About SAFLII
Databases
Search
Terms of Use
RSS Feeds
South Africa: Durban Labour Court, Durban
SAFLII
>>
Databases
>>
South Africa: Durban Labour Court, Durban
>>
2017
>>
[2017] ZALCD 23
|
|
Fidelity Cash Solutions (Pty) Ltd and Others v Herbt and Another (D1223/17) [2017] ZALCD 23 (28 November 2017)
IN
THE LABOUR COURT OF SOUTH AFRICA, DURBAN
Not
Reportable
Case
no: D 1223/17
In
the matter between
FIDELITY CASH SOLUTIONS (PTY)
LTD
First Applicant
FIDELITY SECURITY GROUP (PTY)
LTD
Second Applicant
FIDELITY SECURITY SERVICES (PTY)
LTD
Third Applicant
and
DANIE PETER HERBT
First Respondent
SBV SERVICES (PTY) LTD
Second Respondent
Heard:
20 October 2017
Delivered:
28 November 2017
JUDGMENT
TLHOTLHALEMAJE,
J:
Introduction:
[1]
The applicants seek to enforce certain restraint of trade and
confidentiality undertakings against its former employee, the
first
respondent (Herbst). The relief sought by the applicants is framed as
follows:
“…
2.
To
the extent necessary, that the written employment offer
and
employment agreement, annexures […] to the founding affidavit,
be rectified by deleting the name Fidelity Security Services
(Pty)
Ltd and its company number, 1997/013274/07, wherever they appear in
both documents, and substituting therefor the name Fidelity
Cash
Solutions (Pty) Ltd and its company number, 2000/025082/07.
3.
Interdicting Danie Peter Herbst (the first respondent) until
30 July 2018 (being a period of 12 months from the date of
the first respondent’s termination of employment with
the
applicant), within the area of the Republic of South Africa from:
3.1
being engaged, interested
or concerned, either directly or indirectly and whether
as a
director, partner, member, employee, financer, adviser, proprietor,
shareholder, agent, consultant, representative, administrator
or in
any way whatsoever, in the second respondent, or any other business
similar to that being or be conducted by the applicants
and/ or any
other Group Company, or in any business which competes, or is likely
to compete, with the business being or to be conducted
by the
applicants and/ or any other Group Company.
3.2
canvassing for or soliciting any business from existing customers of
Fidelity
Security Group (Pty) Ltd (FSG), its subsidiaries and
associated companies (collectively referred to as “Group
Company”
or the “Group Companies”), including in
particular the applicants.
3.3
persuading, inducing, encouraging, or enticing any employees of any
Group Company
to become employed by or interested in any manner
whatsoever in any business similar to that being conducted by any of
the applicants,
or in any business which competes, or likely to
compete, with the business being conducted by the Group Company or
terminate his
or her employment with the applicants’ Company;
and
3.4
becoming employed by, in any way whatsoever, directly or indirectly,
any customer
of the Group Company, which/whom has a customer of the
Group Company at the time of the first respondent’s termination
of
employment with the first applicant, or which/ whom has been a
customer of the Group Company during 12 months prior to the
termination
of the first respondent’s employment.
4.
The first respondents is interdicted for an indefinite period after
the termination of his employment with the first applicant within the
area of the Republic of South Africa to:
4.1
make every reasonable effect to hold in trust and confidence all the
first applicant’s
confidential information received or coming
to his knowledge and not to disclose in any manner or make available
confidential information
to anyone without prior written consent of
the applicants (“Confidential information” shall include,
but shall not
be limited to the applicants’ trade secrets,
business methods and techniques, and the identity of the first
applicant’s
customers and suppliers);
4.2
disclose Confidential information only to those employees,
contractors, sub-contractors,
agents or sub-agents all whether
permanent or temporary who require knowledge of such Confidential
information to enable them to
carry out any work directly or
indirectly connected with [the] Group Company; and
4.3
refrain from using commercially or otherwise Confidential Information
except
with the prior consent of the Chief Executive Officer of the
second applicant.
5.
In the
alternative to paragraph 3 and/ or 4 above, granting the relief
in
paragraph 3 and/or 4 above as interim relief pending finalisation of
an action be instituted within 30 days of the grant[ing]
of this
order.
…”
[2]
The second respondent, SBV Security Services (Pty) Ltd (SBV) does not
oppose this application. Herbst sought condonation for
the late
filing of the answering affidavit. An agreement between the parties
in terms of which the late filing of the answering
affidavit was
condoned was made an order of court by Cele J on 15 September 2017
when the matter was also postponed.
