Case Law[2022] ZAGPJHC 8South Africa
Africa Parts Group Holdings (Pty) Ltd and Others v Titan Auto Parts (Pty) Ltd and Others (20/39009) [2022] ZAGPJHC 8; 2022 BIP 554 (GJ) (17 January 2022)
High Court of South Africa (Gauteng Division, Johannesburg)
17 January 2022
Judgment
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# South Africa: South Gauteng High Court, Johannesburg
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## Africa Parts Group Holdings (Pty) Ltd and Others v Titan Auto Parts (Pty) Ltd and Others (20/39009) [2022] ZAGPJHC 8; 2022 BIP 554 (GJ) (17 January 2022)
Africa Parts Group Holdings (Pty) Ltd and Others v Titan Auto Parts (Pty) Ltd and Others (20/39009) [2022] ZAGPJHC 8; 2022 BIP 554 (GJ) (17 January 2022)
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sino date 17 January 2022
SAFLII
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Policy
REPUBLIC
OF SOUTH AFRICA
IN
THE HIGH COURT OF SOUTH AFRICA
GAUTENG
LOCAL DIVISION JOHANESBURG
Case No.: 20/39009
REPORTABLE:
NO
OF
INTEREST TO OTHER JUDGES: NO
REVISED.
17
January 2022
In the matter between:
AFRICA
PARTS GROUP HOLDINGS (PTY) LTD
First Applicant
(REGISTRATION NO.:
2019/022824/07)
AFRICA
PARTS GROUP (PTY)
LTD
Second Applicant
(REGISTRATION NO.:
2005/022801/07)
AFRICA
PARTS GROUP TRADING (PTY) LTD
Third Applicant
(PREVIOUSLY PARTSWORLD
(PTY) LTD)
(REGISTRATION NO.:
1995/0043114/07)
and
TITAN
AUTO PARTS (PTY) LTD
Respondent
(REGISTRATION NO.:
2006/003214/07)
TITAN
PNEUMATICS (PTY)
LTD
Second Respondent
(REGISTRATION NO.:
2019/588786/07)
CECILIA
VAN DER
VYFER
Third Respondent
(IDENTITY NO.: [....])
EUGENE
VAN DER
LITH
Fourth Respondent
(IDENTITY NO.: [....])
RUTHRAKUMARAN
(RAJAN) GOVINDEN
Fifth Respondent
(
IDENTITY NO.: [....])
TANJA VAN JAARSVELD
(IDENTITY
NO.:
[....])
Sixth Respondent
KAREN TIMMS
(IDENTITY
NO.:
[....])
Seventh Respondent
TURBO
ENVIRONMENTAL CONTROLS (PTY) LTD
Eighth Respondent
(REGISTRATION NO.:
2012/018405/07)
DAVID
WILLIAMS
Ninth Respondent
(IDENTITY NO.: [....])
JONATHAN WILLIAMS
(IDENTITY
NO.:
[....])
Tenth Respondent
JUDGMENT
SK HASSIM AJ
Introduction
1.
The papers in this case are not only
voluminous, but they are very confusing. This has greatly contributed
to the delay in finalising
the judgment. Unfortunately, I have found
the applicants’ case to lack lucidity and have found it to be
ambiguous in many
respects. It has not always been clear what is
being alleged. The applicants’ case has at times been difficult
to understand.
2.
A case must be pleaded with precision
regardless of whether it is brought on motion or by action. The
founding affidavit contains
general and sweeping statements that have
tended to obfuscate and obscure issues. The applicants seek orders
which have no factual
foundation or legal foundation and at least in
the case of prayers 1.1 and 1.4, neither. A methodical presentation
of the case
would have gone a long way to understanding the
applicants’ case. With this prelude, I turn to consider the
application.
3.
The
interdictory relief which the applicants seek in this application is
of two kinds: Prohibitory and mandatory. The main relief
in the
notice of motion is based in delict and the alternative relief is
based on a breach of contract. Both are aimed at the cessation
of
alleged unlawful competition by (i) former employees (i.e., the
second to seventh and tenth
[1]
respondents);
(ii) the employer of the former employees (i.e., the first and second
respondents); and (iii) a former customer of
the applicants (i.e.,
the eighth respondent).
4.
As
against the former employees, save for the tenth respondent, the
claim is for specific performance of contractual obligations
assumed
in contracts of employment in terms of which they undertook amongst
others to preserve the confidentiality of confidential
information
received during their employment, not to solicit or entice customers
and employees for a period of three years from
the termination of
employment, not to remove any information relating to the employer
and to return company information/documentation
or related items that
may be in their possession at the termination of employment. The
relief in this regard is set out in prayer
2 of the notice of
motion
[2]
. Therefore, the
applicants must prove the existence of the contract, the term sought
to be enforced as well as the breach thereof.
5.
The claim for the cessation of the delict
of unlawful competition is directed against all the respondents. The
relief in this regard
is set out in prayer 1 of the notice of motion.
To sustain a cause of action for unlawful competition, an applicant
must prove
that the competition is wrongful. Competition is not
wrongful
per se
.
However, in certain instances the law does not countenance
competition and renders it unlawful. There is however no closed list
of such instances. A well-known one, and one relied upon by the
applicants is the misuse of their confidential information. The
applicants must therefore amongst others prove the improper use of
the information whether as a springboard or otherwise.
6.
Additionally,
in both the claim based in contract and that based in delict, the
applicants must prove the requisites for interdictory
relief. The
applicants therefore bear the burden amongst others not only to
demonstrate that the respondents have actually committed
an injury,
or an injury is reasonably apprehended by the applicants,
[3]
but
also that the injury is a continuing one.
[4]
7.
Apart from having the burden to satisfy
these requirements, the applicants in this case face a further hurdle
because of the disputes
of fact concerning the relief claimed in
prayer 1 of the notice of motion. The applicants have to show that
the disputes of fact
were not foreseeable when the application was
instituted. For the reasons discussed later, I find that the dispute
of fact/s was
foreseeable and for that reason alone the application
for the relief in prayer 1 falls to be dismissed. Nevertheless, in
addition
to the foregoing, I am of the view that the applicants have
failed to make out a case for any of the relief sought, not that
sought
in prayer 1 or 2 of the notice of motion or in the draft
order.
The dramatis personae
and their relationships
8.
During 2005, the second applicant purchased
from Torre Parts and Components (Pty) Ltd (“
Torre
”)
a business which supplied medium technology fluid handling equipment
and service backup to the petrochemical mining and
general industries
in Southern Africa. On the version advanced in the founding
affidavit, the applicants provide, supply, market
and distribute
automotive, commercial, pneumatics and industrial parts and
components in Africa. The second and third applicants
are
subsidiaries of the first applicant and on the applicants’
version they operate as a group.
9.
The third, fourth, fifth, sixth and seventh
respondents are former employees (“
the
former employees
”) of the second
applicant. The ninth respondent is the director of the eighth
respondent, the father of the tenth respondent
and a former director
of Pneumax Southern Africa (Pty) Ltd (“
Pneumax
SA
”), whose business operations
were intertwined with that of Torre and loosely referred to in the
founding affidavit as a division
of Flowmax.
10.
The applicants describe the tenth applicant
as having been employed by them as a “
commissioned
representative
”, brought in and
managed by the fourth respondent during the former’s employment
with the applicants. While the employment
contracts with the third,
fourth, fifth, sixth and seventh respondents are attached to the
founding affidavit, none with the tenth
respondent is attached.
11.
