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[2013] ZALAC 14
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Ball v Bambalela Bolts (Pty) Ltd and Another (JA 23/11) [2013] ZALAC 14; [2013] 9 BLLR 843 (LAC); (2013) 34 ILJ 2821 (LAC) (30 May 2013)
REPUBLIC OF SOUTH AFRICA
IN THE LABOUR APPEAL COURT OF SOUTH AFRICA, JOHANNESBURG
Case no: JA 23/11
In the matter between:
TREVLYN BALL
..............................................................................................
Appellant
and
BAMBALELA BOLTS (PTY) LTD
......................................................
First
Respondent
ACTION BOLT (PTY) LTD
............................................................
Second
Respondent
Heard: 26 March 2013
Delivered: 30 May 2013
REPORTABLE
Summary: -Restraint of trade-Mootness- restraint period lapsed -
issue of restraint moot, however, issue of costs vital –
accordingly the appeal cannot be dismissed for being moot. Enquiry
into the reasonableness of a restraint-the question of
onus
avoided in suitable cases by resolving genuine disputes of fact
in favour of the party sought to be restrained. Reasonableness is
determined in light of the facts. If the facts disclose that the
restraint is reasonable then the party, seeking the restraint
order,
must succeed, but if those facts show that the restraint is
unreasonable, then the party, sought to be restrained, must
succeed-
A restraint is enforceable if it protects a legitimate interest–
the determination of reasonableness involves a
balancing of competing
interests-Labour Court correctly concluded that the restraint was
enforceable and reasonable. Order that
the competitor dismiss the
appellant not appropriate relief-Costs- appellant ordered to pay
costs in the court
a quo-
presumably on the basis that the
costs follow the result- this general rule does not apply in the
Labour court – costs orders
in Labour court dependant on law
and fairness- enforcement of a restraint also constitutes a
limitation on a citizen’s right,
in terms of section 22 of the
Constitution – costs not generally granted in constitutional
rights disputes- generally litigants
not to be deterred to litigate
the violation of their labour and constitutional rights for fear of
adverse cost orders-Labour Court
ruling on costs set aside-Urgency-
ruling on urgency generally,
per se
, not appealable. Appeal
partially upheld – no costs ordered on appeal.
___________________________________________________________________
JUDGMENT
__________________________________________________________________
COPPIN AJA
[1] This is an appeal against the order of Lallie J in the Labour
Court, in terms of which, amongst other things, a restraint agreement
was enforced in favour of the first respondent against the appellant.
Leave to appeal was granted by that court.
[2] The appellant was employed by the first respondent from about
September 2009 as an internal sales consultant, initially on
a
temporary fixed term basis and from 1 February 2010 on a permanent
basis. Her employment with the first respondent terminated
on 28
October 2011 after she had resigned having given a month’s
written notice to that effect. She was then employed by
the second
respondent, a competitor of the first respondent.
[3] It is common cause that in the course of her employment with the
first respondent and on or about 19 January 2010, the appellant
concluded an employment contract with the first respondent in terms
of which she, amongst other things, agreed to the following
confidentiality and restraint of trade provisions:
‘
16.
CONFIDENTIALITY
16.1. During
your period of employment and subsequent thereto, you will not
disclose to others (including other employees of the
Company) or make
use of directly or indirectly, any confidential information of the
Company or of others who have disclosed it
to the Company under
conditions of confidentiality, unless for a purpose authorised by the
management of the Company. If there
is any doubt about whether any
disclosure or use is for an unauthorised purpose, you will obtain a
ruling in writing from the management
of the Company and abide by it.
16.2. You
will also be obliged to report in writing, to the management of the
Company, any unauthorised disclosure or use of the
above-mentioned
confidential information and assist the Company to suppress or remedy
any such unauthorised disclosure or use.
16.3. For the
purpose of this clause, confidential information will be deemed to
extend to all confidential technical and commercial
information
(including but not limited to the contents of reports,
specifications, quotations, drawings, computer records –
whether programmes or output or otherwise – customer lists,
supplier lists, stock lists, price schedules and the like).
Information will be deemed to be
confidential unless it has entered the public domain as a result of
the legal activities of others
or of an intentional disclosure by the
Company.
RESTRAINT OF TRADE
In order to protect the
proprietary interests of the Company a restraint of trade is a
requirement. It is agreed that upon termination
of your employment
for whatever reason, you shall be restrained from being employed by,
conducting business with, or associating
yourself directly or
indirectly whether as partner, proprietor, shareholder, director,
member, consultant or otherwise with any
supplier, manufacturer,
wholesaler or retailer of any products stocked, supplied or sold by
this company during the six months
immediately prior to the
termination of your employment.
