Reddy v Siemens Telecommunications (Pty) Ltd (251/06) [2006] ZASCA 135; 2007 (2) SA 486 (SCA); (2007) 28 ILJ 317 (SCA) (30 November 2006)

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Reddy v Siemens Telecommunications (Pty) Ltd (251/06) [2006] ZASCA 135; 2007 (2) SA 486 (SCA); (2007) 28 ILJ 317 (SCA) (30 November 2006)

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THE
SUPREME COURT OF APPEAL
OF
SOUTH AFRICA
Reportable
Case no:
251/06
In the
matter between:
DAYANDREN
REDDY
APPELLANT
and
SIEMENS
TELECOMMUNICATIONS (PTY) LTD
RESPONDENT
________________________________________________________________
Coram:
HOWIE
P, NAVSA, NUGENT JJA
et
COMBRINCK & MALAN AJJA
Date of
hearing: 10 NOVEMBER 2006
Date of
delivery: 30 NOVEMBER 2006
Summary: Agreement
in restraint of trade – undertaking by employee not to accept
employment with employer’s competitor – enforceability
of –
common-law approach to agreements in restraint of trade –
onus
of proof
Neutral Citation: This judgment may be referred to as
Reddy v Siemens [2006] SCA 164
(RSA)
JUDGMENT
________________________________________________________________
MALAN AJA:
[1] This
is an appeal with the leave of the court a quo against a judgment and
order of Blieden J enforcing a written restraint agreement
between
the respondent (‘Siemens’) and the appellant (‘Reddy’) and
effectively interdicting and restraining the latter from
being
employed by Ericsson in the province of Gauteng for a period of
twelve months from 1 March 2006. Ericsson was cited as the
second
respondent in the court a quo and abided the decision of the court.
[2] Reddy
was employed by Siemens from 1 December 1998 but resigned on 26
January 2006 to take up a position with Ericsson from 1
March 2006.
When entering into employment with Siemens he agreed not to be
employed by a competitor for a period of one year after
termination
of his employment and undertook not to disclose trade secrets and
confidential information belonging to Siemens. In
interdicting Reddy
from taking up employment with Ericcson, Blieden J held that it was
not necessary for the purposes of granting
the interdict to find that
Reddy would use the trade secrets and confidential information in his
new employment but that it was sufficient
if he could do so. The
restraint, he said, was aimed at preventing a person with knowledge
of confidential technologies as a result
of his employment from
utilising them to the detriment of the employer:
‘
It is confidential technologies which are to be
protected, it is not necessary for the applicant to prove that
information is not
academic in the hands of [Ericsson]. By its very
nature such information in the hands of a competitor may be
detrimental to the applicant’s
business.’
[3] The
relevant terms of Reddy’s contract of employment with Siemens
provide as follows:
22.1 During your period of employment and subsequent
thereto you shall keep confidential and shall not make use, directly
or indirectly,
and shall not disclose any of the company’s trade
secrets or confidential information . . . other than to persons
authorised by
the company or those employed by the company who are
required to know such secrets [or] have such information for the
purpose of
their employment with the company.’
’
26.3 [T]he
employee [Reddy] . . . agrees and undertakes that, in order to
protect the proprietary interest of the employer [Siemens]
and/or
the group in the group’s trade secrets, he or she shall not
throughout the period of his employment by the employer and/or
the
group and for a period of twelve months after the termination date,
either directly or indirectly within the prescribed area,
be
interested, engaged or concerned . . . as . . . employee . . . in
any concern which carries on the same business as the employer’s
business or group’s business, or a business allied or similar to
the employer’s business or the group’s business.
[4] The
application was launched as a matter of urgency at the end of
February 2006. Since the restraint was for a limited period
of twelve
months the court a quo correctly treated the matter as being
substantially an application for final relief.
1
A final order can only be granted in motion proceedings if the facts
stated by the respondent together with the admitted facts in
the
applicant’s affidavits justify the order, and this applies
irrespective of where the
onus
lies.
