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[2018] ZALCJHB 77
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FNB Insurance Brokers v Grange (J252/18) [2018] ZALCJHB 77 (21 February 2018)
THE
LABOUR COURT OF SOUTH AFRICA, JOHANNESBURG
Not Reportable
case
no:
J252/18
In
the matter between:
FNB
INSURANCE BROKERS,
A
BUSINESS UNIT OF THE FNB BUSINESS
SEGMENT
OF FIRST NATIONAL BANK,
A
DIVISION OF FIRSTRAND BANK LIMITED (FNBIB)
Applicant
and
MARIA
SUSANNA ELIZABETH LE
GRANGE
Respondent
Heard
:
09 February 2018
Delivered
:
21 February 2018
Summary:
An application to enforce a restraint of trade is generally heard
on an urgent basis provided the requirements of Rule 8 are met.
Urgency follows as a matter of course when Rule 8 requirements are
met. A party seeking to enforce a restraint of trade must allege
and
prove the agreement as well as its breach by the other party. Held
(1): The respondents are interdicted and restrained. Held
(2): The
respondent to pay the costs of the application.
JUDGMENT
MOSHOANA,
J
Introduction
[1]
This is an application to restrain and interdict a former employee of
the applicant. The application is opposed. The applicant
seeks,
amongst others, a declaratory relief to the effect that the
respondent breached the Confidentiality and Restraint Agreement
and
to interdict the respondent for a period of 12 months from the date
of resignation from disclosing confidential information
and
soliciting its clients.
[2]
The opposing respondent
challenged the urgency of the matter on the basis that the applicant
did not enrol this application in line
with the practice manual.
[1]
Background
facts
[3]
The respondent commenced employment with
the applicant on 1 May 2010 as a Commercial Broker at its Rustenburg
office. On 11 May
2010, the respondent and the applicant concluded a
Restraint Agreement. On 11 October 2010, the respondent signed the
applicant’s
Articles of Agreement wherein she made
confidentiality undertakings.
[4]
On 24 June 2010, the applicant and First
Rand Bank Limited entered into a sale of business agreement in terms
of which, the business
of the applicant was transferred to First Rand
Bank Limited. The transfer was done in line with section 197 of the
Labour Relations
Act. Clause 7.1.1 of the sale of business agreement
specifically provided that restraint of trade agreements were
transferred.
The respondent was on the list of the employees whose
contracts were transferred.
[5]
On 1 December 2017, the respondent resigned
effective 31 December 2017. Following her resignation, she was
reminded of her contractual
obligations. Whereafter, as it is
routinely done, the applicant conducted some investigations, which
investigations revealed during
the week of 22 January 2018 that the
respondent gave her daughter a confidential list of the applicant’s
clients. Further
it revealed that the respondent took her daughter to
a meeting with one of its clients, Wimpy in Carletonville. It was
also discovered
that prior to her departure, the respondent requested
a schedule of the applicant’s clients. The schedule contained
information
about names, policy numbers, product sold and the
premium. Shortly after obtaining the schedule, one of the clients on
the schedule
cancelled a policy and immediately signed a new policy
with another Broker. Few days after the resignation of the
respondent, another
client, which dealt directly with the respondent,
appointed another Broker. Ultimately, it was discovered that about 30
clients,
which dealt directly with the respondent, were solicited
during November 2017 and December 2017. Consequently, the applicant
through
its attorneys placed certain demands and sought an
undertaking from the respondent. No such undertakings were given. The
applicant
approached this court on 01 February 2018.
[6]
On 5
February 2018, the respondent made an offer effectively agreeing to
an interim order. On 06 February 2018, the applicant accepted
the
respondent’s offer. On 07 February 2018, the respondent sought
to withdraw the already accepted offer.
[2]
Evaluation
Lack
of urgency
[7]
In its
founding affidavit, the applicant set out the reasons why and urgent
relief is required.
[3]
Other than a bare denial, the respondent did not raise any other
basis why an urgent relief was necessary.
[4]
Only during argument did Mr Van Vuuren appearing for the respondent
raise the non-compliance with the Practice Manual. This is
inappropriate. Counsel should not as matter fact make a submission
that is not borne out in the papers before court. A party in
motion
proceedings stands and fall by the allegations made in its affidavit.
Generally, matters involving a restraint of trade
are considered to
be urgent in nature primarily because of the duration of the
restraints. However, the requirements of Rule 8
remain relevant.
[8]
I am unable to agree with the respondent that the
matter is not urgent. The applicant had set out the reasons why it
believes that
an urgent relief is necessary. All that the respondent
did was to provide a bare denial. The non-compliance with the
Practice Manual
argument cannot and should not be entertained.
Therefore the defence of lack of urgency is not upheld
.
Is
there a restraint agreement?
[9]
At paragraph
28 of the founding affidavit, the applicant testified that the
respondent concluded and signed the restraint agreement
on 11 May
2010. This allegation is admitted by the respondent.
[5]
The contention and argument that the respondent was employed by a
company with registration number 1956/000269/07 has no merit.
A
transfer in terms of section 197 of the Labour Relations Act has
taken place and accordingly in law the employment contract,
inclusive
of the restraint agreement has been transferred. I therefore
conclude that there is a restraint agreement in place.
Therefore,
there exists a valid agreement between the parties.
[10]
Any attempt to avoid the terms of the agreement
cannot be upheld especially on the basis contended for by the
respondent.
Is
the agreement enforceable?
