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[2021] ZAECPEHC 5
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Johnson and Another v Sivewright and Others (1729/2020) [2021] ZAECPEHC 5 (26 January 2021)
IN
THE HIGH COURT OF SOUTH AFRICA
(EASTERN
CAPE LOCAL DIVISION, PORT ELIZABETH)
Case
No: 1729/2020
In
the matter between:
SHARL
JOHNSON
First Applicant
(In
his capacity as the Director and Chief Executive Officer of the
Second Applicant)
EXPERT-TECH
ENGINEERING (PTY) LTD
Second Applicant
And
MARK
JAMES
SIVEWRIGHT
First Respondent
SOLOMON
BRENDON KIEWIETS
Second Respondent
JOHANNES
CORNELIUS BOTHA
Third Respondent
JUSTIN
EUGENE
KIEWIETS
Fourth Respondent
BALEGA
ENGINEERING (PTY) LTD
Fifth Respondent
JUDGMENT
BESHE
J:
[1]
This is an application for an order to
interdict and restrain the respondents from approaching business
concerns listed in an annexure
[1]
to applicants’ founding affidavits, with a view to persuade
them to stop dealing with the applicant. Further, to restrain
the
respondents for a period of 24 months from 1 August 2020 to 1 August
2022 or such period as this court may deem fit, from conducting
or
being employed by any engineering and maintenance repair company or
any business which renders engineering and maintenance repair
services within the Eastern Cape.
The
parties
[2]
First applicant is an adult male Director and
Chief Executive Officer of second applicant, a personal liability
company duly incorporated in terms of the Laws of the Republic of
South Africa. The applicants conduct engineering, maintenance
repair
services and sales contract work for various companies within Port
Elizabeth as well as in other provinces according to
the first
applicant. The respondents are described as follows:
First
to fourth respondents are adult male persons. First respondent is
said to be marketing and sales manager. Second respondent
is a
technical sales technician. Third respondent, a maintenance fitter.
Fourth respondent is a personal liability company, duly
incorporated
in terms of the Laws of the Republic of South Africa.
Facts
[3]
The background facts that gave rise to this
dispute can be summarised as follows:
[4]
First to fourth respondents were previously
in the employ of the second applicant. Their employment
relationship
with the second applicant was governed by employment contracts each
one of them concluded with the second applicant.
A covenant in
restraint of trade formed part of these employment contracts which is
housed in
Clause 27
of each of the contracts.
Clause 27.1
of the respective contracts records the following:
“
27.1
The employee undertakes not to be engaged in any other business, in
competition with the employer’s business, be it direct
or
indirect, or as a shareholder, partner, member of a Close
Corporation, director of a company or in any other capacity, within
2
(two)
year(s) after
termination of this agreement, in the area known as
Eastern
Cape / Republic of South Africa
.”
According
to the applicants, during the course of their employment with second
applicant, the respondents became well known as such.
Most of the
times they were required to work and deal with applicants’
trade connections, clients and businesses without
supervision.
Applicants’ complaint is captured in paragraph 29 of the
founding affidavit deposed to by the first applicant
as follows:
[2]
“
29.
My relationship with trade connections, clients and businesses have
suffered severely because of the Respondents approaching
them and
offering to do work for them, which work they did whilst in my
employment. In addition, the Respondents have also approached
some of
my current employees to join them and work for Balega Engineering
(Pty) Ltd (the Fifth Respondent).”
[5]
He concludes that, not having the trade
connections, clients and business referrals will have a devastating
impact upon second applicant and the lives of their employees.
Further that by approaching current employees of the applicants’
trade connections, clients and business that applicants deal and
trade with, the respondents are acting in direct conflict with
Clause
27
of their employment contract as aforementioned. That by
continuing work for, operate and trade as fifth respondent, they are
acting
unlawfully and in breach of the contract.
[6]
In a confirmatory affidavit, one
Mark
Redcliffe
who is employed by the second applicant states that
during 2020 he received a “friend request” from second
respondent
on the Facebook platform which he declined. He was also
telephonically contacted by a former colleague by the name of
Roderick Birman
who told him he wanted to talk to him about
fifth respondent. He told him he was not interested. Another employee
of the second
applicant,
Deon Marcus Stuurman
was approached
by first respondent during 2018 who spoke negatively about second
applicant. During 2019, second respondent asked
if he did not do
projects and drawings on the side-line as they were starting their
own business. He did not take up the offer.