2
[5] Siemens
is a subsidiary of Siemens AG which is based in Germany. The latter
is one of the world’s leading telecommunications
providers in voice
and data networks. The respondent forms an integral part of the
business of Siemens AG. Both Siemens and Ericsson
provide
telecommunication installations and services to cellular
telecommunication networks of which there are three operators in
South Africa, namely, Vodacom, MTN and Cell C. Siemens and Ericsson
are engaged in the same business and are competitors. Vodacom
and
Cell C are customers of Siemens but Ericsson does limited business
with both. Ericsson has been the sole supplier of telecommunications
infrastructure and services to MTN internationally and provides these
services to MTN exclusively in South Africa. Siemens still
has to
acquire some of MTN’s business. Vodacom, Siemens’ main customer,
has operations in six African countries including South
Africa. Cell
C is active on the African continent only in South Africa. Ericsson
and Vodacom have concluded a confidentiality agreement
in 2003 with
the possibility of entering into a transaction in Nigeria. Ericsson
provides telecommunications services in forty three
African countries
and to Celtel and Safricom in Kenya where Siemens does not operate.
[6] Reddy’s
employment with Siemens as a systems engineer was in the carrier
services high level support network platform department
which renders
‘intelligent network’ and value added services to customers. A
solutions integrator, as he is called by Ericsson,
or systems
engineer, is responsible for the installation, commissioning and
‘rollout’ of hardware and software solutions for
a particular
customer. The hardware or software involved depends on the needs of
the customer and has to be customised or integrated
with the
customer’s systems, organisation and processers.
[7] He was
employed by Ericsson from 1 March 2006 as one of ten solutions
integrators intended to perform services to Ericsson customers
in
Sub-Saharan Africa. His duties will not extend to any of Siemens’
customers in South Africa but relate only to MTN, a long-standing
international customer of Ericsson (and not of Siemens) and to Celtel
and Safricom in Kenya (neither of which is a customer of Siemens).
Reddy as an employee of Ericsson will have no involvement, at least
for the duration of the restraint, with Vodacom or Cell C in
South
Africa or Vodacom anywhere else.
[8] Reddy
gained experience and was trained, both locally and abroad, in
relation to Siemens products and networks, and the use of
software in
particular in the application of the software and its customisation
according to the processes, methodologies and systems
architecture
developed by Siemens for implementation in the cellular
telecommunications industry, which gives its ‘intelligence
network’
platform service its unique identity and competitive edge. This
process of customising software is confidential and a
trade secret of
Siemens. He attended training courses including one shortly before
his resignation from 19 November to 10 December
2005 in Vienna. Its
costs were borne by Siemens. The course involved an updating of
Siemens’ processes, methodologies and systems
architecture. As a
consideration for his attendance Reddy undertook to reimburse
Ericsson by ‘working back’ the costs over a
period of eighteen
months. Ericsson has offered to reimburse Siemens for the expenses.
Reddy was also exposed to the maintenance
and installation of
networks, projects, support services and project execution and became
acquainted with Siemens’ strategy and
technology employed in regard
to its customer base. He was thus skilled in, and in possession of,
current knowledge of Siemens’
processes, methodologies and systems
architecture.
[9] Reddy’s
response to these averments is that the training he underwent while
employed by Siemens would be of no use in respect
of Ericsson
products and that the training courses in Vienna and elsewhere are
entirely academic as far as Ericsson products are
concerned. His
employment with Ericsson will therefore not involve any of Siemens’
customers in South Africa but will entail his
working in Kenya
servicing Celtel and Safricom, neither of which is a customer of
Siemens, and rendering services to MTN, a long-standing
Ericsson
customer, in South Africa. In addition, he will be working on
Ericsson products for which, he said, his training on Siemens
products would be academic and of no use.
[10]
Magna Alloys and Research (SA) (Pty) Ltd v Ellis
,
3
described as a ‘landmark’ decision,
4
introduced a significant change to the approach of the courts to
agreements in restraint of trade by declining to follow earlier
decisions based on English precedent that an agreement in restraint
of trade is
prima facie
invalid and unenforceable. In English
law a party seeking to enforce such agreement has to show that the
restraint is reasonable
as between the parties while the burden of
proving that it is contrary to public policy is incumbent on the
party alleging it.
5
Magna Alloys
reversed this approach and held that agreements
in restraint of trade were valid and enforceable unless they are
unreasonable and
thus contrary to public policy, which necessarily as
a consequence of their common-law validity has the effect that a
party who challenges
the enforceability of the agreement bears the
burden of alleging and proving that it is unreasonable.
