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[2015] ZAGPPHC 176
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Curemed CC v Van Onselen and Others (21838/2015) [2015] ZAGPPHC 176 (13 April 2015)
IN
THE HIGH COURT OF SOUTH AFRICA
(GAUTENG
DIVISION, PRETORIA)
REPUBLIC OF SOUTH
AFRICA
CASE NUMBER:
21838/2015
DATE: 13 APRIL 2015
NOT REPORTABLE
NOT OF INTEREST TO
OTHER JUDGES
In the matter
between:
CUREMED
CC
......................................................................................................................
Applicant
trading as Curemed
Healthcare Consultants
and
VICKY
VAN
ONSELEN
...........................................................................................
First
Respondent
MARIETHA
CIAMPI
...........................................................................................
Second
Respondent
HESTER
DU
PREËZ
...............................................................................................
Third
Respondent
SHC
PROJECTS PROPRIETARY
LIMITED
...................................................
Fourth
Respondent
JUDGMENT
JANSE VAN
NIEUWENHUIZEN J
[1]
The applicant launched this application against three of its
ex-employees, being the first to third respondents (“the
three
respondents”) and their present employer, the fourth
respondent, claiming,
inter
alia,
the
following relief:
“
2.
That:
2.1
The First, Second and Third Respondents shall, for a period 12
(twelve) calendar months, from date of this order
;
be interdicted and
restrained from:
2.1.1 Unlawfully
competing with the Applicant by, applying intellectual property of
the Applicant, consisting of the Applicant’s
confidential data
which includes all information, application forms and personal
details of Clients belonging to the Applicant
as well as the data
base of all information relating to Clients of the Applicant
2.1.2
Contacting, soliciting or continuing to deal with the Applicant’s
clients who have been so solicited and or contacted
by the First,
Second
and
or
Third
Respondents;
2.1.3 Contacting
and/or soliciting the Applicant’s clients to:
2.1.3.1 Terminate
their association with the Applicant; and/or
2.1.3.2
Discontinue their transactions with the Applicant; and/or
2.1.3.3 Act
contrary to the interests of the Applicant.
2.2 The First,
Second and Third Respondents shall:
2.2.1
Forthwith return to the Applicant, ail originais and or copies of all
the Appiicant’s confidential information, in the
possession of
the First, Second
and/or
Third Respondents, including but
not limited to:
2.2.1.1 All
confidential information relating to the Applicant’s manuals;
2.2.1.2
All confidential information relating to the Applicant’s
,
specifically
including, the Applicant’s manuals, client lists, client
contact details and client application forms.
2.2.2 Permanently
destroy or delete all confidential information of the Applicant
contained in electronic format from whatever memory
source.
2.2.3
Permanently destroy and or delete all confidential information of the
Applicant contained in those e-mails which the First,
Second
and
or
Third
Respondents sent from their work e-mail address, to their personal
e-mail addresses and or those belonging to
and/or
being utilised by unauthorised
third parties.
2.3
The First, Second and Third Respondents shall be interdicted and
restrained from continuing to engaging in business or any other
related activities with the Applicant’s clients, for a period
12 (twelve) calendar months from date of this order
:
3.
That the Fourth Respondents shall
,
fora period of 12
(twelve) calendar months
,
from date of this
order, be interdicted and restrained from unlawfully competing with
the Applicant by, applying intellectual property
of the Applicant,
consisting of the Applicant’s confidential data which includes
all information, application forms and personal
details of Clients
belonging to the Applicant as well as the sata base of all
information relating to Clients of the Applicant,
which information
has been made known to the Fourth Respondent by the First, Second
and/or
Third Respondents, if any.”
[2] The respondents
oppose the relief claimed by the applicant.
BACKGROUND AND
COMMON CAUSE FACTS
[3] The applicant
markets medical scheme products and so-called gap cover products
(short term products) to the public. Although
the applicant’s
principal place of business is in Pretoria, Gauteng, the applicant
also has offices in KwaZulu Natal and
the Western Cape.
