IN THE HIGH COURT OF SOUTH AFRICA
(GAUTENG DIVISION, PRETORIA)
DELETE WHICHEVER IS NOT APPLICABLE
(1) REPORTABLE:  YES / NO.
(2) OF INTEREST TO OTHER JUDGES:  YES / NO.
(3) REVISED.

DATE                                            SIGNATURE	
Case Number:  35246/2012  
In the matter between:					DATE: 9/6/2014
MAIZEY’S (PTY) LTD           							   Plaintiff                                                              
and
ECO SIGNAGE SUPPLIES (PTY) LTD				First Defendant
MOHAMED SHIRAZ SULIMAN SHAIK                          Second Defendant
LEON NAIDOO                                                            Third Defendant
ANTONY EYBERS                                                      Fourth Defendant
DHANASAGREN GOVENDER                                          Fifth Defendant
AHMED PATEL                                                             Sixth Defendant
ZAHIR MOHAMMED RAWAT                                      Seventh Defendant

JUDGMENT

POTTERILL J

[1]	The defendant is excepting against the particulars of claim of the plaintiff.  The exception is taken on the ground that the summons does not disclose a cause of action, alternatively is vague and embarrassing.  The defendant also served an application in terms of Rule 30 setting out that the particulars of claim do not contain a clear and concise statement of the material facts upon which the plaintiff relies and/or paragraphs 27-29 fails to comply with Rule 18(10) in that it does not set out the basis of the income damages suffered and that constitutes an irregular step.

[2]	The first point raised in the exception centres around paragraph 18 of the particulars of claim.  Paragraph 18 falls under a heading which reads as follows:

“THE BREACHES OF THE DEFENDANTS’ CONTRACTUAL OBLIGATIONS AND FIDUCIARY AND DELICTUAL DUTIES

16.	While still in the employ of the Plaintiff, the Second Defendant incorporated the First Defendant and commenced conducting a competing business with the Plaintiff, utilising the Plaintiff’s customer contacts, and confidential and proprietary information.

17.	Upon the termination of the Second Defendant’s employment with the Plaintiff the Second Defendant continued to compete with the Plaintiff through the vehicle of the First Defendant, and continued to utilise the Plaintiff’s customer contacts and confidential and proprietary information.

18.	Upon the termination of the Third to Seventh Defendants’ employment with the Plaintiff, the Second Defendant employed the Third to Seventh Defendants within the First Defendant, alternatively as agents of the First Defendant, in the full knowledge that to do so would result in a breach of the surviving clauses of the Defendants’ employment contracts with the Plaintiff.  The relevant surviving clauses of the Second to Seventh Defendants’ employment contracts with the Plaintiff breached by virtue of their employment with the First Defendant are:

18.1	Clauses 12, 17 and 17.3 of ‘POC1’ in respect of the second defendant;
18.2	The clause marked ‘Confidentiality’ in ‘POC2’ and ‘POC6’ in respect of the third and seventh defendants respectively;
18.3	Clauses 26.1, 26.2, 26.3 and 24 of ‘POC3’, ‘POC4’ and ‘POC5’ in respect of the fourth, fifth and sixth defendants respectively.”

[3]	The contractual obligations of the defendants are set out from paragraphs 9 to 13 in the summons.  Paragraph 10 sets out the material express terms of “POC1” in respect of the second defendant and reads as follows:

“10.1	In the nature of the EMPLOYEE’S work, he will have access to confidential information.  The EMPLOYEE shall at all times, in accordance with the company’s ethical and professional duties, maintain such information as confidential.  More in particular, he shall not discuss any matters of clients with a third party;  (clause 12)

10.2	The EMPLOYEE may not, while in the employment of the COMPANY and for a period of 12 months after the termination of his services with the company for whatever reason:

10.2.1	have any direct or indirect (whether as director, shareholder, employee, partner, creditor or otherwise) in any partnership, business, firm or company who [sic] is directly or indirectly in competition with the COMPANY, within five (5) kilometres from any one of the branches, including any future branches.

10.2.2	solicit any customer or client of the COMPANY in the area referred to above, directly or indirectly, for any business other than the COMPANY, of which the trading activities are the same or similar to those of the COMPANY;

10.2.3	act as consultant for any business other than the COMPANY, of which the trading activities are the same or similar to those of the COMPANY.

