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[2022] ZAECPEHC 10
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Kallvest (Pty) Ltd and Others v Harvey and Another (438/2022) [2022] ZAECPEHC 10 (28 June 2022)
IN
THE HIGH COURT OF SOUTH AFRICA
(EASTERN
CAPE LOCAL DIVISION, GQEBERHA)
Case
No.: 438/2022
Date
heard: 17 March 2022
Date
delivered: 28 June 2022
In
the matter between:
KALLVEST
(PTY)
LTD
First Applicant
KALLVEST
EC (PTY) LTD
Second Applicant
KALLVEST
COASTAL CLEANING (PTY) LTD
Third
Applicant
KALLVEST
COASTAL SECURITY (PTY) LTD
Fourth Applicant
and
NEIL
LAWRENCE
HARVEY
First Respondent
HARVAN
SERVICES (PTY) LTD
Second
Respondent
JUDGMENT
ZIETSMAN
AJ:
[1]
The applicants approached this court, on an urgent basis, for an
interim
interdict and further ancillary relief, pending an action to
be instituted.
[2]
The applicants, in essence, allege misuse of confidential information
by the respondents in order to advance their own business interests
at the expense of the applicants. In other words, a form
of
unlawful competition.
[3]
The first to fourth applicants are part of the Kallvest Group of
Companies,
of which the first applicant is the holding company.
The first respondent (“Harvey”) is the erstwhile regional
manager of the second applicant. Harvey is the sole director of
the second respondent.
Urgency
[4]
The application was served on the respondents on 17 February 2022,
calling
upon them to file their notice of opposition by no later than
21 February 2022 and answering affidavit by 1 March 2022. The
matter was initially set down for hearing on Tuesday, 22 February
2022, but in the event of it being opposed, it was to be heard
on
Tuesday, 8 March 2022. The respondents’ notice of
opposition was duly served and filed on 21 February 2022.
[5]
Consequently, on 22 February 2022, the matter was postponed to 8
March
2022 and the costs occasioned by the postponement reserved.
On 8 March 2022 the matter was, by agreement, postponed to 15
March
2022 and time periods agreed for the filing of answering and replying
affidavits, and heads of argument. The costs
were reserved.
[6]
On 15 March 2022 I heard argument on urgency, which included
preliminary
argument on the merits of the application. I stood
the matter down to 17 March 2022 for argument on the merits of the
application.
I indicated that my reasons will follow in the
judgment.
[7]
In
Commissioner,
South African Revenue Service v Hawker Air Services (Pty) Ltd;
Commissioner, South African Revenue Service v Hawker
Aviation
Partnership and Others
[1]
Cameron JA (as he then was) said as follows:
“
Urgency
is a reason that may justify deviation from the times and forms the
Rules prescribe. It relates to form, not substance, and
is not a
prerequisite to a claim for substantive relief. Where an application
is brought on the basis of urgency, the Rules of
Court permit a Court
(or a Judge in chambers) to dispense with the forms and service
usually required, and to dispose of it 'as
to it seems meet' (Rule
6(12)(a)). This, in effect, permits an urgent applicant, subject to
the Court's control, to forge its own Rules
(which must 'as far
as practicable be in accordance with' the Rules). Where the
application lacks the requisite element or degree
of urgency, the
Court can, for that reason, decline to exercise its powers under Rule
6(12)(a). The matter is then not properly
on the Court's roll, and it
declines to hear it. The appropriate order is generally to
strike the application from the roll.
This enables the applicant
to set the matter down again, on proper notice and compliance.
”
[8]
“An
applicant
must set forth explicitly the circumstances which is averred render
the matter urgent and the reasons why the applicant
claims that
applicant could not be afforded substantial redress at a hearing in
due course.”
[2]
[9]
The court then exercises a judicial discretion with regard to which
deviations
it will tolerate in a specific case.
[10]
The applicants refer to the need to protect their interests, from
unlawful competition,
before the respondents approach all their
clients; contend that the respondents have already taken 40% of the
applicants’
business in the Eastern Cape; and that the
respondents refuse to provide an undertaking not to approach the
applicants’ remaining
clients. In addition, they contend
that they fear job losses, or even closure of their business, and it
is cold comfort to
the applicants that they will have a damages claim
in due course. In my view, the circumstances as set out in the
applicants’
founding affidavit, which allegedly render the
matter urgent, do not pass muster. This will become apparent
below.
