SAFLII Note: Certain personal/private details of parties or witnesses have been redacted from this document
in compliance with the law and SAFLII Policy
REPUBLIC OF SOUTH AFRICA
IN THE HIGH COURT OF SOUTH AFRICA
GAUTENG LOCAL DIVISION, JOHANNESBURG
(1) REPORTABLE: NO
(2) OF INTEREST TO OTHER JUDGES: NO
(3) REVISED
2 December 2024
________________ ______________________
DATE SIGNATURE
CASE NUMBER: 2024-102799
In the matter between:
IMITHETHO LABOUR LAW CC. t/a Applicant
LABOUR LAW DISTRIBUTORS
(Registration number: 2008/195195/23)
and
GERMARé VAN ECK First Respondent
(Identity number: 7[…])
LABOUR LAW GROUP (PTY) LTD Second Respondent
(Registration number: 2020/036395/07)
DUNCAN LEE NAUDé Third Respondent
(Identity number: 0[…])
2
Coram: DOSIO J
JUDGMENT
DOSIO J:
Introduction
[1] This is an urgent application in terms of which the applicant seeks final relief
against Germaré Van Eck (first respondent), Labour Law Group (PTY) Ltd (second
respondent) and Duncan Lee Naudé (third respondent).
[2] Having decided that the matter is urgent, the parties proceeded to address
me.
[3] Condonation is granted to the respondents for the late filing of the answering
affidavit.
[4] The applicant seeks the following relief:
‘2. That the First, Second and Third Respondents be interdicted and
restrained from:
2.1 Utilising the Applicants’ confidential information, inclusive of the
Applicant’s client databases and client connections, business methods,
pricing methods (including, but not limited to, the details of cost prices and
mark-up), products (including, but not limited to training manuals), suppliers
and know-how, for the benefit of the Respondents or any other person;
2.2 Approaching, directly or indirectly, or assisting any other person in
approaching, directly or indirectly, the Applicant’s clients , as more specifically
listed in Annexure “X”, attached to the Notice of Motion;
3
2.3 Doing business with, and servicing, the Applicant’s erstwhile client,
Langplaas;
2.4 Using the Applicant’s confidential information to unlawfully compete with
the Applicant whether as a labour law distributor or otherwise and to advance
the business interests and activities of the Second and/or Third Respondent
or any other person, in direct competition with, and to the detriment of the
business interest of the Applicant;
2.5 Participating in any conduct which will have the effect of damaging the
goodwill or client or business relationships of the Applicant;
2.6 Copying, transmitting or transcribing, or rendering in usable form, any of
the aforementioned confidential information of the Applicant;
2.7 Making available to any other party or entity, whether in digital form or
otherwise, any of the aforementioned confidential information of the Applicant;
3. That the First, Second and Third Respondents are ordered to surrender all
confidential information in their possession relating to the Applicant’s
business, to the Applicant’s representative, such information to include but not
be limited to:
3.1 All the Applicant’s client databases including but not limited to client and
supplier lists and information indicating the primary needs of particular clients
of the Applicant, identifying the type and quantity of labour law distribution
services the client would be likely to purchase;
3.2 All pricing details and product lists pertaining to the services offered by the
Applicants;
4
3.3 All documents containing details of the Applicant’s business methods,
strategies, operational systems, branding business systems and procedures,
including training manuals.
4. That the First, Second and Third Respondents are ordered to delete, in the
presence of the Applicant’s representatives, all of the Applicant’s confidential
information on any computer hardware possessed by the Respondents.
5. Declaring that the First Respondent is in breach of her restraint of trade
agreement concluded with the Applicant on 19 October 2022.
6. Declaring that the employment of the First Respondent by the Second
and/or Third Respondent is in breach of the restraint of trade agreement
concluded between the Applicant and the First Respondent.
7. Interdicting and restraining the First Respondent from directly or indirectly
using, revealing, disclosing, or in any way utilizing for the First Respondent’s
own purposes, or for the purposes of any third party, including the Second
and/or Third Respondent, any of the Applicant’s confidential information.
8. Interdicting and restraining the First Respondent in accordance with the
provisions of the restraint of trade agreement for a period of two years, from:
8.1 Being directly or indirectly employed by the Second and/or Third
Respondent in any capacity whatsoever;
8.2 Being directly or indirectly associated and/or concerned with, interested
and/or engaged in and/or interested herself in any firm, business, company,
close corporation or other association (“entity”) which is a competitor of the
Applicant and who has its registered office within a 50 km radius of the
registered office of the Applicant;
8.3 Rendering services to any person or business which is a competitor of the
Applicant and who has its registered office within a 50 km radius of the
5
registered office of the Applicant, and in particular the Second Respondent
and/or Third Respondent;
8.4 Conducting, accepting, soliciting, canvassing or discussing business or
mandates in respect of any of the services rendered by the Applicant in the
ordinary course of business with and/or from any principal, supplier or client of
the Applicant;
8.5 Encouraging or enticing to persuade any principal, supplier or client of the
Applicant to terminate their relationship with the Applicant.
