
irrelevant anyway because Counsel for the First Respondent agreed
that the pertinent agreement
was the 2008 upon which the Appellant
was relying as an alternative in his supplementary affidavit.
Accordingly, a decision on
which of the two agreements this matter is
based became academic.
[17] The issues that require
determination are:
17.1 The validity and enforceability of
the 2008 agreement;
17.2 The existence of trade secrets and
confidential information worthy of protection;
17.3 Whether or not the First
Respondent breached the agreement.
[18] The legal position concerning
restraint of trade agreements is that a party seeking to enforce a
restraint of trade agreement
requires to raise the restraint
agreement and prove a breach thereof. The opposing party seeking to
avoid the restraint bears
the onus to demonstrate on a balance of
probabilities that the restraint agreement is unenforceable because
it is unreasonable.
The test for the determination of reasonableness
or otherwise of a restraint of trade provision is set out in Basson v
Chilwan
and Others
[1993] ZASCA 61
;
1993 (3) SA 742
(A) at 767C-Hin:
18.1 Is there an interest of the one
party, which is deserving of protection at the termination of the
agreement?
18.2 Is such interest being prejudiced
by the other party?
18.3 If so, does such interest so weigh
up qualitatively and quantitatively against the interest of the
latter party that the latter
should not be economically inactive and
unproductive?
18.4 is there another facet of public
policy having nothing to do with the relationship between the parties
but which requires that
the restraint should either be maintained or
rejected?
[19] It is settled that insofar as the
first leg of the test in Basson v Chilwan & Others supra, the
proprietary interests that
can be protected by a restraint of trade
agreement are in essence of two kinds and these are:
19.1 all confidential information that
is useful for the carrying on of the business and which could
therefore be used by a competitor,
if disclosed to him, to gain a
relative competitive advantage – trade secrets; and
19.2 The relationships with customers,
potential customers, suppliers and others - trade connection of the
business, being an important
aspect of its incorporeal property known
as goodwill. See Sibex Engineering Services (Pty) Ltd v Van Wyk &
Another
1991 (2) SA 482
(T) at 502 D-F.
[20] Whether information constitutes a
trade secret is a factual question. For information to be
confidential it must be:
20.1 Capable of application in trade or
industry, that is, it must be useful and not be public knowledge and
property;
20.2 Known only to a restricted number
of people or a closed circle; and
20.3 Of economic value to the person
seeking to protect it. See Townsand Productions (Pty) Ltd v Leech &
Others
2001 (4) SA 33
(C) at 53J-54B.
[21] With regard to customer
connection, the need of an employer to protect his trade connections
arises where the employee has
access to customers and is in a
position to build up a particular relationship with a customer. See
Rawlins & Another v Caravantruck
(Pty) Ltd
[1992] ZASCA 204
;
1993 (1) SA 537
(A) at
541C/D-I.
[22]
A respondent bears the onus of
proving the unreasonableness of the restraint. A respondent must
establish that he had no access
to confidential information and that
he never acquired any significant personal knowledge of or influence
over the applicant’s
customers whilst in the applicant’s
employ. It suffices if it is shown that trade connections through
the customer contact
exist and that they can be exploited if the
former employee were employed by a competitor. Once that conclusion
has been reached
and it is demonstrated that the prospective new
employer is a competitor of the applicant, the risk of harm to the
applicant if
its former employee were to take up employment becomes
palpable.
[23] Where the applicant has
endeavoured to safeguard itself against the unpoliceable danger of
the respondent communicating its
trade secrets to, or utilising its
customer connection on behalf of, a rival concern after entering
their employ by obtaining a
restraint preventing the respondent from
being employed by a competitor, the risk that the respondent will do
so is one which the
applicant does not have to run and neither is it
incumbent upon the applicant to inquire into the bona fides of the
respondent
and demonstrate that he is mala fides before being allowed
to enforce its contractually agreed right to restrain the respondent
from entering the employ of a direct competitor. See Institute for
International Research v Tarita & Others
2004 (4) SA 156
(W) at
167B-C.