It is agreed that this restraint
shall endure for a period of one year from the date of such
termination and will apply within the
following Provinces of South
Africa, Gauteng, Mpumalanga, Free State, Limpopo and North West.
It is further agreed that this
restraint, in its entirety, is both necessary to protect the
company’s business interests and
is reasonable.’
[4] It is further common cause that on 28 October 2011, at the time
of her resignation, the appellant signed a letter dealing with
her
resignation, in which she, amongst other things, confirmed to be
bound by the aforesaid provisions.
[5] According to the first respondent, it became aware on 7 November
2011 that the appellant was working for the second respondent,
its
competitor, and it took steps to obtain an undertaking from the
appellant that she would comply with the restraint and also
made the
second respondent aware of the restraint. Neither the appellant, nor
the second respondent gave any undertaking in response
to the request
of the first respondent, as a result of which the first respondent
brought an urgent application in the Labour Court
seeking to enforce
the restraint.
[6] On 13 January 2012, the court
a quo
granted the order,
being appealed against and subsequently, on 1 March 2012, furnished
reasons for the order. The order reads:
‘
IT IS
ORDERED THAT:
The rules of the above
Honourable Court relating to the forms and manner of service are
hereby dispensed with and this matter
is dealt with as one of
urgency.
Ball is restrained from being
employed by, conducting business with, or associating herself
directly or indirectly, whether as
partner, proprietor, shareholder,
director, member consultant or otherwise with any supplier,
manufacturer or retailer of any
products stocked, supplied or sold
by Bambalela during the six months prior to the 28
th
October 2011.
The restraint endures for a
period of one year from the 28
th
October 2011 and applies
within the provinces of Gauteng, Mpumalanga, Free State, Limpopo and
North West.
Action Bolts is ordered to
terminate the services of Ball with immediate effect.
The First Respondent is to pay
the costs of this application.’
[7] In its reasons for the order, the court
a quo,
amongst
other things
,
found that special supplier deals, put in place
by the first respondent with its local and international
counterparts, as well
as the first respondent’s pricing
structure and profit margins were not in the public domain and that
the appellant would
not have acquired that information had she not
been employed by the first respondent. It was also found that as a
sales consultant,
the appellant developed goodwill with customers and
got to know which client ordered which product and the quantities
ordered;
that such information was not in the public domain and that
the first respondent stood to be prejudiced if the appellant was
allowed
to pass it on to the second respondent. The court
a quo
also held that it had considered the appellant’s right, in
terms of section 22 of the Constitution, to choose a trade,
occupation,
or profession freely; that the industry in which the
appellant was employed was not her field of expertise since she had
previously
worked as a conveyancing secretary for nine years and in
internal sales, at another concern, for seven years. The court
a
quo
concluded that the appellant has knowledge of the first
respondent’s confidential information and that her continued
employment
by the second respondent exposes the first respondent to
the prejudice which it sought to protect itself from by concluding a
restraint
of trade agreement with the appellant.
[8] The appellant in her
application for leave to appeal relied on several grounds. She
submitted that the court
a
quo
erred in law and
in fact in determining that the application was urgent and
accordingly erred in not striking the matter from the
roll. Further,
she submitted that the court
a
quo
erred and failed
to properly and fairly apply the test enunciated in
Basson
v Chilwan and Others
1
since it had not been shown that she had breached a protectable
interest of the first respondent and further that it had not been
shown that the appellant transacted in competition with the first
respondent, or that the appellant solicited any of the first
respondent’s customers. Another ground was that the learned
judge erred in the application of the test stipulated in
Basson
.
In this regard, it was submitted that, on the evidence it was not
shown that the appellant would serve any customers other than
the
existing customer base of the second respondent and would only deal
with the second respondent’s existing suppliers.
Furthermore,
the appellant submitted that the evidence had neither shown that she
had detailed knowledge of the prices and products
of the first
respondent, nor was there proof that she had carried any customers of
the first respondent ‘in her pocket’,
or that she had any
‘secret or confidential information she could and would use’.
