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[2017] ZALCJHB 324
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World Net Express (A division of World Net Logistics (Pty) Ltd) v Aucamp and Another (J1794/17) [2017] ZALCJHB 324 (12 September 2017)
IN
THE LABOUR COURT OF SOUTH AFRICA, JOHANNESBURG
Not
Reportable
Case
no: J 1794/17
In
the matter between:
WORLD
NET EXPRESS (A DIVISION OF WORLD NET
LOGISTICS
(PTY) LTD)
Applicant
and
MICHELLE
AUCAMP
First Respondent
ARAMEX
SOUTH AFRICA (PTY) LIMITED
Second Respondent
Heard:
23 August 2017
Delivered:
12 September 2017
JUDGMENT
TLHOTLHALEMAJE,
J:
Background:
[1]
The applicant seeks
interdictory relief to enforce
certain restraint of trade and confidentiality understandings as
contained in the first respondent’s
contract of employment. The
relief sought by the applicant is framed as follows:
“…
2.
It is ordered that the restraint of trade and
confidentiality agreement concluded between the applicant and the
first respondent
on 7 April 2017, annexure “
WN1”
to the founding affidavit, is rectified, by replacing any reference
to “W
orld Net Express (Pty) Ltd”,
with “
World Net Express, a division of
World Net Logistics (Pty) Ltd”.
3.
An interdict is granted in the following terms:
3.1
The first respondent shall not for a period of six months within the
Republic
of South Africa, whether directly or indirectly; whether
alone or jointly; whether as a principal, agent, partner,
representative,
shareholder, consultant, director, employer, employee
or in any other capacity or association:
3.1.1
be employed, engaged in, interested, involved in association with or
contracted to any company,
business, entity, firm, association or
person (whether financially or otherwise) that directly or indirectly
competes against the
applicant or is engaged in a similar business to
that of the applicant as at the first respondent’s termination
date; and
3.1.2
be employed by the second respondent or render services to the second
respondent in any
capacity; and
3.1.3 be employed by, engaged in,
interested or involved in, associated with or contracted to any
company, business, entity, firm,
association or person that is an
existing client, potential client or a legal entity accustomed to
dealing with the applicant (whether
financially or otherwise) within
the 12 (twelve) month period preceding the date of the first
respondent’s termination.
3.2
The first respondent shall not for a period of 12 (twelve) months
after termination
date, either for herself or as the agent of anyone
or any entity; persuade, induce, solicit, consult, meet with,
encourage, employ
or procure (or endeavour to do any of the
aforegoing), any of the applicant’s employees within the
Republic of South Africa
to be employed by, associated with,
interested in any competitor or client of the applicant or to
terminate his/her employment
with the applicant and shall not furnish
any information or advice (including trade secretes) acquired by the
first respondent
to any third party that results in an employee of
the applicant becoming directly employed by, associated with,
interested in,
any competitor or client.
3.3
The first respondent shall not for a period of 12 (twelve) months
after
the date termination of employment with the applicant divert
any business away from the applicant or attempt to divert business
away from the applicant nor will she approach, do business with,
solicit, interfere with, entice or endeavour to approach, do business
with, solicit, interfere with or entice away from the applicant any
person, client, entity, undertaking or association who or which
was,
during the period of 12 (twelve) months immediately prior to the date
of the termination, a client, customer or supplier of
the applicant
or was accustomed to dealing with the applicant and its business.
4.
The interdict contained in prayer 3.1 above shall operate for a
period
of six months from the date of this order, throughout the
Republic of South Africa and the interdict contained in prayer 3.2 -
3.3 above shall operate for a period of twelve months from the date
of this order, throughout the Republic of South Africa”
…”
[2]
The applicant did not file a replying affidavit. Despite the issue of
urgency being raised in the answering affidavit by the
first
applicant, I am satisfied that other than the inherent urgent nature
of such applications, the applicant has also acted with
the
appropriate haste in bringing this application. This is evident from
the fact that the first respondent commenced her employment
with the
second respondent (competitor) on 1 August 2017, and this
application was launched on 8 August 2017.
In the
circumstances, the matter will be treated as urgent.
The
parties and the nature of the industry:
[3]
According to Grant Gietl, the applicant’s General Manager and
National Operations Manager, and the deponent to its founding
affidavit, the applicant, trades as a courier and logistics company,
and provides its services to a broad spectrum of customers.
It
operates throughout South Africa and in certain parts of Europe and
South-East Asia. It has about 600 customers on its books
varying from
individuals and small companies who may place small orders, to large
corporate account holders.
[4]
The applicant’s business falls within the broader logistics
industry, which also includes warehousing and related services.
It
provides its corporate customers with a credit facility of about 30
days to place orders for courier services on an ongoing
basis. There
is however no retention security of customers or fixed agreements
with them. Thus, customers are free to shop around
for the most
competitive rates, and to use any courier company of their choice.
[5]
Large customers often use multiple couriers in order to obtain the
best possible price and service. There is essentially little
or no
customer loyalty in the industry. The applicant utilises various
means which are standard in the industry, to secure business.
These
include cold calling, door to door sales pitches and advertising. The
competitiveness in the industry is further exacerbated
by the fact
that competing companies often recruit each other’s staff.
[6]
The nature of the courier industry according Gietl generally involves
the collection and delivery of small parcels of goods
to a large and
constantly changing group of customers, using smaller delivery
vehicles. Services provided include courier and transport,
which
falls within the broader logistics industry, encompassing also
warehousing and related services. Both the applicant and the
second
respondent (Aramex) operate in the courier and logistics industry,
providing warehousing and distribution services to customers.