6
The effect of the judgment is summarised in
J Louw and Co (Pty)
Ltd v Richter and others
:
7
‘
Covenants in restraint of trade are valid. Like all
other contractual stipulations, however, they are unenforceable when,
and to the
extent that, their enforcement would be contrary to public
policy. It is against public policy to enforce a covenant which is
unreasonable,
one which unreasonably restricts the covenantor’s
freedom to trade or to work. In so far as it has that effect, the
covenant will
not therefore be enforced. Whether it is indeed
unreasonable must be determined with reference to the circumstances
of the case.
Such circumstances are not limited to those that existed
when the parties entered into the covenant. Account must also be
taken of
what has happened since then and, in particular, of the
situation prevailing at the time enforcement is sought.’
[11] All
agreements including agreements in restraint of trade are subject to
constitutional rights obliging courts to consider fundamental
constitutional values when applying and developing the law of
contract in accordance with the Constitution.
8
Section 8 of the Constitution is imperative.
9
The Bill of Rights applies to all law, also private law, and binds,
inter alia, the judiciary (s 8(1)). Its provisions bind natural
and
juristic persons if, and to the extent that, they are applicable,
taking into account the nature of the right and the nature
of any
duty imposed by the right (s 8(2)). In their application to natural
and juristic persons a court must apply or, if necessary,
develop the
common law to give effect to the right when legislation does not do
so (s 8(3)(a)). A court may also develop the common
law to limit the
right in accordance with s 36 (s 8(3)(b)).
10
Section 39(2) requires a court when interpreting and developing the
common law to promote the spirit, purport and objects of the
Bill of
Rights.
[12] Brand JA observed in
Afrox Healthcare Bpk v Strydom
11
that it must be remembered that
‘
die bepalings van die Grondwet nie soseer ‘n stel
reëls is nie maar ‘n hele waardesisteem. Van die waardes in
die sisteem
verkeer soms in onderlinge spanning wat dan versigtige
opweging en versoening verg.’
The exercise of a right may be limited by the exercise of by another
person of his own fundamental right. To determine whether there
has
been an unconstitutional limitation of a right the purpose of the
limitation has to be considered in conjunction with all the
other
factors referred to in section 36(1).
12
This situation may occur when the enforceability of agreements in
restraint of trade and the balancing or reconciling of the concurring
private and public interests are considered.
[13] It
was submitted on behalf of Reddy that the rule that was laid down in
Magna Alloys
- which has the effect of casting the
onus
upon a party seeking to avoid a restraint to allege and prove
that the restraint is unreasonable – is in conflict with s 22 of
the
Constitution which guarantees every citizen the right to choose
his or her trade, occupation or profession freely. The effect of
that
provision, it was submitted, was that a restraint limits that right,
and is enforceable only if it is alleged and proved by
the person
seeking to enforce it that the limitation is reasonable.
13
What was not contested, however, is that a restraint that is found to
be reasonably required for the protection of the party who
seeks to
enforce it, in accordance with the test that has been laid down in
the cases, is constitutionally permitted.
14
The constitutional challenge was restricted to where the
onus
lies.
[14] In
the present case we are not called upon to decide that issue. Where
the onus lies in a particular case is a consequence of
the
substantive law on the issue.
15
I have pointed out that the substantive law as laid down in
Magna
Alloys
is that a restraint is enforceable unless it is shown to
be unreasonable, which necessarily casts an
onus
on the person
who seeks to escape it. But if the rule were to be reversed – to
provide that a restraint is not enforceable unless
it is shown that
it is reasonable – which would necessarily cast an
onus
on
the person seeking to enforce it to allege and prove that the
restraint is reasonable the result in the present case would be
the
same. For in the present case the facts concerning the
reasonableness or otherwise of the restraint have been fully explored
in the evidence, and to the extent that any of those facts are in
dispute that must be resolved in favour of Reddy (these being motion
proceedings for final relief). If the facts disclosed in the
affidavits, assessed in the manner that I have described, disclose
that the restraint is reasonable, then Siemens must succeed: if, on
the other hand, those facts disclose that the restraint is
unreasonable
then Reddy must succeed. What that calls for is a value
judgment, rather than a determination of what facts have been proved,
and
the incidence of the
onus
accordingly plays no role.
[15] A
court must make a value judgment with two principal policy
considerations in mind in determining the reasonableness of a
restraint.
16
The first is that the public interest
17
requires that parties should comply with their contractual
obligations, a notion expressed by the maxim
pacta servanda sunt
.