The
tenth respondent denies that he was employed by any of the applicants
and avers that he was a freelance agent for the third
applicant,
“
brought
business to the two APG companies
[5]
”
and
earned a commission from the third applicant on orders generated by
him. According to him, he sourced products from whichever
supplier
had stock. And whether an order was placed with a supplier depended
on stock availability, how quickly the supplier was
able to deliver
the product and the price thereof.
12.
It is however common cause that the tenth
respondent’s relationship with the second applicant ended
during April 2020. And
since then, he has been involved with the
first and/or second respondents; the applicants aver that he is
employed by the first
and/or second respondent. According to the
tenth respondent he operates as an independent contractor and a
consultant to the first
and second respondents.
13.
The
former employees left the second applicant’s employ over the
period 30 September 2019—31 March 2020 and took up
employment
with the first and second respondents
[6]
.
The third respondent was appointed a director of the first respondent
on 3 September 2019 and of the second respondent on 19 November
2019.
14.
The applicants contend that the first and
second respondents’ businesses are the same as that of the
applicants and involve
the provision, supply, marketing, and
distribution of automotive, commercial, pneumatics and industrial
parts and components into
Africa. According to them, the respondents,
are in the same market as the applicants and they sell and market the
identical products
sold and marketed by the applicants.
15.
Broadly, the applicants allege that the
first to seventh respondents (i.e., the former employees) and the
tenth respondent are unlawfully
competing with them in that:
15.1.
These respondents:
15.1.1.
have attempted to solicit employees and
customers for the first and/or second respondents’ benefit;
15.1.2.
have misappropriated intellectual property,
confidential information, and trade secrets to springboard the first
and second respondents
into direct competition with the applicants
and thereby obtain an unfair and unlawful advantage;
15.1.3.
have breached the terms of their employment
contracts;
15.2.
the fourth respondent additionally:
15.2.1.
attempted to persuade suppliers not to
award exclusive distributorship to the applicants;
15.2.2.
attempted to persuade suppliers to award
exclusive distributorship agreements to the first and second
respondents and to divert
to the first and second respondents, orders
placed with the applicants;
15.2.3.
while in the second applicants’
employ, authorised credit facilities and discounts for the first and
second respondents as
well as the eighth respondent which resulted in
them receiving discounts which allowed them to undercut the prices
offered by the
second applicant to its customers.
16.
The second applicant furthermore alleges
that the former employees, or at least the fourth respondent, has
“
misappropriated
”
the distributorship agreement between the second applicant and its
supplier Pneumax-SPA.
17.
As far as the eighth respondent and ninth
respondents are concerned:
17.1.
the applicants aver that the eighth
respondent has been acquiring products at fraudulently discounted
prices from the applicants.
They allege that this enabled the eighth
respondent to undercut the applicants’ prices and unfairly
compete with them on
the same basis as the first and second
respondent. There are also allegations of collaboration with the
fourth respondent.
17.2.
It is alleged that the ninth respondent is
using the applicants’ confidential information to solicit the
second and third
applicant’s customers for the benefit of the
first and second respondents.
18.
Based on the misappropriation of
confidential information, the applicants seek in some cases vague and
wide relief for which there
exists no factual foundation. And
effectively seek to prohibit the respondents in perpetuity from
lawfully trading with the applicants.
Relevant historical
facts
Purchase of business
by the second applicant
19.
Flowmax (SA) Limited (“
Flomax
”)
was established in 1991 and conducted the business of supplying
medium technology fluid handling equipment and service
backup to the
petrochemical mining and general industries in Southern Africa.
Flowmax had four key subsidiaries of which only one
is relevant to
this application, namely Pneumax Southern Africa (Pty) Ltd (“
Pneumax
SA
”). During 2002 Flowmax sold
its business to Setpoint Group Limited (“
Setpoint
”).
During 2015 Setpoint sold the business to Torre.
20.
In May 2019, the second applicants
purchased from Torre the business which was described in the sale
agreement as “
the distribution of
quality branded parts and components into African markets”
as a going concern.
21.
The
assets which the second applicant purchased included amongst others,
contracts relating to the business which were listed in
Schedule 5
[7]
to
the sale agreement. These included contracts with sixty-four (64)
suppliers
[8]
including
contracts with the following five suppliers:
21.1.
ACL Sri Societá Unipersonale (ACL);
21.2.
Ningbo Intel-Isaiah;
21.3.
Pneumax SPA-Italy (Pneumax-SPA);
21.4.
Ningbo Xinchao Automization Component Co
Ltd (XCPX) and
21.5.
XMC Pneumatic Co Ltd (XMC) and Taiwan Pu
Corporation Ltd (TPUCO).
22.
The
second applicant alleges that it held exclusive
[9]
distribution
agreements with (i) ACL Sri Societá Unipersonale (ACL); (ii)
Ningbo Intel-Isaiah; and (iii) Pneumax-SPA. According
to the
applicants, the Schedule 5 contracts were very valuable to the second
applicant and their transfer from Torre to the second
applicant was
one of the conditions precedent to the sale agreement.
23.
The second applicant alleges furthermore
that Pneumax-SPA accounted for approximately 45% of the applicants’
annual sales
in its industrial division and was vital to their
business, that Pneumax-SPA awarded distributorship agreements for
twelve months
at a time, that the second applicant’s
distributorship agreement with Pneumax-SPA was valid until December
2019, that Flowmax,
Setpoint and Torre had held exclusive
distributorship agreements with Pneumax-SPA for repeated twelve-month
periods stretching
over thirty-two years and but for the fourth
respondent’s failure to renew the distributorship agreement,
the second applicant
would have continued to be an exclusive
distributor.
The employment of the
former employees
24.
The second applicant substituted Torre as
employer in terms of section 197 of the Labour Relations Act, Act 66
of 1995 and consequently
the employment contracts entered into by the
previous owners of the business (i.e., amongst others Flowmax and
Torre) were transferred
to the second applicant.
25.
Save for the fourth respondent, who was
employed by Flowmax, the former employees had been employed by Torre
in terms of written
contracts of employment.
26.
The third respondent, Ms Van der Vyver
commenced employment with Torre on 1 December 2017 as Category
Specialist Clutch and reported
to the fifth respondent. She resigned
on 30 September 2019, having given notice of her intention to do so
on 29 August 2019.
27.
The fourth respondent commenced employment
with Flowmax in terms of a written agreement concluded on or about 25
September 2001.
He initially held the position Product Manager -
Automation and Fluid Handling, and later the position of Head of
Sales –
Industrial General Manager – Industrial. The
fourth respondent resigned on 31 March 2020, having given notice of
his intention
to do so on 22 February 2020.
28.
The fifth respondent, Mr Govinden,
commenced employment with Torre on 1 December 2017 as Category
Manager: Brake and Transmission.
He was later appointed as General
Manager. He resigned on 30 September 2019, having given notice of his
intention to do so on or
about 1 September 2019.
29.
The sixth respondent, Ms Van Jaarsveld,
commenced employment with Torre on 6 March 2017 as Internal Sales
Team Leader for Pneumax
as well as office manager. She reported to
the fourth respondent. She resigned on 13 January 2020 having given
notice of her intention
to do so on 13 December 2019.
30.
The seventh respondent, Ms Timms, commenced
employment with Torre on 20 October 2017 as Sales
Representative-Industrial and reported
to the fourth respondent. She
resigned on 13 March 2020 having given notice of her intention to do
so on 14 February 2020.
31.
The
ninth respondent, Mr David Williams, was previously a director of
Pneumax SA, referred to in the papers as a division of Flowmax.
He is
the sole director of Turbo Environmental Control, the eighth
respondent, a former customer of the applicants
[10]
(or
the second applicant).
32.
