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THE LABOUR COURT OF SOUTH AFRICA,JOHANNESBURG

 

Reportable

 

Case no: J 737/22

 

In the matter between:

 

SLO JO INNOVATION (PTY) LTD                                 Applicant

 

and

 

CHRISTINE BEEDLE                                                     First Respondent

 

FLABOURPRO (PTY) LTD                                             Second Respondent

 

Heard:           29 July 2022

Delivered:     10 August 2022

 

(This judgment was handed down electronically by circulation to the parties' representatives by email. The date for hand-down is deemed to be 10 August 2022.)

 

 

JUDGMENT

 

 

PRINSLOO, J

 

Introduction

 

[1]       The Applicant filed an urgent application seeking inter alia to interdict and restrain the First Respondent (Ms Beedle) from being interested, in any way, in any business which carries on business, manufactures, sells or supplies any commodity or goods, brokers or acts as an agent in the sale or supply of any commodity or goods and performs or renders any service in competition with or identical or similar or comparative to that carried on, sold, supplied, brokered or performed by the Applicant during the period of her employment with the Applicant. Also to interdict Ms Beedle from soliciting the customers of or dealing with or transacting with any business, company, firm, undertaking, association or person in competition with the Applicant and not to disclose the Applicant’s confidential information.

 

[2]       In short: the Applicant launched an urgent application to enforce the restraint of trade clause, as contained in Ms Beedle’s contract of employment.

 

[3]       The Respondents opposed the application and filed opposing papers.

 

[4]       When the matter was argued, Mr Bishop for the Respondents, raised a point in limine, which I will deal with infra.

 

The Respondents’ point in limine

 

[5]       Mr Bishop submitted that the Applicant has not made out a prima facie case on its papers and he submitted that the Respondents have the right to argue at the outset, that no case is made out for the relief sought. Mr Bishop referred to Valentino Globe BV v Phillips[1](Valentino) in support of his submission.

 

[6]       In Valentino,[2] the Supreme Court of Appeal held that:

 

‘There are a number of cases which recognise the right of a respondent, in spite of having filed an answering affidavit, to argue at the outset that the founding affidavit does not make out a prima facie case for the relief claimed. They for two reasons suggest that the procedure is akin to an exception based on the ground that a summons or similar initiating process does not disclose a cause of action. The founding affidavit alone falls to be considered, and the averments contained therein must be accepted as true. An important difference with an exception is, however, that the application contains evidence and not only allegations of fact, and what might be sufficient in a summons may be insufficient in a founding affidavit.’

 

[7]       In Minister of Higher Education and Training and Another v Service Sector Education and Training Authority and Others,[3] this Court referred to Valentino and accepted that a respondent has the right to raise an objection in limine to the effect that the founding affidavit does not make out a prima facie case for the relief claimed.

 

Existence of a clear right

 

[8]       Ms Beedle commenced employment with an entity, Slo-Jo Trading (Pty) Ltd (Slo-Jo) in the capacity of a sales representative. Slo-Jo is a full-service designer drinks company, specialising in the development of designer beverages and concepts. In April 2007, Ms Beedle and Slo-Jo concluded a written contract of employment, which contains the restraint of trade clause, the Applicant seeks to enforce in this application. The Applicant is a wholly owned subsidiary of Slo-Jo.

 

[9]       From 2010 onwards, Slo-Jo’s business grew progressively and Ms Beedle played an instrumental role in such growth and development, and she was responsible for introducing new products into Slo-Jo’s business in the form of various sauces, coulis, purees, syrups and cordials. During 2015, Slo-Jo formally established a research and development team which was headed by Ms Beedle. The Applicant’s case is that during this time, Ms Beedle played an integral part in forming relationships with one of Slo-Jo’s key and primary manufacturers, Fruition. Fruition produces 60% of Slo-Jo’s bespoke and exclusive products for its major clients and from 2015 until her resignation, Ms Beedle worked closely with Fruition.

