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FLYNOTES: LABOUR – Restraint – Seniority and position – Sales representative leaving cleaning company to join competitor – Restraint of trade and confidentiality undertaking – Not involved in design of applicant’s products – Junior sales representative dedicated to only making sales – Contract at competitor providing that she be paid no commission on sales and would be allocated existing customer base – Applicant failed to establish that employment with competitor constituted breach of its protectable interests under restraint of trade – Application dismissed.

 

THE LABOUR COURT OF SOUTH AFRICA, JOHANNESBURG

Not Reportable

Case no. J 1009 / 23

In the matter between:

MAPA CLEANING TECHNOLOGIES CC                                          Applicant

and

LETLHOGONOLO PEARL LETTIE KGAWANE                                First Respondent

PCS GAUTENG (PTY) LTD t/a

PRIME CLEANING SUPPLIES                                                         Second Respondent

 

Heard:           13 October 2023

Delivered:     24 October 2023

This judgment was handed down electronically by circulation to the parties' legal representatives by email. The date and time for hand-down is deemed to be 24 October 2023

 

Summary:     Restraint of trade – principles stated – application of principles to matter – issue of protectable interest and infringement of such interest considered

 

Restraint of trade – protectable interest in the form of trade connections and confidential information considered – protectable interest shown only in respect of trade connections – no protectable interest relating to confidential information shown

 

Restraint of trade – breach of protectable interest in terms of restraint – employment with competing business does not constitute breach of protectable interest in this instance

 

Restraint of trade – seniority and position of employee considered – employee simply not in the position and having the necessary seniority to pose any risk to customer base – no risk to applicant as a result of employment of employee with competitor

 

Restraint of trade – weighing off of interests – principles considered – weigh off favouring employee – enforcement of restraint as a whole unreasonable

 

Restraint of trade – applicant failing to make out case of breach of protectable interest – weigh off also favouring first respondent – enforcement of restraint prohibiting employment with the second respondent would be unreasonable

 

Interdict – requirements of interdict not satisfied – no clear right shown – no reasonable apprehension of prejudice – application refused

 

REASONS

SNYMAN, AJ

Introduction

 

[1]          This judgment concerns an urgent application brought by the applicant on 24 July 2023 to enforce a restraint of trade covenant and confidentiality undertaking against the first respondent, who is a former employee of the applicant. The application arose as a result of the first respondent having taken up employment with the second respondent, a competitor of the applicant. In the application, the applicant seeks an interdict against the first respondent, in order to prevent the first respondent from continuing her employment with the second respondent. The first respondent has opposed this application.

 

[2]          The application came before me on 13 October 2023 for argument. Having read the written submissions by both parties, as well the bundle of affidavits, and having considered the oral arguments by the applicant and first respondent, I made the following order:

 

1.      The application is heard as one of urgency in terms of Rule 8.

.

2.      The application is dismissed.

 

3.      There is no order as to costs.

 

4.      Written reasons for this order will be provided on 24 October 2023.

 

This judgment now constitutes the written reasons for the order referred to above, as contemplated by paragraph 4 of such order.

 

[3]          Because the applicant seeks final relief, the applicant must satisfy three essential requisites to succeed, being (a) a clear right; (b) an injury actually committed or reasonably apprehended; and (c) the absence of any other satisfactory remedy.[1]

 

Urgency

 

[4]          I will first deal with urgency. Neither party really took issue with requirements of urgency when the matter was argued in Court, despite the first respondent challenging the issue of urgency in her answering affidavit. Overall considered, I am satisfied that the applicant met all the requirements of urgency in this matter.[2] The applicant became aware of the first respondent’s alleged breach of the restraint on 4 July 2023, when it became aware of her employment with the second respondent. The applicant, instead of immediately launching into litigation, first sent a letter of demand to the first respondent on 11 July 2023, in which the applicant demanded that the first respondent provide an undertaking that she terminates her employment with the second respondent. The first respondent answered on 17 July 2023, refusing to provide the undertaking sought. The urgent application was then prepared, served on the respondents on 20 and 21 July 2023, and then filed in Court on 24 July 2023.

