Case Law[2025] ZAWCHC 225South Africa
K2014266944 South Africa (Pty) Ltd t/a Hyperion Development v Govender (22420/2024) [2025] ZAWCHC 225 (23 May 2025)
High Court of South Africa (Western Cape Division)
23 May 2025
Judgment
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# South Africa: Western Cape High Court, Cape Town
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## K2014266944 South Africa (Pty) Ltd t/a Hyperion Development v Govender (22420/2024) [2025] ZAWCHC 225 (23 May 2025)
K2014266944 South Africa (Pty) Ltd t/a Hyperion Development v Govender (22420/2024) [2025] ZAWCHC 225 (23 May 2025)
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sino date 23 May 2025
SAFLII
Note:
Certain
personal/private details of parties or witnesses have been
redacted from this document in compliance with the law
and
SAFLII
Policy
FLYNOTES:
LABOUR – Restraint –
Protectable
interest
–
Respondent’s
access to confidential information – Admissions strategies,
pricing models, and student leads –
Constitutes trade
secrets and goodwill worthy of protection – Restraint’s
purpose was to prevent potential misuse
of confidential
information and not just actual misuse – No unreasonableness
in restraint’s scope or duration
– Applicant proved a
protectable interest and a breach of restraint – Final
interdict granted.
IN THE HIGH COURT OF
SOUTH AFRICA
(WESTERN CAPE
DIVISION, CAPE TOWN)
Case No: 22420/24
In
the matter between:
K2014266944
SOUTH AFRICA (PTY)
LTD
Applicant
t/a
HYPERION DEVELOPMENT
(Registration
No: 2014/266944/07)
and
SINISHEN
GOVENDER
Respondent
(ID
No: 8[…])
JUDGMENT
DELIVERED ELECTRONICALLY ON 23 MAY 2025
MANGCU-LOCKWOOD,
J
A.
INTRODUCTION & BACKGROUND
[1]
This is an application for enforcement of the terms of a restraint of
trade agreement between the applicant and the respondent.
The
applicant seeks an order interdicting the respondent from rendering
services to a company called Project Y, or any entity conducting
similar business, for a period of 12 months from the date of the
order, alternatively for a period of 12 months commencing on 10
July
2024 which was the termination date of the respondent’s
employment at the applicant.
[2]
The
applicant operates in the field of Education Technology – what
the industry calls EdTech – and provides online education
platforms for people to acquire or improve skills in various fields,
including software engineering in several programming languages
and
database frameworks. It is one of only three businesses of its size
and reach in the South African education market, the others
being Get
Smarter and Master Start.
[3]
Students
apply for admission and are accepted into the applicant’s
bootcamps, which are intensive courses. One of the vital
elements of
its business is the cultivation of relationships with these students,
from the admissions stage until after their studies,
as the students
put to use their newly acquired skills.
[4]
The
respondent commenced employment at the applicant on 1 June 2021, and
was employed as Head of Admissions, Collections and Student
Success,
which
was a senior managerial post
.
His responsibilities are described in annexure B to the employment
contract
between
the parties dated 23 April 2021
,
and were later augmented in a guidance document, which is also
attached to the papers. Amongst other things, he was tasked with
managing the admissions and setting the admissions policy, including
developing innovative student payment options such as student
loan
financing, forecasting revenue from admissions, and ensuring that the
applicant’s business to customer admission strategies
were
effective.
[5]
As
part of the management team of the applicant, the respondent was
responsible for contributing to shaping and managing the company
culture, scaling a sales team from South Africa to multiple markets,
collaborating with the CEO and management team on strategic
planning,
and refining the generation of leads and tracking processes of the
applicant.
[6]
Some
of his responsibilities included data analysis to understand
application registration flow, quality, team productivity and
conversion rates; building and maintaining strong relationships with
finance partners; staying informed about competitors in the
education
technology and higher education space; and identifying new business
opportunities in current and planned markets.
He
was also in charge of bootcamps described as Full Stack Developer and
Data Science.
[7]
On 10 April 2024, the respondent gave three months’ notice of
his
resignation, and his employment terminated on
with
effect from
10
July 2024.
It
is common cause that part of his
contract
of employment at the applicant included a restraint of trade
agreement, also dated 23 April 2021 when he started employment
there.
[8]
The
terms of the restraint are common cause.
Clause
16 precludes the respondent from seeking employment, or becoming
employed by or contracted to, any ‘
Competitor
’
of the applicant during
‘
the
Restraint Period
’
,
all of which are defined terms. A ‘Competitor’ is any
“
entity
which engages in commercial and/or economic competition with the
[applicant] with the same or similar Business as the
[applicant]
”
;
[1]
the
applicant’s ‘Business’ is defined by reference to
20 core features; and the ‘Restraint Period’
is “
a
period of twelve (12) months after the …date on which the
[applicant’s] employment with the [respondent] is
terminated
”
.