[4] The fourth
respondent also markets medical scheme products and gap cover
products (short term products) to the public. The fourth
respondent
trades throughout the Republic of South Africa and is a direct
competitor of the applicant.
[5] The three
respondents have been in the employment of the applicant as health
care advisers since respectively, May 2005, March
2009 and February
2007.
[6]
All three respondents entered into Healthcare Adviser Agreements with
the Applicant, which agreement contain, for present purposes,
inter
alia,
the
following clauses:
“
11
Ownership of information
11.1
The Adviser acknowledges that all information
,
application forms,
and personal detail of Clients belong to the Broker or another lawful
owner. Equally, the data base of all information
relating to Clients
is that of th Broker.
11.2
....
11.3 The Adviser
agrees that, when this Agreement ends, for whatever reason, he/she
will not persuade, invite, or suggest to any
Client to
11.3.1 terminate
their association with the Broker;
11.3.2
discontinue their transactions or in any way to act contrary to
interests of the Broker or the Client ”
and
"13
Restraint
13.1 For the
purposes of this clause 13, unless the context indicate a contrary
intention:
13.1.1 “area”
means the Republic of South Africa;
13.1.
2
......
13.1.
3
...........
13.1.4
“restraint period
"
means the duration
of this Agreement and a period of 2 (two) years after this Agreement
comes to an end.
13.2
Unless and to the extent otherwise agreed in writing with the Broker,
the Adviser shall not
,
during the
restraint period and in the area, carry on or have any involvement in
or with an entity carrying on a business that competes
with the
business of the Broker Such restraint also includes preventing the
Adviser from making use of or giving personal information
or
particulars of any person referred to the Adviser through any of the
marketing channels in which the Broker operates, notwithstanding
that
consent may have been obtained before termination of this contract.
13.3 The Adviser
agrees that the restraint set out in this clause 13 is reasonable as
to subject matter, geographical area, and
duration, and i required to
protect the proprietary interests of the Broker. ”
[7] The three
respondents, furthermore, entered into Confidentiality and
Non-Disclosure Agreements. The applicant does not rely
on these
agreements in support of the relief claimed and it is not necessary
to consider the contents thereof.
[8] The three
respondents sold medical aid related services to the public. Once
such a service has been rendered, the purchaser
becomes a member of a
specific medical aid and a client of the applicant. Each client so
procured was added to the client list
of a specific advisor. The
relevant medical schemes paid commission to the applicant in respect
of each client.
[9]
At the end of January 2015, the three respondents gave a months’
notice of their intention to resign from the applicant.
During early
February 2015, the three respondents received letters from the
applicant, in terms of which their attention was drawn
to,
inter
alia,
the
restraint of trade clause in their agreements. At that stage, the
first respondent had 926 clients, the second respondent 520
clients
and the third respondent 657 clients.
[10] At the
beginning of March 2015, the three respondents joined the fourth
responded as health care advisors.
[11] On respectively
10 and 11 March 2015, employees of the applicant were contacted by
clients of the first and third respondents.
Both clients indicated
that they had been contacted by the first and third respondents
respectively, in order to change their membership
to the new
brokerage for which the first and third respondents were working. I
pause to mention that these allegations were not
admitted by the
respondents.
[12] On 13 March
2015, letters were sent by the applicant’s attorney to the
three respondents, warning them to cease and desist
from enticing
clients of the applicant to move their business to the fourth
respondent.
[13] On the same
day, Bestmed, one of the medical aid schemes the applicant procured
members for, informed the applicant that approximately
50 of their
members had indicated their intention to move their medical aid cover
from the applicant to the fourth respondent.
[14] The three
respondents do not deny moving clients from the applicant to the
fourth respondent, but allege that these clients
were family members
and friends.
