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[2016] ZAGPPHC 799
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Stewarts and Lloyds Holdings (Pty) Ltd v Rautenbach (6559/2016) [2016] ZAGPPHC 799 (9 September 2016)
IN
THE HIGH COURT OF SOUTH AFRICA
GAUTENG
DIVISION, PRETORIA
9/9/2016
Case
No: 6559/2016
Not
reportable
Not
of interest to other judges
Revised.
In
the matter between:
STEWARTS
AND LLOYDS HOLDINGS (PTY)
LTD Applicant
and
RAUTENBACH,
LEONARD Respondent
JUDGMENT
VAN
DER WESTHUIZEN, AJ
1.
A rule
nisi
was issued on 7 March 2016 in terms whereof an
interim
interdict restraining the respondent from contravening
the terms and conditions of the Restraint of Trade (attached as CHN2
to the
interim
order) with return date 18 April 2016. The
respondent was directed to show cause on the return day why the
interim
interdict should not be made final and was granted
leave to anticipate the return day. By agreement on 18 April 2016,
the return
day was extended to 5 September 2016.
2.
The respondent filed an answering affidavit to which the applicant
filed a replying affidavit.
3.
The applicant is Stewarts and Lloyd Holdings (Pty) Ltd, a company
that conducts the business of wholesaler and supplier to the
market
in respect of
inter alia
steel products, steel pipes, valves,
pumps, irrigation systems and the like. It conducts its business
through various branches across
the Republic of South Africa.
4.
The respondent was employed since November 2011 as a branch manager
at the applicant's Booysens Division at Mafikeng. The respondent
resigned during June 2015 as a result of alleged health problems. He
would take up employment in the family business at Middelburg,
Mpumalanga.
5.
Incorporated in the formal employment agreement between the applicant
and the respondent was a restraint of trade agreement.
In terms
thereof, the respondent undertook to refrain from taking up
employment for a period of twelve months in competition with
the
applicant anywhere in the Republic.
6.
As branch manager, the respondent was privy to the applicant's trade
secrets and trade connections, confidential information
deemed to
extend to all confidential technical and commercial information that
the respondent acknowledged as being exclusive property
of the
applicant. The respondent undertook, during the period of employment
and thereafter, to respect and honour such confidentiality
and
proprietary rights. The respondent further acknowledged that the
applicant would suffer considerable loss should any of the
restraint
provisions be breached. The respondent further undertook not to
employ or solicit for employment any person in the employ
of the
applicant during the period that the restraint of trade was
effective.
7.
The respondent, in view of his position as branch manager, was
obliged to conduct managerial functions that included
inter alia
financial controls, stock controls, stock forecasting, analysis of
the clients served by the branch, their needs and the like.
8.
The applicant and Wasa Pumps Polokwane (Wasa) are business
competitors, although Wasa was also a supplier to the applicant
during
the period that the respondent was in the employ of the
applicant.
9.
During the period leading up to the respondent's resignation, he
discussed with his superior the reasons for his resignation
and that
he intended joining the family business in Mpumalanga, an entity that
was not involved in business dealings that competed
with the
applicant's business. It was made clear to the respondent that he was
subjected to a restraint of trade agreement upon
his resignation. The
respondent verbally assured his superior that he would not be
contravening the restraint of trade agreement.
10.
An advertisement in a local newspaper, in circulation in the
Polokwane area, appeared indicating that the Wasa Pump branch in
Polokwane, Limpopo Province, would open on 20 November 2015. The said
advertisement clearly indicated that the respondent was the
co-owner
of that business. The Wasa Pump branch in Polokwane would conduct the
same type of business as that of the applicant's
branches in Mafikeng
and Polokwane. The respondent is thus directly competing with the
applicant in conflict with the existing
restraint of trade to which
the respondent is bound.
11.
The applicant addressed a letter to the respondent to refrain from
breaching his obligations in terms of the existing restraint
of
trade. The respondent declined to do so. That prompted the applicant
to launch this application on an
ex parte
basis.
12.
The respondent raises the following defences. The respondent seeks to
raise a constitutional issue in respect of the restraint
of trade.
However, there has been non-compliance with the provisions of Rule
16A of the Uniform Rules of court. There is no merit
in that
contention. It was not argued on behalf of the respondent when the
matter was heard.
13.
The further
defence raised, related to alleged verbal variations of the terms of
the restraint of trade. That defence is in conflict
with the term of
the agreement that any variation of the terms thereof shall only
apply if it is in writing.
[1]
14.
The respondent alleges that after his resignation it was orally
agreed between the applicant and himself, that the restraint
of trade
was to onerous. He further alleges that it was further agreed to
reduce the period to a period of six months and to limit
the area
only to the Mpumalanga area, thus leaving the respondent to freely
compete with the applicant in the remaining area of
the Republic.
15.
Opportunistically the respondent seeks to find support for his
contentions in the letter of demand. On a purposive reading thereof,
no support for the respondent's contention is to be gleaned there
from. The letter of demand does record a reduced period that
is
limited to the area of Mpumalanga.
16.
It is highly improbable, and nonsensical, that the applicant would
waive its right to enforce the restraint of trade across
the Republic
and only limit it to the area of Mpumalanga for a reduced period, the
family business not being a business competitor
of the applicant. The
respondent's averments in this regard are so far-fetched and
untenable
that they stand to be rejected.
[2]
17.
It follows that the respondent has failed to show cause why the
interim
interdict restraining him from breaching the restraint
of trade agreement (CHN2) should not be made final.
18.
It was
submitted on behalf of the respondent that the period of twelve
months lapsed on 26 June 2016, and hence this application
has become
moot between the parties. It was further contended that the
exceptions that may find application do not apply in the
present
matter.
[3]
19.
In my respectful opinion that contention is without merit. There
remains the issue of possible damages and costs in respect
of the
application. Had it not been for the procedural delays that
inevitably occur in this Division, the matter would have been
finalised prior to 26 June 2016.
20.
It follows that the applicant is entitled to a final order.
I
grant the following order.
(a) The rule
nisi
issued on 7 March 2016 is confirmed.
(b) The respondent
is to pay the costs.
_________________________________
C
J VAN DER WESTHUIZEN
ACTING
JUDGE OF THE HIGH COURT
On
behalf of Applicant:
C D Roux
Instructed
by:
R C Christie Inc.
On
behalf of Fifth Respondent: P A Wilkins
Instructed
by:
Juan Kotze Attorneys
[1]
SA Sentrale Koop Graanmaatskappy Bpk v Shifren 1964(4) SA 760 (A);
see also Brisley v Drotsky 2002(4) SA 1 (SCA)
[2]
Plascon-Evans Paints Ltd v Van Riebeeck Paints (Pty) Ltd 1984(3) SA
623 (A)
[3]
Radio Pretoria v Chairperson, Independent Communications Authority
of South Africa, et al
2005(4)
SA 319 (CC) [22]