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[2018] ZAECELLC 6
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National Ship Chandlers (Natal) 1989 (Pty) Ltd v Ellis and Another (542/2018) [2018] ZAECELLC 6 (6 April 2018)
NOT
REPORTABLE
IN
THE HIGH COURT OF SOUTH AFRICA
(EASTERN
CAPE DIVISION, PORT ELIZABETH)
Case
No. 542/2018
In
the matter between
NATIONAL
SHIP CHANDLERS
(NATAL)
1989 (PTY)
LTD
Applicant
and
WAYNE
ERIC
ELLIS
First
Respondent
ALBATROSS
PROVISIONING CC
T/A
LINK SHIP CHANDLERS
Second
Respondent
REASONS
FOR ORDER
HARTLE
J
[1]
I granted an order on
29 March 2018 dismissing the applicant’s application with
costs.
[2]
These are my reasons
for doing so.
[3]
The applicant sought on
an urgent basis to restrain and interdict the first respondent, for a
period of 12 months commencing on
31 August 2017 within the area
known as the Nelson Mandela Bay Municipality, from being engaged as
an employee, agent, member,
representative or in any other capacity,
be it directly or indirectly, with the second respondent, or
with any client of
the applicant; or from soliciting clients and
customers of the applicant which he may have dealt with during his
erstwhile employ
with it; or from divulging or disclosing to any
party including the second respondent its customer lists, supplier
lists, price
lists, trade secrets and/or confidential information
obtained whilst in the service of the applicant. It also sought
self-standing
relief against the second respondent interdicting it
from receiving or from indirectly using these trade secrets or
confidential
information such as may have been divulged to it by the
first respondent. Costs were sought against both respondents as well.
[4]
The respondent was in
the employ of the applicant as a procurer, but resigned on 31 August
2017. The applicant put up a copy of
its written contract of
employment concluded with him, which became effective on 1 July
2017. Although the applicant referred
to this as the “new
employment contract”, it contended that the first respondent
had been in its employ since 20 April
2015 already, albeit under the
guise of a different corporate entity.
[5]
Clause 20 of the
contract provided as follows:
“
RESTRAINT
OF TRADE
20.1
After termination of this agreement the employee undertakes and
agrees not to:
20.1.1
be engaged in any other business be it in direct or indirect
competition with the employer or as a shareholder, partner,
member of
a close corporation, director of a company or in any other capacity;
20.1.2
be engaged independently of the employer by any client by the
employer in any capacity;
20.1.3
directly or indirectly, on his/her own behalf or on behalf of others,
undertake or assist in the solicitation of customer
with whom the
employee dealt during the course of his/her employment with the
employer. Within a period of 12 (twelve) months
after
termination in the area known as Port Elizabeth/Nelson Mandela Bay
Municipality.
20.2
After termination, the employee will in addition not divulge
information obtained while in service of the employer, to any
competitor of the employer or any competitor of clients.
20.3
The employee acknowledges and agrees that the restraint is fair,
reasonable and necessary for the protection of the employer,
the
employer’s trade name and the goodwill attached thereto.”
[6]
The applicant alleged
that it had coincidentally come to its attention on 9 February 2018
from a trailing email sent to it by a
client that the first
respondent was doing business on behalf of the second respondent to
which he had “moved over”
and had offered to the client a
price list and a tender to do business with it on a discounted basis
to provide certain supplies.
[7]
The applicant related
that immediately it became aware of the first respondent’s
treachery (this is because he had in fact
informed its operations
manager that he was resigning to pursue a “new venture”,
which involved starting his own business
unrelated to its own), it
sent a demand to him that he should adhere to the restraint provision
in his contract that he not be
employed with a competitor within the
period of restraint. This was followed by a formal demand from
its attorneys to both
respondents a few days later pointing out the
infraction by the fact of the first respondent’s employ with
the second respondent.
This solicited a reply from the
respondents’ attorneys advising that they would reply by close
of business on Monday, 19
February 2018.
[8]
Even before the reply
came the present application was issued, this because, so says the
applicant in its founding affidavit, the
first respondent had
“already attempted to solicit the business of one of (its)
customers, and may have succeeded in doing
so in respect of other
customers” and that it therefore had “no option but to
institute these proceedings to protect
its proprietary interests”.
[9]
Further since in its
view the first respondent had (as appeared from the email) thereby
taken steps to contact and solicit its customers
and business
applying his knowledge of its network in Port Elizabeth, it claimed
that he was also in breach of the confidentiality
undertakings given
by him in clause 19.1 of his employment contract. Clause 19.1
forbids him from “disclosing any confidential
information to
any third party or entity … after (the agreement’s)
termination, unless the employer specifically agrees
so in writing”.