The
industry is highly competitive, with courier companies ranging from
sole proprietors to large multinationals with a global
network of
distribution centres and couriers. There are currently about 2000
courier companies operating and competing in South
Africa.
[7]
Gietl further averred that the applicant’s largest customer is
Samsung Corporation, to whom it provides warehousing and
logistics
services in respect of cell phones and related products. These
products are sent and delivered to the applicant’s
warehouses
from where stock is received, counted and securely stored. Samsung
would then issue instructions to dispatch the goods
to various cell
phone stores and other retail stores that sell Samsung products.
Samsung however also makes use of other competitors
to provide
courier services such as RAM Hand to Hand Couriers and the second
respondent (Aramex).
[8]
The first respondent, Michelle Aucamp (Aucamp) initially joined the
applicant’s service as a receptionist in January 2016.
Her
potential was recognised and she was promoted to the position of Key
Account Administrator responsible for the Samsung account.
She was
part of a team of three people dedicated to servicing that account.
During February 2017, Aucamp was promoted to the
position of Key
Account Manager, and she was tasked with servicing about 60
customers. The Samsung account was excluded from her
responsibilities. On 7 April 2017, Aucamp had signed the
restraint of trade agreement.
[9]
According to Gietl, Aucamp approached him on 28 June 2017 and advised
him that she was contacted by Aramex to take up its position
of Key
Accounts Manager. Gietl reminded Aucamp of her restraint obligations
and informed her that the applicant would enforce the
terms of the
restraint if she took up employment with Aramex, which was the
applicant’s direct competitor. Gietl had also
contacted Jacques
Cilliers of Aramex and advised him that Aucamp was subjected to a
restraint of trade agreement, which the applicant
intended to
enforce.
[10]
On 30 June 2017, Aucamp resigned from the applicant’s
employ. In her resignation letter, she advised the applicant
that she
had received a lucrative offer from a competitor which was ‘
too
exciting to decline’
. On 3 July 2017, Aucamp
further advised Gietl that she was to take up a position with
Postnet. Aucamp was again informed
that she would still be in breach
of her restraint undertakings, as Postnet Head Office was not only
owned by Aramex Head Office,
but that the applicant also provided
courier services to certain Postnet franchises which therefore made
it a client for the purposes
of the restraint of trade agreement.
[11]
On 12 July 2017, the applicant instructed its attorneys of
record, Howes Inc Attorneys (Howes) to address a letter
to Aucamp
recording that in the event that she commenced her employment with a
competitor, the restraint would be enforced. Aucamp
was issued with a
demand to provide written undertaking to the effect that she would
comply with the restraint provisions. She
had responded on
19 July 2017, and indicated that she was willing to sign an
undertaking which the applicant could draft.
[12]
Following further correspondence between Aucamp, Howes, and Aramex’s
attorneys of record [Cliffe Dekker Hofmeyr (‘CDH’)],
(which also acts on behalf of Aucamp), the latter on 2 August 2017,
sent correspondence to Howes, providing certain undertakings
relating
to Aucamp’s employment with Aramex. The applicant in its
response
via
Howes however held the view that these
undertakings fell short of the protection of its proprietary
interests that the terms of
the restraint agreement provided.
[13]
On 1 August 2017, Aucamp commenced employed with Aramex as
a Customer Relations Manager responsible for Postnet Holdings
(Pty)
Ltd. Aramex is wholly owned by its parent company Aramex UK, which
also owns Postnet Holdings (Pty) Limited. Aramex has seventeen
branches throughout the Republic and offers services in domestic and
express international distribution and freight services. It
also
provides business-to-business courier services, business-to-customer
courier services and E-commerce services,
i.e.
online
purchases and delivery thereof.
[14]
Like the applicant, Aramex focuses primarily on securing business
from corporates who either call into its call centres to
arrange
courier services, or who book courier services online. The
distinction between the two entities according to Aucamp is
that
Aramex offers a drop-to-drop service, where customers looking to have
something delivered can simply drop the item into a
drop-box at
appointed retailer shops and then to be picked up by Aramex. The item
will then be delivered to the address provided
on a flyer for a
standard fee.
The
submissions:
[15]
The applicant seeks to enforce the restraint of agreement on the
following summarised grounds:
15.1
The agreement prevents Aucamp from taking up employment with
a
competitor or a client for a period of six months following
termination of her employment. Aramex is its direct competitor.
15.2
During her employment by the applicant, Aucamp was trained
in the
administration of its contract with Samsung, including expertise in
the day to day servicing of this customer, its people
and operations
of the dedicated call centre.
15.3
In the course of these duties, Aucamp developed excellent
working
relationships with key Samsung personnel. She also gained valuable
knowledge and insight into the applicant’s business
model,
pricing structures, customer base and sales strategies. Her knowledge
of the administration and customer service function
of the Samsung
account could easily be used by Aramex in its efforts to secure work
from Samsung.
15.4
In her role as Key Account Manager, Aucamp developed good
working
relationships with over 50 of the applicant’s customers while
servicing these accounts. She therefore developed good
customer
connections in her portfolio, particularly with larger customers such
as Evetech.
15.5
In her new role at Aramex, there was a real risk that Aucamp
would be
able to use her customer connections with the applicant’s
clients, to secure business for Aramex. This could happen
merely as a
result of her taking up employment with Aramex and her old customers
coming to learn of the fact that she had now moved
to a rival courier
company.
