THE REPUBLIC OF SOUTH AFRICA
IN THE HIGH COURT OF SOUTH AFRICA
WESTERN CAPE DIVISION, CAPE TOWN
Case No: 15110 / 24
In the matter between:
SIMAH RISK ADVISORS (PTY) LTD Applicant
and
MICHIEL VAN NIEKERK First Respondent
ANNELI JONKER Second Respondent
MOUNTSURE BROKERS (PTY) LTD Third Respondent
Coram: Wille, J
Heard: 30 July 2024
Order: 30 July 2024
Condonation: 31 October 2024
Reasons: 14 November 2024
REASONS
2
WILLE, J:
INTRODUCTION
[1] This opposed application came before me as an urgent application. I
heard the arguments and determined that the matter was urgent. After that, I
granted most of the relief sought by the applicants.1
[2] In summary, I granted relief against the first and second respondents to
enforce certain written confidentiality and restraint of trade undertakings entered
into by the first and second respondents to benefit the applicant. In addition,
concerning all the respondents , I interdicted them from using the applicant’s
confidential information.2
[3] I determined that the matter be heard as urgent because (a) t he
applicant would not be able to seek substantial redress in the ordinary course;
(b) the applicant did not delay in bringing its application; (c) the applicant was
entitled to enforce the confidentiality and restraint of trade undertakings
because t he first respondent has breached his confidentiality and restraint
undertakings and, (d) the second respondent breached her confidentiality and
restraint undertakings.3
[4] In addition, I found that the applicant's protectable interests warranted
the enforcement of the confidentiality and restraint of trade undertakings in as
much as the third respondent was concerned. Accordingly, I formed the view
that the applicant was e ntitled to the relief sought by it against the third
respondent.4
URGENCY
1 A final interdict restraining the first and second respondents from violating the terms of their
restraint covenants.
2 The third respondent was also interdicted concerning certain ancillary relief.
3 A case was made out for urgency.
4 This was also because a good case had been made out against the first and second
respondents.
3
[5] The applicant found itself in a difficult position because it could not seek
substantial redress in the ordinary course of litigation. This either by way of a
lengthy opposed application in the long form or by initiating action proceedings.
I say this because it was demonstrated that several of the applicant’s clients
(with whom the first respondent and second respondent had dealings) had
since abandoned the applicant's services.5
[6] This undoubted ly had severe financial consequences for the applicant
because ‘its’ clients had left. Moreover, the applicant with haste investigated
the conduct of the first and second respondents , and it sought undertakings
from these respondents, which were not forthcoming from either of them.6
[7] It was a matter of common cause that the first respondent accepted that
the applicant would be unable to seek substantial redress in the ordinary course
in that it was conceded that the applicant acted with reasonable speed by
launching the application . The second respondent complained that she had
insufficient time to file her answering affidavit. The second respondent's
complaint must be adjudicated i n the correct context. She was timeously
provided with a copy of the unissued papers as a matter of courtesy to prepare
for the hearing and file her answering affidavit. The third respondent did not
engage with the issue of urgency.7
CONTEXT
[8] The app licant carries on business as a short-term insurance broker . It
acquired this business from another discrete entity. The effective date for
implementing this business acquisition was over two years ago . The applicant
purchased the short -term insurance business and goodwill from this discrete
entity and took over the employees of this entity.8
5 It was conceded that at least twenty-seven clients left the applicant and became clients of the
third respondent.
6 The applicant attempted to resolve the matter amicably prior to launching the application.
7 I reasoned that the second respondent was given sufficient time to deal with the application.
8 The business it acquired was “Indiwe”, and it did so “Lock Stock and Barrel”.
4
[9] Thus, the applicant was entitled to enforce the written restraint of trade
and confidentiality agreements (the ‘restraint agreements’) concluded with the
first and second respondents. This must be so because the applicant acquired
the entire business and goodwill of the company that it acquired, coupled with
the written cession concluded to the benefit of the applicant . The first
respondent had also concluded a separate ‘consultant agreement’ with the
applicant.9
[10] The first respondent’s restraint agreement provided for the following:
‘…[T]he Employee undertakes in favour of the Employer that the Employee
shall not at any time during his employment with the Employer or for a
period of three years after the termination of his employment with the
Employer for any reason whatsoever and in any m anner whatsoever,
whether for his own benefit or the benefit of any third party, including, but not
limited to, any business, operation, consultancy, organization, individual or
any other juristic or natural person, which carries on business similar to
and/or in competition with the Employer within the Republic of South Africa
or any other country where the Employer conducts business:-
• Canvass, recruit or solicit any Client with regard to short -term insurance
business.
• Accept or take up any short-term insurance business from any Client.
• Accept appointment as a short -term insurance broker or intermediary by
any Client.