It was further submitted by the appellant
that the court
a
quo
ought to have
accepted her version of the facts having regard to the test
enunciated in
Plascon-Evans
Paints Ltd v Van Riebeeck Paints (Pty) Ltd
2
(commonly referred to as ‘the Plascon-Evans rule’). It
was also submitted that the court
a
quo
failed in finding
that all that the first respondent was attempting to do was to stifle
competition. It was also submitted that
the court
a
quo
did not consider
reducing the scope of the restraint and erred in that regard.
Further, that an order which prevented the appellant
from transacting
with, or soliciting the first respondent’s customers and
protecting its confidential information would have
sufficed, without
having to render the appellant unemployed. It was lastly submitted
that the court
a quo
erred in awarding costs against the appellant in the circumstances.
MOOTNESS
[9] The first respondent argued
at the outset that the appeal has become moot. It is common cause
that the period of the restraint,
namely one year from the date of
the termination of the appellant’s employment with the first
respondent (i.e. from 28 October
2011) expired on or about 28 October
2012. The first respondent accordingly submitted, at the hearing
before us on 26 March 2013,
that in those circumstances the issue of
the restraint was moot as contemplated in terms of section 21A of the
Supreme Court Act.
3
This Court in
City of
Cape Town v S A Municipal Workers’ Union on behalf of
Abrahams and Others,
4
held that even though the Labour Relations Act 66 of 1995 (as
amended) (“
the
Act
”) has no
similar provision to section 21A of the Supreme Court Act, the
principles contained in that provision could be applied
to appeals
heard in this Court. The appellant’s legal representative
conceded that since the restraint period has lapsed,
the issue of the
restraint,
per se,
was moot, because it no longer has any practical effect or result,
but submitted, with reference to section 21A(3) of the Supreme
Court
Act, that the issue of costs, given the circumstances of this case,
was still a vital issue.
[10] Section 21A(3) of the Supreme Court Act provides:
‘
Save
under exceptional circumstances, the question whether the judgment or
order would have no practical effect or result, is to
be determined
without reference to consideration of costs.’
Accordingly, in terms of this
subsection, the question whether the judgment, or order, appealed
against would have a practical effect,
or result, could be determined
with reference to a consideration of costs where there are
exceptional circumstances, for example,
where considerable costs have
been incurred in the case. It has been held that in such an instance
the judgment of the court of
appeal would indeed have a practical
effect, or result and the appeal should not be dismissed in terms of
section 21A(1).
5
[11] It was submitted on behalf of the appellant that here there are
indeed exceptional circumstances present in this case. The
appellant
was represented before us on a
pro bono
basis and had been
unable to afford to pay for legal fees at the hearing before the
Labour Court. She appeared there on her own
and was not legally
represented. If the costs order, that was granted against her, should
be confirmed it would hold serious, if
not devastating, financial
consequences for her. In her answering affidavit before the court
a
quo
, the appellant sketched her precarious financial situation.
The first respondent did not dispute those averments. Similarly,
before
us counsel for the first respondent did not dispute that the
costs order, if confirmed and executed, would have a detrimental
impact
on the appellant’s, already depressed, financial
situation.
[12] In my view, the implications that the costs order may hold for
the appellant, constitutes exceptional circumstances. In those
circumstances, the judgment and order of this Court in respect of the
issues would have a practical effect, or result and the appeal
cannot, therefore, be dismissed for being moot, or on the basis of
the principles stated in section 21A(1) of the Supreme Court
Act.
THE MERITS
[13] The thrust of the
appellant’s arguments was directed at the reasonableness of the
restraint. Prior to the decision in
Magna
Alloys and Research SA (Pty) Ltd v Ellis,
6
restraints of trade were only enforceable if they were proved to be
reasonable. Since then they have been regarded as enforceable,
unless
they are proved to be unreasonable. The effect of the
Magna
Alloys
’ decision
was to place an
onus
on the party, sought to be restrained, to prove, on a balance of
probabilities, that the restraint was unreasonable.
7
However, because the right of a citizen to freely choose a trade,
occupation, or profession, is protected in terms of section 22
of the
Constitution and a restraint of trade constitutes a limitation of
that right, the
onus
may well be on the party who seeks to enforce the restraint to prove
that it is a reasonable, or justifiable limitation of that
right of
the party sought to be restrained.
8
[14] In
Reddy
v Siemens Telecommunications (Pty) Ltd,
9
it was held that the reasonableness of a restraint could be
determined without becoming embroiled in the issue of
onus
.