[24] In those circumstances, all that
the applicant can do is to show that there is secret information to
which the respondent had
access, and which in theory the respondent
could transmit to the new employer should he desire to do so. Where
the ex-employer
seeks to enforce against his ex-employee a
protectable interest recorded in a restraint, the ex-employer does
not have to show
that the ex-employee has in fact utilised
information confidential to it - merely that the ex-employee could do
so. The very purpose
of the restraint agreement is that the applicant
does not wish to have to rely on the bona fides or lack of retained
knowledge
on the part of the respondent, of the confidential
information. It cannot be unreasonable for the applicant in these
circumstances
to enforce the bargain it has exacted to protect
itself.
[25] Indeed, the very ratio underlying
the bargain is that the applicant should not have to content itself
with crossing its fingers
and hoping that the respondent would act
honourably or abide by the undertakings that he has given. It does
not lie in the mouth
of the ex-employee who has breached a restraint
agreement by taking up employment with a competitor to say to the
ex-employer 'Trust
me: I will not breach the restraint further than I
have already been proved to have done.' See Institute for
International Research
v Tarita & Others supra.
[26] Insofar as trade secrets are
concerned, the court a quo agreed with the First Respondent’s
assertion that none existed
to which the first respondent was exposed
during his employment with the Appellant. The court a quo further
regarded the surprised
expressed by the Appellant’s customers
when they learned that the First Respondent had concluded a restraint
of trade agreement
with the Appellant as evidence that there was no
confidentiality in the industry. Once the court a quo had made the
aforesaid
pronouncements on trade secrets and trade connections, the
fate of the Appellant was inexorable.
[27] The Appellant has strongly
contended that it has an interest worthy of protection in areas such
as recycling know-how, distribution
know-how, business know-how,
process, techniques and trade secrets in general. To maintain its
leading role and significance in
the industry, the Appellant actively
and deliberately persuaded the First Respondent to learn from other
experienced individuals
employed within the Appellant to gain an
all-round education and understanding of the recycling and
distribution know-how, processes
and techniques as implemented by the
Appellant.
[28] It was in the manner described
above that the First Respondent became privy to the strategic and
competitive manner in which
the Appellant promotes and markets its
business. In the light of the above, the First Respondent was able
to educate other individuals
employed within the Appellant’s
business on how to compete effectively in the scrap metal industry.
[29] The Appellant argued further that
the First Respondent might have acquired some knowledge of how the
industry operates but
could not run such a business prior to his
acquisition of the knowledge and experience from the Appellant. What
is therefore patent
and undeniable is that he failed to run a similar
business enterprise on his own. It is only subsequent to his
exposure to the
trade secrets and business connections of the
Appellant that he has become a successful and competent employee in
the industry.
The information that the First Respondent acquired is
pertinent across the Appellant’s business throughout the areas
over
which it seeks to restrain the First Respondent being the whole
of South Africa and Botswana where it operates business.
[30] The First Respondent on the other
hand has asserted that the Appellant is not entitled to appropriate
the knowledge and experience
that he gained from the Appellant’s
predecessors. The predecessors of the Appellant, so the argument
goes, were separate
and distinct and cannot be said to have been part
of the Appellant in any manner. This argument is artificial as a
successor in
title inherits all that the predecessor owned. In this
scenario therefore the position is that the Appellant took over and
became
the successor in title and as such is entitled to restrain any
person who has been exposed to such knowledge and experience while
in
the employ of its predecessor.
[31] As a result of his knowledge
acquired whilst with the Appellant, the First Respondent became aware
of strategic and confidential
information. Such information relates
to prospective transactions with customers and suppliers situated
throughout the area where
the Appellant conducts its business. In
addition, the First Respondent also became exposed to particular
prices and discounts
negotiated with customers and suppliers with
whom he dealt (and with whom other employees and representatives of
the Appellant
dealt. Generally, the First Respondent came to know of
the Appellant’s pricing methods and structures.
[32] The information to which the First
Respondent was exposed is confidential because it was Capable of
application in trade or
industry. It was only known to those
employees of the Appellant who had to know about it. It was of
economic value to the Appellant
who of course sought to protect it.
