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[2017] ZALAC 7
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Labournet (Pty) Ltd v Jankielsohn and Another (JA48/2016) [2017] ZALAC 7; [2017] 5 BLLR 466 (LAC); (2017) 38 ILJ 1302 (LAC) (10 January 2017)
IN
THE LABOUR APPEAL COURT OF SOUTH AFRICA, JOHANNESBURG
Reportable/Not
Reportable
Case
no: JA48/2016
In the
matter between:
LABOURNET
(PTY) LTD
Appellant
and
DYLLAN
JANKIELSOHN
First
Respondent
SEESA
LTD
Second
Respondent
Heard:
24 November 2016
Delivered:
10 January 2017
Summary:
Enforcement
of a restraint of trade agreement. Employer seeking to restrain
an employee for working for a competitor- principle
restated that a
restraint is only reasonable and enforceable i
f
it serves to protect an interest and that now the reasonableness and
enforceability of a restraint depending on the
nature of
the activity sought to be restrained, the purpose for the restraint,
the duration of the restraint, the
area of the restraint, as
well as the parties’ respective bargaining positions –
concerning access to confidential
documents evidence showing that
employee occupying a junior position could not have access to
confidential document and
employee contending that
tools
used
for work available to public via the internet. In relation to
protected interests, evidence pointing that employee having
no
attachment to employer’s clients and employer not
demonstrating such since employee working for the competitor
–
Court finding the existence of dispute of fact, concerning employee’s
access to confidential information and protected
interest and in
accordance with the Plascon-Evans rule, disputes of fact are resolved
in favour of the employee.
Court also
finding that true dispute about retraining employee
working for a competitor – court restating
that
employee
cannot be interdicted or restrained from taking away his or her
experience, skills or knowledge, even if those were
acquired as
a result of the training which the employer provided to the employee.
Labour Court’s judgment upheld and
appeal dismissed.
Coram:
Tlaletsi DJP, Landman JA and Coppin JA
JUDGMENT
COPPIN JA
[1] This
is an appeal against the order of the Labour Court (Prinsloo J)
dismissing with costs an urgent application brought by
the appellant
(“
Labournet
”) to enforce a restraint agreement
against its employee at the time, the first respondent
(“
Jankielsohn
”) and to interdict the second
respondent (“
SEESA
”) from employing Jankielsohn.
The appeal to this Court was with the leave of the court
a quo
.
[2]
Labournet employed Jankielsohn with effect from about 13 October 2014
as an Industrial Relations Consultant in its Bloemfontein
branch. On
26 January 2016, Jankielsohn gave written notice to terminate his
employment with Labournet and notified it of his intention
to take up
employment with SEESA.
[3] On or
about 17 September 2014, Jankielsohn and Labournet concluded a
written contract of employment which,
inter alia,
included a
confidentiality clause and a very extensive restraint of trade
agreement.
[5] The
confidentiality provision in the employment agreement reads as
follows:
‘
13.
CONFIDENTIALITY
13.1
The employee is required to keep confidential and not to disclose any
of the company’s trade
secrets, confidential documentation,
technical know-how and data, systems, methods, software, processes,
client lists, programs,
marketing and/or financial information to any
person other than to persons employed and/or authorised by the
company or associated
company (where applicable) who are required to
know such secrets or information for the purposes of their employment
and/or association
with the company, both during the continuance of
employment in terms of this agreement or at any times thereafter.
13.2
The company and the employee hereby acknowledge that the confidential
and/or information represents
a substantial monetary value to the
company.
13.2
The employee acknowledges that the aforesaid obligations shall remain
in force indefinitely and notwithstanding
termination of his/her
contracts for any reason whatsoever.’
[6] The
restraint of trade agreement is quite extensive. I have considered
the whole of it. However, for the sake of brevity I only
quote clause
14.11 of the employment agreement, which provides the following:
‘
14.11
In terms of this restraint of trade, the employee specifically
undertakes and agrees:
14.11.1
not to establish or to be interested (as defined in this
clause) in
any business in the territory which carries on business, provides
products or renders any service
in
connection with or identical or similar or comparative
to
that carried on, sold, supplied, provided, brokered or performed by
the company at any time during the period of the employment
of the
employee up to and including the last day of the employment of the
employee; and
14.11.2
not to solicit the custom of or deal with or in any way
transact
with, in competition to the company, any business, company, firm,
undertaking, association or person which during the
period of 3
(three) preceding the date of termination of the employment of the
employee has been
a
client of the company
;
and
14.11.3
not to directly or indirectly
offer
employment
to
or in any way cause to be employed any person who was employed by the
company as at the termination of the employment of the
employee or at
any time within a period of 3 (three) years immediately preceding
such termination.
14.12
Each and every restraint in this entire clause shall operate and be
valid and binding for a period of 3 (three)
years in the territory,
calculated from the date of termination of the employment of the
employee in terms of this agreement.
This restraint shall apply
irrespective of what the cause or reason of such termination may be
and whether the fairness of the
termination of the employee’s
employment is challenged or not by the employee.’
