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2024
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[2024] ZALCJHB 86
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UAV and Drone Solutions (Pty) Ltd v Mcerlean and Others (J669/23) [2024] ZALCJHB 86 (26 February 2024)
IN
THE LABOUR COURT OF SOUTH AFRICA, JOHANNESBURG
Not
Reportable
Case
No: J669/23
In
the matter between:
UAV
AND DRONE SOLUTIONS (PTY) LTD
Applicant
And
DALE
MCERLEAN
First Respondent
VAUGHN
KYLE VOSTER
Second Respondent
ALAN
MICHAEL ENEVER
Third Respondent
ZAYNE
OBERHOLZER
Fourth Respondent
GERT
JOHANNES MALAN
Firth Respondent
VIKKI
BRYNARD
Sixth Respondent
VUTSHILA
MATHEBULA
Seventh Respondent
MASEGO
LANGA
Eighth Respondent
MOOSA
AMANJEE
Ninth Respondent
FAHEEMA
PATON-MAYET
Tenth Respondent
LINEAR
MANAGEMENT SYSTEMS (PTY) LTD
Eleventh Respondent
UAV
INDUSTRIES (PTY) LTD
Twelfth Respondent
UAV
INDUSTRIES TRAINING AFRICA(PTY)LTD
Thirteenth Respondent
Heard:
11 January 2024
Delivered:
26 February 2024
Summary:
Restraint of Trade – application to refer disputes of fact to
oral evidence.
(This
judgment was handed down electronically by circulation to the
parties’ legal representatives, by email, publication
on the
Labour Court’s website and released to SAFLI. The date on which
the judgment is delivered is deemed to be 26 February
2024.)
JUDGMENT
VENTER,
AJ
Introduction
[1]
This is an application for the referral of certain disputes of fact
to oral evidence, for the purposes of the Court adjudicating
the
urgent application, being an application for the enforcement of
confidentiality agreements which contain restraints of trade.
[2]
The applicant seeks an order referring the following disputes of fact
to oral evidence:
2.1 Whether the
first respondent signed the confidentiality agreement which is
attached to the founding affidavit as “FA38”.
2.2 Whether the
applicant waived the restraint of trade of the second respondent
which is attached to the founding affidavit
as “FA56”.
2.3 The exact
terms of the second respondent’s restraint of trade.
2.4 Whether the
first to tenth respondents are in possession of the confidential
information of the applicant.
2.5 Whether the
business of the eleventh respondent is similar or comparative to or
competitive with the business of the
applicant.
[3]
The applicant launched the urgent application on 7 June 2023 to
enforce confidentiality agreements against the first to
tenth
respondents who had all resigned from the employment of the applicant
to take up employment with the eleventh respondent.
[4]
The relevant dates in respect of each respondent are as follows:
4.1 The first
respondent resigned on 15 February 2023. The applicant seeks to
enforce the restraint of trade until 31 March
2024.
4.2 The second
respondent resigned on 17 February 2023. The applicant seeks to
enforce the restraint of trade until 24 March
2024.
4.3 The third
respondent resigned on 17 February 2023. The applicant seeks to
enforce the restraint of trade until 16 March
2024.
4.4 The fourth
respondent resigned on 23 March 2023. The applicant seeks to enforce
the restraint of trade until 23 April
2024.
4.5 The fifth
respondent resigned on 15 March 2023. The applicant seeks to enforce
the restraint of trade until 18 April
2024.
4.6 The sixth
respondent resigned on 6 March 2023. The applicant seeks to enforce
the restraint of trade until 6 April 2024.
4.7 The seventh
respondent resigned on 1 March 2023. The applicant seeks to enforce
the restraint of trade until 15 March
2024.
4.8 The eighth
respondent resigned on 24 March 2023. The applicant seeks to enforce
the restraint of trade until 24 March
2024.
4.9 The ninth
respondent resigned on 26 April 2023. The applicant seeks to enforce
the restraint of trade until 23 May 2024.
4.10 The tenth
respondent resigned on 15 May 2023. The applicant seeks to enforce
the restraint of trade until 31 May 2024.
[5]
Prior to launching the urgent application and on 26 April 2023 the
applicant’s attorney of record, Hoosen Wadiwala
Attorneys (HW
Inc) addressed letters of demand to the first, second, third, fourth,
fifth, seventh and eighth respondents alleging
a concern that the
first, second, third, fourth, fifth, seventh and eighth respondents
are in breach of their obligations in the
confidentiality agreements
as the eleventh respondent is a direct competitor of the applicant
providing management consulting services
in competition to the
applicant.
[6]
The letters of demand in respect of the first and second respondents
differed in material respects from the letters of
demand addressed to
the others in that in respect of the first respondent there is no
allegation by HW Inc that she is bound by,
signed or concluded a
confidentiality agreement or restraint of trade agreement with the
applicant.
[7]
In respect of the second respondent, the allegation is made that the
second respondent was paid for his agreement to conclude
a restraint
of trade, however, despite this payment, the applicant could not
locate the signed restraint of trade. HW Inc quoted
the clause in the
second respondent’s contract of employment providing for the
obligation not to disclose confidential information
post termination
of employment.
[8]
In respect of the third, fourth, fifth, seventh and eighth
respondents reference is made to signed confidentiality agreements.
[9]
On 2 May 2023 HW Inc addressed a letter of demand to the eleventh
respondent alleging that:
9.1
In respect of the first respondent she owes common law and
contractual obligations to the applicant not to disclose confidential
information.
9.2
In respect of the second respondent, that in addition to the
contractual obligations not to disclose confidential information,
he
has an obligation, alternatively, gave an undertaking that he would
for a period of 24 months post termination of his employment,
not
solicit any of the applicant’s clients for purposes of
employment or providing the same or similar services and that
he
signed the same confidentiality agreement as the one signed by the
other respondents (save the first respondent).
9.3
The employees referred to in the letter of demand being the
first, second, third, fourth, fifth, seventh and eighth respondents
signed separate confidentiality agreements containing restraints of
trade in terms of which they would not be engaged in any capacity
whatsoever, for a period of 12 months in any concern or business
which is similar or comparative to or in competition with the
applicant.
[10]
On 8 May 2023, Stein Scop Attorneys (SS Inc) responded to the letters
of demand on behalf of the first, second, third,
fourth, fifth,
seventh, eighth and eleventh respondents.
[11]
As this letter was front and centre of the applicant’s argument
for the referral of the disputes of fact to oral
evidence and the
respondent’s argument in opposition thereto, I will quote the
relevant paragraphs from the letter in detail:
‘
3.
The allegations and demands made in your Letters appear to be based
on a misunderstanding of the facts and circumstances
on the part of
your client. In particular, in paragraph 8 of your Letters (save for
the letters addressed to Ms McErlean and Mr
Enever, in which the
relevant wording appears at paragraphs 3 and 5, respectively), you
state that LMS is a direct competitor of
your client which operates
in the private security sector and provides inter alia management
consulting service, in competition
with your client in relation to
the management of security providers including drones, ground crew
security teams, Remote Operator
Certificate applications to the CAA
and others.
4.
This is incorrect. LMS is not a direct competitor of your client, nor
is it a company that carries on a similar or comparative
business to
that of your client. We elaborate upon that below so that there can
be no
misunderstanding which results in unnecessary litigation
which can be avoided if your client appreciates the correct position
.
The
business of LMS
5.
LMS is in the audit and compliance business, ensuring that security
providers deployed to its clients provide comprehensive
service
delivery. By contrast, your client’s business is primarily
security aerial surveillance operations (i.e the deployment
of drone
surveillance services to clients in order to detect and deter
criminal activity). LMS does not conduct any security or
drone
services whatsoever.
6.
Your client is well aware of the nature of LMS’ business and
the fact that it is not involved in the drone surveillance
industry
or the provision of security services. In fact, your client has
already engaged with LMS in an effort to benefit from
each other’s
complementary rather than competitive services, which it would not
have done had LMS and your client been competitors.
8
The SLA makes it clear that your client’s primary
business is to provide RPAS security monitoring to its clients.
LMS’
business is entirely different, and LMS does not offer an RPAS system
to its clients. As mentioned above, LMS’
services are purely of
a consulting nature and they do not provide any security services as
such.
9.
