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[2022] ZAMPMBHC 66
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Pronto Computer Solution (Pty) (Ltd) v Van Der Merwe and Others (2850/2022) [2022] ZAMPMBHC 66 (10 August 2022)
THE
HIGH COURT OF SOUTH AFRICA
MPUMALANGA
DIVISION, MBOMBELA MAIN SEAT
CASE
NO: 2850/2022
REPORTABLE:/ YES
OF INTEREST TO OTHER
JUDGES: NO
REVISED
10 August 2022
In the matter between:
PRONTO
COMPUTER
SOLUTION APPLICANT
(PTY)
(LTD)
And
GLEN
VAN DER MERWE
FIRST RESPONDENT
EMALANGENI
TECHNOLOGIES SECOND
RESPONDENT
(PTY)(LTD)
DEON
POTTAS
THIRD RESPONDENT
DAVID
BLUMENTHAL
FOURTH RESPONDENT
JUDGMENT
RATSHIBVUMO J:
Delivered:
This judgment was handed down
electronically by circulation to the parties' representatives by
email. The date and time for hand-down
is deemed to be 14H00 on 10
August 2022.
[1]
The Application.
This application was
enrolled to be heard on urgent basis, as envisaged by Rule 6(12) of
the Uniform Rules of the High Court. The
Applicant seeks relief in
the following terms:
1.1.
That the First Respondent is interdicted
and restrained, for a period of one year, calculated from 31 December
2021, from being
employed by or engaged with the Second Respondent
(or any other business similar to that of the Applicant) within the
region of
Mpumalanga;
1.2.
That the Third Respondent is interdicted
for a period of one year, calculated from 19 November 2021, from
being employed by or engaged
with the Second Respondent (or any other
business similar to that of the Applicant) within the region of
Mpumalanga;
1.3.
That the Fourth Respondent is interdicted
for a period of one year, calculated from 20 March 2022, from being
employed by or engaged
with the Second Respondent (or any other
business similar to that of the Applicant) within the region of
Mpumalanga;
1.4.
That the First, Third and the Fourth
Respondents (the employee Respondents) are ordered to comply with
every provision in respect
of the confidentiality and restraint
obligations contained in the employment agreement;
1.5.
That the Second Respondent is interdicted
and restrained from employing or being engaged with:
1.5.1
The First Respondent for a period of one
year, calculated from 31 December 2021;
1.5.2
The Third Respondent for a period of one
year, calculated from 19 November 2021;
1.5.3
The Fourth Respondent for a period of one
year, calculated from 28 March 2022; and
1.6.
The employee Respondents are interdicted
and restrained from directly or indirectly communicating and/or
divulging and/or disseminating
to the Second Respondent and/or any
other person or party, any confidential information relating to the
Applicant.
1.7.
The employee Respondents are interdicted
and restrained from soliciting business and/or employees from the
Applicant, for the Second
Respondent or any other competing business;
1.8.
Insofar as the employee Respondents have
already approached any of the Applicant’s customers, and/or
client and conducted
any business or provided any quotations to them,
they are interdicted and restrained from conducting any further
business with
them.
1.9.
The employee Respondents are to deliver up
to the Applicant any and all confidential information concerning and
belonging to the
Applicant, including but not limited to, all
customer lists and customer information, supplier lists and
information, pricing and
product information within three days of
this order.
1.10.
In the alternative to paragraphs 1.1 to 1.9
above, that the provisions of paragraphs 1.1 to 1.9 operate as an
interim interdict
with immediate effect pending the finalisation of
this application or an action to be instituted within 30 days.
1.11.
The Respondents are to pay the costs of
this application including the costs consequent upon employment of
counsel, jointly and
severally.
[2]
Background.
Facts
of this case are largely undisputed. The dispute is rather on whether
such facts entitle the Applicant to the relief sought
above. It is
common cause that the employee Respondents were at one stage
employees of the Applicant. The First Respondent held
the position of
a Sales Representative. The Third and Fourth Respondents were
employed as Key Accounts Managers. Their responsibilities
were
inter
alia
,
“to effectively promote and sell the company comprehensive
range of products and services offerings; drive sales, turnover
and
profits and any other task necessary for the conduct of the
employer’s business, as the employer may from time to time
direct.”
