IN THE HIGH COURT OF SOUTH AFRICA (EAST LONDON CIRCUIT LOCAL DIVISION)

Transcription

1 1 IN THE HIGH COURT OF SOUTH AFRICA (EAST LONDON CIRCUIT LOCAL DIVISION) Case Nos: EL 526/2010 ECD 1123/10 Date Heard: 10/8/10 Date Delivered: 24/8/10 Not Reportable In the matter between: MARETHA BERGH N.O. PAUL BERGH N.O. First Applicant Second Applicant and BIANCA VAN DER VYVER TARRYN JAY HALL First Respondent Second Respondent When the respondents left the employ of the applicants as beauty therapists they set up a business in opposition to the applicants. Restraints of trade that had been part of their employment contracts prohibited them from doing so. The applicants sought to enforce the restraints of trade. It was held that the restraints were not void for vagueness as had been argued by the respondents, that the respondents had contacted clients of the applicants with a view to enticing them away from the applicants business to their business, that the applicants trade connections constituted a protectable interest and that the restraints were reasonable as to their nature, duration and extent. The respondents were accordingly interdicted from carrying on business in opposition to the applicants in terms of the restraints of trade that they had agreed to.

2 2 JUDGMENT PLASKET, J [1] When the respondents both qualified beauty therapists took up employment in the applicants firm, which trades under the name of the Health and Skin Care Clinic, they bound themselves to restraints of trade. They have now left the employ of the applicants and started their own business, Stay Beautiful Beauty Salon. [2] As a result, the applicants launched an urgent application in which they sought to hold the respondents to the restraints of trade that they had agreed to by interdicting them from continuing to run their business. The issues having been fully canvassed in the papers, Mr De La Harpe, who appears for the applicant, and Mr Cole, who appears for the respondent, are in agreement that, despite a rule nisi being sought in the Notice of Motion, I should determine whether final relief ought to be granted. [3] Before turning to the facts and the issues that arise from them, it is necessary first to set out the basic legal principles applicable to disputes concerning agreements in restraint of trade. [A] THE LEGAL PRINCIPLES [4] Despite there having been a lack of clarity at one stage as to how agreements in restraint of trade should be treated, 1 the Appellate Division decided in Magna Alloys and Research (SA) (Pty) Ltd v Ellis 2 that, in South African law, an 1 See a discussion of the debates current at the time, Du Plessis and Davis Restraints of Trade and Public Policy (1984) 101 SALJ (4) SA 874 (A), 891A-C.

3 3 agreement in restraint of trade is, on the face of it, valid and hence enforceable and will only be invalid and unenforceable if it is contrary to public policy on account of it unreasonably restricting a person s right to trade or to work. Magna Alloys has been described by Christie as a landmark, and he says that [n]o dispute about the enforceability of a contract in restraint of trade can now be decided without reference to the principles it lays down. 3 [5] In arriving at the conclusion that agreements in restraint of trade are prima facie valid, Magna Alloys rejected the English law approach, which had been applied in some South African cases, that agreements in restraint of trace are prima facie against public policy and are therefore presumed to be invalid and unenforceable. 4 [6] The result of Magna Alloys (and subsequent judgments) was summarised by Didcott J in J Louw and Co (Pty) Ltd v Richter and others 5 as follows: Covenants in restraint of trade are valid. Like all other contractual stipulations, however, they are unenforceable when, and to the extent that, their enforcement would be contrary to public policy. It is against public policy to enforce a covenant which is unreasonable, one which unreasonably restricts the covenantor s freedom to trade or to work. In so far as it has that effect, the covenant will not therefore be enforced. Whether it is indeed unreasonable must be determined with reference to the circumstances of the case. Such circumstances are not limited to those that existed when the parties entered into the covenant. Account must also be taken of what has happened since then and, in particular, of the situation prevailing at the time enforcement is sought. [7] Magna Alloys also determined the incidence of the onus when it is alleged 3 The Law of Contract in South Africa (5 ed) Durban, LexisNexis: 2006, See, for instance, Nordenfelt v Maxim Nordenfelt Guns and Ammunition Co Ltd [1884] AC 535 (HL), (2) SA 237 (N), 243B-D.

