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2024
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[2024] ZALCJHB 232
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Twenty Four Motors CC t/a Ford Ermelo v Venter and Others (J1338/23) [2024] ZALCJHB 232 (27 February 2024)
THE
LABOUR COURT OF SOUTH AFRICA, JOHANNESBURG
Not
Reportable
Case
no: J 1338/23
In
the matter between:
TWENTY
FOUR MOTORS CC t/a
FORD
ERMELO
Applicant
and
ANDRIES
JOHANNES JACOBUS VENTER
First Respondent
HELGA
KEULDER
Second Respondent
LUSAPHO
ELVIS NQAKWANA
Third Respondent
MTHOKOZISI
MKHONZA
Fourth Respondent
LWANDILE
MBANGATHA
Fifth Respondent
SHEDRACK
SIPHO NZIMANDE
Sixth Respondent
MLANDENI
NKULULEKO MTHETHWA
Seventh Respondent
THE
CAR LOUNGE (PTY) LTD
Eighth Respondent
Heard:
21 February 2024
Delivered:
27 February 2024
This
judgment was handed down electronically by consent of the parties’
representatives by circulation to them by email. The
date for
hand-down is deemed to be 27 February 2024.
JUDGMENT
PRINSLOO,
J
Background
[1]
The Applicant conducts business as a motor vehicle dealership and it
sells new and second-hand motor vehicles. The Applicant
is the only
Ford dealership in Ermelo and it deals with commercial and private
customers. There are twenty second-hand car dealerships
in Ermelo.
[2]
The First to Seventh Respondents (Respondents) were all employed by
the Applicant in different capacities. The First Respondent
(Mr
Venter) was a vehicle sales manager, the Second Respondent (Ms
Keulder) was a finance and insurance trainee and the Third to
Seventh
Respondents were junior vehicle salespersons. They concluded
confidentiality and restraint agreements with the Applicant.
[3]
The Respondents resigned from the Applicant’s employ on 4
September 2023 and they took up employment with the Eighth
Respondent, a competitor of the Applicant.
[4]
On 11 October 2023, the Applicant approached this Court on an urgent
basis to enforce the confidentiality and restraint
agreements it had
entered into with the Respondents. The urgent application was argued
on 17 November 2023 and on 2 February 2024,
judgment was handed down.
The Court (per Mahalelo AJ) ordered that:
‘
1. The
applicant’s non-compliance with the rules of court pertaining
to service and process is condoned and the application
is treated as
urgent.
2. It is declared
that the first respondent is in breach of the provisions of the
restraint of trade agreement contained in
the written contract
entered into between the applicant and the first respondent on 31
January 2011, together with the addendums
thereto entered into on 1
February 2019 and 12 November 2020, respectively, by directly or
indirectly competing with the applicant.
3. It is declared
that the second respondent is in breach of the provisions of the
restraint of trade agreement contained
in the written contract
entered into between the applicant and the 2nd respondent on 1 August
2014 by directly or indirectly competing
with the applicant.
4. It is declared
that the third respondent is in breach of the provisions of the
restraint of trade agreement contained in
the written contract
entered into between the applicant and the third respondent on 18 May
2018, together with the addendums thereto
entered into on 1 February
2019 and 26 October 2020, respectively, by directly or indirectly
competing with the applicant.
5. It is declared
that the 4th respondent is in breach of the provisions of the
restraint of trade agreement contained in
the written contract
entered into between the applicant and the 4th respondent on 17 May
2023 by directly or indirectly competing
with the applicant.
6. It is declared
that the 5th respondent is in breach of the provisions of the
restraint of trade agreement contained in
the written contract
entered into between the applicant and the respondent on 18 May 2021
by directly or indirectly competing with
the applicant.
7. It is declared
that the 6th respondent is in breach of the provisions of the
restraint of trade agreement contained in
the written contract
entered into between the applicant and the [sixth] respondent on 16
February 2023 by directly or indirectly
competing with the applicant.
8. It is declared
that the 7th respondent is in breach of the provisions of the
restraint of trade agreement contained in
the written contract
entered into between the applicant and the 7th respondent on 16
February 2023, by directly or indirectly competing
with the
applicant.
9. The 1st to 7th
respondents are interdicted and restrained for a period of 12 months,
calculated from 4 September 2023,
this being the date on which the
1st to 7th respondents resigned, with immediate, effect from their
employ with the applicant from:
9.1 Starting a
business for their own account, which in any way whatsoever, whether
directly or indirectly, competes with
the applicant’s business
interests or which does business or trade in matters related to that
of the applicant, within a
region that is within 300 kilometres
(three hundred kilometres) from the applicants main business premises
in Ermelo, Mpumalanga,
South Africa.
