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[2022] ZAFSHC 75
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DIY Superstores (Pty) Ltd v Kruger and Another (113/2022) [2022] ZAFSHC 75; [2022] HIPR 193 (FB) (19 April 2022)

IN
THE HIGH COURT OF SOUTH AFRICA
FREE
STATE DIVISION, BLOEMFONTEIN
Reportable:
Of
Interest to other Judges:
Circulate
to Magistrates:
NO
NO
NO
Case
no:
113/2022
In
the matter between:
DIY
SUPERSTORES (PTY) LTD
Applicant
and
BAZIL
ANTON KRUGER
1
st
Respondent
BUILD
IT
CORNER
2
nd
Respondent
CORAM:
JP
DAFFUE J
HEARD
ON:
17
FEBRUARY 2022
DELIVERED
ON:
19 APRIL 2022
This
judgment was handed down electronically by circulation to the
parties’ representatives by email, and release to SAFLII.
The
date and time for hand-down is deemed to be 15h30 on 19 April 2022.
I
INTRODUCTION
[1]
A well-known and established business, to wit “
the
largest privately owned DIY Store in South Africa”
that has been doing business for the last 33 years
[1]
decided to rely on a restraint of trade clause in an employment
contract to interdict and restrain an ex-employee from taking up
employment with one of its competitors in Bloemfontein for a period
of two years from the date of termination of the ex-employee’s
employment with it.
[2]
This application, which was brought on alleged urgency, has not only
been met with a
detailed response to the merits, but reliance was
also placed on the applicant’s failure to comply with Rule 41A, a
relatively
new rule which allows parties to consider mediation as a
dispute resolution mechanism.
II
THE PARTIES
[3]
The applicant is DIY Superstores (Pty) Ltd (herein later referred to
“DIY”), a private
company with its main place of business
situated at Oranjesig, Bloemfontein.  It was represented by Adv
S Grobler SC, duly instructed
by Kramer Weihmann Inc of Bloemfontein.
[4]
The first respondent is Bazil Anton Kruger (herein later referred to
as “Kruger”),
a major male person who is presently in the employ
of the Build It Corner in Dan Pienaar, Bloemfontein.  He was
represented
by Adv A Sander, duly instructed by Lovius Block
Attorneys, Bloemfontein.
[5]
The second respondent, Build It Corner, has filed a notice to abide
the decision of
the court.
III
THE RELIEF CLAIMED
[6]
The applicant seeks the following relief as is evident from the
notice of motion which
reads
verbatim
as follows:
“
1.
To the extent necessary, the applicant’s noncompliance with the
rules of this Court
related to time periods is condoned and the
application is heard as an urgent application in terms of Rule 6(12).
2.
For a period of two years after 17 December 2021, and in
Bloemfontein, the First Respondent
is interdicted and restrained from
being an employee, shareholder, partner, member of a close
corporation, director of any company
or in any other capacity
whatsoever associated with any entity that directly or indirectly
competes with the Applicant’s business.
3.
The First Respondent is ordered to immediately terminate his
employment with the
Second Respondent.
4.
The First Respondent is ordered to pay the costs of this
application.  Should
the Second Respondent oppose, then and in
that event the Second Respondent is to pay the costs of the
application together with the
First Respondent, payment by one the
other to be absolved.”
IV
THE DEFENCES
[7]
Kruger has raised the following defences:
7.1
DIY has not made out a case for urgency and it has merely relied on
unfounded and vague allegations
for the abridgement of the time
periods.
[2]
7.2
It is also alleged that DIY failed to comply with the provisions of
rule 41A of the Uniform Rules
of Court insofar as it did not file,
together with the notice of motion, a notice indicating whether it
agrees to or opposes a referral
of the dispute to mediation as
contemplated in the rule.  Therefore, the court was requested to
stay the application pending
compliance by DIY.
[3]
7.3
Kruger dealt with the merits of the application in detail in a
further 26 pages.
[4]
It is recorded that a three months’ fixed term contract was entered
into between the parties for the period 20 July 2020
to 31 October
2020 which contract contained a restraint of trade clause.
Firstly, in this regard, it is Kruger’s submission
that, properly
interpreted, the clause does not prohibit him from taking up
employment as a salaried employee with one of DIY’s
competitors.
Secondly, the fixed term contract automatically lapsed at the end of
October 2020 and although he remained in
the employ of DIY
thereafter, the restraint did not apply to his further employment
which was in terms of an oral agreement entered
into with the Human
Resources Manager of DIY.
7.4
Furthermore, the restraint of trade clause, insofar as it applies to
his further employment, is
unreasonable and against public policy.
He was a logistics supervisor who performed his duties in the DIY’s
yard and did
not work in the hardware store.  He was neither
involved in the general management of the business, nor in its sales
department
and hardware store and was not involved in the conclusion
of any transactions with any of DIY’s customers and suppliers.
[5]
He is not involved in the management of his new employer, but is
merely responsible for sales to customers inside the store
and does
not liaise with or approach suppliers or customers for new business.
According to him DIY has no interest that is
deserving of
protection.  The new employer is one of DIY’s customers and
can never compete on a competitive basis with DIY.
[6]
7.5
It is also Kruger’s case that DIY did not provide him with any
training to become a salesperson.
The only purpose with the
enforcement of the restraint of trade is to prevent him from earning
a living and to stifle the free and
fair use of his own skills,
knowledge and experience.
[7]
V
THE UNDISPUTED FACTS
[8]
The following facts are common cause or not seriously disputed:
8.1
As mentioned, DIY is a well-known and established business and the
largest privately owned DIY store
in South Africa which specialises
in the sale of any kind of building materials and related products to
customers, including other
hardware stores.
8.2
Build It Corner, the second respondent, is a material supply store
that provides some of the services
delivered by DIY, although on a
much smaller scale.  No doubt, it to an extent competes with DIY
although it is also one of
its customers.