Background:
[3]
The second respondent, Fidelity Security Group (herein referred to as
FSG/The Group) is an integrated security solutions enterprise
comprising of a large group of companies with numerous subsidiaries
and associated companies which render various security related
services including guarding, cash solutions and cash processing
services, Cash-in-Transit and retail solutions, electronic solutions
which includes smart technology solutions, and integrated technology
services. FSG as a group of companies also offers parking
management
and specialised services such as events and VIP services, mining
security, tactical air and ground support. The restraint
of trade
agreement sought to be enforced was entered into between FSG and
Herbst.
[4]
The first applicant, Fidelity Cash Solutions (Pty) Ltd (FCS) is a
subsidiary of FSG. It sells and manages cash in transit services
(CIT
Services), and cash processing services (Cash Pro Services) for the
financial sector, casinos, retail and property institutions.
[5]
Herbst entered into a contract of employment with the third
applicant, Fidelity Security Services (Pty) Ltd (FSS), which is
also
a subsidiary of FSG. The applicants nonetheless contend that Herbst
was in effect employed by FCS. It was further contended
that the
standard terms in the employment contracts of FCS and for FSS were
identical, but for the name of the employer, hence
the application
for rectification.
[6]
SBV is according to the applicants, FCS’s competitor, as it
also provides security cash services and solutions with the
Republic,
which include Cash-in-Transit to the banking and retail institutions.
SBV also has its footprint in other African counties
such as Nigeria,
Namibia and Lesotho, and provides a range of tailored cash services
and solutions to central and commercial banks,
the commercial and
retail environment.
Jurisdiction:
[7]
Herbst, in disputing that the
applicants are entitled to the relief they seek contended that he
only had a contractual employment
relationship with FSS. In this
regard, he relied on the offer of employment, the contract itself,
the salary advices, and written
warnings issued to him by FSS. It was
submitted on his behalf that the Court’s jurisdiction was
limited to determining matters
concerning ‘contracts of
employment’
[1]
,
and that restraint of trade disputes were justiciable when they were
‘seated in a contract’.
[8]
It was submitted on behalf of Herbst that there was no restraint
provision seated in the employment contract between him and
FSS, and
that the applicants therefore sought to enforce a restraint of trade
agreement concluded separately from his contract
of employment.
Herbst further contended that to the extent that the Court may find
that it had jurisdiction, such jurisdiction
would be limited only to
a claim by FSS, as neither FCS nor FSG were his employers.
[9]
The founding affidavit is deposed to by Mr Johan Andre van Rooyen
(van Rooyen), the New Business Development Manager for FCS,
on behalf
of the applicants. The background to the employment and resignation
of Herbst from Van Rooyen’s averments is briefly
that;
9.1.
On 25 May 2015, FCS through its Group Executive New
Business Development, Mr.
Stephens, presented a written offer of
employment to Herbst, which he had accepted on 1 June 2015.
9.2.
Herbst’s employment with FCS commenced on 1 June 2015, and he
was designated as a
Sales Representative for cash solutions, New
Business Development Kwa-Zulu Natal and surrounding areas.
9.3.
It was a standard requirement of the Fidelity Group of Companies to
require their sales
personnel to enter into restraint of trade
undertakings that formed part of their employment contract. In
compliance, thereto Herbst
concluded a restraint of trade agreement
with Fidelity Group of Companies on 1 June 2015.
9.4.
On 26 June 2017, Herbst tendered his resignation with
effect from 31 July 2017.
He however did not disclose to
the applicants the reasons for the termination nor did he disclose
his plans for future employment.
On 27 June 2017, Herbst
informed Van Rooyen, Michelle Angela Hawthorne, and Stephens in a
teleconference that he had
secured employment with G4S Deposita.
9.5.
On 30 June 2017, Van Rooyen conducted an exit interview
with Herbst. In that
interview, Herbst was informed in writing that
he was bound by the restraint of trade agreement and an
acknowledgment of receipt
of the letter was sought from him. However,
Herbst refused to sign the letter on basis that he considered the
restraint of trade
a violation of his right to earn a living. He
however proceeded to read the content of the letter. Further to that,
Herbst refused
to make available his personal laptop with an IP
address on basis that the FCS’s IT department has the ability
to access
all the FCS folders from the FSS server. It was also
pointed out to Herbst that G4S Deposita was a competitor of the
Fidelity Group
of Companies.
[10]
In determining the jurisdiction of the court to adjudicate upon the
matter at hand, section 77(3) of the BCEA, provides that:
“
The
Labour Court has concurrent jurisdiction with the Civil Courts to
hear and determine any matter concerning a contract of employment,
irrespective of whether any basic condition of employment constitutes
a term of that contract.”