The tenth respondent, Mr Jonathan Williams,
is the son of Mr David Williams. According to the applicants, he was
employed as “
a commissioned
representative
” at the instance
of the fourth respondent. The applicants allege that Mr Jonathan
Williams left the applicants’ employ
in April 2020. He however
claims that he was an independent contractor and not an employee.
According to the applicants he is a
member of the first and second
respondents’ development team.
33.
Clause 14 of the
employment
contracts concluded with the third, fifth, sixth and seventh
respondents provided:
“
Confidentiality
and enticement
The employee shall not
either during or after the termination of this employment contract or
any other employment contract with
the employer, divulge or
communicate any of its secrets or other confidential information
which the employee may receive or obtain
in relation to the company’s
affairs, to any third person or party.
The employee shall not
for a period of three years after the termination of this or any
other employment contract with the employer
solicit or entice any of
the company’s employees or persuade them to leave the company’s
employ. The employee shall
not entice or attempt to entice any of the
company’s customers for three years after the termination of
this or any other
employment contract with the employer.
On
termination of employment the employee will not, remove any
information related to the company in any media format. The employee
will return any company information/documentation/ and or any other
related items that he/she may have in his/her possession
.”
34.
It is common cause that the former
employees are employed by the first and/or second respondents and
have been in the first and/or
second respondents’ employ since
they terminated their employment with the second applicant.
The applicants’
case
35.
According to the applicants, the first and
second respondent carry on the same business as that of the
applicants, and they sell
and market the identical products.
36.
None of the former employees are bound to a
covenant in restraint of trade. The relief against the third, fifth,
sixth and seventh
respondent is based firstly on clause 14 of their
employment contract and secondly, on the delict of unlawful
competition due to
the misuse of confidential information. The latter
is also the basis of the claims against the remaining respondents.
37.
The applicants sought to rely on similar
provisions in the written contract of employment entered into by the
fourth respondent
on 25 September 2001. However, that employment
agreement was superseded by an agreement entered into on 17 October
2012 which did
not contain similar restrictions. The applicants’
case against the fourth respondent is based on firstly, an alleged
breach
of the fiduciary duties owed by an employee to an employer and
secondly, unlawful competition due to the delict of the misuse of
the
confidential information.
The disputes of fact
38.
The application for the oral evidence to
resolve the disputes of fact is a concession that the material facts
on which the applicants
rely for the relief in prayer 1 of the notice
of motion are disputed and that the disputes of fact are real,
genuine, and
bona fide
.
39.
The applicants elected not only to proceed
on motion, but did so for final relief. The election was made
cognisant of the possibility
of a factual dispute. This is patently
evident from the following telling statement in paragraph 124 of the
founding affidavit,
which must be read with paragraph 123:
“
123.
I submit that a case has been made out for final interdictory relief.
124. In the
alternative, and pending the resolution of any factual dispute that
may arise (none of which are presently foreseeable),
the applicant
will seek interim relief.”
40.
The disputes of fact feared by the
applicants materialised. They consequently seek a referral for the
hearing of oral evidence on
the following questions identified in the
applicants’ counsels’ heads of argument (and/or the draft
order):
40.1.
Whether
the applicants’ confidential information has been used as an
unlawful springboard,
[11]
whether
the distributorship agreement with Pneumax-SPA was
misappropriated,
[12]
and
whether the first and second respondents transacted with the
applicants at excessively reduced rates.
[13]
(The
questions for referral for the hearing of oral evidence are set out
in paragraph 4 of the draft order.)
40.2.
Whether
the fourth respondent breached his fiduciary duties to the second
applicant by processing transactions for the first and
second
respondents at excessive discounts.
[14]
40.3.
Whether
to their knowledge the eighth and ninth respondents purchased goods
at unjustifiably low rates to the detriment of the applicants.
[15]
41.
It
appears from paragraph 4 of the draft order that the relationship
between the first and second respondents and a supplier, Pneumax-SPA
(a supplier to the second applicant under an alleged distributorship
agreement), is a matter which the applicants wish to interrogate
in
cross-examination. The reason being that “
[w]hile
[the fourth respondent] is said not to be employed by the [first] or
[second respondent], it is clear that they have secured
the benefit
of this distributorship agreement (formerly de facto an exclusive
arrangement) to the detriment of the Second Applicant.
How it is that
this agreement came to fall into their laps, is not explained. Cross
examination of the respondents and evidence
of Pneumax-SPA- Italy
(under subpoena if need be) will resolve the dispute of fact…”.
[16]
42.
Paragraph 5 of the draft order identifies
the questions to be referred for the hearing of oral evidence
regarding the claims against
the eighth and ninth respondents.
43.
Looking at the disputes of facts and the
questions which the second applicant wishes to interrogate at a
hearing of oral evidence,
it is difficult to understand how a dispute
of fact was not foreseen. If a dispute of fact was not foreseen when
the application
was launched, there was no need for the statement in
paragraph 124 of the founding affidavit. The statement might have
been the
proverbial Freudian slip; especially considering that the
applicants accuse the fourth respondent and the ninth respondent of
fraud.
The alleged fraud is one of the pillars, if not the
fundamental pillar of the relief claimed against the ninth
respondent. How
the applicants could not have foreseen a dispute of
fact when fraud is alleged, is startling. This procedural lapse is
sufficient
reason to dismiss the application. There is another reason
as well, namely that the founding papers do not make out a case for
the relief sought.
The terms of the
relief sought
44.
The applicants seek the following orders in
the notice of motion:
“
1.
Interdicting, restraining and prohibiting, for a period of 5 (five)
years, calculated from such date
as this… Court may determine,
within the Republic of South Africa, any or all of the First, Second,
Third, Fourth, Fifth,
Sixth, Seventh, Eighth, Ninth and Tenth
Respondents (hereinafter collectively referred to as “the
Respondents”):
1.1
From conducting or engaging in any
similar or competing business operation as a business operation
conducted by any or all the Applicants;
1.2
From using any intellectual property
and/or trade secrets and/or know-how and/or technical information of
any or all of the Applicants,
in any manner whatsoever, including
without limitation, disclosing such matters to any person, firm or
company;
1.3
From using any information on
suppliers, customers, products, product listing and categorisation,
pricing schedules, discount structures,
costings and profit margins
(hereinafter referred to as “confidential information”),
including, without limitation,
disclosing such confidential
information to any person, firm or company;
1.4
From directly or indirectly
approaching, contacting, or communicating with any of the Applicants’
suppliers, with which any
one or all of them have or had distributor
agreements, including, but not limited to, ACL Sire Società
Unipersonale (ACL),
Ningo Intel –Isaiah, Pneumax-SPA –
Italy (Pneumax-SPA), Ningbo Xinchao Optimization Component Co Ltd
(XCPX), X M C
Pneumatic Co Ltd (X, M. C) and Taiwan PU Corporation
Ltd (TPUCO);
1.5
From directly or indirectly
approaching, contacting, or communicating with any present or past
customer of any or of all the applicants;
1.6
From directly or indirectly
approaching, contacting, or communicating with any employee of any or
of all the Applicants and/or attempting
to solicit or entice any of
the Applicants’ employees to leave the employ of the Applicants
and/or to join the First, Second
or Eighth Respondent or any other
competitor of any or all the Applicants;
2.
