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[2013] ZALCD 24
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Jonsson Workerwear (Pty) Ltd v Williamson and Another (D 426/2013) [2013] ZALCD 24; (2014) 35 ILJ 712 (LC) (12 August 2013)
3
REPUBLIC
OF SOUTH AFRICA
THE
LABOUR COURT OF SOUTH AFRICA, DURBAN
JUDGMENT
Reportable
Case no: D 426 / 2013
In the matter between:
JONSSON WORKWEAR (PTY)
LTD
...............................................................
Applicant
and
LAWRENCE JOHN
WILLIAMSON
.....................................................
First
Respondent
C & C CLOTHING
CONSULTANTS CC
........................................
Second
Respondent
Heard: 2 August 2013
Delivered: 12 August
2013
Summary:
Restraint of trade
–
principles
stated – application of principles to matter – issue of
protectable interest and infringement of such interest
Restraint of trade –
nature of confidential information – no evidence of
infringement of confidential information
Practice and procedure
– requirement to make out case in founding affidavit –
issue of determining factual disputes
in restraint applications
Practice and procedure
– referral to oral evidence – principles stated –
application to refer to oral evidence
refused
Interdict – no
protectable interest or infringement of such interest shown –
rule nisi discharged
JUDGMENT
SNYMAN, AJ
Introduction
[1] This matter came
before me as a return date on a rule nisi granted on 19 June 2013 in
respect of an urgent application brought
by the applicant in terms of
which the applicant sought to enforce a restraint of trade covenant
against the first and second respondents.
In terms of a judgment
handed down by Gush J on 19 June 2013, a rule nisi was issued in
terms of which the applicant was inter
alia afforded relief in the
form of the enforcement of the restraint of trade by interdicting the
first respondent from being employed
with the second respondent for a
period of 12 months calculated from 22 April 2013 and from being in
any way interested in any
competing business to that of the
applicant. This applied to the territory of the Republic of South
Africa.
[2] The return date on
the rule nisi granted by Gush J as referred to above was 2 August
2013, and the matter came before me on
that date. Since the grating
of the rule nisi, no further pleadings or affidavits had been filed
by the parties. In the hearing
of this matter on 2 August 2013, two
issues were addressed by the parties, the first being whether or not
this matter should be
referred to oral evidence, and the second issue
being the actual enforcement of the restraint of trade by
confirmation or not of
the rule nisi.
[3] Before I deal with
the background facts in this matter, I shall firstly determine the
issue of the application that the matter
be referred to oral
evidence, and as an essential part of the determination of this
question, what evidence must be considered
to determine whether a
case for the enforcement of a restraint of trade has been made out
and where the burden of proof may rest.
The determination of these
issues are crucial in deciding what factual matrix should be
considered in deciding whether or not to
enforce the restraint of
trade.
The referral to oral
evidence
[4] Before I deal with
the issue of the application to refer this matter to oral evidence, I
intend to make some observations as
to how this application was
brought by the applicant. As I will address hereunder, the
applicant’s founding affidavit was
rather sparse where it came
to making out the required case to substantiate the issues of the
existence of a protectable interest
and the infringement thereof. The
first respondent filed a comprehensive answering affidavit taking
issue with the allegations
by the applicant in the founding affidavit
in some detail. It was clear, at this stage, that there was a
material factual dispute
between the parties. What the applicant
however then did was not to apply that the matter be referred to oral
evidence, but sought
to file a comprehensive replying affidavit. In
this replying affidavit, the applicant makes no application for this
matter to be
referred to oral evidence, and seems to be content to
have this matter determined on the papers as it stands.
[5] When the matter came
before Gush J on 11 June 2013, there was equally no application for
this matter to be referred to oral
evidence. In his judgment of 19
June 2013
1
,
Gush J recorded that ‘
I
am not satisfied however that in the light of the answering affidavit
and the replying affidavits filed that it can be said that
the
applicant has established a clear right and it is therefore
inappropriate to grant final relief ….
’
Despite this, and with
the looming return date, the applicant filed no further affidavits or
even a formal and properly motivated
application as to why this
matter should be referred to oral evidence. The request for a
referral to oral evidence was only raised
in heads of argument by the
applicant filed on 26 July 2013 pursuant to the hearing of the return
date of the interim order.
[6] I accept that there
is a material factual dispute between the parties on the two issues
of the existence or not of a protectable
interest and whether such
protectable interest (if it exists) has been infringed. The question
is whether it is appropriate and
proper to resolve this factual
dispute by a referral to oral evidence, considering the above conduct
of the applicant and considering
the normal principles applicable to
factual disputes in motion proceedings (which will be addressed
hereunder).
[7] I agree with Mr
Smithers, who appeared for the first respondent, that there is no
particular magic in a restraint of trade application
that per se
necessitates it being dealt with in a manner other than any other
interdict application. After all, a restraint of
trade application is
nothing but an interdict. The unique requirements of a restraint of
trade to be enforced all relate to the
issue of the existence or not
of a clear right as the first requirement of any interdict
application. There is simply no compelling
reason why a restraint of
trade must be determined differently to any other application for an
interdict dealt with by the Courts
on a daily basis.
[8] Before I deal with
the principles applicable to the determination of an application for
referral to oral evidence, I will firstly
consider the principles
applicable to the determination of factual disputes in restraint of
trade motion proceedings in the normal
course. In fact, it is perhaps
appropriate to first look at the issue of the onus, which seems to be
somewhat controversial in
restraint disputes. In
Magna
Alloys and Research (SA) (Pty) Ltd v Ellis
2
it was
held that:
‘
Acceptance
of public policy as the criterion means that, when a party alleges
that he is not bound by a restrictive condition to
which he had
agreed, he bears the onus of proving that the enforcement of the
condition would be contrary to public policy.
'
This same approach was
followed in
Dickinson
Holdings Group (Pty) Ltd and Others v Du Plessis and Another
3
,
Bridgestone
Firestone Maxiprest Ltd v Taylor
4
,
Rectron (Pty) Ltd v Govender
5
,
David
Crouch Marketing CC v Du Plessis
6
and very recently in
Experian
South Africa (Pty) Ltd v Haynes and Another
.
7
On the other hand, some
authorities have held that in the new constitutional dispensation,
there has been a shift in the onus to
the effect that the party
seeking to enforce the restraint has the onus to prove that it is
enforceable, and reference is made
to
Fidelity
Guards Holdings (Pty) Ltd t/a Fidelity Guards v Pearmain
8
,
Advtech
Resourcing (Pty) Ltd t/a Communicate Personnel Group v Kuhn and
Another
9
and
Esquire
System Technology (Pty) Ltd t/a Esquire Technologies v Cronjé
and Another
.
10
I do not intend to get
involved in this issue in this judgment, and for the purposes of this
application, I will accept that the
correct position in law is that
the onus is on the first respondent to prove the restraint of trade
is unreasonable and not enforceable.
[9] What I must however
point out that no matter where the onus may lie, this does not change
the principle and approach on how
factual disputes in motion
proceedings should be determined, and in particular, how this
restraint application should be determined.
In
Reddy
v Siemens Telecommunications (Pty) Ltd
11
the Court said that
‘…
.
The application was launched as a matter of urgency at the end of
February 2006. Since the restraint was for a limited period
of 12
months the court a quo correctly treated the matter as being
substantially an application for final relief. A final order
can only
be granted in motion proceedings if the facts stated by the
respondent together with the admitted facts in the applicant's
affidavits justify the order, and this applies irrespective of where
the onus lies.
’
The
Court in
Reddy
went further and said:
12
‘…
.
