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[2016] ZAFSHC 133
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Talisman Hire Bloemfontain (Pty) Ltd v Van Niekerk and Another (2608/2016) [2016] ZAFSHC 133 (18 August 2016)
SAFLII
Note:
Certain
personal/private details of parties or witnesses have been
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SAFLII
Policy
IN
THE HIGH COURT OF SOUTH AFRICA,
FREE
STATE DIVISION, BLOEMFONTEIN
Case
number: 2608/2016
In
the matter between:
TALISMAN
HIRE BLOEMFONTEIN (PTY)
LTD
..............................................................
Applicant
[Registration
Number: 2………..]
And
HELENA
JACOBA VAN
NIEKERK
.........................................................................
First
Respondent
[Identity
Number: 8…………]
BASE
HIRE & SALES (PTY)
LTD
........................................................................
Second
Respondent
[Registration
Number: 2………..]
CORAM:
LEKALE, J
HEARD
ON:
4 AUGUST 2016
JUDGMENT
BY:
LEKALE, J
DELIVERED
ON:
18 AUGUST 2016
BACKGROUND
AND INTRODUCTION
[1]
On 30 March 2015 the applicant and the first respondent, who had been
associated to each other in an employment relationship
since 1
February 2010, concluded a written contract of employment which
included a restraint of trade covenant in terms whereof
the first
respondent, as an employee, undertook not to be involved in any
business that is similar to that of the applicant, as
the employer,
or in competition therewith within an area of 150km for a period of
1(one) year after termination of her employment
with the applicant.
[2]
In January 2015 the first respondent verbally informed the applicant,
through its managing director, of her intention to resign
and take up
employment with one of the applicant’s clients, one Lohan Civil
Construction Pty Ltd (Lohan). The applicant
was keen to retain
her services and offered, in vain, to increase her monthly salary.
The first respondent, however, gave
written notice of her resignation
on 4 January 2015 and left the applicant’s employ with effect
from the 4
th
February 2016.
[3]
The second respondent and Lohan share directors and operate from the
same business premises. The first respondent is,
in fact,
employed by the second respondent which conducts a business similar
to that of the applicant and is, as such, its competitor
in
Bloemfontein.
[4]
The applicant felt aggrieved by the employment relationship between
the first and second respondents and sought to enforce the
restraint
agreement in question. It was, however, of the view that the
respondents were violating its proprietary interest
in the form of
trade connections and secrets. It, therefore, secured an Anton Piller
order on the 19 April 2016 under case number
1910/2016 in order to
search the respondents’ offices for any of its documents and to
preserve same as evidence for use in
the instant proceedings.
[5]
Following the execution of the order in question the applicant’s
attorney of record directed a letter to the first respondent
on the
4th May 2016 demanding that she comply with the restraint of trade
covenant by terminating her services with the second
respondent with
immediate effect. When the demand was not met the applicant
launched present proceedings moving for, inter
alia, an order that
the first respondent be interdicted and restrained from taking part
in business activities that are similar
to that of the applicant or
in competition with that of the applicant, within the radius of 150
kilometres of the applicant’s
premises situated in
Bloemfontein, Free State Province for a period of twelve months
commencing from 4 February 2016.
[6]
The respondents oppose the motion and effectively contend in limine
that the restraint clause in question is void for vagueness
insofar
as it does not refer to “a radius” but refers to” …
the area of 150 km” without specifying
the point from and the
direction in which such area stretches.
ISSUES IN DISPUTE
[7]
Ante Omnia parties are at variance on whether or not the restraint of
trade agreement in clause 34 of the Employment Contract
concluded by
and between the applicant and the first respondent is void for
vagueness with the respondents, in effect, and through
Mr Louw,
contending in argument that same is vague insofar as it refers to the
area of 150 kilometres as opposed to the radius
of 150 kilometres
from the premises of the applicant in Bloemfontein.
