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2021
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[2021] ZAGPJHC 424
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Ivette Du Toit Eiendomme (Pty) Ltd t/a Du Toit Real Estates v Swartz and Another (20442/2021) [2021] ZAGPJHC 424 (21 May 2021)
REPUBLIC
OF SOUTH AFRICA
IN
THE HIGH COURT OF SOUTH AFRICA
GAUTENG
LOCAL DIVISION, JOHANNESBURG
REPORTABLE:
YES / NO
OF
INTEREST TO OTHER JUDGES: YES/NO
REVISED
21/5/2021
CASE
NUMBER: 20442/2021
In
the matter between:
IVETTE
DU TOIT EIENDOMME (PTY) LTD t/a DU TOIT REAL ESTATES
Applicant
and
LEONIE
SWARTZ
First Respondent
TANYA
BRAND T/A BRAND &
ASSOCIATES
Second Respondent
JUDGMENT
WINDELL
J
INTRODUCTION
[1]
This is an urgent application for an interdict enforcing a written
restraint of trade agreement entered into between the applicant,
as
employer, and the first respondent, as employee. No relief is sought
against the second respondent. I am satisfied that the
matter is
urgent.
[2]
The applicant conducts business as an estate agency. The applicant's
principal place of business is situated in Nigel and it
conducts its
business primarily on the East Rand in the districts of Nigel,
Heidelberg, Balfour, Grootvlei, Dunnottar, Sharon Park
and Springs.
The first respondent was employed by the applicant as an estate agent
from 1 June 2020 until the date of her resignation
on 29 March 2021.
[3]
The applicant's business (ordinarily undertaken by persons employed
as estate agents) concerns the sourcing and acquisition
of sellers
and/or persons interested in selling immovable property, whether
residential, commercial or agricultural, as well as
sourcing and/or
acquiring prospective purchasers for such properties. This involves
constant networking on a personal basis with
clients on both sides of
the spectrum in order to establish their specific needs with the
ultimate goal of concluding a successful
sale between a seller and a
purchaser. The applicant's primary source of income is commission
which is shared with the estate agent
responsible for the deal.
[4]
The first respondent's primary duties and responsibilities was to
source and/or acquire prospective sellers and purchasers of
properties for properties and to strive to conclude a successful sale
between a seller and a purchaser as a result of which the
applicant
would earn a commission to be shared with the first respondent.
Moreover, it was the first respondent's responsibility
to assist in
managing the relationship between a prospective seller and a
prospective purchaser throughout.
[5]
It is common cause that the first respondent signed a written
employment agreement that contained a restraint clause. In the
agreement the first respondent acknowledged that she agrees that the
only effective and reasonable manner in which the applicant
may
protect its rights and interests with regard to the activities of its
business, is by imposing a restriction on the first respondent
upon
the termination of her employment. In terms of the agreement the
first respondent bound herself towards the applicant not
to have “
any
interest in, nor to be involved in any capacity, whether alone or
together with someone else……. with any person
or legal
person who is directly or indirectly involved in, or has a share in,
or an interest in a competing activity within the
district of Nigel,
Heidelberg, Balfour, Grootvlei, Dunnottar, Sharon Park and Springs”
for a period of six months after termination of her employment with
the applicant.
[6]
The applicant alleges that the restraint of trade and confidentiality
clause in the employment agreement are reasonable and
necessary for
the legitimate protection of its confidential information which
includes, but not limited to, the applicant’s
customer
connections. The applicant alleges that the first respondent had
breached the restraint undertakings and that despite
a demand from
the applicant’s attorneys, Messrs Kruger & Okes Attorneys
("Okes") to desist, the first respondent
refused to provide
the necessary undertaking and persisted that she is not bound to any
restraint. This has left the applicant
with no option but to protect
its rights by enforcing the undertakings given by the respondent in
terms of her employment contract.
[7]
The first respondent alleges that the applicant has failed to
establish the requirements for an interdict and specifically disputes
that she was aware of the restraint when she signed the contract
and/or that she was in breach thereof. In addition, the first
respondent contends that the restraint of trade is unreasonable and
unenforceable.
[8]
The application is one for final relief. It is trite that, being
motion proceedings, disputes of fact are to be dealt with in
accordance with the principles laid down in
Plascon
Evans Paints Ltd v Van Riebeeck Paints Ltd.
[1]
A final interdict may therefore only be granted if the facts stated
by the respondents’ answering affidavits together with
the
admitted facts in the applicant’s founding affidavit justify
such an order.