[10]
Other than to state
that because of the conclusions referred to in paragraph [8] above as
to why it had to institute the proceedings,
no further facts were
averred as is required by the provisions of Rule 6(12)(b), let alone
explicitly, as to why the applicant
believed it could not be afforded
substantial redress at a hearing in due course unless the matter was
entertained on an urgent
basis.
[11]
These were the two
averments on which the applicant relied to make out a case for
urgency, the first being that the first respondent
is employed by the
second respondent, and the second that he had already attempted to
solicit the business of one of its customers
by sending it the second
respondent’s price list. It further speculated (which falls to
be left out of account for want of
any factual foundation) that he
may have done so in respect of other customers as well.
[12]
A certificate of
urgency was put up in which the assertion is made by Mr. Pillay, who
appeared on the applicant’s behalf,
that the application is
“inherently urgent”. The same mantra appears in the
founding affidavit, namely that matters
of this nature are inherently
urgent and demand the attention of the courts.
[13]
It was unnecessary for
the duty judge to issue a directive, such as envisaged in paragraph
12(d)(iii) of the Joint Rules of Practice
of this court, because the
matter was first enrolled for hearing on a day normally enrolled for
motion court matters.
[14]
The notice of motion as
originally framed sought the issue of a rule
nisi
on 27 February 2018, returnable on the same date. I expect this
was an error, but one which was never corrected. The
impression
given is that final relief, moreover retrospectively to 31 August
2017, was being sought.
[15]
The notice of motion
was also not amended to reflect the abridged time periods by when the
respondents should oppose and file their
answering affidavits, albeit
it did exhort any of the respondents wishing to oppose the urgent
interim relief being sought, to
“deliver any documents in
support of such opposition” to two email addresses provided
therein.
[16]
The application was
served on the respondents’ attorneys at 10h26 on 21 February
2018 on only three clear court days’
notice to them.
[17]
I was informed from the
bar that when the matter was called on 27 February 2018 it was not
argued, albeit the respondents had managed
to depose to their
replying affidavits at short notice. The application was
instead postponed to 8 March 2018 at the applicant’s
request to
enable it to file an answering affidavit. As an aside I mention that
the papers had burgeoned to over 300 pages by the
time it came before
me and had grown all sorts of tangents, belying its character as a
bona fide
critically urgent matter. It is perhaps no wonder that when the
matter came before the court on 8 March 2018 the duty judge was
not
prepared to hear it for want of compliance with the provisions of
rule 15A of the Joint Rules of Practice, treating it as an
ordinary
opposed application. The same fate befell the matter when on 15
March 2018 it was “crowded out” on the
opposed roll and
postponed for hearing before me on 22 March 2018. On 19 March 2018
the applicant’s attorneys addressed me
and the Judge President
requesting clarification that the matter would be disposed of,
whatever the status of the roll, on 22 March
2018, because it was an
urgent matter.
[18]
I highlight some of the
tangential developments that happened along the way. The applicant
filed an extremely lengthy replying affidavit
in which it raised
entirely new matter, in a bid in my view to prove that the first
respondent was not being truthful or had sought
to downplay his
involvement in its business and with its customers as well as his
supposed knowledge of a customer list and confidential
information.
Determined to enlarge upon the allegation in the founding affidavit
that the applicant had established a protectable
interest in its
supply information and price and that a threat was posed by what he
knew, and to minimize his refutation that he
did not have a grasp of
the company’s IT system, the applicant put up a spreadsheet
reflecting his purported “activity”
on the system to
identify transactions he was involved with and instances where he
quoted. Emails he had sent during his
tenure with the applicant
were also collected and added to the fray to show that he had indeed
developed relationships with its
customers.
[19]
Then the applicant
purported to file a supplementary affidavit
sans
any application for condonation for it to be admitted in which it
sought to clear its own conscience (following hot on the heels
of its
exposure of the first respondent for the charlatan that he is on its
version) by admitting firstly that its reliance on
documentation
reflecting the first respondent’s earlier employ with it under
the guise of a close corporation as it had traded
before was strictly
speaking not relevant, but then went on to explain and justify the
relevance of this anyway to the threat that
was posed to it by what
the first respondent had taken away with him from this prior period
of employment with the close corporation.
What is remarkable is
that in this affidavit the applicant conceded that this information
should strictly speaking have been put
up earlier in its replying
affidavit, but it defended its absence of the information on account
of the “severe time constraints
and the urgency involved in
timeously preparing the replying affidavit”!