[2]
[9]
On
1 July 2024, whilst the respondent was serving his three months’
notice of termination, the applicant experienced a security
breach
targeting one of its
platforms
called
Nutshell,
a
key element to the applicant’s business which is managed by the
team that was led by the respondent. Nutshell is a system
used by the
applicant to manage leads, which are the identities and details of
students who have indicated an interest in taking
one of the courses
offered by the applicant. According to the applicant’s
investigations,
an
unauthorised user gained access to the system using the respondent’s
login details, and downloaded a file, which had previously
been
exported on 11 June 2024 by also using the respondent’s login
details.
[10]
After his resignation from the applicant, the respondent became
associated
with an entity trading under the name “
Project
Y
”. According to the respondent, Project Y is the brand
name of a German entity, Y Nation UG, that through its German
subsidiary,
SA Future Talents, funds a small number of disadvantaged,
unemployed South Africans through a model similar to an income share
arrangement.
[11]
According to the LinkedIn profile for Project Y,
the business has existed since at least October 2023, or at the
earliest, May 2023.
In the same profile, the respondent is described
as ‘Co-Founder and Chief Operations Officer’ of Project
Y, who is
a “
renowned ed tech
celebrated for his transformative impact on the educational
technology landscape. [The respondent] has played a
pivotal role in
scaling some of the industry’ most innovative companies from
startup phases to successful acquisitions...”.
On
the basis of this information the applicant states that the necessary
implication is that the respondent took an active role
in the
founding of the business whilst still employed by the applicant.
[12]
On 13 August 2024 Mr Moola of the applicant sent
an e-mail to the respondent, advising that he had become aware of his
involvement
as a co-founder of Project Y, which he regarded as a
direct competitor to some of the applicant’s business, in
contravention
of the restraint of trade, and asking him to sever his
relationship with that business.
[13]
The respondent replied on 16 August 2024, seeking
clarity regarding the alleged breach, and also requesting documents
relating to
a similar matter which was referred to in the e-mail of
Mr Moola of 13 August 2024. There was further exchange of
communication,
to and fro, from 13 August 2024 until 12 September
2024 when the applicant’s attorneys issued a letter of demand,
which elicited
more questions of clarity from the respondent. On 10
October 2024 the respondent’s attorney sent a letter to the
applicant’s
attorneys in which any alleged breach of the
restraint of trade agreement was disputed.
[14]
In all these letters the parties mentioned the
possibility of an amicable resolution of the dispute between them,
and although dates
and times for such an endeavour were proposed, no
such resolution occurred. Instead, on about 15 October 2024, the
applicant launched
these proceedings as urgent proceedings. On 30
October 2024, the matter was struck of the roll for want of urgency.
[15]
The applicant states that it has a protectable
interest that is safeguarded by the restraint provisions, which it is
seeking to
enforce, in the form of valuable and confidential
resources which, if made available to a competitor, would save the
competitor
time, money and resources and allow it a springboard to
enable it to compete faster and more effectively than would be the
case
if it did not have access to that information. And that by
working for Project Y, which is its competitor, the respondent is
engaging
in conduct which is contrary to the provisions of the
restraint agreement.
B.
THE LAW
[16]
The law regarding
restraints of trade is now reasonably settled.
[3]
Restraint of trade agreements are enforceable unless their
enforcement would be contrary to public policy.
[17]
A party seeking to
enforce a contract in restraint of trade is required only to invoke
the restraint agreement and prove a breach
thereof. Thereafter, a
party who seeks to avoid the restraint bears the onus to demonstrate,
on a balance of probabilities, that
the restraint agreement is
unenforceable because it is unreasonable.
[4]
[18]
A restraint of trade is
unreasonable if it does not protect some proprietary interest of the
person who seeks to enforce it.
[5]
There are two kinds of proprietary interest that can be protected by
a restraint of trade, namely:
a)
Relationships with customers, potential customers, suppliers and
others that make up
what is compendiously referred to as the 'trade
connections' of the business, being an important aspect of its
incorporeal property
known as ‘goodwill’;
b)
confidential
matter which is useful for the carrying on of the business and which
could therefore be used by a competitor, if disclosed
to him, to gain
a relative competitive advantage. Such confidential material is
sometimes compendiously referred to as 'trade secrets'.
[6]
[19]
Not all trade connections
are protected. It must be established as a fact that the employee has
acquired “
such
personal knowledge of and influence over the customers of his
employer… as will enable him … if competition were
allowed, to take advantage of his employer’s trade
connections
.”
[7]
[20]
Whether information
constitutes a trade secret is also a factual enquiry. For a trade
secret to constitute a protectable interest
it must meet each of the
following three requirements: (a) it must be useful in trade or
industry and not be public knowledge;
(b) it must be known only to a
restricted number of people; and (c) it must be of economic value to
the party seeking to protect
it. Evidence must be provided to
establish the existence of all three requirements.