9. Interdicting and restraining the Second and/or Third Respondent from
employing or being associated with the First Respondent in breach of the
restraint of trade agreement between the Applicant and the First Respondent.
10. That the First, Second and Third Respondents pay the costs of this
application, jointly and severally, the one to pay the other to be absolved, on
an attorney-and-client-scale.’
[5] The respondent contends that the restraint of trade agreement is vague and
too wide as to scope, ambit and duration, and is therefore contra bonos mores.
Background
[6] The applicant was created to provide services and training to companies
that have to comply with the Occupational Health and Safety Act.
[7] The first respondent started her employment with the applicant on 6 May
2021. On 26 July 2022, the applicant and the first respondent entered into a written
agreement of employment , (‘ contract of employment ’), in terms of which the first
respondent was appointed as a training administrator/sales representative, at the
applicant’s Boksburg branch. Clause 36 of the contract of employment regulates the
relationship between the parties regarding confidential information. On 19 October
2022, the applicant and the first respondent entered into a restraint of trade
agreement (‘restraint agreement’).
6
[8] It is alleged by the applicant that on 8 August 2024 and whilst still in the
employ of the applicant, and unbeknown to the applicant, the first respondent
provided a quote to the applicant’s client Langplaas, on behalf of the second
respondent, for similar services but at a reduced and undercut price, which was
accepted and paid for by Langplaas to the second respondent.
[9] The first respondent resigned from her employment with the applicant on 19
August 2024.
[10] It is alleged by the applicant that on 21 August 2024, the first respondent,
whilst still in the employ of the applicant, and unbeknown to the applicant, forwarded
an email to various clients of the applicant from an email belonging to the second
respondent. It is alleged by the applicant that in this email the first respondent
encouraged the clients of the applicant to ‘move with her’ to a new training company
with lots of discounts. It is alleged the first respondent requested that the email be
treated with confidentiality . The applicant only became aware of this email on 2
September 2024.
[11] The applicant forwarded correspondence to the first respondent on 28
August 2024, via its attorney of record, to remind the first respondent of her
confidentiality obligations and restraint conditions , as per the aforementioned
restraint agreement. On 30 August 2024, which was the first respondent ’s last day
with the applicant, the first respondent was removed from the applicant's systems.
[12] On 3 September 2024, the applicant's attorney of record forwarded
correspondence to the first, second and third respondents advising them that their
conduct was unlawful and allowed the respondents to give undertakings by
Thursday, 5 September 2024. The applicant is of the contention that the second
respondent will continue to undercut the prices of the applicant.
Common cause facts
[13] The following are common cause facts:
7
(a) the express wording of the contract of employment and the restraint
agreement.
(b) that the registered address of the applicant is situated at [ …] O[…] Street,
M[…], Brakpan, with its head office, (principal place of business), at […] D[…] Street,
Boksburg.
(c) that the second respondent's registered address is situated at 6[ …] P[…] G[…]
Avenue, Brakpan and that it has its principal place of business at 4[ …] H[…] Road,
S[…], Pretoria.
(d) that the first respondent kne w the identity and contact details of the
applicant’s clients.
(e) that Langplaas was a client of the applicant and that the second respondent
provided services to Langplaas on 7 September 2024 for which they were paid.
(f) that the first respondent is employed by the second respondent, who also
deals in labour law distribution services and was established to provide services and
training to companies that have to comply with the Occupational Health and Safety
Act.
Evaluation
[14] Clause 1.1 to 1.4 of the restraint agreement reads as follows:
‘ 1.1 Party 2 acknowledges that as an Employee employed by Party 1 he/she
will by reason of his/her employment be in possession of and have access to
most of the Company’s accumulation of trade secrets, formulas, price lists,
client lists, and/or other confidential information.”
1.2 It is specifically recorded by the Parties that Party 2 is employed and
remunerated inter alia to have a good relationship with the clients of Party 1 at
all times, and to maintain such relationship as far as possible.”
1.3 It is furthermore agreed and recorded that such relationship with the
clients of Party 1 would leave the Company vulnerable, should the services of
Party 2 with Party 1 be terminated for whatsoever reasons, especially if Party
2 acts in competition to the Company after the termination of his/her services.”
8
1.4 Party 2 acknowledges that the provisions hereinafter set out are fair,
reasonable and necessary for the protection of the propriety interest of the
Company of Party 1, and that all restraints in this Agreement are for the
benefit of Party 1.’
[15] Clause 1.5.3 of the r estraint agreement states ‘the territory shall mean
radius of 50 (fifty) kilometres within the physical address of Party 1 as referred to
here above’.
