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[2021] ZALAC 34
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Carolin v World Power Products (Pty) Ltd (JA44/2020) [2021] ZALAC 34; (2021) 42 ILJ 1898 (LAC) (14 June 2021)
IN
THE LABOUR APPEAL COURT OF SOUTH AFRICA, JOHANNESBURG
Not
reportable
Case
no: JA 44/2020
In
the matter between:
ARTHUR
OWEN
CAROLIN Appellant
and
WORLD
POWER PRODUCTS (PTY)
LTD Respondent
Heard:
20
May 2021
Delivered:
14
June 2021
Coram:
Waglay
JP, Davis JA and Molefe AJA
JUDGMENT
DAVIS
JA
Introduction
[1]
This
case concerns the question whether the appellant breached a
termination agreement entered into with his erstwhile employer
by
disclosing a list of customers to third parties. In turn, this raises
the issue as to whether the respondent was legally entitled
to treat
the agreement as having been terminated.
[2]
The
facts are essentially common cause. The appellant commenced
employment with the respondent in 1990. In June 2016, it appeared
that an extremely strained relationship had developed between the
appellant and Mr Janus Gortzen, the managing director of the
respondent. This resulted in the appellant’s approach to the
respondent’s human resources manager, Mr Peet van Rooyen,
to
discuss a possible exit plan. This discussion prompted Mr Gortzen to
approach the appellant on 10 June 2016 with a view to ending
the
employment relationship between the appellant and the respondent by
way of the conclusion of a termination agreement. This
initiative
proved to be acceptable to the appellant and the agreement was
concluded on 10 June 2016. The appellant left the employ
of the
respondent on that date and surrendered his cell phone and company
laptop to Mr van Rooyen. On 20 June 2016, the appellant
commenced
employment at Remcor (Pty) Ltd, a competitor of the respondent.
[3]
On
22 June 2016, the appellant generated an email to a number of people
in which he wrote; ‘please see my new contact details
below’.
Underneath this message appeared ‘Arthur Carolin Remkor
Technologies. It is common cause that the list of addressees,
constituted a range of clients of the respondent to whom the
appellant had now communicated.
[4]
On
24 June 2016, the respondent’s attorney addressed a letter to
the appellant advising the appellant that he had repudiated
the
termination agreement by sending this email to customers of the
respondent. Accordingly, the respondent had accepted such
repudiation. This contention was predicated on clause 2.3 of the
agreement which reads thus:
‘
The Employee
undertakes not to disclose information, of any nature regarding the
Company or this agreement, to any person or organisation.
Such
information shall include methods, processes, computer software,
documentation, client lists, programmes, trade secrets, technical
information, intellectual property, drawings, financial information,
or any other information which could be damaging to the Company’s
operations or which could benefit other parties to the detriment of
the Company.’
[5]
The
agreement further provided that the respondent pay the appellant an
amount of R 400 000 in full and final settlement before
26 June 2016.
However, on the basis of the conduct of the appellant in generating
the email, the respondent had adopted the view
that the agreement had
been repudiated which entitled it to refuse to pay the agreed sum of
R 400 000.
[6]
On
28 June 2016, the appellant’s attorney wrote to the
respondent’s attorney denying that the appellant repudiated the
agreement by way of the email but undertook to delete and destroy all
of the respondent’s property in the appellant’s
possession, including business cards which he had accumulated while
in the employ of the respondent.
[7]
The
respondent was unimpressed with this offer and persisted with the
view that the conduct of the appellant constituted a repudiation
of
the settlement agreement which it had accepted. Thereafter the
appellant sought relief in the court
a
quo
.
The court
a quo
[8]
Sitting
in the court
a quo
,
Moshoana J found that contrary to the clear terms of the termination
agreement that the appellant ‘disclosed information
emanating
from the business cards amassed during his employment, that
information is clearly customer connections. Customer lists
have been
held by our Courts to be worthy of protection and need not
necessarily be embodied in the document to be construed as
confidential information.’ The learned judge concluded that the
appellant had repudiated the termination agreement which
thus
entitled the respondent to accepted this decision and thus regard the
agreement as having been cancelled. It was on this basis
that the
appellant approached this court on appeal.