Your contention that LMS is a direct competitor of your client is
therefore plainly incorrect and our Clients are not in
breach of the
restraints of trade encompassed in their various employment
agreements with your client by taking up employment with
LMS.
10.
The confidentiality obligations that rest on our clients in terms of
contract or common law are also not at threat: they
are not going to
be in a competitive environment where there is an objectively
sustainable risk of disclosure (firstly) and, secondly,
they have all
unequivocally undertaken to abide by their confidentiality
obligations.
…
17.
The undertakings provided above are given on an open, with prejudice
basis, and encompass the undertakings that your client
would be
entitled to receive by way of an application to Court. In
circumstances where there is no basis for your client to believe
that
our Clients will breach those undertakings,
and LMS is not (sic)
competitor of your client, there can be no basis whatsoever for your
client to approach the Court as threatened
in your Letters
. Any
proceedings launched by your client in that regard will be opposed
and this letter will be brought to the attention of the
Court.’
(own emphasis)
[12]
There was no response from HW Inc to this letter from SS Inc.
[13]
A month later, on 7 June 2023, the applicant launched the urgent
application for hearing on the urgent roll on 19 June
2023. The time
periods set out in the notice of motion for the filing of the
answering affidavit and replying affidavit were 20
June 2023 and 4
July 2023 respectively.
[14]
On 9 June 2023, two days after the urgent application was launched SS
Inc addressed a “
with prejudice
” letter to HW Inc,
the objective of which was to “
provide what our clients
consider to be a fair and reasonable solution to this application,
avoiding a drawn- out costly and, in
our client’s view,
meritless litigation”
.
[15]
SS Inc set out in some detail the reasons why the respondents
contended that the applicant and eleventh respondent were
not
competitors, contended that the founding affidavit did not
demonstrate to the contrary and despite, and in order to avoid costly
litigation, the eleventh respondent undertook until the end of March
2024 to refrain from approaching the applicant’s existing
clients.
[16]
SS Inc furthermore denied that the second respondent is under any
restraint with the deponent to the founding affidavit,
Petrus van
Niekerk (van Niekerk) having given permission to the second
respondent to continue working with Transnet on the Project.
[17]
In conclusion SS Inc placed the following on record:
‘
36.
We repeat our client’s undertakings, which they make without
conceding that they are obliged to give them;
36.1
LMS will refrain from engaging with the Excluded Customers
until the end of March 2024;
36.2
UAVI and UAVI Training will refrain from the (sic) engaging
with the Excluded Customers until the end of March 2024.
37.
In the event that your client persists with this application in the
face of these undertakings;
37.1
This letter will be brought to the attention of the Court;
37.2
A with-prejudice draft order reflecting its material parts
will be presented to Court; and
37.3
Our clients will seek a punitive costs order.
38.
In the interim, our instructions are to proceed with the preparation
of our clients’ answering affidavit. If we
have not received a
response by the time that that affidavit is delivered, the contents
of this letter will be reiterated in it.
39.
All our clients’ rights remain strictly reserved.’
[18]
In the founding affidavit in support of the urgent application to
enforce the confidentiality agreements dated 29 May
2023, and in
particular with regard to those confidentiality agreements of the
first and second respondents, the deponent, van
Niekerk:
18.1
In respect of the first respondent alleges that as at 6 March
2023, the applicant could not locate a signed confidentiality
agreement and that on 23 May 2023, shortly before the launching of
the application, a signed agreement was located in a box marked
for
destruction. van Niekerk further alleges that the first respondent at
no time during the discussions subsequent to her resignation
and when
she gave undertakings, mention that she signed a confidentiality
agreement in 2019.
18.2
In respect of the second respondent, relies on a one page
letter of appointment dated 11 March 2020 signed by the then
joint
chief executive officers, Georges Sayegh (Sayegh) and Otto Werdmuller
von Elgg (Werdmuller von Elgg) in which mention is
made of a payment
to the second respondent of R100 000.00 for a restraint of trade of a
year and contends that the terms of this
restraint must be construed
to be the same as these agreed to by the 3
rd
to 10
th
respondents.’
[19]
The respondents’ answering affidavit consisting of 138 pages
excluding annexures was served and filed on 30 June
2023, seven (7)
court days after the deadline imposed by the applicant of 20 June
2023 and some 19 days before the set down on
the urgent roll.
[20]
The “late” delivery of the answering affidavit resulted
in a postponement of the urgent application to the
urgent roll for
hearing on 31 August 2023.
[21]
The respondents, in the answering affidavit deposed to by the first
respondent:
21.1 Took issue
with the applicant proceeding by motion due to the foreseeability of
disputes of fact and contended that
at the very least the disputes of
fact set out in paragraph 1.1 of the draft order be referred to oral
evidence,
21.2 Deny that the
eleventh respondent is a competitor of the applicant,
21.3 Deny that the
first respondent signed the confidentiality agreement found by the
applicant in the box on 23 May 2023,
21.4 Allege that
van Niekerk waived the enforcement of the second respondent’s
restraint of trade.
[22]
In respect of the denial of competition, the respondents set out a
comprehensive explanation of the business of the eleventh
respondent.
[23]
In respect of the denial by the first respondent that she signed the
confidentiality agreement, annexure “FA38”,
the first
respondent accuses the applicant of manufacturing the document and
gives an explanation why the confidentiality agreement
is suspect
being that:
23.1
She agreed with the former joint chief executive officers of
the applicant, Werdmuller von Elgg and Sayegh, when she
commenced
employment that she would not be required to sign a restraint of
trade agreement, this being a condition of her employment.
23.2
Annexure “FA38” is not initialled by her on each
page and is signed by her allegedly on Sunday, 1 September
2019,
prior to her commencing employment with the applicant on 2 September
2019.
23.3
Regina Maree (Maree) who signed the alleged confidentiality
agreement on behalf of the applicant was a junior employee
and was
not authorised to sign such contracts on behalf of the applicant.
[24]
In respect of the second respondent, the first respondent reiterates
the allegation set out in the 8 May 2023 correspondence
being that
van Niekerk waived the enforcement of the restraint of trade.
[25]
On 24 July 2023 the applicant with the assistance of a different
legal team, brought an
ex parte
Anton Piller application and
obtained an order against the first respondent for purposes of
searching the first respondent’s
home, workplace and vehicle
for confidential information belonging to the applicant.
[26]
On 3 August 2023, SS Inc in response to the execution of the Anton
Piller order on 27 July 2023 proposed that the first
respondent meet
with HW Inc, and van Niekerk for purposes of returning any
confidential documents the first respondent has in her
possession,
deleting any such documents from her hard drives, which would
alleviate any unfounded concerns that your client may
have regarding
the misappropriation or use by Ms McErlean of any of your client’s
confidential information and to prevent
a misleading narrative as to
Ms McErlean’s
bona fides
from being developed.’
[27]
On 4 August 2023 instead of responding to the with prejudice proposal
of SS Inc, HW Inc uses the letter of SS Inc to
inform SS Inc that the
replying affidavit will, now as a result, be served late.
[28]
On 10 August 2023, SS Inc responded,
inter alia
, as follows:
‘
3.14
Fully aware of the contents of Anton Piller application and
that your client was in the process of executing that order,
on 27
July 2023, you wrote to us. Remarkably, that was to refuse a
postponement of the hearing. In that letter, you are silent
as to the
intended timing of your client’s replying affidavit. Our client
presumed, quite reasonably, that it would be delivered
in accordance
with the amended notice of motion: on 4 August 2023.
3.15 Having, on 27
July 2023, received a copy of the Anton Piller application from our
clients and having properly considered
it, our clients instructed us
to make the proposal in our letter of 3 August 2023 regarding the
files that were copied from Ms
McErlean’s hard drive during the
execution of the Anton Piller application. We reject the insinuation
in your letter of 4
August 2023 that the timing of that proposal
indicates a lack of
bona fides
.
3.16
On 4 August, you responded to that proposal, that your client
needed more time to consider it and that your client had
decided
again to amend unilaterally the timeline in its amended notice of
motion. Coyly, you said that your client would “hold
in
abeyance” its replying affidavit until it had had an
opportunity to investigate the issues in our letter of 3 August 2023.