Alternative to paragraph 1:
2.1
With regard to the Third Respondent:
2.1.1 Directing
the Third Respondent to return any confidential information related
to the Second Applicant in any media format
that she may have in her
possession;
2.1.2
Interdicting, restraining and prohibiting the Third Respondent from
divulging or communicating any of the Second Applicant’s
confidential information which the Third Respondent may have received
or obtained in relation to the Second Applicant’s affairs,
to
any third person or party;
2.1.3
Interdicting, restraining and prohibiting the Third Respondent from
soliciting or enticing any of the Second Applicant’s
employees
or persuading them to leave the Second Applicant employ for a period
of 3 (three) years from 31 [sic] September 2019;
2.1.4 Interdicting,
restraining and prohibiting the Third Respondent from enticing or
attempting to entice any of the Second Applicant’s
employees
for a period of 3 (three) years from 31 [sic] September 2019.
2.2
With regard to the Fourth Respondent:
2.2.1 Directing
the Fourth Respondent to return all confidential information of the
Second Applicant (including books of account,
records and
correspondence concerning or containing any reference to the affairs
or business, lists of customers, and all other
documents papers [sic]
and records which may have been prepared by him or which came into
his possession in the course of his employment
with Second Applicant;
2.2.2 Directing
the Fourth Respondent to return any copies of the Second Applicant’s
documentation whatsoever;
2.2.3
Interdicting, restraining and prohibiting the Fourth Respondent from
using for his own benefit, or any other person,
or divulging or
communicating to any other person or persons, any of the secrets of
the Second Applicant or other confidential
information which he may
have received or obtained in relation to the affairs of the Second
Applicant or its customers;
2.2.4 Interdicting,
restraining and prohibiting the Fourth Respondent from, directly or
indirectly, and whether as proprietor, partner,
member of a
syndicate, or otherwise, for a period of 2 (two) years from 31 March
2020:
2.2.4.1 engaging the
services of any person who is an employee of the Second Applicant;
and/or
2.2.4.2 recommend to
any company and/or corporate entity and/or business, of which he may
be an employee, director or shareholder,
or with which she may have
any form of association whatsoever, that such company offer
employment to any person who is an employee
of the Second Applicant
and/or in any way impart to any company, and/or corporate entity
and/or business such as is referred to
in the previous subparagraph,
any knowledge acquired by him, with reference to the qualifications,
ability or character of any
person who is an employee of the Second
Applicant;
2.2.5
Interdicting, restraining and prohibiting the Fourth Respondent from,
directly or indirectly, for a period of 2 (two)
years from 31 March
2020, communicating with, soliciting or conducting negotiations with
or concluding transactions with any entity
in relation to whose
products and/or services the Second Applicant possess distribution
rights;
2.3
With regard to the Fifth Respondent:
2.3.1 Directing
the Fifth Respondent to return any confidential information related
to the Second Applicant in any media format
that he may have in his
possession
2.3.2
Interdicting, restraining and prohibiting the Fifth Respondent from
divulging or communicating any of the Second Applicant’s
secrets or other confidential information which the Fifth Respondent
may have received or obtained in relation to the Second Applicant’s
affairs, to any third person or party;
2.3.3
Interdicting, restraining and prohibiting the Fifth Respondent from
soliciting or enticing any of the Second Applicant’s
employees
or persuading them to leave the Second Applicant’s employ for a
period of 3 (three) years from 30 September 2019;
2.3.4
Interdicting, restraining and prohibiting the Fifth Respondent from
enticing or attempting to entice any of the Second
Applicant’s
customers for a period of 3 (three) years from 30 September 2019
2.4
With regard to the Sixth Respondent:
2.4.1 Directing
the Sixth Respondent to return any confidential information related
to the Second Applicant in any media format
that she may have in her
possession;
2.4.2
Interdicting, restraining and prohibiting the Sixth Respondent from
divulging or communicating any of the Second Applicant’s
secrets or other confidential information which the Sixth Respondent
may have received are obtained in relation to the Second Applicant’s
affairs, to any third person or party;
2.4.3
Interdicting, restraining and prohibiting the sixth Respondent from
soliciting or enticing any of the Second Applicant’s
employees
or persuading them to leave the Second Applicant’s employ for a
period of 3 (three) years from 13 January 2020;
2.4.4
Interdicting, restraining and prohibiting the sixth Respondent from
enticing or attempting to entice any of the Second
Applicant’s
customers for a period of 3 (three) years from 13 January 2020.
2.5
With regard to the Seventh Respondent:
2.5.1 Directing
the Seventh Respondent to return any confidential information related
to the Second Applicant in any media
format that she may have in her
possession;
2.5.2 Interdicting,
restraining and prohibiting the Seventh Respondent from divulging or
communicating any of the Second Applicant’s
secrets or other
confidential information which the Seventh Respondent may have
received or obtained in relation to the Second
Applicant’s
affairs, to any third person or party;
2.5.3
Interdicting, restraining and prohibiting the Seventh Respondent from
soliciting or enticing any of the Second Applicant’s
employees
or persuading them to leave the Second Applicant’s employ for a
period of 3 (three) years from 13 March 2020;
2.5.4
Interdicting, restraining and prohibiting the Seventh Respondent from
enticing or attempting to entice any of the Second
Applicant’s
customers for a period of 3 (three) years from 13 March 2020.”
45.
The relief against the former employees
(“
the alternative relief”
)
is claimed in the alternative to the interdict against all the
parties (“
the main relief”)
and not in addition thereto; nor is it
sought conditionally. The relief which the applicants intended
seeking at the hearing, foreshadowed
in the applicants’
counsels’ heads of argument, was not the relief claimed in the
notice of motion. It was intimated
in the heads of argument that the
applicants would seek, at the hearing, an amendment to the relief
claimed against the former
employees in that the relief against them
would no longer be sought in the alternative to the relief claimed
against all the respondents
(i.e., the main relief in prayer 1), but
in addition thereto.
46.
Faced with the dispute/s of fact the
applicants were constrained to reconsider the relief claimed in the
notice of motion.
47.
At the hearing they applied for the relief
set out in a draft order which reads as follows:
“
1.
Paragraph 2 of the Notice of Motion is amended by the deletion of the
word “alternative”
and the substitution thereof of the
words “In addition”.
2.
The First to Seventh and Tenth
Respondents are interdicted, pendente lite, from competing unlawfully
with the Applicants by utilising
the Applicants’ confidential
information.
3.
The Third, Fifth, Sixth and Seventh
Respondents are interdicted and restrained from:
3.1
divulging or communicating any of
the Second Applicant’s confidential information which they may
have received or obtained
in relation to the Second Applicant’s
business to any third party,
3.2
soliciting or enticing any of the
Second Applicant’s employees or persuading them to leave the
Second Applicant’s employ
for a period of 3 (three) years from
31 September 2019, 30 September 2019, 13 January 2020 and 13 March
2020, respectively,
3.3
enticing or attempting to entice any
of the Second Applicant’s customers for a period of 3 (three)
years from 31 September
2019, 30 September 2019, 13 January 2020 and
13 March 2020 respectively.
4.
The questions whether the First to
Seventh and Tenth Respondents have competed unlawfully with the
Applicants by making use of the
Applicants’ confidential
information and/or misappropriating its distributorship agreement
with Pneumatics SPA – Italy
and/or transacting with the
Applicants at excessively reduced rates are referred to oral evidence
in accordance with the provisions
of Uniform Rule 6(5)(g).
5.
The question whether the Eighth and
Ninth Respondents, knowingly and in collaboration with the Fourth
Respondent, bought goods from
the Applicants at excessively reduced
prices is referred to oral evidence in accordance with the provisions
of Uniform Rule 6(5)(g)
.”
48.
The consequence of the amendment is that:
48.1.
the final relief based on an employment
contract between the second applicant and the third, fifth, sixth and
seventh respondents
is claimed in addition to that based on delict,
which is claimed against all the respondents; and
48.2.
interim relief is claimed against the first
to seventh respondents (i.e., the former employees) and the tenth
respondent interdicting
them from competing unlawfully with the
applicants by utilising the applicants’ confidential
information (this is the claim
based in delict) pending the hearing
of oral evidence on the issues identified in paragraphs 4 and 5 of
the draft order.