10.3	While he is an employee of the COMPANY, or while he is in the employment of the company at any time or thereafter, disclose any information in respect of the identity of the customers or clients of the COMPANY, or their business methods or any other matter regarding the business of customers or clients or of the COMPANY itself, and shall keep same at all times confidential (except as it may be necessary to perform his duties as an employee of the COMPANY);  (clause 17)

10.4	None of the restrictions referred to above shall cease as a result of the termination of the EMPLOYEE’S shareholding or employment with the COMPANY, howsoever it may occurs [sic].  (clause 17.3)”

[4]	
4.1	The material express terms of “POC2” and “POC6” in respect of the third and seventh defendants reads as follows:

“11.1	The Employer shall not divulge any information to any unauthorized person or bodies relating to any aspect of his/her work or to any of the operations or processes of the Employer.  Such information shall include information shall include [sic] methods, processes, computer software, documentation, client lists, programmes, trade secrets, technical information, chemical formulae, drawing, financial information, or any other information which could be damaging to the Employers [sic] operations or which could benefit other parties to the detriment of the Employer.  Such restrictions shall apply during and after the Employees’ employment with the Employer.”

4.2	The material express terms of “POC3” and “POC4” in respect of the fourth and fifth defendants respectively are:

“12.1	The employee undertakes not to be engaged in the establishing of a business be it direct or indirect in competition or as a shareholder, partner, member of a Close Corporation, director of a company or in any other capacity within 1 (one) year of termination of this agreement in an area where Maizey’s (Pty) Ltd or affiliate Companies [sic] conduct their normal business;  (clause 26.1)

12.2	The employee acknowledges and agrees that the aforesaid restraint is fair, reasonable and necessary for the protection of his/her employer, his/her employers’ trade name and the goodwill attached thereto;  (clause 26.2)

12.3	Without prejudice to any other rights which the employer may have in law, the employee acknowledges that the agreed damages due to his/her employer will be an amount of R25 000-00 in respect of each calendar month during which any breach of the aforesaid restraint continues, and that the employer shall be entitled to recover such amount, and any associated recovery costs, from the employee in respect of such breach.  The above amount will escalate at the rate of 10 % for every 5 years employed by the employer or part of the 5 year period;  (clause 26.3)

12.4	The employee undertakes not to disclose any confidential information to any third party or entity during the operation of this agreement or after its termination, unless the employer specifically agrees.”

4.3	The material express terms of “POC5” in respect of the sixth defendant are, inter alia, the following:

“13.1	The employee undertakes not to be engaged in the establishing of a business be it direct or indirect in competition or as a shareholder, partner, member of a Close Corporation, director of a company or in any other capacity within 1 (one) year of termination of this agreement in an area where Maizey’s (Pty) Ltd or affiliate Companies [sic] conduct their normal business;  (clause 26.1)

13.2	The employee acknowledges and agrees that the aforesaid restraint is fair, reasonable and necessary for the protection of his/her employer, his/her employers’ trade name and the goodwill attached thereto;  (clause 26.2)

13.3	Without prejudice to any other rights which the employer may have in law, the employee acknowledges that the agreed damages due to his/her employer will be an amount of R30 000-00 in respect of each calendar month during which any breach of the aforesaid restraint continues, and that the employer shall be entitled to recover such amount, and any associated recovery costs, from the employee in respect of such breach.  The above amount will escalate at the rate of 10 % for every 5 years employed by the employer or part of the 5 year period;  (clause 26.3)

13.4	The employee undertakes not to disclose any confidential information to any third party or entity during the operation of this agreement or after its termination, unless the employer specifically agrees.”

[5]	

5.1	Paragraph 18.1 of the particulars of claim refers to the second defendant.  It sets out that the relevant surviving clauses of the third to seventh defendants’ employment contracts with the plaintiff were breached by virtue of the employment with the first defendant and specifically in breach of clauses 12, 17 and 17.3 of “POC1” pertaining to the second defendant.  The main bone of contention from the excipient is that the suggestion appears to be that the second defendant had interfered with his own contractual relations with the plaintiff;  this is nonsensical.  It is accordingly, it was argued, entirely unclear what purpose is served by references to clauses 12, 17 and 17.3 and the confidentiality clause in the second defendant’s employment contract for purposes of the cause of action pleaded in paragraph 18.  

5.2	In respect of the third and seventh defendants the confidentiality clause referred to in “POC6” simply prohibited the third and seventh defendants from disclosing the plaintiff’s confidential information to third parties.  The second defendant’s decision to employ the third and seventh defendants did not result in a breach of the confidentiality clause in the third and seventh defendants’ employment of contract and there is also no allegation to that effect.  There is nothing in the particulars of claim setting out why the second defendant through the mere employment of the third and seventh defendants interfered with the contractual relations of the plaintiff and the third and seventh defendants.  

