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[2010] ZAWCHC 347
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Frogitt & Vonkel CC v Macbride and Others (15921/10) [2010] ZAWCHC 347 (9 December 2010)
IN THE HIGH COURT OF
SOUTH AFRICA
(WESTERN CAPE HIGH COURT,
CAPE TOWN)
Case
Number: 15921/10
In the matter between:
Frogitt
& Vonkel CC
…...................................................................................
Applicant
and
Samantha
Lucille Macbride
…...........................................................
First
Respondent
Chantal
Packery
…......................................................................
Second
Respondent
Elberti
Wines (Pty) LTD
…...............................................................
Third
Respondent
Wydijnhof & Cilliers
…....................................................................
Fourth
Respondent
JUDGMENT
DELIVERD ON 9 DECEMBER 2010
Baartman
J
[1] In this application,
Froggitt & Vonkel CC. (the applicant) sought to enforce the
restraint of trade embodied in the employment
contracts between it
and Samantha Lucille Macbride (the first respondent) and Chantal
Packery (the second respondent). Clauses
15 and 16 of the employment
contracts are relevant to the dispute between the parties. I deal in
more detail with the clauses
below.
[2]
The
applicant further alleged that the respondents have defamed it in
the course of discussions with its clients, therefore the
applicant
sought to interdict the respondents from defaming it. I deal with
the merits of the defamation allegations below.
[3] The applicant sought
no relief against the third respondent whom it joined because the
third respondent might have had an
interest in these proceedings.
The third respondent did not defend this application. The fourth
respondent is the sole proprietor
through which the first respondent
operates a wine selling business.
[4] The applicant
conducts the business of a private wine merchant selling wine by
means of telephone sales. The applicant had
employed the first and
the second respondents as telephone-sales persons. On 3 September
2009, the first and the second respondents
terminated their
employment with the applicant.
[5]
On 26 July 2010, the applicant approached this court on an urgent
basis and alleged that the first and the second respondents
were
contacting its clients and selling wine to them in breach of the
provisions of the restraint of trade agreements operative
against
them at the time. Blignault J granted a
rule
nisi
interdicting
the first, second and fourth respondents from: (I quote from the
order)
"1.1 That First,
Second and Fourth Respondents, and all persons acting on any of
their behalf, be interdicted and prohibited
from contacting,
interfering with or soliciting in any way (or attempting to entice
away from the Applicant) any of Applicant's
customers and whose
details such Respondent obtained during and through First and Second
Respondents' employment at Applicant.
1.2. That First
Second and Fourth Respondents be interdicted and prohibited from
making, uttering, disseminating or publishing
any defamatory remarks
about Applicant to any customer of Applicant or to any other person.
1.3. That First,
Second and Fourth Respondents be ordered to delete and/or destroy
all material (in which ever form, whether digital',
in writing or
otherwise) which contain any personal detail, including contact
numbers, of any customer of Applicant and whose
details Respondents
obtained during and through First and Second Respondents' employment
at Applicant.
1.4 That First and
Second Respondent be ordered to pay the costs of this application
jointly and severally..,"
[6] The first respondent
opposed the application and the second respondent appeared in person
at the hearing and asked for the
order to be dismissed against her.
The
common cause factors
[7] The applicant had
since January 2005 operated the business of a private wine merchant,
specialising in the sale of wines from
boutique wine estates
directly to a specifically targeted group. The applicant operated
from premises in Dorp Street. Stellenbosch.
[8] The applicant
identified individuals suited for its target group from databases or
profile lists that it had periodically
purchased from database
vendors. The applicant alleged that it acquired the databases at
considerable cost. These databases contained
the names and contact
details of various individuals of a specific profile in South
Africa.
[9] The applicant's
sales persons would make telephonic contact with the persons on the
profile lists. A successful contact would
result in wine sales to
the person and the contact sales person would establish a
relationship with the client. It is the applicant's
case that only
1% of the people contacted from these databases would eventually
become clients.
[10] The sales person
who established the telephonic contact with the client would remain
the client's consultant for the duration
of his or her employment
with the applicant. When the respondents left the applicant's
employ, they were the consultants for
approximately 900 clients. At
the time, the applicant had approximately 6 000 clients, the
majority of whom lived in Gauteng.
The restraint
provisions
[11] The applicant
alleged that all its customer details remained its property and
formed part of its confidential information,
and that unauthorised
use thereof was not permitted. Certainly, former employees were not
permitted to use the applicant's client
information to compete with
the applicant. Therefore, the applicant had included clauses 15 and
16 into the first and the second
respondents' employment contracts.