9.2 Entering into
a partnership, accepting directorship at any group or company,
accepting any position or employment at
any company or group
undertaking or business which in any way whatsoever, whether directly
or indirectly competes with the applicants
business interests or
which does business or trade in matters related to that of the
applicant within a region that is within 300
kilometres from the
applicants main business premises in Ermelo, Mpumalanga, South
Africa.
10. The 1st to 7th
respondents are interdicted and restrained not to divulge to any
person any of the applicant’s confidential
information. The
aforesaid includes any methods, operations, processes, computer
software, documentation, client lists, programmes,
trade secrets,
technical information, drawings, financial information or any other
information which could be damaging to the applicant’s
operations or which could benefit other persons to the detriment of
the applicant.
11. The first to
seven respondents are interdicted and prohibited from being engaged
in any form of employment or engage in
any capacity whatsoever with
the eight Respondent that may breach their restraint of trade with
the applicant.
12. The 1st to 7th
respondents be ordered to pay the costs of this application.’
[5]
The effect of the order is
inter alia
that the First to
Seventh Respondents are interdicted from being employed by the Eighth
Respondent for twelve months from 4 September
2023 in any capacity
that may breach their restraint of trade, using confidential
information and competing with the Applicant.
[6]
Pursuant to receipt of the judgment and on 5 February 2024, the
Respondents filed an application for leave to appeal.
[7]
The Applicant subsequently (on 13 February 2024) approached this
Court on an urgent basis for an order directing that
the operation
and execution of the orders granted in the judgment of 2 February
2024 not be suspended pending the application for
leave to appeal
filed by the Respondents and any subsequent appeal.
[8]
The Respondents opposed the application.
Section
18 of the Superior Courts Act: general principles
[9]
The
default position is that the operation and execution of a decision
(other than a decision not having the effect of a final judgment)
is
suspended pending the outcome of an application for leave to appeal
or an appeal.
Section
18 of the Superior Courts Act
[1]
regulates the circumstances under which a party may apply for an
order that departs from the ordinary consequence of filing an
application for leave to appeal.
The
court may order otherwise under exceptional circumstances, if it is
established on a balance of probabilities that the applicant
will
suffer irreparable harm if the court does not so order, and that the
other party will not suffer irreparable harm if the court
so
orders.
[2]
[10]
Section 18 of the Superior Courts Act provides
that:
‘
18
Suspension of decision pending appeal
(1)
Subject to subsections (2) and (3), and
unless the court under exceptional circumstances orders otherwise,
the operation and execution
of a decision which is the subject of an
application for leave to appeal or of an appeal, is suspended pending
the decision of
the application or appeal.
(2)
Subject to subsection (3), unless the court
under exceptional circumstances orders otherwise, the operation and
execution of a decision
that is an interlocutory order not having the
effect of a final judgment, which is the subject of an application
for leave to appeal
or of an appeal, is not suspended pending the
decision of the application or appeal.
(3) A court may
only order otherwise as contemplated in subsection (1) or (2), if the
party who applied to the court to order
otherwise, in addition proves
on a balance of probabilities that he or she will suffer irreparable
harm if the court does not so
order and that the other party will not
suffer irreparable harm if the court so orders.
(4) If a court
orders otherwise, as contemplated in subsection (1) —
(i) the court must
immediately record its reasons for doing so;
(ii) the aggrieved
party has an automatic right of appeal to the next highest court;
(iii) the court
hearing such an appeal must deal with it as a matter of extreme
urgency; and
(iv) such order
will be automatically suspended, pending the outcome of such appeal.’
(5) For the
purposes of subsections (1) and (2), a decision becomes the subject
of an application for leave to appeal or
of an appeal, as soon as an
application for leave to appeal or a notice of appeal is lodged with
the registrar in terms of the
rules.’
[11]
The Labour
Appeal Court (LAC) in
Road
Traffic Management Corporation v Tasima (Pty) Ltd and others
(
Tasima
)
[3]
considered the provisions of section 18(3) versus the common law
position as follows:
‘
[43]
Prior to the enactment of section 18(3) of the SC Act there was no
statutory provision regulating interim execution
orders. In terms of
the common law, the noting of an appeal automatically suspends
execution of the judgment appealed against.