For in the present case the facts concerning the reasonableness or
otherwise of the restraint have been fully explored in the
evidence,
and to the extent that any of those facts are in dispute that must be
resolved in favour of Reddy (these being motion
proceedings for final
relief). If the facts disclosed in the affidavits, assessed in the
manner that I have described, disclose
that the restraint is
reasonable, then Siemens must succeed: if, on the other hand, those
facts disclose that the restraint is
unreasonable then Reddy must
succeed. What that calls for is a value judgment, rather than a
determination of what facts have been
proved, and the incidence of
the onus accordingly plays no role.
’
What
is clear is that the issue of an onus plays no role in exercising a
value judgment in order to determine if the restraint is
reasonable
or not. In
De
Reszke v Maras and Others
13
which is a decision of
the full bench of the High Court on appeal, the Court said that ‘
Even
though the
onus
was
on the respondents in respect of this second issue, the 'general
rule' relating to disputes of fact in motion proceedings is
applicable.
’
Therefore,
and in deciding which facts to accept in exercising this value
judgment referred to, the normal principles applicable
to resolving
factual disputes in motion proceedings where final relief is sought
apply, even if the onus is on the first respondent.
14
[10] The normal
principles to resolve factual disputes in motion proceedings where
final relief is sought was enunciated in the
now regularly quoted
judgment of
Plascon
Evans Paints v Van Riebeeck Paints.
15
In
Thebe
Ya Bophelo Healthcare Administrators (Pty) Ltd and Others v National
Bargaining Council for the Road Freight Industry and
Another
16
this test was most aptly
described, where the Court said: ‘
The
applicants seek final relief in motion proceedings. Insofar as the
disputes of fact are concerned, the time-honoured rules ….
are
to be followed. These are that where an applicant in motion
proceedings seeks final relief, and there is no referral to oral
evidence, it is the facts as stated by the respondent together with
the admitted or undenied facts in the applicants' founding
affidavit
which provide the factual basis for the determination, unless the
dispute is not real or genuine or the denials in the
respondent's
version are bald or uncreditworthy, or the respondent's version
raises such obviously fictitious disputes of fact,
or is palpably
implausible, or far-fetched or so clearly untenable that the court is
justified in rejecting that version on the
basis that it obviously
stands to be rejected.
’
[11] The difficulty the
applicant in this matter faces is that none of the disputes of fact
as raised by the first respondent can
be considered to be bald or
fictitious or implausible or lacking in genuineness. The issues
raised by the first respondent in the
answering affidavit are
properly raised, and with all the requisite particularity. I may
mention that the first respondent took
it upon himself to provide a
detailed answer to what was a founding affidavit lacking in
sufficient particularity. There is accordingly
no basis or reason for
me to reject any of the versions of the first respondent raised in
the answering affidavit. I thus intend
to determine this matter on
the basis of the admitted facts as ascertained by the founding
affidavit, the answering affidavit and
the replying affidavit, and as
far as the disputed facts are concerned, what is stated in the first
respondent’s answering
affidavit.
[12] This then brings me
to the applicant’s application to refer this matter to oral
evidence, being the only other basis
upon which factual disputes can
be resolved. Rule
7(7)
(b)
of the
Rules for the Conduct of Proceedings in the Labour Court makes
provision for this where it is provided that:
'The
court must deal with an application in any manner it deems fit, which
may include — ….
(b)
referring
a dispute for the hearing of oral evidence.
'
Rule 6(5)
(g)
of the
High Court Rules provides as follows: ‘
Where
an application cannot properly be decided on affidavit the court may
dismiss the application or make such order as to it seems
meet with a
view to ensuring a just and expeditious decision. In particular, but
without affecting the generality of the aforegoing,
it may direct
that oral evidence be heard on specified issues with a view to
resolving any dispute of fact and to that end may
order any deponent
to appear personally or grant leave for him or any other person to be
subpoenaed to appear and be examined and
cross-examined as a witness
or it may refer the matter to trial with appropriate directions as to
pleadings or definition of issues,
or otherwise.
'
In
SA
Football Association v Mangope
17
the Court said that in
applying Rule 7(7)(b) of the Labour Court Rules, this Rule,
being
in
pari
material
with
Rule 6(5)(g), should be construed similarly to that effect. I shall
thus consider the applicant’s application to refer
this matter
to oral evidence in the context of and based on the principles
applicable to Rule 6(5)(g) of the High Court Rules as
well.
[13] The general
principles with regard to applications to refer motion proceedings to
oral evidence was set out in
Kalil
v Decotex (Pty) Ltd and Another
18
where the Court said the
following:
‘
The
applicant may, however, apply for an order referring the matter for
the hearing of oral evidence in order to try to establish
a balance
of probabilities in his favour. It seems to me that in these
circumstances the Court should have a discretion to allow
the hearing
of oral evidence in an appropriate case. …. Naturally, in
exercising this discretion the Court should be guided
to a large
extent by the prospects of
viva
voce
evidence
tipping the balance in favour of the applicant. Thus, if on the
affidavits the probabilites are evenly balanced, the Court
would be
more inclined to allow the hearing of oral evidence than if the
balance were against the applicant. And the more the scales
are
depressed against the applicant the less likely the Court would be to
exercise the discretion in his favour. Indeed, I think
that only in
rare cases would the Court order the hearing of oral evidence where
the preponderance of probabilities on the affidavits
favoured the
respondent.
’
And further held as
follows:
19
‘
It
has been held in a number of cases that an application to refer a
matter to evidence should be made at the outset and not after
argument on the merits (see
Di
Meo v Capri Restaurant
1961
(4) SA 614
(N) at 615H - 616A;
De
Beers Industrial Diamond Division (Pty) Ltd v Ishizuka
1980
(2) SA 191
(T) at 204C - 206D;
Spie
Batignolles Société Anonyme v Van Niekerk: In re Van
Niekerk v SA Yster en Staal Industriële Korporasie
Bpk en Andere
1980
(2) SA 441
(NC) at 448E - G;
Erasmus
v Pentamed Investments (Pty) Ltd (supra
at
180H);
Hymie
Tucker Finance Co (Pty) Ltd v Alloyex (Pty) Ltd
1981
(4) SA 175
(N) at 179B - E; cf
Klep
Valves (Pty) Ltd v Saunders Valve Co Ltd
1987
(2) SA 1 (A)
at 24I - 25D). This is no doubt a salutary general
rule, but I do not regard it as an inflexible one. I am inclined to
agree with
the following remarks of Didcott J in the
Hymie
Tucker
case
supra
at
179D:
'One
can conceive of cases on the other hand, exceptional perhaps,... when
to ask the Court to decide the issues without oral evidence
if it
can, and to permit such if it cannot, may be more convenient to it as
well as the litigants. Much depends on the particular
enquiry and its
scope.
'’
[14] The judgment in
Kalil
was applied in the
judgment in
Bocimar
NV v Kotor Overseas Shipping Ltd
20
where the Court held as
follows:
‘
It
would seem that in the Court
a
quo
Bocimar's
counsel simply applied informally and non-specifically for the
hearing of oral evidence, at the end of his argument on
the merits,
in the event of the Court holding that Bocimar had failed on the
papers to establish a genuine and reasonable need
for security. No
indication was apparently given of who should be required to give
evidence or submit themselves to cross-examination
nor was any
indication given of what evidence new witnesses would be able to
give. In
Kalil
v Decotex (Pty) Ltd and Another
1988
(1) SA 943
(A) at 981D-G reference was made to 'the salutary
general rule' that an application to refer a matter to evidence
should be made
at the outset and not after argument on the merits. It
was pointed out that the rule was not an inflexible one and that in
exceptional
cases the Court may depart from it. It is, however, a
factor to be considered in the present case.
