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[2015] ZALCCT 65
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Oasys Innovations (Pty) Ltd t/a GL Event Oasys v Henning and Another (C536/15) [2015] ZALCCT 65 (6 November 2015)
REPUBLIC
OF SOUTH AFRICA
Not
reportable
Of
interest to other judges
THE
LABOUR COURT OF SOUTH AFRICA, CAPE TOWN
JUDGMENT
C
ase
no: C 536/15
In
the matter between:
OASYS
INNOVATIONS (PTY) LTD
T/A GL EVENTS
OASYS
Applicant
and
BEULAH HENNING
First
Respondent
ASHLEIGH MASFEN
Second
Respondent
Delivered
:
6 November 2015
RULING
ON LEAVE TO APPEAL
STEENKAMP
J
Introduction
[1]
The respondents, Beulah Henning and
Ashleigh Masfin, have applied for leave to appeal against my judgment
of 10 September 2015.
[2]
The respondents
a
quo
(the employees) are thus the
applicants in the application for leave to appeal. The applicant
a
quo
, Oasys, opposes the application for
leave to appeal.
[3]
The judgment found that the employees were
in breach of their respective restraints of trade. I made the
following order:
“
27.1
The respondents are interdicted and restrained for a period of 24
months, calculated
from 30 May 2015, and in the province of the
Western Cape, from:
27.1.1
soliciting business for their own benefit, or the benefit of the
person or entity that
trades as Big Show Stoppers, or any undertaking
other than the applicant itself, from any of the applicant’s
customers with
whom it currently undertakes or has undertaken
business within an 18 month period calculated from 1 June 2015;
27.1.2
employing or offering employment, causing employment to be offered,
or soliciting for
employment any of the applicant’s employees
who were in or are currently in its employ or were in its employ
within a period
of 18 months calculated from 1 June 2015;
27.1.3
divulging to any third person or making use of any know-how, trade
secrets, or confidential
information which is not information already
in the public domain;
27.1.4
procuring or in any way influencing their position with an
undertaking such that the
services provided to a company customer be
terminated, or attended to by any undertaking other than the
company. (This provision
applies only if the respondents are employed
by a company customer).
27.2
The respondents are ordered to pay the applicant’s costs,
jointly
and severally, excluding the costs for 31 July 2015 and the
costs associated with the pleadings filed between 31 July and 4
September
2015.”
[4]
The employees have raised various
submissions in this application for leave to appeal, mainly in
relation to the facts. As their
legal representative summarised it in
their submissions, it is based on:
“
The
evidence overlooked / misinterpreted by the Court
a
quo
in relation to the evidence led at
the hearing.”
[5]
The
reference to “evidence led at the hearing” is somewhat
misplaced, as the matter was heard on motion, on an urgent
basis, and
no oral evidence was led. The evidence before the Court was thus in
the form of affidavits and had to be assessed in
accordance with the
rule in
Plascon-Evans
.
[1]
That task was complicated by the fact that the parties delivered
seven sets of pleadings between them.
[6]
Before dealing with the employees’
submissions, I address the applicable test to be applied in
applications for leave to appeal.
The
test to be applied in applications for leave to appeal
[7]
As
Mr
Hansen
pointed out on behalf of the employees, section 166(1) of the Labour
Relations Act
[2]
read with Rule
30 of the Rules for the conduct of proceedings in the Labour Court
permits an appeal from a judgment of the Labour
Court to the Labour
Appeal Court with leave of the Labour Court.
[8]
The
traditional test applicable whether leave to appeal should be granted
is whether there is a reasonable prospect that another
Court may come
to a different conclusion to that reached by the Court whose judgment
is sought to be taken on appeal.
[3]
The possibility that another court may come to a different conclusion
has to be assessed with reference to the facts and the law,
and will
involve the consideration of factors such as whether they have
satisfied the Court that there is a reasonable prospect
of the appeal
succeeding.
[4]
And
another aspect for consideration for leave to appeal is whether the
matter is of substantial importance for the
applicants or both the
applicants and the respondent.
[5]
[9]
But
to these authorities must be added three cautionary notes sounded by
the higher courts dealing with appeals. The first came
from Davis JA
in
Martin
& East (Pty) Ltd v NUM
:
[6]
“
The
Labour Relations Act was designed to ensure an expeditious resolution
of industrial disputes. This means that courts,
particularly
courts in the position of the court
a
quo
, need to be cautious when leave to
appeal is granted, as should this Court when petitions are granted.
There
are two sets of interests to consider. There are the interests
of the parties such as appellant, namely who are entitled
to have
their rights vindicated, if there is a reasonable prospect that
another court might come to a different conclusion.
