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[2013] ZAGPPHC 54
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Baraka Enterprise Consulting (Pty) Ltd v Reddy and Others (4046/2013) [2013] ZAGPPHC 54 (15 February 2013)
NOT
REPORTABLE
IN
THE HIGH COURT OF SOUTH AFRICA
(NORTH
GAUTENG HIGH COURT)
Case
number: 4046/2013
Date:15
February 2013
In
the matter between:
BARAKA
ENTERPRISE CONSULTING (PTY)
LTD
............................................
Applicant
And
KRISHNA
REDDY
....................................................................................................
1st
Respondent
KIRAN
KAKOLU
.......................................................................................................
2nd
Respondent
PRASAD
MADASU
…............................................................................................
3rd
Respondent
JUDGMENT
PRETORIUS
J.
[1]
In this urgent application the applicant seeks to enforce restraint
of trade provisions whereby the respondents are interdicted
and
restrained from competing with the applicant in its direct customer
base to deliver the same services as the applicant for
a period of 6
months after termination of their engagement with the applicant.
[2]
The applicant is an information and technology professional services
company. It concluded a contract with the City of Tshwane
Municipality to provide support services for the SAP system as set
out in the SAP Support agreement. This contract terminated on
31
December 2012.
[3]
During January and March 2010 the applicant contracted the
respondents as independent contractors, based at the City of Tshwane.
The first respondent was appointed as a SAP consultant and the second
and third respondents were appointed as FICA consultants
by the
applicant to work at the City of Tshwane as such.
[4]
According to their appointment letters they were required to render
services at the City of Tshwane. Clause 5 of the appointment
letters
provided:
“
5.1
It is recorded that during your engagement with the Company, you will
become intimately concerned with the business of the Company
or any
other business carried on by the Company, from time to time, and by
virtue of such involvement you will have access to the
trade secrets,
marketing methods, customer lists, customer know-how of the Company
which the Company is entitled to protect. You
will therefore
undertake that you shall not during your engagement with the Company
and for a period of 6 (six) months after the
termination of your
engagement for any reason whatsoever whether directly or indirectly;
5.1.1
Persuade, induce, encourage or procure any employee of the Company,
to become employed by or interested in any manner whatever
in any
field of activity that competes with the company;
5.1.2
Compete with the company in its direct customer base to deliver the
same services as the company. ”
[5]
The City of Tshwane did not renew the agreement after 31 December
2012. The respondents did not return to work at the applicants
in
January 2013. It is common cause that they are employed by EOH, a
company which presently renders SAP support systems services
to the
City of Tshwane. Accordingly the applicants argues that the
respondents are in breach of the restraint clause, as they are
doing
the same work they did whilst contracted by the applicant.
[6]
The respondents deny breaching the restraint of trade. The
respondents allege that the applicant has no protectable interests
at
all, and no order should be granted.
[7]
At the outset, Mr Maloka, for the applicant, indicated that the
applicant abandons prayer 3 of the notice of motion and I will
not
deal with it.
[8]
In Basson v Chilwan and Other
[1993] ZASCA 61
;
1993 (3) SA 742
(A) it was set out by
Nienaber
JA at p 767 G - H:
“
(a)
Is daar 'n belang van die een party wat na afloop van die G
ooreenkoms beskerming verdien?
(b)
Word so 'n belang deur die ander party in gedrang gebring?
(c)
Indien wel, weeg sodanige belang kwalitatief en kwantitatief op teen
die belang van die ander party dat hy ekonomies nie onaktief
en
onproduktief moet wees nie?
(d)
Is daar 'n ander faset van openbare belang wat met die verhouding
tussen die partye niks te make het nie maar wat verg dat die
beperking gehandhaaf moet word, al dan nie? (Laasgenoemde vraag kom
nie hier ter sprake nie.) ”
These
are the questions that must be considered in the present application.
