About SAFLII
Databases
Search
Terms of Use
RSS Feeds
South Africa: Kwazulu-Natal High Court, Durban
SAFLII
>>
Databases
>>
South Africa: Kwazulu-Natal High Court, Durban
>>
2016
>>
[2016] ZAKZDHC 42
|
|
Old Mutual Life Assurance Company (South Africa (Limited) v Henson (10270/2016) [2016] ZAKZDHC 42 (28 October 2016)
IN
THE HIGH COURT OF SOUTH AFRICA
KWAZULU-
NATAL
LOCAL DIVISION
, DURBAN
CASE
NO: 10270/2016
In
the matter between:
OLD
MUTUAL LIFE ASSURANCE
COMPANY
Applicant
(SOUTH
AFRICA) LIMITED
and
NIGEL LATIMER
HENSON
Respondent
Coram:
Koen J
Heard:
18 October 2016
Delivered:
28 October 2016
ORDER
1.
The Respondent is ordered to hand over to the Sheriff, forthwith upon
service of the order on him, all files and records, whether
in paper
form or on CD disk, including all copies of such files and records,
in Respondent’s possession or under his control,
pertaining to
and/or containing particulars of and other information relating in
any way to Clients (as defined) to whom Respondent
rendered any
financial service (as defined under the
Financial Advisory and
Intermediary Services Act 37 of 2002
, as amended) during the period
from 1 March 2011 up to and including 30 September 2016 (herein after
referred to as ‘Clients’;
2.
The sheriff is authorised to deliver all records, including all
copies thereof, handed over to him by Respondent pursuant to
paragraph 1 above, to Applicant;
3.
Respondent is ordered permanently to delete and destroy all
electronic records in his possession or under his control that
contained
particulars of as other information relating to Clients
and/or details of Clients investments.
4.
Respondent is ordered not to use any information within his knowledge
relating to Clients for any purpose whatsoever, and should
any Client
make contact with Respondent within two years from the date of this
order, Respondent must immediately refer such Client
to Applicant’s
Private Wealth Management Division in Durban;
5.
Respondent is ordered not to disclose any Confidential Information
(as defined in the Contract of Employment concluded between
the
parties on 30 January 2013, and including Clients lists, Client
particulars and details of Clients Investments) to any third
party,
including but not limited to BR Wealth Management Services (Pty)
Limited, trading as Bill Roberts Financial Planning;
6.
Respondent is restrained and prohibited, for a period of two years
from the date that this order is made, from contacting, directly
or
indirectly, any Client (as defined in paragraph 1 hereof) for
purposes of rendering Financial Service (as defined under the
Financial Advisory and Intermediary Services Act 37 of 2002
, as
amended) to them and/or enticing them to appoint a Financial Services
Provider other than Applicant;
7.
Respondent is to bear the cost of this Application on the attorney
and client scale.’
JUDGMENT
KOEN
J:
[1]
The Applicant launched an urgent application seeking to enforce a
restraint against the Respondent. The relief claimed is couched
in
the form of a rule
nisi
with interim relief to be granted.
When the matter first came before me, the interim relief claimed was
opposed by the Respondent,
albeit that he had not yet had an
opportunity to file any affidavit setting out the basis of his
opposition. At that first hearing,
part of the interim relief claimed
was granted and the matter was adjourned to allow for an exchange of
affidavits on the full
extent of the interim relief claimed by the
Applicant. The Respondent subsequently delivered an answering
affidavit and has requested
that the application be treated as one
for final, and not just for interim relief, to bring finality to the
dispute. The Respondent
also invited the Applicant to agree to the
matter being heard as one for final relief. That invitation was
accepted by the
Applicant which indicated that it would seek a final
order in terms of paragraph 2 of the Notice of Motion. When the
matter
came to be argued the Applicant however persisted with final
relief, in slightly different form, in accordance with the terms of
a
draft order annexed to its heads of argument, which reads as follows:
‘
1.
