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[2015] ZALCJHB 426
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E-Merge IT Recruitment CC v Brits and Another (J1947/2015) [2015] ZALCJHB 426; (2016) 37 ILJ 1145 (LC) (14 December 2015)
THE
LABOUR COURT OF SOUTH AFRICA, JOHANNESBURG
JUDGMENT
Not Reportable
Case no: J 1947/2015
In the matter between:
E-MERGE IT RECRUITMENT
CC
Applicant
and
BRITS, MIGNON
First
Respondent
SHIRLEY JACKSON
RECRUITMENT (PTY) LTD
Second Respondent
Heard:
10 December 2015
Delivered:
14 December 2015
Summary:
Urgent application - enforcement of a restraint of trade order
pending finalisation of appeal -
no need to consider the merits since
it as would amount to second-guessing about the judgment.
JUDGMENT
Nkutha-Nkontwana
AJ
Introduction
[1]
This
is an urgent application in terms of which the applicant seeks, by
way of interim interdict, to put in force restraint order
of 22
October 2015 by Boyce AJ which provides that:
“
2.
The First Respondent is interdicted and restrained for period of 12
months from 31
August 2015 and throughout Pretoria, Johannesburg,
Midrand, Cape Town and Durban, from, whether as a proprietor,
principal, member,
agent, partner, representative, shareholder,
director, manager, employee, consultant, advisor, financier,
administrator, and/or
in any other like capacity, bring directly or
indirectly associated and/or concerned with, interested and/or
engaged in any business,
firm undertaking, corporation or company,
directly or indirectly in completion with the Applicant;
3.
The First Respondent is interdicted and restrained for a period of 12
months
from 31 August 2015 from being employed by the second
Respondent;
4.
The Second Respondent is interdicted and restrained for a period of
12 months
from 31 August 2015 from employing by the First
Respondent;…”
[2]
Unlike
previous applications of this nature which had been brought in terms
of High Court Rule 49(11) read with Labour Court Rule
11(3), the
Applicant specifically relies on section 18 of the
Superior
Court Act 10 of 2013 (“The SC Act”)
[1]
which also deals with suspension
of
court orders pending appeal.
The legal principles
[3]
In
L'Oreal
South Africa (Pty) Ltd v Kilpatrick and Another
[2]
Snyman
AJ dealt studiously with a novel question regarding
suspension
of orders pending appeals
subsequent
to
the coming into effect of the SC Act,
[3]
in particular the
new
dimension introduced by the provisions of section 18 and whether this
section is applicable in the Labour Court. I fully endorse
court’s
analysis and findings in
L’Oreal
on the applicability of section 18 of the SC Act in this court.
[4]
However,
in
Incubeta
Holdings (Pty) Ltd and Another v Ellis and Another,
[4]
extensively
referred to in L’Oreal,
the court held that ‘…despite section 18, the provisions
of Rule 49(11) still found application’. In
South
Cape Corporation (Pty) Ltd v Engineering Management Services (Pty)
Ltd,
[5]
dealing with Rule 49(11), the court stated that:
“
The
Court to which application for leave to execute is made has a wide
general discretion to grant or refuse leave and, if leave
be granted,
to determine the conditions upon which the right to execute shall be
exercised (see Voet, 49.7.3; Ruby's Cash Store
(Pty) Ltd v Estate
Marks and Another supra at p 127). This discretion is part and parcel
of the inherent jurisdiction which the
Court has to control its own
judgments (cf Fismer v Thornton
1929 AD 17
at p 19). In exercising
this discretion the Court should, in my view, determine what is just
and equitable in all the circumstances
and, in doing so, would
normally have regard, inter alia, to the following factors:
(1)
the
potentiality of irreparable harm or prejudice being sustained by the
appellant on appeal (respondent in the application) if
leave to
execute were to be granted;
(2)
the
potentiality of irreparable harm or prejudice being sustained by the
respondent on appeal (applicant in the application) if
leave
to execute were to be refused;
(3)
the
prospects of success on appeal, including more particularly the
question as to whether the appeal is frivolous or vexatious
or has
been noted not with the bona fide intention of seeking to reverse the
judgment but for some indirect purpose, eg, to gain
time or harass
the other party; and
(4)
where
there is the potentiality of irreparable harm or prejudice to both
appellant and respondent, the balance of hardship or convenience,
as
the case may be.”
[5]
The above
principles have been endorsed and applied by this court to stay the
interim enforcement of a judgment pending an appeal.
[6]
However, as stated in
L’Oreal
,
the provisions of section of 18 of the SC Act stand to be adopted
since they also specifically deal with the issue of suspension
of
orders pending appeal. section 18 reads as follows:
‘
(1)
Subject to subsections (2) and (3), and unless the court under
exceptional circumstances
orders otherwise, the operation and
execution of a decision which is the subject of an application for
leave to appeal or of an
appeal, is suspended pending the decision of
the application or appeal.