[33] While in the employ of the
Appellant, the First Respondent created close relationships with both
customers and suppliers of
the Appellant. Relationships with
suppliers are crucial in the industry because if a scrap business
cannot secure a steady and
reliable source of scrap material for
recycling, it will very quickly go out of business. It was precisely
for this reason that
the First Respondent was encouraged to make and
establish contacts with suppliers and customers.
[34] It is apparent from the affidavits
of some of the suppliers of the Appellant that the First Respondent
has successfully built
very strong links with the customers and
suppliers of the Appellant. These connections that the First
Respondent has created would
threaten any employer in the position of
the Appellant.
[35] The First Respondent was, in
relation to the Appellant and the customers with whom he dealt, aware
of each customer's business
and that customer's specific and
particular requirements. In relation to the Appellant and the
suppliers with which he dealt,
he would have been mindful of each
supplier's business and that supplier's specific and particular
requirements. He would have
been also acutely conscious of the needs
and requirements of the Appellant's customers and suppliers. Having
assessed the customer's
needs, he would have been in a position to
ensure that he could and did, through the Appellant, fulfil those
needs. He would have
been able to forge relationships with key
representatives of the Appellant's customers, potential customers,
suppliers and potential
suppliers which greatly facilitated on-going
business with the Appellant's customers and suppliers.
[36] Thus, the three affidavits
provided by Rudi Scrap Metals, JJD and Magogo Scrap Metals, all of
which were the Appellant’s
suppliers are a clear indication
that their connection with the First Respondent was strong. He had
serviced them for years. It
was with him, rather than the Appellant,
that a relationship had been built up over the years. They therefore
had no hesitation
in providing supplies to the Second Respondent when
they were approached to do so by the First Respondent.
[37] The surprise or shock exhibited by
the Appellant’s suppliers when they learned that the First
Respondent had signed a
restraint of trade agreement with the
Appellant is ambivalent as one cannot conclusively state that their
reaction to the news
is an indication of the existence or
non-existence of confidential information. A more objective approach
in the circumstances
is thus required and that is simply to go to the
facts and determine what they reveal. It is abundantly clear from
the testimony
of the three suppliers as outlined in their affidavits
that they had dealt with the First Respondent and that they would
like to
follow him wherever he would take them.
[38] We agree entirely with the
argument of the Appellant that although the First Respondent denied
that he made the approaches
in these three instances, his evidence
on this point relied on unsupported hearsay evidence and allegations
that the Appellant’s
suppliers who provided confirmatory
affidavits had perjured themselves. The First Respondent laid no
factual basis for this allegation
of perjury other than the
uncorroborated hearsay evidence. Moreover the allegations that the
First Respondent approached the Appellant’s
suppliers were
confirmed under oath by each supplier in confirmatory affidavits
attached to the founding affidavit.
[39] The court is reasonably satisfied
that on the basis of what is described above, the Appellant has
established that trade secrets
and trade connections existed. These
secrets and connections required protection against employees who
have become exposed to
them such as the First Respondent. Once the
court has concluded as aforesaid, it should follow as a matter of
course that the
restraint that the parties concluded had a purpose to
serve and is therefore valid and enforceable.
[40] Validity, enforceability,
existence of trade and business secrets having been established, the
last issue that falls for determination
by this court is to establish
whether or not the First Respondent violated the provisions of the
agreement. The agreement describes
in detail the trade secrets in
Clause 4. Clauses 5 and 6 deal with the non-solicitation of
employees and the actual restraints
respectively. The First
Respondent acknowledged that he will be exposed to such information
by appending his signature to the
agreement. As a matter of fact,
there is sufficient proof in the founding affidavit that he was
indeed exposed.
[41] In Clause 6.5 of the agreement,
the First Respondent acknowledges and agrees that the restraints
imposed upon him in terms
of Clause 6 are reasonable as to subject
matter, area and duration and are reasonably necessary to protect the
proprietary interests
of the Appellant , its successors-in-title and
assigns in the business and its underlying assets.