Respondent is ordered to hand over to the Sheriff, forthwith upon
service of the order on him, all files and records, whether
in paper
form or on CD disk, including all copies of such files and records,
in Respondent’s possession or under his control,
pertaining to
and/or containing particulars of and other information relating in
any way to clients or customers to whom Respondent
rendered or was
entitled to render and/or to have rendered, any financial service
(as defined under the
Financial Advisory and Intermediary Services
Act 37 of 2002
, as amended) during the period from 1 March 2011 up to
and including 30 September 2016 as set out in the list annexed marked
“A”
(herein after referred to as “
Clients
”);
2.
The Sheriff is authorised to deliver all records, including all
copies thereof, handed over to him by Respondent pursuant to
paragraph 1 above, to Applicant;
3.
Respondent is ordered permanently to delete and destroy all
electronic records in his possession or under his control that
contained
particulars of as other information relating to Clients
and/or details of Clients investments.
4.
Respondent is ordered not to use any information within his knowledge
relating to Clients for any purpose whatsoever, and should
any Client
make contact with Respondent within 36 months from the date of this
order, Respondent must immediately refer such Client
to Applicant’s
Private Wealth Management Division in Durban;
5.
Respondent is ordered not to disclose any Confidential Information
(as defined in the Contract of Employment concluded between
the
parties on 30 January 2013, and including Clients lists, Client
particulars and details of Clients Investments) to any third
party,
including but not limited to BR Wealth Management Services (Pty)
Limited, trading as Bill Roberts Financial Planning;
6.
Respondent is restrained and prohibited, for a period of 36 months
from the date that this order is made, from contacting, directly
or
indirectly, any Client (as defined in paragraph 1 hereof) for
purposes of rendering Financial Service (as defined under the
Financial Advisory and Intermediary Services Act 37 of 2002
, as
amended) to them and/or enticing them to appoint a Financial Services
Provider other than Applicant;
7.
Respondent is to bear the cost of this Application on the attorney
and client scale.’
[2]
The Applicant claims the relief sought on the basis of a contract of
employment concluded between it and the Respondent on 30
January
2013. The salient provisions of this agreement included the
following:
(a) ‘Authorised product range’
is defined to mean a financial product range in respect of which the
employer has a distribution
agreement in place with the product
supplier and the employee is authorised to render financial services
on the employer’s
behalf as appears from the accreditation
records of the employer;
(b) ‘Client’ means
‘
any
specific person or group of persons who is or may become the subject
to whom a Financial Service is rendered by the Employee
in respect of
the Authorised Product Ranges’;
(c) ‘Financial Services’
has the meaning ascribed thereto in FAIS;
[1]
(d) The Respondent acknowledged that
the Applicant holds certain intellectual proprietary rights and
confidential information, as
provided in clauses 20 and 21 thereof;
(e) The relevant portions of clause 24
dealing with the
‘
Consequences
of termination’
of
the agreement provided that upon termination, the Respondent would
inter alia
:
‘
24.1.1
Immediately cease to canvass applications and render financial
services in respect of the authorised product ranges;
24.1.2
Not be entitled to submit any new business in respect of the
authorised product ranges.
24.1.3
…
24.1.4
…
24.1.5
…
24.1.6
Return to the employer all client information and/or data concerning
the Employer and/or any company in the Old Mutual
group and/or the
Clients of the Old Mutual group which may have been in, or come into,
the possession or control of the Employee
during the course of
his/her employment, whether or not such were originally supplied by
the Employer to the Employee, and all
copies thereof, inclusive of
paper, electronic, and CD disk in a form acceptable to the Employer
or, if the Employer so elects,
the Employee shall destroy all copies
of the aforementioned information or data;
24.1.7
For a period of three (3) years from the date of termination, be
restrained from directly or indirectly contacting
the Clients of Old
Mutual and/or of other companies in the Old Mutual group for purposes
of rendering Financial Services to such
Clients and/or enticing such
Clients to appoint a Financial Services Provider other than Old
Mutual.’
