1
Sneller Verbatim/Iks
JOHANNESBURG
2003-06-13
•'11
• YES is NOT APPLICASLE
. :TEF:y! TO OTrl^R JUDG1H3 Y^/NO
DATE
10
SIGNATURE
In the matter between
I I R SOUTH AFRICA BV
t/a The Institute for International Research
and
HALL. SHOUNEEZ AND ANOTHER
JUDGMENT
Applicant
Respondent
15
20
WILLIS. J: The applicant has approached the court by way of
urgency seeking the following relief:
"1. Directing the first respondent immediately to terminate
her employment and/or association with the second
respondent.
25
IN THE HIGH COURT OF SOUTH AFRICA
(WITWATERSRAND LOCAL DIVISION)
CASE NO: 14293/03
5
14293/03 2 JUDGMENT
2. Interdicting and restraining the first respondent from
being in the second respondent's employ until after 24
January 2004.
3. Interdicting and restraining the first respondent for a
period of 12 months from 24 January 2003 from being 5
involved in the restraint area with any entity that
markets, produces, sells, administers and hosts events
similar to and/or in direct or indirect competition with or
may be in direct or indirect competition with such events
as marketed, produced, sold, administered and/or hosted 10
by the applicant as at 24 January 2003 and for a period
of 1 2 months prior to 24 January 2003 where, for the
purposes of this order -
3.1 'entity' means any person, partnership, close
corporation, company, association, firm, business 15
undertaking, trust, association for gain or any other
vehicle, whether a legal persona or not, whereby
business is carried on and any government
department or agency, municipality, public utility or
statutory body; 20
3.2 "events" means conferences, seminars, training
and/or speaker events including "guru-events";
3.3 "involved" means a direct or indirect interest in an
entity whether as a shareholder, director, partner,
owner, principal, agent, employee, representative, 25
14293/03 3 JUDGMENT
financier or consultant to that entity or whether by
way of part-time or fulltime employment by that
entity, or whether in any other capacity
whatsoever, but excluding the holding of not more
than 5% of the issued share capital of any 5
company listed on any Stock Exchange;
3.4 "restraint area" means the geographical area
situated within an 80 kilometre radius from the
Johannesburg City Hall, corner Rissik and Market
Streets, Johannesburg. 10
4. Directing that the respondent immediately returns all the
applicant's property that may still be in the first
respondent's possession or under her control such as
brochures, pamphlets, written instructions, notes,
memoranda or recordings relating to the applicant's 15
business which may have come into the first
respondent's possession and/or which may have been
made (presumably available should appear thereafter! by
the first during her employment with the applicant
including all information (schedules, precedents and the 20
like) captured and recorded electronically on computer
disc or computer hard drive as well as information in hard
copy, i.e. document form.
5. Interdicting and restraining the first respondent with
immediate effect, and henceforth to desist from using 25
confidential information (as defined and set out in the
14293/03 4 JUDGMENT
restraint agreement dated 13 September 2002 or any
portion thereof) for her own and/or the second
respondent's purposes or benefits or for any other
purpose whatsoever.
6. Directing the second respondent to immediately terminate 5
the employment of the first respondent.
7. Interdicting and restraining the second respondent from
employing the first respondent until after 24 January
2004.
8. Interdicting and restraining the first and the second 10
respondent from holding conferences as described and
set out in X hereto ("the offending conferences") on the
planned dates or any other dates.
9. Ordering the first respondent and the second respondent
to pay the costs of this application jointly and severally, 1 5
the one paying the other to be absolved."
There are some 14 conferences that are affected in the schedule,
Annexure X, referred to above.
The facts in this case are common cause although the inference
to be drawn from certain of the facts is not. The first respondent had 20
been employed by the applicant as a "conference producer". In terms
of the contract of employment dated 23 June 2000 she was
employed at a gross monthly salary of R6 500,00 which included a
car allowance of R1 000,00 per month. She signed a confidentiality
and restraint of trade agreement which was included as a clause of 25
the contract of employment.
14293/03 5 JUDGMENT
The first respondent resigned from her employment with the
applicant and worked for the second respondent in breach of the
restraint of trade agreement. She has not opposed this application.
The applicant and the second respondent are competitors in the
business of organising conferences. This is a very competitive 5
industry.
The second respondent does, however, oppose this application
and the issue which has generated much heat in the application is the
relief sought in paragraph 8, namely an interdict restraining the second
respondent from holding the conferences as described in Annexure X 10
hereto.
