THE LABOUR COURT OF SOUTH AFRICA , JOHANNESBURG
Not Reportable
Case No: 2025 -021910
In the matter between:
CANIZE TRADING (PTY) LTD First Applicant
TRANSMART EXPRESS (PTY) LTD Second Applicant
and
ASHLEY THERON First Respondent
ERIKA ENGELBERCHT Second Respondent
LEONIE DE VILLIERS Third Respondent
MADELEIN VENTER Fourth Respondent
TMA EXPRESS ROAD (PTY) LTD Fifth Respondent
Heard: 17 April 2025
Delivered: 22 April 2025
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This judgment was handed down electronically by circulation to the parties’ legal
representatives by email. The date of hand- down is deemed to be 22 April 2025 .
JUDGMENT
MAKHURA , J
[1] The first to fourth respondents are all former employees of the first applicant . The
applicants seek a final order to enforce a restraint of trade agreement against each of
them . The founding replying affidavit s filed on behalf of the applicants are deposed to by
Johannes Jacobus Cornelius Jooste (Jooste), who identifies himself as the Managing Director of both applicants.
[2] Jooste described the applicants respectively as Canize Trading (Pty) Ltd and
Transmart Express (Pty) Ltd, private companies with limited liability , duly registered in
terms of the Company Laws of South Afric a and operating from the same business
address. He claims that “ the first applicant further trades as a second applicant” . Being
a company that trades as the second applicant as alleged, Jooste further descri bed the
first applicant as a:
‘wholly owned subsidiary of the second applicant , sharing the same directors.
The first applicant has no trading functionality and generates no independent
income. The f irst applicant ’s only revenue comes fr om the s econd applicant,
which deposits employee salar ies into an account he ld by the f irst applicant. To
reduce costs associated with the bargaining council, all blue- collar employees
are employed by the second applicant, whilst administrative staff fall under the
first applicant. All the employees of the f irst applicant report directly to the second
applicant’s managers and function as employees of the Second Applicant in
practice.’ (Own emphasis)
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[3] The first, second, third and fifth respondents opposed the application and filed a
joint answering affidavit, deposed to by the first respondent, Ashley Theron (Theron).
The three other respondents filed confirmatory affidavits. The fourth respondent ,
Madelei n Venter (Venter), also opposed the application and filed her separate
answering affidavit.
[4] In their answering affidavit, the first to third respondents contended first that the
applicants are two separate legal entities . Second, that the first to third respondents and
the first applicant concluded a restraint agreement and that the second applicant was
not part of the agreement. Third, the restraint agreement did not seek to protect the
interests of the second applicant .1 Fourth, t here was no separate restraint agreement
between the first to third respondent s, and the second applicant. Fifth, the restraint
agreement , which is contained in their contract s of employment , is formulated as
follows:
‘It is clearly stated and understood by the employee that acceptance of this offer
of employment shall be subject to a Restraint of Trade that will apply for a period of 24 (twenty four) months after resignation from this Company, inside geographic borders of the Republic of South Africa. This implies that the
employee after termination of his/her service with the Company, for whatever
reason, shall not enter into competition with this Company or any of its subsidiaries using or marketing any of its products or similar products that may be available on the market for the said period of 24 months. ’
[5] For the above reasons, so the first to third respondents submitted, the restraint
agreements which the applicants seek to enforce can only be enforced in favour of the
first applicant and its subsidiaries , and not in favour of the holding company, to the
extent that the first applicant is a subsidiary company .
1 Does a third party (not the employer of the employe e) have a legal standing to enforce a restraint
agreement in this Court and/or does this Court have jurisdiction to entertain a third party’s application to
enforce a restraint agreement concluded between that third party and the employee of another employer ?
This issue is addressed later in the judgment in respect of Venter’s opposition.
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[6] Ruffled by the above contentions, Jooste sought to clarify the allegations and/or
claim s in his founding affidavit insofar as the relationship of the two applicants is
concerned. He contended in his r eplying affidavit that the applicants are not two
separate legal entities although they trade separately. He introduced a foreign legal
concept to company law – that the applicants are “subsidiaries of each other” and
further alleged that :
‘all employees of the first applicant report directly to the second applicant’s
managers and function as employees of the second applicant in practice. ’ (Own
emphasis)
[7] During the hearing, Ms Strydom, for the applicants, submitted that the claim that
the two applicants are subsidiaries of each other was an error and that the correct
position is that the first applicant is the subsidiary of the second applicant. She confirmed that the first applicant has no subsidiary company.
[8] Venter ’s grounds of oppos ition of the application are aligned with that of the first
to third and fifth respondents. In addition, and for clarity of issues, she specifically raised
a special plea of jurisdiction. She pleaded as follows:
‘The Labour Court lacks jurisdiction to determine the Applicants' application.
