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[2013] ZAGPPHC 165
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SG Convenience ( A Division of Super Group Trading (Pty) Ltd) v De Sousa and Another (60238/12) [2013] ZAGPPHC 165 (12 June 2013)
NOT
REPORTABLE
IN
THE HIGH COURT OF SOUTH AFRICA (NORTH GAUTENG, PRETORIA)
Case
no: 60238/12
DATE:12/06/2013
In
the matter between:
SG
CONVENIENCE (A DIVISION
OF
..........................................................................
APPLICANT
SUPER
GROUP TRADING (PTY) LTD)
and
JORGE
PAULO DE
SOUSA
.......................................................................
FIRST
RESPONDENT
NAMIB
DISTRIBUTORS CC
….............................................................
SECOND
RESPONDENT
JUDGEMENT
[1]
On 18 October 2012 Applicant launched an urgent application against
First and Second Respondents for a temporary interdict pending
the
adjudication of Applicant's application for a final interdict,
founded on a restraint of trade and confidentiality agreement
allegedly entered into between Applicant and First Respondent.
[2]
On behalf of Applicant appeared Mr C Whitcutt SC and Ms D Wood and on
behalf of First Respondent appeared Ms L Erasmus, with
no appearance
on behalf of Second Respondent against whom no relief was claimed.
[3]
The matter was enrolled in the urgent Court for 6 November 2012 and
on 9 November 2012 the application for interim relief was
dismissed,
each party to pay its own costs.
[4]
Thereafter Applicant proceeded to have the application enrolled to be
adjudicated in order to obtain final interdictory relief
against
First and Second Respondents.
[5]
Having regard to the content of First Respondent's answering
affidavit it clearly emerged that a real factual dispute existed
regarding the question whether a restraint of trade and
confidentiality agreement existed between Applicant and First
Respondent
and, secondly, whether Applicant had acquired a
protectable proprietary interest such as to render the enforcement of
the restraint
of trade reasonable.
[6]
Prior to the matter proceeding to Court the parties by agreement
prepared a draft order which was made an order of Court. In
terms
thereof the following order was handed down:
"1
The determination of the relief sought in Part B of the Applicant's
notice of motion dated 18 October 2012 is referred for
the hearing of
oral evidence, on 25 March 2013 for a determination of
1.1
whether the first respondent entered into a restraint of trade
undertaking with the applicant;
1.2
if so, whether the applicant has a protectable interest such as to
render the enforcement of the restraint of trade reasonable.
2
The evidence shall be that of any witness whom the parties or either
of them elect to call, subject, however; to what is provided
in para
3 hereof;
3
Save in the case of Mr Jerome and Mr De Sousa, neither party shall be
entitled to call any witness unless:
2.1
it has served on the other party at least 14 days before the date
appointed for the hearing a statement wherein the evidence
to be
given in chief by such person is set out;
2.2
the Court, at the hearing, permits such person to be called despite
the fact that no such statement has been so served in respect
of his
or her evidence.
3.
Either party may subpoena any person to give evidence at the hearing,
whether such person has consented to furnish a statement
or not.
4.
The fact that a party has served a statement in terms of para 3
hereofor has subpoenaed a witness, shall not oblige such party
to
call the witness concerned.
5.
Within 15 days of the making of this order, each party shall make
discovery on oath of all documents relating to the issues referred
under para 1 hereof’ which are or have at any time been in the
possession or under the control of such party. Such discovery
shall
be made in accordance with Rule 35 of the Uniform Rules of Court and
the provisions of the Rule with regard to the inspection
and
production of documents discovered shall be operative.
7.
To the extent necessary a pre-trial conference will be held after the
exchange of witness statements and discovery but in any
event not
less than two weeks prior to the hearing of the matter.
8.
The incidence of costs incurred to date shall be determined at the
hearing of oral evidence,
[7]
Suffice it to point out that no pre-trial conference was held as
ordered.
