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[2011] ZAFSHC 207
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Omnia Group (Pty) Ltd v Uys and Others (2708/2011) [2011] ZAFSHC 207 (15 December 2011)
FREE STATE HIGH
COURT, BLOEMFONTEIN
REPUBLIC OF SOUTH
AFRICA
Case No: 2708/2011
In
the matter between:
OMNIA
GROUP (PTY) LTD
…...................................................
Applicant
and
RUDOLF
JOHANNES UYS
….........................................
1st
Respondent
RUDOLF
JOHANNES UYS N.O.
…................................
2
nd
Respondent
In
his capacity of Trustee of Die Hanina Trust
WILHELMINA
UYS N.O.
….............................................
3
rd
Respondent
In
his capacity of Trustee of Die Hanina Trust
JACOBUS
PETRUS COETZEE N.O.
…..........................
4
th
Respondent
In
his capacity of Trustee of Die Hanina Trust
PROFERT
(PTY) LTD
…..................................................
5
th
Respondent
JUDGEMENT:
MATHEBULA AJ
HEARD ON
:
22 SEPTEMBER 2011
DELIVERED ON:
15 DECEMBER 2011
[1] The applicant is a
well known company manufacturing and selling fertilizers based in
Sasolburg. It is one of the key players
in this industry conducting
business even beyond the borders of the Republic. Its fertilizer
business rakes in excess of R2,5 billion
sales per year.
[2] The fertilizer
business booms during the planting season. This business is not only
price sensitive but also must keep abreast
with technological
innovation in maximising profits for consumers namely farmers. The
competition is fierce and stiff among different
manufacturers and
consumers.
[3] The applicant, in
order to market its products, engaged a network of sales agents to
deal directly with the consumers. The
First
Respondent
was appointed an agent in 1994 operating in the
Magisterial District of Koppies, Vredefort, Sasolburg and Parys. The
First Respondent
did excellently and in
the past year turnover from his sales was approximately R60-70
million.
[4] It is important to
dwell into how these sales are conducted with the consumers. The
farmers are decided into “buying groups”
namely
“Vredefort”, Calculated Farms” and “Jaap van
der Westhuizen”. These groups are merely bargaining
tools for
better prices for members. The applicant as the major player in the
area considered these groups as its major clients
and the First
Respondent was the agent in charge. According to the applicant the
First Respondent was effectively the first port
of call for the
clients and its face in the area.
[5] The business
relationship between the parties came to an end on the 18
th
April 2011. It appears that the breakdown of the relationship was
brought about by changed commission structure with falling income.
This led to disputes and finally the termination of the agreement.
[6] The parties signed a
Memorandum of Agreement on the 16
th
March 2009. The
parties cited are Omnia Kunsmis a division of Omnia Group (Pty) Ltd
represented by its Marketing Director, Maartens
Jacobs van Jaarsverld
and Die Hanina Trust represented by Rudolf Johannes Uys, its Trustee.
This is the agreement that is at the
crux of the dispute between the
parties. The essence of the matter is that the applicant is seeking
to interdict and restraint
the First Respondent from being engaged as
a salesperson directly or indirectly in the aforementioned
magisterial districts. The
First Respondent
is of the view that the agreement was entered into by the applicant
and the trust which excluded him personally.
[7] In his submission Mr
Redding referred extensively to the Memorandum of Agreement signed by
both parties. In particular, the
restraint
clause 5
on
page
107
of the Founding papers. His argument was that the background
and surrounding circumstances manifest the intention that the aim was
to bind a person. He emphasised that the Trust is neither a juristic
nor a natural person. The Trust was simply a conduit to render
services or perform obligations.
[8] The services and
obligations as per the Memorandum of Agreement were of such a nature
that they could be rendered or performed
by a natural person. This is
also substantiated by the conduct of the parties in particular the
cancellation of the agreement by
the
First
Respondent.
The reference to “
we”
and the
usage of reference to “
I”
and “
Trust”
interchangeably in the opposing papers. It was his view that the
extrinsic evidence points to the parties having entered into the
relationship as per his submission.
[9] I was referred to by
Mr Grundligh to the ambiguity of the agreement. He submitted that the
applicant was not claiming rectification
of the agreement. Further
that the Trust was formed in 1994 but the restraint was inserted in
the 2009. Importantly in this matter,
there was no allegation of any
abuse of the Trust. In addition, that Profert (PTY) Ltd was an entity
belonging to another person
and that it was not formed to defraud the
applicant. The proper analysis is to look this matter in totality
given its own peculiar
circumstances while taking cognisance of the
intention of the language used and its object See
PICARDI
HOTELS LTD v THEKWINI PROPERTIES (PTY) LTD
[2008] ZASCA 128
;
2009 (1) SA 493
SCA. In
COOPERS and LYBRANDT v BRYANT
[1995] ZASCA 64
;
1995 (3) SA 761
(A) at 767 – 768 E per JOUBERT JA the court stated the
following:-
“
The
correct approach to the application of the ‘golden rule’
of interpretation after having ascertained the literal
meaning of the
word or phrase in question is, broadly speaking, to have regard:
to the context in which
the word or phrase is used with its interrelation to the contract as
a whole, including the nature and
purpose of the contract…;
to the background
circumstances which explain the genesis and purpose of the contract.
ie to matters probably present to the minds
of the parties when they
contracted…;
to apply extrinsic
evidence regarding the surrounding circumstances when the language
of the document is on the face of it ambiguous,
by considering
previous negotiations and correspondence between the parties,
subsequent conduct of the parties showing the sense
in which they
acted on the document, save direct evidence of their own
intentions.”
