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[2016] ZAGPPHC 1059
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De Meyer and Others v Property Competence Management (Pty) Ltd (A408/2014) [2016] ZAGPPHC 1059 (20 December 2016)
IN
THE HIGH COURT OF SOUTH AFRICA
GAUTENG
DIVISION, PRETORIA
APPEAL
CASE NUMBER: A408/2014
Reportable:
No
Of
interest to other judges: No
Revised.
20/12/2016
In
the matter between
ADRIAAN
W DE
MEYER
First
Appellant
BLUEBERRY
MANAGEMENT SERVICES (PTY) LTD
Second
Appellant
BLUEBERRY
MANAGEMENT PORTFOLIO (PTY) LTD
Third
Appellant
and
PROPERTY
COMPETENCE MANAGEMENT (PTY)
LTD
Respondent
JUDGMENT
MURPHY
J
1.
The appellants appeal against two judgments of Kollapen J. In the
first judgment handed down on 9 May 2014, the learned judge
granted
orders interdicting and restraining the appellants from using any
confidential information in their possession relating
to the
respondent's clients for the purpose of soliciting their property
management business and from contacting the respondent's
clients for
a period of six months from the date of the order with the aim of
dealing with, securing or soliciting the business
of those clients.
The appellants were further ordered to hand over the relevant
confidential information in their possession within
48 hours. On 4
June 2014 Kollapen J handed down a second judgment in which he
granted an order that pending the outcome of the
appeal against his
first judgment (leave having been granted by him) the orders granted
in that judgment would not be suspended
and would remain of full
force and effect. As stated, the appellants appeal against both
judgments.
2.
The respondent is a company specialising in the management and
administration of security complexes, especially sectional title
developments, on behalf of their bodies corporate or homeowners
associations. The first appellant ("De Meyer") was employed
by the respondent from 2007 until his resignation in March 2014. At
the time of his resignation De Meyer was employed as a portfolio
manager. His duties included direct liaison with the different bodies
corporate and homeowners' associations. He therefore had
knowledge of
the respondent's client base.
3.
The second and third appellants ("Blueberry") conduct
similar business. The managing director of Blueberry is Mr. Leon
Visser ("Visser"), a former employee of the respondent.
4.
The respondent maintains that De Meyer tendered his resignation on 1
March 2014 with effect from the end of March 2014. It claims
that De
Meyer was asked about his future plans but refused to disclose them.
In early March 2014, Mr Theo Kleynhans ("Kleynhans"),
the
controlling shareholder of the respondent, was contacted by a
business associate, Mr Eppo Kruger ("Kruger") who told
him
that De Meyer had tried to solicit employment as a portfolio manager
with Green Circle Property Management (Pty) Ltd, a company
of which
Kruger is a director. De Meyer allegedly offered to target clients of
the respondent on behalf of Green Circle and told
Kruger that he was
confident that he could poach and bring to Green Circle over at least
80% of his portfolio.
5.
De Meyer admitted that he met Kruger in November 2013 at which
meeting the possibility of employment was discussed. De Meyer
denied
telling Kruger that he could poach 80% of his portfolio but conceded
that there was some discussion about "whether
there would be any
blocks that De Meyer will bring over" to Green Circle. Kruger
and De Meyer discussed the question of salary.
De Meyer informed
Kruger that "he was very good at what he did and that he
believed that the income which he would generate
would cover his
salary". Nothing further appears to have come from their
meeting. However, at about the end of January 2014
Kruger contacted
De Meyer and invited him to attend a meeting at Visser's office,
where De Meyer and Visser were introduced to
each other for the first
time. According to Visser, Kruger suggested that Green Circle should
merge with Blueberry and discussions
were held in that regard. Kruger
had invited De Meyer to the meeting because he believed De Meyer was
a very good managing agent
who would be of value to Blueberry. The
merger did not happen, but De Meyer nonetheless ultimately became
associated with Blueberry.
6.
After speaking to Kruger in early March 2014, Kleynhans suspended De
Meyer on 7 March 2014 (during his notice period), pending
a
disciplinary enquiry. The suspension was on condition that De Meyer
would not have any contact with the respondent's clients.
De Meyer
maintains that the true reason for the suspension was the fact that
Kleynhans was unhappy about De Meyer's resignation
and thus
retaliated by suspending him.
7.