5.3	The surviving clauses in respect of the fourth, fifth and sixth defendants read as follows:

“12.1	The employee undertakes not to be engaged in the establishing of a business be it direct or indirect in competition or as a shareholder, partner, member of a Close Corporation, director of a company or in any other capacity within 1 (one) year of termination of this agreement in an area where Maizey’s (Pty) Ltd or affiliate Companies [sic] conduct their normal business.”

These clauses, it was argued, do not prohibit the fourth to sixth defendants to take up employment as a competitor such as the first defendant nor could they preclude the second defendant acting on behalf of the first defendant from employing the fourth, fifth and sixth defendants.  From this it was argued there is no breach of the fourth to sixth defendants employment agreements with the plaintiff and accordingly no unlawful conduct on the part of the second defendant.  It was thus argued that there is no cause of action disclosed in respect of interference by the second defendant in the contractual relations of the plaintiff and the fourth to sixth defendants.  Alternatively, the pleading is vague and embarrassing because the second and fourth to sixth defendants simply do not know what case they are called upon to meet.

[6]	The plaintiff argued that the particulars of claim do set out a contractual claim if the pleading is read as a whole.  Furthermore, that the most obvious interpretation is that there was a breach of clause 26.1 which prevents employment for a period of one year after the termination of the employment with the plaintiff.  Paragraph 18 of the particulars of claim states that “Upon the termination of the Third to Seventh Defendants’ employment with the Plaintiff, the Second Defendant employed the Third to Seventh Defendants within the First Defendant”.  The most obvious interpretation is that the employment occurred on the termination of the employment with the plaintiff within one year.  Upon a reading of the particulars of claim as a whole, the termination dates of the various defendants employed with the plaintiff have been set out supporting the interpretation that employment with the first defendant was within one year.  It was furthermore argued that the arguments raised on the particulars of claim do not relate to the pleadings as a whole and would constitute a plus petitia.

[7]
7.1	Upon a perusal of paragraph 18 and it subsections I agree with the submissions of the excipient that they do net set out a cause of action or at best for the plaintiff are vague and embarrassing. Paragraph 18.1 suggests that the second defendant interfered with his own contractual relationship with the plaintiff because clauses 17 and 17.3 relate to his own restraint of trade and clause 12 to his own breach of confidentiality. The breach of these clauses in his employment contract with the plaintiff does not causally connect to the second defendant employing through the vehicle of the first defendant the third to seventh defendants.

7.2	As for the third and seventh defendants the second defendant’s decision to employ the third and seventh defendants did not result in an interference with the contractual confidential clause and relations of the plaintiff and the third and seven defendants.

7.3	Pertaining to the fourth to sixth defendants it is not averred in the particulars of claim that they engaged directly or indirectly in establishing a business or how their taking up employment with the first defendant is a breach of the fourth to sixth defendants’ employment agreements with the plaintiff.   
7.4	The court has however to be guided by the principles that the pleading must be read as whole. The excipient also has the duty to persuade the court that on every interpretation which the pleading and the documents on which it is based can reasonably bear, no cause of action is disclosed, otherwise the exception ought not to be upheld. Vagueness of a pleading relates to the pleading being meaningless or capable of more than one meaning. The excipient must be seriously prejudiced if that which is complained of is not expunged. 

7.5	This matter has a history in that an Anton Pillar order was granted against the same defendants wherein the defendants admitted having the plaintiff’s confidential information and return of the confidential information of the plaintiff was granted by agreement. It is common cause that the defendants did commence a competing business and they were interdicting from unlawfully competing with the plaintiff. The defendants accordingly intend to plead one of a tender. The tender could lead to shortening of the litigation and obviously would impact on the costs. This is accordingly not a matter where the lack of particularity  should be remedied by means of a request for further particulars for trial or by a request for discovery or inspection of documents as suggested in Jowell v Bramwell Jones and Others 1998 (1) SA 836 (W). The cause of action must set out all the necessary averments to sustain a cause of action and must not be so vague and embarrassing that a tender cannot be pleaded. The bar is not set higher due to a plea of tender, but the plaintiff must comply with the rules for pleading to enable the defendant to tender.
 
