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[2015] ZAWCHC 54
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Awcape (Pty) Ltd v Pietersen and Others (19362/14) [2015] ZAWCHC 54 (8 May 2015)
THE HIGH COURT OF SOUTH
AFRICA
(WESTERN
CAPE DIVISION, CAPE TOWN)
Case No: 19362/14
DATE: 08 MAY 2015
In the matter between
AWCAPE (PTY)
LTD
.........................................................................................................
APPLICANT
And
BARBARA ANN
PIETERSEN
.........................................................................
FIRST
RESPONDENT
STEPHEN GEORGE
RUSH
.......................................................................
SECOND
RESPONDENT
STREAMLINK TECHNOLOGIES
CC
.........................................................
THIRD
RESPONDENT
Coram
:
ROGERS J
Heard:
29 APRIL 2015
Delivered:
8 MAY 2015
JUDGMENT
ROGERS
J:
Introduction
[1]
The applicant
(‘AWCape’) seeks to enforce the terms of restraints of
trade against the third respondent (‘Streamlink’)
and the
first and second respondents (‘Pietersen’ and ‘Rush
Snr’) who work for Streamlink. Streamlink’s
sole
shareholder is Rush Snr’s son Anthony Rush (‘Rush Jnr’).
The application was issued on 29 October 2014.
The need for urgent
interim relief was obviated by an agreed order made on 5 November
2014. Mr Corbett appeared for AWCape and
Mr Brembridge for the
respondents.
[2]
In the founding
affidavit AWCape’s deponent, Mr JH Hattingh (‘Hattingh’),
states that AWCape markets and sells
Sage computerised accounting
packages and after-sales support and services to its customers.
AWCape is accredited by Sage to do
so. It is one of about 50 Sage
agents in South Africa. AWCape started business in 2009. It initially
traded under the name Acctech.
At the time proceedings were
instituted it had 30 alleged customers, whose names were listed in an
annexure to Hattingh’s
affidavit (‘the listed
customers’). Excluded from the list are eight customers who
were allegedly poached by the respondents
in breach of the restraints
before the application was launched (‘the excluded customers’).
AWCape accepts that it
cannot regain the excluded customers but
relies on their loss to establish its reasonable apprehension that
the respondents will
continue to breach the restraints unless
interdicted.
[3]
Paras 2.1 and 2.2 of
the notice of motion are directed at protecting allegedly
confidential information. Paras 2.3 and 2.4 seek
to interdict the
respondents from selling products and services to the listed clients,
for two years as from 1 March 2014 in the
case of Pietersen and
Streamlink and for two years as from 1 August 2014 in the case of
Rush Snr.
Factual
background
[4]
In December 2011 a
written agreement was concluded between AWCape and Streamlink (‘the
distribution agreement’). Rush
Jnr and Pietersen signed it on
behalf of Streamlink. In terms thereof Streamlink appointed AWCape as
its sole distributor and was
to have AWCape as its sole customer for
the products and services covered by the agreement. Those products
and services were to
be absorbed into AWCape’s product
offerings. In respect of products and services developed by
Streamlink, identified in the
agreement as ‘backup services,
virtual servers and Internet ISP services’, gross profit was to
be shared on a 50/50
basis. In respect of consulting services,
Streamlink was to be paid a specified amount per hour plus an
additional commission on
consulting revenue received from
Streamlink’s existing clients. In respect of software sales
clinched by Streamlink it would
receive 10% of AWCape’s gross
profit.
[5]
Hattingh styled this
agreement a ‘merger’. This characterisation, and
Hattingh’s allegation that the transaction
was prompted on
Streamlink’s side by financial distress, have been disputed by
the respondents.
[6]
Be that as it may, the
terms of the agreement are not in dispute. Clause 2.3 reads as
follows:
‘
2.3.
Streamlink further agrees and undertakes in favour of Acctech that it
or its associated companies shall not directly or indirectly
engage
in business involving products and services with any customer of
Acctech, either in that customer’s private or corporate
capacity, for a period of 3 (three) years following termination of
this agreement, either as principal, agent, partner, representative,
shareholder, member, director, employee, consultant, adviser, or in
any other like or similar capacity. Existing customers of Streamlink
at time of concluding this agreement and as indicated in Appendix A
are excluded from this constraint.’
I shall refer to the customers listed in the said
appendix A as the pre-existing Streamlink customers. There were eight
of them.
[7]
In terms of clause 3.1
of the agreement Streamlink acknowledged that, by virtue of its
association with AWCape, it had become possessed
of AWCape’s
confidential information and had gained access to AWCape’s
trade connections, particulars of which were
listed in clause 3.2. In
clause 3.3 Streamlink acknowledged that AWCape’s proprietary
interest in its trade connections and
confidential information would
be prejudiced if Streamlink
[1]
or its employees became associated with or interested in a competitor
of AWCape. Clause 4 sets out various restraints accepted
by
Streamlink in favour of AWCape. Clauses 4.1.1 and 4.1.2 deal with
confidential information. Clauses 4.1.3 and 4.1.4 read thus:
‘
4.1.3. Streamlink
shall not for a period of three years after the date of the
termination of his/her [sic] engagement
with Acctech:
4.1.3.1. persuade or
attempt to persuade any person whom [sic], during his/her employment
with Acctech, was a banker,
financier, supplier or customer of
Acctech, to cease doing business with Acctech or commence doing
business with anyone else;
4.1.3.2. solicit or
attempt to solicit the business or custom of any persons referred to
in 4.1.3.1 above;
4.1.3.3. persuade,
induce, solicit, encourage or procure any employee employed by
Acctech to cease such employment or
to undertake employment with or
have any interest in any other business.
4.1.4. Streamlink
shall not during the period of three years after the termination of
this agreement for any reason whatsoever,
either alone or jointly or
together with or as agent for any other person, assist, be
interested, engaged or concerned, directly
or indirectly, whether as
principal, proprietor, shareholder, partner, representative, member,
consultant, adviser, director, administrator,
employee or otherwise,
in any business, company or concern which carries on business in
competition with Acctech within the provincial
area of Western Cape;
Existing customers of Streamlink at time of concluding this agreement
and as indicated in Appendix A are
excluded from this constraint.’
[8]
In clause 5 Streamlink
acknowledged the reasonableness of the restraints in all respects.
[9]
During October 2012
Rush Snr signed what purported to be a contract of employment with
AWCape. The agreement was to be effective
from 24 October 2012. His
job title was Services Manager, reporting to Hattingh as CEO. His
remuneration was set out in an annexure.
Clause 9 identified trade
connections and confidential information in identical terms to clause
3 of the distribution agreement.
Clause 10 contained a restraint
identical to clause 4 of the distribution agreement. Rush Snr
acknowledged the reasonableness of
the restraints in clause 11.