On 20 March 2014, Kleynhans addressed a letter to the trustees of the
various sectional title schemes that De Meyer had serviced,
informing
them that De Meyer had tendered his resignation with effect from the
end of that month and that his resignation had been
accepted. He then
went on to outline that he had received information that De Meyer had
been offering the respondent's clients
to other managing agents in
exchange for employment. He mentioned Blueberry in particular who he
noted had absolved the respondent's
clients against costs, legal or
otherwise, which might be incurred by transferring from the
respondent to Blueberry. He requested
trustees contacted by De Meyer
or Visser to inform him so that he could take legal action.
8.
At the time he sent the letter Kleynhans was aware that four
sectional title schemes had cancelled their management agreements
with the respondent. All of these clients had been in the portfolio
of De Meyer. The respondent accordingly alleged that De Meyer
had
breached his duty of confidentiality and trust under his contract of
employment, with prejudicial consequences for the respondent.
9.
De Meyer placed a different interpretation on events. He denied that
he approached any of the bodies corporate. He admitted to
speaking to
certain trustees who he had bumped into and had "informally"
informed them that he would be taking up new
employment with
Blueberry. Certain trustees then approached De Meyer, enquired about
his new position and asked whether his new
employer (Blueberry) would
provide a quote for services. De Meyer denied that he convinced any
of the respondent's clients to terminate
their agreements with the
respondent. He insisted that the clients in fact approached him and
that their move to Blueberry was
motivated by their appreciation of
his competence as a managing agent. The respondent contended that
this version was improbable
in light of the documentary evidence
establishing that in the period between 12 March and 5 April 2014
(during De Meyer's period
of suspension) various bodies corporate
indicated that they intended to terminate their contract with the
respondent and move to
Blueberry.
10.
The respondent's version is borne out by an email (Annexure TK17)
addressed by Mr Willem Scholtz to Kleynhans on 1April 2014,
the
relevant part of which reads:
"I
am the current chairman of Helderberg Body Corporate. At our last
Trustee meeting in Feb'14 Mr de Meyer mentioned that he
will be
resigning at the end of March 2014 and that he is going to Blueberry.
I left it there, but on Sunday 16 March I was approached
by one of my
fellow trustees with a proposal from Blueberry signed by Mr Visser. I
told her that I am leaving the next morning
on holiday and that we
can discuss this at the next trustee meeting. I had a brief look at
the proposal and left it at her doorstep
when I left the next
morning. I suppose she approached the other two trustees staying in
the building in the same manner and probably
convinced them to
co-sign the document for the transfer. My personal opinion is that
there are no reasons whatsoever to move away
from Property
Competence. In the ten years I am involved in this Body Corporate we
never had any major problems. I have to mention
that no formal
decision was made to move away from Property Competence.
When
I returned and went through my mails yesterday I only realised what
is going on. It was my intention to discuss the matter
at the next
trustee meeting and/or the AGM.
I
suppose that we carry on with business as normal until the
investigations are finished."
11.
De Meyer failed in his affidavit to identify the trustees he bumped
into, and has not filed any confirming or supporting affidavits
from
them.
12.
Furthermore, on 20 March 2014, De Meyer, while still in the employ of
the respondent, was in email correspondence with Ms Nowele
Rozani, a
trustee of the Helderberg Body Corporate, and other trustees which
indicated that documentation had been sent by the
body corporate to
De Meyer in his capacity as an employee of Blueberry and that he had
drafted or was in possession of proposal
documents drafted on behalf
of Blueberry. De Meyer concluded the email by saying: 'Welcome to
Blueberry and enjoy the long weekend".
De Meyer admitted sending
the email but denied that he remained employed. He claims he had been
unlawfully suspended. He denied
there was any lawful restraint of
trade upon him or that he had competed unlawfully. He argued that the
fact that Blueberry offered
cheaper services and that some of the
clients preferred to move with him did not mean that he had breached
any duty in relation
to confidential information or had acted
unlawfully in any way.
13.
The respondent annexed to the founding affidavit resolutions taken by
five of its clients previously managed by De Meyer between
12 March
2014 and 5 April 2014 terminating the services of the respondent and
appointing Blueberry as their managing agent. The
resolutions are
virtually identtical and were drafted on the same computer using the
same template. All the resolutions record
that the trustees of the
scheme "confirm that they approached Blueberry Management
Services (Pty) Ltd to act as Managing Agents".