 

[10]    During 2018, Slo-Jo underwent an internal restructuring as part of a ‘Black Economic Empowerment’ initiative. The internal restructuring was intended to achieve certain objectives, inter alia to streamline efficiencies, to achieve long-term goals, to reduce shared cost and ensure that there was no duplication of roles or tasks. Pursuant to achieving the aforesaid objectives and in 2018, Slo-Jo established three new companies, namely the Applicant, Slo-Jo Distribution (Pty) Ltd and Slo-Jo International (Pty) Ltd. Each of the companies is responsible for a niche and separate element of Slo-Jo’s overall business and are wholly owned subsidiaries of Slo-Jo.

 

[11]    After the creation of the aforesaid entities, certain Slo-Jo employees were transferred to the said entities – employees responsible for the distribution of products, were transferred to Slo-Jo Distribution (Pty) Ltd, those responsible for research and development were transferred to the Applicant and the employees responsible for international sales were transferred to Slo-Jo International (Pty) Ltd.

 

[12]    The Applicant’s pleaded case is that during 2018 and as part of the aforesaid internal restructure, Ms Beedle was transferred to the Applicant on the same terms and conditions of employment that she had with Slo-Jo. The transfer was purely an internal transfer between a holding company and its wholly owned subsidiaries, as part of an internal restructure within Slo-Jo. Save for the change in the name of the transferred employees’ employer, no other terms and conditions of employment were altered or affected in any way. The transferred employees, including Ms Beedle, retained the same salaries, duties and responsibilities as they had with Slo-Jo, they retained their years of service and all benefits and entitlements that they had enjoyed with Slo-Jo. Ms Beedle’s salary remained the same and her annual leave balance was transferred to the Applicant.

 

[13]    Ms Beedle had resigned from the Applicant’s employ and she became involved with the Second Respondent (Flavourpro), a direct competitor of Slo-Jo and the Applicant. This sparked the need to approach this Court to enforce Ms Beedle’s restraint undertakings.

 

Ms Beedle’s transfer to the Applicant

 

[14]    The Respondents submitted that the Applicant seeks relief on the basis of contractual terms restraining Ms Beedle from competing with it, soliciting customers, soliciting employees away from the Applicant and divulging confidential information. Ms Beedle’s case is that the Applicant does not have a cause of action or a clear right in the form of a restraint of trade agreement and therefore cannot obtain the relief sought. This is so because the prospective right in the contract which the Applicant purports to rely on for the relief sought, is found in the contract concluded in April 2007, which contract was concluded between Slo-Jo and Ms Beedle. The party to the contract is not the Applicant in this matter.

 

[15]    Ms Beedle was employed by the Applicant in 2018 but disputes that the aforesaid contract was transferred from Slo-Jo to the Applicant. In short: there is no restraint of trade agreement between the Applicant and Ms Beedle and therefore the Applicant has no right, contractual or otherwise, to seek the relief it seeks against her.

 

[16]    The questions is whether there is a restraint of trade agreement between Ms Beedle and the Applicant existing which gives the Applicant a clear and contractual right to the relief it seeks. Put differently: whether the restraint of trade Ms Beedle had agreed to as an employee of Slo-Jo, would be enforceable beyond the establishment of the Applicant and her subsequent employment with the Applicant.

 

[17]    The transfer of Ms Beedle’s employment and her employment relationship with the Applicant is pleaded. I already alluded to the Applicant’s pleaded case that Ms Beedle was transferred to the Applicant during 2018, on the same terms and conditions of employment that she had with Slo-Jo, that save for the change in the name of the employer, no other terms and conditions of employment were altered or affected in any way and Ms Beedle, retained her same salary, duties and responsibilities she had with Slo-Jo, she retained her years of service and all benefits and entitlements that she had enjoyed with Slo-Jo and her annual leave balance was transferred to the Applicant.