[10]
Rush Snr admits that he
signed this document but claims he did so without applying his mind
and he denies that the parties gave
effect to the document. The true
position, he says, is that he was employed by Streamlink. The latter
invoiced AWCape in terms
of the distribution agreement, inter alia
for his consulting services. On this basis he denies being bound by
the restraint. Hattingh
in reply says that some of Rush Snr’s
remuneration was channelled through Streamlink to take advantage of
the latter’s
assessed loss but that he was employed by AWCape.
This explanation is denied in the respondents’ supplementary
answering
papers.
[11]
I do not need to decide
whether Rush Snr was an employee of AWCape or of Streamlink. If
technically he was employed by Streamlink,
the terms of the
distribution agreement were nevertheless such as to create a
situation practically the same as if Rush Snr were
working for
AWCape. Rush Snr has not alleged facts to show that AWCape through
its CEO was not, from a practical point of view,
the entity which
directed Rush Snr’s activities. Rush Snr must have seen things
the same way because he not only signed the
contract of October 2012
but also an addendum in February 2013 setting out his remuneration
structure applicable from 1 February
2013. AWCape had the same
justification for obtaining restraints from Rush Snr as if he were
its employee. I am satisfied that
the restraint undertakings
represent a valid contract between the parties.
[12]
I may add that Rush Jnr
in May 2013 also signed an addendum reflecting that he was an
employee of AWCape. The addendum set out his
remuneration as from 1
March 2013. Whether there was an employment contract preceding this
addendum does not appear from the papers.
There may well not have
been, given that AWCape has not cited Rush Jnr or alleged that he is
personally bound by any restraints.
[13]
AWCape asked Pietersen
to sign an employment contract similar to that of Rush Snr. She
refused to do so on the basis that it was
not intended that she
should be an AWCape employee. This is not entirely consistent with a
letter of grant she signed during May
2013 in which she accepted a 2%
shareholding in AWCape. It was a condition that she should be an
employee of AWCape at the date
of acceptance. Again, however, AWCape
does not in her case rely on a restraint flowing from an employment
contract but on a restraint
contained in clause 34 of AWCape’s
memorandum of incorporation, which the shareholders adopted on 28
October 2013. Pietersen
was one of those shareholders. She does not
dispute that she signed the memorandum. Clause 34.4 reads as follows:
’
34.4.
The Shareholders further undertake and agree in favour of the Company
that neither they nor their associates shall directly
or indirectly
engage in business involving products and services with any customers
of the Company, such customers including all
customers, past and
present which were active and did business with the Company during
the time that any such Shareholder was a
Shareholder of the Company
either in that customer’s private or corporate capacity, for a
period of two (2) years following
either the termination of that
Shareholder’s shareholding in or employment with the Company,
whichever shall be the later,
either as principal, agent, partner,
representative, shareholder, member, director, employee, consultant,
adviser, financier, or
in any other like or similar capacity.’
[14]
In early October 2013
Rush Jnr informed Hattingh that he wished to negotiate a termination
of their contract. He said he had been
offered part-time employment
with one of AWCape’s customers, Wesgro. He expressed the view
that this would not conflict with
the services AWCape provided to
Wesgro but would provide him with the flexibility to continue
developing his products and solutions
and to pursue other interests
outside the consulting environment. Further correspondence and
discussion took place on the subject
during October, November and
early December 2013. Hattingh was prepared to relax the Streamlink
restraint in respect of certain
services supplied to Wesgro. There is
a factual dispute as to the precise terms of the termination but it
is common cause that
the distribution agreement came to an end.
[15]
The precise date on
which this termination occurred is not clear. There does not seem to
have been a clean break. The discussions
in the latter part of 2013
were concerned mainly with the role of Rush Jnr. Pietersen and Rush
Snr continued to provide their services
to AWCape customers, on their
version as employees of Streamlink rather than as employees of
AWCape. In February 2014 Pietersen
terminated her services in respect
of AWCape customers and ceased to be a shareholder of AWCape. Rush
Snr followed suit in July
2014. Both of them continue to work for
Streamlink.
The relief
claimed
[16]
In respect of Pietersen
and Streamlink, AWCape seeks an interdict preventing them from
directly or indirectly engaging in business
involving the provision
of products and services to the listed clients for a period of two
years as from 1 March 2014. In the case
of Streamlink, the requested
interdict is (i) for a shorter period than the three years
specified in clauses 2.3, 4.1.3 and
4.1.4 of the distribution
agreement; and (ii) accords, in ambit, with clause 2.3 of the
distribution agreement. AWCape does not
seek to enforce the general
prohibition against competition contained in clause 4.1.4. In the
case of Pietersen the two-year period
is reckoned from the
termination of her shareholding in AWCape, in accordance with clause
34.4 of the memorandum of incorporation.
In her case, the ambit of
the requested restraint is more or less in line with clause 34.4 of
the memorandum, save that AWCape
does not seek to prevent her from
dealing with Streamlink’s pre-existing customers.
[17]
In respect of Rush Snr,
AWCape seeks a similar interdict for a two-year period as from 1
August 2014. The two-year period is in
line with clause 10.1.4 of his
employment contract. The ambit of the requested restraint is confined
to dealing with the listed
customers. Once again, AWCape does not
seek to enforce the general prohibition against competition contained
in clause 10.1.4.
[18]
In respect of
confidential information, AWCape in summary seeks an interdict to
prevent the respondents from divulging or using
AWCape’s
confidential information and an order directing them to hand over all
documents in their possession, written or
electronic, pertaining to
AWCape’s business.
Restraints
of trade - legal principles
[19]
There was no dispute
regarding the law applicable to the enforcement of restraints of
trade. The following legal principles, taken
from leading authorities
(including
Magna
Alloys & Research (SA) (Pty) Ltd v Ellis
[1984] ZASCA 116
;
1984
(4) SA 874
(A),
Basson
v Chilwan & Others
[1993] ZASCA 61
;
1993
(3) SA 742
(A),
Rawlins
& Another v
Caravantruck
(Pty) Ltd
[1992] ZASCA 204
;
1993
(1) SA 537
(A) and
Reddy
v Siemens Telecommunications (Pty) Ltd
2007
(2) SA 486
(SCA)), may be mentioned:
(a) There is nothing in our common law which states that
a restraint of trade agreement is invalid or unenforceable.
(b) It is in the public interest that agreements entered
into freely should be honoured.
(c) However, it is also in the public interest that
everyone should, as far as possible, be able to operate freely in the
commercial
and professional world and that productive capacity should
not be sterilised.
(d) Because of the public interest in (c), a restraint
of trade may be unenforceable by virtue of being contrary to public
policy.
Generally this will be the case where the restraint is not
reasonably required to protect a legitimate interest of the enforcing
party, typically an interest in confidential information or trade
connections, the use of which in either case by the restrained
party
would be competitively harmful to the restraining party.
