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[2018] ZAKZPHC 47
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Otis (Pty) Ltd v Beni and Another (8355/2018P) [2018] ZAKZPHC 47 (5 October 2018)
IN
THE HIGH COURT OF SOUTH AFRICA
KWAZULU
NATAL DIVISION, PIETERMARITZBURG Case
No. 8355/2018P
In
the matter between:
Otis
(Pty)
Ltd Applicant
and
Phoolwanthi
(Nirvana)
Beni First
Respondent
Kone
Elevators South Africa (Pty)
Ltd Second
Respondent
Judgment
[1]
The applicant in this application is Otis (Pty) Ltd ('Otis') which
carries on the business of manufacturing, installing and
maintaining
lifts, moving walkways and escalators in South Africa and
internationally. Otis seeks an order interdicting and restraining
an
ex-employee, the first respondent Phoolwanthi Beni ('Ms Beni') in
terms of a restraint of trade agreement. Otis also seeks to
interdict
and restrain Ms Beni's current employer, the second respondent Kone
Elevators South Africa (Pty) Ltd ('Kone') from employing
her or using
any knowledge of the business of Otis conveyed to it by Ms Beni.
[2]
The application originally came before this court on the 2nd
of August 2018. The application was then adjourned by consent between
the parties to the 3151 of August 2018, when the matter was heard.
[3]
The history of Ms Beni's relationship with Otis is set out in
her answering affidavit. Including the allegations of Otis which are
admitted by her, they may be summarised as follows:
(a)
Having no formal qualifications other than a matric
certificate, Ms Beni was employed as a a··call··centre
agent at Otis in Johannesburg during 2005.
(b)
Her function was to receive calls from customers who had
phoned in to report elevator breakdowns, and then to dispatch a
technician
qualified to attend to the problem. She did this job for
three years.
(c)
In October of 2008 she was promoted to head of the call centre
with the responsibility of overseeing the other call centre agents.
(d)
During the period between 2010 and 2012, Ms Beni was given the
additional responsibility of being the Field Operations Department
Coordinator. This involved liaising with technicians who encountered
problems during a call out. Ms Beni would then ensure that
the
relevant field engineer contacted the technician.
(e)
In the conduct of her functions up until 2012, Ms Beni worked
in a liaison position without any technical knowledge in so far as
it
related to the operation, installation, sales or maintenance of
elevators.
(f)
In 2012 Ms Beni worked for a sister company of Otis, Sigma
Lifts and Elevators (Pty) Ltd, as the National Sales Consultant. In
this
capacity she was trained to, and in fact sold Sigma Lifts.
Between 2013 and 2014 she was employed by Sigma as an Upgrading
Consultant,
approaching existing customers with a view to upgrading
their lifts.
(g)
In 2014 she was transferred to Otis as an 'O Sales Consultant'
involving the sale of maintenance contracts to clients of Otis. Her
functions included ensuring that existing contracts were maintained
and renewed.
(h)
In 2015, because Ms Beni wished to relocate to Durban for
family reasons, she was promoted to the position of 'Service
Supervisor'
in Durban. The position entailed collecting and collating
the time sheets of technicians and ensuring that they had carried out
the tasks allocated to them, were equipped with the correct
protective clothing and equipment, and where the technicians could
not cope with the tasks, she ensured that the relevant engineering
personnel were contacted. Effectively Ms Beni was monitoring
the work
of the technicians actually involved in call outs. This required no
technical knowledge or ability on her part.
(i)
In October of 2016 she was promoted to the position of 'Branch
Manager' in Durban. Similarly this task did not require technical
expertise and she was not made privy to any confidential information.
She would complete forms relating to queries and complaints
from
customers and relay those to the appropriate persons. They were
usually in Johannesburg, but also in Durban, and they would
deal with
the problem. She did not supervise work in the field and did not deal
with sales.
(j)
In her functions as the Branch Manager in Durban Ms Beni
compiled reports of the sales staff which were given to head office
to
ensure that they were kept abreast of sales. The figures were
given to her by the sales persons.
(k)
The employment contract which contained the restraint of trade
relied upon by Otis was signed by Ms Beni on the 19th of October,
2016. The restraint of trade was to operate for one year after the
termination of Ms Beni's employment, and to be applicable throughout
the whole of South Africa.