[10] In this matter, the
applicant appointed different agents for its regions to deal with its
clients. It did not dictate the manner
which the agents conducted
their business but relied on their business acumen to further its
objectives in maximising profit. In
addition it made available its
trade secrets in its business models and support for the agents to
perform. In doing so it also
sought to protect itself by inserting
the restraint clause in the event of termination of the agreement.
[11] In this matter the
agreement, some of the obligations to be performed by the agent is to
attend training courses. Further,
the agreement will terminate when
the agent dies. The agent indemnified the applicant in the event of
firearm related incidents.
These obligations could not be performed
by a Trust but a natural person. In this regard, it will be the
First
Respondent.
[12] In concluding
whether restraint was unreasonable or not the court in
RANOLINGS
and ANOTHER v CARAVANTRUCK (PTY) LTD
(1993) 1 ALL SA 389
(A)
at 391:-
“
The
need of an employer to protect his trade connections arises where the
employee has access to customers and is in a position
to build up a
particular relationship with the customers so that when he leaves the
employer’s service he could easily induce
the customers to
follow him to a new business (JOUBERT GENERAL PRINCIPLES OF THE LAW
OF CONTRACT AT 149). Heydon: THE RESTRAINT
OF TRADE DOCTRINE (1971)
at 108, quoting and American case, says that the “customer
contact” doctrine depends of the
notion that:-
“
the
employee, by contact with the customer, gets the customer so strongly
attached to him that when the employee quits and joins
a rival he
automatically carries the customer with him in his pocket”
HERBERT MORRIS LIMITED vs
SAXELBY
(1916) 1 AC 688
(HL) at 709 it was said that the relationship
must be such that the employee acquires
“
such
personal knowledge of and influence over the customers of his
employer…as would enable him (the servant or apprentice),
if
competition were allowed, to take advantage of his employer’s
trade connection…”
[13] It is indeed, so
that the
First Respondent
was a
qualified agronomist and well known in the area. However, it cannot
be discounted that during a period of 22 years he came
to know the
clients of the applicant well and its trade secrets. This is
manifested in his conduct immediately after cancelling
the agreement.
He solicits through newsletter the very same clients of the
applicant. In essence marketing the products of the
competitor much
against the agreement between the parties. Through his conduct the
First Respondent was tapping unfairly on the
vast network created before him and which he developed and
strengthened. In acting
contrary to the agreement, between the
parties this was to the detriment of the applicant.
[14] Given the short
period of the restraint it can never be classified as against public
policy. It was contended that the granting
of this interdict will be
of academic value. This submission is neither based on law or fact.
It is real that the First Respondent
through his conduct is
negatively affecting the applicant. It must be emphasized that the
demands of public policy is that parties
must honour their
agreements. I could also find no other remedy appropriate in this
regard. The First Respondent ought to be restrained.
[15] This matter by its
very nature is an involved one. The importance to the applicant
cannot be overemphasized given its magnitude.
It will be expected
that two (2) counsels will be required to bring an application of
this nature. I could find no basis to depart
from the rule that the
costs follow the event.
[16] I make the following
order:-
The First Respondent is
interdicted and restrained for a period of 12(twelve) months from
19 April 2011, from being employed
by or engaged by the Fifth
Respondent as a salesperson, whether directly or indirectly, in the
Magistrate’s Districts
of Parys, Vredefort, Koppies and
Sasolburg;
The First Respondent is
interdicted and restrained for a period of 12(twelve) months from
19 April 2011, from contacting or
soliciting, drawing away or
dealing with, canvassing or enticing or attempting to draw away,
deal with, canvass or entice any
of the Applicant’s
customers, that were customers the Applicant in the Magistrate’s
District of Parys, Vredefort,
Koppies and Sasolburg as at 19 April
2011, with a view to causing them to terminate their relationship
with the Applicant.
The First Respondent is
to pay the applicant’s costs including the costs of two (2)
counsels.
_____________________
M.A. MATHEBULA, AJ
On behalf of the
applicant: Adv AIS Redding SC
assisted by
GA
Fourie
Instructed
by:
Lovius Block
BLOEMFONTEIN
Ref: PD
YAZBEK/C10777/rb/S169/11
On behalf of the 1
st
respondent: Adv R Grundlingh
Instructed
by:
Lampen
Attorneys
POTCHEFSTROOM
REF: P0095/0441/G
LAMPEN/mv