7.6	The breach of the contracts of the plaintiff by the defendants in general can sustain a cause of action. The references to certain clauses in the contract are necessary to set out what clauses in the contract was breached, but it must also bet set out how this was breached. Paragraph 18.1 suggests that the second defendant interfered with his own contractual relationship with the plaintiff which is meaningless. The second defendant’s decision to employ the third and seventh defendants did not result in an interference with the confidential clauses and relations of the plaintiff and the third and seven defendants and the averred breach is not set out in the particulars of claim; it is thus meaningless. In the particulars of claim it is not averred that the fourth to sixth defendants engaged directly or indirectly in establishing a business or how their taking up employment with the first defendant is a breach of the fourth to sixth defendants’ employment agreements with the plaintiff. On behalf of the plaintiff it was argued that upon interpretation one would deduce that they took up employment within a year after the termination of their contracts when the particulars of claim are read as a whole. The plaintiff would need to prove this fact to disclose a cause of action of a breach of the surviving clauses. The nature of the breach must not be deduced, but set out.

7.7	The remaining question is whether the defendants are prejudiced by this vagueness to make a tender in their plea. The defendants are very much alive to their contracts with the plaintiff and the surviving clauses therein.  Paragraphs 18.1, 18.2 and 18.3 read with par 18 and the other particulars of claim although vague and without particularity is in the circumstances of the case not so serious as to cause prejudice to the excipient if compelled to plead a tender. This is matter where the breach of their contractual surviving clauses is within the defendants’ own knowledge and on a breach of the contract as a cause of action they could plead a tender. 

[8]	There is also an exception against paragraphs 20, 21 and 22 of the particulars of claim which reads as follows:
“20. 	In an effort to disguise their unlawful conduct the Second to Seventh Defendants, or some of them, caused the First Defendant to place orders with the Plaintiff under fictitious names.
21.	The Second to Seventh Defendants alternatively some of them, unlawfully persuaded and sought to persuade employees of the Plaintiff to sell goods to the First Defendant at less than their usual selling price, thereby to undercut the Plaintiff, by manipulating the Plaintiff’s internal electronic pricing system. This, in turn, caused Messrs Maxwell Mntungwa and Gerhard Lewis, both of whom had been employed by the Plaintiff as salesmen, to breach their respective employment contracts with the Plaintiff subsequently resulting in their dismissal. 
22.	The defendants, alternatively some of them, and/or their agents gained, alternatively attempted to gain, access to the Plaintiff’s computer server and the confidential information contained therein.”

[9]
9.1	The excipient argued that in paragraphs 20 and 21 there is no allegation of fraud and absence such an allegation there is no basis set out why persuading the plaintiff to sell goods at less than their selling price is unlawful. Simply calling it unlawful in the pleading does not make it unlawful; a basis therefor must be pleaded. Furthermore the material facts relating to the alleged manipulation of the plaintiff’s pricing system were not pleaded at all. The plaintiff also did not plead any basis in law or fact on which the alleged breach by Messrs Mntungwa and Lewis of their employment contracts is attributable to or amounts to unlawful conduct of the second to seventh defendants.  The plaintiff has accordingly not set out a cause of action and the defendants cannot plead thereto.

9.2	It was submitted that the defendants cannot be expected to respond meaningfully to the allegations in par. 22 in the absence of any particularity as to the attempts to gain access to the plaintiff’s server. There is also no averment that this alleged conduct resulted in damage to the plaintiff and what this damage is.

[10]
10.1	On behalf of the plaintiff it was argued that the complaints pertaining to paragraphs 20 and 21 are misdirected as it can be addressed in further particulars. The particulars set out in the paragraphs smacks of unlawful behaviour. The particulars of claim must be read in light of the complaint of unlawful competition and should not be adjudicated on exception. 

10.2	Pertaining to par. 22 it was submitted that all the complaints raised hereto are all matters for the leading of evidence. The plaintiff pleaded an unauthorized attack upon its confidential information and pleaded on one or more breaches of duties that are owed and therefor the conduct complained of is unlawful. 

[11]	In court counsel for the plaintiff explained that the plaintiff would never sell to a competing company at a lower price and that is why fictitious names were used. One would then think that it would be pleaded to clarify what the unlawful competition was, if that is the cause of action.  
I cannot but agree with the excipient that paragraph 20 read with par. 19 and all the other particulars of claim is vague and embarrassing. At first blush, upon any interpretation, par. 20 and 21 read as though there   was fraud committed in the manipulating of the system and that some delictual claim is to be made out, which is not. Persuasion as a breach of contract would need further particularity to bring it within the scope of breach of fiduciary duties or contractual obligations. Persuasion per se is not unlawful and the content of paragraph 20 and 21 is vague and embarrassing. The manipulating of the system requires further particularity to render the particulars not vague and embarrassing. The exception is to be upheld because there is prejudice to the defendants to plead to such a vague and embarrassing pleading. The same applies to paragraph 22. Upon a reading of this paragraph is seems that the attempt to gain access to the computer server happened after they had left the company. Did this impact on the confidential information already obtained? What further harm was caused, if any, and how much damaged flowed from this attempt to gain or their gain? The defendants are prejudiced in having to plead to such a vague and embarrassing pleading and the exception must be upheld. 

