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[2017] ZAGPPHC 832
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E & G Concrete Pumps CC v Foxcrete Concrete Pumping CC and Another (11658/2017) [2017] ZAGPPHC 832 (3 March 2017)
REPUBLIC
OF SOUTH AFRICA
IN
THE HIGH COURT OF SOUTH AFRICA
GAUTENG
DIVISION, PRETORIA
03/03/2017
CASE
NUMBER: 11658/2017
NOT
REPORTABLE
NOT
OF INTEREST TO OTHER JUDGES
In
the matter between:
E
& G CONCRETE PUMPS CC
Applicant
and
FOXCRETE
CONCRETE PUMPING
CC
First
Respondent
CORNE
THEO
VANWYK
Second
Respondent
JUDGMENT
KUBUSHI,
J
INTRODUCTION
[1]
The application before me is about the protection of alleged
confidential information and the respondents' alleged unlawful
competition with the applicant by unlawfully exploiting the
applicant's alleged confidential information.
[2]
The applicant seeks relief against the respondents and has approached
court on an urgent basis for an interim interdict on the
basis that
the respondents are unlawfully interfering with contractual
relationships and unlawful competition. The urgency is not
challenged.
BACKGROUND
[3]
It is said that the applicant provides pump equipment in the form of
trucks and pipes that allow wet concrete to be pumped from
a concrete
truck (being the truck that brings concrete to the construction site)
to the area in which the concrete will be poured.
Through its years
in this business, exceeding a decade, the applicant has acquired a
substantial reputation in the industry in
relation to the service it
provides.
[4]
It is common cause that on or about 23 July 2014 the applicant and
the second respondent concluded a contract of employment
in terms of
which the second respondent was employed by the applicant as a fleet
manager. As a fleet manager, the second respondent
dealt primarily
with all the clients of the applicant by ensuring that trucks were
deployed timeously to the clients and
scheduling
the various trucks to be dispatched to the respective clients. Based
on this position, it is alleged that he was familiar
with the pricing
relating to each customer, the identity of each customer and each
project that was taking place. He was also privy
to and had access to
the applicant's documentation and confidential information.
[5]
In terms of a clause in the contract the second respondent was
required not to disclose to any person/s any information as to
the
company's practice, dealings, business or affairs which may come to
his knowledge by reason of his employment with the applicant
during
or after termination of employment.
[6]
The first respondent on the other hand had a subcontracting agreement
with the applicant. The second respondent has resigned
his position
with the applicant and is presently under the employ of the first
respondent. It is thus alleged that he is in a position
to influence
or induce and entice the applicant's clients to follow him to the
first respondent. The argument is that the first
respondent as a
subcontractor of the applicant is in a position to compete directly
with the applicant.
[7]
Applicant avers that it has come to its knowledge that the
respondents are unlawfully competing with him and have also lured
some of its clients, namely: Limpopo Ready Mix; Triangle Ready Mix
and Concrete and Adamson and Neilson.
[8]
With this application the applicant wants to enforce its rights in
terms of the employment agreement with the second respondent
and to
interdict the first and second respondents from competing unlawfully
with the applicant. The applicant relies in its claim,
on breach of
contract and the principles of unlawful competition. The contention
is that the respondents are unlawfully using confidential
information
obtained by the second respondent during the course of employment
with the applicant and are using such information
to compete with the
business of the applicant.
THE
APPLICANT'S CASE
[9]
The applicant alleges in its founding documents that it is the
proprietor of, and has invested a substantial amount of time,
effort,
and financial resources in acquiring and developing its:
9.1
Client and
potential client connections; and
9.2
Secret and
confidential information;
9.3
Know-how,
processes and techniques utilised by the applicant in relation to the
cement pumping industry involving
inter
alia,
pricing,
premiums, customer information and contact details and client
transaction history;
9.4
The
contractual arrangements between the applicant, its clients and
subcontractors;
9.5
The financial
details of the applicant's relationship with its clients and
subcontractors;
9.6
Other matters
which relate to the business of the applicant and in respect of
which, information is not readily available in the
ordinary course of
business to a competitor of the applicant; and
9.10
The names of
existing clients and subcontractors and their requirements in
relation to the service provided by the applicant.