[20]
Of course there
followed an objection to the admission of the supplementary
affidavit, and a formal application by the first respondent
to file a
further affidavit to defend his integrity (in which he objected to
the introduction of hearsay evidence and the applicant’s
failure to have complied with the relevant provisions of the
Electronic Communications and Transactions Act, no 25 of 2002
relating to the data and emails sought to be relied upon by the
applicant in the replying affidavit), the delivery of that further
affidavit and then, thereupon, the filing of a very lengthy
“answering affidavit in response to the first respondent’s
application for leave to file a further affidavit” which was
handed up to me from the bar at the hearing of the matter.
[21]
In
his answering affidavit the first respondent, with whom the second
respondents joined issue, raised as an
in
limine
argument the applicant’s noncompliance with the peremptory
requirements of
rules 6(12)(b)
(I have already dealt with this above)
and 6(12)(a) read with
rule 6
generally, in the latter respect
because it had failed to indicate in its notice of motion by when
the respondents were to
give notice of their intention to
oppose or to stipulate by when they had to file their answering
affidavits.
[1]
They
averred that the procedure adopted by the applicant in its notice of
motion was a “misuse and an abuse of the
process of court”
and that as a result, the application should be dismissed with costs.
[22]
On the substantive
issue of urgency the first respondent alleged that the applicant had
known from the time he gave notice to resign
already, on 28 August
2017, that he intended to conduct business for his own account as a
ship chandler and that he in fact did
exactly that. After his
resignation he continued to work for the applicant for two months and
later (up until mid-January
2018) conducted business for his own
account t/a Quayside Marine Services with the applicant’s
knowledge. In fact,
he claims that on 15 January 2018 he took
delivery from the applicant of a significant order of 100 kg of
coloured rags as a sub-contractor
to the second respondent, which
rags were supplied by the latter to a ship “A S Virginia”.
When taking delivery
of the order, he claims that the applicant’s
employees even assisted him to load the goods onto his bakkie. For
this reason,
he denied that the applicant only became aware of his
employment by the second respondent on 9 February 2018, or that this
purported
realization warranted the cry of urgency. These
critical events, which I must accept on the first respondent’s
version
– certainly detract from the applicant’s claim
that it was blindsided and faced with an emergency when it discovered
his double dealings so to speak. To the contrary, this defence
suggested a waiver of the applicant’s entitlement to
rely on
the restraint in all the circumstances.
[23]
The applicant in its
replying affidavit appeared to miss the sting of the respondent’s
formal criticism of it levelled at
the form of the notice of motion
and the question of urgency. It simply asserted that these points
“become academic”
in the light of the court order which
directed the further conduct of the proceedings.
[24]
These shortcomings are
however by no means inconsequential neither does it matter that the
matter had probably become ripe for hearing
by the time it came
before me. The provisions of
rule 6(12)(b)
in peremptory
language requires the applicant to set forth explicitly the
circumstances which he avers renders the matter urgent
and the
reasons why he claims that he cannot be afforded substantial redress
at the hearing in due course.
[25]
It is not sufficient to
contend in my view that these matters are “inherently urgent”
even assuming that the first respondent
had ostensibly become
employed by the second respondent in breach of the restraint of trade
agreement in contravention of clause
20 of his employment contract.
[26]
It
was obvious that at the time the respondents were placed on terms by
the applicant’s direct letter to him and those of
its attorneys
addressed to both of them, the only cause of complaint was the
applicant’s knowledge that the first respondent
had taken up
employment by a competitor. By the time of the issue of the
application this had morphed into an attempt to
solicit customers of
the applicant and a purported breach of the confidentiality
undertaking in paragraph 19 of the employment
contract on the
assumption that he had accessed the applicant’s Port Elizabeth
network.
[2]
The attorneys’
letter addressed to the second respondent had only tentatively
suggested that the applicant’s
confidential information “may
have” been disclosed to the second respondent.
[27]
But even assuming an
infraction by a breach of the first respondent’s undertaking
given in paragraph 20 of the employment
contract, this did not
per
se
establish any
objective urgency, neither did it fall to this court to make the
default assumption the applicant seemed to suggest
should follow
logically by the mere fact of the first respondent’s employment
with a competitor during the period of restraint.
[28]
On the issue of why the
applicant believed the first respondent’s entitlement to expect
compliance with the peremptory provisions
of
rule 6
should be
compromised by short service on the respondents’ attorneys and
the unacceptable format of the notice of motion,
the applicant
offered no excuse, apology or justification as to why the respondents
should be rushed through the portals of the
court to answer to the
applicant’s claim on an urgent basis.