 

[18]    Mr Bishop submitted that the Applicant relies on section 197 of the Labour Relations Act[4] (LRA) for the continuation of the initial contract Ms Beedle had signed in 2007. He argued that the application of section 197 in casu is inappropriate as Ms Beedle was not left high and dry after the transfer. In support of the aforesaid contention, Mr Bishop referred to paragraphs 103 – 112 of Aviation Union of SA and another v SA Airways (Pty) Ltd and others[5] (Aviation).

 

[19]    The Constitutional Court in Aviation held that section 197 must be interpreted against the background that its purpose is to preserve all contracts of employment between the workers and the owner of the business which is transferred as a going concern. In this way, on the one hand, the workers' employment is safeguarded and, on the other, a new owner is guaranteed a workforce to continue with the operation of the business.

 

[20]    In my view, Mr Bishop’s reliance on Aviation is misplaced. In Aviation, the Court was faced with a set of facts where a section 197 enquiry was embarked upon in circumstances where the business was transferred as a going concern, but not the employees. That is not the case with Ms Beedle. The Constitutional Court held[6] specifically that:

 

‘One must bear in mind that the legislation, providing as it does for the automatic transfer of employees consequent upon the transfer of a business as a going concern, is aimed at the kind of situation in which the business is transferred as a going concern but the employees are not. In other words, if all the employees involved in the transferred business were indeed transferred to the new employer, the section 197 inquiry would become irrelevant. It only has application where, on a proper construction of the transaction in issue, the business is transferred as a going concern without the concomitant transfer of employees. The evaluation whether section 197 applies to a particular transaction will ordinarily arise where it is contended that the business has been transferred as a going concern but that, contrary to the provisions of section 197, the employees involved in the business have not been transferred.’

 

[21]    After considering only the founding affidavit, Ms Beedle’s transfer to the Applicant is established and applying the applicable legal prescripts, the transfer had to be in terms of section 197 of the LRA. The Respondents’ case is that the contract is unenforceable because there was no contract that transferred and therefore there is no restraint.

 

[22]    Mr Bishop argued that the 2007 restraint was concluded between Ms Beedle and Slo-Jo, which is a separate juristic person from the Applicant and Ms Beedle never agreed to the transfer of the restraint. The 2007 restraint was superseded by the transfer of employment in 2018, including the new 2018 agreement, which Ms Beedle never signed. There was never any indication from either Slo-Jo or the Applicant, at any time that the 2007 restraint continued to apply or had been transferred from Slo-Jo to the Applicant. Mr Bishop further submitted that the terms of a restraint of trade agreement do not as a matter of law pass from one party to another.

 

[23]    In support of this, Mr Bishop relied on Laser Junction (Pty) Ltd v Fick[7] (Laser Junction) where it was held that only contracts of employment and not a restraint of trade agreement, are transferrable under section 197 of the LRA.

 

[24]    Section 197(2) of the LRA provides that:

 

(2)         If a transfer of a business takes place, unless otherwise agreed in terms of subsection (6) - 

(a) the new employer is automatically substituted in the place of the old employer in respect of all contracts of employment in existence immediately before the date of transfer;

(b) all the rights and obligations between the old employer and an employee at the time of the transfer continue in force as if they had been rights and obligations between the new employer and the employee; 

(c) anything done before the transfer by or in relation to the old employer, including the dismissal of an employee or the commission of an unfair labour practice or act of unfair discrimination, is considered to have been done by or in relation to the new employer; and 

(d) the transfer does not interrupt an employee's continuity of employment, and an employee's contract of employment continues with the new employer as if with the old employer.'