15.6
Even if it were to be accepted that Aucamp was employed by
Aramex to
service the Postnet business, this did not provide adequate
protection of the applicant’s protectable interests
in that
nothing prevented her from calling on other clients, including her
old client base, or securing work from other sources.
[16]
Aucamp does not dispute the existence of the restraint of trade in
favour of the applicant, and she further does not take no
issue with
prayer 2 of the applicant’s Notice of Motion. She further
accepted that on the face of it, she would be in breach
of the
restraint of agreement as she had taken up employment with Aramex who
is a direct competitor of the applicant. She however
does not accept
that there is merit in the contention that the enforcement of the
restraint of trade agreement against her will
serve to protect the
applicant’s protectable proprietary interests on the basis
that;
16.1
In her new role in Aramex as Customer Relations Manager, her
role
will be focused on Postnet, and to maintain and develop the
relationship with its franchises in order to achieve growth between
it and Aramex.
16.2
Her role was isolated to maintaining and developing Aramex’s
relationship with Postnet, and that she will not be assisting Aramex
with its business generally or in respect of any of its other
services which it offers to its customers directly. She contended
that she would not in any way involved in the part of business
of
Aramex that competes with the business of the applicant;
16.3
Aramex is a direct competitor of the applicant, but Postnet
was not,
in that Postnet Holdings (Pty) Ltd was is in the business of selling
franchises and offering those franchises administrative
and
associated support. There are about 360 privately owned Postnet
franchises across South Africa, who in turn offered their customers
a
variety of services including courier, external office support,
identity and passport photographs and post boxes. Other than
courier
services, the applicant did not offer any of the other services
offered by Postnet.
16.4
Postnet and the applicant, even though they offer courier
services,
had a vastly different business focus. Whilst the applicant’s
business primarily serviced large corporate customers,
Postnet’s
business on the other hand was geared towards walk-ins, and
individual customers with often once off business.
16.5
Other than two franchises the applicant had done business
with, there
was no record of the applicant being a customer of Postnet, and/or
having secured such repeat business from Postnet
franchises so as to
justify it asserting any proprietary interests. Postnet on the other
hand had two preferred suppliers being
Aramex and DHL.
16.6
Whilst employed by the applicant, she did not deal with any
of the
Postnet franchises, and she therefore had not built up any customer
connections with any of the franchises which could be
said to be
vulnerable to exploitation, nor was she privy to any confidential
information pertaining to the applicant’s alleged
dealings with
Postnet. She had no knowledge of any information that she could use
to the detriment of the applicant.
16.7
Her interaction with the Samsung account on the other hand
was
limited and related to promotional products. Her last interaction
with Samsung as the applicant’s client was effectively
prior to
March 2017.
16.8
Aramex has had a pre-existing relationship with Samsung since
2011,
and has always assisted with its express/international and domestic
distribution of spare parts and peripheral items. These
services were
secured through a tender process, for which the applicant and RAM had
competed for. Other companies including the
applicant, have also been
awarded tenders by Samsung in respect of certain services.
16.9
Aramex was given and had declined an opportunity to assist
Samsung
with its warehousing, and Aucamp had undertaken not to perform any
warehouse activities for the duration of the restraint.
Currently,
Aramex’s contract was no longer with Samsung itself but with
Samsung SDS Global (Pty) Ltd, which was a fourth
party logistic
provider for Samsung, and which Aucamp had not dealt with.
16.10
Regarding the customers listed on annexure ‘WN3’ of the
founding
affidavit, Aucamp conceded that she was responsible for
servicing them, and was further privy to the different rates agreed
with
the applicant. She could however not recall the rates of
particular customers, and had averred that she had not taken any
information
with her when she left the applicant’s employ.
16.11
Furthermore, in her new employment at Aramex, she will not be dealing
with
those customers, as she would be solely responsible for the
relationships with Postnet. Aramex has also undertaken not to do any
business at all with any of those customers, save for four out of 56
of those it has a pre-existing relationship with;
16.12
Enforcing the restraint of trade against her would not serve any
legitimate
purpose in view of the fact that several of the
applicant’s employees have joined Aramex, whilst employees from
Aramex had
gone to the applicant. Examples in this regard included;
(a) Van der Merwe, who was previously employed by the applicant as
General Manager of the international division without a restraint of
trade agreement, and who had subsequently joined Aramex in
June 2016
as its Divisional Chief Executive; (b)
Rubert Wolff, who was previously
the applicant’s National Sales
and Operations Manager, who despite his restraint of trade agreement,
was allowed to join
Aramex; (c) Grant Gietl, Charles Dornan
and Stead were previously employed by Aramex and were allowed to join
the applicant
despite their restraint of trade agreements.
Evaluation:
[17]
The central issue to be determined in this case is whether the
applicant is entitled to insist on enforcing the restraint of
trade
agreement in circumstances where Aucamp and Aramex have made certain
undertakings, and where Aucamp’s contention was
that she will
have no contact with the applicant’s customers she used to deal
with, more specifically since her focus at
Aramex will be on Postnet.
[18]
It needs to be stated from the onset that there are disturbing
features with this this application in the light of (i)
the
alleged the proprietary interests the applicant seeks to protect;
(ii) the nature of the industry it operates in; (iii) the
manner with
which it had dealt with senior employees who had left its employ to
join the competition and Aramex in particular;
(iv) Aucamp’s
uncontested versions in regards to her role and responsibilities
whilst employed by the applicant
vis-à-vis
her new role
at Aramex; and (v) the ‘with prejudice’ undertakings made
by both Aucamp and Aramex.