These clauses provide for:
"(15)
Confidentiality
(a) You acknowledge
that you will have access during the course of your employment to
confidential information and that F &
V has a legitimate
commercial interest in preventing the unauthorized disclosure of
such information.
(b)
You must
not
at any time (except as required for the proper performance of your
duties) durino or after your employment disclose or make
use off
mv
emphasis) your knowledge of any confidential information of F&Vor
any other member of the Group. In this clause confidential
information includes (without limitation) the designs and techniques
used in developing any products developed or sold by the
F& V or
any other member of the Group including designs, patents and ...the
names, addresses, contact details and other requirements
of
customers, the terms of business between the sellers. ... (whether
or not recorded in writing or on computer disk or tape)
which F&V
or any other member of the Group treats as confidential."
16. Restriction on
competition
(a) The agent agrees
that he/she will not, without the written permission of F&V,
during the continuance of this agreement
or for a period of 12
months thereafter, in connection with the carrying on of any
business which competes with any business
of any group company with
which he/she was involved with 12 months prior to the termination of
this agreement, and whether on
his/her own behalf or on behalf of
any individual, company, firm, business or other organization,
directly or indirectly;
(i)
Solicit
or entice away from F& V the business of any customer
or
prospective customer with whom he/she had business dealings on
behalf of F& V in the course of the 6 months prior to the
termination
of this agreement, and about which customer, or
prospective he/she is privy to confidential information at the date
this agreement
terminates;
(ii)
Seek
to entice away from F& V any director or other agent of F&V,
or any other person employed by F&V or any other
senior employee
at the date this agreement terminates (or who would have been so
employed had that person not left F&V due
to solicitation on the
part of the Agent in the 4 months prior thereto) and with whom the
Agent had dealings in the last 12 months
of this agreement
(iii) Encourage or
influence any Agent, independent the Agent, supply or any other
person or company to terminate or alter a relationship
with F&V,
whether or not such termination or alteration involves a breach of
the agreement.
(b) Each of the
sub-clauses contained in clause 16 constitutes an entirely separate
and a visible undertaking. If any restriction
is held to be invalid
or unenforceable by a court of competent jurisdiction, it is
intended and understood by the parties that
such invalidity or
unenforceability will not affect the remaining restrictions or the
validity of the rest of the agreement and
that if any such
restriction would be valid if some part thereof were deleted such
restriction shall apply with such modification
as may be necessary
to make them effective.
(c) The Agent
acknowledges that -
(i)
each
of the restrictions in clause 16 goes no further than is
necessary
to protect the legitimate business interest of the F&V;
(ii)
each
of the restrictions is fair and reasonable as regards its
extent
duration and nature: and
(iii) the restriction
contained in this clause 16 shall apply mutatis mutandis to all
other Group Companies.
(iv) from the date of
termination of this agreement, the Agent will not represent
him/herself as being in any way connected with
the business of F&V
(except to the extend agreed by such Company)."
The
alleged breaches
[12] The provision of
clause 16, referred to above, prohibited the respondents from
competing with the applicant, as set out in
paragraph 11 above, for
12 months after the termination of their employment. The first and
the second respondents terminated
their employment with the
applicant on 3 September 2009. It follows that the clause 16
restriction period expired on 3 September
2010 and that no relief in
respect of that period is required. In its urgent application, the
applicant alleged that the first
and the second respondents had
contacted approximately 15 of the applicant's clients in breach of
the clause 16 provisions.
[13] The first
respondent admitted that she had breached the provisions of clause
16. She said that she remembered client names
and found their
contact details through a Google search. She further had one
client's details on scrap paper. She did not say
whose details were
recorded on the paper or why she had it. She further said that;
"45.
In
regard to Mr Binini Titus, Mr OB Oliver, Mr Harold Mathews,
Mr Greame McNally.
Ryno Frylinck and Rodney Deacon. I confirm that I contacted them
during June and July 2010 in regard to the
sale and purchase of
wine. I knew their names from my employment with the applicant and
in certain cases I had remembered certain
information, which made
the tracing process easier. For instance I knew Mr Gawie,... worked
for NEWPORT CONSTRUCTION and that
Dr Char! Oliver, ...worked at a
hospital. In regard to the other customers set out above, aside from
Graham McNally who contacted
me. I used the internet as a method of
tracing....
