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[2013] ZAKZDHC 46
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CCI Call Centres (Pty) Ltd v Sequeira and Another (8121/2013) [2013] ZAKZDHC 46 (13 September 2013)
In the KwaZulu-Natal High
Court, Durban
Republic of South Africa
Case
No : 8121/2013
In
the matter between :
CCI
Call Centres (Pty) Ltd
..................................................................................
Applicant
and
Laron-Shaun
Sequeira
...........................................................................
First
Respondent
Coracall
(Pty) Ltd
..............................................................................
Second
Respondent
___________________________________________________________________
Judgment
___________________________________________________________________
Lopes J
[1] The applicant, CCI
Call Centres (Pty) Ltd seeks an order interdicting and restraining
the first respondent for a period of twelve
months calculated from
the 1
st
July 2013 from being employed by the second
respondent and from carrying on business in the call centre industry,
together with
certain other relief.
[2] The relief is sought
pursuant to a restraint of trade agreement which was contained in an
employment contract signed by the
applicant and the first respondent.
The relevant history of the relationship between the parties is as
follows :
(a) the applicant is part
of an international call centre business registered in Mauritius. It
has been incorporated in South Africa
since September 2009, operates
only from Durban, and has 2 000 employees;
(b) the applicant
provides what are referred to as ‘Inbound Services’ and
‘Outbound Services’ to its clients.
‘Inbound
Services’ involve call centre operators fielding queries from
the applicant’s clients’ customers
relating to those
clients’ products. ‘Outbound Services’ involve call
centre operators calling prospective customers
of the applicant’s
clients to persuade them to part with information about themselves to
be used for marketing purposes,
or to sell them the applicant’s
clients’ products
(c) the first respondent
was employed by the second largest client of the applicant from March
2004 to March 2007 as a district
sales manager;
(d) from April 2007 to
January 2012 he was employed by the applicant’s largest client
(‘TT’) as an account manager;
(e) in 2010 the first
respondent was seconded to work at the applicant where his function
was to manage the applicant’s ‘inbound
sales campaign’
for TT;
(f) having been made
redundant by TT in 2012, the first respondent was thereafter employed
by the applicant as campaign manager
forthe ‘outbound campaign’
for TT. He was later put in charge of the TT ‘Web Chat’
campaign whereby customers
could have a live feed with sales agents.
He also worked on a campaign called ‘Correspondence’
where customer queries
are dealt with through email correspondence;
(g) on the 15
th
March 2013, after the first respondent had been working for the
applicant for approximately fourteen and a half months, he was
asked
to sign an employment contract. In the employment contract, at
paragraph 18, is what is commonly referred to as a restraint
of trade
clause. The clause is headed ‘Confidentiality Non-Solicitation
and Restraint’ and covers some ten typewritten
pages. It is
common cause that the first respondent was asked to sign the
employment contract ‘for audit purposes’.
The first
respondent avers, and it is not disputed, that he did not read the
document;
(h) on the 1
st
April 2013, some two weeks after he had signed that document, the
first respondent resigned from his employment with the applicant;
(i) he left the
employment of the applicant on the 1
st
July 2013;
(j) thereafter the first
respondent was employed by the second respondent;
(k) the second
respondent, Coracall (Pty) Ltd, against whom the applicant seeks no
relief, is a competitor of the applicant and
is also engaged in the
call centre industry.
[3] On the 31
st
July 2013 I granted an order by consent between the parties setting
dates for the delivery of affidavits and heads of argument,
and
recording an undertaking that the first respondent would not be
employed by the second respondent pending the outcome of this
application, and that the applicant would continue to pay the first
respondent’s salary during that period. The matter was
then
heard as an opposed application on the 20
th
August 2013.
[4] Mr
Pammenter
SC who appeared for the applicant submitted that I was to apply the
test for final relief in motion proceedings as set out in
Plascon-Evans Paints Ltd v van Riebeeck Paints (Pty) Ltd
[1984] ZASCA 51
;
1984
(3) SA 623
(A) – i.e. I was to grant an order only if the facts
as stated by the respondent together with the admitted facts in the
applicant’s affidavit justify the order, unless I am of the
view that a denial by the first respondent of a fact alleged by
the
applicant may not be such as to raise a real, genuine or bona fide
dispute of fact because it is clearly untenable.
[5] Mr
Pammenter
submitted that once that test in
Plascon-Evans
was satisfied I
should then consider whether the restraint imposed was reasonable. He
referred to the tension which is always evident
in these cases
between the right of the first respondent to be allowed to carry on
his employment, and the right of the applicant
to protect its
relationship with its customers and its confidential information.
