About SAFLII
Databases
Search
Terms of Use
RSS Feeds
South Africa: Johannesburg Labour Court, Johannesburg
SAFLII
>>
Databases
>>
South Africa: Johannesburg Labour Court, Johannesburg
>>
2016
>>
[2016] ZALCJHB 1
|
|
High Tech Medical Services CC v Oberholzer and Another (J2553/15) [2016] ZALCJHB 1 (5 January 2016)
THE LABOUR COURT
OF SOUTH AFRICA, JOHANNESBURG
JUDGMENT
Case no: J
2553/15
Reportable/Not Reportable
In the matter between:
HIGH TECH MEDICAL SERVICES
CC
Applicant
and
CLINTON OBERHOLZER
First
Respondent
AKACIA HEALTH CARE (PTY)
LTD
Second Respondent
Heard:
23 December 2015
Delivered:
05 January 2016
JUDGMENT
MOLAHLEHI, J
Introduction
[1]
This
is an urgent application in terms of which the applicant seeks an
order enforcing the restraint of trade and confidential undertaking
agreement made with the first respondent. The restraint of trade is
for a period of 12 months.
[2]
The
first respondent opposes the application essentially on the ground
that the restraint is invalid for the following reasons:
·
the
restraint is unreasonable in that the applicant has no proprietary
interest which is capable of protection.
·
the
applicant waived its right to enforce the restraint of trade
agreement when it accepted his undertaking made after leaving
the
applicant’s employment.
·
he
was not in breach of the undertaking he made after joining the second
respondent
·
that
the confidential information which the applicant relies on is readily
available in the Internet
·
that
he had extensive knowledge of the flexible endoscopic equipment
before joining the applicant
·
that
the training he received from the applicant was only for two days.
·
that
he was not involved in the pricing of products.
Background
facts
[3]
The
applicant conducts its business of distributing Flexing Endoscopic
fujifilm in various provinces in South Africa. The business
includes
training and repairs of the high medical equipment which the
applicant distributes to various hospitals and private medical
practitioners in the country. The applicant is one of the four
high-tech medical companies operational in the in South Africa and
currently provides its services and supply its product to the
following hospitals:
(a)
Netcare
Medicross
(b)
Mediclinic
group of hospitals
(c)
Life
Health Care group of hospitals
[4]
The
applicant also performed the function of processing applicants for
government tenders.
[5]
The
first respondent was prior to his resignation employed as a sales
representative. He resigned after working for applicant for
a short
period of seven months. After his resignation he immediately joined
the second respondent, a competitor to the applicant
as an employee.
[6]
According
to the applicants the sales representatives, such as the first
respondent, undergo training before they could be allowed
to conduct
demonstrations and presentations to the various clients of the
applicant. They would only be allowed to conduct demonstrations
and
presentations once they had undergone the training and Mr Vosloo was
satisfied that the particular employee has mastered the
skill.
[7]
The
applicant says that because of the training he received from it the
first respondent became versed in the following skills:
‘
a)
The specification of the products
b)
The advantage of the product when compared to those of the two
opponents of the
Applicant.
c)
How the opposition operated and which products the promoted and
marketed,
d)
Was equipped to do a
comparative study to use during presentation and demonstrations,
e)
Was duly knowledgeable about the technology used in the products
marketed by
the Applicant,
f)
Was thoroughly aware
and trained on the pricing and price lists of the Applicant.’
[8]
The
other point made by the applicant in its founding affidavit is that
the first respondent often arrived early at work and during
that
period he would be alone in the office and would then have access to
the following information:
‘
a)
all the data
b)
quotations,
c)
price structure and lists,
d)
client basis and their individual and specific needs and
requirements,
e)
potential clients and their needs,
f)
state and other tenders.’
[9]
On
11 November 2015 the applicant’s attorneys addressed the letter
to the second respondent confirming that after resigning
from the
applicant the first respondent took employment with it (second
respondent) and further reminded it of the restraint of
trade
agreement with the applicant. The letter further require of the
second respondent to give an undertaking that would not breach
the
terms of his contract with the applicant.
[10]
The
second respondent's attorneys responded to the above letter the
following day 12 November 2015 and amongst other things made
the
following undertaking:
‘
9
Without detracting from what is set out above, our client has
instructed us that
it would not-
9.1
receive or accept any of your client’s confidential information
(properly so-called)
from Mr Oberholzer for any purpose whatsoever;
9.2
instruct, request or permit Mr Oberholzer to impart relay, divulge or
disclose any of your
client’s confidential information to any
of its employees or representatives. On the contrary (and without
conceding that
such confidential information exists) our client has
instructed Mr Obeholzer not to do so.’
