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[2017] ZALCJHB 164
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Incledon (Pty) Limited and Others v Slabbert and Others (J2237/16) [2017] ZALCJHB 164 (5 April 2017)
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THE
LABOUR COURT OF SOUTH AFRICA, JOHANNESBURG
Not
reportable
Case
no: J2237/16
In
the matter between:
INCLEDON
(PTY) LIMITED
DISTRIBUTION
AND WAREHOUSING NETWORK LIMITED
DPI
HOLDINGS (PTY) LIMITED
DPI
PLASTICS (PTY) LIMITED
and
SLABBERT,
GEORGE
ELS,
GARY
BOTHA,
MORNE
SIBANYONI,
SIPHO
EVANS,
JOHANITA
KISHUGU
HOLDINGS (PTY) LTD
PROCURE
POINT (PTY) LIMITED
First
Applicant
Second
Applicant
Third
Applicant
Fourth
Applicant
First
Respondent
Second
Respondent
Third
Respondent
Fourth
Respondent
Fifth
Respondent
Sixth
Respondent
Seventh
Respondent
Heard:
27 October 2016
Judgment:
5 April 2017
JUDGMENT
VAN
NIEKERK J
[1]
This application was launched on an urgent basis, to enforce a
restraint and confidentiality agreement. In the light of the
evidence
adduced in the answering affidavit to the effect that the sixth and
seventh respondents are not competitors of the applicants,
the
applicants elected not to pursue the application. They seek the
court’s leave to withdraw the application and an order
that the
first, second and fourth respondents bear the costs of the
application because they failed to disclose material facts
relating
to the application when demand was made upon them. The first, second
and fourth respondents seek to have the application
dismissed,
alternatively, and in the event that leave to withdraw is granted, an
order to the effect that the applicants pay the
first, second and
fourth respondents’ costs. (For convenience, unless the context
indicates otherwise, I shall refer to the
first, second and fourth
respondents collectively as ‘the respondents’.)
[2]
In relation to the withdrawal of the application, the court has a
discretion to grant leave to withdraw. It is not the function
of the
court to compel a party to proceed with an action against its will. A
party is ordinarily permitted to withdraw a claim,
subject to an
appropriate order as to costs, unless the withdrawal amounts to an
abuse of process (an instance which the court
in
Levy v Levy
[1991] ZASCA 81
;
1991 (3) SA 614
(A) described as ‘one difficult to visualise’).
In my view, there is no material prejudice to the respondents should
leave to withdraw the application be granted, nor would any injustice
result. There is no counter-application or other compelling
reason
for the respondents, in effect, to take charge of the proceedings. I
see no reason to refuse the application for leave to
withdraw the
application.
[3]
The real issue between the parties is that of costs. The basis on
which the applicants seek a costs order is that the respondents
have
treated the present litigation as a game, in particular, because they
failed to disclose, in response to a letter of demand
addressed to
them, that the sixth and seventh respondents were not competitors of
the applicants. Had they done so, the applicants
contend, the
application would never have been filed.
[4]
The court has a broad discretion to make orders for costs. Section
162 requires the court to exercise a discretion, taking into
account
all relevant factors, and to ensure that any order (to grant costs or
not) meets the requirements of the law and fairness.
[5]
The factual background is one in which the respondents had given
certain restraint and confidentiality undertakings in respect
of
various of the applicants. During the period March to August 2016,
the respondents tendered their resignations from the respective
applicants’ employ and took up employment with the sixth and/or
seventh respondent.
[6]
On 31 August 2016, the applicants’ attorney addressed a letter
of demand to the respondents, recording the restraint undertakings
and alleging a breach of them by virtue of the respondents’
employment with the sixth and/or seventh respondents. In particular,
the applicants’ attorney asserted that the sixth and seventh
respondents were engaging in the same or a similar business
as the
applicant and were thus competitors. An undertaking to comply with
the restraint undertakings was sought, failing which
the applicants
indicated their intention to institute appropriate proceedings to
enforce them.
[7]
On 2 September 2016, the first and second respondents’ attorney
replied. The substance of the reply is no more than a
page long and
disputes the enforceability of the restraints in the light of the
fact that the restraint in respect of the first
respondent was
unsigned, the respondents were not a party to the restraint
agreement, and in respect of the second respondent,
that the
restraint was not enforceable by his employer alternatively, that the
restraint it expired. The letter concluded with
the following
paragraph:
4.
With reference to your letter, our clients dispute all other
allegations set
out therein and reserve the right to that they are in
direct breach of the restraints in any event (sic).
