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[2012] ZAGPPHC 174
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Ermelo Sand CC t/a Pro Fire v Barnard and Others (45533/2012) [2012] ZAGPPHC 174 (17 August 2012)
NOT
REPORTABLE
IN
THE NORTH GAUTENG HIGH COURT,
PRETORIA
(REPUBLIC OF SOUTH AFRICA)
CASE
No. 45533/2012
DATE:17/08/2012
In
the matter between:-
ERMELO
SAND CC t/a PRO
FIRE
...................................................................
Applicant
and
ADAM
BARNARD
...............................................................................................
First
Respondent
LIZ-MARI
HATTINGH
..........................................................................................
Second
Respondent
A
& M INDUSTRIAL
SUPPLIES
........................................................................
Third
Respondent
JUDGMENT
Van
der Byl, AJ:-
[1
] In this application the Applicant, Ermelo Sand CC, trading as Pro
Fire, seeks, as is apparent from its initial Notice of Motion,
as a
matter of urgency, in addition to a punitive order of costs, an order
-
(a)
committing the First and Second Respondents to imprisonment for a
period of 90 days for contempt of the court order granted
on 25 May
2012 in Case No. 24512/12 (prayer 3);
(b)
interdicting the Respondents from approaching or soliciting business
from any of the Applicant's clients listed in Annexure
S3 to the
founding affidavit (record p. 81) regarding signage requirements and
the sales and annual service of fire-extinguishers
and fire fighting
equipment for a period of 18 months from 24 February 2012 (prayer 4).
I
may mention that these orders were at first sought by way of a rule
nisi and interim relief, but all the parties having filed
their
papers, the matter was argued on the basis that final relief is
claimed.
[2]
The Applicant, being an entity established more than 19 years ago,
conducts the business of servicing and supplying fire extinguishers
and fire fighting equipment to the mining and corporate industries in
various towns and areas in an around Mpumalanga and also
conducts the
business of designing and manufacturing for the same clients signs
mainly relating to prescribed safety signage and
also the branding of
motor signage and general signs.
[3]
It is common cause that the First Respondent was previously employed
by the Applicant as a technician and a representative of
the
Applicant's business until he left the Applicant's employ on 24
February 2012. Whilst in the employment of the Applicant he
was "the
face of the business" and had a cell phone of his own on which
clients could at all times contact him. After
having left the
Applicant's employ he obviously took the cell phone with him.
[4]
The Second Respondent was similarly employed by the Applicant as a
graphic designer, was also in charge of the production of
signage
manufactured by the Applicant and had contact with many of the
clients until she resigned and left the Applicant's employ
on 23
March 2012.
[5]
It is an indisputable fact that the First and Second Respondents
obtained in the course of their employment by the Applicant
information relating to the Applicant's clients, the Applicant's
price structures and business opportunities which clearly constitute
a protectable interest.
[6]
Their employment agreements contained confidentiality and restraint
of trade clause.
[7]
It is also common cause that the First Respondent, after having left
the employment of the Applicant, registered an incorporated
the Third
Respondent which conducts business in direct competition with the
Applicant and has taken up a position in the Third
Respondent in the
exact same capacity in which he was employed by the
Applicant.
The Second Respondent was after her resignation from the employment
of the Applicant on 23 March 3012 employed by the
Third Respondent
where she admittedly conducts the same functions as she conducted
when employed by the Applicant.
[8]
Having received information that the First Respondent diverted
business away from the Applicant and has with the benefit of
inside
knowledge of the Applicant's pricing structures approached clients of
the Applicant and, inter alia, offered to manufacture
signage at
prices lower than the prices of the Applicant and that the Second
Respondent designed the same graphic designs to produce
signage for
former clients of the Applicant.
[9]
On this information the Applicant launched an urgent application
against the three Respondents on 4 May 2012 and obtained on
25 May
2012 an order in terms of which the First and Second Respondents were
interdicted, inter alia, from -
(a)
"approaching and soliciting business from any of the Applicant's
clients listed in Annex ure F to the Founding Affidavit
pertaining to
the annual service of their fire extinguishers and fire-fighting
equipment for a period of 18 months from 24 February
2012" (para
1.6 of the order, record p. 25);
(b)
"utilising any information and documents belonging to the
applicant of any nature whatsoever, including client lists, whether
compiled by the first respondent during his term of employment of any
other person employed by the applicant'
(para
1.7 of the order);
(c)
"competing unfairly with the applicant (para 1.9 of the order).