4 4 that an agreement in restraint of trade is unreasonable: as with any other agreement, when a party to an agreement in restraint of trade attacks its validity, he or she bears the onus of establishing that it is unreasonable. 6 [8] In determining the reasonableness or otherwise of agreements in restraint of trade two competing policy considerations come into play and have to be balanced in the light of the particular circumstances of the case. The first is that it is in the public interest that people should be held to their agreements. The second is that it is also in the public interest that people should be free to engage in economic activity. 7 The Constitution now protects the right to choose a trade, occupation or profession freely. 8 It has been held, however, that the common law rules relating to restraints of trade are not unconstitutional. 9 The effect of the Constitution on the common law rules of restraint of trade was summarised by Kroon J in MMA Security Services CC and another v Callanan and another 10 when he stated that when a court considers whether to enforce a restraint of trade it is required to exercise a value judgment on its assessment of the facts seen in the light of both common law principles as well as constitutional values (the first essentially embodied in the maxim pacta servanda sunt, the second essentially reflected in the provision in s 22 of the Constitution that every citizen has the right freely to choose his occupation). [9] Guidance on how to approach this value judgment is to be found in the judgments of the Appellate Division, in Basson v Chilwan and others 11 and of the Supreme Court of Appeal, as it became, in Reddy v Siemens Telecommunications (Pty) Ltd. 12 In the latter case, Malan AJA endorsed the approach adopted in Basson but added a gloss to it in order to bring it into line 6 Magna Alloys, 893C-G. 7 Magna Alloys, 893H-C. 8 Constitution, s Knox D Arcy Ltd and another v Shaw and another 1996 (2) SA 651 (W), 660I-661A; Fidelity Guards Holdings (Pty) Ltd t/a Fidelity Guards v Pearmain 2001 (2) SA 853 (SE), 862B-F. 10 ECP 31 May 2010 (case no. 495/10) unreported, para (3) SA 742 (A) (2) SA 486 (SCA).

5 5 with the Constitution s method for determining whether infringements of rights are reasonable and justifiable. He held, in the first place: 13 In applying these two principal considerations, the particular interests must be examined. A restraint would be unenforceable if it prevents a party after termination of his or her employment from partaking in trade or commerce without a corresponding interest of the other party deserving of protection. Such a restraint is not in the public interest. Moreover, a restraint which is reasonable as between the parties may for some other reason be contrary to the public interest. In Basson v Chilwan and Others, Nienaber JA identified four questions that should be asked when considering the reasonableness of a restraint: (a) Does the one party have an interest that deserves protection after termination of the agreement? (b) If so, is that interest threatened by the other party? (c) In that case, does such interest weigh qualitatively and quantitatively against the interest of the other party not to be economically inactive and unproductive? (d) Is there an aspect of public policy having nothing to do with the relationship between the parties that requires that the restraint be maintained or rejected? Where the interest of the party sought to be restrained weighs more than the interest to be protected, the restraint is unreasonable and consequently unenforceable. The enquiry which is undertaken at the time of enforcement covers a wide field and includes the nature, extent and duration of the restraint and factors peculiar to the parties and their respective bargaining powers and interests. Secondly, he stated that in order to properly reflect s 36 of the Constitution in cases involving restraints of trade, a fifth question had to be asked, namely whether the restraint goes further than necessary to protect the interest. 14 [B] THE FACTS 13 Para Para 17.