My contractual employer is Canize. I concluded the Restraint Agreement with Transman. The Restraint Agreement is not incorporated [in] the Employment Contract. The Restraint Agreement is therefore a commercial agreement, and not a term and condition of my employment contract with Canize.
As such, a dispute about the Restraint Agreement is therefore not a matter concerning my contract of employment as envisaged by section 77 of Basic
Conditions of Employment Act 75 of 1997 ("BCEA"), nor is it a dispute in respect
of which the Labour Court has jurisdiction in terms of section 157 of the Labour
Relations Act 66 of 1995 (“LRA”).’
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[9] The contract of employment signed by Venter clearly states that it is between her
and the first applicant, not the second applicant. Clause 16 of Ve nter’s contract of
employment contains confidentiality undertakings . The applicants rely on annexure “C”
to the contract of employment , titled “restraint of trade ”. This restraint agreement , as
Venter correctly observed, was signed between her and the second applicant (not the
first applicant , as the employer) . Further, the applicants introduced and relied on a
document titled “secrecy and confidentiality undertaking” signed by Venter . The
applicants relied on the introductory clause of this undertaking, in terms of which Venter
acknowledged that :
‘pursuant to my employment as … by Educated Risk Investments 164 (Pty) Ltd
t/a Transmart and/or its subsidiary and associate companies from … I have and
will become possessed of and have and will have ac cess to some or all of
Transmart’s trade secrets and confidential information including, but without
limiting the generality of tea foregoing, the following matters, all of which are hereinafter referred to as “Transmart’s trade secrets ”…’
[10] It is common cause between the parties that Venter was employed by the first
applicant. Therefore, any suggesti on that Venter was employed “by” the second
applicant is of no moment and must be disregarded, as it is also not borne out of the
evidence placed before this Court .
[11] The jurisdictional point raised by Venter, which was also pleaded by the first to
fourth respondents , albeit not raised as a special plea, is, in essence, that the first to
fourth respondents were employed by the first applicant and that to the extent that the
second applicant (a third party) seeks to enforce a restraint agreement against them,
particularly Venter in terms of the secrecy and confidentiality undertaking, must find an appropriate forum to enforce the restraint agreement because this Court lack s
jurisdiction on the basis that th ere is and was no employment relationship between the
second applicant and them . For the above legally sound submissions, the respondents
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place reliance on section 77 of the Basic Conditions of the Employment Act2 (BCEA)
and section 157 of the Labour Relations Act3 (LRA).
[12] In the absence of a contract of employment, Venter correctly referred to the
“restraint of trade” and “secrecy and confidentiality undertaking” documents as a purely
commercial transaction. T he jurisdiction of this Court , per section 77 of the BCEA and
section 157 of the LRA, has not been engaged. In addition, this Court has no jurisdiction
to entertain the second applicant ’s application to enforce a restraint agreement against
the first to third respondents . The special plea raised by Venter must therefore succeed.
[13] I proceed to deal with the application by the first applicant. It is common cause
that the first applicant and the first to third respondents signed a restraint agreement. It
is further common cause that the first applicant seeks to enforce the confidentiality
clause against Venter , which is contained in clause 16 of her contract of employment .
Clause 16.2 prohibits Venter , during the existence of the contract or thereafter and for
an unlimited period, from divulging to any person or use to the first applicant’s detriment
or prejudice of the first applicant .
2 Act 75 of 1997. See in particular section 77(3) , which provides that this Court “has concurrent
jurisdiction with the civil courts to hear and determine any matter concerning a contract of employment,
irrespective of whether any basic condition of employment constitutes a term of that contract. ”
3 Act 66 of 1995, as amended. Section 157(1) and (2) provides that:
“(1) Subject to the Constitution and section 173, and except where this Act provides otherwise, the
Labour Court has exclusive jurisdiction in respect of all matters that elsewhere in terms of this Act or in
terms of any other law are to be determined by the Labour Court.
(2) The Labour Court has concurrent jurisdiction with the High Court in respect of any alleged or
threatened violation of any fundamental right entrenched in Chapter 2 of the Constitution of the Republic
of South Africa, 1996, and arising from –
(a) employment and from labour relations;
(b) any dispute over the constitutionality of any executive or administrative act or conduct, or any
threatened executive or administrative act or conduct, by the State in its capacity as an employer; and
(c) the application of any law for the administration of which the Minister is responsible. ”
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[14] The legal principles applicable to restraint applications are trite.4 In Automotive
Tooling Systems (Pty) Ltd v Wilkens and others5, the Supreme Court of Appeal held
that:
‘At issue in this case , therefore, is whether the appellant does have a proprietary
interest worthy of protection. An agreement in restraint of trade is enforceable
unless it is unreasonable. It is generally accepted that a restraint will be
considered to be unreasonable, and thus contrary to public policy, and therefore unenforceable, if it does not protect some legally recognisable interest of the
employer but merely seeks to exclude or eliminate competition.’
