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[2019] ZANCHC 40
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Stahl Cranes & Hoists Proprietary Limited v Van Staden and Another (1630/19) [2019] ZANCHC 40 (6 September 2019)
IN
THE HIGH COURT OF SOUTH AFRICA, NORTHERN CAPE DIVISION, KIMBERLEY
Not reportable
Case No: 1630/19
In the matter
between:
STAHL CRANES
& HOISTS
PROPRIETARY
LIMITED
APPLICANT
And
SUANNETTE
VAN STADEN
FIRST RESPONDENT
GREGBEV
ENTERPRISE
PROPRIETARY
LIMITED
SECOND RESPONDENT
Heard: 16
August 2019
Delivered: 06
September 2019
Judgment
PHATSHOANE
ADJP
[1]
Stahl Cranes & Hoists (Pty) Ltd (“Stahl”), the
applicant, approached this Court on semi-urgency
to enforce the
restraint of trade provisions which it alleges were breached by Ms
Suannette Van Staden, the first respondent. It
seeks an order
interdicting and restraining her, for a period of twenty four (24)
months, from:
1.1
either alone or jointly or together with or as agent for any other
person, assist, be interested,
engaged or concerned, directly or
indirectly whether as principal, proprietor, shareholder, partner,
representative, member, consultant,
advisor, director, financier,
administrator, employee or otherwise in any business, company or
concern which carries on business
in competition with Stahl within
Africa;
1.2
persuading or attempt to persuade any person whom, during her
employment with Stahl, was
a banker, financier, supplier or a
customer of Stahl or to cease doing business with Stahl or commence
doing business with anyone
else;
1.3
soliciting or attempt to solicit the business or custom of any person
whom, during her employment
with Stahl was a banker, financier,
supplier or a customer of Stahl; and
1.4
persuading, inducing, soliciting, encouraging to procure any employee
employed by Stahl,
to cease such employment or to undertake
employment with or have any interest in any other business.
[2]
Stahl is a specialised multi-disciplinary engineering, lifting and
materials handling entity to mining, power
generation, chemical, oil,
gas and industrial sectors, throughout Africa. It offers a full
spectrum of services, including design,
fabrication, construction,
installation of overhead cranes, hoists, and the like machines. It
also attends to breakdowns, repairs,
service and maintenance to all
makes of cranes, hoists and lifting equipment. It is the sole
distributor of Stahl crane systems
in South Africa. It executes
projects and renders services to mines and power stations throughout
Africa.
[3]
Stahl has a satellite office at Sishen Mine, Kathu, Northern Cape,
and supply Sishen Mine with overhead cranes,
hoists, hook lifting,
rigging equipment, and spare parts in respect of cranes. It also
attends to repairs and maintenance of cranes.
Its satellite office
was established at Sishen in order to ensure that it is able to
render effective service to Sishen Mine on
ongoing basis.
[4]
Gregbev Enterprise (Pty) (Ltd) (“Gregbev”), the Second
Respondent, is in the business of inspection
of machinery used for
lifting equipment such as cranes and hoists. It examines them to
ensure that they are fit for use for which
they were intended. Under
normal circumstances it does not supply spare parts or repair
machines as that was the work performed
by Stahl. Its principal place
of business is also situated on the premises of Sishen Mine, Kathu,
Northern Cape.
[5]
On 06 February 2018 Ms Van Staden was appointed as an administrative
assistant by Stahl at its satellite office
in Sishen, Kathu, on a
three months fixed-term contract which commenced on 01 February 2018
and expired on 30 April 2018. The contract
had a restraint of trade
clause, the salient terms of which were that Ms Van Staden would
protect the proprietary interest of Stahl
as follows:
5.1
She would not during her employment or at any time thereafter,
directly or indirectly, divulge or disclose to others
any of Stahl’s
trade connections and trade secrets;
5.2
Any written instructions, notes, memoranda or records relating to the
employer’s trade connection and trade
secrets which are made by
the employee or which come into her possession during the period of
her employment shall be deemed to
be the property of the employer and
shall be surrendered to the employer on demand and in the event of
termination of her employment,
and she will not obtain any copies
thereof or extracts therefrom.