6 6 [10] A number of important facts are either common cause or are not disputed. I shall set these out first before dealing with the disputed facts. [11] The applicants are the trustees of the Health and Skin Care Trust which, as stated above, trades under the name of Health and Skin Care Clinic. It does so at two premises 9 Surrey Road, Vincent and Shop UG03, Hemmingway s Mall, corner of Western Avenue and Two Rivers Road, both in East London. These two undertakings are beauty salons which offer a wide range of products and services to members of the public. [12] On 21 and 22 July 2009, the respondents concluded written agreements of employment with the applicants. Initially, the first respondent was employed as a receptionist and telephonist. On 9 December 2009, she entered into a new contract of employment. She was employed, in terms of this agreement, as a somatologist and nail technician, 15 the same position that the second respondent held. [13] Clause 13 of the contracts of employment is the provision that is relevant to this matter. It states: The employee undertakes to keep confidential and not disclose any of the salon s trade secrets, confidential documentation, technical know-how and data, trade agreements, systems, chemical formulae, methods, software, processes, client lists, programs, marketing, technological information and/or financial information and/or other confidential information, other than to persons employed or authorized by the employer who are required to know such information for the purposes of their employment and/or association with the salon, both during the continuance of employment hereunder or thereafter. 15 The Concise Oxford Dictionary does not contain the word somatologist. It defines the word somatic as relating to the body especially, as distinct from the mind. The respondents refer to themselves as therapists.

7 7 The employer and the employee also agree that the employee will not directly or indirectly work in opposition with the employer for a period of 12 months after termination of work within a 50 km radius. [14] It is not disputed that the respondents signed the contracts of employment and, in so doing, bound themselves to clause 13. (In the papers, it is suggested at some length that the contracts of employment were, in their entirety, invalid but this argument was, wisely, abandoned by Mr Cole.) [15] On or before 2 May 2010, the respondents sought and obtained an opinion from one Conrad Winterbach, who described himself as a paralegal, on the validity of clause 13 of their contracts of employment. He stated in an to the first respondent that was dated 2 May 2010 that he had studied the document that governs your conditions of employ (sic) in your present company. His advice was that the agreement in restraint of trade was not enforceable, stating by way of conclusion: I would be most surprise if any legal practitioner, who has his client s best interest in mind, would even entertain an action to impose a restraint of trade condition in your case. Only in cases where the employee is poorly informed and economically incapable of defending themselves, are these clauses applied, and then only to intimidate the employee into unnecessary decisions. You are neither poorly informed, nor incapable of adequate defence. [16] On the following day the respondents resigned from their employment with the applicants. The first respondent ended her letter of resignation by thanking the first applicant vir alles gedurende die nege maande wat ek hier gewerk het. She said that she had learnt a lot and had enjoyed the experience, but that she now had to move on ( moet nou aan beweeg ). The resignation letter of the second respondent took a similar form. She said that she would like to say a very big thank you for the nine months I have worked here and that she had

8 8 enjoyed it. She concluded by saying: I just feel in life everyone is given an opportunity to move forward and better themselves. [17] When the respondents resigned they told the first applicant that they had obtained an opinion to the effect that clause 13 was unenforceable. They also gave her a copy of the opinion. [18] By 18 May 2010, the respondents had placed a signboard displaying the name of their business on their premises at 59 Pearce Street, Berea, East London. They have since commenced trading for their own account from these premises. [19] It is not denied that the premises at which the respondents trade is within 50 kilometres of the two premises at which the applicants trade. It cannot be disputed that, as both the applicants and respondents run beauty salons, they are in direct competition with each other. [20] Certain facts are in dispute. The respondents deny that they acquired any of the information that is protected by the first paragraph of clause 13, namely trade secrets, confidential documentation, technical know-how and data, trade agreements, systems, chemical formulae, methods, software, processes, client lists, programs, marketing, technological information and/or financial information and/or other confidential information. [21] Paragraph 2.2 of the Notice of Motion seeks an interdict prohibiting the respondents from disclosing this information but, given the obvious difficulties of enforcement and the overarching relief envisaged by paragraph 2.1 of the Notice of Motion, Mr De La Harpe decided during argument that he no longer sought an order in terms of paragraph 2.2: paragraph 2.1 would, he believed, afford the applicants adequate protection. He submitted that the applicants were entitled to an order in terms of paragraph 2.1 because the facts that I should accept

