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[2019] ZAFSHC 115
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Thomas NO and Others v Christians and Another (2177/2019) [2019] ZAFSHC 115 (28 June 2019)
IN
THE HIGH COURT OF SOUTH AFRICA,
FREE
STATE DIVISION, BLOEMFONTEIN
Case
number: 2177/2019
In
the matter between:
LIESEL
THOMAS
N.O
1
St
Applicant
VERNON
VAN DER WESTHUIZEN N.O
2
nd
Applicant
REGINALD
THOMAS
N.O
3
rd
Applicant
(In
their capacity as trustees for the time being of the
BLOEMSEC
TRUST)
and
JANICE AVRIL
CHRISTIANS
1
st
Respondent
VR
SECURITY
2
nd
Respondent
CORAM: MHLAMBI J,
HEARD ON:
6 June 2019
REASONS FOR
JUDGMENT
: 28 June 2019
REASONS
MHLAMBI,
J
[1]
On 06 June 2019, I granted an order enforcing a restraint of trade
agreement against the first respondent much in line with
the prayers
sought in the notice of motion, save that I shortened the restraint
period to a period of eight months instead of twelve
months. I
undertook to furnish my reasons for the order in due course. The
application was opposed by the first respondent.
[2]
The application served on the urgent roll on 30 May 2019 before
Daffue, J and was postponed to 06 June 2019 with directions
as to the
filing of heads of argument. All issues relating to costs were
reserved for later adjudication.
[3]
The first respondent opposed the relief sought on the following
grounds:
3.1 She signed the
contract of employment containing the restraint of trade under duress
and could not be held bound to it;
3.2 The applicants failed
to demonstrate that they had a protectable interest;
3.3 Should the court find
that there is indeed a protectable interest, the respondent posed no
threat to it;
3.4 The protectable
interest did not weigh up, qualitatively and quantitatively against
her interest to be economically active and
productive; and/or
3.5 It would be against
public policy for the restraint to be maintained.
[4]
It was submitted in both the heads of argument and orally that if the
application was not dismissed, I was urged to make an
order in terms
of the tender contained in the respondent’s answering
affidavit.
[5]
The tender reads as follows:
“
51 For the
purpose of settling this matter I propose the following:
51.1
I will only deal with leads provided to me by the VR Security sales
team and or management up and until May 2020;
51.2
I will not, directly or indirectly approach any existing Bloemsec
client/s insofar as it is not at the instance of said Bloemsec
client
requesting a quote from VR Security.”
[6]
The court was urged that the enforcement of the restraint of trade
agreement should be no more constrictive than what was contained
in
the tender.
[7]
It was conceded in the papers that even though the application was
brought on an urgent basis, the matter was overtaken by events
in
that the application was postponed on 30 May 2019 for hearing on 06
June 2019.
[1]
It was submitted
that the wasted costs of 30 May 2019 should be borne by the
applicants as they should have foreseen the inevitable
postponement
of the matter.
[8]
The first respondent is employed by the second respondent and
previously was in the employ of Bloemsec Trust represented in
this
application by the applicants in their capacities as trustees. The
trust and the first respondent entered into a written contract
of
employment on 10 May 2018 which included a confidentiality clause and
a very extensive restraint of trade agreement. Her initial
employment
with the trust commenced on 03 February 2014 and apparently did not
contain a restraint of trade clause as the parties
did not enter into
a written and signed contract of employment. On 24 April 2019, the
first respondent gave a written notice to
terminate her employment
with Bloemsec with the last day being 24 May 2019. The reason for the
resignation was stated in the letter
of resignation as “
the
acceptance of an offer from another company”.
[9]
The notice of motion was fashioned
verbatim
along the lines of
clause 1.3 of the confidentiality agreement and restraint of trade.