[1]
[3]
The Third Respondent was the first to
resign from the Applicant’s employ which he did on 05 November
2021. His last working
day was 19 November 2021. He disclosed to the
Applicant that he will be working for the Second Respondent. He was
followed by the
First Respondent who resigned on 01 December 2021.
His last working day was 31 December 2021. The First Respondent had
been working
for the Applicant since 01 May 2018. Shortly after
resigning, he informed the Applicant that he also joined the Second
Respondent
as an employee. The Fourth Respondent resigned on 01 March
2022 with 28 March 2022 as his last day as the Applicant’s
employee.
He also informed the Applicant that he would be joining the
Second Respondent as an employee. He and the Third Respondent had
started
working for the Applicant on 11 February 2021.
[4]
Upon their employment with the Applicant,
the employee Respondents signed employment contracts that also
provided for restraint
of trade. The said clause provides,
RESTRAINT OF TRADE
a)
The employee undertakes not to be engaged
in any other business, in competition with the employer’s
business, be it direct
or indirect, or as a shareholder, partner,
member of the Close Corporation, director of a company or any other
capacity, within
1 (one) year after termination of this agreement, in
the area known as Mpumalanga.
b)
The employee acknowledges and agrees that
the aforesaid restraint is fair, reasonable and necessary for the
protection of his employer,
his employer’s trade name and the
goodwill attached thereto.
c)
Without
prejudice to any other rights which the employer may have in law, the
employee acknowledges that the agreed damages due
to his/her employer
will be an amount of R5000.00 (five thousand rand) in respect of each
calendar month during which any breach
of the aforesaid restraint
continues, and that the employer shall be entitled to recover such
amount, and any associated recovery
costs, from the employee in
respect of such breach.
[2]
[5]
Acts in breach of the employment
contracts.
It is also common cause
that after he had resigned, the First Respondent attended to at least
two companies that in the past, were
serviced by the Applicant. They
are the Lowveld Spar and a company known as Chem Kleen. The Applicant
learned of the first incident
when on 08 June 2022, its employee
attended to Lowveld Spar in order to offer them a quotation for CCTV
installation. While attending
to this, he was informed that the First
Respondent was there already to quote the Lowveld Spar on the
installation of the same
equipment and data.
[6]
As for Chen Kleen, another Applicant’s
employee had provided this company with a quotation for fibre network
installation.
Some days later, Chem Kleen called back to inform this
employee that their company will no longer take the quoted offer.
Chem Kleen
disclosed later that this was because the Applicant’s
quotation was expensive and that the First Respondent came and did
the installation “efficiently and timely.”
[7]
The
First Respondent explains himself by invoking his prior knowledge and
relationship with these companies and/or their employees.
According
to him, these were his clients long before he joined the Applicant as
an employee. While he does not deny that they were
also served by the
Applicant (through him) at the time he worked for the Applicant, his
attitude is that they were his clients
during and before he joined
the Applicant. In my view, there remains no dispute as the different
understanding between the Applicant
and the Respondents is about the
legal interpretation of the First Respondent’s continuous
relationship with the clients.
I will deal with the interpretation
when evaluating the Respondents’ defences hereunder.
[3]
[8]
In a confirmatory affidavit deposed to by
the Second Respondent’s representative, it is confirmed that it
(the Second Respondent)
is in a competitive business with that of the
Applicant. The deponent to the Second Respondent’s affidavit
went as far as
to allege that the Applicant has always been aware of
this position. What remains for the court to determine is whether the
Applicant
gave the employee Respondents consent to work for the
Second Respondent, knowing it to be a competitor. The court will deal
first
with the question of urgency as it is disputed.
[9]
Urgency.