49.
No interim relief is claimed against the
eighth and ninth respondents.
50.
Not
surprisingly, the respondents object to the amendment. I was not
addressed on the issue, but the amendment does raise in my
mind the
principle that where separate claims arise from common facts, the
litigant must choose which of the available options
it wishes to
pursue.
[17]
This
question arose in the famous case of
Lillicrap,
Wassenaar and Partners v Pilkington Brothers (SA) (Pty) Ltd
where
the plaintiff sought to enforce a contractual as well as a delictual
claim.
51.
The
relief the applicants claimed in the notice of motion was not
objectionable because it was being claimed in the alternative.
However, the amended relief seeks to enforce a contractual, as well
as a delictual, claim. In view of the order which I intend
making, it
is not necessary for me to decide the informal
[18]
application
for the amended relief. I therefore determine this application as if
the relief in prayer 2 of the notice of motion
was claimed in
addition to that in prayer 1. Because I was not addressed on the
issue, assuming in favour of the second applicant
that a contractual
claim as well as a delictual claim arising from common facts can be
enforced and that therefore the second applicant
does not have to
elect whether to pursue the contractual claim against the former
employees or the delictual claim, the issues
in my view that fall to
be resolved are set out below.
The issues
52.
A finding against an applicant on the trite
issue whether
locus standi
is
established, is dispositive of any application.
53.
The issues which arise are:
53.1.
The first and third applicants’
locus
standi;
53.2.
Has a case for interdictory relief for
unlawful competition, whether founded in contract, or delict, been
made out? Two of the questions
arising in this regard is whether the
benefits of the springboard provided to the first and second
respondents by the applicants’
alleged confidential information
has evaporated by the passage of time and whether any interdictory
relief avails the applicants
for the fourth respondent’s
failure to renew the agreement with Pneumax-SPA. Another issue is
whether the requirement of
a reasonable apprehension of harm if a
final interdict is not granted, has been met. The latter raises the
question whether a case
for continuing or repeated harm has been
established by the applicants.
53.3.
Whether the disputes of fact should be
referred for the hearing of oral evidence even though a case for
unlawful competition based
in delict has not been established by the
applicants in the affidavits.
54.
In order to determine whether the disputes
of fact relating to the relief claimed against the eighth and ninth
respondents should
be referred for the hearing of oral evidence, I
have to determine whether the applicants have made out a case for an
interdict
against these respondents. Therefore, even though the
applicants do not claim interim relief against the eighth and ninth
respondents
at this point, I must consider in relation to them the
following additional issues:
54.1.
Does the first and/or second and eighth
respondents’ purchase of heavily discounted products from the
applicants give rise
to a cause of action against it for unlawful
competition. The parties’ intention or collaboration with the
fourth respondent
has become irrelevant because the agreements with
these respondents has been cancelled by the deponent to the founding
affidavit
and in any event the person who granted the discounts,
namely the fourth respondent having left the applicants’ employ
is
no longer able to do so;
54.2.
Whether the applicants have established
that the ninth respondent is using the applicants’ confidential
information to solicit
the second and third applicants’
customers for the benefit of the first and second respondents.
55.
The requirements for an interdict are trite
and it is therefore not necessary to repeat them. The applicants must
meet all the requirements
for an interim interdict and a final
interdict, depending on the relief they seek.
The first and third
applicants’ locus standi
56.
The applicants’ entire case against
the former employees rests on the existence of an employment
relationship.
57.
The former employees’ employment was
governed by a written employment contract entered into between them
and Seapoint or Torre,
which contracts were transferred to the second
applicant in terms of section 197 of the Labour Relations Act. The
first and third
applicants do not assert that they have entered into
a written, or for that matter, any contract of employment with the
former
employees and the tenth respondent. They attempt to overcome
this hurdle by claiming that the applicants operated as a group and
that their affairs are “
intrinsically
intertwined and interrelated
.”
The fact that they have invested time, labour and money and have
acquired and developed information is irrelevant. In my
view it is
also irrelevant that the former employees may have been working, and
performing functions, for each of the applicants.
In order to catch
the third applicant into the net of an employment relationship, it is
alleged that the third applicant processes
and paid the former
employees’ salaries. The payment of a salary alone, is not an
indication of an employment relationship.
The applicants are silent
on which of the applicants exercised control over the employees;
and/or their time. This is an essential
element of an employment
relationship. In the absence of the first and second applicants
having demonstrated an employment relationship
with the former
employees, I am not persuaded that these two applicants have
locus
standi
.
58.
The averment that the former employees were
de facto
employees of all the applicants in my view is of no consequence; the
applicants rely on an employment contract, and they bear the
onus of
proving the contract and its terms. The first and third applicants
have not done so.
59.
As far as the relief claimed in prayer 1 of
the notice of motion is concerned (the case for unlawful competition
based in delict),
each of the applicants has to demonstrate that a
wrong has been committed by the respondents vis-à-vis each of
them. The
second applicant purchased the business from Torre as a
going concern and it is this business that is operating. Therefore,
the
proprietary interest in the alleged confidential information and
trade secrets rests with the second applicant. The misappropriation
of confidential information or trade secrets is actionable at the
instance of the second applicant, not the applicants. The founding
papers in my view do not contain sufficient facts from which it can
be inferred or concluded that the first and third applicants
have a
protectable interest and in any event, they do not make out a case
which of the respondents specifically have threatened
that interest.
60.
I am not satisfied that the first and third
applicants are entitled to any relief and their claims against the
respondents therefore
fall to be dismissed. In view of this finding I
will assume that the applicant seeking the relief is the second
applicant and will
refer to only it, unless there is a need to refer
to the other applicants alone or collectively with the second
applicant.
Has a case been made
out for any relief?
61.
The second applicant seeks final relief
against the third, fifth, sixth, and seventh respondents on the basis
of the alleged breach
of clause 14 of their respective employment
contracts. In this regard it seeks to interdict the former employees
from utilising
confidential information and soliciting employees and
customers of the second applicant.
62.
It
seeks interim relief against the first to seventh and the tenth
respondents pending the finalisation of the hearing of oral evidence
on factual disputes relating to the claim for unlawful competition
based in delict
[19]
against
these respondents and the eighth and ninth respondents. The wrongful
conduct upon which the delictual claim is based is
the use by the
respondents of the second applicant’s confidential information,
intellectual property and trade secrets as
a springboard for the
first and second respondent’s business and the
“
misappropriation”
of
the distributorship agreement with Pneumax-SPA. It also seeks to
protect its trade secrets and intellectual property, however
the
founding papers do not contain sufficient facts from which these
trade secrets or intellectual property can be identified,
and their
misuse inferred. The second applicant has therefore not made out a
case for the protection of trade secrets or intellectual
property.
63.
At the heart of the relief based in
contract as well as that based in delict is the question whether the
second applicant is entitled
to protect its confidential information
by way of interdictory relief. If the second applicant is not
entitled to protection of
the confidential information, be it on the
second applicant’s contractual claim or its delictual claim,
then the only other
issue will be whether the second applicant is
entitled to interdict the solicitation of its employees and
customers.
64.
The confidential information which the
second applicant seeks to protect is supplier and customer lists,
product listing and categorisation,
pricing schedules, price lists,
discount structures, costings, and profit margins, some of which
appear to me to be stored on an
electronic database called the
Customer Relationship Management System (“CRM System”)
and the Enterprise Resource System
(“ERM System”). It is
assumed in favour of the applicants that the information that the
second applicant seeks to protect
is confidential, that the second
applicant has a protectable interest, that the confidential
information which the second applicant
seeks to protect is
information which provides a springboard to a competitor and that the
confidential information has been misused.