’
[15]
In
Minister
of Environmental Affairs and Tourism and Another v Scenematic
Fourteen (Pty) Ltd
21
the Court said the
following:
‘
In
Khumalo
v Director-General of Co-operation and Development and Others
[1990] ZASCA 118
;
1991
(1) SA 158
(A) at 167G - 168A the Court cited with approval the
conclusions of Kumleben J in
Moosa
Bros & Sons (Pty) Ltd v Rajah
1975
(4) SA 87
(D) at 93E - H regarding the approach to be adopted in
applications to hear oral evidence in terms of Rule 6(5)
(g)
.
The passage is worthy of repetition:
'(a)
As a matter of interpretation,
there is nothing in the language of Rule 6(5)
(g)
which restricts the
discretionary power of the Court to order the cross-examination of a
deponent to cases in which a dispute of
fact is shown to exist.
(b)
The illustrations of ''genuine''
disputes of fact given in the
Room
Hire
case at 1163 do
not - and did not purport to - set out the circumstances in which
cross-examination
under the relevant Transvaal
Rule of Court could be authorised. They
a
fortiori
do not
determine the circumstances in which such relief should be granted in
terms of the present Rule 6(5)
(g)
.
(c)
Without attempting to lay down
any precise rule, which may have the effect of limiting the wide
discretion implicit in this Rule,
in my view oral evidence in one or
other form envisaged by the Rule should be allowed if there are
reasonable grounds for doubting
the correctness of the allegations
concerned.
(d)
In reaching a decision in this
regard, facts peculiarly within the knowledge of an applicant, which
for that reason cannot be directly
contradicted or refuted by the
opposite party, are to be carefully scrutinised.
'’
[16] Based on the above,
it is clear that as a general principle, the Court has a discretion
to decide whether to refer motion proceedings
to oral evidence where
there is a dispute of fact that needs to be resolved. In exercising
this discretion, a litigant applying
for a matter to be referred to
oral evidence should at least advance reasonable grounds to support
this discretion being exercised
in favour of the litigant. Proper and
formal application must be made in this regard. It should at least be
set out what evidence
presented by the other litigating party in the
affidavit is lacking in credibility and how the referral to oral
evidence will resolve
this. The Court should consider to what extent
this referral to oral evidence could tip the scales in support of the
litigant seeking
the referral. The final issue to consider is
convenience to the Court.
[17] The applicant has
unfortunately not make out a case for the matter to be referred to
oral evidence in terms of the above principles.
The applicant has not
made a proper application for this relief, and has simply asked for
this to happen in heads of argument.
The applicant has further not
sufficiently motivated as to which of the contentions of the first
respondent in its answering affidavit
could be successfully
discredited by a referral to oral evidence and what kind of evidence
would be led to establish this. Considering
the nature of the
dispute, being that of a restraint of trade and all its consequences,
it is simply not convenient to delay its
determination any further by
a referral to oral evidence. The applicant has thus simply not
convinced me to exercise the wide discretion
that I have in this
regard in its favour.
[18]
The
applicant has another obstacle in the way of its application to refer
the dispute to oral evidence being granted. This is the
fact, as set
out above, that no such application was made when the matter was
argued before Gush J especially considering that
no further pleadings
have been filed since then in any event. In
Santino
Publishers CC v Waylite Marketing CC
22
the full bench of the
High Court on appeal said that ‘
In
practice an application for a referral is typically made at the
hearing of an opposed application by the applicant who is faced
with
the reality of irresoluble disputes of fact having arisen on the
papers.
’
In
fact, the approach of the applicant in this case appears to be
exactly that kind of approach which the Court was critical of
in
De
Reszke v Maras and Others
23
where the following was
said:
‘
Some
younger counsel, in particular, seem to take it half for granted that
a court will hear argument notwithstanding disputes of
fact and,
failing success on such argument, will refer such disputes, or some
of them, for oral evidence. That is not the procedure
sanctioned by
the Supreme Court of Appeal. On the contrary, the general rule of
practice remains that an application to refer for
oral evidence
should be made prior to argument on the merits. The Supreme Court of
Appeal has widened the exceptions to this general
rule, but they
remain exceptions.’
[19] In a restraint of
trade dispute, the applicant must surely have anticipated a material
factual dispute. The prior correspondence
between the parties before
this application was brought must surely further confirm that a
material factual dispute should have
been anticipated from the
outset.
24
The applicant should have
preempted this with a request for the matter to be referred to oral
evidence as an alternative prayer
from the outset, should the Court
not be inclined to determine the factual dispute on the papers in
favour of the applicant party.
In not doing this, the applicant in
fact indicates that it is satisfied that any factual disputes be
determined in terms of the
normal principles applicable to motion
proceedings, referred to above. This was precisely the sentiment
exhibited by the Court
in
Singh
v Adam
25
which dealt with a
restraint application, and where the Court said: ‘
In
her replying affidavit the applicant revisits the issue by arguing
that on receipt of the answering affidavit it has become evident
that
the anticipated dispute of fact has indeed materialized and that a
referral to oral evidence would accordingly be justified.
Alternatively, given that the respondent referred a dispute to the
CCMA shortly after the launch of the application proceedings,
the
interim interdict should be granted pending the resolution of the
constructive dismissal dispute by arbitration. In my opinion,
an
application on this basis amounts to an irregular proceeding. Having
anticipated a material dispute of fact that could not be
resolved on
the papers it was inappropriate for the applicant to seek a final
interdict by way of notice of motion. ….
’
.
By not anticipating the factual dispute that was inevitable in
arising in this matter and dealing with it accordingly, it is my
view
that the applicant cannot now be allowed to remedy this defective
conduct by a referral to oral evidence.
[20] I shall now deal
with the final issue in this regard, being the failure by the
applicant to make out a proper case on the founding
affidavit, and
then seeking to make out a proper case in the replying affidavit. In
Betlane
v Shelly Court CC
26
the Court said: ‘
It
is trite that one ought to stand or fall by one's notice of motion
and the averments made in one's founding affidavit. A case
cannot be
made out in the replying affidavit for the first time.
’
This approach applies
equally in the Labour Court, and I refer to
De
Beer v Minister of Safety and Security and Another
27
where it was held that
‘
It
is trite law that an applicant must stand or fall by his or her
founding affidavit. The applicant is therefore not permitted
to
introduce new matter in the replying affidavit. The courts strike out
such new matter.
’
The
above being the relevant principle, I am thus entitled to exclude any
new material in the replying affidavit insofar as it seeks
to make
out a new case and not simply replying to what is set out in the
answering affidavit.
28
[21] I
conclude by pointing out that what the applicant in fact is seeking
to do is to establish a proper case though a request
for oral
evidence, considering the difficulties with its case made out in the
founding affidavit.
This
would be comparative to what happened in the judgment of
Minister
of Land Affairs and Agriculture and Others v D and F Wevell Trust and
Others
29
where the Court said:
‘…
.
The
parties concerned could have made the necessary allegations, but
failed to do so. They sought to supplement the allegations
made by a
referral to evidence. That is not permissible. ….
’
[22] I shall therefore,
based on the reasons as set out above, exercise my discretion against
referring this matter to oral evidence,
and decline to do so. I shall
further determine this matter on the basis of the normal principles
applicable to factual disputes
in motion proceedings where final
relief is sought. Insofar as new material is sought to be introduced
in the replying affidavit,
I shall not consider it. Based on these
conclusions, I shall now set out the background facts that properly
would form the factual
matrix for the purposes of the determination
of this matter.
Background facts
[23] Firstly, and for the
purposes of this application, I will accept that at all relevant
times the first respondent was employed
by the applicant, by virtue
of being employed with the applicant’s predecessor in title and
a transfer of the business having
taken place.
30
[24] The business of the
applicant is that of being one of the leading manufacturers and
distributors of workwear garments in the
Republic of South Africa.
This business is, simply put, and as it appears from the papers, the
manufacturing of work clothing and
corporate uniforms for corporate
customers. The applicant currently provides about 850 different
garments to its various customers.