 

[25]    In Laser Junction, the court considered the question whether agreements are transferable by operation of law under section 197 of the LRA and found that where a contract of employment was transferred because section 197 of the LRA expressly provides for it, the same cannot be said for the restraint agreement. In Laser Junction,[8] it was held that:

 

‘[21]       Only contracts of employment are transferrable under s 197 of the LRA. What is a contract of employment? Section 4 of the Basic Conditions of Employment Act 75 of 1997 (BCEA) stipulates that contracts of employment may contain basic conditions of employment as provided in the BCEA or a sectoral determination, and any law or term in a contract that is more favourable to the employee. The corollary of this is that a restraint that is less favourable than the BCEA to an employee cannot be a term in a contract of employment. Whether a restraint agreement is less favourable must be determined case by case. If it is less favourable and therefore excluded from a contract of employment as defined then it cannot be transferred by operation of law under s 197.

 

[22]   Is the restraint in this case less favourable to the respondent? Neither the Constitution of the Republic of South Africa, 1996 nor our labour laws recognise a right to work. Similarly conventions of the International Labour Organisation from which the LRA draws sustenance, recognises fundamental rights at work but not the right to work. By signing the restraint agreement the respondent acquired the right to work. And with that right came all the protections of an employee under s 23 of the Constitution. However, the restraint agreement also constrains the respondent’s other rights including rights to freedom of trade, occupation and profession in s 22. The respondent could have acquired the right to work in a contract of employment as workers usually do if that was the only purpose of concluding an agreement. It was not. In the hands of Laser CNC and now the applicant who relies on it the real and only purpose of the restraint agreement was to wield it as a weapon to discourage him from leaving and when he did to constrain his new employment to its advantage. As such the restraint was not merely less favourable but manifestly unfavourable to the respondent; therefore it did not meet the definition of a contract of employment. Consequently it could not be transferred to the applicant by operation of law. 

 

[23]   For these reasons I find on the facts that the restraint agreement fell away in 2013 when the applicant became the employer and concluded a new agreement with the respondent, otherwise it fell away when he was promoted to procurement. As a matter of law s 197 of the LRA does not permit a transfer of agreements that were not contracts of employment, i.e. agreements favourable to an employee, which the restraint agreement was not. Consequently no valid restraint agreement existed between the parties. This finding is dispositive of the application. However, if it transpires that the restraint agreement still exists, the further questions raised in my introduction will be relevant.’

 

[26]    There are a number of difficulties with the application of the dicta of Laser Junction in casu. Firstly, the factual matrix is distinguishable from the facts before this Court. In Laser Junction, the employee had signed a contract, including a restraint of trade, with his employer. When the applicant (Laser Junction) took over the business as a going concern, the employee had signed a new contract of employment with the Laser Junction, which did not include a restraint of trade.

 

[27]    That is not the case in casu. The Applicant’s pleaded case is that subsequent to the transfer in 2018, Slo-Jo and the Applicant embarked upon an exercise to update and synchronize the employment agreements with all of its staff and to this end, the Applicant sought to have all its employees sign new employment contracts. This was not an acknowledgement that the transferred employees did not have any written terms and conditions of employment in place, but it was rather an effort to update and synchronize the terms and conditions of employment. Only a small number of transferred employees signed new contracts of employment and as a result, the employees who did not sign a new employment agreement retained the same terms and conditions as per the contracts they had signed with Slo-Jo. Out of necessity and by law, Ms Beedle had to be employed, with an employer, on particular written terms and conditions of employment and it follows that when and while employed by the Applicant, her terms and conditions of employment, were those contained in the agreement she had signed in April 2007 with Slo-Jo. The restraint of trade clause is contained in the aforesaid contract.

 

[28]    It is evident from the Applicant’s pleaded case that it had embarked upon an exercise to update and synchronize the employment agreements with all of its staff, subsequent to the transfer from Slo-Jo, but employees were not pressured into signing new employment contracts and where they did not sign new contracts, they retained the same terms and conditions of employment which they had with Slo-Jo. In Laser Junction, the employee had signed a new contract with the new employer, subsequent to the transfer, which did not contain a restraint clause.

