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South Africa: North Gauteng High Court, Pretoria
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2009
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[2009] ZAGPPHC 249
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T G Medical (Pty) Ltd v Jacobs (10188/2009) [2009] ZAGPPHC 249 (20 April 2009)
NOT
REPORTABLE
IN
THE HIGH COURT OF SOUTH AFRICA
NORTH
GAUTENG COURT, PRETORIA
DATE: 20/4/2009
CASE NUMBER: 10188/2009
T
G MEDICAL (PTY)
LTD
..................................................
APPLICANT
V
GENE
JACOBS
.............................................................
RESPONDENT
JUDGMENT
SAPIRE,
AJ
The
applicant conducts a small business distributing rapid diagnostic
testing kits and related products in South Africa. It has
a sole
distributorship agreement in relation to the products of two
companies namely CS Innovations Pty Ltd and the Scientific
Group Pty
Ltd. The first name supplies blood testing kits and the latter mucosa
testing kits. The kits are use to detect a number
of medical
conditions including pregnancy and the presence of the HIV virus.
The
applicant since its inception in early 2007 had only 2 shareholders
and 3 directors. The shareholders are the Theo Roelofsz
family trust
and the respondent. The directors until the resignation of the
respondent were Theo Roelofsz junior and senior and
the respondent.
These persons are parties to a shareholders agreement which regulated
their relationship but did not provide for
any restraint of trade or
competition. The respondent resigned as a director on the 30th of
January. Since his resignation the
respondent has obtained permission
from CS Innovations to distribute its products in competition with
the applicant. CS Innovations
in agreeing to allow the respondent to
distribute its products in competition with the applicant is in
breech of its sole distributorship
agreement with the applicant.
The
respondent has joined a business Dynamic Diagnostics and in
competition with the applicant intends to market and distribute
the
products of CS Innovations to clients including customers of the
applicant. The respondent has in his possession and insists
on
retaining her data in a client file the exact nature of the
information being in dispute. He also has data in an electronic
format contained on a laptop. The applicant maintains that the
respondent by his actions is acting unlawfully and that his proposed
business constitutes an unfair competition with the applicant.
The
applicant complains that the respondent is using confidential
information that is the property of the applicant, and it is the
applicant’s contention that this constitutes a breech of his
fldutiaiy duties and his also unlawful competition. The applicant
further alleges that the respondent’s interference in the
contractual relationship between the applicant and its supplier
CS
Innovations is unlawful. It must be said that if any party is in
breech of a contractual relationship it is CS Innovations which
is
not party to these proceedings.
As
far as the applicant is concerned the position is exacerbated by the
fact that the respondent misrepresents to both CS Innovations
and the
applicant’s client’s information regarding the applicant
and the respondent’s respective rights and obligations.
The
applicant has brought this application as a matter of urgency in
which it seeks relief in the following terms: (insert par
1-6 on
pages 1-4).
The
respondent is opposing the application and has made a counter
application to rent the applicant from informing the suppliers
that
the respondent’s actions are illegal and that he is in breech
of some duty owed to the applicant by sitting up a business
in
competition.
The
applicant contents that the urgency is that the respondent’s
conduct threatens to cause the applicant’s business
immediate
and irreparable arm in relation to which the applicant has no
alternative remedy. The applicant in so alleging states
that the
respondent is determined to proceed with the cause he has adopted and
maintains that he has every right so to do. I have
grave reservations
as to the urgency of the matter. What the respondent has done has
already taken place and it is not possible
by way of an interdict to
undo any damage which may have been done. This also involves the
finding that what the respondent has
done is not unlawful and the
steps he has taken to establish a business in competition with the
applicant does not constitute unfair
trading which can be stopped.
I
have already observed that there is no restraint meaning covering the
position. It must also be remembered that the information
which the
respondent has about the applicant’s suppliers and its
customers is not of a confidential nature and either has
been
committed to the respondent’s memory or easily ascertainable
from sources available to him.
The
respondent admits that when he left he took with him his “client
file” and his laptop computer. The respondent has
in heads of
argument submitted on his behalf, quoted extensively from LAWSA
Second Edition, part 2, paragraph 266 to demonstrate
that the
information both documentary and electronically recorded does not
constitute secret information which can be protected.
In arguing that
the applicant is not entitled to the relief claimed in the notice of
motion the respondent made reference to METER
SYSTEMS HOLDINGS LTD vs
VENTER AND ANOTHER
1993 (1) SA 409
W in which Stegman J had decide
whether the applicant are entitled to inter alia certain relief
directed at the protection of alleged
confidential information. In
that case as in the present, the respondent was an x- director and
x-employee. In the cause of his
judgment Stegmann J warned that
English law could not be applied slavishly and in this connection
made reference to ATLAS ORGANIC
FERTILIZER PTY LTD vs PIKKEWYN GHWANO
PTY LTD AND OTHERS
1981 (2) SA 173
T.
In
dealing with the customer lists Stegmann J observe that customer
lists drawn up by a trader and kept confidential for the purposes
of
his own business contain confidential information and property of a
trader and distinction is drawn by the judge between such
a situation
and the circumstances where the employee or former employee who
leaves a business retains in his own memory details
of the clients.
In these circumstances an employee is free to use and disclose such
recollected knowledge in his own interest or
in the interest of
anyone else who competes with the old employer. In this case it is
quite clear that the limited number of customers,
some 55 in all is
all known to the respondent as he has had personal contact with them
and the knowledge which he has gained of
the requirements and
preferences cannot be erased from his mind.
There
is nothing on the papers to show that the applicant has adopted any
specific policies, strategies or targets of a kind which
are to be
protected as confidential information and the conclusion to which I
had come is that the respondent is not trading or
preparing to trade
in unfair competition with the applicant. In so far as the applicant
has sole distributorship agreements with
the suppliers of the
equipment in which it trades, Applicant may have a remedy against the
suppliers and may be able to stop them
trading with the respondent.
As
far as the counter claim is concerned no urgency attaches thereto and
anything which may have been said by the applicant cannot
now be
undone. This order, subject to what has been observed regarding sole
distributorship agreements, may afford the respondent
sufficient
answer to any allegations which the applicant may make to its
suppliers and customers who thereof:
1.
I make no order on the counter application
2.
The application is dismissed with costs including the reserved costs
of the 24th of March 2009.
SAPIRE,
ACTING JUDGE OF THE HIGH COURT