They all
terminated the services of the respondent on 30 April 2014. The
resolutions appointed Blueberry as the managing agent
instead of the
respondent and authorised it to take over all communication and
dealings with members of the schemes. It is common
cause that these
clients were in fact taken over by Blueberry and continued to be
managed by De Meyer.
14.
On 29 April 2014, Mr Hendrik Hoffman, a director of the respondent
attended a meeting with the trustees of Montanac body corporate,
one
of the clients who had terminated its agreement with the respondent
in the previous month. He averred that the trustees told
him that De
Meyer at a meeting during January 2014 had informed the trustees of
his intention to resign as an employee of the respondent
and at a
meeting on 14 March 2014 De Meyer brought the trustees under the
impression that he had already left the employ of the
respondent and
that an agreement had been reached between the respondent and
Blueberry that the latter would take over the management
of Montanac.
In the light of that, De Meyer allegedly persuaded the trustees to
sign a resolution terminating the respondent's
services. The
respondent placed this information before the court by way of
supplementary affidavits including an affidavit of
Mr Hoffman. It was
not supported by any confirmatory affidavit of any of the Montanac
trustees, and thus, albeit admissible in
the course of an urgent
application, this evidence is hearsay.
15.
De Meyer filed an answering affidavit in response to the
supplementary affidavit. He denied that a meeting took place on 14
March 2014 or that he had fraudulently misrepresented that management
of the scheme would be transferred by mutual agreement.
16.
The respondent relied principally upon clause 24 of De Meyer's
contract of employment. Its relevant provisions read:
"The
employee undertakes not to disclose any confidential information to
any third party or entity during the operation of
this agreement or
after its termination unless the employer specifically agrees."
Clause
26 of the contract includes a restraint of trade of narrow ambit in
the form of an undertaking "not to be engaged in
the
establishing of a new business" within one year after
termination of employment in Gauteng or the Western Cape.
17.
The information regarded by the respondent as confidential is that
pertaining to the sectional title owners or tenants in the
various
schemes. Blueberry, in April 2014, was able to address welcome
letters to the individual section owners and tenants. These
addresses, according to the respondent, were exclusively within its
possession. Thus, the most probable inference is that this
information was given to Blueberry by De Meyer. Other confidential
information the respondent claimed was in the possession of
De Meyer
included:
· Pricing
structures and specific fees charged for specific services and for
specific clients.
· The identity of
all clients of the respondent specifically those serviced by De
Meyer.
· The contracts
between the respondent and the clients serviced by De Meyer.
· Address lists of
all clients, including all bodies corporate and homeowners
associations as well as the address lists of
owners of individual
properties and their contact information.
· All financial
management information of the respondent as well as that of every
sectional title scheme, especially those
managed by De Meyer.
18.
The respondent regards this information as extremely valuable as it
was specifically compiled by it to enable it to service
its clients
and to compete in the market place. The pricing structures are
particularly valuable in that they would permit a competitor
with
access to such information to undercut and strategically price
services to outbid the respondent, as appears to have happened
in
March 2014. The correspondence with Nowele Rozani, for instance,
reveals that the move of the Helderberg contract to Blueberry
may
well have been motivated by savings in management costs.
19.
The appellants denied that they were in possession of any
confidential information of the respondent and complained that it
was
not clear what confidential information the respondent sought to
protect. In so far as the information was restricted to the
identity
and details of the respondent's clients, the appellants denied that
the respondent has any interest of its own in such
information. They
contended that the information is public knowledge and thus not
confidential. The respondent services various
bodies corporate and
the identities of such are known. The appellants accordingly denied
that the information was confidential
and that it had any financial
value. They furthermore denied that the information regarding
individual owners had come from De
Meyer and averred that it had been
obtained from a body corporate. They neglected to file any
confirmatory affidavit or documentary
evidence supporting that
averment.
20.
The appellants nevertheless did admit that De Meyer "had access
to certain information" at the respondent. They did
not specify
the nature, ambit and value of such information. Instead they averred
baldly that the information was not confidential
and that De Meyer
did not possess it. They reiterated that the identity of the
respondent's clients was information in the public
domain. They
denied that Blueberry was using any information obtained from De
Meyer to unlawfully compete with the respondent.
21.