[29]
It is a misconception
in my view that applications of this nature, which in practice and in
effect involve putting an abrupt end
to the covenanter’s
freedom to trade and work by the granting usually of interim relief
to enforce a restraint (which might
in the long run turn out to be an
unreasonable one at that), should be elevated to a category of cases
requiring urgent attention.
To the contrary, given the harsh
effect of a restraint in trade and the burden that a party who
challenges the enforceability of
the agreement bears to allege and
prove that it is unreasonable and therefore against public policy, a
respondent in such
matters should in my view be afforded a
reasonable opportunity to meet that burden without the threat of an
urgent interim interdict
hanging over his head especially where the
barest of allegations have been made in support of the allegation
that the matter is
so urgent and without saying why the respondents
should not be afforded the usual time periods to respond formally.
[30]
The applicant itself
acknowledged this burden confronting the respondents in asserting the
so-called inherent urgency demanding
the attention of the courts in
the following averment:
“
the
onus rests (on) the respondents to demonstrate on clear evidence why
the restraint is not enforceable. ...
The
balance of convenience clearly favours the grant of interim relief
pending any
resolution of disputes of fact
.”
(Emphasis added.)
[31]
This recognition that
there would likely be disputes of fact notwithstanding, the applicant
in effect sought final relief, well
at least this is the case the
respondents had to meet on the face of the notice of motion.
[32]
In
Caledon Street Restaurants CC v D’Aviera
[3]
this court noted what was expected of a litigant to contend with when
relief is sought on an urgent basis:
“
In
the assessment of the validity of a respondent's objection to the
procedure adopted by the applicant the following principles
are
applicable. It is incumbent on the applicant to persuade the court
that the non-compliance with the rules and the extent thereof
were
justified on the grounds of urgency. The intent of the rules is that
a modification thereof by the applicant is permissible
only in the
respects and to the extent that is necessary in the circumstances.
The applicant will have to demonstrate sufficient
real loss or damage
were he to be compelled to rely solely or substantially on the normal
procedure. The court is enjoined by
rule 6(12)
to dispose of an
urgent matter by procedures "which shall as far as practicable
be in terms of these rules". That obligation
must of necessity
be discharged by way of the exercise of a judicial discretion as to
the attitude of the court concerning which
deviations it will
tolerate in a specific case. Practitioners must accordingly again be
reminded that the phrase " which shall
as far as practicable be
in terms of these rules" must not be treated as
pro
non scripto.
The
mere existence of some urgency cannot therefore necessarily justify
an applicant not using Form 2 (a) of the First Schedule
to the rules.
If a deviation is to be permitted, the extent thereof will depend on
the circumstances of the case. The principle
remains operative even
if what the applicant is seeking in the first instance, is merely a
rule nisi without interim relief. A
respondent is entitled to resist
even the grant of such relief. The applicant, or more accurately, his
legal advisors must carefully
analyse the facts of each case to
determine whether a greater or lesser degree of relaxation of the
rules and the ordinary practice
of the court is merited and must in
all respects responsibly strike a balance between the duty to obey
rule 6(5)(a)
and the entitlement to deviate therefrom, bearing in
mind that that entitlement and the extent thereof, are dependent
upon, and
are thus limited by the urgency which prevails. The degree
of relaxation of the rules should not be greater than the exigencies
of the case demand (and it need hardly be added these exigencies must
appear from the papers). On the practical level it will follow
that
there must be a marked degree of urgency before it is justifiable not
to use Form 2(a). It may be that the time elements involved
or other
circumstances justify dispensing with all prior notice to the
respondent. In such a case Form 2 will suffice. Subject
to that
exception it appears that all requirements of urgency can be met by
using Form 2(a) with shortened time periods or by another
adaptation
of the form, e.g. advanced nomination of a date for the hearing of
the matter, or omitting notice to the registrar accompanied
by
changed wording where necessary. Adjustment, not abandonment of Form
2(a) is the method.”
[33]
Even assuming the
applicant was only intent upon applying for interim relief, I was not
satisfied that it had established a proper
basis for a departure from
the peremptory provisions of the rules or sufficient reasons why I
should condone its failure.
The real loss or damage were the
applicant to be compelled to rely solely or substantially on the
normal procedure simply did not
appear from the papers. Worst
case scenario the first respondent’s services would be engaged
by a competitor while
the normal time periods ran their course and so
what of that? On the respondents’ version which I am
constrained to
accept, there would be no threat to the applicant
thereby that warranted the treatment of the matter as an urgent one.
In
its founding affidavit it had simply speculated regarding the
supposed harm to it.