[16] Clause 1.8 of the restraint agreement states the following:
‘In terms of the restraint of trade Party 2 specifically undertakes and agrees:
1.8.1 Not to establish, or be interested in any business in the territory, which
carries on business, manufactures, sells, or supplies any commodity or
goods, brokers, or acts as an agent in the sale or supply of any commodity or
goods, and/or performs, or renders any service in competition with, or
identical, or similar, or comparative to that sold, supplied, brokered, or
performed by the Company after the termination of his/her employment by
party 1;
1.8.2 Not to solicit the custom of, or deal with, or in any way transact with, in
competition with the business, any business, company, firm, undertaking,
association or person who has been a customer or supplier of the business in
the territory; and
1.8.3 That each and every restraint in this entire Agreement shall be valid and
binding for a total period of 2 (two) years, calculated from the official date of
termination of the employment of Party 2 with Party 1. This restraint shall
apply, irrespective of what the cause(s) and/or reason(s) for the termination of
Party 2’s services might have been, and also whether the fairness of the
termination of Party 2’s services was challenged in any way by party 2, or
not.’
9
[17] Clause 36.4 of the contract of employment reads as follows:
‘The Employee shall not, (during her employment, or after termination of her
employment), be entitled, whether for her own benefit, or that of a other, to
make use of, or avail herself, or to deprive profit, from any trade secrets,
confidential records, and/or information, relating to the defined business of
affairs of any of the Clients of her Employer, which she may have acquired by
reason of her position in, or association with the business of her Employer.’
Whether the registered or physical address of the companies are applicable
[18] The applicant argued that the first respondent is in breach of the agreement
as it is the registered address and not the physical address that should be
considered for purposes of clause 1.5.3 of the restraint agreement.
[19] The respondent, on the other hand, argued that the reference to a physical
address clearly must refer to the physical address where they conduct business , it
cannot be the registered address, as the registration address of a company is simply
an address for administrative purposes.
[20] A radius is, in terms of the dictionary, defined as a straight line from the
centre to the circumference of a circle. T he registered addresses of both the
applicant and second respondent fall within the Brakpan area. T he applicant’s head
office is based in Boksburg whereas, the second applicant’s head office is based in
Silver Lakes, Pretoria.
[21] In the matter of Sibakhulu Construction (Pty) Ltd v Wedgewood Village Golf
Country Estate (Pty) Ltd
1(‘Sibahkulu’), t he Western Cape High Court had to
determine the ‘place of residence’ of a company for purposes of determining which
court would have jurisdiction and stated that:
1 Sibakhulu Construction (Pty) Ltd v Wedgewood Village Golf Country Estate (Pty) Ltd (27956/2010) [2011]
ZAWCHC 439 (16 November 2011)
10
‘… whereas the 1973 Companies Act expressly acknowledged the possibility
of a distinction between a company’s registered office and its ‘main place of
business’, the 2008 Act requires the registered office and the principal place
of business for jurisdictional purposes to be at one and the same address.’ 2
‘I consider that it would give effect to the purposes set out in s 7(k) and (l) to
interpret s 23 of the Act to the effect that a company can reside only at the
place of its registered office (which, as mentioned, must also be the place of
its only or principal office).’ 3 [my emphasis]
[22] Although the matter of Sibakhulu
4 dealt with jurisdiction, the same principle
can be applied for purposes of territory in terms of a restraint agreement.
[23] The registered office of the applicant is situated at [ …] O[…] Street, M[…],
B[…] and the registered office of the second respondent is situated at 6[ …] P[…]
G[…] Avenue, Brakpan. Both companies are resident in Brakpan and therefore the
second respondent is resident within a 50-kilometer radius of the applicant.
[24] Even if this Court is wrong, if one looks at the ‘physical business addresses’
of the parties and not the registered addresses and one measures the distance, in a
straight line, from the business address of the applicant, situated at 41 David Street,
Boksburg, to the second respondent ’s business address, situated at 49 Hadeda
Road, Silverlakes, then, according to Google Maps, it measures 50.406 kilometres.
The respondent’s argument that the address falls 0.406 kilometres outside the 50 -
kilometer radius is negligible. A few hundred meters beyond the radius is irrelevant.
For purposes of the agreement, 406 meters cannot be a limit to the applicant not
enforcing the agreement.
Whether the restraint of trade is too wide and against public policy
[25] The applicant argued the restraint agreement is not too wide and is not
against public policy. The applicant contended that it does not merely seek to
2 Ibid para 19
3 Ibid para 23
4 Ibid
11
enforce the restraint agreement for the sake of restricting fair competition, but also to
legitimately protect the applicant's protectable proprietary interest. Reference was
made to the case of Slo Jo Innovation (Pty) Ltd v Bendle and Another 5.
[26] The respondents allege that the agreement is too wide and contrary to
public policy and therefore unenforceable, alternatively unsustainable in law.
Furthermore, there is no proprietary interest or confidential information known to the
respondents that is indeed protectable, and no enforcement of a restraint of trade
should be allowed. It was argued not only has the applicant failed to identify or
describe any ‘confidential information’ worthy of that name in the legal sense, it is
also clear that the applicant has ‘unclean hands’. In addition, a two- year period as
mentioned in the restraint agreement is contra bona mores, rendering the agreement
invalid and unenforceable, restricting fair competition.
[27] The respondent’s counsel r eferred this court to the matter of Reddy v
Siemens Telecommunications Ltd
6, where the Supreme Court of Appeal pointed out
that the incidence of onus plays no role in the question whether a restraint is
reasonable or not on a given set of facts, since answering that question calls for a
value judgment.