• Divulge, publish, disclose, copy and/or in any manner and/or in any
format, whether electronic or otherwise, the confidential information,
data, intellectual property, records, documentation, customer/client lists,
9 Indwe’s predecessor was Mountainview (Pty) Limited.
5
names and/or contact details of clients, trade secrets, trade connection
confidential to the Employer, or programmes and databases of the
Employer…’10
[11] Under the rubric of confid entiality, the restraint agreement provides as
follows:
‘…[t]he Employee shall not during his employment with the Employer or at
any time thereafter, use or directly or indirectly divulge or disclose to any
other person, other than authorised employees or officers of the Employer,
any of the Confidential Information for any re ason whatsoever unless that
use or disclosure is made with the prior written consent of, or in accordance
with the policies and procedures approved by the Employer;
• any information or other Intellectual Property that is created and/or made
and/or captured by the Employee or which comes into possession of the
Employee’s period of employment with the Employer, shall be deemed to
be the property of the Employer and shall be delivered immediately by
the Employee to the Employer on demand and in any event upon t he
termination of the Employee’s employment for whatever reason;
• the Employee shall not retain any copies or extracts of any Information,
Intellectual Property or other Confidential Information in any form for any
reason whatsoever….’11
[12] Finally, as far as re-employment was concerned, the following:
‘…[S]hould the Employee at any time in the future cease to be employed
by the Employer and should the Employee thereafter again become
employed on a full time basis with the Employer, then he terms and
conditions hearing contain shall apply mutatis mutandis from the date of
commencement of such employment save that the non -soliciting period
10 The actual terms of the restraint covenants was not the subject of any genuine dispute.
11 Again, these terms were not the subject of any genuine dispute.
6
and the restraint period s hall be for the period that the Employee is
employed by the Employer for such full time basis and for a period of 3
(three) years after he ceases be so employed by the Employer for any
reason whatsoever….’12
[13] In addition to these instruments, the first respondent concluded a
separate ‘consultant agreement’ with the applicant, which was in operation for
about a year before the first respondent terminated his business relationship
with the applicant . The first respondent then engaged in the business of the
third respondent as a consultant through an entity incorporated by the third
respondent.13
[14] It was alleged that both the respondents: - (a) were privy to and
possessed significant confidential information about the applicant ’s business ,
(b) had established close and trust -based relationships with the applicant’s
clients, and (c) knew the history and requirements of the applicant’s clients.14
[15] The applicant took the position that the first respondent actively solicited
its clients, which clients then terminated their broker appointments with the
applicant and moved their business to the third respondent entity and their
business affairs were then managed a nd transacted upon by the first and
second respondents through the entity of the third respondent.15
CONSIDERATION
[16] The first respondent conceded that he ha d breached and would continue
to breach the core restraints set out in the applicant's restraint of trade
covenant. He contends that t he applicant’s assertion that he was privy to the
12 The wording and interpretation of this clause was also uncontroversial.
13 With effect from 8 April 2024 in a business known as M B Broking Services (Pty) Limited.
14 It was alleged that t he first and second respondents were privy to the applicant’s confidential
business information.
15 The first respondent does not deny this. He says he will continue to act in this manner.
7
confidential protection information rings hollow because this is information
which he carried and continues to ‘carry with him in his head’.16
[17] The first respondent also contends that any information he may have
been privy to does not assist him or the third respondent in carrying on the third
respondent’s business. The second respondent advances the same argument.
Undoubtedly, the first and second respondents were privy to the applicant’s
confidential information and could use this information.17
[18] It was not and is not the subject of any dispute that the third respondent
remains a direct competitor of the applicant. Thus, it does not matter whether
or not the first and second respondents contacted the clients’ of the applicant or
whether such clien ts contacted the first and second respondent as both these
forms of conduct amount to solicitation of the applicant’s clients’ which is
impermissible during the period of the restraint covenant.18
[19] To hold or reason otherwise would render most of the provisions relating
to restrictions in restraint covenants dealing with business relationships in the
service industry completely worthless. This would undermine the purpose of a
restraint covenant and make it very difficult, if not impossible, for an entity in the
position of the applicant to demonstrate that the provisions of a restraint
covenant have been breached because it is more than li kely that the affected
clients will support the entity or person/s in the position of the first and second
respondent.19
[20] Self-evidently, the same must apply to confidential information. It would
similarly be near impossible to demonstrate that confid ential information had
indeed been imparted to a third party save in circumstances of direct forensic
evidence being tendered in this connection. The risk remains that the first and
16 The first respondent alleged that the restraint covenants were not binding on him.
17 Reddy v Siemens Telecommunications (Pty) Ltd 2007 (2) SA 486 (SCA) para graphs [20] -
[21].