[3]
The Respondent has had a long career in the financial services
industry. In the early days he was previously employed by the
Applicant. He left in 1981 to take up employment with the brokerage
firm Price Forbes. One year later he joined Stewart and Wrightson
Brokers in 1982. He thereafter joined Life and Associate Brokers from
February 1984. In February 1986 he formed Nigel Henson and
Associates
CC and was primarily responsible for conducting the business of that
entity. He left that entity to take up employment
with the Applicant
in March 2011 and remained in its employ until his resignation on 3
October 2016. Prior to joining the
Applicant in March 2011, he
had been a successful independent broker for some 30 years. He states
that he always directed the bulk
of his investment work to the
Applicant as he considered them a reputable company and found its
administrative procedures and policy
in relation to Wealth Management
to be attractive to the type of client he represented.
Dissatisfied with the rigours of
reporting and administration brought
about by FAIS which places onerous record keeping and other
requirements on a single broker,
he approached the Applicant in 2011
to conduct his ‘business as a broker from home’. For this
he maintains he would
continue to be paid a basic commission as an
‘independent broker’, but he would also have the
potential to earn free
overseas trips as an employee and would be
paid a bonus annually based upon performance, but in turn would
become liable to pay
an administration fee.
[4]
Notwithstanding his claim that he was being paid a commission as an
‘independent broker’ it is clear from the terms
of the
agreement that he had become an Employee and a representative of the
Applicant.
[5]
When it came to concluding the agreement in January 2013 on which the
Applicant relies, he had been employed with the Applicant
for two
years, was 62 years old, aware that the Applicant in 2013 had a
retirement policy for employees which meant that they retired
at the
age of 61, was apprehensive that the Applicant might terminate his
relationship with the Applicant, and was wanting to secure
his future
with the Applicant for as long as possible. He states that he
had:
‘
continued
to look after the Clients which Nigel Henson and Associates CC had at
the time when I became an employee. Prior
to becoming an
employee those clients had investments with the Old Mutual which
Nigel Henson and Associates CC had brought to the
Old Mutual as an
independent broker. Nothing was said at the time of the
conclusion of the first agreement in 2011 about
the fate of those
clients should I leave the employment of the Old Mutual.’
He
admits that he accepted those parts of the contract which the
Applicant relies upon in its founding affidavit. He contends
however that the restraint intends to provide for the situation where
a new and inexperienced employee wishes to start off as a
broker
selling the financial products of the Applicant and explains that in
that situation the Applicant would provide a wealth
of experience and
assistance to such an inexperienced new employee. He maintains that
it would be perfectly reasonable for the
Applicant to provide that
should such an employee wish to leave the employment of the
Applicant, that he should leave his Clients
behind, but that his
position was entirely different in ‘that the clients that I
brought to the Old Mutual were entirely
mine and during the period of
my employment until my resignation I serviced those clients without
the help of the Old Mutual other
than in respect of administration
and compliance with the FAIS Act.’ Hence, the Respondent
objects to being required
to immediately cease canvassing
applications and rendering financial services in respect of the
authorised product ranges, and
not being entitled to submit any new
business in respect of the authorised product ranges.
[6]
The relief claimed by the Applicant however does not extend that far
and does not seek to enforce the obligations in clause
24.1.1 and
24.1.2 of the agreement. As was stated in the replying
affidavit of Mr van Eck:
‘
What
Old Mutual seeks in this application is an order obliging Henson to
comply with clauses 24.1.6 (return of Client information)
and 24.1.7
(a limited restraint) of the contract. In paragraph 25 of the
opposing affidavit, Henson avers that “the restraint
contained
therein covers the breadth of all the clients of Old Mutual“
and further “I have no idea of the number or
identity of people
that I am restrained from contacting. It is this respect too wide and
too vague.“ This is patently
not the case. I refer in
this regard to the definition of Clients in the Contract which is
limited to “any specific person
or group of persons who is or
may become the subject to whom a financial services rendered by the
Employee in respect of the authorised
product ranges”.’