There
are also the rights of employees who land up in a legal
“no-man’s-land” and have to wait years for an
appeal (or two) to be prosecuted.
This
was a case which should have ended in the Labour Court. This
matter should not have come to this court. It stood
to be
resolved on its own facts. There is no novel point of law to be
determined nor did the court
a quo
misinterpret existing law.
There was no incorrect application of the facts; in particular the
assessment of the factual justification
for the
dismissals/alternative sanctions.
I
would urge labour courts in future to take great care in ensuring a
balance between expeditious resolution of a dispute and the
rights of
the party which has lost. If there is a reasonable prospect that the
factual matrix could receive a different treatment
or there is a
legitimate dispute on the law, that is different. But this kind
of case should not reappear continuously in
courts on appeal after
appeal, subverting a key purpose of the Act, namely the expeditious
resolution of labour disputes.”
[10]
I dare say that these sentiments expressed
by the LAC are even more pertinent in a case such as this one, where
the application
was heard on an urgent basis and the restraint of
trade may well have run its course by the time it is resolved by the
appeal courts.
[11]
The
second
dictum
is from the SCA in
Kruger
v S
:
[7]
“
[2]
Before dealing with the merits of the appeal, it is necessary at the
outset to deal with the test applied by the high court
in granting
leave to appeal to this court. Despite dismissing the appellant’s
appeal, the high court concluded that it was
‘possible’
that another court might arrive at a different conclusion and that
leave to appeal should not be ‘lightly
refused’ where the
person concerned is facing a lengthy sentence of imprisonment. This
is an incorrect test. What has to
be considered in deciding whether
leave to appeal should be granted is whether there is a reasonable
prospect of success. And in
that regard more is required than the
mere ‘possibility’ that another court might arrive at a
different conclusion,
no matter how severe the sentence that the
applicant is facing. As was stressed by this court in
S
v Smith
2012 (1) SACR 567
(SCA) para 7:
‘
What
the test of reasonable prospects of success postulates is a
dispassionate decision, based on the facts and the law, that a
court
of appeal could reasonably arrive at a conclusion different to that
of the trial court. In order to succeed, therefore, the
appellant
must convince this court on proper grounds that he has prospects of
success on appeal and that those prospects are not
remote but have a
realistic chance of succeeding. More is required to be established
than that there is a mere possibility of success,
that the case is
arguable on appeal or that the case cannot be categorised as
hopeless. There must, in other words, be a sound,
rational basis for
the conclusion that there are prospects of success on appeal.’
[3]
The time of this court is valuable and should be used to hear appeals
that are truly deserving of its attention. It is in the
interests of
the administration of justice that the test set out above should be
scrupulously followed. In the present case, it
was not, and this
court has had to hear an appeal in respect of which there was no
reasonable prospect of success.”
[12]
And
thirdly, the SCA held in in
Dexgroup
(Pty) Ltd v Trustco Group
[8]
that:
”
The
need to obtain leave to appeal is a valuable tool in ensuring that
scarce judicial resources are not spent on appeals that lack
merit.
It should in this case have been deployed by refusing leave to
appeal.”
[13]
It is against that background that this
application must be assessed.
The
employees’ submissions with regard to evidence allegedly
overlooked
[14]
The would-be appellants submit that the
court misdirected itself in respect of various findings of fact in
that it misdirected itself
or overlooked the evidence in various
respects. I will deal with each of those submissions.
The
finding that Oasys has a protectable interest
[15]
It
is settled law that customer connections and trade secrets are
protectable interests, as set out in para [20] of the judgment.
[9]
From the evidence on affidavit before the Court it transpired that
Oasys has been in existence for 33 years, that it
enjoys a good
reputation and has a substantial customer base. The employees
held key positions with Oasys, as set out in
para [21] of the
judgment. They were employed for a considerable length of time viz.
15 and 7 years respectively. They concede
that they have good
relationships with Oasys’s customers. They were clearly
able to build up relationships with those
customers so as to make
them able to induce the customers to follow them when they left. That
this is so was evidenced with Conferences
et al who gave their Cape
Wine Show business to Big Show Stoppers as a result of the
relationship between the employees and Ms
Deidre Cloete.
[16]
The variables mentioned by the employees in
an attempt to justify the contention that no customer connections
worthy of protection
exist are unsustainable. Every customer who
requires a service will be influenced by pricing and delivery, just
like every customer
purchasing a product will be influenced by price
and quality. This in no way detracts from the fact that they were in
a position
to influence Oasys’s customers by virtue of the
position they held so as to be able to direct business to Big Show
Stoppers.
They could do this by under-cutting Oasys’s
known price structures or simply misusing the relationship built up
with that
customer to divert business away.
