IN THE HIGH COURT OF SOUTH AFRICA
(WESTERN CAPE DIVISION, CAPE TOWN)
CASE NO: 2025-176724
In the matter between:
TRUWORTHS LIMITED Applicant
And
MELUSI NXASANA, MR PRICE GROUP LIMITED First Respondent
MR PRICE GROUP LIMITED Second Respondent
Heard : 11 November 2025
Delivered : 10 December 2025
Summary : Contract- restraint of trade.- The mere presence of a restraint of trade
agreement is insufficient proof of a protectable interest; the applicant bears the
burden of actively demonstrating that such an interest genuinely exists. - General
industry skills and experience are not confident ial or protectable by law. However, a
senior employee's access to high -level proprietary information, corporate secrets,
and key client relationships creates a heightened risk of competitive harm to the
former employer. For this information to be legally p rotected, it must be objectively
shown to warrant confidential status . - Differentiation strategies
change how companies compete (through targeting specific markets or unique
designs) but do not remove the underlying competition within the industry landscape.
- There is no single, fixed standard or universal formula for evaluating
reasonableness of restraint; instead, each individual case must be assessed and
decided based purely on its own unique facts and merits. - An employer is not
responsible for losses in value of employee share options that result from general
market fluctuations, as this liability is dependent on the specific facts and
circumstances of each individual case.
ORDER
Application granted with costs.
JUDGMENT DELIVERED ELECTRONICALLY
Introduction
Nziweni, J
[1] In this application the applicant (“Truworths ”) seeks to enforce a six-month
restraint of trade against the respondent (“ the first respondent ”). On 05 September
2012, the first respondent accepted an offer of employment with Truworths as a
‘Store Planner’ ( The job title for a Store Planner was later updated to 'Store
Designer').
[2] Truworths positions itself as a retailer of fashion, clothing, footwear,
homeware and related merchandise in the ladies’ , men’s and children’s markets.
According to Truworths, part of its competitive edge is the manner in which they
execute; and the importance they attach to the concept of store development (which
encompasses both store design and store build) . Truworths holds the view that it is
no secret that their competitors look to emulate them, in order to gain market share
at their expense.
[3] No relief is sought against the second respondent , for sake of brevity, I will
refer to the second respondent as (“Mr Price”). According to Truworths, they cited Mr
Price only out of abun dance of caution . However, the application against Mr Price
was withdrawn by the applicant.
[4] The offer of employment between Truworths and Mr Nxasana contained a
restraint of trade clause [headed ‘Restraint of Trade’]. The restraint of trade clause
stated the following:
“This offer is dependent on your signing the attached Restraint of Trade of 6 (six)
months, for which you will acquire R120, 000 (One Hundred and Twenty Thousand
Rand) share appreciation rights, or share options or High-Performance Shares
(HPSS) options or a com bination thereof . We anticipate that the new share
appreciation right scheme will be approved by shareholders in Novem ber 2012,
failing which we will invest the amount in our existing share scheme or in High
Performance Share Scheme (HPSS) or a combinatio n thereof under the same
conditions as above.”
[5] It is Truworths’ assertion that the restraint of trade and the employment
agreement, inter alia, record that the first respondent would be exposed to
confidential and commercially sensitive information regarding Truworths’ business
and that to this end, he would be required to sign the restraint.
[6] On 17 October 20 12, the parties concluded the restraint of trade agreement.
The restraint of trade, inter alia, stipulates the following:
“2.5 The Restrainee has been employed by and is in the service of Truworths and by
reason thereof and by virtue of his /her aforementioned capacity and period of
service, been brought into contact with the operations of Truworths . Its philosophy ,
development, general policy and approach to business as well as Truworths’ trade
secrets and know -how. This has placed , and for as long as he/she remains
associated with Truworths will continue to p lace, the Restrainee in the position of
being able to assimilate and acquire a key fundamental and in-depth knowledge and
understanding of aforementioned aspects of Truworths.
understanding of aforementioned aspects of Truworths.
2.6 By virtue of his/her position of employment, it is sine qua non that the Restrainee
will remain and will operate in close contact with most, if not all, of the the customers,
suppliers and business associates of Truworths.
2.7 Pursuant to the aforegoing and particularly by virtue of the position(s) which the
Restrainee has held/filled and will continue to hold during his/her period of service
with Truworths, the Restrainee has acquired and will continue to acquire certain
unique skills, experience, expertise and knowledge , as more fully defined hereunder
and which, had he/she not been employe d by and in the service of Truworths would
not otherwise have been available to or have been able to have been acquired by
him/her.
2.8 . . .
2.9 In order to protect its interest with a view to ensuring its continued profitability,
growth, development and the expansion of its market share, with particular reference
to the interest s of all its members/shareholders and the commitment which it has
towards all its employees, Truworths has decided to implement a policy aimed at
protecting its trade secrets and know-how, its goodwill and propriety interests by
concluding an agreement with the Restrainee, pursuant to which the latter will be:
2.9.1 restrained for a reasonable period from being associated , directly or indirectly
with any competitor of Truworths;
2.9.2 obliged to respect and maintain absolute confidentiality in respect of all trade
secrets and know-how acquired by him/her in the cours e of his or her employment
and association with Truworths.