The second respondent, when its attention was drawn to the
fact that the first respondent was working for the second respondent
in breach of her restraint of trade agreement, convened a disciplinary
enquiry against the first respondent and ultimately dismissed her. 15
Therefore much of the relief sought by the applicant is irrelevant.
Technically there may be some merit in interdicting the first
respondent from, for example, using confidential information but as
she has been dismissed, I see no necessity for making an interdict
along these lines. 20
Furthermore, the relief sought against the first respondent
relating to the return of such documents as she may have in her
possession, also seems to me to be irrelevant as there is nothing
before me to indicate that she is indeed in possession of any such
documents in breach of her agreement although of course I accept 25
that she may be. These issues were faintly pursued by Mr Weiner,
14293/03 6 JUDGMENT
who appears for the applicant.
As I have already indicated, the keenly contested issue, the
gravamen of this entire case and the issue which is of critical
importance to both the applicant and the second respondent is
whether or not I should interdict the second respondent from holding 5
these conferences. It goes without saying that if the court were to
interdict the second respondent accordingly, there would be a
considerable economic penalty entailed for the second respondent,
and much inconvenience, not only to the second respondent but also
to people who have either registered for these conferences or were 10
planning to attend them.
It is common cause that the first respondent assisted in "putting
the conferences together". She was not, however, the sole or
exclusive cause of these conferences being set up.
The second respondent has explained how it came about that 15
it employed the first respondent. It says as follows in its answering
affidavit:-
"29. The second respondent advertised the position of
conference producers towards the end of 2002 in "The
Star Workplace". The first respondent applied and the 20
first interview was held with Mr Devin McDuling.
Because the second respondent requires its empioyees to
sign restraint of trade and confidentiality agreement, the
first respondent was specifically asked by Mr McDuling
whether she was subject to a restraint of trade 25
14293/03 7 JUDGMENT
agreement. She said "No". She was asked whether she
had a letter of appointment, to which she replied that she
had misplaced it.
30. I held a second interview with the first respondent and
again she was asked whether she was subject to a
restraint of trade agreement. She replied "No" and added
that even if she had, she believed that the applicant
would not enforce such an agreement.
31. I had no reason to doubt the first respondent and made
no further enquiries. I too had worked for Marcus Evans
without a restraint of trade as I refused to sign one. I
therefore did not find it strange when the first respondent
said that she was not subject to a restraint."
It is, however, common cause, that in this particular industry restraint
of trades are the norm.
It is clear from the second respondent's version of events that
it did not intentionally assist the first respondent to breach the
restraint of trade agreement and if I understood Ms Weiner correctly,
she did not argue that there had been an intentional act on the part of
the second respondent. She submitted that the second respondent
had been negligent in the light of these explanations by the first
respondent in not making further enquiries. Ms Weiner colourfully
submitted that the second respondent had "sedulously applied
Nelson's telescope".
I shall assume, without deciding the issue, that negligent
conduct on the part of a person in the position of the second
14293/03 a JUDGMENT
respondent can indeed give rise to a claim based on unlawful
competition. In my view, the second respondent was not negligent.
In my view people conducting their everyday lives are entitled to
assume that others with whom they are dealing are honest. There is
nothing particularly unusual in the version of the first respondent 5
which in my view would have alerted the second respondent to the
possibility that the first respondent was being dishonest. After all, it
must be borne in mind that the first respondent was employed as a
conference producer earning some R6 500,00 per month which
included a car allowance. She was therefore not obviously some 10
"high-flying" executive in respect of whom a restraint of trade
agreement might have been expected.
There is a further issue that arises even if I am wrong in finding
that the second respondent was not indeed negligent. It is this:
whether the second respondent's conduct in "sedulously" applying 15
"Nelson's telescope", justifies the relief that has been so keenly
contested in this particularly application namely the restraint on the
second respondent from holding the conferences as set out in
Annexure X.