Counsel for all the
Respondents argued that the application lacked urgency for two
reasons. First, he submitted that the Applicant’s
delay in
bringing the application was inordinate, thereby removing the urgency
the application would otherwise have. In calculating
the period that
lapsed, the Respondents start counting from the date the Applicant
became aware that each of the employee Respondents
had joined the
Second Respondent. Secondly, counsel submitted that the Applicant
failed to prove that it would not have a substantial
redress if the
matter was enrolled for normal hearing. He argued that since a
provision was made under restraint of trade, for
damages at R5000.00
per month in case of breach by the employees, there was therefore no
need to enrol the matter as urgent.
[10]
The first argument cannot stand in that it
ignores averments made by the person who deposed to the Applicant’s
founding affidavit
(Mr. Herbst). In the same affidavit in which he
mentioned the dates on which the employee Respondents resigned and
joined the Second
Respondent, he also disclosed the dates on which he
became aware that they were involved in acts of competition. The
dates of resignation
and the dates he became aware that the employee
Respondents were embarked on competition behaviour are not the same.
He also made
it clear that he did not perceive the Second Respondent
as a competitor.
[11]
Mr.
Herbst averred in the founding affidavit that “during my
discussion with the Third Respondent in which I advised him of
his
restraint of trade and confidentiality provisions of his employment
agreement, he advised me that he had been appointed as
a General
Manager of the Second Respondent but that his new employer only
focused on serving the public sector (something which
the Applicant
did not). He also undertook to comply with the remaining provisions
of his employment agreement.”
[4]
[12]
Similar assertions are to be found in the
exit interview that Mr. Herbst had with the First Respondent in
December 2021. The First
Respondent advised him that he intended
becoming employed in the Fast Consumer Goods Industry and not
Information Technology. Again,
when the Fourth Respondent resigned in
March 2022, he told him that he also accepted a position with the
Second Respondent and
that he would be responsible for the
compilation of the Second Respondent’s Public Sector Tender
submissions. He also confirmed
that he would abide by the terms of
his employment agreement.
[13]
It is evident from the above that M r.
Herbst did not consider the Second Respondent as a competitor until
information about its
clients being pouched by the First Respondent
reached his attention on 09 June 2022. It would appear he simply took
whatever the
employee Respondents told him as to what kind of a
business the Second Respondent was involved in. Looking at all the
steps taken
by the Applicant to have this application heard from the
date he learned for the first time that the First Respondent could be
in unlawful competition, it cannot be said that there was inordinate
delay before this application was launched.
[14]
I
have noted that the Second Respondent claims that the Applicant “has
always been aware” that it is a competitor. No
details were
given as to when exactly the Applicant became aware of this and
nothing is advanced to substantiate this allegation.
This bare denial
does not constitute a dispute as envisaged in
Plascon-Evans
rule. That rule was enunciated by Harms DP in
National
Director of Public Prosecution v Zuma
[5]
when
he said,
“
Motion
proceedings, unless concerned with interim relief, are all about the
resolution of legal issues based on common cause facts.
Unless the
circumstances are special they cannot be used to resolve
factual issues because they are not designed to determine
probabilities. It is well established under the
Plascon-Evans
rule that where in motion proceedings disputes of fact arise on the
affidavits, a final order can be granted only if the facts
averred in
the applicant's affidavits, which have been admitted by the
respondent, together with the facts alleged by the latter,
justify
such order. It may be different if the respondent's version consists
of bald or uncreditworthy denials, raises fictitious
disputes of
fact, is palpably implausible, far-fetched or so clearly untenable
that the court is justified in rejecting them merely
on the papers.”
[15]
The second reason is about the availability
of substantial redress in the future. In my view, this argument
misquotes the actual
wording of the contract. The opening statement
in the paragraph providing for damages stipulates, “
Without
prejudice to any other rights which the employer may have in law
,
the employee acknowledges that the agreed damages due to his/her
employer will be an amount of R5000.00…” [My emphasis].
The underlined statement makes it clear that the provision for
damages in the contract is an added avenues availed to the employer,
over and above other avenues it may be entitled to invoke in law. It
therefore cannot be raised as providing for substantial redress
available so as to preclude it from exercising other rights it may
have in law including bringing urgent application as it did.