2.9.3 generously compensated as a further quid pro quo in respect of this
agreement.
2.10 . . .
3. INTERPRETATION
3.1 . . .
3.1.3 “Trade Secrets and Kow How” means all financial and marketing policies,
strategic plans including, inter alia, mergers, acquisitions , and/or investments;
strategic and business plans in connection with or relating to all functions of the
business; the business philosophy; sources of supply ; expansion programme(s);
quality control of merchandise ; discounts obtained from suppliers; control of stock
losses (“shrinkages”); methods of distribution ; specialised knowledge of training
programmes and staff welfare; business connections both in the Republic of South
Africa and internationally; all export activities and overseas /international markets;
internal control systems buying policies and strategies; salary and wages policies;
security methods; methods of warehousing and systems of control there fore;
Information technology information systems technology; employment, staff and
personnel policies and practi ces; general and specific internal systems , policies and
procedures; all credit control and debt collecting processes and systems of
Truworths; and any further “assets” appearing from the recordal above and any
other matters which relate direct ly or indirectly to the business of Truworths and in
respect of which information is not readily available in the ordinary course of
business to a competitor of Truworths . . .
3.1.6 “Restrained Business” means any business which is the same or materially
similar to or competitive with any business conduc ted by Truworths ( “Competitive
Business”) or the business of any supplier who supplies goods and services to a
competitor or competitors of Truworths . Without limiting the generality of the afore
going, the Competitive Business shall be deemed to include any organisation
undertaking business which is a retailer of clothing and footwear and related
accessories and/or jewellery and/or homewares. Furthermor e, and again without
limiting the generality of the description of “Restrained Busi ness” above, the
limiting the generality of the description of “Restrained Busi ness” above, the
Competitive Business shall be deemed to include any organisation, undertaking or
business which is the same as, or materially similar to or competitive with any
specialist business unit or department of Truworths . . .
4. THE CONSIDERATION
4.1 . . . The Restrainee hereby undertakes to and in favour of Truworths that:
4.1.1 he/she shall not, throughout the period of his /her employment with Truworths
and for a period of 6 six months with effect form Termination Dat e; and anywhere
within the Territory, directly or indirectly;
4.1.1.1 carry on; or
4.1.1.2 be engaged or concerned or interested in or employed by or . . .
Any business, company, close corporation, partnership , trust, person, body
corporate, juristic person, association or other legal or business entity . . .
which in any manner whatsoever. . . carries on Restrained Business . . .
4.3 The Restrainee hereby records and acknowledges that:
4.3.1 he/she has given careful consideration to the restraints undertaken by him/her
and made by virtue of this Agreement (Including taking into consideration his/her
personal knowledge of the Trade secretes and Know-how of Truworths) and the said
restraints are fair and reasonable and go no further than reasonably n ecessary to
protect the proprietary rights and interests of Truworths;
4.3.2 the compensation offered to and accepted by him/her (as provided in clauses
4.1 above) constitutes a more than fair and reasonable compensation and quid pro
quo for the undertakings given by him/her and the obligations imposed upon him /her
in terms of this Agreement; . . .”
[7] The first respondent received an employment offer from Mr Price . On 29 July
2025 the first respondent then tendered his resignation to Truworths. On 8 August
2025, Truworths addressed a letter of demand to the first respondent , reminding him
of the restraint. Truworths also wrote to Mr Price notifying them that the first
respondent is subject to a restraint of trade contract. Upon learning of the restraint,
Mr Price wrote to the first respondent , amongst others , stating that Mr Price
competes with Truworths.
Evaluation
[8] This Court is aware of the delicate balance required when enforcing restraint
of trade provisions. Enforcement requires careful consideration, as such contracts
of trade provisions. Enforcement requires careful consideration, as such contracts
frequently clash with public policy principles that prioriti se an individual's right to
participate freely in the commercial labour market.
[9] Notwithstanding the general caution applied, these agreements will be
enforced provided they are not determined to be contrary to public policy, are
necessary to protect the legitimate interests of the employer, and do not unduly
restrict the employee's rights . These determinations require careful consideration of
specific contractual details, and operational context.
[10] The first respondent is opposing Truworths’ application for an interdict which
is aimed at preventing him from commencing employment with Mr Price ; by
launching an integrated, three -pronged challenge. The initial argument contest s the
scope and enforceability of the restraint of trade agreement; the second focuse s on
defining the nature of his new role at Mr Price; and the third maintains that Truworths
faces no demonstrable risk to its protectable interests.
[11] To justify the restraint of trade agreement's scope, Truworths must
demonstrate that its protectable interest possesses a level of uniqueness adequate
to warrant such specific legal protection. The restraint must be reasonably related to
that protectable interest. There is no universal formula for assessing
reasonableness; each case must be determined on its own merits.
The nature of the new role
[12] The first respondent argues that if he finds employment with Mr Price, his new
position would be in project management and not in store design as was the case
with Truworths . According to him, the project management role would involve co -
ordination and executi on rather than creative or strategic design. As such, the role
does not require access to or use of any confidential information obtained by him at
Truworths.