5.3
She would not for a period of 24 months “after the date of the
termination” of her employment with Stahl:
5.3.1
persuade or attempt to persuade any person who, during her employment
with Stahl, was a banker,
financier, supplier or customer of Stahl,
to cease doing business with Stahl or to commence doing business with
anyone else; or
to solicit or attempt to solicit their business or
custom;
5.3.2
persuade, induce, solicit, encourage or procure any employee employed
by Stahl to cease such
employment or to undertake employment with or
have any interest in any business.
5.4
She would not, during her period of employment with Stahl, and for a
period of 24 months after the termination of
her employment for any
reason whatsoever, either alone or jointly or together with or as
agent for any person, assist, be interested,
engaged or concerned
either alone or jointly or together with or as agent for any person,
employee, or otherwise, in any business,
company or concern which
carries on business in competition with the employer within Africa.
[6]
Each part of the restraint is separate, severable and separately
enforceable in the widest sense possible
in respect of each of the
years falling within the period of the restraint; each locality
falling within the area which the restraint
operates; and every
capacity in relation to other businesses in which the employee is
prohibited from acting as set out in the
restraint clause.
[7]
Stahl and Ms Van Staden agreed that the restraint was reasonable in
all respects relating to the subject matter,
period and territorial
limitation and that the terms were more than reasonable to
protect the proprietary interest, goodwill,
trade secrets, trade
connections and confidential information of Stahl. I hasten to state
that the parties' own views, as reflected
in the agreement, as to
what is reasonable can never be decisive,
inter
alia
,
because the reasonableness of the restraint is judged only after
consideration by a court on the basis of factors which might
not
necessarily have been present to the minds of the parties when they
concluded the contract.
[1]
[8]
Following the expiry of the three months fixed-term contract Stahl
did not renew it. However, Ms Van Staden
remained in its employ for a
period of a year until she tendered her resignation on 16 June 2019
and took up employment with Gregbev
on 18 June 2019.
[9]
On or about 15 July 2019 Ms Van Staden was instructed by her direct
supervisor at Gregbev to call for a quotation
for a new optidrive
part for a Lasch crane. In view of the fact that the optidrive that
had to be replaced was a product of Invertek
Drives SA (“Invertek”)
she says she approached Invertek for a new optidrive part which was
sought by Gregbev for its
use and therefore complied with the
instruction. In any event, Invertek did not supply its quotation and
consequently she never
submitted its quotation to Sishen Mine.
[10]
At first, Stahl was not keen on enforcing the restraint provisions
against Ms Van Staden because Gregbev rendered different
services to
Sishen Mine. It was only on 15 July 2019 when it came to Mr Steven
Claase’s attention, the deponent to Stahl’s
founding
papers, through a telephone call by a certain Mr Mark de Beer, an
employee of Invertek, a supplier of Stahl, that Ms Van
Staden
approached Invertek, for purposes of obtaining a quotation to
purchase some 37 kilowatt Invertek Drive to be installed on
a crane
at Sishen Mine. Stahl was an agent of Invertek in the Northern Cape.
It supplied crane parts and spares to Sishen Mine.
[11]
On 16 July 2019 Stahl’s attorneys dispatched a letter to Ms Van
Staden requiring her irrevocable written undertaking
to leave the
employ of Gregbev by Friday 19 July 2019 because it was carrying on
business in competition with Stahl. In the event
of noncompliance,
she was informed, this Court would be approached for urgent relief.