[15] The applicant in a restraint application is required to invoke the contract and the
breach. Thereafter, the onus is on the respondent opposing the enforcement of the
restraint agreement to prove that the restraint agreement is unenforceable because it is
unreasonable. In Reddy v Siemens Telecommunications (Pty) Ltd
6, the SCA held that :
‘A final order can be granted in motion proceedings if the facts stated by the
respondent together with the admitted facts in the applicant’s affidavits justify the order, and this applies irrespective of where the onus lies.’
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[16] In casu , the first to fourth respondents were all employed by the first applicant, a
separate legal entity . The applicant s argued that the first applicant is a subsidiary of the
second applicant . There is no evidence to support this allegation. The mere fact that the
directors of two companies are the same and that the employees of one company
render their services at the second company does not mean that the first company is a
4 See: Magna Alloys and Research (SA) (Pty) Ltd v Ellis 1984 (4) SA 874 (A ); [1984] 2 All SA 583 (A);
Reddy v Siemens Telecommunications (Pty) Ltd 2007 (2) SA 486 (SCA) ; (2007) 28 ILJ 317 (SCA) (Reddy
v Siemens ) at paras 10 and 16; New Just fun Group (Pty) Ltd v Turner and Others (New Justfun) [2014]
ZALCJHB 177; (2018) 39 ILJ 2721 (LC) at paras 9 and 10; Labournet (Pty) Ltd v Jankielsohn and others
(2017) 38 ILJ 1302 (LAC ); [2017] 5 BLLR 466 (LAC) at paras 41 – 43.
5 2007 (2) SA 271 (SCA); (2007) 28 ILJ 145 (SCA) at para 8.
6 Reddy v Siemens (supra).
7 Ibid at para 4; see Plascon -Evans Paints Ltd v Van Riebeeck Paints (Pty) Ltd 1984 (3) SA 623 (A) ;
[1984] ZASCA 51 at 634E – I and 634A – C.
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subsi diary of another. In any event, t his makes no difference because the restraint
agreement is between the first to third respondents on the one hand and the first
applicant and its subsidiaries on the other . The first applicant has no subsidiary
company . The first to fourth respondents do not dispute the contract with the first
applicant . However, they dispute that they breached the restraint agreement,
alternatively that the first applicant has no proprietary interest and therefore the
application shoul d fail. In other words, the first applicant failed to discharge its onus of
establishing a breach.
[17] Jooste has laid bare the purpose of establishing the first applicant - to reduce the
costs associated with the bargaining council . To do this, all employees in administrative
capacities are employed by the first applicant , whilst all blue- collar employees are
employed by the second applicant . On the applicant s’ own version, the first applicant
was established as a vehicle solely for the purpose of avoiding paying the bargaining
council costs . Jooste has also laid bare the fact that the first applicant has no trading
functionality and generates no independent income.
[18] Flowing from the above, an inevitable concession was made that the first
applicant had no protectable proprietary interest . In fact, on the papers, the applicants
did not plead any proprietary interest the first applicant has, let alone a protectable
interest , in the founding and replying affidavits . The proprietary interest referred to in
this application, whether protectable or not, is that of the second applicant . This is fatal
to the first applicant’s application. The absence of a protectable proprietary interest
marks the end of the enquiry , and the first applicant failed to establish a breach. The
first applicant is not in competition with any company, let alone the fifth respondent. The
application by the first applicant stands to fail.
[19] With regard to costs, I agree with Mr Lennox that , considering the manner in
which the application was prosecuted, costs must be awarded in favour of the
respondents. Mr Lennox submitted that t here were a number of oversights by the
applicants’ attorneys, which included filing of an un- deposed but commissioned
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confirmatory affidavit, the institution of the application in Johannesburg against Theron
who is based in Cape Town, the failure by the applicants to refer to the first to third respondents’ response to the applicants’ letter of demand in their founding affidavit and
a suggestion that these respondents did not respond to the letter of demand when they
did, and the manner in which service of the documents was effected with incomplete
documents at times . For these reasons, Mr Lennox submitted that costs de bonis
propriis should be granted against the applicants’ attorneys , alternatively that costs
must be awarded on an attorney and client scale.