[28] In the matter of Labournet (PTY) Ltd v Jankielson & Another
7(‘Labournet’),
the Labour Appeal Court held that:
‘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. A restraint is only
reasonable and enforceable if it serves to protect an interest, which, in terms
of the law, requires and deserves protection. The list of such interests is not
closed, but confidential information (or trade secrets) and customer (or trade)
connections are recognised as being such interests. To seek to enforce a
restraint merely in order to prevent an employee from competing with an
5 Slo Jo Innovation (Pty) Ltd v Bendle and Another (J737/22) [2022] ZAL, CJHB 310 (9 November 2022) para 46
6 Reddy v Siemens Telecommunications Ltd 2007 (2) SA 486 SCA
7 Labournet (PTY) Ltd v Jankielson & Another (2017) 38 ILJ 1302 (LAC)
12
employer is not reasonable [see Ball v Bambalela Bolts (PTY) Ltd and
Another (2013) 34 ILJ 2821 (LAC) para 14] 8’
‘According to the Appellate Division in Basson v Chilwan and Others [1993 (3)
SA 742 (A) at 767 E -I] the following questions require investigation, namely,
whether the party who seeks to restrain has a protectable interest, and
whether it is being prejudiced by the party sought to be restrained…. If
the interest of the party to be restrained outweighs the interest of the
restrainer – the restrain is unreasonable and unenforceable.’ 9[my emphasis]
‘… With reference particularly to the facts of this matter, it is an established
principle of law that the employee cannot be interdicted or restrained from
taking away his or her experience, skills or knowledge, even if those were
acquired as a result of the training which the employer provided to the
employee.’
10
[29] The purpose of a restraint agreement is to limit the ability of an employee to
accept future employment to the detriment of the current employer.
[30] It is trite law that covenants in restraint agreements are valid and become
unenforceable when their enforcement would be contrary to public policy. A clause in
a restraint agreement will be enforceable if there is an interest that requires
protection.
[31] A protectable proprietary interest as per the decision of Labournet
11 is
usually in the nature of trade secrets, know -how, pricing or customer connections
and therefore, a restraint agreement would be an enforceable restriction on the
activities of an employee who had access to the company’s customers and who
used such relations with the company’s customers to the advantage of a competitor
and to the detriment of the company.
[32] In order to protect the applicant's confidential information by way of an
interdict, the applicant needs to allege and prove the following:
8 Ibid para 41
9 Ibid para 42
10 Ibid para 43
11 Ibid
13
(a) that t he applicant has a proprietary interest in the confidential
information;
(b) that the information has the necessary quality of confidentiality;
(c) that there is a relationship, usually contractual, between the parties
which imposes a duty (expressly, impliedly or tacitly) on the respondent to
preserve the confidence of the information. An example of a contractual
relationship is that between employer and employee;
(d) that the second respondent is in direct competition with the applicant
and obtained the information in an improper manner; and
(e) that t he first respondent had knowledge of the confidentiality of the
information and its value;
(f) that there has been improper possession and use of the information by
the respondents; and
(g) that damages have been suffered by the applicant.
[33] The respondents contend that if the applicant chooses to call something
‘secret’ or ‘confidential’ it does not per se make it so. Reference was made to the
case of Telefund Raisers CC v Isaacs and Others
12. It was further argued that the
first respondent is no longer in the employ of the applicant and that slightly different
principles apply both in relation to the adjudication of proprietary interests and what
an employee may do.
[34] A protectable proprietary interest by implication can include customer
connections and pricing. In the matter of Refinery Post Production Facilities (Pty) Ltd
v Lautre
13 (‘Refinery’) the Labour Court noted that:
‘The Court in Square One Power Solutions [ [2004] ZAFSHC 11] quoted with
approval Easyfind International v Instaplan Holdings [(1983(3) SA 917) (W) ]
that “our law also recognizes certain categories of information or documents
as being of a confidential nature. A customer’s list is one such type of
document.’ 14 [my emphasis]
12 Telefund Raisers CC v Isaacs and Others 1998 (1) SA 521 at 528E-G
13 Refinery Post Production Facilities (Pty) Ltd v Lautre (J1836/18) [2018] ZALCJHB 263 (16 August 2018) at
paragraph 46
14 Ibid para 46 ( see also Square One Power Solutions [2004] ZAFSHC 11 at para 12)
14
[35] In the matter of Pam Golding Properties v Neille 15, the Court recognised
that the details of sellers and potential buyers constitute a proprietary interest in the
hands of the applicant. 16
[36] The onus is on the respondent s to satisfy this court that the applicant does
not have a proprietary interest. In the matter of Digicore Fleet Management v Steyn
17(‘Digicore’), the Supreme Court of Appeal stated that:
‘It is now trite that provisions in restraint of trade are enforceable unless
shown by the person wishing to escape an undertaking to be unreasonable
and hence contrary to public policy . It is not necessary to rehearse the
principles that have been set out by this and other courts governing
agreements in restraint of trade. Suffice it to say that Steyn, in order to escape
her contractual undertaking, must show that Digicore has no proprietary
interest that is threatened by her working for a competitor of Digicore.’ [my
emphasis]
[37] It is common cause that the first respondent knew the identity and contact
details of her clients and it is to be accepted that the applicant has a proprietary
interest in its customer connections , as the applicant has spent considerable time
and money to build its client base. It is also common cause that t he first respondent
is currently employed by the second respondent and there exists a relationship
between these parties which imposes a duty (expressly, impliedly or tacitly) on the
first respondent to preserve the confidence of the information obtained during the
course of her employment with the applicant.