[11]
The
contention that there is no employer and employee relationship is
rejected. Therefore the restraint is enforceable in law.
[6]
[12]
The allegation that since the 2016 agreement was
not signed, there is no enforceable agreement is nothing but a red
herring. The
applicant before me seeks to enforce the undisputed
agreement signed on 11 May 2010.
Was
the restraint breached?
[13]
It is
trite that a party in motion proceedings is to make his or her case
in the founding affidavit
[7]
.
The applicant has made such a case
[8]
.
The respondent does not seriously dispute the allegations. By and
large, the respondent provides a bare denial and actually becomes
argumentative instead of placing before court a version to amplify
the bare denial.
[14]
When someone
alleges that he or she is not bound by a restraint to which he had
assented to in a contract, he or she bears the onus
of proving that
enforcement of the restraint is contrary to public interest.
[9]
Other than alleging that there is no employer and employee
relationship, the respondent failed to demonstrate on a balance of
probabilities why the restraint is unreasonable.
[10]
[15]
There can be
no doubt that the respondent was exposed to the trade connections of
the applicant given her position and her undisputed
tasks
[11]
whilst in the employ of the applicant.
[16]
Regarding
confidential information and trade secrets, it is not seriously
disputed that the former employee had access to the schedules
[12]
.
I am satisfied that in the course of the access the respondent was
availed to confidential information and trade secrets of the
applicant. There is real likelihood that she can use that and or
disclose that to other parties. In fact the respondent does not
seriously dispute that she gave a list to her daughter and that she
took her to Wimpy at Carletonville. Accordingly, the applicant
is
entitled to be protected in this regard.
[17]
I am therefore satisfied that the respondent is in
breach of the restraint. Accordingly, her conduct is prejudicing the
applicant’s
protectable interest. On the basis of the above
breaches, the applicant is entitled to the relief sought.
Issue
of costs.
[18]
The LAC in
Ball
v Bambelela Bolts (Pty) Ltd
[13]
has already decreed that since these matters raise a constitutional
issue-breach of section 22 of the Constitution, a rule of costs
following the results does not apply. However the matter before me
warrants a cost order. The respondent failed to give an undertaking
which would have obviated this application. She agreed to an interim
order and without any justification made a volte face. Despite
all of
that I am not inclined to make a punitive costs order. To my mind the
opposition was frivolous and vexatious. Therefore,
the appropriate
order to make is that of costs on a party and party scale.
Conclusion
[19]
I come to the conclusion that there is a valid and
enforceable restraint and that the interest of the applicant is
worthy of protection.
I am satisfied that the respondent is
prejudicing such an interest. As to costs, the appropriate order to
make is that of costs
on a party and party scale.
[20]
In the results I make the following order:
Order
1.
The matter is heard as one of urgency.
2.
The respondent breached the restraint agreement by
disclosing confidential information to her daughter Carla.
3.
The respondent breached the restraint agreement by
not adhering to the non-solicitation undertaking.
4.
The respondent is interdicted and restrained for a
period of 12 months commencing on 01 December 2017 from using the
confidential
information of the applicant in any manner whatsoever,
soliciting, canvassing business or providing prescribed services or
products
to the applicant’s prescribed clients as defined in
the agreement signed on 11 May 2010 and from disclosing the
information
to any third party.
5.
The respondent to pay the costs of the applicant.
_______________________
GN
Moshoana
Judge
of the Labour Court of South Africa
.
Appearances
For
the Applicant:
Advocate T Manchu
Instructed
by:
Hogan Lovells (SA) Inc, Sandton.
For
the Respondents:
Advocate M Van Vuren.
Instructed
by:
Manong Badenhorst & Badenhorst Inc, Klerksdorp.
[1]
12.3 The normal time for the bringing of an urgent
application, whether during term or recess, is 10h00 on
Tuesdays and
Thursdays. If the urgent application cannot be brought at 10h00 on
Tuesdays or Thursday of any week, it may be brought
on any other day
of the week at any time, but the applicant in the founding affidavit
must set out facts which justify the bringing
of the application at
a time other than 10h00 on Tuesdays or Thursdays.
[2]
In the letter of 7 February 2018, the respondent’s attorneys
stated the following: “We now have instructions from
our
client that
it will not be
in the best interest for an interim order to be granted
against her…” [My underlining and emphasis]
[3]
Paragraphs 65-68 of the Founding Affidavit;
[4]
Paragraphs 51.1-51.5 of the Answering Affidavit;
[5]
Paragraph 20.1 of the Answering Affidavit
[6]
Basson v Chilwan and others
[1993] ZASCA 61
;
1993 (3) SA 742
(A) at 776H-777B
[7]
Betlane v Shelly Court
CC
2011 (1) SA 388
(CC) para 29 and
De
Beer v Minister of Safety and Security and Another
[2011] 32 ILJ 2506 (LC)
[8]
Paragraphs 38-50 of the Founding Affidavit
[9]
John Saner Agreement in Restraint of Trade in South Africa Law issue
13 (October 2011) and
Experian
SA (Pty) Ltd v Haynes and Another
2013 (1) SA 135 (GSJ)
[10]
The allegations made in paragraph 10 of the AA remain argumentative
and are not factual.
[11]
Paragraph 26 of the Founding Affidavit read with paragraph 20.1 of
the Answering Affidavit.
[12]
See paragraphs 41.1-41.2 of the Founding Affidavit read with
paragraphs 32.1 and 32.2 of the Answering Affidavit.
[13]
[2013] 9 BLLR 843
(LAC).