(2)
Subject to subsection (3), unless the court under exceptional
circumstances orders
otherwise, the operation and execution of a
decision that is an interlocutory order not having the effect of a
final judgment,
which is the subject of an application for leave to
appeal or of an appeal, is not suspended pending the decision of the
application
or appeal.
(3)
A court may only order otherwise as contemplated in subsection (1) or
(2), if the
party who applied to the court to order otherwise, in
addition proves on a balance of probabilities that he or she will
suffer
irreparable harm if the court does not so order and that the
other party will not suffer irreparable harm if the court so orders.”
[6]
In
Incubeta,
the
c
ourt,
dealing with
above
provisions of
section
18(1) and (3),
concluded
as follows:
[7]
“
It
seems to me that there is indeed a new dimension introduced to the
test by the provisions of s 18. The test is twofold. The requirements
are:
•
First,
whether or not 'exceptional circumstances' exist; and
•
Second,
proof on a balance of probabilities by the applicant of —
o the
presence of irreparable harm to the applicant/victor, who wants to
put into operation and execute the order;
and
o the
absence of irreparable harm to the respondent/loser, who seeks leave
to appeal.
”
[7]
Indeed,
I agree with Snyman AJ in L’Oréal that ‘section 18
appears to now specifically determine the concept
of ‘irreparable
harm’ as part of the test already enunciated in
South
Cape Corporation (Pty) Ltd
,
and certainly specifically places an onus on the applicant for relief
in this regard…And further, it appears that a new
requirement
of ‘exceptional circumstances’ has been added.’
Exceptional
circumstances
[8]
The
Applicant asserts in its affidavit that given the fact that the
Respondents have noted their leave to appeal in the normal course,
that process on its own may take some time. The Respondents have not
sought an urgent hearing of the leave to appeal or filed submissions
in thereof Rule 30(3A) of the Rules of Court. Therefore, it is most
likely that the whole appeal process may take some time.
[9]
The
duration of the restraint is 12 months commencing from 31 August 2015
and 2½ months of the restraint period has already
expired.
Given the fact that the Respondents have not launched the
appeal process on urgent basis, the restraint period would
have
lapsed or, at the very least, a substantial portion thereof would
have expired by the time the appeal is finalised. That would,
consequently, render the relief granted in the restraint order
futile. The Applicant would derive no benefit from its successful
litigation.
[10]
If
the relief sought by the Applicant in these proceedings is refused,
the First Respondent would remain employed by the Second
Respondent
under the same conditions that gave rise to the restraint application
in the first place.
[11]
Therefore,
the forfeiture of the relief granted in the restraint order,
regardless of the outcome of the appeal, constitutes exceptional
circumstances which warrant the granting of the relief sought.
[12]
The
Respondents, on the other hand, assert in their answering affidavit
that, given their prospects of success in the leave to appeal,
the
application lacks factual basis for exceptional circumstances. Also,
the Applicant and the Second Respondent are not in competition
since
the Applicant has several recruitment divisions but the IT sales
division was started by the First Respondent and she
remained the
only employee in that division. After her departure, the
Applicant stopped trading in that division.
[13]
The
Respondents do recruitment in IT sales and not in other recruitment
areas in which the Applicant does recruitments. Even if
the Applicant
does do IT sales on ad hoc basis as alleged, that business would only
form 10% of the Applicants business and 10%
of its income. Therefore,
if the First Respondent is competing with the Applicant, such
would be negligible since it would
only be with 10% of the
Applicant’s business. Therefore, a final interdict is not an
appropriate relief in the circumstances.
[14]
I
endorse the following sentiments as expressed by the court in
Incubeta
,
that:
[8]
“
Do
these circumstances give rise to 'exceptionality' as contemplated? In
my view the predicament of being left with no relief, regardless
of
the outcome of an appeal, constitutes exceptional circumstances which
warrant a consideration of putting the order into operation.
The
forfeiture of substantive relief because of procedural delays, even
if not protracted in bad faith by a litigant, ought to
be sufficient
to cross the threshold of 'exceptional circumstances'.”
[15]
In
this instance, by the very nature, the restraint order contemplates
‘exceptional circumstances’ since it provides
immediate
protection of the protectable interest and elimination of continued
risk in relation to confidential information.
[9]
Irreparable harm to
the Applicant
[16]
The
Applicant asserts that it carries on a business as a specialist staff
recruitment consultancy in the information technology
sector, and as
such sources and places candidates who are skilled in variety of
software platforms the country.