[12]
Ms Van Staden refused to accede to the demand which precipitated the
launching of this application. Stahl submitted that
whilst executing
her duties as administrative assistant Ms Van Staden became privy to
Stahl’s strategies, know-how, identity
of suppliers, profit
margins and the likes. Mr Claase explained that, when a crane at
Sishen had a breakdown or the Sishen’s
cranes required to be
serviced, Ms Van Staden would be instructed to liaise with Stahl’s
suppliers to establish the pricing
and availability of spares. A
Stahl’s technician would furnish Van Staden with a list of
spares required and thereafter Van
Staden would contact suppliers to
establish pricing and availability of the spares. She would also
prepare quotations in respect
of the spares for Sishen which included
all the expenses relating to procuring the spares as well as Stahl’s
profit. She
presented quotations to the site supervisor in Sishen for
purposes of correcting any mistakes.
[13]
Mr Claase says that by using Stahl’s strategy and now-how Ms
Van Staden rapidly gained sufficient knowledge to
prepare the
quotations without any significant intervention by any other employee
of Stahl. As a sequel to this she began liaising
directly with the
representatives of Sishen for purposes of presenting quotations. He
intimates that Ms Van Staden would not have
been able to execute this
task without the knowledge of Stahl’s profit margins. Mr Claase
further explained that Ms Van Staden
not only became privy to the
identity of Stahl’s suppliers but also the identity of the
representative of Sishen to whom
the quotations would be presented.
He says that prior to taking up employment with Stahl Ms Van Staden
never worked in the industry
that Stahl operated in. She acquired all
her knowledge of the industry while she was in the employ of Stahl.
[14]
Ms Van Staden admitted that regard being had to the limited number of
staff at the Sishen Satellite office of Stahl her
duties would not
only be limited to trivial administrative tasks but included
assisting Stahl in its service delivery to Sishen.
She denies having
obtained knowledge of Stahl’s strategies or know how. She
claimed to have merely obtained knowledge of
Stahl’s profit
margins only on spare parts for lifting machinery. She admitted
preparing quotation by merely typing them
on the instruction of her
supervisor or the site manager of Stahl. She never used her own
initiatives when preparing quotations
for Sishen. Her liaison with
Stahl’s suppliers and Sishen Mine was restricted to obtaining
lists of required spares in order
to determine prices and
availability. Upon receiving quotation she would forward them to
Sishen following authorization by responsible
managers. As to the
identity of Stahl’s suppliers she says this were known to
Gregbev even prior to her employment with it.
[15]
The principal controversy in this case is whether following the
expiry of the fixed-term contract Ms Van Staden remained in
employment of Stahl on the same terms and conditions as contained in
the fixed-term which included the restraint of trade clause.
Put
differently, whether the terms set out in the expired fixed-term
contract were impliedly extended to the employment relationship
between Stahl and Ms Van Staden following its termination.
[16]
Ms Van Staden argued that it was never explained to her that some of
the terms of the fixed-term contract would endure
beyond the expiry
of the fixed-term. In any event, she contended that in terms of
Clause 1.1 of the expired contract Stahl made
it clear to her that
the fixed-term contract was not to be construed as raising any
expectation for ongoing employment or a permanent
appointment; Which
she understood to mean that a further contract would be concluded for
her permanent appointment by Stahl. This
never occurred. Instead, she
says, she was offered a new contract which she was unhappy with due
to its unfair and unreasonable
restraint of trade clause.
[17]
Mr Wannenburg, for Stahl, submitted that following the expiry of the
fixed-term contract Ms Van Staden was remunerated
on terms as set out
in the expired contract; she received her monthly salary advice; and
was entitled to all the benefits provided
for in the fixed-term
contract, for instance, the bonus, annual leave, and sick leave. He,
therefore, contended that the terms
and conditions of employment as
set out in the expired fixed-term contract were impliedly extended to
the employment relationship
between Stahl and Ms Van Staden.
