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[2018] ZALCJHB 308
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P B Hairdressing Organization (Pty) Ltd v Kruger and Another (J1239/18) [2018] ZALCJHB 308 (6 June 2018)
LABOUR COURT OF SOUTH AFRICA,
JOHANNESBURG
Not
Reportable
Case No: J 1239/18
In the matter between:
P B HAIRDRESSING ORGANIZATION (PTY)
LTD
Applicant
and
RUDOLPH
KRUGER
First
Respondent
JINGLES HAIR
EMPORIUM
Second
Respondent
Heard: 11 May 2018
Delivered: 6 June 2018
JUDGMENT
TLHOTLHALEMAJE,
J:
Introduction:
[1]
The applicant seeks an order on an urgent basis,
to enforce certain restraint of trade and confidentiality
undertakings against
its erstwhile employee, the first respondent Mr
Rudolph Kruger (Kruger). The order sought is in the following terms:
“…
2.
Directing the First Respondent to resign from his employment with the
Second Respondent with immediate effect.
3.
Interdicting and restraining the First Respondent until 13 March 2019
from-
3.1.
either directly or indirectly, within a radius of five kilometres
from the Applicant’s hairdressing salon at which he
had
rendered services, being employed by any firm, business, undertaking,
person, corporation or company or by any agent, associate,
representative or advisor of any such organisation which performs the
services in the territory that are directly competitive with
those
performed by the Applicant;
3.2.
in any manner assisting in the activities of any undertaking in the
territory which carries on any activities which are directly
competitive with those of the Applicant;
3.3.
taking part in any undertaking carrying on business of a type, class
or kind competitive with the type, class, kind of business
carried on
by the Applicant in the territory; and
3.4.
directly or indirectly soliciting the customers of the Applicant or
seeking to take the business of any person and/or corporate
entity
who is a client of the Applicant…”
[2]
Only Kruger opposed this application. His main
contentions are that the application is not urgent, and/or that the
urgency claimed
is self-created. To the extent that it may be found
that the matter is urgent, that the applicant failed to demonstrate
that there
are protectable interests worthy of protection in terms of
the restraint of trade agreement, that agreement ought to be declared
contra bonos mores
and
therefore unenforceable as its duration and geographical area was
illogical and unenforceable. He further contended that the
entire
agreement, considered as a whole, was of general application and not
proportional to what the applicant seeks to protect.
Background:
[3]
The applicant operates 23 stores (Hairdressing
Salons) throughout the Republic. One of them is Carlton Hair,
situated at the Nelson
Mandela Square in Sandton, Johannesburg, where
Kruger was employed prior to his resignation. In seeking the order,
the applicant
averred that it has invested a large amount of time,
resources and energy in developing its business over the years and
has acquired
experience and expertise in the operation of
hairdressing salons. It further contended that its customers are
regular clients who
represents some considerable investment in time,
money and energy, and that over time, a relationship of goodwill was
developed
with clients, whom it considered its valuable assets.
[4]
According to the applicant, a stylist like Kruger
had the responsibility of forging and maintaining personal relations
with clients.
As such, a “regular client” would almost
without fail report to a specific stylist each time he/she visited
the salon
for a hair treatment or styling, and that stylist would
then be responsible for the hairdressing needs of that client.
[5]
Kruger commenced his employment with the applicant
with effect from 28 June 2000 as a Learner Stylist. He
progressed and
was eventually promoted to the position of Master
Stylist. On 7 July 2017, Kruger signed an amended contract
of employment
which also included restraint and confidentiality
undertakings in favour of the applicant. The pertinent clause(s) of
the employment
contract record the following:
“…
15. Restraint of Trade
…
15.1.1. “Client”
means any client/customer of the Company or Group of Company who
visited on at least 2 (two) occasions
within 6 (six) month period to
the Termination date, the salon at which the Employee rendered
services as at the Termination Date;
15.1.2. “Restraint
area” means a radius of 5 (FIVE) kilometres (as the crow files)
calculated from the front door of
the salon at which the Employees
rendered services as at termination date and any other salon at which
the Employee may rendered
services in a six (six) month period prior
to the Termination Date;
15.1.3. “Restraint
Period” means a period of 1 (one) year immediately following
the termination Date;
15.1.4. “Restraint
Business” means that business and those activities conducted by
the Company (and any Group Company)
including hairstyling,
hairdressing and related activities.
…
15.2 It is recorded and
agreed that:
15.2.2.2 repeatedly and
on an on-going basis be exposed to clients of the Company on a
personal level, enabling the Employee to
forge and maintain a
personal relationship with each client, that he/she services; and
…
15.3 The Employee
acknowledges that-
15.3.1 the client
relationship(s) referred to in clause 15.2.2.2 above constitutes a
propriety and protectable interest of the Company;
…
15.4 in light of the
foregoing, the employee warrants and undertakes that he/she shall not
at any time during the Restraint Period-
15.4.1 in any capacity
whatsoever (including that of principal, proprietor, agent, broker
partner, representative, assistant, trustee
or beneficiary of a
trust, manager, member of a close corporation, member of a voluntary
association, shareholder, director, employee,
consultant, contractor,
advisor, financier, demonstrator) directly or indirectly, take up
employment with, contract or consult
to, be associated or concerned
with or interested or engaged in any Restrained Business in a
Restraint Area;
15.4.2 solicit, interfere
with or entice or endeavour to entice away from the Company or any
Group Company any client(s);
…”
Urgency:
[6]
On 28 February 2018, Kruger advised the
applicant in writing of his intention to resign from its employ. The
contract
of employment was set to terminate on 13 March 2018.