(e) The question of reasonableness calls for a value
judgment guided by the competing policy considerations just
mentioned, which
are now also underpinned by constitutional rights
and values. The court must consider how the restraining party’s
protectable
interests, if any, weigh, qualitatively and
quantitatively, against the restrained party’s interest in not
being economically
inactive and unproductive. The enquiry covers a
wide field, and includes the nature, extent and duration of the
restraint and factors
peculiar to the parties and their respective
bargaining powers and interests.
(f) The burden of proving that the restraint is contrary
to public policy and thus unenforceable rests on the restrained
party.
(g) The reasonableness of the restraint must be assessed
with reference to the circumstances prevailing at the time of
enforcement.
(h) That the restrained party contractually acknowledged
the reasonableness of the restraint may be taken into account in
assessing
enforceability but can never be decisive.
[20]
The fact that in motion
proceedings the onus rests on a respondent does not reverse the
operation of the
Plascon-Evans
rule
(
Ngqumba
en ʼn Ander v Staatspresident en Andere
1988
(4) SA 224
(A) at
259E-263D). If there is a genuine dispute of fact bearing on the
question whether the restraint is unenforceable, the respondent’s
version must be accepted unless the applicant seeks a referral to
oral evidence (
Rawlins
supra 541I-542B).
[21]
The general
requirements for a final interdict, which is what AWCape in this case
seeks, are trite: (i) a clear right on the
part of AWCape;
(ii) an injury actually committed or reasonably apprehended; and
(iii) the absence of any other satisfactory
remedy.
The
restraints - assessment
The
‘products and services’
[22]
As observed, the notice
of motion follows clause 2.3 of the distribution agreement and clause
34.4 of the memorandum in seeking
to restrain the respondents from
engaging in business ‘involving products and services with any
customers of’ AWCape.
There was some debate about the meaning
of the expression ‘products and services’. On the face of
it the expression
is unrestricted. I do not think it is limited to
the products and services which AWCape provided to its customers
immediately prior
to the conclusion of the distribution agreement or
to the additional products and services which Streamlink brought to
the table.
Indeed, this type of distinction would have no textual
support in the memorandum of incorporation, which was not concerned
with
the relationship with Streamlink at all.
[23]
In context, the
expression ‘products and services’ may by necessary
implication be limited to products and services
in the IT field.
Beyond this I do not think it is limited to the products and services
actually supplied by AWCape or Streamlink
at any given point in time.
Accordingly, and as framed, the restraints provide protection to
AWCape not only in respect of its
actual product offering from time
to time but also in respect of potential expansions of the product
offering into other IT products
and services.
The
excluded customers
[24]
Mr Brembridge drew a
distinction in argument between the enforceability of the restraints
and the question whether, for purposes
of obtaining an interdict,
AWCape had established a breach or reasonable apprehension of a
breach of the restraints. The evidence
regarding the breach or
reasonable apprehension of breach focused on the fact that the eight
excluded clients had switched from
AWCape to Streamlink. Mr
Brembridge submitted that the respondents had satisfactorily
explained these switches, showing in some
instances that there had in
truth been no breach of the restraints and in other instances that
there were reasons why the restraints
were not enforceable in respect
of the specific customers in question. One must bear in mind,
however, that AWCape does not seek
to enforce the restraints in
respect of the eight excluded customers. While the facts surrounding
those customers may be relevant
to the question of reasonable
apprehension of injury, the enforceability of the restraints must be
judged with reference to the
30 listed customers in respect of whom
AWCape seeks to enforce the restraints. Facts peculiar to the eight
excluded customers would
not be facts demonstrating why it would be
contrary to public policy to enforce the restraints in respect of the
30 listed customers.
[25]
Bearing these
distinctions in mind, I deal briefly with the circumstances of the
eight excluded customers. Three of them –
Achievement Awards,
Trader’s Warehouse and
UCS/Moresport
–
appointed
Streamlink in place of AWCape as their accredited Sage agent during
the period March - May 2014. Since they were pre-existing
Streamlink
customers, the restraints in the distribution agreement did not
prevent Streamlink from dealing with them. Streamlink
was thus
entitled to resume its position as their accredited Sage agent. This
exception to the restraints in the distribution agreement
is of
potential application to only one of the 30 listed customers,
Oom
Polla se Winkel (Pty) Ltd (‘OPW’). OPW is a pre-existing
Streamlink customer which chose, after termination of the
distribution agreement, to remain with AWCape. Although I was not
addressed on the matter, I do not think the distribution agreement
prevents Streamlink from competing for OPW’s custom merely
because, for the moment, OPW has not switched back to Streamlink.
On
an ordinary reading of clauses 2.3 and 4.1.4 the exemption in respect
of the pre-existing Streamlink customers is absolute.
[26]
The next three excluded
customers with which I deal are SPH Kundalila (‘SPH’),
Smit Amandla Marine (‘SAM’)
and Duferco Steel
(‘Duferco’). These customers appointed Streamlink as
their Sage agent on various dates in August
and October 2014. They
are not pre-existing Streamlink customers. The respondents contend,
however, that AWCape has no proprietary
interest in respect of these
customers worthy of protection by way of a restraint. The facts
underlying this contention are briefly
the following. During 2012 Ms
Evelyn Wiehahn (‘Wiehahn’), who conducted business under
the name Proacctive, concluded
a collaboration agreement with AWCape.
If there was a written contract between AWCape and Wiehahn it has not
been adduced as an
exhibit in this case but the arrangement seems to
have been similar to the Streamlink distribution agreement, in that
Wiehahn brought
certain customers to AWCape on the basis that she
would be entitled to take them back if her agreement with Streamlink
was terminated.
The agreement was terminated in September 2014. SPH,
SAM and Duferco were pre-existing Wiehahn customers. The respondents
allege
that Wiehahn did not intend herself to continue servicing them
and therefore referred them to Streamlink. They say that during the
period of her agreement with AWCape Wiehahn was the person who
exclusively dealt with them. The respondents had no dealings with
these customers and there was thus no ‘trade
connection’justifying a restraint.
[27]
The fact that Wiehahn
could have taken back the customers does not in itself mean that
Streamlink could lawfully deal with them
on Wiehahn’s referral.
The three customers in question were AWCape customers before they
switched to Streamlink, even though
Wiehahn had brought them into
AWCape’s business. Wiehahn’s right was limited to taking
them back if she so wished.
She could not exempt the respondents from
their restraints.
[28]
However, the
respondents go further and allege that during their time at AWCape
they had no dealings with SPH, SAM and Duferco so
that there was no
trade connection of which they could take advantage after the
termination of the distribution agreement. Whether
the respondents
were aware of confidential information which could have been of
assistance in competing for the business of these
customers is
unclear. The evidence regarding confidential information or lack
thereof was of a general nature; it did not focus
on these specific
customers.