[9]
The respondents argue that the court has to apply the findings of the
Appellate Divisions in the Basson case (supra) where Botha
JA held at
778 C-D:
“
In
essence, the Chilwans are seeking to prevent Basson from using his
skill and experience, and his innate or acquired abilities,
to the
potential detriment of their
investment
In this respect the case bears no resemblance to the case of the
seller and buyer of a business. On the contrary, it
approximates
closely to the case of an employer and employee relationship in one
respect. In relation to such cases it has often
been said in the
authorities that a man's skills and abilities are a part of himself
and that he cannot ordinarily be precluded
from making use of them by
a contract in restraint of trade.” (court’s emphasis)
[10]
The applicant does not set out at all on which facts the applicant
relies in connection with the knowledge of the respondents.
It would
be incorrect to interpret the restraint of trade that the respondents
are prohibited for a period of six months from competing
with the
applicant by not seeking employment with any other competitor and/or
any clients of the applicant. This will cause the
respondents not to
apply their trade for the duration of the restraint and they will be
prevented to use their skills and abilities,
which are part of
themselves. These facts correspond to a great extent with the facts
which had to be decided in the Basson case(supra).
[11]
The allegations the applicant relies on is set out as:
“
1.
Proprietary information of a special nature;
2.
contracts and the skills and experience obtained represent commercial
and competitive value for the applicant;
3.
this competitive edge;
4.
critical information. ”
[12]
No particulars are added so that the court can find on what basis the
applicant is bringing the application and on which secret
facts or
knowledge by the respondent’s does the applicant rely.
[13]
The applicant sets out in the replying affidavit that the protectable
interest is:
“
1.
Prior exposure to the City’s SAP system;
2.
were exposed to the applicant’s working methods at the City;
3.
...the unique skills set that is possessed by its consultants, the
respondents;
4.
using the same skill set they acquired by virtue of their engagement
by the applicant;
5.
obtained skills and experiences related to the City’s SAP
system. ”
[14]
This contains no particulars of what the applicant wishes to protect.
The fact that the respondents gained more experience
and a SAP
certification in respect of certain modules, does not constitute a
protectable interest.
[15]
The court accepts the evidence of the respondents that none of them
gained any knowledge of the manner in which the applicant
conducted
its business. They are not involved in the management of the
applicant, but were mere employees who did the work as required
by
the applicant. They only rendered standard SAP services and not
specialised services.
[16]
If regard is had to the restraint provision it is clear that it only
prohibits competition. There is no mention that the respondents
are
not entitled to work for a company which is competition for the
applicant.
[17]
In Reddy v Siemens Telecommunications (Pty) Ltd
2007 (2) SA 486
(SCA)
Malan AJA found in paragraphs15 and 16:
"The
second is that all persons should in the interests of society be
productive and be permitted to engage in trade and commerce
or the
professions. Both considerations reflect not only common-law but also
constitutional values. Contractual autonomy is part
of freedom
informing the constitutional value of dignity, and it is by entering
into contracts that an individual takes part in
economic life. In
this sense, freedom to contract is an integral part of the
fundamental right referred to in s 22.”
and:
Where
the interest of the party sought to be restrained weighs more than
the interest to be protected, the restraint is unreasonable
and
consequently unenforceable. The
enquiry
which is undertaken at the time of enforcement covers a wide field
and includes the nature, extent and duration of the restraint
and
factors peculiar to the parties and their respective bargaining
powers and interests, ’’(court’s emphasis).
[18]
The four considerations to determine whether the restraint of trade
is reasonable must be considered by the court. This court
cannot find
that there is an interest that should be protected after the
agreement with the applicant had been terminated. The
applicant has
no interest that will be prejudiced as no details of the interest of
the applicant is set out by the applicant in
the founding affidavit.
Public policy does not dictate that the restraint should be enforced,
as there is nothing else in the terminated
relationship between the
parties that should be protected.
[19]
The court has considered all the arguments, heads of argument and
pleadings carefully. I cannot find that there is any basis
to
interdict and restrain the respondents as requested by the applicant.
[20]
The application is dismissed with costs.
Judge
Pretorius
Case
number : 3209/2013
Heard
on : 13 February 2013
For
the Applicant / Plaintiff: Adv Makola
Instructed
by : Ramushu Mashile
For
the Respondents : Adv Hollander
Instructed
by : Botoulas Krause & Da Silva INC
Date
of Judgment : 15 February 2013