[8]
On 25 March 2013 the matter was set down for the hearing of oral
evidence in order to determine and adjudicate the issues referred
for
the hearing of oral evidence in order to determine whether the relief
sought by Applicant in Part B of its Notice of Motion
should be
granted or refused.
[9]
The Applicant, SG Convenience, being a division of Super Group
Trading (PTY) Ltd is involved in the retail and distribution
business
supplying fast moving consumer goods such as beverages, confectionary
and grocery items directly to customers in various
sectors of the
market, including, but not limited to forecourts and the petroleum
retail sector, small and medium businesses. The
Applicant operates
its business throughout South Africa and currently has approximately
eighteen thousand customers on its books.
In order to obtain business
the Applicant relies almost exclusively on its sales representatives
to manage and promote its business
relationship with its customers,
of whom a certain number is allocated to each sales representative to
service, and depending on
the customers' needs, the customers are
visited by sales representatives on a weekly to fortnightly basis,
who then meets with
the customers and manages all aspects of the
customers' orders. The key to the success of Applicant's business is
the emphasis
placed by the Applicant on its customer relationships
developed by the sales representatives attending to a dedicated
number of
customers with whom they build long standing relationships
in order to understand and anticipate the needs of each of the
customers.
Consequently service delivery and customer relationships
are of paramount importance to the Applicant.
[10]
The Second Respondent is also involved in the retail and distribution
business providing products directly to customers in
various sectors
of the market in direct competition with the Applicant. The business
within which the Applicant and the Second
Respondent operate is
extremely competitive, which competitiveness is exacerbated by the
fact that customers do not enter into
any direct purchasing
arrangements with retail distributors such as the Applicant and
Second Respondent. Accordingly, there is
no guarantee of a continued
support by a customer, nor is there an obligation on such a customer
to purchase from only one provider,
albeit the Applicant or Second
Respondent.
[11]
The aforesaid summation was common cause between the parties as well
as the fact that First Respondent, had prior to his employment
with
the Applicant, been employed by the Second Respondent, who at that
time was trading as Palm Tree CC, for a period of approximately
twenty two years. Furthermore it was common cause that First
Respondent had been head hunted by Roy Pienaar, commencing in
December
2007, in order to join his company, R & P Marketing,
which was then a division of Super Group Trading (PTY) Ltd, which was
subsequently changed to SG Convenience.
[12]
The crux of the dispute is founded therein that the Applicant alleges
that First Respondent, when he took up his employment
with the
Applicant during late February or early March 2008, had entered into
a restraint of trade and confidentiality agreement
with the
Applicant, duly signed by both parties. First Respondent emphatically
and vociferously denied this fact. To exacerbate
the situation the
Applicant was unable to produce the original written restraint of
trade and confidentiality agreement signed
by First Respondent or a
copy thereof, whilst First Respondent is emphatic in his denial that
he had not signed a restraint of
trade and confidentiality agreement,
contending that he had deleted the clauses dealing with the restraint
of trade and confidentiality
prior to signing his contract of
employment. In order to overcome the hurdle with which the Applicant
was faced, several requests
were directed at First Respondent to once
more sign a contract of employment containing a restraint of trade
and confidentiality
clause, which First Respondent obstinately
refused to accede to.
[13]
Having regard to the issues referred for the hearing of oral
evidence, it is clear that should the Applicant fail to prove
on a
balance of probabilities that First Respondent had entered into a
restraint of trade and confidentiality agreement with the
Applicant,
that would be the end of the matter, cadit quaestio, with no need for
the second issue referred for the hearing of oral
evidence to be
determined.
[14]
Having regard to the fact that the Applicant's case is founded on a
restraint of trade and confidentiality agreement, I deem
it apposite
to refer to the incidence of the burden of proof as expounded in
Basson v Chilwan & Others 1993(3) SA 742 (AD)
at 7761 - 777A
'The
incidence of the onus in a case concerning the enforceability of a
contractual provision in restraint of trade does not appear
to me in
principle to entail any greater or more significant consequences than
in any other civil case in general. The effect of
it in practical
terms is this: the covenantee seeking to enforce the restraint need
do no more than 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 restraint is
unreasonable, because public policy discountenances unreasonable
restrictions on people's freedom of trade.'