[18]
In
KPMG
Chartered Accountants (SA) v Securefin Ltd and Another
[2]
the Court emphasised the importance of parol evidence as follows:
'First, the integration (or parol
evidence) rule remains part of our law. However, it is frequently
ignored by practitioners and
seldom enforced by trial courts. If a
document was intended to provide a complete memorial of a jural act,
extrinsic evidence may
not contradict, add to or modify its meaning
(
Johnson v Leal
1980 (3) SA 927
(A) at 943B)…’
[19]
Clause
2.1 of the fixed-term stipulated that should the contract be in
conflict with any existing or future law or collective agreement,
such law or agreement shall be binding in respect of the impugned
term only and all other terms of the contract shall remain valid
and
binding upon the parties.
[20]
Section 198B of the Labour Relations Act, 66 of 1995 (“LRA”),
applies to fixed-term contracts of employees
earning below the
threshold determined by the Minister of Labour in terms of s 6 of the
Basic Conditions of employment Act, 75
of 1997. At present the
threshold is R205 433.30.
[3]
Ms Van Staden earned R5000. 00 per month. Her employment on
fixed-term fell within the purview of s 198B of the LRA. For purposes
of s 198B(1)(c ) a 'fixed-term contract' means a contract of
employment that terminates on,
inter
alia
,
a fixed date, other than an
employee
's
normal or agreed retirement. An employer may employ an
employee
on a fixed-term contract or successive fixed-term contracts for
longer than three months of
employment
only if- the nature of the work for which the
employee
is employed is of a limited or definite duration or the employer
can demonstrate any other justifiable reason for fixing the
term of
the contract.
[4]
More
pertinently, an offer to employ an
employee
on a fixed-term contract or to renew or extend a fixed-term contract,
must
be in writing
;
and state the reasons for the limited duration of
the employment contract.
[21]
Following the expiry of the three months contact Stahl did not renew
the contract in writing as required in terms of
s 198B or the LRA. It
describes Ms Van Staden’s version that she was offered a new
contract with restraint provisions which
she was unhappy with as “
a
blatant lie
.”
According to Stahl such a new or extension contract “
does
not exist
.”
That may well be. But the point is that the fixed-term contract could
not have been impliedly extended on intervals of
three months or on a
monthly basis as Stahl sought to argue. It follows that the restraint
provisions were binding upon the parties
for a period of 24 months
following the expiry of the fixed-term on 30 April 2018. This, of
course, is subject to a caveat on the
reasonableness of the restraint
provisions to which I now turn.
[22]
Freedom to contract is of great social value and so is the right to
engage freely in trade and occupation. These competing
rights were
dealt with by Malan AJA in
Reddy
v Siemens Telecommunications (Pty) Ltd
[5]
as follows:
“
All agreements including
agreements in restraint of trade are subject to constitutional rights
obliging courts to consider fundamental
constitutional values when
applying and developing the law of contract in accordance with the
Constitution of the Republic of South
Africa, 1996……A
court must make a value judgment with two principal policy
considerations in mind in determining
the reasonableness of a
restraint. The first is that the public interest requires that
parties should comply with their contractual
obligations, a notion
expressed by the maxim
pacta
servanda sunt
. The
second is that all persons should in the interests of society be
productive and be permitted to engage in trade and
commerce or the
professions. Both considerations reflect not only common-law but also
constitutional values. Contractual autonomy
is part of freedom
informing the constitutional value of dignity, and it is by entering
into contracts that an individual takes
part in economic life. In
this sense, freedom to contract is an integral part of the
fundamental right referred to in s 22”.
See also
Barkhuizen v Napier
2007
(7) BCLR (CC) 691 at 700 B-C para 29-30.
[23]
The covenants in restraint of trade are valid and enforceable unless
they are unreasonable and thus contrary to public
policy.
[6]
In
Basson
v Chilwan & others
[7]
it
was held that a restraint which is reasonable
inter
partes
might nevertheless, for a reason not peculiar to the parties, damage
the public interest. Four questions were formulated as follows:
(a)
Is there an interest of the one party which is deserving of
protection at the termination of the agreement?
(b)
Is such interest being prejudiced by the other party?
(c)
If so, does such interest so weigh up qualitatively and
quantitatively against the interest of the other party that the
latter
should not be economically inactive and unproductive?
