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2024
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[2024] ZAFSHC 311
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Voltex (Pty) Ltd v Jackson (5110/2024) [2024] ZAFSHC 311 (30 September 2024)
IN THE HIGH COURT
OF SOUTH AFRICA,
FREE STATE
DIVISION, BLOEMFONTEIN
Reportable:
NO
Of Interest to other
Judges: NO
Circulate to
Magistrates: NO
CASE NO: 5110/2024
In
the matter between:
VOLTEX
(PTY) LTD
Applicant
And
JOYCE
DORIS JACKSON
Respondent
HEARD
ON:
23 SEPTEMBER 2024
JUDGMENT
BY:
MHLAMBI, J
DELIVERED
ON:
30
September 2024
[1]
This is an opposed application to enforce a restraint of trade
agreement between the applicant and the respondent for eight months.
The applicant approached the court on an urgent basis seeking the
following orders:
1.1 The
Respondent is interdicted and restrained from.
a.
Competing with the Applicant's business directly or
indirectly, either as a shareholder, employee, partner, member of a
close corporation,
director of a private company or in any other
natural or juristic capacity, on her own or through any associated or
related person
or entity, for a period of 8 Months from 1 August
2024, within the Republic of South Africa, alternatively, within the
province
of the Free State;
b.
from soliciting or enticing or coaxing away any of the
Applicant's customers, for a period of 8 months from I August 2024,
whether
for reward or not, directly or indirectly, by furnishing any
information or advice to any customer of the Applicant or using any
other means or to take any other action which is directly or
indirectly designed, or in the ordinary course of events, calculated
to result in such customer/s terminating their business relationship
with the Applicant or transferring any part or all of their
business
to any person/entity other than the Applicant;
c.
From divulging or disclosing to any competitor of the
Applicant or making use directly or indirectly of any trade secrets
or confidential
information, of any nature whatsoever concerning or
relating to the business of the Applicant.
1.2 The
Respondent is directed to pay the costs of this application,
including the costs of senior and junior counsel
where so employed,
on tariff scale C, alternatively;
1.3 An Order
is granted on the same terms set out in paragraphs 2 to 3 above on an
interim basis, pending the finalisation
of this application.
1.4 Such
further and/or alternative relief as the above Honourable Court deems
fit.
The
Parties
[3]
The Applicant is VOLTEX (PTY) LTD, a company duly registered and
incorporated in accordance with the relevant
laws of the Republic of
South Africa with registration number 1964/006740/07, with its head
office at Freestone Office Park, 135
Patricia Road, Sandton,
Johannesburg, and its place of business within the jurisdiction of
this Court at 2-8 Hornby St, Oranjesig,
Bloemfontein. It supplies all
manner of electrical components, cabling, appliances, and solutions
and provides specialist, turnkey
services in this regard.
[4]
The First Respondent is JOYCE DORIS JACKSON, an adult female employed
by Actom Electrical Products (Pty) Ltd
as a branch manager at 20
Lombard Street, Bloemfontein.
The
contract of employment
[5]
On 19 October 2018, the parties entered into a contract
of employment in which the applicant appointed the respondent
as the
internal sales representative who reported to the branch manager. On
the same day, the respondent signed the acceptance
clause and agreed,
unconditionally, to abide by the conditions detailed in the
contract.
[1]
She acknowledged,
by her signature, that the undertakings and restraints of trade
contained in the contract were entirely reasonable
and necessary,
both in regard to their period (i.e., duration) and area. She
acknowledged furthermore that a breach of such restraints
should
cause the company to suffer, inter alia, financial harm and
damage.
[2]
[6]
The restraint of trade undertakings is contained in
clause 24 of the employment contract and provided as follows:
“
20.1 You
warrant and agree that in the nature of your employment you will have
access to significant confidential information of
the Company and may
develop relations with the Company’s Customers and Suppliers.
You accordingly agree, without reservation,
that the restraints set
out in this clause are entirely reasonable and necessary in duration,
scope and area to protect, inter
alia, the Company’s
proprietary information and business interests.