[19]
A brief exposition and restatement of the relevant applicable
legal principles in such matters is necessary. It is trite that
a
party that seeks to enforce a contract in restraint of trade is
required to invoke the restraint agreement and prove a breach
thereof. In this case, and as already stated, the agreement is not in
dispute, and Aucamp has conceded that her employment with
Aramex in
view of it being a competitor is
prima
facie
, a breach of her restraint
undertakings,
albeit
her contention was that Postnet was not effectively a competitor of
the applicant.
[20]
Aucamp’s contention was that the
Postnet franchises were not direct competitors of the applicant, and
that whilst employed
by the applicant, she did not deal with any of
these franchises, nor did she possess any information concerning
them. These averments
remain undisputed, as well her contention that
there are 360 Postnet franchises of which only two had utilised the
services of
the applicant. In my view, and in the light of the
applicant’s minimal involvement with these franchises, there is
therefore
no basis to deem Postnet a customer of the applicant, and
any proprietary interest in respect of Postnet or risk of
infringement
to that interest is indeed negligible in the extreme.
[21]
To
the extent that Aucamp seeks to avoid the restraint of trade
agreement, she bears the onus to demonstrate on a balance of
probabilities
that the restraint agreement is unenforceable because
it is unreasonable
[1]
.
In
Basson
v Chilwan and others
[2]
,
the Court identified four questions which should be asked when
considering the reasonableness or otherwise of the restraint
provisions.
These are;
a)
Does the one party have an interest that
deserves protection at the termination of the employment?
b)
If so, is that interest
threatened/prejudiced by the other party?
c)
Does such interest weight 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, which
requires that the restraint
be maintained or rejected? Thus, where
the interest of the party sought to be restrained outweighs the
interest to be protected,
the restraint is unreasonable and
consequently unenforceable.
[22]
Other
considerations the Court is obliged to take into account include
whether the enforcement of restraint undertakings is merely
intended
to stifle competition. Any attempts at seeking enforcement for that
sole purpose would clearly be unreasonable
[3]
.
It further needs to be determined whether
the
restraint goes further than is necessary to protect the interests
alleged in terms of area and duration
[4]
.
[23]
Regarding the reasonableness of the restraint in
terms of area and duration, Aucamp’s contention was that the
duration of
the restraint was not unreasonable. She however submitted
that the restraint could not be reasonable in circumstances where the
applicant seeks an order interdicting and restraining her from
joining the employ of Aramex for six months from the date of the
order of this court, and not from the date of the termination of her
employment as provided for in the signed agreement. I agree
with her
submissions in this regard. The applicant cannot be granted relief
which it is not entitled to in terms of the restraint
of trade
agreement. It is not for this Court to extent the terms and
conditions of agreements entered between parties.
[24]
Protectable
interests worthy of protection are of two kinds. The first relates to
the ‘trade connections’ of the business,
which
essentially entails the goodwill of the business encompassing
relationships with customers, potential customers, suppliers
and
others
[5]
.
The second relates to ‘trade secrets’ of the company,
which involves all confidential matters which are useful for
the
carrying on of the business and which could be useful to a
competitor
[6]
.
[25]
Once it is demonstrated that the prospective new
employer is a competitor of the applicant as in this case, the risk
of harm, if
its former employee were to take up employment, becomes
apparent. This principle can however not be deemed to be immutable,
in
the sense that an ex-employee can join a competitor, and yet not
have anything to do with the business of the old employer in his
or
her new role when employed by the competitor. The undisputed facts in
this case illustrates this point. In this regard, it was
Aucamp’s
contention that one Charles Dornan was initially employed by Aramex
as its Business Analyst, and was permitted to
join the applicant as
the position offered to him was that of the applicant’s
Operations Division, which was unrelated to
sales.
[26]
I have already on a general level, alluded to features of this
application which I had deemed to be disturbing, and I intent
to deal
with them within the context of ‘customer connections’.
In this case, the onus would be on Aucamp to
demonstrate that she has never acquired any significant personal
knowledge of, or influence
over, the applicant’s customers,
potential customers, suppliers and others. It is trite however that
not every contact between
an employee and the ex-employer’s
customers constitutes or forms the basis of a protectable interest in
the form of trade
connections. It however suffices if it is
shown that trade connections through customer contact exists, and
that they can
be exploited if the former employee was to be employed
by a competitor. This is particularly so where on the facts, it can
be established
that there was indeed an attachment between the
ex-employee sought to be restrained and those customers.
[27]
In view of Aucamp’s uncontested averments, I have difficulty in
appreciating how it can be said that Aucamp’s employment
by
Aramex would severely prejudice any such interests in circumstances
where on the applicant’s own version, the industry
it operates
in is highly competitive. Gietl described the industry as
‘cutthroat’, with the primary reasons for this
being
that;
a)
There are many entities (about 2000) in the industry vying for the
same piece of the pie.
b)
There is no customer loyalty to any brand, nor is there retention
security of customers or fixed agreements concluded with them.
c)
Customers are generally at liberty to shop around for the most
competitive rates, and to use any courier company of their choice.
d)
Large customers are equally at liberty to use multiple couriers in
order to obtain the best possible price and service.
e)
Competitors utilise standard methods of securing business, and worst
still, competitors liberally poach each other’s employees.