Further
down in paragraph 10 he states:
‘
The
restraint in clause 24.1.7 of the Contract and the relief sought in
paragraph 2.6 of the Notice of Motion seek to prevent Henson,
for a
period of 36 months, from having contact with the Clients (as defined
in the Contract, namely those to whom Henson rendered
(or ought to
have rendered
[2]
) financial
services (as defined in the FAIS Act) during the course of his
employment as a representative of Old Mutual).
Henson knows
exactly who these people are. Neither the clause nor the relief
sought prevent Henson from having contact with
any
other
clients of PWM (The Applicant’s Private Wealth Management
Business Unit) or any customers who hold financial products issued
by
Old Mutual (provided he does not use confidential information
accessed whilst an employee to do so)…’
This
is also consistent with the statement in paragraph 5.7 of the
founding affidavit that:
‘
Applicant
does not seek to restrict Respondent from being economically active
or from being employed by a competitor of Applicant,
simply to
prevent Respondent from infringing Applicant’s contractual
rights and proprietary interests in doing so.’
[7]
The motivation for restricting the relief claimed thus is apparent,
as a restraint would only be competent in respect of a protectable
interest such as a risk of damage to its customer connection.
[8]
Following that explanation in the Replying Affidavit, Mr
Broster
SC for the Respondent confined his argument to the duration of the
three year period during which the Respondent:
(a) would be restrained from using any
information within his knowledge relating to Clients for any purpose
whatsoever, and requiring
that if any Client makes contact with him,
to immediately refer such client to the Applicant’s Private
Wealth Management
Division in Durban; and
(b) would be restrained from
contacting, directly or indirectly any Client for purposes of
rendering financial services to them
and/or enticing them to appoint
a financial services provider other than the Applicant.
With
reference to the broader policy considerations applying in restraint
of trade situations, alluded to by Nienaber JA in
Basson
v Chilwan and Others,
[3]
he argued that those
restraints would violate the very consideration mentioned by Nienaber
JA namely that ‘onproduktiwiteit
moet ontmoedig word (al
verongeluk dit ook ‘n ooreenkoms)’, that the enforcing of
the restraint against the Respondent
would result in such
‘onproduktiwiteit’, and hence that for policy
considerations the restraint should be unenforceable
in
toto
,
or alternatively that the enforcement of the restraint for 36 months
would be unreasonable, and that its duration should be curtailed
.
[9]
As appears from the extracts quoted from the Applicant’s
founding and replying affidavit above, the Applicant is not seeking
to enforce a restraint which would prevent the Respondent from, for
example, referring any new business to the Applicant (on which
he can
earn an income), or having any contact with any other clients of the
Applicant or any customers who hold financial products
issued by Old
Mutual, other than Clients as defined, being persons to whom a
financial service was being rendered by him in respect
of the
authorised product ranges on 30 January 2013, or who thereafter
became persons to whom a financial service was rendered
by the
Respondent in respect of authorised product ranges. Inherent in and
arising from the very limitations in the definition
of ‘Client’
is that it is a limited restraint, which although it practically
would have an impact on the possible range
of his economic
activities, in that he cannot use information relating to those
Clients or contact them directly or indirectly
for the purpose of
rendering any financial service to them or enticing them to appoint a
financial services provider other than
the Applicant, will
nevertheless not result in total unproductivity.
[10]
That limitation however appears justified on the basis that
irrespective of whether the Respondent initially ‘brought’
these clients with him, the Applicant has a protectable interest in
its customer connection. The specific requirements and preferences
of
those clients, who he had ‘brought’ in at the
commencement of his relationship with the Applicant in 2001 or
secured
thereafter, and serviced, and more particularly as their
requirements and preferences have changed over time, specifically
over
the last five plus years, are intimately known to him and he
would acquire an attachment and influence over them.