[11]
Although the respondents contend that the applicants fail to make out
a case for urgency,
the parties’ respective counsel were
ad
idem
that the matter be argued since all papers and heads of
argument were filed.
[12]
The circumstances relating to urgency and the merits of the matter
are, in my view, linked.
This was also the sentiment conveyed
by the respondents’ counsel in argument on urgency.
[13]
In order to
ensure an expeditious
[3]
and
inexpensive decision, I proceeded to hear argument on the merits of
the matter. I am fortified in my decision since it
became
apparent during argument on urgency that none of the applicants
appeared to have made out a case for the relief which they
seek
against the respondents, as will become apparent later in this
judgment.
Factual
background
[14]
The applicants and respondents are all involved in the security and
cleaning industry,
some longer than others.
[15]
The first applicant has been trading since 2004 and the second
applicant since 2013.
The third and fourth applicants only
commenced trading in October 2021, after having taken over the
business of the second applicant.
[16]
Harvey has been in the security and cleaning industry for
approximately 22 years.
He attended to the security for various
buildings and townhouse complexes, managed by Trafalgar Property
Management, from 1998
to 2002. In 2004 he started his own
security and cleaning business. Initially as sole proprietor,
but in 2008 he registered
a close corporation, Iqela Cleaning and
Security CC (“Iqela”).
[17]
During Harvey’s prior employment, with Trafalgar Property
Management, and when he
ran his own business, he acquired all of the
necessary skills and training in relation to the security and
cleaning industry, and,
in general, how to run a business.
[18]
It is common cause that the security industry is highly regulated. A
service provider
must be registered with the Private Security
Industry Regulatory (“PSIRA”). PSIRA imposes
minimum wages to be
paid to security guards according to their
different grades. The cleaning industry is not as regulated,
but the minimum wages
are determined by bargaining councils.
[19]
Service providers accordingly secure business by competing on pricing
and their quality
of service delivery.
[20]
During 2013 Pierre Charl van Wyk (“Van Wyk)”, as managing
director of the first
applicant, approached Harvey with the proposal
to join forces in the Eastern Cape. Van Wyk knew Harvey since
they attended
high school together. At that stage, the first
applicant was involved in the security and cleaning industry in
Johannesburg.
Van Wyk’s idea was to increase the first
applicant’s footprint.
[21]
The proposal was that the second applicant be established, that it
would purchase the business
and/or clients or existing contracts of
Iqela and the shares in the second applicant be allocated as follows,
60% to the first
applicant and 40% to Harvey. Harvey would be
employed by the second applicant as its regional manager.
[22]
Importantly, it was made clear to Van Wyk that neither Harvey nor
Iqela would be prepared
to be restrained from carrying on business in
the security and cleaning industry since that is the only industry
which Harvey knew
and he had no assurance that the business would
work out.
[23]
Accordingly, during January 2013 a shareholders agreement, in respect
of the second applicant,
was entered into between the first applicant
and Harvey.
[24]
During January 2014 Iqela, duly represented by Harvey, sold its
“Business Assets”,
defined as “Client List of
[Iqela]”, to the second applicant. The first applicant
paid Iqela approximately R350 000.00
for the purchase of the
Client List, and the 40% shareholding in the second applicant was,
allegedly, allocated to Harvey.
[25]
Having
regard to the agreement relating to the sale of the Client List (of
Iqela), the shareholders agreement and the terms of Harvey’s
employment with the second applicant,
[4]
the following appears to be common cause:
25.1.
None of the aforementioned agreements contain provisions restraining
either Harvey or Iqela from conducting
business, or being employed in
the security and cleaning industry, albeit in competition to the
second applicant, or not.
25.2.
All confidential information of Iqela, which included all know-how
and specifications, remained the
exclusive property of Iqela.
This included,
inter alia
, pricing of services provided to its
clients, identity of suppliers and terms upon which the services were
rendered.
25.3.
Confidential information known to Harvey prior to the conclusion of
the shareholders agreement, remained
his exclusive property.
25.4.
None of the agreements contain a restraint of trade clause.