[7] It
was also agreed that the areas to which the restraint applied are the
whole of the Free State and Northern Cape Provinces.
[8] It is
further common cause that after Jankielsohn tendered his resignation
there was interaction between Jankielsohn and Labournet’s
Bloemfontein Regional Manager, Mr Mornay Terblanche, concerning the
intended resignation and that, ultimately, Mr Terblanche informed
Jankielsohn that SEESA was its “
direct competition
”
and that his acceptance of its offer of employment would be “
in
direct conflict with the restraint of trade
” that applied
and that Labournet would be enforcing the restraint. Mr Terblanche
also sought a written undertaking from Jankielsohn
that he would not
take up employment with SEESA.
[9] In
response, Jankielsohn gave a written undertaking dated 18 February
2016 that he would not “
interfere, contact, ‘poach’,
incite or impose to any degree whatsoever with any of Labournet’s
clients
”. He further,
inter alia
, disputed that
SEESA was Labournet’s direct competition and stated that there
was no incentive for him to engage in any unethical
behaviour.
[10] On
16 February 2016, Labournet brought an urgent application to
interdict and restrain Jankielsohn and SEESA, respectively.
Jankielsohn opposed the application and SEESA gave notice that it
would abide by the outcome of the court process. Jankielsohn
delivered an opposing affidavit and Labournet delivered a replying
affidavit in the application.
[11]
According to its notice of motion, in addition to having required
that the matter be dealt with on an urgent basis, Labournet
sought
the following relief:
‘
2.
That a rule nisi be issued with a return date to be determined by the
above Honourable
Court, in terms of which rule nisi the first
respondent and/or the second respondent shall be required and called
upon to show
cause why a final and binding order should not be
granted in the following terms:
2.1
That the first respondent be interdicted and restrained from directly
or indirectly:
2.1.1
competing with the business of the applicant for a period of 3
(three) years
calculated from 1 March 2016 in the area of the Free
State and Northern Cape Provinces;
2.1.2
soliciting and/or accepting any business or custom from any existing
customers
or clients of the applicant, and/or in any manner dealing
with any existing customers or clients of the applicant, for a period
of 3 (three) years calculated from 1 March 2016;
2.1.3
being employed with any business or entity or person which conducts
business
which is similar to or competes with that of the applicant,
and in particular the business of the second respondent, for a period
of 3 (three) years calculated from 1 March 2016, in the area of the
Free State and Northern Cape Provinces.
2.2
That the second respondent be interdicted and restrained from
employing the first respondent, or in
any way being associated with
the first respondent, in breach of the restraint of trade covenant of
the first respondent.
2.3
That the costs of this application be paid by the respondents.
3.
That it be ordered and determined that paragraphs 2.1, 2.1.1, 2.1.2,
2.1.3, and
2.2 of the rule nisi, as set out above, shall operate as
an interim order with immediate effect, pending the return date, and
shall
be immediately binding upon the first and/or second respondents
and which shall immediately be required to fully comply with and
adhere to the same, pending the return date'.’
[12] Mr
Terblanche deposed to Labournet’s founding affidavit. He
stated,
inter alia,
that the business of Labournet could be:
‘
broadly
described as human capital consulting services to employers
throughout the Republic of South Africa. This entails in essence,
and
in a nutshell, on-sight consulting, advice, services, expert
assistance, documents and policy and process preparation and
implementation, assurance of compliance (whether legislative or
otherwise), all dealings with third parties, trade unions and
employees,
disciplinary issues, incapacity and operational issues and
disputes, training, employment law, dispute resolution and finally
general
advice relating to the following fields of expertise and
disciplines:
5.1.1
industrial relations;
5.1.2
human resources;
5.1.3
skills and equity;
5.1.4
industrial relations and human resources training;
5.1.5
payroll outsourcing and management;
5.1.6
labour law;
5.1.7
recruitment;
5.1.8
occupational health and safety.
All
of the above will her
einafter
be collectively referred to as “the services”
.’
[13] Mr
Terblanche further,
inter alia,
indicated that in the case of
Jankielsohn, the services that were relevant are “
services
related to industrial relations and labour law disciplines
.”
He also,
inter alia,
explained how Labournet “
structures
its relationship with its clients
” in those areas of
service. It, in essence, enters into a fixed term service and
retainer agreement with a client in terms
of which services are
provided to the client in return for payment of a fixed monthly
retainer fee. Once a client has concluded
such a fixed term
agreement, it is allocated an account on Labournet’s Client
Management System (“
CMS
”) and according to Mr
Terblanche, a specific consultant is allocated to service the client.
There are a number of disputes
of fact on the papers. Jankielsohn,
inter alia,
denies that particular consultants are allocated
to particular clients and states that a consultant does not always
provide services
to the same client. A consultant, who is available,
is assigned by his or her manager to provide the service that is
required by
a client at a particular time.