8.3
Kruger worked for DIY earlier,
i.e.
from 2003 to 2008, again from 2009 to 2014 and also during 2015,
[8]
but this is apparently not relevant for purposes of the relief sought
by DIY insofar as no reference is made thereto in the founding
affidavit.  Fact of the matter is that Kruger took up employment
with DIY again on 20 July 2020, this time as a supervisor in
DIY’s
yard, in accordance with a written fixed term contract entered into
between the parties.
[9]
8.4
Clause 1.1 of this employment contract reads as follows:
“
1.1
Vastetermyn Aanstelling
Die werknemer word
hiermee aangestel vir ‘n beperkte periode en hierdie kontrak tree
in werking op
20/7/2020
en sal
outomaties termineer
word op
31/10/2020
sonder kennis, soos na verwys in klousule 17 hieronder, (vir ‘n
periode van
03 (drie)
maande / jare).”
(sic).
Clearly, the employer failed to
delete the words “
jare”
.  I emphasise
the words “
outomaties termineer”.
It
would not be necessary for any of the parties to give notice of
termination insofar as the employment contract would automatically
terminate on 31 October 2020.  No doubt, the employment contract
was drafted to in essence deal with permanent employees as
numerous
clauses in the agreement are totally irrelevant to a fixed term
contract.  I do not deem it necessary to mention any
of these.
8.5      The
contentious clause, to wit the restraint of trade clause, is
encapsulated in clause 28, which reads
as follows:
[10]
“
28.
BEPERKING OP HANDELSVRYHEID
28.1   Die
werknemer onderneem om nie binne ‘n tydperk van twee (02) jaar
nadat die werknemer se diensverhouding by die
werkgewer beëndig is,
betrokke te wees as aandeelhouer, vennoot of lid van ‘n Beslote
Korporasie, direkteur van ‘n Maatskappy
of enige ander hoedanigheid
hetsy direk of indirek in ‘n besigheid wat met die werkgewer
kompeteer in die gebied bekend as Bloemfontein
nie.
28.2   Die
werknemer erken en stem saam dat die voormelde beperking op
handelsvryheid redelik, billik en noodsaaklik is
vir die beskerming
van die werkgewer se besigheid, besigheidsnaam en wat daarmee verband
hou.
28.3   Met
voorbehoud van regte en sonder om afbreuk te doen aan enige regte wat
die werkgewer in terme van die gemenereg
of statutêre reg besit,
stem die werknemer toe tot skade van ‘n bedrag van R5 000-00
(vyf duisend rand) vir elke maand waaraan
die werknemer hom skuldig
maak aan verbreking van hierdie klousule en vir solank die verbreking
voortduur en dat die werkgewer geregtig
is om sodanige skade te
verhaal, asook kostes verbonde aan verhaling, van die werkgewer ten
opsigte van sodanige verbreking.”
8.6
Notwithstanding the lapse of the fixed term contract on 31 October
2020 Kruger remained in the employ
of DIY until 17 December 2021.
The circumstances giving rise to the further employment are in
dispute and will be dealt with
later herein.
8.7
On 17 December 2021 an incident occurred which caused Kruger to
immediately leave the premises of
DIY during the early morning in a
clear and emphatic fashion not to return to work.  There is a
dispute as to what exactly happened,
but it is no doubt apparent that
one of DIY’s two directors, Mr Marius Eksteen, was furious. I shall
deal later herein with the
manner in which the dispute should be
considered in application proceedings.
8.8
At the beginning of January 2022 Kruger took up employment with the
second respondent,
Build It Corner, as a sales manager.  This
triggered an immediate response from DIY which eventually led to the
present litigation.
8.9
Within days,
i.e.
on 4 January 2022, the first letter of demand by DIY’s attorneys
was served upon Kruger and second respondent in terms whereof
Kruger
was instructed to immediately terminate his employment with second
respondent.
[11]
There was a response from Tiaan Smuts Attorneys who at that stage
apparently had instructions from the second respondent, but
this
letter was followed by a further letter from DIY’s attorneys dated
5 January 2022, insisting upon Kruger’s immediate resignation
by
the next day, to wit 6 January 2022.
[12]
8.10
On 6 January 2022 Tiaan Smuts Attorneys forwarded a letter in which
they requested a copy of the
agreement applicable when their client
resigned as logistics supervisor.  Clearly a request was made
for a copy of the employment
contract that was entered into after
termination of the three months’ fixed term contract.  It was
also placed on record that
Kruger resigned whilst he was a logistics
supervisor with DIY, but was appointed by the new employer as a
salesman and that he had
no intention to compete unlawfully with
DIY.
[13]
8.11
Hereafter the urgent application was issued without complying with
rule 41A, followed by answering
and replying affidavits.
8.12
Tiaan Smuts Attorneys and their Bloemfontein correspondents,
Phatshoane Henney Inc, withdrew as
Kruger’s attorneys of record two
days before the hearing of the application.  Lovius Block
Attorneys hereafter came on record
as Kruger’s new attorneys.
As indicated, second respondent abides the judgment of this
court.
VI
THE 1
st
DEFENCE: LACK OF URGENCY
[9]
In my view no proper defence has been raised in this regard.
The time periods
have been truncated to a certain extent, but Kruger
had sufficient opportunity to place all relevant evidence on record
in support
of his defence on the merits.  I also accept that
applications of this nature are generally considered sufficiently
urgent,
requiring speedy adjudication thereof.
VII
THE 2
nd
DEFENCE: NON-COMPLIANCE WITH RULE 41A
[10]     Rule
41A reads as follows and for purposes hereof I merely quote sub-rules
1, 2, 3 and 9 thereof:
“
(
1)
In this rule-
‘
dispute’ means
the subject matter of litigation between parties, or an aspect
thereof.  ‘mediation’ means a voluntary process
entered into
by agreement between the parties to a dispute, in which an impartial
and independent person, the mediator, assists the
parties to either
resolve the dispute between them, or identify issues upon which
agreement can be reached, or explore areas of compromise,
or generate
options to resolve the dispute, or clarify priorities, by
facilitating discussions between the parties and assisting
them in
their negotiations to resolve the dispute.
