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[2015] ZAKZDHC 53
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Eagleburgmann Seals SA (Pty) Ltd v Naidoo (11211/14) [2015] ZAKZDHC 53 (22 June 2015)
SAFLII
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Certain
personal/private details of parties or witnesses have been
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IN
HIGH COURT OF SOUTH AFRICA
KWAZULU-NATAL
LOCAL DIVISION, DURBAN
CASE
NO: 11211/14
DATE:
22 JUNE 2015
EAGLEBURGMANN
SEALS SA (PTY)
LTD
...................................................
APPLICANT
[Registration
No. 2003/015783/07]
And
NAIDOO,
MARK
..............................................................................................
RESPONDENT
[ID
No, 7…………….]
JUDGEMENT
MBATHA
J
[1]
On the 30
th
of April 2015, I made the following order:
(a)
The Respondent is
interdicted and restrained until 31 August 2015 in the Province of
KwaZulu-Natal from:-
i)
divulging or disclosing
to any person (private or legal) or making use of or availing himself
or deriving a profit from the Applicant’s
name, business
strategy or business image, whether for the Respondent’s own
benefit or that of others or any other information
or knowledge
relating to the business or finances or affairs or trade secrets or
trade connections or marketing techniques or sales
philosophies of
the Applicant which may have come to the Respondent’s knowledge
during his employment with the Applicant,
unless he is required to do
so by the directors of the Applicant or a valid court order;
ii)
soliciting or
endeavouring to solicit, interfere with, or endeavouring to interfere
with, enticing or endeavouring to entice, away
from the Applicant,
any person who was a customer of the Applicant who was accustomed to
dealing with the Applicant;
(b)
The Respondent is
interdicted and restrained until 31 August 2015 in the Magisterial
Districts of Durban, Pietermaritzburg, Port
Shepstone, Pinetown,
Reunion, Pinelands, New Germany, Mobeni, Westmead, Hammarsdale,
Meadowdale, Chatsworth, Queensburgh, Merebank,
La Lucia Ridge,
Canelands, Phoenix, Umbogintwini, Marburg, Cato Ridge, Isipingo,
Willowton, Jacobs, Ixopo, Mayville, Serena, West
Beach, Mount
Edgecomb, Albertsville, Glen Anil, Verulam, Cascades, Chatsworth and
Congella. from:
i)
carrying on any
business carried on by the Applicant;
ii)
being in any way
employed in such business;
iii)
being in any way
interested or engaged in, or associated or concerned with such
business, whether as principal, shareholders, director,
agent or
otherwise;
iv)
being in any way
associated with or engaged in or interested in or concern himself in
financing or guaranteeing the obligations
of such business;
(c)
The Respondent is to
pay the costs of this application, including the costs which were
reserved on 10 October 2014.
I
indicated that my reasons will follow.
[2]
The Applicant in this case is Eagleburgmann Seals SA (PTY) LTD. The
Respondent is Mark Naidoo of Motala Heights, Naidoo Road,
Durban.
[3]
The Applicant sought an order to enforce a restraint of trade
agreement with the Respondent for a period of twelve (12) months.
This application was initially brought on an urgent basis on the 25
th
of September 2014. A consent order was granted on the 10
th
of October 2014 to the effect that the application was adjourned sine
die, the applicant to file its Replying affidavit within
ten (10)
working days of the date of the order and that pending the
finalisation of the application, the Respondent undertook not
to
carry any business in any capacity whatsoever, as principal,
shareholder, director, agent, employee, or otherwise, carried on
by
the Applicant with any of the Applicant’s clients who were
serviced or dealt with by the Respondent at any time during
his
employment with the Applicant, and the costs were reserved.
[4]
The Respondent was employed by Applicant as a technical sales
representative of the Applicant in its Durban branch with effect
from
the 1
st
of June 2007. Prior to that he was employed in the same company
as from the 4
th
of April 1996 as a reconditioning assistant. The Applicant is
in a business of reconditioning, refurbishing, manufacturing,
servicing and supplying of mechanical seals and other related
products.
4.1
The Respondent was responsible for the servicing of 51 customers
throughout KwaZulu-Natal. In dealing with these clients,
he
developed intimate knowledge of the Applicants’ products and
clients’ base. The Respondent according to the
Applicant
was their highest performing sales representative in Durban and
responsible for a huge turnover. This is not disputed
by the
Respondent. The Respondent was the face of the Applicant,
servicing a total of 51 customers throughout KwaZulu-Natal.
The
Respondent had access to the Applicants’ customer base,
listings, product range and maintenance practices.
4.2
The breach of the employment contract occurred when the Applicant
received invoices with the reference “Mark Naidoo”.
It then transpired that the Respondent was purchasing directly from
SA Mechanical in his personal capacity. This was confirmed
by
invoices found on the Respondent’s computer, with confirmed
orders from the Applicant’s clients which had nothing
to do
with the Applicant. This resulted in the dropping of the sales
with one of their major clients, Dyefin. Investigations
led to
the discovery that Dyefin was now supplied by ACT General
Maintenance, the main contact person being Mark Naidoo cell 082………..,
address being 22A Trotler Road, Westmeds”. This major breach of
contract led to the disciplinary hearing of the Respondent,
which
resulted in his immediate dismissal on the 27
th
of August 2014. He was also advised in writing after his
dismissal not to breach the terms thereof, but deliberately breached
such terms on the basis that he has to earn a living.