18 Experian SA (Pty) Ltd v Haynes 2013 (1) SA 135 (GSJ) at paragraph [52].
19 This is also known as “indirect” solicitation.
8
second respondents may give over the applicant’s confidential information to
the third respondent.20
[21] I am left with the contention by the first respondent that the applicant’s
predecessors did not previously employ him , but he was instead a consultant.
Further, the applicant did not employ him, but he was only engaged as a
consultant. His argument is that the applicant cannot enforce the restraint of
trade against him as it only applies to the first respondent ceasing to be
‘employed’ by the applicant. This argument was artificial. I say this because
the ‘Sale of Business A greement’ read with the ‘Cession Agreement’ made it
abundantly clear from which date the applicant was entitled to enforce the first
respondent's restraint of trade independently from the rights that the applicant
acquired independently in terms of the first respondent’s restraint of trade.21
[22] I say this also because the suite of agreements between the applicant
and the first respondent unequivocally recorded that the first respondent c ould
not simply provide services to anyone else and required the applicant's consent
if he wished to do so.22
[23] Significantly, a t all material times during this dispute, the applicant’s
attorneys asserted that the first respondent was an employee of the applicant,
which was never engaged with by the first respondent’s attorneys. This was not
the subject of any challenge. In these peculiar circumstances, one would have
expected more than silence or inaction from the first respondent on this score.23
[24] On social media, the first respondent actively advertised that he
benefitted from information technology provided by the applicant and possessed
an email address and an email signature bearing the applicant's trade name.
20 The first and second respondents admitted they had the applicant’s confidential application “
n their heads”.
21 With effect from 3 May 2022.
22 Why would consent be required if there was no covenant of restraint?
23 McWilliams v First Consolidated Holdings (Pty) Ltd 1982 (2) SA 1 (A): dictum at 10E – F:
9
Moreover, he stated that he was directed to engage with the applicant 's clients
in a specific manner and received training from the applicant.24
[25] Turning now to the position of the second respondent. The applicant’s
predecessor initially employed her in terms of a written employment contract.
After that, she entered into a restraint covenant in the same terms as the first
respondent’s restraint of trade , save that the restraint period was for two years
and not for three years.25
[26] Subsequently, she became employed by the applicant a s a senior
employee. She conceded that she is bound by the restraint of trade covenant
to the benefit of the applicant. She resigned from the applicant's employ and
gave the applicant the requisite one month’s notice. The third respondent
employed her as a personal portfolio administrator. She denied soliciting any of
the applica nt’s clients, but the evidence overwhelmingly suggested otherwise.
Also, she could not contend that she was not involved with soliciting the
applicant’s clients, albeit indirectly. Finally, the second respondent attempted to
artificially assert that she only did administrative work for the third respondent.26
[27] Turning now to the third respondent. The evidence demonstrated that
the applicant possessed confidential information . Given that the third
respondent is a competitor of the applicant, the third respondent was and is
likely to use the applicant’s confidential information for its benefit. Thus, t here
was and is a strong likelihood that the first and second respondents w ould
impart this information to the third respondent.27
[28] In addition, there could be no dispute that the applicant had established a
right not to be faced with unfair competition at the behest of the third
respondent, and it had no alternative remedy. The first and second respondent
never disputed that the applicant gave them access to its confidential
information, which was worthy of protection. Also, what remained undisputed
24 Undoubtedly, the first respondent was employed by the applicant.
25 With effect from 1 November 2019.
26 I found no traction with this argument.
27 The averments by the respondents that this would not occur rang hollow,
10
was that the first respondent’s and second respondent ’s employment with th e
third respondent was not permitted regarding the wording of the restraint
covenants. The applicant says that the first and second respondents must be
held to their agreements.28
[29] The applicant promoted and trusted the first and second respondents
with confidential information, and th eir undertakings should thus be honoured.
The first respondent’s claims of lack of actual possession of the confidential
information (other than in his head) did not render the applican t’s motivation
behind the terms of the restraint covenants against public policy. I say this
because the suite of agreements between the applicant and the first respondent
undoubtedly served an acceptable employment purpose to the benefit of both
parties when it was concluded and also at the time that the applicant promoted
the services of the first respondent.29
[30] The enforceability of the covenants was and is essential for commerce
and fair employment practices. Thus, any public policy argument would have to
be based on the premise that the first and second respondent would not have
constitutionally waived their rights to f reedom of employment and that,
accordingly, public policy factors weigh against enforcing the restraint
covenants in these particular circumstances.30
[31] I was not persuaded that the restraint covenant s were inconsistent with
public policy in these circumstances. The correct position in our jurisprudence
on this score has been recently clearly re -stated. In short, establishing whether
a clause should be enforced includes considering whether the parties
negotiated with equal bargaining power and understood what they agreed to. In
this matter, it is clear that the parties possessed equal bargaining power, and
they must have understood what they were agreeing to.31
28 This is precisely why these agreements were concluded.
29 There was equal bargaining power between the parties when these agreements were
concluded.