[4]
In dealing with the allegations of her functions as set out in
the founding affidavit of Otis, Ms Beni emphatically avers that
during
2013 and 2014, when she was involved in sales, she was in
Johannesburg, and when she came to Durban she was not in any way
involved
in procuring new customers for Otis. She did not oversee the
work done by the sales representatives, but merely forwarded returns
to head office setting out what they had reported to her. The
suggestion by Otis that she was 'managing sales' is emphatically
denied, and Ms Beni points out that that function was performed by
one Richard Hardy, the National Sales Manager. There was also
a sales
manager for new equipment sales. Ms Beni also emphatically denies the
suggestion that she was ever responsible for ‘construction
and
lift installation'.
[5]
Mr
Grundlingh,
who appeared for Otis, stated at the
outset of his address that Otis relied only upon:
(a)
A protectable interest; and/ or
(b)
The protection of its customer and trade connections,
in
seeking to enforce the restraint of trade agreement. Otis does not
allege that Ms Beni has used any confidential information
in any way
and does not seek a referral of the application for the hearing of
oral evidence.
[6]
Mr
Grundlingh
submitted that insofar as any disputes of
fact arise between the affidavits of Otis and those of Ms Beni, they
should be dealt with
in accordance with the exception to the rule set
out in
Plascon-Evans Paints Ltd v Van Riebeeck Paints (Pty) Ltd
[1984] ZASCA 51
;
1984 (3) SA 623
(A) at 635B-C:
'Moreover, there may be exceptions to
this general rule, as, for example, where the allegations or denials
of the respondent are
so far-fetched or clearly untenable that the
Court is justified in rejecting them merely upon the papers....'
[7]
He submitted that the denials and explanations in Ms Beni's
answering affidavits are so implausible and untenable that I should
dismiss them without more. Mr
Grundlingh
drew attention to the
fact that Ms Beni bore the onus of establishing why the restraint of
trade agreement should not be enforced.
[8]
I drew to Mr
Grundlingh's
attention that the founding
affidavit of Otis fails to establish either the requisite evidence
for the protection of trade secrets/confidential
information, or
customer connections. He submitted that in restraint of trade
disputes, the applicant was entitled to make its
case in reply, and
that there is authority for this deviation from the general rule
that an applicant is obliged to make out
its case in its founding
papers. Mr
Grundlingh
referred me to John Staner
SC:
Agreements in Restraint of Trade in South African Law
issue 21
(2017). Saner, at paragraph 15.9 refers to the application of the
Plascon-Evans
rule, and opines that the test is equally
applicable in cases of restraint of trade where the onus is reversed.
The incidence of
the onus does not, however, affect the application
of the
Plascon-Evans
rule. See:
Ngqumba en 'n ander v
Staatspresident en andere
:
Damons NO en andere v
Staatspresident en andere: Jooste v Staatspresident en andere
1988(4)
SA 224 (A).
[9]
Saner suggests that because the onus rests on the respondent,
facts germane to the issues will be set out in the answering
affidavits
for the first time, and will accordingly need to be dealt
with in reply by the applicant. The footnote he refers to however, at
15-39, makes it clear that it is both necessary and desirable that
the applicant set out in its founding affidavit that it has
protectable interests, the nature thereof and why they are
confidential. In my view, it may well be that a respondent in an
application
such as this may raise an unforeseen matter, which
requires reply. It is quite another to suggest that the general rule
in
Plascon-Evans
may be departed from simply because the
application concerns a restraint of trade. I am uncertain whether
that is what Saner is
suggesting. If he is, I am in respectful
disagreement with the learned author.
[10]
Mr
Collingwood,
who appeared for Ms Beni, submitted
that the case for Otis as set out in its founding affidavit was
replete with meaningless terminology.
There was no serious engagement
with the facts. Paragraph 17 of the founding affidavit of Otis sought
to establish the need for
customer protection. The paragraph consists
of eight sub-paragraphs dealing with the alleged interaction of Ms
Beni with the customers
of Otis. They are introduced with words such
as 'she serviced', 'was responsible for' (six times), 'was involved
in' all the contracts
with Otis' KZN customers (both locally and
where appropriate nationally) and 'intimately knew what requirements
were crucial to
the Applicants' contracts and what were negotiable.
She was intimately involved in the pricing of maintenance work and
tenders
for construction and installation work’. The first two
phrases are immediately linked in each subparagraph with a customers'
name.