[29]
In regard to trade
connection, I am doubtful whether its absence in relation to these
three specific customers renders the restraint
unenforceable in
respect of them. If the restrained party’s opportunity to take
advantage of trade connections is on the
facts of the case a general
justification for a restraint of trade, I do not think the law
requires that the enforceability of
the restraint be tested
separately in relation to each customer. In
Rawlins
,
for example, a two-year restraint in general terms was enforced on
the basis that the appellant had not shown an absence on his
part of
any significant personal knowledge of or influence over the persons
with whom he dealt as a salesman. The appellant’s
evidence was
that during his employment with the respondent he largely dealt with
his own pre-existing customer base rather than
the respondent’s
other customers. The court found that his employment with the
respondent gave him the opportunity to strengthen
his relationships
with his pre-existing customers and that this justified the
restraint. Notwithstanding evidence that Rawlins
did not deal with
other customers of the respondent, the court did not limit the
enforceability of the restraint.
[30]
However, and even if
one assumes that the enforcement of the restraints as against these
Wiehahn customers would have been contrary
to public policy, the
respondents do not say that any of the listed customers in respect of
whom AWCape seeks to enforce the restraints
are Wiehahn customers or
that they stand on a similar footing to SPH, SAM and Duferco.
[31]
The next excluded
customer is RMS Shopfitters (‘RMS’). On 21 October 2014
this customer appointed Streamlink as its
Sage agent in place of
AWCape. The respondents say that they did not solicit RMS’
business. RMS had recently become an AWCape
client. Wiehahn provided
consulting services to RMS on behalf of AWCape as well as certain
accounting services in her own right.
She continued providing
services to RMS after the termination of her agreement with AWCape.
At about this time, so the respondents
say, RMS decided to
discontinue a database hosting service provided by AWCape and instead
to use an in-house server to store its
database. This switch was done
by RMS’ own IT personnel. RMS told Wiehahn that because they
intended to terminate the AWCape
hosting service they would require
someone to assist in the administration of the in-house server.
Because (so the respondents
allege) AWCape did not have the
capability to offer this service, Wiehahn referred RMS to Streamlink.
[32]
What does not appear to
be in dispute, however, is that AWCape was previously RMS’ Sage
agent. The respondents do not say
that Wiehahn brought RMS to AWCape
as a Sage client and that Wiehahn had a right to take RMS back as a
Sage client after the termination
of her agreement with AWCape. At
least in regard to the provision of Sage products and related
after-sale and support services,
RMS does not seem to stand on a
different footing from the other listed customers. The fact that the
respondents did not actively
solicit RMS’ custom is irrelevant
because the restraints are not limited to solicitation.
[33]
It is convenient here
to mention certain email correspondence relating to RMS. Hattingh
attached to his founding affidavit email
communications between
Pietersen, Wiehahn and the Rushes on 14 August 2014. From the first
email it appears that they wanted to
locate a copy of AWCape’s
contract with RMS. Pietersen wrote to the others as follows:
‘
Good
news! Steve has located a copy of the contract between RMS & AWC
and there is no notice period required, so as soon as
we get the
go-ahead and have the signed forms (even though we won’t send
them until André gives the go-ahead so) we
can get going.
[sic]
Will get the quotes prepared
asap and send them along.’
(The ‘André’ mentioned in this email
is Mr André Tancred of RMS. It appears from another email of
the
same date that he did not have a copy of RMS’ contact with
AWCape.)
[34]
In the event, Pietersen
was mistaken in thinking that Rush Snr had found the RMS contract.
This appears from an email she wrote
to Tancred (with copy to Wiehahn
and Rush Jnr) on 18 August 2014. She annexed this email to her
answering affidavit.
[2]
The email reads thus:
‘
It
appears that Steve was mistaken when he thought he had found a signed
RMS/AWCape contract. He had been looking at the Standard
T & C
Agreement which does not have an expiry date in it. He cannot find a
signed contract. I think you will be quite safe
giving a week’s
notice.
Evelyn indicated that you have
decided to move your server to on premise, as you were concerned
about the reaction of AWCape. Just
for your information, we have
servers ready for you to change over at a moment’s notice which
will be a lot quicker than
commissioning and setting up a server on
site. Please let me know if we can provide you with costs relating to
this, just in case
this route is still open to consideration. You can
always change your mind again in the future.’
[35]
This email, of which
AWCape was not aware when it launched the application, lends force to
its apprehension that the respondents
were using, or attempting to
use, AWCape’s confidential information. Rush Snr evidently had
in his possession a number of
documents relating to AWCape’s
business and initially thought that the RMS contract was among them.
The respondents had no
compunction in trying to use the document with
a view to assisting RMS’ departure from AWCape. It also appears
from the email
of 18 August 2014 that RMS’ decision to move its
server in-house was not the cause of the shifting of business to
Streamlink.
Rather, the decision to move the server in-house (with
the resultant need for RMS to obtain administration support services
from
Streamlink) appears to have been a precaution prompted by RMS’
concern ‘about the reaction of AWCape’. Reaction
to what?
The only event identified in the papers to which an adverse reaction
from AWCape might have been anticipated was a decision
by RMS to
appoint Streamlink as its Sage agent in place of AWCape. The timing
fits in with this thesis: the in-house server, according
to the
respondents, became operational on 13 October 2014; RMS formally
appointed AWCape as its Sage agent on 21 October 2014.
[36]
The last of the eight
excluded customers is Wesgro. On 28 June 2014 Wesgro appointed
Streamlink as its Sage agent in place of AWCape.
The reason Wesgro
gave for the switch in the appointment form was that Streamlink was
now servicing all Wesgro’s IT requirements.
As I have already
mentioned, a partial relaxation of the restraint in respect of Wesgro
was agreed when Rush Jr left AWCape. The
initial emails between Rush
Jnr and Hattingh indicated that the former’s new role in Wesgro
would not be in conflict with
the services provided by AWCape to
Wesgro. In an email dated 25 November 2013 Hattingh set out his
proposal ‘in layman’s
terms, and without prejudice’.
He said that AWCape would relax the restraint only for Wesgro, the
extent of the relaxation
being that
‘…
you will be
allowed to provide goods and services to Wesgro similar to products
and services offered by AWCape and such services
will be limited to
the creation and support of their infrastructure, hosted servers,
Sage CRM support but will exclude Sage 300
ERP (Accpac) and related
third-party products such as
eWorkflow
.’