Having served his notice of resignation, Kruger thereafter on the
same date informed the applicant’s store manager and deponent
to the founding affidavit, Ms Lesly Kahn that he intended taking
up
employment with the second respondent, Jingles Hair Emporium
(Jingles).
[7]
Jingles is the applicant’s competitor
operating in Benmore Gardens, Sandton, and is located some 1.7 km
from Mandela Sandton
Square. Subsequent to his resignation, Kruger
had indeed commenced employment with Jingles. On 22 March 2018,
the applicant
addressed a letter to Kruger advising him that his
continued employment with Jingles was in direct contravention and in
breach
of his restraint undertakings. Kruger was requested to give an
undertaking on or before 26 March 2016, that he would
immediately resign from the employ of Jingles and to also hand back
any confidential information that he may still have had in his
possession.
[8]
On 5 April 2018, Kruger wrote an email
to the applicant’s attorneys of record wherein he denied that
he had solicited
any client(s). He further denied that he had
received any training from the applicant except for product
knowledge. He refused
to make any undertaking as requested by the
applicant.
[9]
The applicant averred that since Kruger’s
resignation, approximately 10 of the 1 587 repeat clients or
regulars have
returned to the branch, meaning that a vast majority of
Kruger’s clients have not returned to the applicant’s
salon.
[10]
The applicant
launched this application on 18 April 2018. It is accepted
that applications to enforce restraint of trade
undertakings are
inherently urgent
[1]
.
The inherent urgent nature of such applications obviously derives
from the fact that restraint of trade agreements are normally
of a
limited duration, and further that any proprietary interests, if they
exists, need urgent protection. Be that as it may, I
have
consistently held the view that the inherent urgent nature of these
applications does not absolve a party from satisfying
the
requirements of urgency, particularly those set out in Rule 8 of the
Rules of this Court
[2]
.
These provisions
[3]
were explained in
J
iba
v Minister: Department of Justice and Constitutional Development and
others
[4]
as follows;
“
Rule
8 of the rules of this court requires a party seeking urgent relief
to set out the reasons for urgency, and the degree to which
the
ordinary applicable rules should be relaxed is dependent on the
degree of urgency. It is equally trite that an applicant is
not
entitled to rely on urgency that is self-created when seeking
deviation from the rules”.
[11]
Thus, where the applicant has not
advanced sufficient reasons for the matter to be treated as one of
urgency, and where on the facts
there is no discernable evidence that
the applicant had acted with the necessary haste in approaching the
Court, the application
ought to be struck off from the roll
[5]
.
[12]
The applicant avers that the matter is urgent on the basis that it
cannot be afforded substantial redress at a hearing in due
cause. In
this regard, it was submitted that the nature of the relief sought
and Kruger’s non-compliance with his undertakings
was such that
it may be denied redress in a hearing in due cause, because the
imminent or perceived harm that it seeks to be protected
against may
have potentially occurred.
[13]
The applicant had conceded that upon Kruger’s resignation on
28 February 2018, it became aware of his intentions
to
start employment with Jingles. It nonetheless contended that upon the
realisation that Kruger was to join Jingles in breach
of his
restraint provisions, its attorneys of record were approached, and
attempts were made to either persuade him not to leave
or at most,
correspondence was sent to him requesting that he made certain
undertakings in respect of his restraint obligations.
After Kruger’s
response on 5 April 2018, the founding affidavit was then
deposed to on 13 April 2018.
[14]
Kruger contends that no grounds were laid by the
applicant to demonstrate urgency, particularly in the light of lack
of haste in
approaching the Court, and
I am inclined to agree
with him for the following reasons;
14.1 Kruger resigned from the
applicant’s employ on 28 February 2018, and his last
day at the applicant’s
employ was on 13 March 2018.
In the founding affidavit, the applicant merely states that
subsequent to Kruger’s
resignation, it came to its attention
that Kruger had commenced employment with Jingles. It is not stated
when and how such information
came to its knowledge.
14.2 Only on 22 March 2018,
and some three weeks since Kruger had left and taken up employment
with Jingles, was he reminded
of his restraint of trade undertakings
through correspondence from the applicant’s attorneys of
record. This was in circumstances
where it was known as at
28 February 2018, (and not on 14 March 2018 as
alleged) that he intended to take up
employment with Jingles. That
correspondence was only hand delivered to Kruger on 29 March 2018.
Still, nothing was heard from
Kruger until 5 April 2018 when he sent
correspondence effectively stating his intentions not to be bound by
the restraint provisions.
Even then, it took the applicant a further
six days before deposing the founding affidavit, and not much is
explained in
regards to what happened between that period.