THE
RESPONDENTS' CASE
[10]
The respondents are, of course, opposing the application and have
raised several defences against the applicant's claim. The
defences
raised are set out in the respondents' heads of argument as follows:
10.1
The applicant
has not made out a cause of action against the respondents in that –
10.1.1.
It is not
known in which way the applicant is, the proprietor of, and has
invested a substantial amount of time, effort and financial
resources
in acquiring and developing its client and potential client
connections; secret and confidential information comprising
of
inter
alia,
the
know-how, processes and techniques utilised by the applicant in
relation to the cement pumping industry.
10.1.2.
The applicant
has not specified the precise nature and details of the confidential
information and trade secrets relied upon in
regard to these claims.
10.1.3.
The applicant
does not provide any particulars as to how it invested substantial
time, effort and financial resources in creating
the alleged
proprietary right that constitute the confidential information.
10.1.4.
The unfounded
allegations in the founding affidavit do not prove the existence of
confidential information worthy of protection,
which is a requisite
for proving unlawful competition.
10.1.5.
The applicant
has failed to demonstrate that the respondents are competing
unlawfully with it.
10.1.6.
The
allegations by the applicant that its customer connections and price
lists constitute confidential information are without merit
in that
the applicant has failed to demonstrate the requirements necessary
for such information to qualify as trade secrets.
10.1.7.
The applicant
has failed to establish that the respondents are competing unlawfully
against it.
10.1.8.
The incident
referred to by the applicant of work previously being performed by
the applicant on behalf of Limpopo Ready Mix and
for who the
respondent now perform, does not constitute unlawful competition.
This, according to the respondents, is the characteristics
of a free
enterprise which requires the successful functioning of a competitive
market where personal skills and expertise may
be exploited.
10.2
The applicant
has failed to establish the requisite for interim relief or final
relief in that –
10.2.1.
Clear Right
The case made
out by the applicant in its papers falls far short of establishing
that there is a protectable interest in the form
of confidential
information or trade secrets worthy of legal protection.
The applicant
has not shown that the respondents were in possession of any secret
or confidential information which would have been
of economic value
to any other competitor, and detrimental to the applicant.
10.2.2.
Irreparable Harm
The applicant
does not make the assertions that its clients are return clients and
as such run the real risk that it would suffer
irreparable harm
should the respondents not be interdicted.
The infringement
has already occurred and there is no fear that it will be repeated.
10.2.3.
No other Remedy
It is clear from
the applicant's papers that it has another remedy available to it in
that it can claim damages. The damages are
quantifiable as
per
the
various customer sales annexed to the papers.
ANALYSIS
OF EVIDENCE
Confidential
Information and Unlawful Competition
[11]
A party that seeks to protect its confidential information, its trade
secrets, and intellectual property must show that the
information,
know-how, technology or method is unique and peculiar to its business
and that such information is not public property
or that it falls
within public knowledge. Furthermore the party must show that the
interest that it has in the information it seeks
to protect is worthy
of protection. See
Strike Productions
(Pty) ltd v Bon View Trading
2011 JDR
0022 (GSJ)
[12]
It is said that an applicant must raise the issues upon which it
would seek to rely in the founding affidavit. It must do so
by
defining the relevant issues and by setting out the evidence upon
which it relies to discharge the onus of proof resting on
it in
respect thereof. See
Swissborough Diamond Mines v Government of
the Republic of South Africa
1999 (2) SA 279
(T).
[13]
I am not convinced that the applicant was able, in its papers, to
prove that the information it seeks to protect is worthy
of
protection or that the respondents are in unlawful competition with
it. The averments made by the applicant are bald and speculative
and
as such fails to demonstrate the existence of confidential evidence
worthy of protection or the conduct of the respondents
that
demonstrates unlawful competition. Most of the evidence proffered by
the deponent Ms Elize Wolvaart (Ms Wolvaart) in the founding
affidavit came to her knowledge. Ms Wolvaart does not say how these
facts came to her knowledge and who provided them. There is
no
confirmatory affidavit/s to such facts.