9 9 establish that the respondents must have taken the applicants client lists and that they tried to entice some of them to their new business. [C] THE ISSUES [22] The issues I have been called upon to decide are these: first, whether clause 13 is void for vagueness; secondly, whether it has been established on the papers that the respondents made use of the applicants client lists and solicited the applicants clients; and thirdly, if so and provided clause 13 is not void for vagueness, whether the restraint is reasonable. (a) Clause 13: Void for Vagueness? [23] The relevant aspect of clause 13 that is subject to challenge is to the effect that the employee will not directly or indirectly work in opposition with the employer for a period of 12 months after termination of work within a 50 km radius. It is argued by Mr Cole that the failure to mention a point from which the 50 kilometre radius is to be measured renders this part of clause 13 vague to the extent that it is void. [24] Mr De La Harpe, on the other hand, contends that when clause 13 is read in the wider context of the contract of employment as a whole, it is clear that the parties intended and understood the 50 kilometre radius to be measured from the premises at which the respondents worked for the applicants. In the alternative, he argues that a tacit term to this effect is part of the contract. [25] The general approach of the counts to attacks on the validity of contractual provisions on account of vagueness is that the striking down of a provision that the parties agreed to should be a measure of last resort or, expressed differently, that contractual provisions attacked on the basis of vagueness ought to be benevolently and contextually interpreted so as to avoid their setting aside if at all

10 10 possible. This point is made in CTP Ltd and others v Argus Holdings Ltd and another, 16 a case involving mutual restraints of trade of unlimited duration in the print media. It had been held in the court below that the terms regional newspapers and local newspapers in the agreement were too vague for enforcement because the line between the regional and the local could not be determined. On appeal, Nienaber JA held: 17 With respect I disagree. Viewed in vacuo the precise line between the concepts regional and local is doubtless difficult to define. But does that make the restraint clauses void for vagueness? Three points need to be made. One, the words in a contract must not be interpreted in the abstract and out of context (cf Swart en 'n Ander v Cape Fabrix (Pty) Ltd 1979 (1) SA 195 (A) at 202C). Two, a restraint which in general terms may be unduly wide or imprecise can be trimmed to fit the common understanding and perceptions of the parties in the light of the circumstances prevailing at the time of its enforcement (cf Magna Alloys and Research (SA) (Pty) Ltd v Ellis 1984 (4) SA 874 (A) at 896A-E, 898D). Three, a conclusion of invalidity will only be reached as a last resort (cf Haviland Estates (Pty) Ltd and Another v McMaster 1969 (2) SA 312 (A) at 337H; Lewis v Oneanate (Pty) Ltd and Another 1992 (4) SA 811 (A) at 819E-J). [26] And, in De Beer v Keyser and others 18 in which it was argued that the vagueness of certain terms in a franchise agreement rendered it void, Nugent AJA said the following: 19 An agreement that is expressed in words that are capable of various meanings when they are viewed in isolation is not for that reason alone too vague to be enforced. The proper meaning of words that might at first sight appear to be ambiguous, or ill-defined, or otherwise vague, might often emerge when the words are seen in their context, or against the background to the transaction, or when they are linked by admissible (4) SA 774 (A). 17 At 787E-G (1) SA 827 (SCA). 19 Para 13.