14.3 Ultimately, since it was not in
dispute that when Kruger handed in his resignation on
28 February 2018, he had also
on the same day, advised the
applicant’s Kahn that he intended to join Jingles, I agree with
his contentions that effectively,
the
proverbial horse bolted
on 28 February 2018. There is nothing in the applicant’s
averments that anything was done immediately to remind Kruger of
his
restraint of trade undertakings and the consequences should he not
abide by those undertakings.
14.4
Kruger
had further submitted that the six weeks’ delay in bringing
these proceedings coincided with the interval in which
a client would
be expected to return to the applicant and be deemed a regular
client. (It being his contention that repeat customers
return to the
applicant every six to eight weeks). On the applicant’s own
version,
since
Kruger’s resignation, approximately 10 of the 1 587 repeat
clients or regulars have returned to its store, meaning
that a vast
majority of his clients have not returned. This in my view adds
credence to Kruger’s contentions that indeed
the application is
belated, and
any
imminent or perceived harm sought to be protected by the enforcement
of the restraint of trade undertakings would in any event
have
occurred and as such, any urgency would be self-created
[6]
.
14.5
Thus,
to the extent that the applicant seeks interdictory relief, it has
long been stated that such a remedy is not meant for past
invasion of
rights, but is concerned with present or future infringements
[7]
.
Thus where as in this case the applicant had not acted with the
necessary haste to approach the court, and had only done so some
one
month after Kruger’s resignation, with the full knowledge that
he had joined Jingles, and where the harm sought to be
prevented had
already taken place, the invariable conclusion to be reached in the
absence of a reasonable explanation for the delay
is that indeed the
urgency claimed is self-created, and the harm complained of, if it
has already occurred is as a direct result
of the applicant’s
dilatoriness.
14.6 It does not in my view, assist
the applicant’s case to merely allege that litigants should
resolve their differences
prior to approaching the court. There is no
such legal obligation imposed on litigants, especially if the alleged
harm is imminent.
Attempts at resolution of disputes between the
parties is merely a courtesy between them, which has no bearing on
whether the requirements
of urgency have been met or not. This is
particularly so in this case, where any alleged attempt to resolve
the dispute essentially
involved a mere demand rather than serious
engagements with Kruger in resolving the matter. To that end, it is
concluded that the
applicant has not satisfied the requirements of
urgency, and in effect, the urgency claimed in this case is
self-created. Ordinarily,
the matter ought to be struck off the roll
in the light of these findings. For reasons that will appear clearer
below however,
I propose to deal with the merits of the matter.
The
merits:
[15]
To the extent that I may be incorrect
in my conclusions in regard to urgency, it is further my view even if
this matter was to find
its way back on the court’s ordinary
roll, the applicant nonetheless faces insurmountable hurdles on the
merits, which I
propose to dispense with. Since the nature of the
relief sought is in the form of a final order, it is trite that
the
applicant has to
inter
alia
show
a clear right; the absence of an alternative remedy; and that, if the
interdict should not be granted, it will suffer irreparable
harm.
In
order to establish a clear right, the court has to consider whether
there is an interest deserving of protection, and to thereafter
look
at the other factors proposed in
Basson
v Chilwan and others
[8]
as shall be
illustrated below.
[16]
The applicant wishes to enforce the
restraint of trade agreement against Kruger, and it is common cause
that indeed such an agreement
exists. By taking up employment with
Jingles which is some 1.7 km from the applicant’s store, Kruger
has indeed breached
his restraint of trade undertakings. Having
discharged the onus in respect of the existence of the agreement and
the breach,
the onus is upon Kruger to demonstrate that the
enforcement of the agreement is unenforceable, unreasonable and/or
contrary to
public policy
[9]
.
[17]
The enquiry into the reasonableness of
the restraint is essentially a value judgment that encompasses a
consideration of two policies,
namely the duty on parties to comply
with their contractual obligations and the right to freely choose and
practice a trade, occupation
or profession
[10]
.
Central to an enquiry into the reasonableness of the restraint are
four interrelated questions as identified in
Basson
v Chilwan and others
[11]
,
viz;
(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?.
[18]
The interests sought to be protected
are generally in two categories. The first is confidential
information which is useful for
the carrying on of the business and
which could be used by a competitor, if it were to be disclosed to
that competitor, to gain
a relative competitive advantage (‘trade
secrets’). The second is relationships built with customers,
potential customers,
suppliers and others (‘trade connection’
of the business, this being an important aspect of its incorporeal
property
known as goodwill)
[12]
.
[19]
The existence of these interests require a factual enquiry, as it is
not sufficient to lay claim to them based on the mere
existence of a
restraint of trade agreement or alleged breach. Furthermore, it is
also not sufficient for the applicant to merely
rely on the so-called
‘
acknowledgement
’ or ‘
freely and
volunt
arily’ or ‘
equal bargaining position’
clauses in the restraint of trade agreement in an attempt to
enforce it. A case needs to be made out that there indeed exists
proprietary
interests worthy of protection, and the respondent must
equally demonstrate that the agreement is unenforceable for some or
other
reason.