[13] It is not in dispute that Truworths and Mr Price are in the retail industry.
Truworths contends that the confidential know -how and proprietary information
accessed by the first respondent during his employment tenure [particularly as a
accessed by the first respondent during his employment tenure [particularly as a
senior] constitutes interests deserving of protection; the disclosure of which to Mr
Price could confer an unfair competitive advantage upon the latter.
[14] Further, the first respondent contends that his new role at Mr Price is solely
focused on project management, with distinct responsibilities that do not necessitate
the utilisation or transfer o f Truworths' confidential or proprietary information,
systems, or internal methodologies. The first respondent asserts that the project
management role at Mr P rice, focusses on co -ordination, execution and delivery of
store projects, rather than creative or conceptual aspects of design.
[15] In these circumstances , he [the first respondent] asserts that he will not
continue in a store design function.
[16] The restraint is sought due to the highly competitive commercial environment
in which Truw orths operates. Surely, a non-disclosure provision alone is insufficient
to protect legitimate business interests, as adherence would be difficult to monitor
without the restraint. The core concern is the potential difficulty in proving whether
the first r espondent is improperly utilising confidential goodwill and proprietary
knowledge gained during employment for the benefit of competitors.
[17] The stipulations contained within clause 2.6 and 2.7 of the Restraint of Trade
and Confidentiality Agreement ar e unequivocal, transparent, and do not necessitate
further elucidation. The contents of clause 2.6 and 2.7 are cited in paragraph 5 of
this judgment.
[18] Clearly clause 2.6 states that, because of the nature of the job the first
respondent held at Truworths, it is inherent and inevitable that the first respondent
would work very closely with all of Truworths' key clients, vendors, and partners. As
such, this close contact with Truworths’ customers and suppliers is a fundamental,
essential part of the first respondent’s job.
[19] Clause 2.7 posits that, due to the inherent specifics of the first respondent’s
position at Truworths, he has inevitably amassed speciali sed and proprietary
knowledge, skills, and expertise that are distinct to the company and could not have
knowledge, skills, and expertise that are distinct to the company and could not have
been accessed or obtained within an alternative professional environment. Truworths
contends that the expertise and skills the first respondent developed during his
tenure of employment are precisely what confer a competitive advantage upon the
company.
[20] The defining factor is the first respondent's acquisition of vital experience and
expertise at Truworths, not the particulars of his new role. As previously mentioned
Truworths' objective is to safeguard that specific information from being used
elsewhere. This then implies that Truworths believes the skills and insider knowledge
the first respondent gained are inherently valuable and sensitive enough to pose a
risk, regardless of how different his new job title might sound I pause only to note
one further point: this is that, g iven the inherent nature of a project manager's role in
directing projects, it is reasonable to infer that the knowledge, expertise, and
confidential information accrued during the individual's prior engagement with
Truworths would be directly applicable and be neficial to their performance and the
outcome of the projects currently under their new employer.
[21] This Court notes Truworths' contention that their business interests are
threatened by the first respondent’s new role. This judgment will subsequently
provide the rationale and evidence demonstrating why this view is justified.
Does the restraint agreement protect a legitimate and a protectable interest?
[22] It is also the first respondent’s assertion that not all knowledge gained during
his employment at Truworths qualifies as protectable trade secrets. The first
respondent contends that much of the expertise developed are transferable skills
and not proprietary assets.
[23] The mere existence of the restraint of trade agreement does not necessarily
mean there is a protectable interest. The applicant [Truworths] must prove that the
interest exists. The court will only enforce the contract if interest is proven. A key
challenge is distinguishing between an employer's confidential business information
(protectable interest) and an employee's general professional knowledge (not
protectable), as the two often overlap, making precise definitions difficult and risking
protectable), as the two often overlap, making precise definitions difficult and risking
inadvertent curbing of legitimate skills use.
[24] The central issue is whether Truworths' interests are substantial enough to
warrant legal protection. The employer's subjective opinion about what is protectable
is legally irrelevant to the formal determination; the interest must be objectively
worthy of protection.
[25] General industry skills and experience are not protectable information.
However, a senior employee’s access to high -level strategies, company secrets or
information, and key client relationships creates a heightened risk of using
proprietary knowledge elsewhere, which can harm the former employer. However,
the information itself must objectively warrant protection.
(a) Truworths' Assertions of Protectable Interests
[26] Truworths argues that the training provided to the Store Design team is
specific, focusing on brand concepts, design standards, merchandising principles,
and operational requirements. New recruits work on single -brand projects to
internalise these specific standards before moving to complex projects.
[27] By training and employing speciali sed store design staff, Truworths claims
these employees are exposed to core, confidential business information.
[28] The first respondent, a former senior employee in the Store Design
department, was reportedly privy to sensitive, confidential information during his
tenure, including proprietary details on future store locations, formats, timelines,
confidential design principles, branding strategies, and supplier lists.
[29] Truworths asserts that the expertise and skills acquired by the respondent are
not widely known or easily discoverable by competitors. According to Truworths, the
goal is to shield information that gives the company a competitive advantage over
rivals.