[26]
The second applicant proceeded to trade in the security and cleaning
industry.
[27]
In respect of the second applicant, there was no confidential
marketing strategy to secure
new business. Harvey was not
involved in securing any of the national clients, whereas Van Wyk
was.
[28]
Only four
of the clients
[5]
transferred
from Iqela to the second applicant remained as clients of the second
applicant, namely Pagdens Attorneys, Harvest Christian
Ministries,
Pier 14 and Bidfood. The remaining twelve clients were
introduced by Harvey to the second applicant through personal
relationships which he had with their representatives or through
friends.
[29]
The relationship between Harvey and Van Wyk deteriorated over time.
[30]
During mid 2021 Harvey became concerned when Van Wyk informed him
that he would be splitting
the business of the second applicant in
order to achieve a saving. The rate for Workmen’s
Compensation for cleaning
employees was apparently substantially less
than for security employees. Van Wyk’s plan was to
transfer the security
business of the second applicant to the fourth
applicant and the cleaning business to the third applicant. The
split was
apparently prompted by the second applicant owing the
Workmen’s Compensation Commissioner approximately R500 000.00.
Harvey was deeply concerned and alarmed by these developments.
[31]
With regard to Harvey’s shareholding, Van Wyk’s proposal
was that the value
of the second applicant’s business would be
used to determine Harvey’s percentage shareholding in the third
and fourth
applicants. Van Wyk pressured Harvey to agree to a
figure since he wanted the plan to be implemented by 1 October 2021.
Harvey realised that he would effectively be taking up a minority
stake in two companies. The debt owed to the Workmen’s
Compensation Commissioner was also of great concern to Harvey.
He did not want to be involved in proposals which could be
conceived
as circumventing liabilities to the State.
[32]
Therefore, during August 2021 Harvey decided to rather start his own
business. He
commenced with applying for the second
respondent’s registration with PSIRA, obtaining quotes for
insurance and so forth.
[33]
On 2 September 2021 Harvey informed Van Wyk that he would not be
taking up any shares in
the third and fourth applicants, but that he
would be leaving the second applicant. Harvey proposed that he
takes Bidfood
and Pier 14, which, at that stage, constituted 40% of
the turnover of the second applicant. This, according to
Harvey, would
have been in lieu of his 40% shareholding in the second
applicant.
[34]
Van Wyk, however, proceeded with the transfer of the business to the
third and fourth applicants,
without the consent and approval of
Harvey, bearing in mind that he was a 40% shareholder and that such
decision required the consent
of 75% of the shareholders of the
second applicant.
[35]
In October 2021, Van Wyk wanted to meet with Harvey in order to
discuss his proposal and
the business of the second applicant.
Harvey did not feel comfortable to meet since he was uncertain about
his long-term
commitment to the second applicant.
[36]
On 15 November 2021, Van Wyk addressed an e-mail to Harvey, stating
that the proposed splitting
would not work since a client, Lactalis,
had been lost and the shareholders agreement does not provide for
it. Van Wyk proposed
that Harvey buys the shares of the first
applicant, in the second applicant, for R1.1 million. By then
the business of the
second applicant had already been transferred to
the third and fourth applicants and they were invoicing clients
directly.
[37]
During December 2021, the second applicant was deregistered with
PSIRA, and the third and
fourth applicants registered.
[38]
On 1 January 2022, Harvey tendered his resignation from the second
applicant. On
the same day, Pier 14 and Bidfood’s
contracts for security and cleaning services were terminated and
Harvey was informed
that they would be using the second respondent’s
services, with effect from 1 February 2022.
[39]
Van Wyk proceeded with a notice to Harvey to attend a disciplinary
hearing on 7 January
2022, despite the fact that Harvey was no longer
employed by the second applicant. This elicited a response from
Harvey in
that his attorney of record addressed a letter to Van Wyk.
They,
inter alia
, placed on record that Harvey is not bound by
any covenant in restraint of trade and is free to establish a
business in competition
with the second applicant in order to earn a
livelihood. Further, if Van Wyk contends otherwise, he should
state what the
basis for such contention is. They also
requested copies of the 2021 financial statements of the second
applicant and demanded
that Van Wyk must stop defaming Harvey.
Van Wyk neither responded to the letter nor did he provide a copy of
the financial
statements.