Appellant’s
argument
[9]
The
core argument advanced by Mr van As, on behalf of the appellant, was
that the court
a quo
should have concluded that the appellant had sent the relevant email
to those addresses he had taken from business cards as opposed
to
customer lists. This source of information did not fall within the
scope of confidential information and thus there had been
no breach
of clause 2.3 of the termination agreement through the generation of
the relevant email. For this reason, Mr Van As submitted
that the
court
a quo
should not have concluded that the respondent was entitled to
withhold the payment of the contractual amount because there was
no
forfeiture clause in the termination agreement. In addition, Mr van
As sought reliance on the following passage from the judgment
in
Micaren Exel
Petroleum Wholesaler (Pty) Ltd v Stella Quick Shop (Pty) Ltd and
another
[2020]
ZASCA 61
at para 11:
‘
The
traditional approach to an enquiry into an allegation of repudiation
is to examine the objective intention of the repudiator
and the
response or acceptance thereof by the aggrieved party. The question
is whether the conduct of the repudiator or non- performing
party,
when fairly considered by a reasonable person in the place of the
aggrieved or innocent party, demonstrates an intention
no longer to
be bound by the contract. Needless to say, such conduct must be
viewed comprehensively. All material aspects thereof
must be taken
into account.
[10]
In
Mr van As’ view, on the strength of this dictum, the court
a
quo
had erred in
concluding that the appellant had demonstrated an intention to
repudiate the agreement, particularly because the agreement
did not
contain a
lex
commissoria
which
allowed the respondent to cancel the agreement in the event that the
appellant breached clause 2.3.
Evaluation
[11]
The
wording of clause 2.3 clearly unlocks this dispute. It provides,
inter alia
,
that the appellant undertook not to disclose any information of any
nature. Such information shall include methods, processes,
computers,
software, documentation, client lists, programs, trade secrets.
[12]
There
is no suggestion from the wording that a disclosure had to be
regarded as confidential information. The wording of the agreement
is
clear. It embraces the prohibition of the disclosure of information
including client lists. Pressed by the Court to answer whether,
in
the event that the appellant had disclosed trade secrets or technical
information or intellectual property which are also contained
in
clause 2.3 would the respondent have been entitled to repudiate the
agreement, Mr van As was forced to concede that this would
have been
a justification for regarding the appellant’s conduct as a
repudiation of the agreement. No distinction can plausibly
be drawn
between this concession and the appellant’s disclosure of
client lists. The fact that the appellant generated an
email which
was captured on the system of Remcor, his new employer, and which
contained the email contacts of a range of the respondent’s
customers manifestly constituted a disclosure of the respondent’s
client lists.
[13]
To
the argument that all the email said was ‘Hi, here is my new
address’, this act surely sufficed to provide Remcor
with a
list of the respondent’s clients. At best, it can be regarded
as a subterfuge by the appellant to circumvent the scope
of clause
2.3. However, the generation of this email held the clear consequence
that a list of customers of the respondent were
now captured on
Remcor’s computer system.
[14]
The
law on repudiation is neatly captured in
Nash
v Golden Dumps (Pty) Ltd
1985 (3) SA 1
(A) where at p 22 Corbett JA (as he then was):
‘
Where one
party to a contract, without lawful grounds, indicates to the other
party in words or by conduct a deliberate and unequivocal
intention
no longer to be bound by the contract, he is said to “repudiate”
the contract... Where that happens the other
party to the contract
may elect to accept the repudiation and rescind the contract. If he
does so, the contract comes to an end
upon communication of his
acceptance of repudiation and rescission to the party who has
repudiated.’
[15]
It
is clear from the facts of this case that the conduct of the
appellant in this case fell within the scope of this dictum. By
his
conduct, the appellant had exhibited a clear and unequivocal
intention not to be bound by the terms of the termination agreement
by ensuring that a list of the clients of the respondent had been
disclosed through the email of 2 June 2016 and hence he was no
longer
prepared to abide by the terms of the termination agreement entered
into with the respondent on 10 June 2016.
Costs
[16]
Mr
Van As submitted that, given that the appellant was now out of pocket
in the amount of R 400 000, he should not be mulcted with
costs of
this appeal. There is no justification in this argument. The
appellant sought to pursue an appeal which is clearly without
any
merit and accordingly ran the risk that an adverse finding would be
accompanied by a costs order. The risk has now passed into
a reality.
[17]
For
all of these reasons, the appeal is dismissed with costs.
Davis JA
Waglay JP and Molefe AJA
concur.
APPEARANCES:
FOR
THE APPELLANT: Adv
M J VAN AS
Instructed
by Fluxmans Attorneys
FOR
THE RESPONDENT: Adv
R
Pottas
Instructed
by
Leach JW Attorneys