Where the successful
party wishes to execute upon the judgment, it is required to make an
application for leave to do so and bears
the onus to show why the
judgment should be executed pending the appeal, subject, in
appropriate cases to the furnishing of security
de restituendo
.
The court had a wide discretion to grant or refuse leave to execute
and was required to determine what was just and equitable
in all the
circumstances having regard to the potentiality of irreparable harm
or prejudice to the parties, the balance of convenience
and the
prospects of success on appeal. At common law, an interim execution
order is itself an interlocutory order and was generally
not
appealable on the grounds that such an order may be varied by the
court granting it in the light of changed circumstances.
[44] Section 18 of
the SC Act has significantly altered the common law in more than one
respect. The court no longer has
a wide discretion to do what is just
and equitable or to rely exclusively on the balance of convenience or
the appeal’s prospects
of success. Now, before a court may
order interim execution, the applicant for that relief must prove
three things on a balance
of probabilities. Firstly, the applicant
must show that exceptional circumstances exist (perhaps including the
balance of convenience
and prospects of success) justifying the
reversal of the ordinary principle of suspension pending appeal.
Secondly, it must prove
on the probabilities that it will suffer
irreparable harm if interim execution is not ordered. Thirdly, it
must prove that the
other party will not suffer irreparable harm if
an order of interim execution is granted. Should the applicant fail
to discharge
its onus in relation to any one of these requirements,
the court may not grant an interim execution order. Additionally, in
terms
of section 18(4) of the SC Act, where an interim execution
order is granted, the aggrieved party has an automatic right of
appeal
against that order to the next highest court and the order
will be automatically suspended, pending the outcome of such appeal.’
[12]
In
Incubeta
Holdings (Pty) Ltd and another v Ellis and another
[4]
(Incubeta),
the
Court held that:
‘
[16] It
seems to me that there is indeed a new dimension introduced to the
test by the provisions of s 18. The test is twofold;
the requirements
are:
16.1 First,
whether or not ‘exceptional circumstances ‘exist, and
16.2 Second, proof
on a balance of probabilities by the applicant of –
16.2.1 The
presence of irreparable harm to the applicant/victor, who wants to
put into operation and execute the order, and,
16.2.2 The absence of
irreparable harm to the respondent/loser, who seeks leave to appeal.’
[13]
In
University
of the Free State v Afriforum and another
[5]
(Afriforum),
the
Supreme Court of Appeal (SCA) held:
‘
[9] What is
immediately discernible upon perusing sections 18(1) and (3), is that
the Legislature has proceeded from the well-established
premise of
the common law that the granting of relief of this nature constitutes
an extraordinary deviation from the norm that,
pending an appeal, a
judgment and its attendant orders are suspended. Section 18(1) thus
states that an order implementing a judgment
pending appeal shall
only be granted “under exceptional circumstances”. The
exceptionality of an order to this effect
is underscored by section
18(4), which provides that a court granting the order must
immediately record its reasons; that the aggrieved
party has an
automatic right of appeal; that the appeal must be dealt with as a
matter of extreme urgency and that pending the
outcome of the appeal
the order is automatically suspended.
[10]
It is further apparent that the requirements introduced by sections
18(1) and (3) are more onerous than
those of the common law. Apart
from the requirement of “exceptional circumstances” in
section 18(1), section 18(3)
requires the applicant “in
addition” to prove on a balance of probabilities that he or she
“will” suffer
irreparable harm if the order is not made,
and that the other party “will not” suffer irreparable
harm if the order
is made. The application of rule 49(11) required a
weighing-up of the potentiality of irreparable harm or prejudice
being sustained
by the respective parties and where there was a
potentiality of harm or prejudice to both of the parties, a
weighing-up of the
balance of hardship or convenience, as the case
may be, was required. Section 18(3), however, has introduced a higher
threshold,
namely proof on a balance of probabilities that the
applicant will suffer irreparable harm if the order is not granted
and conversely
that the respondent will not, if the order is
granted.’
[14]
The effect in short is this: t
he Superior
Courts Act limits the discretion of a court to grant the relief of
interim execution and section 18(3) introduced a
higher threshold and
more onerous requirements. An applicant must prove three distinct
requirements on a balance of probabilities:
1. Exceptional
circumstances (including the balance of convenience and prospects of
success);
2. That it will
suffer irreparable harm if interim execution is not ordered;
3. That the other
party will not suffer irreparable harm if an order of interim
execution is granted.