[8]
[21]
As regards the
bona fides
of an ex-employee, the following was
stated in
Experien
South Africa
:
“
The
ex-employer seeking to enforce against his ex-employee a protectable
interest recorded in a restraint does not have to show
that the
ex-employee has in fact utilised information confidential to it: it
need merely show that the ex-employee could do so.
The very purpose
of the restraint agreement is to relieve the applicant
from having to show bona fides or lack of retained
knowledge on the
part of the respondent concerning the confidential information.
In
these circumstances, it is reasonable for the applicant to enforce
the bargain it has exacted to protect itself. Indeed, the
very ratio
underlying the bargain is that the applicant should not have to
content itself with crossing its fingers and hoping
that the
respondent would act honourably or abide by the undertakings that it
has given
.
It does not lie in the mouth of the ex-employee who has breached a
restraint agreement by taking up employment with a competitor
to say
to the ex-employer, 'Trust me, I will not breach the restraint
further than I have already been proved to have done.”'
[9]
(own emphasis)
[22]
Only once it established
that the party seeking to enforce the restraint has an interest
worthy of protection, and that the other
party is threatening that
interest, does the enquiry shift to whether enforcing the restraint
would be unreasonable.
[10]
[23]
In
Basson
v Chilwan
[11]
the Supreme Court of
Appeal set out the elements to be taken into account in determining
whether or not it is reasonable to enforce
a restraint, which are
translated as follows: (a) Is there an interest of the one party
which is deserving of protection at the
termination of the agreement?
(b) Is such interest being prejudiced by the other party? (c) If so,
does such interest so weigh
up qualitatively and quantitatively
against the interest of the latter party that the latter should not
be economically inactive
and unproductive? (d) Is there another facet
of public policy having nothing to do with the relationship between
the parties, but
which requires that the restraint should either be
maintained or rejected?
[24]
Since this is an
application for final relief, the principles established in the
matter
Plascon-Evans
Paints v Van Riebeeck Paints
[12]
are applicable concerning disputes of fact arising. That is
that a final order will be granted if those facts averred in
the
applicant’s affidavits which have been admitted by the
respondent, together with the facts alleged by the respondent,
justify an order.
[25]
It may be different if
the respondent’s version consists of bald or uncreditworthy
denials, raises fictitious disputes of
fact, is palpably implausible,
far-fetched or so clearly untenable that the court is justified in
rejecting them merely on the
papers.
[13]
The court has to accept those facts averred by applicant that were
not disputed by respondent, and respondent’s version insofar
as
it was plausible, tenable and credible.
[14]
It is otherwise undesirable to decide an application upon affidavit
where the material facts are in dispute
[15]
,
and a final interdict may be granted on application if no
bona
fide
dispute
of fact exists.
[16]
C.
DISCUSSION
[26]
The applicant states that it has a clear
contractual right enshrined in an express written agreement
containing a covenant in restraint
of trade; that the restraint of
trade provisions are not contrary to public policy, nor are they
unreasonable; and that there has
been an injury actually committed,
in the form of a breach of the agreement. Further, that it has a
well-grounded and reasonable
apprehension that it will suffer further
irreparable harm should the interdict not be granted and there is no
other effective remedy
available to it.
[27]
The respondent opposes the application on the basis, firstly that the
applicant
has failed to establish a proprietary interest that would
be protected by enforcing the restraint. In this regard, it states
that
the applicant relies on generic references to confidential
information and company strategies, without adducing any evidence of
exactly what proprietary information it says is actually in the
possession of the respondent, or of what goodwill it contends is
threatened by the respondent’s association with Project Y.
[28]
However, there are a number of averments made by the applicant in
relation to its
proprietary interest, which are not disputed in the
papers. First is the applicant’s averment that
Mr
Moola, the sole director of the applicant, has made the building of
the business of the applicant his primary responsibility
and focus
for the last 10 years, both in South Africa and in other countries
particularly the United Kingdom. It is also not disputed
that he has
spent much of that time developing products and cultivating customer
relationships; and that he has also extensively
investigated the
possibility of extending the applicant’s course offering to
cover all elements of modern business and technology.
None of this is
disputed by the respondent.
[29]
It is also common cause that a
vital element of
the applicant’s business is the cultivation of relationships
with students who are admitted into the various
bootcamps, from the
admissions stage, through during the students’ progression
during studies, and thereafter as the students
put to use their newly
acquired skills. It is not disputed that the respondent was
privy to all the admissions and student
improvement strategies
associated with such a hybrid learning product.
