About SAFLII
Databases
Search
Terms of Use
RSS Feeds
South Africa: Cape Town Labour Court, Cape Town
SAFLII
>>
Databases
>>
South Africa: Cape Town Labour Court, Cape Town
>>
2025
>>
[2025] ZALCCT 28
|
|
Sentinel International Advisory Services Proprietary Limited v Mulder (2025/022896) [2025] ZALCCT 28 (2 May 2025)
THE
LABOUR COURT OF SOUTH AFRICA
AT CAPE TOWN
Of
interest to other judges
Case
no: 2025-022986
In
the matter between:
SENTINEL INTERNATIONAL
ADVISORY
Applicant
SERVICES PROPRIETARY
LIMITED
And
ANITA
MULDER
First Respondent
ANGELA
LAWSON
Second Respondent
DALE
IRVINE
Third Respondent
BEDROCK MULTI FAMILY
OFFICE
Fourth Respondent
Heard
:
17 and 25 April 2025
Delivered
:
2 May 2025
Summary:
(Restraint of trade – Merits –
Breach common cause – Existence of protectible interest in
preserving company information
especially relating to client details
– employment of first respondent by direct competitor
prejudicing preservation of protectible
interest - enforcement of
geographically attenuated restraint reasonable - Costs –
apportionment)
JUDGMENT
LAGRANGE, J
Nature
of the application
[1]
This is an opposed restraint of trade application. It was initially
enrolled on 17 April 2025. At the first hearing, the
urgency of the
application was argued at length and a ruling was made striking the
application off the roll in so far as the second
and third
respondents (‘Lawson’ and ‘Irvine’) were
concerned. The relief sought against the first respondent
(‘Mulder’)
was found to have been launched with sufficient urgency.
[2]
During the first hearing, parties also argued about the admission of
the applicant’s replying affidavit, to which
the respondents
had objected under Labour Court Rule 36(2) on the basis it was filed
late, and whether a confidential affidavit
tendered by the applicant
should be admitted.
In limine issue –
objection to late filing of replying affidavit
[3]
The replying affidavit was admitted on a provisional basis and for
the reasons which follow it should have been admitted
in my view. In
the notice of motion, Sentinel set out the timetable for filing
further affidavits in keeping with the timetable
set out in Labour
Court Rule 39 for urgent restraint of trade applications. As things
turned out, it could not meet its own deadline
to file its own
replying affidavit. It filed it six court days late, on 17 March
2025, prompting the objection by the respondents
dated 20 March 2025.
Notwithstanding the objection the respondents still filed their
fourth set of affidavits within five days
of receipt of Sentinel’s
replying affidavits. In the curiously truncated way in which
restraint of trade applications are
dealt with under the rules, the
application was only enrolled for hearing on 17 April 2025. I agree
that Sentinel should have sought
the respondents’ indulgence to
file its replying affidavit later than the timetable it had
stipulated. However, the respondents
suffered no demonstrable
prejudice as result and there was still ample time for both parties
to prepare heads of argument for the
hearing. While disregard of the
rules should not be indulged, I fail to see what the purpose of the
objection was under these circumstances.
For this reason, the
provisional admission of the replying affidavit is confirmed.
[4]
The confidential affidavit concerned details of Sentinel clients,
which was information Lawson and Mulder were privy to
before they
resigned from Sentinel and went to work for the fourth respondent
(‘Bedrock’). As early as 17 March 2025,
the applicant had
sought undertakings from Lawson and Mulder that they would not
disclose the content of the confidential affidavit
to Irvine and
Bedrock. All the respondents were represented by the same attorneys
of record. Although the non-disclosure undertaking
was only sought
from Lawson and Mulder, their attorney objected on behalf of all the
respondents to the compartmentalisation that
a selective disclosure
to only two of them would be prejudicial Irvine as the information
clearly affected all the respondents.
Nonetheless, when the court
ruled that the application against Lawson and Irvine would not be
heard on an urgent basis, Mulder
gave the necessary undertaking and
the affidavit was admitted. The determination of the restraint
application against Mulder could
not be heard without giving her a
chance to file an answering affidavit, so the hearing could not be
concluded and was postponed
until 25 April.
Factual background
[5]
Most of the material facts are common cause.