 

[29]    In casu, Ms Beedle did not sign a new contract and in terms of section 197(2)(a), the new employer is automatically substituted in the place of the old employer, in respect of contracts of employment in existence immediately before the date of the transfer. If the provisions of section 197 of the LRA apply, the transferee is substituted automatically and by operation of law for the transferor as the employer of those of the transferor's employees engaged in the business on the date of the transfer. The transfer occurs by operation of law and independent from intentions of the parties, equally so was Ms Beedle’s consent not required.

 

[30]    Secondly, in Laser Junction, the court held that only contracts of employment are transferrable under section 197 of the LRA. The court considered what a contract of employment is and answered the question with specific reference to section 4 of the Basic Conditions of Employment Act[9] (BCEA), which stipulates that contracts of employment may contain basic conditions of employment, as provided for in the BCEA, or a sectoral determination, or any law or term that is more favourable to the employee. The court concluded that the corollary of this is that a restraint that is less favourable than the BCEA to an employee cannot be a term in a contract of employment. If it is less favourable and therefore excluded from a contract of employment as defined, then it cannot be transferred by operation of law under section 197.

 

[31]    I am not inclined to follow the aforesaid dicta as it is wrong. The BCEA is the principal statute giving effect to statutory minimum terms and conditions of employment. The stated purpose of the BCEA is to advance economic development and social justice by establishing and enforcing minimum conditions of employment and by defining the circumstances in which these minimum standards may be varied.

 

[32]    The BCEA provides a default set of conditions of employment. When a contract of employment or a wage-regulating measure (such as a sectoral determination or collective agreement) is silent about a basic condition of employment provided for in the BCEA, the particular statutory condition is automatically included in the contract. On the other hand, should the contract of employment or wage-regulating measure provide for more favourable terms and conditions, these trump any minimum condition set by the BCEA.

 

[33]    The BCEA uses the mechanism of a ‘basic condition of employment’ to fix minimum standards. Section 4 of the BCEA provides that a basic condition of employment constitutes a term of any contract of employment, except to the extent that: any other law provides for a more favourable term, or where the basic condition has been replaced, varied or excluded in terms of the Act, or where a term of the contract of employment is more favourable to the employee than the basic condition of employment[10].

 

[34]    Section 4 of the BCEA does no more than to provide for basic conditions of employment and to set out circumstances in which these minimum standards may be varied. To interpret and apply section 4 to mean that if a restraint of trade agreement is less favourable to an employee than the BCEA, it is excluded from a contract of employment and can therefore not be transferred by operation of law under section 197 of the LRA, is wrong. It is not an interpretation to be followed or accepted by this Court.

 

[35]    The parties to an employment contract are free to regulate their respective rights and duties, subject to the requirements of the law. This may include an agreement to a restraint of trade clause and the obligations set out in such a clause. Only if the contract is silent on particular terms and conditions laid down in applicable legislation or collective agreement, the provisions of the legislation or collective agreement will be read into the contract as if the parties have agreed to them. The conclusion of such a contract, creates reciprocal rights and obligations between an employer and an employee. 

 

[36]    A contract of employment is transferrable under the provisions of section 197 of the LRA, including all the terms agreed to between the parties, not only those that are more favourable than the provisions of the BCEA.

 

[37]    A restraint of trade agreement concluded between an employer and employee and included in a contract of employment, is transferable under section 197 of the LRA.

 

[38]    In Horn and others v LA Health Medical Scheme and another[11] (Horn) the minority judgment of the Constitutional Court considered the interpretation of section 197(2)(a)-(d) of the LRA. The majority declined to consider the interpretation of section 197 of the LRA. In the relevant parts of the judgment, it was held that:

 

‘[62]       In the light of paragraphs (a) and (b) of subsection (2) the answer to the question whether the alleged obligation was not taken over by Discovery upon the transfer of the administrative division must be that it was. If that obligation was part of the appellants’ contracts of employment, then it was taken over by reason of paragraph (a) of subsection (2). If the alleged obligation was not part of the contracts of employment but was, nevertheless, an obligation affecting the employment relationship, then it was taken over by reason of paragraph (b) of subsection (2). The language used in paragraph (b) is very wide. The paragraph says that, if a business is transferred as a going concern, unless otherwise agreed in terms of subsection (6):

 

“all the rights and obligations between the old employer and an employee at the time of the transfer continue in force as if they had been rights and obligations between the new employer and the employee.”