[15]
Section 18(3) places a heavy onus on an applicant and if an applicant
fails to prove any one requirement, the application
must fail and be
dismissed.
[16]
It is in the context of the requirements of section 18(3) that this
application is to be decided.
Analysis:
The section 18(3) application
Exceptional
circumstances
[17]
The first issue to be decided is whether there are exceptional
circumstances.
[18]
What would constitute ‘exceptional circumstances’ had
been considered in
Incubeta
and
the Court held that exceptionality must be fact-specific and
circumstances which are or may be ‘exceptional’ must
be
derived from the actual predicaments in which the given litigants
find themselves. The Court held that:
‘
In
my view the predicament of being left with no relief, regardless of
the outcome of an appeal, constitutes exceptional circumstances
which
warrant a consideration of putting the order into operation. The
forfeiture of substantive relief because of procedural delays,
even
if not protracted in bad faith by a litigant, ought to be sufficient
to cross the threshold of ‘exceptional circumstances.’
[6]
[19]
Incubeta
has
been quoted with approval by the SCA
[7]
and it is clear that the determination of whether exceptional
circumstances exist, is a fact-specific enquiry and each case has
to
be decided on its own facts as there is no definition of exceptional
circumstances.
[20]
In
Incubeta,
it was
held that:
[8]
‘
Significantly,
although it is accepted in that judgment that what is cognisable as
‘exceptional circumstances’ may be
indefinable and
difficult to articulate, the conclusion that such circumstances exist
in a given case, is not a product of a discretion,
but a finding of
fact.’
[21]
In
Afriforum,
with regard to proving exceptional
circumstances, it was held that:
‘
[13]
Whether or not “exceptional circumstances” for the
purposes of section 18(1) are present, must necessarily
depend on the
peculiar facts of each case. In
Incubeta Holdings
at paragraph
22 Sutherland J put it as follows:
“
Necessarily, in my
view, exceptionality must be fact-specific. The circumstances which
are or may be ‘exceptional’ must
be derived from the
actual predicaments in which the given litigants find themselves.”
I agree. Furthermore, I
think, in evaluating the circumstances relied upon by an applicant, a
court should bear in mind that what
is sought is an extraordinary
deviation from the norm, which, in turn, requires the existence of
truly exceptional circumstances
to justify the deviation.’
[9]
[22]
In
L'Oreal
South Africa (Pty) Ltd v Kilpatrick and Another
[10]
(L’Oreal),
the Court held that:
‘
In the case of a
restraint of trade interdict, it is the immediate protection of the
protectable interest of the applicant that
is critical to the
application even having any purpose. It is all about the elimination
of continued risk, which in the case of
a protectable interest
relating to confidential information can only be achieved by
interdicting employment of the individual respondent
with the
competitor where such respondent is so employed (which is the case in
the current matter). If an applicant manages to
pass the quite
substantial hurdle of convincing a Judge to exercise the Judge’s
discretion in the applicant’s favour,
it is in my view
untenable that all this effort and the very objective that needs to
be achieved is thwarted by the respondent
party simply proceeding
with an appeal. It is, in my view, the nature of restraint of trade
proceedings that in itself must contemplate
‘exceptional
circumstances’.’
[23]
Exceptionality is fact-specific and exceptional circumstances cannot
be assumed or accepted merely because the matter
involves a restraint
of trade. Each case must be decided on its own merits and
L’Oreal
is not authority for a position that when the matter involves a
restraint of trade, the existence of exceptional circumstances
follows
as a matter of fact.
[24]
The LAC confirmed in
Tasima
that the applicant must show that
exceptional circumstances exist, including the balance of convenience
and prospects of success,
justifying the reversal of the ordinary
principle of suspension pending appeal.
[25]
The question is thus whether the circumstances
in casu
are
truly exceptional and whether an extraordinary deviation from the
normal position is justified. This question is to be answered
by
considering the facts and the circumstances relied upon by the
Applicant.
[26]
The Applicant’s pleaded case in respect of exceptional
circumstances is that the duration of the restraint is 12
months,
expiring on 3 September 2024 and approximately five months of the
restraint period has already expired. By the time the
appeal is
finalised, the restraint period or a substantial portion thereof
would have expired and it would render the relief granted
futile and
the Applicant would derive no benefit from its successful litigation.
If the relief sought is not granted, the Respondents
would remain in
the employ of the Eighth Respondent under the same conditions and
circumstances that gave rise to the urgent application
to enforce the
restraint of trade and the Applicant would continue to suffer
irreparable harm.