[6] With regard to the
question of onus and the approach of the courts generally to
restraint of trade agreements, I have been referred
to, and have
considered
Reddy v Siemens Telecommunications (Pty) Ltd
2007
(2) SA 486
(SCA);
Advtech Resourcing (Pty) Ltd t/a Communicate
Personnel Group v Kuhn and Another
2008 (2) SA 375
(C);
Dickinson
Holdings (Group) (Pty) Ltd and Others v Du Plessis and Another
2008 (4) SA 214
(N);
Den Braven SA (Pty) Ltd v Pillay and Another
2008 (6) SA 229
(D); Mozart Ice Cream Franchises (Pty) Ltd v Davidoff
and Another
2009 (3) SA 78
(C) and
Experian South Africa (Pty)
Ltd v Haynes and Another
2013 (1) SA 135
(GSJ).
[7] The applicant’s
case is set out in a wordy affidavit filled with phrases which are
typical of the marketing industry.
The result is a very confusing
affidavit and it is necessary to sift through these phrases in order
to be able to summarise the
applicant’s complaints as follows :
(a)the first respondent
is one of the applicant’s ‘longest standing high-ranking
officials’;
(b) during his employment
with the applicant, the first respondent has had access to, and used,
‘state of the art telephony
and information technology systems
and programmes and a mix of local and UK based management
structures’;
(c)
these ‘sophisticated IT systems and programmes’ are
unique to the applicant’s business;
(d)
the applicant has ‘developed specific and valued relationships
with identified suppliers and human resources, telephony
and IT
industries’ and ‘the applicant has been able to develop
practical methodologies (sic) for maintaining data and
other clients
lists for statistical reporting to our clients on their customers’
requirements and for gathering information
relating to potential
customers.’;
(e)
‘
the
names and requirements and capabilities of these suppliers and
clients is confidential in that the Applicant has retained
confidential
relationships with them since the suppliers provide
services to the Applicant at negotiated rates and also provide highly
confidential
(and prized) programmes. These programmes are developed
for us and are not freely available. They are both trade secrets and
confidential
information’
(f) ‘
A
competitor armed with the negotiated rates of these suppliers may be
able to bring pressure to bear on such supplier thereby achieving
a
preferred rate for itself, to the detriment of the Applicant’s
profitability and competitive edge.’
[8] The first respondent
disputes much of what the applicant alleges both in relation to his
standing and position in the company,
the degree to which he has
access to confidential information, and the extent to which knowledge
of the applicant’s customer
base and the processes used by the
applicant are confidential or constitute trade secrets.
[9] As far as the first
respondent himself is concerned, he records that :
(a) he is 31 years of age
having matriculated in 1999 without a university entrance pass;
(b) he was thereafter
employed in positions as a waiter, a barman, and then a clerk in a
micro-lending company, whereafter he worked
as a driver delivering
motor vehicle parts and progressed to the position of a counter
assistant in the parts department at a Volkswagen
dealership in
Boksburg;
(c) in 2004 he went to
the United Kingdom where he began working in the cellphone industry
as a call centre operator;
(d) he was eventually
promoted to the position of an ‘assistant team manager’
i.e. a person who helps others to man
the telephones, and he was
subsequently promoted to a management position in Carphone Warehouse
where he supervised twelve members
of staff as an account manager;
(e) at the time he left
the applicant’s employ, he supervised approximately 110 people
in the applicant’s call centre;
(f) since 2004 the first
respondent has only worked in call centres and it is only in this
field that he has the expertise to maintain
his lifestyle.
[10] Mr
Pammenter
submitted that it was sufficient for the applicant to show that the
first respondent had access to confidential information of
the
applicant and could have imparted it to his new employer. It was not
necessary for the applicant to demonstrate that the first
respondent
had in fact done so. In this regard reliance was placed on
BHT
Water Treatment (Pty) Ltd v Leslie and Another
1993 (1) SA 47
(W).
In that case the applicant sought to interdict the disclosure of
chemical formulae which were highly confidential. They were
the
product of research and development by the applicant’s
associated company throughout the world, and the applicant paid
royalties to use the formulae. They were confidential to the
applicant and the use by competing companies would have caused
financial
prejudice. Although there was no evidence before the court
that the formulae had been copied or memorised, the applicant did not
have to rely upon undertakings given by its employee not to disclose
the information, and interdict was granted.