3.17
As we write this letter, your client’s replying
affidavit remains outstanding, weeks after it should have been
delivered. Your client has provided no indication when it will be
delivered. Indeed, quite the oppose is the case.
…
8.
Your client has taken an entirely unreasonable approach to this
matter. As we have said to you on previous occasions, the
way that
your client is conducting itself is causing prejudice to our clients.
Your letter of 4 August 2023 is yet a further example
of this. Our
clients have repeatedly made reasonable proposals on the way forward,
all of which have led to naught through your
client’s
recalcitrant stance.
9.
The one fact, however, that is as plain as a pikestaff that this
matter will not be ready for hearing on 31 August 2023.
10.
We, therefore, ask that your client confirms that it will remove the
matter from the roll by Monday, 14 August 2023. If
this is not done,
we hold instructions to approach the Registrar for assistance in this
regard. A copy of the letters exchanged
between our firms will then
be provided to the Registrar. We trust that this will not be
necessary and that the parties will instead
agree on a reasonable
timeline going forward.’
[29]
On the same day in separate correspondence, SS Inc reiterated its
proposal made on a with prejudice basis which was in
effect a
proposal for the parties to engage with each other.
[30]
On 18 August 2023 SS Inc wrote to HW Inc as follows:
‘
3.
Save to write to us on 4 August 2023 to confirm that your client
required more time to consider the Proposal and you would
hold the
delivery of its answering affidavit in abeyance in the meantime, your
client has failed to:
3.1
Respond to Our Letter;
3.2
Respond to the Proposal;
3.3
Remove the matter from the roll on 31 August 2023.
4.
In the circumstances, and given your previous insistence that the
matter proceeds on 31 August 2023 despite our client’s
assertions that the matter will not be ready for hearing by then, we
have no option but to assume that you intend to proceed with
the
matter on 31 August 2023 notwithstanding that your client has to date
still not
delivered its replying affidavit in what it, as
applicant, contends is an urgent application, and have briefed
counsel accordingly.
We point out that your offices were extremely
critical of what you contended to be unreasonable delay on the part
of our Clients
to deliver their answering affidavits
. That
criticism rings particularly hollow in the light both your Client’s
inexplicable and considerable delay in delivering
a
replying
affidavit in its own “urgent” application and your
offices complete failure to communicate or engage constructively
with
our offices in an effort to ensure that the Court is not burdened
with an application that may an application that may not
be ripe for
hearing alternatively to ensure that the matter is ripe for hearing
without prejudicing any parties’ rights as
litigants
.’
[31]
Despite the tight deadlines given to the respondents to file the
answering affidavit, the applicant only delivered its
replying
affidavit on 18 August 2023 almost two (2) calendar months and
thirty-two (32) court days after the delivery of the answering
affidavit.
[32]
In the replying affidavit, van Niekerk accuses the respondents of
deliberately creating disputes of fact in an effort
to prevent the
main application from being heard on 31 August 2023. Van Niekerk
refers to the disputes raised by the respondents
as “
spurious
”
and states that the applicant will be seeking an order to refer the
disputes to oral evidence.
[33]
In respect of the first respondent’s denial of her signature of
annexure “FA38”, the applicant relies
solely on a report
from a handwriting expert where the expert, Mr. Bester “
has
opined that the signature on the confidentiality agreement is
authentic and is that of the first respondent
”.
[34]
Van Niekerk further alleges that the confidentiality agreement is
signed by Maree on behalf of the applicant who has
informed Ms
Tarynne Willis (Willis), an attorney employed by HW Inc that while
she was employed by the applicant, she signed contracts
of
employment. No confirmatory affidavit by Maree is attached to the
replying affidavit.
[35]
The applicant expresses the wish to cross examine the first
respondent on her allegations.
[36]
In regard to the second respondent van Niekerk admits that he did
agree that the second respondent continue work on the
Project as the
client so desired but alleges that he only so agreed on proviso that
the second respondent did not do so for a competitor.
[37]
In respect of the respondents’ denial that the eleventh
respondent is a competitor of the applicant, van Niekerk
relies on
the “
mass exodus
” of the respondents to “
infere”
competition and further relies on statements made by the first
respondent prior to her statements made in the answering affidavit
to
demonstrate competition and/or that this issue was not a foreseeable
dispute of fact.
[38]
On 22 August 2023, HW Inc informed SS Inc that the first respondent’s
proposal to engage was rejected and that
on 31 August 2023 at the
hearing of the urgent application, the applicant will seek the
referral of the disputes of fact to oral
evidence. HW Inc demands
that SS Inc agree to the referral of the disputes of fact to oral
evidence by 24 August 2023 failing which
an order will be sought on
31 August 2023.
[39]
On 28 August 2023, five (5) court days after the delivery of the
replying affidavit, the respondents deliver their supplementary
affidavit in reply to the allegations in the replying affidavit and
in anticipation of the matter being heard on 31 August 2023.
[40]
On or about 29 August 2023 the applicant requested a postponement of
the matter set down on 31 August 2023 which the
respondents agreed to
on condition the applicant tenders the respondents’ wasted
costs.
[41]
On 30 August 2023, HW Inc replied refusing to agree to the applicant
paying the wasted costs and proposing costs to be
reserved. This
proposal was declined by SS Inc. It was, however, eventually agreed
that the matter would be postponed
sine die
with costs
reserved. The agreement was communicated to the court on 30 August
2023 at 14:56 by email from HW Inc.
[42]
On 31 August 2023, Justice Nkutha- Nkontwana issued an order
postponing the matter with no order as to costs. The order
did not
reflect the agreement of the parties that the costs would be
reserved.
[43]
On 4 October 2023 SS Inc wrote to HW Inc raising the concerns that:
43.1 The urgent
application was launched almost four months’ prior, a month has
passed since 31 August 2023 and the
main application has not been
re-enrolled.
43.2 Any urgency
alleged by the applicant has been lost. The following was stated:
‘
This is amplified
by the leave sought in your client’s replying affidavit to
refer certain factual issues to oral evidence
for determination. It
is this relief (i.e the referral of certain issues to oral evidence)
that your client must seek at the rescheduled
hearing date rather
than the relief sought in your client’s notice of motion to the
Application. Should this relief (the
referral to evidence), be
granted, the parties would no doubt embark on a protracted discovery
process before oral evidence is
heard. The list of issues in respect
of which your client seeks referral to oral evidence is also
extensive and the witnesses that
would testify are many.
It is in this context
that the parties must consider the relief sought by your client in
the Application, i.e. for the respondents
to adhere to their
restraints of trade and resign from their employment with Linear
Management Systems (Pty) Ltd until
March/ April 2024
. On your
own client’s own version, the relief that it seeks has a
long-stop date of April 2024, when it becomes moot.
Assuming, optimistically,
that the hearing of the referral sought to oral evidence is heard
this year, there is no conceivable way
that the discovery process and
presentation of oral evidence will be finalised before (on your
client’s version) the expiry
of the restraints of trade in
question. The relief sought in the Application has, therefore,
already become moot. Litigants are
not to burden a Court with the
adjudication of matters that have become moot, lest a punitive costs
order be visited upon them.
As said in our client’s
answering affidavit delivered in the Application, to the extent that
your client contends that our
clients’ conduct has caused your
client to suffer harm (which is denied), the correct course of action
is for your client
to pursue a damages action against our clients. In
fact,
your client has explicitly acknowledged this by launching a
damages action against our client on 7 September 2023 under case
number
089851/2023
. Those proceedings are, as you are no doubt
aware, being defended by our clients.’
[44]
SS Inc requested HW Inc to withdraw the main application as the
relief the applicant seeks will become moot when the
matter is
considered and the application constitutes an abuse of the court
process. SS Inc cautions that if the applicant persists
it will seek
a punitive costs order.
[45]
On 10 October 2023 HW Inc informed SS Inc that the applicant will not
withdraw the matter and requested the honourable
Waglay JP to enrol
the matter on an expedited basis proposing 28, 29 or 30 November 2023
as suitable dates.
[46]
On 15 November 2023, SS Inc again contend to HW Inc that urgency has
“
now entirely dissipated
” with the relief sought
in the notice of motion ending in April 2024. SS Inc again propose
that the applicant withdraw the
application and tender costs.
[47]
On 11 December 2023, the referral application is set down for hearing
on 11 January 2024.