[42] The Appellant alleges that the
First Respondent's employment by and/or association with the second
respondent commenced whilst
he was still employed by the Appellant
and continues to this day. In view of the fact that the second
respondent is a direct competitor
of the Appellant, such employment
and/or association constitutes a breach of the restraint of trade
agreement, which the first
respondent signed in 2008 making certain
undertakings in favour of the Appellant.
[43] In direct violation of Clause 5 of
the agreement, In March 2013 The First Respondent offered employment
to Mbedlhi with the
Second Respondent, a former driver in the employ
of the Appellant. Mbedhli tendered his resignation with immediate
effect to Pavkovich
and told him that he would be joining First and
the Second Respondents. Mbedhli was very resolute as he would not
even consider
an effort by the Appellant to match the offer made by
the Appellant. It has since been confirmed that Mbedhli is indeed in
the
employ of the Second Respondent, a company in direct competition
with the Appellant.
[44] In late March 2013, the First
Respondent recruited Joseph Itumeleng who was also in the Appellant’s
employ as a driver.
Like Mbedhli, Joseph would not consider a
revised offer meant to match that of the Appellant. When Pavkovichq
called Joseph a
week later to find out why he was not coming to work,
the latter told him that after persuasion by the First Respondent he
had
taken up employment with the Second Respondent. Similar
approaches with offers of employment with the Second Respondent were
made
to Maroping Rosina Sekotaborwa and Susan Mansfield by the First
Respondent.
[45] Needless to state that all these
approaches constitute a contemptuous violation of Clause 5 of the
agreement. It cannot assist
the First Respondent’s case to
state that the recruited employees could not have caused any major
loss of business to the
Appellant as they were not key in the conduct
of its business. Whatever the position is, the solicitation of the
Appellant’s
employees constitutes a blatant and deliberate
infringement of the agreement.
[46] Following disciplinary proceedings
against the First Respondent, the First Respondent was dismissed on 6
February 2013. His
dismissal activated the provisions of Clause 6 of
the agreement in particular that he would not for a period of two
years take
employment with a competitor of the Appellant. Subsequent
to his release from employment with the Appellant, however, it
transpired
that the First Respondent had been associated with the
Second Respondent and that he was then fully employed by it. The
Second
Respondent currently operates its business in the precise
areas over which the First Respondent had control whilst in the
employ
of the Appellant and in respect of which the Appellant sought
to enforce its restraint.
[47] The Appellant contended that the
fact that the business of the Second Respondent has been established
in the very areas which
the First Respondent controlled whilst in the
employ of the Appellant, is indicative of the key role which the
first respondent
plays in the Second Respondent. In fact it must be
correct to add to the aforegoing that the Second Respondent would not
have
been interested in the First Respondent had it not been
attracted by the knowledge and experience that he gained whilst in
the
employ of the Appellant.
[48] The trade secrets and customer
connections, which the First Respondent acquired as a trader from
2008, would enable a competitor
to compete unlawfully with the
Appellant if it were to be disclosed to it. The information about
the scrap business which the
First Respondent obtained would be
passed on to the Second Respondent to the detriment of the Appellant.
The question of unreasonability
does not arise in view of the
provisions of Clause 6.5 of the agreement besides, the power play
between the parties was evenly
spread between the parties in 2008
unlike in 2011.
[49] In the circumstances the court
finds that:
49.1 The trade and customer connections
of the Appellant are an interest which is worthy of protection;
49.2 The interest of the Appellant is
being prejudiced by the First Respondent taking up employment with a
competitor, the Second
Respondent;
49.3 A qualitative and quantitative
weighing up of the interest of the Appellant tilts in favour of
restraining the First Respondent
for the period of the restraint, two
years; and
49.4 The First Respondent was free when
he made the restraint undertakings and should for that reason be held
to observe his obligations.