[15]
The aforesaid exposition is trite law and has been followed and
applied in preceding and numerous subsequent decisions. See
Magna
Alloys and Research (SA) (PTY) Ltd v Ellis 1984(4) SA 863 (AD), Sibex
Engineering Services (PTY) Ltd v Van Wyk & Another
1991(2) SA
482(T) at 4861 - 488D, Aranda Textile Mills (PTY) Ltd v Hurn &
Another [2000J4 B ALL SA 183(E) at 192f, Townsend
& Productions
(PTY) Ltd v Leech & Others 2001(4) SA 33 (CPD), Reddy v Siemens
Telecommunications (PTY) Ltd 2007(2) SA 486
(SCA).
[16]
In the present matter it is clear that the aforesaid legal principle
will only become applicable once the Applicant has proved
on a
preponderance of probabilities that the First Respondent had entered
into a restraint of trade and confidentiality agreement
with the
Applicant.
[17]
The crux of the dispute is founded thereon that the Applicant alleges
that First Respondent had entered into a restraint of
trade and
confidentiality agreement with the Applicant, signed by both parties,
which First Respondent emphatically denies. To
exacerbate the
situation Applicant has been unable to produce the signed restraint
of trade and confidentiality agreement or a
copy thereof, whilst
First Respondent is emphatic in his denial adamantly confirming that
he had deleted the clauses pertaining
to the restraint of trade and
confidentiality in the contract of employment he had signed.
[18]
The Applicant called three witnesses, to wit Anthony Reznik, the
chief executive officer of the Applicant, John William Gordon
Jerome,
the general manager of Applicant and Danie Botes, Applicant's sales
manager for the past three years to substantiate and
prove the issue
in dispute.
[19]
From the evidence presented by the Applicant it appears that the
witness Reznik was aware of the fact that First Respondent
was being
head hunted by Roy Francois Pienaar, at the time employed by the
Applicant as sales manager, to take up employment with
the Applicant,
although it was clear that Reznik was not personally involved during
the negotiations that ultimately culminated
in First Respondent
taking up employment with the Applicant, except insofar as he
approved the sign up fee of R250 000.00 paid
to First Respondent.
[20]
According to the evidence of Jerome, presently a general manager of
the Applicant, but at the time First Respondent was head
hunted by
Pienaar, Pienaar's assistant, he was present and involved in the
negotiations Pienaar conducted with First Respondent
which culminated
in First Respondent taking up employment with the Applicant. In this
regard Jerome was the only witness presented
by the Applicant, and
therefore a single witness to whom a cautionary rule applies, who was
called to testify and confirm that
First Respondent had indeed signed
a contract of employment with First Respondent without deleting the
restraint of trade and confidentiality
clauses, and consequently
being bound thereby. See Woji v Sandton Insurance Ltd 1980(2) SA 971
(SE).
[21]
The third witness, Botes, presently the sales manager, and at the
time when First Respondent was head hunted, an appointed
sales
representative, had not been privy to the negotiations between
Pienaar and First Respondent and was therefore not able to
provide
any assistance in this regard except to reiterate that all sales
representatives were required to sign restraint of trade
and
confidentiality agreements with the Applicant.
[22]
This concluded the evidence presented by the Applicant in support of
its contention that First Respondent had bound himself
in terms of a
restraint of trade and confidentiality agreement when he had signed
his original contract of employment with the
Applicant.
[23]
Thereafter First Respondent proceeded to present his case in support
of his denial that he had accepted a restraint of trade
and
confidentiality agreement contained in his contract of employment
with the Applicant.