In conclusion I
respectfully submit that the entire application would have been
avoided had the applicant simply e-mailed a demand
to desist from
further interaction with its customers. I would have immediately
ceased contacting them and would have waited
until the
restraint period was
finished, i thus respectfully submit that the applicant should
either be ordered to pay the costs of this
application alternatively
there ought to be no order as to costs and I consent to an order as
set out in the notice of motion
restraining me until 3 September
2010."
[14] As indicated above,
the second respondent did not tile any opposing papers. I therefore
accept that she too, as alleged by
the applicant, had breached
clause 16 of her employment contract. {See Moosa and Another v Knox;
Paruk v Knox
1949 (3) SA 327
(N))
The clause 15 dispute
There
is no ambiguity in the employment contract
[15] Mr Baynham. who
appeared on behalf of the first respondent, submitted that the
effect of the 12 months restraint imposed
by clause 16 was that
after the 12 months had expired, "clause 16 authorises ...the
first respondent ...to contact customers
or prospective customers."
[16] Mr Maree. on behalf
of the applicant, submitted that after 3 September 2010, the first
respondent was entitled to contact
any of the applicant's clients;
however, she could not use the applicant's confidential information
to make such contact. That,
so the argument went, would offend the
provisions of clause 15. as appears from paragraph 11 above.
[17] Mr Baynham
submitted that there existed an ambiguity between the provisions of
clauses 15 and 16 because clause 16 prohibited
the use of
confidential information for 12 months and clause 15 placed an
indefinite prohibition on the use of the applicant's
confidential
information.
[18] Mr Maree submitted
that there was no ambiguity because:
(a) The contract
provided for the absolute prohibition on the use of confidential
customer information (the common law position)
- clause 15.
(b) Clause 16 imposed
restrictions upon ex-employees in competing business activities
within 12 months after the termination of
his/her
[19] He also submitted
that only if the court was of the view that the absolute prohibition
was unreasonable that a period of
3 or 5 years should be read into
the contract instead of "not at any time", as indicated in
the emphasised paragraph
11 above. The effect would be that an
ex-employee would be prohibited for a period of 3 or 5 years after
the termination of his/her
employment with the applicant from using
confidential information instead of never being able to use the
information.
[20]
Mr Baynham submitted that I should resolve the alleged ambiguity, to
the extent that it existed, by applying the
contra
proferentem
rule.
Van Dyk J, in the matter of Stocks Construction (OFS) (Pty) Ltd v
Metter-Pingon (Pty) Ltd
[1978] 4 All SA 339
(T). described the rule
as follows:
"The contra
proferentem rule, as I understand it, is only to be used in cases of
obscure or ambiguous agreements and is not
to be used unless the
ordinary rules of interpretation have been exhausted in an attempt
to arrive at the true intention of the
parties. ..."
[21] In my view, the
rule does not find application in this matter as there is no
ambiguity in the contract under discussion.
The customer information
is the relevant confidential information in this matter. It is
common cause that customer information,
customer lists, can qualify
as confidential information. (See Van Castricum v Theunissen and
Another
1993 (2) SA 726
(T) and Knox D'Arcy Ltd and Others v
Jamieson
1992 (3) SA 520
(W)) Clause 15 seeks to protect the
applicant's confidential information indefinitely while clause 16
seeks to prevent competition
for 12 months after termination of
employment. (See Coopers and Lybrand v Bryant
[1995] ZASCA 64
;
1995 (3) SA 761
(A).
Mia v Verimark (Pty) Ltd [2010] 1 All 280 (SCA) and Proflour (Pty)
and another v Grindrod (Pty) Ltd t/a Atlas Trading and
Shipping and
another
[2010] 2 All SA 510
(KZD)).
[22] However, I am of
the view that the indefinite period (not at any time) imposed by
clause 15 is unreasonable in the circumstances
of this case. (See
Basson v Chilwan and Others
[1993] ZASCA 61
;
1993 (3) SA 742
(A) ) The information,
referring to the client list, that the applicant seeks to protect is
readily available, although at a
price and with some effort. It also
appears from the papers that some of the clients have already
severed their relationship
with the applicant. In respect of those
clients there is no interest to protect. It would lead to absurd
results to prohibit
the respondents indefinitely from the use of
information so readily available.
[23] As indicated above,
Mr Maree submitted that a 3 to 5 year period would be reasonable in
the event of me finding the contract
period unreasonable However, he
persisted that the period was not unreasonable. In the circumstances
of this matter the period
of 5 years is reasonable in respect of the
prohibition imposed by clause 15 of the agreement.