This could be done if the facts regarding reasonableness have been
adequately explored in the evidence and if any disputes of
fact are
resolved in favour of the party sought to be restrained. If the
facts, assessed as aforementioned, disclose that the restraint
is
reasonable then the party, seeking the restraint order, must succeed,
but if those facts show that the restraint is unreasonable,
then the
party, sought to be restrained, must succeed.
10
Resolving the disputes of fact in favour of the party sought to be
restrained involves an application of the
Plascon-Evans
rule.
11
[15] The enquiry into the
reasonableness of a restraint is a value judgment that involves a
consideration of two policy considerations
namely, the public
interest, which requires that parties to a contract must comply with
their contractual obligations (i.e.
pacta
servanda sunt
) and the
principle, that a citizen should be free to engage or follow a trade,
occupation or profession of her choice.
12
[16] A restraint would not be
regarded as reasonable and enforceable in the absence of an
interest-deserving protection i.e. a legitimate
protectable interest.
A restraint which is purposed to merely prevent competition is not
reasonable.
13
In
Basson v Chilwan,
14
four questions have been held to require investigation namely:
(a) Whether there an interest of the one party which is deserving of
protection at the termination of the agreement?
(b) Whether such an interest is being prejudiced by the other party?
(c) If so, does such interest so weigh up qualitatively and
quantitatively against the interest of the other party that the
latter
should not be economically inactive and unproductive?
(d) Whether there is another facet of public policy having nothing to
do with the relationship between the parties, but which requires
that
the restraint should be maintained or rejected?
Insofar as the interest in (c)
exceeds the interest in (a), the restraint would be unreasonable and
accordingly unenforceable.
15
Examples of protectable interests would include trade secrets or
confidential information.
16
[17] The enquiry into
reasonableness has been refined and elaborated on in cases such as
Reddy
and
Basson
.
The enforceability of a restraint essentially hinges on the nature of
the activity that is prevented, the duration of the restraint,
and
the area of operation of the restraint. In particular, the
determination of reasonableness is, essentially, a balancing of
interests that is to be undertaken at the time of enforcement and
includes a consideration of ‘the nature, extent and duration
of
the restraint and factors peculiar to the parties and their
respective bargaining powers and interests’.
17
[18] Regarding the process of
determining reasonableness, in
Reddy,
it was held that the common law of balancing and reconciling the
different interests involved, gives effect to the precepts of
section
36(1) of the Constitution.
18
The restraint agreement is regarded as having been concluded pursuant
to ‘
a
law
of general application’ referred to in section 36 of the
Constitution. The four questions posed in
Basson,
for determining the reasonableness of the restraint, comprehend the
considerations referred to in section 36(1) of the Constitution.
The
fifth question which was identified and which is really covered by
the relationship between questions (c) and (a) posed in
Basson
,
relates to proportionality and will cover the consideration referred
to in section 36(1)(e) of the Constitution.
19
It was held in
Reddy
that, accordingly, the process of weighing up the different interests
in common law does not differ materially from a justification
analysis in terms of section 36 of the Constitution.
[19] It is perhaps so that the court
a quo
did not in its
judgment illustrate a detailed analysis and balancing of the
different interests of the contesting parties, but,
in my view, the
conclusion that the restraint was reasonable and enforceable cannot
be faulted. There was a breach of the restraint
simply by the fact
that despite her agreement not to go and work for a competitor of the
first respondent (i.e. based on the area
covered by the restraint)
for a year after the termination of her employment with the first
respondent, the appellant nevertheless
did so. The appellant averred
in her founding papers that the restraint agreement was entered into
under duress. The court
a quo
made no specific finding on this
point, but it seems to have fallen by the wayside because it was not
raised as one of the grounds
of appeal and was not argued before us.
In any event duress is a technical defence and has to be properly
made out. The impression
one gets is that the appellant, a layperson,
in drafting her own papers, used the term loosely, but intended to
convey that she
signed the agreement, because she needed the
employment. It was not a case of her not having had any choice at all
in the matter.
She could have refused to sign the agreement which
included the restraint but this would have meant possibly that she
would not
have got the employment. To require an employee to agree to
a restraint as part of her contract of employment cannot, by itself,
constitute duress as contemplated in the law of contract.
[20] The appellant’s own economic and financial circumstances
made it imperative for her to find employment. The first respondent
was not shown to be responsible for creating those circumstances and
to have compelled, as it were, the appellant to enter into
the
agreement. It is quite common for employers to require employees to
sign confidentiality and restraint undertakings as part
of their
employment contracts.
[21] The first respondent relied on trade secrets, or
confidentiality, or more particularly, on customer lists and pricing
information,
including profit margins, as its protectable interest.