The applicable and relevant portions of
that clause read as follows:
“
1.3.2 the
employee shall not, during the currency of this agreement or after
the termination of his employment during the months
of the restraint
period, directly or indirectly:
1.3.2.1
carry on or other wise (sic) be engaged or associated or concerned or
interested in or employed by;
1.3.2.2
solicit business for;
1.3.2.3
be a director, shareholder, member, employee or partner in;
1.3.2.4
act as an consultant, trustee, manager, agent, representative,
partner, advisor, officer, or in any other capacity to;
1.3.2.5
render any service (gratuitously or otherwise) to;
1.3.2.6
lend or advance, or bind himself as surety for, any sum of money or
assist financially;
1.3.3 the employee nor
any entity in which he is directly or indirectly interested will,
during any month of the restraint period
and in the restrained area,
directly or indirectly, through any entity, and whether for reward or
not;
1.3.3.1
solicit orders from prescribed customers, clients or suppliers for
the prescribed good and/or the prescribed service;
1.3.3.2
canvass business in the respect of the prescribed good and/or the
prescribed services from prescribed customers, clients
or suppliers;
1.3.3.3
sell or otherwise supply any prescribed good to any prescribed
customer, client or suppliers;
1.3.3.4
render any prescribed service to any prescribed customer, client or
supplier;
1.3.3.5
Purchase any prescribed goods from any prescribed customer, client or
supplier or accept the rendering of any prescribed
service from any
prescribed customer, client or supplier;
1.3.3.6
solicit appointment as a distributor, license, agent or
representative of any prescribed customer, client or suppliers in
respect of the prescribed goods and/or the prescribed services;
1.3.3.7
carry on a competitive activity or any portion thereof;”
[10]
Clause 1.4 of the said agreement reads as follows:
“
1.4.1 endure
for a period of twelve (12) months as and from the date of cessation
of his employment with the employer for any reason
whatsoever (
the
restraint period
”), and
1.4.2 be operative
within the whole of the Bloemfontein area (“
the
restraint
area
”).”
[11]
The first respondent stated
in her opposing affidavit that she commenced her employment with
Bloemsec during February 2014. Prior
to this employment, she was
employed by ADT which is a company providing security services in
Bloemfontein. She was head hunted
by Bloemsec from ADT. Her services
were procured because she was experienced in sales in the security
industry. She was already
knowledgeable of the selling and quoting on
alarm panels and systems. At the time of her employment at Bloemsec
she already had
three years of experience in the security industry.
She was called on or about 09 May 2018 by the human resources manager
of Bloemsec,
a certain Liesel Opperman, to sign a backdated
employment contract which indicated that she would have signed same
and became employed
during 2014. She refused to sign the backdated
contract even more so that it contained a restraint of trade clause.
She wanted
an opportunity to read through the contract before she
signed. She was told that unless she signed, she would lose her work.
She
walked away without signing the agreement and considered her
options that evening at home. The following day she signed the
agreement,
protesting that she was unhappy as she felt pressurised.
Had it not been for the threat that she would be left unemployed, she
would not have signed the agreement.
[12]
She
admitted the salient terms of the agreement and that she undertook
not to compete with the trust in Bloemfontein for a period
of twelve
months in the way prescribed by the contract and the notice of
motion.
[2]
However, she
pleaded that she signed the agreement under duress and stated that
“
I
signed the agreement under duress. Also, and in the event that the
Honourable Court would find me to be bound to this, I emphatically
state that the effect of the restraint of trade is unreasonable and
unconstitutional in my specific circumstances, not only relating
the
manner of the restraint, the area as well as the period involved. It
is specifically denied that I would have signed without
any demure
(sic)”
[3]
[13]
The above response was triggered by the following passage in the
founding affidavit
[4]
, in which
the first applicant stated that
“
What
happened was that during the early part of 2018, a change in
management of Bloemsec took place. When I took over the lion’s
share of the management responsibilities at Bloemsec at that stage,
amongst others an audit of the employee files was undertaken.
At that
stage it appeared that Mrs Christians had never signed a contract of
employment. As a result of the importance of her role
within
Bloemsec’s structures, I immediately attended to the
finalisation of her employment contract, which included a restraint
of trade, and presented same to Mrs Christians for signature. She
signed without demur, a fact that will become relevant later.”