[30]
The respondent seeks to minimise his relatively
significant exposure and prowess in admissions and student
improvement strategies
of the applicant by stating that he was only
privy to the applicant’s admissions and student improvement
strategies until
December 2021. That, however, does not detract from
the fact of his exposure to the strategies, which are indisputably an
important
aspect of the business of the applicant.
[31]
The applicant states that the respondent was privy
to significant confidential information regarding existing student
leads and
current state of negotiations with various partners
including prospective partners. To this the respondent states he had
limited
knowledge relating to marketing and negotiations and was not
part of ‘everything’. But he does not deny that he was
privy to significant confidential information regarding existing
student leads and current state of negotiations with current and
prospective partners. In fact, it is not denied that the respondent
was tasked with various contractual obligations, which involved
confidential information.
[32]
The applicant states that, by virtue of his
position the respondent acquired an intimate and commercially
valuable understanding
of how the bootcamps are priced, sold and
delivered. Although the respondent denies that there was intimate and
commercially valuable
understanding or learning about the pricing of
bootcamps, he also states that “
at
times various members would be tasked with conducting an analysis of
past pricing and propose a new set of fees”
.
There would be no need to embark on such a task if the information
was not commercially valuable, and if it did not require intimate
understanding of the business of the applicant.
[33]
It is not denied that the respondent was involved
in all strategic planning and had access to quarterly objectives and
key results
set across the applicant’s business, which are goal
setting frameworks for the applicant. Further, that he attended
monthly
meetings known as syncs in which various company metrics were
highlighted and discussed. The syncs were conducted by using
confidential
documents containing the data of every metric that the
applicant tracks, known as strategy blueprints. It is not disputed
that
these are highly valuable to the applicant and are confidential,
and that access to them would be of extremely valuable to a
competitor.
[34]
The
respondent does not dispute the confidentiality of the documents used
at the sync meetings. He explains, however, that various
employees
were, at different stages, part of the syncs and that the information
shared was not specific only to himself or his
role at the applicant.
Even in the respondent’s version, it is not claimed that the
information used at the syncs was public
knowledge. And there is no
allegation that, by granting access to other employees, the
confidential nature of the information which
he admits, was
diminished. I do not understand the law to require confidential
information to be shared with only one individual,
in this case the
respondent, in order to meet the requirements of confidentiality set
out in
Townsend
[17]
and
Mossgas
[18]
.
There is certainly no evidence that those other employees who were
privy to the confidential information used at syncs were not
entitled
to information of a confidential nature at the applicant. There is
otherwise no dispute that the information used at those
meetings is
useful
in the industry in which the parties operate, and that it is of
economic value to the applicant.
[19]
[35]
All of the above is sufficient to conclude that the applicant has
established
a protectable interest in the form of
trade
secrets and goodwill. The next question is whether there has been a
breach of the restraint by the respondent. The main bases
on which
the respondent denies any breach is firstly that Project Y is not a
competitor of the applicant, and secondly, on the
basis of his
limited role there.
[36]
As regards the argument that Project Y is not a competitor of the
applicant,
the respondent emphasises that the business models of the
two companies are different. He emphasises that
the
applicant and its competitors in the market are providers of
Education Technology and are involved in the curation and delivery
of
academic programmes or bootcamps, which are in turn sold at a
commercial level to clientele. Further, that the applicant and
its
competitors operate by earning revenue for their bootcamps through
various payment methods, irrespective of the customers’
background. The applicant, according to him, only provides services
to those who can afford it.
[37]
By contrast, the respondent states that Project Y
is a membership platform which offers a small group of disadvantaged
youth access
to a cash stipend used for basic needs, transport,
housing, education and necessities; education should they need it;
trauma counselling,
laptops and infrastructure such as a safe working
space. It is not a coding bootcamp provider. Further, that it is an
international
project, and is not a list of the applicant’s
small list of competitors, who are named in the founding affidavit as
Master
Start and Get Smarter.
[38]
Whilst the respondent admits that Project Y
indirectly offers 3 of the 20 services defined in the restraint
clause as comprising
the ‘business’ of the applicant, he
distinguishes those three services in that they are not limited to
careers in software
development and may include any career pathway,
such as sales. Further, that Project Y aims to place its members
mainly with German
employers, and the applicant does not operate in
the German market and is only focused in the UK and South Africa.
Furthermore,
he states that, after attainment of employment by the
students, Project Y continues to support the members by providing
infrastructure
and benefits for a period of two years.
[39]
In addition to the admitted indirect overlaps above, the papers
indicate that
there are more significant overlaps between the
businesses of the applicant and Project Y.
It
is important to bear in mind that,
when
determining whether the two businesses are competitors, the relevant
question is not whether their business models or areas
of emphasis
are identical – all businesses have different business models
- but rather whether the business or services
offered by the
two are sufficiently similar to amount to a breach of the restraint
provisions.