Counsels’
Argument
[48]
The applicant was represented by Adv I Green SC (Adv Green) with Adv
P Bosman.
[49]
The respondents were represented by Adv C Whitcutt SC (Adv Whitcutt)
with Adv JJ Meiring.
[50]
At the outset of the argument for the applicant I enquired from Adv
Green whether the application for the enforcement
of the
confidentiality agreements or an application for the referral of
specific disputes as per the draft order attached to his
heads of
argument was before me.
[51]
Adv Green
stated that I was tasked only with the determination of the
application for oral evidence and not the main application
and that
as a consequence I am not called on to adjudicate the matter on the
basis of the trite principle of
Plascon-Evans
[1]
.
Adv Green argued that the court is to “
stick
to its lane”
and only consider the referral application. Adv Green did agree,
however, that if I was inclined to dismiss the referral application,
the applicant, on the application of
Plascon-Evans
,
will not be entitled to final relief as sought in the amended notice
of motion. Adv Green was willing to and did so agree that
if I
dismiss the referral application, the main application is to be
dismissed on the strength of
Plascon-Evans
.
[52]
Adv Green further contended that the applicant has taken a
responsible approach by seeking the referral of the disputes
of fact
to oral evidence especially in circumstances where the respondents
have agreed that the disputes should be referred to
oral evidence.
The argument was that there is a joint recognition by the parties
that
Plascon-Evans
is inappropriate and where the parties have
both said this, the Court should not decide otherwise.
[53]
The fact that the respondents in the answering affidavit agree that
at least the disputes of fact relating to whether
or not the first
respondent signed the confidentiality agreement, whether or not the
applicant waived the restraint of trade of
the second respondent and
what the exact terms are of the second respondent’s restraint
of trade should be determined with
oral evidence, is a factor that
should weigh heavily in the court exercising its discretion in favour
of the applicant.
[54]
In response, Adv Whitcutt argued that the respondents have never
agreed to refer the dispute relating to whether or not
the eleventh
respondent is a competitor of the applicant to oral evidence and that
this is a fundamental issue to the main application.
The argument is
that the applicant has no case against the respondents as the
eleventh respondent is not a competitor and thus
there is no breach
of the confidentiality agreements.
[55]
I raised a concern that should I grant the referral of the restraint
of trade disputes to oral evidence, by the time
the matter is
enrolled and heard, the respondents would have lapsed rendering the
matter moot.
[56]
Adv Green argued that I am to deal with the matter as at 11 January
2024, the status being that there are valid and operative
restraints
of trade in place and until the restraints of trade expire, the court
is enjoined to hear the referral application.
[57]
The argument continued that the restraints of trade have not expired
and thus I am not faced with having to consider
potential mootness.
[58]
Adv Whitcutt contended to the contrary and argued that I am to
consider the applicant’s conduct in pursuing the
main
application in deciding whether or not to even entertain the referral
application.
[59]
Adv Whitcutt submitted that the main application has been “
a
dead man walking”
since its inception, that the main
application and the referral application was a waste of resources and
an abuse of court processes
with the applicant refusing to engage and
refusing to see sense.
[60]
It was contended on behalf of the respondents that the applicant was
aware when the answering affidavit was filed on
30 June 2023 that
there was a material dispute of fact and the election to apply to
have the disputes of fact referred to oral
evidence should have been
made then. It was contended further that the applicants knew already
on 8 May 2023 with the respondent’s
attorney’s letter
that there was a material dispute of fact. The applicant did not seek
interim relief pending the referral
to oral evidence which, it was
contended, fatally undermines the referral application.
[61]
Adv Whitcutt contended that should I be inclined to refer the
disputes of fact to oral evidence and thus grant the referral
application, I would be perpetuating an exercise in futility. In
response Adv Green contended that the delay in the main application
was due to the Anton Piller proceedings. The applicant did not sit on
its hands and do nothing. Adv Green stated that when reading
the
answering affidavit, the election was made to refer the disputes of
fact to oral evidence. Adv Green strongly argued that it
is not for
the presiding judge to guess what the Judge President will or will
not do or what the Registrar will or will not do
to expedite the
matter should I grant the referral application and that it is
irrelevant for me as the judge to have regard to
the fact that
certain of the restraints of trade will lapse in March 2024.
[62]
As to the dispute of fact as to whether or not the eleventh
respondent is a competitor of the applicant, the focus of
the
applicant on whether or not a dispute as to the fundamental question
in any proceedings for the enforcement of a restraint
of trade
agreement, being whether the eleventh respondent is a direct
competitor to the applicant, was annexure “FA1”
to the
founding affidavit.
[63]
Annexure “FA1” is SS Inc.’s response on behalf of
the respondents’ dated 8 May 2023 being the
response to the
applicant’s letter of demand dated 2 May 2023.
[64]
Adv Green argued that “FA1” is to be read by the court as
an admission by the respondents that the eleventh
respondent is a
direct competitor of the applicant or that it carries on business
which is similar or comparative. The argument
was that if I was
prepared to regard “FA1” as an admission that the
eleventh respondent is a direct competitor of the
applicant then in
such circumstances the dispute of fact that the eleventh respondent
is not a direct competitor was not foreseeable
by the applicant.
[65]
Adv Green referred to the various allegations contained in the
answering affidavit which contradict statements made by
the first
respondent publicly prior to her departure from the applicant in
support of his argument that a dispute as to whether
or not the
applicant is a competitor of the first respondent was not
foreseeable.
[66]
Adv Green further argued that the mere fact that there was a planned
mass exodus from the applicant to the eleventh respondent
is in
itself an indicator that the eleventh respondent is a competitor of
the applicant.
[67]
Adv Green argued that proceedings for the enforcement of a restraint
of trade are a perfect example of proceedings before
a court where a
dispute as to whether the respondent party is a competitor of the
applicant could generally be foreseeable by the
applicant and that is
why foreseeability alone is not sufficient for the court to dismiss
the referral application. Something more
is required being the
applicant having acted with “
reprehensibility”
in
bringing the application. Adv Green contended that there was no
reprehensibility on the part of the applicant and that as a
consequence the court should grant the referral application. It was
argued that a clear reading of annexure “FA1” together
with the prior statements of the first respondent indicate
confirmation of competition by the eleventh respondent. It was
further
argued that the fact that the applicant’s legal team
decided to proceed by application and made the “
wrong call”
is not sufficient to satisfy the requirement of reprehensibility.
Adv Green was reluctant to give a label to the term
“
reprehensibility
” and contended that it may mean
recklessness but not
mala fides
. Adv Green further contended
that the applicant should not be punished for its legal teams’
“
best guess
” being the wrong one.
[68]
Adv Whitcutt argued that there are only two ways of looking at “FA1”
being the common sense approach or the
approach of “
let’s
see what we can read between the lines
” to justify why the
applicant is proceeding with the main application. The contention of
the respondents is that “FA1”
must be read with common
sense in mind and from such a common sense reading it is clear that
there is a denial of competition by
the respondents. If “FA1”
is read as a denial, then the applicant was forewarned on 8 May 2023
already and at the outset
that the aspect of competition would be
disputed.
[69]
Adv Whitcutt further referred to annexure “AA20” being
correspondence addressed to the applicant’s
attorneys dated 9
June 2023, a few days after the main application was launched and
prior to the service and filing of the answering
affidavit where the
respondents reiterate their “
primary contention
”
that the eleventh respondent is not a competitor of the applicant,
contend that the main application is premised on a “
misappreciation
of a competitive overlap, is fundamentally misconceived and cannot
succeed”.
[70]
Adv Whitcutt argued that the “
reprehensibility”
on
the part of the applicant is in the applicant’s refusal to
engage with the respondents despite being invited to do so,
the
applicant’s insistence on launching the main application
despite the correspondence explaining why the eleventh respondent
is
not a competitor of the applicant, the undertakings given, the
failure of the applicant once it was clear that there were disputes
of fact from seeking interim relief pending a referral and the
applicant’s conduct in the prosecution of the main application
with its 32 days delay in filing the replying affidavit without
explanation and the further delays in the litigation.
[71]
On the dispute of fact on whether the first respondent signed “FA38”,
the applicant contended that the first
respondent is in a
“
credibility crisis”
and must be called to be
cross examined in that she has never explained why she took
confidential information from the applicant
and has denied that she
signed the confidentiality agreement accusing the applicant of fraud.