[14]
After
the replying affidavit was filed the first respondent filed what was
styled the first respondent’s affidavit in duplication,
the
purpose of which was to answer to certain new allegations contained
in the applicants’ replying affidavit. In the replying
affidavit
[5]
the
applicants restated that the first respondent was an extremely good
employee. She won the sales person of the year award at
Bloemsec in
2018. She collected a PMR award for Bloemsec in 2018 as well as the
“Best of Bloem” award for security
service during 2018 as
well. It was incorrect that she was unhappy at work and even if she
was, it was not of Bloemsec’s
doing. In support of the good
relationship that existed between the parties, the applicants
attached as “REP3” a whatsapp
message the first
respondent sent to them describing the deponent and Mr Thomas as a
“power couple” and thanking them
in general for whatever
they had done for her and that they “
inspired
her
”.
The applicants pointed out that this was not commensurate with the
version that Mr Thomas is a ranting and shouting
tyrant.
[15]
She also failed to address the allegations that she had secured a
large contract with PACOFS and that together with a well-known
businesswoman in Bloemfontein, Anri Powell, and that she would pursue
a “Lets Talent” business.
[6]
Appended
to the whatsapp message to the replying affidavit and marked “REP
4” was another whatsapp message, which was
apparently sent on
19 April 2019 seeking permission from the first applicant to post an
advert concerning the Lets Talent/PACOFS/Radio
contract. In this
advert she described herself as “
Janice
Christians owner of Urban Talent Dance Studio. Janice is also the
co-owner of Lets Talent with local businesswoman Anri Powell”.
The
advert also referred to the many accolades she received during 2018.
[16]
The first respondent gives the impression that the reason for the
termination of the employment relationship is that the employment
relationship had become unbearable. Since the change of management in
Bloemsec during April/May 2018 she was unable to meet her
target. The
conditions deteriorated to such an extent that she could no longer
remain employed there. The environment was unhealthy
and she was
treated like the office “whipping boy”. Mr Reginald
Thomas shouted at her daily.
[7]
She
denied that on 6 May 2019 Mr Thomas had a candid discussion with her
during which certain proposals were made to her in an attempt
to
retain her services
[8]
. She
maintained, on the contrary, that he was very aggressive during such
discussions and indicated that he would make her life
miserable and
he would enforce the restraint of trade to the extent she would be
left unemployed. This militates against the apparent
cordial
relationship reflected in the emails between the first respondent and
Mr Thomas during early May 2019.
[17]
In the replying affidavit, it was pointed out that the first
respondent, by making the tender indicated above, apparently accepted
that Bloemsec had a protectable interest by way of its existing
clientele. Even though the tender appeared inviting, it was prudent
not to accept same as it would have been difficult to monitor it, and
there was nothing that would have prevented the first respondent
from
contravening the undertaking, and subsequent order in such a way as
to escape detection. On her own evidence, she at no stage
intimated
to any person at Bloemsec that she had signed the agreement under
undue pressure. There was no evidence to support her
allegations that
she did so under duress. She also failed to present evidence to
underscore her contention that the restraint of
trade was
unconstitutional and unenforceable. The first respondent failed to
respond to these allegations in her affidavit in duplication.
[18]
It
is clear from the authorities that a contract maybe vitiated by
duress
(metus)
as it renders consent of the party subjected to duress no true
consent
[9]
. Where a person seeks
to set aside a contract, or resist the enforcement of a contract, on
the ground of duress based on fear,
the following elements must be
established:
(i) The fear must be a
reasonable one;
(ii) It must be caused by
the threat of sum considerable evil to the person consent or his
family;
(iii) It must be the
threat of an imminent or inevitable evil;
(iv) The threat or
intimidation must be unlawful of
contra bonos mores;
(v) The moral pressure
used must have caused damage.
[10]
[19]
In
Paragon
Business Forms (Pty) Ltd v Du Preez
[11]
the following was
stated:
“
To
prevent the remedy getting out of hand one must, in my view,
have regard to the person complaining of the duress and the
circumstances in which he found himself at the time, and then gauge,
in the light of all those relevant factors, whether it was
reasonable
for him to have suffered fear and to have succumbed thereto. I adopt
the approach of Christie (op cit at 369):
'The
point is that every person who complains of duress is entitled to be
seen as the sort of person he or she is, but to prevent
the remedy
getting out of hand he is not entitled to repudiate the contract if
he claims to have succumbed to a fear that would
be unreasonable even
for the sort of person he is
.