20.2 It is thus
a material term of this agreement and your employment with the
Company that, by your signature hereto, you
irrevocably agree and
understand in favour of the Company, its successors in the title and
assigns, that:
20.2.1 you
shall not during the period of your employment with the Company (and
its assigns/successor in title) or at
any time thereafter, utilize
either for yourself or for any other person, or disclose to any
person, any confidential Information
or trade secrets, other than
secrets which may be available in the ordinary course of business,
relating to the business of the
Company;
20.2.2 you
undertake to surrender to the Company, on demand and In any event on
termination of your employment with the Company,
any documents,
property, vehicles, assets or records, written instructions, notes or
memoranda and any copies thereof which relate
to the business of the
Company or Its affair, irrespective of who the author was of any such
document or record;
20.2.3 you
will not solicit or tout for any clients of the or suppliers or any
other connections of the Company. nor
shall you seek to solicit, tout
for or entice any of the staff for the time of the Company or any of
the Company’s clients.
20.3 It is
a further material term of this agreement and your employment with
the Company that, by your signature hereto,
you irrevocably agree and
understand in favour of the Company, its successors in title and
assigns, that you will not during the
currency of your employment
with the Company and for a period of 8 (eight) months after date of
termination of your employment
with the Company for any reason
whatsoever and howsoever arising, (including summary dismissal or
notice duly given by the Company)
be directly or indirectly engaged
in or employed in or associated in anyway with any business which is
similar to or competitive
with any of the various business of the
Company.
20.5 the
area to which the restraint referred to in paragraph 20.3 above is
applicable to each of any of the provinces
of the Republic of South
Africa as constituted from time to time and in which province/s you
rendered services to the Company at
the date of termination of your
employment and/or at any time during the 8 (eight) month period
preceeding the termination of your
employment with the Company.”
Factual
Background
[7]
The applicant employed Jackson for approximately 23
years. She was employed in various roles and positions in its
Kimberly and Bloemfontein branches from 2000 to 2011. In 2011, she
was appointed as the applicant’s branch manager in Kimberly
until 2013, when she became the branch manager of the Bloemfontein
branch. In 2017, she resigned from her employment with Voltex.
The
applicant appointed her at the Bloemfontein branch in 2018 until 29
July 2024, when she tendered her resignation from Voltex.
[8]
As the internal sales representative, she had
unrestricted access to and knowledge of the applicant’s
confidential
information and trade secrets. Although her official
appointment was as an internal sales representative, her day-to-day
functions
were that of a senior managerial position. She had access
to the applicant’s server, which was reserved for managerial or
senior manager positions. She was the head of the applicant’s
sales operations for the region of Lesotho. She had access
to pricing
structures, discount spreadsheets,
invoicing
systems and cash
reconciliations, which ordinary internal sales representatives were
not privy to. She could change the pricing
structure for her own
clients without a manager's assistance, and was permitted to vary the
pricing structure of clients serviced
by other internal sales
representatives within Voltex.
[3]
[9]
According to the applicant, it was unknown that the
respondent intended to work with one of its direct competitors
upon
her resignation. It was discovered, on/ or about 19 August 2024, that
not only had she taken employment as a branch manager
with Actom, a
direct competitor of Voltex, on 27 July 2024, she sent a customer
list from her work email address to her email address.
The customer
list contained each customer's individual TIN ("Tax
Identification Number"), which is required by the Lesotho
border
clearing agents when bringing stock across borders into Lesotho. The
branch at which the respondent has taken up employment
as branch
manager is approximately 4 kilometres from the applicant’s
Bloemfontein branch, where she was employed.
[10]
In her answering affidavit, the applicant stated that Voltex employed
her in various positions over 23 years, making up almost
all of her
working life. The skills that she learned through her employment with
the applicant was what she knew. If she were to
be restrained to
perform the only job in the industry known to her for eight months,
it would cripple her family and put them in
a dire financial
predicament. Unemployment was rife in South Africa, and chances are
slim that she would enter the market in a
different sector. Her age
and the high number of unemployed graduates actively searching for
work may make it difficult for her
to obtain alternative employment.
[11]
She did not and would not use any confidential
information of Voltex to its detriment. After cutting the
specific
employment benefit, the applicant knew she had taken over the work
cell phone. That meant that Voltex customers could
contact her
directly on her cell phone. Since 2 August 2024, after her
resignation, she referred all customer enquiries to the
applicant.