[72]
On the dispute of fact as to whether or not the applicant waived the
second respondent’s restraint and what the
exact terms are of
the second respondent’s restraint, Adv Green argued that the
issue of the exact terms of Vorster’s
restraint of trade, while
possibly being foreseeable by the fact that there was a “
loose
restraint”
only mentioned in the offer of employment and
the payment of R100 000.00 to him, does not meet the threshold of
reprehensibility
and thus this issue should also be referred to oral
evidence.
[73]
Adv Whitcutt contended that due to the “
high watermark
”
of the applicant’s case against the second respondent being the
offer of employment, it could not be argued that the
applicant could
not have foreseen a dispute on the terms of the restraint, when the
applicant itself could not do so itself. In
addition, the second
respondent’s opposition was set out in annexure “FA1”.
Principles
applicable to motion proceedings and applications for referral
[74]
The law applicable to applications for the referral of disputes of
fact to oral evidence is trite.
[75]
The starting point is
Plascon-Evans
. A well-known principle
that needs no introduction applicable to motion proceedings where the
applicant is seeking final relief.
‘
It
is correct that, where in proceedings on notice of motion disputes of
fact have arisen on the affidavits, a final order, whether
it be an
interdict or some other form of relief, may be granted if those facts
averred in the applicant’s affidavits which
have been admitted
by the respondent, together with the facts alleged by the respondent,
justify such an order. The power of the
Court to give such final
relief on the papers before it is, however, not confined to such a
situation. In certain instances the
denial by respondent of a fact
alleged by the applicant may not be such as to raise a real, genuine
or
bona
fide
dispute of fact… If in such a case the respondent has not
availed himself of his right to apply for the deponents concerned
to
be called for cross-examination under Rule 6(5)(g) of the Uniform
Rules of Court… and the Court is satisfied as to the
inherent
credibility of the applicant’s factual averment, it may proceed
on the basis of the correctness thereof and include
this fact among
those upon which it determines whether the applicant is entitled to
the final relief which he seeks… Moreover,
there may be
exceptions to this general rule, as for example, where the
allegations or denials of the respondent are so far-fetched
or
clearly untenable that the Court is justified in rejecting them
merely on the papers…’
[2]
[76]
In
Benyon
v Rhodes University and Another
[3]
,
the Court set out the position as follows:
‘
[28]
In
Plascon – Evans Paint Ltd v van Riebeek Paints (Pty) Ltd
[1984] ZASCA 51
,
1984 (3) SA 623
(A) 634 – 635, the rule was
established that where in motion proceedings disputes of fact arise
on the affidavits, a final
order can be granted only if the facts
averred in Applicant’s affidavits, which have been admitted by
the Respondent, together
with the facts alleged by the latter,
justify such order. It may be different if the Respondent’s
version consists of bald
or uncreditworthy denials, raises fictitious
disputes of fact, is palpably implausible, farfetched all so clearly
untenable that
the Court is justified in rejecting them merely on the
papers.
National Director of Public Prosecutions v Zuma
2009
(2) SA 279
SCA.
[29]
It should be emphasized that whilst generally undesirable to attempt
to decide an application on affidavit where there
are material facts
in dispute, it is equally undesirable for a court to take all
disputes of fact that (sic) the face value which
would enable a
Respondent to raise fictitious issues of fact in avoidance. It is
necessary then to examine the alleged disputes
and determine whether
they are real or can be satisfactorily resolved without the aid of
oral evidence.’
[77]
Hefer JA in
Wightman
t/a JW Construction v Headfour (Pty) Ltd
and
another
[4]
,
stated the approach to the assessment of disputes of fact as follows:
‘
[13]
A real, genuine and
bona fide
dispute of fact can exist only
where the court is satisfied that the party who purports to raise the
dispute has in his affidavit
seriously and unambiguously addressed
the fact said to be disputed. There will of course be instances where
a bare denial meets
the requirement because there is no other way
open to the disputing party and nothing more can be expected of him.
But even that
may not be sufficient if the fact averred lies purely
within the knowledge of the averring party and no basis is laid for
disputing
the veracity or accuracy of the averment. When the facts
averred are such that the disputing party must necessarily possess
knowledge
of them and be able to provide an answer (or countervailing
evidence) if they be not true or accurate but, instead of doing so,
rests his case on a bare or ambiguous denial the court will generally
have difficulty in finding that the test is satisfied. I
say
“generally” because factual averments seldom stand apart
from a broader matrix of circumstances all of which needs
to be borne
in mind when arriving at a decision. A litigant may not necessarily
recognize or understand the nuances of a bare or
general denial as
against a real attempt to grapple with all relevant factual
allegations made by the other party. But when he
signs the answering
affidavit, he commits himself to its contents, inadequate as they may
be, and will only in exceptional circumstances
be permitted to
disavow them.’
[78]
In
South
African Football Association v Mangope
[5]
,
the LAC discussed the different scenarios where disputes of fact
could cause:
‘
[11]
As pointed out in
Room Hire Co (Pty) Ltd v Jeppe Street Mansions
(Pty) Ltd
, a real dispute of fact will arise in one of three
ways. Firstly, the respondent may deny one or more of the material
allegations
made by the applicant and produce evidence to the
contrary, or may apply for the leading of oral witnesses who are not
presently
available or who though averse to making an affidavit,
would give evidence if subpoenaed. Secondly, the respondent may admit
the
applicant’s affidavit evidence but allege other facts which
the applicant disputes. Thirdly, the respondent, while conceding
that
he has no knowledge of one or more material facts stated by the
applicant, may deny them and put the applicant to the proof,
and
himself give or propose to give evidence to show that the applicant
and his deponents are untruthful or their evidence unreliable.’
[79]
In
Bocimar
NV v Kotor Overseas Shipping Ltd
[6]
;
the Court, in determining an application for oral evidence held that:
‘
It
would seem that in the Court
a quo
Bocimar’s counsel
simply applied informally and non- specifically for the hearing of
oral evidence, at the end of his argument on the merits, in the
event
of the Court holding that Bocimar had failed on the papers to
establish a genuine and reasonable need for security
. No
indication was apparently given of who should be required to give
evidence or submit themselves to cross-examination nor was
any
indication given of what evidence new witnesses would be able to
give.
In
Kalil v Decotex (Pty) Ltd and Another
1988 (1) SA 943
(A), at 981D -G reference was made to ‘the
salutary general rule’ that an application to refer a matter to
evidence
should be made at the outset and not after argument on the
merits. It was pointed out that the rule was not an inflexible one
and
that: in exceptional cases the Court may depart from it. It is,
however, a factor to be considered in the present case
. In
Kalil’s
case
supra
this Court said, with
reference to the discretion to allow oral evidence in the case of an
application for a provisional order
of winding-up (at 979H-I):
“
Naturally,
in exercising this discretion the Court
should be guided to a
large extent by the prospects of
viva voce
evidence tipping the balance in favour of the applicant. Thus, if on
the affidavits the probabilities are evenly balanced, the
Court would
be more inclined to allow the hearing of oral evidence than if the
balance were against the applicant. And the more
the scales are
depressed against the applicant the less likely the Court would be to
exercise the discretion in his favour. Indeed,
I think that only in
rare cases would the Court order the hearing of oral evidence where
the preponderance of probabilities on
the affidavits favoured the
respondent
.”
These
observations are, in my view, pertinent to applications generally. In
the present case, the probabilities on the affidavits
(on those
issues where the balance of probabilities is the standard of proof)
tend to favour Kotor rather than Bocimar,
Moreover, the lack of
any specific indication as to what oral evidence Bocimar had in mind
increases the difficulty of making a
favourable assessment of the
prospects of
viva voce
evidence tipping the
balance in favour of Bocimar
.’ (own emphasis)
[80]
In
Ripoll-Dausa
v Middleton NO and Others
[7]
,
the Court stated as follows:
‘
In
their commentary of rule 6(1)(g) Erasmus
et al Superior Court
Practice
at B1-50 A state:
“
In
exercising its discretion under the subrule,
the court will to a
large extent be guided by the prospects of
viva voce
evidence tipping the balance in favour of the applicant. If on the
affidavits the probabilities are evenly balanced, the court
would be
more inclined to allow the hearing of oral evidence than if the
balance were against the applicant.