'
”
[20]
The learned Judge (Leach, J, as he then was)
[12]
continued
to say:
“
and
in the light of the fact that the respondent is apparently a man who
has been able to make his way in the exacting and competitive
world
of retail sales, and who has now started his own business after
spending many years in the employ of the applicant, it does
not seem
to me to lie in his mouth to allege that he had any reasonable fear
of dismissal when no such threat was in fact made, when
the
applicant's representative merely insisted upon him signing the
restraint and when he took no steps to ascertain what the
consequences would be if he failed to comply. Even if he did fear
dismissal upon non-compliance with the instruction to sign (something
which I do not believe), such 'fear' was so unreasonable that it does
not satisfy the requirement of fear or the anticipation of
harm
required to enable him to avoid the restraint agreement.”
The
onus to show that she entered into the agreement under duress rested
on the first respondent to make the necessary averments
to support a
claim based on duress
[13]
. In
my view, the issue that she was coerced to sign the contract is not
real.
[21]
The respondent made a tender not to directly or indirectly approach
any of the existing Bloemsec clients. The evidence revealed
that she
was a very successful salesperson who built up a relationship with
customers of the applicants. She took up employment
with the
applicants’ competitor. In
Den
Braven SA v Pillay and Another
,
[14]
the
court had difficulty with the suggestion “
that
the relationship between the applicant and its customers is not one
involving a particular connection with the applicant through
Mr
Pillay, but is a more tenuous relationship governed by price”.
The
court was of the view that the respondent, as salesperson, had built
up a relationship with customers of the applicant and account
should
be taken of such factors as customer loyalty to a particular
supplier; customer inertia in continuing to purchase from an
established supplier rather than going to the effort of always
checking the market for the best possible price; and the fact that
where two different suppliers quote very similar prices for
comparable products, the trade connection established through the
sales person may well be the decisive factor. It suffices for
the applicant to show that trade connections through customer
contact
exist and can be exploited by the former employee if employed by
a competitor
[15]
. The
applicant in that case had discharged that onus and that the
applicant had a commercial interest deserving of protection at
the
termination of the agreement. The applicant would be prejudiced if
the ex-employee took up employment with a competitive rival.
[22]
Once that conclusion is reached and it is demonstrated that the
prospective new employer is a competitor of the applicant,
trading in
a range of similar products, the risk of harm to the applicant if its
former employee is able to take up employment
with that
competitor is apparent. The risk is increased where, as here, the
employee in question is an excellent and highly
successful
salesperson with a lengthy track record working in the particular
mark
et.
[23]
The reasonableness of the enforcement of the restraint of trade
depends upon deciding the following questions
[16]
:
(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?; and
(d) Is there an aspect of public policy having nothing
to do with the
relationship between the parties that requires that the restraint be
maintained or rejected?; (e) does the restraint
go further than
necessary to protect the relevant interest
[17]
.
[24]
The enquiry into reasonableness of the restraint is essentially a
value judgment that encompasses a consideration of two policies:
the
duty of parties to comply with their contractual obligations and the
right to freely choose and practise a trade, occupation
or
profession. A restraint is only reasonable and enforceable if it
serves to protect an interest, which, in terms of the law,
requires
and deserves protection. Confidential information and customer
connections are recognised as such interests.
[18]
[25]
When it comes to the quantitative and qualitative weigh off to be
conducted, the scope and period of the restraint is relevant
as a
shorter restraint and properly limited geographical area would
mitigate in favour of enforcement, whilst an unduly long and
broad
restraint would mitigate against it.
[19]
The
reasonableness of the restraint is determined with reference to the
circumstances at the time the restraint is sought to be
enforced.
[26]
An undertaking by an employee that the employee would not exploit
trade connections where employment with a competitor can
be seen to
be a violation of the restraint is not a consideration that can be
applied in favour of an employee and does not serve
as a defence
[20]
.
The applicant should not have to content itself with crossing its
fingers and hoping that the first respondent would act honourably
or
abide by the undertakings he has given
[21]
.