4.3
To prove further that he was acting in competition with the
Applicant, the following evidence come afore. Subsequently,
after his dismissal a call was received from Global Armature Winders
on his business mobile phone regarding the seals. The
seals
were later on collected from a Malcolm Naidoo and not from the
Applicant. Global Armature had been one of the Applicants’
clients. This was a confirmation that the Respondent was
breaching his restraint of trade agreement with the Applicant.
4.4
The Respondent also supplied Global Armature with seals which were
never reflected in the Applicant’s books. He
supplied
them with seals from MS Mechanical, a competitor to the Applicant.
The Respondent continued to conduct business
with the Applicant’s
clients after his dismissal in breach of the Restraint of Trade
agreement with the Applicant.
[5]
The Respondent has tried to rebut the allegations in the Applicant’s
affidavit, however, the Applicant has provided proof
by way of emails
and telephone calls, indicating that indeed the Respondent was
selling a competitor’s product, to its clients,
in competition
against the Applicant.
5.1
The Respondent disputed that the agreement was of any legal force by
averring that it’s a forgery, he was forced to sign
the
agreement and that he did not sign the last page, therefore, it was
of no force and effect. This is a contradiction in
terms as on
the other hand he denies signing it, at the same time alleges that he
did not sign the last page. He also admits signing
it, but says that
it was under duress. These things cannot exist side by side.
To rebut the defence of forgery and
duress, the Applicant has also
shown that he had previously signed an identical document in January
2007. In the light therefore,
I can accept that the Respondent
was
au fait
with the terms of the restraint of trade agreement, that there could
not have been any forgery of his signature or lack of knowledge
of
the terms of the agreement.
[6]
I am of the view that there was a binding contract between the
parties. In terms of the judgment in
Greendale
Hardware and Electrical (PTY)
LTD v Bangaba
[1]
a restraint of trade is an obligation voluntarily undertaken by an
employee to refrain from the exercise of freedom of trade in
favour
of the employer in the exercise of freedom of contract.
Basically, a restraint of trade agreement is legally binding
and
therefore enforceable, unless there is a valid legal reason for not
doing so, for instance, if it is against public policy
or
unreasonable.
Magna
Alloys and Research (SA)
(PTY) LTD v
Ellis
[2]
.
For
a restraint of trade to be valid, it must also relate to the
protectable interest on the part of the employer. Therefore,
it
is vital that the employer identifies precisely the interest it seeks
to protect. The interest that the Applicant sought
to protect
was clearly set out in the contract being the protection of its trade
connections where, if competition were allowed,
the employee would
take advantage of the employer’s customer’s connections.
These included trade secrets, confidential
information, and
customer’s goodwill or trade connection. There has been
no confusion with the use by the Respondent’s
own expertise,
know-how, skill and experience. It is not in dispute that the
Respondent was a highly skilled employee
of the Applicant.
[7]
On the date of the hearing of this matter, the Respondent had not
filed any heads of argument. He appeared in person,
addressed
the Court only on the basis that he needed to earn a living, he was
exploited by his ex-employer and that the restraint
was prejudicial
to him. I have also considered the reasonableness of the
restraint, the period of restraint, duress, and
the interests of the
individual versus the interests of the company. In that regard, I
have considered the various types of information
that could be
considered confidential.
In
Meter Systems
Holdings Ltd v Venter and Another
[3]
it was held that though there is
numerus
clausus
as to the
type of information that could be considered confidential, our courts
have recognised certain categories of information
as confidential.
These include:
(a)
Information received by
an employee about business opportunities available to an employer,
even if such information can be obtained
from another source.
(b)
Information relating to
proposals or,
inter
alia
, the marketing
of a new product.
(c)
Information relating to
the price at which one person has tendered competitively to do work
for another is confidential in the hands
of those who stand in a
fiduciary relationship.
[8]
I find that the information in possession of the Respondent was
confidential, as it is applicable in the business of the Applicant.
(a)
It was not public
knowledge or property, as it was known only to a restricted number or
closed circle of people; and
(b)
It was of economic
value to the Applicant who was seeking an order to protect it.
See
Aranda
Textile Mills (PTY) LTD v Hurn and Another
[4]
.
The
Applicant has shown that the Respondent has personal knowledge of,
and influence over its customers and suppliers which has
enabled him,
to take advantage of his former employer’s trade connections.
The relationship with the Applicant’s
customers put him in a
position to build up a particular relationship with the customers,
which he easily used to induce the customers
to follow him wherever
he went to. In that case, the Business of the Applicant needs
to be protected.
[9]
I have weighed the interests of the employee to be gainfully employed
against the interests of the employer. The Respondent
is only
restricted to specific areas and he could easily be employed anywhere
in the KwaZulu-Natal province, save for the places
mentioned in the
order and at any other place in South Africa.
[10]
Accordingly, for these reasons I gave the order dated 30
th
of April 2015.
MBATHA
J
Appearances
Date
of hearing: 30 April 2015
Date
for reasons for judgment: 22 June 2015
For
the Applicant: Advocate A.G. South SC
Instructed
by: Adams and Adams
Durban
For
the Respondents: Mr Mark Naidoo (in person)
[1]
(2008) JOL 21460 (ZS).
[2]
1984 (4) SA 874 (A).
[3]
1993 (1) SA 409 (W).
[4]
[2000] 4 All SA183.