[6]
The background to the application is that Sentinel and Bedrock
provide advice on asset protection, estate planning and
perform
fiduciary services for so-called ‘high-net-worth’
clients. Irvine, who is still a 24.48 % shareholder in Sentinel,
was
an executive director of the Sentinel. Irvine was also the trust
officer of approximately 120 of Sentinel client trusts which
managed
their assets.
[7]
At the end of August 2024, Irvine relinquished his directorship and
resigned from Sentinel under a mutual separation agreement.
He
established Bedrock, which was incorporated on 7 October 2024. Since
he established Bedrock it has engaged four former employees
of
Sentinel. Lawson would be the fifth former employee to join Bedrock
if she is not held to the terms of her restraint agreement.
In
addition, 82 of Sentinel’s former trust clients, amounting to
about one-third of those clients, have moved their business
to
Bedrock. Unsurprisingly, It is common cause that Bedrock and Sentinel
are direct competitors.
[8]
Lawson and Mulder performed the administrative work of the trusts.
According to Sentinel they both worked closely with
Irvine in
managing the trusts. It claims they did the majority of the complex
administrative tasks entailed in managing trusts.
Although Irvine
emphasised his own overwhelming significance in the relationship with
clients. He admits that Lawson and Mulder
were “important”
to him. However he stated, with their concurrence, that they were
performing tasks which junior staff
from other department sometimes
performed on their behalf, and that they were “entirely
dispensible” as far as the
clients were concerned. While it was
conceded that they had relationships with clients and had access to
confidential information,
it was claimed that their relationship with
clients was not such that they could solicit them to transfer their
business to Bedrock.
It was stated that their role was limited to
coordinating meetings, relaying information and ensuring the smooth
flow of information.
The respondents described the roles of Mulder
and Lawson as trust administrators at Sentinel in these terms:
“
A trust
administrator is an internal designation of the applicant and acts as
the interface between trustees and third parties such
as banks,
financial institutions, asset managers and the Master’s Office.
Trust administrators ensure that resolutions are
signed, execute the
advice provided by the trust officer, and implement decisions taken
by the trustees. They naturally act as
conduit of information between
the client and Trust Officer.”
[9]
It was also conceded that both Lawson and Mulder had had “regular
contact with the clients and administrators of
Wealth Managers”.
Wealth managers are third parties responsible for investing client
funds.
[10]
Mulder worked for ten years before she handed in her resignation on
22 January 2025. Lawson had been employed for fourteen
years before
she left. They serviced client trusts managed by Irvine and another
trust officer, Ms S De Wet (‘De Wet’).
[11]
The provisions of the confidentiality and restraint provisions in
Mulder’s contract of employment are extensive
and it is not
necessary to repeat them here. It need only be mentioned that for a
period of one year from the termination of her
employment with
Sentinel, the restraint provision in clause 10 of the contract
inter
alia
: (a) prohibits her from being engaged in any capacity in a
business which competes with Sentinel; (b) prevents her from
attempting
to solicit any party connected with Sentinel to terminate
or vary their relationship with it, and (c) prevents her from
disclosing
any confidential information of Sentinel. The
confidentiality provision in clause 9 of the contract, which is not
subject to a
time limit, binds her not to disclose various forms of
confidential company information, or make use of it for any purpose.
The
restraint provision is national in scope but Sentinel has
confined the relief it seeks to the Western Cape province.
Evaluation
[12]
The
accepted method of evaluating the reasonableness of a restraint was
set out
Basson
v Chilwan and Others
[1]
and has been repeatedly reaffirmed by the courts. A recent
confirmation of the approach was set out by the Labour Appeal Court
in
Venter
and Others v Twenty Four Motors CC ta Ford Ermelo
[2]
.
The court also confirmed the respective evidentiary burdens which
still rest on the parties, notwithstanding the absence of an
onus in
deciding on the reasonableness of a restraint.
“
[8]
Restraint of trade agreements are valid, binding, and enforceable
unless their enforcement would be
unreasonable. In determining the
reasonableness of a restraint of trade agreement, a court must make a
value judgment keeping in
mind the principles expressed through the
maxim pacta servanda sunt on the one hand, and a party’s
interest in engaging freely
in their chosen trade, occupation or
profession, on the other.