[30] Truworths asserts their non -public databases contain proprietary business
strategies and commercially sensitive data, which constitute a valuable protectable
interest and a source of competitive advantage. Th is Court agrees that the evidence
presented by Truworths, explicitly evidences a quantifiable financial valuation to this
information.
[31] The evidence before this Court also demonstrates that Truworths took
measures through the restraint agreement to safeguard this speciali sed knowledge
from competitors. Amongst others, the measures taken by Truworths are aimed at
preventing their employees from utilising the information and knowledge acquired
during employment with a competitor.
(b) The first Respondent's Position and the Court's Assessment
[32] The first respondent concedes signing the restraint in anticipation of exposure
to confidential information . This is not to say, however, that the first respondent
concedes that all the information he had access to is protectable information. As
mentioned previously, the first respondent argues that much of the knowledge
gained is industry standard and widely used across the sector.
[33] According to the Competition Act, Act 89 of 1998, “Confidential information”
means trade, business or industrial information that belongs to a firm, has a
particular economic value, and is not generally available to or known by others.
[34] Of special importance in this case is the fact that t he first respondent's use of
"much of the information" indicates a challenge to the scope of the protectable
information, rather than a total denial of exposure. Th at being so it seems to me that
the first respondent does not contest access to Truworths’ protectable information
but maintains that much of it constitutes common industry knowledge, not proprietary
secrets.
[35] In Basson v Chilwan & Others [1993] ZASCA 61; 1993 (3) SA 742 (A) at
767A-D, the co urt held that to determine the reasonableness or otherwise of a
restraint of trade, the following questions should be asked:
----
1. Is there an interest of the one party, which is deserving of protection at the
termination of the agreement?
2. Is such interest being prejudiced by the other party?
3. If so, does such interest so weigh up qualitatively and quantitatively against the
interest of the latter party, that the latter should not be economically inactive and
unproductive?
4. Is there another face t of public policy having nothing to do with the relationship
between the parties but which requires that the restraint should either be
maintained or rejected?
[36] The argument before us, as in the Chilwan judgment supra, proceeded on the
footing that th e question to be asked was whether there is an interest of the one
party, which needs to be protected.
[37] It is the applicant’s contention that given the first respondent’s central role in
the store design process positioned between the conceptual and implementation
teams, the first respondent has a comprehensive understanding of Truworths’ store
design approa ch and strategies, as well as its store development strategy and
planning.
[38] Truworths asserts that the first respondent played an integral role in
Truworths’ Store Design department. So the argument continues, that the first
respondent’s intimate kn owledge of Truworths’s store design approach and
strategies, as well as its store development strategy and planning, would give a
competitor an unfair springboard.
Standard of Proof and Conclusion on Harm/Risk of harm
[39] Truworths aims to prevent a b reach of confi dentiality. It was argued that the
first respondent's employment with a direct competitor (Mr Price) poses a significant
risk of inadvertent disclosure. This access would confer an invaluable competitive
advantage upon Mr Price, risking Truwo rths' market position. The evidence in this
matter demonstrates that Truworths is highly motivated to protect its significant
competitive edge.
[40] I do not find it difficult to accept that it is reasonable for Truworths to assert
the first respondent, due to his senior position, had access or the potential for access
confidential information . Truworths is not required to furnish proof that the first
respondent obtained actual exposure to or use of the confidential information (this is
an interdict application requiring only reasonable apprehension of harm).
[41] For an employer to maximise the value of an employment contract and of
employing, they must be able to confidently share the sensitive information
necessary for the employee's optimal job performance.
[42] As stated above, by virtue of his position, the first respondent acquired inside
knowledge about Truworths' strengths and weaknesses, which he would inevitably
carry over to Mr Price, allowing Mr Price to appropriate that knowledge.
[43] Hence, the specific nature of the role the first respondent intends to assume
at Mr Price is immaterial if Mr Price is a competitor; prior knowledge could still
facilitate disclosure.
[44] The first respondent’s commitment not to disclose information of fers minimal
reassurance to Truworths, nor does the argument that the information is obsolete.
This overlooks Truworths' central assertion that, by virtue of his employment
position, the first respondent inherently gained access to proprietary and confiden tial
information.
[45] In light of the prevailing evidence, the conclusion is inescapable that
Truworths possesses a demonstrable and superior protectable interest, both in
nature and extent, which takes precedence over that of the first respondent.
[46] Having established that a protectable interest is present and threatened, I turn
now to weigh the employer's interest against the employee's interest in being
economically active and productive.
Reasonableness of the restraint
[47] The first respondent further argues that Mr Price operates within a separate
market segment, characterised by a different customer base, pricing strategy, and
brand identity, thereby suggesting that the general industry overlap does not equate
to dire ct competition sufficient to warrant the enforcement of the restraint of trade.
The first respondent's position is that he is unable to disclose any of Truworths’ trade
secrets. As such, the respondent asserts that the restraint of trade would be
unreasonable. The question as to whether the restraint of trade is reasonable is a
vital issue in the case.