[38] The first respondent not only has knowledge of the customer details of the
applicant, but has knowledge of how discounts and charges were imposed on the
applicant’s existing clients, thereby affecting the price that the applicant would
charge for its services.
15 Pam Golding Properties v Neille [2017] ZAGPJHC (28 July 2017)
16 Ibid para 12
17 Digicore Fleet Management v Steyn 2009] All SA 442 (SCA)
15
[39] The first respondent sent an email to various of the clients of the applicant
from an email address belonging to the second respondent. Had the first
respondent's intentions been so pure she would not have stated in her email the
following, namely:
‘Please keep this mail confidential as I am sending this mail to you discreetly
and in all confidence.’ In addition, the e- mail encourages these clients to
‘move with her’ and that she will ensure that she will continue to service these
clients and get them ‘ even better prices of course’ … ‘ and give the new
company I am joining a chance to do better in all aspects’. [my emphasis]
From the wording of this email, it is clear to this Court that the first respondent
understood and had knowledge of the confidentiality of the information and
the value of the information, especially in respect to pricing.
[40] Notwithstanding the proprietary interest the applicant had with the client
Langplaas, the first respondent, whilst still in the employ of the applicant sent out an
invoice on 25 July to Langplaas whilst fully aware of what services Langplaas
required and also what price the applicant would charge for these services. In
addition, whilst still in the employ of the applicant, with the knowledge she had, she
sent out on 8 August 2024, on behalf of the second respondent to Langplaas, exactly
the same services invoiced by the applicant, but at an undercut price, without the
knowledge of the applicant.
[41] The first respondent, whilst an insider and working for the applicant ,
divulged this confidential information to the second respondent thereby causing
damage to the applicant . It is common cause that the applicant and the second and
third respondents are in direct competition with each other.
[42] There is a major difference between various companies approaching a
potential client as compared to an insider of the applicant, such as the first
respondent, with the knowledge she had and whilst still working for the applicant , to
use such information for the benefit of a direct competitor, namely, the second
respondent.
16
[43] This Court is aware of the decision of Basson v Chilwan 18, where the
Appellate Division, as it then was, stated that if one weighs the competing interests,
qualitatively against the interests of the other with the result that the defendant will
be economically inactive and unproductive, then the court should lean towards the
invalidity of the document. The second and third respondents have an existing client
base. To prevent the first respondent, in terms of the restraint agreement, from using
the applicant’s client base, as well as information pertaining to how the applicant
dealt with its pricing, is not unreasonable.
[44] In light of the principles set out in Dig icore
19, I am not satisfied that the first
or second respondent have discharged this onus or that the restraint agreement is
contra bonos mores.
[45] This Court is not implying that the first respondent cannot use what she has
learnt and what is in her head. An ex-employee will always retain some knowledge of
their former employer. It is clear that such an employee cannot unlearn the skills they
have derived. The first respondent is free to use and disclose such generally used
recollected knowledge in her own interests and those of anyone else, including a
new employer, provided that she does not take confidential information with her.
[46] In the matter in casu, the first respondent did take confidential information to
a direct competitor.
[47] This Court does not find that the contract of employment and the
confidentiality clause the first respondent signed is invalid or unenforceable. Even if
this Court is wrong and the restraint agreement is declared invalid, the fact remains
that clause 36.4 of the contract of employment is not limited by time or territory.
[48] The second respondent has not given a convincing explanation how it came
to service Langplaas. As a result, this Court must accept that t he first respondent ,
18 Basson v Chilwa 1993(3) SA 742 (A)
19 Digicore (note 17 above)
17
whilst still in the employ of the applicant, unlawfully sent the applicant’s pricing in
respect of Langplaas to the second respondent.
[49] The first respondent had a duty to preserve the confidence of the
information she obtained during the course of her employment with the applicant.
The applicant spent a considerable amount of time and money to build up its client
base. The first respondent cannot now use the contact details of the applicant to
solicit its clients for the benefit of the second and third respondents. The respondents
contend that the f irst respondent had a contractual obligation to maintain a good
relationship with the clients of the applicant at all times. This may be so, but such
relationship ended when the first respondent stopped working for the applicant. To
send an e- mail indicating that she would be moving and that the applicant’s clients
must move with her goes way beyond maintaining a good relationship. In fact, it is
detrimental to the applicant.