[25] The first respondent
was initially employed by the applicant as what was called a “sample
set manager”. At the
time of termination of employment he held
the position of head of garment technology, being a position he held
for about a month
following restructuring in the applicant. The
applicant has attached a purported job description of the first
respondent to the
founding affidavit, but the first respondent
disputes that this was ever his job description, and in fact explains
how this document
came about. In terms of the principles enunciated
above, I accept the version of the first respondent, and I will
accept that the
actual duties of the first respondent with the
applicant are as set out hereunder, and are not as set out in this
purported job
description.
[26] The first respondent
was subject to a written contract of employment, voluntarily and
properly concluded. This contract of
employment contained a restraint
of trade covenant. This restraint of trade covenant inter alia
prohibits the first respondent
from having any interest in, and this
includes employment, with any competing business to that of the
applicant, for a period of
12 months from termination of employment
with the applicant, and for the area of the Republic of South Africa.
[27] As to the background
information of the first respondent before commencing employment with
the applicant, the first respondent
obtained a diploma in clothing
production management on 1988. He then held several clothing
production positions at a number of
clothing manufacturers in the
period between 1990 and 2008, when he joined the applicant. In this
time, the first respondent accumulated
substantial experience in
working with a large variety of clothing production machines,
attending to machine maintenance, quality
control on work processed,
allocation of work loads, and general management of factory staff.
The first respondent also in this
time attended regular production
meetings at his erstwhile employers. The first respondent thus had
all the technical ability,
skills and experience in the clothing
industry in place when he joined the applicant in 2008 and brought
these skills and experience
with him. The first respondent acquired
no special skills or experience from the applicant.
[28] There is nothing
confidential and unique about the manufacturing of clothes in the
applicant. The applicant used the same manufacturing
processes used
by all clothing manufacturers and the applicant’s processes is
in fact described by the first respondent as
“antiquated”.
The fact is that the first respondent could apply his own skill and
expertise brought with him to the
applicant to discharge his duties
at the applicant. The clothing made is also “graded” is
ensure that universal sizes
are applied, and this applies commonly,
is an industry standard, and is not confidential.
[29] The nature of
clothing is such that it is not possible to keep as “confidential”
any makeup of the clothing. As
the first respondent points out,
anyone in the clothing industry can take any garment and readily and
easily determine how it was
made and what materials have been used.
Added to this is the fact that once the clothing is sold, it is in
the public domain and
cannot attract any “confidentiality”
thereafter, even if it is accepted that it had some or other form of
confidentiality
in the first place.
[30] The first respondent
was not responsible for clothing design in the applicant. The first
respondent did not deal with customers
nor did he have any customer
relationships (the applicant does not even rely on trade connections
as a protectable interest). On
the common cause facts, the applicant
and the second respondent in any event share some customers, and
specific reference was made
to the Spar Group in this regard on the
papers. On face value, it does not appear that the large customers
are exclusive in any
event.
[31] The process of
garment manufacture is aptly described by the first respondent. What
is needed is a pattern, documents that
provide what the garment must
look like, and a sample. The first respondent created none of these
three items. He was responsible
to make sure these three items were
matched before the clothing was manufactured. When manufacturing was
completed, the first respondent
did quality control, in the form of
making sure the manufactured garments actually matched the three
items. If the garments were
found to be defective, the first
respondent would travel to the factory to investigate why this was
so, and to implement remedial
measures. This the first respondent was
able to do because of the skill and experience in clothing
manufacture he “brought
to the party”, so to speak.
[32] The first respondent
was not responsible for the creative aspects of the clothing
manufacture at the applicant. The first respondent’s
responsibility can broadly be described as quality control, which
entails the assessment of the finished product. The first respondent
did not purchase fabric for the applicant. In fact, the first
respondent’s duties towards the end of his employment with
the
applicant were that if the applicant required productions methods to
be improved and to be made more efficient, it would defer
to the
first respondent who would use his own skill and experience to try
and achieve these objectives. However, this meant that
the first
respondent would spend more and more time in the factory in Lesotho
which is what he did not want, and which, according
to him, was
tiring and time consuming. The first respondent was also dissatisfied
with his salary. Finally, the first respondent
feared, with the
change in emphasis of his position that he would be required to
relocate to the factory in Lesotho, which he did
not want.
[33] The first respondent
then sought alternative employment for these personal considerations
and used three separate employment
agencies for this purpose. He was
not recruited by the second respondent. The first respondent went to
a number of interviews and
accepted the job offer with the second
respondent following an interview, for reasons related to better
prospects and income, and
being closer to his home.
[34] The first respondent
then resigned from his employment with the applicant on 18 April 2013
with effect from 17 May 2013. The
first respondent disclosed at the
time of his resignation to the applicant that he would take up
employment with the second respondent.
The applicant then required
the first respondent to leave immediately and not work out his
notice.
[35] The first respondent
then took up employment with the second respondent and I accept that
the second respondent is a direct
competitor of the applicant. The
first respondent’s duties with the second respondent is that of
quality control.
[36] Significantly, the
second respondent does not conduct its own manufacturing of garments,
and this function is outsourced to
a third party. As such, the first
respondent would not have to become involved in the manufacturing
process, and any knowledge
the first respondent may have about
manufacturing processes and methods of the applicant in fact have no
interest at all to the
second respondent, and there is simply no
value in the second respondent having such information.
[37] Dealing then with
the case made out in the founding affidavit, all the applicant
records is that the first respondent “knows
everything there is
to know” about the applicant’s products. The applicant
however does go further and states that
the first respondent knows of
the special material used, the sourcing of its fabrics, garment
assembly and sequence of operations,
the art work, the manufacturing
processes, the technical packs of the garments, and all aspects of
the manufacture and design of
the applicant’s products. These
general statements are not amplified by any particularity and are
clearly bald and general
in nature. The applicant then further
contends that the first respondent’s employment with the second
respondent as direct
competitor of the applicant is breach of the
protectable interest per se, especially considering that the work
being done by the
first respondent at the second respondent is
similar to the duties he fulfilled at the applicant..
[38] In answer to the
above contentions, and in addition to what has already been set out
above, the first respondent says that
he had no particular knowledge
of the makeup of fabric other that what he could ascertain from the
label. The first respondent
also says that the fabric is purchased
from third party manufacturers as the applicant does not produce its
own fabrics and these
manufacturers also supply to many other
purchasers. The first respondent states that he did not source any
fabrics, trims or finishes,
and there is nothing confidential about
garment assembly. The artwork referred to does not emanate from the
applicant, but in fact
comes from third parties engaged by the
customer of the applicant for that purpose and for branding purposes.
The first respondent
had nothing to do with design in any event. The
first respondent was not responsible for the costing, pricing or
selection of materials
in the production process. The content of the
technical packs are recorded on the applicant’s central drive
accessible to
anyone. There is nothing unique in the applicant’s
quality control processes. Finally, and as to specifications,
garments
are made in standard sizes and is consistent throughout the
entire industry, and is not confidential.
[39] The first respondent
states that the clothing industry in South Africa has diminished
substantially, with most clothing production
now being done overseas
and job opportunities being limited. The clothing industry is all the
first respondent knows.
[40] For the reasons as
already set out above, I will not consider the new material raised in
the replying affidavit, as well as
material which contradicts the
version of the first respondent referred to above.
The restraint
principles
[41] It by now trite that
restraints of trade are valid and binding, and as a matter of
principle enforceable, provided the enforcement
of the restraint of
trade is reasonable. The general principles in the enforcement of a
restraint of trade was set out in
Basson
v Chilwan and Others
31
,
where Nienaber JA identified four questions that should be asked when
considering the reasonableness of the enforcement of a restraint,
being
(a)
Does
the one party have an interest that deserves protection after
termination of the agreement?
