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THE LABOUR COURT OF SOUTH AFRICA, JOHANNESBURG

   Not Reportable

case no: J 683/23

 

In the matter between:

HYLTON ACKERMAN (PTY) LTD t/a PC WORX RUSTENBURG	Applicant
And
THERON MARK DONOVAN	First Respondent
PRIME INSTRUMENTATION CC	Second Respondent

Heard:   24 May 2023

Delivered:  26 May 2023

Summary:  An application to enforce a restraint of trade is generally heard on an urgent basis provided the requirements of Rule 8 are met. Urgency follows as a matter of course when Rule 8 requirements are met. A party seeking to enforce a restraint of trade must allege and prove the agreement as well as its breach by the other party. The former employee breached the restraint and the breach continue to prejudice the applicant. Held (1): The former employee is interdicted and restrained. Held (2): The respondents to pay the costs.

JUDGMENT

MOSHOANA, J

Introduction

[1]  This is an urgent application seeking to restrain and interdict a former employee of the applicant. The application is opposed by the first (the former employee) and second (current employer of the former employee) respondents.

[2]  The respondents sought to deliver a fourth affidavit in an instance where the reasonableness of the restraint was not attacked[1]. Correctly so, the applicant objected to the delivery of the fourth affidavit. Although leave was not sought (through a substantial application being launched), the respondents simply begged the Court to accept the fourth affidavit on the sole basis that the applicant raised new matters in reply. Procedurally, if a new matter is raised in reply, the available remedy is to apply for a strike out as opposed to delivering a further affidavit[2]. For all the above reasons, this Court rejected the begging to deliver the fourth affidavit. On the merits, the only relevant dispute in this matter is whether the applicant and the second respondent are in competition or not.

Background facts

[3]  Given the narrow basis on which the present application oscillates, a detailed narration of the facts may not be necessary. Hylton Ackerman (Pty) Ltd t/a PC Worx Rustenburg (PC Worx) conducts business of providing information technology and office automation solutions, services and maintenance to its clients. Mr. Mark Donovan Theron (Theron) was employed by PC Worx as a Callout and Technical. On 17 February 2021, Theron concluded and signed an employment contract, which contained a restraint clause. Of relevance to the present application, he agreed to the clauses couched in the following terms:

“18.5.1 not to be interested in any business in the territory which carries on business, manufactures, sells or supplies any commodity or goods, brokers or acts as agent in the sale or supply of any commodity or goods and/or performs or renders service, in competition with or identical or similar or comparative to that carried on, sold, supplied, brokered or performed by the company during the period of the employment of the employee up to and including the last day of employment of the employee;

18.5.2   not to solicit the custom of or deal with or in any way transact with, in competition to the company, any business, company, firm, undertaking, association or person which during the period of one (1) year preceding the date of termination of the employment of the employee has been a customer or supplier of the company in the territory;”

[4]  On 3 April 2023, Theron tendered his resignation as an employee of PC Worx. On 4 April 2023, Theron commenced employment with the second respondent Prime Instrumentation CC (Prime) as a Technical Sales representative. It is common cause that on 11 April 2023, Theron in the company of a representative of Prime visited one of PC Worx clients, Helam Mining (Pty) Ltd (Helam) and held some discussions with one Mr. Steve Steyn (Steyn) around the performance of cable splicing services. There is a dispute around the contents of the discussion between the two. On Helam’s version exposed in a letter dated 17 April 2023 ostensibly signed by one “Royen”, Theron communicated to Steyn that he was currently available for cable splicing and other duties performed at PC Worx as an independent contractor.

[5]  On Theron’s version during the common cause visit Steyn enquired from him if he can do cable splicing, to which he responded in the affirmative and also pointed out the one he did for Helam when he was still employed by PC Worx.

[6]  When PC Worx got wind that Theron visited Helam, one of its known clients, it undertook some investigations, which revealed that Theron had joined its direct competitor. PC Worx in knowing that Theron had a relationship with its customers, Helam included, it got concerned that Theron may solicit its clients away from it. It considered the conduct of Theron to be in breach of the restraint clauses outlined above. On advice, the present application was launched seeking interdictory reliefs. The application is strenuously opposed by Theron and Prime. During argument of the matter, this Court afforded the parties an opportunity to attempt a resolution of the matter. The opportunity drew blank.   

Evaluation

Is there a restraint agreement?

[7]  There is no dispute that Theron signed an employment agreement which incorporates a restraint of trade clause. Therefore, there exists a valid, binding and enforceable restraint agreement between the parties.

Is the agreement enforceable?

[8]  As far back as 1984, Rabie CJ held that there is nothing in our common law which states that a restraint of trade agreement is invalid and unenforceable. It is in the public interest that agreements entered into freely should be honoured and that everyone should, as far as possible, be able to operate freely in the commercial and professional world. In casu, the enforceability and or reasonability of the restraint of trade clause has not been challenged. Theron simply alleged that Prime is not a direct competitor of PC Worx thus he did not breach the restraint clause.

Was the restraint breached?