(2)
(a)
In every new
action or
application
proceeding, the
plaintiff or
applicant shall
, together with the summons or
combined summons or notice of motion,
serve
on each defendant
or respondent
a notice indicating
whether such plaintiff or
applicant
agrees to or opposes referral of the dispute to
mediation.
(b)
A defendant or respondent shall, when delivering a notice of
intention to defend or a notice of intention to oppose, or
at any
time thereafter, but not later than the delivery of a plea or
answering affidavit, serve on each plaintiff or applicant or
the
plaintiff’s or applicant’s attorneys, a notice indicating whether
such defendant or respondent agrees to or opposes referral
of the
dispute to mediation.
(c)
The notices referred to in paragraphs (a) and (b) shall be
substantially in accordance with Form 27 of the First Schedule
and
shall clearly and concisely indicate the
reasons for such party’s belief
that the
dispute is or is not capable of being mediate.
(d)
Subject to the provisions of subrule 9(b) the notices referred to in
this subrule shall be of a without prejudice and shall
not be filed
with the registrar.
(3)
(a)  Notwithstanding the provisions of subrule (2), the parties
may at any stage before
judgment, agree to refer the dispute between
them to mediation:  Provided that where the trial or opposed
application has commenced
the parties shall obtain the leave of the
court.
(b)
A Judge, or a Case Management Judge referred to in rule 37A or the
court may at any stage before judgment direct the parties
to consider
referral of a dispute to mediation, whereupon the parties may agree
to refer the dispute to mediation.
(9)
(a)  Unless the parties agree otherwise, liability for the fees
of a mediator shall be
borne equally by the parties participating in
mediation.
(b)
When an order for costs of the action or application is considered,
the court may have regard to the notices referred to
in subrule (2)
or any offer or tender referred to in subrule (8)(d) and any party
shall be entitled to bring such notices or offer
or tender to the
attention of the court.”
(emphasis added)
[11]     It is
important to consider the definition of “
mediation”
.
No doubt, the new rule provides for a voluntary process entered into
by agreement between the parties to a dispute.
The aim is that
an independent person, a mediator, should be instructed to assist the
parties in order to come to a possible settlement
of the dispute or
disputes between them.  The word “shall” is found in
sub-rules 2(a), 2(b) and 2(c) which is indicative
of a peremptory
provision.  The notices mentioned in sub-rules 2(a) and (b) must
be substantially in accordance with Form 27
of the First Schedule to
the Uniform Rules of Court.  The parties must indicate clearly
the reasons for the belief that the
dispute is capable of being
mediated or not.
[12]     It
is evident that the fees of the mediator must be paid by the parties
equally, unless they agree otherwise.
When the costs of the
application or action is considered, the court is entitled to have
regard to the notices filed in terms of
sub-rule 2.  I have
serious reservations as to the relevance of rule 41A at present.
The rule makers apparently believed
that speedy and less expensive
resolution of disputes between parties would be achieved and possibly
also an avoidance of over-congested
court rolls.  Unfortunately,
this is a pie in the sky.  Unless mediation is peremptory and
provision is made for payment
of mediators by the State, litigants
will in most cases endeavour to obtain adjudication of their disputes
by the court.  This
is especially true for plaintiffs and
applicants who believe that they are entitled to certain relief.
Obviously, some defendants
and respondents who prefer not to be
dragged into litigation may well try their level best to delay
adjudication of the applicants’
or plaintiffs’ claims and in the
process insist on compliance with Rule 41A.
[13]
Mediation is a costly affair.  If it is not agreed to and/or
stated clearly in the rules that the
parties shall not be presented
by legal representatives during the mediation process, the same legal
representatives eventually appearing
for the parties during the
action, trial or opposed application, would elect to appear on behalf
of the parties during mediation.
The mediator, who should be a
qualified, experienced and legally trained person, will charge
his/her fees in line with what trained
lawyers charge and the parties
would have to pay these fees, contrary to the situation in court
where presiding judges and magistrates
are being paid their salaries
from public funds.
[14]
Having said this, I am satisfied that if I an experienced lawyer was
approached prior to the commencement
of proceedings to act as
mediator, there might have been a good possibility of a settlement.
Sub-rule 3(b) provides a discretion
to the court to direct the
parties to consider referral of a dispute to mediation, but again,
the parties do not have to adhere to
such a request.  I
reiterate, unless mediation is made compulsory and provision is made
for the payment of the mediator’s
fees and services accessory
thereto, such as accommodation facilities, microphones and recording
machines and interpreters, the purpose
of the rule makers will not be
achieved.
[15]     I
have come across only one reported judgment in this regard, to wit
Nomandela and Another v
Nyandeni Local Municipality and Others
.
[14]
In that case the respondents raised the preliminary point of
non-compliance with rule 41A(2)(a) when the applicants approached
the
court on an urgent basis for the determination of
interim
relief.  I fully agree with the following
dictum
by Majiki J:
“
[9] Having said
that, the rule became effective in March 2020. I have not been made
aware that there are available, adaptable instruments
in place,
including personnel, for effective implementation of the rule in this
division. More significant, though, is the respondents'
own silence
about their stance on mediation. Rule 41A(2)
(b)
compels the respondents to also file their
notice as to whether they agree or oppose referral of the dispute to
mediation. The rule
does not suggest that their compliance is
dependent on the applicants' filing of a rule 41A(2)
(a)
notice. Even if it were, nowhere have they
stated in the answering affidavit that they would have wished to
explore or not explore
the mediation process, but could not do so for
reason of the applicants' nonfiling.  I am of the view that they
could have complied
with their part of the obligation in terms of the
rule, or communicated their stance on mediation regardless of the
applicants' failure.”
[16]     I am
also in full agreement with the learned judge’s comment that “
rules
are meant for the court and not the other way around”
,
as
well as the following comment:
“
It
is ideal that in the near future litigants should comply with this
rule.  That would ease the congested court rolls and achieve
less costly and speedier resolution of disputes.”
[15]
However,
I reiterate what I have said earlier pertaining to who should foot
the bill.
[17]
Having said all this, I am satisfied that an applicant’s failure to
comply with Rule 41A, either to
agree to a process of mediation, or
at least to consider the procedure and explain why it is not a viable
option, may have a bearing
on the award of costs.