[15] In the
premises, it is clear that the three respondents have breached the
provisions of the restraint of trade clause.
GROUNDS OF
OPPOSITION
[16] The three
respondents oppose the relief claimed by the applicant on the
following grounds:
i) the applicant has
failed to prove that it has a clear right; and:
ii) the restraint
and relief sought is unreasonably wide.
LEGAL FRAMEWORK
[17] It is at this
stage apposite to, first of all, refer to the legal principles
applicable to restraint of trade contracts.
[18]
The principles have been succinctly summarised in
Basson
v Chilwan and Others
1993
(2) SA 742
A at 776H-777B, as follows:
“
........
the
covenseeking to enforce the restraint need do ho more that to invoke
the provisions of the contract and prove the breach; the
covenantor
seeking to avert enforcement is required to prove on a preponderance
of probability that in all the circumstances of
the particular case
it will be unreasonable to enforce the restraint; if the Court is
unable to make up its mind on the point,
the restraint will be
enforced. The covenantor is burdened with the onus because public
policy requires that people should be bound
by their contractual
undertakings. The covenantor is not so bound, however, if the
rerstraint is unreasonable, because public policy
discountenances
unreasonable restrictions on people’s freedom of trade.”
[19]The test for
determining reasonableness has been developed to include the
following enquiries:
i) is there an
interest worthy of protection?
ii) if so, is such
interest being prejudiced?
iii) if so, does the
prejudice justifies the economic inactivity and unproductivity of the
offender;
v) does another
facet of public policy having nothing to do with the relationship
between the parties, requires that the restraint
be either maintained
or rejected? and
vi) does the
restraint go further than Is necessary to protect the interest.
[See:
Basson v Chilwan
and Others,supra
at
767G;
Kwik Kopy
(SA) (Pty) Ltd v Van Heerden and Another
1999(1)
SA 472 W at 484E]
[20]
Customer-connections is deemed a proprietary interest that can be
protected by a restraint of trade agreement. [See:
Sibex
Engineering Services (Pty) Ltd v Van Wyk and Another
1991
(2) SA 482
T at 502 D-F.
[21]
In
Experian SA v
Haynes
2013
(1) SA 135
GSJ at 141 l-J, confidential information worthy of
protection has been defined as follows:
“
For
information to be confidential it must be capable of application in
the trade or industry, that is, it must be useful and not
be public
knowledge and property; known only to a restricted number of people
or a close circle; and be of economic value to the
person seeking to
protect it (see
Towsend
Productions (Pty) Ltd v Leech and Others
2001
(4) SA 33
(C) ([2001]
2 All SA 255)
at 53J-54B;
Mossgass
(Pty) Ltd v Sasol Technology (Pty) Ltd
[1999]
3 All SA 321
(W) at 333f)."
[22]
In view of the aforesaid principles, the three respondents’
opposition to the relief claimed by the applicant will be
examined
infra.
CLEAR RIGHT
[23] The three
respondents contend that the applicant has failed to prove:
i) that it is the
proprietor of the information it seeks to protect;
ii) that the
information qualifies as confidential information;
iii) that such
strong customer-connections exist between the three respondents and
the clients of the applicant that the clients
would follow the three
respondents to the fourth respondent; and
iv) the duration of
the restraint.
Proprietor of
information
[24] In support for
their contention in this regard, the three respondents rely the
Healthcare Adviser Agreements containing the
restraint clause and on
a Commercial Facilitators Agreement between the applicant and
Bestmed.
[25]
Firstly and in respect of the Healthcare Adviser Agreement, the three
respondents refer to clause 11.1
supra
and
more specifically the words “
or
any other lawful ownef
therein.
According to the three respondents, the applicant did not disclose
who the other lawful owner of the information is and/or
what
information of clients belong to such owner.