[8]
In the event of the aforegoing question being decided in the negative
the dispute between the parties extends to the question
as to whether
the covenant is unreasonable with specific reference to:
8.1
Whether or not the applicant has a clear right or protectable
interest in the form of trade connections and/ or confidential
information to which the first respondent had access during her
employment with it;
8.2
In the further event of the question in paragraph 8.1 being decided
in the affirmative, the parties are in dispute over whether
or not
such protectable interest is under threat with the respondents
maintaining that there exists no evidence that the applicants
interests are being prejudiced or might be prejudiced;
8.3
In the event of the question in paragraph 8.2 being positively
determined, the parties are at variance on whether or not the
applicant’s protectable interest outweighs both qualitatively
and quantitatively the first respondent’s right not to
be
economically inactive and unproductive with Mr Louw submitting that
there exists no plausible evidence that the applicant lost
any
customers or suffered any damages and that whatever prejudice there
might have been for it was ephemeral while the first respondent,
on
the other hand, stands to lose substantially if the restraint is
enforced;
8.4
The parties are, further, in dispute as to whether or not the
restraint goes further than necessary with the respondents contending
that the period of 12 months is inordinately long regard being had to
the fact that it would only take a new employee a few weeks
to
establish a customer relationship similar to the one the first
respondent had with the appellant’s clients.
[9]
The parties are in conclusion in dispute over who should carry the
costs of the Anton Piller order with the respondents contending
that
the applicant should be saddled with the same given its lack of
success in that matter.
DEPOSITIONS AND
CONTENTIONS FOR AND ON BEHALF OF THE
APPLICANT
[10]
The applicant’s managing director deposes to, inter alia, the
effect that the first respondent was satisfied with and
understood
clearly the import of the restraint. He further maintains that
the first respondent, in her capacity as the Senior
Hire Specialist
with the applicant, was effectively the face of the applicant and had
access to confidential information which
was only available to few
senior employees. The first respondent received intensive
training and had a strong relationship
with applicant’s clients
to the extent that she could sway their loyalty away from the
applicant and take them with her when
she left the latter. The
execution of the Anton Piller order on 29 April 2016 yielded
valuable information and
documents which clearly show that the
respondents use applicant’s confidential information to build
the second respondent’s
business. The first respondent
breached the covenant and should also pay the agreed penalty of
R35 000 being twice her
monthly salary with the second
respondent. The respondents jointly breached the applicant’s
protectable interest and
should be retrained.
[11]
Mr Coetzer for the applicant contends, inter alia, that the retraint
clause is valid and enforceable insofar as it is reasonable
and not
against public policy. The applicant satisfied the requirements
for the final interdict sought and is, as such, entitled
to the
relief it prays for in the notice of motion. There exist no
genuine, real and bona fide disputes of fact between the
parties
insofar as the first respondent’s version is untenable and
should be rejected on the papers. The relief sought
is limited
to 12 months calculated from February 2016 and is, as such,
reasonable.
DEPOSITIONS AND
CONTENTIONS FOR AND ON BEHALF OF THE
RESPONDENTS
[12]
The first respondent, inter alia, denies that she was, in effect, the
face of the applicant and contends that she only held
the glorified
title of Senior Hire Specialist with the applicant and had no
significant authority enabling her to access the latter’s
confidential information and documents such as discount structures.
Her relationship with the applicant’s clients was
ephemeral
insofar as she only dealt with walk-in clients and telephone orders.
The relationship in question could not reasonably
possibly allow her
to influence clients so as to sway their loyalty away from the
applicant. She, further, denies that the Anton
Pillar order secured
any confidential documents or information belonging to the
applicant because the pricelist found
related to the 2013 season and
was easily available to all and sundry insofar as clients were
entitled to ask for the same.
When she left the applicant’s
employ she took no confidential documents belonging to it inclusive
of any laptops.