[16]
Even
if the court was to accept that the clause provides for some redress
that can be available to the Applicant, the question would
still be
whether such redress is substantial. The Applicant demonstrated that
the damages it suffered exceed by far the amount
stipulated in the
employment contract.
[6]
Over and
above that, as Davis J observed in
Mozart
Ice
Cream
Franchises (Pty) Ltd v Davidoff
[7]
,
breaches of restraint of trade have an inherent quality of urgency.
In
Kiron
Interactive (PTY) LTD v Netshishivhe,
[8]
Malindi J remarked that,
“
Failure
to do so [treating breaches of restraint of trade as urgent] would
serve to defeat the Applicant’s right to restraint
the
Respondent before a significant lapse of the restraint period that it
claims applies and would not be reasonably easily able
to claim
damages as damages in these matters are not susceptible to easy
calculation.”
[17]
Mr. Herbst became aware for the first time
of the competitive behaviour on the part of the First Respondent on
09 June 2022. This
was when information relating to the quotation he
made to Lowveld Spar was relayed to him. He consulted with the
attorneys on 14
June and on 17 June 2022, the first letter from the
attorneys to the First Respondent was dispatched, in which they
demanded an
undertaking to adhere by the employment contracts. No
undertaking was made, but the Respondents indicated that they
intended to
respond through their legal representatives, and wanted
more time to do so. They failed to respond even after they were
granted
an extension. This application was therefore launched on 05
July 2022.
[18]
In
Value
Logistics Limited v Kuhn and Another
[9]
,
the employer (applicant) became aware of its employee (respondent)
intending to take up a position with its competitor on the
date of
resignation being 16 October 2020. Two weeks later, the employer
discovered confidential information having been sent out
from the
respondent’s work email address to his private email address. A
letter warning him of the restraint of trade agreement
contained in
the employment contract was sent to him on the same date (16 October
2020). Another letter was sent to the respondent
and his new employer
on 02 November 2020, demanding an undertaking that they will adhere
by the restraint of trade and for the
respondent’s employment
to be terminated. When no undertaking was made, the employer launched
an urgent application on 19
November 2020. The time lapsed was found
not to be inordinate by the court. The matter was dealt with
urgently.
[19]
Having considered the nature of complaint
in this case, the interest sought to be protected and the time frames
prescribed in the
employment contracts, I find that the application
is urgent, the delay in launching it is not inordinate and that the
Applicant
will not get substantial redress in a normal hearing should
it be successful.
[20]
Respondents’ defences.
The Second, Third and
Fourth Respondents confirmed and aligned themselves with the
affidavit deposed to by the First Respondent.
The First Respondent
alleged in the answering affidavit that the restraint of trade clause
was unreasonable because the Applicant
does not have the protectable
interests that it claims, in that the clients that it wishes to
prevent him from approaching for
business purposes were in truth his
clients. This claim should be read alongside the letters written by
Lowveld Spar and Chem Kleen,
attached to the First Respondent’s
answering affidavit.
[21]
A certain Hannes Blom, a Retail Risk
Manager at Lowveld Spar wrote an undated letter the relevant parts of
which read,
“
I
first met Mr. Glen van der Merwe about 7 years ago at ICTS (IT
Company). ICTS performed CCTV installation for J&M Security
who
we had a relationship with at the time. From there
Mr.
Glen van der Merwe moved to Pronto Computer Solutions where I met him
again, through Pronto Computer Solutions we started doing
CCTV
solution planning and integrations at a few of our Spar stores
.
Our Spar required a CCTV
upgrade and I knew that Mr. Glen van der Merwe no longer worked at
Pronto Computer Solutions. I then gave
him a call on the 17
th
of May and found out that he was now working at Emalangeni
Technologies. I then contacted Mr. Glen van der Merwe if he could
make
a turn and have a look at our current CCTV Solution and advise
and quote on an upgrade solution…” [My emphasis].
[22]
Chem Kleen also wrote an undated letter the
relevant parts of which read,
“
This
is to inform you that we have known Glen van der Merwe for
approximately 20 years.