30 The first and second respondents failed to discharge this onus on them.
31 Beadica 231 CC and Others v Trustees for the time being of the Oregon Trust and Others
2020 (5) SA 247 (CC).
11
[32] The facts demonstrate that the first respondent voluntarily consented to
the terms of the subject restraint covenants. This brings me briefly to the public
policy considerations. Public policy, in this context, falls to be constitutionally
infused. This means that a court may refuse to enforce specific contractual
terms of an agreeme nt where that term itself, alternatively, the enforcement
thereof, would be contrary to public policy.32
[33] For obvious reasons, this refusal by a court must be used sparingly.
Generally, public policy dictates that parties should be bound by their
contractual obligations embodied in a contract. This is primarily where the
contract was entered into freely and voluntarily. In this case, the subject matter
of the restraint covenants was specific and very limited in effect.33
CONCLUSION
[34] In summary (in my view), the first and second respondents had breached
their respective restraints of trade covenants. Because of the extent of the
applicant’s confidential information , there were protectable interests warranting
the enforcement of the fi rst and second respondents’ respective restraint of
trade covenants. The applicant had a clear right to enforce the restraint of trade
covenants of the first and second respondents and was entitled to the relief it
sought against the third respondent . Also, the area and duration of the
restraints of trade sought to be enforced by the applicant were not challenged .
The applicant satisfied all the requirements for a final interdict.34
[35] The first and second respondents breached and intend ed to continue to
breach, their restraint s of trade , and there was and still is, a reasonable
apprehension of harm. The applicant had no adequate alternative remedy and
was thus entitled to an order regarding its notice of motion.35
32 This was not a core issue to be decided in this application.
33 Barkhuizen v Napier 2007 (5) SA 323 (CC) at paragraph 70.
34 Setlogelo v Setlogelo 1914 AD 221 at 227.
35 I granted the relief sought, save for the order concerning costs against the second
respondent.
12
COSTS
[36] Costs followed the result. The third respondent also opposed the
application. An order was granted jointly and severally against the first and third
respondents for the applicant’s costs of and incidental to the application. Given
the positio n occupied by the second respondent in the exercise of my
discretion, I did not make an order for costs against her.36
[37] I have to say something about how the respondents piloted this request
for reasons. Initially, I assume as a knee -jerk reaction to my order, the
respondents “filed” a “Request for Reasons” and a n “Application for Leave to
Appeal” the day after my order was granted. The legal representatives for the
respondents then leisurely sat back and assumed that some “magical
intervention” would bring these documents to my attention.37
[38] Eventually, more than a month later, the respondents’ legal
representatives brought the court file and these documents to my attention. I
struck out the purported “Request for Reasons” and the “Application for Leave
to Appeal” because this division's applicable practice directions/ directives were
ignored. In response to my striking -out order, the legal representatives of the
respondent filed an imaginative application styled “ Notice of Further Set Down /
Notice of Application in Respect of Leave to Appeal”.38
[39] To a ttempt to regulate these “proceedings”, I called a judicial case
management meeting . T o my surprise, the legal team representing the
respondents indicated they were completely unaware of the practice
directions/directives that found application.39
36 I believed a joint and several costs order against the first and third respondents was more
appropriate.
37 The applicant attempted to settle the matter amicably prior to the launching of the
application.
38 The purpose and nature of this application was difficult to understand.
39 I was asked to email the respondents’ legal representatives a copy of the current Practice
Directives for the WCHC.
13
[40] The respondents then withdrew all their previous defective notices and
the fatally defective ‘application’ and filed a ‘regular’ application for condonation
on 31 October 2024. I mention all of this as I will make a costs order to the
effect that the resp ondents’ legal team shall not be allowed to recover any of
these costs from the respondents in connection with their defective notices and
their defective application.40
[41] These are then my reasons for the order granted on 30 July 2024. The
following o rder is made in connection with the condonation application and
costs.
1. The application for condonation dated 31 October 2024 is granted.
2. The respondent’s legal representatives shall not be permitted to
recover any costs or disbursements incurred in c onnection with
the following process.
2.1 The “request for reasons” dated 31 July 2024.
2.2 The “application for leave to appeal” dated 31 July 2024.
2.3 The “application” dated 16 September 2024.
2.4 The “notice of withdrawal” dated 31 October 2024.
__________
E. D. WILLE
CAPE TOWN
40 Strydom and Another v Coomans and Others (M593/2021) [2024] ZANWHC 6 (8 January
2024].