[9]
As stated in Basson v Chilwan and Others, the test for determining
the reasonableness of a restraint
of trade agreement turns on the
following: (a) whether one party has an interest that deserves
protection after termination of
the agreement; (b) whether that
interest is threatened or being prejudiced by the other party; (c) if
so, whether that interest
weighs qualitatively and quantitatively
against the interest of the other party not to be economically
inactive and unproductive;
and (d) whether there is an aspect of
public policy having nothing to do with the relationship between the
parties that requires
that the restraint be maintained or rejected. A
fifth consideration, identified in Reddy v Siemens Telecommunications
(Pty) Ltd,
is whether the restraint goes further than necessary to
protect that interest. This consideration has been found to
correspond
with s 36(1)(e) of the Constitution. It requires that it
be considered whether less restrictive measures exist which can
achieve
the purpose of the limitation by determining whether the
restraint or limitation is “reasonable and justifiable in an
open
and democratic society based on human dignity, equality and
freedom”.
[10] It
is trite that the party seeking to enforce a restraint of trade
agreement must prove a breach of the contract,
with the party seeking
to avoid enforcement of the contract bearing the onus to demonstrate
that the restraint is unenforceable
because it is unreasonable.
[11]
The party seeking to enforce a restraint of trade must establish an
interest worthy of protection and that
the other party is threatening
that interest. The party resisting enforcement must prove that it
would be unreasonable to do so.
[12] In
Ball v Bambalela Bolts (Pty) Ltd and another , this Court stated, in
relation to the reasonableness of
restraint, that:
‘
[13] …
Prior to the decision in Magna Alloys and Research SA (Pty) Ltd v
Ellis,10 restraints of trade were only enforceable
if they were
proved to be reasonable. Since then they have been regarded as
enforceable, unless they are proved to be unreasonable.
The effect of
the Magna Alloys’ decision was to place an onus on the party,
sought to be restrained, to prove, on a balance
of probabilities,
that the restraint was unreasonable. However, because the right of a
citizen freely to choose a trade, occupation,
or profession, is
protected in terms of s 22 of the Constitution and a restraint of
trade constitutes a limitation of that right,
the onus may well be on
the party who seeks to enforce the restraint to prove that it is a
reasonable or justifiable limitation
of that right of the party
sought to be restrained.
[14] In Reddy v Siemens
Telecommunications (Pty) Ltd,11 it was held that the reasonableness
of a restraint could be determined without
becoming embroiled in the
issue of onus. This could be done if the facts regarding
reasonableness have been adequately explored
in the evidence and if
any disputes of fact are resolved in favour of the party sought to be
restrained. If the facts, assessed
as aforementioned, disclose that
the restraint is reasonable then the party, seeking the restraint
order, must succeed, but if
those facts show that the restraint is
unreasonable, then the party, sought to be restrained, must succeed.
Resolving the disputes
of fact in favour of the party sought to be
restrained involves an application of the Plascon-Evans rule.’
”
(references omitted
Breach of the restraint
[13]
It is self evident that by going to work for Bedrock, an acknowledged
direct competitor, the commercial foundation of
which is a
substantial portion of Sentinel’s former trust clients, that
Mulder will be in breach of her obligation not to
be involved in a
competitive business (clause 10.1(a) of the contract). Moreover, both
Mulder and Lawson admit that “on the
face of it” their
employment by Bedrock would be a breach of the restraint.
[14]
On the question of her access to confidential information, Mulder
denies that she retains any knowledge of all the details
of client
contacts that are contained in the Outlook address book of Sentinel’s
clients, which she and Lawson used in the
course of their work. It is
an extract of these details which comprises the confidential
information divulged by the confidential
affidavit. The address book
contains: the name of the trust and details of the current trustees
including their identity numbers,
email addresses, contact numbers,
physical addresses; the Master of the High Court’s registration
number for the trust; the
details of the wealth advisor and, or
alternatively, their assistant’s; trust bank details; trust tax
reference numbers and
login details of trust bank accounts and
details of various accounts linked to the trust. Mulder denies having
copied or being
able to remember any of these details.
[15]
On the question whether Mulder has breached her obligation not to
disclose any of the business information, particularly
relating to
Sentinel’s clients, to Bedrock, Mulder initially denied she
made user of Sentinel’s confidential information.
As this
information would include the information set out in the confidential
affidavit, which would have part of the information
she would have
needed to liaise with the client’s, banks , wealth managers and
SARS, this denial is inherently implausible.