[14]
Mr Terblanche also avers,
inter
alia,
that Jankielsohn was a specialist consultant with commensurate
duties. Jankielsohn denies that he was employed as a specialist
consultant – describing the services that he was required to
perform as limited to the area of industrial relations and involving
the application of the Labour Relations Act
[1]
(“
the
LRA
”).
According to Jankielsohn, legal practitioners or any other persons,
having regard to the LRA – could have done what
was required of
him.
[15]
Jankielsohn avers that he was expected to and trained to negotiate
with unions on behalf of employer businesses (i.e., clients
of
Labournet) and to prepare charge sheets, conduct disciplinary
hearings and make findings, which were in effect recommendations
to
the client. Jankielsohn avers that his duties were limited to matters
involving misconduct and those concerning the basic conditions
of
employment. He states that those are the only areas in which he
received training and was allowed to work in.
[16] Mr
Terblanche, on behalf of Labournet, denied those averments of
Jankielsohn, but in the replying affidavit concedes that Jankielsohn
did not provide all the services which he (Mr Terblanche) had
described; that those services were merely part of Jankielsohn’s
“
career path
” at Labournet and that Jankielsohn
resigned before “
achieving this end goal
”, i.e.,
of providing all the services described by Mr Terblance in the
founding papers.
[17] Mr
Terblanche also states that the purpose of the application was to
obtain an order that Jankielsohn “
adheres to his written
restraint of trade agreement and confidentiality undertaking
”
and that he be interdicted from breaching it. Mr Terblanche also
avers that Labournet does not seek any relief “
per se
against
” SEESA – “
other than to ensure that
it does not perpetuate
” Jankielsohn’s breach of his
restraint agreement and that if relief were granted against
Jankielsohn SEESA would have
to give effect to the court’s
order.
[18] A
large portion of the appellant’s papers is used up by Mr
Terblanche to explain the nature of the training Labournet
provides
to consultants such as Jankielsohn and how attractive their trainees
are to competitors. Shorn of all the verbiage, including
all
vagueness, repetition and obvious hyperbole, in its founding papers,
Labournet is, essentially, relying on two kinds of protectable
interest, which, according to it, justifies the enforcement of the
restraint, namely, confidential information (or trade secrets)
and
trade or customer connections. In its founding papers, Labournet
seems to conflate these interests.
Confidential
information
[19] In
its founding affidavit Labournet contends that, because of his
position, Jankielsohn had been “
exposed to sensitive and
confidential information concerning the applicant’s clients,
pricing, modus operandi and marketing
strategies, and
[has]
in
fact built up a detailed and close relationship with such clients
”.
Labournet, through Mr Terblanche, further avers that there was,
therefore, the risk that such information would be disclosed
to and
be utilised by its competitor, for whom Jankielsohn intended to work,
or by Jankielsohn himself, for their, respective,
benefit.
Customer
connections
[20] Mr
Terblanche, also averred in its founding affidavit that “
the
nature of the relationship between
[Jankielsohn]
and the
clients he was specifically tasked to attend to and service, is one
of the utmost trust and confidence.
[Jankielsohn]
in fact
carries the clients he serviced in his pockets. The nature of
the relationship was further such, that [Jankielsohn]
can easily
influence and convince clients to do business with him and
[SEESA]
rather than the applicant
”.
[21]
Jankielsohn denied all of these averments of Labournet, including
those relating to its alleged protectable interests. He denied
that
there was any need for him to have any detailed information of any
client that he serviced and that he had had such a close
relationship
with any of the clients of Labournet that would enable him to carry
any of its clients “
in his pockets
”, or persuade
them to do business with either, himself, or SEESA, in place of
Labournet.
[22]
Jankielsohn avers that he occupied “
the lowest possible
”
position in the scheme of Labournet’s business. He only had one
and a half day’s training. He then completed
the probationary
period and passed an oral examination at the end of that period. In
order for him to progress, he was required
to complete “
career
path tests
” consisting of eight modules - each module
requiring one or more tests and a corresponding assignment. According
to Jankielsohn,
he only completed three tests and their corresponding
assignments and he was never promoted or given an increase.
[23]
Jankielsohn denied ever receiving or being exposed to confidential
information of Labournet. He denied having any knowledge
of any of
its marketing strategies and avers that all the information he had
access to, including the procedures referred to by
the appellant, was
“
readily available to any member of the public
”
and that, in addition, his education, before being employed by
Labournet, had exposed him to the information and procedures
which
were applicable to his work at Labournet. Further, that all
documentation that was used in his sphere of work at Labournet
was
obtainable from and was indeed obtained from the Internet.
[24] In
Labournet’s replying affidavit, Mr Terblanche denies the truth
and correctness of Jankielsohn’s entire version,
including his
version about the information he had access to and his connection to
its customers. The replying papers are bulky.
Excluding the annexures
and confirmatory affidavits by Mr Snyman, the replying affidavit
itself comprises some 31 pages. The founding
affidavit was only 23
pages.