The degree of the overlaps is
not the point, since the restraint is not aimed at the business of
Project Y but at the conduct of
the respondent.
[40]
In the restraint agreement, ‘Business’ is defined as
follows:
“
16.1.2.1
Building, supporting, and delivering mentor-led online and on-site
coding
bootcamp education;
16.1.2.2
Providing, building or supporting on-demand code review systems;
16.1.2.3
Providing or building platforms for, or supporting, online and
on-site
coding education;
16.1.2.4
Providing, building or supporting the assessment of coding, software
development or technical skills of candidates in the hiring process;
16.1.2.5
Providing, building or supporting synchronous code review systems;
16.1.2.6
Integrating Artificial Intelligence techniques to make code review
more scalable and effective in an educational context and/or for
students learning how to code;
16.1.2.7
Building course content for programmers learning mobile, web, and/or
software engineering to be delivered online or on-site in a
mentor-led manner with a human mentor;
16.1.2.8
Building course content for software development education with the
support/partnership of tech companies such as Google or Facebook;
16.1.2.9
Building both the technical and operational infrastructure to provide
review of code at scale in both an education and software development
context;
16.1.2.10
Building course platforms from both an operational and technical
perspective;
16.1.2.11
Developing mentor-led online and on-site education systems and
processes;
16.1.2.12
Integrating mentors from one relatively low cost market to support
students
in a higher income market on online or on-site education;
16.1.2.13
Supporting projects such as Jobs Fund and SDL-funded education
projects in South
Africa.
16.1.2.14
Fundraising from investors in South Africa, the US, and the UK for
the purpose
of furthering an online or on-site edtech product.
16.1.2.15
Building a community of coding education, coding mentors, and code
reviewers
in the development world to service educational needs of
students learning to code in another or the same market as the
community;
16.1.2.16
Developing a system for sourcing mentors, code reviews, and code
educators from
top technical talent in African countries;
16.1.2.17
Building free trials for coding education to be delivered on an
online education
platform;
16.1.2.18
Placing software developers and data scientists in tech roles with
companies;
16.1.2.19
Providing recruitment services to companies hiring developers;
16.1.2.20
Building and hosting an online careers platform to connect companies
with developers,
data scientists and software engineers.”
[41]
From the evidence in the papers already discussed
above, there are some overlaps in at least 7 of the above itemised
business areas
of the applicant, namely 16.1.2.1, 16.1.2.7,
16.1.2.10, 16.1.2.11, 16.1.2.13, 16.1.2.16, 16.1.2.19 and 16.1.2.20.
The overlaps between the two businesses, as
identified from the papers may be summarized as follows:
(a)
Both companies offer and deliver online learning
products to students.
(b)
They both market online learning products to
students that provide education in the field of computer technology.
(c)
They both market courses designed to upskill
learners in the fields of coding (writing programs) and other related
fields.
(d)
They both offer funding opportunities to students
who cannot afford the offered bootcamps.
(e)
They both cultivate relationships with third party
employers to provide employment opportunities to students coming out
of the offered
courses.
(f)
The courses marketed by the applicant and Project
Y are not solely digital in that both offer the interpersonal
mentorship.
[42]
The respondent emphasises the fact that Project Y
does not itself offer courses, but that they are provided by third
parties. Thus,
argues the respondent, the product offering and
business model of Project Y is materially different to the
applicant’s, whose
core focus is bootcamp training.
[43]
The
business model is not the point, because the restraint is not aimed
at Project Y. In
K2014266944
South Africa (Pty) Ltd t/a Hyperion Development v Du Plessis
[20]
,
a
matter from
this
Division
involving
the
same contract wording as in the present matter, the respondent argued
that the company he joined did not offer bootcamps itself,
but
referred students to online programs offered by a third entity
(Cambridge Spark). On this basis, the ex-employee argued that
the new
employer was not a competitor of the applicant. The court dismissed
this argument stating
inter
alia
:
“
As regards the
four courses supplied by Cambridge Spark, both Cambridge Spark and
the applicant vie for the same goal. They are
pitted against each of
the for the provision of the same courses and services. They scramble
for the same clientele. They compete…
”
[21]
[44]
The difference in business models does not mean that businesses are
not competing
for the same clientele.
The fact
that Project Y does not itself provide the education, or take part in
any designing, delivering or improving the bootcamps
itself, and
instead engages with other bootcamp providers in South Africa, must
be seen in that light. In its engagements with
those other businesses
who are the applicant’s competitors, there is an overlap in the
services provided.
[45]
The same may be said in response to the respondent’s argument
that the
mentorship provided by
Project Y relates
to life skills guidance, uplifting and motivating members, rather
than coding which is the emphasis of the applicant.
Whilst employed
by the applicant, the respondent was placed at the forefront of one
of the largest mentor-led education programmes
in the world,
including its campaigns and strategies.