[28]
It was correctly submitted on behalf of the applicant that the risk
of a good salesperson with strong customer connections
taking up
employment with a competitor is recognised as a factor strongly in
favour of enforcing a restraint of trade. In this
case, on Aucamp’s
version, she never forged any strong bonds or relationships with
customers, and there is no reason to doubt
that in view of the common
cause facts highlighted above. The mere fact that an ex-employee had
contact or dealings with clients
or customers does not lead to an
invariable conclusion that those contacts automatically create
protectable interests that can
be exploited for nefarious reasons.
[29]
The applicant’s concerns in this regard are primarily in
respect of Samsung, Evetech and the other customers listed in
annexure ‘WN3’ to the founding affidavit. In respect of
Samsung, Aucamp averred that she had limited and project specific
interaction with the Samsung account, and her last interaction with
that account was prior to March 2017 when she was promoted
to the
position of Key Account Manager for customers listed in annexure
“WN3’.
[30]
It was further not disputed that Aramex has had a pre-existing
relationship with Samsung since 2011, and has always assisted
with
its express/international and domestic distribution of spare parts
and peripheral items. This cannot in my view point to an
exclusive
relationship between Samsung and the applicant. Crucial however with
the concerns of the applicant regarding the Samsung’s
account
is that Aramex has little or no interest in Samsung’s business.
Even if it could be said that Aucamp was privy to
information
peculiar to Samsung, in her new role, she will not deal with that
entity moreso since currently, Aramex’s contract
was no longer
with Samsung itself but with Samsung SDS Global (Pty) Ltd. As to
whether the distinction drawn by Aucamp between
Samsung Corporation
and Samsung SDS Global (Pty) Ltd is artificial or real is a matter
that the applicant failed to respond to.
[31]
In regard to the customers listed on annexure ‘WN3’ of
the founding affidavit, including Evetech, there is further
no reason
to doubt Aucamp’s version that even though she was responsible
for servicing them whilst employed by the applicant,
she would not
have any contacts with these customers, and to the extent that Aramex
had made an undertaking that these customers
would be out of bounds
save for the four it had always serviced, again, I fail to appreciate
how it can be said that these customer
connection would be exploited
to the detriment of the applicant, or that Aucamp was in a position
to lure them to Aramex.
[32]
My conclusions above are further fortified by factors surrounding
Aucamp’s employment at the applicant, which reveals
that upon
her promotion during February 2017 to the position of Key Account
Manager, she was to service 60 customers excluding
Samsung. As to
whether it can be concluded that she was able to form such strong
bonds with these client from February to July
2017 is clearly
doubted. In any event, to the extent that it can be said that there
was a possibility of Aucamp exploiting these
customers’
connections, the undertakings as shall be dealt with in the course of
this judgment in my view went far in protecting
any interests the
applicant may have.
[33]
Whilst on the topic of customer connections, it needs to be stated
that it remains uncontested that some of the applicant’s
ex-senior employees had joined Aramex, whilst some of the latter
entity had joined the applicant. It is my view that Aucamp was
correct in her assessment that the applicant was selective in
enforcing the restraint agreements which it had with its employees,
and that the sole purpose of the application was to dissuade Aramex
from poaching its employees.
[34]
The issue however goes further than that in the sense that if indeed
the applicant was concerned about infringement of its
perceived
proprietary interests, it is inexplicable how it would have waived
the restraint undertakings in respect of Wolff, who
used to be its
National Sales and Operations Manager. It was correctly pointed out
on behalf of Aucamp that if indeed the applicant’s
proprietary
interests were ever at risk of being infringed, it would have been
when these ex-senior employees joined Aramex. The
question that
remains unanswered as correctly submitted on behalf of Aucamp is what
information regarding proprietary interests
could she possibly pass
on to Aramex which the other two senior employees had not already
done?
[35]
Regarding confidential
information which Aucamp may have acquired whilst employed by the
applicant,
it
is trite that the essence of any restraint of trade agreement is to
prevent the use of such information by a former employee
to the
detriment of the employer. It has been held that it was not necessary
to find that the ex-employee did or would actually
use trade secrets
and confidential information in his new employment, but that is was
sufficient if
she
could do so
[7]
.
For information to be regarded as confidential, it must (a) be
capable of application in trade or industry, must be useful; must
not
be public knowledge or property; (b) it must be known only to a
restricted number of people or a closed circle and (c) be of
economic
value to the person seeking to protect it.
[8]
[36]
In this case, the applicant’s contention was that Aucamp was
also privy to all the information of the clients she serviced,
that
she had in-depth knowledge of the applicant’s services, its
business model, pricing structures, sales strategies and
customer
requirements. It was further contended that Aucamp had detailed and
up to date knowledge of the pricing structure applicable
to each
customer in her old portfolio whilst at the applicant, and that it
would be easy for her to undercut the applicant by offering
slightly
lower prices from Aramex by joining Aramex.
[37]
Aucamp had conceded that having serviced the customers in question,
she would have been privy to information peculiar to those
customers,
but contended that there was no risk of her utilising the information
for the benefit of Aramex in that her focus in
her new position would
be on Postnet, with the intention of maintaining and developing
Aramex’s relationship with it. To
this end, it was argued on
her behalf there was no evident risk to the applicant in that she did
not, whilst employed by the applicant,
deal with Postnet business.