[17]
This ground of appeal has no reasonable
prospects of success, given the factual findings on the evidence
before the Court.
The
finding that Oasys’s interests are prejudiced
[18]
The attempt to solicit business from Mining
Indaba LLC and the fact that Conferences et al gave their Cape Wine
Show business to
Big Show Stoppers is clear evidence that Oasys’s
interests are prejudiced in that it ran the risk of losing the Mining
Indaba
2016 and lost the revenue it had historically generated on the
Cape Wine Show.
This ground of appeal has no reasonable prospect of success.
The
enforcement of the restraints will not render the employees
economically inactive and unproductive; and this enforcement is
a
justifiable limitation to the employees’ interest when weighed
up against Oasys’s interests
[19]
It was not the employees’ case in the
court
a quo
that
they would be rendered economically inactive and unproductive by
virtue of the enforcement of the restraints. In fact, they
conceded
that there is enough of a customer base and business to go around
which would mean they would not need to canvass Oasys’s
customers. And, as the Court pointed out in para [23], they are not
prevented from working for a competitor. They are already gainfully
employed as directors of Big Show Stoppers. The only limitation on
them is that they cannot solicit the business of the customers
with
whom they developed connections during the course of their employment
with Oasys for the benefit of Big Show Stoppers. There
is no
detriment to them economically in this regard. This ground of appeal
has no reasonable prospects of success.
The
restraints or portions of them are not enforceable; are
unreasonable; and are contrary to public policy
[20]
A
litigant who challenges the reasonableness and thus enforceability of
a restraint bears the onus to prove such unreasonableness
[10]
. This, regard being had to the common cause facts, the
employees have failed to do. When deciding whether a restraint is
unreasonable the court is enjoined to make a value judgment when
determining whether to enforce a restraint of trade based on two
competing policy considerations. The one is that the public interest
requires that parties should comply with their contractual
obligations. The other is that all persons should in the interests of
society be productive and be permitted to engage in trade
and
commerce or their professions. That is what the court
a
quo
did.
[21]
The common cause facts relating to the
position held by the employees are such that they held the classic
position relative to customers
to be able to exercise influence over
them and which requires the protection afforded by the respective
restraints, as set out
in paragraph [21] of the judgment.
The
conclusion that the employees had breached the restraint relative to
Mining Indaba LLC
[22]
The common cause facts support the finding
that the employees had breached the restraint by the approach to
tender for the 2016
Mining Indaba. The approach to Mr Feinsilver was
clearly in breach of the provisions of the restraint of trade.
Applicants
do not deny the approach; rather they state that the email
communication which recorded the approach was taken out of context.
They offered no explanation as to how it was taken out of context and
in what respects a contextualisation would render the approach
innocent. As such the finding relative to Mining Indaba LLC was
justified. This ground of appeal has no reasonable prospects of
succeeding.
Gearhouse
and Conferences et al
[23]
No finding was made by the court that that
the employees breached their restraint relative to Gearhouse or
Conferences et al.
The
employees had created customer connections whilst in the employ of
Oasys that were of such a nature that they would constitute
a
protectable interest and they were in a prime position to
influence those customers and to carry those customers
with them
[24]
As mentioned in the judgment, the employees
were employed as accounts personnel for 15 years and 7 years
respectively.
The positions held by them and the period
of time with which they held such positions gave them the opportunity
to build up customer
relationships so as to exercise influence over
them. They were the key personnel that a customer would call when
enquiring about
Oasys’s services. Their jobs entailed sourcing
new business, liaising with existing clients, obtaining the specific
needs
and requirements of a customer relative to an event or
exhibition, liaising with the design department, producing and
presenting
quotations, and overseeing the execution, supply and
installation of the infrastructure required for an exhibition or
event. Their
employment with Oasys allowed them to gain personal
knowledge of and influence over its customers which would enable them
to take
advantage of those customer connections.
[25]
The employees lay no factual basis to
support their submission that the court erred in finding that they
had established customer
connections which were worthy of protection
or that they were in the perfect position to carry customers away
with them.
[26]
This ground of appeal has no reasonable
prospects of succeeding.
The
finding that Oasys had trade secrets worthy of protection and the
employees had reasonably been suspected of divulging these
trade
secrets and confidential information to third parties
[27]
Oasys’s
confidential information in the form of pricing and incentives is
valuable confidential information which is worthy
of protection.
The employees have gained valuable information relative to pricing,
incentives and the business needs of its
customers. They had
full knowledge of its price structure. They are the ones who
compiled quotes in respect of the
exhibitions or events. They
had knowledge of incentives given to customers. Price
structures have been told to
be confidential information worthy of
protection by the courts.