[10]
It would appear that the clients referred to Annexure F are not all
the clients of the Applicant (who are now listed in the
aforesaid
Annexure S3), but only refers to clients which were serviced by the
First Respondent.
[11]
It is, briefly stated, the Applicant's case in this application that
it established that the Respondents, equipped with knowledge
of the
Applicant's trade secrets, continued to conduct business under the
name of the Third Respondent and competing unfairly with
the
Applicant in defiance of, particularly, prayers 1.6, 1.7 and 1.9 of
that order.
[12]
On having investigated this state of affairs it established -
(a)
that AVBOB Funeral Services, being a former client of the Applicant,
but not listed in Annexure F, elected to no longer make
use of the
services of the Applicant due to the fact that it elected since June
2012 to make use of the services of the Third Respondent
which
services constituted the supply of signage similar to that provided
by the Applicant;
(b)
that the Mashala Mine Group and Vunene Mine Group, being clients
specified in Annexure F, were also making use of the services
of the
Third Respondent for the service and supply of its fire fighting
equipment;
(c)
that the Ligbron High School in Ermelo, being a client which is also
listed in Annexure F, was contacted by the First Respondent
to
confirm a quote given to the school during April 2012 to finalize the
acceptance of the quote to supply safety signs to the
school;
(d)
that the Respondents during June 2012 sold fire extinguishers and
signage to the Mooiplaats Mine, forming part of Coal of Africa
Group
of mines which business forms a substantial part of the Applicant's
business turnover and also obtained a vendor number from
it and have
contacted the Coal of Africa Group from which they also applied for a
vendor number;
(e)
that the Respondents during June 2012 approached the Umlabo Mine,
also an established client of the Applicant which forms part
of the
S.T.A Group of Mines.
[13]
According to the deponent to the Applicant's founding affidavit he,
following up a quotation submitted to Mooiplaats Mine on
26 June 2012
for the annual service of its fire-extinguishers, on 4 July 2012
visited the workshop of the Mooiplaats Mine and,
upon entering the
main entrance, he saw the First Respondent in his vehicle branded
with the Third Respondent's insignia exiting
the premises with
approximately 40 fire extinguishers on the back of the vehicle. On
enquiry at the workshop he was informed that
the Respondents are in
business with Mooiplaats Mine and took the Applicant's
fire-extinguishers to be serviced.
[14]
In an attempt to amicably resolve the dispute between the Applicant
and the Respondents the Applicant, through their attorney
of record
arranged for a meeting between the parties which eventually took
place of 24 July 2012. At the meeting the Respondents
were requested
to sign an undertaking (Annexure S15, record p. 111) in which they
declare that their actions are covered by paragraphs
1.6, 1.7 and 1.9
of the court order of 25 May 2012 and undertake not to unfairly
compete with the Applicant (see: record p. 18,
para 8.33 of the
founding affidavit).
[15]
The Respondents were not prepared to sign the undertaking in the form
it was submitted to them and suggested various amendments
to the
undertaking which in effect had as its aim to limit any undertakings
to the clients specified to Annexure F as they obviously
did not
regard them restricted in approaching any other clients (Annexure
S16, record p. 117).
[16]
As is apparent from the Respondents' opposing affidavit deposed to by
the First Respondent, it appears, apart from a number
of technical
defences raised, to be the Respondents' case -
(a)
that they are in terms of prayer 1.6 only interdicted from
approaching and soliciting business from any of the Applicant's
clients listed in Annexure F pertaining to the "annual service
of their fire extinguishers and fire-fighting equipment and
not from
approaching and soliciting business from any of its other clients and
not from approaching and soliciting business from
all clients
pertaining to business other than the "annual service of their
fire extinguishers and fire-fighting equipment]
(b)
that the Applicant failed to make out a case that they are in
contempt of prayers 1.7, 1.8 and 1.9 of the court order in question
as the Respondents at all times acted in accordance with prayer 1.6
and, therefore, never competed unfairly with the Applicant;
(c)
that the Applicant is not entitled to the relief claimed in prayer 4
of the Notice of Motion as it merely envisages an amendment
of prayer
1.6 of the court order of 25 May 2012 by extending the interdict to
all three Respondents in relation to any of the clients
of the
Applicant regarding also signage requirements and the sales.
