Marlim (Pty) Ltd v Longhurst (2912/2005) [2005] ZAFSHC 107 (29 September 2005)

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[2005] ZAFSHC 107
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Marlim (Pty) Ltd v Longhurst (2912/2005) [2005] ZAFSHC 107 (29 September 2005)

IN THE HIGH COURT
OF SOUTH AFRICA
(ORANGE FREE STATE
PROVINCIAL DIVISION)
Case No.: 2912/2005
In
the case between:
MARLIM
(PTY) LTD
Applicant
and
MICHAEL LONGHURST
Respondent
JUDGEMENT:
H.M. MUSI J
_____________________________________________________
HEARD ON:
8 SEPTEMBER 2005
_____________________________________________________
DELIVERED ON:
29 SEPTEMBER 2005
_____________________________________________________
[1] This is an
application to enforce a restraint of trade contract. The applicant
is a duly incorporated company conducting business
at Welkom, in the
Free State. Its core business is the sale, installation and repair
of airbrake systems, coolers, hydraulic and
related components.
[2] The respondent is a
former employee of the applicant. He is a businessman and technician
involved in the repair of air – and
hydraulic brake systems. He
resides and conducts business in Bloemfontein.
[3] It is common cause
that the respondent was employed by the applicant from April 2003 to
September 2003 as a technician in the
field of installation and
repair of airbrakes and related components. The applicant alleges
that some relatives of the respondent
had previously work for it but
that after they had left its employ they went on to establish rival
businesses operating in the same
line of trade as it, and thus became
its trade competitors. The applicant wanted to ensure that the
respondent does not follow the
same route and for that reason entered
into a restraint of trade contract with him. The contract was
allegedly entered into and
signed on 30 April 2003. It is annexed to
the founding affidavit, marked “A” (hereinafter referred to as
annexure “A”).
The material terms of this contract which are
relevant to the instant dispute are as follows:
¡°
2.3 The
EMPLOYEE will not, after termination of his service with the
EMPLOYER, for whatever reason, accept any similar employment
with a
similar business/undertaking as that of the EMPLOYER, for a period of
2 (two) years in any place/area situated within a 200
(two hundred)
kilometre radius, of the Welkom City Hall
;
2.4 The EMPLOYEE will not, after
termination of his service of the EMPLOYER, for whatever reason, have
or obtain any share/interest,
being direct or indirect, in a similar
business/undertaking as that of the EMPLOYER for a period of 2 (two)
years, in any place/area
situated within a 200 (two hundred)
kilometre radius, of the Welkom City Hall;
2.5 The
EMPLOYEE will not after termination of his service with the EMPLOYER,
for whatever reason, have or make any contact, directly
or
indirectly, with the EMPLOYER’S:
(a) Clients;
(b) Suppliers;
(c) Debtors
or;
(d) Creditors.”
[4] It is alleged that
the respondent has breached the above terms in that he has set up a
rival business in Bloemfontein which is
within 200 kilometre radius
of the Welkom City Hall and competes with the applicant.
[5] The applicant brought
this application on the basis urgency and on 14 July 2005 Rampai J
granted it a rule
nisi
returnable on 4 August 2005, in the following terms:
¡°
2. ‘n
Bevel
nisi
uitgereik word
wat respondent oproep om op 4 Augustus 2005 om 9h30 of so spoedig
moontlik daarna, redes aan te voer, indien enige, waarom ‘n bevel
in die volgende terme nie finaal gemaak moet word nie:
(a) dat respondent verbied word om vir
die tydperk vanaf verlening van die bevel tot 1 September 2006 in
diens te wees van ‘n persoon
of instelling soortgelyk aan die van
applikant in enige plekarea geleë binne ‘n radius van 200 (twee
honderd) kilometer vanaf
die Welkom Stadsaal.
(b) dat
respondent verbied word om tot 1 September 2006 enige belang te
verkry of aandeel te verkry, hetsy direk of indirek, in ‘n
onderneming of besigheid soortgelyk as die van die applikant in enige
plek of area geleë binne ‘n radius van 200 (twee honderd)
kilometer vanaf die Welkom Stadsaal.