 

[5]          In line with the practice that has developed in this Court, the Registrar allocates hearing dates where it comes to applications to enforce restraints of trade, with a longer lead time, and the earliest available date was 30 August 2023, for which delay the applicant cannot be blamed. This is simply part of the general practice in this Court where it comes to enforcing restraints.

 

[6]          I am satisfied that the approach adopted by the applicant to first resort to seeking an undertaking to comply, from the first respondent, before simply launching into litigation, was a proper and responsible approach.[3] Therefore, I consider the time taken by the applicant between 11 and 17 July 2023 to obtain redress without litigation, should not serve to non-suit it where it comes to urgency.

 

[7]          And finally, the following period of less than a week, after the attempts to secure an undertaking came to naught, in which the applicant in took all the steps necessary to initiate, prepare, compile and then bring the application to Court, is prompt action, and does not constitute an undue delay or procrastination of any kind.

 

[8]          It must also be considered that the nature of the relief sought, and the purpose sought to be achieved by the enforcement of a restraint of trade must be considered in the context of urgency. It is all preventative in nature, and a hearing in the ordinary course may well render any restraint enforcement application entirely moot, especially considering that the period in which a restraint remains operative would always be limited. It follows that it is highly unlikely that there is any other form of substantial redress in due course, especially considering that the restraint period in casu is only 6 months.[4] I also consider that in general, restraints of trade carry with them an inherent quality of urgency.[5]

 

[9]          In all the circumstances as set out above, I am satisfied that the requirements of urgency in terms of Rule 8 have been satisfied by the applicant, and it is appropriate to decide this application as an urgent application.

 

The relevant facts

 

[10]       In this case, a number of important facts were fortunately either undisputed or admitted.[6] However, and where it comes to the factual disputes that do emerge from a consideration of the first respondent’s answering affidavit, and the applicant’s founding and replying affidavits, I shall determine these factual disputes in line with the principles established in Plascon Evans Paints v Van Riebeeck Paints[7], which equally applies in restraint of trade enforcement applications. As said in Ball v Bambalela Bolts (Pty) Ltd and Another[8]: ‘… Resolving the disputes of fact in favour of the party sought to be restrained involves an application of the Plascon-Evans rule ….’. The background facts as summarized below are arrived at on this basis.

 

[11]       The business of the applicant started in October 1998. It provides cleaning solutions to a variety of customers, which includes what it calls state of the art chemicals, consumables relating to cleaning activities, floor care machines, high pressure washers, hygiene brushware, and related spares and accessories.

 

[12]       According to the applicant, what gives its business the edge over competitors is that its product range incorporates SABS approved chemicals that it then customises for use by individual customers. This would include forecourt cleaner, granular drain cleaner, grime cleaner, hand sanitizer, speciality degreaser, solvent replacement degreaser, water softener, ammoniated cleaner, dishwashing liquid, bleach and general cleaners. The applicant states that its chemicals are not ordinarily available on the open market. The applicant also refers to the fact that it designs and assembles high pressure cleaning machines for customers.

 

[13]       In the founding affidavit, the applicant states that it employs what it calls technical employees responsible for the design and implementation of particular customer solutions (the products), and sales representatives responsible for the sales of the products to customers. The first respondent was employed by the applicant, in the latter category, being a sales representative.

 

[14]       The first respondent commenced employment with the applicant on 27 January 2020, in terms of a written contract of employment signed on 28 January 2020 (the employment contract). The duties of the first respondent with the applicant was in essence focussed on sales. In clause 4.2 of the employment contract, the first respondent was required to reach monthly sales targets, conduct sales activities, build a working relationship with customers, attend sales and training meetings, and deliver excellent customer service.

 

[15]       It is clear from the employment contract that the first respondent is not in any manner responsible for chemical acquisition, supplier relationships, product design and composition, or any operational and technical activities. That is done by the technical staff.

 

[16]       Included in the employment contract was a restraint of trade and confidentiality undertaking. In clause 26, the first respondent undertook not to disclose any of the confidential information of the applicant to any third parties. In clause 28, the first respondent undertook not be directly or indirectly engaged in any competing business to that of the applicant, for a period of six months following termination of employment, for the area of the province of Gauteng.