[11]
On
19 November 2015 the first respondent's attorneys addressed a letter
to the applicant's attorneys and amongst other things made
an
undertaking on behalf of the first respondent in the following terms:
‘
7.
Without detracting from what is set out above, our client has
instructed us that he
will not:
7.1
utilise distribute any of your client’s confidential
information for any purpose whatsoever;
7.2
impart, relay, divulge or disclose any of your client’s
confidential information to
Akacia or its representatives.’
[12]
The
incident that gave rise to the present proceedings arose on 19
November 2015 when the applicant noticed a flyer from the first
respondent at one of its customers. The flyer contained the details
of the first respondent. The second incident occurred on 7
December
2015 when the first respondent attended a presentation by the
employees of the applicant it Milpark hospital.
The
requirements of final relief in an urgent application
[13]
The
applicant in the present matter is seeking a final interdict and
therefore in order to succeed it had to satisfy the following
requirements:
(a)
a
clear right
(b)
an
injury which was actually committed or one which is apprehended
(c)
That
there is no other satisfactory remedy to protect its
interests.
[14]
The
other key requirement involves the applicant satisfying the
requirements of rule 8 of the Rules of this court which requires
an
applicant in an urgent application to set out in the founding
affidavit the following:
(a)
The reason for agency and why an urgent relief is necessary
(b) The reasons
why the requirements of the rules were not complied.
[15]
In
National
Mineworkers Union v Black Mountain- a division of Anglo Operations
Ltd,
[1]
the Court held that:
‘
Only
once an applicant has persuaded the court that sufficient grounds
exist which necessitates a relaxation of the rules and ordinary
practice, will the court proceed to consider the matter as one of
agency. The extent to which the court will allow the parties
to
dispense with the rules relating to the period will depend on the
degree of agency in the matter.’
[16]
The
general principles governing restraint of trade are summarized by
this Court in
SPP
Pumbs (South Africa) Pty Ltd v Stoop and Anothe
r,
[2]
in the following terms:
a.
‘
The
restraint of trade agreement is an enforceable contract.
b.
The
restraint of trade is enforceable if it protects legally recognized
interests of the party seeking to enforce it.
c.
The
restraint of trade is unenforceable if it is unreasonable and
contrary to public policy.
d.
The
restraint of trade is unenforceable if it merely seeks to limit
competition.’
[17]
It
was also stated in that case that the onus to establish the existence
of the restraint of trade agreement rests with the party
seeking the
enforcement including the breach thereof. Thereafter the onus
rests on the party resisting the enforcement of
the restraint of
trade to show that the restraint is unreasonable and therefore
unenforceable.
[18]
In
Fertility
Guards Holding (Pty) Ltd t/a Fidelity Guard v Pearmain
,
[3]
the court held that the onus to prove that the restraint of trade is
unreasonable and therefore not enforceable rests with the
respondent.
[19]
The
factors to consider in determining whether the restraint of trade is
reasonable or otherwise are set out in
Basson
v Chilwan and Others
[4]
in the following terms:
a.
Is
there interest of the one-party which is deserving of protection at
the termination of the agreement?
b.
Is
such interest prejudiced by the other party?
c.
If
so, does such interest so weigh up quantitatively and qualitatively
against the interests of the latter party that the latter
should not
be economically inactive and unproductive?
d.
Is
that another facet of public policy having nothing to do with the
relationship between the parties but requires that the restraint
should either be maintained or rejected?
[20]
According
to
Basson
[5]
there are two kinds of propriety interests that may be protected
through the restraint of trade contract; namely:
‘
all
confidential matters which is useful for the carrying on of the
business and which could therefore be used by a competitor,
if
disclose to him, to gain a relative competitive advantage. Such
confidential material is sometimes compendiously referred to
as
“trade secrets” and the relationship with customers,
potential customers, suppliers and others that go to made what
is
compendiously referred to as the “trade connection” of
the business, being an important aspect of incorporeal
property
known as goodwill.’