[40]
On 14 January 2022, Harvey received a demand, from the applicants’
attorneys of record,
that he must desist from approaching its clients
and that that was “
in contravention of the rules of unlawful
competition
”. The letter neither mentions that Harvey
is in possession of any confidential information nor did it demand
that he
returns such information, if any, in his possession.
[41]
The applicants thereafter proceeded, in February 2022, to launch the
application, on an
urgent basis.
The
relief
[42]
The applicants seek the following relief against the respondents:
“
1.
Condoning the applicants’ non-compliance with the Rules
relating to forms, service
and time periods and allowing the matter
to be heard as one of urgency …
2.
Pending the outcome of an action to be instituted by the applicants
against the
respondents within one (1) month of the Order, an order
in the following terms:
2.1.
The respondents are interdicted, prevented and restrained
from:
2.1.1.
utilising the applicants’ confidential information,
inclusive of the applicants’ business methods; the applicants’
pricing methods (including, but not limited to, the details of cost
prices and mark-up); products, suppliers, and know-how, for
the
benefit of the respondents or any other person;
2.1.2.
approaching, directly or indirectly, or assisting any other
person in approaching, directly or indirectly, the applicants’
clients situated in the Eastern Cape – a complete client list
is attached …;
2.1.3.
doing
business with, and servicing, the applicants’ erstwhile
clients, Bidfood and Pier 14; and
2.1.4.
competing unlawfully with the applicants.
2.2.
The respondents are ordered to surrender all confidential
information in their possession relating to the applicants’
business,
such information to include but not be limited to:
2.2.1.
all
of the applicants’ customer and supplier lists, including the
contact details thereof;
2.2.2.
all
pricing details and product lists pertaining to the services offered
by the applicants; and
2.2.3.
all
documents containing details of the applicants’ business model.
2.3.
That the respondents are ordered to delete, in the presence of
the applicants’ representatives, of all the applicants’
confidential information on any computer hardware possessed by the
respondents.
3.
Costs of the Application.
”
Legal
framework
[43]
The relief
sought by the applicants is analogous to that of a temporary
interdict, which
requires
them to show: (1) that the right which is the subject-matter of the
main action and which they seek to protect is clear
or
prima
facie
established
though open to some doubt; (2) if the right is only
prima
facie
established,
that there is a well-grounded apprehension of irreparable harm
to the applicants if the interim relief is
not granted and they
ultimately succeed in establishing their right; (3) that the balance
of convenience favours the granting of
the interim relief; and (4)
that the applicants have no other satisfactory remedy.
[6]
[44]
The court
must take into account the allegations made by both the applicant and
the respondent in deciding whether a
prima
facie
right
has been established. It is not sufficient that the applicant
has in affidavits, taken alone, made out a
prima
facie
case.
[7]
[45]
The
following approach, as set out by Clayden J in
Webster
v Mitchell
,
[8]
has been followed by our courts for more than 70 years:
“
The
use of the phrase 'prima facie established though open to some
doubt' indicates I think that more is required than merely
to look at
the allegations of the applicant, but something short of a weighing
up of the probabilities of conflicting versions
is required. The
proper manner of approach I consider is to take the facts as set out
by the applicant, together with any facts
set out by the respondent
which the applicant cannot dispute, and to consider whether, having
regard to the inherent probabilities,
the applicant could on those
facts obtain final relief at a trial. The facts set up in
contradiction by the respondent should then
be considered. If serious
doubt is thrown on the case of the applicant he could not succeed in
obtaining temporary relief, for
his right, prima
facie established, may only be open to 'some doubt'. But if
there is mere contradiction, or unconvincing
explanation, the matter
should be left to trial and the right be protected in the meanwhile,
subject of course to the respective
prejudice in the grant or refusal
of interim relief
.
”
[46]
The
approach as set out in
Webster
,
however, became subject to a qualification as set out in
Gool
v Minister of Justice
,
[9]
as follows:
“
With
the greatest respect, I am of opinion that the criterion
prescribed in this statement for the first branch of the inquiry
thus outlined is somewhat too favourably expressed towards the
applicant for an interdict. In my view the criterion on an
applicant's
own averred or admitted facts is: should (not could) the
applicant on those facts obtain final relief at the trial. Subject to
that qualification, I respectfully agree that the approach outlined
in Webster v Mitchell, supra, is the correct approach for
ordinary interdict applications.
