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2024
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[2024] ZAECELLC 15
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Algoalex (Pty) Ltd t/a Depot Gonubie v Gower and Others (1251/2023) [2024] ZAECELLC 15 (7 May 2024)
IN
THE HIGH COURT OF SOUTH AFRICA
(EASTERN
CAPE DIVISION, EAST LONDON)
Reportable
CASE
NO: 1251/2023
In
the matter between:
ALGOALEX
(PTY) LTD T/A DEPOT GONUBIE
APPLICANT
and
ZANE
GOWER
FIRST
RESPONDENT
BUID
IT GONUBIE (PTY) LTD
SECOND RESPONDENT
KYRASCORE
(PTY) LTD T/A DEPOT
THIRD
RESPONDENT
KIDDS
BEACH
JUDGMENT
Noncembu
J
[1]
A
rule nisi
enforcing a restraint of trade agreement against
the first respondent was granted by Collet AJ on 15 August 2023. Same
was extended
from time to time. In terms of the
rule
which
operates as an interim order the respondent is restrained, until 12
July 2024, and within 15 km from 35 Main Road, Gonubie,
East London,
from
inter alia
, working for any business which trades
similarly or competes with the business of the applicant, that is, in
conducting a hardware
store.
[2]
The matter was referred to oral evidence by order of Bloem J on 24
August 2023 on two limited
issues. These were:
2.1
whether the applicant and first respondent concluded the written
employment contract attached
as Annexure “BB” to the
founding affidavit, lawfully or at all; and
2.2
whether the first respondent was employed from 1 September 2022 at
Kidd’s Beach DIY
Depot in terms of a tacit contract of
employment with Kyrascore (Pty) Ltd.
[3]
The first respondent was also granted leave to file a further
affidavit on the above-mentioned
issues as part of the aforementioned
order.
[4]
On 24 October 2023 an order joining the third respondent to the
proceedings at the instance
of the first respondent was granted by
Bloem J and the matter was postponed to 2 November 2023 for oral
evidence on the two issues
stated above. Costs for the joinder
application were reserved.
[5]
On 2 November 2023 this court heard the oral evidence of three
witnesses, namely; Preshan
Lawa, the sole director of the applicant;
Nikita Lawa, the administrator of the applicant and the sole director
of the third respondent;
and the first respondent himself, Zane
Gower. The matter was thereafter postponed until 11 December 2023 for
arguments, with the
rule nisi
extended accordingly.
[6]
Before this court therefore, the applicant seeks a confirmation of
the
rule nisi
, whilst the first respondent seeks a discharge
of the
rule
with costs.
Factual background
[7]
It is common cause before this court that Preshan Lawa and Nikita
Lawa are married to each
other. It is also common cause that the
Preshan Lawa is the sole director of the applicant which owns DIY
Depot Gonubie and DIY
Depot Buffalo Road, both operating as hardware
stores. It is further common cause that Nikita Lawa is the
administrator of the
applicant and the sole director of the third
respondent which owns DIY Depot Kidd’s Beach, also a hardware
store. Acting
in such capacities, Nikita deposed to the founding
affidavit on behalf of the applicant as well as the affidavit on
behalf of the
third respondent. This is primarily because the issues
raised in the third respondent’s affidavit were pre-empted in
the
founding affidavit of the applicant. For similar reasons, both
the applicant and the third respondent are represented by the same
attorney and counsel in these proceedings.
[8]
But for the crisp issues for determination at the hearing of the oral
evidence in this matter,
the bulk of the evidence is common cause.
The first respondent was appointed by the applicant as a sales person
at Gonubie DIY
Depot on 26 May 2021. In the course of his
employment to the applicant, he signed a restraint of trade agreement
marked as
annexure “B” to the founding affidavit.
According to the applicant, a competitor, Build It, had opened a
competing
business within their area, and hence it became necessary
for all the employees to sign a restraint of trade agreement. The
employment
of the first respondent was terminated on 12 July 2023 and
he took up employment with the second respondent (Build- It), a
competitor
of the applicant.
[9]
It is further common cause that the first respondent also worked at
Kidd’s Beach DIY
Depot on instructions from Preshaan. On the
applicant’s version, this was out of concern for the first
respondent as business
had slowed down at the Gonubie DIY. As an
option to having him retrenched, the first respondent was utilised at
Kidd’s Beach
DIY but retained his duties as a supervisor at
Gonubie, and his salary continued to be paid by the applicant.
According to the
first respondent however, his employment at Gonubie
DIY was terminated when he was transferred to Kidd’s Beach DIY
on 1 September
2022, and a tacit employment contract was entered into
with the third respondent (Kyrascore). This is denied by both the
applicant
and the third respondent.