The more the scales are
depressed against the applicant, the less likely the court will be to
exercise its discretion in its favour.
Only in rare cases will the
Court order the hearing of oral evidence where the preponderance of
probabilities of affidavits favour
the respondent”.’
[81]
The Court
in
Jonsson
Workwear (Pty) Ltd v Williamson and Another
[8]
;
referred to the case of
Kalil
v Decotex (Pty) Ltd and Another
[9]
,
as follows:
‘
[13]
The general principles with regard to applications to refer motion
proceedings to oral evidence was set out in
Kalil v Decotex (Pty)
Ltd and Another
where the Court said the following:
“
The
applicant may, however, apply for an order referring the matter for
the hearing of oral evidence in order to try to establish
a balance
of probabilities in his favour. It seems to me that in these
circumstances the Court should have a discretion to allow
the hearing
of oral evidence in an appropriate case. … Naturally, in
exercising this discretion the Court should be guided
to a large
extent by the prospects of
viva voce
evidence tipping the
balance in favour of the applicant. Thus, if on the affidavits the
probabilities are evenly balanced, the
Court would be more inclined
to allow the hearing of oral evidence than if the balance were
against the applicant. Thus, if on
the affidavits the probabilities
are evenly balanced, the Court would be more inclined to allow the
hearing of oral evidence than
if the balance were against the
applicant. And the more the scales are depressed against the
applicant the less likely the Court
would be to exercise the
discretion in his favour. Indeed, I think that only in rare cases
would the Court order the hearing of
oral evidence where the
preponderance of probabilities on the affidavits favoured the
respondent”.’
[82]
The Court further held as follows:
‘
It
has been held in a number cases that an application to refer a matter
to evidence should be made at the outset and not after
argument on
the merits (see
Di Meo v Capri Restaurant
1961 (4) SA 614
(N)
at 615H – 616A;
De Beers Industrial Diamond Division (Pty)
Ltd v Ishuizuka
1980 (2) SA 191
(T) at 204C- 206D;
Spie
Batignolles Societe Anomyme v Van Niekerk: In re Van Niekerk v SA
Yster en Staal Industriele Korporasie Bpk en Andere
1980 (2) SA
441
(NC) at 448E – G,
Erasmus v Pentamed Investments(Pty)
Ltd
(s
upra
at 180H);
Hymie Tucker Finance Co (Pty) Ltd
v Alloyex (Pty) Ltd
1981 (4) SA 175
(N) at 179B – E; cf
Klep Valves (Pty) Ltd Saunders Valve Co Ltd
1987 (2) SA 1
(A)
at 24I – 25D). This is no doubt a salutary general rule, but I
do not regard it as an inflexible one. I am inclined to
agree with
the following remarks of Didcott J in the
Hyme Tucker
case
supra at 179D:
“
One
can conceive of cases on the other hand, exceptional perhaps, …
when to ask the Court to decide the issues without oral
evidence if
it can, and to permit.”
[83]
The court further held as follows:
‘
[16]
Based on the above, it is clear that as a general principle, the
Court has a discretion to decide whether to refer motion
proceedings
to oral evidence where there is a dispute of fact that needs to be
resolved. In exercising this discretion, a litigant
applying for a
matter to be referred to oral evidence should at least advance
reasonable grounds to support this discretion being
exercised in
favour of the litigant. Proper and formal application must be made in
this regard. It should at least be set out what
evidence presented by
the other litigating party in the affidavit is lacking in credibility
and how the referral to oral evidence
will resolve this. The Court
should consider to what extent this referral to oral evidence could
tip the scales in support of the
litigant seeking the referral. The
final issue to consider is convenience to the Court.
[17]
The applicant has unfortunately not make out a case for the matter to
be referred to oral evidence in terms of the above
principles. The
applicant has not made a proper application for this relief, and has
simply asked for this to happen in heads of
argument. The applicant
has further not sufficiently motivated as to which of the contentions
of the first respondent in its answering
affidavit could be
successfully discredited by a referral to oral evidence and what kind
of evidence would be led to establish
this. Considering the nature of
the dispute, being that of a restraint of trade and all its
consequences, it is simply not convenient
to delay its determination
any further by a referral to oral evidence. The applicant has thus
simply not convinced me to exercise
the wide discretion that I have
in this regard in its favour.’
[84]
The Court held further that:
‘
[19]
In a restraint of trade dispute, the applicant must surely have
anticipated a material factual dispute. The prior correspondence
between the parties before this application was brought must surely
further confirm that a material factual dispute should have
been
anticipated from the outset. The applicant should have preempted this
with a request for the matter to be referred to oral
evidence as an
alternative prayer from the outset, should the Court not be inclined
to determine the factual dispute on the papers
in favour of the
applicant party. In not doing this, the applicant in fact indicates
that it is satisfied that any factual disputes
be determined in terms
of the normal principles applicable to motion proceedings, referred
to above. This was precisely the sentiment
exhibited by the Court in
Singh v Adam
which dealt with a restraint application, and
where the Court said: ‘In her replying affidavit the applicant
revisits the
issue by arguing that on receipt of the answering
affidavit it has become evident that the anticipated dispute of fact
has indeed
materialized and that a referral to oral evidence would
accordingly be justified. Alternatively, given that the respondent
referred
a dispute to the CCMA shortly after the launch of the
application proceedings, the interim interdict should be granted
pending
the resolution of the constructive dismissal dispute by
arbitration. In my opinion, an application on this basis amounts to
an
irregular proceeding.
Having anticipated a material dispute of
fact that could not be resolved on the papers it was inappropriate
for the applicant to
seek a final interdict by way of notice of
motion…’. By not anticipating the factual dispute that
was inevitable in
arising in this matter and dealing with it
accordingly, it is my view that the applicant cannot now be allowed
to remedy this defective
conduct by a referral to oral evidence
.’
[85]
On the
issue of the inherent urgent nature of proceeding to enforce
restraints, I quote the Honourable Prinsloo J in
Slo-Jo
Innovation
(Pty) Ltd
v
Beedle and Another
[10]
:
‘
[9]
Furthermore, one of the fundamental considerations in any assessment
of urgency is the ability of the applicant to obtain
the relief it
seeks in the ordinary course. It is a matter of public record that
the ordinary opposed motion roll is full until
the end of 2023. The
restraint that the applicant seeks to enforce is until 1 November
2023 and would have expired before this
application would be enrolled
for hearing in the normal course. If this application is to be
enrolled and adjudicated in the normal
course, the restraint
agreement and obligations will become meaningless and the relief
sought academic. Evidently, the Applicant
will not get relief in the
ordinary course.’
[86]
It is trite
that when the Court is approached to enforce a restraint of trade and
is called on to adjudicate whether or not the
restraint the applicant
seeks to enforce is unreasonable, the Court must do so with reference
to the circumstances of the case
which is not limited to the
circumstances when the restraints were entered into. The Court can
have regard to what has happened
since and can have regard to the
circumstances prevailing at the time the enforcement is sought.
[11]
Analysis
[87]
The applicant is asking the Court to exercise its discretion in its
favour and refer the motion proceedings to oral evidence
for the
purpose of certain disputes of fact being resolved hopefully in its
favour so it can enforce the confidentiality agreements
against the
respondents and restrain them from continuing their employment with
the eleventh respondent.
[88]
On an application of the legal principles as discussed above the
applicant in my view faces a number of challenges and
difficulties
which leads the Court to seriously consider exercising its discretion
against the referral of the disputes to oral
evidence. The challenges
relate to the applicant’s conduct in dealing with the disputes
of fact when they were raised by
the first respondent but also its
conduct in the prosecution of an application that by its very nature
is urgent considering the
time periods set out in the confidentiality
agreements and where the applicant seeks final relief against ten
individuals almost
12 months later where the proverbial horse has
bolted and which relief if granted would pose significant
consequences for not only
the first to tenth respondents but the
eleventh and twelve respondents.
[89]
I will deal with some difficult challenges the applicant faces which
in my view are factors that weigh heavily against
the applicant and
from which the Court is inclined to decline to grant the applicant
the relief sought of the referral of the disputes
of fact to oral
evidence. The facts do open the applicant to strong criticism and
this in my view meets the test for reprehensibility
as referred to in
argument.