Evaluation
[21]
In
the present instance it is common cause that the parties concluded a
restraint of trade agreement which was to be operational
between 4
November 2015 and 4 November 2016. The restraint of trade amongst
others prohibited the first respondent from, carrying
on business or
being involved in a business which would be in competition with that
of the applicant.
[22]
It
is common cause that the first respondent tendered his resignation on
5 November 2015 and also on the same day notified the applicant
that
he would be taking employment with the first respondent who as
indicated is a competitor of the applicant. At the time
the
deponent to the founding affidavit was aware of the implication of
what the first respondent had informed him about in relation
to the
provisions of the restraint of trade agreement. He in fact in that
respect reminded the first respondent of the implication
that this
may have on the restraint of trade.
[23]
It
follows that the applicant waited for six weeks before instituting
this proceedings despite the fact that it was aware of the
breach.
There is no explanation for this delay and therefor the urgency in
that regard was self-created.
[24]
In
my view applicant's urgent application stands to fail due to lack of
urgency.
[25]
The
other aspect of this case relates to the undertaking made by the
first respondent after his commencing of employment with the
second
respondent. The first respondent in his answering affidavit contends
that in accepting undertaking which was made through
his attorney the
applicant waived its right to enforce the restraint of trade beyond
the parameters of that undertaking.
[26]
The
applicant did not file a replying affidavit and hence the point about
waiver remains unopposed. The point is also not dealt
with in the
heads of argument neither did Ms Swanepoel for the applicant deal
with it in her submission during the hearing of this
matter.
[27]
I
agree with Mr Van As, for the first respondent, that in order to
enforce the restraint of trade agreement in these circumstances
the
applicant had to show that the first respondent had breached the
undertaking made.
[28]
It
is important to note that the first respondent did not give an
undertaking that he would not do business with other clients.
The
first respondent in his answer contends that he did not breach the
undertaking.
[29]
There
is no evidence that the first respondent breached his undertaking.
The placing of the flyer at Linmed hospital does not, in
my view,
constitute a breach of the undertaking. The response of the employee
that he had gone to Linmed hospital to introduce
himself as a new
representative of the second respondent and to inform them that he
would be assisting them with after sales
needs in relation to
the existing equipment has not been disputed by the applicant. It has
also not been disputed that the first
respondent did not do business
with Linmed hospital whilst in the employ of the applicant.
[30]
The
first respondent also denies participating in a demonstration at
Milpark hospital. He states in his answering affidavit that
on the
day in question he had attended at Milpark hospital to deliver the
endoscopes. He also states that he did not do any business
with
Milpark hospital whilst he was in the employ of the applicant.
[31]
Turning
to the issue of the enforceability of the restraint of trade I find,
based on the reasons set out below, that there is no
proprietary
interest to protect. The problem that the applicant faces in this
regard is that it did not file a replying affidavit.
[32]
In
contending that the restraint of trade was unreasonable the first
respondent relies on the following:
a.
the confidential information which applicant relies on in seeking to
enforce
the restraint of trade is readily available on the Internet.
b.
that he had extensive knowledge of flexible endoscopic equipment
prior joining
applicant.
c.
he received a two day training on the product of the gender
applicant.
d.
He was not involved in the pricing of the product.
[33]
Ms
Swanepoel argued that the experience which the first respondent was
referring to, was not relevant to the flexible endoscopic
equipment.
There is however no evidence to assist the court in determining the
difference in the operation of the two systems.
[34]
In
relation to the experience the applicant had in applications for the
government tenders, Ms Swanepoel contended that the applicant
may
have had experience in government tenders but it was not specific to
the business model of the applicant. There is again no
evidence
detailing the difference in the experience of dealing with the
government tenders between those that involved the business
model of
the applicant and other business models.
[35]
In
light of the above the case of the applicant stands to fail. I see no
reason why in both the law and fairness the costs should
not follow
the results.
Order
[36]
In
the premises the applicant’s application is dismissed with
costs.
________________
E,Molahlehi
Judge of the Labour Court of South
Africa
Appearances:
For the Applicant:
Adv Swanepoel
Instructed by:
Aucamp and Cronje’ Attorneys
For the Respondent:
Adv Van As
Instructed by:
Witz Callichio, Isakow and Shapiro Attorneys
[1]
(2007)
28 ILJ 2796 (LC) at paragraph 12.
[2]
[2014]ZALCJHB
453.
[3]
2001
(2)SA 853 (SE).
[4]
1993
(SA 742 (A)
[5]
(supra)