This was apparently
whilst second respondent was still in the employ of the applicants.
[7]
According to
Mr Nicol Stegmann Coetzee
who is employed by the applicants as an Occupational Health and
Safety Officer, he was approached by the first respondent at the
time
when the latter was still employed by the applicants, with a request
that he assists him in his private time to create an
Occupational
Health and Safety file. But he never contacted him again to follow up
on the request.
Mr Themba Mthwezi
states that during 2018 he
was approached by first and second respondents who asked him to leave
his job and come work for them.
He declined. According to the
respondents,
Mr Mthwezi
is employed as a general cleaner by
the applicants.
[8]
The opposing affidavit is deposed to by the
first respondent who is also the shareholder and director
of the
fifth respondent
Mr Sivewright
. He confirms that he was
employed by second applicant as a marketing and sales manager during
the period January 2016 to February
2019. Second respondent who is
also a shareholder in fifth respondent worked for the second
applicant for a period 2010 until 2019.
At the time of his
resignation he was a technical sales technician. Third respondent was
employed by the applicants from 2008 /
2009 to June 2020 as a
maintenance fitter. He denies that third respondent is employed by
fifth respondent. Alleging that he is
self-employed. Fourth
respondent was an employee of the applicants as a technical assistant
from 2016 until 2019. He is currently
employed by fifth respondent as
a general employee. He further states that fifth respondent was
registered on the 5
th
of February 2019 after his
resignation from second applicant. This was to allow him to pursue
new employment opportunities. He
had originally anticipated that
fifth respondent’s field of work would be to buy, refurbish and
resell wood working equipment.
He goes on to outline the
circumstances under which he together with second and third
respondents felt constrained to leave their
jobs with the second
applicant due to unfavourable working conditions. He denies that he
recruited or sought the third respondent
or caused him to resign from
second applicant. Fourth respondent also resigned from second
applicant due to certain frustrations
relating to his working
conditions. It is admitted that the employment contract in question
governed the employment relationship
between the second applicant and
first to fourth respondents.
Mr Sivewright
denies that the
applicants are entitled to the relief sought, based
inter alia
on the following factors:
The
work that is performed by second applicant is general engineering and
general maintenance work. It was not specialized or unique
in any
way. Second applicant conducted work for clients on an
ad hoc
basis. He is not aware of any good will of special relationship
of trust that second applicant developed with those he carried work
for. That applicants therefore do not have an interest that requires
protection. First to fourth respondents are not aware or privy
to
list of applicants’ clients.
[9]
In the notice of motion as regards the first
prayer, applicants refer to a list marked EEM1. This list
is simply
entitled Customer Listing. It runs into 4 pages of what appears to be
business names from A-Z. There is however no allegation
/ evidence
that the respondents have approached any of the concerns or persons
associated therewith with a view to cause them to
cease dealing with
the applicants. First respondent denied that he dealt directly with
applicants’ clients, adding that he
conducted his work mostly
from second applicant’s offices. In respect of second to fourth
respondents, even though the conducted
work at client’s sites
from time to time, the nature of work conducted did not result in any
relationship being created with
the said clients. They had little
direct dealings with second applicant’s clients. They simply
conducted work as directed
by the second applicant. And that all work
obtained by the fifth respondent came about through clients phoning
fifth respondent
be enquire about its services.
Mr Sivewright
asserts that none of the respondents have contacted the employees of
the second applicant for purposes of persuading them to take
up
employment with the fifth respondent.
[10]
Whilst not denying that first to fourth respondents
signed the restraint of trade in question, respondents suggest
that
they signed it without the exact wording, ambit and consequences
thereof being properly and adequately explained to them.
However,
this was not pursued with any vigour or at all during argument,
correctly so in my view. Respondents deny therefore that
they acted
in breach of
Clause 27
of their respective contracts. They do
however acknowledge that fifth respondent has issued business cards
to the first and second
respondents who in turn have from time to
time distributed to persons they have come into contact with.