VIII
THE CASE LAW IN RESPECT OF
PACTA SERVANDA SUNT
AND RESTRAINT
OF TRADE DISPUTES
[18]   I recently had
to adjudicate two identical matters, the facts which are not too
dissimilar from the facts
in
casu
.  I then had
the opportunity to consider relevant case law and deem it apposite to
quote extensively from that judgment, to
wit
Mangaung
Building Materials v Zulu and Sekhoane
[16]
:
“
[14]
The authorities in restraint of trade disputes are well known and it
would suffice to briefly mention
a few judgments.  We learned
from the Romans:
pacta servanda sunt
,
i.e.
contracts must be
complied with. This remains an important principle, but many years
before the enactment of both the
interim
and final Constitutions, the Appeal Court (as it was then called)
held in its landmark decision of nearly 40 years ago in
Magna
Alloys and Research (Pty) Ltd v Ellis
that
agreements in restraint of trade are valid and enforceable, unless
they are unreasonable and thus contrary to public policy.
The
court held that the party challenging the enforceability of the
agreement bears the
onus
to allege and prove that it is unreasonable.
[15]
Many years after
Magna Alloys
the Constitutional Court
confirmed in
Barkhuizen v Napier
that
pacta servanda sunt,
but courts are allowed to decline to enforce contracts, or terms
thereof, that are in conflict with constitutional values, even where
the parties consented thereto.
[16]
Although restraint of trade agreements should not be regarded as
special contracts separate from any
other type of contract, it is no
doubt so that restraint of trade agreements give effect to a wide
range of circumstances ‘spanning
the spectrum from the hugely
successful businessperson who sells the business that he or she has
built up for massive amounts of
money and is required to sign a
restraint of trade agreement in order that the purchaser may protect
its investment, to relatively
humble employees
who may be
required to sign such an agreement as a matter of rote and possibly
in terrorem
to deter them from seeking a more advantageous
position …’ as Wallis AJ (as he then was) stated in
Den Braven
SA (Pty) Ltd v Pillay and another.
Later on, in the same
paragraph quoted, the learned judge stipulated that where a business
seeks to protect itself, there is
no reason for the courts to view
this with disfavour, unless the bounds of public policy are
overstepped in which case the court
will withhold its assistance.
[17]
Although the public interest requires parties to comply with their
contractual undertakings, it
is also in the public interest that all
persons shall be granted an opportunity to remain economically
productive to enable them
to earn a living and to support their
families.  This was again reiterated in
Reddy v Siemens
Telecommunications (Pty) Ltd.
The court continued in
Reddy
as follows:
‘
A
restraint would be unenforceable if it prevents a party after
termination of his or her employment from partaking in trade or
commerce
without a corresponding interest of the other party
deserving of protection. Such a restraint is not in the public
interest.’
[18]
In conclusion, and as Malan AJA did in
Reddy
, a court should follow the approach adopted in
Basson
v Chilwan and Others
where four questions were identified that
should be asked to consider the reasonableness of a restraint of
trade:
‘
(a)  Does
the one party have an interest that deserves protection after
termination of the agreement?
(b)   If
so, is that interest threatened by the other party?
(c)   In
that case, does such interest weigh qualitatively and quantitatively
against the interest of the other party not
to be economically
inactive and unproductive?
(d)   Is
there an aspect of public policy having nothing to do with the
relationship between the parties that requires the
restraint to be
maintained or rejected?’”
(footnotes omitted)
[19]     I
shall say more about the facts in
Den
Braven SA (Pty) Ltd v Pillay and another
and
Reddy v Siemens
Telecommunications (Pty) Ltd,
referred
to in my judgment quoted in the previous paragraph when I evaluate
the evidence
.
In
Automative Tooling
Systems (Pty) Ltd v Wilkens and another
[17]
the Supreme Court of Appeal dealt with the know-how acquired by an
ex-employee where such know-how forms part of the stock of skill
and
knowledge acquired by him in the course of developing his trade.
That case dealt with the manufacturing of machines which
in my view
is a much more specialized field than the position occupied by Kruger
during his employ with DIY.  The court held
that the employer
had no proprietary interest that might legitimately be protected and
that the restraint was inimical to public
policy and unenforceable.
In casu
,
the acumen of a salesperson to sell various building materials who
has been employed as such by more than one hardware store over
the
years, including the applicant some years ago, is in the spotlight.
[20]    In
Digicor
Fleet Management v Steyn
[18]
the Supreme Court of
Appeal, while acknowledging the trite legal principle that the
onus
is on the person
trying to escape the consequences of a restraint of trade clause to
prove that the employer has no propriety interest
which needs
protection,
[19]
emphasised that insofar as motion proceedings were instituted, the
version of Mrs Steyn as the respondent had to be accepted.
In
that case Mrs Steyn had previous experience in the particular field
in which she was employed and although she made contact with
customers of Digicore after termination of her employment, the
Supreme Court of Appeal had no hesitation to confirm the correctness
of the High Court’s decision to dismiss the application.  The
court distinguished the facts before it from that in
Reddy
to be discussed later herein.  It also accepted the fourfold
test enunciated in
Basson
v Chilwan
[20]
which I also quoted in my aforementioned judgment.  In this
regard it
inter alia
held that Digicore had a proprietary interest in its client base and
information about it which deserves protection, but that Mrs
Steyn
presented no threat to that interest.
[21]
[21]     In
Barkhuizen v
Napier,
[22]
referred to in my judgment quoted in detail
supra
[23]
the Constitutional
Court held that “
the
proper approach to constitutional challenges to contractual terms is
to determine whether the term challenged is contrary to public
policy
as evidenced by the constitutional values, in particular, those found
in the Bill of Rights.”
Ngcobo J, writing for the
majority, made the point that such an approach “
leaves
space for the doctrine of
pacta sunt servanda
to operate, but at the same time allows courts to decline to enforce
contractual terms that are in conflict with the constitutional
values
even where the parties have consented to them.”