[13]
On the papers and before the court Mr Louw for the respondents, inter
alia, reiterates that the barring clause in question
is void for
vagueness insofar as it lacks specifications with regard to the area
over which it applies. He, further, submits
that their exists
various genuine and material factual disputes between the parties
which simply cannot be resolved on papers and
should be resolved in
favour of the respondents in accordance with the respondent-friendly
test applicable in applications for
final relief. The applicant
failed to establish protectable interest and, even if it succeeded,
the relief it seeks goes
too far.
APPLICABLE
LEGAL PRINCIPLES
[14]
In proceedings of the instant nature where a final relief is sought
on motion the onus on the applicant includes showing on
a balance of
probabilities that it has a clear right which it seeks to protect,
actual or imminent injury to the same as well as
absence of
alternative appropriate relief. (See
V
& A Waterfront Properties (Pty) Ltd & Another v Helicopter
Marine Services Pty Ltd and Others
2006 (1) SA 252
(SCA) par [20]).
[15]
At common law where the final relief sought is the enforcement of a
restraint clause the onus on the applicant is limited to
proof of the
existence of the covenant relied upon with the consequence that once
established the restraint is prima facie enforceable
unless it is
shown by the party seeking to escape it that it is unreasonable and
contra bonos mores. (See
Magna
Alloys and Research (SA) (Pty) Ltd v Ellis
[1984] ZASCA 116
;
1984 (4) SA 874
(A)).
[16]
Where the facts concerning the reasonableness or otherwise of the
restraint are fully before the court, the court makes a value
judgment on whether or not the restraint is reasonable regard being
had to the fact that public interest requires that parties
should
comply with their contractual obligations in line with the notion
expressed in the maxim pacta servanda sunt as well as
the fact that
it is in the interest of society that all people should “be
productive and be permitted to engage in trade
and commerce or
professions”. (See
Reddy v
Siemens Telecommunications(Pty) Ltd
2007 (2) SA 486
(SCA) par [15]).
[17]
The enquiry as to the reasonableness of a contractual restraint
involves consideration of facts and circumstances prevailing
at the
time the restrainor seeks to enforce the restraint such as the
duration of the restraint, the area over which it applies,
whether or
not the restrainee was paid any consideration in respect of the
restraint, whether the restrainee would still have the
ability to
earn a living if the restraint is enforced and the “proprietary
interest or capital asset which the restrainor
seeks to protect as
well as all other relevant circumstances prevailing at the time
enforcement is sought”. (
See
Magna Alloys and
Research SA (Pty)
Ltd, (supra) and
J Louw and Company
(Pty) Ltd v Richter and Others
1987 (2)
SA 237
(N)).
[18]
In assessing the reasonableness of the restraint the court considers
the questions whether or not there exists an interest
which deserves
protection after the termination of the contract between the
parties; whether such protectable interest is
threatened by the
other party; whether such interest weighs both qualitatively
and quantitatively heavier than the interest
of the other party not
to be economically inactive and unproductive; whether there is
an aspect of public policy which either
militates against or supports
the enforcement of the restraint and lastly whether the restraint
goes further than necessary to
protect the relevant interest.
(See
Basson v Chilwan and Others
[1993] ZASCA 61
;
1993 (3) SA 742
(A) at 767 and
Kwik Copy
(SA) Pty Ltd v Van Haarlem and Another
1991 (1) SA 472
(W) at 484 E with regard to the last enquiry).
[19]
A covenant which prevents a party after termination of his or her
employment from earning a living by partaking in trade or
commerce or
profession without a corresponding interest of the other party
deserving of protection is unreasonable and, as such,
unenforceable.
(See
J Louw and Company (Pty) Ltd v
Richter and Others
supra).
[20]
Trade secrets, pricing and customer/supplier connections are all
proprietary interests which prima facie deserve protection.