[4]
As was remarked by Nestadt JA in a similar situation in
Rawlins
and Another v Caravan Truck (Pty) Ltd
[5]
in relation to an employee who left the employ of his former employer
but claimed that he had dealt largely with his own pre-existing
following of clients or clients he later found, that:
‘
Does
this establish that the [former employer] did not have a proprietary
interest of the kind under consideration? It is,
of course, a
factor in [the former employees} favour; but not conclusively so …
Even though the person to whom an employee
sells and whom he
canvasses were previously known to him and in this sense “his
customers”, he may nevertheless during
his employment, and
because of it, form an attachment to and acquire an influence over
them which he never had before. Where this
occurs, what I call the
customer goodwill which is created or enhanced, is at least in part
an asset of the employer. As
such it becomes a trade connection
of the employer which is capable of protection by means of restraint
of trade clause.
The
onus
being on Rawlins to prove the unreasonableness of the restraint, it
was for him to show that he never acquired any significant
personal
knowledge of or influence over the person he dealt with as a
salesman of [the former employer] over and above that
which
previously existed.’
[11]
Various criteria have been identified, although the list can never be
exhaustive, to determine what is essentially a question
of fact in
each case, and in many, one of degree, as to whether there is such a
trade connection which a departing employee can
take advantage of to
the detriment of his employer’s trade connections. As was
stated by Nestadt JA
supra:
‘
Much
will depend on the duties of the employee; his personality; the
frequency and duration of contact between him and the customers;
where such contact takes place; what knowledge he gains of their
requirements and business; the general nature of their relationship
(including whether an attachment is formed between them, the extent
to which customers rely on the employee and how personal their
association is); how competitive the rival businesses are; in the
case of a salesman, the type of product being sold; and whether
there
is evidence that customers were lost after the employee left…’
[6]
[12]
In weighing up the competing interests of, on the one hand, giving
effect to the terms of contracts seriously concluded, and
on the
other, creating a situation resulting in total unproductivity,
it has become recognised that it would be contrary
to the public
interest to enforce an unreasonable restriction on a person’s
freedom to trade.
[7]
[13]
The Respondent has not disputed that the Applicant has an interest
that deserves protection after determination of the agreement.
Over
the past five (almost six) years ‘the clients have not been
his’ clients because he was not a registered financial
services
provider. They were clients of the Applicant. This gives the
Applicant a protectable interest in all files and records
and
confidential information relating to its clients. The
quid
pro quo
for the Applicant’s acquisition of the clients and
their confidential information was inter alia the Applicant’s
assumption
of the duties imposed upon it as a financial services
provider in terms of chapter V of the FAIS Act, which the Respondent
wanted
to give up.
[14]
It was also not disputed by the Respondent that his approach to
clients following his resignation threatened the Applicant’s
interests. He could hardly contend to the contrary. There was also no
indication given that he would cease with such conduct.
The
Applicant therefore reasonably apprehends that if the Respondent’s
conduct was permitted to continue, it would lose the
opportunity of
forging a relationship with these clients, with a loss of revenue.
[15]
Damages would also not constitute a satisfactory alternative remedy
as it is wholly impossible to determine the measure of
damages in
months to come. It is impossible to identify the degree of influence
the Respondent might be able to exert, which might
persuade a
particular client to take his business elsewhere, and hence to
determine future losses. To the extent that business
opportunities
might be reduced for the Respondent, this is not solely as a result
of the enforcement of the restraint of trade
clause but in terms of
the FAIS Act or the Respondent’s own election. There is
nothing preventing the Respondent from
being employed even by a
competitor of the Applicant (provided he does not infringe the
Applicant’s contractual rights),
or from marketing Old Mutual
products (provided that he does so through an alternative financial
services provider and in relation
to clients who are not already
clients of the Applicant, without using confidential information
accessed while he was employed
by the Applicant). There is also
no bar on the Respondent marketing non-Old Mutual products subject to
the same provisos.