(b)
If so,
is that interest threatened by the other party?
(c)
In that
case, does such interest weigh qualitatively and quantitatively
against the interest of the other party not to be economically
inactive and unproductive?
(d)
Is
there an aspect of public policy having nothing to do with the
relationship between the parties that requires that the restraint
be
maintained or rejected?
[42] In
Reddy
32
the Court held that in
deciding whether or not to enforce a restraint of trade, the
following must be considered:
‘
A
court must make a value judgment with two principal policy
considerations in mind in determining the reasonableness of a
restraint.
The first is that the public interest requires that
parties
should
comply with their contractual obligations, a notion expressed by the
maxim pacta servanda sunt. The second is that all persons
should in
the interests of society be productive and be permitted to engage in
trade and commerce or the professions. Both considerations
reflect
not only common-law but also constitutional values. A Contractual
autonomy is part of freedom informing the constitutional
value of
dignity, and it is by entering into contracts that an individual
takes part in economic life. In this sense freedom to
contract is an
integral part of the fundamental right referred to in s 22.
In
applying these two principal considerations, the particular interests
must be examined. A restraint would be unenforceable if
it prevents a
party after termination of his or her employment from partaking in
trade or commerce without a corresponding interest
of the other party
deserving of protection. Such a restraint is not in the public
interest. Moreover, a restraint which is reasonable
as between the
parties may for some other reason be contrary to the public interest.
A
n agreement in
restraint of trade is concluded pursuant to 'law of general
application' referred to in s 36(1). What is meant by
this expression
includes the law in the general sense of the legal system applicable
to all which, in this case, consists of the
corpus of law generally
known as 'the law of contract' and which allows for contractual
freedom and the conclusion of agreements
pursuant thereto. The four
questions identified in Basson
comprehend
the considerations referred to in s 36(1). A fifth question, implied
by question (c), which may be expressly added, viz
whether the
restraint goes further than necessary to protect the interest,
corresponds with s 36(1)(e)
requiring
a consideration of less restrictive measures to achieve the purpose
of the limitation. The value judgment required by
Basson
necessarily requires determining
whether the restraint or limitation is 'reasonable and justifiable in
an open and democratic society
based on human dignity, equality and
freedom'.
’
[43]
I further refer to the judgment in
Automotive
Tooling Systems (Pty) Ltd v Wilkens and Others
33
where the Court held as
follows:
‘
Nienaber
JA listed four questions that need to be asked when determining
whether a restraint would be upheld. Only the first of
these, whether
there is an interest of the one party (in this case the employer)
which deserves protection once the contract comes
to an end, is
relevant in this matter. Precisely what the parameters of such an
interest are need not now be decided. What is clear,
however, is that
the interest must be one that might properly be described as
belonging to the employer, rather than to the employee,
and in that
sense 'proprietary to the employer'. The question in the present case
is whether the interest that is relied upon -
the skill, expertise
and 'know-how' that the employees undoubtedly acquired in the
techniques for manufacturing these machines
- was one that accrued to
the employer or to the employees themselves.
The
rationale for this policy was succinctly explained by Kroon J in
Aranda Textile Mills (Pty) Ltd v L D Hurn
as
follows:
'A
man's skills and abilities are a part of himself and he cannot
ordinarily be precluded from making use of them by a contract
in
restraint of trade. An employer who has been to the trouble and
expense of training a workman in an established field of work,
and
who has thereby provided the workman with knowledge and skills in the
public domain, which the workman might not otherwise
have gained, has
an obvious interest in retaining the services of the workman. In the
eye of the law, however, such an interest
is not in the nature of
property in the hands of the employer. It affords the employer no
proprietary interest in the workman,
his know-how or skills. Such
know-how and skills in the public domain
become
attributes of the workman himself, do not belong in any way to the
employer and the use thereof cannot be subjected to restriction
by
way of a restraint of trade provision. Such a restriction, impinging
as it would on the workman's ability to compete freely
and fairly in
the market place, is unreasonable and contrary to public policy.'
Thus
the mere fact that the first and second respondents have taken up
employment with AMS Manufacturing, assuming that it is in
competition
with the appellant, does not in itself entitle the appellant to any
relief if all they will be doing is applying their
skills and
knowledge acquired whilst in the employ of the appellant. It is only
if the restriction on their activities serves to
protect a
proprietary interest relied on by the appellant that they would be in
breach of their contractual obligations. The interest
sought to be
protected in this case, as I understand the submission made on behalf
of the appellant, is the special knowledge of
how the components of
the appellant's machine are put together. The crux of this matter
therefore is whether the appellant has
a proprietary interest in the
'know-how' that was acquired by the employees. This is a question of
fact and in motion proceedings
the matter must be decided on the
basis of – 'those facts averred in the applicant's affidavits
which have been admitted
by the respondent, together with the facts
alleged by the respondent'.
’
[44] In simple terms
therefore, and what needs to be considered in determining whether or
not the enforcement of a restraint of
trade would be reasonable, are
five issues, being (a) the existence of a protectable interest, (b)
the breach of such protectable
interest, (c) a quantitative and
qualitative weigh off the respective interests of the parties, (d)
general considerations of public
interest, and (e) whether the
restraint goes further than necessary to protect the relevant
interest. All these considerations
need to determined as a whole, as
part of a value judgment to be exercised, in order to finally
conclude whether or not the restraint
should be enforced.
[45]
The next issue to be considered is then what exactly constitutes a
protectable interest. In
Dickinson
Holdings Group
34
it was held that a
protectable interest would firstly be
what
is commonly referred to as trade connections, and secondly
confidential information. In this matter now before me, Mr Pemberton
who represented the applicant conceded that this case had nothing to
do with trade connections, and related solely to the issue
of
confidential information. This concession is in any event confirmed
by the founding and replying affidavits where no case is
made out
that the first respondent has any particular trade connections worthy
of protection. I shall accordingly not deal with
the principles and
requirements relating to trade connections and shall only deal with
the issue of confidential information.
[46]
In
Dickinson
Holdings Group
35
the
Court said the following with regard to the issue of confidential
information:
‘
The
categories of protectable confidential information were set out in
Dun
& Bradstreet (Pty) Ltd v SA Merchants Combined Credit Bureau
(Cape) (Pty) Ltd
and
Meter Systems Holdings Ltd v Venter
as
follows:
'(1)
Customer lists drawn by a trader, and kept confidential for the
purposes of his own business.
(2)
Information received by an employee about business opportunities
available to an employer.
(3)
The information received in confidence by an employee whilst in
employment with a particular employer remains protected by a
legal
duly, implied by the contract of employment.
(4)
Information which, although in the public domain is nevertheless
protected as confidential when skill and labour have been expended
in
gathering and compiling it in a useful form, and when the compiler
has kept his useful compilation confidential, or has distributed
it
upon a confidential basis.
(5)
Information relating to the marketing of a new product, if such
proposals are the product of skill and industry and have been
kept
confidential.
(6)
Information relating to the specifications of a product, and a
process of manufacture, either of which has been arrived at by
the
expenditure of skill and industry or has been kept confidential.
(7)
Information relating to the prices at which one person has tendered
competitively to do work for another is confidential in
the hands of
one who stands in a fiduciary relationship to the tenderer.'
It
is so that the type of information alone does not necessarily
establish its confidentiality. All of the relevant circumstances
must
be considered.
Information
must be objectively useful to a competitor in order to be
confidential as between ex-employee and an ex-employer.
’
[47]
In
David
Crouch Marketing
36
the Court also dealt with
the issue of the meaning of confidential information and said:
‘
A
former employer who wishes to rely on or enforce a restraint of trade
agreement in order to protect secrets and confidential information
must therefore show that the information, know-how, technology or
method is unique and peculiar to its business and that such
information is not public property or that it falls within the
public's knowledge. In other words, the former employer must show
that the interest that it has in the information it seeks to protect,
is indeed worthy of protection. In this regard the court
in
Hirt
pointed
out that the information which the former employer wishes to protect
'must be objectively useful to a competitor in order
to be
confidential as between ex-employee and an ex-employer' (para 46).