More specifically, the first respondent averred that in the course of
the
appellant’s employment with it and as part of her duties as
internal sales consultant the appellant acquired confidential
pricing
information from the first respondent. It was also averred that the
appellant in that capacity was privy to the terms of
specialised
supplier deals which its Managing Director, Tania Williamson
(“
Williamson
”), who deposed to the founding
affidavit of the first respondent, had put together with the first
respondent’s local
and overseas counterparts. Further, that the
appellant also knew the names and contact details of persons, both
locally and overseas,
with whom orders were placed and that all this
information was not in the public domain, i.e. was confidential. It
was also averred
by the first respondent that the appellant was
responsible for internal sales and customer care and was, as a
result, in constant
contact with the first respondent’s
customers and knew which customer ordered which product and the
quantities. The first
respondent also averred that the appellant had
been contacting its suppliers and customers and was using the
aforesaid confidential
information to negotiate deals for her new
employer, the second respondent.
[22] The appellant denied being
privy to specialist deals made with suppliers of the first respondent
and denied knowledge of international
suppliers. She averred that she
did not deal with exports at all and mentioned the names of persons
who did deal with exports.
She further denied having had any contact
information of relevant persons, both locally and overseas, with whom
to place orders,
but did not deny that the contact information and
terms of the specialised deals, which the first respondent had with
its local
and overseas suppliers, was confidential. The appellant
also denied knowing the kind of product ordered and the quantities
ordered
by customers, but she did not deny that this information was
confidential. According to the appellant, she did not take any
information,
or documentation of the first respondent and has not
informed her new employer, the second respondent, of any of the first
respondent’s
customers. However, the appellant admitted to
contacting two suppliers of the first respondent, but averred that
she only contacted
them because they had also been suppliers of her
new employer long before her employment with the second respondent.
According
to the appellant, the suppliers have different discount
structures for their customers and she does not know what discount
structures
the suppliers offer to the first and second respondents.
She also averred that she could not compare the pricing. According to
her, she was in no way jeopardising the first respondent’s
relationship with its suppliers and customers and ‘was not
using any information to the advantage’ of the second
respondent. She further denies having ‘taken any information
or
documentation relating to pricing’ and avers that although she
had been employed by the second respondent to service its
existing
customer base, she has not approached any of the first respondent’s
customers for business. But the appellant does
not deny that she
knows who the first respondent’s customers and suppliers are. A
customer list is generally confidential.
Implicit in her version is
that even though she was privy toconfidential information she has not
and does not intend using it.
An undertaking not to use the
confidential information, in the circumstances, is no defence. An
employer does not have to show
that the former employee has in fact
utilised its confidential information, but merely that she could do
so.
20
[23] The appellant did not deny
at all the first respondent’s averment in its founding
affidavit deposed to by Williamson,
that locally she developed
customer goodwill and trade connections and that her duties, which
included internal sales and customer
care, entailed that she was in
constant contact with customers. She also did not deny submitting a
weekly report of the kind attached
to the first respondent’s
answering papers. Neither did she deny the truth of its contents. The
report gives details of quotes
to customers, contact persons’
details, amounts and comments. Williamson’s averment that this
kind of report indicates
that the appellant knew which local customer
ordered what product and in what quantities, is a fair inference. The
appellant’s
denial of that fact cannot be regarded as creating
a
bona fide
dispute of fact and can be rejected out of hand.
[24] The restraint was only for one year and was limited to certain
provinces. It did not apply at all to the Eastern Cape, Western
Cape,
Northern Cape and KwaZulu-Natal Provinces. Furthermore, it was common
cause that the appellant had other skills and competencies.
Before
being employed by the first respondent she worked for nine years as a
conveyancing secretary and for seven years in internal
sales dealing
with other products. The restraint was not such that it nullified the
appellant’s right to choice of a trade,
or profession, or
occupation. There is no suggestion that the appellant was unable to
secure employment within the fields of her
expertise either as
conveyancing secretary or in internal sales dealing with a different
product or dealing with the same product
as the first respondent, but
in a province other than the provinces covered by the restraint.
[25] In my view, quantitatively
and qualitatively, the interest of the first respondent surpassed
that of the appellant. The fact
that the appellant stated that she
did not intend and did not use any of the information in favour of or
for the benefit of the
second respondent is irrelevant in determining
whether the restraint is reasonable, or in determining whether the
restraint had
been breached. Furthermore, in my view, there was no
other fact or aspect of public policy, at the time when the restraint
was
to be enforced, which required that the restraint be rejected. In
the circumstances, I am satisfied that the court
a
quo
correctly
concluded that the restraint was reasonable and enforceable and in
granting relief accordingly.