We requested a
quote from Pronto Computers for the installation of our fibre network
as they were supplying us with data
,
but found that they were ridiculously expensive, so having known Glen
for so many years we approached him to install the fibre
network for
us…” [My emphasis].
[23]
From the letters written by Spar, it is
evident that although the author had known the First Respondent from
the past, they met
again through the Applicant and they started doing
CCTV solution planning and integrations at other Spar stores. There
cannot therefore
be any doubt that the Spar (and a few other
branches) became a client of the Applicant and that the First
Respondent was their
contact person at the Applicant. Equally, Chem
Kleen first requested a quote from the Applicant because it was a
client thereof
from whom data was supplied. The statement by the
First Respondent that the Spar and Chem Kleen were actually his
clients (and
thereby not the Applicant’s), is not supported by
the letters he attached to the answering affidavit.
[24]
The
First Respondent finds himself in no different situation to the first
respondent in
Nampesca
(SA) Products (Pty) Ltd v Zaderer
[10]
when
he alleged in his answering affidavit,
“
'I
was not introduced to any of Nampesca's important customers
subsequent to my joining Nampesca. I introduced the customers
and most of the important suppliers to Nampesca. Nampesca's customers
and suppliers were customers and suppliers with whom I had
close
contact and a strong personal and business relationship even before
Nampesca was started and even before the service contract
was
concluded. I deny furthermore that, during my employment with
Nampesca and because of my employment with Nampesca, I formed
any attachment to or acquired any influence over Nampesca's customers
which I never had before.”
[25]
The court however held,
“
The
first respondent's approach is that the first applicant does not have
any proprietary interest in the customers and suppliers
introduced by
him to it. That approach, in my view, is fallacious. When the first
respondent introduced customers and suppliers
to the first applicant
they became the latter's customers and suppliers. Although the first
respondent may have had dealings with
them before, his employment
with the first applicant enabled him to re-establish any pre-existing
relationships and further strengthen
them over a period of
approximately five-and-a-half-years. That customer goodwill can be
established or enhanced in favour
of an employer over customers
previously known to an employee is recognised in
Rawlins
and Another v Caravantruck (Pty) Ltd
[11]
.
It is recognised that where an employee has access to an employer's
customers and is in a position to build up a particular relationship
with them so that when he leaves an employer's service he could
easily influence them to follow him, there is, in principle, no
reason why a restraint to protect the employer's trade connections
should not be enforced.”
[12]
[26]
I
echo the sentiments expressed by Nestadt JA in
Rawlins
and Another v Caravantruck (Pty) Ltd
[13]
who
dealt
with
the issue of a party's relationship with customers as follows,
“
The
need of an employer to protect his trade connections arises where the
employee has access to customers and is in a position
to build up a
particular relationship with the customers so that when he leaves the
employer's service he could easily induce the
customers to follow him
to a new business. (Joubert
General
Principles of the Law of Contract
at
149). Heydon
The Restraint of Trade
Doctrine
(1971) at 108, quoting an
American case, says that the 'customer contact' doctrine depends on
the notion that 'the employee,
by contact with the customer, gets the
customer so strongly attached to him that when the employee quits and
joins a rival he automatically
carries the customer with him in his
pocket'. In
Morris (Herbert) Ltd v
Saxelby
[1916] 1 AC 688
(HL) at
709 it was said that the relationship must be such that the employee
acquires such personal knowledge of and influence
over the customers
of his employer . . . as would enable him (the servant or
apprentice), if competition were allowed, to take
advantage of his
employer's trade connection . . .”
[27]
The
First Respondent further alleged that there was no confidential
information to protect. He alleged that the list set out in
paragraph
78.2 to 78.23 does not constitute trade secrets. “Trade secrets
are protected by patents and copyright.”
He further alleged
that they do not constitute confidential information saying, “In
any event, the applicants have failed
to prove that this information
is currently in the possession of the employee Respondents especially
considering that this information
resides in the CRM (Customer
Relation Management) which they have no access to.”