[17]
Whilst
in the employ of the Applicant, the First Respondent was tasked with
canvassing the job seekers’ market searching for
suitably
qualified candidates that she would introduce to potential employers
seeking to engage their services. As such, she was
exposed to
or acquired knowledge or (which she still has) of the Applicant’s
confidential information that is valuable
to the competitor, and is
known only to the Applicant’s members and senior employees. The
First Respondent possesses such
information and the risk of
disclosure by her to a competitor could have detrimental effect in
the Applicant. Such information
is a key differentiating factor as to
the Applicant’s success in such a highly competitive market.
[18]
The
First Respondent took up employment with Second Respondent
immediately after terminating her employment with the Applicant,
a
company that she has been a director since last May 2014 whilst in
the employ of the Applicant. She is employed as a Senior Specialist
Consultant & Head Hunter by a company that markets itself as
being “
made
up of headhunters – experts in their field, specializing in
information technology”.
[19]
The
Second Respondent’s profile changed soon after it employed the
First Respondent as it boasts of a large client base across
the
country despite the fact that it is only new in the market and the
fact that the First Respondent had no prior experience in
IT Sales
Recruitment before being employed by the Applicant.
[20]
The
First Respondent changed the password and user name of the
Applicant’s Linkdin profile which is the Applicant’s
electronic data base of its clients. She refuses to provide such
details to the Applicant.
[21]
The
restraint order has stopped the First Respondent’s breach of
restraint of trade and prevents the Second Respondent from
unlawfully
interfering with the contractual relationship between the Applicant
and the First Respondent, to protect the Applicant’s
legitimate
interest during the period of 1 September to 31 August 2016.
[22]
The
Applicant has no suitable alternative remedy:
13.1
The Applicant has no other relief that would have the effect of
preventing the First Respondent from breaching
restraint of
trade and the Second Respondent from unlawfully interfering with the
contractual relationship between the Applicant
and the First
Respondent, thus eliminating the continued risk;
13.2 It
will be difficult to compute the damages suffered by the Applicant
consequent upon the First Respondent
enticing its clients away since
the extent of the business loss would not be known by the Applicant;
13.3 A
damage claim would not be appropriate as such a claim would take some
time to be heard and would not have
immediate effect on an interdict,
which is necessary to limit the damages that have been suffered by
the Applicant.
[23]
Instead,
the Applicant’s prejudice is compounded by the First Respondent
continued employment by the Second Respondent. Therefore,
on the
balance of probabilities, the Applicant will suffer irreparable harm
if the relief is not granted.
[24]
The
First Respondent asserts that she did not take any copies of the
Applicant’s documents or data base. As such, the knowledge
would not be confidential information but would be her personal
knowledge or a skill. Such personal knowledge or a skill would
not
form an interest deserving of protection to enforce a restraint of
trade.
Irreparable harm to
the First Respondent
[25]
The
Applicant asserts that restraint order does not prevent the First
Respondent from using her own skills and abilities, and earning
a
living in any area other than areas she is precluded from in terms of
the restraint; to recruit in any other foiled other than
IT
recruitment sector; to sell IT products and services as she did
before taking up employment with the Applicant; and to sell
any
products she wishes to as her sales skills are transferable to
selling product. The Respond would be free to compete with the
Applicant in IT sales after a relatively short restraint period.
[26]
Also,
if the relief is granted, the First Respondent would not lose her
current employment or be prejudiced as she is the sole employee
and
shareholder of the Second Respondent. As a small business, it
would be able to refocus its area of operation to the areas
not
covered by restraint. No employee stand to be affected by the by the
refiled sought.
[27]
If
the Respondents succeed in the appeal, they can sue for loss of
earnings and the quantum of damages is feasible to compute since
it
would either be the First Respondent’s salary or Second
Respondent’s profits or any other income she would have
derived
from her position within the Second Respondent.
[28]
Conversely,
the First Respondent asserts that she will suffer irreparable harm
should the relief be granted as she is a single mother
and the sole
provider in her household. She had no any other income than her
employment in the Second Respondent.
[29]
If
the order is granted she would not be able to provide for her 4 year
old child and pay the rental for the property where she
is residing
with her child. She has no family in South Africa to offer her
accommodation in the event she is evicted for defaulting.
[30]
The
area covered by the restraint is in the main cities of the country
where most IT sales opportunities would be. Also she would
not afford
to leave Johannesburg because of her child school commitments and
support wise, her boyfriend works in Johannesburg.
[31]
The
following considerations and concluding remarks in
Incubeta
[10]
are
pertinent in this instance:
“
The
plight of the victor alone is probably all that is required to
pass muster. Nonetheless, I am not unconscious of the
undesirable
outcome that relief granted by the court becomes a
vacuous gesture. A court order ought not to be lightly allowed to
evaporate,
a fate which, seems to me, would tend to undermine the
role of courts in the ordering of social relations.