 

[63]        If the obligation was in existence at the time of the transfer, it continued in force beyond the transfer but, after the transfer, it was borne by Discovery, the business transferee. If the obligation was not in existence at the time of the transfer but arose after the transfer, then that obligation can only be enforced against the business transferee and not the business transferor.

…

[66]        Apart from that, the language used in section 197(2)(b) is very wide and is not qualified other than by the requirement that the rights and obligations be “between the old employer and an employee at the time of the transfer”. Other than that, section 197(2)(b) says that all the rights and obligations between the business transferor and each employee at the time of the transfer continue in force as if they were rights and obligations between the business transferee and each employee. A suggestion that the obligation that the appellants seek to enforce falls outside the ambit of section 197(2)(b) would require a justification as to how that is possible in the light of the wide language used in paragraph (b). The appellants have failed to proffer such a justification. In my view there is no exception provided for in section 197(2)(b) and, therefore, the obligation sought to be enforced by the appellants falls within the ambit of section 197(2)(b).

…

[84]        In my view, the provision of section 197(2)(b) means what it says. That is that the reference in section 197(2)(b) to “all the rights and obligations in existence at the time of the transfer between the [business transferor] and each employee at the time of the transfer” is a reference, without exception, to all the rights and obligations in existence at the time of the transfer between the business transferor and every employee and all those rights and obligations continue after the transfer as if they had been rights and obligations between the business transferee and the employee. This interpretation is consistent with the European Court of Justice’s decisions in Beckmann and Martin. (Own underlining)

 

[39]    Section 197(2)(b) provides for all the rights and obligations between the old employer and an employee at the time of the transfer to continue in force as if they had been rights and obligations between the new employer and the employee. The Constitutional Court in Horn confirmed that “if the obligation was in existence at the time of the transfer, it continued in force beyond the transfer[12].” This obligation Ms Beedle agreed to with Slo-Jo was in existence at the time of her transfer to the Applicant and it remains in existence and will continue in force beyond the transfer.

 

[40]    The Labour Appeal Court (LAC) held in Bonfiglioli SA (Pty) Ltd v Panaino[13] (Bonfiglioli) that the restraint agreement is geared at protecting the employer's proprietary interest after the employee has left the employer's employment and the legitimate object is to protect the employer's goodwill and customer connections. The LAC confirmed that the restraint remains effective for a specified period after the employment relationship has come to an end. If the old employer is substituted by the operation of law with a new employer, the restraint is still enforceable as the object remains to protect the employer’s interests.

 

[41]    There is no merit in Ms Beedle’s submissions that the terms of a restraint agreement do not pass from one party to another, that the Applicant has no contractual restraint of trade agreement with her and that there is no cause of action for the relief sought. Ms Beedle’s contract of employment, including the restraint of trade, transferred to the Applicant and the obligation Ms Beedle had agreed to in the restraint of trade undertaking, transferred to the Applicant.

 

The terms of Ms Beedle’s contract

 

[42]    Mr Bishop further argued that paragraph 1.1 of Ms Beedle’s contract provided that she was employed in the capacity of ‘Sales Representative’ and that she shall be employed and shall serve the company in such capacity “or in any such capacity of a like status, as the company may require from time to time.” Clause 1.3 of the contract provides that the company shall be entitled to transfer Ms Beedle to “any other business of the company, in any such other capacity of a like status.” He argued that over time, Ms Beedle’s position changed significantly and in the founding affidavit, the Applicant failed to make out a case that her new role is in any way a ‘capacity of a like status’ and as her role changed completely, the restraint of trade agreement was no longer binding and enforceable. Ms Beedle agreed to a restraint of trade in her capacity as a sales representative or ‘like position’, she did not agree to same in respect of the capacity or the role she had at the termination of her employment.