In the
court
a quo
[25]
Having considered the versions of the parties, the court
a quo
found, in respect of Labournet’s contentions regarding the
confidentiality of the information that Jankielsohn had access
to,
that Labournet “
failed to put convincing evidence
”
before it “
to firstly, show what the strategies,
documentation, modus operandi, specifications or the services
supplied by
[Labournet],
etc, are and that are regarded as
confidential, why it is regarded as confidential and why it would be
useful to SEESA
”. The court
a quo
then found that
Labournet had made “
bald and unsubstantiated allegations in
that regard
” and was not able to convince it that there was
indeed confidential information that required protection.
[26]
Regarding the issue of “
customer relations
” or
“
customer connections
”, the court
a quo,
having considered the versions of the parties, concluded that there
was no “
convincing evidence
” placed before it to
show that Jankielsohn “
had a special relationship with some
clients
”.
[27] The
court
a quo
went on to hold that if it was wrong with regard
to the said findings and if Labournet did in fact have a protectable
interest,
it had not been shown that Jankielsohn’s employment
with SEESA “
would infringe on such protectable interests or
that there was such a breach as alleged by Labournet
”.
[28]
The court
a
quo
then embarked on a balancing of the respective interests. Having
referred to
Reddy
v Siemens Telecommunications (Pty) Ltd
[2]
(“
Reddy
”)
it found that “
(a)
quantitative and qualitative weigh off in this matter favours
Jankielsohn’s interests to be economically active and
productive
as opposed to the applicant’s interests
”.
[29] The
court
a quo
concluded that Labounet “
has no
protectable interest, the employment of Jankielsohn at SEESA does not
infringe any protectable
interest
the [Labournet] may have in
any event, and the quantitative and qualitative weigh off favours
Jankielsohn
.
To enforce the restraint of trade in these
circumstances would not only be unreasonable, but will stifle
competition
”. Having concluded that the costs should follow
the result, Labournet’s application was dismissed with costs.
Grounds
of appeal
[30] In
its notice of appeal, Labournet levelled extensive criticism at the
court
a quo’s
judgment and order. The criticism formed
the basis of the main arguments persisted in before this Court.
Briefly, they were the
following.
[31] It
was submitted that the court
a quo
failed “
to
appreciate and consider
” that the confidential information
relied upon by Labournet – included the information Jankielsohn
had about its customers,
their identity, their requirements, contact
persons, and the nature of the contracts Labournet had with its
clients. It was
also contended that the confidential information
included Labournet’s “
own knowledge base
”
which is not a “
LexisNexis
” subscription, but one
which it “
constantly develops, and on which it trains its
consultants and which is only accessible through passwords
”.
[32] In
relation to the “
knowledge base
”, it was further
submitted that Jankielsohn would not have been able to do his work
unless he was “
skilled in this by”
Labournet and
had used its “
knowledge base
”. It was further
contended with regard to Jankielsohn’s training, that
Jankielsohn’s version, which, according
to Labournet, in
effect, was that he was left to his own devices, was not true.
[33]
Generally, regarding the issue of confidential information, it was
submitted that Labournet had given enough detail of the
information
it sought to protect and to have given any more information would
have destroyed the very object of protecting such
information.
[34]
Regarding customer relations, Labournet’s legal representative
submitted that the court
a quo
erred in finding that it did
not have such a protectable interest. According to this argument, it
was undisputed that Jankielsohn
“
extensively dealt with
customers
” and his undertaking not to solicit Labournet’s
customers underscored the influence he had on those customers whom he
dealt with.
[35]
Labournet’s further contended that the court
a quo
failed to appreciate that Jankielsohn knew nothing of the industry
and its business before joining it and that his training by
Labournet
and his exposure to the confidential information and customers of
Labournet made him attractive to SEESA, who “
headhunted
”
him.
[36]
Labournet criticised the court
a quo
’s approach,
including its weighing up of the interests of the parties’
qualitatively and quantitatively, and its findings
that those of
Jankielsohn outweighed those of Labournet, and that Labournet’s
motive for bringing this application was to
stifle competition.
[37] The
crux
of Labournet’s criticism of the court
a quo
’s
decision was that it rendered restraints meaningless. In its grounds
of appeal Labournet,
inter alia
, states:
‘
With
respect, the approach of the learned judge leads to the simple
question – why even have restraint? It would be
of no
value, and this is simply untenable. In its simplest form, what the
appellant does is to take someone ‘fresh’
out of
university, give him training, skill and the career, and all its asks
in return is that this employee does not further pursue
his career
with the appellant’s competitors. This is not the case of
an employee coming to be employed by the appellant
with all the skill
and experience in tow. Obviously that would belong to the
employee himself. Surely the appellant
is entitled to say that
all of its efforts in respect of training and skilling consultants
should not be used to the benefit of
its competitors. That is
why one concludes restraints.’
I shall
return to these statements, which clearly underlie the whole purpose
and object of Labournet’s restraint agreement
with Jankielsohn
and which motivated it to seek to enforce the agreement against
Jankielsohn and to interdict SEESA.
[38]
Lastly, Labournet, in its notice of appeal, criticises the court
a
quo
’s finding that the period of the restraint, namely
three (3) years, was unreasonable. Although in argument before us,
Labournet’s
legal representative (Mr Snyman) conceded that the
period was not reasonable and that a lesser period, in the order of
one year,
would be reasonable.