[11]
The Labour Appeal Court in in
University
of the North v Franks
[2]
interpreted
the above provisions so as to grant exclusive jurisdiction to the
Labour Court in certain matters, and further stated
that;
“
There
is no indication that section 77(3) of the BCEA was enacted solely to
solve the so-called dual claims problem. Section 77(1),
with certain
exceptions, grants exclusive jurisdiction to the Labour Court “in
respect of all matters in terms of this act”.
The act seeks “to
give effect to the right to fair labour practices referred to in
section 23(1) of the Constitution by establishing
and making
provision for the regulation of basic conditions of employment...”
In those matters exclusive jurisdiction is
conferred. Section 77(3)
goes much wider. It expressly also deals with employment contracts
which have no statutory basic conditions
and thus fall outside the
scope of the act. Consequently, the legislature had in mind that the
Labour Court should also have jurisdiction
in such matters. Even if
there is no dual claims problem. In short, the Labour Court is to
have jurisdiction in respect of all
employment contracts and
exclusive jurisdiction in respect of some. But the jurisdiction is
even wider. It is in respect of any
matter concerning a contract of
employment.”
[3]
.
[12]
Flowing from
the above principles, it can be accepted that
the
Court would assume jurisdiction in a dispute where there is a
relationship between the matter to be adjudicated and the employment
contract. The relationship need not be direct
[4]
,
and all that needs to be established is whether the issue in dispute
relates to, or is linked to, or connected with a contract
of
employment.
[13]
In
considering
whether the
restraint agreement in this case can be enforced against Herbst in
circumstances where it was concluded with FSG on
behalf of its
subsidiaries, one needs to make such a determination by reference to
the wording of the agreement itself, particularly
since it was
Herbst’s contention that the Court lacked jurisdiction on the
basis that the restraint of trade agreement was
not ‘seated’
in the contract of employment
[5]
.
In this regard,
the
court is required to ascribe a sensible meaning to the agreement,
which is consistent with the apparent purpose of the document
as
signed between the parties
[6]
.
[14]
To reiterate, the offer of employment dated 25 May 2015 was made by
FSS, and the contract in that regard as signed on 1 June
2015 was
similarly entered into with FSS. The restraint of trade agreement was
entered into on the same date that the contract
of employment was
signed. It was however entered into between Herbst and FSG.
[15]
From the relevant provisions of the agreement as identified and
discussed below, the only conclusion to be reached is that
the
restraint provisions are in respect of matters concerning or linked
to, or connected to Herbst’s contract of employment.
A further
reading of the restraint of trade agreement and Herbst’s
contract of employment further point to the restraint
provisions
being incorporated into Herbst’s contract of employment. My
conclusions in this regard are fortified by the following
observations;
15.1
Under clause 1 of the restraint of agreement, it is stated that it
(the agreement)
is concluded between FSG and the employee (Herbst),
as well as between each of the Group Companies and Herbst. The Group
Companies
are listed in clause 4.1 to 4.27 of the agreement, and
include
inter alia
, FSS and FCS.
15.2
Under clause 1.2, it is stated that these entities have authorised
FSG to bind
them to the restraint of trade agreements with their
existing and any future employees including Herbst. This therefore
implies
that the submission made on behalf of Herbst that the
agreement was concluded on behalf of FSS without its authority is
misplaced.
15.3
Under clause 1.3, it is stated that the agreement shall operate as
between
the employee (Herbst) and FSG, as well as between Herbst and
any of the Group Companies in which he is employed, seconded or
otherwise
engaged in any capacity during the 36 (thirty-six) months
prior to the termination of the employee’s employment with FSG
or a Group Company.
15.4
Clause 1.5 further provides that any reference in the agreement to
the ‘company’
shall be in reference to the company/ies at
which the employee is so employed, seconded or otherwise engaged.
15.5
Under clause 3.6, it is provided that the restraint of trade
agreement forms
an integral part of Herbst’s employment
contract with FSG or any of the Group companies. This therefore
implies that the
agreement is incorporated into Herbst’s
contract of employment in line with Clause 20 of his contract of
employment, which
stipulates that Herbst is required to sign a
restraint of trade agreement, which will form an
addendum
to
that contract of employment.
[16]
In the light of these and other provisions, the most
sensible
construction of the restraint of agreement is that FSS, with whom
Herbst had entered into a contract of employment, is
indeed a
subsidiary of FSG, making FSS a beneficiary of a separate restraint
established by the terms of the agreement entered
into with FSG. The
uniform restraint agreement as entered into with FSG is applicable
and binding upon all of its subsidiaries,
associated companies and
their employees. It therefore follows that
the Court has the
requisite jurisdiction to determine this application, and Herbst’s
contention that FSS is not a subsidiary
of FSG or that he could not
be bound by the restraint agreement signed with FSG ought to be
rejected.