[20] Mr Orton, for the fourth respondent, argued for costs on an attorney and own
client’s scale. He relied primarily on the lack of merits in the application, which have
been addressed above. Further, he submitted that Venter, who now formed his
company, which is yet to start operating, is not in competition with the applicants,
particularly the second applicant , even if the issue of jurisdiction did not defeat the
second applicant’s application. Mr Orton further submitted that the applicants ’ conduct,
in establishing the first applicant to employ the administrative staff to reduce the costs of
the bargaining council, is frau s legis. This argument was based on the nature of the
‘relationship’ between the employees of the first applicant and the first and second
applicants. He referred the Court to the judgment of Labournet Holdings (Pty) Ltd v
McDermott & a nother
8 (McDermott), which found that a court should not come to the aid
of a party or parties who conclude misleading contracts and/or contracts that are against public policy. The argument is that the first applicant was established as a
separate legal entity solely to avoid falling under the scope and jurisdiction of the National Bargaining Council for the Road Freight and Logistics Industry ( NBCRFLI ) and
to avoid paying prescribed or agreed increases, benefits and levies .
[21] Whether or not there was frau s legis is not for this Court to determine. However,
there is, on the face of it , merit in Mr Orton’s a rgument, particularly considering the
applicants’ version that the first applicant was established to reduce the costs of the bargaining council. Further, t he directors of the first and second applicants are the
8 (2003) 24 ILJ 185 (LC) ; [2002] ZALC 180.
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same. The first applicant has no trading functionality and does not generate any income
on its own. However, it has employees who appear not to fall under any industry , simply
because they are administrative employees . It essentially employed these employees
on behalf of the second applicant , who appear to dedicate all their working hours to the
second applicant. The second applicant pays the salaries of the employees by
depositing the money into the first applicant’s account. Because the employees are
employed by the first applicant and not by the second applicant , which falls within the
scope and jurisdiction of the NBCRFLI , the applicants are not liable to pay any monies
in terms of the NBCRFLI collective agreements . For these reasons, t he second
applicant can argue that these are not my employees , and the first applicant can argue
that it is not involved in the business of the road freight and logistics industry .
[22] The applicants’ subsequent volte -face attempt in their replying affidavit that the
purpose of establishing the first applicant was for an administrative purpose (without
providing any further details) , is a ruse which is unhel pful to their case . Whatever the
administrative purpose the first applicant was established, it was , on the face of it to
hide the employees in this entity to avoid paying the NBCRFLI costs , per their version.
[23] Whilst I accept that applications to enforce restraint agreement s should not be
dealt with and determined as purely and strictly contractual matters because they
involve constitutional issues
9, that this Court retains its discretion on the issue of costs
and that this is a court of equity , the current application, in my view, should never have
been instituted or should have been abandoned and withdrawn after receipt of the
answering affidavit s. This application is an abuse of the court processes and a flex of
the applicants’ financial muscles . That this is a court of equity is not a license for
meritless and frivolous applications to be launched and persisted with on the face of
obvious and sound factual and legal oppo sition. This Court should rebuke unmeritorious
claims by issuing costs orders, and where necessary , on a higher scale. The
respondents should not be saddled with the costs of opposing this application.
9 Ball v Bambalela Bolts (Pty) Ltd & another (2013) 34 ILJ 2821 (LAC) ; [2013] 9 BLLR 843 (LAC) at paras
29 – 30.
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[24] For the above reasons, I am persuaded that an order for costs on an attorney
and client scale is warranted. I am not persuaded that the applicants’ attorneys ’ conduct
constitutes negligence and/or negligence of such a degree or disregard for professional
responsibilities that is so egregious that it deserves this Court’s disapproval with costs
de bonis propriis .10 The applicants’ attorneys have, in my view, explained most of what
Mr Lennox complained of .
[25] In the premises, the following order is made:
Order :
1. The fourth respondent’s special plea of jurisdiction succeeds , and the
application by the second applicant is dismissed for lack of jurisdiction.
2. The first applicant’s application is dismissed.
3. The applicants are ordered to pay the respondents’ costs on an attorney
and client scale, jointly and severally , the one paying the other to be absolved.
M. Makhura
Judge of the Labour Court of South Africa
Appearances:
For the Applicant s: Ms D. Strydom
Instructed by: Pearson Attorneys
For the 1
st – 3rd Respondent s: Mr M. Lennox
Instructed by : DH Hinrichsen Attorneys
For the 4th Respondent: Mr R . Orton of Snyman Attorneys
10 See: Lekhesa: In re Ngwenya v Trustees for the Time being of Sishen Iron Ore Company Community
Development Trust & another (2024) 45 ILJ 1220 (LAC) ; [2024] 6 BLLR 585 (LAC) at para 17 .