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[2015] ZAGPPHC 178
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Curemed CC T/A Curemed Healthcare Consultants v Onselen and Others (21838/2015) [2015] ZAGPPHC 178 (13 April 2015)
IN THE HIGH COURT OF
SOUTH AFRICA
(GAUTENG DIVISION,
PRETORIA)
CASE NUMBER: 21838/2015
DATE: 13 APRIL 2015
In the matter between:
CUREMED
CC
.........................................................................................................................
Applicant
Trading as Curemed Healthcare
Consultants
And
VICKY VAN
ONSELEN
..............................................................................................
First
Respondent
MARIETHA
CIAMPI
..............................................................................................
Second
Respondent
HESTER DU
PREEZ
.................................................................................................
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 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: Tor 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
JUQQE OF THE HIGH COURT OF SOUTH
AFRICA
GAUTENG DIVISION, PRETORIA