 

[43]    This argument is misplaced and opportunistic to say the least.

 

[44]    In Profibre Products (Pty) Ltd v Govindsami[14], the applicant sought to enforce the restraint provisions as contained in the contract of employment between itself and the respondent. The respondent was employed on 15 December 2005 and promoted in 2011 to the position he held until his resignation seven years later. From the facts, it appears that the parties did not conclude a new contract of employment at the time of the respondent’s promotion in 2011. The respondent contended that he was not bound by any restraint because when he was promoted in 2011, the restraint covenants (and indeed the entire employment contract concluded in 2005) were no longer binding. The Court held that –

 

‘There is manifestly no merit in this submission. The contract of employment signed by the respondent at the commencement of his employment remained intact and enforceable until the respondent terminated the contract by way of his resignation. There is simply no conceptual basis on which it could be otherwise. The respondent continued to reap the benefits of the contract after his promotion in 2011, by way of remuneration and other benefits. There is no reason why he should not continue to be bound by the obligations imposed on him by the contract, including the restraint’.[15]

 

[45]    The Supreme Court of Appeal (SCA) in Natal Joint Municipal Pension Fund v Endumeni Municipality,[16] affirmed the principles applicable to the interpretation of legislation and contracts. What the judgment underscores is that the exercise of interpretation does not require a court to discern the intention of the legislature or the parties to a contract only by reference to the plain meaning of words with a deferential nod, if necessary, in the direction of the Oxford English Dictionary, as was said at paragraph 18:

 

'The present state of the law can be expressed as follows: interpretation is the process of attributing meaning to the words used in a document, be it legislation, some other statutory instrument, or contract, having regard to the context provided by reading the particular provision or provisions in the light of the document as a whole and the circumstances attendant upon its coming into existence. Whatever the nature of the document, consideration must be given to the language used in the light of the ordinary rules of grammar and syntax; the context in which the provision appears; the apparent purpose to which it is directed and the material known to those responsible for its production. Where more than one meaning is possible each possibility must be weighed in the light of all these factors. The process is objective, not subjective. A sensible meaning is to be preferred to one that leads to insensible or unbusinesslike results or undermines the apparent purpose of the document…. The "inevitable point of departure is the language of the provision itself" read in context and having regard to the purpose of the provision and the background to the preparation and production of the document…'

 

And further at paragraph 26:

 

'In between these two extremes, in most cases the court is faced with two or more possible meanings that are to a greater or lesser degree available on the language used. Here it is usually said that the language is ambiguous although the only ambiguity lies in selecting the proper meaning (on which views may legitimately differ). In resolving the problem the apparent purpose of the provision and the context in which it occurs will be important guides to the correct interpretation. An interpretation will not be given that leads to impractical, unbusinesslike or oppressive consequences or that will stultify the broader operation of the legislation or contract under consideration.'

 

[46]    If Ms Beedle’s interpretation is accepted, it would mean that the Applicant wanted to protect its interest only during the time that she was employed as a sales representative, whereas the need for protection arose by virtue of her employment with the Applicant, in fact the need for protection arose only after the termination of employment. The restraint agreement would, on Ms Beedle’s interpretation, yield not only an insensible but also an unbusinesslike result.

 

[47]    In Bonfiglioli, the LAC confirmed that a contract in restraint of trade is one that prevents an employee from exercising his or her trade, profession or calling, or engaging in the same business venture as the employer for a specified period, and within a specified area after leaving employment. The restraint agreement is therefore geared at protecting the employer's proprietary interest after the employee has left the employer's employment. The legitimate object of a restraint is to protect the employer's goodwill and customer connections (or trade secrets) and the restraint accordingly remains effective for a specified period after the employment relationship has come to an end.