[24]
First Respondent elected to testify and emphatically denied that he
had entered into a restraint of trade and confidentiality
agreement
with the Applicant contained in the contract of employment which he
had signed. He confirmed that he had been head hunted
by Pienaar to
terminate his employment with Second Respondent and to commence
employment with the Applicant. According to his evidence
the head
hunting and the subsequent negotiations commenced during December
2007, and although presented with a contract of employment,
he
refused to accept the restraint of trade and confidentiality clauses
and refused to sign a contract of employment with the Applicant.
Subsequent thereto during January 2008 the negotiations were
continued with and after being offered an inducement of R250 000.00,
which had to be refunded to the Applicant should First Respondent
terminate his employment with the Applicant within two years,
First
Respondent agreed to terminate his employment with Second Respondent,
and proceeded to commence employment with the Applicant,
subject
thereto that First Respondent refused to be bound by the restraint of
trade and confidentiality clauses contained in the
contract of
employment, which he deleted and was initialled by himself and
Pienaar. After signature of the original contract of
employment First
Respondent neglected to obtain a signed copy thereof and continuously
prior to his resignation endeavoured to
obtain a copy of his signed
contract of employment without success. Prior to his resignation
First Respondent was arraigned before
a disciplinary enquiry for
allegedly having 'moonlighted', for which he was subsequently
acquitted. Contained in the bundle of
documents regarding the
disciplinary enquiry was a letter in terms whereof First Respondent
was informed that should he not provide
the Applicant with a new
signed contract of employment containing the restraint of trade and
confidentiality clauses, it would
be presumed that he had accepted
same and agreed to be bound thereby. First Respondent denied having
seen this letter or having
had any knowledge of it.
[25]
The next witness called by First Respondent in support of his denial
that he had signed a contract of employment with the Applicant
containing the restraint of trade and confidentiality clauses was Roy
Francois Pienaar. Suffice it to state that Pienaar confirmed
and
corroborated the evidence of First Respondent, and emphatically
denied that Jerome had been present during his negotiations
with
First Respondent, and that Jerome had been present and witnessed
First Respondent signing the original contract of employment
without
having deleted the restraint of trade and confidentiality clauses.
[26]
No further evidence was presented by First Respondent to substantiate
and corroborate his version.
[27]
Counsel for the Applicant handed in written heads of argument for the
assistance of the Court, for which the Court extends
its gratitude,
besides addressing the Court on the merits of Applicant's case,
whilst First Respondent's counsel deemed it meet
to merely address
the Court.
[28]
Having heard the evidence presented by the Applicant and First
Respondent the Court was faced with two mutually destructive
versions
compelling the Court to be satisfied upon adequate grounds that the
Applicant upon whom the onus rests version is true
and the other
false, keeping in mind that this was an application serving before
Court and not an action. See Koster Ko-operatiewe
Landboumaatskappy
Bpk v Suid Afrikaanse Spoorwee en Hawens 1974(4) SA 420 (W) at 426-7,
African Eagle Life Assurance Co Ltd v Cainer
1980(2) SA 234 (W),
National Employers' General Insurance v Jagers 1984(4) SA 437
(ECD) at 440B.
[29]
As indicated hereinbefore the evidence of Botes did not assist in
determining whether First Respondent had deleted the restraint
of
trade and confidentiality clauses of the contract of employment he
had originally signed or not. Insofar as the Applicant relied
on
Botes' evidence as circumstantial evidence in an attempt to refute
any evidence presented by First Respondent, the Court is
not
satisfied that such circumstantial reliance is justified. When
reliance is placed on circumstantial evidence, the inference
sought
to be drawn must be acceptable and credible in the light of the
proved facts as to the existence of a fact in issue. See
AA
Onderlinge Assuransie Assosieasie Bpk v De Beer 1982(2) SA 603 (AD),
Macu v Du Toit 1983(4) SA 629 (AD), Motor Vehicle Assurance
Fund v
Dubuzane 1984(1) SA 700 (AD).