[37]
This was the last of
the emails attached to Rush Jnr’s supplementary answering
affidavit. It appears, however, from Hattingh’s
supplementary
replying affidavit that there was further discussion, leading to an
email by Hattingh of 29 November 2013 recording
various matters, in
response to which Rush Jnr on 3 December 2013 interpolated his
comments. The following is relevant to Wesgro
(for convenience I
italicise Rush Jnr’s interpolations):
‘◦
We are happy
to allow you to join Wesgro on a one-year contract as outlined by Ian
Blackie, but the services that you will supply
to Wesgro should be
limited to CRM, cloud & infrastructure services.
[AR] There
are other services that are being supplied to Wesgro, which are in
fact the primary focus of contracts in place,
but which don’t
conflict.
◦
You are not
allowed to get involved in Accpac or eWorkflow services at Wesgro on
behalf of AWCape.
[AR] As
previously mentioned – as AWCape is the business partner to
Wesgro – it is only right that I forward requests
for
Accpac/eWorkflow support to AWCape.
◦
By allowing
you to engage in business for your own account with Wesgro, this does
not constitute a waiver of our rights under this
agreement.
◦
Other
customers of AWCape – you are not allowed to engage in business
with any of the existing AWCape customers in accordance
with the
attached agreement concluded with you, and in particular with
reference to paragraphs 2.3 and those contained in paragraph
4 of the
agreement …
◦
[AR] Regarding
the above 2 points – as I have mentioned before I am, as you
have been doing, taking these under advisement
so everyone is
protected. As I have stated before, the legal opinions I have
indicate that the contract referred to above would,
at worst, need
rectification, as it is flawed around the restraint.’
[38]
These emails show that
AWCape was not prepared to grant a blanket exclusion in respect of
Wesgro. In particular, Rush Jnr would
not be permitted to supply Sage
300 ERP (Accpac) and eWorkflow services to Wesgro. Rush Jnr seems to
have accepted this state of
affairs. But even if he did not, the
emails indicate that AWCape did not waive the restraint in respect of
these particular products
and services. Yet in the event Wesgro in
June 2014 appointed Streamlink as its Sage agent for all products.
Accordingly, and though
Hattingh can be criticised for not having
acknowledged the partial relaxation in his founding affidavit,
Streamlink’s conduct
in accepting all Sage business breached
the restraints. At any rate, AWCape does not now seek an interdict in
respect of Wesgro.
Any special arrangements excluding Wesgro from the
restraints have no bearing on the enforceability of the restraints in
respect
of the listed customers.
Dowson and
NSFAS
[39]
There are two other
customers – both on the list of 30 – calling for comment.
They are Dowson & Dobson Industrial
(‘Dowson ‘) and
National Student Financial Aid Scheme (‘NSFAS’). Prior to
the scheduled hearing of the
urgent interim relief on 5 November 2014
the respondents disclosed that, in addition to the eight excluded
customers, they currently
had dealings with Dowson and NSFAS.
Accordingly, and although in terms of the interim order the
respondents agreed not to engage
in business with the listed
customers, an exception was made for Dowson and NSFAS in the
following terms:
‘
7.2.1
In respect of Dowson & Dobson Industrial Respondents shall be
entitled to continue to provide existing maintenance and
support
services; and
7.2.2 In respect of [NSFAS] the
Respondents shall not provide any products and/or services, save that
Respondents shall be entitled
to complete the work which they have
been contracted to perform and which has been partially performed if
so required or requested
by NSFAS.’
[40]
Rush Jnr dealt with
these two customers in his answering affidavit. In regard to Dowson,
he said that Streamlink continues to provide
maintenance and support
services to Dowson which AWCape does not have the capability to
render. He alleged that because of this
lack of capability Hattingh
agreed that Rush Jnr could continue to render the services. In the
replying affidavit Hattingh admitted
that this was ‘initially
agreed’ but said that AWCape had subsequently acquired the
necessary resources to service
Dowson. In a supplementary answering
affidavit Rush Jnr denies that AWCape has acquired the necessary
capability.
[41]
Clause 2.4 of the
distribution agreement provides that no alteration or waiver of the
terms thereof will be of any force or effect
unless reduced to
writing and signed by the parties. Nevertheless, Hattingh has
admitted that there was ‘initially’
an agreement that
Streamlink could provide the maintenance and support services in
question to Dowson. The word ‘initially’
refers, as I
understand, to the time when the relationship between AWCape and
Streamlink ended. Hattingh does not say that his
agreement with Rush
Jnr was limited in point of time. Accordingly, and despite the
absence of a formal written waiver, I do not
think it would be right
to enforce the restraint in respect of the provision of the existing
maintenance and support services mentioned
in para 7.2.1 of the
interim order. However, and subject to any general findings regarding
the enforceability of the restraints,
they will remain applicable to
all other products and services supplied to Dowson (and in particular
Sage products).
[42]
In regard to NSFAS,
Rush Jnr alleges in the answering affidavit that NSFAS is not an
AWCape customer. NSFAS’ Sage agent is
eNovate
.
AWCape did render certain services to NSFAS but was contracted to do
so by Deloittes; NSFAS was not AWCape’s direct customer
in
respect of these services. The services were physically provided by
Pietersen through Streamlink. These allegations are effectively
admitted by Hattingh in reply. He says that it was anticipated that
once the project for which AWCape had been contracted through
Deloittes was completed NSFAS would contract directly with AWCape to
provide maintenance and support services. That may be so but
NSFAS
nevertheless was at no stage a direct customer of AWCape. I am not
inclined to interpret the expression ‘any customer’
in
the distribution agreement and memorandum of incorporation broadly so
as to include indirect relationships.
The
enforceability of the restraints in general – trade connections
[43]
This concludes the
discussion regarding customers or alleged customers who stand on a
special footing. Insofar as the listed customers
are concerned, the
upshot is that the restraints are not enforceable in respect of NSFAS
and OPW and are not enforceable in respect
of Dowson in regard to the
existing maintenance and support services mentioned in para 7.2.1 of
the interim order of 5 December
2014. Save as aforesaid, a
consideration of the circumstances surrounding the excluded customers
does not lead to a conclusion
that the restraints are not enforceable
against the listed customers.
[44]
What remains to
consider is whether the respondents have put up facts to show that in
general the enforcement of the restraints
in respect of the listed
customers would be contrary to public policy. Since the onus was on
the respondents, AWCape was entitled
to deal with these matters more
fully in reply than in the founding papers. This has not caused
procedural unfairness because the
respondents were granted leave to
file supplementary answering papers.