[50] In the result, the Court makes the
following order:
1. The appeal is upheld with costs.
2. The order of the court a quo is set
aside and is replaced with the following:
“1. The First Respondent is
hereby interdicted and restrained –
1.1 for a period of two years
calculated from 6 February 2013 ("the termination date") up
to and including 5 February
2015 ("the restraint period")
whether as proprietor, principal, member, agent, partner,
representative, shareholder,
director, manager, employee, consultant,
advisor, financier, administrator and/or any other like capacity,
whether for reward or
not, and whether alone or jointly, from being
directly or indirectly associated and/or concerned with, interested
and/or engaged
in and/or interest himself in any entity, including
but not limited to the second respondent, which carries on any and
all activities
which are the same as, similar to or directly or
indirectly competitive with the business of scrap metal dealers
(whether ferrous
scrap metal and/or non-ferrous scrap metal and/or
re-rollable and/or re-usable steel products) which involves –
1.1.1 the ongoing purchase of ferrous
and non-ferrous scrap metal from the public in general including
demolition and dismantling
contractors, any generators of scrap metal
and the industry as a whole;
1.1.2 the processing and sale thereof
to consumers of those products either as raw material or as a
re-usable item;
1.1.3 as haulers and/or plastic
recyclers and/or paper recyclers and/or cardboard recyclers and/or
glass recyclers and/or rubber
recyclers which involves –
1.1.3.1 the ongoing purchase of plastic
and/or paper and/or cardboard and/or glass and/or rubber from the
public in general and
the industry as a whole; and
1.1.3.2 the processing and sale thereof
to consumers of these products either as a raw material or a
re-usable item;
1.1.3.3 the transportation of scrap
metal and/or paper and/or plastic and/or cardboard and/or rubber
and/or glass;
1.1.3.4 demolition work that generates
scrap metal;
1.1.3.5 diamond mining, beneficiation
and marketing; and
1.1.3.6 primary steel activities,
("prescribed activities"),
and/or any other activities of the applicant as at the termination
date (collectively "competitive
activities") anywhere in
South Africa and/or Botswana ("prescribed area");
1.2 during the restraint period,
directly or indirectly, whether as proprietor, partner, director,
shareholder, employee, consultant,
contractor, financier, agent,
representative, assistant, trustee or beneficiary of a trust or
otherwise in any part of the prescribed
area and whether for reward
or not, and/or alone or jointly, from –
1.2.1 soliciting orders from prescribed
customers ("prescribed customers") as defined annexure "A"
hereto for
the prescribed goods ("prescribed goods") as
defined annexure "A" hereto and/or the prescribed services
("prescribed
services") as defined annexure "A"
hereto; and/or
1.2.2 canvassing business in respect of
the prescribed goods and/or prescribed services from prescribed
customers; and/or
1.2.3 selling or otherwise supplying
any prescribed goods to any prescribed customer; and/or
1.2.4 rendering any prescribed services
to any prescribed customer; and/or
1.2.5 purchasing any prescribed goods
from any prescribed supplier (as set out annexure "A"
hereto) or accepting the rendering
of any prescribed services from
any prescribed supplier; and/or
1.2.6 soliciting orders from prescribed
suppliers for the rendering of prescribed services or the supply of
prescribed goods; and/or
1.2.7 soliciting appointment as a
distributor, licensee, agent or representative of any prescribed
supplier in respect of the prescribed
goods and/or the prescribed
services;
1.3 during the restraint period –
1.3.1 either for himself or as agent of
anyone else, from persuading, inducing, soliciting, encouraging or
procuring any employee
of the applicant to –
1.3.1.1 become employed by or
interested in any manner whatever in any entity, directly or
indirectly in competition with the business
carried on by the
applicant; or
1.3.1.2 terminate his employment with
the applicant;
1.3.2 from furnishing any information
or advice to any employee then employed by the applicant or to any
prospective employer of
such employee or use any other means which
are directly or indirectly designed, or in the ordinary course of
events, calculated
to result in any such employee terminating his or
her employment by the applicant or becoming employed by, or directly
or indirectly
interested in or associated with, any other entity;
1.4 from using or directly or
indirectly divulging or disclosing to any third party any of the
applicant's trade secrets and/or