[38]
To the extent that it is not disputed that Aucamp had not whilst
employed by the applicant dealt with Postnet, there can be
no basis
to conclude that she has in her possession, any confidential
information concerning Postnet, or any other clients or customers
linked to Postnet. I have already dealt with the issue of whether
Postnet was a crucial customer of the applicant in view of Aucamp’s
undisputed version that only two out of 360 franchises of Postnet had
utilised the services of the applicant. In these circumstances,
and
in view of the issue of the undertaking made in regard to the other
customers, there is further no basis for a conclusion to
be reached
that whatever information may be in Aucamp’s possession ran the
risks of being utilised to the applicant’s
detriment.
The
‘with prejudice’ tender:
[39]
Subsequent to an exchange of correspondence between the parties’
attorneys of record, on 15 August 2017, CDH
addressed a
letter to Howes, wherein
inter alia
they took issue with the
time afforded for the respondents to file their answering papers.
Central to that correspondence was the
proposal that the matter be
removed from the roll and to be enrolled on a different date, and the
intention to make ‘with
prejudice’ offer, with a view to
resolving the dispute.
[40]
In a response dated 16 August 2017, the applicant through
Howes refused to accede to the request for a postponement
of the
matter. Notwithstanding the refusal accede to a postponement, Aucamp
and Aramex then on the same day made a with prejudice
offer. The
relevant portions of the letter read as follows;
“…
2
We confirm that in the interest of settling this matter
amicably, the
first and second respondents (without in any way conceding that the
restraint of trade agreement is enforceable in
these circumstances),
intends to make a with prejudice tender.
3.
Having considered the matter, it appears that your client’s
primary concern is that our client will be able to persuade the
customers with whom she dealt whilst in your client’s employ,
to do business with the second respondent. In order to address that
concern, the first and second respondents tender on a with
prejudice
basis and in settlement of this application, that the following order
be made:
3.1
“
The restraint of trade and confidentiality agreement
concluded between the applicant and the first respondent on 7 April
2017, annexure
“WN1” to the founding affidavit, is
rectified, by replacing any reference to “World Net Express
(Pty) Ltd, with
“World Net Express, a division of World Net
Logistics (Pty) Ltd;
3.2
The first respondent shall not for a period of 12 months commencing
on
1 August 2017 and within the Republic of South Africa,
either for herself or as the agent of anyone or entity, persuade,
induce, solicit, consult, meet with, encourage, employ or procure (or
endeavour to do any aforegoing), any of the applicant’s
employees within the Republic of South Africa to be employed by,
associated with, interested in any competitor or client of the
applicant or to terminate his/her employment with the applicant and
shall not furnish any information or advice (including trade
secrets)
acquired by the first respondent to any third party that results in
an employee of the applicant becoming directly or
indirectly employed
by, associated with, interested in, any competitor;
3.3
The first respondent shall not for a period of 12 months commencing
on
1 August 2017 and within the Republic of South Africa,
divert any business away from the applicant or attempt to divert
business away from the applicant nor will she approach, do business
with, solicit, interfere with, entice or endeavour to approach,
do
business with, solicit, solicit, interfere with or entice away from
the applicant any person, client, entity, undertaking or
association
who or which was, during the period of 12 months immediately prior to
1 August 2017, a client, customer or
supplier of the
applicant or was accustomed to dealing with the applicant and its
business;
3.4
The first respondent will not use or disclose any of the applicant’s
confidential information to which she may have been privy to whilst
employed by the applicant to the second respondent or any other
third
party;
3.5
The second respondent shall not for a period of 6 months commencing
1 August 2017
and within the Republic of South Africa do
business:
3.5.1
any of the customers listed on annexure “WN3” to the
founding affidavit save
for the following clients with which it
already does
business:
3.5.1.1
Rymco (Pty) Ltd t/a Anchor Yeast;
3.5.1.2
Deltamune (Pty) Ltd;
3.5.1.3
Boehringer-Ingelheim (Pty) ltd; and
3.5.1.4
Samsung Corporation (“
Samsung
”)
save for the courier services which the second respondent has always
provided to Samsung from time to time in respect of
the distribution
of the “peripheral items” as contemplated in paragraph 23
of the founding affidavit and the logistics
of fault and/ or damaged
items to be repaired. Simply put, the second respondent will not
offer Samsu
ng warehousing or logistic services in respect of
new cell phones and related products as contemplated in paragraph 22
of the founding
affidavit;
3.6
The first respondent is permitted to be employed by the second
respondent;
and
3.7
Each party pay their own costs of the application”
[41]
It is common cause that the applicant had rejected the tender,
contending that it was not credible or policeable, and further
lamenting the fact that Aramex had a long history of poaching its
staff. Aucamp’s contention was that the with prejudice
tender
completely addressed any legitimate concerns that the applicant may
have had, and that it was entirely policeable as Aramex
itself had
undertaken not to deal with any of the applicant’s customers
listed in annexure ‘WN3’ safe for the
four entities it
had always serviced.
[42]
It was submitted on Aucamp’s behalf that the fact that Aramex
has bound itself to the undertakings was significant for
a number of
reasons, including that;
a)
Aramex was not a party to the restraint of trade agreement and
therefore
dishonesty or distrust of the undertakings it provided in
its own right are not to be lightly inferred;
b)
the tender was also policeable since it precluded Aramex from doing
any
business with customers as envisaged in the tender
c)
the tender was to be made an order of court
d)
case law which stated that an applicant need not cross its fingers
and
hope that Aucamp will abide by the undertakings she gave are
distinguishable in that the tender was made by Aramex, and there was
no longer any risk to the applicant and it was no longer a question
of the applicant having to cross its fingers
[43]
The applicant however holds the view that it was not for it to
enquire into the
bona fides
of the undertakings, as what was
important was whether its proprietary interests were under threat.