[48] The apt question that then arises here is whether the restraint in question
prevents the employee from working in his field of expertise for six month s, thereby
imposing a hardship that far outweighs any potential harm to employer?
[49] It is an established legal principle that a court will only enforce a restraint of
trade agreement against a former employee to the degree that the restraint is both
reasonable and essential means of safeguarding a legitimate business interest of the
employer.
[50] In Bidfood (Pty) Ltd t/a Bidfood Western Cape v Govender and Others
(2264/2017) [2017] ZAWCHC 91 (28 March 2017) at paragraphs 11 and 13 , the
following was stated:
“[11] It is now well accepted in our law that the reasonableness or otherwise of a
restraint of trade agreement is a matter for the Court to determine. The fact that
parties may accept and choose to describe it as reasonable is no longer the decisive
factor. In this regard see Advtech Resourcing t/a Communicate Personnel Group v
Kuhn 2008 (2) SA 375 (CPD) at 382 G and the cases cited therein. . .
“[13] The reasonableness of a restraint also entails a value judgment. This is
factually driven and premised upon the facts of each case. In Reddy supra, the
following was held at para [15]-[16]:
“A court must make a value judgment with two principal policy considerations in mind
“A court must make a value judgment with two principal policy considerations in mind
in determining the reasonableness of a restraint. The first is that the public interest
requires that parties should comply with their contractual obligations, a notion
expressed by the maxim pacta servanda sunt. The second is that all persons should
in the interests of society be productive and be permitted to engage in trade and
commerce or the professions. Both considerations reflect not only common law but
also constitutional values. Contractual autonomy is part of freedom infor ming the
constitutional value of dignity, and it is by entering into contracts that an individual
takes part in economic life. In this sense, freedom of contract is an integral part of
the fundamental right referred to in s 22 …. In applying these two prin cipal
considerations, the particular interest must be examined. A restraint would be
unenforceable if it prevents a party after termination of his or her employment from
partaking in trade or commerce without a corresponding interest of the other party
deserving of protection. Such a restraint is not in the public interest. Moreover, a
restraint which is reasonable as between parties may for some other reason be
contrary to the public interest.”
[51] Plainly, r easonableness of restraint is not a one size fits all exercise. The
important principle at play in this matter is that an employee’s mobility is essential for
an individual to earn a living and pursue career opportunities. A restraint of trade
agreement can hinder an employee's capacity to change jobs or pursue new career
opportunities. Nonetheless, courts will safeguard an employer from the unauthorised
disclosure or use of its confidential or strategic information by a for mer employee,
provided that the employee formally agreed to an enforceable and reasonable
restraint of trade contract.
[52] Once an employer and an employee enter into a restraint of trade agreement,
a confidential relationship and a duty of confidence is established between them. As
mentioned in Reddy v Siemens Telecommunications (Pty) Ltd 2007 (2) SA 488 SCA,
the principles of freedom of contract come into play.
[53] The first respondent voluntarily entered a clear, six -month restraint of trade
agreement as a condition of his employment with Truworths. The restraint of trade
agreement as a condition of his employment with Truworths. The restraint of trade
agreement restrained the firs t respondent for a reasonable period from being
associated, direct ly or indirectly with any competitor of Truworths . His subsequent
assertion of hardship is currently based on a bare assertion of inability to secure
work for the duration of the restraint. Surely, the restraint involved in this case
cannot be described as one that is excessively broad in its duration . It can also not
be said that the restraint conflicts with public interest. The restriction of the restrained
to the competitors of Truworths cannot be viewed as being unreasonable. It does not
unjustly prevent the respondent from getting employment with companies that are
not in competition with Truworths.
Is Truworths a competitor of Mr Price
[54] The first respondent asserts that “Mr Price is one of Truworths’ direct
competitors” is broadly correct, but it lacks nuance and oversimplifies the nature of
the competition in retail . It is the first respondent’s assertion that Truworths and Mr
Price operate in different segments. The first respondent asserts that Truworths is
positioned to high end fashion retailer, while Mr Price is value driv en brand, catering
to a broader, more price sensitive demographics. The first respondent further argues
that Truworths’ and Mr Price’s operational models, customer bases, and brand
philosophies are distinct and the overlap in industry does not equate to di rect
competition in a way that would justify enforcement of such a sweeping restraint.
[55] According to Truworths, there is no much distinguishing features between
Truworths and Mr Price, both are clothing retailers, both are mass market and both
have a n element of substitutability between their offerors. Both are retailers in an
overlapping market which means they are competitors. It was argued on behalf of
Truworths that the distinctions that the first respondent seeks to draw between
Truworths and Mr Price are not distinctions that are relevant in evaluating the
competition element. It is further asserted on behalf of Truworths that the concession
made by the first respondent in the answering affidavit that Mr Price is one of
Truworths’ direct competitors is correct and is telling.
[56] In Pepkor Retail (Proprietary) Limited v Truworths Limited (900/2015) [2016]
ZASCA 146; 2016 BIP 286 (SCA) (30 September 2016) , the Supreme Court of
Appeal remarked as follows:
“Truworths and Ackermans are competitors in the fashion retail industry. Both
“Truworths and Ackermans are competitors in the fashion retail industry. Both
predominantly sell clothing, footwear, headgear and other fashion -related goods.