[10] According to
the evidence of Nikita, materially supported by that of Preshaan, the
first respondent was employed
as a sales person at Gonubie DIY on 26
March 2021, promoted to the position of supervisor in March 2022 and
in May 2023 signed
a one-year employment contract as a supervisor at
Gonubie DIY. Video evidence depicting the signing of the said
contract was presented
in court as well as the contract itself marked
as annexure “BB”. Payslips of the first respondent
depicting the position
of supervisor were also presented to the court
in support of the applicant’s case in this regard.
[11] Quite
significantly, the first respondent disavowed ever signing an
employment contract as a supervisor with
the applicant in his
answering affidavit, to the extent that he even referred to the said
contract as a fraudulent document. He
contended that his signature
had been fraudulently obtained and placed on the said document. This
is significant because he dedicated
an entire topic (almost 5 pages)
to this issue in his answering affidavit titled “Fake/Fraudulent
contract of employment”.
[12] At paragraphs
26 and 27 of his answering affidavit he deposes to the following:
“
26.
I have only signed two contracts with the applicant. My first
contract was a probation contract which
is not attached, and my
second contract was the salesman position, which is annexed to the
founding papers and marked as annexure
A.
27.
Annexure
BB
which purports to be my employment contract is
disingenuous and false I am seeing this contract for the first time
during my disciplinary
hearing on the 12 July 2023. In the
circumstances, the applicant is put to the proof thereof.”
[13] He states the
following at paragraphs 31 – 33:
“
31.
I reiterate, I did not enter into annexure
BB.
I intend to open a criminal case of fraud regarding annexure BB. The
applicant seeks to bind me to the restraint of trade by attaching
a
fake document that I was not a party to.
32.
I suspect that annexure
BB
was tempered with because annexure
BB
reflects my signature on the last page. I suspect that my
signature was taken from another document (i.e. my probation
contract).
The initials that I see on the bottom of the pages look
suspicious.
33.
Nikita must explain where she received this contract. She brought it
into these proceedings.
She must explain these discrepancies and the
circumstances and the circumstances that led to the conclusion of
this purported contract.
Annexure
BB
is suspicious and
dubious.”
[14] In a
significant turn of events however, after Nikita does provide proof
and the circumstances under which
the contract was signed (in the
replying affidavit), the first respondent makes an about turn and
suddenly remembers signing the
contract in question. Notably, this
was one of the two issues that were referred to oral evidence because
on his earlier version
that he had never seen the contract in
question until his disciplinary inquiry on 12 July 2023.
[15] In the
supplementary affidavit he deposed to in preparation for the oral
evidence, the first respondent admits
to signing the supervisor
contract, but contends that this was intended as a ploy to show the
labour inspector that all was well
at the applicant’s business
and that all the employees had employment contracts. He therefore
signed the contract on the
instructions of Preshaan as he was told
that it was to be destroyed afterwards.
[16] This however,
does not add up because on his own version, he already had an
employment contract of a salesperson
(annexure “A”) with
the applicant. It therefore makes no sense for him to sign a bogus
contract to mislead the labour
inspector when there was a valid
contract in place which was to serve the same purpose, i.e. show the
inspector that all was well
with the applicant’s business. From
having never seen the contract before and even threatening criminal
prosecution, to having
signed it for a bogus purpose makes for a 360
0
shift. The fist respondent’s version in this regard therefore
(both the initial and the latter version) is simply untenable.
[17] It was
explained to court that the initial promotion in February 2022 was by
means a verbal contract. Proof
thereof however, is shown in the first
respondent’s payslip for the month of March 2022 which reflects
both the new position
of supervisor and an increase in salary which
goes with such a position. Clearly there is nothing bogus about those
and the first
respondent gives no explanation in this regard, nor
does he dispute the said payslip. It was further explained on behalf
of the
applicant that it was after it was decided that all employee
contracts had to be on a 1-year basis that the contract changed to
a
written contract, and hence the first respondent’s contract was
only signed in May 2023 even though it was effective from
March 2023.
This evidence was not gainsaid by the first respondent.
[18] The above also
conclusively answers the question of the termination of Gower’s
employment by the applicant
on 1 September 2022. Surely the first
respondent would not have signed a contract with the applicant in May
2023 if his employment
had been terminated in September the previous
year. His pay slips are objective evidence supporting that of Nikita
and Preshaan;
that he continued to be employed and to receive his
salary from the applicant even though he also worked at the Kidd’s
Beach
and the Buffallo Street stores on instructions of Preshaan. The
explanation given for this is that business had slowed down at the
Gonubie store because of the competitor store opened in the area, and
to avoid retrenching the first respondent, Preshaan had decided
to
utilise him in the other stores as well.