The applicant contended that
it could not run the risk of Aucamp
being employed by Aramex.
[44]
In
considering whether the enforcement of restraint provisions is
reasonable or not, it is trite that the fact that the respondent
made
certain undertakings that they will not breach the agreement is not
relevant for the purposes of this court in exercising
its discretion
when considering the matter
[9]
.
The circumstances of this case
in
the light of the conclusions made in respect of the allegations of
risk or threats to the applicant’s proprietary interests
however compel me to conclude that indeed there was no basis for the
applicant to reject the tender, and further that its grounds
for
doing were unreasonable in the extreme when the following factors are
taken into account;
a)
The applicant had in the past, relaxed or failed to enforce restraint
provisions
in respect of other senior managers who had jumped ship
and joined the competition, and more specifically, Aramex.
b)
There is merit in Aucamp’s
contention that the applicant merely sought to enforce the restraint
provisions against her simply
to stop Aramex from poaching its staff.
This is evident from the response of its attorneys of record to the
tender
[10]
,
wherein they had outlined Aramex’s long history of poaching its
staff, and lamenting the fact that Aramex ‘
clearly
had no respect for our client’s legal rights and contractual
arrangements with its employees or clients’
.
c)
The applicant however cannot make an example of Aucamp despite the
acknowledgement
of the principle
that it is in the
public interest that persons should honour their own agreements. The
submission made by Mr. Fourie on behalf of
the applicant that the
history of not enforcing restraint provisions was not relevant cannot
be sustainable. This is particularly
so in instances where the
applicant portrays a view that it takes these types of agreements
seriously given the nature of the industry
it operates in. It is my
view that the seriousness contended makes the court obliged to take
notice of the consistency with which
the applicant has enforced
restraint provisions against its employees in the past, and where
exceptions were made, to determine
whether there was justification.
d)
To the extent that the applicant sought to enforce
the restraint provisions against Aucamp, it needed to do so for the
right reasons,
including demonstrating that it was entitled to the
protection of its proprietary interests, and not for any other
extraneous factor,
which had nothing to do with the enforcement of
the restraint.
e)
A further consideration in this matter is
that based on Gietl’s own version,
the competitiveness
in the industry was exacerbated by the fact that competing companies
in the industry often recruited each other’s
staff. In this
case, there was nothing to gainsay Aucamp’s version that she
was not recruited but had responded to an advertisement
of the post
in question. Even if it can be said that she was poached, that
unfortunately was in the inherent nature of the business
the
applicant operates in, a factor it had acknowledged and appreciated.
f)
In the light of the
above,
there
is cause to conclude that the applicant merely sought to enforce the
restraint provisions against Aucamp to not only draw
the line in the
sand and prove a point to Aramex as submitted by Ms. de Witt on her
behalf, but also to stifle competition. It
appears that the
the
purpose of enforcing the restraint in this case was merely to punish
Aucamp for the sins of former employees of the applicant
who had
joined Aramex. It has been emphasised over time that the purpose of
enforcement of restraint provisions is not to punish
employees
[11]
.
To the extent that it is evidently so in this case, and further to
the extent that it is apparent that the enforcement is also
intended
to stifle competition, such enforcement cannot by all accounts be
reasonable.
g)
The applicant’s contention that the undertakings are
unpoliceable
is equally without merit, given the nature of the
industry it operates in, the undertakings made by Aramex even when it
was not
a party to these proceedings, and the fact that both Aramex
and Aucamp sought to make those undertakings an order of court. The
issue which the applicant failed to address is why would Aramex risk
contempt proceedings unless it was genuine in its intent?
h)
Inasmuch as it is accepted that the applicant should not content
itself
with crossing its fingers and hoping that Aucamp and Aramex
would act honourably and abide by the undertakings given, there was
no basis for the applicant in this case to be suspicious of these
undertakings or for any conclusion to be made that they are not
credible in view of the undertakings made by Aramex;
i)
In my view, having regard to the conclusions made in respect of the
potential
risks to the applicant’s proprietary interests, the
undertakings made by both Aucamp and Aramex went far beyond than
merely
protecting those interests, to the extent that they may exist.
Summary
and Conclusions:
[45]
The requirements of
a
final interdict are well-established. Thus, there must be a clear
right; an injury actually committed or reasonably apprehended,
and
lastly, the absence of any other satisfactory remedy.
[12]
In instances
involving the enforcement of restraint of trade provisions, the
availability of an alternative remedy is a factor that
may be taken
into account in considering whether and to what extent the restraint
should be enforced
[13]
.
[46]
For a clear right to be established, the
court has to consider whether there is an interest deserving of
protection. My conclusions
elsewhere in this judgment in regard to
the proprietary interests that the applicant seeks to protect are
that it has not demonstrated
that it has any of these interests, and
even if there is a semblance of any, that they are worthy of
protection.
I was further unable to find on
the papers, that Aucamp and Aramex are in a position to pose any
discernible risk or harm to the
applicant’s interests (if any),
to the extent that there is an overlap in the customer base of these
two entities. In any
event, I am not convinced that Aucamp’s
employment by Aramex with her focus being on Postnet Holdings poses
any threat to
the applicant’s interests in any of Postnet’s
franchises it might be linked with.