[9]   Regard being had to the contention by Theron that Prime and PC Worx are not competitors, in order to establish a breach, this Court must determine whether the two are competitors. If they are, the fact that Theron joined Prime breaches the restraint. With regard to the approach of Helam a breach will arise as well.

[10] PC Worx specifically alleged that Prime is its direct competitor. In responding to the allegation, Theron retorted thus:

“4.11.4  Although it is admitted that there exists a small overlap on the information technology service where both parties supply computer equipment and do fibre networks, it should be stressed that the Second Respondent’s core business is for the purpose of industrial automation and not office automation as per the Applicant’s. to put this in perspective, 99% of Second Respondent’s turnover comes from services and products Applicant does not render, service or support. During my roughly 6 weeks of employment with the Second Respondent I have not rendered or promoted on Second Respondent’s behalf any of the Applicant’s services or products. 

4.11.5   I am further currently employed by the Second Respondent as a technical sales representative while at the Applicant I occupied the position of technician. These positions are materially different from each other and are not identical as alluded to by the Applicant. At the Applicant my core duties were to attend to installations, maintenance and breakdowns while at the Second Respondent I promote its products and services, which in turn is rendered to clients by other department of the Second Respondent.

4.11.6   It is further denied that I have ever or would ever procure any clients at the Applicant’s expense since the Second Respondent’s core business activities differs materially from the Applicant.”

[11] On the version of Theron, there is 1% competition between Prime and PC Worx. PC Worx in disputing the 1% allegation annexed a web page setting out the profile of Prime.

[12] Turning to the question of competition, this Court in Inter-Waste (Pty) Ltd v Smith and another[3] held as follows:

“[22]  …There exists an element of rivalry between the two of them. There is no doubt that both of them vie for industrial cleaning business. In that market segment the two are rivals. As held above the degree of rivalry is of no moment for the purposes of determining whether there is rivalry between the two. As rivals, given an opportunity one will use that opportunity to out-rival another…”

[13] Therefore, the fact that Prime does only 1% of the same functions does not matter. Given an opportunity, Prime would certainly out-rival PC Worx and possibly snatch Helam as a client away from PC Worx[4]. Theron does not explain why he and the official of Prime chose to visit Helam, which he knew very well to be a client of PC Worx, having rendered services there himself whilst in the employ of PC Worx. The only inference to be drawn is that the visit was not an innocuous one given the position (sales technician) Theron holds at Prime. Thus, the conclusion this Court reaches is that Prime and PC Worx are in competition. This conclusion leads to an inevitable finding that Theron breached the restraint and that breach continues to prejudice PC Worx on its protectable interests. Clients list is a protectable interest. Clearly the discussion between Steyn and Theron is one suggestive of soliciting in the protected territory of Northwest Province. It became common cause that in the midst of the current application, Theron approached other two clients of PC Worx. The fact that he went there to source a different business does not of itself remove the risk of solicitation. On the basis of the above breaches, the applicant is entitled to the reliefs sought.

Issue of costs.

[14] This application is effectively a civil claim justiciable under section 77 (3) of the Basic Conditions of Employment Act, 1997 (BCEA). Accordingly, the principle of costs following the results finds application. Nothing was suggested by Theron that the principle should not be applied. Perhaps, had the parties resolved the matter, the issue of costs could equally have been resolved.

Conclusion

[15] Ultimately, this Court comes to the conclusion that there is a valid and enforceable restraint and that the interest of PC Worx is worthy of protection. This Court is satisfied that Theron is prejudicing such an interest. As to costs, the first and second respondents must bear the costs of this application.  

[16] In the results I make the following order:

 

 Order

1. The application is heard as one of urgency.

2. The first respondent is interdicted and restrained from directly or indirectly:-

2.1. Being interested in, which includes employment, in any business, that carries on business, manufactures, sells or supplies any commodity or goods, brokers or acts as agent in the sale or supply of any commodity or goods and / or performs or renders any service, in competition with ot identical or similar or comparative to that carries on by the applicant, being the business of information technology and office automation consulting, maintenance and support services, for a period of 1 (one) year calculated from 30 April 2023, within the area of the North West Province of the Republic of South Africa.

2.2. Directly or indirectly soliciting and / or transacting or dealing with, and / or accepting any business or custom from, any existing customers or clients of the applicant for a period of 1 (one) year calculated from 30 April 2023 within the area of the North West Province of the Republic of South Africa.

2.3. Revealing or disclosing or in any way utilising, whether for the first respondent’s own purposes, or for the purposes of any third party, any of the applicant’s confidential information.

2.4. The second respondent is interdicted and restrained from employing the first respondent, or in any way being associated with the first respondent, in breach of the restraint of trade covenant of the first respondent

3. The first and second respondent (Theron and Prime) should pay the costs of this application, the one paying absolving the other.

 

GN Moshoana

Judge of the Labour Court of South Africa.

 

Appearances

For the Applicant: Mr J Biggs of Snyman Attorneys, Rosebank.

For the Respondents: Mr. J M de Villiers of De Villiers, Du Plessis Attorneys Pretoria.

 

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