(d)
Is there another facet of public policy having nothing to do with the
relationship between the parties but which requires that
the
restraint should either be maintained or rejected? Insofar as the
interest in
(c)
surpasses the interest in
(d)
,
the restraint would as a rule be unreasonable and accordingly
unenforceable. It is a matter of judgment which can vary from case
to
case.
[24]
A restraint would be an enforceable restriction on the activities of
an employee who, amongst others, had access to the
company's
customers and could use his/her relations with the company's
customers to the advantage of a competitor and to the detriment
of
the company.
[8]
[25]
Although Ms Van Staden and Gregbev denied that Gregbev was a
competitor of the applicant, in an affidavit filed by the
marketing
director of Gregbev, in support of Ms Van Staden’s case, it is
clear that Gregbev was not only registered with
Sishen Mine as an
inspector of lifting machines but was also a supplier of spare parts
for these machines and may upon request
from the mine supply spare
parts. In light of this, Gregbev, in my view, was a competitor of
Stahl.
[26]
Ms Van Staden’s duties were not limited to trivial
administrative tasks. On her own version, she knew the relevant
representatives of Stahl’s customers. For instance, when this
litigation was underway, she made contact with a certain Mr
Ruben
Rakgalakane, a crane maintenance supervisor of Anglo American, to
enquire whether Stahl was the sole supplier of spare parts
to Sishen
Mine. She also knew the identity of Stahl suppliers and obtained and
submitted their quotations; she typed quotations
and knew the
percentage increase that Stahl added to its quotations for spare
parts. She had a list of spare parts and knew of
Stahl’s profit
margins on spare parts for lifting machinery.
She
volunteered information to Mr Marc De beer of Invertek that she no
longer worked for Stahl. She gave him her new e-mail address
where he
had to forward his the quotation to. She also admitted that when a
crane at Sishen suffered a breakdown or when the Sishen’s
cranes were serviced she liaised with Stahl’s suppliers in
order to establish pricing and availability.
[27]
Ms Van Staden’s concession that she attempted to buy spare
parts from a supplier of Stahl, to wit: Invertek, is
a clear breach
of the restraint clause. Invertek was never a supplier of Gregbev
because Mr De beer of Invertek would not have
requested Ms Van
Staden, upon learning that she no longer worked for Stahl, to
approach Stahl as the agent of Invertek in the Northern
Cape.
[28]
There can be no question that Ms van Staden used the knowledge she
acquired and the relationship she built with the suppliers
of Stahl
for purposes of furthering the business activities of Gregbev to the
prejudice of Stahl. In my view, Stahl established
that it had a
protectable interest in the form of customer connections, its
strategies, know-how, identity of suppliers, profit
margins which is
imbedded in the restraint of trade provisions it sought to enforce.
[29]
Mr Olivier, for Ms Van Staden, contended that the scope of the
restraint in respect of the area which Stahl seeks to
enforce is
unreasonably wide and the 24 months period of operation is unduly
lengthy. Mr Wannenburg readily conceded, wisely so,
that the
territorial operation of the restraint, insofar as it was applicable
to the African continent as a whole, had a far-reaching
effect on Ms
Van Staden’s constitutional right to freely engage in economic
activity or to choose a trade, occupation or
profession. I am of the
view that limiting the applicability of the restraint within the
provincial boundaries of the Northern
Cape would suffice.
[30]
In respect of the period of operation of the restraint Mr Wannenberg
urged that it be found that it commenced from 16
June 2019, when Ms
Van Staden resigned and took up employment with the rival business
because clause 28 of the fixed-term contract
expressly stipulated
that : “
The
employee shall not for a period of 24 months
after
the date of the termination of her employment with the employer
persuade or attempt to persuade any person whom during her employment
with the employer was a banker, financier, supplier or customer
of
the employer, to cease doing business with the employer or commence
doing business with anyone else…”
(My
own emphasis)
[31]
I have already determined that restrained provisions became binding
on the parties immediately following the expiry of
the three months
fixed-term contract. Regard being had to the limited duration of the
fixed-term contract and Ms Van Staden’s
experience as an
administrative assistant, I am of the view that the 24 months period
of restraint is unreasonable. There is a
paucity of information
regarding what the reasonable period of restraint should be. However,
the purpose of a restraint is not
to punish.