(c) dat
respondent verbied word om direk of indirek met die volgende persone
kontak te maak en te intimideer.
(i) kliënte van applikant
(ii) verskaffers
van applikant
debiteure van applikant
krediteure van applikant
dat respondent
die koste van die aansoek sal betaal.
3. Die bevel in interme van paragrawe
2(a), (b) en (c) hierbo sal geld as ‘n tussentydse bevel met
onmiddellike werking.”
The rule
nisi
was extended further to the date of hearing on 8 September 2005 and I
extended it further to 29 September 2005 pending judgment.
[6] The respondent
opposes the application on various grounds. The first ground is an
attack on the validity of the contract. He
denies that annexure “A”
represents a valid and binding contract between him and the
applicant. He says, firstly, that he was
merely given a document and
told to sign, which he did without reading it. Nor were the terms
thereof discussed with and explained
to him. Secondly he disputes
that annexure “A” is the document that he signed and says that
the document that he signed had
more pages. The respondent also
points out that annexure “A” has not been signed by the
applicant, and contends that as such
it could not be a binding
contract.
[7] I intend dealing with
this ground right away because if the contract is found not to be
valid, then that would be end of the matter.
This is so because it
is trite law that in a claim based on a contract the onus is on the
party relying on it to prove its existence
and the material terms
thereof. See
DA
SILVA v JANOWSKI
1982 (3) SA 205
(AD) at 219 B – C.
[8] It should be noted at
the outset that these are motion proceedings and the rule enunciated
in
PLASCON-EVANS
PAINTS LTD v VAN RIEBEECK PAINTS (PTY) LTD
1984 (3) SA 628
A applies. That means that where there are
bona
fida
disputes of fact the order sought can only be granted if the facts
averred by the respondent taken together with the admitted facts
in
the applicant’s affidavit justify it. However, sometimes a
respondent’s denial of a fact averred by an applicant may be so
poor or improbable that the court would be entitled to reject it. To
that extent, there is no
bona
fida
dispute of fact.
[9] The averment made by
the respondent that annexure “A” is not the document that he
signed does not, in my view, raise a
bona
fida
dispute of fact and can summarily be dismissed. Firstly it is a bald
statement made without conviction. The respondent does not
even
attempt to substantiate it, by giving an indication of what other
pages are missing. He apparently refers to an annexure.
But then
again he does not deny that the signature appearing on annexure “A”
is his. Most importantly the applicant relies not
on any annexure
but exclusively on the terms as fully set out in annexure “A”.
I would have no
difficulty holding that annexure “A” is the document that
respondent signed and which purports to be the contract
in issue.
[10] The other averments
made by the respondent stand on a different footing and raise serious
disputes of fact which cannot be resolved
on the papers. The
applicant’s case is complicated by the fact that contract has not
been signed on its behalf.
[11] In its replying
affidavit, the applicant seeks to cure the obvious defect with the
averment that René Taljaard was the person
authorised to conclude
and sign the contract on its behalf. This is a disingenuous
explanation. The first page of the document
makes it clear that Mr.
Johan van der Merwe is the person who represented the applicant. He
is clearly the person who should have
signed but failed to do so for
unknown reasons. René Taljaard only signed as a witness.
Significantly she signed not only as a
witness for the applicant, but
also for the respondent as well. Surely she could not sign as a
witness and a party at the same time.
These discrepancies raise the
question of whether the parties to the contract were ever together
and discussed its terms before
it was signed.
[12] In support of his
submission that the applicant has failed to discharge the onus of
proving the validity of the contract and
the material terms thereof,
Mr. Fischer relied heavily on the case of
DA
SILVA v JANOWSKI
supra
.
That case supports the respondent’s case insofar as it confirms
that the onus is on the applicant to prove not only the existence
of
a valid and binding contract but also the material terms thereof. It
was further held that it is not enough to show that the
other party
has appended his/her signature to the document. The crux of the
matter is the intention to be bound and it must be clear
that in
appending his/her signature the other party was signifying an
acceptance of the terms of the contract. In
casu
there is a dispute of fact whether the respondent’s signature
signified acceptance of liability. However, this issue is immaterial
in view of what follows infra.