[19]
The evidence presented to court also shows that during the times that
the respondent worked at the Kidd’s
Beach DIY he also continued
with his supervisory duties at the applicant’s store in
Gonubie. He did not receive any salary
at the Kidd’s Beach DIY
and continued to receive his instructions from Preshaan the entire
time. No evidence therefore has
been tendered to show that a tacit
agreement had been concluded between the first respondent and the
third respondent.
[20]
The test for the existence of a tacit contract was established by the
Appellate Division in
Standard
Bank of South Africa Ltd v
Ocean
Commodities
[1]
where
Corbett JA stated:
“
In order to
establish a tacit contract it is necessary to show, by a
preponderance of probabilities, unequivocal conduct which is
capable
of no other reasonable interpretation than that the parties intended
to, and did in fact, contract on the terms alleged.
It must be proved
that there was in fact consensus
ad
idem
.
[2]
[21]
A party alleging the existence of a tacit contract must show on a
balance of probabilities unequivocal
conduct on the part of the other
party that proves that it intended to enter into a contract with
it.
[3]
[22] It is not
disputed that the first respondent worked at the Kidd’s Beach
DIY, however, it has been clarified
how this came about and under
what circumstances. It can therefore not be said that the conduct of
the third respondent is capable
of no other reasonable interpretation
than that the parties intended to, and did in fact, enter into an
employment contract. In
these circumstances therefore, the first
respondent has failed to establish the existence of a tacit contract
of employment on
a balance of probabilities.
[23] Given that the
first respondent did not dispute signing the restraint of trade
agreement, his argument in
this regard being that it no longer
applied to him because he had ceased working for the applicant in
September 2022 when he started
working for the third respondent, and
given that this argument has been dispelled as reflected above, the
only logical conclusion
remaining is that he is indeed bound by the
restraint of trade agreement. Furthermore, as is clear from the
agreement itself, the
restraint is not attached to any position, so
long as one is an employee of the applicant they are bound by it. It
is therefore
irrelevant whether the first respondent was a
salesperson or a supervisor at the time of signing the agreement.
What matters is
that he was an employee, a factor I am satisfied that
the applicant has established on a balance of probabilities.
[24] It
is common cause that the first respondent took up employment with
Build-it which is situated
within the prohibited radius in terms of
the restraint agreement. Under these circumstances therefore he has
breached the terms
of the restraint of trade agreement and as such,
the
rule nisi
stands to be confirmed.
[25]
Nothing turns on the argument raised by the first respondent
pertaining to the lifting of the
corporate veil. The law is clear
under which circumstances that can be applied and no case for same
has been made in the present
matter. The first respondent is not
seeking relief against the applicant or the third respondent in this
matter, an aspect which
could warrant a consideration of the lifting
of the corporate veil under relevant circumstances. Therefore, this
issue does not
arise.
Conclusion
[26] The
only issue that remains for determination is the aspect of the
reserved costs for the joinder
of the third respondent. Given the
nature of the defence raised by the first respondent in the matter,
which placed the third respondent
squarely within the midst of the
issues that arose in the matter, specifically with regards to the
lifting of the corporate veil
defence, I am persuaded that the third
respondent was a necessary party to the proceedings, and as such its
joinder was warranted.
There is no reason therefore why costs should
not be in the cause.
Order
[27]
Therefore, the following order shall issue:
(a)
The
rule nisi
is
confirmed with costs.
(b)
The reserved costs for the joinder application shall be costs in the
cause.
V P NONCEMBU
JUDGE OF THE HIGH
COURT
APPEARANCES
Counsel
for the Applicant (Defendant):
C D Kotze`
Instructed
by:
Gravett Schoeman Attorneys
Beacon Bay
East London
Counsel
for the Respondent:
A Mafu
Instructed
by:
Dyushu & Mabece Inc Attorneys
Nahoon
East London
Date
of hearing:
11 December 2023
Date
judgment delivered:
07
May 2024
[1]
Standard
Bank of South Africa Ltd v Ocean Commodities
[1984]
ZASCA 2; 1983 (1) SA 276 (A).
[2]
Ocean
Commodities
above
n 12 at 292 A – C.
[3]
Buffalo
City Metropolitan Municipality v Nurcha Development Finance (Pty)
Ltd
[2018]
ZASCA 122.
Paras 16-22.