Ackermans is, however, regarded as a ‘value’ retailer aimed at selling at affordable
prices.”
[57] Mr Price's acknowledgment of Truworths as a competitor is significant,
making it challenging to argue otherwise when both companies mutually recognise
the competitive relationship. It is evident that Truworths and Mr Price are direct
competitors. They do have the same target audience in the same market.
[58] Truworths and Mr Price have maintained operations within the retail industry
for a significant period. Both companies are well -established entities in the
merchandising sector, demonstrating long -standing engagement in the busi ness of
selling goods directly to consumers. The argument presented by the first respondent
is unsustainable. It depends on an unduly narrow interpretation of "competitors" that
is completely unsupportable when considering the core business activities of both
companies. Both operate in the same market, offering wearing apparel, household
equipment, and accessories and competing for consumers.
[59] I do not understand the averment made by the first respondent, when he says
that the differentiation in target market, product offering and store design philosophy,
means that the two companies are not direct competitors. Surely, this averment is
incorrect. Differentiation strategies (t arget market, product, design) do not eliminate
competition; they are simply different ways of competing within the same general
market landscape. These are simply strategies to gain competitive edge.
[60] Companies employ various strategies, such as focusing on specific customer
groups or creating unique products, as methods to compete within the same market
and achieve a leading position . These approaches are not ways to avoid
competition; rather, they are the very tactics used to actively fight against direct
competitors. Surely, companies will always use different approaches, like targeting
unique demographics or developing specialised products, to strive for dominance.
[61] This makes sense, particularl y given the fact that b oth companies are
[61] This makes sense, particularl y given the fact that b oth companies are
powerful, rapidly expanding retail companies that have enjoyed significant success,
making them aggressive competitors. Although Truworths and Mr Price may target
slightly different customer segments, this does not mean they are not competitors. In
fact, for the majority of their products, they compete directly for the same customers.
Which means the two companies operate within the same competitive space. This is
why this case is totally distinguishable for the case of Truworths Limited v De Bruyn
and Another (2020) 41 ILJ1617 (WCC)
[62] Thus, it is not correct to contend in the context of Truworths and Mr Price, that
differences in target demographics, design philosophy, and brand strategy mean that
the two companies are not direct competitors in the strict sense.
[63] Furthermore, the fact that one company may be larger or pricier than the other
does not negate their competitive relationship. A consumer might be deciding
whether to spend R1000 on a high -end item from a pricey retailer (Truworths) or buy
several essential items for the same total price at a value retailer (Mr Price).
However, both companies are c ompeting for that consumer's discretionary income.
Businesses compete for a customer's discretionary income regardless of their vastly
different price points or market segments. As long as they are targeting the same
pool of optional spending money, they are direct rivals.
[64] In fact, pricing is a crucial and powerful source of the competition between
rivalries. Identical pricing prevents or lessens competition. Uniform pricing among
competitors tends to diminish market rivalry.
[65] Competition isn't just about customers; it's also about resources. Firms
compete for favourable store locations , the appearance of their stores ,
manufacturing capacity, talented employees, and management staff . Mr Price's
attempt to recruit a Truworths emp loyee serves as proof that they operate in the
same competitive space. Thus, hiring a rival's staff provides quick access to valuable
industry insights, strategic intelligence (like trade secrets), and knowledge of the
competitor's operations and vulnerabi lities, which consequently leads to proliferation
of restraint of trade agreements.
The consideration (Share Appreciation Rights)
[66] According to Truworths, the first respondent was awarded 102, 700 shares on
[66] According to Truworths, the first respondent was awarded 102, 700 shares on
14 December 2012. Truworths asserts, the consideration gave the first respondent a
share appreciation rights. It is further the Truworths’ contention that the value in the
share appreciation rights was linked to the performance of Truworths’ share price.
[67] It was argued on Truworths’ behalf that Truworths wants its senior employees
to have a stake in the business to feel some sense of ownership in relation to it.
Truworths gives employees the opportunity to purchase shares in Truworths. It is
further argued on Truworths’s behalf that the way the share appreciation rights work
is that Truworths gives a relatively senior a stake in the business to feel some of
ownership in rela tion to it. Like so many other public companies Truworths has a
share option scheme. Acording to Truworths, in a way the employee becomes an
investor in the business. According to Truworths’ counsel, Truworths has a share
option scheme, to acquire the shar es in the company after having worked for a
particular period of time.
[68] Whether they want to keep the shares or not; t here is an outer limit within
which an employee has to chose to acquire those shares. Truworths avers that there
were vesting dates in respect of the first respondent opportunity to accept the offer
that Truworths makes to acquire share in Truworths. The first vesting date for the
first respondent’s opportunity to exercise the acceptance of the offer of shares in
Truworths was the 14 of December 2015. At that stage the first respondent could
have acquired the right to accept an offer in respect of 116 shares, this offer expired
on 14 December 2020. A year after the first vesting, on 14 December 2016, the first
respondent received an o pportunity to accept an offer made to him to purchase 350
of his shares and the expiry date of the offer was 14 December 2020. The third
vesting date was 14 December 2017; the respondent received an opportunity to
acquire 350 shares made to him and the exp iry date was 14 December 2020.