[27]
On the issue of prospects of success, the Applicant submitted that
the Respondents’ application for leave to appeal
is frivolous
and vexatious and has been launched for the purpose of defeating the
Court order and is not
bona fide.
It was filed merely to gain
time for the Respondents to continue to solicit the Applicant’s
clients.
[28]
The Respondents dispute that there are any truly exceptional
circumstances and that any deviation from the normal position
that
the judgment is suspended pending an application for leave to appeal,
will not be justified.
[29]
The Respondents’ case is that the Applicant is the only car
dealership in Ermelo that sells new Ford vehicles,
but there are
multiple businesses in Ermelo, including the Eighth Respondent, that
sells second-hand vehicles, including Ford vehicles.
The Eighth
Respondent is only a direct competitor of the Applicant insofar as
they both sell second-hand vehicles. The Eighth Respondent
is not a
Ford dealership and does not sell new vehicles as only the Applicant
sells new Ford vehicles in Ermelo.
[30]
The Respondents’ case is that they have good prospects of
success on appeal
inter alia
because the Court incorrectly
applied the test as to whether the Applicant has a protectable
interest. The Court found a protectable
interest by virtue of the
fact that the Respondents had close contact with the Applicant’s
customers and the Respondents
submit that the Court should have
enquired whether the Respondents had such a grip on or influence over
the customers that they
could carry them away to another employer and
the answer to this question is no. The Respondents submit that Ms
Keulder did not
sell vehicles as she was a finance and insurance
trainee, under the supervision of the ‘finance and insurance
lady’
employed by the Applicant and apart from Mr Venter, the
other Respondents were employed in junior positions and they did not
have
such an influence over the customers. Furthermore, most
customers were single transaction customers and they do not
necessarily
return to the same dealership to buy another vehicle and
in the event that they do, the probability is that the salesperson
the
customer previously dealt with is no longer employed at the same
dealership as salespersons come and go.
[31]
Furthermore, the price a dealership will pay for a vehicle and for
which it will sell a vehicle is determined by means of the ‘book
value’ of the vehicle, which is not a formula unique to the
Applicant but is used by all car dealers.
[32]
The other main issue raised as one of the Respondents’ grounds
for appeal, is that the Court enforced the restraint of trade
for a
radius of 300 kilometres, calculated from Ermelo. The Court held that
the Respondents could “
work for any employer anywhere,
provided they do not breach the restraint clauses for a period of 12
months
”. The Respondents submitted that the Court erred in
this regard because the Applicant made out no case as to why the
restraint
of trade should be enforced for an area that is 600
kilometres in diameter. The Applicant sells vehicles in Ermelo,
Mpumalanga
and it operates only in Ermelo. No case was made out for
it to be granted protection for the wide radius of the restraint. By
granting
a restraint of trade with a radius of 300 kilometres, the
Respondents cannot work for any dealership in the entire Gauteng, the
majority of Limpopo and Mpumalanga and a substantial part of the Free
State and KwaZulu-Natal. The Respondents’ case
is that
the Court did not take into account the stifling and unfair effect
that such enforcement will have on the Respondents’
ability to
engage in their profession and it should have found that it was not
in the public interest to enforce a restraint for
such an unnecessary
wide area.
[33]
I accept that litigation which concerns the enforcement of a
restraint of trade is
sui generis
in the sense that the period
of the restraint is limited and that enforcement of the terms of the
restraint agreement has to happen
within the limited period of the
duration of the restraint of trade. It certainly renders the
enforcement urgent and an appeal
process will no doubt delay the
enforcement of the restraint of trade. However, I am not convinced
that it is sufficient
per se
to constitute exceptional
circumstances. The LAC has on a number of occasions dealt with
appeals concerning a restraint of trade
on an urgent, expedited basis
and there is no reason why the same cannot happen
in casu.
[34]
In
Afriforum
, the SCA held that the prospect of success in the
appeal is a valid consideration when determining whether exceptional
circumstances
have been established by an applicant seeking leave to
execute pending appeal.
[35]
The
prospects of success in the appeal is a relevant factor in the
consideration of the application, as was held in
Minister
of Social Development, Western Cape and others v Justice Alliance of
South Africa and another
[11]
,
where
the court said that:
‘
It follows that
the less sanguine a court seized of an application in terms of
section 18(3) is about the prospects of the judgment
at first
instance being upheld on appeal, the less inclined it will be to
grant the exceptional remedy of execution of that judgment
pending
the appeal. The same quite obviously applies in respect of a court
dealing with an appeal against an order granted in terms
of section
18(3). The position is very much akin to that which pertains when
interim interdictory relief pending a judicial review
is being
considered.’