Clearly, as already indicated, not all information obtained
by the
employee during the course of his employment will be secret or
confidential (see also
Advtech
at
para 20). The following passage referred to by the court in
Hirt
with
approval from Colman
The
Law of Trade Secrets
(Sweet
& Maxwell 1992) at 60 explains the circumstances in which
information may be considered to be confidential:
'[The]
latest attempt to draw the line between protectable and
non-protectable information in English law is to be found in
Faccenda
Chicken v Fowler
[1986]
1 All ER 617
(CA) where it will be remembered that Neill J said that,
in order to determine whether information could be classified as so
confidential
that an employee should not be allowed to use or
disclose it after termination of the contract of employment, it was
necessary
to consider all of the circumstances of the particular
case, but the following were among those to which particular
attention should
be paid:
(1)
The nature of the employment; employment in a capacity where
confidential information is habitually handled may impose a higher
obligation of confidentiality, because the employee could be expected
to realise its sensitive nature to a greater extent than
if he were
employed in a capacity where such material reached him only
occasionally.
(2)
The nature of the information itself; in order to be protected, the
information must be of a highly confidential character -
no other
information could be protected even by a covenant in restraint of
trade.
(3)
Whether the employer impressed on the employee the confidentiality of
the information.
(4)
Whether the information can easily be isolated from other information
which the employee is free to use or disclose.
The
result of this is that if information is not categorised as
confidential under Neill LJ's criteria, then it forms part of the
employee's general knowledge and skill, which he is free to use for
his own benefit or for the benefit of others after the termination
of
the contract of employment....
'
[48]
I also wish to make reference to what the Court in
Esquire
System Technology
37
said about
confidential information, where the Court held as follows:
‘
It
was pointed out in
Meter
Systems Holdings Ltd v Venter & another
that,
while there is no numerus clausus as to the type of information which
could permissibly be regarded as confidential, our case
law has
frequently recognized certain categories of information as
confidential. These include:
(a)
Information received by an
employee about business opportunities available to an employer, even
if such information could be obtained
from another source. The
potential or actual usefulness of the information to a rival is an
important consideration in determining
whether it is confidential or
not.
(b)
Information relating to
proposals or, inter alia, the marketing of a new product.
(c)
Information relating to the
price at which one person has tendered competitively to do work for
another is confidential in the hands
of those who stand in a
fiduciary relationship to the tenderer.
Information
is confidential if it meets the following requirements:
(a)
It must be capable of
application in a trade or industry.
(b)
It must not be public knowledge
or public property (in other words, it must be known only to a
restricted number or closed circle
of people).
(c)
It must, objectively, be of
economic value to the person seeking to protect it.’
[49]
Finally, and recently on the issue of confidential information, the
Court in
Experian
SA (Pty) Ltd v Haynes and Another
38
said ‘
It
is trite that the law enjoins confidential information with
protection. Whether information constitutes a trade secret is a
factual question. For information to be confidential it must be
capable of application in the trade or industry, that is, it must
be
useful and not be public knowledge and property; known only to a
restricted number of people or a close circle; and be of economic
value to the person seeking to protect it.
’
What
thus must now be done, as part of the value judgment to be exercised
in this matter, is to determine whether there is a case
made out on
the proper accepted facts as to whether the information the first
respondent had access to whilst employed with the
applicant would
fall within the parameters of what could be classified as
confidential information in terms of the above authorities,
and also
whether this information would be of benefit to the second respondent
as employer of the first respondent.
[50] In this matter,
there is particular issue of public policy, and as such, it is a
neutral factor. What however is further importance
and has to be
determined in this matter is whether or not, even if the applicant is
found to have a protectable interest, it has
been shown that the
first respondent’s employment with the second respondent would
infringe on such protectable interest.
This is a factual question,
based on what the first respondent would actually do at the second
respondent and what possible risks
the applicant would be exposed to
if the first respondent is allowed to remain employed with the second
respondent. I accept that
as the second respondent is a direct
competitor of the applicant, the employment of the first respondent
with the second respondent
prima facie would be a breach of the
protectable interest, but this would always be subject to the
determination of the existence
of actual infringement on the facts.
[51]
This then only leaves the issue of the weighing off of interests of
the parties. In this context the issue of seniority of
the first
respondent is an important consideration.
39
In
fact, the following dictum in
Pest
Control (Central Africa) Ltd v Martin
40
illustrates
this, where the Court said
‘…
.
A restriction, which would be absurd when imposed upon a junior
engineer in a huge concern, might be perfectly reasonable in the
case
of a general manager with the whole business at his finger tips.
’
The
point is that the more senior the position of the employee, the more
likely it is that the employee would have access to such
kind of
confidential information that would be most useful to a competitor
and highly prejudicial to an erstwhile employer if revealed.
Further
on the issue of the weighing off of interests, it must be considered
if the employee concerned had particular skills which
he or she was
possessed of before becoming employed with the employer and would
simply remain using. This could even include special
skills developed
in the course of the employee applying his trade in the employer. In
Automotive
Tooling Systems
41
the
Court said
‘
In
my view, the facts establish that the know-how for which the
appellant seeks protection is nothing other than skills in
manufacturing
machines albeit it that they are specialised skills.
These skills have been acquired by the first and second respondents
in the
course of developing their trade and do not belong to the
employer - they do not constitute a proprietary interest vesting in
the
employer - but accrue to the first and second respondents as part
of their general stock of skill and knowledge which they may not
be
prevented from exploiting. As such the appellant has no proprietary
interest that might legitimately be protected.
’
[52]
Further on the issue of the weighing off of interests, the Court in
Advtech
Resourcing (Pty) Ltd t/a Communicate Personnel Group v Kuhn and
Another
42
held as follows: ‘
Factors
which may play a role in the process of determining the
reasonableness or not of the ex-employee's conduct are the following:
The duration of the employee's period of service. The vocational
status and position of the employee in the undertaking. The economic
and competitive significance of the trade secrets for the particular
business or economic sector. The personal contribution of
the
employer to the development of the trade secret and the motive of the
employee.
’
As
to what may weigh in the interest of the employer would be unique and
special business activities, processes and methodologies
in the
employer
43
,
the motives of the competitor and how the employee could assist and
contribute in such motives,
44
whether there is
something peculiar to the employer not readily available in the
market elsewhere,
45
or where the
circumstances would in fact amount to unlawful competition.
46
[53] Having set out all
the legal principles applicable to the determination as to whether
the enforcement of a restraint of trade
would be reasonable, I shall
now proceed to apply these provisions to the facts of this matter.
The merits of the
application
[54]
As this matter now concerns the issue of the
granting
of a final interdict, the applicant must satisfy three essential
requisites: (a) a clear right; (b) an injury actually
committed or
reasonably apprehended; and (c) the absence of any other satisfactory
remedy.
47
[55] The first question
is thus whether the applicant has demonstrated a clear right. In the
context of this matter, this means
whether the applicant has a
protectable interest. In my view, the applicant has failed to
demonstrate a clear right in the form
of a protectable interest, for
the reasons set out hereunder.
[56] The applicant has
simply not made out a case on the founding affidavit, as required.
There is not nearly enough particularity
given about why the
information the first respondent was privy to was in fact
confidential. As opposed to this, the first respondent
has stated
exactly what he did at the applicant, and from this appears that none
of the information he had was confidential. The
applicant this in
essence makes bald statements about information being confidential.
With regard to this kind of approach, the
Court in
Automotive
Tooling
48
said
‘
There
are, I think, a number of difficulties that confront the appellant.