[26] Secondly, the
three respondents aver that, on a proper construction of clauses 6
and 7.1 of the Commercial Facilitators Agreement,
it appears that
Bestmed is the lawful owner of, at the very least, some of the
information pertaining to the applicant’s
clients.
[27] If one have
regard to the different contractual relationships that exist between
the applicant and Bestmed on the one hand
and the applicant and the
three respondents on the other hand, it is clear that both contracts
endeavour to protect client information
that will, due to the nature
of the services rendered, come to the attention of the party
rendering the services.
[28]
In
Rawlins and
Another v Caravantruck (Pty) Ltd
[1992] ZASCA 204
;
1993
(1) SA 537
A at 541 C-D customer-connections worthy of protection was
described as follows:
“
..
.
the need of an
employer to protect his trade connections arises where the employee
has access to customers and is in a position
to built up a particular
relationship with the customers so that when he leaves the employer’s
service he could easily induce
the customers to follow him to a new
business. ”
[29] For purposes of
the basis on which the applicant claims the relief herein, I am
satisfied that it has the necessary proprietary
interest in the
information it aims to protect.
Confidential
information
[30]
The three respondents rely on clauses 12.2, 12.4 and 12.5
(confidentiality clauses) of the Healthcare Advisor Agreements in
support of their contention that the information the applicant seek
to protect is not confidential. These clauses deal with the
dissemination of information regarding the business of the applicant,
which includes particulars of its clients. The clauses prohibit
disclosure of the information without prior written consent by the
applicant or the client or in some instances the medical scheme.
The
confidentiality clauses apply according to clause 12:
“
For
the duration of this Agreement and afterwards...”
[31] The three
respondents gained knowledge of the details and particulars of the
applicant’s clients through the services
it rendered to the
applicant. The fact that a client of the applicant may give written
consent to the three respondents for his/her
particulars to be made
known to another person/entity, does not distract from the
confidentiality of the information.
Customer-
connections
[32] The applicant
seeks an order interdicting and restraining the three respondents
from contacting, soliciting or continuing to
deal with any of its
clients. The three respondents aver that the applicant has at least
20 000 to 30 000 clients. Prior to the
three respondents’
resignation, they were part of a team of 10 advisors utilised by the
applicant in Gauteng. The applicant
also has advisors in KwaZulu
Natal and the Western Cape.
[33] Due to the
nature of the services rendered by the advisors, each advisor attends
to the clients in his/her portfolio. In the
premises, the three
respondents do not know any of the clients of the other advisors nor
did they build customer connections with
such clients. I agree with
the three respondents that the applicant did not prove that they have
customer-connections with ail
of the applicant’s clients.
[34]
The three respondents, furthermore, aver that they did not form
strong customer- connections with the bulk of the clients in
their
own portfolios. According to the three respondents, contact with
clients were mostly restricted to contact once a year or
if and when
a client has a query. In
Experian
SA v Haynes, supra,
at
142 B, Mbha J held as follows:
“
...it
suffices if it is shown that trade connections through customer
contact exist and that they can be exploited if the former
employee
were employed by a competitor. ”
[35] In the
premises, the applicant has made out a clear right for protection
only in respect of the clients that formed part of
the client
portfolios of the three respondents, respectively.
RESTRAINT AND
RELIEF SOUGHT UNREASONABLY WIDE
[36]
The arguments pertaining to the number of clients discussed
supra
,
is also relied upon by the three respondents in support of this
ground of opposition. I agree with the three respondents that
the
relief claimed is unreasonably wide. That is, however, not the end of
the matter. If it is possible to partially enforce the
agreement
without possible injury to the public and without injustice to the
parties themselves, the court is at liberty to do
so. [See:
National
Chemsearch (SA)(Pty) Ltd v Borrowman and another
1979
(3) SA 1092
T at 1117]
[37] The three
respondents contend further that the duration of the restraint is not
clear and/or unreasonable. Clause 11.3 relied
upon by the applicant
to obtain an order interdicting and prohibiting the three applicants
from contacting, soliciting or continuing
to deal with any of the
applicant’s clients, does not contain a restraint period.