18
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,
19
and it is by entering into contracts that an individual takes part in
economic life.
20
In this sense freedom to contract is an integral part of the
fundamental right referred to in s 22.
21
Section 22 of the Constitution guarantees ‘[e]very citizen … the
right to choose their trade, occupation or profession freely’
reflecting the closeness of the relationship between the freedom to
choose a vocation and the nature of a society based on human
dignity
as contemplated by the Constitution.
22
It is also an incident of the right to property to the extent that s
25 protects the acquisition, use, enjoyment and exploitation
of
property,
23
and of the fundamental rights in respect of freedom of association (s
18), labour relations (s 23) and cultural, religious and linguistic
communities (s 31).
[16] In
applying these two principal considerations the particular interests
must be examined. A restraint would be unenforceable
if it prevents a
party after termination of his or her employment from partaking in
trade or commerce without a corresponding interest
of the other party
deserving of protection. Such a restraint is not in the public
interest.
24
Moreover, a restraint which is reasonable as between the parties may
for some other reason be contrary to the public interest. In
Basson
v Chilwan and others
25
Nienaber JA identified four questions that should be asked when
considering the reasonableness of a restraint: (a) Does the one party
have an interest that deserves protection after termination of the
agreement? (b) If so, is that interest threatened by the other
party?
(c) In that case, does such interest weigh qualitatively and
quantitatively against the interest of the other party not to
be
economically inactive and unproductive? (d) Is there an aspect of
public policy having nothing to do with the relationship between
the
parties that requires that the restraint be maintained or rejected?
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.
26
[17] The
common-law approach in balancing or reconciling the concurring
interests in this manner gives effect to the precepts of s
36(1) of
the Constitution
:
‘
The
rights in the Bill of Rights may be limited only in terms of law of
general application to the extent that the limitation is reasonable
and justifiable in an open and democratic society based on human
dignity, equality and freedom, taking into account all relevant
factors, including –
(a) the
nature of the right;
(b) the
importance of the purpose of the limitation;
(c) the
nature and extent of the limitation;
(d) the
relationship between the limitation and its purpose; and
(e) less
restrictive means to achieve the purpose.’
An agreement in restraint of trade is concluded pursuant to ‘law
of general application’ referred to in s 36(1). What is meant
by
this expression includes the law in the general sense of the legal
system applicable to all which, in this case, consists of the
corpus
of law generally known as ‘the law of contract’ and which allows
for contractual freedom and the conclusion of agreements
pursuant
thereto.
27
The four questions identified in
Basson
comprehend the
considerations referred to in s 36(1). A fifth question, implied by
question (c), which may be expressly added, viz
whether the restraint
goes further than necessary to protect the interest,
28
corresponds with s 36(1)(e) requiring a consideration of less
restrictive measures to achieve the purpose of the limitation. The
value judgment required by
Basson
necessarily
requires
determining whether the restraint or limitation is ‘reasonable and
justifiable in an open and democratic society based
on human dignity,
equality and freedom.’ I agree with Rautenbach and Reinecke,
29
albeit writing on s 33(1) of the interim Constitution, who remarked
that
‘
dit moeilik [is] om in te sien hoe daar bloot deur
die feite deur ‘n konstitusionele bril te beoordeel, verbeter kan
word aan die
wyse waarop die howe ingevolge die gemenereg die private
en openbare belange teenoor mekaar opweeg [ten opsigte van
ooreenkomste
ter beperking van handelsvryheid] . . . ’
[18] In
its founding papers Siemens relied on both clauses 22 and 26 of the
contract of employment but the case advanced essentially
centres on
clause 26. Neither is intended to preclude Reddy from making use of
his own skills and abilities which are ‘a part
of himself’
30
or an ‘attribute’
31
of himself and in which Siemens has no proprietary interest.
32
Clause 26 placing a limit on Reddy from being employed by a
competitor is restricted to a twelve month period. It has not been
argued
that the limitation as to time is unreasonable. Reddy is
restrained only in the
choice
of his employer for a limited
period not in his being economically active at all. Restraining him
from being employed by Ericsson
does not affect his employment
elsewhere or his ability to engage in the employment he was trained
for. The nature and extent of
the limitation is therefore restricted.
[19] Reddy
will during the period of the restraint have no contact with Vodacom,
nor will he be able to solicit Vodacom to move its
business to
Ericsson. He will, however, provide services to MTN in South Africa
and to Celtel and Safricom in Kenya where Siemens
does not operate.
