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REPUBLIC OF SOUTH AFRICA

IN THE HIGH COURT OF SOUTH AFRICA,

GAUTENG LOCAL DIVISION, JOHANNESBURG

CASE NO: 20182/2017

Not reportable

Not of interest to other judges

Revised.

In the matter between:

MAUREEN ALLEM INC.                                                                                         Applicant

and

DR BURT JOOSTE                                                                                            Respondent

 

JUDGMENT

 

FISHER J:

[1] This matter deals with two competing business concerns. Each provides medical aesthetic and anti-ageing treatments and procedures, such as facial rejuvenation, dermal fillers, laser hair removal, and skin resurfacing to the public. Central to the providing of the procedures in issue is that they are medical professional services and thus have to be provided by a medical practitioner registered with the Health Professions Council in terms of the Health Professions Act[1] ("the Act").

[1] There are 3 main protagonists in this case:

(a) The applicant, Maureen Allem Inc, a personal liability company conducted by Dr Maureen Allem, a medical practitioner who registered in terms of the Act and the Ethical Rules of the Health Professions Council and bound by thereby;

(b) Skin Renewal cc (" Skin Renewal') , a close corportaion of which Dr Allem is sole member and which conducts the business which provides the treatments and procedures to the public;

(c) The respondent, Dr Burt Jooste, who was previously employed by the applicant.

[2] This application came before me in the urgent court. The applicant, alleges that urgency arises because the respondent is breaching a restraint of trade agreement and/ or competing unlawfully with it by using confidential information and soliciting patients and employees to follow him to a new business, which he has set up in competition with Skin Renewal and which he has called The Longevity Institute. At the time of the hearing, approximately 50 of the patients previously treated by the respondent whilst he was employed by the applicant and seconded by it to Skin Renewal had indicated that they wished their medical records, which were in the custody of Skin Renewal, to be released to them by Skin Renewal. It appears clear that these patients intend to follow the respondent to his new place of practice at The Longevity lnstitute's premises. The respondent is the sole director of The Longevity Institute which offers the same or similar services and treatments to those offered by Skin Renewal. I was asked to deal with the matter urgently in order to stop this ongoing attrition of the clients of Skin Renewal. On this basis I opted to deal with the matter as one of urgency.

[3] The roles, interactions, and legal obligations of the 3 protagonists are all important for the determination of this matter. The following is relevant:

(a) The applicant conducts a business which employs medical doctors which provide the medical aesthetic services to Skin Renewal.

(b) The applicant alleges the respondent was employed at a salary of R 50 000 per month. plus a "percentage on monthly turnover billed by [the doctor} in respect of consultations, botox, fillers and aesthetic medical services" which is calculated in accordance with a formula imposed by the applicant.

(c) It stands to reason that the turnover on which the formula is brought to bear is that of Skin Renewal and not that of the applicant.

(d) The applicant does not conduct the business with which the respondent competes, Skin Renewal conducts this business which relies on the services of doctors provided by the applicant.

(e) Dr Allem is sole member of Skin Renewal and is the director of the applicant. She and her partner Victor Snyders, who is not a medical doctor. conduct the businesss of both Skin Renewal and the applicant. Mr Snyders made the main affidavits on behalf of the applicant and states that he is the ' CEO' of both the applicant and Skin Renewal

(f) Dr Allem and Mr Snyders conduct the business of both the applicant and Skin Renewal on the basis that same are symbiotic. Mr Snyders purports to explain this relationship stating merely that Skin Renewal is able to offer the services to what it appears to regard as its patients "by virtue of the utilization of the services of the doctors employed by the Applicant.'·

(g) Skin Renewal also generates income by performing non-medical treatments such as laser and other aesthetic treatments. Therapists and other support staff are employed by it for these purposes

[4] The fact that the services which form the basis of the competitive enterprises in issue need to be performed by medical doctors is significant to the manner in which the businesses in issue have been set up. This is because the manner in which medical professionals may legally trade 1s strictly regulated.

[5] The following provisions of the Act and the Ethical Rules of Conduct which bind health care practitioners have relevance for this case:

(a) a person cannot practise a health profession unless registered in terms of the Act[2];

(b) a practitioner may not share fees with any person or with another practitioner who has not taken a commensurate part in the services for which such fees are charged[3];

(c) a practitioner may not charge or receive fees for services not personally rendered, except for services rendered by another practitioner in his or her employment or with whom he or she is associated as a partner, shareholder or focum tenens[4];

(d) a practitioner may not take over a patient from another practitioner if he or she is aware that such patient is in active treatment with another practitioner, unless he or she takes reasonable steps to inform the other practitioner that he or she has taken over the patient at such patient's request and establishes from the other practitioner what treatment such patient previously received, in which case the other practitioner is obliged to provide such information[5].

(e) a practitioner shall not impede a patient from obtaining the opinion of another practitioner or from being treated by another practitioner[6].

(f) a practitioner may divulge information regarding a patient only in terms of a statutory provision: the instruction of a court of law; or where justified in the public interest[7].