When the matter was enrolled in the urgent court before Kollapen J it
was argued that the conduct of the appellants constituted
unlawful
competition in that they sought unfairly to use the respondent's
fruits and labour, misused the respondent's confidential
information
in order to advance their own business interests at the expense of
the respondent, induced or procured a breach of
contract by the
trustees of the relevant bodies corporate, and acted in collusion
together to achieve these ends.
22.
The respondent argued that it was entitled to an interdict
restraining the appellants. In particular, it contended that it had
a
clear right to the protection of its business interests and the
confidential information belonging to it and a right to be protected
from unlawful competition. It maintained that it was unlawful for De
Meyer to take its confidential information and to use it to
compete
with the respondent. Since Blueberry was a trade rival, it was
especially unlawful to obtain its confidential information
and use it
to compete in a manner infringing its "clear rights of freedom
of lawful trade". It accordingly had a reasonable
apprehension
of further injury by further possible inducements to clients to
breach their contracts with the respondent, so it
submitted, and in
the absence of a satisfactory alternative remedy, it was entitled to
a final interdict.
23.
Kollapen J
held that the matter was urgent and proceeded to deal with what he
described as the second issue, "namely that of
confidential
information". The court referred to clause 24 of the contract of
employment and affirmed that De Meyer was under
a contractual
obligation not to disclose any confidential information to any third
party during the operation of the agreement
or after its termination.
The learned judge followed and applied the reasoning in
van
Castricum v Theunissen and
another
[1]
to
conclude that the information in question was indeed confidential.
24.
In
van Castricum
the first respondent had been employed by the
applicant, an insurance broker, as a claims clerk and underwriter. In
performing her
duties as a claims clerk the first respondent used a
handwritten Bantex telephone directory which contained names,
telephone numbers
and some fax numbers of existing clients of the
applicant. The first respondent subsequently left the employ of the
applicant and
joined the second respondent (a direct competitor and
trade rival of the applicant) as an administrative and marketing
manager.
The first respondent removed the Bantex telephone directory
from the applicant's business premises when she left his employ and
used the information to approach clients of the applicant on behalf
of her new employer. The applicant then sought an interdict
restraining the respondents from using any confidential information,
including the Bantex telephone directory for the purpose of
soliciting the applicant's clients and restraining the respondents
from contacting, dealing with, securing or soliciting the business
of
the applicant's clients.
25.
The facts
and the relief sought in
van
Castricum
are
similar in most respects to those in the present matter. As in the
present matter, Roos J in
van
Castricum
had
to consider and determine whether the information contained in the
Bantex directory constituted confidential information worthy
of
protection. Referring to a decision of the Court of Appeal in the
United Kingdom,
Saltman
Engineering
Co
Ltd v
Campbell
Engineering
Co
Ltd,
[2]
Roos J
held that in order to be confidential the information must have the
necessary quality of confidence about it, that is, it
must not be
something which is public property or public knowledge. Accepting
that it was sometimes difficult to decide whether
information was
general knowledge or whether it was confidential or constituted a
trade secret worthy of protection, the court
held that the test was
an objective one.
[3]
It applied
the following principles enunciated in
Thomas
Marshall (Exports) Ltd v Guinle.
[4]
First,
the information must be information the release of which the owner
believes would be injurious to him or of advantage to
his rivals or
others. Second, the owner must believe that the information is
confidential or secret, that is, that it is not in
the public domain.
Although some of his rivals may have the information, the court
should incline to the grant of the relief where
the information is
reasonably believed to be confidential. Third, the owner's belief
must be reasonable. Fourth, the information
must be judged in the
light of the usage and practices of the particular industry or trade
concerned.
26.
Roos J in
van
Castricum
concluded
that a list of clients, together with their contact details could
well constitute confidential information, notwithstanding
that it may
have been compiled from generally available information. The learned
judge opined that information compiled in confidence
by one party
should be protected because confidential information may not be used
as a springboard for activities detrimental to
the person who made
the confidential information available, and it would remain a
springboard even when all the features had been
published or can be
ascertained by actual inspection by any member of the public.
[5]
The reason for protecting such information is that an employee who
obtained it in confidence should not be permitted to use that
information as a springboard for activities detrimental to the person
who compiled the information, even where some of that information
is
in the public domain, because the possession of the information has
"a long start" over any member of the public.
[6]
27.
It is
clearly established in South African law that it is unlawful for an
employee either to take his employer's information or
to use such
information to compete with him. The fact that the first respondent
in
van
Castricum
had
left the employ of the applicant made no difference because the duty
to preserve such confidential information continues to
exist even
after the period of employment has terminated.