65.
The
object of the law in affording protection for confidential
information is to protect the information being misused as a
springboard
in the case of trade rivals. An interdict against the
misuse of confidential information is to provide to the person with
the protectable
interest fair protection for the period for which the
unfair advantage may reasonably be expected to continue. The
rationale for
the protection was discussed by Broome J in
Multi
Tube Systems (Pty) Ltd v Ponting and Others:
[20]
“
The
applicant's complaint is that the respondents are abusing information
which the first respondent obtained in confidence and
it is this
abuse of confidentiality which has given the respondent an unfair and
improper headstart in their competition with the
applicant. In the
case of
Terrapin Ltd v Builders'
Supply Co (Hayes) Ltd
1960 RPC
128
ROXBURGH J said in a passage quoted with approval in the
Harvey
Tiling
and
Atlas
cases:
‘
As
I understand it, the essence of this branch of the law, whatever the
origin of it may be, is that a person who has obtained information
in
confidence is not allowed to use it as a springboard for activities
detrimental to the person who made the confidential communication,
and springboard it remains even when all the features have been
published or can be ascertained by actual inspection by any member
of
the public. Therefore, the possessor of the confidential information
still has a long start over any member of the public.’
As observed by Turner
in The Law of Trade Secrets (1962), what has to be prevented is the
recipient of the confidential information
enjoying an advantage over
the general public, and it is this initial impetus that constitutes
the advantage and that he will be
deprived of by way of interdict.
On the facts of this
case, I take the view that the benefit of the springboard or
headstart conferred by the confidential information
has probably
abated, if not completely disappeared…
…
Following the South
African cases which I have quoted above, I take the view that the
unfair advantage of the headstart or springboard
is usually of
limited duration and that there must come a time when the matters in
question are no longer secret and that an interdict
would not then be
warranted.
I agree, with respect,
with the remarks of DENNING MR in the case of
Potters-Ballotini
Ltd v Weston-Baker and Others
1977 RPC 202:
‘
...
there is the problem, which has been discussed, and much discussed of
late, of what is called the 'springboard' doctrine, whereby
it is
said that a servant of any other person who has got confidential
information ought not to save himself the time of working
it out for
himself or getting it from some other people without paying for it.
... Although a man
must not use such information as a springboard to get a start over
others, nevertheless that springboard does
not last for ever. If he
does use it, a time may come when so much has happened that he can no
longer be restrained.’
I am unable to decide
on these papers whether that time has definitely arrived. It seems
from what I have said that it probably
has. That being so, interdict
would not be an appropriate remedy at this stage.
Having
regard then to the springboard or headstart principle, I would be
disinclined to issue an interdict at this late stage.
”
66.
The
court in
Knox
D’Arcy Ltd and Others v Jamieson and Others
[21]
recognised
that the effectiveness of information which provides a springboard
“
diminishes
with the passage of time, and ultimately evaporates entirely
”.
If the effectiveness of the confidential information which the second
applicant seeks to protect has diminished or has
evaporated, then an
interdict, interim or final, is not the appropriate remedy.
[22]
67.
On the second applicant’s own version
its “
product and price-lists
contain a full and current catalogue of all the applicants’
product offerings and prices
.”
The former employees had left the second applicant’s employ by
the end of March 2020. The product and price lists
that the former
employees may have, is no longer a “
current
”
catalogue of products and prices. Additionally, the information on
the CRM and ERM Systems on the second applicant’s
own version
is updated continuously. Any confidential information that the former
employees had access to, and may still have in
their possession, has
lost its usefulness to competitors because it has become outdated by
the passage of time. Outdated information
in the hands of a
competitor is not useful to the competitor and therefore cannot cause
injury. In the circumstances interdictory
relief is not appropriate.
68.
There
is a further reason the second applicant is not entitled to
interdictory relief, final or interim. Interdictory relief is
not
aimed at addressing past wrongs
[23]
;
but to prevent future harm reasonably apprehended.
Even
if for the sake of argument I were to accept that the second
applicant has established an actual injury committed in the past,
which I am prepared to do, this does not entitle it to an interdict.
The fact that the former employees in breach of their contractual
obligations divulged confidential information, or any or all of the
respondents misused the second applicant’s confidential
information giving rise to a claim in delict, is not proof that they
will do so in the future; it is merely evidence from which
to imply
an intention to continue doing so. In
Stauffer
Chemicals Chemical Products Division of Chesebrough-Ponds (Pty) Ltd v
Monsant Company
[24]
in
the context of the infringement of a patent, Harms J (as he then was)
stated the following:
“
As
far as interdicts are concerned, the ordinary rules relating to
interdicts apply. Terrell on The Law of Patents 13th ed at 41
correctly points out that the basis of an interdict is the threat,
actual or implied, on the part of a defendant that he is about
to do
an act which is in violation of the plaintiff's right and that actual
infringement is merely evidence upon which the Court
implies an
intention to continue in the same course. I would have thought it
axiomatic that an interdict is not a remedy for past
invasions of
rights
.”
69.
The founding papers in my view do not
contain sufficient facts from which I can conclude an intention on
the part of any of the
respondents to repeat or continue to misuse
the second applicant’s confidential information. The second
applicant is accordingly
not entitled to an interdict to protect what
it claims is confidential information.
70.
I turn to the final interdict restraining
the former employees from soliciting employees and customers of the
second applicant in
breach of the terms of their employment
contracts.
71.
The
second applicant identifies three individuals
[25]
who
were approached to take up employment with the first and second
respondents. However, on the second applicant’s version
the
approach was made by the fourth respondent and the fifth respondent;
not the third, sixth or seventh respondents. In the absence
of the
second applicant having proven the breach, the second applicant is
not entitled to an interdict against these respondents.
72.
The former employees who allegedly enticed
or solicited customers (or attempted to do so), apart from the fourth
respondent, are
the fifth, sixth and seventh respondents. The second
applicant has not demonstrated that the third respondent has breached
the
contractual obligation not to entice or attempt to entice any of
the second applicant’s customers. Accordingly, the relief
in
this regard against the third respondent must fail.
73.
Regarding the alleged attempted
solicitation of employees by the fifth respondent, and the alleged
solicitation of customers by
the fifth, sixth and seventh respondent
in breach of their respective contracts of employment, I have assumed
in favour of the
second applicant that the fifth, sixth and seventh
respondents have breached the terms of their employment contracts.
However,
this alone is not sufficient for interdictory relief. The
second applicant must show a reasonable apprehension of injury. The
second
applicant cannot overcome the hurdle of establishing a
reasonable apprehension of harm if it is unable to show a continuing
breach
or a reasonable apprehension of the respondents repeating the
breaches. I consider hereunder the applicants’ averments
regarding
the breach of the former employees’ contracts of
employment.
73.1.
It is not clear precisely when the fifth
respondent approached an employee of the second applicant with a job
offer. It may have
been in January 2020 when he told the employee
that the “
business was going
under”.
73.2.
the fifth respondent attempted to solicit a
customer on 2 December 2019,
73.3.
the breach, if any by the sixth respondent,
occurred in February 2020,
73.4.
the seventh respondent is alleged to have
breached her obligation not to solicit customers with reference to
invoices sent by her
to a customer of the second applicant on 1 June
2020, 4 June 2020, 22 June 2020, 7 July 2020 and 1 October 2020.
74.