[9]
In
Basson
v Chilwane,
[2]
the
Appellate Division (as it then was) stated that the
incidence
of the
onus
in
a case concerning the enforceability of a contractual provision in
restraint of trade does not entail any greater or more
significant
consequences than in any other civil case in general. Botha JA
stated that “
the
effect of it in practical terms is this: the covenantee seeking to
enforce the restraint need do no more than to invoke the
provisions
of the contract and prove the breach; the covenantor seeking to avert
enforcement is required to prove on a preponderance
of probability
that in all the circumstances of the particular case it will be
unreasonable to enforce the restraint; if the Court
is unable to
make up its mind on the point, the restraint will be enforced. The
covenantor is burdened with the onus because
public policy
requires that people should be bound by their contractual
undertakings. The covenantor is not so bound, however,
if the
restraint is unreasonable, because public policy discountenances
unreasonable restrictions on people's freedom of trade.”
The
court
further held that to determine the reasonableness or otherwise of a
restraint of trade provision, the following questions
should be
asked:
a.
Is there an interest of the one party, which is deserving of
protection at the
termination of the agreement?
b.
Is such interest being prejudiced by the other party?
c.
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?
d.
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?
THE
CONTRACT OF EMPLOYMENT
[10]
The first respondent admits that she signed and concluded a contract
of employment with the applicant. She further admits that
the
applicant, Ms Ivette Du Toit, explained the terms of the contract to
hear. She, however, states that she did not bother to
read the actual
terms of the contract and that she was unaware of the restraint
clause.
[11]
The first respondent was previously employed by Mint Properties as an
intern estate agent for a period of four months. There
was an
agreement with her previous employer that she could retain 30
properties that she had listed during her employment with
Mint
Properties and move them over to the applicant. The first respondent
contends that the applicant was aware of this fact when
she commenced
her employment with the applicant. She stated that the way the
applicant explained the contract to her was that in
the event she
resigned, she will be allowed to retain her properties she worked on
as per her previous employer's agreement. She
stated that “
being
an intern estate agent with limited knowledge, I assumed this to be
standard practice and a practice readily accepted by estate
agent
agencies that when a person resigns as an employee; they could retain
the properties worked on during their employment.”
[12]
The applicant denies that she explained to the first respondent that,
upon her resignation from the applicant, she would be
allowed to
retain the properties she worked on as per her previous employer's
agreement. The applicant states that the first respondent
expressed
no concerns with regard to the terms and conditions of her employment
contract or the restraint undertakings and instead
expressed the view
of wanting to spend the rest of her working life employed by the
applicant.
[13]
The first respondent’s version on whether she was aware of the
restraint or not, is incongruent. Firstly, on 15 April
2021, two
weeks after the first respondent’s resignation from the
applicant, the applicant received an email from a certain
Mr Charl
Cronje (“Cronje”). Cronje informed the applicant that the
first respondent had contacted him and his wife
during the middle of
March (2021) about a property which they had viewed on the Property
24 platform, but which was listed by another
estate agent, namely,
Harcourts Property. The first respondent arranged to take Cronje and
his wife to view the property whereupon
they filled in various
documentation after having expressed interest in purchasing the
property, which they then returned to the
first respondent. The first
respondent was at this stage still employed by the applicant. On 29
March 2021, the first respondent
sent Cronje a WhatsApp message
informing him that she had left the applicant and that she was with a
new estate agency. The first
respondent further informed Cronje that
his loan application had been approved and that her new principal
would assist with the
further steps. The first respondent further
informed him that if he is contacted by “Anelda” of
BetterBond for information
and documentation, he should not provide
her with anything and to inform Anelda that they were no longer
interested in the deal.
BetterBond is a business which conducts
business as bond originators who assist prospective purchasers to
secure the necessary
financing against registration of a mortgage
bond over the properly sought to be purchased. The applicant and in
particular the
first respondent dealt with BetterBond and in
particular Anelda during her tenure with the applicant in assisting
prospective purchasers
to secure financing. One of the WhatsApp
messages that Cronje shared with the applicant that was received from
the first respondent,
shortly after her resignation from the
applicant, loosely translated, read as follows:
“
Just
want to inform you that I will no longer be with Du Toit Properties.
I have decided for personal reasons to join another agency.
We will
then do the offer to purchase through them. I have already confirmed
with my new principal and discussed you with her.
So you will be in
our safe hands.
Then I just want
to ask that you and Monique for now say nothing thereabout.
I must still submit my resignation to my previous boss. Do not wish
to elaborate too much, but I think I can offer and give my
clients
something better as at the moment with Du Toit Properties. If Anelda
contacts you with feedback you can just say that I
will complete the
offer and send as soon as it is done. Hope you understand.”