A
protectable customer or supplier relationship exists where an
employee has personal knowledge of and influence over the customers
or suppliers of his/her employer such that if he or she were to leave
the employer he or she would automatically carry the
customers with him or her and, if competition were to be allowed,
he/she would be able to take advantage of his employer’s
trade
connections. (See
Rawlins and
Another v Caravantruck (Pty) Ltd
[1992] ZASCA 204
;
1993
(1) SA 537
(A) at 541 D-I).
[21]
For a factual dispute to be real, genuine or bona fide the court
should be satisfied that the party purporting to raise the
same has
in his/her papers seriously unambiguously addressed the alleged
disputed issue. (See
Wightman t/a
JW Construction v Headfour (Pty) Ltd and Another
[2008] ZASCA 6
;
2008 (3) SA 371
(SCA) at par
[13]
).
[22]
In order to be confidential for purposes of qualifying as protectable
interest information must have the necessary quality
of confidence
about it in the form of something which is not public property and
public knowledge and be useful to trade and industry.
(See
Harvey Tiling Company (Pty) Ltd v
Rodomac (Pty) Ltd and Another
1977 (1)
SA 316
(T) at 321G).
[23]
The contract must have certainty and in the restraint clause such
certainty is important to enable the restrainee affected
thereby to
know precisely where he cannot operate in competition with the
restrainor. The court cannot make a contract for
the parties
and in the event of vagueness as to the area in which the restraint
operates the covenant is simply invalid for that
reason. (See
Carthew-Gabriel v Fox and Carney (Pvt) Ltd
1978 (1) SA 598
(R.AD)).
[24]
Courts interpret contractual provisions benevolently and contextually
where possible to avoid having to set them aside on account
of
vagueness. A contract is read as a whole in order to determine
the proper meaning of the words used where such words are
capable of
various meanings when viewed in isolation. (See
De
Beer v Keyser and Others
2002 (1) SA
827
(SCA) and
Bergh NO and Another v Van
der Vyver and Another
[2010 ZAECGHC
73]).
APPLICATION
OF LEGAL PRINCIPLES AND FINDINGS
[25]
The relevant restraint clause is couched in the following words:
“
34.
Restraint of Trade
By
virtue of the fact that the employee will, during the period of
his/her employment with TALISMAN HIRE, gain possession of and
acquire
intermittent knowledge of the affairs and business of TALISMAN HIRE
which is technical and confidential and would be of
value to its
competitors and to others, the employee hereby undertakes in favor of
TALISMAN HIRE that, for period of one year after
termination of
his/her employment with TALISMAN HIRE howsoever caused, he/she will
not, either directly or indirectly, be engaged
or concerned or
interested, within the area of 150 KM whether as principal, director,
partner, agent, employee, shareholder, consultant,
member, or in any
other capacity whatsoever, whether similar to the a foregoing or not,
in any affairs of which compares with that
carried on by Talisman
Hire at the date of such termination.”
[26]
The clause clearly seeks to protect the business of the applicant, as
the employer, from all its competitors regardless of
the direction in
which there may be located and bars the first respondent, as the
employee, from, inter alia, taking up employment
with the former’s
competitors within the area of 150 kilometres without specifying the
point from and the direction in which
such area is to be calculated.
However the fact that the clause seeks to protect the applicant
indicates that the point from which
the field covered by the
restraint extends is the business centre of the applicant where the
first respondent was employed. The
fact that the clause seeks to
protect the applicant’s business from all its competitors
suggests, in my view, that all such
competitors located within 150
kilometres around the applicant at the workplace where the first
respondent is placed are targeted.
[27]
I am, therefore, satisfied that a contextual and benevolent
construction of the relevant clause indicates that the parties
most
probably intended that the restraint should operate within the radius
of 150 kilometres from the applicant’s Bloemfontein
business
centre which was the first respondent’s workplace. (See
Turner
Morris (Pty) Ltd v Riddell
1996 (4) SA 397
(E)).