Rectification:
[17]
As per paragraph 2 of the notice of motion, the applicants seek an
order that the written employment offer made to Herbst and
the
employment agreement entered with him be rectified by deleting the
name Fidelity Security Services (Pty) Ltd (FSS) and substituting
the
name with Fidelity Cash Solutions (Pty) Ltd (FCS). The basis of
seeking rectification is that;
a)
The employment offer to Herbst and the subsequent employment
contract
were erroneously concluded with FSS. This was due to an
administrative oversight and the wrong documentation being utilised.
Herbst was nevertheless
de facto
employed by FCS on the basis
that;
i.
He reported to the New Business Development Manager of
FCS;
ii.
He marketed and sold CIT services to FCS’ clients,
and was
required to upsell the services of other entities in the Fidelity
Group, which included the services of FSS;
iii.
FSG has a centralised payroll department which is housed
within FSS,
and accordingly undertakes the payroll activities on behalf of all
the entities in the Group. Despite this, each entity
in the Group has
its own specific company and cost centre to which the costs are
allocated, and Herbst formed part of the FCS’s
pay roll system;
iv.
The costs in respect of Herbst’s employment were
allocated to
FCS, which FSG considered to be the correct employer;
v.
Herbst in the course of his duties concluded contracts
on behalf of
FCS for cash management services, such as CIT services, engaged with
clients on its behalf, and was paid a salary
and commission from its
account.
b)
Even if Herbst’s contention was that FCS did not employ
him,
and the dispute of fact persisted in that regard, this according to
the applicants was of no consequence, as he would have
been seconded
by FSS to FCS, and the restraint of trade undertaking in his
employment contract was in favour of the Group, including
FSS and
FCS.
[18]
Herbst denied that the applicants were entitled to a
rectification order. His starting point is that the claim for
rectification
should have been brought through action proceedings,
and that to the extent that they chose motion proceedings, the
applicants
have not demonstrated the facts entitling them to such an
order.
[19]
Herbst denied that he was employed by FCS and contended that
all the objective evidence supported his version including the offer
of employment, the contract of employment, the salary advices he had
received, the written warnings issued to him and any other
forms he
was required to deal with during his employ by FSS. Herbst further
pointed out that the applicants’ contention that
FCS paid his
salary was demonstrated to be false, and that there was no
bona
fide
mutual error or common mistake when the offer was made or
when the contract was concluded.
The
legal framework and evaluation:
[20]
The
principles applicable to rectification are fairly trite. It is
acknowledged that there are
circumstances
where the written agreement, which is clear and unambiguous may not
necessarily record and reflect the true agreement
between the
parties. In such cases, the parties are entitled to rectification of
the agreement, so that it records and reflects
the true and proper
agreement that was concluded between the parties. This is
particularly so in instances where it is apparent
that terms that
were agreed upon were omitted or, the terms not agreed to were
erroneously added to the written agreement
[7]
.
[21]
This
court in
Cape
Clothing Association v de Kock NO and Others
[8]
(per Steenkamp J) approached an application for rectification as
follows;
“
Where
parties concluded a written agreement which incorrectly reflects a
prior common intention which came into existence between
them, the
court may on application grant rectification of that contract. The
court must be satisfied that the agreement recorded
is not the same
as the actual agreement arrived at. The mistake relied upon may be
the result of a bona fide mutual error, an intentional
act by one of
the parties, or a mistaken acceptance by the parties that the written
agreement did not exclude an earlier agreement
from operating
together with the written agreement. It is not necessary to prove
that the written agreement does not correctly
reflect the oral
agreement because of a mutual error or mistake. What is necessary is
to prove that there was a prior common continuing
intention which is
not reflected in the agreement. It is not a prerequisite that there
should be any ambiguity. The mistake may
even be caused intentionally
by one of the parties”
(Authorities
omitted)
[22]
In
SAMWU obo TE Chaane,
the Labour Appeal Court further held
that;
“
The
duty falls upon the appellants to satisfy this Court by presenting
evidence that can demonstrate in clear and satisfactory manner
the
contentions made by them to support their entitlement to
rectification. In
Bardopoulos
and Macrides v Miltiadous
,
it was said:
“
A
party seeking to obtain rectification must show the facts entitling
him to obtain that relief “in the clearest and most
satisfactory manner‟…and as it is pointed out in Taylor
v Cape Importers
1938 CPD 362
at p368, where the common intention is
to be shown not by any writing but by verbal evidence, the Courts may
have great difficulty
in determining whether there was a mistake in
the written contract. These cases do not, I consider, require more
than a balance
of probability in favour of the party seeking
rectification but indicate that such a claim is in fact difficult to
prove””
[9]
[23]
In
motion proceedings, as in the present case, and where the applicants
seek final relief, it is now trite that where disputes of
fact exist,
these are to be decided in favour of the respondent taking into
account the principles as set out in
Plascon-Evans
Ltd v Van Riebeeck Paints (Pty) Ltd
[10]
.