[36]
Prospects of success are to be considered as a factor in deciding
whether or not to grant the exceptional remedy of execution of
a
judgment pending appeal. In my view, considering what I alluded to
supra,
more specifically the findings on the existence of a
protectable interest and the wide area of the restraint, it is likely
that
leave to appeal will be granted in due course and that the LAC
will reach a different finding on appeal.
[37]
In casu,
no facts placed before this Court are sufficient to
constitute exceptional circumstances.
Irreparable
harm
[38]
The second leg of the enquiry is ‘irreparable
harm’.
[39]
The Applicant must prove, on a balance of probabilities, that it
would suffer irreparable harm should the order for leave to execute
or enforce not be granted pending the appeal and that the
Respondents, on the other hand, will not suffer irreparable harm if
leave to execute is granted pending appeal.
The
Applicant’s case
[40]
The Applicant’s case is that since the urgent application was
argued in November 2023, it continues to suffer losses and
the total
unit sales on used vehicles decreased by more than 50% since the
Respondents took up employment with the Eighth Respondent.
From
September 2023 until January 2024, the Applicant’s used vehicle
division has suffered a financial loss of approximately
R1,5 million.
[41]
The Applicant submitted that if the relief sought is not granted, the
Respondents will be allowed to continue to make use of its
confidential information to springboard off the Applicant’s
intellectual property and confidential information to assist
the
Eighth Respondent to unlawfully compete with the Applicant and to
provide the Eighth Respondent with a new client base, to
the
financial and reputational detriment of the Applicant. The harm
suffered by the Applicant will continue.
[42]
The Applicant suffers substantial harm as its clients are solicited
away in favour of the Eighth Respondent and there is a risk
of
further disclosure of confidential information, trade secrets and
trade connections.
[43]
A claim for damages will not give the Applicant the required and
necessary relief as the Applicant is at risk of permanently losing
clients and will be subjected to unfair and unlawful competition by
the Respondents. A damages claim in due course is cold comfort
and
does not protect the Applicant’s rights. The Applicant requires
that the Court order be put into immediate operation
in order to
limit the damages that it continues to suffer.
[44]
The Applicant has no alternative remedy as it is extremely difficult
to calculate the exact damages already suffered and still
to be
suffered as a result of the Respondents’ employ with the Eighth
Respondent.
[45]
The Respondents, on the other hand, might suffer hardship if the
interdict is enforced, but if they are ultimately successful with
their appeal, such harm will not be irreparable as they would be able
to sue for loss of earnings, the quantum of which could be
easily
calculated. The only possible harm the Respondents could suffer is
that they would have lost out on income from their employment
with
the Eighth Respondent or any other establishment conducting the same
or similar business as the Applicant. The Respondents
can also be
gainfully employed in any other position that does not directly or
indirectly compete with the Applicant. The Respondents
should have
foreseen this at the time of agreeing to the restraint of trade
provisions.
The
Respondents’ case
[46]
The Respondents submitted that they would suffer irreparable harm if
the relief sought by the Applicant is granted. This is so
because the
effect of the Court order is that they must resign from their
employment and cannot be employed by any other motor
vehicle
dealership within a radius of 300 kilometres of Ermelo.
[47]
The Respondents explained that they have been working in the motor
industry for different periods of time and their skills and
experience pertain to the motor industry and specifically to selling
motor vehicles and performing the duties associated therewith.
Ms
Keulder’s skills and experience pertain to the motor industry
and motor vehicle dealerships. The skills and experience
they have,
are within the motor industry.
[48]
The Respondents further explained that the nett effect of the
judgment is that they either have to find work at a motor vehicle
dealership beyond the wide area of the restraint or be unemployed
until 3 September 2024. They all reside in Ermelo, they own or
rent
properties they stay in and their families are settled there. It
would be impossible to relocate to an area outside of the
restraint
area as many of them have children attending schools in Ermelo or
spouses also employed in Ermelo. It would disrupt their
entire
families to relocate. Furthermore, the Respondents are breadwinners
and they have families who depend on them for their
livelihood and
they cannot be unemployed until September 2024.
[49]
The enforcement of the restraint judgment will render the Respondents
economically inactive and unproductive in respect of their
chosen
professions and will have a devastating effect on the Respondents and
their families. The Respondents referred to the high
unemployment
rate in South Africa and submitted that there is no guarantee that
they would find another job, for which they are
qualified outside of
the restraint area, alternatively, a non-competing job for which they
are not qualified in Ermelo.