[20]
The interests that the applicant seeks to protect in this case relate
mainly to the goodwill and relationships established
between
Kruger, in the course of his employment, and the customers serviced
by him during his period of employment. In this regard,
it was
submitted that;
20.1 The applicant’s commercial
interests are threatened directly by the possibility of its existing
customers previously
served by Kruger, who will be diverted to
Jingles along with him. This was particularly so since Kruger had
conceded that some
of these customers have been serviced by him at
Jingles.
20.2 The applicant’s protectable
interests were prejudiced as Kruger was utilising his unfair
advantage of having established
strong client relations developed
during his employment for the benefit of Jingles, which conduct
amounted to ‘spring boarding’,
and was unfair and
unlawful.
20.3 The goodwill and client
connections were a clear and vital proprietary interest of the
applicant and formed the basis of it
requiring that all its stylists
enter into restraint of trade agreements, which terms were reasonable
and fair in terms of geographical
area and duration.
[21]
Kruger in opposing the application raised a number of other
preliminary points related to the position of the deponent to the
founding affidavit, Kahn, and the averments made, which were
considered to be inadmissible hearsay as it is alleged that she was
not a manager at the applicant’s salon where Kruger was based.
He also took issue with the reliance by the applicant on annexure
‘LK2’ which purports to be a summary of customers
serviced by Kruger between March 2017 and 4 April 2018, and the fact
that it is not indicated in the founding affidavit as to who had
compiled the report, who was responsible for confirming the accuracy
of that document, when or at what point the applicant’s
computer was updated or reconciled. Kruger also questioned the
authenticity
of that document and further pointed out it related to a
period when he was no longer in the applicant’s employ. Kruger
further
pointed out that even though it was alleged that only 10 of
the regular customers had returned to the salon, it is not clear as
to who had advised Kahn of those figures and the details in that
regard. He nonetheless submitted that there was no evidence to
support the allegation that his regular customers did not return
after 13 March 2018.
[22]
Kruger also submitted that in the light of the relief that the
applicant seeks, the determinative question is whether his skills,
expertise and know-how as a hairdresser is an interest which accrues
to him as an employee, or one which accrues to the employer.
He
appreciated that in the event that such an interest accrued to the
employer, then it was protectable by way of enforcement of
restraint.
If however it did not, then the employer had no proprietary interest
and could not seek to enforce the restraint of
trade provisions.
[23]
The applicant’s view however in the light of Kruger’s
contentions is that the purpose of the restraint is not to
restrict
him from utilising his skills and qualities that he had acquired over
the years, but to restrict him from relying upon
the relationship he
had established with its clients whilst still in its employ, and from
taking advantage of those client relationship
and utilising his
skills, knowledge and experience for the benefit of Jingles. It was
submitted that Kruger’s allegations
that the applicant retained
no protectable interest in respect of its clients were misleading,
generalised and speculative, and
further that attributes such as
personal know-how and skills played no role in the determination of
the issues.
[24]
It is now trite that t
he
fact that the ex-employee has taken up employment with a competitor
does not necessarily in itself entitle the applicant to any
relief,
if all that the ex-employee would be doing is to apply his/her skills
and knowledge acquired while in the employ of the
applicant.
Effectively, it is only if the restriction on the ex-employee’s
activities serves to protect a
recognisable
proprietary interest
relied
on by the applicant, that it can be said that there is a breach of
contractual obligations
[13]
.
[25]
Kruger submitted that because of the nature of the hairdressing and
styling industry, the product serviced to customers is
the skill and
qualities of the stylist developed over the years, and not the
product of the employer or its proprietary interest,
which therefore
rendered the restraint provisions contrary to public policy and
unenforceable.
[26]
The need to protect customer goodwill
or trade connections at a general level arises where the employee has
access to customers
and is in a position to build up a particular
relationship with the customers so that when he leaves the employer’s
service,
he could easily induce the customers to follow him to a new
business
[14]
.
The ability of an ex-employee to enable him or her to induce
customers to follow him or her arises from the connection (attachment
or influence) built between the ex-employee and those customers
[15]
.
I further accept that customer connections entails a relationship a
business has with customers or potential customers, which
is indeed
an important aspect of a business goodwill
[16]
.
[27]
In the same token however, one is
mindful of the principle emphasised in
Den
Braven
that a protectable
interest in the form of customer connections does not necessarily
come about simply because the former employee
had contact with the
employer’s customers in the course of his or her duties. An
element of ability to induce customers to
follow an ex-employee to
the new employer remains a critical factor
[17]
.
[28]
It is accepted in the hairdressing industry that despite some form of
training, mentoring and investment into a stylist, the
latter, in any
event ultimately will apply his or her own skills, knowledge,
experience and personality in attending to the
individual and
personal needs of clients. Any claim by a salon owner that there is a
specific formula applied by stylists in attending
to the needs of
each customers would be fallacious, in that each individual client
invariably has specific if not unique needs,
even if he or she is a
repeat client.
[29]
As to whether a relationship developed between a hairstylists and a
client
constitutes an
important element of
the goodwill of the business, and whether that is an interest which
the employer is entitled to have protected
has been a subject of
divergent views by the Courts over the years.