[22]     It
is also important to mention more recent authorities in order to
appropriately adjudicate the dispute.
Perhaps the latest
judgment of the Constitutional Court pertaining to
pacta
servanda sunt
is
Beadica 231 CC and
Others v Trustees, Oregon Trust and Others (Beadica).
[24]
I can do no better than to quote the judgment of Unterhalter AJA, a
unanimous judgment of the full bench of the Supreme Court of
Appeal
where the learned judge of appeal dealt as follows with
Beadica
in
Capitec Bank
Holdings Ltd and Another v Coral Lagoon Investments 194 (Pty) Ltd and
Others (Capitec)
[25]
:
“
[63]
Beadica affirms the following.
First, the
principle that contracts freely and voluntarily entered into must be
honoured remains central to the law of contract
.
This principle, often captured under the phrase freedom of contract,
recognises that persons, through voluntary exchange, may freely
take
responsibility for the promises they make, and have their contracts
enforced. Second, at common law, now infused with the values
of the
constitution, there are principles expressed in the detailed
doctrines that make up the law of contract, that determine how
freedom of contract is exercised and contracts are enforced.
Third,
one such doctrine concerns the enforcement of contract terms that
offend against public policy
. Both the scope
of public policy and its application, to invalidate contract terms,
should be undertaken with circumspection, but
without timidity, in
upholding fundamental constitutional values. Fourth, while good faith
underlies the law of contract and informs
its substantive rules, good
faith and fairness are not substantive, free-standing principles to
which direct recourse may be had
so as to interfere with contractual
bargains or decline to enforce contracts.”
(emphasis
added)
IX
EVALUATION OF THE EVIDENCE AND SUBMISSIONS OF THE PARTIES PERTAINING
TO THE MERITS OF
THE APPLICATION
[23]     Mr
Sander’s submission pertaining to the lack of proper attestation
needs to be dealt with immediately
before all else.  He
submitted that Mrs Jackie Oosthuizen’s affidavit should be ignored
and in such case the version of Mr
Marius Eksteen, who deposed to the
founding affidavit, contains inadmissible hearsay pertaining to the
alleged further agreement
between the parties relating to Kruger’s
employment beyond the three months’ fixed term contract.
This submission
is without substance and rejected.  There cannot
be any doubt that the HR manager of DIY is a female.  Kruger
himself said
so.  She is described by Mr Eksteen as female,
being Mrs Jackie Oosthuizen, exactly as Kruger described her.
The applicant’s
attorney, the typist, the deponent and the
commissioner of oaths – all four of them -  should have noted
that the attestation
clause of Mrs Oosthuizen’s affidavit is wrong
in only single respect: a typographical error occurs in that the word
“
he”
in the first line should have been
“
she.”
The remainder of the attestation
clause clearly reflects that the affidavit is binding on “
her”
-
the deponent’s conscience – and that “
she”
has signed and sworn to before the commissioner of oaths.  Such
a technical approach to litigation is not in the interests of
justice
and should not be countenanced.  I conveyed my stance clearly
during oral argument and nothing more needs to be said.
Consequently, I shall consider the evidence of Mr Eksteen insofar as
it is confirmed by Mrs Oosthuizen.
[24]    This is
opposed motion proceedings.  In adjudicating the various
disputes, the version of the respondent
must be accepted unless it is
so far-fetched or improbable that it should be rejected as false.
I bear in mind that the inherent
probabilities do not play a role.
Clearly on both versions, that of Mrs Oosthuizen and Kruger, there
was a discussion between
the two upon termination of the fixed term
contract.  DIY’s version is that all the terms of the written
agreement would remain
in place with the necessary amendments
pertaining to remuneration and post designation issues.
Kruger’s version is that he
was told to continue with his
employment and that no written contract would be presented to him.
According to him, he was never
informed that his permanent employment
would be on the same terms as set out in the fixed term contract and
he also did not agree
thereto.  I am satisfied that Kruger did
not play open cards in this regard.  He did not say with which
terms and conditions
he did not agree or which new terms would govern
the permanent relationship.  I accept that he knew that the
restraint of trade
clause would apply also to his permanent
employment.  I mentioned above that the terms of the written
fixed term contract contained
all those terms usually encountered in
permanent employment contracts.
[25]     I
also reject the defence and submissions on behalf of Kruger that the
restraint of trade clause did
not prohibit him from taking up
employment as a salaried employee with one of DIY’s competitors.
I do not intend to waste
much time on this aspect, bearing in mind
the eventual conclusion arrived at in this judgment.  The
Afrikaans language is unambiguous
and clear.  No reasonable
interpretation can lead to anything else:  Kruger was prohibited
to become involved, directly
or indirectly, in any other capacity
than those specifically mentioned, with any competitor of DIY in
Bloemfontein.  No doubt,
it includes being employed as an
employee and being paid a salary for his services.
[26]     In
his most able address and in his usual eloquent approach Mr Grobler
did his best to convince me that
the applicant is entitled to relief
although he eventually spontaneously conceded that a restraint of
trade of two years is far too
broad.  I shall come back to this
aspect.  Mr Grobler submitted that Kruger occupied such an
important position at DIY
that his employment with a competitor could
seriously undermine DIY’s business.  I do not agree.
Kruger can never be
equated with Messrs Reddy and Pillay, the
employees in the aforementioned judgments.
[26]
[27]     Mr
Reddy, the appellant in
Reddy
v Siemens
[27]
quoted above was a
systems
engineer in the carrier services high level support network platform
department of Siemens which rendered “
intelligent
network”
and value added services to its customers.  He had knowledge of
confidential technologies which could be utilised when he started
employment with a competitor of Siemens, such as Ericsson.
Reddy gained experience and was trained both in South Africa and
abroad in relation to his ex-employer’s products and networks and
the use of its software which gave Siemens’ intelligence network
platform service a unique identity and competitive edge. The process
of customising software was confidential and a trade secret
of
Siemens. Clearly, Reddy was a skilled employee in possession of
knowledge of Siemens’ “
processes,
methodologies and systems architecture.”