[14]
[28]
The
list the First Respondent was referring to is what the Applicant
quoted as Trade Secrets and confidential information which
comprises
inter
alia
of,
“marketing and business strategies; pricing, inclusive of
mark-ups, of its products and services which are not general
and
unique to particular customer; profit margins; financial and
marketing policies and philosophies of the Company; sources of
supply; quality control products; discount granted by suppliers;
client and supplier relationships; method of distribution; other
matters which relate to the business of the Applicant and in respect
of which information is not readily available in the ordinary
course
of business to a competitor of the Applicant; the names and contact
details of existing clients and their requirements,
who require
additional product and/or service offering which are offered by the
Applicant and in respect of which such existing
clients are therefore
also potential clients. ; knowledge of Company’s customers and
business associates…”
[15]
[29]
In
response to this argument, counsel for the Applicant referred the
court to a judgment of
Graffiti
Design (Pty) Ltd v Teffu
[16]
where the Labour Court said,
“
It
cannot be doubted that information such as customer lists including
the names and contact details of key customers and their
requirements; sales, business and marketing strategies; pricing of
products of clients; the terms of contractual relationships
with
suppliers and the terms of supply; business financial information
including revenue generated; and information and contact
details of
suppliers, is confidential. Such information in a competitive market
is clearly
capable of application in the
trade or industry, and is of economic value to the person seeking to
protect it, unless the person
seeking to escape from the restraint
provisions can demonstrate that such information is either useless to
other persons, or alternatively,
that it cannot be deemed to be
confidential as it was in the public domain.”
[30]
It is common cause that the employee
Respondents had access to CRM when they worked for the Applicant and
that from the CRM, information
relating to client’s contact
details, their purchases, invoices, sales needs and potential future
orders based on their historical
dealings was stored. This
information is not readily available to everyone in the ordinary
course of business. While the employee
Respondents no longer have
access to the CRM, the fact that the First Respondent still has
contact details of some of the Applicant’s
clients is enough
proof that some of the information may have been stored for use
outside the CRM. There could be more such information
still stored by
any of the Employee Respondents. The Applicant remains at their mercy
or has to rely on their
bona fides
.
[31]
In
New
Justfun Group (Pty) Ltd v Turner
[17]
,
Van Niekerk J held that all that an applicant needs to show is that
there is secret information to which the respondent had access
and
which in theory the respondent could transmit to the new employer
should he or she desire to do so. Where the ex-employer seeks
to
enforce against an ex-employee, a protectable interest recorded in a
restraint, the ex-employer does not have to show that the
ex-employee
has in fact utilised information confidential to it; it is sufficient
to show that the ex-employee could do so. Indeed,
the very purpose of
a restraint agreement is that the applicant does not wish to have to
rely on the
bona
fides
or lack of retained knowledge on the part of the respondent, of the
confidential information.
[32]
In
Experian
South Africa (Pty) Ltd v Haynes and Another
[18]
,
Mbha J (as he then was) held,
“
Where
an applicant as employer has endeavoured to safeguard itself against
the unpoliceable danger of the respondent communicating
its trade
secrets to, or utilising its customer connection on behalf of a
rival concern after entering that rival concern's
employ, by
obtaining a restraint preventing the respondent from being employed
by a competitor, the risk that the respondent will
do so is one which
the applicant does not have to run and neither is it incumbent upon
the applicant to enquire into the bona fides
of the respondent, and
demonstrate that he is mala fide, before being allowed to enforce its
contractually agreed right to restrain
the respondent from
entering the employ of a direct competitor.”
[33]
Different positions with the new
employer.
The First Respondent
further submitted that he and other employee Respondents are
currently employed in different capacities from
their employment with
the Applicant. Their duties are different from the duties they
performed whilst employed by the Applicant.
This, he argued, rendered
this application unnecessary. He used to be a salesperson and now he
is a project manager. The Third
and Fourth Respondent used to work as
Key Accounts Managers and now they work as General Manager and Sales
Representative respectively.
I take note that none of the employee
Respondents attached their employment contracts with the Second
Respondent to prove their
current position.