[30]
The facts of this case are not
dissimilar to those in
Nachtsheim
v Overath
[18]
,
where
the applicant sought to enforce a restraint of trade agreement (‘a
bar clause’) against a hairdresser. The
court (per
Corbett J) held that;
“
...having
regard to all of these facts, the circumstances of the case
generally, more particularly the two year period of the employment
contract, it seems to me that the applicant was entitled, at the time
when this contract was entered into, to take steps for the
protection
of his business, more particularly for the retention of his
customers, in the event of the respondent terminating his
contract of
employment and seeking employment elsewhere. It seems to me that,
under the circumstances, the applicant had a real
interest in the
retention of such customers who might well be induced to patronise a
rival business should the respondent become
employed by such a
business because of the personal relationship which arises between an
employee in the position of the respondent
and the clientele of the
business.”
[19]
[31]
Kruger however as already indicated
maintains that his skills and knowledge as a hairdresser is an
interest that accrues to him.
A number of authorities support his
contentions. In
Aranda
Textile Mills v Hurn & Another
[20]
,
the court emphasised
that proprietary interests sought to be protected must be properly
described as belonging to the employer.
In this regard, Kroon J held
that;
“
A
man’s skills and abilities are a part of himself and he cannot
ordinarily be precluded from making use of them by a contract
in
restraint of trade. An employer who has been to the trouble and
expense of training a workman in an established field of work,
and
who has thereby provided the workman with knowledge and skills in the
public domain, which the workman might not otherwise
have gained, has
an obvious interest in retaining the services of the workmen. In the
eye of the law, however, such an interest
is not in the nature of
property in the hands of the employer. It affords the employer no
proprietary interest in the workmen,
his know-how or skills. Such
know-how and skills in the public domain become attributes of the
workman himself, do not belong in
any way to the employer and the use
thereof cannot be subjected to restriction by way of a restraint of
trade provision. Such a
restriction, impinging as it would on the
workman’s ability to compete freely and fairly in the market
place, is unreasonable
and contrary to public policy.”
[32]
A similar approach as above was
followed in
Automotive
Tooling Systems (Pty) Ltd v Wilkens and Others
[21]
,
where
the court
held that the
facts of that case established that the know-how acquired by the
respondents was no more than a specialist skill in
manufacturing
machines. Those skills did not belong to the ex-employer, but to the
respondents as part of their general stock of
skill and knowledge,
which they could not be prevented from exploiting. In the
circumstances, the ex-employer had no proprietary
interest worthy of
protection, and the restraint sought was inimical to public policy
and unenforceable
[22]
.
[33]
Similarly in
Basson
v Chilwan,
the court
accepted that a restraint would be against public policy if it
prevented the employee, at the termination of employment,
from freely
participating in the profession or industry, provided the protectable
interests of the employer were not violated.
The court further
accepted that a person is entitled to take his skills with him, even
if those skills were acquired through his
former employer’s
training, and that he is free to earn his living in his chosen
occupation
[23]
.
The Labour Appeal Court in
Labournet
(Pty) Ltd v Jankielsohn and Another
[24]
in reference to
Sibex Engineering
Services (Pty) Ltd v Van Wyk and Another
accepted
that
even if
an employer spent time and effort and money to train or “
skill
”
an employee in a
particular area of work the employer had no proprietary hold on the
employee, or his, or her, knowledge, skills
and experience, even if
those were acquired at that employer.
[34]
Applying the above principles to the facts of this case, the starting
point is to accept that
the very nature of
establishments such as hairdressing is that the hairstylists
invariably develops personal contacts or attachment
with regular
clients that they attend to. This is so in that clients ordinarily
have individual specific needs and tastes, and
seek to be attended to
by specific stylists of their choice. A rapport is built between the
stylist and the client as a result
of the personal nature of the
service provided, and invariably, clients want stylists they are
comfortable with, know and trust,
and who understand and appreciates
their own personal (styling) needs. That relationship can for all
intents and purposes be described
as unique.
[35]
It can also be accepted that stylists through
their own personalities or skills, endear themselves to those
clients, hence the latter’s
need to be attended to by them. In
effect, it cannot be said in such an industry that there is a one
size fits all formula in the
procurement and retention of clients.
Clients come and go to salons depending on whether their hairdressing
needs and requirements
are met, and it cannot be said that they are
necessarily attached to the salon itself. It is not far-fetched to
conclude that clients
tend to be attached to stylists instead. The
salon merely provides an avenue for the expression of a relationship
between the stylist
and the client. This is the trend in all
professions where clients require intimate contact and attention.
[36]
The approach of
Corbett J in
Nachtsheim
v Overath
clearly
favoured the principle of sanctity of contracts, which dictated that
restraint of trade agreements, like all others which
are not unlawful
or
contra bonos mores
,
must be performed and if necessary be enforced. The same theme ran
through the decision of Didcott J in
Roffey
v Catterall, Edwards & Goudre (Pty) Ltd
[25]
. However, with the advent of the new
constitution, the strict application of the principle of sanctity of
contracts in regards
to the enforcement of restraint of trade
agreement to the exclusion of other considerations had to change as
was evident from
Barkhuizen
v Napier
[26]
,
where the Constitutional Court (per Ngcobo J) held that the principle
of contract
pacta
sunt servanda
was
not a sacred cow that should trump all other considerations. The
Court accepted that constitutional values of equality and dignity
may
prove to be decisive when the issue of the parties’ relative
bargaining positions was before the court, and that
all law,
inclusive of the common law of contract, was now subject to
constitutional control. In the end, the principle was confirmed
that
the application of the principle
pacta
sunt servanda
was
therefore subject to constitutional control.