Finally, the fourth vesting, respondent had a last chance to acquire 350 shares from
Finally, the fourth vesting, respondent had a last chance to acquire 350 shares from
13 December 2018, subject to an expiry date of 14 December 2020 [the outer limit
date for the exercise of the share appreciation right] [the share appreciation rights
offer lapsed].
[69] According to Truworths, the Truworths shares performed badly, particularly in
2020.
[70] It is Truworths’ submission that the ghastliness of the pandemic led to the first
respondent not receiving those benefits the parties thought he would receive due to
the pandemic. Nobody contemplat ed in 2012, that the share price would be lower
come 2020. It was argued that embedded in the consideration that Truworths gave
was the risk that it could happen that the share’s value could become lower.
[71] According to the Truworths, had the shares performed well in the period 2012
to December 2020, the first respondent could have exercised his shares appreciation
rights for a substantial profit.
[72] The question her e is whether Truworths gave effective consideration to the
first respondent that, amongst others makes the restraint reasonable.
[73] Mr Patrick SC, on behalf of Truworths, submitted that the lack of consideration
does not mean that the restraint fails. According to him, English law states that there
cannot be a valid contract unless consideration is received. Thus, in terms of the
English law a contract can fail for want of consideration.
[74] It was further submitted on behalf of Truworths by Mr Patri ck SC that South
African law, does not have a doctrine of consideration , and there is no requirement
that consideration must be given and received. According to Mr Patrick SC, what
courts in South Africa enquire is whether the contract is concluded with ea rnest
contractual intents. The approach of Truworths was was authoratively stated in
Conradie v Rossouw 1919 AD 279 at 289 and specifically endorsed by the
Constitutional Court in KwaZulu-Natal Joint Liaison Committee v MEC Department of
Education, Kwazulu-Natal and Others (CCT 60/12) [2013] ZACC 10; 2013 (6) BCLR
615 (CC); 2013 (4) SA 262 (CC) (25 April 2013) when it expressly stated at para 94
that :
“[94] Our law of contract, unlike English law, enforces promises seriously made, not
bargains. Not all promises are enforced, only those made “seriously and deliberately
bargains. Not all promises are enforced, only those made “seriously and deliberately
and with the intention that a lawful obligation should be established”, in the words of
Wessels AJA in Conradie v Rossouw. There have been different formulations of this
“redelike oorsaak” or underlying cause for a contract, but what Conradie settled more
than 90 years ago was that consideration is not a requirement for a valid contract in
our law. And although the underlying rationale for rejecting consideration as a
separate requirement for the validity of a contract is that mere serious agreement
between parties is sufficient to constitute a contract, our law is also practical enough
to recognise that it must, as a general rule, concern itself with the external
manifestations, and not the workings of the minds of parties to a contract. When a
person thus expresses his or her intention in relation to the formation of a contract
the decisive question is often not what he or she subjectively intended, but what it
leads the other party, as a reasonable person, to believe was his or her intention.
Once again, this has been formulated in many ways by our courts. Perhaps the most
famous and enduring is that of Innes J in Pieters & Co v Salomon:
“When a man makes an offer in plain and unambiguous language, which is
understood in its ordinary sense by the person to whom it is addressed, and
accepted by him bona fide in that sense, then there is a concluded contract. Any
unexpressed reservations hidden in the mind of the promiso r are in such
circumstances irrelevant. He cannot be heard to say that he meant his promise to be
subject to a condition which he omitted to mention, and of which the other party was
unaware.”
[75] Truworths acknowledges that a restraint of trade carries some sort of
measure of an impairment of an employee’s ability to find just any job. However, it is
the Truworths’ contention that the harshness of the restraint of trade is mitigated by
the consideration. The consideration is made by Truworths in order t o protect it
proprietary interest.
[76] It is asserted on behalf of Truworths that this is not the sort of matter in which
an employee is left in the cold, on the contrary, in this matter the first respondent is
given the opportunity to continue to be e mployed by Truworths. According to
Truworths, this offer ameliorates the harm which is resulting in the consequence of
Truworths, this offer ameliorates the harm which is resulting in the consequence of
granting the interdict.
[77] On the other hand, it is the first respondent’s assertion that the restraint
agreement was expressly cond itional upon the award of the Share Appreciation
rights. The respondent asserts that he did not receive the consideration. The first
respondent further asserts that, although Truworths offered R120 000.00 in Share
Appreciation Rights as a consideration, th e consideration failed and proved to be
commercially worthless. According to the first respondent, the Share Appreciation
Rights were contingent on two conditions: that the right would vest and that the
share price would exceed the award price.
[78] The f irst respondent contends that neither condition was met and the share
price remained consistently below the grant price, rendering the Share Appreciation
Rights “under water” and incapable of yielding any financial value.
[79] The first respondent further asserts that the historical share data confirms that
that the Share Appreciation Rights never reached a value that could confer any
meaningful benefit.