[50] Even if the second and third respondents did not know that the first
respondent sent this e- mail to existing clients of the applicant, the fact remains that
the second and third respondents would in any event benefit from this once the first
respondent started working for them , as these clients would have already followed
the first respondent to her new employment.
[51] A restraint agreement should not place an unreasonable restraint on an
employee to seek new employment. The restraint agreement does not extend to the
whole of South Africa, therefore the first respondent could have applied her mind to
seek employment outside the radius of 50 kilometres. She could have sought
employment in any other area of Gauteng or South Africa as a training administrator
or sales representative without being in breach of her restraint of trade agreement.
Neither does the r estraint agreement prevent the first respondent from using the
skills she derived whilst working for the applicant , or the skills derived since 2014.
The restraint agreement is merely to prevent the first respondent from contacting the
applicant’s clients and dispersing confidential information she derived whilst working
for the applicant.
18
[52] The respondents contend that annexure X to the notice of motion is evident
that the applicant seeks a nationwide protection from free trade and competition, to
which it is not entitled and which should not be countenanced. In other words, the
applicant is attempting to quash competition. The second and third respondents
contend that annexure X is virtually a ‘who’s who of the JSE listed companies’. It is
true that in annexure X there are certain companies which have offices nationwide,
for example Spar, Shoprite, PG Glass, Spur Corporation, KFC, Goldwagen,
Ackermans, WBHO, Yokohama, Hudaco, RCL Foods, PSG, Bidvest, Pioneer Foods,
CTM and Bell Equipment. The second respondent stated that it has been doing
business with certain of these companies. The interdict the applicant seeks is to
prevent the second and third respondents from approaching, directly or indirectly, or
assisting any other person in approaching, directly or indirectly, the a pplicant’s
clients, as more specifically listed in a nnexure ‘X’. There is nothing wrong with the
wording of this request. If there is an existing relationship between the second and
third respondents with any of the companies listed on annexure X, then there is
nothing preventing these companies , themselves, in approaching the second and
third respondents.
[53] As regards the issue raised by the respondents that two years is contra
bonos mores, this Court does not agree. The first respondent was fully aware of the
two years stipulated when she signed the agreement. To now state that it is contra
bones mores is non-sensical.
[54] Despite a request by the applicant that the respondents give an undertaking
that they would not unlawfully compete or unlawfully use the information the first
respondent derived from the applicant, no such undertaking was forthcoming. The
only undertaking given was in the answering affidavit where it was stated that the
first respondent would not be assigned to any of the clients she had dealt with whilst
in the employee of the applicant. However, there is no undertaking that the first
respondent would not make contact with the clients. There was also no undertaking
with regard to the clients of the applicant that the first respondent had already
contacted in the e-mail dated 21 August 2024 and what the situation would be when
the clients, contacted by the first respondent, responded to that e-mail.
19
[55] This court finds the first respondent breached the restraint agreement in
that:
(a) she joined a direct competitor of the applicant , namely the second
respondent, within the two years of restraint.
(b) she joined a direct competitor of the applicant whose registered
address is situated within a 50- kilometre radius of the applicant's registered
address.
(c) The first respondent solicited the clients of the applicant for the
advancement of the business of the second and third respondents who are in
direct competition with the applicant, an example being Langplaas.
[56] The misuse of confidential information to advance one’s own business
interest and activities at the expense of a competitor constitutes unlawful
competition.
20 An interdict is the preferred remedy for unlawful competition.
[57] The applicant has succeeded to demonstrate to this court that the first
respondent was privy to confidential information of the applicant and that with this
knowledge, prices were undercut by the second respondent, resulting in the client
Langplaas accepting the quote and services of the second respondent.
[58] Accordingly, this Court finds that the r estraint agreement is reasonable and
enforceable. The applicant has successfully sought to enforce the r estraint
agreement to protect its legitimate proprietary interests.
Final relief/ interdict
[59] In the matter of Refinery
21, the C ourt held that in order for a restraint
covenant to be enforced by way of a final interdict, an employer has to show that
there is a valid restraint agreement and that the same has been breached or there is
a reasonable apprehension that same will be breached and that the employer will
suffer irreparable harm. Thereafter, the onus shifts to the employee to show that the
20 see Amler’s Precedents and Pleadings, 9th Edition, Page 367)
21 Refinery (note 13 above)
20
covenant is either invalid or unenforceable because it is unreasonable and/or
because it is against constitutional values and public policy. 22
Clear right
[60] The requisites for a final interdict were stated in Setlogelo v Setlogelo
23 , as
follows:
‘The requisites for the right to claim an interdict are well known; a clear right,
injury actually committed or reasonably apprehended, and the absence of
similar protection by any other ordinary remedy.’