[37]
The above approach was similarly followed in
Mozart Ice Cream Classic Franchises (Pty) Ltd v Davidoff &
Another,
where it was held that the principle of
pacta sunt
servanda
, that agreements freely entered into must be honoured,
although important, must be balanced against public policy
considerations
that seek to encourage gainful employment, and against
the constitutional right to be employed and to trade freely.
[38]
Within the context of the
constitutionally guaranteed right to human dignity
[27]
and the freedom of trade, occupation
and profession
[28]
,
and the authorities referred to subsequent to courts’ decision
in
Nachtsheim
v Overa,
it
can now be accepted that the enforcement of restraint of trade
provisions is no longer a purely contractual matter, especially
in
such cases where respondents claim that the service that they provide
to clients cannot be divorced from their own personal
attributes, and
thus falling outside the realm of protectable interests.
[39]
The hairdressing industry as already indicated is
unique. It does not as with ordinary conventional industries, entail
mere provision
of services of goods nor does it ordinarily involve
the selling, buying and/or delivery of specialised products. It is
appreciated
that salons obviously provide an avenue for the forging
of relationships with clients, but in the end, and as in this case,
the
nature of the service provided to clients ordinarily involves an
application of the stylists own personal skills, expertise, and
know-how. To some extent, it can even be argued that there is an
element of a human touch involved in the provision of services
in
such an industry. Kruger is therefore correct in his assertions that
the very nature of the product serviced in the light of
these
considerations cannot by all accounts be construed to be the product
of the employer or its proprietary interests.
[40]
The clients in such an industry ordinarily get
attached to the stylist rather than the salon. To therefore equate
the skills, know-how
and experience of a hairdresser or hair stylist
inclusive of his or her personality to that of a product capable of
accruing to
the employer as proprietary interest is clearly taking us
back to an archaic master and servant system, where the salon
owner
not only owns the property, but also the inherent skills,
expertise, know-how and
persona
of the stylists. This cannot be in keeping with
the tenets and values enshrined in our constitution.
Conclusions:
[41]
Even though on the common cause facts Kruger went
to the competition in breach of his restraint of trade undertakings,
the applicant
failed to surmount the hurdle of demonstrating that
even if some of its clients followed Kruger to Jingles, it was Kruger
through
any other means other than his inherent skills, know-how and
experience, that induced them to follow him.
[42]
T
here is no merit in the applicant’s
contentions that all it seeks to do is merely to restrict Kruger from
relying upon the
relationship he had established with the clients
whilst still in its employ, or from taking advantage of those client
relations,
and utilising his skills, knowledge and experience for the
benefit of Jingles. What the applicant seeks to do with the
enforcement
of the restraint agreement is effectively to preclude
Kruger from making use of his own skills and abilities which are part
of
his
persona
,
which attributes are incapable of being converted into a protectable
proprietary interest accruable to anyone.
[43]
Kruger has been in the hairdressing industry since 2000, and I accept
that his skills and expertise can only be said to be
in that field.
There is nothing placed before the Court that suggests that Kruger
during his employ or training by the applicant,
was exposed to any
particular special techniques, methods, secrets, or specialised
products which are unique to the applicant,
and which would
make his own personal attributes unique for the purposes of a
legitimate claim to any proprietary interest
deserving of protection.
[44]
To conclude, all that Kruger would be doing having joined Jingles
is
to apply his skills, knowledge and know-how even if acquired while in
the employ of the applicant.
To therefore deprive him of the
benefits of utilising the only skills and knowledge he has, would be
inimical his constitutional
rights to be employed and to trade
freely. Such a restriction in this case
would not
serve to protect any discernible or recognisable proprietary
interest, and
would equally be unreasonable, contrary to
public policy and unenforceable.
[45]
It is worth repeating that any attempt in enforcing a restraint of
trade in circumstances where a proprietary interest has
not been
demonstrated is purely an attempt at eliminating competition, and
this cannot be countenanced. In my view, the facts of
this case point
to this application being intended to eliminate competition,
especially near or around the prime area of Nelson
Mandela Square in
Sandton.
[46]
Similarly, even if it might be argued
in this case that Kruger in the course of his employment had
agreed to subject himself
to a restraint on the exercise of his
knowledge and skills, and should thus be held to his undertaking, the
facts nonetheless indicate
that at the time when the applicant sought
to enforce the restraint, it had no interest to protect other, than
the 'investment'
it had made in Kruger over the 18 years of his
service. Accordingly, and based of these further two grounds, it
should be concluded
that Kruger had succeeded in discharging the onus
of proving that the enforcement of the restraint would be
unreasonable and contrary
to public policy
[29]
.