[12]
12.1	The exception also lies against the damages claim set out in paragraphs 27-29. Paragraph 27 reads as follows:

“As a consequence of the Defendants’ breaches of their employment contracts, their fiduciary duties and their delictual duties, the Plaintiff suffered damages as set out below, and which damages flow naturally and directly from the Defendants’ breaches;-“

	There follows four subparagraphs wherein four different branches of the plaintiff is identified and wherein in three of these branches the fourth, fifth, sixth and seventh defendants were respectively employed. In another branch another employee, not one of the defendants, is identified and this employee was also dismissed. In each paragraph it is then stated that:

“… a drop in annual turnover from financial year ending 28 February 2011 to financial  year ending 28 February 2012 unrelated to any exogenous factor of ...” [–each paragraph then contained a figure.]

“28.	The drop in turnover from 28 February 2011 to 28 February 2012, after taking into account unexpended cost of sales and variable costs translates into a net loss to the Plaintiff of R3 514 028.00.”

	This is then the amount claimed jointly and severally from the defendants, one paying, the other to be absolved.

12.2	The excipient complains that the damages claim is not pleaded with the requisite particularity to assess the quantum of damages.  A claim for a loss of profit is a claim for special damages. The defendants are thus entitled to know from the pleading how the pleaded turnover and profits have been arrived at.  No account is given of the variable costs and the unexpended costs of sales. The plaintiff also did not plead the basis upon which it determined its net loss. It is thus impossible for the defendants to plead to the damages claim.

12.3	The plaintiff argued that the damages claim complied with Rule 18(10) and that the excipient requires no further particularity. It is a loss of profits claim and the defendants have been told how the amounts were arrived at. It is a decline in turnover in branches where the identified defendants worked and due to unlawful competition against the plaintiff. Expert notices and discovery will supply the particularity. The defendants have a duty themselves to work out what a reasonable assessment of the damages suffered by the plaintiff are. The damages flow naturally and directly from the defendants’ breaches.

12.4	There is no indication in the paragraphs complained of how the plaintiff’s loss of profit was calculated. It provides no account of the loss of turnover figures and the net loss of turnover figures and the relationship between these figures. There is no account of what constitutes “variable costs” or “unexpended costs of sales.” According to the particulars of claim the loss of profits is either based on breach of contract, fiduciary and or delictual duties. In the heads of the plaintiff much reliance is placed on unfair competition as a basis for the loss of profit. 

12.5	Rule 18(10) requires a claim to be set out in such a manner that the defendant can reasonably assess the quantum. In casu the defendants cannot reasonably assess the quantum. They know it is a special damages claim for loss of profit. They know it relates to loss of turnover in certain branches and the amounts thereof. They do not know what was taken into account as exogenous factors. They do not know what was seen as unexpended costs of sales or variable costs or on what basis the net loss of profit was calculated. Without any indication as what was taken into account and how the figures were arrived at the defendants cannot reasonably assess the damages as they have no means to do so. The figures are pleaded in the abstract leaving the paragraphs complained of vague and embarrassing thus prejudicing the defendants in having to tender or plead.  

[13]	I accordingly make the following order:

13.1	The exception against paragraph 18 of the particulars of claim is dismissed;
13.2	The exceptions against paragraphs 20 and 21 of the particulars of claim is upheld;
13.3	The exceptions against the damages claim as set out in paragraphs 27-29 of the claim is upheld;
13.4	The plaintiff has 30 days from this order to amend its particulars to address the complaints in the exceptions upheld.
13.5	The plaintiff is to pay the costs.

__________________
S. POTTERILL
JUDGE OF THE HIGH COURT

CASE NO:  35246/2012 

HEARD ON:    2 June 2014

FOR THE PLAINTIFF:  ADV. D. VETTEN 

INSTRUCTED BY:  Mohamed Randera & Associates, Johannesburg

FOR THE EXCIPIENT/DEFENDANT:  ADV. G.D. MARRIOTT

INSTRUCTED BY:  Adams & Adams Attorneys, Pretoria 

DATE OF JUDGMENT:    9 June 2014