[26] However, I do have a
difficulty with the relief granted in paragraph 4 of the order,
namely ordering the second respondent
to terminate the services of
the appellant with immediate effect. In my view such relief was not
competent. If that order was allowed
to stand it would mean that the
second respondent would have to dismiss the appellant even though the
restraint has already expired,
because that order is not limited to
the period of the restraint. At best, the court
a
quo
could have
interdicted the second respondent for the period of the restraint if
a proper case had been made out for such relief.
21
In this case, it was not shown that any of the first respondent’s
confidential information had been disclosed to the second
respondent,
or had been used by the appellant to the advantage of the second
respondent, or that it was reasonable, or within the
power of the
Labour Court, to order the second respondent to dismiss the
appellant. The first respondent would have been adequately
protected
by an interdict as set out in the order which is to substitute the
order of the court
a
quo
.
[27] I also have difficulty with
the fact that the court
a
quo
ordered the
appellant to pay the costs of the application. No reasons were
furnished by the court
a
quo
for its costs
order and it appears as if the court
a
quo
granted costs
purely on the basis of the principle that applies generally in courts
of law, namely, that costs follow the result.
22
[28] It is so that the awarding
of costs was a matter within the discretion of the court
a
quo
and that the
appeal court will not easily interfere with the exercise of that
discretion. In
Pretorius
v Herbert,
23
Trollip J summarised the position on appeal as follows:
‘
The
mere fact that that is not the order that I would have made does not
mean that this Court is justified in interfering with the
exercise of
the magistrate’s discretion.
Penny
v Walker
,
1936 AD 241
at p 260, states specifically that the mere fact that a
court of appeal would have made a different order as to costs is no
ground
for interfering with a lower court’s order. The limits
to which this Court on appeal can interfere with an order made by the
magistrate as to costs is, I think, clear from
Merber
v Merber
,
1949 (1) SA 446
(AD) at pp 452 and 453. The effect of the passages
there is that the discretion as to costs must be judicially exercised
by the
trial court, that is, there must be some grounds on which a
court, acting reasonably, could have come to the particular
conclusion;
if there are such grounds then their sufficiency to
warrant that conclusion is a matter entirely for the trial court’s
discretion,
and the court on appeal cannot interfere, even if it
would itself have made a different order.’
[29] In my view, the only ground
upon which the court
a
quo,
seemingly and in
the absence of any reasons indicating the contrary, ordered the
appellant to pay the costs is because of the fundamental
principle
which applies generally in courts of law, as I have stated above. If
that is so, then the court
a
quo
has erred. In the
Labour Court, specifically, the law and fairness are prime
considerations when considering costs. The normal
rule that costs
follow the result is not automatically applicable in Labour Court
proceedings. The court is required to consider
factors like the
financial state of the parties, their
bona
fides
and their
continuing relationship, in coming to a decision whether to order the
unsuccessful party to pay costs. Litigants are
not to be deterred
from defending or prosecuting
bona
fide
actions for fear
of adverse costs orders. In
MEC
for Finance, KwaZulu-Natal and another v Dorkin NO and another,
24
Zondo JP summarised the position, regarding the awarding of costs in
the Labour Court, as follows:
‘
The
rule of practice that costs follow the result does not govern the
making of orders of costs in this Court. The relevant statutory
provision is to the effect that orders of costs in this Court are to
be made in accordance with the requirements of the law and
fairness.
And the norm ought to be that costs orders are not made unless those
requirements are met. In making decisions on costs
orders, this Court
should seek to strike a fair balance between, on the one hand, not
unduly discouraging workers, employers, unions
and employers’
organisations from approaching the Labour Court and this Court to
have their disputes dealt with, and, on
the other, allowing those
parties to bring to the Labour Court and this Court frivolous cases
that should not be brought to court.
That is a balance that is not
always easy to strike but, if the court is to err, it should err on
the side of not discouraging
parties to approach these courts with
their disputes. In that way, these courts will contribute to those
parties not resorting
to industrial action on disputes that should
properly be referred to either arbitral bodies for arbitration or to
the courts for
adjudication.
In this case, the second
respondent will lose his job and he has had to defend the decision
taken by the first respondent and has
even engaged senior counsel to
defend such decision. Unless there is a trade union behind which will
foot his legal bill, he stands
to spend a lot of money on legal fees.