[47]
In the light of no protectable interests having been demonstrated,
the enquiry into weighing up of the interest of the parties
qualitatively and quantitatively becomes moot. Even if for some
reason the facts of this case had disclosed something of a
protectable
interest, (which is not the case), it is my view that
those interests, both qualitatively and quantitatively
,
do not
outweigh Kruger’s interest to remain economically active and to
apply his skills, knowledge and know-how in the industry
of his
choice. Thus, in regards to the relief sought, it should be concluded
that even if it is appreciated that the applicant’s
alternative
remedies are limited if not non-existent, I am satisfied that the
other elements of the relief have not been satisfied,
and thus the
application ought to be dismissed.
[48]
In regards to costs, it is trite that
this court ought to take into account the requirements of law and
fairness in accordance with
the provisions of section 162 of the LRA,
and
rule of
practice that costs follow the result does not apply in this
Court
[30]
.
Furthermore, it had long been held by the
Labour
Appeal Court in
Ball
v Bambelela Bolts (Pty) Ltd
[31]
that since
restraint of trade disputes raises a constitutional issue, a rule of
costs following the results does not apply. To that
end, the
appropriate order to make is that of each party paying its own costs.
Order:
[49]
Accordingly, the following order is made:
1. The applicant’s application
is dismissed.
2. Each party is to pay its own costs.
___________________
E.
Tlhotlhalemaje
Judge
of the Labour Court of South Africa
APPEARANCES:
For
the applicant: Mr G. Stansfield of Cliffe Dekker Hofmeyr Incorporated
For
the Respondent: Adv. C Gibson
Instructed
by: Muller Voigt Attorneys
[1]
Mozart Ice Cream Classic
Franchises (Pty) Ltd v Davidoff and Another
2009
(3) SA 78
(C) at
88J
[2]
See
Ecolab (Proprietary)
Limited v Thoabala and Others
(2017)
38 ILJ 2741 (LC) at paras 16 – 20;
Moyo
& Others v Administrator of the Transvaal & Another
(1988)
9 ILJ 372 (W) at 387I, where it was held that:
“
An
applicant who seeks relief by way of notice of motion should put all
the facts, in as much detail as possible, before the Court.
The mere
fact that an application is urgent and urgent relief is sought does
not relieve an application of this duty.”
[3]
Rule 8 of the
Rules of this Court reads;
(1) “
A party
that applies for urgent relief must file an application that
complies with the requirements of rules 7(1), 7(2), 7(3)
and, if
applicable, 7(7).
(2)
The affidavit
in support of the application must also contain-
(a)
the
reasons for urgency and why urgent relief is necessary;
(b)
the
reasons why the requirements of the rules were not complied with, if
that is the case; AND
(c)
if
a party brings an application in a shorter period than that provided
for in terms of section 68(2) of the Act, the party must
provide
reasons why a shorter period of notice should be permitted”.
[4]
(2010) 31 ILJ 112
(LC)
at
para 18
[5]
See
National
Police Services Union & Others v National Negotiating Forum &
Others
(1999)
20 ILJ 1081 (LC) at para 13
[6]
See
Macneil
Jhb (Pty) Ltd v Cocolaras and Another
(J1722/17)
[2018] ZALCJHB 2 (11 January 2018) at para 19 where it was held;
“
In
essence, urgency must not be self-created as a consequence of the
applicant’s failure to launch the application at the
first
available opportunity. It stands to reason that a litigant seeking
an indulgence to be heard on urgent basis must act swiftly
in
instituting the litigation. Urgency dwindles with time, hence the
applicant must come to Court immediately, or risk failing
on
urgency. In
Valerie
Collins t/a Waterkloof Farm v Bernickow NO and Another
the
Court held:
‘
[9]
It is clear from the above that the Courts do not easily grant
urgent relief. This caution is justified given the exceptional
and
drastic nature of such relief. The Labour Court Rules set out the
proper procedure through which applications to the Court
should be
pursued and these rules exist to ensure that due process is allowed
to run its course. They have not been arrived at
arbitrarily but
after careful consideration as developed over years of practice.
Thus, deviation from the usual rules should
not be taken lightly, it
is only in exceptional circumstances that the Court will deal with
applications on an urgent basis.
In order to succeed in an urgent
application, the applicant must satisfy the Court that on balance
the interests of justice outweighs
the right of the parties to have
a considered opportunity to place their case before this Court.
Although the Courts recognise
that financial consideration may be
taken into account, the onus is on the applicant to show the
prejudicial effect that will
give rise to the injustice and plus the
urgency of the situation. In particular, the applicant must show
that he has launched
the application at the first available
opportunity; that special circumstances exist justifying the
granting of the order; and
there is no alternative remedy available
to it.’