The restraint against being employed by a competitor, in addition,
applies to Gauteng only despite Siemens being
active throughout South
Africa. It was submitted on behalf of the appellant that in these
circumstances the restraint is unreasonable.
[20] However,
all the facts must be considered. Siemens and Ericsson are
competitors providing services to telecommunication network
operators. Although Vodacom and Cell C are customers of Siemens
Ericsson does some business with them. Siemens still has to acquire
any of MTN’s business. Reddy is in possession of trade secrets and
confidential information of Siemens. Moreover, shortly before
his
resignation from Siemens he attended a training course updating his
knowledge of the processes, methodologies and systems architecture
developed by Siemens. Information of this kind, if disclosed, could
be used to the disadvantage of Siemens. This is not a case such
as
Basson v Chilwan
33
where an employer’s application to assert a protectable
interest in respect of customer connections against an ex-employee
who had
no such connections was dismissed. Reddy is in possession of
confidential information in respect of which the risk of disclosure
by his employment with a competitor, assessed objectively,
34
is obvious. It is not that the mere possession of knowledge is
sufficient, and this is not what was suggested by Marais J in
BHT
Water
:
35
Reddy will be employed by Ericsson, a ‘concern which carries on the
same business as [Siemens]’
36
in a position similar to the one he occupied with Siemens. His
loyalty will be to his new employers and the opportunity to disclose
confidential information at his disposal, whether deliberately or
not, will exist.
37
The restraint was intended to relieve Siemens precisely of this risk
of disclosure. In these circumstances the restraint is neither
unreasonable nor contrary to public policy. I agree with the remarks
of
Marais J in
BHT Water
:
38
‘
In
my view, all that the applicant can do is to show that there is
secret information to which the respondent had access, and which
in
theory the first respondent could transmit to the second respondent
should he desire to do so. The very purpose of the restraint
agreement was that the applicant did not wish to have to rely on the
bona fides
or lack of retained knowledge on the part of the
first respondent, of the secret formulae. In my view, it cannot be
unreasonable
for the applicant in these circumstances to enforce the
bargain it has exacted to protect itself. Indeed, the very
ratio
underlying the bargain was that the applicant should not have to
content itself with crossing its fingers and hoping that the first
respondent would act honourably or abide by the undertakings he has
given. … In my view, an ex-employee bound by a restraint, the
purpose of which is to protect the existing confidential information
of his former employer, cannot defeat an application to enforce
such
a restraint by giving an undertaking that he will not divulge the
information if he is allowed, contrary to the restraint, to
enter the
employment of a competitor of the applicant. Nor, in my view, can the
ex-employee defeat the restraint by saying that he
does not remember
the confidential information to which it is common cause that he has
had access. This would be the more so where
the ex-employee, as is
the case here, has already breached the terms of the restraint by
entering the service
s
of a competitor.’
[21] Public
policy requires contracts to be enforced. This is consistent with the
constitutional values of dignity and autonomy. The
restraint
agreement in this matter is not against public policy and should be
enforced. Its terms are reasonable. What Reddy is required
to do is
to honour the agreement he entered into voluntarily and in the
exercise of his own freedom of contract. While it is correct
that his
employment with Ericsson will be restricted it remains a breach of
his contractual undertaking. It follows that it is no
answer to
suggest that an undertaking would be sufficient to protect Siemens’
interests and that less restrictive means could therefore
achieve the
same purpose as enforcing the restraint (s 36(1)(e)). Such an
approach was followed by the High Court of England and
Wales in the
Queens Bench Division in
Gordian Knot Limited v Kenneth Towers
.
39
However, in
The Littlewoods Organisation Ltd v Harris
40
Lord Denning MR remarked, and I agree with his observations:
‘
It is thus established that an employer can stipulate
for protection against having his confidential information passed on
to a rival
in trade. But experience has shown that it is not
satisfactory to have simply a covenant against disclosing
confidential information.
The reason is because it is so difficult to
draw the line between information which is confidential and
information which is not;
and it is very difficult to prove a breach
when the information is of such a character that a servant can carry
it away in his head.
The difficulties are such that the only
practical solution is to take a covenant from the servant by which he
is not to go to work
for a rival in trade. Such a covenant may well
be held to be reasonable if limited to a short period.’