The
law and restraints
[39]
According to the decision in
Magna
Alloys and Research SA (Pty) Ltd v Ellis,
[3]
(“
Magna
Alloys
”)
restraints of trade are enforceable unless they are proved to be
unreasonable. Because the right of a citizen, to freely
choose a
trade, occupation, or profession and to practice such, is
constitutionally protected, the
onus
to prove “
the
reasonableness
”
of a restraint might well have been affected.
[4]
[40]
In
Reddy
,
the Supreme Court of Appeal preferred not to become embroiled in the
issue of
onus
and adopted a pragmatic approach, which according to it, was
consistent with an approach where there was a direct application of
the Constitution to restraint agreements. This approach was
specifically adopted in respect of motion proceedings for the
enforcement
of restraints where the issue for determination was the
reasonableness of the restraint. In terms of that approach, where the
facts,
concerning the reasonableness, had been canvassed in the
affidavits – genuine disputes of fact are to be resolved in
favour
of the party sought to be restrained by applying the so-called
Plascon-Evans
rule.
[5]
If
the accepted facts show that the restraint is reasonable, then the
applicant must succeed, but if they show that the restraint
is
unreasonable then the respondent in those proceedings must
succeed.
[6]
[41]
The enquiry into the reasonableness of the restraint is essentially a
value judgment that encompasses a consideration of two
policies,
namely the duty on parties to comply with their contractual
obligations and the right to freely choose and practice a
trade,
occupation or profession. A restraint is only reasonable and
enforceable if it serves to protect an interest, which, in
terms of
the law, requires and deserves protection. The list of such interests
is not closed, but confidential information (or
trade secrets) and
customer (or trade) connections are recognised as being such
interests. To seek to enforce a restraint merely
in order to prevent
an employee from competing with an employer is not reasonable.
[7]
[42]
According to the Appellate Division in
Basson
v Chilwan and Others,
[8]
the
following questions require investigation,
[9]
namely,
whether the party who seeks to restrain has a protectable interest,
and whether it is being prejudiced by the party sought
to be
restrained. Further, if there is such an interest – to
determine how that interest weighs up, qualitatively and
quantitatively,
against the interest of the other party to be
economically active and productive. Fourthly, to ascertain whether
there are any
other public policy considerations which require that
the restraint be enforced. If the interest of the party to be
restrained
outweighs the interest of the restrainer – the
restraint is unreasonable and unenforceable.
[10]
[43]
It is now clear from,
inter
alia, Basson
and
Reddy
[11]
that
the reasonableness and enforceability of a restraint depend on the
nature of the activity sought to be restrained, the
rationale
(purpose) for the restraint, the duration of the restraint, the area
of the restraint, as well as the parties’ respective
bargaining
positions. The reasonableness of the restraint is determined with
reference to the circumstances at the time the restraint
is sought to
be enforced.
[12]
With
reference particularly to the facts of this matter, it is an
established principle of law that the employee cannot be interdicted
or restrained from taking away his or her experience, skills or
knowledge, even if those were acquired as a result of the training
which the employer provided to the employee.
[13]
[44]
Even though it is acknowledged that it is difficult to distinguish
between the employee’s use of his or her own knowledge,
skill
and experience, and the use of his or her employer’s trade
secrets, it is accepted that an employee cannot be prevented
from
using what is in his, or her, head.
[14]
[45] Also
relevant to this matter are the principles relating to the
reasonableness of the duration of the restraint. This aspect
is
generally assessed as part and parcel of assessing the reasonableness
of the restraint, but it bears mentioning that the duration
must the
rational and reasonable. It cannot be reasonable if it is not
rational.
Analysis
[46]
Against this background and before embarking on an analysis and
determination of the issues and facts in this matter, the following
ought to be borne in mind. Since about 1 March 2016 Jankielsohn
has been employed by SEESA. At the time of argument in this
Court on
24 November 2016, it has been for a period in excess of about eight
months. Further, no relief in the form of an interim
interdict had
been given or was in place. While the court
a quo
did not
mention the
Plascon-Evans
rule, it seems to have assessed or
weighed the parties’ contradictory versions and concluded that
Labournet had not “
put up convincing evidence
” in
particular to show that it had the protectable interests which it
claimed it had.
[47] With
regard to Labournet’s claim that Jankielsohn had access to
confidential information – which was information
about its
business and clients, including its strategies, documentation and
processes which it used to procure new clients and
service existing
ones, its pricing of its services and the kind of services provided
to clients, as well as its, alleged “
knowledge base
”
– the court
a quo
was not convinced of the
confidentiality of that information and in particular that part of
the information that Jankielsohn admitted
that he had access
to.
[48]
It is well-accepted that for information to be confidential “
it
must (a) be capable of being applicable in trade or industry, that
is, it must be useful; not be public knowledge and property;
and (b)
it must be known only to a restricted number of people or a close
circle, and (c) of economic value to the person seeking
to protect
it
”.