[46]
It is also not disputed that school leavers are
within the catchment of Project Y, although that is not its main
focus. Nor that
its business is aimed at the South African market,
save that Project Y is aimed at individuals who are disadvantaged and
lack the
resources to become employed.
[47]
In support of their cases, both parties refer to an approach made by
the founder
of Project Y, Mr Felix Anthonj, to the applicant’s
sole director, Mr Riaz Moola, on 24 May 2023. In the email, Mr
Anthonj
wrote as follows:
“
I
am pretty much at the beginning of a new venture and also quite new
to the African startup ecosystem in general (my network is
mainly in
Germany), hence the reason for contacting you was to:
(a)
Extend my network/
meet the most successful and promising founders in Cape Town area...
(b)
Get feedback on my
new venture idea and validate my assumptions (e.g. underprivileged
talents do not have access or the necessary
funding to education
programmes such as [the applicant] or ‘ed-tech providers
such as [the applicant] happy to let
me integrate and distribute
their products to people that cannot afford it ‘free of charge’
o[r] ‘at cost’).
(c)
Pre-select potential
vendors for my ecosystem (I do not have the intention to build any of
the education services myself), but to
partner with the best service
providers available and help them grow their brand internationally,
to increase their social impact
and provide them with free leads for
cross- or upsells and access to the talent).”
[48]
On 1 June 2023 Mr Moola declined the invitation,
stating that he did not have time or incentive to assist Mr Anthonj.
In these proceedings,
he states that he declined the invitation
because he realised that Mr Anthonj's business venture, which was to
promote other companies
that offer online education, would be in
competition with the applicant, which already offered funding
services for students who
could not afford payment.
He
states that, since the e-mail of 24 May 2023 makes clear that Project
Y was considering using the applicant as a potential vendor,
it is
axiomatic that the vendor selected in its stead is in the same or
similar business.
[49]
The respondent denies that Mr Moola perceived
Project Y as a competitor, because he did not mention any such
perceived competition.
He points to the fact that Mr Moola later
reached out to Mr Anthonj on 13 August 2024, “
recalling
that we didn't have a chance to chat. I am now more open- would you
be open to a quick call to share notes?”
[50]
In a further email of 14 August 2024, Mr Moola
stated as follows: “
we've recently
raised R100 million to fund free courses for unemployed SA youth and
so let me know if you want to talk for pathways
on that as I see you
operating an ISA model which is a part of the project we've been
working on.”
According to the
respondent, the further email of 14 August 2024 should be viewed with
suspicion and should be viewed as a surreptitious
attempt to create
competition with Project Y, which did not exist. He states that the
timing of this e-mail is highly suspicious
in that, in all his years
at the applicant, there was never any project in terms of which free
courses were offered to unemployed
South Africans. In that regard the
respondent challenged the applicant to provide proof that he did
indeed receive such funding.
There is no reply to these allegations.
[51]
It is understandable that the applicant did not
reply to the challenge to provide proof of the funding. In the
answering affidavit,
the respondent states that he was ‘not
aware’ of any specific strategies aimed at fully funding
disadvantaged South
African students who could not afford to pay for
the boot camps; and he ‘has no recollection’ of any
active strategy
aimed at fully funding disadvantaged South Africans
who could not afford the boot camps; he ‘is not aware’ of
the applicant
developing any innovative student payment options”.
There is no outright denial in this regard. Given his previous
position
at the applicant, I would have expected him to have
knowledge on this issue and to be able to deny it if that was his
stance in
these proceedings. It is difficult to conclude that the
respondent’s denial in this regard is genuine or credit worthy.
[52]
As regards the perception of the approach by Mr.
Anthonj in May 2023, it is correct that Mr Moola did not decline the
invitation
on the basis of a perceived competition. And even in his
follow up e-mail in which he was now available to connect with Mr.
Anthonj,
there was no indication of any perceived competition.
However, it might be argued that, by reaching out to Mr Anthonj, he
wanted
to gain more understanding of the nature of his business so
that he could reach a conclusion in that regard. And the fact that he
did not expressly refer to perceived competition does not mean that
he did not have such perception or suspicion. The question
is whether
this issue raises a genuine dispute of fact.
[53]
I
am of the view that this issue is a red herring and does not rise to
the level of a genuine dispute of fact because, when these
emails
commenced (May 2023) on their express wording, the business of
Project Y had not yet been established. The case law indicates
that a
restraint must be determined at the time that
a
court is requested to enforce that restraint.
[22]
The
context of those emails indicates that there had been no
comprehensive discussion between Mr. Moola and Mr. Anthonj regarding
the detail of the business of Project Y, which would have caused the
applicant to approach the Court at that stage.