In all of the circumstances, I am of the view that the requirements
of the law of fairness
dictate that no order would be made as to
costs on appeal and none should have been made in the court below.’
[30] Another important aspect
which the court
a quo
clearly did not consider before making the costs order, is the fact
that the enforcement of a restraint, technically, involves
a
constitutional issue. Restraints of the kind being considered,
constitute a limitation on a citizen’s right, in terms of
section 22 of the Constitution, which, arguably, requires
justification (although the procedure employed in
Reddy,
25
would suffice in most cases). In constitutional matters, the general
rule that costs follow the result, does not apply. In such
matters
costs orders are generally eschewed out of concern that they may
produce a ‘chilling effect’, in that litigants
may be
deterred from approaching a court to litigate concerning an alleged
violation of their Constitutional rights for fear of
being penalised
with costs if they are unsuccessful.
26
If constitutional matters are raised or defended in good faith and
not vexatiously and the issues raised have merit or are important,
like the violation of a right guaranteed in the Bill of Rights, and
the proceedings that ensued, resolved those issues, the party
complaining of the violation, even if unsuccessful, would, generally,
not be ordered to pay the costs.
27
[31] It was not in dispute that the appellant had to contend with
perilous financial circumstances. She could not afford legal
representation and defended herself in the court
a quo
. Before
us she was represented on a
pro bono
basis. She is a layperson
and may not have drafted the papers and put her case in the court
a
quo
as well as it may, or could, have been put by an experienced
legal practitioner, if one had been employed at the appropriate time.
The appellant’s disadvantage of having defended herself also
was compounded by the fact that matters involving restraints
of trade
and confidentiality are technical and generally complex. Another
consideration is that it was not shown that the appellant
acted out
of ill-will or malice in defending the action. In all probability she
was of the
bona fide
belief that as long as she did not impart
with, or use, the confidential information, she was not in breach of
the restraint. This
perception was wrong, but it is not unreasonable
for a layperson to have. Other considerations are, that at the time
of her resignation
the appellant informed the first respondent of her
intention to work for the second respondent. Her change of employment
was necessitated
by legitimate financial needs. It was not shown that
she actually used any of the first respondent’s confidential
information,
either at all or, for the benefit or advantage of the
second respondent. In my view, the requirements of law and fairness
dictate
that the court
a quo
should not have ordered her to
pay the costs even though she was unsuccessful. Such an order is most
likely to ruin her financially.
On the other hand, it has not been
alleged that the first respondent would be in a similar financial
situation if no costs order
had been made. For the same reasons, I am
also of the view that no costs order should be made on appeal.
[32] At the hearing before us the
appellant did not persist with the ground that the court
a
quo
erred in ruling
that the matter was not urgent. In the circumstances, I need not say
much on the point, save for restating that,
generally, rulings on
urgency, by themselves, are not appealable, because they are not
final and definitive of the rights of the
parties.
28
[33] In the result, the following is ordered:
1. The appeal against the court
a quo’s
order is partly
upheld.
The order of the court
a quo
is set aside and its order is
replaced with the following order:
‘
1) The
rules of the above Honourable Court relating to forms and manner of
service are dispensed with and this matter is dealt with
as one of
urgency.
2) The first respondent is
interdicted and restrained from being employed by, conducting
business with, or associating herself directly
or indirectly whether
as partner, proprietor, shareholder, director, member, consultant or
otherwise with any supplier, manufacturer
or retailer of any products
stocked, supplied or sold by the applicant (Bambalela Bolts) during
the six months prior to 28 October
2011.
3) The interdict and restraint
endures for a period of one (1) year from 28 October 2011 to and
including 28 October 2012 and applies
within the Provinces of
Gauteng, Mpumalanga, Free State, Limpopo and North West.
5) No costs order is made.’
3. No costs order is made in respect of the appeal.
__________________
P Coppin
Acting Judge of the Labour Appeal Court
I agree:
_________________
B Waglay
Judge President of the Labour Appeal Court
I agree:
________________
L P Tlaletsi
Judge of the Labour Appeal Court
APPEARANCES:
FOR THE APPELLANT: MR Snyman of
Snyman Attorneys
FOR THE FIRST RESPONDENT: A
Dippenaar of Du Randt Du Toit Pelser Attorneys
1
Basson
v Chilwan and Others
[1993] ZASCA 61
;
1993 (3) SA 742
(A).