[22] It
follows that the judge a quo was correct in holding Reddy to his
contractual undertaking. The requirements for a final interdict
have
been met: not only has Siemens’ clear right been demonstrated but
also its breach: the very breach is an ‘injury actually
committed’
in the formulation of the second requirement for a final interdict as
an ‘injury actually committed or reasonably
apprehended’.
41
There is no other appropriate remedy.
The
appeal is dismissed with costs including the costs of two counsel.
F R MALAN
Acting
Judge of Appeal
CONCUR:
HOWIE P
NAVSA JA
NUGENT JA
COMBRINCK
AJA
1
BHT
Water Treatment (Pty) Ltd v Leslie and another
1993
(1) SA 47
(W) 55A-B.
2
Plascon-Evans Paints Ltd v Van
Riebeeck Paints (Pty) Ltd
[1984] ZASCA 51
;
1984
(3) SA 623
(A) 634H-635B;
Ngqumba en ‘n
ander v Staatspresident en andere; Damons NO en andere v
Staatspresident en andere; Jooste v Staatspresident en
andere
1988
(4) SA 224
(A) 260H-262D;
Tamarillo (Pty) Ltd v BN Aitken (Pty)
Ltd
1982 (1) SA 398
(A) 430G-431A;
BHT Water
above
55I-56A.
3
[1984] ZASCA 116
;
1984
(4) SA 874
(A).
4
RH
Christie
The Law of Contract in South Africa
5ed (2005) p
361. For a review of the literature before and after
Magna Alloys
see AJ Kerr ‘Restraint of Trade after
Magna Alloys
’
in Coenraad Visser (ed)
Essays in Honour of Ellison Kahn
(1989) p 186; JM Otto ‘Inkorting van “restraint of
trade”-bedinge in kontrakte:
Magna Alloys
se nageslag’
1997 (60)
THRHR
p 282 and his earlier ‘Roffrey v Catterall
Edwards & Goudre (Pty) Ltd
1977 4 SA 494
(N)’ 1978 (41)
THRHR
p 208.
5
Esso
Petroleum Co Ltd v Harper’s Garage (Stourport) Ltd
[1967] UKHL 1
;
[1968]
AC 269
(HL) 319E;
Commercial Plastics Ltd v Vincent
[1964] 3
All ER 546
(CA) 551D. See
Halsbury’s Laws of England
4ed
Volume 47
(2001) para 21 at p 28-9; Simon Mehigan and David
Griffiths
Restraint of Trade and Business Secrets: Law and
Practice
(1996) 3ed p 45-46 and, on Canadian law,
Elsley et
al v JG Collins Insurance Agencies Ltd
(1978) 83 DLR (3d) 1; on
Australian law,
Lindner v Murdoch’s Garage
[1950] HCA 48
;
[1950] 83 CLR
628
(High Court of Australia).
6
Magna Alloys
893CG, 897H-898D.
7
1987
(2) SA 237
(N) 243B-C. See
CTP Ltd and others v Argus Holdings
Ltd and another
[1995] ZASCA 32
;
1995 (4) SA 774
(A) 784A-B.
8
Napier
v Barkhuizen
2006 (4) SA 1
(SCA) para 6 and see
Brisley v Drotsky
2002 (4) SA 1
(SCA)
paras 88-95;
Afrox Healthcare Bpk v Strydom
2002 (6) SA 21
(SCA) para 18-30.
9
Khumalo and others v Holomisa
[2002] ZACC 12
;
2002 (5) SA 401
(CC) para 29-33
(and see the discussion by IM Rautenbach ‘Overview of
Constitutional Court decisions on the Bill of Rights –
2002’
2003
TSAR
166
pp 172 ff, 180-181).
10
Carmichele v
Minister of Safety and Security
[2001] ZACC 22
;
2001
(4) SA 938
(CC) para 32;
Phumelela Gaming and Leisure Ltd v
Gründlingh & others
[2006] JOL 17421
(CC) paras 27-8.
11
2002
(6) SA 21
(SCA) para 30 and cf
Phumelela Gaming and Leisure Ltd v
Gründlingh & others
[2006] JOL 17421
(CC) para 38.
12
IM
Rautenbach “The Bill of Rights applies to private law and binds
private persons”
2000
TSAR
296
p 311.