First, the mere assertion by the appellant that the processes
and
methodologies in the design, manufacture and commissioning of
customized marking machines are confidential does not make it
so. The
appellant does not identify any part of the process or method which
is unique nor point to any other reason why such process
or method is
deserving of protection. There is no indication on the papers that
the first and second respondents were placed in
possession of any
formulae, or designs or special methods of manufacturing relating to
the processes and methodologies which, if
done on a confidential
basis, would have amounted to an interest worthy of protection.
’
In
David
Crouch Marketing
49
the Court said: ‘
The
applicant in its founding affidavit also submits that its modus
operandi and products as well as its services are indeed confidential
and worthy of protection. The applicant again does not elaborate or
give any details as to why these products, modus operandi and
services are worthy of protection. Why these aspects are so unique is
not clear from the founding affidavit. I am again in agreement
with
the submission advanced on behalf of the respondent that, without
elaborating on the details of the applicant's alleged unique
modus
operandi, products and services, it must be accepted that the
applicant has no unique modus operandi, products or services
that are
worthy of protection.
’
In
my view, these ratios in
Automotive
Tooling
and
David
Crouch Marketing
directly
apply in the current case. There is simply nothing unique
demonstrated by the applicant with regard to any aspect of its
manufacturing process, and no such case has been made out. The
version of the first respondent, which is to be accepted, confirms
this.
[57] An important
consideration in this matter is the fact that the second respondent
does not conduct its own manufacturing. As
such, it could not
prescribe to its third party contractors on how to conduct
manufacturing. The second respondent orders a finished
product from
the manufacturer. Any information the first respondent may have about
the manufacturing process of the applicant is
of no use and value to
the second respondent. The first respondent has no information about
trade connections and the applicant’s
case in any event is not
based on this. The first respondent was not involved in design and
fabric sourcing. As the applicant does
not manufacture its own
fabric, the first respondent cannot have any information about unique
fabric manufacture processes. Therefore,
and other than the skill and
experience and expertise the first respondent brought with him to the
applicant, the first respondent
has no information about the
applicant of value or use to the second respondent.
[58] The applicant makes
some mention of the risk the first respondent’s employment with
the second respondent creates with
specific reference to the
customer, the Spar Group. I have difficulty in understanding the
applicant’s case in this regard.
On the applicant’s own
version, the Spar Group is an existing customer of the second
respondent as well, and the Spar Group
insists on having two
suppliers. There is also no evidence at all of any special
relationship the first respondent may have with
the Spar Group and
again, as stated, the case of the applicant is not even based on
this. The crisp point is that this pertinent
issue raised by the
applicant in the founding affidavit cannot establish a protectable
interest because the Spar Group is not an
exclusive customer. In
Hirt
& Carter (Pty) Ltd v Mansfield and Another
50
the Court said that
‘…
.
in my view, the less exclusive the relationship between a service
provider and a client, the more impersonal is the trade connection
likely to be.
’
[59] The first respondent
came to the applicant with a wealth of skill, expertise and
experience in the industry. He did not acquire
this from the
applicant. In fact, there is no evidence of the first respondent
acquiring any specialized skill or training or expertise
from the
applicant. On the contrary, it appears that the applicant was
utilizing what the first respondent brought to the party,
so to
speak, and which, in terms of the above principles, belongs to the
first respondent. As the Court said in
Aranda
Textile Mills (Pty) Ltd v Hurn and Another
51
‘
A
man's skills and abilities are a part of himself and he cannot
ordinarily be precluded from making use of them by a contract in
restraint of trade.
’
[60] The first
respondent’s employment position with the second respondent is
that of quality control. Although this is very
similar to the
position occupied by the first respondent in the applicant, it is
simply not the kind of position that could expose
the applicant to
risk or prejudice. The position, at its core, assesses the quality of
finished garments, and then recommends and
implements steps to assure
and improve such quality. It has nothing to do with design or
patterns or sourcing of fabrics. The recommendations
as to how to
maintain and improve quality actually come from the first
respondent’s own skill and expertise, and not from
what was
imparted on him by the applicant. The position is also not senior in
the context of being involved in strategic decision
making, customer
relationships, pricing and IP. It is, for the want of a better
description, a simple “working” position.
[61]
In this matter, there is in my view a strong inclination that all
that the applicant is trying to do is to stifle competition
from one
of its principal competitors. I am inclined to accept that the
applicant actually realises the value of the first respondent
and
wishes to deprive the second respondent as its competitor of such
value. This is not what is envisaged as a protectable interest
in a
restraint of trade. I refer with agreement to what the Court said in
Esquire
System Technologies
52
where
it was held that ‘
It
is not in the public interest - interpreted in the light of the
Constitution - to enforce a restraint of trade clause as broad
as
this one on an employee in the position of Ms Cronjé. As I
have stated above, it would serve merely to stifle competition
and
not to protect any real interests worthy of protection. It would,
instead, be in the public interest to allow the employee
to exercise
her constitutional right to exercise her occupation freely.
’
[62]
Dealing then with the information itself, and in terms of the legal
principles set out above, there is simply very little that
is
confidential about the information the first respondent had access
to. I accept that that the methodology of manufacturing clothing,
as
the first respondent says, has remained unchanged for decades. As the
first respondent says, making a shirt is making a shirt,
no matter
where and in what form. There is simply nothing unique in what the
applicant does.
53
Virtually
all the information the applicant refers to is actually in the public
domain.
54
If the
applicant has a protectable interest, it would lie in the realm of
trade connections or unique patterns and designs, which
are issues
the first respondent was not involved in. The first respondent’s
duty with the applicant related to the end product,
and not how the
product came about. I also accept that all a competitor need do is
take a garment made by the applicant, and which
is in the market
place, and analyse it, and would know all it needs to know about the
product from this analyses. I have not been
provided with any
evidence relating to anything particular or unique and in the
pipeline at the applicant, so to speak, which the
general market
would not have.
55
The
first respondent has no knowledge of the pricing of the applicant and
does not deal with customers. Finally, and as set out
above, and as
the second respondent does not manufacture, the involvement of the
first respondent in the manufacturing process
of the applicant has no
value to the second respondent. There is, in my view, nothing
confidential in the information the first
respondent may have accrued
at the applicant.
[63] With regard to the
issue of possible motives, there is simply no evidence at all of the
employment of the first respondent
being solicited by the second
respondent with the view of procuring confidential information of the
applicant. In fact, the first
respondent left the applicant for
personal considerations. He applied for a number of positions, went
to a number of interviews,
and in essence accepted the best job
offer. There is simply no ulterior motive to be found in these
circumstances. The first respondent
has simply remained in the
industry he started out in, that he knows, and that he has acquired
his own skill and experience in
over decades. The current employment
opportunities in the industry are limited. On a quantitative and
qualitative weigh off in
this matter, I have little doubt that this
balancing act must come down in favour of the first respondent.
[64] In my view, the
applicant has thus failed to demonstrate a clear right in this
matter. I conclude that the applicant has no
protectable interest,
the employment of the first respondent at the second respondent does
not infringe any protectable interest
the applicant may have in any
event, and on the quantitative and qualitative weigh off favours the
first respondent. To enforce
the restraint of trade in these
circumstances would be unreasonable. As the applicant has not
demonstrated a clear right, this
is where the enquiry stops. The
applicant has thus not discharged the onus on it to obtain the relief
sought. The applicant’s
application falls to be dismissed, and
thus the rule nisi must be discharged.
Costs
[65] This then only
leaves the issue of costs. There is no reason why costs should not
follow the result. There is no ongoing relationship
between the
parties. With regard to costs, I must however point out that that the
costs order made by Gush J in paragraph 20(d)
of the learned Judge’s
judgment is a final order and not part of the rule nisi, and there is
no basis for me to interfere
with the same. I shall therefore only
limit the costs order in this judgment to the proceedings in respect
of the return date of
the rule nisi.