89.1 The first
difficulty which I addressed with both counsel in argument is that in
reality the referral to oral evidence
if granted will result in
further protracted proceedings between the parties. The proceedings
to date have been fraught with hostility
with accusations being
directed both ways in the affidavits between van Niekerk and the
first respondent and Anton Piller proceedings
with the home and
private space of the first respondent being subjected to search.
There is no love lost between the parties and
any further proceedings
will, if regard is had to the overburdened court roll, not take place
before most of the periods in the
confidential agreements have
expired resulting in the relief the applicant seeks in the notice of
motion becoming moot. To burden
the parties and the court with
protracted, costly and time-consuming litigation in these
circumstances is illogical and in my view
foolish. I disagree with
Adv Green that it is not for me to guess what the Registrar will or
will not do to expedite the hearing
of the oral evidence. It is not
up to the Registrar to expedite any proceedings at this stage as the
trial proceedings are not
ripe for hearing. As Adv Whitcutt contended
the referral to oral evidence will be preceded by lengthy
preparations such as discovery
and subpoenas. Any practitioner of
this court will know that such preparations do not magically happen
overnight. The applicant
only has a few weeks before at least 6 of
the 10 restraints expire. I do not agree that I cannot have regard to
these facts in
exercising my discretion. I am entitled as the
presiding officer exercising my discretion to take into account, the
facts and circumstances
prevailing at the time the applicant is
seeking the relief. The circumstances are such that the applicant on
its own version, has
allowed the respondents to continue their
employment in breach of the confidentiality agreements for a period
of almost 10 months
before coming to court to ask for the referral.
The facts weigh heavily against the applicant particularly where the
applicant
was aware of the disputes of fact in June 2023 already,
threatened to bring an application for referral, failed to request
interim
relief pending the referral, delayed the exchange of
affidavits, postponed the urgent application twice and thereafter
failed to
act with the urgency and expediency necessary to protect
its interests which it contended were being prejudiced by the
respondents.
Instead and despite being cautioned by the respondents,
the applicant persisted with the application in circumstances where
it
must have been aware that if and should the court in the trial
proceedings find in its favour, the restraints would have lapsed.
In
my view just on this basis alone, I should dismiss the application
for referral to oral evidence, however, there are other difficulties
the applicant faces which I feel I must address.
89.2 Van Niekerk
has motivated his request for the referral of the disputes of fact to
oral evidence by his desire to cross-examine
the first respondent to
test her version of the signature or lack thereof to the
confidentiality agreement. The challenge van Niekerk
has is that none
of the allegations by the first respondent in the answering affidavit
and the disputes of fact raised by her can
be considered as
fictitious, palpably implausible, far-fetched or clearly untenable so
as for this Court to simply reject them.
89.3 To the
contrary, the first respondent in raising the disputes of fact with
her denials, does so with full particularity.
To illustrate what I
believe is the
bona fides
of the first respondent, I refer to
her denial that she signed annexure “FA38”. The denial in
the answering affidavit
is not a bare or general denial. The first
respondent gives detailed facts surrounding her employment with the
applicant and provides
confirmatory affidavits of both Werdmuller von
Elgg and Sayegh in support thereof. The first respondent even deals
with the alleged
signature of the confidentiality agreement by Maree
alleging that as a junior employee, she was not authorised to sign
contracts
of employment on the applicant’s behalf. The first
respondent is so certain of her facts she goes as far as accusing the
applicant of manufacturing the confidentially agreement. This is a
serious allegation to make under oath.
89.4 Van Niekerk
in reply makes the astonishing statement that “
[A] simple
comparison of the signature on the confidentiality agreement with the
admitted signature on Ms McErlean’s contract
of employment
(FA37) shows that the signatures are the same”
. In support
of this statement van Niekerk relies on the expert report of Mr
Bester and makes a further astonishing statement that
“
Mr
Bester has opined that the signature on the confidentiality agreement
is authentic and is the same signature as appears on other
documents
which Ms McErlean signed”
. A similar submission is made in
Adv Green’s heads of argument that Mr Bester in his report
confirms that the signature on
the confidentiality agreement is that
of Ms McErlean.
89.5 I have
perused the expert report numerous times in an attempt to find where
Mr Bester confirms that the signature on
FA38 is that of the first
respondent. I was unable to find this conclusion by Mr Bester. Mr
Bester’s opinion is in fact the
following:
‘
OPINION:
After consideration of the corresponding inherent handwriting
characteristics between the questioned signature and the collected
specimen signatures, the identification of the absence of fundamental
handwriting differences between the questioned signatures
and the
collected specimen signature, the absence of signature forgery
characteristics and the consideration of the examination
limitations,
it is my opinion that the
identified forensic technical evidence
support the proposition that the possibility cannot be excluded that
the writer of the Dale
Keri McErlean collected specimen signatures is
the writer of the Dale Keri McErlean questioned signature on the UDS
CONFIDENTIALITY
AGREEMENT document with signature date 01 September
2019
. The possibility expressed in this opinion is supported by
the identified forensic technical evidence and is not an opinion of
speculative nature.’
89.6 Adv Green,
when I asked him to point out exactly where in the expert report Mr
Bester’s opinion that the signatures
are the same is reflected,
agreed with me that his submission in the heads of argument is
overstated. I agree. Not only is the
submission in the heads of
argument overstated but the allegation by van Niekerk in the replying
affidavit is too.
89.7 With regards
to Maree, the best van Niekerk could do in reply to the first
respondent’s allegation that Maree
was a junior employee who
did not have the authority to sign contracts of employment, let alone
restraints of trade agreements
on behalf of the applicant was the
following paragraph in his replying affidavit:
‘
14. The
confidentiality agreement is signed on behalf of UDS by Ms Maree. Ms
Maree has confirmed to Tarynne Willis (“Ms Willis”),
an
attorney employed by the attorneys for UDS, that while she was
employed by UDS she signed employment-related agreements on behalf
of
UDS.’
89.8 I do not know
what to make of this paragraph and statement by van Niekerk. Not only
does it constitute hearsay, but
it is not supported by a confirmatory
affidavit by Maree, the person who is alleged to have signed the
confidentiality agreement,
confirming that she in fact did sign the
confidentiality agreement in the presence of the first respondent.
The fact that Maree
told Tarynne Willis, an attorney of HW Inc that
she (Maree) signed employment-related agreements on behalf of the
applicant is
of no value to the Court and does not assist the
applicant in its pursuit to show that the first respondent is bound
by FA38 as
she signed same.
89.9 What makes
matters worse for the applicant is the fact that the first respondent
replies directly to the applicant in
her supplementary affidavit
supported by a confirmatory affidavit by Maree in which Maree
confirms under oath that she recalls
the first respondent’s
refusal to sign the confidentiality agreement.
89.10 I find it
astonishing that the first respondent was able to make contact with
Werdmuller von Elgg, Sayegh and Maree
for purposes of preparing her
opposition to the main application against her and to have these
individuals, who had personal knowledge
of the facts put forward by
the first respondent in her affidavits, sign confirmatory affidavits
in support of her opposition but
the applicant appears not to have
done so. Is the applicant and van Niekerk questioning all these
individuals’ integrity?
Does van Niekerk want to cross question
Werdmuller von Elgg and Sayegh as he proposes in respect of the first
respondent? The astonishing
part is that the applicant, who in its
conduct from the outset as demonstrated from the correspondence prior
to the launching of
the main application, was well aware that there
may be an issue with the first respondent’s confidentiality
agreement, seems
to not have taken any reasonable steps one would
have expected of it to properly investigate the circumstances
surrounding the
employment of the first respondent prior to launching
the application.
89.11 The
applicant appears to have taken the approach that annexure FA38 is
sufficient for the purposes of the first respondent.
The
circumstances surrounding the “
serendipitous
”
discovery of the annexure FA38 are in my view not adequately dealt
with in the founding affidavit. Van Niekerk does not
take the Court
into his confidence by giving details of what steps were taken by the
applicant over the period from the first respondent’s
resignation to finding the confidentiality agreement in the box. This
is a period of over 2 months that is not explained by van
Niekerk.