[34]
Mr.
Pillay urgent upon me to find that the facts of this matter were
distinguishable from Caledon Street Restaurants CC v D’Aviera
[4]
because here the respondents had been given fair warning that the
application was to come and some attempt had been made to adjust
the
notice of motion, but I was not so convinced that it was an issue of
form over substance. The applicant simply did not
make out a
case on urgency.
[35]
When an applicant
insists on dealing with a matter on an urgent basis there is not only
inconvenience to the respondent, but to
the court as well as
litigants and practitioners making demands on its time and
resources. Other litigants (and their representatives)
waiting
for their matters to receive attention are also compromised by the
queue being jumped as it were by a litigant making their
subjective
emergency everyone else’s concern.
[36]
Absent any objective
urgency established on the papers or reason why the applicant could
not be afforded substantial redress in
due course, I was not inclined
to deal with the merits of the supposed infraction.
[37]
In
Vena and Another v Vena and Others,
[5]
Jones J explained why an order dismissing an urgent application, for
want of compliance with
rule 6(12)(b)
, rather than simply striking
the matter from the roll, was not inappropriate in circumstances
similar to the present situation:
“
My
finding was that the applicant’s allegations did not comply
with
rule 6(12)(b)
which requires him to set out explicitly the
circumstances rendering the matter urgent and also the reasons why he
will not be
afforded substantial redress at a hearing in the ordinary
course. He gave no reasons at all why he could not get substantial
redress
at a hearing in due course. The circumstances allegedly
giving rise to the commercial urgency upon which he relied were the
reverse
of being explicit. Instead, they were set out in vague,
incomplete, and insubstantial terms and did not seem to me to have
bearing
on the relief sought in the notice of motion or the issues in
dispute, other than that the divorce between the parties was
disruptive
of the business of the service station. The grounds of
urgency alleged certainly did not justify giving the respondents two
court
days within which to give notice of an intention to oppose and
to file opposing affidavits. A postponement was inevitable and was
granted. The 1
st
respondent
filed her opposition as soon as reasonably possible, on 12 December
2008. The applicant’s replying affidavit was
not filed until 8
January 2009. He gave no explanation for his delay and one is
therefore left in doubt about the
bona
fides
of
his case for urgency. The urgency appears to have completely
disappeared. In consequence, I find myself echoing the remarks of
Kroon J at page 21 of the judgment in
Caledon
Street Restaurants CC
that
‘in my judgment, therefore, the use that the applicant made of
the procedure relating to matters of urgency was a misuse,
indeed an
abuse, of the process of the court. On that ground alone I find that
the applicant should be non-suited’.
[38]
He
went on to note that a dismissal for want of urgency on the basis
found by him was tantamount to an order for absolution from
the
instance, in which event it is open for an applicant to set the
matter down again, because the urgency point is procedural
and the
merits would have not been determined. In other words, the
applicant will not be permanently non-suited.
[6]
[39]
In my view the
applicant abused the process of court by issuing out the application
on an urgent basis, warranting the order of
dismissal which I
ultimately granted. I was incidentally not inclined to isolate
the wasted costs of the day incurred when
the matter was “crowded
out” due to “no fault” of either party. To
the contrary, the matter would
not have been superfluous on the roll
except for the applicant’s insistence that it was urgent and
should be heard
[40]
In the result I issued
the order which I did.
_______________
B
HARTLE
JUDGE
OF THE HIGH COURT
DATE
OF HEARING : 22 March 2018
DATE
OF ORDER : 29 March 2018
DATE
OF REASONS : 6 April 2018
APPEARANCES
:
For
the applicant : Mr. Pillay instructed by Stauss Daly Incorporated c/o
Stauss Daly Incorporated, Port Elizabeth (ref. Mr. J
Senekal/LGC/NAT222/0003).
For
the respondents : Ms I Bands instructed by Mc Williams & Elliot
Attorneys, Port Elizabeth (ref. Mr. Ed Murray).
[1]
Rule
6(12)(a) enjoins the court to dispose of urgent matters by procedures
“which shall as far as practicable be in terms
of these
rules”. Rule 6 sets out the normal procedure which
applies.
[2]
Although
the first respondent conceded that he had sent the price list in
contention, he claims that he did so in response to
an unsolicited
request therefor. The respondents further denied that the
customer was exclusive to the applicant.
[3]
[1998]
JOL 1832
(SE) at pages 7 – 9.
[4]
Supra
.
[5]
2010
(2) SA 248
(ECP) at par [5].
[6]
Vena
and Another v Vena and Others
supra
at
paras [6] – [8].