”
[47]
The
position in relation to the granting of interim interdicts has been
succinctly summed up in
Olympic
Passenger Services (Pty) Ltd v Ramlagan
[10]
as follows:
“
It
thus appears that where the applicant's right is clear, and the other
requisites are present, no difficulty presents itself about
granting
an interdict. At the other end of the scale, where his prospects
of ultimate success are nil, obviously the Court
will refuse an
interdict. Between those two extremes fall the intermediate cases in
which, on the papers as a whole, the applicants'
prospects of
ultimate success may range all the way from strong to weak. The
expression 'prima facie established though open
to some doubt'
seems to me a brilliantly apt classification of these cases. In such
cases, upon proof of a well-grounded apprehension
of irreparable
harm, and there being no adequate ordinary remedy, the Court may
grant an interdict - it has a discretion, to be
exercised judicially
upon a consideration of all the facts. Usually this will resolve
itself into a nice consideration of the prospects
of success and the
balance of convenience - the stronger the prospects of success, the
less need for such balance to favour the
applicant: the weaker the
prospects of success, the greater the need for the balance of
convenience to favour him. I need
hardly add that by balance of
convenience is meant the prejudice to the applicant if the interdict
be refused, weighed against
the prejudice to the respondent if it be
granted
.
”
[48]
With regard to an employee leaving his employment, the following is
applicable:
“
An employee who
by virtue of his employment would be in a position to exploit on his
own behalf his employer's customer connections
is free on leaving his
employment, subject to certain limitations, to compete with his
erstwhile employer for the business of the
latter's customers unless
restrained by contract from doing so.
”
[11]
[49]
In
Roberts
v Etwell's Engineers Ltd
[12]
Lord Denning MR said:
“
It
is settled law that a servant, having left his master's service, may,
without fear of legal consequences, canvass for the custom
of his
late master's customers, whose names and addresses he has learned
during the period of his service, so long as he does not
take a list
of them away with him .... All the more so, an agent may do so,
especially when the customers have been introduced
by the agent
himself. In the absence of express restriction (which must be
reasonable) he cannot be restrained from canvassing
the customers for
a new principal.
”
[50]
Also, in
Meter
Systems Holdings (Pty) Ltd v Venter & Another
[13]
categories of confidential information were referred to, which list
is not exhaustive,
inter
alia
:
“
Customer
lists drawn up by a trader, and kept confidential for the purposes of
his own business, contain confidential information,
the property of
the trader. The legal protection afforded to this type of
confidential information is limited by the fact
that the law, whilst
prohibiting an employee from taking his employer's customer list, or
deliberately committing its contents
to memory, nevertheless
recognises that, on termination of an employee's employment,
some
knowledge of his former employer's customers will inevitably remain
in the employee's memory
;
and it leaves the employee free to use and disclose such recollected
knowledge, in his own interests, or in the interests of anyone
else,
including a new employer who competes with the old one.
”
[14]
[51]
I bear the above principles in mind.
The
applicants
[52]
Before I deal with whether the applicants have satisfied the
requirements for an interim
interdict, it is necessary to first deal
with the various applicants.
[53]
The first applicant is a holding company which does not trade.
It is common cause
that other than the shareholders agreement,
between the first applicant and Harvey, no other contract exists
between them.
Significantly, the shareholders agreement
expressly reserves ownership of confidential information possessed by
Harvey prior to
the conclusion thereof, to him.
[54]
The second applicant has been deregistered from PSIRA. The
respondents contend that
since the business of the second applicant
has been transferred, and it is incapable of rendering private
security services, there
is no legal basis upon which the respondents
could be competing unlawfully with the second applicant since it, in
fact, ceased
doing business. The second applicant also failed
to disclose the terms upon which the business were transferred.
[55]
It is also common cause that no contract exists between either or
both of the respondents
and the third and fourth applicants.
The business operated by the second applicant, of which Harvey is/was
a 40% shareholder,
was transferred to the third and fourth applicants
on 1 October 2021, without Harvey’s consent. The third
and fourth
applicants are invoicing the erstwhile clients of the
second applicant directly for services previously rendered by the
second
applicant to such clients.