Furthermore, it is plain from the
summary of circumstances given above that the applicants would indeed
suffer irreparable harm
if the order is not put into operation.
Moreover, it is plain that Ellis will not suffer irreparable harm if
the order is put into
operation. Although Ellis in his answering
affidavit complains that putting the order into operation will render
his right of appeal
meaningless, this is incorrect for the reasons
mentioned above; he cannot be without practical relief. The s 18 test
is met on
both counts of the second leg.”
[32]
However,
unlike Ellis, the First Respondent has made allegations that she and
her family will suffer real hardship during restraint
period of 8
months mainly since her sole source of income comes from her
employment by the Second Respondent. Still, this assertion
does
present a novel situation. In
University
of the Western Cape Academic Staff Union and Others v University of
the Western Cape,
[11]
referred to with approval
in
L’Oreal:
“
Mlambo J (as he then was)
said: ‘With regard to the notion of irreparable harm it needs
to be mentioned that loss of income
as a result of dismissal is the
inevitable consequence and as such provides no good ground for the
granting of urgent interim relief
….’, which reasoning
can equally apply to the contentions of the first respondent now made
in this application.
I
thus accept that the applicant has indeed show irreparable harm to
exist, and I also accept that it has been shown that the current
financial harm to the first respondent, is not irreparable harm.”
[12]
[33]
The
above finding is true in this instance. In my view, the Applicant has
successfully met both counts of the second leg in terms
section 18
requirements.
Prospects of success
[34]
The
counsel for the Applicant contended that, in the light of
Incubeta
test,
there is no need to consider the prospects of success on appeal in
this application. I do agree. In
Incubeta,
the
court made no reference to merits of the case that led to the
interdict. Sutherland J stated further that:
“
In
my view they are not pertinent to this kind enquiry. The
considerations that are valuable presuppose a bona fide application
for leave to appeal or actual appeal. No second-guessing about the
judgment per se comes into reckoning.”
[13]
[35]
Therefore,
I am not inclined to follow the court’s approach in
L’Oreal
as
suggested by the Respondents’ counsel. In any event, the
Applicant does not dispute that the leave to appeal is bona fide
and,
most pertinently, Boyce AJ has not pronounced on the leave to appeal.
Indeed, any reference to the merits would amount to
second-guessing
that outcome.
Conclusion
[36]
I
am persuaded that, by the very nature, the restraint order
contemplates ‘exceptional circumstances’ since it
provides
immediate protection of the protectable interest and
elimination of continued risk in relation to confidential
information. I also
accept that the Applicant has successfully shown
that indeed irreparable harm does exist on its part; and that,
conversely, the
First Respondent’s harm is not irreparable.
[37]
On
urgency, the authorities are clear that breaches of restraint of
trade have an inherent quality of urgency.
[14]
That urgency certainly extends to this application, which is
consequent to the application for leave to appeal.
Costs
[38]
On
the issue of costs, there is no reason for me to deviate from the
general principle in applications of this nature that is, in
the
event of the application succeeding, the costs should be made costs
in the appeal.
Order
[39]
In
the circumstances, I make the following order:
1.
The
orders 2, 3 and 4 of Boyce AJ restraint order of 22 October 2015
shall not be suspended and shall continue to remain operative
pending the outcome of the appeal process, which process shall
include the application for leave to appeal and/or petition for
leave
to appeal, and/or any appeal noted, if at all.
2.
The
costs of this application are to be costs in the appeal.
__________________
Nkutha-Nkontwana AJ
Acting
Judge of the Labour Court of South Africa
[1]
This Act became operational on 23 August 2013.
[2]
(C788/2011) [2013] ZALCCT 16.
1962
(4) SA 531
(A)
[3]
This Act became operational on 23 August 2013.
[4]
2014 (3) SA 189
(GJ).
[5]
1977 930 SA 534
(A) at 544H –
546B.
[6]
Solidarity v Department of Correctional Services and Others: In
re Solidarity and Others v Department of Correctional Services and
Others; Solidarity and Others v Department of Correctional Services
and Others
(
2014) 35 ILJ 1647 (LC) at para
16.
[7]
Above note 5 at
para 16.
[8]
Above n 5 at para 27.
[9]
L’Oréal above n 2 at para 49.
[10]
Above n 5 at paras
28 to 29.
[11]
(1999) 20 ILJ 1300 (LC) at para 17.
[12]
Above n 5 at para 54.
[13]
Incubeta
at para
26.
[14]
Mozart Ice
Cream Franchises (Pty) Ltd v Davidoff
and
Another
2009 (3) SA 78
(C) 89A.