[11] Mr
Pammenter
placed
emphasis upon the fact that the second respondent was engaged in a
similar business to that of the applicant. He stressed
that although
it is alleged that the second respondent did not carry on precisely
the same functions as the applicant, it advertised
to the world at
large that it was able to do so. Mr
Pammenter
referred to the
confidential information sought to be protected by the applicant as
including customer lists that were kept confidential
for the purpose
of the applicant’s business, and information which, although in
the public domain, is protected as confidential
information because
skill and labour have been expended in gathering and compiling it in
a useful form.
[12] Mr
Pammenter
also pointed to the fact that the first respondent had told the
applicant’s representatives that he was resigning because
he
wished to return to the United Kingdom in order to pursue his
employment there. He subsequently did not do so.
[13] Mr
Collingwood
,
who appeared for the first respondent submitted that there was no
dispute on the papers with regard to the first respondent’s
lack of qualifications, and that the applicant could not be
prejudiced if the first respondent was to continue to be employed by
the second respondent. He submitted that the only way in which the
first respondent had earned an income since 2004 was by being
involved in the call centre industry.
[14] Mr
Collingwood
submitted that the involvement of the first respondent in the
applicant’s business was not at the level of :
‘
one
of the longest standing high-ranking officials of the Applicant …’
as suggested in the
applicant’s founding affidavit. This is evidenced by the first
respondent’s earnings, his lack of
any formal education and the
lack of access to confidential information which was afforded to the
first respondent.
[15] With regard to the
suggestion that the first respondent misled the applicant with regard
to his reasons for leaving the applicant’s
employment, Mr
Collingwood
submitted that this is fully explained in the
first respondent’s affidavits where he sets out that his
intention at the time
he resigned was to relocate to the United
Kingdom, but between conveying that intention to the applicant’s
employees and
beginning his employment with the second respondent, he
had been advised that he could fulfil his primary intention of
returning
to the United Kingdom – to comply with visa
requirements – by being employed by the second respondent. It
is not disputed
that the first respondent had no employment at the
time he resigned from the applicant.
Confidential
information
[16] In setting out the
applicant’s case concerning confidential information, the
deponent to the applicant’s founding
affidavit, one Carlos
Santana, states that he will not ‘disclose actual data,
programs, technological systems and the like
but will refer to them
in a general manner.’
[17] The applicant is not
expected to disclose in court documents all its confidential
information in a manner which will enable
any reader to copy or
replicate them. It is, however, necessary for the applicant to
explain in sufficient detail what these are,
in
order for this court to be able to understand the importance of them,
and why it is necessary for them to be protected by a court
order.
With regard to confidential information and trade secrets, Davis J
remarked in
Mozart Ice Cream
at
page 87 A that “
‘
It
is clear, however, given the nature of the
Plascon-Evans
rule,
that the mere
ipse
dixit
of
the applicant cannot suffice on its own to establish these
proprietary interests. As Olivier AJ noted in
Viamedia
(Pty) Ltd v Sessa
(unreported,
CPD case No 8679/2008) :
“
Information
does not become confidential and a process or practice does not
become secret merely because Viamedia contends that
they do –
or, perhaps, even if Mr Sessa subjectively believed them to be so. It
does not suffice for Viamedia to say that
it has confidential
information or trade secrets. It must set out what they are and when
and how Mr Sessa was exposed to them.
It must set up the facts from
which the conclusion could be drawn that something is indeed
confidential or secret.”
See also
Automotive
Trading System (Pty) Ltd v Wilkens and Others
2007
(2) SA 271
(SCA)
[2007] 4 All SA 1073
at 281 B – D.’
[18] Santana explains in
some detail the functions performed by the applicant. The references,
however, to the fact that the equipment
used is ‘state of the
art’, a ‘mix of local and UK based management structures’
and that ‘All of
this has been developed over time at great
cost’ is vague and most unhelpful in enabling this court to
understand what it
is that is so special about these matters that
they warrant protection.
[19] The vague and
generalised nature of the allegations with regard to the information
to which the first respondent had access
makes it impossible for me
to conclude that this was information which the first respondent not
only had access to, but could have
fully understood and conveyed to
others. There is no suggestion whatsoever that the first respondent
could have, or has, memorised
any confidential information.