[7]
It will be recalled that in the present case Clause 24 of the
contract of employment included an express undertaking not to
disclose
any confidential information to any third party both during
the operation of the contract and after its termination.
28.
In the present case, Kollapen J applied these principles and
concluded that the information in question was likewise worthy
of
protection. He held that the fact that the clients were known to each
other in the industry did not extend to knowledge of systems
"in
the context of how such information is then compiled by the applicant
into a data base". In his view, the respondent
was entitled to
the protection of such information even if it could be shown that
such information taken separately is generally
and widely available.
That finding is undoubtedly correct.
29.
With regard to the denials by the appellants that De Meyer was in
fact in possession of any information that could be considered
as
confidential or that they had used such information, Kollapen J held
as follows:
"In
dealing with this denial one must consider the following. The first
respondent (De Meyer) was employed as a portfolio manager
by the
applicant for some seven years. That would be a considerable time in
my view. Given his job description, it is hardly tenable
that he
would not have had access to the applicant's clients' records and
databases. On the contrary such access would have been
necessary for
him to have carried out his duties. His duties would also have
enabled him to acquire knowledge of the workings of
the applicant and
the workings of the development or sectional title schemes he was
responsible for. Accordingly his denial that
he had confidential
information can hardly stand in the face of his long period of
employment and the nature of his job description."
30.
In addition, the learned judge a
quo
held that the evidence
established that De Meyer had interacted with the clients of the
respondent on behalf of Blueberry while
he was still in the employ of
the respondent (albeit on suspension). This constituted a conflict of
interest, and, in my view,
a breach of the contract of employment.
This indicated that De Meyer was prepared to interact with the
clients of his employer
to the detriment of his employer. It hardly
mattered that the clients may have initiated contact. The learned
judge held:
"His
overriding duty was to his employer (applicant). His stance in this
regard gives credence to the allegations made by Mr
Kruger that
indeed the first respondent had informed him that he was willing and
able to bring over a substantial portion of his
portfolio from the
applicant to his new employer ...... The migration of five clients
during March 2014 from the applicant to the
respondents could hardly
be ascribed to service delivery or financial reasons. If it was for
financial reasons then surely migration
would have occurred earlier
and it is simply too much of a coincidence to suggest that it was
anything other than a deliberate
targeting based on confidential
information the respondent had ... about the applicant's clients and
contact details."
31.
Kollapen J relied on two further facts to fortify his conclusion that
De Meyer had used the confidential information in breach
of clause 24
of the contract of employment. The first was the fact that the
resolutions adopted by the bodies corporate terminating
the
respondent's services and appointing Blueberry included a
"questionable inducement", namely an undertaking by
Blueberry
to pay all costs, including legal costs incurred by the
client in the event of any litigation arising with the respondent.
The
second was the fact that Blueberry in its welcome letters used
the
domicilium
addresses which could
only have been obtained from the
respondent's records as the bodies
corporate would not have possessed
that information.
32.
For those reasons Kollapen J granted the interdict. It is important
to note that the primary basis for granting the interdict
was the
respondent's clear right arising under clause 24 of the contract of
employment to the protection of its confidential information.
Although the court intimated that the appellants may have acted
wrongfully in a broader sense, it made no explicit finding that
the
appellants had competed unlawfully or had committed any delict.
33.
As stated at the outset, paragraph 1 of the interdict prohibited and
restrained the appellants from using any confidential information
in
their possession. The information specifically identified was that
related to the respondent's clients and included but was
not limited
to the respondent's pricing structures, contracts between the
respondent and its clients, address lists of owners and
the persons
or entities responsible for the paying of levies, contact details of
such persons and financial management information
of the respondent
pertaining to clients. Paragraph 2 of the court order interdicted the
appellants from contacting the clients
of the respondent, nor dealing
with them, securing or soliciting their business for a period of six
months. Paragraph 3 of the
order directed that any and all
information set out in paragraph 1 of the order, including all
computer records, handwritten records,
otherwise be handed over to
the respondent within 48 hours of the order.
34.
On 4 June 2014, Kollapen J handed down judgment in two further
applications ("the second judgment"). The first application
was an application for leave to appeal. The learned judge granted
leave to appeal to a full court of this division. The second
application was an application in terms of the then existing rule
49(11) seeking an order that the order made by Kollapen J on
9 May
2014 not be suspended pending the outcome of the application for
leave to appeal, or any possible appeal processes that might
follow.