 

[17]       On 1 June 2023, the first respondent resigned. The separation appeared to be amicable, considering the content of the letter of resignation. The notice period of the first respondent, in terms of the employment contract, would expire on 30 June 2023.

 

[18]       The applicant in fact required the first respondent to work out her notice. She continued to fulfil her ordinary duties up to 16 June 2023. On 16 June 2023, the first respondent was required to meet with her manager, Johan Meyer (Meyer), to conduct a handover of all her customers. The handover was then done, in full, in the period 19 to 23 June 2023. This handover even included introducing the customers to the other sales representatives. Meyer then instructed the first respondent to do office work for the last week of her employment, during which week the first respondent handed over the company laptop and all company materials and information to the applicant.

 

[19]       As dealt with above, the applicant came to realize on 4 July 2023 that the first respondent had taken up employment with the second respondent. It was undisputed that the first respondent has in fact employed by the second respondent since 3 July 2023.

 

[20]       As to the business of the second respondent, ii is indeed a direct competitor of the applicant. It also provides a similar range of cleaning chemicals, solutions and products to a variety of customers in the industry. It is however also a long standing business, already having its own dedicated customer base, product and equipment ranges, and customer solutions.

 

[21]       As stated, the first respondent commenced employment with the second respondent on 3 July 2023. She was employed as a sales representative, in terms of a written contract of employment signed on 3 July 2023. In terms of this contract, the first respondent is paid a fixed basic salary, and it is recorded in clause 8 that the first respondent earns no commission for six months, as she is provided with an existing client book of the second respondent to service.

 

[22]       On 4 July 2023, the applicant became aware of the fact that the first respondent had taken up employment with the second respondent. This led to the letter of demand, demanding an undertaking, sent to the first respondent on 11 July 2023, discussed above. When the undertaking was not provided, the application in casu followed.

 

Restraint principles

 

[23]       In A J Charnaud & Co (Pty) Ltd v Van der Merwe and Others[9] the Court summarized the process where it comes to enforcing restraints of trade as follows:

 

‘In short, the logical sequence that applies in the case of an employer (the applicant) seeking to enforce a restraint against an employee, is firstly to prove the existence of a restraint obligation that applies to the employee. Secondly, and if a restraint obligation is shown to exist, the employer must prove that the employee acted in breach of the restraint obligation imposed by the restraint. Finally, and once the breach is shown to exist, the determination then turns to whether the facts, considered as a whole, show that the enforcement of the restraint would be reasonable in the circumstances.’ 

 

[24]       It is trite that restraints of trade are valid and binding, and as a matter of principle enforceable, unless the enforcement thereof would be considered to be unreasonable.[10] A restraint of trade also does not infringe on the constitutional right to free economic activity.[11]

 

[25]       Where it comes to determining whether the enforcement of a restraint of trade is unreasonable, it is true that the onus rests on the person against whom the restraint of trade is sought to be enforced, to show that enforcement would be unreasonable.[12] But it is seldom necessary to become embroiled in the issue of where the onus lies, when deciding the issue of whether the enforcement of the restraint would be reasonable. The proper approach to follow was summarised in Reddy v Siemens Telecommunications (Pty) Ltd[13] as follows:

 

‘…. If the facts disclosed in the affidavits, … disclose that the restraint is reasonable, then Siemens must succeed: if, on the other hand, those facts disclose that the restraint is unreasonable then Reddy must succeed. What that calls for is a value judgment, rather than a determination of what facts have been proved ….’

 

Similarly, and in Ball supra the LAC said:[14]

 

‘… The reasonableness of a restraint could be determined without becoming embroiled in the issue of onus. This could be done if the facts regarding reasonableness have been adequately explored in the evidence and if any disputes of fact are resolved in favour of the party sought to be restrained. If the facts, assessed as aforementioned, disclose that the restraint is reasonable then the party, seeking the restraint order, must succeed, but if those facts show that the restraint is unreasonable, then the party, sought to be restrained, must succeed.’