Neverless, she denies
having retained any of the information, which was accessible to her,
but does not dispute she had access
to the information on Sentinel’s
Outlook program. It was alleged that they only contacted clients who
were part of Irvine’s
portfolio when instructed to do so. On
the other hand the respondents acknowledged that Lawson and Mulder
acted as the “interface”
between trustees and third
parties such as banks, financial institutions, asset managers and the
Master’s Office. It is hardly
credible to suggest that in this
role they would only have relied on Irvine or De Wet to provide them
with contact details every
time they performed that roll and that
they would not have become familiar to such third parties during
their employment with Sentinel.
Mulder had been with Sentinel for ten
years. It is relevant to note that, in terms of the their job
descriptions, both Mulder and
Lawson were required
inter alia
to attend and take minutes of trustee meetings, keep the trust
database and client contact details up to date. It is difficult
to
see that such work would not have entailed developing a working
familiarity with the clients, some basic knowledge of the different
trusts, and interaction with the personnel performing the roles of
third parties.
[16]
In any
event, it is well established law that a proven breach of the
confidentiality provisions of a restraint is not a pre-requisite
for
obtaining relief if the employee had the opportunity to access the
confidential business information in question
[3]
.
It is sufficient that there is a risk that confidential information
could be conveyed to a competitor and could be of use to it.
Even if
an undertaking to abide by the non-disclosure provisions f a
restraint agreement is given by the former employee, that
is
generally not considered to be a sufficiently reliable way of
preventing breach of the confidentiality requirement
[4]
.
Reasonableness of
enforcing the restraint.
[17]
The information Mulder was exposed to in the course of her work and
the familiarity she obtained with the various trusts
she
administered, while not the kind of information that would put her in
a position to personally persuade former Sentinel clients
to move to
Bedrock, would obviously be of value to the latter. Her involvement
with Sentinel’s client portfolio would plainly
be far more
useful to Bedrock than someone who was appointed in her new position
there with no direct personal exposure to such
a large number of
potential clients whose interests were managed by either Irvine or De
Wet. This knowledge of Sentinel’s
clients and their trusts is
plainly of commercial value to a business, which has been launched
using a sizable portion of Sentinel’s
former clients as a
foundation. It was argued that because Irvine already had knowledge
of the clients, it made little difference
if Mulder joined Bedrock. I
am not persuaded that the bolted horse argument is persuasive in
these circumstances. Whether there
is some overlap in knowledge
between Irvine and Mulder, Mulder would undoubtedly be more valuable
to Bedrock than someone performing
her work without that prior
knowledge.
[18]
In light of Mulder’s value to Bedrock and, correspondingly, the
loss to Sentinel of someone with her knowledge,
her move to Bedrock
is prejudicial to Sentinel. In weighing up the respective interest of
Mulder to exercise her right to freedom
to trade in terms of s 22 of
the Constitution and Sentinel’s interest in not having
knowledge of its business being utilised
to compete with it, the
balance favours Sentinel in my view. Mulder decided to hitch her
wagon to a direct competitor when she
was not facing any threat to
her existing employment. She has previously worked in other
capacities in the financial sector and
if she wanted to join Bedrock,
there is nothing to indicate she could not have taken up other
employment for a temporary period
until the restraint had run its
course. No public policy considerations have been advanced which
would upset this balance of interests.
[19]
In the circumstances, I believe Sentinel is entitled to the relief it
seeks.
Costs
[20]
This is a contractual matter and there is no reason why costs should
not be awarded. Determining an appropriate apportionment of
costs is
somewhat complicated by the fact that the application could not be
heard on one day, primarily because of the belated
undertaking from
Mulder to agree to non-disclosure of the confidential affidavit. The
reason advanced previously for not providing
the undertaking was that
Lawson and Mulder could not agree to give the undertaking because it
was argued that the confidential
information might be relevant to
Irvine’s case as well Irvine. The relief, which had been,
sought against Irvine was to prevent
him from using any of the
information he had acquired about Sentinel for his own benefit or
that of Bedrock. While confidential
disclosure to only Lawson and
Mulder but withholding the information from Irvine and Bedrock might
have presented some practical
difficulties for the respondents’
attorneys who represented all four of respondents, I do not
understand why, as a matter
of principle, confidential disclosure to
Lawson and Mulder could not have been made, subject to the
undertakings being given by
them. However, it was also argued that
there was no need for the confidential affidavit to have been filed
in the first place because
the type of client information contained
in the Outlook program, could simply have been described in the
founding affidavit, as
the same type information had been entered for
all Sentinel clients on the Outlook database. I agree. It would only
have been necessary
to file the confidential affidavit, if the
respondents had disputed that such information was obtainable from
the Outlook database.