[11]
But no finding was made by the Court
a
quo
that
the employees had been suspected of divulging these trade secrets and
confidential information to third parties. This ground
of appeal has
no reasonable prospects of succeeding.
The
finding that a two year restraint period was reasonable
[28]
The onus is on the employees, who seek to
escape the restraint, to show that the period of two years is
unreasonable. This they
have failed to do.
[29]
Oasys’s customers do not do weekly or
monthly business it, but their business is limited in most cases to
annual or bi-annual
exhibitions, as pointed out in para [23] of the
judgment. The two year restraint is necessary to negate the influence
that the
former employees have over those customers. For this reason
the period of the restraint is indeed reasonable and enforceable.
This ground of appeal has no reasonable prospects of succeeding.
The
territory of the restraint was reasonable
[30]
The employees say that the majority of
Oasys’s customers are based in the Western Cape and that they
do not service customers
from other provinces. They lay no factual
basis for the assertion that the territory of the Western Cape is
unreasonable, either
in their answering papers or in their
submissions. The complaint in the answering papers relative to
territory was that the restraint
should not apply to territory
outside of the Western Cape which is in line with the judgment handed
down by the Court.
This ground of appeal has no reasonable prospects of succeeding.
The
judgment is ambiguous in that it is unclear which customers on the
list of annexures “A” and “B” are
not
protected by the restraints
[31]
No such ambiguity exists. The employees are
restrained from soliciting business of customers with whom Oasys
currently does business
or has undertaken business within an 18 month
period calculated from 1 June 2015. There is no reference to the
annexures referred
to in the notice of motion in the Labour Court
judgment and as such the clause is unambiguous. This ground of appeal
has no reasonable
prospects of succeeding
The
judgment is ambiguous in that it is unclear whether the restraints
are applicable only to the customers on the lists that are
based in
the Western Cape, as long as the customer exhibitions are held
elsewhere
No
such ambiguity exists. The employees are restrained from soliciting
business of customers with whom Oasys does business or has
undertaken
business within an 18 month period calculated from 1 June 2015. The
prohibition is against soliciting business in the
Western Cape from
the customers specified in the order. This ground of appeal has no
reasonable prospects of succeeding.
The
judgment that is ambiguous in that it is unclear as to whether the
restraints are operative to exhibitions in the Western Cape,
as long
as the clients on the lists are based elsewhere
[32]
No such ambiguity exists. The employees are
restrained from soliciting business of customers with whom Oasys
currently does business
with or has undertaken business within an 18
month period calculated from 1 June 2015. It was the employees’
case that
they only did business with customers in the Western Cape.
The prohibition is against soliciting such customers’ business
in the Western Cape. This ground of appeal has no reasonable
prospects of succeeding.
Conclusion
[33]
There are no reasonable prospects that
another court will come to a different decision based on the facts
that were placed before
the court
a quo
on affidavit.
[34]
Both parties asked for costs to follow the
result. I see no reason in law or fairness to differ.
Order
The
application for leave to appeal is dismissed with costs.
_______________________
Steenkamp
J
APPEARANCES
APPLICANTS
(respondents
a quo)
:
Blane Hansen of
Michael Ward attorneys.
RESPONDENT
(applicant
a
quo
):
D M B Watson
Instructed by
Shepstone & Wylie.
[1]
Plascon-Evans
Paints Ltd v Van Riebeeck Paints (Pty) Ltd
1984
*3) SA 623 (A).
[2]
Act 66 of 1995.
[3]
Dince v
Dept of Education, North West
[2010]
6 BLLR 631
(LC) para [3].
[4]
Tsotetsi
v Stallion Security (Pty) Ltd
(2008) 31
ILJ
2802 (LC) para [14].
[5]
GA
Motor Winders (Eastern Cape) cc v CCMA
(1999)
20
ILJ
1802
(LC) para [3].
[6]
[6][6]
(2014) 35
ILJ
2399
(LAC).
[7]
2014 (1) SACR 369
(SCA) paras [2] – [3].
[8]
[2013]
ZASCA 120
(20 September 2013).
[9]
With
reference to
Rawlins
v Caravantruck (Pty) Ltd
1993 (1) SA 537 (A) 541 D-I.
[10]
Reddy v
Siemens Telecommunications (Pty) Ltd
2007
(2) SA 486
(A) at 496A;
Magna
Alloys and Research (SA) (Pty) Ltd v Ellis
1984
(4) SA 874 (A).
[11]
Meter
Systems Holdings Ltd v Venter
1993
(1) SA 409
(W);
Esquire
System Technology (Pty) Ltd v Cronje
(2011)
32
ILJ
601
(LC).