[45]
In regard to customer
connections, Hattingh in the founding affidavit says that Pietersen
and Rush Snr were responsible for installing
the Sage computerised
accounting systems at the offices of AWCape’s customers and for
providing after-sales support in respect
of the systems. As a result
of ongoing contact, they built up relationships with AWCape’s
customers and knowledge of their
IT requirements. In their answering
papers the respondents allege that Rush Snr is not a qualified Sage
consultant and has never
installed Sage systems, his services being
limited to consulting services as set out in the distribution
agreement. Hattingh’s
riposte in the replying affidavit is that
Pietersen attended to many Sage installations and provided ongoing
support. Rush Snr
was designated as AWCape’s Services Manager
and was in this capacity responsible for project management and
ensuring that
services were delivered according to customer
expectations. He was required regularly to visit customers to keep
them informed
regarding the progress of projects. He was a team
member of most Sage implementation projects undertaken by AWCape
during the period
of his employment.
[46]
Although the
respondents take issue with Hattingh regarding the precise nature of
Rush Snr’s work, they do not appear to deny
that Pietersen and
Rush Snr both had occasion to develop relationships with key
personnel of AWCape’s customers. They certainly
do not allege
facts to show that there was an absence of such relationships with
the concomitant ability to influence customer
behaviour.
[47]
Hattingh’s
allegations regarding Rush Jnr in the founding papers focused on
Wesgro. There seems little doubt that during the
period of the
distribution agreement Rush Jnr spent some months at Wesgro’s
offices working on a special AWCape project.
In the addendum he
signed in May 2013 he was described as AWCape’s Divisional
Director. He was at all material times Streamlink’s
sole
member. In the answering papers he did not allege an absence of
relationships with the listed AWCape customers. In the replying
affidavit Hattingh said that the respondents and Rush Jnr developed
strong relationships with key personnel of AWCape’s customers,
becoming privy to information concerning their IT structures and
future needs and requirements. The nature of the close association
allowed the respondents to take advantage of AWCape’s trade
connections with its customers. In his supplementary answering
affidavit Rush Jnr did not deny this. What he said in para 36 was
that the respondents did not solicit the customers who had switched
to Streamlink and that only Wiehahn had dealt with the customer she
had referred to them.
[48]
Since the respondents
say that during the period of the distribution agreement Pietersen
and Rush Snr dealt with AWCape customers
via Streamlink, any
relationships they developed with AWCape customers would provide a
basis for restraints not only against them
personally but also
against Streamlink. Relationships between Rush Jnr and AWCape
customers would provide a further basis justifying
the restraints as
against Streamlink.
[49]
In my opinion, the
respondents have not discharged the burden of showing that AWCape
lacks a proprietary interest in the form of
customer connection
justifying the restraints. Accordingly, and as in
Rawlins
(cf 541B-C), it
would not matter whether or not the restraints were also justified
with reference to trade secrets.
[50]
The respondents have
also not discharged the burden of showing that the restraints are
unreasonable, having regard to AWCape’s
interest in its
customer connections. The reaching of this conclusion is made easier
by the relatively modest form in which AWCape
seeks an interdict.
Firstly, AWCape has reduced the restraint period to two years. This
does not seem an unreasonable period for
diluting the influence which
the respondents might during the period of the distribution agreement
have been able to develop over
AWCape customers. And as matters
stand, the restraints will only be operative for another nine months
in the case of Streamlink
and Pietersen and for another 14 months in
the case of Rush Snr.
[51]
Second, AWCape only
seeks to enforce the restraint in respect of actual customers. And
even in respect of actual customers, there
is an exemption for
Streamlink’s pre-existing customers (despite the fact that the
respondents’ relationships with
the pre-existing customers
might have been strengthened during the period of the distribution
agreement). While a non-compete restraint
in wider terms might be
justified by customer connection, the respondents can have little
reason to be aggrieved at a temporary
restriction against dealing
with persons who are actual customers of AWCape and whom the
respondents did not introduce to AWCape.
The distribution agreement
gave the respondents entrée to AWCape’s customer base.
In the founding affidavit Hattingh
said that Pietersen and Rush Snr
had knowledge of and experience in the installation and support of
computer systems while AWCape
had a quite extensive customer base
which was growing at a good pace. In his answering affidavit Rush
Jnr, while disputing that
Streamlink was in financial distress at the
time the distribution agreement was concluded, says that the
agreement was an opportunity
for Streamlink to extend the network of
customers to whom it could provide its suite of products and
services. If Streamlink was
not in financial distress and if the
respondents believed that their wider service offering would have
enabled them to win existing
AWCape customers through ordinary
competition, they would not have needed the distribution agreement.
[52]
The restriction on the
respondents’ right to compete freely in the market is very
limited. There are at least 50 other accredited
Sage agents in South
Africa. As Rush Jnr himself said in his answering affidavit, there
are in the Western Cape and in the rest
of South Africa a great
number of other firms who conduct essentially the same business as
AWCape. The respondents are at liberty
to compete for the Sage
business currently provided by these other agents and to compete for
the custom of other firms which do
not currently use Sage or
Streamlink’s other products and services. The universe of
Streamlink’s potential customers
is large.
[53]
In short, I am
unpersuaded that AWCape’s interest in protecting its trade
connections does not, quantitatively and qualitatively,
outweigh the
interests of the respondents in being able to do business, for the
remaining months of the restraint, not only with
Streamlink’s
existing customers and the large universe of potential customers
(which they are free to do) but also with the
28 or so listed AWCape
customers.
[54]
In the answering papers
the respondents place considerable emphasis on alleged differences
between the businesses of AWCape and
Streamlink. As noted, Hattingh
in the founding affidavit described AWCape’s business as the
marketing and selling of Sage
accounting products and after-sales
support and services. In his answering affidavit Rush Jnr described
this business as that of
a Sage reseller. He said that although
Streamlink too was and still is a Sage reseller, its business was not
limited to that of
a reseller; Streamlink’s business was ‘the
delivery of complete business solutions to companies to transform the
way
that they do business’. To do this Streamlink partnered not
only with Sage but also with Mweb, Microsoft and others:
‘
36. By
using a combination of Sage & Microsoft Applications, Mweb &
Microsoft Infrastructure products and importantly,
its own in-house
developed products and solutions, Streamlink offers services which
can provide a complete bespoke transformation
of a company’s IT
department including ERP & Procurement systems, CRM Systems,
Networking and Infrastructure Design &
Support, VoIP telephony,
Online Data Backups, Digital Marketing and Web Design and Hosting.
37. The important
distinction between the business of AWCape and that of Streamlink is
thus that, in addition to being
a reseller of Sage products,
Streamlink trades in the products of its other business partners and
in addition, both develops IT
infrastructure products and supplies IT
infrastructure services of its own and in which it holds the
intellectual property and
thus has a protectable interest.
38.It
was in respect of these products, belonging to Streamlink, in respect
of which AWCape was contracted, by way of the distribution
agreement
to act as Streamlink’s distribution agent. As agent AWCape
could not and did not acquire rights in these products.’
[55]
Rush Jnr goes on to
allege that Streamlink’s products were not and are not in
competition with AWCape’s business because
AWCape did not and
does not have an equivalent suite of products. The attraction of the
distribution agreement for AWCape was that
it could offer a wider
range of services. With the termination of the distribution
agreement, AWCape’s capability to provide
this wider range of
services also came to an end.