13
This
submission is consistent with remarks in
Fidelity
Guards Holdings (Pty) Ltd t/a Fidelity Guards v Pearmain
2001
(2) SA 853
(SE) 861F-862F;
Canon Kwazulu-Natal (Pty) Ltd t/a
Canon Office Automation v Booth and another
2005 (3) SA 205
(N)
209E-G;
Lifeguards Africa (Pty) Ltd v Raubenheimer
2006 (5)
SA 364
(D) para 29-34;
Triangle Bearings CC v Selepe Electrical
Wholesalers CC t/a Selepe Bearings, Muller Stephen; Dias, Helder
Fernando dos Santos, Selepe
Bearings CC
(WLD) case 05/7935 and
cf
Coetzee v Comitis and others
2001 (1) SA 1254
(C) para 40
but see
Rectron (Pty) Ltd v Govender
2006 CLR 1
(D) para
8-16;
Kotze & Genis (Edms) Bpk en ‘n ander v Potgieter en
andere
1995 (3) SA 783
(C) 785I-786I;
Petros Magos and
Associates (t/a PMA) v Kenneth Cyril NTA; Afrisun International
Gauteng (Pty) Ltd (t/a Carnival City)
(WLD) case 06/105.
14
This
view was expressed in cases under both the interim (
Waltons
Stationery Co (Edms) Bpk v Fourie
1994 (4) SA 507
(O) 510I-511F;
Kotze & Genis (Edms) Bpk en ‘n ander v Potgieter en andere
1995 (3) SA 783
(C) 786E-I;
Knox D’Arcy Ltd and another v
Shaw and another
1996 (2) SA 651
(W) 657H ff, 661D-F) and the
final Constitution (
CTP Ltd and others v Independent Newspaper
Holdings Ltd
1999 (1) SA 452
(W) 468G-H;
Fidelity Guards
Holdings (Pty) Ltd t/a Fidelity Guards v Pearmain
2001 (2) SA
853
(SE) 861F-862G;
Petros Magos and Associates (t/a PMA) v
Kenneth Cyril NTA; Afrisun International Gauteng (Pty) Ltd (t/a
Carnival City) (
WLD) case 06/105).
15
Tregea
and another v Godart and another
1939
AD 16
32-33;
Chetty v Naidoo
1974 (3) SA 13
(A) 20A.
16
Basson
v Chilwan and others
[1993] ZASCA 61
;
1993 (3)
SA 742
(A) 767C-F;
Reeves and another v Marfield Insurance
Brokers CC and another
[1996] ZASCA 39
;
1996 (3) SA 766
(A) 775J-776F.
17
The
determination of the public interest and its weight, where it is an
element of a common-law principle, must be fashioned by
constitutional values. See
Minister of Safety and Security v
Van Duivenboden
2002 (6) SA 431
(SCA) para 17;
Van Eeden v
Minister of Safety & Security (Women’s Legal Centre Trust, as
amicus curiae)
2003 (1) SA 389
(SCA) paras 10-12;
Du Plessis
v Road Accident Fund
2004 (1) SA 359
(SCA) paras 18-21.
18
SA Sentrale
Ko-op Graanmaatskappy Bpk v Shifren en andere
1964
(4) SA 760
(A) 767A;
Brisley v Drotsky
2002 (4) SA 1
(SCA)
para 23 and Coenraad Visser’s historical survey ’The principle
pacta servanda sunt
in Roman and Roman-Dutch law, with
specific reference to contracts in restraint of trade’
(1984) 101
SALJ
641.
19
Mort NO v
Henry Shields-Chiat
2001 (1) SA
464
(C) 475 A-B;
Brisley v Drotsky
above para 94. In
Knox
D’Arcy Ltd and another v Shaw and another
1996 (2) SA 651
(W)
660J-661A Van Schalkwyk J remarked that ‘the enforcement of a
bargain (even one which was ill-considered) gives recognition
to the
important constitutional principle of the autonomy of the
individual.’
20
CFC
van der Walt ‘Kontrakte en beheer oor kontrakteervryheid in ‘n
nuwe Suid-Afrika’
1991 (45)
THRHR
367
p 383 ff.
21
IM
Rautenbach and MFB Reinecke ‘Kontrakte ter beperking van die
handelsvryheid en die grondwetlike reg om vrylik aan die ekonomiese
verkeer deel te neem’
1995
TSAR
551
p 556.
22
Affordable
Medicines Trust v Minister of Health
[2005] ZACC 3
;
2006
(3) SA 247
(CC) para 59.