[54]
As for the later e-mail from Mr Moola of 13 August
2024, it was sent on the same date as the e-mail sent to the
respondent in which
his association with Project Y was referred to as
a transgression of the restraint. In the e-mail addressed to the
respondent,
Project Y was pointedly referred to as a competitor.
There is accordingly no substance to the respondent’s argument
that
the applicant did not view project Y as a competitor.
[55]
I am otherwise in agreement with the applicant’s
conclusion that,
since the e-mail of 24 May
2023 makes clear that Project Y was considering using the applicant
as a potential vendor, that the vendor
selected in its stead is in
the same or similar business as the applicant.
[56]
I am accordingly satisfied that the two businesses
are competitors as defined in clause 16.1.3 of the employment
agreement in that
they engage in commercial or economic competition
with each other and with the same or similar business.
[57]
The respondent denies being contracted or employed
by Project Y, and states that he offers
pro
bono
services to it. He states that,
contrary to what is advertised on the website of Project Y, he is not
a co-founder of the business,
and that the title was offered to him
as an honorarium. Moreover, he states that at Project Y he performs
none of the duties that
he previously performed at the applicant. He
explains that his role at project Y consists predominantly of soft
coaching with members
in need, facilitating access to counselling
services, assisting with housing disputes and building soft skills
such as business
professional English.
[58]
In answer to the various overlaps between the
businesses of the applicant and of Project
Y, some of which are not in dispute, his constant refrain is that he
performs none of
the functions that he performed whilst employed by
the applicant, and there is accordingly no danger of him
transgressing the terms
of his restraint.
[59]
What the respondent is restrained from is taking
up work, whether paid or unpaid, with a business that is a competitor
of the applicant
as defined in the common cause agreement, and which
conducts a similar business. As stated in
Experien
,
it is not necessary for the applicant to show that the respondent is
in fact sharing information of a confidential nature. It
is enough
that he can. The applicant should not have to contend with the
anxiety of whether he will act in good faith whilst in
that
environment. That was the point of the restraint agreement.
[60]
One example in this case is the fact that it is
not disputed
that he has retained contact
with the third parties
who provided funding
for the bootcamps he was responsible for, namely Stack Developer and
Data Science
,
and
that he acquired in-depth understanding and contact with them from
his work at the applicant. That experience is, no doubt,
beneficial
and valuable to Project Y.
[61]
Yet another example is the common cause fact that
he was privy to significant confidential information regarding
existing student
leads and current state of negotiations with current
and prospective partners. To this the respondent can only
retort that
he was not privy to everything.
[62]
In the same vein,
whilst
employed by the applicant, the respondent headed the admissions
department for one of the largest mentor-led education programmes
in
the world, and by virtue of that position, was placed at the
forefront of that mentor-led online learning campaign. Whilst he
states that mentors are only involved post enrolment, and that he was
not involved at that stage at all, he does not deny that
he was
exposed to, and had access to, the mentoring strategies.
[63]
It is not enough for the respondent to state that
the information he acquired is not relevant to his current role. It
is very valuable
information to the applicant which would similarly
be valuable to Project Y. Otherwise, there would be no point in
leveraging the
respondent’s experience, which is advertised in
Project Y’s website as a “
renowned
ed tech celebrated for his transformative impact on the educational
technology landscape”.
[64]
I am accordingly of the view that the applicant
has discharged the onus to establish facts necessary to establish a
breach of restraint
of trade provisions.
It
is not necessary to determine the issue of the security breach
involving Nutshell. The above-discussed issues are sufficient
to
discharge the onus placed upon the applicant. The matter is, in any
event, still under investigation, and it would not be appropriate
to
determine it in motion proceedings.
[65]
What remains for consideration is whether it would
be unreasonable to enforce the restraint, in respect of which the
respondent
bears the onus. In this regard, the respondent’s
case is mainly premised on the argument that the two companies are
not competitors.
I have already made findings in this regard.
[66]
What is more, the terms of the restraint are
common cause. There is otherwise no case made out by the respondent
that its terms
are excessively prohibitive in duration or regarding
its area of effect. Nor does the restraint of trade prohibit him from
working.
As the applicant points out, the restraint does not prohibit
the respondent from working in the field of education, in respect of
which he has qualifications and experience. It only prevents him (for
a limited time) from working for a limited set of businesses
that are
competitors of the applicant and conduct similar business. For all
these reasons, the respondent has accordingly failed
to show that the
terms of the restraint agreement are unreasonable.
[67]
In the language of an interdict, all of the above
has established that the applicant has established a clear right, and
a reasonable
apprehension of continuing harm. Furthermore, as set out
earlier, prior to the launching of these proceedings the parties
engaged
in correspondence in which mention was made of an amicable
resolution of the dispute, but that bore no fruit. There is
accordingly
no alternative remedy available to the applicant, other
than to enforce the terms of the restraint.