In
the case of Reddy, the Supreme Court of Appeal held that he would be
employed with Ericsson in a similar position to the
one he occupied
at Siemens, that his loyalty would be to his new employer and the
opportunity to disclose confidential information
at his disposal,
whether deliberately or not, would exist.  Therefore, the
restraint was intended to relieve Siemens from the
risk of disclosure
and the court had no difficulty to find that the restraint was
neither “
unreasonable
nor contrary to public policy.”
[28]
The differences between the experience and expertise of Reddy and
that of Kruger are enormous, not to mention Reddy’s knowledge
of
trade secrets.
[28]     In
the
Den Braven
case, Mr Pillay, the ex-employee, was regarded as an excellent sales
representative who in the financial year before his resignation
was
responsible for close to 50% of Den Braven’s sales of its products
in KwaZulu-Natal.  Pillay conceded that he had knowledge
of Den
Braven’s client base and that he had built-up a close relationship
with customers over a period of 8 years.  The court
had little
difficulty to hold that the purchasing decisions of customers are not
only influenced by price as opposed to the relationship
between the
salesperson and customers in that factual scenario.
Furthermore, the trade connection established through a specific
salesperson may well be the decisive factor in the minds of
customers.
[29]
No doubt, Pillay could be described as an excellent salesman that
would most definitely have a detrimental effect on Den Braven’s
future sales whose commercial interests were deserving of
protection.
[30]
It does not require the intellect of an Einstein  to appreciate
the differences between the value contributed to the business
of his
ex-employer by Pillay and the relatively low-impact position held by
Kruger.
[29]     In
Reddy
the duration of the restraint of trade was one year which the court
held was reasonable.  In Pillay the duration of the restraint
was decreased from two years as contained in the restraint of trade
agreement to eight months and Wallis AJ stated the following
in
support of the decrease:
[31]
“
In
my view the period of the restraint should not be any longer than is
necessary to enable the Applicant to place a new salesperson
in the
field, enable them to become acquainted with the products and the
customers and to make it plain to the latter that they are
now the
person with whom to deal on behalf of the Applicant. Having regard to
the nature of the products, the type of customer to
whom they are
sold and the number of customers who will
need
to be contacted
I think that a period of 8 months is sufficient for those purposes.”
(emphasis
added)
[30]     Mr
Grobler relied during oral argument on a case not referred to in his
heads of argument, to wit
Kwikspace
Modular Buildings v Sabodala Mining CO SARL
,
[32]
in order to convince me that DIY did not have to explain in its
founding affidavit why public policy did not come into play
in
casu
and also why it
was unnecessary to set out facts to show that the restraint was
necessary to protect its business interests.
Therefore, he
submitted that insofar as DIY dealt with these issues in detail in
the replying affidavit, it was expected of Kruger
to obtain leave
from the court to file a fourth set of affidavits in order to try and
counter DIY’s version in reply which he failed
to do.  It was
submitted that without a response from Kruger in a further affidavit,
DIY’s version stands unchallenged and
that the issues of public
policy and the threat of applicant’s business interests are not
live anymore.  This is not the law.
The court must
consider all the evidence and also bear in mind the manner in which
opposed motions should be adjudicated,
i.e.
on the respondent’s version, unless it is so far-fetched that
it stands to be rejected.  I reiterate that the approach
in
B
asson v Chilwan
has
stood the test of times.  I do not intend to repeat it.
The test was applied in numerous judgments thereafter.
A court
should always consider the reasonableness of a restraint of trade and
whether or not it offends public policy.  I referred
to several
other judgments dealing specifically with restraints of trade above,
but the reader is also reminded to consider the
Beadica
judgment of the Constitutional Court and the
Capitec
Holdings
judgment of
the Supreme Court of Appeal that deal with contracts in general –
the
pacta servanda sunt
principle and the
effect of fundamental constitutional values upon contracts freely
entered into.
[31]    I noted
from the notice of motion that DIY provided for “
further
affidavits to be filed by 10 February 2022”
,
three days after the filing of its replying affidavit.  I must
say I find it astonishing that an applicant may reserve the
right for
the respondent to file a fourth set of affidavits.  Only three
sets of affidavits are permitted in motion procedure
although further
sets of affidavits may be allowed by the court in exceptional
circumstances and upon application for leave by the
particular
party.
[33]
It is trite that a party electing to make use of motion procedure
must make out a case for relief in the founding affidavit.
[32]     The
Kwikspace
judgment relied upon by Mr Grobler is not relevant
to the present dispute as it is distinguishable on the facts.
Furthermore,
the
dictum
relied upon was in any event
obiter.
I quote: “
In the present appeal it may be
convenient to include the term for which the contractor contends; but
it is not necessary to do so.
If a contractor really was unaware of
the basis on which the principal would rely to present the
guarantee, and the contractor
was of the view that there could not be
any valid basis, it could swear an affidavit to this effect - and,
absent an undertaking
by the principal, it could obtain an interim
interdict to prevent presentation of the guarantee pending
determination of the application.
The principal's case would then
have to be made out in its answering affidavit to which the
contractor would be able to reply.
This may necessitate an
application by the principal for leave to file a fourth set of
affidavits. But it is not unusual for a party
to be unaware of the
details of the case of its adversary. In an application to restrain
publication of a defamatory article, the
applicant will seldom
be able to attach a copy of what a newspaper intends publishing.
In applications for the enforcement of a
restraint of trade, the applicant is not obliged to set out in its
founding affidavit the
reason why it contends the restraint is
necessary for its protection.
And certainly
at least before the advent of the Prevention of Illegal Eviction from
and Unlawful Occupation of Land Act 19 of 1998,
when an owner brought
a
rei vindicatio
, it
was not obliged to say why it alleged that the defendant/respondent
was in unlawful occupation of its property.”
(emphasis
added).