[14]
In trying to show that it has confidential information or trade
secrets, the applicant in its founding papers states only that
it is
the proprietor of and has invested a substantial amount of time,
effort and substantial amount of time, effort and financial
resources
in acquiring certain information, know how, processes and
techniques without stating what exactly is that information,
know-how
processes and techniques. The allegations in the founding affidavit
do not specify the precise nature and details of the
information and
trade secrets. As such it will be impossible for the respondents to
know which information, know-how, processes
and techniques it must
not use. For instance, the applicant alleges that the second
respondent solicits its clients because he
knows the pricing related
to each customer but does not show how the second respondent would be
able to remember all the price
structures of each of its client. To
the extent that the information is inevitably carried away in the
second respondent's head
after the employment has ended, the
information may be freely used for the benefit either of himself or
others. See
Knox D'Arcy v Jamieson
&
Others
1992
(3} SA 520
(W) at 526E.
[15]
The evidence of the applicant does not show in what way is the
alleged information, know-how, technology, methods, customer
connections and price lists are unique or peculiar to its business
and as such worthy of legal protection. What I could ascertain
from
the papers as perhaps unique and or peculiar is the knowledge of the
client. The applicant state that 'the cement pumping
business is, a
very specialised business and the knowledge of the clients would not
be within the general public's knowledge'.
But it is not clear from
the papers for instance why 'the knowledge of the client should be
protected.
[16]
There is no evidence presented in the founding affidavit that
confirms the applicant's allegation that it's erstwhile clients
-
Limpopo Ready Mix, Triangle Ready Mix and Concrete and Adamson and
Neilson - were lured and enticed from the applicant. If we
are to
accept that they were lured and enticed the applicant does not show
how this was done and whether its information or trade
secrets were
used when this was done. The only confirmatory affidavit is that of
Mr Roy Gibb who telephonically informed Ms Wolvaart
that the second
respondent wanted to redirect his job to the first respondent. Ms
Wolvaart does not state in the founding affidavit
what she did with
that information. Did she ask the second respondent about it? It does
not appear so. The second respondent denies
ever having discussed the
redirecting of work from the applicant with Mr Gibb.
[17]
The applicant's allegations that the second respondent erased and
deleted jobs that were booked in the roster can also not
assist it.
It is apparent that this deletion, if ever there was one, must have
happened at the time the second respondent was still
in the employ of
the applicant. The applicant does not show that the information so
erased was confidential or was a trade secret.
It cannot also be said
that such information was used as a springboard for the business of
the first respondent. There is no evidence
that proves that the
erased information was used by the first respondent as a springboard.
In any event, it appears from the papers
that the first respondent
had been in operation for sometimes before the second respondent was
employed by it and the information
referred to by the applicant could
as such not have been used as a springboard for it. In the
applicant's own version the first
respondent was its subcontractor.
[18]
There is no evidence in the papers that establish the applicant's
allegation that the respondents have unlawfully targeted
the client
base and business of the applicant and have as a result taken over a
number of the applicant's clients. There is also
no prove before this
court that the respondents use the applicant's confidential
information to obtain an unfair advantage over
the applicant
regarding its business and for competing unlawfully with the
applicant.
Interim
Interdict
[19]
The applicant having failed to prove that the information it seeks to
protect is worthy of protection or that the respondents
are in
unlawful competition with it has in the circumstances failed to
establish that it is entitled to the relief it seeks.
[20]
I therefore make the following order
20.1.
The
application is dismissed with costs.
E.M.
KUBUSHI
JUDGE
OF THE HIGH COURT
APPEARANCES:
HEARD
ON THE
:
01/03/2017
DATE
OF JUDGMENT
:
03 March 2017
APPLICANT'S
COUNSEL
:
ADV.SJ van Rensburg
APPLICANT'S
ATTORNEYS
:
Tintingers Incorporated
RESPONDENT'S
COUNSEL
:
ADV.RC De Alcantara
RESPONDENT'S
ATTORNEY
:
Tuckers Incorporated