D.
REMEDY
[68]
Clause 16.5 of the
restraint agreement provides as follows:
“
Should
any of the provisions of this Agreement be breached by the Employee,
then the restraint period will be deemed, at the instance
and in the
discretion of the Company, to be extended by a period equal to the
period from when such a breach came to the attention
of the Company
until the date on which the Employee ceases to be in breach of this
Agreement. If the Company exercises its rights
to extend such period
as aforesaid, the provisions of this Agreement will apply mutatis
mutandis in respect of such extended period.”
[69]
In effect, clause 16.5 allows the applicant, at
its discretion to delay the start of the 12-month restraint period,
until the breach
of the agreement has been cured. Relying on that
provision, the applicant seeks an order interdicting the respondent
from continuing
to be employed or contracted with Project Y, for a
period of 12 months, commencing on the date of the order. In the
alternative,
it seeks an order interdicting the respondent from
continuing to be employed or contracted with Project Y for a period
of 12 months,
commencing 10 July 2024 ending on 10 July 2025.
[70]
Given that the respondent states he provides his
services on a
pro bono
basis,
I do not consider the scope, nature and duration of the restriction
to unduly burden his right to earn a living, or to be
against public
policy and unenforceable. The restraint of trade does not prohibit
him from working in the field of education. I
also take into
consideration that the effect of the alternative order would render
the restraint nugatory, since it would amount
to a restraint period
of approximately a month and a half.
[71]
There is otherwise no reason why costs should not
follow the result.
E.
ORDER
[72]
In the circumstances, the following order is
granted:
1.
The respondent is interdicted from rendering
services to Project Y or any entity conducting similar business, for
a period of 12
months, calculated from the date of judgment, which is
23 May 2025.
2.
The respondent is to pay the costs of this
application,
including costs of counsel,
on a party-party basis, on Scale C.
N.
MANGCU-LOCKWOOD
Judge
of the High Court
APPEARANCES
For
the applicant :
Adv. R.A.J. Acton
Instructed
by
:
M.Y.
Jamal
Larson Falconer Hassan
Parsee Attorneys
For
the respondent :
Adv S. Fuller
Instructed
by
:
J.
Henkes
Johnny Henkes &
Associates
[1]
Clause 16.1.3.
[2]
Clause 16.1.7.
[3]
See synopsis of authorities set out in
Avis
Southern Africa (Pty) Ltd and Others v Porteous and Another
2024 (2) SA 386
at [87]
to [98].
[4]
Experian
South Africa (Pty) Ltd v Haynes & Another
2013
(1) SA 135
(GSJ) at 140 F-G.
[5]
See
Basson
v Chilwan
Avis
SA
supra
at
[87] and the authorities cited therein at fn 42-44.
[6]
Experian
(supra)
at
141 A-C;
Sibex
Engineering Services (Pty) Ltd v Van Wyk and Another
1991 (2) SA 482
(T) at
502
[7]
Avis
SA
supra
at
[90], quoting
Herbert
Morris Ltd v Saxelby
[1916]
1 AC 688
(HL) at 709.
[8]
Avis
SA
supra
at
[95].
[9]
At 142 F-I.
[10]
Avis
SA
supra
at
[88].
[11]
Basson
v Chilwan & Others
[1993] ZASCA 61
;
1993
(3) SA 742
(A) at 767 G-J.
[12]
Plascon-Evans
Paints Ltd v Van Riebeeck Paints (Pty) Ltd
1984
(3) SA 623 (A).
[13]
Media
24 Books (Pty) Ltd v Oxford University Press Southern Africa (Pty)
Ltd
2017
(2) SA 1
(SCA);
National
Director of Public Prosecutions v Zuma
[2009]
2 All SA 243; 2009 (2) SA 279 (SCA).
[14]
Airports
Company South Africa Soc Ltd v Airports Bookshops (Pty) Ltd t/a
Exclusive Books
[2016]
4 All SA 665 (SCA).
[15]
Harmse
Civil
Procedure in the Supreme Court
,
B6.45.
[16]
Plascon-Evans
supra
.
[17]
Townsend
Productions (Pty) Ltd v Leech & Others
2001
(4) SA 33
(C)
at 53J-54B.
[18]
Mossgas
(Pty)
Ltd v Sasol Technology (Pty) Ltd
[1999]
3 All SA 321
(W)
at 333F.
[19]
See
Avis
SA v Potgieter
para
[94].
[20]
K2014266944
South Africa (Pty) Ltd t/a Hyperion Development v Du Plessis
(case
no 1577/23)
[21]
Para
9 of the Judgment.
[22]
Magna
Alloys and Research (SA) (Pty) Ltd v Ellis
[1984] ZASCA 116
;
1984
(4) SA 874
(A) at 894G, 896C-E, 898D.
sino noindex
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