[17]
Furthermore, it is contended by the Respondents -
(a)
that they concede that they conducted business with entities not
listed in Annexure F;
(b)
that, in so far as the Applicant purports to extend the interdict to
the clients listed in Annexure S3, the Applicant is no
longer dealing
with various clients referred to in paras 4.11.1 to 4.11.7 of the
opposing affidavit (record pp. 137 to 138);
(c)
that the Applicant failed to submit any proof that the Second
Respondent is in contempt of the court order;
(d)
that, in relation to the Applicant's allegations relating to AVBOB
Funeral, Services, AVBOB Funeral Services was not part of
the
previous order which in any event does not restrict the provision of
signage and that it is in any event free to decide with
whom it
wishes to conduct business;
(e)
that, in relation to the Applicant's allegations relating to the
Mashala Mine Group, the Respondents never contacted the Mashale
Mine,
but that they were contacted by the Group itself, that they informed
the Group of the order, but that the Group nevertheless
elected to
conduct business with the Respondents;
(f)
that, in relation to the Applicant's allegations relating to Vunene
Usutu Mine Group, the Respondents did not approach the
Group, but
that they were approached the Group which indicated that it has not
used any supplies or services from the Applicant
in the last three
years and that although it was aware of the order it in any event
wish to do business with the Respondents;
(g)
that, in relation to the Applicant's allegations relating to the
Ligbron High School, the Respondents were contacted by the
school to
come and give a quotation for signage in the school hall and to fit
brackets to the wall as the school was hosting a
musical an it wanted
the signs and the brackets, that during a visit to the school the
First Respondent discussed the court order
but as signage was not
part thereof the school was comfortable to make use of the
Respondent's services, but that the Respondents
were later phoned by
the school and informed the Respondents that it was phoned by the
Applicant's attorney and does not want to
become part of the legal
battle between the parties;
(h)
that, in relation to the Applicant's allegations relating to
Mooiplaats Mine, the Third Respondent was indeed awarded a vendor
number, but that Mooiplaats Mine is not included in Annexure F and
that there was accordingly nothing prohibiting the Respondents
to
obtain such a number;
(i)
that, in relation to the Applicant's allegations relating to Coal of
Africa, Coal of Africa does not appear on Annexure F;
(j)
that, in relation to the Applicant's allegations relating to Umlabo
Mine, that Umlabo Mine does not appear in Annexure F and
if that mine
forms part of the S.T.A Group of Mines the Respondents were not aware
of thereof;
(k)
that, in relation to the Applicant's allegations relating to the
Applicant's visit to Mooiplaats Mine, it is noted that the
Applicant
waited until 3 August 2012 to issue this application, that Mooiplaats
Mine does not appear in Annexure F, that the Respondents
were
contacted by an employee of Mooiplaats Mine and that the
fire-extinguishers at the back of his vehicle were not that of
Mooiplaats
Mine but belong to Kwena Mining who acts as a contractor
of Mooiplaats Mine.
[18]
In response to these allegations made the Respondents, the Applicant
contends in its replying affidavit -
(a)
that the clients referred to paragraphs 4.11.1 to 4.11.7 of the
opposing affidavit are, referring to various quotations and
tax
invoices and, particularly, the fact that these clients formed part
of the goodwill of the business that was purchased by the
Applicant
during May 2010 (see: p.9, para [19] of the judgment of Hiemstra AJ
handed down on 25 May 2012 in Case No.24512/12),
indeed clients of
the Applicant;
(b)
that the Respondents' conduct, in so far as they conducted business
with the Applicant's clients who are not listed in Annexure
F,
constitutes a breach of clauses 1.7 and 1.9 of the court order of 24
May 2012.
[19]
The disputes between the parties calls for an interpretation of all
the paragraphs the court order of 24 May 2012 read in context
and
regard being had to the allegations contained in the papers filed in
the application which had given rise to that order.