[34]
Assuming
that they indeed hold the positions they claim to, this submission is
shallow given the behaviour by the First Respondent
having consulted
the Applicant’s clients irrespective of his current position.
In
Mpact
Operations (Pty) Ltd t/a Mpact Plastics Wadeville v Whitehead and
Another
[19]
Basson
J held that being in a different division in the competitor’s
employment does not bar an employee from sharing information
with the
employer. After all the wording of the actual employment contracts
bars the employee Respondents from taking up jobs with
the
Applicant’s competitors (irrespective of the positions).
[35]
Unreasonable restraint of trade.
The
employee Respondents argue that the employment contracts are
unreasonable in that they take away their right to work in the
field
of their qualification. But this is not a fact for consideration on
whether the restraint of trade is unreasonable or not.
The right to
work needs to be balanced with the right to freely enter into a
contract freely and voluntarily. In
New
Justfun Group (Pty) Ltd v Turner
[20]
,
the court held that a party seeking to enforce a contract in
restraint of trade is required only to invoke the restraint and to
prove a breach of its terms. Once a restraint agreement has been
invoked and a breach of the agreement proved, the onus is on the
respondent to prove on a balance of probabilities that the restraint
agreement is unenforceable because it is unreasonable.
[36]
In
Reddy
v Siemens Telecommunications (Pty) Ltd
[21]
,
the Supreme Court of Appeal (the SCA) held that
agreements
in restraint of trade were valid and enforceable unless they are
unreasonable and thus contrary to public policy, which
necessarily as
a consequence of their common-law validity has the effect that a
party who challenges the enforceability of
the agreement bears the
burden of alleging and proving that it is unreasonable. The SCA
referred to
J
Louw and Co (Pty) Ltd v Richter and Others
[22]
with
approval where the following was held,
“
Covenants
in restraint of trade are valid. Like all other contractual
stipulations, however, they are unenforceable when, and to
the extent
that, their enforcement would be contrary to public policy. It is
against public policy to enforce a covenant which
is unreasonable,
one which unreasonably restricts the covenantor's freedom to
trade or to work. Insofar as it has that effect,
the covenant will
not therefore be enforced. Whether it is indeed unreasonable must be
determined with reference to the circumstances
of the case. Such
circumstances are not limited to those that existed when the parties
entered into the covenant. Account must
also be taken of what has
happened since then and, in particular, of the situation prevailing
at the time enforcement is sought.”
[37]
In applying these principles to the facts,
the employee Respondents would have to compare the circumstances at
the time of signing
their contracts, against the current developments
to show what has since changed, what caused the changes, the reason
thereof and
the roles by the employer in those changes that renders
the contract enforcement unreasonable. Using this test, the
Respondents
have failed dismally to show that the restraint of trade
contained in the employment contracts is unreasonable.
[38]
For the aforesaid reasons, I make the
following order:
[38.1] The Applicant’s
failure to comply with the forms and service provided for in the
Uniform Rules of the Court is condoned.
This matter is dealt with on
an urgent basis as envisaged in Rule 6(12) of the Uniform Rules.
[38.2]
The First Respondent is interdicted and restrained, for a period of
one year, calculated from 31 December 2021 from being
employed by or
engaged with the Second Respondent (or any other business similar to
that of the Applicant) within the Province
of Mpumalanga.
[38.3] The Third
Respondent is interdicted for a period of one year, calculated from
19 November 2021 from being employed by or
engaged with the Second
Respondent (or any other business similar to that of the Applicant)
within the Province of Mpumalanga.
[38.4] The Fourth
Respondent is interdicted for a period of one year, calculated from
20 March 2022 from being employed by or engaged
with the Second
Respondent (or any other business similar to that of the Applicant)
within the Province of Mpumalanga.