[28]
To the extent that a reading of the relevant clause in the context of
the nature of the applicant’s business and the
employment
relationship between the latter and the first respondent sheds light
to what the parties most probably intended, it
is, in my view, not
vague. Even if I am wrong in the aforegoing regard, I am satisfied
that the tacit term of the relevant clause
is that the bar operates
within the radius of 150km from the workplace where the first
respondent worked regard being had to the
decision in
Alfred
McAlpine and Son (Pty) Ltd v Transvaal Provincial Administration
1974 (3) SA 506
(A) at 531 H).
[29]
The parties are in dispute over whether or not there exists real,
genuine or bona fide dispute of fact between them with regard
to
whether or not the applicant has protectable interest in the form of
customer/supplier connections and confidential information.
In the
case of such a dispute the respondent-friendly approach applicable in
proceedings of the instant nature requires that such
a dispute be
resolved in favour of the respondent in that a final order only be
granted if the facts as stated by the respondent
together with those
admitted in the applicant’s papers justify such an order. (See
Plascon-Evans Paints Ltd v Van Riebeeck
Paints (Pty) Ltd
[1984] ZASCA 51
;
1984 (3) SA 623
(A)).
[30]
Although I am satisfied from the papers that the respondents dealt
seriously and unambiguously with the relevant issues, I
am persuaded,
on the probabilities, that the respondents’ version to the
effect that the first respondent’s relationship
with
applicant’s clients was ephemeral is so untenable that it can
be rejected on papers as improbable regard being had to
the fact that
it is not in dispute that the first respondent was headhunted by
Lohan, who was applicant’s client and who
offered her
employment. If the relationship between the first respondent and
Lohan, as applicant’s client, was of very short
duration and
not intense Lohan would not reasonably possibly have been able to
assess the first respondent’s services to
the extent of
offering her employment at a monthly salary of R17 500 which was
far more than the salary she was earning with
the applicant viz.
R11 750 and would, further, probably not have had the confidence
to approach her with the offer in question.
Lohan would, in my view,
furthermore not have offered her that salary if she did not possess
the skill commensurate with and commanding
the same. On first
respondent’s own deposition she was already in contact with
Lohan at least in 2013 when she
could have, probably, provided it
with applicant’s 2013 pricelist. Such was definitely not
a short-lived relationship
in my view. (See
Associated
South African Bakeries (Pty) Ltd v Oryx and Vereinigte Bäckereien
(Pty) Ltd & Andere
1982 (3) SA 893
(A) at 924 (A)).
[31]
In respect of alleged confidential information and documents yielded
by the Anton
Piller order I am satisfied that there exists a real, genuine or bona
fide dispute of fact on papers and that the respondents’
version cannot just be rejected on papers. The applicant seeks
final relief and there is no request for the issue to be referred
to
oral evidence. On respondents’ version applicant’s 2013
pricelist was found on a computer used by an employee other
than the
first respondent and was utilised in a comparison spread-sheet for
2014 which was done before the first respondent’s
commenced
employment with the second respondent.
[32]
On evidence before me I am satisfied that the applicant has
protectable interest in the form of trade connections and not in
the
form of confidential information/documents when the
respondent-friendly test is applied. In my view a mention by the
first
respondent of the applicant’s name in an email directed
to the applicant’s supplier does not amount to the use of
applicant’s
confidential information to advance the second
respondent’s business as correctly disputed by the first
respondent. In my
judgment such name-dropping, in fact, serves to
identify the first respondent to the relevant supplier with reference
to the applicant,
thus, using applicant’s trade connections.
It is simply clear from the relevant mail that the relevant supplier
is
not easily accessible to role players such as the second
respondent for, if that was not the case, it would not have been
necessary
for the first respondent to identify herself as follows:
“
I
used to be at Talisman Hire Bloemfontein, which is why I know your
address.”