[20]
It is on the one hand the Respondents submissions that paragraph 1.6
of the court order (1) that only prohibits the First and
Second
Respondents from contacting the clients listed in Annexure F; (2)
that the prohibition exclusively pertains to service of
fire-extinguishers and fire fighting equipment; (3) that nothing
restricts them from approaching and soliciting the business of
the
business of the Applicant's clients not specifically mentioned in
Annexure F.
[21]
Having read the papers in the application that served before Hiemstra
AJ and the judgment handed down by him, it is in my view
clear that
he held that the Applicant has a protectable interest and that the
Respondents should be restrained from doing business
with all the
clients of the Applicant as such business will constitute unfair
competition, hence the order contained in paragraph
1.9 of the order.
[22]
If regard is had to paragraph 1.9 in all the circumstances of the
disputes between the parties, it is in my view clear that
it could
not have been the intention to restrict the First and Second
Respondents from approaching and soliciting business from
not only
the clients listed in Annexure F. If that was the intention paragraph
1.9 must be construed of having no effect and to
be superfluous. Any
such interpretation will defeat the whole case of the Applicant (see,
eg.: record p. 51, para 9.13, record
p. 52, para 9.14, record p. 54,
para 10.6, record p. 436, para 26 and record p. 452, para 53).
[23]
The Respondents' conduct in conducting, with their inside knowledge
of the Applicant's business, business which entails not
only the
service of fire-extinguishers and fire fighting equipment, but also
in relation to all the other activities comprising
the Applicant's
business, with clients of the Applicant, whether or not listed in
Annexure F and whether or not the Respondents
or the clients
approached each other, in my view clearly constitutes unfair
competition, as was indeed held by Hiemstra AJ.
[24]
The next question is whether the First and Second Respondents in
having acted in the manner they did, they did wilfully and
in bad
faith acted in defiance with the court order.
[25]
In my view the fact that they interpreted the court order and,
particularly, paragraphs 1.7 and 1.9 thereof as being limited
to the
circumstances set out in paragraph 1.6, there is insufficient proof
beyond all reasonable doubt that their actions constitute
mala fides
and wilfulness on their part.
[26]
I am, however, satisfied that the matter calls for an order which
clearly prevent them from conduct which constitutes unfair
competition in the context of their contractual obligations to the
Applicant.
[27]
As far as costs are concerned, I am satisfied that the Applicant is,
although only partially entitled to the relief claimed,
entitled to
its costs as it had no option other than to approach the court so as
to protect its protectable interests.
[28]
Apart from these considerations, I, sitting in the urgent court where
I am swamped by various other urgent applications, am
unable to deal
in particular detail with all the allegations contained in the papers
and the submissions made in relation to those
allegations on behalf
of the parties, except to say that I have read and considered all the
allegations made therein and all submissions
made by counsel on both
sides.
[29]
In the result I make the following order:-
1.
THAT the relief claimed in prayer 3 be dismissed.
2.
THAT the First, Second and Third Respondents be interdicted from
conducting any business with the Applicant's clients listed
in
Annexure S3 of the founding affidavit (record p. 81) regarding
signage requirements and the sales and annual service of
fire-extinguishers
and fire fighting equipment for a period of 18
months, in the case of the First Respondent, as from 24 February 2012
and, in the
case of the Second Respondent, as from 23 March 2012.
3.
THAT the First and Second Respondents be ordered to pay, jointly and
severally, tr^e one paying the other to be absolved, the
costs of the
Applicant.
P
C VAN DER-BYL
ACTING
JUDGE OF THE HIGH COURT
ON
BEHALF OF THE APPLICANT: ADV J A VENTER
DR
T C BOTHA INC Ref: C Botha Tel: 017 819 1881
c/o
WEAVIND & WEAVIND Weavind Forum 573 Fehrsen Street
Nieu
Muckleneuk PRETORIA
Ref:
Mr. N Viviers/DR/B24070 Tel : 012 346 3098
ON
BEHALF OF THE RESPONDENTS: ADV J MINNAAR
On
the instructions of: PRINSLOO WOLMARANS & GREYLING ATTORNEYS
c/o
MALAN NORTJE ATTORNEYS 13 Farmer's Folly Lynn wood PRETORIA
Ref:
H J Nortje/RM/EP0184 Tel: 012 348 1005/7
DATE
OF HEARING: 15 August 2012
JUDGMENT
DELIVERED ON: 17 August 2012