[16]
If a restraint is unreasonable then the onus is on the Respondent to
prove that it has that effect.
[8]
[17]
In
Rawlins and Another v Caravan Truck (Pty) Limited
(
supra
)
the following was said in this regard:
‘
The
onus being on Rawlins to prove the unreasonableness of the restraint,
it was for him to show that he never acquired any significant
personal knowledge of or influence over the persons he dealt with as
a salesman of the respondent, over and above that which previously
existed. In my opinion he did not do so. No allegation
that he did not acquire such knowledge or influence is made
by
Rawlins. Nor do I think that it can be inferred. On the contrary, it
would appear to be no less probable that Rawlins’s
relationship
with the customers he dealt with as a salesman after respondent were
such as to make it reasonable for the respondent
to protect itself.
Rawlins worked for the respondent for some 15 months. During
this time he received training in the
use and marketing of products
sold by the Respondent. He was obviously a successful salesman.
Taking account of the realities of
commerce, it is a fair inference
in these circumstances that it was Rawlins’ employment with the
respondent that gave him
the opportunity to consolidate or even
strengthen the prior rapport which he had with his customers…
The
point is, however, that Rawlins says nothing, along the lines alluded
to earlier, about the nature of the relationship that
was formed with
these customers. In particular, he does not explain how many
there were or how frequently or for how long
he saw them. Nor,
save for a bald statement that he had “intimate knowledge of
the identities of buyers and businesses
in the automotive industry”,
does one know how close his previous ties with such buyers were…
It
will be recalled that the restraint is for a period of two years. I
confess to thinking that this is rather a long time. It must
be close
to the limit which would be reasonable in this type of case.
Rawlins’ salary (excluding commission) was a
modest one. He had
not been long in the Respondent’s employ. On the other hand he
was a salesman that because of his experience
had a particular
expertise. Furthermore, for the reasons given by Van Rensburg
J, and bearing in mind the limited area to
which the restraint
applies, it would not seem that its enforcement will appreciably
inhibit Rawlins’ inability to earn a
living. On a
conspectus
of all the facts and in the absence of anything in his affidavit
alleging unreasonableness of the duration of the restraint, I
am not
persuaded that a two year period is unfair.
It
may be that a referral to oral evidence would have enabled Rawlins to
make out his case on the issue under consideration. There
was,
however, no application to the Court
a
quo
that
this be done. … There is no merit in the request if only
for the reason that this is a case of a paucity of evidence
rather
than a case of material dispute of fact. The result is that, the
allegations made by Rawlins being insufficient to show
either that
the respondent was not entitled to protect its trade connections or
that, as ordered, the restraint was unreasonably
wide, he failed to
prove that it was unenforceable. It follows that the sanctity of
contract must prevail. The interdict against
Rawlins was correctly
granted. His appeal must fail.’
[9]
[18]
Likewise
in
casu,
the Respondent’s opposition has
focused mainly on the broad but misconceived effect he believed the
restraint would have.
In regard to the period of three years he
simply submitted ‘that it will ruin me financially’ and
that to the extent
that it is found that ‘a protectable
interest’ existed, that the Applicant needed ‘no more
than 3 months’.
He conceded that the Applicant has an
interest in protecting the service which he has given to its clients
for the past almost
six years and that the ‘Old Mutual has an
interest deserving of protection after determination.’ He
also did
not dispute having sought to approach the clients mentioned
in the founding affidavit and the supplementary affidavit and that
such approaches threatened the interest of Old Mutual, but contended
that it was, ‘unrealistic in the extreme to expect me
at the
age of 65 to begin an entirely new career in the brokering business
finding new clients and new financial institutions to
invest in.’
The latter belief is of course misplaced. He also placed much
emphasis on the invidious position he was
in when he resigned.
Nowhere however, does he deal with the criteria, some of which were
referred to in
Rawlins
, on the basis of which an objectively
rational limitation with reference to fact can be placed on the three
year duration of the
restraint.