[27]
In conclusion I refer to
Wightman
t/a TW Construction v Headfour (Pty) Ltd and Another
[22]
where
it was said that a real, genuine and bona fide dispute of fact can
only exist where the court is satisfied that the party
who purports
to raise a dispute has in his affidavit seriously and unambiguously
addressed the fact said to be disputed. As indicated
above, the first
respondent failed to traverse the issues raised in the affidavits. I
agree with the submission that, properly
considered, her defence is
simply that she is not in a position to cause harm to the applicants.
[28]
In
Reddy
,
[23]
the
court applied the principle in
Plascon-Evans
Paints (Pty) Ltd v Van Riebeeck Paints (Pty) Ltd
[24]
and
said that a final order could only be granted in motion proceedings
if the facts stated by the respondent together with the
admitted
facts in the applicant’s affidavits justify such an order, and
this applies irrespective of where the onus lies.
If the facts
disclose that the restraint is reasonable, then the party seeking the
restraint order must succeed; but if those facts
show that the
restraint is unreasonable, then the party sought to be restrained
must succeed.
[25]
[29]
In the light of the above, I am satisfied that the first respondent
failed to prove the defences she raised, namely, that she
signed the
contract of employment containing the restraint of trade under duress
and that it would be against public policy for
the restraint to be
maintained. The restraint agreement in this matter is not against
public policy and should be enforced. She
entered into the agreement
voluntarily in the exercise of her freedom of contract and she should
honour it. Taking into account
that the restraint of trade agreement
was only signed in May 2018, a year before the first respondent’s
resignation, I was
of the view that a shortened period of eight
months was both reasonable and appropriate in the circumstances.
[30]
When it came to the aspect of costs, I found no reason to deviate
from the principle that costs should follow the event. Due
to the
nature of the application from the onset, I was of the view that the
applicants were entitled to the costs of the postponement
of the
application on 30 May 2019.
[30]
These are my reasons.
_________________
MHLAMBI,
J
Counsel
for applicants: Advocate S Grobler
Instructed
by: Honey Attorneys
Honey
Chambers
North
Ridge Mall
Bloemfontein
Counsel
for 1
st
Respondent: Advocate LA Roux
Instructed
by: Rossouws Attorneys
119 President Reitz
Avenue
Westdene
Bloemfontein
[1]
Paragraph 12 of the respondents heads of argument
[2]
Paragraph 46.2
[3]
Para
46.1 of the opposing affidavit
[4]
Para
16.2
[5]
Para
6.11 and 6.13
[6]
Para
6.15
[7]
Paras
30 and 31 : Opposing affidavit
[8]
Para
15.7 of the founding affidavit
[9]
Broodryk v Smuts N.O.
1942 TPD 47
at Page 53
[10]
Arend and another v Astra furnishers (Pty) Ltd
1974 (1) SA 298
(c)
at 305; Broodryk, supra
[11]
1997 (1) SA 434 (SE)
[12]
Paragon Business Forms, supra, page 441:
[13]
Rothman
v Curr Viviers Inc. 1997(4) SA 540 (C) at 551
[14]
2008
(6) SA 229
para 17
[15]
See
also Reddy v Siemens Telecommunications (Pty) Ltd 2007 (2) SA 486
(SCA)
[16]
Basson
v Chilwan and Others
[1993] ZASCA 61
;
1993 (3) SA 742
(A) at 767 G-H
[17]
Medtronic
(Africa) (Pty) Ltd v Van Wyk and Another (2016) 37 ILJ 1165 (LC) at
para15.
[18]
Labournet
(Pty) Ltd v Jankielsohn and another (JA48/2016)[2017] ZALAC 7;
[2017] 5 BLLR 466
(LAC);(2017) 38 ILJ 1302 (LAC) (10 January 2017).
[19]
Vumatel
(Pty) Ltd v Mohammed Salmaan Majra and others case no. J2400/18
(LC); Labournet, supra paras 43 and 45.
[20]
Vumatel,
supra para 40; Reddy, supra para 20.
[21]
BHT
Water Treatment (Pty) Ltd v Leslie and Another 1993 (1) SA 47 (W).
[22]
2008
(2) SA 512
SCA.
[23]
Supra,
para 4.
[24]
1984
(3) SA 623
[25]
Ball
v Bambalela Bolts (Pty) Ltd and Another (2013) 34 ILJ 2821 (LAC) at
para 14.