THE REPUBLIC OF SOUTH AFRICA

IN THE HIGH COURT OF SOUTH AFRICA 
WESTERN CAPE HIGH COURT, CAPE TOWN

CASE NO: 10752/2011

In the matter between:
BOVIDAE INVESTMENTS (PTY) LIMITED 

HYBRICODE (PTY) LIMITED 

PWC OFFICE AUTOMATION (PTY) LIMITED 

JUST JASMINE INVESTMENTS 201 (PTY) LIMITED 

and

JUDGEMENT: 11 JUNE 2011

VELDHUIZEN J:
[1]The applicants apply for a final order, pending the advent of 25 February 2013, interdicting and restraining the respondent: 
(a) from directly or indirectly utilising, disclosing, divulging or making known the trade secrets and confidential information of the applicants;
(b) from approaching, advising or contacting in order to either directly or indirectly solicit the custom or any person or entity who was a customer with whom or to whom either on behalf of the applicants negotiations, discussions or representations were entered into or made during the period of the respondent's employ with the applicant;
(c) either directly or indirectly being employed by or having an interest in either as employee, principal, agent, worker, director, shareholder, partner, consultant, financier or advisor in or in any other like capacity in any concern or entity which carries on the same business or a business similar to or alike the business of the applicants within the exclusive area of the franchise of the applicants as depicted within the geographical boundaries of the map annexed to the Notice of Motion and which area includes the towns and suburbs reflected on the list annexed to the Notice of Motion.

[2] It is common cause that the respondent and the first applicant on 22 June 2006 entered into a written agreement in terms whereof the first applicant employed the respondent as a sales executive. The parties furthermore agree that this agreement contained a binding restraint of trade clause.

15.4.1. . . .
15.4.2. . . .

It is not disputed that the restraint is a valid one and, in my view, rightly so. It has been enforced in a number of decisions in this division.

[4] During February 2011 the applicant entered into a written agreement in terms of which it sold different parts of its business and assets to the second, third and fourth applicants. The effective date of the agreement was 1 February 2011. A portion of the business which operated in the Worcester area was sold to the second applicant. Clause 19.3.2 of this agreement states that section 197(2) of the Labour Relations Act, No 66 of 1995 applies to the contracts of employment of all employees. Ss (2) and (3) of s197 of this Act reads:
'(2)   If a transfer of a business takes place, unless otherwise in terms of subsection(6)-
(a) the new employer is automatically substituted in the place of the old employer in respect of all contracts of employment in existence immediately before the date of transfer;
(b) all the rights and obligations between the old employer and an employee at the time of the transfer continue in force as if they had been rights and obligations between the new employer and the employee;
(c) anything done before the transfer by or in relation to the old employer, including the dismissal of an employee or the commission of an unfair labour practice or act of unfair discrimination, is considered to have been done by or in relation to the new employer; and
(d) the transfer does not interrupt an employee's continuity of employment, and an employee's contract of employment continues with the new employer as if with the old employer.
(3)(a)       The new employer complies with subsection (2) if that employer employs transferred employees on terms and conditions that are on the whole not less favourable to the employees than those on which they were employed by the old employer.'

[5] The respondent left the employ of the second applicant on or about 25 February 2011. The respondent states that he has 'set up my business with a view to canvassing new business in the Boland/Overberg area.
This I do by targeting new customers currently served by other players in the market, to wit Toshiba, Xerox, Ricoh and others.' It is common cause that the players in the market mentioned by the respondent carry on the same business as the applicants and are competitors of the applicants. It is also clear that the area within which the respondent is operating falls within the area covered by the restraint of trade clause referred to above.

[6] The respondent opposes the applicants' application on the ground that the second applicant breached the agreement by requiring him to sign a new agreement which differed in material terms from those of the existing agreement and which was less favourable to him. The respondent states that towards the end of January 2011 and during February 2011 the divisional manager of the second respondent, mr Louis Botha, requested him to sign the new agreement. He was at one stage told that if he did not sign the new agreement then there would be no work for him. The respondent refused to sign the new agreement. The request was repeated on a number of subsequent occasions and the respondent steadfastly refused to sign it and eventually left the employ of the second applicant on 25 February 2011.

[7] The respondent lists a number of respects in which the proposed new agreement differed from the existing agreement which he had with the first applicant. He states as follows:
'27. I point out the following fundamental distinctions between the First Applicant's contract and that of the Second Applicant:
27.1. Clause 6.4 of the Second Applicant's contract makes provision for the deduction of monies from my salary, which is not contained in the First Applicant's contract.
27.2. In terms of the Second Applicant's contract I was to be appointed in terms of a probationary period of 3 months from signature of the new contract, whereas in terms of the First Applicant's contract I had served for a period of 6 years and had long moved past the probationary period. This meant that the Second Applicant did not recognise my years of service with the First Applicant.
27.3. During the probationary period, a short notice period applied.

[8] Mr Louis Pieter Botha, on behalf of the second applicant, denied that the second applicant's contract of employment differed in material respect from that of the first applicant. He states:
'2.2.2   ... I notice that the Respondent has conveniently omitted to include in his answering papers the content of a further email I sent to the Respondent that same day. I attach hereto as annexure "LB 7" an email I sent to the Respondent on 28 January 2011 wherein I offered the Respondent a position as team leader. This would be a promotion for the Respondent and a promotion which would be accompanied with a more lucrative salary.' He goes on to state that all employees knew that commission structures change regularly without consulting them and that this depends on various factors such as the increase in productivity, the increase in sales, staff morale and external factors. He denies that there was any obligation on the first applicant to consult the respondent before amending the commission structure. He submits that the respondent would in any event, on the whole, have been in a better position if he had signed the second applicant's agreement than he was whilst in the employ of the first applicant.

[9] I am prepared to accept that the second agreement differs in some respects from the respondent service agreement with the first applicant. It is submitted that the second applicant acted in breach of the respondent's contract with the first applicant and that the second applicant adopted an unfair labour practice. It is further submitted that the applicants, having wrongfully caused the termination of the agreement, should not be allowed to rely upon the continued existence of a restraint of trade clause contained in the agreement. This is really the only issue which I need to decide.

For the purpose of the present case it is unnecessary to go further than to decide that the rule can have no application in such a case. Whether there is room for the application of the rule in the absence of such a provision in the restraint clause is a question which need not be decided at this stage and I accordingly refrain from doing so.' (pp 774 I - 775 A).

[15] Contracts of employment can come to an end in any of a number of ways: firstly the contract may be for a fixed period and its time has run out; secondly the parties may, in terms of the contract, give notice of termination; thirdly the parties may mutually agree to end the agreement; fourthly the employee may breach the agreement; and in the last instance the employer may breach the agreement. It is clear that a valid restraint of trade provision in such a contract will, in the absence of a severance agreement to the contrary, be enforceable in the first four instances mentioned. Whatever form the termination may take the employer's need for protection remains after the contract has come to an end.

[16] In the result I conclude that the applicants are entitled to the relief sought and I grant an order in terms of prayers 2.1 and 2.2 of the Notice of Motion . The respondent is ordered to pay the applicants' costs of suit.