[15]
[49]
Jankielsohn did not just baldly deny that he had access to
confidential information – but explained in the context of
the
nature of his duties – why he did not have and did not require
such access. He states in effect that the confidential
information
was information in the possession of “
the proprietors
”
of Labournet’s business and was never imparted to him. He
states that all the documents that were used while he was
in the
employment of Labournet were retrieved from the Internet and they
were thus available to the public. Bearing in mind his
relatively
junior employment status – his version cannot be rejected as
“
far-fetched
” or “
clearly untenable
”
or “
palpably implausible
”. His work was to render
relatively basic kinds services to clients of Labournet – as
were assigned to him by his managers.
[50] So
that even if some of the alleged information Labournet alleged it
had, has an aura of confidentiality, there is no specific
reason
given why Jankelsohn would have required access to it. It is, for
example, not clear why he would have required access to,
inter
alia
, the pricing list of Labournet’s clients (including
those pertaining to the clients he was required to service from time
to time); the strategies, documentation and processes used by
Labournet to procure clients, if his job was not to procure clients
or bill them. Mr Terblanche explained that their clients were
serviced in terms of a retainer with a fixed fee. As far as the
knowledge base is concerned, there is no reason, because of his very
junior status, why Jankielsohn would have been exposed to,
or would
have required any kind of precedent or form, other than the most
basic forms that are commensurate with the tasks which
he had to
perform and which, as conceded by Labournet’s legal
representative in argument before us, are readily and freely
available. There is thus, in my view, a genuine dispute of fact,
concerning Jankielsohn’s access to confidential information,
on
the papers.
[51]
Regarding the other protectable interests claimed by Labournet,
namely, customer or trade connections. They are protectable
provided
it is established on the facts that the attachment, between the
employee sought to be restrained and those customers,
was of such a
nature that the employee would be able to induce those customers to
follow him or her.
[16]
[52]
In
Rawlins
v Caravantruck (Pty) Ltd,
[17]
(“
Rawlins
”)
it was held that whether there is such an attachment, is a question
of fact to be determined in each case. A great deal
will depend on
the employee’s duties, his personality, the frequency of his
contact with clients and the duration of such
contact, what knowledge
he gains of their requirements and business, the general nature of
the relationship he or she has with
clients; whether the employee is
involved in the canvassing of customers and whether any customers
were lost after the employee
left his or her employment. This is
clearly not a closed list of factors.
[53]
There is a dispute about whether Jankelsohn had such attachment with
the clients of Labournet, including those for whom he
was required to
render services from time to time. In light of the concessions made
in argument before us by Mr Snyman, Labournet
clearly exaggerates in
averring in its affidavits that the influence Jankelsohn had over
those clients was of such a nature that
he could “carry them in
his pockets”. Jankelsohn avers that he was “
not
specialised
” and did not receive the full training that had
been given to other consultants employed by Labournet. He, for
example, states
that he was employed at the lowest level at
Labournet; that after completing a day and a half’s training he
commenced employment.
He never completed the requisite modules that
would have ensured his advance and on Labournet’s own version,
as deposed to
by Mr Terblanche, by leaving he had cut short his
career path. Jankielsohn’s version in that regard is not
seriously disputed
by Labournet. In so far as it disputes whether
Jankelsohn has only passed three tests and has done their
corresponding assignments,
Labournet did not produce any proof of any
other tests, let alone modules, that Jankielsohn had passed or
completed, even though
it was clearly in a position to do so.
[54]
Jankelsohn states that he was only competent to handle “
blue
collar misconduct
” matters and received no training in the
more complex matters such as “
concerning gross negligence,
assault, CCMA preparation, strikes, retrenchments and so on
”.
He further states that he was not allowed to deal with such matters.
When he was instructed by his managers to deal with
any such matters
he was obliged to do so with his limited knowledge and training. He
states that it was his manager’s duty
to maintain a
relationship with clients and that he was not allocated any
particular client for any appreciable period of time,
which would
have enabled him to form an attachment with those clients.
Recruitment of clients was not part of his duties and because
of the
limitations of his training and experience, he was hardly one that
could induce clients to follow him. In argument before
us Mr Snyman
made an important concession in that regard, namely, that there was
nothing about Mr Jankelsohn’s personality
that would have,
particularly, endeared him to Labournet’s clients, or enabled
him to form strong bonds or attachments with
those clients.
[55]
Jankielsohn further explains that Labournet’s office in
Bloemfontein has about 500 clients. Consultants, depending on
the
availability, would serve clients on instruction of their manager. He
had no reason to have any confidential detail or extensive
information of any client and it was also not necessary for him to
have such information because of the nature of the services
he would
have been required to render.
[56]
Jankielsohn’s denial of having an attachment to his the clients
of Labournet, similarly, cannot be rejected out of hand.
In my view,
there is a genuine dispute of fact in respect of the second (alleged)
interest Labournet seeks to protect, namely,
customer connections.
