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[2016] ZAGPJHC 375
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Fletcher and Another v Zeag SA (Pty) Limited (A5028/2015) [2016] ZAGPJHC 375 (24 June 2016)
IN
THE HIGH COURT OF SOUTH AFRICA
GAUTENG
LOCAL DIVISION, JOHANNESBURG
Case
No: A5028/2015
In
the matter between:
TREVOR
FLETCHER
First
Appellant
SKIDATA
SOUTH AFRICA (PTY)
LIMITED
Second
Appellant
and
ZEAG
SA (PTY)
LIMITED
Respondent
Case
Summary: Appeal – Generally – Power of court of
appeal in terms of
s 16(2)(a)
of the
Superior Courts Act 10 of 2013
- Appeal to be determined only if judgment or order of court of
appeal will have real practical result or effect –
Appeal
dismissed.
JUDGMENT
MEYER,
J (SATCHWELL and MAKUME JJ concurring)
[1]
This is an appeal against an order of the Gauteng Local Division of
the High Court (Mayat J) on 5 December 2014, enforcing a
restraint of
trade agreement concluded between the first appellant, Mr Trevor
Fletcher, and the respondent, ZEAG SA (Pty) Limited
(ZEAG), by
interdicting Mr Fletcher from being employed by the second appellant,
SKIDATA South Africa (Pty) Limited (SKIDATA),
until 1 October 2015,
and interdicting him from competing unlawfully with ZEAG (using its
confidential information). The
appeal is with the leave of the
Supreme Court of Appeal.
[2]
ZEAG is a technology-based company. It has been operating in
South Africa for more than 20 years. Its business includes
the
assembly, installation and maintenance of electronic parking and
traffic control systems. It offers specialised equipment,
machinery, software and services to the revenue-generating parking
market. Its customer base is comprised mostly of property
owners and developers, property funds, government departments,
airports and professionals, such as architects and quantity
surveyors.
It is common cause that ZEAG’s business is
within a specialised and highly competitive market in which a limited
number of
competitors fiercely compete for market share. ZEAG
and SKIDATA are direct competitors in that market.
[3]
Mr Fletcher was employed by ZEAG as its chief sales and marketing
officer from 1 March 2008 until 30 September 2014. He
and ZEAG
concluded a restraint of trade agreement on 5 March 2008 (the
restraint agreement). Having left ZEAG’s employment
on 30
September 2014, he immediately took up employment with SKIDATA, which
act, so ZEAG contends, constituted a breach of the
restraint
agreement.
[4]
ZEAG, accordingly, launched the present application as an urgent one
on 16 September 2014. In striking the matter from
the urgent
motion court roll on 30 September 2014, Sutherland J found the
urgency to have been self-created. The application
was
thereafter heard in the ordinary opposed motion court by Mayat J on 5
December 2014. She granted the following order:
‘
1. Interdicting and restraining
the First Respondent until 1 October 2015 from being interested in or
engaged by the Second Respondent,
directly or indirectly, anywhere in
the Republic of South Africa in any capacity (including but not
limited to advisor, agent,
consultant, independent contractor,
director, employee, financier, manager, member of a close
corporation, member of a voluntary
association, partner, proprietor,
shareholder or trustee).
2. Interdicting and restraining the
First Respondent, for his own benefit or the benefit of a third
party, from utilising or directly
or indirectly disclosing or making
available or deriving any profit from any of the Applicant’s
intellectual property, trade
secrets or confidential information.
3. The First and Second Respondents
are directed to pay Applicant’s costs, jointly and severally,
the one paying the other
to be absolved, including the costs of two
counsel.’
[5]
The further procedural background to this appeal is also relevant.
Mr Fletcher and SKIDATA filed an application for leave
to appeal on
24 December 2014. Due to the absence of Mayat J from this
division during the first term of 2015, the application
for leave to
appeal was heard by Boruchowitz J on 23 March 2015, which was within
days after the transcribed judgment had become
available. The
application for leave to appeal was dismissed with costs, including
those of two counsel. Mr Fletcher
and SKIDATA then lodged an
application for leave to appeal with the registrar of the Supreme
Court of Appeal on 7 April 2015.
ZEAG’s affidavit in
answer to the application for leave to appeal was lodged on 10 April
2015 and the replying affidavits
of Mr Fletcher and of SKIDATA on 24
April 2015. On 22 May 2015, the Supreme Court of Appeal (Ponnan
and Dambuza JJA) granted
Mr Fletcher and SKIDATA leave to appeal to
the full court of this division.