The
respondents have confidential information
[24] The applicant
alleged that the respondents have contacted approximately 15 of
applicants customers because of the extent
of the contact, the
applicant alleged that the respondents must have 'copied and taken
with them air customer details'".
As indicated above, the first
respondent conceded that she had contacted the applicant's clients
[25] However, the first
respondent has denied that she was in possession of any client
lists; she said that she knew some of the
customers from memory and
simply consulted Google for their contact details. The first
respondent said that when she resigned
from the applicant. Ms
Woodward, a 50% member of the applicant, demanded that she leave the
applicant's premises forthwith Ms
Woodward did not allow the first
respondent to return to her desk and searched the first respondent's
personal possessions before
she could take them off the premises.
Similarly, the applicant searched the first respondent's cellular
telephone by having the
first respondent scroll through her list of
contacts.
[26] The first
respondent said that she obtained the customer details as follows:
"...
Thus on or about the 1& June 2010. I had set up the business and
began the task of finding customers At this stage.
I made use of
Google to find new markets and admit that I contacted certain of
Applicant's clients I knew some of them extremely
well as
i
had
dealt with them whilst in the employ... Some had even become really
good friends of mine. I thus was in a position to Google
their names
and obtain their contact details.
...In only one
instance I had a piece of scrap paper with a client's address. After
receipt of the application ...t destroyed
the piece of paper....
Some of the clients
referred to in the applicant's founding affidavit contacted me."
[27] Mr Maree submitted
that it was improbable that the applicant's clients would have had
the first respondent's personal details.
The applicant further
submitted that:
"Personal
telephone numbers of customers are generally not freely available on
the internet."
[28] The applicant
further alleged, in its replying affidavit, that the following was
seized from the first respondent's backpack
on the day of her
resignation:
"...Interestingly,
a master copy of Applicants training guides and 'sales script' was
found in her bag, together with the
employment contract of another
employee, Moira Daniels ...Also some personal details of Zelda
Stanley, another employee..."
[29] The first
respondent failed to indicate which clients contacted her and how
they happened to have her personal details. She
also did not inform
the court that the applicant had seized, from her backpack, the
items mentioned above and why they were in
her possession. The first
respondent gave no detail of the client information that she had on
a scrap of paper.
[30] Although I do not
doubt that the first respondent would be able to obtain some contact
information off the internet, I cannot
accept, in the circumstances
of this case, that she obtained the details of 15 clients in that
manner. As indicated above, she
also did not explain how some of the
clients were able to contact her after she had left the applicant's
employ. I am of the
view that on the facts of this matter I am
justified in rejecting the first respondent's version that she did
not have client
information in some form as false. (See
Plascon-Evans Paints Ltd v Van Riebeeck Paints (Pty) Ltd
[1984] ZASCA 51
;
1984 (3) SA
623
(A).)
[31] It follows that the
applicant is entitled to an interdict prohibiting the use of such
information. As indicated above, I
intend to amend the period
referred to in clause 15 to 5 years.
Allegations of
defamation scant
[32] The applicant
alleged that the first and the second respondents had defamed it. Mr
Maree succinctly summarised the circumstances
that gave rise to that
allegation as follows:
"From
the
confirmatory affidavits it is clear, it is submitted., that various
customers have suddenly taken a negative attitude towards
applicant.
This only points to First Respondent "badmouthing"
Applicant, and hence an order interdicting First Respondent
from
defaming Applicant is warranted. "
[33] Christie Smith, an
employee of the applicant, attested to one of the confirmatory
affidavits referred to above, and said
the following:
"3.5
Mr
Harold Matthews informed me on 30 June 2010 that First Respondent
informed him that she was "unfairly fired" by Applicant
-and that she borrowed money from him."
[34] Lara Stemmet, also
one of the applicant's employees, said the following about the
alleged defamation:
"...Mr Hein
Zentgraf (referring to one of the applicant's customers)
...immediately indicated that he is not willing to do
any further
business with Applicant ...as we have put First Respondent ...in a
difficult position."
[35] The applicant has
relied on hearsay in support of its defamation allegations. The
first respondent has denied that she defamed
the applicant. In my
view, the applicant has failed to show that the first respondent had
defamed it. The applicant is therefore
not entitled to a final
interdict in respect of its defamation claim.
BAARTMAN,
J
9