The applicants as correctly pointed out on behalf of Herbst face
insurmountable difficulties in demonstrating in clear and
satisfactory
manner that they are entitled to rectification. These
difficulties are that;
i.
the application for rectification was
brought by way of notice of motion, in which final relief is also
sought;
ii.
Herbst had denied that there was any common
intention between the parties that he would be employed by FCS, and
there could therefore
be no
bona fide
mutual error or common mistake when the offer was made or the
contract concluded.
iii.
On the applicants’ own version, the
contract of employment presented to Herbst was a standard contract
across the Group.
On the objective facts, it is apparent that
the contract was presented to Herbst in its form, and was hardly a
product of negotiations
or discussions.
iv.
T
here is further no evidence pointing to
any negotiations between the parties in the form of
minutes
setting out the discussions, agreements and disagreements that took
place between the parties, to lead to the conclusion
that
indeed there may be mutual or common understanding that Herbst would
be employed by FCS rather than FSS.
v.
There is nothing in the founding affidavit
to indicate on what basis it is alleged that the employment agreement
was erroneously
concluded with FSS. An explanation that there was a
mere ‘administrative oversight’ leading to wrong
documents being
used hardly qualifies as a clearest and satisfactory
explanation, nor can that mere innocent oversight lead to a
conclusion that
there was a common continuing intention that Herbst
would be employed by FCS.
vi.
In the absence of any other evidence
therefore, I am satisfied that purely on the objective facts as
pleaded and denied, there is
no basis for this court to conclude that
the contract of employment between FSS and Herbst was concluded as a
result of
bona fide
mutual error or common mistake.
vii.
Even if there was any reason to believe
that there was any such mistake, there is still no explanation as to
the reason it took
the applicants more than one year, and only after
Herbst’s resignation to realise the alleged ‘administrative
oversight’
in respect of the offer, the contract itself, and
the manner of salary payments.
viii.
It further remains unexplained as to how
FSS, which allegedly was not the employer, had issued Herbst with
disciplinary written
and final written warnings on account of his
alleged failure to reach sales targets. It is trite that only an
employer can discipline
its own employees.
[24]
The applicants’ further contention
that even if Herbst were to argue that he was employed by FSS was of
no moment since he
would in effect have been seconded by FSS to FCS
is equally flawed. The circumstances surrounding the alleged
secondment are unknown,
and for FCS to have seconded Herbst, this
would have implied a contract of employment between it and Herbst,
which was however
not the case. To conclude on this issue then, the
applicants have not demonstrated the facts entitling them to
rectification, and
there is further no basis to conclude that Herbst
was seconded to FCS by FSS.
[25]
It has already been concluded that the
Court has the requisite jurisdiction in respect of the restraint of
trade agreement as a
result of it being valid and binding between the
Group, its subsidiaries and Herbst as a consequence of his employment
with FSS.
I am therefore in agreement with Herbst’s contentions
that whether the restraint of trade agreement is enforceable can only
be in relation to his employment relationship with FSS, on whose
behalf FSG had entered into that agreement with.
The
legal position in regard to restraint of trade agreement and
evaluation:
[26]
The principles applicable to
disputes surrounding the enforcement of restraint of trade agreement
are trite as rehashed over time
by this and other courts.
The
starting point is that considerations of public policy dictates that
agreements entered into voluntarily are binding and enforceable
as
between parties
[11]
.
A restraint of trade agreement is enforceable if it protects legally
recognized interests of the party seeking to enforce it.
The
agreement will however be unenforceable if it is unreasonable and
contrary to public policy
[12]
.
Furthermore, the courts will not enforce a restraint of trade if the
purpose is merely to seek to stifle competition or to unreasonably
restrict an individual’s freedom to work or trade
[13]
.
[27]
The onus to
establish the existence of the restraint of trade agreement and its
breach rests on the party seeking the enforcement
thereof. Once
that onus has been discharged, it would then be for the party
resisting the enforcement, to demonstrate that
the restraint is
unreasonable and therefore unenforceable
[14]
.