(Emphasis added)
[14]
Cronje thereafter became uncomfortable with the matter and enquired
from the first respondent whether there were other properties
available which they could view. A few days later the first
respondent notified Cronje that there was a property that she could
show to them on the following Friday. Cronje's misgiving about the
situation persisted and they thereafter decided to approach
a
different estate agent whereupon they put in an offer to purchase a
different property.
[15]
If, as the first respondent alleges, she believes that there was
nothing wrong with her conduct, then why would she specifically
ask
Cronje and his wife not to say anything about the dealings with them?
The first respondent's attempts to keep her dealings
in this regard a
secret demonstrates not only that she was aware that her conduct was
dishonest (and by virtue of her restraint
of trade undertaking) but
also provides an indication that she was aware of the restraint.
[16]
Secondly, the first respondent's denial that she was aware of the
restraint provisions in her employment contract and that
she only
became aware thereof upon receipt of the applicant's attorney's
letter of demand for an undertaking to desist from her
conduct on 16
April 2021 is not supported by the written response to Okes. In this
response, no mention was made of the respondent's
lack of existence
of the restraint. If the first respondent was not aware of the
restraint it would have been her first response
and it would have
been included in the letter. A further incongruence in the first
respondent's denial that she was aware of her
restraint undertakings,
is found in her assertion in her answering affidavit that
'the
restraint hung around her neck like an albatross'.
[17]
Thirdly, the first respondent was fully aware that without the
permission of her erstwhile employer, any clients would remain
as
clients of her erstwhile employer. It is for that reason she first
sought the permission from her previous employer, Mint Properties,
before she moved her clients to the applicant. Clients who either
moved to the applicant together with the respondent at the start
of
her employment or who were sourced by her during her employment with
the applicant, remain the applicant's clients. There is
no basis
either in law or fact entitling the respondent to claim such clients
as her clients pursuant to the termination of her
employment with the
applicant.
[18]
In any event, the first respondent’s defence, namely, that she
signed the agreement, but did not read its terms and is
therefore
unaware of the restraint, is bad in law. In
George
v Fairmed (Pty) Ltd
[3]
,
the court held that if a person signed a document which contained the
terms of her contract and chooses not to read those terms,
then she
did it with her eyes wide open and cannot plead ignorance of that
which she signed.
PROTECTABLE
INTEREST
[19]
The applicant proved that there was a valid agreement containing the
restraint clause. The question is whether there is an
interest which must be protected at the
termination of the agreement.
[20]
In
Bridgestone
Firestone Maxiprest Ltd v Taylor
[4]
,
it
was accepted that:
“
[o]nce
it is established that there is an agreement, the contract must be
enforced, unless the party sought to be restrained shows
that the
party seeking to enforce the restraint has no protectable interest,
which protectable interest may take the form of trade
secrets or
confidential information, or goodwill or trade connections, i.e. he
must discharge onus of proving that at the time
the enforcement is
sought, the restraint is directed solely to the restriction of first
respondent competition with the ex-employer
(the covenantee); and
that the restraint is not at that time reasonably necessary for the
legitimate protection of the covenantee’s
protectable
interests, being his goodwill in the form of trade connections and
his trade secrets“.
[21]
One of the core mechanisms utilised by the applicant is to compile a
list of properties up for sale and to market such properties
by
posting a list on a website known as Property 24 where prospective
buyers and interested persons may view the properties that
are up for
sale. Property 24 describes itself on its website as South Africa's
number 1 property platform whose goal is to assist
people to find
homes through the provision of a second respondent- building and
marketing platform with the opportunity to connect
with home- buyers
and renters searching for property online. This includes various
search tools on their website for the use of
interested persons based
on one's particular needs and the availability of properties that
meet those needs. The first respondent
took up employment with the
applicant without any prior knowledge of the applicant's business
model or its confidential information
and customer connections. In
particular, the first respondent, who was previously employed as a
sales representative and as an
intern estate agent for a period of
four months, had a very limited amount of knowledge of the estate
agency industry. The applicant
alleges that the first respondent
acquired knowledge of each of these aspects while in the employ of
the applicant and was continuously
exposed to information regarding
the applicant's clients, including sellers and purchasers, and their
specific needs.
[22]
In
Alum-Phos
(Pty) Ltd v Spatz,
[5]
the court held that in order to qualify as confidential information,
such information must comply with the following three requirements:
(a)
It must involve and be capable of
application in trade or industry; that is it must be useful.
(b)
It
must not be public knowledge and public property, that is objectively
determined, it must be known only to a restricted number
of people or
to a closed circle of persons.
[6]
(c)
The
information objectively determined must be of economic value to the
person seeking to protect it.