[11]
In none of the sub-paragraphs are the introductory phrases explained.
No explanation is given of the relationships between
Ms Beni and the
customers of Otis, and no information is given as to her
'involvement' in maintenance work or tenders for construction
and
installation work. It is as if the deponent wished to list as many of
the important sounding functions as possible without
having to
explain the facts. The allegations in paragraph 17 of the founding
affidavit are dealt with extensively by Ms Beni, as
far as she was
able to do given the imprecise language in the paragraph. Her
clarification of the functions she allegedly performed
then prompted
Otis to attempt to set out its case in reply.
[12]
One of the allegations is that Ms Beni 'was responsible for
maintenance and construction (specifically lift installation)'. This
is emphatically denied by Ms Beni. Despite a long list of Ms Beni's
assertions which are repeated (the purpose for so doing is
unclear)
in the replying affidavit, these allegations are not substantiated.
The allegation is also made that Ms Beni is 'now using
the
information obtained from the Applicant during the course of her
employment to procure employment with a competitor with reference
to
the possibility of using the information as a springboard to
unlawfully advance her interests... ' These allegations are denied
by
Ms Beni, and no attempt is made to explain or justify these
allegations.
[13]
The founding affidavits (paragraph 69) also contain obviously
exaggerated suggestions of existing and possible harm were Ms Beni
to
be allowed to be employed by Kone - 'The harm to the Applicant is not
only anticipated, but was and is actually currently committed
by the
Respondents. The Applicant stands to lose tens of millions of Rands
due to the Respondents' conduct, which may ultimately
result in the
Applicant's demise'.
[14]
Mr
Collingwood
submitted that Mr
Grundlingh
made much
of the fact that Ms Beni admitted being aware of a number of Otis’s
customers, and that she was also privy to confidential
information.
These statements by Ms Beni have to be read in context. For example,
she admits having acquired knowledge of some
personal details of some
of the employees of Otis - she understands, however, that out of a
duty to those persons she should not,
and would not, disclose them.
She makes no such admission with regard to any confidential
information concerning the confidential
information or trade
connections of Otis, nor of any trade secrets or financial knowledge.
I
agree with the submissions made by Mr
Collingwood,
both with
regard to the lack of any proper substance to the allegations made by
Otis regarding the ability of Ms Beni, as well as
the submission that
Otis has not set out facts to substantiate the conclusions it
reaches. It has also failed to set out facts
concerning any trade
secrets and details of customer connections requiring protection.
[15]
Mr
Boulle,
who appeared for Kone submitted that Otis
was not entitled to an interdict against it for the following four
reasons:
(a)
The lack of any protectable interest relied on by Otis;
(b)
The case against Kone;
(c)
The contents of the annexures to the replying affidavit; and
(d)
The duration of the restraint.
[16]
Otis relies upon customer protection and confidential
information. In order to distinguish between facts and legal
conclusions,
an applicant must allege facts in order to support the
allegations and conclusions. Otis had not done this and its
references to
various customers in the founding affidavits do nothing
to establish facts upon which Otis could rely for the legal
conclusions
it sought. Mr
Boulle
referred to
A M Moolla
Group Ltd
&
Others v The Gap Ink
&
Others
2005
(6) SA 568
(SCA), para 31 where Harms JA stated:
'Affidavits in application proceedings
must do more than make bald allegations; they must, in addition,
provide the facts that support
the allegations....'
Mr
Boulle
submitted that the
adoption of the
Plascon-Evans
rule is a two part process:
(a)
Are there facts in the affidavits which disclose disputes? In
order to reach such a conclusion there must facts from which one can
assess the positions of the respective parties.
(b)
In the light of those facts, has the onus been discharged?
Mr
Boulle
argued that as
insufficient facts have been alleged in the founding affidavits of
Otis, the matter must be decided in favour of
Kone. In this
particular case the allegations and counter allegations are not such
that the exception to the
Plascon-Evans
rule can be invoked
against either Ms Beni or Kone.
[17]
Mr
Boulle
submitted that Otis has not made out a
sufficient case against Kone for the relief sought against it.
(a)
Mr
Boulle
referred to
IIR South Africa BV
(Incorporated in the Netherlands) t/a Institute for International
Research v Hall (aka Baghas)
&
another
2004 (4) SA174
(W}, sub-para 13.4.2 where Schwartzman J stated:
'Where the ex-employer seeks to
finally interdict a third party on the ground that it is competing
unlawfully, by employing an ex-employee
who has breached a restraint,
the ex-employer must prove that:
(a) It has confidential
information or trade secrets.