[56]
In reply Hattingh says
that subsequent to the departure of the respondents AWCape has
appointed a new team making up its ‘systems
engineering
division’ to offer the services previously offered to AWCape’s
customers via Streamlink. Rush Jnr scoffs
at this in his
supplementary answering affidavit, saying that AWCape’s
engineering division exists ‘in name only’
but does not
have the skills or capabilities to offer the services in question.
[57]
It is not easy for a
lay person to understand the precise boundaries of the businesses of
AWCape and Streamlink at the time the
distribution agreement was
concluded though it seems clear that Streamlink brought certain
additional skills and products to the
table. I cannot resolve the
factual dispute as to whether AWCape’s systems engineering
division is a serious contender to
provide the additional services
which Streamlink can offer. I do not think, however, that a finding
on these matters is necessary.
The listed customers are AWCape’s
customers. Let us assume that immediately prior to the conclusion of
the distribution agreement
AWCape was only able to provide its
customers with Sage products and related services. Even so, by
concluding the distribution
agreement AWCape put itself in a position
to extend its product offering. Although AWCape has no proprietary
interest in unique
products developed by Streamlink, it has a
legitimate interest in protecting its business relationships with its
customers not
only in respect of Sage products but also in respect of
the expanded range of services which it was able to offer to its
customers
by contracting with Streamlink. Upon Streamlink’s
departure, AWCape was and is entitled to attempt to replace the
skills
which Streamlink previously provided, thereby enabling it to
continue providing an expanded range of services.
[58]
For this reason, and
even if it were clear that the respondents had no intention of
offering Sage products and related services
to the listed customers,
I think AWCape would have a legitimate interest in restraining
them, for a limited period, from
offering the additional services
which Streamlink previously contributed and which AWCape, following
the termination of the distribution
agreement, is entitled to try to
replace. But I do not understand the respondents in any event to
accept a restraint against supplying
Sage products and related
services to AWCape’s existing customers. As I read the
answering papers, Sage features, or
at least generally features, as a
component of the ‘complete business solution’ that
Streamlink offers its customers.
Streamlink’s case is that
because it offers ‘bespoke’ products of which Sage only
forms part, and because AWCape
does not do likewise, the restraints
are not enforceable. That contention is unsound. On the basis of its
proprietary interest
in its trade connections, AWCape is at very
least entitled to protect its business of providing Sage products by
restraining the
respondents from using their influence to sell to
AWCape customers ‘complete business solutions’ which
incorporate
Sage products and services, thus causing AWCape a
corresponding loss of Sage business.
The
enforceability of the restraints in general – confidential
information
[59]
Although it is not
strictly necessary in the present case to deal with the question of
confidential information as an additional
basis for justifying the
restraints, I intend to do so since confidential information is in
any event the subject of distinct relief
claimed in paras 2.1 and 2.2
of the notice of motion.
[60]
In the founding
affidavit Hattingh says that the respondents, during their time with
AWCape, became privy to highly confidential
information ‘concerning
customer lists, the requirements of individual customers, the key
persons at the individual customers,
the future requirements of
individual customers and [AWCape’s] pricing structures’.
In the distribution agreement Streamlink
acknowledged that it would
acquire confidential information of this kind, as did Rush Snr in the
employment contract.
[61]
The respondents in Rush
Jnr’s answering affidavit criticise AWCape’s supposed
inability to explain or identify the confidential
information. They
say that because AWCape’s business is only that of a Sage
reseller, the supposed confidential information
is common to all Sage
agents or is proprietary or confidential to Sage or is dictated or
regulated by Sage. Sage provides the necessary
manuals and training
information. They claim that Sage dictates the contractual
arrangements between agents and their customers.
Pricing is
determined by Sage. Sage’s price list is known to all agents
and often by customers as well.
[62]
In his replying
affidavit Hattingh said that AWCape has developed business strategies
which he regards as unique. Most IT projects
undertaken by AWCape for
a particular customer are formally managed by a project manager,
following specific procedures. Individual
IT projects often take a
long time to implement. The respondents and Rush Jnr became privy to
information concerning individual
customers’ existing IT
structures and their future needs and requirements. He emphasised
that AWCape did not lay claim to
intellectual property in Sage
software and Sage’s manuals and training programs. He alleged
that the respondents also obtained
knowledge of AWCape’s
pricing structures and the terms of the contracts concluded between
AWCape and its customers. In regard
to contractual arrangements, he
stated that while customers signed an end-user license agreement with
Sage, all other contractual
arrangements regarding installation and
support were the subject of separate contracts, the content of which
was confidential to
AWCape. Although Sage’s price lists were
not confidential, AWCape’s prices for installing, implementing
and maintaining
IT systems were indeed confidential.
[3]
[63]
Hattingh alleged,
further, that AWCape had designed, developed and implemented what is
known as a customer portal (an electronic
helpdesk), which he
believed to be unique among Sage agents. AWCape had also designed,
developed and supplied hosted virtual server
products, branded as
AwCloud
Solutions.
[64]
In his supplementary
answering affidavit Rush Jnr says that AWCape’s price list
cannot be confidential because AWCape quotes
its price list to its
customers and anyone else who seeks a quote.
[4]
This is, as I read it, an admission that AWCape indeed determines its
own prices for installing, implementing and maintaining IT
systems,
including Sage. Rush Jnr’s allegation is now that AWCape’s
prices, like Sage’s, are not confidential.
Even if Rush Jnr had
persisted with an allegation that AWCape did not determine prices for
the services it provided, I would not
have regarded this as a genuine
dispute of fact. It is inconceivable that AWCape cannot determine its
own prices for related services,
even if it is bound to charge a
particular price for the Sage software itself. Dictation of this kind
by Sage, apart from being
contrary to commercial common sense, would
be contrary to
s 5
of the
Competition Act 89 of 1998
.
[65]
Although Rush Jnr
referred to AWCape’s ‘price list’, Hattingh did not
say that AWCape issued price lists for its
services to customers; he
said that the prices AWCape charged its customers constituted
confidential information. Be that as it
may, and even if AWCape has
price lists which are available to its customers, it is a common
occurrence in commerce for negotiated
contractual prices to differ
from price lists. Larger customers, for example, may be able to
bargain for better rates than smaller
customers.
[66]
In regard to the
customer portal, Rush Jnr said in his answering affidavit that it was
not unique but ‘a simple call-logging
system’. The hosted
server products were likewise not confidential. These had previously
been supplied via Streamlink and
were transferred to AWCape after
termination of the distribution agreement.