[28]
The factors
to be considered in determining whether a restraint of trade is
reasonable or otherwise were set out in
Basson
v Chilwan and Others
[15]
as
follows;
a)
Is
there interest of the one-party which is deserving of protection at
the termination of the agreement?
b)
Is
such interesting 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?
[29]
A fifth consideration is
whether the restraint provisions go further than is necessary to
protect the particular interest
[16]
,
and it is further trite that t
he
mere fact that parties to an agreement choose to describe a restraint
as being reasonable, is not itself decisive, as the reasonableness
or
otherwise thereof is a matter for the court to determine
[17]
[30]
The t
wo
kinds of proprietary interests worthy of protection through the
enforcement of a restraint agreement are first, confidential
matters
which are useful for the carrying on of the business, and which could
therefore be used by a competitor, if disclosed to
him, to gain a
relative competitive advantage. Such confidential material is
sometimes compendiously referred to as “trade
secrets”
[18]
.
The second kind of interests involves the relationship an employee
had 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
[19]
.
[31]
It is trite that in motion
proceedings, the affidavits constitute both the pleadings and the
evidence, and the issues and averments
in support of the parties’
respective cases should appear clearly therefrom. Thus, it is
required of the applicant in application
proceedings to make out a
case in the founding affidavit, which must contain sufficient facts
upon which a court may find in its
favour
[20]
.
An applicant must therefore stand or fall by its founding affidavit,
as it is trite that a case cannot be made out in replying
papers
[21]
.
[32]
Whether the applicants in this case are entitled to the enforcement
of the restraint of trade agreement needs to be determined
on the
basis of their case as pleaded.
In the light of
the conclusions reached that Herbst’s contract of employment
with FSS incorporates the restraint of trade
provisions, and further
that the applicants are not entitled to a rectification order, the
issue is whether a case has been made
out for the enforcement of the
restraint provisions against Herbst.
[33]
The obvious difficulty with the applicants’ approach insofar as
it sought to enforce the restraint against Herbst
vis-à-vis
FSC, is that it pleaded its case in anticipation that rectification
would be granted. Thus, any averments made in justifying the
enforcement of the restraint of trade were in reference to Herbst
being employed by FCS, which it has been found is not the case.
[34]
Significant with the applicants’ replying affidavit is that it
was acknowledged that Herbst in his answering affidavit
had
consistently made reference to FSS as his employer. It further came
out in the replying affidavit that FSS was merely cited
in these
proceedings as an interested party, and for the purposes of the
rectification application. However, once that application
failed, the
implications thereof are that FSS, even if it has been concluded that
it has a binding restraint of trade agreement
with Herbst, is not
before the Court, whilst FCS, in which the case for the applicants
was advanced, is not recognised as Herbst’s
employer.
[35]
The applicants’ case was nonetheless that the restraint was in
favour of all the group of companies. Part of the reasoning
in this
regard was that there was an overlap between activities of various
subsidiaries of the Group and its clients. In this regard,
it was
submitted
inter alia
that even though for instance, Herbst
sold CIT services but was required to upsell the services of other
entities in the Group
including FSS, there was no record that Herbst
actually did upsell services in respect of FSS. A supplementary
affidavit as promised
to verify this information was not however
forthcoming from the applicants.
[36]
A further difficulty with the applicants’ case, to the extent
that it was contended that the restraint provisions covers
all
companies/subsidiaries or associated companies of the Group, is that
they seek to bind Herbst to these provisions in a generalised
sense,
even in circumstances where Herbst’s tasks and responsibilities
did not transcend beyond his employment with FSS.
[37]
Herbst’s contention that the restraint of trade agreement can
only be enforced as
vis-à-vis
his employment with FSS
cannot be faulted. Even if clause 1.5 of the restraint indicates that
the agreement covers all the companies/associated
companies, or
subsidiaries of the Group, this can only imply that it can only be
enforceable against Herbst within the context
of his employment with
FSS. To hold otherwise would create unfairness. As I understood the
business of the Group, it is a large
and complex group of companies
with various subsidiaries and connected companies all rendering
various security related services
ranging from gardening, to other
specialised security services. To have Herbst bound by these blanket
restraint provisions even
in areas where he had no role, knowledge or
experience in, or where there was no link or connection between his
areas of responsibilities
and other subsidiaries, would be wholly
unreasonable.
[38]
It therefore does not assist the applicants to insist on general
enforcement of the restrain on the basis that employees move
from one
area of the business to the other or in between
companies/subsidiaries or associated companies. This can only be
permissible
where a person was moved, and a new area specific
restraint of trade agreement is entered into. Even then, a case ought
to be made
out for enforcement.