(b) The third party is making
use of, or is likely to make use of such information or trade secrets
either knowingly or innocently....
(c) It has a real right not to
be faced with unfair competition. In deciding unfairness, a court is
entitled to look at the
competing interests of the parties as spelled
out by Van Dijkhorst J in
Atlas Organic Fertilizers (Ply) Ltd v
Pikkewyn Ghwano (Ply) Ltd and Others
1981 (2) SA 173
(T) at
188H-189A. In the instant appeal, the possible damages that could be
suffered by the appellant is infinitesimal when compared
to the
second respondent's unchallenged evidence that it would be put out of
business if the interdict was granted.
(d) It has no other remedy.'
Mr
Boulle
submitted that no
allegations have been made supporting these requirements.
(b)
In its founding affidavits (paragraph 53) the suggestion is
made of Ms Beni that:
'She is now using the information
obtained from the Applicant during the course of her employment to
procure employment with a competitor
that may result in the employee
using the information of the Applicant as a springboard to unlawfully
advance her interests and
the business interests of Kone, to the
detriment of the Applicant.'
Mr
Boulle
points out that there
are no facts alleged to substantiate these allegations and no
reference whatsoever to unlawful conduct on
the part of Kone.
(c)
Otis also alleges (paragraph 61), with regard to Ms Beni, that
she:
'Would surely use the information at
her disposal (which she became possessed of during her occurrence of
employment with the applicant)
for the furthering of Kane's business
to the detriment of the applicant.'
No basis is suggested for why this
assumption should be accepted.
(d) Reference is made to the
cancellation of an agreement with the Pavilion Mall Shopping Centre.
This is comprehensively
dealt with by Ms Beni in her answering
affidavit, and no allegations involving Kone are made.
(e) A further reference
(paragraph 69) is made in the founding affidavit to the effect that:
'The harm to the Applicant is not only
anticipated, but was and is actually currently committed by the
Respondents. The Applicant
stands to lose tens of millions of Rands
due to the Respondent's conduct, which may ultimately result in the
applicants demise
.....'
Once
again no facts are set out to substantiate the conclusion arrived at
in this paragraph, and no allegations are made in respect
of Kone,
which are in any way substantiated.
Mr
Boulle
submits in any event that in its answering affidavit
Kone has emphatically stated that it has not sought any information
from Ms
Beni regarding her previous employment, and will not do so.
[18]
With regard to whether Otis has discharged the onus it bears,
Mr
Boulle
referred to:
(a)
Micah Kitchens
CC
v Romarno
2018 JDR 0493 (GJ)
at para 50 where Keightley J stated:
'Micah's case against Alto, being the
sixth respondent, is based on the delict of unlawful competition. In
//R v Ha/12004
(4) SA 174 (W), [para 20] it was held that a
competitor's employment of an ex-employee with or without knowledge
of a restraint
cannot of itself amount to the delict of unlawful
competition. It must be established that the new employer, through
the ex-employee
used confidential information of the ex-employer. As
I have already indicated, Micah accepts that it has no evidence to
this effects.
In the circumstances, there is no basis for its claim
against Alto.'
No such evidence has been produced by
Otis in this application.
(b)
In
Roxsure Insurance Brokers (Pty) Ltd v Salomon
&
another (11834/2015) [2015} ZAGPJHC 64 (20 April 2015),
Nicholls
J stated at paras 29-30:
'As regards the second respondent,
there are no public policy considerations or legal requirements
justifying the grant of an order
to prevent the second respondent
from employing Salomon. The relief that the applicant seeks against
the second respondent is a
separate cause of action founded in
delict. The relief sought against Salomon is a cause of action
founded in contract. As pointed
by a full bench of this Court in
IIR
South African BV (Incorporated in the Netherlands) t/a
Institute for International Research v Hall (aka Baghas)
&
another
2004 (4) SA 174
(W},
this distinction is often
overlooked. A claim against a third party is a delictual one based on
unfair competition. In order to
succeed in interdicting the second
respondent, the applicant has to plead and prove not only that
Salomon has confidential trade
secrets or information, but also that
the second respondent is making use of this information.