 

[26]       Whether the enforcement of the restraint of trade against the first respondent would be reasonable is dependent upon deciding the following questions set out in Basson v Chilwan and Others[15]: (a) Does the one party have an interest that deserves protection?; (b) If so, is that interest threatened (breached) by the other party?; (c) does such interest weigh qualitatively and quantitatively against the interest of the other party not to be economically inactive and unproductive?; and (d) Is there an aspect of public policy having nothing to do with the relationship between the parties that requires that the restraint be maintained or rejected. More recently, a further enquiry has been added, which can be called question (e), being whether the restraint goes further than necessary to protect the relevant interest.[16]

 

[27]       This Court and the LAC have been consistently applying these five considerations in determining whether the enforcement of a restraint of trade would be reasonable.[17] Deciding each of these considerations is a determination on the facts of that particular case, applying, as held in Ball supra[18], the following approach:

 

‘… the determination of reasonableness is, essentially, a balancing of interests that is to be undertaken at the time of enforcement and includes a consideration of 'the nature, extent and duration of the restraint and factors peculiar to the parties and their respective bargaining powers and interests …'

 

[28]       The protectable interest of an applicant in a restraint of trade can be found in one or both of two considerations, being confidential information (trade secrets), or trade connections.[19] In Labournet (Pty) Ltd v Jankielsohn and Another[20] the Court held:

 

‘… A restraint is only reasonable and enforceable if it serves to protect an interest, which, in terms of the law, requires and deserves protection. The list of such interests is not closed, but confidential information (or trade secrets) and customer (or trade) connections are recognised as being such interests. …’

 

[29]       Confidential information would be:[21] (a) Information received by an employee about business opportunities available to an employer; (b) information that is useful or potentially useful to a competitor, who would find value in it; (c) Information relating to proposals, marketing or submissions made to procure business; (d) information relating to price and/or pricing arrangements, not generally available to third parties; (e) information that has actual economic value to the person seeking to protect it; (f) customer information, details and particulars; (g) information the employee is contractually, regulatory or statutory required to keep confidential; (h) Information relating to the specifications of a product, or a process of manufacture, either of which has been arrived at by the expenditure of skill and industry which is kept confidential; and (i) information relating to know-how, technology or method that is unique and peculiar to a business. Importantly, the information summarized above must not be public knowledge or public property or in the public domain. In short, the confidential information must be objectively worthy of protection and have value.

 

[30]       Trade connections as an interest worthy of protection would be where the employee has access to customers and is in a position to build up a particular relationship with the customers so that when he or she leaves employment and becomes employed by a competitor, the employee could easily or readily induce the customers to follow the employee to the new business.[22] Whether the employee can be seen to have the ability to exert this kind of influence, is dependent upon: (a) the duties of the employee; (b) the employee’s particular personality and skill; (c) the frequency and duration of contact between the employee and the customer(s); (d) the nature of the relationship between the employee and the customer(s) and in particular whether the relationship carried with it a notion of trust and confidence; (e) the knowledge of the employee concerning the particular requirements of the customer and the nature of its business; (f) how competitive the rival businesses are, and (d) the nature of the product or services at stake.[23]

 

[31]       The seniority of the employee concerned is also an important consideration where it comes to evaluating the existence of a protectable interest.[24] The more senior the employee, the more likely it is that the employee would be entrenched with what can legitimately be considered to be a protectable interest based on the above two considerations.[25] Seniority is not just the level of the employee in the organization of the erstwhile employer, but also includes factors such as the influence, knowledge, expertise, nature of duties, relationships and even the particular person of the employee.

 

The protectable interest

 

[32]       Where if comes to considering the applicant’s protectable interest, I will firstly deal with the issue of confidential information. Considering what the first respondent was employed by the applicant to do, I do accept that the first respondent was possessed of confidential information relating to customers. Simply considering her job description, as contained in the employment contract, she would be required to have detailed knowledge of customers particulars (including identities and contact particulars), requirements, purchasing activities by customers, and pricing arrangements, at the very least of those customers she serviced. It was undisputed that the duties fulfilled by the first respondent on a day to day basis was in line with her job description in her employment contract. This kind of information relating to the applicant’s customer base may well have value to a competing business like the second respondent. All this being so, the important question that must nonetheless be answered is whether the first respondent’s employment with the second respondent would violate this protectable interest in the particular circumstances of this case.