[39]
The applicants in an attempt to extricate themselves from the
conundrum created by the far-reaching restraint provisions and
their
unreasonable nature then sought to sugar coat the relief sought in
paragraph 3.1 of the notice of motion, by contending that
to the
extent that it was framed to make reference to ‘
or any other
business similar to that being or to be conducted by the applicants
and/or any other Group Company’
, this was unintentional,
and should be deleted from the prayer in respect of the relief
sought. This unfortunately cannot be permissible,
as a proper
application in that regard needed to be made.
[40]
Contrary to the applicants’ contentions, there is everything
unfair and unreasonable in its approach in the light of
the failure
of the application for rectification. It is apparent from the above
that FSS is only cited as an interested party,
and once the
application for rectification failed, that was the end of the
applicants’ case. There is therefore in the absence
of a case
having been made out in particular on behalf of FSS, no basis to
conclude that there is every reason to deem the restraint
provisions
enforceable in favour of FCS.
[41]
If ever there is any doubt in respect of my conclusions above, one
need not go further than the applicants’ founding
affidavit and
Herbst’s answer thereto. In this regard;
a)
any allegations made in regards to SBV being a competitor in
the
founding affidavit is clearly in reference to FCS, which is not the
employer for the purposes of enforcement.
b)
To the extent that SBV is
viewed as a competitor to the Group as a whole, no case has been made
out in the founding affidavit to
establish in what respects this is
the case. The applicants sought to rely on a letter from ABSA
[22]
for its contention that SBV was nonetheless a competitor of the
Group. This letter is however in my view not of assistance. It
is not
sufficient for a general statement to be made by a bank that SBV, G4S
and FSG all provide services to ABSA and tender to
supply services
when requested to do so. It was common cause that FSG offers a wide
variety of services, and ABSA’s statement
is therefore
meaningless insofar as it is lacking in particularity.
c)
Herbst’s contention was that he had not breached the restraint
of trade agreement by joining SBV as the latter was not a competitor
of FSS. He contended that SBV marketed itself differently
to FSG. He
had conceded that whilst FSS and SBV both provided services in the
same overall industry, there were significant differences
including
the disparity in pricing. FSS according to Herbst operates in a
different sector of the market and offered different
services, being
guarding of premises (not cash in transit or cash management
services).
d)
Herbst in his answering affidavit distinguished SVB and FSS
on the
basis that the former provided a premium security product to its
customers, provided customers with additional security
protocols;
charged between 20% and 40% more, and accordingly did not compete
against each other. He conceded that whilst SVB was
in the same
overall industry, it has pitched itself in a different sector of the
market.
[42]
It has already been stated that
in matters related to enforcement of restraint agreements, it is for
the applicants to establish
the breach of the restraint provisions.
If as a starting point a case has not been made out for FSS, there is
no basis for any
conclusion to be reached that Herbst by joining SBV
is in breach of the restraint provisions. As concluded elsewhere in
this judgment,
it did not assist the applicants’ case to allege
that SBV is the Group’s competitor on a general level, and
without
contextualising that competitive interface within Herbst’s
employment with FSS
[23]
.
To the extent that the applicants have not surmounted this first
hurdle that should be the end of the matter, and the applicants’
application ought to be dismissed.
[43]
I have further had regard to
the requirements of law and fairness in regards to the issue of
costs, and
I
am mindful of the caution issued out by the Labour Appeal Court when
considering costs in such matters
[24]
.
I am therefore satisfied that given the circumstances of this case,
albeit
unique
as they are, a costs order is nonetheless not warranted.
Order:
[44]
Accordingly, the following order is made;
1.
The applicants’ application is dismissed.
2.
There is no order as to costs.
_____________________
E
Tlhotlhalemaje
Judge
of the Labour Court of South Africa
APPEARANCES:
For
the Applicant:
Adv. A.C Botha
Instructed
by:
Blake Bester De Wet & Jordaan Attorneys
For
the Respondents:
Adv. W.N Shapiro
Instructed
by:
Till and Associates
[1]
In
reference to
section 77
(3) of the
Basic Conditions of Employment
Act 75 of 1997
[2]
[2002] 8
BLLR 701 (LAC)
[3]
At para 29
[4]
Randwater
at para 21
[5]
In
reference to
Singh
v Adams (2006) 27 ILJ 385 (LC)
at para 18 and
David
Crouch Marketing CC v Du Plessis (2009) 30 ILJ 1828 (LC)
at para 14 where it was held that;
“
It
is trite that this Court does have the jurisdiction to hear the
present application. In terms of
section 77(3)
of
the
Basic Conditions of Employment Act 75 of 1997
the
Labour Court has jurisdiction to determine any matter “
concerning
a contract of employment
”.