The applicant has failed to allege the
existence of confidential information worthy of protection and failed
to allege the second
respondent has utilized any such information, or
intends to use it. To allege that merely by virtue of its employment
of Salomon,
the second responded must possess the information, is
inadequate to sustain the relief sought against the second
respondent....'
(c)
Mr
Boulle
also referred to
Kirk Marketing (Pty) Ltd
v Burmeister
2012 JDR 2084 (KZD), para 13 where Pillemer AJ
stated:
'As against Second Respondent the
Applicant seeks to interdict it using Applicant's trade secrets
communicated to it by the First
Respondent. The Second Respondent
says ii has not been given any and has no intention of using any
information. There is no reason
to doubt this evidence. Against a
third party like the Second Respondent the Applicant had to set out
evidence to establish the
delict it relied upon, but the papers did
not achieve this result. The application against Second Respondent
must fail for want
of evidence of it committing a delict of the kind
that would justify this kind of relief.'
[19]
Similarly in this application Kone states that it has received
no information or trade secrets of Otis from Ms Beni and has no
intention
of using any information. I have no reason to doubt this.
In my view Otis has not discharged the onus it bears of establishing
the requisites for an interdict against Kone.
[20]
Mr
Boulle
referred to the correspondence referred to in
annexures Z1 to Z34 to the replying affidavit of Otis. Mr
Boulle
stated that he agreed with, and adopted, the argument of Mr
Collingwood
that the lengthy contents of these annexures,
consisting of emails sent by Ms Beni, assist both the respondents. He
submitted that
there was a complete disconnect between what was set
out in the replying affidavits of Otis concerning these emails, and
the contents
of the emails themselves. I do not intend to trawl
through all the emails and reflect on each one. Suffice it to say
that in many
of them the contents were drafted by one Mr Berry, a
legally trained person working for Otis, and the emails were simply
sent or
signed off by Ms Beni. This has been made abundantly clear in
emails where Mr Berry sets out the body of a letter to be used by
Ms
beni in the event that a contract was to be cancelled. I agree with
both Mr
Collingwood
and Mr
Boulle
that the replying
affidavits assist the respondents in showing that Ms Beni in
particular was simply referring one person to another
and forwarding
information. In the case of the tender involving National Health Lab
Services, the inference sought to be drawn
by Otis in its replying
affidavit is simply not warranted on an examination of the emails.
Indeed, a comparison between the letters
which were drafted by Mr
Berry for Ms Beni and those drafted by Ms Beni herself, illustrate
clearly that Ms Beni could not operate
at the level suggested by
Otis. In numerous cases involving tenders, Ms Beni did no more than
pass the information on from the
customer to the person assigned to
deal with the tenders.
[21]
Lastly Mr
Boulle
dealt with the duration of the
proposed restraint. He submitted that an appropriate restraint would
only be for the time it would
take for a new branch manager to be
trained, acquainted with the role and introduced to customers. A
period of no more than three
months would be more than adequate for
this process.
[22]
Having assessed all the facts set out in the affidavits, I am
of the view that Otis has not established a case for the restraint
which it seeks to impose upon Ms Beni. Her denials and the facts
alleged by Otis, both in its founding and replying affidavits
are not
such that I could adopt the exception to the
Plascon-Evans
rule
and conclude that Ms Beni was being dishonest, or the allegations in
her affidavit should be dismissed without more. Mr
Grundlingh
emphatically refuted any suggestion that Otis wished the matter
to proceed to the hearing of oral evidence. I agree with the
submissions
of both Mr
Collingwood
and Mr
Boulle
that a
case is simply not made out, and that the replying affidavit of Otis
creates more problems for its case than it assists it.
There is also
insufficient evidence upon which to grant an interdict against Kone.
[23]
In all the circumstances I make the following order: The application
is dismissed with costs.
_______________
Lopes
J
Date
of Hearing: 31st August 2018
Date
of Judgment: 5th October 2018
Counsel
for the Applicant: Mr
Grundlingh
(instructed by Berry &
Associates c/o Grant & Swanepoel)
Counsel
for the First Respondent: Mr A D
Collingwood
(instructed by
Messrs Anuradha Kallideen & Associates)
Counsel
for the Second Respondent: Mr A J
Boulle
(Instructed by Messrs
Barkers c/o Cajee Setsubi Chetty Inc)