Van Niekerk does not provide any details of who found the
confidential agreement in the box. Van Niekerk does not adequately
answer the questions raised by the first respondent which cast
suspicions over the confidentiality agreement such as being signed
on
a Sunday, prior to her commencement of employment and the most
important being that it was agreed with Werdmuller von Elgg and
Sayegh that she would not be bound by a restraint of trade agreement.
Van Niekerk ignores these facts and relies on “
a simple
comparison of signatures”
and an expert report that in my
view does not opine that the signature is that of the first
respondent.
89.12 In respect
of the second respondent, the dispute as to the terms of the
restraint of trade agreement could in my view
be no other than
foreseeable considering that the “
highwater mark
“of
the applicant’s case is a one year restraint as evidenced by
annexure FA56, another document signed on behalf of
the applicant by
Werdmuller von Elgg and Sayegh.
89.13 The
applicant in the founding affidavit submits that the terms of the
restraint of trade with the second respondent
must be “
construed
as the same as those agreed to by other of the Former Employees in
the Confidentiality Agreement signed by them”
. The
applicant wants the Court to make an assumption, an assumption this
Court cannot make and is not prepared to do so either.
89.14 The
difficulty here for the applicant is that it could not be contended
that the dispute of fact as to the terms of
the restraint agreed to
between the second respondent and Werdmuller von Elgg and Sayegh is
bald, implausible, fictitious and lacking
in credibility. The
applicant simply wants the Court to find that as the other
respondents concluded confidentiality agreements
with the applicant
on the terms set out in the signed and written confidentiality
agreements, it is only logical that the restraint
for which the
second respondent was paid R100 000.00 was the same as those
concluded by the other respondents. This is farfetched
and not
genuine. The applicant has not even attempted to set out the terms
agreed to between Werdmuller von Elgg, Sayegh and the
second
respondent, I assume for the same reason it has failed to explain its
efforts taken to contact Werdmuller von Elgg and Sayegh
to obtain
further facts relating to the “
missing confidentiality
agreement
” signed by the first respondent.
89.15 As to the
dispute of fact whether the eleventh respondent is a competitor of
the applicant, surely with the correspondence
by SS Inc to HW Inc
both prior to and shortly after the main application was launched,
such a material dispute must have been anticipated
by the applicant.
It must have been an anticipated dispute from the outset but yet the
applicant launched the main application
seeking final relief taking
the risk of the application of the principles of Plascon-Evans. I
agree with Adv Whitcutt that the
failure to seek interim relief was
fatal for the applicant particularly considering the delays by the
applicant in prosecuting
the main application. I agree with Adv
Whitcutt that “FA1” is to be read with common sense. Adv
Green’s contention
that the Court read a letter that
unequivocally and unambiguously denies that the eleventh respondent
is a competitor as being
an “
admission of competition”
cannot be accepted. The applicant knows that it faces a challenge on
the affidavits and is trying to avoid the consequences.
89.16 As to
probabilities, Adv Green argued that I am not to consider the
probabilities on the affidavits in deciding whether
to refer the
facts to oral evidence. I again disagree. The probabilities are to be
considered and in my view, the probabilities
are not evenly balanced
with the “
scales”
depressed against the applicant. On the affidavits, the probabilities
favour the respondents, for all the reasons mentioned above
and thus
on the principles set out in
Bocimar
NV v Kotor Overseas Shipping Ltd
and
Jonsson
Workwear (Pty) Ltd v Williamson and Another
[12]
I am inclined not to exercise my discretion in favour of the
applicant. The applicant has not set out what allegations of the
first respondent could be successfully discredited with oral evidence
and what evidence will be led to do so. In the absence of
these
allegations, I am not in a position to determine the prospects of
oral evidence tipping the scales in favour of the applicant.
I am of
the view the prospects are in any event poor.
[90]
In
conclusion, considering the nature of the dispute being the
enforcement of restraints of trade which will lapse in a few weeks,
the conduct of the applicant in prosecuting an “
urgent
application”
for final relief in circumstances where material disputes of fact
were foreseeable, where the applicant was cautioned by the
respondents’
attorneys, refused to engage and continued with
its pursuit for final relief, I am inclined not to exercise my
discretion in favour
of referring the disputes of fact to oral
evidence. To do so in the circumstances would be a great
inconvenience to an already
overburdened court and be a great cost
for all concerned. The courts are not to condone abuse of its
processes and a waste of resources
under circumstances where the
relief that is being sought will lose all practical significance in a
few weeks once the restraints
of trade have expired. The applicant is
clearly trying to avoid the application of the
Plascon-Evans
rule with its attempt to “
belatedly”
refer the disputes of fact to oral evidence. This is not
permissible.
[13]
[91]
The applicant’s application for the referral of the disputes of
fact falls to be dismissed. Accordingly, and as
accepted by Adv
Green, the relief sought by the applicant in the main application is
to be dismissed.
Costs
[92]
Adv
Whitcutt argued that the applicant’s conduct in the prosecution
of the matter warrants a punitive cost order. The general
practice
that costs follow the result is not applicable in the Labour Court
where cost orders are awarded if the requirements of
fairness and law
so dictate.
[14]
[93]
I am of the view that law and fairness require that the applicant be
burdened with a cost order considering that the
applicant brought the
respondents to court on an urgent basis, undertakings were given, the
applicant was forewarned about the
disputes of fact, the applicant
was cautioned, the applicant delayed filing of the replying
affidavit, postponed the urgent application
twice and refused to
engage. The applicant persisted with final relief and allowed time to
slip by to a stage where most of the
restraints had a few weeks left.
[94]
I am,
however, not of the view that a punitive cost order is warranted.
Although I have strong criticism against the applicant’s
conduct in the prosecution of the application, I do not feel that the
conduct is “
unconscionable
,
appalling
and disgraceful”.
[15]
[95]
I make the following order:
Order
1.
The application for referral of the disputes of fact is dismissed.
2.
The application for the relief sought by the applicant in its amended
notice of motion dated 21 July 2023 is dismissed
with costs including
the costs associated with the postponement on 31 August 2023 as per
the agreement between the parties.
3.
The costs are on a party and party scale and include the costs of two
counsels.
D
Venter
Acting
Judge of the Labour Court of South Africa
Appearances:
For
the applicant:
Adv I Green SC with Adv P Bosman
Instructed
by:
Hoosen Wadiwala Inc
For
the respondent:
Adv C Whitcutt SC with Adv JJ Meiring
Instructed
by:
Stein Scop Inc.
[1]
Plascon-Evans
Paints v Van Riebeek Paints
[1984] ZASCA 51
;
1984
(3) SA 632
;
[1984] 2 All SA 366
(A) at 634 E -635 C
(Plascon
Evans).
[2]
[1984] ZASCA 51
;
1984 (3) SA 623
(A);
[1984]
2 All SA 366
(A)
at 634H-635C.
[3]
[2016] ZAECGHC 161; [2017] 4 BLLR 423 (ECG).
[4]
[2008]
2 All SA 512
(SCA);
[2008] ZASCA 6
at para 13.
[5]
[2012] ZALAC 27
; (2013) 34 ILJ 311 (LAC) at para 11.
[6]
1994 (2) SA 563
(A);
[1994] ZASCA 5
at 587A-H.
[7]
[2005] 2 All SA 83
(C);
[2005] ZAWCHC 6
at 94.
[8]
[2013]
ZALCD 24; (2014) 35 ILJ 712 (LC) at paras 13, 16-17 and 19.
[9]
1988 (1) SA 943
A.
[10]
[2022] JOL 56595
(LC); (2023) 44 ILJ 839 (LC) at para 9.
[11]
Arrow
Altech Distribution (Pty) Ltd v Byrne and Others
[2007] ZAKZHC 33
; (2008) 29 ILJ 1391 (D).
[12]
Supra.
[13]
Minister
of Land Affairs and Agriculture and Others v D & F Wevell Trust
and Others
2008
(2) SA 184
(SCA);
[2007] ZASCA 153.
[14]
MEC
for Finance: KwaZulu-Natal and Another v Dorkin NO and Another
[2007]
ZALAC 24; [2008] 6 BLLR 540 (LAC).
[15]
Sentrachem
Ltd v Prinsloo
[1996]
ZASCA 133
;
1997 (2) SA 1
(SCA).