[19]
Mr
Broster
has however urged me to determine a lesser period
than the three years. He placed reliance on paragraph [55] of the
judgment in
Den Braven
where Wallis AJ held:
‘
In
the result the applicant is entitled to confirmation of the rule
although on terms narrower than originally formulated. Although
no
argument was addressed to me in the course of the hearing on the term
of the restraint I had some concern about this in the
course of
preparing this judgment and raised the matter with leading counsel
for the parties. It has been said, as noted
already, that two
years is the outer limit in the case of this type. On consideration I
believe that it is simply too long and
Mr van Niekerk reminded me
that he had said as much in the course of the application for
interim
relief.
In my view the period of the restraint should not be any longer than
is necessary to enable the Applicant to place
a new sales person in
the field, enable them to become acquainted with the products and the
customers and to make it plain to the
latter that they are now the
person with whom to deal on behalf of the Applicant. Having
regard to the nature of the products,
the type of customer to whom
they are sold and the number of customers who will need to be
contacted I think that a period of eight
months is sufficient for
those purposes. This was not seriously disputed by Mr
Van
Niekerk
…
’
[20]
Mr
Salmon
SC on behalf of the Applicant, however, in argument
disputed the efficacy of any shorter period on the basis that the
Respondent
had simply failed to discharge the onus of proving any
unreasonableness which would justify a shorter period.
[21]
I am very mindful of the comments of Wallis AJ in
Den Braven
and even in the absence of any proof (in that case that two years was
the outer limit) of any ‘outer limit’ in the
context of a
representative employed in the industry which the Respondent was, am
and remain concerned that three years might be
‘simply too
long’. However, I was given no particular details of the
products which were sold or held by any
of the clients, or being
products in the nature of financial services, at what frequency these
clients would be serviced by representatives
such as the Respondent,
to obtain some idea of the frequency of contact or the need of
clients to be contacted by a representative
such as the Respondent in
regard to their financial planning, as to determine what portion of a
three year restraint would be unreasonable
and go beyond the
protection of the Applicant’s trade connections in so far as
its Clients are concerned. Thirty-six
months might seem to be
‘too long’ but the determination of a lesser period
should not be arbitrary, without an evidential
basis, without regard
to what might be acceptable norms in the industry and therefore
reasonably justifiable. As in
Rawlins
, the situation is
one of a ‘paucity of evidence’ on an aspect on which the
Respondent bore the onus. It nevertheless
seems to me that my
prima
facie
view that three years is too long, albeit only informed by
general allegations by the Respondent, nevertheless informs a
determination,
based on past experience in matters of this nature,
that the restraint period should be limited to two years from the
date of the
grant of this order. As regards any shorter period than
two years, the Respondent has simply not discharged the onus of
showing
to what extent a restraint of two years would be
unreasonable. Bald submissions and allegations of unreasonableness
are insufficient.
[22]
The draft order suggested by the Applicant details the names of the
clients to whom the Applicant maintains the restraint should
apply.
No opportunity had previously been given to the Respondent to comment
on that list, specifically as to whether he
agrees with the
Applicant’s inclusion of their names. I am accordingly
not disposed to incorporate that list as part
of the order. The
order will follow the general terms in which the relief was initially
claimed. Insofar as the Respondent
may be left in any doubt,
the reference to the names in the list will no doubt assist him as an
indication as to which Clients
the Applicant contends the restraint
would extend to.
[23]
Finally as regards costs, the Respondent has at least since 8 August
2016, namely for two months already, sought to persuade
the
Applicant’s clients to appoint a new financial services
provider with which he shall be involved. The Respondent has
not been
forthright in disclosing all his communications in this regard.
The Respondent had opted for a contract ‘with
restraint’
knowing full well that the Applicant would implement client retention
procedures on termination of employment.