[33]   To the best of
my knowledge the aforesaid
dictum
was not referred to at all
in any reported judgment over the past 12 years.  I acknowledge
that, in principle, the applicant
relying on a restraint of trade
clause only needs to prove the contract and breach thereof by the
other party.  Insofar as public
policy and the constitutionality
of a restraint of trade need to be considered, an applicant will be
ill-advised if these aspects
are not addressed in the founding
affidavit.  Obviously, once that has been done and bearing in
mind the respondent’s response,
it would be possible to deal with
the issues again in the replying affidavit.  The learned judge
referred to the principles
applicable to applications based on the
rei vindicatio
and conceded that the situation has changed
since the promulgation of the Prevention of Illegal Eviction from and
Unlawful Occupation
of Land Act, 19 of 1998.  In my view, and
although the
onus
has not changed, an applicant in restraint
of trade applications cannot wait to deal with the aforementioned
issues in the replying
affidavit for the first time.
[34]    Mr Grobler
also handed up from the bar the Labour Court judgment,
ITE
Events SA (Pty) Ltd v Kilian & others
[34]
which he submitted supported his submission that Kruger’s failure
to file an affidavit in response to the averments in the replying
affidavit was the end of the matter insofar as unreasonableness and
public policy were concerned.  The judgment does not support
DIY’s case at all.  In that case the employees without leave
from the court filed a fourth affidavit a day before the hearing
to
which the applicant objected.  The court reiterated the trite
principles regarding the number of sets and sequence of affidavits
and that a party seeking leave to file a further affidavit must
advance proper reasons for the indulgence sought.
[35]
The court mentioned that a fourth set of affidavits may sometimes be
necessary in restraint of trade litigation, for example
insofar as
the applicant seeks to rebut allegations of unreasonableness or
contrary to public policy, but to allow a departure from
the general
rule remains in the discretion of the court.
[36]
I find it difficult to understand why an applicant would want to seek
permission to file a fourth set of affidavits in the
circumstances
mentioned by the court.  Surely, the respondent may raise these
issues in the answering affidavit to which the
applicant may respond
in a replying affidavit as DIY did
in
casu
.
[35]     I
cannot for one moment accept that Kruger could disclose confidential
information if he so chose.
No case has been made out in the
founding affidavit. The facts, even the allegations in the replying
affidavit, are insufficient.
Kruger might have known at what
prices DIY obtain products from suppliers, but I fail to understand
how this can assist him to damage
DIY’s business.  Prices
differ over time and it would be impossible for Kruger to memorise
the prices of various products.
In any event, it is DIY’s
competitive edge in the market that allows it to negotiate the best
prices, as it’s deponent made clear
in reply.
[37]
I fail to understand on what basis would Kruger be able to negotiate
the same prices on behalf of his new employer.  He
was never
involved with any deal making.  I also do not accept the version
that Kruger’s new employer will be able to “
undercut”
DIY’s prices merely because Kruger is employed by them.  All
and sundry can obtain quotations from any hardware shop either
over
the internet or by entering the shop.  All these shops, like
other businesses, market themselves and advertise so-called
specials
on a regular basis.  Prices are really not a secret anymore.
I also find it highly improbable that a former logistics
supervisor,
and now a salesman selling products over the counter, is able to
persuade potential customers to buy from his new employer
and thereby
enticing them away from DIY.  Surely, there is no evidence that
Kruger has any of DIY’s customers “
in
his pocket”
as
was the case with Mr Pillay, the superb salesman mentioned above.
The matter is totally distinguishable from
Reddy
and
Den
Braven
.  In my
assessment of the evidence no potential exploitation has been shown
by DIY, let alone proven exploitation.  The
mere fact that DIY
has an existing clientele and that Kruger had limited contact with
customers in his position as logistics manager/supervisor
is just not
enough for a finding that Kruger is in a position to threaten DIY’s
interests.  I also point out that in order
to establish urgency,
DIY pertinently stated that Kruger’s involvement with 2
nd
respondent was a “
threat
to the DIY business”
and
his employment with it “
is
causing to DIY harm.”
No
evidence whatsoever has been provided, either in the founding, or the
replying affidavit, to support these vague and unsubstantiated
averments.
[36]     I find it
unbelievable that the applicant could reason for one moment that it
could restrain Kruger to work
for the opposition for a period of two
years after the expiry of the three months’ fixed term contract.
Yet, this is exactly
the deal that it insisted Kruger to agree upon.
This is unreasonable in the extreme.  Notwithstanding this
observation,
I accepted above that the parties came to a new oral
agreement upon expiry of the fixed term contract based on the same
terms as
set out in the written contract, subject to the changes
mentioned by DIY’s HR manager, Mrs Jackie Oosthuizen.  I
rejected
Kruger’s version in this regard and held that the
restraint of trade clause quoted above governed the new employment
relationship.
[37]    Kruger’s
right – like the right of any other citizen in this country - to
choose his trade, occupation
or profession freely, subject to being
regulated by law
[38]
– is a fundamental constitutional right which plays an important
role in the weighing up of the parties’ interests.  Already
before the promulgation of the final Constitution the court held in
Basson v Chilwan
that a restraint is unreasonable if it prevents a party from
participating freely in the commercial and professional world without
a protectable interest of the other party being properly served
thereby.
[39]
Even if is accepted that there was an interest to
protect, employers such as DIY who insist on overly broad restraints,
such as two years in this case, may find out soon that courts may not
be prepared to come to their assistance as these time limits
are in
most cases totally unreasonable and cannot serve any purpose, but to
prevent an ex-employee to earn an income.  Mr Grobler
conceded
that the period was unreasonable.  He suggested that the court
may consider a period of one year, or at best for Kruger,
six months.
Kruger stated in his answering affidavit that if the court held that
DIY did in fact have an interest worthy of protection,
a period of
three months would be sufficient to protect such interest.
[40]
This is a logical submission and if DIY was prepared to accede
thereto, the matter could have been settled without incurring
the
enormous costs of an opposed application.  Why should courts
continue to assist recalcitrant employers who should know that
they
rely on unreasonable restraint of trade clauses, especially when
their counsel more often than not concede the unreasonableness
and
opt for lesser periods?  Courts are not in the business of
making contracts for parties.  I should not be understood
to be
averse to all agreements in restraint of trade.  The contrary is
true.  An employer may rely on a restraint of trade
period which
is reasonable if it has an interest worthy of protection.