Ms Weiner relied very heavily on two unreported judgments in 20
submitting that indeed it would be correct for the court and indeed
required by law to grant this relief. These two judgments are Marcus
Evans (South Africa) (Pty ) Ltd v Mpungose, Zinhle and Others, Case
No. 2002/2780 which is a judgment of my brother Malan J and IR
Netherlands BV (Incorporated in the Netherlands) T/A Institute for 25
International Research v Tarita, Imagen, Case No. 02/19675, which
"293/03 9 JUDGMENT
is a judgment of my brother Marais J. Marais J in his judgment
referred to the reported judgment of Genwest Batteries fPty) Ltd v Van
der Heyden and Others 1991 (1)SA 727(W). This is the judgment
of my brother Goldstone J. In that judgment Goldstone J held that
unlawfully assisting a person to breach a restraint of trade agreement 5
was wrongful and could be interdicted. I do not consider this
judgment to be of particular assistance in dealing with the particular
issue with which I am confronted, namely whether I should go so far
as to restrain the second respondent from holding the conferences in
question. 10
In both the Marcus Evans case and the "Tarita" case (in which
the present applicant was also a party), the learned judges did indeed
interdict against the holding of conferences By persons who had
employed others in breach of their restraint of trade agreements. In
my view it is important to consider these issues in perspective. Until 15
the famous case of Magna Alloys and Research (SA) (Pty) Ltd v Ellis
1984 (4) SA 874 (A) the courts had generally been content to apply
the English principle that restraint of trade agreements were prima
facie contrary to public policy and unenforceable. Since Magna Alloys
the law has been corrected on the basis that Roman Dutch Law did 20
not apply the same principle that restraint of trade agreements were
prima facie unenforceable as they were contrary to public policy. As
is well known, the Magna Alloys case decided that restraint of trade
agreements were enforceable unless they were unreasonable.
Nevertheless, it is clear from the Magna Alloys case and the numerous 25
14293/03 10 JUDGMENT
cases that have been decided in restraint of trade matters thereafter,
that it is ultimately public policy which draws the line between what
is permissible and what is not.
Interestingly, in this particular case I have not been called upon
to find whether or not the restraint in this particular matter was 5
reasonable. The second respondent, by taking the steps which it did
to dismiss the first respondent, obviously accepted that the restraint
was reasonable. I am not convinced as to the wisdom of its decision
but that is a matter that is irrelevant for the purposes of deciding this
particular application. 10
I cannot believe that public policy would accept such draconian
and far reaching consequences as interdicting the second respondent
in circumstances such as this from holding the conferences in
question. Ms Weiner employed an interesting and useful analogy.
She posed the situation of a scientist who had been working for 15
company A in endeavouring to find a cure for AIDS. The scientist
was subject to a restraint of trade agreement. The scientist in breach
of his agreement went to work for company B which was negligent in
not ascertaining that the scientist was subject to a restraint of trade
agreement and refusing to employ that scientist. Over the course of 20
a few months during which the scientist was subject to the restraint
of trade, he, together with others discovered the cure for AIDS. What
would the consequence be for company A by reason of its negligent
employment of the scientist? Could company A obtain an interdict
against company B, restraining it from selling or in any way benefitting 25
14293/03 1 1 JUDGMENT
from the discovery of the cure for AIDS because company B had been
negligent in employing the scientist. Ms Weiner, if I understood her
correctly, was, by force of logic, constrained to agree that if I
accepted the principles for which she was contending, that indeed
would be the relief that company A would be entitled to obtain against 5
company B.
Indeed, if I understood Ms Weiner correctly, she was neither
embarrassed nor inhibited in making this assertion. On the contrary,
she made it with considerable enthusiasm. In my view, if a court
were to make such an order there would be a public outcry and rightly 10
so. Not only would the order be draconian and hugely burdensome
upon company B but it would also deprive the ordinary citizenry of
access to the^cure for AIDS.
In this particular case an interdict stopping the conferences in
question would not only profoundly inconvenience the second 15
respondent and cost it a considerable amount of money but it would
inconvenience those persons who had registered for or were planning
to attend the conferences. If my brothers Malan J and Marais J
intended to develop principles of law which had such far reaching and
draconian consequences, I am constrained to conclude that they were 20
indeed wrong. The pendulum cannot swing so far from holding that
restraint agreements were prima facie contrary to public policy to, so
allowing the kind of draconian consequences which the applicant
submits would arise in situations such as that with which I am
confronted in the present case. 25
14293/03 12 JUDGMENT
I do not think it appropriate to nit-pick in this particular case
about costs. As I have already indicated, the residual relief sought
against the first respondent was faintly pressed and I do not think that
it is appropriate to penalise her with a costs order, especially as she
had not opposed the application. Furthermore, it is clear that this was 5
not the real issue in contention.
It is true that certain costs were incurred by the applicant prior
to the second respondent's dismissal of the first respondent. The fact
is, however, that the second respondent acted promptly in remedying
what it believed to have been a wrong and I do not see why it should 10
be penalised in the circumstances of this particular case by a costs
order.
The application is dismissed with costs.