Consequently, so the three respondents
argue, the prohibition is in
perpetuity and extremely unreasonable.
[38]
In clause 13 the restraint period in respect of the activities
mentioned therein, is for a period of two years. Clause 13 does,
however, not refer to the activities mentioned in clause 11.3. In the
premises, the three respondents contend that the relief sought
on the
strength of clause 11.3 cannot be granted by this court. I do not
agree with this argument. As stated
supra
,
a court might order partial enforcement of a restraint clause in
appropriate circumstances.
[39]
Lastly, the three respondents contend that the words
“
or
any related activities”
in
prayer 2.3 is unreasonable for a number of reasons,
inter
alia,
because
the term was not agreed upon by the parties. I agree with the three
respondents and will be mindful of this ground of opposition
in
considering an appropriate order.
RETURN OF
DOCUMENTS
[40] The three
respondents denied that they are in possession of any of the
documents referred to by the applicant in prayer 2.2
of the Notice of
Motion.
[41] The applicant
has failed to provide any detailed information in substantiation of
its assertion that the three respondents
possess these documents. In
the premises, the applicant is not entitled to an order in terms of
prayer 2.2 of the Notice of Motion.
FOURTH RESPONDENT
[42] It is common
cause that the fourth respondent has already benefited from the fact
that the three respondents have persuaded
clients of the applicant to
join the fourth respondent. Notwithstanding the fact that an
undertaking was requested from the fourth
respondent to desist from
taking over clients from the applicant via the efforts of the first
to third respondents, the fourth
respondent has steadfastly refused
to do so.
[43]
Mr Prinsloo, counsel for the applicant, has referred me to various
decisions justifying an interdict prohibiting the fourth
respondent
from persisting in its current course of conduct. In
Coolair
Ventilator Co (SA) Ltd v Liebenberg and Another
1967
(1) SA 686
W at 691 B, the following was stated in respect of such a
type of situation:
“
It
seems to me than an employer is entitled to be protected from unfair
competition
,
as it is called in
American law, brought about by confidential information of his
business having been conveyed to a trade rival
by an employee or
ex-employee. “
[44] I am satisfied
that the applicant is entitled to be protected from the unfair
competition brought about by the disseminating
of its confidential
information to the fourth respondent.
COSTS
[45] The parties
were each successful to such an extent, that I do not deem it fair to
award costs to any of the parties.
ORDER
In the premises, I
make the following order:
1. The First, Second
and Third Respondents shall, for a period 12 (twelve) calendar
months, from date of this order, be interdicted
and restrained from:
1.1.1 Unlawfully
competing with the Applicant by, applying intellectual property of
the Applicant, consisting of the Applicant’s
confidential data
which includes all information, application forms and personal
details of clients belonging to the Applicant
and which clients
formed part of the first, second and third respondents’ client
portfolio whilst rendering services to the
Applicant (“the
clients”), as well as the data base of all information relating
to the clients of the Applicant.
1.1.2 Contacting
and/or soliciting the clients of the Applicant to:
1.1.2.1 Terminate
their association with the Applicant; and/or
1.1.2.2 Discontinue
their transactions with the Applicant; and/or
1.1.2.3 Act contrary
to the interests of the Applicant.
2. The Fourth
Respondents shall, for a period of 12 (twelve) calendar months, from
date of this order, be interdicted and restrained
from unlawfully
competing with the Applicant by, applying intellectual property of
the Applicant, consisting of the Applicant’s
confidential data
which includes all information, application forms and personal
details of the Clients belonging to the Applicant
as well as the data
base of all information relating to the Clients of the Applicant.
JANSE VAN
NIEUWENHUIZEN
JUDGE
OF THE HIGH COURT OF SOUTH AFRICA
GAUTENG
DIVISION, PRETORIA