[50]
The Respondents denied that the Applicant would suffer irreparable
harm as a period of five months had passed since they commenced
to
work for the Eighth Respondent. Furthermore, the Applicant was able
to quantify the damages it allegedly suffered and two of
the
Respondents (Messrs Mbangatha and Mkhonza) as well as Mr Nkosi, who
worked for the Eighth Respondent, had resigned from the
Eight
Respondent and (again) took up employment with the Applicant.
[51]
In the replying affidavit, the Applicant did no more than to deny
that the Respondents’ only skill and experience pertain
to the
motor industry and specifically the selling of motor vehicles. The
Applicant’s response is that the Respondents would
be able to
apply their knowledge and skills in any other sales role and that the
Respondents should have foreseen the consequences
of their
resignation from the Applicant and their subsequent employment by a
direct competitor and they now seek to escape the
consequences of the
risk they took.
[52]
Considering the facts, set out in this application, the Applicant has
not made out a case for irreparable harm and did not establish
on a
balance of probabilities that the Respondents will not suffer
irreparable harm if the judgment is to be enforced pending the
appeal.
Conclusion
[53]
The Applicant must prove the existence of exceptional circumstances
and that, on a balance of probabilities, it will suffer irreparable
harm should the order for leave to execute or enforce not be granted
pending the appeal and that the Respondents, who seek leave
to
appeal, will not suffer irreparable harm if leave to execute is
granted pending appeal.
[54]
In
Afriforum,
the SCA confirmed that section 18(3) is a novel
provision and places a heavy onus on the applicant. Section 18 does
not merely purport
to codify the common-law practice, but introduces
more onerous requirements.
[55]
It has been accepted and confirmed by the courts that the prospects
of success of the proposed appeal remain a relevant factor
for
purposes of considering whether the court should grant an order
pursuant to section 18(3).
[56]
In
Knoop
NO and another v Gupta (Execution)
[12]
,
the SCA held that courts ought not to be too eager to enforce
judgments pending an appeal:
‘
The immediate
execution of a court order, when an appeal is pending and the outcome
of the case may change as a result of the appeal,
has the potential
to cause enormous harm to the party that is ultimately successful.’
[57]
I found
that the Applicant was unable to show ‘something that is
sufficiently out of the ordinary and of an unusual nature’
[13]
that would constitute exceptional circumstances and which would
warrant a departure from the ordinary rule.
[58]
Notwithstanding Ms Lancaster’s argument that this Court should
not concern itself with the Respondents’ prospects of
success,
the prospects of success in the appeal are relevant in deciding
whether or not to grant the exceptional relief sought
by the
Applicant in terms of section 18(3). I am satisfied that the
Respondents have prospects of success in their application
for leave
to appeal, more specifically in relation to the question of whether
the Applicant has a protectable interest and the
reasonableness of
the area of the restraint.
[59]
The Applicant must prove, on a balance of probabilities, that the
Respondents will not suffer irreparable harm if leave to execute
is
granted pending appeal.
[60]
The Respondents dealt in detail with the harm they stand to suffer if
the order was executed and enforced pending their application
for
leave to appeal. The Applicant, who has the onus to show that the
Respondents would not suffer irreparable harm, simply contended
in
its replying affidavit that as the First, Third, Sixth and Seventh
Respondents are excellent vehicle salespersons they will
be able to
sell any item and as such they will be able to find employment within
the interdicted area. If they remain unemployed
and are ultimately
successful in their appeal, they can sue for damages for the salaries
they did not earn until September 2024.
The Applicant’s
proposition is not only unrealistic and far-fetched, it also lost
sight of the Respondents’ version
that they have no skills and
experience in selling other items and that they cannot compete with
other candidates in a non-competing
business when such other
candidates have relevant skills and experience pertaining to their
relevant industries. The Respondents
rely on their monthly
remuneration to support themselves and their families and their
income on a monthly basis is critical.
[61]
The Applicant must also prove, on a balance of probabilities, that it
would suffer irreparable harm should the order for leave
to execute
or enforce not be granted pending the appeal.
[62]
This Court should come to the assistance of an applicant faced with
the predicament of being left with no relief,
regardless of the outcome of an appeal. That is not the case for the
Applicant.
The Applicant informed this Court in its founding
affidavit that it has quantified its alleged losses as a result of
the Respondents
and the Eighth Respondent unlawfully competing with
it.