Bearing in mind the facts in this case, the period should
be no
longer than required to find a suitable substitute.  Obviously,
a longer period may be reasonable if it concerns key personnel
like
the chief executive officer of a business, or its financial manager,
or some other high ranking employee, especially if such
employee is
privy to confidential information that may be used to compete
unlawfully with the ex-employer.
[38]     It
is not necessary to dwell on the reasons why Kruger left his
employment with DIY so suddenly.
According to him he was
degraded and insulted by Messrs Marius and Jan Eksteen, the DIY
directors, in the presence of co-employees
over a period of time,
causing the relationship between them to deteriorate. On the morning
of 17 December 2021 a furious Mr Marius
Eksteen used foul language,
degraded the employees and threatened them with written warnings for
something beyond their control.
He left and tendered his
resignation by email at 09h35. His version is disputed, but Mr
Eksteen admits that he was furious and intimated
to him that
disciplinary steps would ensue.  I need not have to decide the
dispute in light of the weighing up of the conflicting
interests.
[39]     I might
have decided in the exercise of my discretion to dismiss the
application with costs to show my repugnance
of the high-handed
approach adopted by DIY, firstly by insisting on a two year restraint
when a three months’ fixed term contract
was entered into (bearing
in mind that it avoided the possible negative consequences of labour
legislation insofar as probation periods
and employees’ rights are
concerned),  secondly, for failing to enter into a proper
written employment contract pertaining
to permanent employment
embodying the restraint of trade clause although written contracts
are not compulsory, thirdly, for making
further employment so
intolerable that Kruger was prepared to quit a few days before
Christmas, fourthly, for failing to consider
mediation and neglect to
utilize rule 41A in circumstances where the matter could easily be
settled if DIY was prepared to decrease
the period of the restraint
of trade, for example to three months which would have been
reasonable in the circumstances, and lastly,
for insisting until the
day of the hearing that its business was under such serious threat
that Kruger should be interdicted from
working for the opposition for
a period of two years as he was causing harm to DIY.
[40]    I accept
that DIY might well have been entitled to some assistance in
different circumstances.  Kruger
can never be seen in the same
vein as a specialist like Reddy or a superb salesman like Pillay.
I do not want to degrade him,
but he was such a small cog in the
mighty DIY machine that a three months’ restraint period would be
more than sufficient to allow
DIY to replace him with a suitable
substitute.  Bearing in mind the time lapse since the date of
termination of the employment
relationship, any order at this stage
would be of academic value only.  If this judgment was delivered
within three months from
termination of the employment relationship,
DIY might have been successful.  Even in such a case, I would
have shown my discontent
with DIY’s approach and refused to grant
costs in its favour.  I considered ordering Kruger to pay DIY’s
costs until the
filing of the answering affidavit when the concession
was made mentioned above and to order DIY to pay Kruger’s costs in
opposing
the application since then, but eventually decided against
that.  In the exercise of my discretion I deem it fair to both
parties
to order them to pay their own costs.
X
ORDER
[41]     The
following order is issued:
(1)  The application is
dismissed.
(2)  Each party shall pay
its/his own costs.
J P DAFFUE J
On behalf of the
Applicant

:
Adv S Grobler SC
Instructed
by

:
Kramer
Weihmann Inc
Bloemfontein
On behalf of the 1
st
Respondent
:
Adv A Sander
Instructed by

:
Lovius Block
Inc
Bloemfontein
[1]
Founding
affidavit: para 13.3, p 11
[2]
Answering
affidavit: paras 15 – 22, pp 65 - 66
[3]
Ibid
:
paras 23 – 28, pp 66 - 67
[4]
Ibid
:
pp 67 - 93
[5]
Ibid
:
paras 42-45, p 70
[6]
Ibid:
paras 80-109, pp 77-83
[7]
Ibid
:
paras 98 – 103, p 81
[8]
Ibid
:
paras 29 – 35, pp 67 & 68
[9]
Job
offer, annexure “FA1”, p 21 and employment contract, annexure
“FA2”, pp 22 - 41
[10]
“
FA2”,
p 39
[11]
Founding
affidavit: paras 42 – 47 & annexures “FA3” & “FA4”
[12]
Annexure
“FA6”, pp 50 & 51
[13]
Annexure “
FA9”,
pp 58 & 59
[14]
2021
(5) SA 619
(ECM)
[15]
Para
10 of the judgment
[16]
3387/2020 and 3388/2020
[2020] ZAFSHC 188
(26 October 2020)
[17]
2007 (2) SA 271
(SCA) at para 8 and further and para 20 in
particular
[18]
[2009]
1 All SA 442
(SCA)
[19]
Ibid
:
para 7
[20]
[1993] ZASCA 61
;
1993
(3) SA 742
(A) at p 768F – H
[21]
Digicore,
loc cit
at
paras 14 &15
[22]
[2007] ZACC 5
;
2007 (5) SA 323
(CC) at para 30
[23]
Para 18
supra
[24]
2020
(5) SA 247 (CC)
[25]
2022
(1) SA 100
(SCA) at para 63
[26]
Reddy v Siemens
Telecommunications (Pty) Ltd
2007 (2) SA 486
(SCA) and
Den
Braven SA (Pty) Ltd v Pillay & another
2008 (6) SA 229
(D & CLD)
[27]
Loc cit
para 9
[28]
Loc cit
para 20
[29]
Loc cit
para 17
[30]
At para 19
[31]
At para 55
[32]
2010
(6) SA 477
(SCA) at para 20
[33]
Hano
Trading CC v JR 209 Investments (Pty) Ltd
(650/11)
[2012] ZASCA 127
(21 September 2012)
[34]
Case no J 3394/2017, a judgment delivered on 31 January 2018
[35]
Ibid
:
para 10
[36]
Ibid
:
para 12
[37]
Replying affidavit: para 10, pp 176 - 179
[38]
Section
22 of the Constitution, 108 of 1996
[39]
Loc cit
at 767D
[40]
Answering affidavit: para 108, pp 82/3 & para 165, p 92