[7]
[23]
It is common cause that the first respondent, whilst employed at the
applicant, was responsible for marketing and selling immovable
property by bringing willing sellers and/or landlords and able buyers
and/or tenants together. The first respondent was provided
with and
had access to confidential information of the applicant, including
property lists, details and portfolios of sellers and
buyers, as well
as seller and buyer lists. The property list includes the applicant's
subscription to the Property 24 platform
where the properties are
listed and advertised for sale and letting. In order to gain access
to the applicant's property listings
on the Property 24 platform, the
first respondent required the applicant's access codes thereto in
order to allow her to either
post new listings and to vary or delete
existing postings. The first respondent's access to, and knowledge of
this information
was vital in order for her to successfully carry out
her daily tasks. In order to conclude a successful transaction, the
first
respondent would apply her knowledge regarding the seller's
peculiar requirements not advertised on the listing such as, for
example,
the minimum price or rent which a seller is prepared to
accept and which is obviously lower than the listed price or rent.
Coupled
herewith is the first respondent's personal knowledge of the
applicant's peculiar requirements in regard to commission payable by
the seller and the minimum commission that the applicant is willing
to accept.
I
agree with the applicant that although this information is not static
and may be of a limited duration, it is compiled by the
applicant
over a period of time involving skill and knowledge of the real
estate industry and is intended only for the use of its
employees,
including the first respondent.
[24]
In
Oasis
Group Holdings (Pty) Ltd v Bray,
[8]
the
court recognized that trade connections which include customer
connections and information about business opportunities available
to
the employer and knowledge of the identity of a supplier as well as
customer lists and information thereabout, have enjoyed
consistent
recognition as a protectable interest in the context of restraint of
trade.
In
Rawlins
& Another v Caravan Truck (Pty) Ltd,
[9]
the Appellate Division (as it then was) held that:
"
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 the customer so that when he leaves the
employer's service he could easily induce the
customers to follow him
to a new business (Joubert: General Principles of
Law of Contract at 149).
Heydon, The Restraint of Trade Doctrine (1971) at 108, quoting an
American case says that the 'customer
contact' doctrine depends on
the notion that
'the
employee, by contact with the customer, gets the customer so strongly
attached to him that when the employee quits and joins
a rival he
automatically carries the customer with him in his pocket'.
[25]
In
Pam
Golding Properties (Pty) Ltd v
Neille,
[10]
the court held that it is sufficient for the applicant to show that
the customer contacts exist and that it can be exploited by
the
former employee. 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
would take up employment becomes apparent. A similar
view was adopted
in
Vumatel
(Pty) Ltd v Majra.
[11]
In
HE
Sergay Estate Agencies (Pty) Ltd v Romano
[12]
,
the court recognised
that
an estate agent can enjoy certain proprietary rights including the
retention of clients and customers which can be protected.
The court
in this matter held as follows:
"Moreover,
even if more than one estate agent is employed to sell a property,
knowledge of prospective purchasers is no doubt
of great importance.
An estate agent who knows the requirements of persons who are
potential buyers of property by reason of being
speculators or
investors in property enjoys an advantage or interest which is
entitled to protection".
[13]
[26]
The
protectable interest of customer connections does not automatically
come into being when the employee has built up a relationship
with
the customer, but rather where it is evident that the connection
between the former employee
and
the customer is such that the employee is able to exert influence
over the customer and persuade the latter to transfer its
business
elsewhere. In other words, a
protectable
interest in the form of customer connections does not come into being
by simply having contact with an employer’s
customers.
[14]
The
existence or otherwise of such relationships is a question of fact
and depends on the nature of the employees’ duties;
the
frequency and duration of the contact with customers; where such
contact takes place; what knowledge he or she gains of their
requirements and business; the general nature of their relationship;
how competitive the rival businesses are; and whether there
is
evidence that customers were lost after the employee left.
[27]
The applicant
alleges that it has a protectable interest in its confidential
information and customer connections which include
prospective and/or
existing sellers and purchasers.
The
question is whether the relationship between the respondent and the
applicant's clients (i.e., sellers and purchasers) was such
that she
could easily induce the clients to follow her to a new business.
[28]
The applicant explained that properties are often listed by other
estate agents each vying to sell the same property. This,
however,
does not detract from the advantages which one estate agent may have
over the other based on an estate agent such as the
applicant's
peculiar knowledge of client requirements and the concessions which
an estate agent is willing to make in order to
conclude a successful
transaction. It is in this regard that the first respondent is in a
position to exploit the applicant's client
list and to assist the
applicant's competitors to tailor their services in a manner that
will enable it to attract customers from
the applicant, where such
information is not freely available to third parties.