[6]
In terms of s 17(2)(f) of the Superior Courts Act 10 of 2013 (the
Act), which provides ‘that the President of the Supreme
Court
of Appeal may in exceptional circumstances, whether of his or her own
accord or on application filed within one month of
the decision,
refer the decision to the court for reconsideration and, if
necessary, variation’, ZEAG applied to the President
of the
Supreme Court of Appeal for a referral of the decision of Ponnan and
Dambuza JJA for reconsideration and variation.
The answering
affidavit of Mr Fletcher and of SKIDATA was lodged with the registrar
of the Supreme Court of Appeal on 19 May 2015
and ZEAG’s reply
on 2 July 2015. Mpati P dismissed the application for
reconsideration and variation with costs on
16 July 2015 on the basis
that no exceptional circumstances have been shown to exist for such a
referral. The notice of appeal,
record of the proceedings and
the parties’ respective heads of argument were thereafter filed
and the appeal was allocated
for hearing before us on 8 June 2015.
[7]
ZEAG contends that no practical effect or result can any longer be
achieved in this case and that the appeal should therefore
be
dismissed in terms of subsection 16(2)(a) of the Act, which provides
as follows:
‘
(2)(a)(i) When at the hearing
of an appeal the issues are of such a nature that the decision sought
will have no practical effect
or result, the appeal may be dismissed
on this ground alone.
(ii) Save under exceptional
circumstances, the question whether the decision would have no
practical effect or result is to be determined
without reference to
any consideration of costs.’
Subsections
16(2)(a)(i) and (ii) are similar in wording to subsections 21A(1) and
(3) of the former repealed Supreme Court Act 59
of 1959.
[8]
It is a fundamental principle, spelt out in many cases, that courts
will not make determinations that will have no practical
effect.
An appeal is to be determined only if the judgment or order of the
court of appeal will have a real practical result
or effect. (See
Premier, Provinsie Mpumalanga v Groblersdalse Stadsraad
1998
(2) SA 1136
(SCA), at 1143A-B;
Western Cape Education
Department v George
1998 (3) SA 77
(SCA), at 84G;
Rand
Water Board v Rotek Industries (Proprietary) Limited
2003 (4) SA
58
(SCA), para 26;
Radio Pretoria v Chairman, Independent
Communications Authority of South Africa
2005 (1) SA 47
(SCA),
para 45.) The object of subsection 16(2)(a) is to alleviate the
heavy workload of courts of appeal. (See
Groblersdalse
Stadsraad
(supra), at 1143A-C.)
[9]
Mr Fletcher, in terms of the order of the court
a quo
, was
interdicted from being employed by SKIDATA for a period of one year
from 1 October 2014 until 1 October 2015. The order
was never
put into effect due to the applications for leave to appeal, first
unsuccessful to this court and then successfully to
the Supreme Court
of Appeal. The restraint period has now terminated.
[10]
In resisting the dismissal of the appeal on the ground that the order
sought will have no practical effect or result, Mr Fletcher
and
SKIDATA argue that ZEAG’s mootness argument was implicitly
rejected by two Supreme Court of Appeal justices (Ponnan and
Dambuza
JJA), who granted them special leave to appeal, and it was rejected
by the President of the Supreme Court of Appeal, who
rejected ZEAG’s
application for a referral of the decision granting them leave to
appeal for reconsideration and variation.
I disagree.
[11]
Subsection 17(1) of the Act provides that leave to appeal may only be
given where the judge or judges concerned are of the
opinion
inter
alia
that the appeal would have a reasonable prospect of success
and the decision sought on appeal does not fall within the ambit of
subsection 16(2)(a). The decision sought on appeal obviously
did not fall within the ambit of subsection 16(2)(a), either
when
leave to appeal was granted on 22 May 2015 or when the application
for reconsideration and variation was dismissed on 16 July
2015.
It only became moot on 1 October 2015. It was open to Mr
Fletcher and SKIDATA to approach the Deputy Judge President
of this
division for a preferential date for the hearing of the appeal in
order to have the appeal finalised before the decision
sought on
appeal had become without practical effect or result. They did
not avail themselves of the opportunity.
[12]
Mr Fletcher and SKIDATA argue that the court
a quo’s
judgment (if not reversed) may have future repercussions
regarding Mr Fletcher’s ‘status’. They
complain
about certain findings made by the court
a quo
in
granting the relief to ZEAG. But appeals do not lie against the
reasons for judgment; only against the substantive order
of a lower
court. (See
Atholl Development v The Valuation Appeal
Board for the City of Johannesburg
[2015] ZASCA 55
(30 March
2015).)