[56]
Mr Nepgen, who appeared for the respondents, submitted that the
applicants set out no basis
for the relief sought by the first, third
and fourth applicants in their founding affidavit and, therefore, the
application insofar
as it relates to the first, third and fourth
applicants ought to be dismissed with costs. The same argument
was advanced
in respect of the second applicant.
[57]
Mr Bands, who appeared for the applicants, conceded that the first
and second applicants
do not persist with any relief.
[58]
The question which then remains to be answered is, have the third and
fourth applicants
made out a case for the relief which they seek.
Discussion
[59]
The applicants contend that the respondents are in possession of
confidential information,
of the applicants, and have “
a
right not to be competed with unlawfully
.”
[60]
Misuse of confidential information to advance one’s own
business interests and activities
at the expense of a competitor is a
form of unlawful competition.
[61]
It is common cause that Harvey is not in possession of any
information capable of return.
That disposes of the relief
sought in paragraphs 2.2 and 2.3 of the notice of motion.
[62]
What then remains is the interdict to prevent and restrain the
respondents from approaching
the third and fourth applicants’
clients in the Eastern Cape; doing business with Bidfood and Pier 14;
competing unlawfully
with the third and fourth applicants; and costs.
[63]
The alleged confidential information is that of the second
applicant. The respondents
contend that the third and fourth
applicants cannot have a proprietary interest in the second
applicant’s clients.
It was submitted, on behalf of the
respondents, that, therefore, the third and fourth applicants cannot
be granted an interdict
pending a damages claim. I agree with
the respondents, but if I am wrong I proceed to deal with such
relief. In any
event, the applicants merely contend that they
have “
a claim for unlawful competition
”, without
providing any further details. Without such details, I am
unable to consider their prospects of success.
[64]
Section 22 of the Constitution provides:
“
Every citizen has
the right to choose their trade, occupation or profession freely.
The practice of a trade, occupation or
profession may be regulated by
law”.
[65]
In
Phumelela
Gaming and Leisure Ltd v Gründling and Others
[15]
the court held that:
“
The Bill of
Rights protects the right to property, and also promotes and protects
other freedoms, notably in this case, the right
to freedom of trade.
The consequence of the right to freedom of trade is competition.
”
[66]
The Sale of Business Asset Agreement (Iqela) and the Shareholders
Agreement, referred to
above, contain no express stipulation relating
to the use of confidential information. The applicants rely on
the allegation
that the conduct of the respondents
per se
amounts
to unlawful competition.
[67]
The starting point would therefore be to determine whether the
information in question
is truly of a confidential nature. If
it is not, it is not protected. That would, in my view, be the end of
the matter since
the applicants would then have failed to establish
the first requirement, a
prima facie
right.
[68]
It is
necessary to have regard to when information is considered to be
confidential. For information to be considered confidential,
it
must be (i) useful – that is, if it involves and is capable of
application in trade or industry; (ii) (objectively determined)
not
public knowledge or public property but known to a restricted number
of persons; and (iii) objectively of economic value to
the
applicant.
[16]
[69]
Information
does not become confidential merely because an applicant contends
that it does, or, perhaps, even if an applicant believes
it to be
so. An applicant must set out the facts from which the
conclusion could be arrived at that the information is indeed
confidential.
[17]
[70]
In its notice of motion the applicants refer to “
applicants’
confidential information, inclusive of the applicants’ business
methods; the applicants’ pricing methods
(including, but not
limited to, the details of cost prices and mark-up); products,
suppliers, and know-how …
”.
[71]
However, during argument on behalf of the applicants, it became
apparent that it is only
the customer list and pricing which the
applicants contend amount to confidential information. This is
also apparent from
the applicants’ replying affidavit, which
refers to “
pricing and service specifications
”.
[72]
It is common cause that the information of clients, whom a service
provider renders services
to, is intentionally placed in the public
domain by all service providers in the security and cleaning services
industries.
This is also the case with the applicants.
They display the names of some of their clients on their website.
In addition,
security and cleaning personnel are identifiable by
their uniforms, which are used,
inter alia
, for purposes of
marketing.
[73]
With regard to the customer list, as already mentioned above, it is
common cause that Harvey
is not in possession of any information
capable of return.