2
Plascon-Evans
Paints Ltd v Van Riebeeck Paints (Pty) Ltd
[1984] ZASCA 51
;
1984 (3) SA 623
(A)
at 634H-635B.
3
Act
No. 59 of 1959.
4
City
of Cape Town v S A Municipal Workers’ Union on behalf of
Abrahams and Others
2012 33 ILJ 1393 (LAC).
5
See
Oudebaaskraal (Edms) Bpk v Jansen van Vuuren
2001 (2) SA 806
(SCA) at 812C-F.
6
Magna
Alloys and Research SA (Pty) Ltd v Ellis
1994 (4) SA 874
(A).
7
See
Magna Alloys
(above);
Reddy v Siemens Telecommunications
(Pty) Ltd
2007 (2) SA 486
(SCA)para 14 at 498E-499.
8
See
Fidelity Guards Holdings (Pty) Ltd t/a Fidelity Guards v Pearmain
2001 (2) SA 853
(SE) at 862;
Canon KwaZulu-Natal (Pty) Ltd
t/a Canon Office Automation v Booth
2005 (3) SA 205
(N). Also
compare
Affordable Medicines Trust and Others v Minister of
Health and Another
[2005] ZACC 3
;
2005 (6) BCLR 529
(CC).
9
Reddy
v Siemens Telecommunications (Pty) Ltd
(above).
10
Compare
Reddy v Siemens Telecommunications (Pty) Ltd
(above)
at 496B-D.
11
This
rule is applicable in labour matters:
Fry’s Metals (Pty)
Ltd v Numsa and Others
[2003] 2 BLLR 140
(LAC).
12
This
principle is captured in section 22 of the Constitution. See:
Reddy
v Siemens Telecommunications (Pty) Ltd
(above) para 15 at 496.
13
See
inter alia
Basson v Chilwan
(above) at 771D.
14
Basson
v Chilwan
(above) at 767E-I.
15
See
Basson v Chilwan
(above) at 767.
16
See
Sibex Engineering Services (Pty) Ltd v Van Wyk
1991 (2) SA
482
(T) at 486-488;
Basson v Chilwan
(above) at 769;
Aranda
Textiles Mills (Pty) Ltd v Hurn
[2000] 4 All SA 183
(E) at 192
and
Walter McNaughtan (Pty) Ltd v Schwartz
2004 (3) SA 381
(C).
17
See
Reddy v Siemens Telecommunications (Pty) Ltd
(above) para 16
at page 497F.
18
See
Reddy v Siemens Telecommunications (Pty) Ltd
(above) at
767G-H.
19
See
Reddy v Siemens Telecommunications (Pty) Ltd
(above) paras
16-17.
20
IIR
South Africa BV (Inc in the Netherlands)t/a Institute for
International Research v Tarita and others
[2003] 3 All SA 188
(2004 (4) SA 156
(W));
Fidelity Guards Holdings (Pty) Ltd t/a
Fidelity Guards v Pearmain
(above);
Reddy v Siemens
Telecommunications(Pty) Ltd
(above).
21
Compare
IIR South Africa BV(Incorporated in the Netherlands) t/a
Institute for International Research v Tarita and others
(above).
22
In
courts of law this rule is not likely to be departed from except on
good grounds. See, for example,
Union Government v Gass
1959
(4) SA 401
(A) at 413C-E,
Letsitele Stores (Pty) Ltd v Roets
1959 (4) SA 579
(T) and
Smit v Maqabe
1985 (3) SA 974
(T) at
977D-E.
23
Pretorius
v Herbert
1966 (3) SA 298
(T) at 301H-302B.
24
MEC
for Finance, Kwazulu-Natal and another v Dorkin NO and another
[2008] 6 BLLR 540
(LAC) paras 19-20 at 551B-E.
25
Reddy
v Siemens Telecommunications (Pty) Ltd
(above).
26
See,
for example,
Ferreira v Levin (II)
[1996] ZACC 27
;
1996 (2) SA 621
(CC).
27
Motsepe
v Commission for Inland Revenue
[1997] ZACC 3
;
1997 (2) SA 898
(CC) para 30;
Beinash v Ernest and Young
1999 (2) SA 91
(CC) para 30;
De
Reuck v Director of Public Prosecutions, WLD
2003 (3) SA 389
(W)
paras 94-97.
28
See
eg.
Lubambo v Presbyterian Church of Africa
1994 (3) SA 241
(SE).