[8]
A rather different response was received form the sixth respondent’s
attorney. On 20 September 2016, a full and considered
response to the
letter of demand was provided. In that letter, and in respect of the
fourth respondent, the sixth respondent addressed
the issue of the
competitive interface and made certain undertakings regarding the
employment of the fourth respondent that it
considered addressed the
applicants’ concerns.
[9]
On 30 September 2016, the present application was filed. In the
founding affidavit, the applicants aver that the applicants
and the
sixth and seventh respondents compete in the same industry. Paragraph
40 of the founding affidavit records that in the
letters of demand
addressed to the respondents, the applicants contended that either
the six or seventh respondents, or both, were
operating in direct
competition with the applicants. The response to that was that there
was no obligation on the part of the second
to seventh respondents to
respond to the letters of demand. That is not in dispute to that none
of the respondents responded to
the letter of demand by saying that
the applicant’s concerns were unfounded for the reason that
neither the sixth and\or
seventh respondent was a direct competitor
of the applicants. Instead, as I have indicated, the response focused
on the enforceability
of the restraints. In the introduction to the
answering affidavit, in an explanation covering some three pages, the
respondents
make the case that the sixth and seventh respondents are
not competitors of the applicant and for the first time, spill out in
some detail the nature of the activities undertaken by the sixth and
seventh respondents respectively.
[10]
As I have stated, when it became clear from the papers that the sixth
and seventh respondents were not direct competitors of
the
applicants, the applicants elected to withdraw the application. The
applicant contends that it employed the requisite measures
of
prudence before launching the application by addressing letters of
demand to all of the respondents in order to provide each
with an
opportunity to answer the assertions made by the applicants and
thereby avoid the application. The applicants contend further
that
the respondents, rather than addressing the applicants’
concerns and advising them that they were mistaken, adopted
an
approach in which it sought to secure a tactical advantage with the
consequence that unnecessary costs have been incurred
[11]
One of the fundamental rules of fairness that underlies the court’s
rules of procedure and evidence is that litigants
should be warned in
advance of points being taken against them (see
King William’s
Town v Border Alliance Taxi Association
2002 (4) SA 152
(ECD)).
The very purpose of a letter of demand is to avoid litigation,
amongst other things, by affording a party the opportunity
to respond
to all of the material allegations articulated in the demand. In the
present instance, the respondents raise the point
that the sixth and
seventh respondents are not direct competitors of the applicants.
Here, the respondents say:
The seventh respondent, Procure Point
(Pty) Ltd, is the procurement arm of Kishugu, (the Sixth Respondent).
Kishugu and Procure
Point’s business is in fire management and
accordingly unrelated to that of the applicants. The seventh
respondent is not
in the business of supplying pipes, fittings,
valves or other listed products to customers in the listed market
segments, all generally.
[12]
There is no reason why that point could not have been made in the
letter written on behalf of the first and second respondents
on 2
September 2016. The letter, as I have observed, contains no more than
a number of technical defences and a bare denial of
every other
allegation made in the letter of demand. The failure to address the
issues raised by the applicants relating to the
competitive interface
was unprofessional, to say the least. It indicates either a degree of
negligence or worse, as the applicants
submit, the deliberate setting
of an ambush. This is not to suggest that a response to a
letter of demand ought to assume
the particularity of a pleading –
what is required is at least that the material allegations made be
addressed with sufficient
particularity to enable an applicant to
decide whether to take the next step of initiating litigation.
[13]
Ordinarily, I would have had no hesitation in ordering the first and
second respondents to pay the costs of the application.
In my view,
had the letter of demand been addressed with the required degree of
diligence, in all likelihood, the application would
never have been
filed. However, I must necessarily take into account that the
response to the letter of demand addressed to the
applicant’s
attorney on 20 September 2016 alerted them, albeit from the sixth
respondent’s perspective to the possibility
that the sixth and
seventh respondents were not engaged in the same area of business
activity. In my view, the applicants ought
properly to have further
investigated this issue before filing the application, as they did,
ten days later.
[14]
Having regard to all of the relevant facts, in my view, the
requirements of the law and fairness are best satisfied by each
party
bearing its own costs.
I
grant the following order:
1. The applicants
are granted leave to withdraw the application against the first,
second and fourth respondents.
2. There is no order
as to costs.
ANDRÉ VAN NIEKERK
Judge of the Labour Court of South
Africa
REPRESNTATION
For
the applicants: Adv. C Whitcutt SC, with him Adv. C De Witt,
instructed by Fluxmans Inc.
For
the first, second and fourth respondents: Adv. C Nel, instructed by
MacGregor Erasmus Attorneys.