[61] This Court has already found that the restraint agreement has been
breached and that it is not contra bonos mores. This Court has also found that that
there has been confidential information of the applicant which was us ed by the first
respondent. Even if this Court is wrong in regard to the issue of confidential
information, in the matter of Refinery
24 the Court stated that:
‘The applicant avers that it has a protectable interest both in the form of
confidential information that if disclosed to the respondent’s new employer
would be detrimental to their business and secondly that the respondent has
customer connections which if exploited by her new employer would cause
irreparable harm to the applicant. I believe it should be mentioned fr om the
outset that both of these do not have to be present in order for the applicant to
show that it has a protectable interest. If one is shown to exist, and not the
other, the applicant would still have a protectable interest.25 [my emphasis]
And further
‘The respondent herein raises a few grounds in defence of whether her
conduct would amount to unlawful competition. The first being that the
information taken was not confidential. The Court in Square One Power
Solutions (supra) went further to state that the absence of confidentiality does
not militate against the applicant’s clear right. The applicant has a right to the
22 Ibid para 16
23 Setlogelo v Setlogelo 1914 AD 221
24 Refinery (note 13 above)
25 Ibid para 26
21
goodwill of its business and to the protection of such right against wrongful
infringement.’26 [my emphasis]
[62] The Court in Refinery
27 stated further that:
‘[39] Once the applicant has established that it has a clear right, the Court
needs to determine whether the applicant will suffer irreparable harm and
whether there is an appropriate alternative remedy but for the interdictory
relief sought. Steenkamp J, stated the following in his judgment of Continuous
Oxygen Suppliers
28:
‘I have come to the conclusion that the restraint of trade agreement is
enforceable and that the applicant has interests worthy of protecting. It is
axiomatic that the applicant will suffer irreparable harm if it is not enforced.
The potential harm caused by an employee who is in a position to divulge
trade secrets to and exploit customer connections in favour of her new
employer cannot be easily remedied by a damages claim in due course.’29
‘… The obvious alternative remedy of a damages claim is cold comfort to an
applicant that seeks to enforce a legitimate restraint of trade covenant. By the
time a damages claim is likely to be heard, the horse would have bolted and
the harm would have been done. That harm is very difficult to repair.’
30
[40] Therefore the applicant has shown that it has a protectable interest that if
not enforced will cause irreparable harm to its business . The applicant should
not be denied urgent relief because it has an alternative remedy in due
course, because such a remedy will be cold comfort.’ [my emphasis]
[63] As stated the applicant has a clear right in that the first respondent’s conduct
is in direct breach of not only the r estraint agreement but also the confidentiality
clause in the contract of employment and the applicant has demonstrated that it has
a protectable interest in the form of confidential information which includes the
applicant’s customer details.
26 Ibid para 43
27 Ibid
28 Continuous Oxygen Suppliers (Pty) Ltd t/a Vital Aire v Meintjies and Another (2012) 33 ILJ 629 (LC)
29 Ibid para 49
30 Ibid para 50
22
Actual harm or the reasonable apprehension of harm
[64] The first respondent does not have the applicant's permission to be in
possession of the information or to make use of the information and has used the
information in an improper manner . It has already been shown that the first
respondent used the contact details of the applicant's client, Langplaas, to solicit this
client of the applicant. There is also the reasonable apprehension of harm that all the
other clients contacted in the email dated 21 August 2024, may still approach the
first respondent.
[65] The first respondent has used the applicant’s client’s contact details to solict
them. This was done purely for the advancement of the business of the second and
third respondents, resulting in the undercutting of the prices of the applicant which
has been manifested in the agreement concluded between the second respondent
and Langplaas.
[66] The applicant has suffered damages as a result of the first, second and third
respondents' actions, and will continue to suffer irreparable harm if the first
respondent continues to disclose the applicant ’s confidential information to the
second or third respondent.
[67] The applicant has made out a proper case for the protection of its
confidential information by way of an interdict, as the harm already caused cannot be
easily remedied by a damages claim in due course.
The absence of similar protection by any other ordinary remedy
[68] The lead times for civil trials in this division is approximately five years. This
means that a damages claim cannot be heard for some time, thereby allowing the
harm caused to continue. This is not a tenable situation.
[69] As a result , this court finds that the applicant has adduced all the
requirements necessary for a final interdict to be granted.
23
[70] This court has borne in mind the provisions as set out in the matter of
Plascon-Evans Paints (TVL) Ltd. V Van Riebeck Paints (Pty) Ltd 31, where the
Supreme Court of Appeal noted the following with regard to a dispute of fact:
‘It is correct that, where in proceedings on notice of motion disputes of fact
have arisen on the affidavits, a final order, whether it be an interdict or some
other form of relief, may be granted if those facts averred in the applicant’s
affidavits which have been admitted by the respondent, together with the facts
alleged by the respondent, justify such an order.
The power of the court to give such final relief on the papers before it is,
however, not confined to such a situation. In certain instances the denial by
respondent of a fact alleged by the applicant may not be such as to raise a
deal, genuine or bona fide dispute of fact.’
[71] This Court does not find that the respondents have raised a real, genuine or
bona fide dispute of fact regarding the fact that the applicant does not have
confidential information to protect . This Court finds that the confidential information
extends beyond just mere training manuals. Neither does this Court find the
allegations of the applicant, pertaining to the existence of confidential information, as
being vague and unsupported.