[33]
I am, further, satisfied from available evidence that there is actual
threat to applicant’s protectable interest in the
form of trade
connections insofar as one of its suppliers has already been
approached by the first respondent in the course and
within the scope
of her employment with the second respondent.
[34]
The question in the instant matter is not whether or not the
applicant would lose clients and/or suppliers but whether or not
it
could lose the same regard being had to the respondents’ view
that there exists no plausible evidence that applicant has,
in fact,
lost any clients. (See
Reddy
v Siemens Telecommunications (Pty) Ltd
(supra).
[35]
I am persuaded by available evidence that the applicant could lose
clients/suppliers in that the first respondent could poach
them as
she has access to and influence over them regard being had to the
skill she has for which clients, such as Lohan, are prepared
to pay.
In my judgment applicant’s clear right in the form of
protectable interest weighs both quantitatively and qualitatively
heavier than the first respondent’s right to remain
economically active and productive insofar as it provides employment
to, inter alia, the two hire specialists who used to be the first
respondent’s colleagues.
[36]
The restraint agreed upon by and between the applicant and the first
respondent does not, in my view, go farther than necessary
regard
being had to the fact that same applies from February 2016 when the
first respondent resigned and terminates 12(twelve)
months later
which is 6(six) months calculated from the date hereof. The
first respondent had lasting relationship with the
applicant’s
clients and it would take new employees some considerable time to
build such a relationship in my view.
[37]
In my judgement there exists no policy consideration which militates
against the restraint in question as the applicant simply
seeks to
protect its interests for the benefit of continued existence of its
business. In fact public policy expects of the
first respondent
to observe her contractual obligations as against the applicant.
I am, further, at peace with available
evidence to the effect that
the covenant in question was made fairly with the first respondent
acting freely at the time when she
was already more than 5(five)
years in the applicant’s employ. She, thus, could not, in
my view, have been desperate
to secure employment when she signed the
same. I am, further, satisfied that the first respondent was
afforded an opportunity
to reconsider her position after the Anton
Piller order was executed and she, as such, reconciled herself with
the possible consequences.
The restraint is, therefore, reasonable
and enforceable.
[38]
The Anton Piller order secured by the applicant against the
respondents yielded evidence tending to show that the respondents
are
violating its trade connections insofar as the first respondent was
approaching one of its suppliers for purposes of business.
I
am, thus, satisfied that the applicant was successful in that regard
and deserves its costs.
ORDER
[39] In the result
the following order is granted:
39.1
The first respondent is hereby ordered and directed to pay the amount
of R35 000 to the applicant within a period of 14
days
calculated from the date of this order;
39.2
That the first respondent is hereby interdicted and restrained from
taking part in any business activities that are similar
to that of
the applicant or in competition with that of the applicant within a
radius of 150 kilometres of the applicant’s
premises situated
in Bloemfontein, Free State Province be it directly, indirectly,
financial or otherwise, as principal, agent,
partner, director,
employer, employee, consultant or shareholder, whether on her own
behalf or on behalf of any other person, close
corporation,
partnership or company with whom the applicant dealt at any time
during her employment for period of 12 months commencing
from 4
February 2016;
39.3
That the first respondent is hereby prohibited and interdicted to,
directly or indirectly, make use of any of the applicant’s
trade secrets or trade connections in her possession;
39.4
That the second respondent is hereby interdicted and prohibited from,
directly or indirectly, making use of or disclosing any
of the
applicant’s trade connections;
39.5
That the respondents are ordered to pay the costs of this
application, including the costs of the application issued under
civil case cover 1910/2016 jointly and severally the one paying the
other to be up solved from payment.
LJ
LEKALE, J
On
behalf of applicant: Adv. JC Coetzer
Instructed
by: Lovius Block
Bloemfontein
On
behalf of 1
st
& 2
nd
Respondents: Adv. MC
Louw
Instructed
by: Azar & Havenga Inc
Bloemfontein
PK