[7]
See
National
Council of Societies for the Prevention of Cruelty to Animals v
Openshaw
[2008] ZASCA 78
;
[2008] 4
All SA 225
(SCA);
2008 (5) SA 339
(SCA) at para 20
[8]
[1993] ZASCA 61
;
[1993]
(3) SA 742
(A) at 767 G-H
[9]
See
Experian
South Africa (Pty) Ltd v Heyns and Another
[2013]
(1) SA 135
(GSJ) at para 14, where it was held that;
‘
The position in our law is,
therefore, that a party seeking to enforce a contract in restraint
of trade is required only to invoke
the restraint agreement and
prove a breach thereof. Thereupon, a party who seeks to avoid the
restraint, bears the onus to demonstrate
on a balance of
probabilities, that the restraint agreement is unenforceable because
it is unreasonable’
See
also
Massmart Holdings Ltd and Others v Vieira and Others
(J1945/15) [2015] ZALCJHB 451 (3 November 2015) at para 4 where it
was held that;
“…
Restraint
agreements are enforceable unless they are unreasonable (see Magna
Alloys and Research (SA) (Pty) Ltd v Ellis
[1984] ZASCA
116
;
1984 (4) SA 874
(A)). In general terms, a restraint
will be unreasonable if it does not protect some proprietary
interest of the party seeking
to enforce a restraint. In other
words, a restraint cannot operate only to eliminate competition. The
party seeking to enforce
a restraint need only invoke the restraint
agreement and prove a breach of the agreement, nothing more. The
party seeking to
avoid the restraint bears the onus to establish, on
a balance of probabilities, that the restraint agreement is
unenforceable
because it is unreasonable (see
2013 (1) SA 135
;
Magna Alloys and Research (SA) (Pty) Ltd supra; Den Braven SA (Pty)
Ltd v Pillay and another
2008 (6) SA 229
(D)).
[10]
See
Labournet
(Pty) Ltd v Jankielsohn and Another
[2017]
5 BLLR 466
(LAC) at para 41;
Sunshine
Records (Pty) Ltd v Frohling and others
1990
(4) SA 782
(A) at 794C-E
[11]
[1993] ZASCA 61
;
[1993]
(3) SA 742
(A) at 767 G-H
[12]
Massmart
Holdings Ltd and Others v Vieira and Others
at
para 6
[13]
Automotive
Tooling Systems (Pty) Ltd v Wilkens and Others
2007
(2) SA 271
(SCA) at 279
[14]
Rawlings and
Another v Caravan Truck (Pty) Ltd
[1992] ZASCA 204
;
1993
(1) SA 537
(A) at 541C-D
[15]
Longfield
Trading CC v Bradfield
[2011]
JOL 28113
(KZD) at para 15
[16]
Den Braven SA
(Pty) Limited v Pillay & Another
2008
(6) SA 229 (D)
[17]
At para 236D
[18]
1968 (2) SA 270
(C).
[19]
At para
272
G-H
[20]
Aranda Textile Mills (Pty) Ltd v
Hurn and Another
[2000]
4 All SA 183
(E); See also
PB
Hairdressing Organisation (Pty) Ltd t/a Carlton Hair International v
Vinciguerra and Another
(J2948/16)
[2017] ZALCJHB 8 (16 January 2017) at para 13
[21]
At para 8
[22]
At 277G-278A and
C; 282E-F and 282G. See also
Kopano
Copier Company (Pty) Ltd
t/a
Nashua
Kopano v Gibson
2013
JDR 1994 (GSJ);
(13340/2013)
[2013] ZAGPJHC 233 (31 July 2013) at para 19 where the Court (Per
Madima AJ) held that;
“
I agree
further that the fact that the first respondent has taken up
employment with Smart Office does not in itself entitle the
applicant to any relief if all he will be doing is applying his
skills and knowledge acquired while in the employ of the applicant.
It is only if the restriction on his activities serves to protect
a
recognisable
proprietary interest
relied
on by the applicant that the first respondent would be in breach of
his contractual obligations.
Automotive
Tooling Systems (Pty) Ltd v Wilkens and Others
2007
(2) SA 271
(SCA) at
279.
This also does
not appear to be the applicant’s case in its founding papers.”
[23]
See also
Sibex
Engineering Services (Pty) Ltd v Van Wyk and Another
1991
(2) SA 482
(T) at 507A, where the copurt held that;
‘
In seeking
to protect his ‘investment’ in training the workmen, the
employer is pursuing an objective which is unreasonable
and contrary
to public policy. For public policy requires that workmen should be
free to compete fairly in the market place to
sell their skills and
know-how to their own best advantage; and the enforcement of a
restraint which has no objective other than
to stifle such free and
fair competition is unreasonable and contrary to public policy.’
[24]
At para 61
[25]
1977 (4) SA 482
(N) at 493 , where it was held that;
“
I am satisfied that South
African law prefers the sanctity of contracts. That principle is
firmly entrenched in our system, where
it shows its’ head in
so many places. Freedom of trade does not vibrate nearly as strongly
through our jurisprudence”
[26]
[2007] ZACC 5
;
2007 (5) SA 323
(CC);
2007 (7) BCLR 691
(CC) at para 15
[27]
Section 10 of the
Constitution
[28]
Section 22
[29]
See
Sibex
Engineering Services (Pty) Ltd v Van Wyk and Another
at 507D-H;
Automotive
Tooling Systems (Pty) Ltd v Wilkins and Others
at
para 10.
[30]
Sibongile Zungu
v Premier of the Province of KwaZulu-Natal and Others
[2018] ZACC 1
at
paragraphs 22 - 24
[31]
[2013]
9 BLLR 843
(LAC).