In
Labournet Holdings (Pty) Ltd v
McDermott & Another
(2003)
24
ILJ
185
(LC) the Court held as follows:
“
In
my opinion, a restraint of trade clause, when it is seated in a
contract of employment, is a matter concerning the contract
of
employment as envisaged by
s 77
of the BCEA. Prima facie
this Court has jurisdiction to grant the relief which LNH seeks.””
[6]
See
Sign
and Seal Trading 154 (Pty) Ltd t/a Davidson's Discount Boards v
Sebastian and Another (C649/2015) [2015] ZALCCT 74 (30 September
2015)
at
para 12 where it was held that;
“…
The
starting point is the language of the document itself, but this
should be construed in the light of its context, the apparent
purpose to which it is directed and the material known to those
responsible for its production. In other words, the purpose of
the
document and the background to its production are fundamental to the
process of interpretation. (see
Natal
Joint Municipal Pension Fund v Ndumeni Municipality
2012
(2) SA 593(SCA)
and
Dex Group v
Trust Group Co Group International
2013
(6) SA 520
(SCA))”
[7]
See
SAMWU obo TE Chaane &
others v City of Johannesburg Metropolitan Municipality. Case no: JA
48/10
at paras 20 - 21
[8]
(2014) 35 ILJ 465 (LC)
at para 41
[9]
At para 23
[10]
[1984] ZASCA 51
;
1984 (3)
SA 623
(A)
at 634H – 635B.
[11]
See
Reddy
v Siemens Telecommunications (Pty) Ltd
2007 (2) SA 488
SCA
,
at para [16], where it was held that;
“
A
court must make a value judgment with two principal policy
considerations in mind in determining the reasonableness of a
restraint.
The first is that the public interest requires that
parties should comply with their contractual obligations, a notion
expressed
by the maxim pacta servanda sunt. The second is that all
persons should in the interests of society be productive and be
permitted
to engage in trade and commerce or the professions. Both
considerations reflect not only common law but also constitutional
values.
Contractual autonomy is part of freedom informing the
constitutional value of dignity, and it is by entering into
contracts that
an individual takes part in economic life. In this
sense, freedom of contract is an integral part of the fundamental
right referred
to in
s 22
…. In applying these two principal
considerations, the particular interest must be examined. A
restraint would be unenforceable
if it prevents a party after
termination of his or her employment from partaking in trade or
commerce without a corresponding
interest of the other party
deserving of protection. Such a restraint is not in the public
interest. Moreover, a restraint which
is reasonable as between
parties may for some other reason be contrary to the public
interest.”
[12]
See
Advtech
Resourcing (Pty) Ltd t/a Communicative Personnel Group v Kuhn &
Another
2008
(2) SA 375
(C)
at
para 25 where the Court held that;
“
What
public policy is and whether a term in a contract is contrary to
public policy must now be determined by a reference to the
values
that underlie our constitutional democracy as given expression by
the provisions of the Bill of Rights. Thus, a term in
a contract
that is inimical to the values enshrined in our Constitution is
contrary to public policy and is therefore unenforceable.”
[13]
See
Reddy
v Siemens Telecommunications (ibid); Den Braven v Pillay &
another
2008
(6) SA 229
(D) and
Automotive
Tooling Systems (Pty) Ltd 2007 [2] SA 271 (SCA)
[14]
Reddy
at para 10
[15]
1993 (SA
742 (A)
(at
767 G-H).
[16]
Kwik
Kopy v Van Haarlem
1999 (1) SA 472
(W)
at
484B-E
[17]
Advtech
Resourcing (Pty) Ltd t/a Communicate Personnel Group v Kuhn2008 (2)
SA 375 (C)
[18]
Sibex
Engineering Services (Pty) Ltd v Van Wyk
1991 (2) SA 482
(T))
at
502D-F
[19]
See
Basson
(supra);
Experian
South Africa (Pty) Ltd v Haynes & another
[2013] (1) SA 135
(GSJ)
[20]
Bapedi Marota Mamone v
Commission of Traditional Leadership Disputes and Claims and Others
[2014] 3 All SA 1
(SCA)
at
para [16].
[21]
See
Director of Hospital
Services v Mistry
1979 (1)
SA 626
(A) at 635H-636B;
SA
Railways Recreation Club and Another v Gordonia Liquor Licensing
Board
1953 (3) SA 256
(C)
at 260).
[22]
Annexure ‘RA2’ to the Replying Affidavit
[23]
See
paragraphs 60 – 69 of the Founding Affidavit
[24]
See
Trevlyn
Ball v Bambalela Bolts (Pty) Ltd
(2013)
34 ILJ 2821 (LAC)
at para 29 - 30