These
past breaches are “
merely
evidence upon which the Court implies an intention to continue in the
same course”
[26]
.
Again,
the founding papers in my view do not contain sufficient facts from
which I can conclude an intention on the part of the
fifth, sixth and
seventh respondents to repeat or continue to breach the undertakings
in their contracts of employment. An interdict
in these circumstances
will have no practical effect. There is also not a sufficient basis
for concluding a well-founded and reasonable
apprehension of injury
if an interdict is not granted.
75.
In my view, the second applicant has not
established continuing wrongful conduct nor that it reasonably
apprehends future breaches.
I am therefore not able to find in the
circumstances that there exists a reasonable apprehension of injury.
76.
A complaint against the eighth respondent,
apart from the misuse of confidential information and the suggested
misappropriation
of the Pneumax-SPA distributorship agreement, is
that it purchased goods from the second applicant at excessively
discounted prices.
This complaint is levelled against the first and
second respondents as well. However, the second applicant does not
disclose its
discounting structure nor provide any information from
which it can be determined that the discount was excessive. I would
have
expected the second applicant at the very least to have revealed
the percentage by which the discount exceeded the norm. I find
that
no case for excessive discounts has been made out.
77.
I have found no facts to support a case
that either the eighth or ninth respondents are using the applicants’
confidential
information, nor have I found facts which demonstrate
that either of them have solicited the second applicant’s
customers
whether for the benefit of the first and second respondents
or not.
78.
Apart from this, the purchase of products
from a supplier at excessively discounted prices does not give rise
to a cause of action
for unlawful competition. If a purchaser
succeeds in negotiating a purchase at a discount, the discount may
reduce the seller’s
profit or even cause it to suffer a loss.
However, the conduct which brings about the loss (or causes
prejudice), is not wrongful.
I accept that buying goods at a
substantial discount is an opportunity to undercut a supplier’s
prices. However, the creation
of the opportunity to undercut a
supplier is not wrongful, nor is the sale of products at prices lower
than those of the supplier
wrongful. Moreover, the conduct which
causes injury to the supplier is the sale at a discount; not the
purchase at a discount.
In my view, the loss which a supplier suffers
in these circumstances is not actionable against the purchaser.
79.
If the discounts negotiated with the fourth
respondent ought not to have been granted, then the remedy lies
against the fourth respondent
for damages. Furthermore the first and
second, and eighth respondents’ accounts have been closed by
the deponent to the founding
affidavit. The conduct sought to be
interdicted therefore cannot be repeated. On this basis alone no case
is made out for interdictory
relief against the eighth respondent.
For the same reason, the second applicant has no case against the
first and second respondent
for purchasing goods from the second
applicant at excessively reduced prices due to terms approved by the
fourth respondent; the
second applicant has also closed the first
and/or second respondent’s account. Insofar as the allegations
of collaboration
or fraud on the part of the eighth and/or ninth
respondents and the fourth respondent are concerned, the facts in the
affidavits
are insufficient to lead to such conclusion.
80.
The fourth respondent’s failure to
renew the distributorship agreement with Pneumax-SPA, according to
the second applicant
wrongfully, is a core complaint in this case.
81.
However, the Pneumax-SPA distributorship
agreement issue is fraught with problems partly caused by the manner
in which it has been
dealt with in the papers by the second
applicant. The papers are completely wanting in specificity about the
distributorship agreement.
A copy of the agreement is not attached.
It is wholly unhelpful to describe an agreement as a “distributorship
agreement”
without referring to the terms thereof.
82.
The information that is supplied about the
agreement is confusing. The second applicant describes its agreement
with Pneumax-SPA
at places in the affidavit as an “
exclusive
”
distributorship agreement and at others as a
“
distributorship agreement
”
.
It avers that Pneumax-SPA awards “
distributorship
agreements with a duration of twelve months at
a time
”
. The confusion for me is
compounded by the description in paragraph 22.3 of the applicants’
counsels’ heads of argument
(quoted in paragraph 41
above) of the distributorship agreement as “
de
facto an exclusive arrangement”
.
I do not know from the papers whether the now lapsed “
de
facto exclusive arrangement
” or
the exclusive distributorship agreement or a distributorship
(exclusive or non-exclusive) is the basis for the order
sought in
paragraph 1.4 of the notice of motion.
83.
One
of the issues
[27]
which
the second applicant wishes to interrogate in oral evidence, is
whether the first to seventh and tenth respondents have competed
unlawfully by misappropriating the distributorship agreement with
Pneumatics SPA – Italy. I do not know what the second applicant
means when it says that the distributorship agreement has been
“misappropriated”. Contracts are consensual, they cannot
be stolen. It puzzles me how the second applicant comes to seek an
order prohibiting the eighth and ninth respondents, let alone
the
other respondents, from contacting or communicating with any supplier
with whom the second applicant had or has distributorship
agreements,
which would include Pneumax-SPA, especially when no facts are averred
to support such relief. It is a quantum leap
to seek to interdict the
eighth and ninth respondent for something done by an employee or
employees of the second applicant and/or
the first and second
respondents.
84.
The second respondent may have a claim for
damages against the fourth respondent but nothing more. The second
applicant is not entitled
to any interdictory relief regarding the
distributorship agreement.
85.
I have found no facts to support a case
that the eighth and ninth respondents are using the second
applicant’s confidential
information, nor have I found facts
which demonstrate that the eighth respondent and/or the ninth
respondent have solicited customers,
or employees, whether for the
benefit of the first and second respondents or not.
86.
Apart from the question as to costs, the
last issue I must deal with is the second applicant’s
application for the referral
of factual disputes for the hearing of
oral evidence. The respondents oppose the application for the
referral of the disputes for
the hearing of oral evidence.
87.
Oral evidence is not an opportunity to an
applicant to supplement a defective case nor is it an opportunity to
embark on a fishing
expedition. If this is the litigant’s aim,
it constitutes an abuse of the court process and must not be ordered.
88.
In my view the second applicant is on a
fishing expedition for facts to support its theory of collusion and
the misappropriation
of confidential information and the Pneumax-SPA
agreement. The following statement in the applicants’ counsels’
heads
of argument leads me to this conclusion:
“
23.1
[The eighth respondent] denies any knowledge or collusion with the
[fourth respondent, but what is not explained or addressed
at all by
[the eighth respondent] or its director [the ninth respondent], is
why they never queried [the] significantly reduced
prices that there
were being offered. To their knowledge, there had been a significant
reduction in prices which they happily accepted
without demour [sic].
As against this background, their denial of any wrongdoing cannot
simply be accepted at face value and further
interrogation by means
of cross examination is warranted.”
89.
There is also another reason for refusing
to refer the disputes for the hearing of oral evidence. If there is
no case for the other
party to meet, there is no point in referring a
dispute of fact for the hearing of oral evidence.
90.
It is trite that affidavits in motion
proceedings must contain sufficient factual averments to support the
cause of action on which
the relief claimed is based. Therefore,
where an applicant seeks a referral of disputed facts for the hearing
of oral evidence,
its founding papers must contain sufficient facts
to sustain a cause of action. Conclusions are not facts. At the risk
of stating
the obvious, sufficient facts must be averred from which
the conclusion of law (or fact) necessary to sustain a cause of
action
can be drawn. I am not satisfied that the second applicant has
done so or that a cause of action avails it in law.
91.
Prayer 1.1 of the notice of motion seeks to
prevent, in perpetuity, all the respondents from conducting any
business activity in
competition with the second applicant. If
granted, the respondents will be prohibited from doing what the law
not only permits
but encourages, namely lawful competition. The
second applicant has not established a right to interdict competition
by the respondents.
92.