At a time when
correspondence was being exchanged regarding some of the very matters
forming the subject of this application, the
Respondent was
communicating with clients and seeking to entice their business away
from the Applicant. By communicating with these
clients and
attempting to persuade them to appoint an alternative financial
services provider, whilst the parties’ respective
attorneys
were corresponding with each other, the Respondent has made himself
guilty of conduct of which this court should show
its disapproval.
That conduct has persuaded me, in the exercise on my discretion on
costs, to direct that the costs of this application
be paid by the
Respondent on the attorney and client scale.
[24]
The following order is accordingly granted:
1.
The Respondent is ordered to hand over to the Sheriff, forthwith upon
service of the order on him, all files and records, whether
in paper
form or on CD disk, including all copies of such files and records,
in Respondent’s possession or under his control,
pertaining to
and/or containing particulars of and other information relating in
any way to Clients (as defined) to whom Respondent
rendered any
financial service (as defined under the
Financial Advisory and
Intermediary Services Act 37 of 2002
, as amended) during the period
from 1 March 2011 up to and including 30 September 2016 (herein after
referred to as ‘Clients’;
2.
The sheriff is authorised to deliver all records, including all
copies thereof, handed over to him by Respondent pursuant to
paragraph 1 above, to Applicant;
3.
Respondent is ordered permanently to delete and destroy all
electronic records in his possession or under his control that
contained
particulars of as other information relating to Clients
and/or details of Clients investments.
4.
Respondent is ordered not to use any information within his knowledge
relating to Clients for any purpose whatsoever, and should
any Client
make contact with Respondent within two years from the date of this
order, Respondent must immediately refer such Client
to Applicant’s
Private Wealth Management Division in Durban;
5.
Respondent is ordered not to disclose any Confidential Information
(as defined in the Contract of Employment concluded between
the
parties on 30 January 2013, and including Clients lists, Client
particulars and details of Clients Investments) to any third
party,
including but not limited to BR Wealth Management Services (Pty)
Limited, trading as Bill Roberts Financial Planning;
6.
Respondent is restrained and prohibited, for a period of two years
from the date that this order is made, from contacting, directly
or
indirectly, any Client (as defined in paragraph 1 hereof) for
purposes of rendering Financial Service (as defined under the
Financial Advisory and Intermediary Services Act 37 of 2002
, as
amended) to them and/or enticing them to appoint a Financial Services
Provider other than Applicant;
7.
Respondent is to bear the cost of this Application on the attorney
and client scale.’
__________________________________
Appearances
For
the Applicant:
R J SALMON SC
Instructed
by:
WALKERS INC.
(Ref:
B van der Vyver/CW/W38969)
C/O
GARLICKE & BOUSFIELD INC.
(Ref.:
C Seger/ )
Tel:
031 570 5334
For
the Respondent:
L B BROSTER SC
Instructed
by:
PEARCE, DU TOIT & MOODIE
(Ref:
Mr TK Pearce)
Tel.:
031 304 6781
[1]
The
Financial
Advisory and Intermediary Services Act 37 of 2002
, as amended.
[2]
It
is unclear where this limitation arises from. It does not seem to me
to have any foundation in the agreement.
[3]
[1993] ZASCA 61
;
1993
(3) SA 742
(A) at 767C-E.
[4]
Such
an attachment and influence appears
prima
facie
to exist from a perusal of the emails attached to the papers and
received from Clients whom the Respondent has contacted with
a view
to them following to the new brokerage he intends joining.
[5]
[1992] ZASCA 204
;
1993
(1) SA 537
(A) at 541C-H.
[6]
At
page 541 H.
[7]
See
for example
Sunshine
Records
(Pty)
Ltd v Frohling and Others
1990
(4) SA 782
(A) and
Den
Braven SA (Pty) Ltd v Pillay and Another
2008 (6) SA 229 (D).
[8]
Reddy
v Siemens Telecommunications (Pty) Ltd
2007
(2) SA 486
(SCA) para [10].
[9]
From
page
542I
ff.