confidential information, which
includes but is not limited to –
1.4.1 recycling know-how, processes and
techniques;
1.4.2 distribution, know-how, processes
and techniques;
1.4.3 information relating to strategy,
being information as to new business, cessation of business, focus of
business, client retention,
marketing approach, investment strategy,
the applicant's group strategy, pricing of services, information
technology, shareholding,
staffing of the business and remuneration
of employees (including the structuring of remuneration);
1.4.4 information relating to financial
performance, being information as set out in management accounts,
financial projections
and financial statements, specifically
including (without limitation) information as to the profitability
(or otherwise of the
applicant), its margins, cash flows and all
other issues relating to the income statements, balance sheets, cash
flow statements
and other financial reports;
1.4.5 information relating to
involvement in tenders, being information as to which tenders the
applicant is or will be participating
in, all information contained
in tender submissions, the applicant's marketing approach to any
tender and whether the tender was
awarded to the applicant or not and
the grounds therefor;
1.4.6 information relating to operating
activities, being all information relating to administrative systems,
information technology,
service level agreements between the
applicant and any service provider, day to day operating performance,
information relating
to staffing, problems experienced in relation to
individual staff members or on the whole, remuneration, dismissals,
appointments,
disciplinary problems, staff strategy and issues
relating to diversity and employment equity;
1.4.7 information relating to client
management, being all information relating to former, current and/or
targeted clients, any
problems relating to them, their profitability
(or otherwise), the marketing approach taken in respect of them and
strategies for
dealing with competitors; and
1.4.8 technical and business know-how
and trade secrets in general.
2 The Second Respondent is hereby
interdicted and restrained from being party to the First Respondent
acting in the manner set out
in paragraph 1, inclusive of paragraphs
1.1 to 1.4.8 above.
3 The First Respondent is to pay the
costs of the application AND that the aforesaid costs are to include,
inter alia, the costs
occasioned by the employment of two counsel.”
M L MAILULA
JUDGE OF THE HIGH COURT OF SOUTH
AFRICA
GAUTENG LOCAL DIVISION, JOHANNESBURG
B MASHILE
JUDGE OF THE HIGH COURT OF SOUTH
AFRICA
GAUTENG LOCAL DIVISION, JOHANNESBURG
M ZULU
ACTING JUDGE OF THE HIGH COURT OF
SOUTH AFRICA
GAUTENG LOCAL DIVISION, JOHANNESBURG
Date of Hearing: 08 October 2014
Date of Judgment: 30 January 2015
Counsel for the Appellant: Advocate
Subel
Instructed by: Werksmans Attorneys
Tel: 011 – 535 8283
Counsel for the Respondents:
Advocate van Blerk
Instructed by: Brian Kahn
Incorporated
Tel: 011 – 577 5600
ANNEXURE A
DEFINITIONS
1. “prescribed customer”
means any person -
1.1 who is or was a customer of the
applicant in connection with the competitive activities, as at
termination date;
1.2 who is or was a prospective
customer of the applicant in connection with the competitive
activities, at the termination date
whom the employee or the
applicant had approached to do business with the applicant within the
period of one year preceding the
termination date;
1.3 who purchased prescribed goods from
the applicant within the period of one year preceding the termination
date;
1.4 to whom prescribed services were
rendered by the applicant within the period of one year preceding the
termination date.
2. “prescribed goods” means
any and all goods which are dealt in or by the applicant in the
ordinary course of business
and in connection with the competitive
activities, as at the termination date.
3. “prescribed services”
means any and all services rendered by the applicant in the ordinary
course of business and
in connection with the competitive activities,
as at the termination date.
4. “prescribed supplier”
means any person –
4.1 who is or was a supplier of
prescribed goods and /or prescribed services to the applicant as at
the termination date;
4.2 who is or was a prospective
supplier of prescribed goods and/or prescribed services to the
applicant at the termination date
which the employee or the applicant
had approached to do business with the applicant within a period of
one year preceding the
termination date; or
4.3 who supplied prescribed goods
and/or prescribed services to the applicant within the period of one
year preceding the termination
date.