[29]
The first respondent does not dispute that she had access to the
applicant's information, including the applicant's access
codes to
its listings on Property24. She also does not dispute that in order
for her to conclude a successful transaction on behalf
of the
applicant she was required to apply her knowledge in regard to the
applicant's foresaid information and in particular that:
"(she)
would apply her knowledge regarding the seller's peculiar
requirements not advertised on the listing such as for example
the
minimum price of rent which a seller is prepared to accept and which
is obviously lower than the listed price for rent".
Coupled herewith is the first respondent's personal knowledge of the
applicant's peculiar requirements in regard to commission
payable by
the seller and the minimum commission that the applicant is willing
to accept which is obviously lower than that ordinarily
disclosed in
a contract or to a prospective purchaser.
Furthermore,
the first respondent does not dispute that the applicant's listing on
Property24 together with other estate agents
require a mandate from
the seller to market the property and that coupled with the foresaid
information the applicant is able to
gain an advantage over a
competitor in regard to the sale of a property. The first respondent
further admits that she has limited
knowledge concerning the estate
agent industry. It is with this limited knowledge that she was
exposed to the applicant's business
model and confidential
information, as well as customer connections in order to successfully
render services as an estate agent
for the applicant.
[30]
Despite
all of the foregoing,
the first respondent persists in her denial that she is not in a
position to assist the applicant's competitors
to tailor their
services in a manner that would enable her to attract the applicant's
clients. The first respondent, however, concedes
that she has the
ability to retain a relationship with the applicant's clients which
she attributes to her own capabilities. This
is evident from the
contents of the statements by three erstwhile clients of the
applicant attached to the first respondent's answering
affidavit
wherein the
deponents
explain their election to move their business from the applicant and
to follow the respondent as it were, to her new employment.
The
statements by the erstwhile clients irrefutably demonstrates not only
that the first respondent has filched the applicant's
clients, but
also that she is actively carrying on business as an estate agent in
competition with the applicant in breach of her
restraint
undertakings.
[31]
Taking into consideration the estate agent industry and the facts in
this matter, I am satisfied that the trade connections
and detailed
customer information, which belongs to the applicant and which is
used by the applicant in its business,
is
useful, of economic value and capable of application in the estate
agency industry and
constitutes
a protectable interest in regard to enforcement of a restraint
undertaking.
THE
BREACH
[32]
On 29 March 2021, the first respondent tendered her immediate
resignation from the applicant. The first respondent did not,
when
she resigned, divulge what her intentions were in regard to her
future employment or whether she intended taking up employment
with a
competitor or not pursuant to her resignation from the applicant. In
the circumstances, the period of the first respondent's
restraint
undertakings run for a period of six months from 1 April 2021 to 30
September 2021. The first respondent, however, informed
the
applicant, just prior to her resignation, that she had removed
approximately 98 of her listings from the Property 24 platform.
[33]
The applicant alleges that the first respondent also edited the
information of 98 of the applicant's Property 24 listings,
by
changing the listed prices (with the exception of one property which
remains listed at its original purchase price of R840 000.00),
to an
amount of R12 345.00; and changing the addresses of the listed
properties all to either "Hendrik Verwoerd Street"
or
"Somerset Road, Nigel"; and changing the owner or seller's
name to "aaaa aaaa". Moreover, so it is alleged,
the first
respondent has identified herself as the listing agent and has
amended the status of the listing to read as either "mandate
withdrawn", "mandate cancelled" thereby creating the
false impression that the applicant is no longer mandated to
sell the
property. The first respondent does not seriously dispute these
allegations, but submits
that
she deleted a number of properties from the applicant's listing on
Property24
'because
such listing
no longer
served any purpose'
.
It is noteworthy to note that this “editing” of the
applicant's listing occurred just prior to the respondent's
resignation
from the applicant.
The
first respondent, however, insists that the properties removed from
the applicant's listing on Property24 constitute
'her
own client base, all of which emanate from her employment with the
applicant'.
It is obvious that
the first respondent gained access to the platform by using the
applicant's personal information and applicant's
code and password to
which she was previously afforded access during her employment with
the applicant.
[34]
The first respondent denies that she breached the restraint and
contends that she has not entered into a contract of employment
with
the second respondent or with any other third party. The first
respondent, however, admits that she had approached the second
respondent and discussed “
eventually working with her
”.
[35]
The evidence that the first respondent breached the restraint is
overwhelming and mainly undisputed. Firstly, notwithstanding
the
alleged absence of a written contract of employment between the first
and second respondent, the first respondent's WhatsApp
messages to Mr
Cronje make it very clear that the first respondent and second
respondent have entered into an employment relationship.
Secondly,
the first respondent's conduct as described by Cronje constitutes a
breach of her restraint undertaking as well as her
undertaking in
regard to the protection of the applicant's confidential information.