(g) A practitioner may only accept employment from employers approved by the council and then only in accordance with a written employment contract which is drawn up on a basis which is in the interest of the public and the profession and which shall be made available to the Council at its request[8].

(h) a practitioner shall in the conduct and scope of his or her practice, use only forms of treatment apparatus or health technology which is not secret and which is not claimed to be secret[9].

(i) a practitioner must act in the best interests of his or her patients; respect their confidentiality, privacy, choices and dignity: provide adequate information about alternative treatment options and the costs of such options and other factors which will enable a patient to make informed choices as to treatment; keep his or her professional knowledge and skills up to date; and maintain proper and effective communication with patients and other professionals[10].

(j) A practitioner may not canvass or tout or allow canvassing or touting to be done for patients on his behalf[11].

[6] The effect of these regulatory provisions on the manner in which a doctor is allowed to be employed is this He cannot contract out of his duties as a medical practitioner and he may not share fees that he has earned unless this is under controlled and regulated circumstances He may only be employed to carry out medical services by a juristic entity registered a nd approved in terms of the legislation and then only on the basis that the terms of his employment are in keeping with the requirements of the regulatory environment in which the doctor his employer must practise.

[7] Skin Renewal does not employ the respondent and this is, in all likelihood, because the regulatory constraints do not permit of this. Skin Renewal is however the entity that conducts the business and earns the profits and, in some unexplained way is involved in determining the fees and/or salary paid to the doctors employed by the applicant. The applicant has not provided details of the financial arrangement that it has with Skin Renewal and how this affects the employment terms of doctors whom it uses. Thus it is not clear on what basis the applicant earns its income from the exploitation of its doctor employees - does Skin Renewal pay it for such services, if so on what basis and how is the applicant s profitability affected by the conduct of the respondent which is complained of in the application? These important questions are unanswered.

[8] What is clear however, is that the applicant and Skin Renewal are not competitors: the applicant provides medical services to Skin Renewal on some inscrutable basis and Skin Renewal conducts the business in issue and thus generates the income. Whether the commercial structures which generate the income do so in accordance with the law 1s not something that this court can fathom with H1e scant and apparently obfuscated information which it has been given.

[9] On a cursory reading of the unsigned agreement on which the applicant seeks to make its case in the first instance, there seem to be a number of terms which are specifically at odds with the protections afforded to the public in terms of the Act and Rules. For example, the loyalty of the doctor as employee of the applicant is stated to be paramount and the interests of patients and the public are not even regarded as worthy of mention in this context. The provisions in the agreement relating to the confidentiality of the doctorIpatient relationship and the rights of the patient to the medical practitioner of his choice seem to me to be substantially undermined by the terms of the agreement.

[10] This would perhaps be relevant to an assessment in due course as to the enforceability of the restraint agreement. However, this is not an evaluation which requires to be undertaken now, in light of the facts of this matter. It is not made clear by the applicant in relation to the confidential information and trade secrets and trade relationships relied on, which are those of the applicant and which are those of Skin Renewal. The applicant seeks to blur these lines in a bid to suggest that such information and relationships are protectable on behalf of either entity. Given the stark differences in the businesses conducted there is no conceivable basis on which this could be the case. The applicant seeks to get around this difficulty by recourse to a term of the restraint in the unsigned agreement which provides that the respondent shall not compete with the applicant or its 'joint ventures. associates. and affiliated companies" for a period of 12 months of termination of the employment. This term, argues the applicant, prevents the respondent from acting in competition with any business of an associate entity of the applicant and that this means Skin Renewal.

[11] Central to the enquiry, is whether or not there is a restraint of trade agreement in force at all. The respondent was asked to sign an employment agreement which contained a restraint of trade clause but he did not sign it. The applicant contends that the relationship proceeded on the basis that the terms of the unsigned agreement were in force; the respondent contends that this was not the case and that, to the knowledge of the applicant, he did not agree to be restrained as set out in the unsigned agreement.

[12] This is a hotly contested central dispute in the case. The applicant contends that the dispute should be determined on the basis that the version of the respondent is far fetched and falls to be rejected. It contends that if it is found however that the dispute is not capable of being resolved on the papers before me, that this central dispute should then be referred to oral evidence.

[13] The dispute is quite clearly not resoluble on the papers.

The question thus to be determined is what effect this dispute has on the determination of the case.

[14] The applicant seeks alternative relief to the enforcement of the restraint agreement in the form of an interdict as follows (I quote from the amended notice of motion):

''4. In the alternative to the 3 above interdicting the Respondent for a period of 12 (twelve) months within a 10 (ten) kilometres radius of any location within the Republic of South Africa in which the applicant conducted business during the 12 (twelve) months period immediately preceding 1 June 2017 from unlawfully competing with the Applicant by way of,'

4.1 using the Applicant's Proprietary and Confidential Information:

4.2 using his knowledge of, and influence over, the Applicant's customers, employees and business associates for his own interest and that of any of the of the Competitors to the prejudice of the Applicant"

4.3 encouraging or enticing or inciting or persuading or inducing any employee of the Applicant to terminate his or her employment with the Applicant or causing or assisting in causing any of the aforegoing to take place;

4.4 furnishing any information or advice to an employee employed by the Applicant to any prospective employer of such an employee, or using any other means which are directly or indirectly designed or, in

the ordinary course of events, calculated to result in any employee terminating his/her employment by the Applicant and/or becoming employed by or directly or indirectly in any way interested in or associated with any other company, close corporation firm undertaking or concern;

4.5 encouraging or enticing or melting or persuading or inducing any client or past client of the Applicant, to take its custom away from the Applicant, or causing or assisting in causing any of the aforegoing to take place· and

4.6 discouraging or dissuading any or past client of the Applicant from maintaining its custom with the Applicant, causing or assisting in causing any of the aforegoing to take place.