[13]
Mr Fletcher and SKIDATA found authority for their contention, that
this appeal should be considered on its merits, in
Centre for
Child Law v Governing Body of Hoërskool Fochville
2016 (2)
SA 121
(SCA), at 14, wherein it was held that-
‘
. . . absent an appeal its
judgment will in all probability continue to influence how litigants
approach such an enquiry, if the
High court erred in its approach, as
it appears that it indeed has, then future litigants are entitled to
the benefit of this court’s
view on the issue. I thus
consider that the determination of the appeal will have a ‘practical
effect or result’
within the meaning of that expression,
inasmuch as a discrete legal issue of public importance arises that
would affect matters
in the future and on which the adjudication of
this court is required.’
[14]
There are no circumstances in the present case that might conceivably
create a practical need for this court to express its
view on a
particular point of law – on a matter of wide public interest
or to resolve conflicting high court decisions.
No such need
exists here. The principle enunciated in
Governing Body of
Hoërskool Fochville
(supra), therefore, does not find
application in the present appeal. The court
a quo
did
not pronounce on the law, but approached the interpretation of the
restraint agreement in accordance with our modern day dual
approach
to the interpretation of instruments.
[15]
The judgment of the court
a
quo
is
not likely to ‘in all probability continue to influence how
litigants approach’ the question of interpretation.
In
the past decade there have been significant developments in the law
relating to the interpretation of instruments. (See
Belet
Cellular v MTN Service Provider
(936/2013)
[2014] ZASCA 181
(24 November 2014).) But the principles
of interpretation have now been established and agreements are to be
interpreted
in accordance with such established principles, which are
to be found in the leading judgments of the Supreme Court of Appeal
on
the topic, such as
Natal
Joint Municipal Pension Fund v Endumeni Municipality
2012
(4) SA 593
(SCA), para 18 and
Batho
Transport (Edms) Bpk v S Bothma & Seun Transport (Edms) Bpk
2014
(2) SA 494
(SCA), para 12. (See
Kilburn
v Turning Fork (Pty) Ltd
[2015]
ZASCA 53
(27 March 2015), para 10.)
[16]
Mr Fletcher and SKIDATA argue that this appeal should be considered
on its merits since the relief granted in terms of paragraph
2 of the
order of the court
a quo
- interdicting Mr Fletcher from
competing unlawfully with ZEAG (using its confidential information) -
is not dependent on the period
of the restraint agreement and the
order sought on appeal includes the setting aside of that part of the
order. There is
also no merit in this argument.
[17]
Competition which is unlawful, such as using a competitor’s
confidential information, is prohibited by the common law,
and
actionable. Mr Fletcher may legally not utilise ZEAG’s
confidential information irrespective of whether or not
paragraph 2
of the order of the court
a quo
is set aside on appeal.
That part of the order is in the widest of terms and meaningless.
Moreover, Mr Fletcher has
in any event tendered not to divulge any
confidential information of ZEAG. In substance that part of the
order thus embodies
Mr Fletcher’s own tender. A ground of
appeal raised in the notice of appeal is that in light of the tender
the court
a quo
erred in granting costs against Mr Fletcher
and SKIDATA in respect of that part of the order. I disagree.
ZEAG would
have remained substantially successful had that part of
the order not been granted.
[18]
In terms of subsection 16(2)(a)(ii), the question whether a judgment
or order by a court of appeal would have a practical effect
or result
may in exceptional circumstances be decided with reference to
considerations of costs. There are no such exceptional
circumstances that compel this court to exercise its discretion in
favour of entertaining the appeal on its merits.
[19]
In
Oudebaaskraal (Edms) Bpk en Andere v Jansen van Vuuren en
Andere
2001 (2) SA 806
(SCA), apart from a costs order, the
appeal became moot as a result of the repeal of the Water Act 54 of
1956 at a time when the
appeal was ripe for hearing. In response to
an argument that the appeal should be dismissed in terms of s 21A of
the now repealed
Supreme Court Act, the Supreme Court of Appeal held
as follows (at 812D):
'In die onderhawige geval het die saak
in die Waterhof etlike dae geduur. Die oorkonde beslaan 2 379
bladsye. Die appellante is
verteenwoordig deur 'n senior en 'n junior
advokaat, die respondente deur 'n prokureur en die Departement deur
'n senior advokaat.
Verskeie deskundiges is as getuies geroep. Die
verhoorkoste is dus 'n wesenlike faktor. Verder was die appèl
gereed vir
verhoor op die stadium wat die Waterwet herroep is. Ten
minste nege kopieë van die oorkonde, bestaande uit 35 volumes
elk,
moes voorberei word. Hoofde van argument was ook reeds
geliasseer.
Die voormelde oorwegings stel na my
mening buitengewone omstandighede soos bedoel in art 21A(3) daar.