She also enabled an automatic response on the business WhatsApp
number to contact Anthony at Voltex and provided his
contact details.
She never intended to "steal" any of the applicant’s
customers. It is unreasonable of the applicant
to prevent her from
taking up employment with Actom because the products of the two
companies are of similar or generic nature
in the specific market
segment.
[4]
The period for which
the restraint would operate was unreasonable. Actom, Voltex, and
several other companies operated and competed
in the same
geographical area on the same customer basis, services, and products.
The applicant did not pay or assist her financially
for the proposed
restraint period.
[5]
[12]
It is contrary to the public interest to enforce an unreasonable
restriction on her freedom to trade and /or be employed, which
is a
constitutionally entrenched right. She could not be precluded from
using her skills and abilities by a restraint of trade
contract.
Although she acquired the skills whilst working for the applicant,
such skills and abilities were not the applicant’s
property.
Parties
submissions
[13]
The respondent’s defences can be summarised as follows: her
access to confidential information had been revoked,
and it no longer
constitutes the applicant’s protectable interest.
[6]
She would not use any confidential information to the applicant’s
detriment.
[7]
As an internal
sales representative at Voltex, she did not have insight into the
applicant’s strategic issues or trade secrets.
[8]
The applicant did not have a legitimate proprietary interest worthy
of protection.
[9]
The words and
actions of the applicant’s managing director repudiated the
contract of employment and/or waived the restraint
of trade
provisions when she and other staff members were told that they were
free to join the applicant’s competitors if
they were not happy
at Voltex.
[10]
[14]
It was pointed out on behalf of the applicant that the respondent had
full customer information and tax invoices relating to
the
applicant’s Lesotho customers in her possession.
[11]
Her daily activities revolved around local and Lesotho customers she
procured on behalf of the applicant with whom she developed
relationships. Her admissions denied her allegations that the
applicant had no proprietary protectable interest as she had
confidential
information and acquired customer relations. Relying on
Lufuno
Mphaphuli & Associates (Pty) Ltd v Andrews and Another
,
[12]
the applicant’s counsel submitted that, on the respondent’s
version alone, the statements she alleged were made did
not pass
muster to qualify them as a waiver of the restraint of trade
provisions of her contract of employment. Waiver, amongst
others, is
not presumed; it must be alleged and proved; not only must the acts
allegedly constituting the waiver be shown to have
occurred, but it
must also appear clearly and unequivocally from those facts or
otherwise that there was an intention to waive.
Legal
position
[15]
In
Experian
South Africa (Pty) Ltd v Haynes and Another
,
[13]
Mbha J, as he then was, stated that p
proprietary
interests that may be protected by a restraint of trade agreement
between an employer and an employee include trade
connections and
confidential information. An employer seeking to enforce a restraint
agreement is required only to invoke it and
show breach, whereupon
the employee seeking to avoid it must show unreasonableness by
establishing that he had no access to confidential
information or
never acquired any significant personal knowledge of, or influence
over, the employer's customers. For the employer
it suffices to show
that there was confidential information or trade connections to which
the employee had access and which could,
in theory, be exploited by
the new employer.
[16] The court went on to
say that the ex-employer seeking to enforce against its ex-employee a
protectable interest recorded in
a restraint does not have to show
that the ex-employee has utilised information confidential to it. It
need merely show that the
ex-employee could do so. The purpose of
the restraint agreement is to relieve the applicant from having
to show bona fides
or lack of retained knowledge on the part of the
respondent concerning the confidential information. In these
circumstances, it
is reasonable for the applicant to enforce the
bargain it has exacted to protect itself. Indeed, the very ratio
underlying the
bargain is that the applicant should not have to
content itself with crossing its fingers and hoping that the
respondent would
act honourably or abide by the undertakings it has
given. It does not lie in the mouth of the ex-employee who has
breached a restraint
agreement by taking up employment with a
competitor to say to the ex-employer, 'Trust me, I will not breach
the restraint further
than I have already been proved to have
done.'
Conclusion
[17]
It is not in issue that the restraint of trade clause in the contract
is valid and enforceable. Its reasonableness and the
fact that it
protects the employer’s legitimate proprietary interest are in
issue. It is common cause that the respondent
had access to the
applicant’s server and had knowledge of its confidential
information and trade secrets.