She actively assisted with, and/or engaged
in the business of a
competitor of the applicant, namely, the second respondent, as a
sales representative and/or estate agent.
Thirdly, the first
respondent admitted that she has “
taken her listings with
her
”. No such permission was sought by the first respondent
from the applicant, nor was any such permission granted when the
first respondent resigned from the applicant. Moreover, the first
respondent has conceded her intention to render a professional
service as an estate agent to numerous clients whom she believed she
was entitled to take with her to her new employer or place
of
employment and more particularly to the second respondent whose place
of business is situated in Heidelberg.
[36]
The first respondent’s belief that she is entitled to take “
her
listings
” with her after
resignation from the applicant is misguided. The first respondent at
all times during her tenure with the
applicant acted as an agent on
behalf of the applicant, her principal. Accordingly, any clients
acquired and/or sourced by the
first respondent during her tenure
with the applicant are the applicant's clients.
The
first respondent was fully aware that without the permission of her
erstwhile employer, the said clients would remain the property
of her
erstwhile employer. It is because of this knowledge that she first
sought the approval from her erstwhile employer Mint
Properties, who
consented to her retaining the clients. She never sought the
permission of the applicant nor was she granted permission
to take
her supposed clients with her to her new employment.
[37]
In the matter of
Pam
Golding Properties (Pty) Ltd v Neille
supra, the court held that an admission by an employee that it was
bound by a restraint undertaking with his previous employer
and who
had admitted contacting customers of the previous employer whilst in
the employ of the new employer, constitutes an admission
of the
breach of the restraint and "(
that)
nothing came of it
”
is irrelevant.
[15]
[38]
It is insightful to note that despite the bald denials by the first
respondent regarding the breach of her restraint undertakings,
she
persists with her insistence that she is entitled to
'take her
clients'
with her from the applicant in pursuit of new
employment. This flies in the face of her denial that she is in
breach of her restraint
undertakings. The first respondent's
intention to exploit the applicant's trade connections in competition
with the applicant is
a clear breach of her restraint undertaking.
ENFORCEABILITY
OF RESTRAINT
[39]
It
is generally accepted that a restraint will be considered to be
unreasonable, and thus contrary to public policy, and therefore
unenforceable, if it does not protect some legally recognisable
interest of the employer, but merely seeks to exclude or eliminate
competition.
[16]
[40]
It is trite that the
first respondent bears the
onus
of demonstrating that enforcement of her restraint undertakings would
be unreasonable and therefore against public policy.
The first respondent alleges that the restraint of
trade unreasonably infringes on her constitutionally enshrined right
to pursue
the career of her choice and is far wider than is
reasonably necessary to protect any protectable interest that the
applicant might
have and offends public policy. She avers that she is
in the process of getting a divorce and that the applicant is
effectively
attempting to restrain her from earning an income to
maintain herself and her minor children. She also contended that any
customer
base wishing to follow her will do so out of their own free
will and due to the fact that they have no relationship with the
applicant.
The applicant disputes the allegation that the restraint
of trade unreasonably infringes the first respondent’s
constitutionally
enshrined right to pursue the career of her choice.
[41]
The first respondent on the one hand admits that she only worked for
four months as an intern estate agent with her previous
employer Mint
Properties and started work with the applicant with very limited
knowledge of the estate agency industry. On the
other hand, she
asserts that "
my whole working
career to date in South Africa involved the selling of properties”
and that she has not worked with any other products or service and
have not gained experience in any other field. The first respondent,
however, does not disclose the nature and extent of her previous
employment or a description of her qualifications and experience
in
the employment sector. The applicant alleges that the first
respondent previously worked as a sales agent for Tupperware and
as
an administrative clerk for a farmer and was also employed by an
attorney's firm in Nigel as a receptionist for a number of
years.
This is not disputed by the first respondent. In fact, in
contradiction to her earlier statement, the first respondent
stated
that she has spent her entire working life in sales, “
as
well as stints in various other places of employment such as a sales
agent for Tupperware and an administrative clerk for a farmer
and a
receptionist at an attorney's firm."
[42]
The first respondent
further contends that the relief sought by the applicant would have
an extremely prejudicial and detrimental
effect on her ability to
generate an income and earn a living for herself and her children,"
and that it
would be against public policy to restrain her for six months while
going through a divorce
".
The first respondent, however, fails to take this court into her
confidence by not disclosing any details regarding her
personal
circumstances and those of her children, or what or how a pending
divorce might impact on her personal circumstances.