[80] The first respondent argues that Truworths’ failure to deliver the promised
benefit due to non-performance and undisclosed terms, means the consideration has
failed entirely. As such, it is argued that a party who did not get the value can
withhold their performance because they did not receive a reciprocal performance
which is due to them by their contractual counter parts.
[81] A signatory to a contract continues to be legally bound by that agreement,
even if circumstances change. Put differently, it is a standard tenet of contract law
that original signatories cannot easily escape their contr actual liabilities. For
instance, if the value of the promised consideration drops unexpectedly or becomes
worthless, this is not grounds for a contract breach. In any event, the first
respondent did not seriously claim a breach occurred.
[82] It is, as I understand it, not disputed at present that t he value of the first
respondent’s Share Appreciation Rights decreased. I should also mention, that this
is a risk inherent to shares, which can fluctuate wildly and even evaporate in value.
[83] The long and the short of it is that Truworths contend s that the first
[83] The long and the short of it is that Truworths contend s that the first
respondent could have exercised the options earlier to prevent the loss. It follows
from all these considerations that the vesting dates were meant to mitigate the risks
associated with normal share volatility, the opportunity for the first respondent to
acquire shares in Truworths was structured with specific vesting dates.
[84] The contract offered no guarantee against these normal share price swings or
volatility, a situation exacerba ted by COVID -19's effect on Truworths' shares. As
such, there were no guarantees against value loss.
[85] These vesting dates served as defined periods when the respondent could
"cash out" or exercise their options to acquire shares, allowing them to capt ure value
at specific points in time.
[86] In the course of Truworths’ counsel submissions, I inquired whether the
lapsing of the share appreciation rights rendered the consideration clause null
because the applicant could not generate income from it. Truworth’s counsel
responded and the heart of Mr Patrick's submission is that, although the
consideration unexpectedly became worthless, Truworths did, in fact, provide valid
consideration.
[87] All these consideration underlines the fact that t he first respondent had the
opportunity to accept the shares earlier. It was further submitted that i t was
unfortunate that the value evaporated due to the pandemic. It was vehemently
argued on behalf of Truworths that t he value was present at a prior time point when
the right could have been exercised, but the first respondent's failure to act resulted
in the shares becoming valueless.
[88] It is well known that t he core principle of investing is that timing is everything
when dealing with shares; their value can evaporate overnight, meaning the decision
of when to execute an option is as important as the option itself. Consequently,
inaction or a deferred decision may lead to significant financial detriment. The direct
consequences of passive condu ct versus affirmative action are borne by the
decision-maker [in this instance , the first respondent] . In the matter of the first
respondent's options, the failure to exercise the rights by the optimal vesting date
respondent's options, the failure to exercise the rights by the optimal vesting date
resulted in a foregone opportunity for a higher share value. It therefore follows that ,
Truworths cannot be held liable for the first respondent's losses.
[89] On that basis, of course, depending on the facts of each case, I am of the
view that, an employer is not liable for market fluctuations that diminish the value of
employee shares options.
[90] It was argued by Truworths’ counsel that before 14 December 2020,
Truworths notified the first respondent and told him that the outer limit date for the
share appreciation right is approaching [ the date upon which he needs to accept his
offer to acquire the shares]. It appears the first respondent does not deny prior
knowledge of the Share Appreciation Rights' terms. His own answering affidavit
confirms he received automated notificati ons about the conditions shortly before the
December 2020 expiration date. That being said it does not, of course, follow that
the notification about the outer limit date , did not reach the first respondent .
Consequently, I am satisfied that the first resp ondent received formal notification
regarding the specified deadline [outer limit date].
Conclusion
[91] Truworths has fulfilled the requisite legal criteria necessary to be granted a
final interdict enforcing a restraint of trade. The complexity and circumstances of this
matter warranted the instruction of two counsels; therefore, the general principle
applies that costs ought to follow the event. One might express a wish that the
involved parties could set aside their dispute and return to negotiation to restore their
working relationship, as the first respondent demonstrated himself to be a highly
intelligent, effective and resourceful employee. Moreover, Truworths has indicated its
interest in reemploying him.
[92] I thus make the following order:
92.1 The first respondent is interdicted and restrained from:
(a) assuming employment with the second respondent as envisaged in the
restraint of trade agreement concluded by the first respondent on 17 October
2012 (“the restraint”) (annexure “TM1” to the founding affidavit, for the period
2012 (“the restraint”) (annexure “TM1” to the founding affidavit, for the period
of the restraint, namely six (6) months commencing from the date of
termination of first respondent’s employment with the appli cant, in the
Republic of South Africa.
(b) The first respondent is directed to pay the costs of the application, including
the costs of two counsel where so employed, on scale C.
_____________
CN NZIWENI
JUDGE OF THE HIGH COURT
Appearance:
Counsel for the Applicant : Advocate R Patrick SC
Advocate J Ord
Instructed by : Ward Brink Attorneys
F Strydom
Counsel for First Respondent : Advocate A Lawrence
Advocate U Mlamleni
Instructed by : Gqencu Attorneys
U Gqencu