35.
The second
application was determined in accordance with the provisions of
section 18 of the Superior Courts Act,
[8]
which came into operation on 23 August 2013. In general terms the
section provides that unless the court under exceptional
circumstances
orders otherwise, the operation and execution of a
decision which is the subject of an application for leave to appeal
is suspended
pending the decision of the application or appeal. In
terms of section 18(3) a court may only order otherwise if the party
who
applied to the court to order otherwise, in addition proves on a
balance of probabilities that he or she will suffer irreparable
harm
if the court does not so order and that the other party will not
suffer irreparable harm if the court so orders. Kollapen
J held that
the respondent would indeed suffer irreparable harm if the order was
not put immediately into operation, whereas De
Meyer would be
entitled to continue and remain in the employ of Blueberry who could
conduct business within the constraints of
the interdict without
suffering any significant prejudice. He accordingly ordered that the
order of 9 May 2014 would not be suspended
pending the appeal.
36.
In the appeal before us, the appellants appeal against the judgment
and order of 9 May 2014 and the order granted in terms of
section 18
of the Superior Courts Act on 4 June 2014.
37.
The appeals were originally set down for hearing on 5 August 2015.
However, the matter was postponed as it transpired that a
notice of
appeal had not been lodged against the judgment of 9 May 2014. The
appellants then filed a condonation application requesting
that the
late delivery of the notice of appeal be condoned and that the appeal
be reinstated. The basis for the condonation application
is an
alleged misunderstanding between the attorney and counsel for the
appellants. The respondent argued that sufficient explanation
was not
given for the default and that there are no prospects of success on
appeal. The application for condonation can therefore
best be
determined after due consideration of the merits.
38.
Notwithstanding the fact that a notice of appeal was lodged in terms
of section 18 of the Superior Courts Act no urgent date
of appeal was
allocated. The respondent accordingly submitted that the various
orders have become moot, and that the appeal will
have no practical
effect. As I understand the submission, the respondent relies upon
section 16(2)(a)(i) of the Superior Courts
Act which provides that
when at the hearing of an appeal the issues are of such a nature that
the decision sought will have no
practical effect or result, the
appeal may be dismissed on that ground alone.
39.
The essential ground of appeal advanced by the appellants in relation
to the merits of the main application was that there was
a dispute of
facts on the papers that precluded Kollapen J from granting the
interdict. De Meyer denied that he was in possession
of confidential
information or that he had breached his contract of employment by
disclosing that information to a trade rival.
Blueberry further
averred that there was no contractual relationship between it and the
respondent, that it had no confidential
information belonging to the
respondent and that the information it used was a matter of public
knowledge. Blueberry also denied
that it induced any breach of
contract or had competed unfairly.
40.
The finding
that De Meyer had breached his contract is in my opinion unassailable
for the reasons stated by the court a
quo.
The
court applied the methodology ordained in
Plascon-Evans
Paints Ltd v Van Riebeeck Paints (Pty) Ltd
[9]
and
correctly rejected the denials of De Meyer as untenable,
un-creditworthy denials and was right to do so on the papers for the
reasons stated. Where in proceedings on notice of motion disputes of
fact have arisen on the affidavits, a final order, whether
it be an
interdict or other relief, may be granted if those facts averred in
the applicant's affidavit which have been admitted
by the respondent,
together with the facts alleged by the respondent, justify such
order. Where the allegations or denials of the
respondent are so
far-fetched or clearly untenable then the court may be justified in
rejecting them merely on the papers.
[10]
The court a
quo
favoured
the respondent's version because it felt that De Meyer's denials and
explanations for how Blueberry came into possession
of the
confidential information were un creditworthy and untenable. In
its view, a conspectus of the evidence revealed that
De Meyer had
confidential information in the form of client lists, contact details
and the like and was engaged in discussions
or negotiations with
these clients which led to some of them migrating to Blueberry. I
agree with those findings. The information
was confidential for the
reasons stated in
van
Castricum
and
De Meyer used that information for the benefit of his employer's
rival while still in employment, in breach of his contract
of
employment and in unfair competition with the respondent. Those facts
alone justified the interdict against De Meyer to prevent
his further
breach of the obligation he undertook and which endured beyond the
termination of his employment.