It
is, however, noteworthy
that
pursuant to the first respondent’s resignation from the
applicant she (first) "
wanted
to take a bit of a break
"
thereby suggesting that she has no immediate intention of taking up
employment with the second respondent or even earning
an income just
yet. The contradiction in this regard is that if the respondent
wishes to take a break and is in no hurry of taking
up employment
with second respondent, then she is not too concerned or desperate to
earn an income at present. This is more so
in view thereof that the
first respondent voluntarily resigned from a gainfully employed
position with the applicant.
[43]
It is further not correct that the
first respondent is barred from working for any competitor of the
applicant (and regardless of
where the competitor may be located) for
a period of six months. The restraint is restricted to certain towns
and suburbs. The
first respondent is entitled to pursue any other
form of employment in regard to sales in any area and with any
company of her
choice. By virtue of the nature of an estate agency
business, the clients, whether sellers or purchasers, are of limited
duration,
hence the limited duration of the first respondent's
restraint undertaking of six months. The applicant conducts business
beyond
the borders of the area recorded in the restraint agreement
including the city of Pretoria. No restraint is sought against the
first respondent in regard thereto.
[44]
The first respondent
furthermore alleges that she had no choice in signing the contract of
employment and nor did she have any bargaining
power when signing her
contract of employment. The first respondent, however, has failed to
provide any detail or explanation regarding
the basis of these
allegation or what is meant thereby. It behoves repeating that the
first respondent also voluntarily resigned
from her previous employer
Mint Properties, and willingly took up employment with the applicant.
The same shortcomings apply in
regard to the first respondent's
assertion that her restraint undertakings are unduly oppressive.
Likewise, the first respondent
has failed to set out the grounds upon
which she contends that the restraint is
'far
wider than is reasonably necessary'.
[45]
The first respondent's assertion that the restraint infringes her
constitutional right "
to
pursue a career of her choice
"
is ill-conceived.
Section
22 of the Constitution
[17]
provides that:
"Every
citizen has the right to choose their trade, occupation or profession
freely.”
It is trite that a restraint of trade,
per
s
e,
does not offend the provisions of section 22 of the Constitution. In
the present instance the respondent is not denied the right
to pursue
a career of an estate agent, but is merely restricted to a few towns
and districts for a very limited period of time
from pursuing that
particular career; she is otherwise not restricted from generating
any other form of income whatsoever.
[46]
A court must make a value judgment with two principal policy
considerations in mind in determining the reasonableness of a
restraint. The first is that the public interest requires that
parties should comply with their contractual obligations, a notion
expressed by the
maxim pacta servanda sunt
. The second is that
all persons should in the interests of society be productive and be
permitted to engage in trade and commerce
or the professions. Both
considerations reflect not only common-law but also constitutional
values.
[47]
The first respondent has failed to demonstrate that her employment
contract, including the restraint undertakings are unduly
oppressive.
Accordingly, the first respondent has failed to acquit herself of the
onus of proving that the restraint undertaking
is unreasonable and
therefore unenforceable.
CONCLUSION
[48]
Despite having allegedly that she had not concluded a contract of
employment with the second respondent, it
is
clear from the WhatsApp messages and annexures attached to the first
respondent’s answering affidavit that she was able
to build up
and maintain a close relationship with clients who have
mandated the applicant to
either sell or let their properties and was able to do so during her
employment with the applicant.
It is
further clear that her resignation from the applicant had already
caused at least three other erstwhile clients of the applicant
to
sever ties with the applicant and instead to pursue the first
respondent with their business.
The
first respondent, therefore, has the prowess and skill to utilise the
relationship that she has built up with her clients, including
both
sellers and purchasers, to entice these clients to move their
business to a competitor.
[49]
The applicant has no alternative way of protecting itself and its
proprietary interests against the first respondent's breach
of her
restraint undertakings and unlawful exploitation of the applicant's
confidential information. In the circumstances of this
matter and the
industry in which the applicant competes and having regard to the
nature of the first respondent's duties, the applicant’s
damages would be impossible to quantify. Quite apart from the
difficulties in quantifying and proving such damages, the applicant
would have to embroil its clients and in such an enquiry, something
which is counter-productive. Moreover, the first respondent
would be
entitled to defend any damages claimed to secure from the applicant
financial information pertaining to its business,
clients and other
highly confidential information, the disclosure of which would
aggravate the prejudice to the applicant. There
is no doubt that,
unless the relief sought is granted, the first respondent will
continue to pursue her intention to breach her
restraint
undertakings. Moreover, the first respondent would be duty bound by
virtue of her fiduciary duties to a new employer
to disclose
information that will assist it/her to obtain custom. Any such
information which is confidential to the applicant or
was obtained by
the first respondent through her employment relationship with the
applicant is at a real risk of disclosure.
[50]
I am satisfied that the first respondent's use of the confidential
information, to which the first respondent had access as
a
consequence of her employment with the applicant, will result in the
applicant suffering financial loss and loss of market share.