Had it not been necessary for Mulder to
consider the confidential affidavit and file an answering affidavit,
the argument on the
merits could have been concluded at the initial
hearing.
[21]
The further factor that requires consideration is that the
application was only completely successful in relation to Mulder. The
respondents were also represented by one firm of attorneys and had
consolidated their pleadings.
[22]
To achieve some kind of equitable distribution of the costs and
taking account of the law, I have tried to take account the
consolidated
nature of the pleadings and the mixed success of the
parties as well as the fact that the matter would not have run over
two days
if was not for the difficulty caused by admission of the
confidential affidavit, which was not really necessary.
Order
1.
The admission of the applicants’
replying affidavit, provisionally admitted on 17 April 2025, is
confirmed.
2.
In so far as the relief sought against the
First Respondent is concerned, the application is dealt with as one
of urgency and any
non-compliance with the Rules of Court relating to
time limits governing the filing of pleadings and submissions is
condoned.
3.
The First Respondent is interdicted and
restrained, until 1 March 2026 and within the Western Cape Province,
from directly or indirectly:
3.1
carrying on or being interested or engaged in or concerned with the
Fourth Respondent or with any other
company, firm, partnership, close
corporation, trust, undertaking or concern which carries on any
business which competes, directly
or indirectly, with the Applicant;
3.2
persuading, inducing, inciting, soliciting, encouraging or
procuring any employee, consultant, agent, representative, supplier,
principal, client, dealer, financier, trade connection or
contractor
to vary or terminate its agreements or arrangements with the
applicant, leave the employ of the Applicant, sever, curtail,
restrict or alter its employment, arrangements or business dealings
with the Applicant in any way or refrain from or discontinue
doing
business or continuing its ongoing arrangements on the same basis as
previously with the Applicant;
3.3 soliciting or
conducting negotiations or concluding transactions arrangements with
any party in relation to whose products
and services the Applicant
possesses distribution rights or which has entered into any agency,
franchise, registered user or
license agreement with the Applicant
relating to such products and services;
3.4 furnishing or
disclosing any information, whether confidential or otherwise, of or
relating to the Applicant, its management,
operations, business
activities, directors, management, staff, agents, representatives,
suppliers, principles, customers and trade
connections and any of its
trade secrets or know-how or give any advice in regards thereto;
3.5 commenting
upon, discussing, debating, issue comments or statements, whether in
writing or orally, of or in regard to
the operations or business of
the Applicant, its directors, management, employees, consultants,
agents,
representatives, suppliers, trade connections or customers.
4.
Interdicting and restraining the First
Respondent from either directly or indirectly from divulging to any
person:
4.1 any
information relating to the trade secrets or trade connections of the
Applicant;
4.2 any
confidential information concerning the Applicant’s business or
affairs and in particular any information pertaining
to the salaries
and wages and personnel records and details of any employees
currently in the employ, previously employed or prospective
employment of the Applicant, including but not limited to any details
pertaining to any trade connections (including but not limited
to any
contractors, suppliers, clients or agents) employed by or for and on
behalf of the Applicant;
4.3 using or
disclosing to others or availing to others or deriving profit or
benefiting from, information concerning the
business or affairs of
the Applicant or its clients, suppliers or trade connections, which
the First Respondent has acquired by
reason of her position or
association with the business and affairs of the Applicant or its
clients.
5.
The Applicant must pay two-thirds of the
Respondents’ costs, and the Respondents must pay one-third of
the Applicant’s
costs.
R Lagrange
Judge
of the Labour Court of South Africa
.
For the
Applicant: Adv
S Swarts
Instructed
by: Haffegee
Roskam
Savage Attorneys Inc.
For the
Respondents: Adv H Nieuwoudt
Instructed
by: C&A
Friedlander
Inc.
[1]
[1993] ZASCA 61
;
1993 (3) SA 742
(A) at 767C-I.
[2]
(JA34/2024)
[2024] ZALAC 32
(28 June 2024)
[3]
E.g., see
Den
Braven SA (Pty) Ltd v Pillay and Another
[2008] ZAKZHC 22
;
2008 (6) SA 229
(D) at 240H
[4]
See
e.g.,
Automation
& Control Components Gauteng (Pty) Ltd t/a MCA v Searle and
Another
(J 426/2024) [2024] ZALCJHB 305 (7 August 2024) at paragraph 62 and
the authorities cited there.