[20] I have no doubt that
any well-run call centre relies on the latest technology and the best
management systems they are able
to provide, using ‘highly
trained professionals’. The underlying technology is, however,
in the main provided by telephonic
and computer systems providers
available to those who are prepared to pay for them. Even the fact
that the applicant has created
‘a customised program that will
handle a realistically projected call volume’ and that they use
‘sophisticated
IT systems and programs unique to our business’
does not of itself create a protectable interest. It is necessary for
a court
to be able to understand why these systems are so special
that they warrant protection. These are not in the same category as,
for example, a chemical formula, which a chemist could understand and
memorise, and pass on to a competitor.
[21] With regard to the
apparently confidential information which was found on the first
respondent’s computer, there is no
dispute on the papers that
the information was given to him so that he could work out the basis
of his compensation. The fact that
he then kept it, can hardly be
conclusive of an intention to behave in a mala fide manner in
conveying that information to the
second respondent or any other
person. That information in any event only related to the applicant’s
operations in June of
2013, and appears to have no use thereafter.
The first respondent kept that information in order to be able to
determine precisely
what compensation would be due to him. The need
for him to do so was demonstrated by the fact that the applicant has
refused to
pay the first respondent the bonuses to which he claims to
be entitled. Once again, however, there is no demonstration in the
founding
affidavit of what this information, is save for the vague
and confusing generalisations referred to above.
Customer Connections :
[22] With regard to the
first respondent’s ability to influence the clients of the
applicant, there is no evidence that the
first respondent was in any
position to harm the trade connections of the applicant by alienating
its customers. As pointed out
by Mr
Collingwood
the applicant
and the second respondent shared customers in some instances because
it was the practice of companies wishing to
use the services of a
call centre to use more than one call centre in order to protect
their position, and the possibility of poor
service from one of the
call centres. Both of the parties know the customers of the other.
Alienation of staff
[23] Santana also relies
upon the fact that ‘The Applicant’s most valuable asset
is its human resources’. He complains
that, because certain
members of staff left the employ of the applicant after the first
respondent did, that ‘the inescapable
conclusion is therefore
that the Second Respondent is utilising the Confidential Information
of the Applicant and influence of
the First Respondent and actively
recruiting the Applicant’s staff to mirror the Applicant’.
[24] Other than
conjecture and speculation on the part of Santana there is nothing
which establishes any factual basis that the
first respondent is
seeking to entice employees of the applicant to join the second
respondent. Indeed, the papers demonstrate
only that the applicant
has sought to entice employees of the second respondent to leave, by
handing out leaflets offering employment
with the applicant, and
doing so outside the premises of the second respondent.
[25] Nor is it helpful
for Santana to refer to ‘the vast training and resources which
the Applicant has expended on growing
its workforce’. I fail to
understand how the fact that ‘Our call centre management
applications are developed and maintained
by highly experienced
professionals’ is helpful in this regard.
Geographical area of
the restraint :
[26] With regard to the
geographical area within which the applicant seeks to restrain the
first respondent from being employed,
it is clear from the papers
that the first respondent could as easily be employed by an entity
competing with the applicant from,
for example, the UK, the business
of call centres not being hampered by the physical restraints imposed
upon other businesses,
and the clients of the applicant notionally
being located anywhere in the world. In those circumstances there
seems to be no purpose
in the applicant seeking to impose a
geographical restriction on the area within which the first
respondent could be employed by
a competitor, other than to hamper
the first respondent in his choice of a place of residence and work.
[27] Mr
Pammenter
submitted that in the event that I was not inclined to grant the
applicant the relief which it seeks in its notice of motion, that
the
matter should be referred for the hearing of oral evidence in order
to determine the disputes between the parties. In this
regard he
pointed out the fact that the first respondent could not complain of
any prejudice because the applicant had undertaken,
in the interim,
and pending the outcome of the relief in this application, to pay the
first respondent’s salary. The first
respondent would not
therefore find himself in the position that he was unemployed with no
income.
[28] In my view the
disputes of fact are not such that they create a bar to this
application being resolved on the papers. The applicant
has failed to
make out a proper case for the relief which it seeks because it has
not demonstrated that the first respondent was
in a position where he
was in possession of confidential and protectable information which
he could pass on to the second respondent
and thereby prejudice the
applicant’s business. In addition the applicant has not
established that there were customer connections
which were under the
influence of the first respondent to the extent that he could easily
influence them to change their allegiance
to the second respondent at
the expense of the applicant.
[29] In the circumstances
the application is dismissed with costs.
Date
of hearing : 20
th
August 2013
Date of judgment : 13
th
September 2013
Counsel for the Applicant
: C J Pammenter SC (instructed by Andrew Inc)
Counsel for the
Respondents : A D Collingwood (instructed by Garlicke &
Bousfield)