[74]
Regardless, confidential information known to Harvey prior to the
conclusion of the shareholders
agreement, remains his exclusive
property. Also, none of the agreements contain a restraint of
trade clause.
[75]
What remains then, is the pricing.
[76]
It is common cause that the industry is not complex and pricing
methods are uniform and
simplistic. The applicants provide no
explanation of what pricing and service specifications entail.
As already mentioned,
PSIRA imposes minimum wages to be paid to
security guards according to their different grades. The
cleaning industry is not
as regulated, but the minimum wages are
determined by bargaining councils.
[77]
Therefore, in my view, the pricing appears to be so standardised and
of such general application
that it cannot justifiably be regarded as
confidential.
[78]
It is common cause that Harvey neither approached nor requested
either Bidfood or Pier
14 to do business with him or terminate their
agreements with the second applicant. Both were informed in
December 2021 that
Harvey would be tendering his resignation from the
second applicant in January 2022 and that he intended to open up his
own business
as from 1 February 2022.
[79]
Representatives of Bidfood and Pier 14 deposed to affidavits,
confirming that neither entities
would do business with the
applicants, even if the respondents were prevented from doing
business with them. In fact, the
representative of Pier 14 even
went as far as stating that Pier 14 would never do business with the
applicants again.
[80]
The only clients of the second respondent are Bidfood and Pier 14.
[81]
I agree with the respondents contention that the applicants “
seek
under the guise of unlawful competition an interdict to impose a
restraint of trade on [Harvey]
” for an undetermined period
of time. That would, in my view, inordinately hamper the
respondents’ right to freedom
of trade and be against public
policy.
[82]
The
following, as was held in
Motion
Transfer & Precision Roll Grinding CC v Carstens and another
,
[18]
is apposite:
“
In
the present case there is no proof whatsoever that the respondents
stole the applicant’s customer list or even memorised
it
without purloining the actual document. The most that can be said is
that the first respondent in particular, on his own admissions,
learned in the course of his employment the identity of a number of
the applicant’s clients and that respondents have, since
they
commenced trading in competition with the applicant, solicited work
from some of those clients. In my view, it has not been
shown in the
first place that their approach to those clients was because those
clients featured on the applicant’s customer
list; and,
secondly, even if the first respondent originally learned of their
identity because they were on the list, there is
nothing to show that
his subsequent dealings with them were not of such a nature as to
render it inevitable that he would remember
them and carry away their
identity in his head as potential customers when he left the
applicant’s employ. I accordingly
do not think that the
applicant has proved, even prima facie, that his conduct in
approaching them was unlawful; and it was,
in my view, no more than a
legitimate exercise of his right freely to compete with the applicant
after he left its employ. To hold
that under those circumstances he
should be precluded from approaching any potential customer who
happened to have featured on
the applicant’s customer list
would be unduly to stultify that right and against public interest.
”
[83]
Also,
in
Townsend
Productions (Pty) Ltd v Leech and others
Erasmus AJ (as he then was) said as follows:
[19]
“
I am, however,
in agreement with Page J in Motion Transfer & Precision Roll
Grinding CC v Carsten (supra) at 176h that
the approach
suggested by Van Heerden & Neethling Unlawful Competition at
237–238 is to be preferred. On the
approach suggested by the
learned authors, it must first be determined, with reference to the
requirements of confidentiality and
economic value, whether the
information concerned actually constitutes a trade secret. If the
information does not constitute a
trade secret, cadit quaestio:
the employee is entitled to use it. If the information is found to be
a trade secret, the court
must pass a value judgment as to whether
the use of the information by the ex-employee is justified despite
its confidential nature.
Such judgment involves a weighing up of the
conflicting interests of the employer and ex-employee employing the
criterion of reasonableness
or the boni mores in the light
of all the relevant circumstances of the case. The matter which the
applicant seeks to
protect is not confidential or secret; in other
words, the applicant has not passed the first hurdle of the test
enunciated by
Van Heerden & Neethling Unlawful
Competition at 237–238.
”
[84]
Accordingly, I am of the view that the applicants have failed to
establish even a
prima facie
right although open to some
doubt, and therefore the application must, on this basis alone, fail.