 

[33]       In the founding affidavit, the applicant placed substantial focus on is the issue of confidential information relating to what can in general be described as the trade secrets of the applicant. This would be the confidential information relating to the composition and nature of its chemicals, as well as the design of its products it provides to customers. According to the applicant, it is these particular solutions provided to customers that would distinguish it from any competitor in the industry, such as the second respondent. Even if it is accepted that this constitutes confidential information worthy of establishing a protectable interest, I am unconvinced that the first respondent is possessed of any of this kind of information to the extent that it can have any value to a competitor.

 

[34]       In my view, and on the evidence, the first respondent was not in any way involved in the design, for a want of a better description, of the applicant’s particular chemical compositions. Similarly, she is not involved in the design or the applicant’s other products, or the solutions the applicant provides to customers. These tasks were the responsibility of what the applicant itself describes as its technical employees. It seems clear that the first respondent only had a rudimentary knowledge of these issues, to the extent of enabling her to make sales. But I am not satisfied that she would be able to, for example, explain to a business like the second respondent how to compose the different chemicals to make up the product of the applicant. In simple terms, the first respondent was a junior sales representative dedicated to only making sales. She was not involved in operations, products design and development, and determining customer solutions. She simply did not have confidential information the applicant seeks to attribute to her in this regard.

 

[35]       Added the aforesaid, the chemicals themselves as purchased by the applicant is not unique or proprietary in any way to the applicant. The applicant purchases the same chemicals from the same suppliers, as all the other competitors in the industry do. In fact, and on the evidence, the applicant and the second respondent use the same supplier. The applicant even buys from the second respondent. Any product information in this regard is therefore not confidential to the applicant, and thus not worthy of protection.

 

[36]       As already alluded to above, I accept that the second respondent is a competitor of the applicant. I also accept that the applicant and the second respondent would complete in the same market for the same customers. In this context, the confidential information the first respondent may have concerning the applicant’s customer base, could place the business of the applicant at risk if she is employed by the second respondent. However, and as I deal with later in this judgment, the fact that the second respondent may be a competitor of the applicant does not necessarily mean that the first respondent is acting in competition to the applicant because of her employment with the second respondent, to the extent that a prohibition of such employment is justified.

 

[37]       It is also important to consider what the first respondent is doing at the second respondent.[26] The first respondent has disclosed her contract of employment with the second respondent. It is clear from this contract that she would be fulfilling the exact same duties at the second respondent, as she fulfilled at the applicant. In short, she would also conduct sales of the second respondent’s products to customers. However, there is an important rider in the first respondent’s contract of employment at the second respondent, being that she is paid no commission on sales and would be allocated an existing customer base of the second respondent to service. This contractual obligation on the first respondent at the second respondent would substantially mitigate any risk to the applicant caused by the first respondent’s employment at the second respondent. Effectively, it is contractually expected from the first respondent, whilst employed at the second respondent, not to approach any of the applicant’s customers (or any other prospective customers), for six months. The first respondent’s restraint period in the employment contract with the applicant is six months. It follows that the confidential information the first respondent may have about the applicant’s customer base simply cannot serve to exclude her from employed by the second respondent, because when it may become of use to her, her restraint period would have expired.

 

[38]       It is therefore apparent that there is no obligation on the second respondent to advance the business of the second respondent by recruiting new customers. Even more than that, the first respondent is contractually prohibited form recruiting new customers and she will not paid for recruiting new customers. These factual considerations show that there is very little risk that the first respondent could or would use the confidential information relating to the applicant’s customer base that was at her disposal whilst employed at the applicant, in the course of her employment with the second respondent, and that it is simply not necessary to prevent her from being employed there.[27]

 

[39]       It must also be said that the facts illustrate that the contractual prohibition on recruiting new customers in the first respondent’s employment contract with the second respondent is genuine. No matter what may have been the cause for the delay in this matter ultimately being heard in Court, the fact is that more than three months had gone by since the first respondent joined the second respondent, and there no evidence or any case made out that the first respondent, or anyone from the second respondent for that matter, had called on the applicant’s customers with the view of soliciting their custom. In short, no one for the second respondent is going after the applicant’s customers. So where is the risk to the applicant?