[47]
Furthermore, I am of the view that the
enforcement of the restraint given the circumstances of this case
will not be proportionate
having regard to any interests that the
applicant may have. The restraint in this case is unenforceable as it
not only seeks to
prevent Aucamp from being economically active in
circumstances where the applicant has not established a corresponding
interest
deserving of protection, but it is meant also to punish her
and to stifle competition. To the extent that the applicant has not
demonstrated a clear right, that in my view should be the end of the
enquiry.
[48]
In further coming to my conclusions, I have
also taken account of the fact that Aucamp was amenable to a Court
order encapsulating
the provisions of the tender, and a draft order
was handed in Court in that regard. However, in view of my other
conclusions in
this judgment in regard to the enforceability of the
restraint agreement, and more particularly the fact that Aucamp’s
bona fides
through her undertakings were unreasonably rejected, I can find no
reason in law or fairness that why the applicant should be entitled
to any relief other than in terms of its paragraph 2 of its Notice of
Motion.
Costs:
[49]
In terms of section 162 (1) of the LRA, this Court may make an
order of costs after taking account of the requirements of law and
fairness. In considering the issue of costs in this Court, and in
particular, within the context of restraint of trade applications,
the Labour Appeal Court in
Trevlyn Ball v Bambalela Bolts (Pty)
Ltd
held that;
“
The
normal rule that costs follow the result is not automatically
applicable in Labour Court proceedings. The court is required
to
consider factors like the financial state of the parties, their
bona
fides
and
their continuing relationship, in coming to a decision whether to
order the unsuccessful party to pay costs. Litigants are not
to be
deterred from defending or prosecuting bona fide actions for fear of
adverse costs orders
.”
[14]
[50]
In the light of the conclusions reached in this case in regard to the
enforceability of the restraint provisions, ordinarily
a cost order
would not have been appropriate in line with what is stated in
Trevlyn Ball
as above. It is however my view that taking into
account the unreasonable nature of the refusal to accept the tender,
and the basis
upon which the enforcement was pursued, the prosecution
of this application was clearly
mala fide
. To this end, there
is no reason why Aucamp should be burdened with the costs of this
application in circumstances where they could
have been avoided.
Order:
[51]
In the circumstances, the following order is made;
1.
The matter is heard as one of urgency, with the forms and service
provided
for in the Rules being dispensed with to the extent
necessary.
2.
The restraint of trade and confidentiality agreement concluded
between
the applicant and the first respondent on 7 April 2017
as contained in annexure ‘WN1’ to the founding affidavit,
is rectified by replacing any reference to ‘World Net Express
(Pty) Ltd’, with ‘World Net Express, a division
of World
Net Logistics (Pty) Ltd’.
3.
The applicant’s application is dismissed with costs.
_______________________
E
Tlhotlhalemaje
Judge
of the Labour Court of South Africa
Appearances:
For
the Applicant:
Adv. G. Fourie
Instructed
by:
Howes Incorporated Attorneys
For
the Respondent:
Adv. C. de Witt
Instructed
by:
Cliff Dekker Hofmeyr Attorneys
[1]
See
Experian
South Africa (Pty) Ltd v Haynes and Another (2013) (1) SA 135
(GSD)
;
Basson
v Chilwan and Others at 767A-D
[2]
[1993] ZASCA 61
;
[1993] (3) SA 742
(A) at 767 G-H
[3]
See
Ball v Bambalela Bolts
(Pty) Ltd and Another
(2013)
34 ILJ 2821 (LAC)
[4]
Kwik
Kopy (SA) (Pty) Ltd v Van Haarlem and Another
(1999) (1) SA 472
(W)
at 484E
[5]
See
Basson
supra
[6]
Experian
at paras 17, 17.1 and 17.2
[7]
In
Reddy v. Siemens
Telecommunications (Pty) Ltd
[2006] ZASCA; 2007
SA 486 (SCA)
[8]
See
Mozart Ice Cream
Classic Franchises (Pty) Ltd v Davidoff and Another
[2008]
ZAWCHC 118; 2009 (3) SA 78 (C)
[9]
See
International
Executive Communications Ltd t/a Institute for International
Research v Turnley and Another
1996 (3) SA 1043
(W) 1056H –
1057A
,
where it was held that;
“
In
each case, the Court must look to the facts: even a very limited
recollection of a vast amount of confidential information
might be
useful to a competitor; whereas, conversely, an incomplete
recollection of all the information might (conceivably) be
of no
value at all, even as a pointer in the right direction. I would
stress, however, that once it is established that an ex-employee
has
been exposed to trade secrets, and entered the employ of a
competitor, an objective assessment is required of whether the
danger exists that he could disclose such trade secrets to his new
employer; and in making this assessment, the Court will not
be
influenced by undertakings by the ex-employee not to do so, much
less embark on an investigation of the bona fides of the
ex-employee
in tendering such undertakings.”
[10]
Annexure
‘AA4’ to the answering affidavit
[11]
Labournet
(Pty) Ltd v Jankielsohn and Another (JA48/2016)
[2017]
ZALAC 7
;
[2017] BLLR 466
(LAC); (2017) 38 ILJ 1302 (LAC) at para 65
[12]
See
Pilane and Another v
Pilane and Another
2013
(4) BCLR 431
(CC) at para 39.
[13]
Mozart Ice Cream Franchises
(Pty) Ltd
supra
[14]
At para [29]