[13] Mr. Hefer submitted
that the written contract, annexure “A”, is not of paramount
importance as it is only a recordal of an
oral agreement that had
earlier been entered into by and between the parties. He referred to
SCHLINKMAN
v VAN DER WALT AND OTHERS
1947 (2) SA 900
EDLD. However, the instant case is clearly
distinguishable from the latter judgment. In the Schlinkman-case
there had been a definite
earlier agreement which had been made an
order of court. Although the agreement had stipulated that a formal
lease agreement would
be drawn, which had not been done, the court
held that such provision did not mean that the settlement was not
binding and unenforceable.
[14] The biggest hurdle
in the applicant’s way is that its case is not based on an earlier
verbal agreement, of which annexure “A”
would be a mere recordal.
The founding affidavit makes it clear that annexure “A” is the
sole and complete agreement. Paragraphs
4.3 and 4.5 state as
follows:
¡°
4.3
Om
hierdie rede het ek gedurende April 2003, toe Respondent sy dienste
by Applikant hervat het, daarop aangedring dat ‘n ooreenkoms
deur
Respondent
onderteken
word
.
(my own underlining)
4.4 Die relevante terme van hierdie
ooreenkoms vir doeleindes van hierdie aansoek lees as volg:”
The material terms of
the agreement are then set out. Mr. Van der Merwe, the deponent to
the founding affidavit proceeds as follows:
“
4.5 Hierdie ooreenkoms is dan
inderdaad deur Applikant en Respondent onderteken op 30 April 2003,
‘n afskrif waarvan hierby aangeheg
word as aanhangsel “A”.”
[15] The applicant must
stand or fall by its founding affidavit. What appears in paragraph
10 of the replying affidavit does not
take the matter any further.
Besides, René Taljaard confirms that annexure “A” is the sole
and complete agreement between the
parties. She states in paragraph
3:
¡°
Ek
bevestig voorts dat vir sover dit die onderhawige ooreenkoms
aanbetref, die ooreenkoms soos per aanhangsel “A” tot die
funderende
verklaring, die algehele ooreenkoms is wat deur Respondent
onderteken
moes word
en uiteindelik
deur Respondent onderteken is.” (my own underlining)
[16] R.H. Christie, the
Law of Contract in South Africa, 4
th
Edition at page 122 correctly states the legal position as follows:
¡°
Once
the parties have decided that they will reduce their contract to
writing and that they will be bound by their written contract
but not
by any earlier informal contract, then the contract comes into
existence when, and only when, the written document containing
it has
been signed by both parties”.
The contract herein was
not signed by both parties and has accordingly not been fully
executed. It is null and void.
[17] In the
circumstances, it is unnecessary to deal with the rest of the issues
raised in this matter. Nor is it necessary to express
any view on
the correctness or not of the judgment in
CANON
KZN (PTY) LTD t/a CANNON OFFICE OUTOMATION v BOOTH
2005 (3) SA 205
NPD, wherein Kondile J departed from the
well-established authority of
MAGNA
ALLOYS & RESEARCH (SA) (PTY) LTD v ELLIS
[1984] ZASCA 116
;
1984 (4) SA 874
A and decided that in view of the fact that the right
to freedom of trade is now entrenched in our constitution and that a
restraint
of trade covenant impinges on such right, the onus to prove
that enforcing the restraint would not be contrary to public policy
or
unreasonable now shifts onto the party seeking to enforce it.
[18] In the result, the
rule
nisi
is discharged with costs.
____________
H. M. MUSI, J
On behalf of
applicant: Adv. J.J.F. Hefer
Instructed
by:
Hill,
McHardy & Herbst
BLOEMFONTEIN
On
behalf of respondent: Adv. P.U. Fischer
Instructed
by:
Krohn
Incorporated
BLOEMFONTEIN
/em