23
Cf
First National Bank of SA Limited t/a Wesbank v Commissioner for
the South African Revenue Services and another; First National Bank
of SA Limited t/a Wesbank v Minister of Finance
[2002] ZACC 5
;
2002 (7) BCLR
702
(CC) para 58.
24
Townsend
Productions (Pty) Ltd v Leech and others
2001
(4) SA 33
(C) 50J-51B;
CTP Ltd and others v Argus Holdings Ltd
and another
[1995] ZASCA 32
;
1995 (4) SA 774
(A) 784A-C.
25
[1993] ZASCA 61
;
1993
(3) SA 742
(A) 767G-H.
26
Reeves and
another v Marfield Insurance Brokers CC and another
[1996] ZASCA 39
;
1996
(3) SA 766
(A) 776A-F;
Basson v Chilwan
above 786B-C.
27
Cf
Fidelity Guards Holdings (Pty) Ltd v Pearmain
1997 (10) BCLR
1443
(SE) 1451A-B);
Taylor v Kurtstag NO and others
2005 1 SA
362
(W) para 45 and see IM Rautenbach
Bill of Rights Compendium
(1998) Service Issue 17 (September 2005) p 1A-68 ff.
28
Kwik Copy
(SA) (Pty) Ltd v Van Haarlem and another
1999
(1) SA 472
(W) 484D-E added a fifth question, viz whether the
restraint goes further than necessary to protect the interest;
Recton (Pty) Ltd v Govender
2006 CLR 1
para 37 but see
De
Klerk Vermaak en Vennote v Coetzer
1999 (4) SA 115
(W) 125C and
Super Towing (Pty) Ltd v Thomas
2001 (2) SA 969
(W) para
16.This question fits comfortably into s 36(1)(e) (or, for that
matter, s 36(1)(c)).
29
At
p 558 and cf C-J Pretorius ‘Covenants in restraint of trade: an
evaluation of the positive law’ 1997 (60)
THRHR
6 at p
23-24.
30
Basson
v Chilwan
above 778D.
31
Sibex
Engineering Services (Pty) Ltd v Van Wyk and another
1991
(2) SA 482
(T) 507D-F.
32
Sibex
Engineering Services
above
507D-F.
33
[1993] ZASCA 61
;
1993
(3) SA 742
(A) 769I-770B.
34
International
Executive Communications Ltd t/a Institute for International
Research v Turnley and another
1996
(3) SA 1043
(W) 1056I-J;
Rectron (Pty) Ltd v Govender
2006
CLR 1
(D) par 40.
35
1993
(1) SA 47
(W) 58H-59A.
36
Clause
26(3).
37
Turner
Morris (Pty) Ltd v Riddell
1996
(4) SA 397
(E) 409I-410B.
38
At
57J-58B.
See similar remarks in
International
Executive Communications Ltd t/a Institute for International
Research v Turnley and another
1996 (3) SA 1043
(W) 1055E-1057A;
IIR South Africa BV (Incorporated in the Netherlands) t/a
Institute for International Research v Hall (aka Baghas) and another
2004 (4) SA 174
(W) 179H-180C;
Fidelity Guards Holdings (Pty)
Ltd t/a Fidelity Guards v Pearman
2001 (2) SA 853
(SE) 859C-J;
IIR South Africa BV (Incorporated in the Netherlands) t/a
Institute for International Research v Tarita and others
2004
(4) SA 156
(W) 166I-167A.
39
No
HQ01X04936 (QBD) of 6 December 2001. Wright J said: ‘I remind
myself again of Mr Read’s argument about policing, but I am
not
prepared to assume that a man who gives a solemn undertaking to the
court will not do his utmost to observe his undertaking,
knowing, as
he does, that if, in fact, he deliberately and willfully breaches
that undertaking, he is likely to be faced with a
motion to commit
him to prison to contempt.’
40
[1978]
1 All ER 1026
(CA) 1033c-d. See
Scorer v Seymour Jones
[1966]
1 WLR 1419
(CA) 1425B-D;
Freight Bureau (Pty) Ltd v Kruger and
another
1979 (4) 337 (W) 340B-E.
41
V
& A Waterfront Properties (Pty) Ltd and another v Helicopter and
Marine Services (Pty) Ltd and others
2006
(1) SA 252
(SCA) para 20-21.