[38.5] The First, Third
and the Fourth Respondents (employee Respondents) are ordered to
comply with every provision in respect
of the confidentiality and
restraint obligations contained in the employment agreement;
[38.6] That the Second
Respondent is interdicted and restrained from employing or being
engaged with:
[38.6.1] The First
Respondent for a period of one year, calculated from 31 December
2021;
[38.6.2] The Third
Respondent for a period of one year, calculated from 19 November
2021;
[38.6.3] The Fourth
Respondent for a period of one year, calculated from 28 March 2022;
and
[38.7] The employee
Respondents are interdicted and restrained from directly or
indirectly communicating and/or divulging and/or
disseminating to the
Second Respondent and/or any other person or party, any confidential
information relating to the Applicant.
[38.8] The employee
Respondents are interdicted and restrained from soliciting business
and/or employees from the Applicant, for
the Second Respondent or any
other competing business;
[38.9] Insofar as the
employee Respondents have already approached any of the Applicant’s
customers, and/or client and conducted
any business or provided any
quotations to them, they are interdicted and restrained from
conducting any further business with
them.
[38.10] The employee
Respondents are to deliver up to the Applicant any and all
confidential information concerning and belonging
to the Applicant,
including but not limited to, all customer lists and customer
information, supplier lists and information, pricing
and product
information within three days of this order.
[38.11] The Respondents
are ordered to pay the costs of this application including the costs
consequent upon employment of counsel,
jointly and severally.
TV RATSHIBVUMO
JUDGE OF THE HIGH
COURT
MPUMALANGA DIVISION
MBOMBELA
FOR THE
APPLICANT
ADV JA BOOYSE
INSTRUCTED
BY BARNARD
INC
C/O:
DE KOCK ATTORNEYS
NELSPRUIT
FOR THE
RESPONDENT
ADV T NGWENYA
INSTRUCTED
BY
NTHABISENG
MADOA ATTORNEYS
NELSPRUIT
DATE
HEARD 26
JULY 2022
JUDGMENT
DELIVERED 10
AUGUST 2022
[1]
See clause 3.2 of the First Respondent’s employment contract
and clause 4.2 of the Third and Fourth Respondents’
employment
contracts on pages 61, 81 & 103 of the paginated bundle.
[2]
See clause 26 of the First Respondent’s employment contract
and clause 29 of the Third and Fourth Respondents’ employment
contracts on pages 73, 96 &118 of the paginated bundle.
[3]
See paragraphs 20 to 32 below.
[4]
See para 82 of the Founding Affidavit on p. 38 of the paginated
bundle.
[5]
[2009] ZASCA 1
;
2009
(2) SA 277
(SCA) at para 26.
[6]
See the Applicant’s sales report since the resignation of the
First Respondent on p. 123 of the paginated bundle.
[7]
2009
(3) SA 78
(C) at 88J-89A.
[8]
(11014/2022)
[2022] ZAGPJHC 328 (13 May 2022)
[9]
(2854/2020)
[2021] ZAECPEHC 1;
[2021] 2 All SA 298
(ECP) (12 January 2021).
[10]
1999
(1) SA 886 (C)
at 898G-H
[11]
1993
(1) SA 537 (A)
at
542E-H
[12]
See
Nampesca
(SA) Products (Pty) Ltd v Zaderer (Supra)
at
898J-899A.
[13]
Supra
at 541D-F.
[14]
See paragraphs 13.2.6 and 22 of the First Respondent answering
affidavit.
[15]
See paragraph 78.2 of the founding affidavit on p. 36 of the
paginated bundle.
[16]
(J4376/2018)
[2019] ZALCJHB 10 (22 January 2019) at para 24.
[17]
(J786/14)
[2014] ZALCJHB 177; (2018) 39 ILJ 2721 (LC) (14 May 2014) at
paragraph 13.
[18]
2013
(1) SA 135 (GSJ)
at paragraph 21.
[19]
(J1335/2015)
[2015] ZALCJHB 442 (25 September 2015) at paragraph 13.
[20]
Supra
at paragraph 9.
[21]
2007
(2) SA 486
(SCA) at paragraph 15. See
also
Magna
Alloys and Research (SA) (Pty) Ltd v Ellis
[1984] ZASCA 116
;
1984
(4) SA 874
(A)
.
[22]
1987
(2) SA 237 (N)
at 243B - C.