[30]
From the evidence presented by the Applicant it is clear that the
only witness who alleges that he was intimately involved
and present
when the contract of employment was entered into between the
Applicant and First Respondent without the restraint of
trade and
confidentiality clauses being deleted, was Jerome, who as the Court
has already indicated, was a single witness.
[31]
As indicated hereinbefore, Jerome is to be regarded as a single
witness whose evidence is subject to a cautionary rule. In
order to
decide whether the cautionary rule applicable to a single witness has
been satisfied, the merits and demerits of Jerome's
evidence has to
be weighted against the totality of the evidence presented, and
should the Court find that the applicable cautionary
rule has not
been satisfied, no reliance can be placed on Jerome's evidence to
justify rejecting the direct evidence presented
by First Respondent.
Considering the aforesaid principle and applying the cautionary rule
the Court is of the opinion that Jerome's
evidence contains serious
discrepancies and materially contradicts the evidence of Reznik.
[32]
Although Reznik was not intimately involved in the negotiations
between Pienaar and First Respondent whilst First Respondent
was
being head hunted, he had knowledge of the fact that First Respondent
had been presented with a contract of employment during
December 2007
which he had rejected. Thereanent Jerome was adamant, although being
Pienaar's assistant, and intimately involved
with the negotiations
with First Respondent that he had no knowledge of prior negotiations.
A further fact militating against the
credibility of Jerome was the
fact that at each occasion that a letter or document was presented to
First Respondent, for example
when his commission rates were changed,
although First Respondent refused to accept same, he was required to
sign such document
confirming his refusal, which was then co-signed
by a witness who was present during the interview. This consistent
conduct was
also confirmed and corroborated by Botes.
[33]
Significantly this procedure and conduct was not followed when the
document, annexure "B" to the Applicant's founding
affidavit, was allegedly handed to First Respondent, wherein it was
stated, and I quote:
"We
therefore request that you return a signed copy of the agreement by
no later than close of business Friday 5 November 2010,
failure to do
so would leave us with no other option but to accept that you are in
agreement with the terms and conditions set
out in the document and
that you will abide."
[34]
The copy of the agreement referred to in the said letter, it is
common cause, refers to a contract of employment containing
the
restraint of trade and confidentiality clauses which First Respondent
refused to accept and sign. Although Botes confirms that
he was
present when this document was handed to First Respondent it is
significant that he failed to sign and confirm that he had
witnessed
same. No plausible and acceptable explanation for this conduct was
presented. Besides the aforesaid, Jerome initially
intimated that
this document was specifically handed to First Respondent, which
First Respondent denied having received, and when
Jerome was
presented with the fact during cross- examination that there was no
confirmation that First Respondent had received
the said letter,
Jerome attempted to circumvent this problem by alleging that it had
formed part and parcel of the documents handed
to First Respondent
comprising the documents for his disciplinary enquiry. This the Court
finds surprising and improbable. Having
regard to the demeanour of
Jerome as a witness the Court was not impressed. More than once
Jerome was cautioned by the Court to
answer the questions in cross-
examination, not to be argumentative, nor to respond to a question by
means of a counter question.
Although Jerome and Pienaar had been
close friends prior to Pienaar resigning from the Applicant's
employment, their relationship
had deteriorated and a marked
animosity was discernible by Jerome towards Pienaar. Undoubtedly
these are facts which reflect adversely
on Jerome as a witness and
considering the merits and demerits of Jerome's evidence weighted
against the totality of the evidence
presented, the Court finds that
the applicable cautionary rule has not been satisfied and that no
reliance can be placed on Jerome's
evidence to justify rejecting the
direct evidence presented by First Respondent and Pienaar.
[35]
Juxtaposed thereto, the Applicant was confronted with the direct
evidence of First Respondent and Pienaar that First Respondent
had
deleted the restraint of trade and confidentiality clauses prior to
him signing his contract of employment with Applicant.