Furthermore, the respondents
take issue with the insistence by the
applicants that the restraint of trade should span the period from 1
August 2020 to 1 August
2022 when in fact at worst the restraint(s)
should apply as follows:
First
respondent
28 January 2021.
Second
respondent 10 April
2021.
Third
respondent
16 June 2022.
Fourth
respondent
10 April 2021.
[11]
This assertion is clearly based on the fact that first
to fourth respondents left the employ of the second applicant
at
different times. The two year period for the restraint of trade on
question would have commenced at different times for each
of the four
respondents. 28 January 2019 in respect of first respondent. 16 June
2020 in respect of third respondent. According
to the applicants,
second respondent absconded. But second respondent annexes a letter
of resignation from 10 April 2019. 10 April
2019 in respect of fourth
respondent.
Discussion
[12]
There is no evidence to support the relief sought in
paragraph 1 of the Notice of Motion whatsoever. Even if prayer
1 were
to be read to include persons in the employ of the second applicant
(which I do not think it does because second applicant
is not one of
those businesses that are listed in EEM1) there is no evidence that
the respondents approached the second applicant’s
employees or
clients with a view to cause them to cease dealing with the
applicants.
Mr
Roderick Bierman
who is alleged to have told one of applicant’s employee
Mr
Redcliffe
over the phone that he also wanted to speak to him about fifth
respondent, is not one of the respondents. This in my view does
not
shown that the respondents approached
Redcliffe
with a view to cause him to cease dealing / working for the
applicants. According to the respondents,
Bierman
was not connected to the respondents in any manner. The friend
request on Facebook to
Redcliffe
by second respondent means nothing. First respondent is alleged to
have spoken negatively about second applicant way back in 2018.
During 2019, first respondent is alleged to have asked him if he did
not want to do projects on the side as they were starting
their own
business. This does not amount “to the respondents having
approached applicants’ employees to join them and
work for
fifth respondent” as first applicant asserts.
[3]
In the same paragraph, it is suggested that respondents approached
applicants’ trade connections, clients and business offering
to
do work for them, which work they did whilst in second applicant’s
employment. This is just a bald allegation without
any facts to
support it. In a confirmatory affidavit deposed to by applicant’s
Occupational Health and Safety officer in
July of 2020, the following
is recorded:
“
4.
Around November 2018, I was approached by
MARK
SIVEWRIGHT
whilst he
was still employed at Expert-Tech Engineering. He asked if I could
assist him in my private time to create an Occupational
Health and
Safety File. He said that he will contact me in due course with
details for the file that he asked me to compile.
6.
He never contacted me with the details of the file he asked me to
create and I also never created one for him. I rather brought
this
information and request to the attention of
SHARL JOHNSON
.”
This
does not advance applicants’ case at all in my view.
Prayer
2 of the Notice of Motion
[13]
It appears to be common cause that respondent Balega
Engineering carries on business in engineering and maintenance
work,
having commenced operations on 1 March 2019. It is also common cause
that first to fourth respondents are part of the fifth
respondent in
their capacities as directors / shareholders and employees
respectively. This has been the case after first to fourth
respondents resigned from the employ of the second applicant and
before the expiry of two years after such resignation as envisaged
in
Clause 27.1
of their contract of employment with the second
applicant.
[14]
In terms of
Clause 27.1
, the area of operation of
the restraint of trade in question is the Eastern Cape in respect of
first respondent, Republic of South
Africa in respect of second and
third respondent and Eastern Cape in respect of fourth respondent.
[15]
In paragraphs 1 and 6 of the founding affidavit the
following assertion is made:
“
1.
I am an adult male Director and Chief Executive Officer of
Expert-Tech (Pty) Ltd (the Second Applicant). The Applicants carries
on business as an engineering, maintenance repair and sales company
at various locations in Port Elizabeth, Uitenhage, East London
as
well as the broader Eastern Cape, one of which is situated at no. 1
Fearick Street, Sidwell, Port Elizabeth, named Expert-Tech
Engineering and Maintenance Repair Services and Sales.
6.