[85]
If I am incorrect in concluding that the applicants have failed to
establish a
prima facie
right,
the
balance of convenience favours the refusal of the interim relief.
I say so because the prejudice to the applicants in
refusing the
relief, and in the event of them proving successful in their claim
(of which no details, save for the bald allegation
of unlawful
competition, have been given), is that it will in the interim have to
compete with the second respondent, on the basis
of them having
unlawful use of confidential information. Although its trading
activities may be adversely affected, it will
not be put out of
business. On the other hand, if the interim relief is granted,
and the respondents are ultimately successful
in defending an action
(yet to be instituted), they would in the interim have been
effectively precluded from trading. This
prejudice, in my view,
far outweighs that which would be suffered by the applicants if the
relief is refused.
Conclusion
and costs
[86]
The information which the applicants seek to protect is not
confidential. Therefore,
they have not passed the first hurdle
of the test. In other words, the applicants have not
demonstrated a
prima facie
right for the relief which they
seek. Nor have they satisfied the other requirements for
interim relief.
[87]
At the hearing of the matter it was conceded that the first and
second applicants are not
seeking any relief.
[88]
The third and fourth applicants, for the reasons as set out above,
have not made out a
case for the relief which they seek.
[89]
Although the respondents’ counsel submitted that costs should
be awarded on the attorney
and clients basis, no such relief is
sought in the papers.
[90]
Accordingly the following order will issue:
90.1.
The application is dismissed.
90.2.
The applicants are ordered to pay the respondents’ costs
jointly and severally, the one paying
the other to be absolved.
T.
Zietsman
ACTING
JUDGE OF THE HIGH COURT
Appearances:
For
the Applicants:
Adv D S Bands, instructed by Lawrence
Masiza Vorster
Inc.,
Gqeberha
For
the Respondents: Adv
J J Nepgen, instructed by Joubert Galpin Searle Inc.,
Gqeberha
[1]
[2006] ZASCA 51
;
2006 (4) SA 292
(SCA) at para
[9]
.
[2]
Uniform Rule 6(12)(b).
[3]
As expeditiously as possible.
[4]
There is no employment agreement attached to the papers.
[5]
The applicants attached a list of sixteen clients to their notice of
motion.
[6]
Bandle
Investments (Pty) Ltd v Registrar of Deeds and Others
2001 (2) SA 203
(SE) at 214I – 215B; see also
Setlogelo
v Setlogelo
1914
AD 221
at 227;
Spur
Steak Ranches Limited and Others v Saddles Steak Ranches, Claremont,
and Another
1996
(3) SA 706
(C) at 714B; and more recently,
Tshwane
City v Afriforum and Another
2016 (6) SA 279
(CC) at para [49].
[7]
Herbstein & Van Winsen
The
Civil Practice of the High Courts of South Africa
5
ed at 1460.
[8]
1948 (1) SA 1186
(W) at 1189.
[9]
1955 (2) SA 682
(C) at 688E – F.
[10]
1957 (2) SA 382
(D) at 383C – G.
[11]
Reeves
and Another v Marfield Insurance Brokers CC and Another
[1996] ZASCA 39
;
1996 (3) SA 766
(A) at 772E – F (footnotes omitted).
[12]
[1972] 2 All ER 890
at 894; quoted with approval in
Freight
Bureau (Pty) Limited v Kruger and Another
1979 (4) SA 337
(W) at 341E – F.
[13]
1993 (1) SA 409
(W) at 428E – F (references omitted).
[14]
Own emphasis added.
[15]
[2006] ZACC 6
;
2007 (6) SA 350
(CC) at para
[33]
(footnote omitted).
[16]
Alum-Phos
(Pty) Ltd v Spatz
[1997] 1 All SA 616
(W) at p 623.
[17]
Mozart
Ice Cream Franchises (Pty) Ltd v Davidoff and Another
2009 (3) SA 78
(C) at 87A – C; and see
Automotive
Tooling Systems (Pty) Ltd v Wilkens
2007 (2) SA 271
(SCA) at para [15].
[18]
[1998] 4 All SA 168
(N) at 177.
[19]
[2001]
2 All SA 255
(C) at pp 273 – 274 (also reported in
2001 (4) SA
33(C)
at 54J-55D).