Costs
[72] The general rule in matters of costs is that the successful party should be
given his costs, and this rule should not be departed from except where there be
good grounds for doing so, such as misconduct on the part of the successful party or
other exceptional circumstances.
32
[73] This court is aware that this matter was on the roll the prior week and that it
was struck off and placed on the roll on 1 October 2024, before this court, in order to
allow the respondents to upload their answering affidavit. The late filing of an
31 Plascon-Evans Paints (TVL) Ltd. V Van Riebeck Paints (Pty) Ltd (53/84) [1984] ZASCA 51
32 See Myers v Abramson 1951(3) SA 438 (C) at 455
24
answering affidavit in an urgent court should not be a ground to order that punitive
costs be paid for this. It is inevitable that in urgent court proceedings pleadings of
this nature require proper attention before filing such pleadings.
Order
[74] In the premises the following order is made:
1. The First, Second and Third Respondents are interdicted and restrained
from:
1.1 Utilising the Applicants’ confidential information, inclusive of the
Applicant’s client databases and client connections, business methods,
pricing methods (including, but not limited to, the details of cost prices and
mark-up), products (including, but not limited to training manuals), suppliers
and know-how, for the benefit of the Respondents or any other person;
1.2 Approaching, directly or indirectly, or assisting any other person in
approaching, directly or indirectly, the Applicant’s clients, as more specifically
listed in Annexure “X”, attached to the Notice of Motion;
1.3 Doing business with, and servicing, the Applicant’s erstwhile client,
Langplaas;
1.4 Using the Applicant’s confidential information to unlawfully compete with
the Applicant whether as a labour law distributor or otherwise and to advance
the business interests and activities of the Second and/or Third Respondent
or any other person, in direct competition with, and to the detriment of the
business interest of the Applicant;
1.5 Participating in any conduct which will have the effect of damaging the
goodwill or client or business relationships of the Applicant;
1.6 Copying, transmitting or transcribing, or rendering in usable form, any of
the aforementioned confidential information of the Applicant;
25
1.7 Making available to any other party or entity, whether in digital form or
otherwise, any of the aforementioned confidential information of the Applicant;
2. The First, Second and Third Respondents are ordered to surrender all confidential
information in their possession relating to the Applicant’s business, to the Applicant’s
representative, such information to include but not be limited to:
2.1 All the Applicant’s client databases including but not limited to client and
supplier lists and information indicating the primary needs of particular clients
of the Applicant, identifying the type and quantity of labour law distribution
services the client would be likely to purchase;
2.2 All pricing details and product lists pertaining to the services offered by the
Applicants;
2.3 All documents containing details of the Applicant’s business methods,
strategies, operational systems, branding business systems and procedures,
including training manuals.
3. The First, Second and Third Respondents are ordered to delete, in the presence
of the Applicant’s representatives, all of the Applicant’s confidential information on
any computer hardware possessed by the Respondents.
4. The First Respondent is in breach of her restraint of trade agreement concluded
with the Applicant on 19 October 2022.
5. The employment of the First Respondent by the Second and/or Third Respondent
is in breach of the restraint of trade agreement concluded between the Applicant and
the First Respondent.
6. The First Respondent is interdicted and restrained from directly or indirectly using,
revealing, disclosing, or in any way utilizing for the First Respondent’s own purposes,
26
or for the purposes of any third party, including the Second and/or Third Respondent,
any of the Applicant’s confidential information.
7. The First Respondent is interdicted and restrained in accordance with the
provisions of the restraint of trade agreement for a period of two years, from:
7.1 Being directly or indirectly employed by the Second and/or Third
Respondent in any capacity whatsoever;
7.2 Being directly or indirectly associated and/or concerned with, interested
and/or engaged in and/or interested herself in any firm, business, company,
close corporation or other association (“entity”) which is a competitor of the
Applicant and who has its registered office within a 50 km radius of the
registered office of the Applicant;
7.3 Rendering services to any person or business which is a competitor of the
Applicant and who has its registered office within a 50 km radius of the
registered office of the Applicant, and in particular the Second Respondent
and/or Third Respondent;
7.4 Conducting, accepting, soliciting, canvassing or discussing business or
mandates in respect of any of the services rendered by the Applicant in the
ordinary course of business with and/or from any principal, supplier or client of
the Applicant;
7.5 Encouraging or enticing to persuade any principal, supplier or client of the
Applicant to terminate their relationship with the Applicant.
8. The Second and/or Third Respondent are interdicted and restrained from
employing or being associated with the First Respondent in breach of the restraint of
trade agreement between the Applicant and the First Respondent.
9. The First, Second and Third Respondents are to pay the costs of this application,
jointly and severally, the one to pay the other to be absolved.
27
D DOSIO
JUDGE OF THE HIGH COURT
JOHANNESBURG
APPEARANCES
ON BEHALF OF THE APPLICANT: Adv. K Potgieter
Instructed by Chris Janeke Attorneys
ON BEHALF OF THE RESPONDENT: Adv. S Davies
Instructed by JW Wessels and
Partners Inc