 

[40]       Confidential information aside, the applicant has not done enough to make out a case relating to a protectable interest where it comes to trade connections. Other than general statements about what is expected of the first respondent where it comes to dealing with customers, there is little in the form of elaboration as to why she would hold a particular relationship with customers that would cause her to carry these customers in her pocket. The first respondent stated in her answering affidavit that she was a junior sales representative and held little sway in convincing customers to follow her to another employer. She stated that she came into the applicant with nothing, and left with nothing. The facts seem to support this contention. There is certainly no suggestion or evidence that she was employed by the second respondent so the second respondent could get its hands on the applicant’s customer base.

 

[41]       In my view, the actual interaction between the first respondent and the applicant’s customers was more of the nature of taking orders and making sales, and not the kind of close working relationship and relationship of trust that would cause the first respondent to carry those customers in her pocket. The functions of the applicant could readily be handed over to any of the other sales representatives in the applicant. In fact, the applicant’s own conduct when the first respondent resigned showed that the applicant had little concern about the kind of relationship the first respondent may have had with the customers. Ordinarily in the sales environment where the employee holds particular and close relationships with customers, and that employee resigns, that employee is immediately stopped from working with those customers, and more often than not, that employee is not even required to work out notice and is required to leave service immediately. But in the case of the first respondent, and even after she resigned, she continued to fulfil her same duties with the customers for several weeks. She was asked to do a full handover and introduction of the customers she dealt with, to other sales personnel of the applicant, which she did. In the end, she was, all considered, an individual junior employee employed by the applicant, with no duty or opportunity to cultivate the kind of relationship that would cause her to carry of the applicant’s customers in her pocket.[28]

 

[42]       In sum, I conclude that the applicant has failed to establish a protectable interest relating to trade connections that corresponds with the following dictum in Rawlins and another v Caravantruck (Pty) Ltd[29], where the Court said:

 

'The need of an employer to protect his trade connections arises where the employee has access to customers and is in a position to build up a particular relationship with the customers so that when he leaves the employer's service he could easily induce the customers to follow him to a new business …’

 

[43]       In order to overcome the above difficulty, the applicant makes a bald statement to the effect that that the first respondent was using the confidential information available to her by calling on the customers of the applicant, and promoting the products of the second respondent. The applicant refers to the fact that the first respondent was in the process of closing a transaction for chemicals to the value of R1 million, with a customer of the applicant called Retebo Investments (Retebo), when she left. The sale had however not yet been concluded when she left. According to the applicant, and on 11 July 2023, Retebo called the applicant and indicated they no longer wished to continue with the transaction, giving no reasons for it. According to the applicant, the ’only reasonable inference’ was that the first respondent solicited this business. But this inference does not follow. There can be many reasons why a particular transaction is not concluded. Further, there is no evidence or even an allegation that Retebo left the applicant as its customer and walked over to the second respondent. There is no evidence or even an allegation that this transaction had instead been concluded with the second respondent. The purported inference by the applicant is nothing more than pure speculation and conjecture. But other than this single speculative reference to the Retebo transaction, the applicant could not point to one customer that had been lost to or even approached on behalf of the second respondent in more than three months.

 

[44]       As opposed to the applicant’s bald averments and speculation that the first respondent was exploiting the applicant’s confidential information, the first respondent has specifically said that she did not approach any of the applicant’s customers. Her contractual obligations and terms at the second respondent supports this version, and she states in the answering affidavit that she is only employed to service the existing customers of the second respondent. In her letter of response to the letter of demand by the applicant’s attorneys, she stated that she handed over all her customers, and this included all information about those customers, which averment was repeated in the answering affidavit. The first respondent also provided an undertaking not to approach any of the applicant’s customers. In the end, there is no reason to reject the version offered by the first respondent, considering the following dictum in TIBMS (Pty) Ltd t/a Halo Underground Lighting Systems v Knight and Another[30]:

‘… Credibility is only capable of being addressed on paper when the assertions are palpably absurd or demonstrably false. The threshold that had to be cleared is ‘wholly fanciful and untenable’. Moreover, the appetite to resolve paper contests by reference to the probabilities, though ever present, is not appropriate. On the allegations canvassed on the record, the threshold was not cleared. …’

 

[45]       All considered, it is my conclusion that the applicant has failed to establish that the employment of the first respondent with the second respondent, especially considering the terms she is employed under there, constitutes a breach of the applicant’s protectable interests under the restraint of trade. I therefore do not believe that prohibiting the first respondent’s current employment with the second respondent would be reasonable, as such employment, overall considered, does not constitute a violation of the applicant’s protectable interests.