 

[48]    The restraint was entered into by virtue of Ms Beedle’s employment and the fact that she had access to and knowledge of the Applicant’s business and confidential information, with the corresponding need for the protection thereof. There was no need to enter into a new contract every time Ms Beedle was promoted or when her role changed. The need for protection arose only after the termination of her employment, with the aim to protect the Applicant’s proprietary interest. Ms Beedle’s access to and knowledge of the Applicant’s business and confidential information is not limited to her position as a sales representative.

 

The applicable legal principles

 

[49]    The general principles applicable to restraint agreements are well-established. In Massmart Holdings v Vieira and another[17] (Massmart) the Court summarised them as follows:

‘Restraint agreements are enforceable unless they are unreasonable (see Magna Alloys and Research (SA) (Pty) Ltd v Ellis [1984] ZASCA 116; 1984 (4) SA 874 (A)). In general terms, a restraint will be unreasonable if it does not protect some proprietary interest of the party seeking to enforce a restraint. In other words, a restraint cannot operate only to eliminate competition. The party seeking to enforce a restraint need only invoke the restraint agreement and prove a breach of the agreement, nothing more. The party seeking to avoid the restraint bears the onus to establish, on a balance of probabilities, that the restraint agreement is unenforceable because it is unreasonable (see 2013 (1) SA 135; Magna Alloys and Research (SA) (Pty) Ltd supra; Den Braven SA (Pty) Ltd v Pillay and another 2008 (6) SA 229 (D))’.

 

[50]    The position in our law is, therefore, that a party seeking to enforce a contract in restraint of trade is required only to invoke the restraint agreement and prove a breach thereof.

 

[51]    Mr Bishop argued that in paragraph 54 of the Applicant’s heads of argument it is submitted that the Applicant “alleges a suspected breach in the founding papers” and based on the ‘suspicion’ as opposed to ‘proof’ of a breach, the Applicant did not discharge its onus, which is fatal to its case.

 

[52]    The aforesaid argument is without merit and amounts to no more than grasping at straws.

 

[53]    In the founding affidavit, the Applicant made clear averments to the effect that Ms Beedle had a direct involvement with Flavourpro, a direct competitor of the Applicant and provided detailed statements regarding Ms Beedle’s conduct in breach of the provisions of the restraint agreement. The Applicant has set out Ms Beedle’s breach in sufficient particularity for the onus to be discharged.

 

[54]    In conclusion: there is no merit in the Respondents’ submissions that the Applicant failed to make out a prima facie case in the founding affidavit.

 

Costs

 

[55]    Mr Bishop submitted that this Court should find that no prima facie case was made out and that the application should be dismissed with costs.

 

[56]    This Court found that there was no merit in the points in limine raised by the Respondents. The effect of the approach taken by the Respondents is that, notwithstanding the fact that a full set of pleadings was available, that an urgent Court hearing was granted and that resources were made available to deal with the merits of the matter, the matter is not one step closer to finality. This Court had to consider the points in limine by considering only what was contained in the Applicant’s founding affidavit.

 

[57]    The resources of this Court are notoriously scarce. All the Respondents achieved, was to get confirmation from this Court that the Applicant had made out a prima facie case in its founding papers. The merits of the application are still to be decided and unfortunately, another Court day will have to be allocated for a hearing on the merits and more resources will have to be spent on a matter that already had its day in Court.

 

[58]    The Applicant elected to invoke this Court’s jurisdiction under section 77(3) of the BCEA, a jurisdiction that the Court exercises concurrently with the civil courts. The rule applied in those courts that costs ordinarily follow the result, is to be applied in casu and I can see no reason why costs should not follow the result.

 

[59]    In the premises, I make the following order:

 

Order

 

1.           The Respondents’ points in limine are dismissed with costs.

 

 

PRINSLOO, J

Judge of the Labour Court of South Africa

 

 

Appearances:

For the Applicant:               S Saunders

Instructed by:                      Eversheds Sutherland (SA) Inc Attorneys

For the Respondents:         A Bishop

Instructed by:                      Gitttins Attorneys

 

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