[57]
There is also,
inter alia,
a dispute concerning the
reasonableness of the area and duration of the restraint. The period
of the restraint is three (3) years.
Labournet contended on the
papers and in the court
a quo
that the area and duration of
the restraint was reasonable. However, at the hearing before us Mr
Snyman, for Labournet, conceded
that given Jankielsohn’s level
and experience, the three-year period was probably too long and
sought to persuade us that
a restraint period of about 12 months (or
a year) was justifiable. Even though the concession was, in my view
correctly made, no
particular reason was furnished why 12 months
would be reasonable, or why a lesser period than that would not be
reasonable. In
any event, the reasonableness of the duration of a
restraint is a value judgment to be arrived at upon a consideration
of all the
relevant facts.
[58] I
should point out at this stage that Labournet liberally resorted to
generalities regarding consultants and did not deal with
specifics,
even though it was essential for Labournet to deal specifically with
Jankielsohn as an individual it sought to restrain.
[59] If
all the (real) disputes of fact, or at least the crucial ones
regarding the alleged protectable interests, are resolved
in favour
of Jankielsohn, then one cannot find that the papers after such an
exercise disclose that Labournet has protectable interests.
[60] The
overwhelming theme of Labournet’s application is its objection
to its competitors employing a person whom it has
trained, or skilled
and equipped to provide certain services. Labournet tried to raise
this as an additional “
injury
” to the threat
Jankielsohn’s employment by a competitor held for its
protectable interests. Having described how consultants
are selected
and trained and equipped, Mr Terblanche, the deponent of Labournet’s
founding affidavit, states:
‘
To
add insult to injury, the reason why the applicant’s
consultants are very employable and are often offered lucrative
employment
elsewhere is because of what the applicant did for them
and because of the services they rendered to clients on behalf of the
applicant.
The applicant needs to protect itself against such
kind of situation, hence the restraint of trade.’
And
elsewhere he states:
‘
The
applicant must send a clear and consistent message, and has always
sought to enforce its restraints of trade with its consultants.’
[61]
As pointed out earlier – even if an employer spent time and
effort and money to train or “
skill
”
an employee in a particular area of work the employer has no
proprietary hold on the employee, or his, or her, knowledge,
skills
and experience, even if those were acquired at that employer.
[18]
[62]
In
Sibex
Engineering Services (Pty) Ltd v Van Wyk and Another,
[19]
the
court,
inter
alia,
pointed out that:
‘
In
seeking to protect his ‘investment’ in training the
workmen, the employer is pursuing an objective which is unreasonable
and contrary to public policy. For public policy requires that
workmen should be free to compete fairly in the market place to
sell
their skills and know-how to their own best advantage; and the
enforcement of a restraint which has no objective other than
to
stifle such free and fair competition is unreasonable and contrary to
public policy
.’
[63]
Since the facts disclosed and assessed as above do not disclose
protectable interests, the next stage, namely, to weigh up
the
interest of the parties qualitatively and quantitatively, falls away.
[64] On
the off chance that the facts have disclosed something of a
protectable interest, which I do not find, it is my view that
those
interests, both qualitatively and quantitatively
,
do not
outweigh Jankielsohn’s interest to remain economically active
in the occupation of his choosing and which he is academically
and
otherwise qualified for. In any event, the chances of economic
exploitation of those interests by Jankielsohn, at this stage,
are in
my view infinitesimal if not non-existent. Jankielsohn has been
employed with SEESA since March 2016 and, at the time this
matter was
argued before this Court, he had been employed there for more than
eight months. If there was any exploitation of any
protectable
interest of Labournet it would have occurred at the earliest
available opportunity, which would have been very soon
after
Jankielsohn’s employment by SEESA, when the information was
still fresh, valid and commercially relevant. Labournet
has not
referred to any overt act of exploitation of any protectable
interest, other than for objecting to the fact that Jankielsohn
has
gone to work and was presently working for its competitor.
[65]
The restraint Labournet seeks to enforce against Jankielsohn, as I
pointed out earlier, is for a period of 3 years, but which
Labournet’s counsel correctly conceded to be unreasonable. A
period of 12 months was suggested as an alternative, but it
was
apparently a suggestion made off the cuff by Mr Snyman. There is
nothing to show that 12 months in the present circumstances
would be
reasonable. The purpose of a restraint is not to punish.
[20]
To enforce the restraint against Jankielsohn at this stage would have
drastic adverse economic consequences for him. Losing his
job in this
depressed economic climate – which is also dominated by a very
high unemployment rate – is not justified
in light of all the
facts and circumstances.
[66] In
light of the above, the court
a quo,
in my view, correctly
dismissed, with costs, Labournet’s application for an interdict
restraining Jankielsohn from being
employed by SEESA.
[67] The
fate of the application against SEESA is tied to the fate of
Labournet’s application against Jankielsohn. Accordingly,
the
court
a quo
was also correct in dismissing the application
against SEESA.
[68] As
regards the costs of the appeal, given the nature and circumstances
of this particular matter, I am of the view that there
should be no
costs order.