[14]
In
Reddy
v Siemens Telecommunications (Pty) Ltd,
[15]
it was stated
that:
“
Reddy is in
possession of confidential information in respect of which the risk
of disclosure by his employment with a competitor,
assessed
objectively, is obvious. It is not that the mere possession of
knowledge is sufficient, and this is not what was
suggested by
Marais J in BHT Water: Reddy will be employed by Ericsson, a
'concern which carries on the same business as [Siemens]
in a
position similar to the one he occupied with Siemens. His loyalty
will be to his new employers and the opportunity to disclose
confidential information at his disposal, whether deliberately or
not, will exist. The restraint was intended to relieve Siemens
precisely of this risk of disclosure. In these circumstances the
restraint is neither unreasonable nor contrary to public policy.”
[18]
I am satisfied that the respondent has no defence against the
restraint of trade undertakings she provided to the applicant
in the
employment contract. I agree with the applicant’s counsel that
the short duration of the restraint necessitates the
relief sought to
be final and adjudicated based on
Plascon
Evans Paints Ltd v Riebeeck Paints (Pty) Ltd.
[16]
I am also
satisfied that the applicant is entitled to final relief as sought
since it has shown a clear right that is being infringed
on by the
respondent in commencing employment with the applicant’s
competitor in breach of the agreement. An injury has been
committed
or is reasonably apprehended, and no other satisfactory remedy is
available.
[17]
Clause 20.5 of
the employment contract states that the area to which the restraint
is applicable is the province in which the respondent
rendered the
services to the company at the date of the termination of her
employment.
[19]
I, therefore, make the following order:
Order:
1. The respondent is
interdicted and restrained from:
1.1 competing with
the Applicant's business directly or indirectly, either as a
shareholder, employee, partner, member of
a close corporation,
director of a private company or in any other natural or juristic
capacity, on her own or through any associated
or related person or
entity, for a period of 8 Months from 1 August 2024, within the
province of the Free State;
1.2 from
soliciting or enticing or coaxing away any of the Applicant's
customers, for a period of 8 months from I August
2024, whether for
reward or not, directly or indirectly, by furnishing any information
or advice to any customer of the Applicant
or using any other means
or to take any other action which is directly or indirectly designed
or in the ordinary course of events,
calculated to result in such
customer/s terminating their business relationship with the Applicant
or transferring any part or
all of their business to any
person/entity other than the Applicant;
1.3 From divulging or
disclosing to any competitor of the Applicant or making use directly
or indirectly of any trade secrets or
confidential information of any
nature whatsoever concerning or relating to the Applicant's business.
2. The respondent is
ordered to pay the costs of this application, including senior
counsel's costs on tariff scale C.
MHLAMBI, J
On
behalf of Plaintiff:
Adv.
J Blou SC,
Instructed
by:
Lovious
Block INC
31
First Avenue
Westdene
Bloemfontein
On
behalf of the Defendant:
Adv.
J Els
Instructed
by:
RC
Ishmail Attorneys
Unit
4 Red Plaza
21
Reid Street
Westdene
Bloemfontein
[1]
Page 94 of the
indexed papers.
[2]
Clause 20.7 of
the contract.
[3]
Paras 17 and 18
of the FA and paras 112 and 113 of the AA.
[4]
Para 74 of the
AA.
[5]
Para 75 of the
AA.
[6]
Para 12-12.5 of
the AA.
[7]
Para 69 of the
AA.
[8]
Para 85 of the
AA.
[9]
Para 82 of the
AA.
[10]
Paras 48,49,59
and 60 of the AA.
[11]
Para 12 of the
AA.
[12]
2009 (4) SA (CC)
at para 80.
[13]
2013
(1) SA 135
(GSJ) paras Paragraphs [14], [17] and [20] – [22]
at 140G, 141B – D.
[14]
Para 113 of the
AA and para 17 and 18 of the FA.
[15]
2007 (2) SA 486
(SCA) para 20.
[16]
1984
(3) SA 623 (A).
[17]
Setlogelo v
Setlogelo
1914 AD 221.