[63]
Although the Applicant submitted that a claim for damages will not
give the Applicant the required and necessary relief, the Applicant
is able to quantify its damages and can institute proceedings to sue
for damages.
[64]
In
Incubeta,
the Court held:
‘
... if the loser,
who seeks leave to appeal, will suffer irreparable harm, the order
must remain stayed, even if the stay will cause
the victor
irreparable harm too. In addition, if the loser will not suffer
irreparable harm, the victor must nevertheless show
irreparable harm
to itself.’
[14]
[65]
The Applicant operates the only dealership selling new Ford vehicles
in Ermelo and the Respondents can in no way compete with this
part of
the Applicant’s business. It is only the second-hand car sales
part of the Applicant’s business that is affected,
wherefore
the Applicant can still trade and, to the extent that it suffered
damages relating to the sale of second-hand vehicles,
it can sue for
damages.
[66]
It is true that the Respondents are not prohibited from working or
being employed, but the issue is the area of the restraint.
The
Respondents cannot be employed by any car dealership within a radius
of 300 kilometres from Ermelo, and if they want to pursue
their
professions, they have to relocate and disturb their entire family,
alternatively remain unemployed until September 2024,
both scenarios
will cause harm far greater than the harm to be suffered by the
Applicant. The harm to be suffered by the Respondents
is not merely
financial and would indeed be irreparable.
[67]
What is telling is that in its replying affidavit, the Applicant
admitted that Mr Venter was hired by the Applicant because of
his
robust approach and his likeable personality which connects easily
with customers, Ms Keulder was hired because of her technical
knowledge and experience in respect of structuring deals and
assisting customers in obtaining finance, Mr Nqakwana was hired
because
of his robust approach and his extrovert personality which
connects easily with customers and Mr Mthethwa was hired because of
his robust approach, technical knowledge and experience and his
likeable personality which connects easily with customers. It is
evident that the Respondents possessed skills, experience, technical
knowledge and personality traits which made them attractive
and
suitable for the positions they occupied, even prior to being
employed by the Applicant and they should be free to use those
in
their chosen profession.
[68]
During argument, the parties expressed a willingness for the appeal
in this matter to be dealt with on an expedited basis. The
parties
are encouraged to approach the Judge President in this regard. If the
appeal is expedited, it will alleviate any prejudice
to a great
extent.
[69]
The Applicant failed on all three substantive requirements for
departing from the default position that an appeal suspends execution
of the order appealed against.
It follows that all
the requirements under sections 18(1) and (3) of the Superior Courts
Act have not been satisfied and that this
application must fail.
Costs
[70]
The last issue to be decided is the issue of costs.
[71]
Insofar as costs are concerned, this Court has a
broad discretion in terms of section 162 of LRA to make orders for
costs according
to the requirements of the law and fairness. Both Ms
Lancaster and Mr Ebersöhn argued for costs, but ultimately left
it in
the hands of this Court.
[72]
In my view, this is a matter where the interest of
justice will be best served by making no order as to costs.
[73]
Accordingly, I make an order as follows:
Order
1.
The application is dismissed;
2.
There is no order as to costs.
Connie Prinsloo
Judge of the Labour Court
of South Africa
Appearances:
For the
Applicant:
Ms S Lancaster from Lancaster Kungoane
Attorneys
For the
Respondents: Mr G Ebersöhn
from Gerrie Ebersöhn Attorneys
[1]
Act
10 of 2013.
[2]
See:
Luxor
Paints (Pty) Ltd v Lloyd and another
(2017)
38 ILJ 1149 (LC).
[3]
[2018] ZALAC 47
;
[2019] 5 BLLR 434
(LAC) at paras 43 – 44.
[4]
2014
(3) SA 189 (GJ)
at
para 16.
[5]
[2017] 1 All SA 79
(SCA) at paras 9 – 10.
[6]
Incubeta
supra
at
para 27.
[7]
Ntlemeza
v Helen Suzman Foundation and another
2017
(5) SA 402
(SCA),
Afriforum
supra
.
[8]
Incubeta
at
para 18.
[9]
Afriforum
at
para 13.
[10]
(2015) 36 ILJ 2617 (LC) at para 49.
[11]
[2016]
JOL 35612
(WCC) at para 27.
[12]
2021
(3) SA 135
(SCA) at para 1.
[13]
Ibid
at
para 46.
[14]
Incubeta
supra
at
para
24.