41.
The basis of the grant of the interdict against Blueberry is
admittedly less clear. A careful reading of the judgment (granted
in
the context of the busy urgent court) reveals that there had been
debate during argument about the scope of the relief. Kollapen
J
stated that he was mindful "not to make orders that have the
effect of stifling lawful competition and that could operate
to the
prejudice of the respondents (appellants) in an open and free
market". From this it may be deduced that Blueberry was
interdicted on the basis that its conduct in acting in collusion with
De Meyer constituted unlawful competition.
42.
The conduct
of Blueberry in using the information supplied to it by De Meyer
involved the commission of what might rightly be regarded
as a civil
wrong. While its conduct did not constitute a breach of contract, it
served as an inducement to De Meyer to breach his.
Its undertaking to
indemnify migrating clients for legal costs in the event of any
dispute arising with the respondent is a clear
indication that it was
consciously and deliberately engaged in enticing clients away from
the respondent; and was using the information
in possession of De
Meyer to achieve that end. The test of wrongfulness applied in such
an instance is one of fairness and honesty
having regard to the
boni
mores
and
the general sense of justice in the community.
[11]
A combination of two or more persons wilfully to injure another in
his trade (by breach and inducement) will normally be unlawful,
and
if it results in damage, or may so result, should be actionable.
[12]
The wrongful use of a competitor's fruits and labour, as well as the
misuse of confidential information in order to advance one's
own
business interests and activities at the expense of a competitor is
therefore wrongful and actionable in terms of the
lex
Aquilia
[13]
and the
extension of the relief to include the conduct of Blueberry was
accordingly justified and permissible in law.
43.
In the premises, the appeal against the judgment of 9 May 2014 has no
prospects of success. For that reason the application
for condonation
and reinstatement of the appeal falls to be dismissed with costs.
44.
As for the appeal in terms of section 18(4) of the Superior Courts
Act against the order allowing the interdict to remain operative
pending appeal, the appeal against paragraph 2 of that order is
certainly moot and will have no practical effect. The six month
period of prohibition has long since expired. The prohibition against
the use of any confidential information and the return of
it pending
the appeal would not have caused irreparable harm to the appellants,
and they have made out no convincing case that
it would do so. On the
other hand, the use of such information in all probability would have
prejudiced the respondent as contemplated
by section 18. I see no
basis for concluding that the court a
quo
erred or misdirected
itself in reaching its conclusion that the circumstances were
exceptional and that the respondent would have
suffered irreparable
harm.
45.
In the result I make the following orders:
i) The application for
condonation and the reinstatement of the appeal is dismissed with
costs.
ii) The appeal in terms
of
section 18(4)
of the
Superior Courts Act 10 of 2013
is dismissed
with costs.
______________________
JR
MURPHY
JUDGE
OF THE HIGH COURT
I
agree
______________________
WRC PRINSLOO
JUDGE OF THE HIGH COURT
I
agree
_____________________
NV KHUMALO
JUDGE OF THE HIGH COURT
Counsel
for Applicants:
Adv.
C Woodrow
Instructed
by:
AJ van Rensburg Attorneys
Counsel
Respondent:
Adv JR Minnaar
Instructed
by:
Pretorius Le Roux Inc.
Date
Heard:
14 September 2016
Date
of Judgment:
[1]
1993 (2) SA 726 (T)
[2]
(1948) 65 RPC 203
(CA) at 215
[3]
See Coolair Ventilator Co (SA) (pty) Ltd v Liebenberg and another
1967 (1) SA 686
(W) at 689F-H
[4]
[1978] 3 All ER 193 (Ch)
[5]
van Castricum 731F-G
[6]
See Valuenet Solutions Inc v eTel Communications Solutions 2005 (3)
SA 494
[7]
van Castricum 736A-B
[8]
Act 10 of 2013
[9]
[1984] ZASCA 51
;
1984 (3) SA 623
(A) at 634H-I
[10]
At 635C
[11]
Schultz v Butt
1986 (3) SA 667
(A) at 679
[12]
Sorrell v Smith (1925] AC 700 at 712; and Atlas Organic Fertilizers
(Pty) Ltd v Pikkewyn Ghwano (Pty) Ltd
1981 (2) SA 173
(T) at 200
[13]
Schultz v Butt
1986 (3) SA 667
(A) at 679