 

[46]       Even though this should be the end of the enquiry, I intend to deal with the other restraint enforcement considerations as well, assuming it is said that I was mistaken in finding there was no breach of the applicant’s protectable interests under the restraint.

 

Other considerations

 

[47]       Where it comes to the quantitative and qualitative weigh off to be conducted, the Court in Plumblink SA (Pty) Ltd v Legodi and Another[31] summarized the factors to be considered, being (1) the scope and period of the restraint;[32] (2) whether the employee was possessed of the skills, expertise, qualifications and experience before joining the employer;[33] (3) the nature of the industry;[34] and (4) the ability of the employee to secure gainful employment elsewhere, It must also be considered whether the enforcement of the restraint would go further than necessary in order to protect the interests of the employer.

 

[48]       Where it comes to the nature of the industry, the applicant’s business is not unique. It has no particular modus operandae that would distinguish it from all other related businesses, which would be of value to the second respondent. There is nothing the applicant does, as a business, that the second respondent did not already do prior to its employment of the first respondent. The first respondent, as discussed above, was in any event not involved in the operational side of the business and there is not a thing she could pass on the second respondent in the form of possible product development and product composition. And added to all that, the applicant and second respondent not only use the same suppliers, but the applicant is an actual customer of the second respondent. The nature of the industry would thus be a consideration that would work in favour of the first respondent in the weigh off.

 

[49]       In the answering affidavit, the first respondent pointed out that she came into the applicant already having the necessary sales skills and experience. She states that she was not provided with any training by the applicant, and this is not disputed by the applicant. The applicant instead countered and stated that all of the first respondent’s particular experience in and knowledge of the cleaning industry in which the applicant (and the second respondent for that matter) conducted business, was because of her employment with the applicant. The difficulty with such proposition is however that the skills, experience and expertise obtained by the first respondent in this regard, through her ordinary work with the applicant, would accrue to her, and she would be entitled to deploy the same in her new position at the second respondent. It simply does not belong to the applicant. In Automotive Tooling Systems (Pty) Ltd v Wilkens and Others[35] the Court said:

 

‘In my view, the facts establish that the know-how for which the appellant seeks protection is nothing other than skills in manufacturing machines albeit it that they are specialised skills. These skills have been acquired by the first and second respondents in the course of developing their trade and do not belong to the employer - they do not constitute a proprietary interest vesting in the employer - but accrue to the first and second respondents as part of their general stock of skill and knowledge which they may not be prevented from exploiting. As such the appellant has no proprietary interest that might legitimately be protected.’

 

[50]       I am convinced that this is a case where the applicant has sought to dispense retribution for what it considered a betrayal by the first respondent resigning. In the answering affidavit, the first respondent specifically stated that she was told several times by the applicant’s proprietor, Paul Dahl, that she was making ‘a big mistake’ by resigning. This is disputed in the replying affidavit, but this is done by way of simple bald denial. I believe that applicant expressed its dissatisfaction by way of the enforcement of the restraint of trade, and this is not appropriate. As said in Labournet supra[36]: ‘… The purpose of a restraint is not to punish …’.