None of the employment contracts restrain
the former employees from trading in competition or being employed by
a competitor of
the second applicant.
93.
As far as the eighth respondent is
concerned, the second applicant concedes in the founding affidavit
that the eighth respondent’s
business differs from the second
applicant’s and that the eighth respondent does not deal
directly with the same products.
It however uses components sold by
the second applicant in its dust and emission control systems
business. In view of the concessions
and having failed to prove that
the eighth respondent’s business is similar to the second
applicant’s business and
also having failed to prove that the
eighth respondent is a competitor there is no case made out against
the eighth respondent.
Nor has the second applicant shown that the
ninth respondent is a competitor and has been unlawfully competing
with the second
applicant
94.
In prayer 1.2 of the notice of motion the
second applicant seeks to permanently interdict the respondents from
using any intellectual
property, trade secrets, know-how and/or
technical information of the second applicant. The second applicant
describes, but does
not identify, what it seeks to protect. I
therefore cannot decide whether the second applicant has a
protectable interest and whether
it warrants the protection of an
interdict.
95.
I have already discussed why the second
applicant is not entitled to protection of confidential information.
It has therefore not
made a case for the relief claimed in prayers
1.2 and 1.3 of the notice of motion.
96.
Nor has the second applicant made out a
case for the relief claimed in paragraph 1.4 of the notice of motion.
The second applicant
seeks a final interdict restraining the
respondents from “
approaching,
contacting or communicating with
”
any of the second applicant’s suppliers with whom
distributorship agreements had been concluded on or after 1 January
2018. The second applicant seeks to prohibit all the respondents in
perpetuity from approaching or communicating with suppliers
with whom
the second applicant had or has distributor agreements. The second
applicant has not identified whence the right to permanently
restrict
the respondent emanates.
97.
The effect of the interdict sought will be
that the respondents will never be free to trade with any supplier
with whom the second
applicant had or has a distributorship
agreement. But it may go wider than that: The second applicant took
over sixty-four (64)
contracts which Torre had with suppliers. Of
these, three are described in the papers as exclusive distributorship
agreements,
but the papers are silent whether the remaining sixty-one
(61) are non-exclusive distributorship agreements or simply supplier
agreements.
98.
The relief claimed in prayer 1.5 is to
restrict all the respondents in perpetuity from approaching,
contacting, or communicating
with any of the second applicant’s
present or past customers. The effect is that none of the respondents
will ever be able
to trade with the second applicant’s
customers, not even those who independently decided to terminate
their trading relationship
with the second applicant. The second
applicant has not established a right which entitles it to restrict
the respondents in this
way. In any event any general, wide or
indefinite prohibition in trading will fall foul of the Constitution
of the Republic of
South Africa, 1996.
99.
The second applicant has also not
established a right to prohibit the respondents in perpetuity from
approaching, contacting, communicating
or attempting to solicit or
entice the second applicant’s employees to leave its employ.
100.
The submissions in paragraphs 22.3.(quoted
in paragraph 41
above) and 23.1 (quoted in
paragraph 88
above) of the applicants’
counsels’ heads of argument suggest that the second applicant
wishes to use the opportunity
to lead oral evidence to supplement its
evidence in an effort to cure its failure to make out a case in its
affidavits.
101.
Rule
6(5)(g) is not a mechanism “
to
enable an applicant to amplify affidavits by additional evidence
where the affidavits themselves, even if accepted, do not make
out a
clear case, but leave the case ambiguous, uncertain, or fail to make
out a cause of action at all….”.
[28]
The
second applicant cannot present through oral evidence facts that
should have been presented in affidavits
102.
For the reasons above, I find that the
second applicant has not made out a case for the final interdict
sought in prayer 1 of the
notice of motion and a referral of disputes
of fact for the hearing of oral evidence will accordingly be
pointless.
103.
It follows thus that the application falls
to be dismissed. As far as costs are concerned there is no reason why
they should not
follow the event.
Order
In
the result the following order is made:
The application is
dismissed with costs.
_____________________________________________
S
K HASSIM AJ
Acting
Judge: Gauteng Local Division, Johannesburg
(electronic
signature appended)
17
January 2022
This
judgment was prepared and authored by the Judge whose name is
reflected and is handed down electronically by circulation to
the
parties’ legal representatives by email and by uploading it to
the electronic file of this matter on CaseLines. The date
for
hand-down is deemed to be 17 January 2022
Date
of Hearing:
7 June
2021
Date
of Judgment:
17
January 2022
Appearances:
For
the applicants:
Adv C Whitcutt SC
Adv
C de Witt
For
the respondents:
Adv W Strobl
[1]
There
is a dispute whether the tenth respondent was an employee.
[2]
At
the hearing, an amendment to the notice of motion was moved and an
order was sought by the applicants in terms of a draft order.
[3]
Cf
.
Setlogelo
v Setlogelo
1914 AD 221
at 227.
[4]
Philip
Morris Inc and Another v Marlboro Shirt Co SA Ltd and Another
1991 (2) SA 720 (A)
[5]
The
two APG companies is a reference to the second and third applicant
collectively.
[6]
The
fourth respondent denies that he is an employee of the first and
second respondents. He avers that he is a consultant to them.
[7]
The
contracts which were listed in schedule 5 included exclusive and
non-exclusive distributorship agreement and supplier agreements.
[8]
The
applicants specifically use the word “s
uppliers
”
and not the word “distributors”
[9]
`
None were attached to the papers to support the averment
notwithstanding the
respondents’ denial of the existence of
not only exclusive distributorship agreement but any distributorship
agreement.
[10]
The
applicants view themselves as one group and do not differentiate
between the various applicants.
[11]
Applicants’
HoA: para 22.2
[12]
Applicants’
HoA: para 28.1
[13]
Cf.
Applicants’ HoA: para 28.1.
[14]
Applicants’
HoA: para 22.4
[15]
Draft
order: para 5
[16]
Applicants’
HoA: para 22.3.
[17]
Spilhaus
Property Holdings (Pty) Ltd and Others v Mobile Telephone Networks
(Pty) Ltd and
Another
2019 (4) SA 406
(CC) para 38;
Lillicrap,
Wassenaar and Partners v Pilkington Brothers (SA) (Pty) Ltd
1985
(1) SA 475
(A)
.
[18]
The
applicants ought to have invoked the procedure in rule 28 of the
Uniform Rules of Court. In the event of an objection to the
amendment to the notice of motion, a formal application should have
been made for the amendment. It is inappropriate for an amendment
to
be moved for in an informal manner; a court has a discretion whether
to grant an amendment and in the absence of a proper
application, in
the event of opposition to the amendment, the application has to be
determined in a vacuum. This is highly undesirable.
[19]
i.e.,
prayer 1 of the notice of motion.
[20]
1984(3)
SA 182 (D).
[21]
1992
(3) SA 520
(W) at 528I.
[22]
Cf
.
Multi
Tube Systems (Pty) Ltd v Ponting and Others
.
[23]
Philip
Morris Inc
at
735B.
[24]
1988
(1) SA 805
(T) at 809F-G.
[25]
Johan
Mathee, the acting general manager; Rowland Dixon, employed in
internal sales; and Leigh Ann Rogers, the procurement manager.
[26]
Stauffer
Chemicals Chemical Products Division of Chesebrough-Ponds (Pty) Ltd
v Monsant Company
[27]
Draft
Order: Paragraph 4.
[28]
Hymie
Tucker Finance C0 (Pty) Ltd v Alloyex Ltd
1981(4) SA 175 (N) at 179 and the authorities referred to therein;
see also
Reymond
v Abdulnabi and Others
1985 (3) SA 348
(W)
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