[9]
The restraint in issue is severable and separately enforceable in the
widest sense possible in respect of
,
inter alia
,
its period of operation. Restricting the period of operation in the
order of a year (12 months) would, in my view, be reasonable
in the
circumstances of this case. Essentially, Ms Van Staden honoured the
12 months period of the restraint by remaining in the
employ of Stahl
following the expiry of the fixed-term. The 12 months period has
lapsed and therefore she is no longer bound by
the restraint
provisions.
[32]
On the above conspectus both parties succeeded only to a limited
extent. Therefore, each party should bear its own costs.
I make the
following order.
Order
1.
Stahl
Cranes & Hoist Proprietary Limited, the applicant, succeeds to
the following extend:
1.1
Ms
Suannette Van Staden, the first respondent, is interdicted and
restraint for a period of twelve (12) months, calculated from
01 May
2018 , to:-
1.1.
1 either alone or jointly or together with or as
agent for any other person, assist, be interested, engaged
or
concerned, directly or indirectly whether as principal, proprietor,
shareholder, partner, representative, member, consultant,
advisor,
director, financier, administrator, employee or otherwise in any
business, company or concern which carries on business
in competition
with the applicant, within the provincial boundaries of the Northern
Cape.
1.1.
2 persuade or attempt to persuade
any person whom, during her employment with the applicant,
was a
banker, financier, supplier or a customer of the applicant or to
cease doing business with the applicant or commence doing
business
with anyone else;
1.1.3
solicit or attempt to solicit the business or custom of any person
whom, during
her employment with the applicant was a banker,
financier, supplier or a customer of the applicant;
1.1.4
persuade, induce, solicit, encourage to procure any employee employed
by the applicant,
to cease such employment or to undertake employment
with or have any interest in any other business.
2.
Each party is to pay its own costs.
MV Phatshoane ADJP
APPEARANCES:
FOR
THE APPLICANT: Adv W Wannenburg
Instructed
by Duncan & Rothman Inc.
FOR
THE FIRST RESPONDENT: Adv D Olivier
Instructed
by Hugo Mathewson & Oosthuizen Inc.
[1]
See
Basson v Chilwan and Others
1993 (3) SA 742 (A)
[2]
2009 (4) SA 399
(SCA) ([2009]
2 All
SA 523
;
[2009] ZASCA 7)
para 39
[3]
GN 531 in
GG
37795 of 1 July 2014 determines that all employees earning in excess
of R205 433.30 per annum be excluded from sections 9, 10,
11, 12,
14, 15, 16, 17 (2) and 18 (3) of the Basic Conditions of employment
Act with effect from 1 July 2014 - for the purposes
of this notice:
'earnings'
means the regular annual remuneration before deductions, i.e. income
tax, pension, medical and similar payments but excluding
similar
payments (contributions) made by the employer in respect of the
employee: Provided that subsistence and transport allowances
received, achievement awards and payments for overtime worked shall
not be regarded as remuneration for the purpose of this notice.
[4]
Section 198B(3)
[5]
2007 (2) SA 486
(SCA) at 494 C-F.
[6]
See
Reddy
v Siemens Telecommunications (Pty) Ltd
2007 (2) SA 486
(SCA) and authorities cited therein at 493-494 at
para 10.
[7]
[1993] ZASCA 61
;
1993 (3) SA 742
(A) at 767G-H
[8]
Continuous Oxygen Suppliers (Pty)
Ltd t/a Vital Aire v Meintjes & another (
2012
33 ILJ 629 (LC) at 638 para 34
[9]
Ntsanwisi v Mbombi
2004 (3) SA 58
(T) at
64E