The Applicants have been conducting engineering, maintenance repair
services and sales contract work for various businesses in
Port
Elizabeth mentioned in paragraph 1
supra
, as well as
businesses in other provinces.”
[16]
Respondents deny that second applicant conducts work in the
broader Eastern Cape. They admit that certain work is conducted
by
the second applicant in Port Elizabeth, Uitenhage, East London and
Kirkwood on occasion. There is no evidence that shows which
businesses are applicants’ clients. In respect of which fifth
respondent is engaged in business in competition with the applicants.
Respondents make the point that both second applicant and fifth
respondent companies’ conduct work of general engineering
and
maintenance nature. That there is nothing specialized or unique in
respect of work second applicant carries out. It is trite
that it is
not necessary for the applicants to show actual harm having been
suffered, it suffices if the applicant is able to show
that the
respondents have the potential to exploit trade secrets and business
connections.
[4]
But that is not
the applicants’ case
in
casu
.
There is no complaint that the respondents are likely to disclose
applicants’ confidential information and trade secrets.
In any
event, according to the respondents, they know of no such trade
secrets or clientele list or data, because work performed
by the
applicants is of general engineering and maintenance nature and is
done on an
ad
hoc
basis.
[17]
It is trite that a clause in restraint of trade is
enforceable, unless it is shown to be unreasonable
[5]
or against public policy. Trite also is the principle that public
policy requires that agreements freely entered to should be honoured.
At the same time, public policy also requires that everyone should be
free to take part in economic activities in order to earn
a living.
This is a right that is also enshrined in
Section
22 of the Constitution
.
The right to choose a trade, occupation or profession freely. This
requires a court faced with these contending rights or interests
to
make a value judgment in balancing them in order to give effect to
spirit of
Section
36 of the Constitution
.
[6]
[18]
A feature of this case is that in terms of
Clause 27.1
of the employment contract with their former employer, first to
fourth respondents are precluded from being engaged in any business
in competition with employers’ business for two years after the
termination of the agreement, in respect of some of them
in the whole
of South Africa and others in the Eastern Cape Province. I do not see
how that can be said to be reasonable. But most
importantly and
contrary to the submission made in paragraph 15 of applicants’
heads of argument the applicants have not
shown that the respondents
are competing with them or are engaged in business in competition
with applicants’ business. This
submission that the papers
illustrate that the respondents “continue to do engineering and
maintenance work at sites where
the applicants first conducted
engineering and maintenance work” is misplaced. There is no
such evidence. But most importantly
Clause 27.1
of the
employment contract in question does not envisage the restraint of
the employee “from conducting or being employed
by
any
engineering and maintenance company or
any
business which
renders engineering and maintenance repair services within the
Eastern Cape. This is the relief sought in prayer
2
[19]
For the reasons stated above, I am of the view that the
applicants have not made a case for the relief sought.
[20]
Accordingly, the application is dismissed with costs.
NG
BESHE
JUDGE
OF THE HIGH COURT
APPEARANCES
For
the Applicants :
Adv: Thyse
Instructed
by
:
MPHUMZI
NGCAYI ATTORNEYS
10
Market Street
North
End
PORT
ELIZABETH
Ref:
N Ngcayi // Eepert-Tech
Tel.:
041 – 487 5121
For
the Respondents :
Adv: Moorhouse
Instructed
by
:
BROWN
BRAUDE & VLOK INC.
317
Cape Road
Newton
Park
PORT
ELIZABETH
Ref:
C L J JESSOP/Tiaan D/tanya
Tel.:
041 – 365 3668
Date
Heard
:
5
November 2020
Date
Reserved
:
5
November 2020
Date
Delivered
:
26
January 2021
[1]
Annexure EEM1 page 27 of the indexed papers.
[2]
Page 10 of the indexed papers.
[3]
Paragraph 29 page 10 of the indexed papers.
[4]
Reddy v Siemens Telecommunications (Pty) Ltd 2007 (2) SA 486.
[5]
See Magna Alloys and Research (SA) (Pty) Ltd v Ellis
[1984] ZASCA 116
;
1984 (4) SA 874
A.
[6]
Reddy v Siemens Telecommunications (Pty) Ltd 2007 (2) 486 SCA at
497.