Order
[66] In the premises, I
make the following order:
66.1 The rule nisi issued
on 19 June 2013 is discharged.
66.2 The applicant is
ordered to pay the first and second respondent’s costs only for
the period after the handing down of
the rule nisi on 19 June 2013.
66.3 The costs order of
Gush J in paragraph 20(d) of the judgment dated 19 June 2013 stands.
____________________
Snyman AJ
Acting Judge of the
Labour Court
APPEARANCES:
APPLICANT: Mr R C W
Pemberton of Garlicke & Bousfield Inc
RESPONDENTS: Mr M D C
Smithers SC
Instructed by Barkers
Attorneys
1
At
para 19
2
[1984] ZASCA 116
;
1984
(4) SA 874
(A) at 875H-I
3
(2008)
29 ILJ 1665 (N) para 89
4
[2003]
1 All SA 299
(N) at 302j-303b
5
[2006]
2 All SA 301
(D)
6
(2009)
30 ILJ 1828 (LC)
7
(2013)
34 ILJ 529 (GSJ)
8
2001
(2) SA 853
(SE)
9
2008
(2) SA 375
(C)
10
(2011)
32 ILJ 601 (LC) para 25
11
(2007)
28 ILJ 317 (SCA) para 4
12
Id
at para 14
13
2006
(1) SA 401
(C) para 29
14
See
Esquire System Technology (supra) footnote 10 at para 44
15
[1984] ZASCA 51
;
1984
(3) SA 623
(A) at 634E 635C ; See also
Jooste
v Staatspresident en Andere
1988
(4) SA 224 (A)
at 259C
–
263D;
National Director of Public
Prosecutions v Zuma
[2009] ZASCA 1
;
2009
(2) SA 277
(SCA) paras 26
–
27
;
Molapo Technology (Pty)
Ltd v Schreuder and Others
(2002)
23 ILJ 2031 (LAC) para 38 ;
Geyser
v MEC for Transport, Kwazulu Natal
(2001)
22 ILJ 440 (LC) para 32 ;
Denel
Informatics Staff Association and Another v Denel Informatics (Pty)
Ltd
(1999) 20 ILJ 137 (LC)
para 26
16
2009
(3) SA 187
(W) para 19
17
(2013)
34 ILJ 311 (LAC) para 10
18
1988
(1) SA 943
(A) 979F – I
19
Id
at 981D – F
20
[1994] ZASCA 5
;
1994
(2) SA 563
(A) 587B – D
21
[2005] ZASCA 11
;
2005
(6) SA 182
(SCA) para 29
22
2010
(2) SA 53
(GSJ) para 5
23
Id
at para 33
24
Bundle
page 41 – 49
25
(2006)
27 ILJ 385 (LC) para 15 – 16
26
2011
(1) SA 388
(CC) para 29 ; See also
Van
der Merwe and Another v Taylor NO and Others
2008
(1) SA 1
(CC) para 122;
President
of the Republic of South Africa and Others v South African Rugby
Football Union and Others
2000
(1) SA 1
(CC) para 150;
National
Council of Societies for the Prevention of Cruelty to Animals v
Openshaw
[2008] ZASCA 78
;
2008
(5) SA 339
(SCA) paras 29 – 30;
Lufuno
Mphaphuli and Associates (Pty) Ltd v Andrews and Another
[2007] ZASCA 143
;
2008 (2) SA 448
(SCA) ;
Director
of Hospital Services v Mistry
1979
(1) SA 626
(A) at 636A – B ;
Sonqoba
Security Services MP (Pty) Ltd v Motor Transport Workers Union
(2011) 32 ILJ 730 (LC)
27
(2011)
32 ILJ 2506 (LC)
28
See
Dutch Reformed Church Vergesig and Another v Sooknunan
2012
(6) SA 201
(GSJ) at para 53 where it was said ‘
Regarding
the further complaints in the replying affidavit, with reference to
further annexures attached thereto, I am not referring
to those in
this judgment. The applicants' case should have been made out in the
founding affidavit’
; See also
Ex Parte Arntzen
(Nedbank Ltd as Intervening Creditor)
2013 (1) SA 49
(KZP) para
15
29
2008
(2) SA 184
(SCA) para 58
30
Labournet
Holdings (Pty) Ltd v McDermott and Another
(2003) 24 ILJ 185
(LC) para 8 and 13
31
[1993] ZASCA 61
;
1993
(3) SA 742
(A) at 767G-H
32
Reddy
(
supra
)
footnote 11 at para 15 – 16
33
(2007)
28 ILJ 145 (SCA) para 8 – 9
34
Dickinson
Holdings (supra) footnote 3 para 32 ; see also
Basson
v Chilwan (supra)
769 G – H
;
Bonnet and Another
v Schofield
1989 (2) SA 156
(D) at 160B-C
;
Esquire System Technology
(
supra
)
footnote 10 para 27
35
Id
at para 33 – 35
36
David
Crouch Marketing
(
supra
) footnote 6 para 21
37
Esquire
System Technologies
(
supra
)
footnote 10 at para 29
38
(2013)
34 ILJ 529 (GSJ) para 19
39
See
Dickinson Holdings
Group (supra) para 38 ;
SA
Breweries Ltd v Muriel
(1905)
26 NLR 362
at 370-371 ;
Stewart
Wrightson (Pty) Ltd v Minnitt
1979
(3) SA 399
(C) at 404B-C;
Random
Logic (Pty) Ltd t/a Nashua
,
Cape Town v Dempster
(2009) 30 ILJ 1762 (C) para 32 ;
Experian
(
supra
)
para 43
40
1955
(3) SA 609
(SR) at 613G
41
Automotive
Tooling
(
supra
)
footnote 33 at para 20
42
2008
(2) SA 375
(C)
43
Automotive
Tooling
(
supra
)
para 15 ;
Hirt and Carter (Pty) Ltd v Mansfield and
Another
(2008) 29 ILJ 1075 (D)
44
Continuous
Oxygen Suppliers (Pty) Ltd t/a Vital Aire v Meintjes and Another
(2012) 33 ILJ 629 (LC) para 40 –
42
45
David
Crouch
Marketing
(supra) para 57
46
Den
Braven
SA (Pty) Ltd v Pillay and Another
2008 (6)
SA 229
(D)
para 35
47
Setlogelo v Setlogelo
1914 AD 221
at 227 ;
V
& A Waterfront Properties (Pty) Ltd and Another v Helicopter &
Marine Services (Pty) Ltd and Others
2006
(1) SA 252
(SCA) para 20 ;
Royalserve
Cleaning (Pty) Ltd v Democratic Union of Security Workers and Others
(2012) 33 ILJ 448 (LC)
para
2 ;
Esquire
System Technology
(
supra
)
at para 38 - 40
48
Automotive
Tooling
(
supra
)
at para 20
49
David
Crouch Marketing
(
supra
)
at para 31
50
Hirt
& Carter
(
supra
)
at para 84
51
[2000]
4 All SA 183
(E)
52
Esquire
System Technologies
(
supra
)
at para 50
53
In
David Crouch Marketing
(
supra
)
the
Court said: ‘
In my view, for an
employer to succeed in establishing that trade secrets and
confidential information are interests justifying
protection by the
restraint, it should demonstrate in reasonably clear terms that the
information, know-how, technology or method,
as the case may be, is
something which is unique and peculiar to the employer and which is
not public property or public knowledge,
and is more than just
trivial.
’
54
See
David Crouch Marketing
(supra) at para 29
55
See
for example
Poolquip
Industries (Pty) Ltd v Griffin and Another
1978
(4) SA 353
(W) at 362B-E