 

[51]       But very important in the weigh off in casu is the fact that for all intents and purposes, there is only some two months left on the restraint period. To put the first respondent out of work for two months, in the context of no evidence that the applicant actually suffered any prejudice to its business or a loss of a single customer for the period of approaching four months the first respondent spent employed with the second respondent, would simply not make sense and would in my view not be fair. In the weigh off, a proper balance must be struck, and I believe that depriving the first respondent from employment with the second respondent for two months, after she had been working there for some four months without incident to the applicant, unduly upsets this balance to the undue prejudice of the first respondent. The following dictum in the judgment of Dust A Side Partnership v Ludik and Another[37] is instructive:

 

‘In this instance, if an order of specific performance was granted it would have the effect of the first respondent having to leave the second respondent’s employment for a period of a month having been employed for three months already. I accept on the one hand that the applicant is entitled to enforce the restraint, but in deciding if it reasonable to do this now I must also consider the relative value to the applicant of removing the first respondent from the second respondent’s employment for a month at this juncture and the loss of an entire month’s income by the first respondent. My concern is that the protectable interests the applicant has are unlikely to be served at this point by neutralising the first respondent’s employment with the second respondent for the last month of the restraint. Further, any potential prejudice the applicant might suffer as a result of the first respondent’s breach of the restraint in all probability has already occurred. At this juncture, depriving the first respondent of a month’s earnings where his absence from the second respondent’s workplace is unlikely to serve the purpose of the restraint does not seem to strike a reasonable balance between the applicant’s right to enforce the agreement and the second respondent’s freedom to engage in economic activity.’

 

[52]       All said, I am of the view that the weigh off must favour the first respondent. The prejudicial consequences to her if the restraint is enforced greatly outweighs any prejudicial consequences to the applicant if it is not. Her employment with the second respondent will have no financial consequences to the applicant, whilst the first respondent will have no income for the remaining restraint period of two months.[38]

 

[53]       Where it comes to the restraint period, the first respondent had the onus to provide proper information or a factual basis upon which the restraint period would be considered to be unreasonable.[39] The first respondent did not challenge this. I am satisfied that the 6(six) months restraint period can be considered to be a short period and is reasonable. As to the restraint area, it is informed by the nature of the applicant’s business. I am satisfied that the restraint area is only limited to the area in which the applicant mainly does actual business. There is accordingly nothing unreasonable in the restraint area being designated to be for the Gauteng province.

 

[54]       Therefore, and even though the restraint period and restraint area are reasonable, the applicant has still not satisfied the requirement of the quantitative and qualitative weight off favouring it, in this instance. Such weigh off favours the first respondent, and this factor thus equally counts against enforcement of the restraint of trade.

 

Conclusion

 

[55]       In summary, the applicant has not demonstrated the existence of a clear right, despite having a legitimate and proper restraint of trade covenant and confidentiality undertaking in place with the first respondent, susceptible to being enforced. The simple reason for this is that the applicant has failed to demonstrate that any protectable interest it may have relating to confidential information and trade connections, is infringed or placed at any kind of risk, as a result of the employment of the first respondent with the second respondent. The weighing off of interests favours the first respondent and there is no intervening issue of public interest. For these reasons, the applicant would also fail to demonstrate the existence of an injury reasonably apprehended. The application must fail.

 

Costs

 

[56]       This then leaves only the issue of costs. Both parties sought costs against the other. However, and despite this position of the parties, I must nonetheless exercise the wide discretion I have in terms of section 162(1) where it comes to costs.[40] It must of course be considered that overall, the applicant was ultimately unsuccessful, and that the current dispute is principally a contract dispute, and not an LRA dispute where ordinarily costs do not follow the result.

 

[57]       The above being said, it is my view that in this case, and for the reasons to follow, no order as to costs is appropriate. I do not believe that either party acted inappropriately or unreasonably in respectively bringing and opposing this application. I also consider the first respondent’s conduct in effectively causing the postponement of the application when it was originally set down for hearing in August 2023. Fairness in this case, given the nature and circumstances of the matter in casu as a whole, dictates that no order of costs be made.[41]

 

[58]       For all the reasons as set out above, I made the order as set out in paragraph 2 of this judgment, supra.

 

_____________________

S. Snyman

Acting Judge of the Labour Court of South Africa

 

 

Appearances:

For the Applicant:              Ms C Bonsch of Higgs Attorneys   

Instructed by:                     Steenkamp & Van Niekerk Inc Attorneys

For the First Respondent: Advocate M Mpya

Instructed by:                    Mabapa Inc Attorneys

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