Ingevolge die artikel kan
die vraag of die uitspraak of bevel van
hierdie Hof 'n praktiese uitwerking of gevolg sal hê dus bepaal
word met verwysing
na oorweging van koste. Op dié basis sal
die uitspraak van hierdie Hof, indien die appèl sou slaag, wel
'n praktiese
uitwerking of gevolg hê en is hierdie nie 'n geval
waar die appèl ingevolge die artikel van die hand gewys
behoort
te word nie.'
[20]
In dismissing an appeal in terms of s 21A of the now repealed Supreme
Court Act, the Supreme Court of Appeal in
Radio Pretoria v
Chairman, Independent Communications Authority of South Africa
2005 (1) SA 47
(SCA), paras 42-43, distinguished the circumstances in
Oudebaaskraal
. In this regard Navsa JA held thus:
‘
[42] . . . We were referred by
counsel for Radio Pretoria to the judgment in
Oudebaaskraal
(Edms) Bpk en Andere v Jansen van Vuuren en Andere
2001
(2) SA 806
(SCA) as support for his submission that, in the
circumstances of the present appeal, Radio Pretoria was entitled to
rely on s
21A(3). In terms of this subsection, the question whether a
judgment or order by a court of appeal would have a practical effect
or result may in
exceptional
circumstances be decided
with reference to considerations of costs. It was submitted on
behalf of Radio Pretoria that the
circumstances that prompted the
present appeal were, as in the
Oudebaaskraal
case, exceptional.
[43] I disagree. The
Oudebaaskraal
case is distinguishable. . . . In the present matter the
appeal is against a judgment in motion proceedings and the
appeal
record consists of eight volumes. The
Oudebaaskraal
case and
the present appeal are not comparable at all.’
[21]
The present case is comparable to
Radio Pretoria
and
Oudebaaskraal
is distinguishable. The appeal in this
instance too is against a judgment in motion proceedings. The
notice of motion
and affidavits consist of a few volumes.
Furthermore, ZEAG agreed that should the appeal be dismissed in terms
of subsection
16(2)(a), the related costs order should be set aside
and substituted with an order that each party pays its own costs.
(See
Nordengen v Vanguard Rigging (Pty) Ltd
2014 JDR 1371
(GJ), paras 6.)
[22]
I am in all the circumstances of the view that there is no longer (to
borrow the words of Moseneke DCJ in
Director-General Department of
Home Affairs v Mukhamadiva
2013 JDR 2860 (CC), para 45) any ‘live
dispute that cries out for resolution’ and no order of the
court
a quo
to upset on appeal. No practical effect or
result can be achieved by an order of this court, not on the parties
nor the public
at large. This is, therefore, a proper
case in which to order a dismissal of the appeal in terms of
subsection 16(2)(a).
[23]
Finally, the matter of costs of the appeal. Prior to 1 October
2015, the pending applications for leave to appeal and
the order
granting Mr Fletcher and SKIDATA leave to appeal suspended the
operation and execution of the order of the court
a quo
, and
their persistence in the appeal until that stage is understandable.
But by 1 October 2015 the period contemplated in
the order of the
court
a quo
had expired and the relief sought in the notice of
motion had been rendered redundant. By then it must have been
abundantly
clear that no purpose would be served by persisting in
this appeal.
[24]
ZEAG was brought to this full court of appeal as an unwilling party.
It objected and raised the mootness point
inter alia
in
correspondence addressed to the attorneys of Mr Fletcher and of
ZEAG. No cause exists for departing from the normal rule
that
costs follow the result, at least as far as the costs of the appeal
incurred during the post 1 October 2015 period are concerned.
(See
Coin Security Group (Pty) Ltd v SA National Union for
Security officers and others
[2000] ZASCA 137
;
2001 (2) SA 872
(SCA), para 12;
Kenmont School v D M
2013 JDR 1365 (SCA), para 14;
Atholl
Development v The Valuation Appeal Board for the City of Johannesburg
[2015] ZASCA 55
(30 March 2015).) It is not in issue that
it was a wise and reasonable precaution for each party to engage two
counsel.
[25]
In the result the following order is made:
(a) The appeal is
dismissed.
(b) Paragraph 3 of the
order of the court
a quo
is set aside and replaced with the
following order:
‘
3. Each party is
to pay its own costs of the application.’
(c) The appellants are to
pay all costs in relation to the appeal incurred after 1 October
2015, jointly and severally, the one
paying the other to be absolved,
including the costs of two counsel.
SATCHWELL,
J
MEYER,
J
MAKUME,
J
Date
heard: 8 June 2016
Date
of judgment: 24 June 2016
Counsel
for appellants: Andrew Kemack SC (assisted by T Ossin)
Instructed
by: Wertschrӧder Inc., Darrenwood, Johannesburg
Counsel
for respondent: I Miltz SC (assisted by WH Pocock)
Instructed
by: Fluxman’s Inc., Rosebank, Johannesburg