5. Directing that the costs of this application to be reserved for determination in terms of part B of this application save in the event of opposition "

[15] This alternative relief is carefully crafted. It seeks to achieve the same effect as an enforcement of the disputed restraint agreement. Thus, in essence what is sought is that the unexpired portion of the restraint be enforced. Although the relief purports to be interim, it would, in fact, have the effect of a final interdict if granted. Where in substance final relief is sought, a court will approach the matter as if a final interdict was applied for[12].

[16] Without the tenuous rights in the unsigned agreement (which are purportedly afforded to affiliates of the applicant and which may have by some triumph of gymnastic reasoning allowed the business conducted by Skin Renewal be protected by such agreement) no case is made out at all for the relief claimed. Without this agreement there is simply no basis on which the applicant has made out any case for the protections sought in the alternative.

[17] As set out above the applicant has not seen fit to set out how it earns its income and derives its profits from the employment of doctors such as the respondent and their purported secondment to Skin Renewal It has not been shown how the applicant has and would itself thus suffer any loss as a result of the conduct of the respondent which it complains of In order for the applicant to obtain the interdictory relief it seeks. it must be shown that the applicant itself has suffered or will probably suffer some damage[13].

[18] The version of the respondent, which must be accepted[14], is simply that he did not sign the agreement. that the has no confidential information at his disposal: that as a doctor. he is bound to respect the confidentiality of his patients and that such information as he is privy to in this capacity does not belong to the applicant or any other person or entity but to the patient. The respondents relationships with his patients is. on the facts in this matter. not shown to be protectable by the applicant. The fact that Skin Renewal was not joined in these proceedings is unsurprising. It seems clear that Dr Allem is aware that its activities are such that it too probably has no lawful interest.

[19] No basis for the referral to evidence of the question of whether the agreement was in force between the parties. It is only this dispute in respect of which a referral is sought by the applicant. It is obvious from what is set out above that this dispute is not capable of being excised from the other facts in issue. In any event the determination of this sole issue by way on evidence in due course is unlikely to lend any clarity to the case in light of the separate interests of the applicant and Skin Renewal. On 28 April 2017 the respondent through his attorneys sent a letter in terms of which his resignation was tendered. In this letter it was trenchantly placed on record that there existed no written restraint of trade agreement and no written employment agreement The applicant could have been left in no doubt as to the version of the respondent on this score.

[20] One further troubling aspect has some relevance to the conduct of the applicant in these proceedings. Prior to the hearing, an issue arose as to whether an affidavit obtained from, Ms Tamara Moen a laser therapist employed by Skin Renewal had been obtained by intimidation. This dispute led to a further set of voluminous affidavits being filed These affidavits do not take the issues in the matter any further. They do reveal however a regrettable state of affairs which saw Ms Moen threatened with criminal charges and intimidated in an attempt to obtain information to further the aims of the applicant in this case. These threats and intimidation were exerted on Ms Moen during a protracted "meeting' which played out over an approximate 7 hour period on 14 June 2017, at a time when the applicant was preparing to file answering papers in this matter. Ms Moen was unrepresented at such meeting but she was confronted, questioned, and cajoled by Dr Allem Marie Lou Bester who is an attorney and the sister of Dr Allem, Mr Snyders (for a short period on speaker phone), Megan Harrington-Johnson and Jarryd Spargo (both of the applicants attorneys) and two forensic experts employed on behalf of the applicant who took custody of Ms Moen's mobile phone. The exchange with Ms Moen was video recorded. A transcript of these interactions was made available to the court by the applicant. On a reading thereof there is no doubt that substantial and undue pressure was put on Ms Moen by these individuals. Given their stature and positions in relation to Ms Moen. who was, until her husband arrived towards the end of the meeting alone and vulnerable, I regard their conduct as reprehensible and worthy of the censure of this court.

I order as follows:

1. The application is dismissed;

2. The applicant is to pay the costs of the application:

3. A copy of this judgment is to be referred to the Health Professions Council.

 

 

________________________

D FISHER

HIGH COURT JUDGE

GAUTENG LOCAL DIVISION, JOHANNESBURG

 

Date of Hearing:

Judgment Delivered: 30 June 2017

 

APPEARANCES:

For the Applicant: Adv Nowitz Instructed by Schindlers Attorneys.

For the Respondent: Adv Posthusmus Instructed by Pagel Schulenburg Inc.

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