First
Respondent, as well as Pienaar, was adamant that First Respondent was
not bound by a restraint of trade and confidentiality
agreement of
any nature whatsoever in favour of the Applicant. Having observed and
noted the demeanour of First Respondent in the
witness stand the
Court is satisfied that he is a credible witness, whose evidence was
in all material and relevant aspects corroborated
by Pienaar.
Notwithstanding the fact that Pienaar initially refused to present a
copy First Respondent's contract of employment
to him, and although
Pienaar conceded that he had lied to First Respondent in this regard,
and that he had made a error when indicating
to the HR Department
that First Respondent had indeed signed a restraint of trade and
confidentiality clause, he candidly admitted
that he had erred and
lied in order to prevent First Respondent resigning. The explanation
presented in this regard is not implausible
nor improbable. Having
regard to Pienaar's demeanour in Court he was at all times during
cross-examination candid in his answers
and candid about facts that
had the potential to reflect adversely on his credibility as a
witness, nor was his evidence tainted
by any animosity aimed at the
Applicant, notwithstanding the fact that Jerome, and initially
Reznik, was adamant that Pienaar had
'an axe to grind' with the
Applicant, whilst Reznik later refuted this and conceded that all
issues had been resolved amicably.
[21]
When evaluating the evidence, the Court is called upon to evaluate
the evidence in its totality, and not by applying a piecemeal
process
of reasoning, taking into consideration the merits and demerits of
each witnesses' evidence, as well as the probabilities
and
improbabilities manifested by the evidence. Keeping the aforesaid in
mind, the Court is satisfied that the direct evidence
presented by
First Respondent that the restraint of trade and confidentiality
clauses had been deleted when he had signed his contract
of
employment with the Applicant, is acceptable and credible and
contains noting inherently so improbable as to justify the rejection
thereof as false. Insofar as First Respondent's evidence regarding
the deletion of the restraint of trade and confidentiality clauses
from his contract of employment is in conflict with the evidence
presented by the Applicant, such conflicting evidence by the
Applicant is rejected.
[37]
Consequently the Court is satisfied that First Respondent had not
entered into a restraint of trade and confidentiality agreement
with
the Applicant and therefore the need does not arise for the Court to
determine the second issue referred for the hearing of
oral evidence.
[38]
Although two issues had been referred for the hearing of oral
evidence this remained substantially an application for final
relief.
See BHT Water Treatment (PTY) Ltd v Leslie & Another
1993 (1) SA
47
(W) at 55A - E; Hirt & Carter (PTY) Ltd v Mansfield &
Another 2008(3) SA 512 (D & CLD) at 515J – 516A.
[39]
In the premises, and irrespective of the incidence of the onus. the
Court can only grant the Applicant the relief it seeks
if the facts
stated by First Respondent together with the admitted facts in the
Applicant's affidavits and the evidence presented
justifies the
order.
See Plascon - Evans Paints Ltd v Van Riebeeck Paints (PTY) Ltd
1984(3) SA 623 (AD) at 634H – 635B.
[40]
In the result, the Court is satisfied that the Applicant has failed
to discharge the onus that First Respondent had entered
into a
restraint of trade and confidentiality agreement with the Applicant.
[41]
Therefore the following order is made:
1.
The application is dismissed with costs, whereby is included the
costs incurred relating to the draft order that was made an
order of
Court.
W
F pienaar
ACTING
JUDGE OF THE HIGH COURT
COUNSEL
FOR APPLICANT ADV C WHITCUTT SC ADV D WOOD
ATTORNEY
FOR APPLICANT FLUXMANS INC
C/O
FRIEDLAND HART SOLOMON & NICOLSON
3rd
Floor, Block 4
Monument
Office Park 79 Steenbok Avenue Monument Park Pretoria
Ref:
C G Stolp/VM
COUNSEL
FOR FIRST RESPONDENT ADV L ERASMUS
ATTORNEYS
FOR FIRST RESPONDENT DDP ATTORNEYS
Suite
301, 3rd floor Lougardia Building 1262
Embankment
Road Centurion
Ref:
J du Randt/D161