[70] In
the result, the appeal is dismissed.
________________________
P Coppin
Judge
of the Labour Appeal Court
Tlaletsi
DJP and Landman JA concur with the judgment of Coppin JA
APPEARANCES:
FOR THE
APPELLANT:
Mr S Snyman of S Snyman Attorneys
FOR THE
FIRST RESPONDENT :
J L Olivier
Instructed by Rossouws Inc
[1]
Act
No 66 of 1995.
[2]
2007
(2) SA 406 (SCA).
[3]
1994
(4) SA 574 (A).
[4]
Views
have been expressed and decisions have been made by various courts
in support of and against that view. The difficulty
with the
latter view is that it overlooks the fact that the Constitution
(1996) is intended to permeate all areas of law and
that no area, or
branch, of law, including the law of contract, or the common law, is
insulated from the Constitution’s
reach. In section 8(1)
the Constitution provides that the Bill of Rights applies to all
law. In section 2 the Constitution
provides that it is the supreme
law of the Republic and that
l
aw
or conduct inconsistent with it, is invalid. At the time of
the decision in
Magna
Alloys,
freedom of contract was considered, in terms of the common law, to
trump the freedom of trade. See
Magna
Alloys
at 891 and see also what Didcott J (as he then was) stated in
Roffey
v Catterall
,
Edwards
and Goudre (Pty) Ltd
1977 (4) SA 494
(N) at 507F – namely, “
I
am satisfied that South African law prefers the sanctity of
contracts … Freedom of trade does not vibrate nearly as
strongly through our jurisprudence … It is intrinsically the
less commanding of the two ideas …”
Now, in terms of the Constitution, there is clearly a shift in
preference. The right to trade is specifically protected
in terms of
section 22. See also;
inter
alia
,
I Currie and J de Waal
Bill
Of Rights Handbook
6th
Ed.
740-741.
[5]
See
Plascon-Evans
Paints Ltd v Van Riebeeck Paints (Pty) Ltd
[1984] ZASCA 51
;
1984 (3) SA 623
(A) at 634. See also:
Fry’s
Metals (Pty) Ltd v Numsa and Others
[2003]
2 BLLR 140
(LAC) and
Ball
v Bambalela Bolts (Pty) Ltd and Another
(2013) 34 ILJ 2821 (LAC) at para 14.
[6]
See
Reddy
v Siemens Telecommunications (Pty) Ltd
(above)
at 496B-D; and this Court’s decision in
Ball
v Bambalela Bolts (Pty) Ltd and Another
(above) at para 14.
[7]
See
Ball
v Bambalela Bolts (Pty) Ltd and Another
(above).
[8]
[1993] ZASCA 61
;
1993
(3) SA 742
(A) at 767E-I.
[9]
A
fifth question, which was identified in
Reddy
v Siemens Telecommunications (Pty) Ltd
(above) is really covered by the relationship between the first and
third questions identified in
Basson
v Chilwan (
above)
and relates to proportionality. See further
Ball
v Bambalela Bolts
(
Pty)
Ltd and Another
(above) at para 18.
[10]
Ibid
at 767.
[11]
See
also
Ball
v Bambalela Bolts and Another (Pty) Ltd
(above).
[12]
See:
Reddy
v Siemens Telecommunications (Pty) Ltd
(above)
at 497F, at para 16;
Ball
v Bambalela Bolts (Pty) Ltd
(above)
at para 17.
[13]
See:
inter
alia,
Easy
Find International SA (Pty) Ltd v Insta Plan Holdings
1983
(3) SA 917
(W) at 929F-930A and the cases cited there.
[14]
See;
for example,
Northern
Office Microcomputers (Pty) Ltd v Rosenstein
[1981]
4 All SA 509
;
1981 (4) SA 123
(C);
Knox
D’Arcy Ltd v Jamieson
[1992]
4 All SA 275
;
1992 (3) SA 520
(W). In,
inter
alia,
Automotive
Tooling Systems (Pty) Ltd v Wilkens
2007 (2) SA 271
(SCA) at 282E-G, it was held that the skills which
an employee acquired in the course of developing his or her trade,
even if
they were specialised, did not constitute a protectable
interest of the employer who sought to restrain the employee.
[15]
See
Van Reenen J in
Walter
McNaughten (Pty) Ltd v Schwartz
[2003]
1 All SA 770
;
2004 (3) SA 381
(C) at 389.
[16]
See,
inter
alia, Reddy v Siemens Telecommunications (Pty) Ltd
(above)
at para 20.
[17]
[1992] ZASCA 204
;
[1993]
1 All SA 389
(A);
1993 (1) SA 537
(A) at 541 G-I.
[18]
See,
for example,
Basson
v Chilwan (supra)
at 771C-F and 778D and
inter
alia,
Sibex
Engineering Services (Pty) Ltd v Van Wyk and Another
1991 (2) SA 482
(T) at 507D-H.
[19]
(
supra
)
at 507A.
[20]
See
Ntsanwisi
v Mbombi
2004
(3) SA 58
(T) at 62D-63H.