This is
particularly so if, and when, the confidential information is being
made available to the applicant's competitors who will
in turn gain
an unfair advantage of undercutting the applicant by appropriating
business originally intended for the applicant.
Moreover, the first
respondent is possessed of all of the information pertaining to the
listed properties edited by her from the
Property 24 platform as well
as the details regarding the seller and the seller's requirements
regarding the sale of the property.
As stated previously this
information belongs to the applicant regardless of whether the first
respondent assisted in sourcing
the seller as a client of the
applicant.
[51]
The applicant has a contractual right in terms of the first
respondent's employment contract to protect its propriety interests
and confidential information and customer connections by way of the
restraint undertakings given by the first respondent. By virtue
of
the competitiveness of the industry of estate agencies in which the
applicant operates, the importance of detailed information
regarding
sellers and prospective sellers and purchasers and prospective
purchasers in regard to the sale and letting of immovable
property
and the effort incurred by the applicant in gathering such
information has added value thereto, as a result of which the
applicant has secured the restraint undertakings from the first
respondent which were agreed to by the first respondent at the
time
of accepting employment with the applicant.
[52]
The first respondent's belief that she is entitled to take her
listings with her pursuant to her resignation from the applicant
is
misguided. This belief by the first respondent, coupled with her
admission that she has indeed now “
taken her listings with
her”
, underscores the applicant's reasonable apprehension
of harm based on the first respondent*s filching of the applicant's
clients.
In addition, the first respondent's admission that she has
been in discussions with the second respondent regarding her
eventually
working for her and that after having taken a break she
was advised to contact the second respondent when she was ready to
join
the second respondent, coupled with her and the second
respondents' refusal to give an undertaking as sought by the
applicant,
further underscores the applicant's grounds of a
reasonable apprehension of harm if an interdict is not granted.
[53]
The first respondent's continued possession of a list of the
applicant's client base which information she took with her without
any entitlement thereto upon the termination of her services with the
applicant. The only purpose for doing so would have been
for her to
filch the applicant's clients whom she believed she was entitled to
take with her to her new employer or place of employment.
[54]
In the result the following order is made:
1.
The application is granted with costs.
2.
The Draft order is marked “X” and made an order of court
L.
WINDELL
JUDGE
OF THE HIGH COURT
GAUTENG
LOCAL DIVISION, JOHANNESBURG
(Electronically
transmitted therefore unsigned)
Delivered:
This judgment was prepared and authored by the Judge whose name is
reflected and is handed down electronically to the
parties/their
legal representatives by email and by uploading it to the electronic
file of this matter on CaseLines. The date for
the hand-down is
deemed to be 21 May 2021.
APPEARANCES
Counsel
for applicant:
Advocate HP West
Instructed
by:
Kruger and Okes Attorneys
Counsel
for respondents:
Advocate Smith
Instructed
by:
Etienne de
Heus Attorneys
Date
matter heard:
6 May 2021
Judgment
date:
21 May 2021
[1]
[1984] ZASCA 51
;
1984 (3) SA 623
(A) at 634 E-I.
[2]
[1993] ZASCA 61
;
1993 (3) SA 742
(A).
[3]
1958 (2) SA 465 (A).
[4]
2003 JDR 0203 (N) at page 6.
[5]
[1997] 1 All SA 616 (W).
[6]
See
also
Telefund
Raisers CC v Isaacs
1998 (1) SA 521
(C) at 528E.
[7]
At
632F-624A.
[8]
[
2006]
4 All SA 183 (C)
[9]
[1992] ZASCA 204
;
1993
(1) SA 537
(A)
at
541C
[10]
(26039/17) [2017] ZAGPJHC 219 (28 July 2017
).
See
also
New
Justfun Group (Pty) Ltd v Turner
[11]
[2018] 39 ILJ 2771(LC)
at
4A.
[12]
1967 93) SA 1
(R) at 3G.
[13]
See
also
Den
Braven Limited v Pillay
2008 (6) SA 229
(D) wherein the court dealt with the employer's
trade connections and specifically the employee's interaction with
the employer's
customers.
[14]
Walter
McNaughton (Pty) Ltd v Schwartz
2004 (3) SA 381 (C) 390 C-D.
[15]
Also
s
ee
Reddy
v Siemens Telecommunications
(Pty) Ltd 2007 (2) SA 486 (SCA).
[16]
Automotive
Tooling Systems (Pty) Ltd v Wilkins
2007
(2) SA 271
(SCA) at [8]. Also see Neethling
Unlawful
Competition
above
fn 29 at 20 fn 46.
[17]
Act
108 of 1996