[67]
I do not need to decide
whether Hattingh has exaggerated the extent of AWCape’s
confidential information. I accept that there
must be some
information of a confidential nature relating to AWCape’s
business, including negotiated contract terms and
information
pertaining to the IT requirements of its customers. Even if AWCape’s
business were confined to the supply of
Sage accounting packages and
related services, these packages are sophisticated software products,
not a simple physical commodity.
It is inevitable that some degree of
customisation is needed to adapt the packages to the particular needs
of customers. In any
event, I do not accept that AWCape’s
business is confined to that of a Sage reseller. AWCape extended its
product range by
concluding the distribution agreement with
Streamlink. Information regarding its customers’ IT needs is
also relevant to
the provision or potential provision of such
additional services to its customers. As I have explained, AWCape is
entitled to attempt
to supply such services by procuring expertise in
substitution for that hitherto provided by Streamlink. Accordingly,
information
obtained by AWCape in regard to its customers’
broader IT needs is protectable confidential information.
[68]
I thus find that the
respondents have failed to discharge the burden of proving that the
restraints are not also justified on the
basis of protecting
confidential information. For similar reasons, the contractual terms
in the distribution agreement and Rush
Snr’s employment
contract for the protection of confidential information are
enforceable.
Requirements for an interdict
[69]
The analysis thus far
leads to the conclusion that AWCape has established a clear right in
regard to the restraints and confidential
information. The only other
requirement for an interdict calling for discussion is injury or
reasonable apprehension of injury.
[70]
Although AWCape’s
loss of Wesgro, RMS, SPH, SAM and Duferco is characterised by certain
special circumstances not applicable
to the listed customers, I have
nevertheless concluded that the respondents breached the restraints
in taking on their Sage business
(though in respect of Wesgro, the
breach would be limited to the supply of Sage 300 ERP and related
third-party products such as
eWorkflow). The loss of this business
constitutes injury suffered by AWCape and, together with Pietersen’s
email correspondence
of August 2014 relating to RMS, provided a
reasonable basis for apprehending future conduct in breach of the
restraints. There
was thus a proper basis for launching an
application for an interdict to enforce the restraints. The answering
papers did not neutralise
the reasonable apprehension. Although the
respondents in some respects provided satisfactory answers, the
position they adopted,
to the effect that that the restraints were
not enforceable, strengthened rather than weakened the apprehension
that future harm
would be suffered in the absence of an interdict.
[71]
The requirements for an
interdict are thus satisfied in respect of the relief sought in paras
2.3 and 2.4 of the notice of motion
(the restraints of trade).
[72]
Insofar as confidential
information is concerned (paras 2.1 and 2.2 of the notice of motion),
the email correspondence of August
2014 relating to RMS indicates, to
my mind, that Rush Snr was in possession of confidential information
relating to AWCape’s
business affairs and that the respondents
were prepared to take advantage of such confidential information in
dealing with RMS.
It is naturally difficult for AWCape to know
precisely what confidential information the respondents have in their
possession.
The respondents’ attitude (which I have rejected)
that AWCape has no confidential information does not inspire
confidence
that they do not have any in their possession.
[73]
Accordingly, I think
AWCape is entitled to an interdict against the use of confidential
information and an order for the delivery-up
of all documentation
containing such confidential information. Para 2.2 of the notice of
motion does not contain a date by which
the confidential information
must be surrendered and does not specify precisely how it must be
handed over. Since I was not addressed
in that regard, I do not
intend to go beyond the terms of the notice of motion. I trust that
the parties will reach a sensible
arrangement. Prima facie the
appropriate procedure would be for the respondents to file affidavits
within a reasonable period listing
the documents in their possession
containing confidential information relating to AWCape’s
business. Hopefully this judgment
will provide some guidance as to
what sort of information is to be regarded as confidential. To the
extent that the confidential
information is in electronic form, a
mutually acceptable arrangement will need to be reached for the
removal of such data from
the respondents’ computers and
storage devices.
Conclusion
[74]
In regard to costs,
this matter originally came before Riley AJ as a matter of urgency on
5 November 2014. The costs of that hearing
were reserved. The
application was issued on Wednesday 29 October 2014 and only served
on the respondents after ordinary business
hours. AWCape’s
attorneys had already addressed a letter to Streamlink on 11
September 2014 regarding alleged breaches of
the restraints.
Streamlink’s attorney responded on 30 September 2014, stating
that any legal action would be vigourously
defended. It was not
reasonable for AWCape to delay until the end of October and then give
the respondents barely three court days’
notice of the
application. This degree of urgency was not satisfactorily explained
in the founding affidavit. If the application
had been launched
earlier with more generous notice, an interim arrangement might have
been reached at lower cost. As a mark of
the court’s
disapproval I intend to disallow the costs of that appearance.
[75]
In regard to the
appearance on 9 February 2015, a costs order has already been made.
[76]
I grant the following
order:
(a) The respondents are interdicted and restrained from
divulging and/or utilising any confidential information in their
possession
relating to the applicant’s clients, transactions,
business and/or affairs including its trade connections and trade
secrets,
either directly or indirectly.
(b) The respondents are directed to hand over to the
applicant all documents, notes, memoranda and records, whether
written or electronic,
pertaining to the applicant’s business
in their possession, including all copies thereof.
(c)
The respondents are interdicted and restrained, for a period of two
years calculated from 1 March 2014 in the case of the first
and third
respondents, and for a period of two years calculated from 1 August
2014 in the case of the second respondent, from directly
or
indirectly engaging in business involving the provision of products
and/or services to the applicant’s clients, a list
of which
clients is annexed to the founding affidavit of Johannes Hendrik
Hattingh marked ‘JH1’, save that the interdict
and
restraint in this paragraph shall not apply to clients 22 and 23 on
the said list (National Student Financial Aid Scheme and
Oom
Polla se Winkel
(Pty)
Ltd) and shall, insofar as client 7 on the list is concerned (Dowson
& Dobson Industrial), not apply in respect of the
existing
maintenance and support services referred to in para 7.2.1 of this
court’s order dated 5 November 2014.
(d)
The respondents shall pay the applicant’s costs jointly and
severally, the one paying the others to be absolved, save
that no
order is made in respect of the costs of the appearance on 5 November
2014.
ROGERS
J
APPEARANCES
For Applicant Mr PA
Corbett
Instructed by
Fairbridges
16th Floor Main Tower
Standard Bank Centre
Heerengracht
Cape Town
For Respondents Mr I
Brembridge
Instructed by Adriaans
Attorneys
16th Floor, 2 Long
Street
Cape Town
[1]
The agreement says ‘Acctech’ but that
is obviously a typographical error.
[2]
The email was alluded to in her answering
affidavit but mistakenly not attached. It was, by agreement, handed
up during the course
of argument under cover of a short
supplementary affidavit.
[3]
Paras 10 and 49-51.
[4]
Para 58.