11 11 evidence to the circumstances in which they were intended to apply. [27] He then cited with approval the following passage from Namibian Minerals Corporation Ltd v Benguela Concessions Ltd: 20 Once a Court is called upon to determine whether an agreement is fatally vague or not, it must have regard to a number of factual and policy considerations. These include the parties' initial desire to have entered into a binding legal relationship; that many contracts (such as sale, lease or partnership) are governed by legally implied terms and do not require much by way of agreement to be binding (cf Pezzutto v Dreyer and Others 1992 (3) SA 379 (A); that many agreements contain tacit terms (such as those relating to reasonableness); that language is inherently flexible and should be approached sensibly and fairly; that contracts are not concluded on the supposition that there will be litigation; and that the Court should strive to uphold - and not destroy - bargains. [28] It is clear from the contracts of employment that the place of employment was the applicants Health and Skin Care Clinic at 9 Surrey Road, Vincent, East London. The contracts are headed with its name, address, locality, telephone number and fax number. Clause 17, however, entitled the applicants to transfer the respondents to any other salon, with consultation and on reasonable notice. It is common cause that both respondents were transferred to the applicants salon in Hemmingway s Mall, East London. [29] From these facts alone, it seems to me that the inference is inescapable that it was the intention of the parties that the centre of the 50 kilometre radius mentioned in clause 13 was the clinic at which the respondents were working when they resigned. In my view the approach that I have taken is in conformity with what I may term the common sense approach adopted in similar but not identical circumstances in Turner Morris (Pty) Ltd v Riddell. 21 In that case a (2) SA 548 (A), 561G-J (4) SA 397 (E).

12 12 restraint was agreed to operate within a radius of 100 kilometres of the applicant firm, but its physical location was not specified. Erasmus J held: 22 As a rule, the Court will endeavour to give effect to what appears to be an agreement solemnly entered into by the parties with the intention of becoming contractually bound. The parties here clearly had in mind that the restraint agreement would operate in certain areas. By definition, these areas surround the specific points where Turner Morris, as defined, is situated. As the geographic position(s) of Turner Morris is not mentioned anywhere in the agreement, the Court must consider whether it is ascertainable in the light of the agreement as a whole. It is clear from the agreement that Turner Morris and its subsidiaries are engaged in commercial enterprise. Such activity is in the ordinary course conducted on or from business premises. The physical location of these premises is a fact presumably known to the parties; or is readily ascertainable by them; or, in the case of dispute, should be determinable by the Court on evidence usually admissible in such situations. [30] Mr Cole relied on the matter of Carthew-Gabriel v Fox and Carney (Pvt) Ltd 23 in support of his argument that clause 13 is void on account of its vagueness. In my view, however, Carthew-Gabriel is distinguishable. It concerned not the centre of the radius describing the area in which the restraint operated but the outer boundary. It described this area as being within an area of Rhodesia in which the company is carrying on its business. [31] Lewis JP held that given the breadth of the term in which the company is carrying business and the peregrinate nature of an estate agent s business the evidence disclosed transactions in 20 parts of the country outside of Salisbury, where the office was it could not be said that the evidence established a common intention that the restraint was to operate in the Salisbury district. The 22 At 405E-G (1) SA 598 (RA).

13 13 reason why the phrase used in the restraint was vague is amply demonstrated by the following passage: 24 The term "area in which business is carried on" is not a term of art. It is a pure question of fact, depending on the nature of the business concerned. The fact that an estate agent has his offices in a certain city or town means nothing more than that he is holding himself out as willing to do business from those premises, and it must be remembered that, unlike the attorney in the example given by the learned Judge, the estate agent is permitted to advertise. The mere fact that he has his offices in the city does not ipso facto mean that the limits of the area of his business activity are the boundaries of that city. There may be many parts of the city lying within the municipal boundaries in which he has never done business and has no interest in doing business; per contra, there may be many parts of the rural areas outside the boundaries where he has numerous business transactions. If one were to put flags on a large map of Rhodesia showing the location of each transaction carried out by the respondent in its business as an estate agent, it would be quite impossible, using such data, to draw a line (or lines) showing the area (or areas) in which the appellant is precluded from operating and, with respect, the "area" is not one which is "capable of more precise determination by evidence". On the contrary, no amount of evidence could result in the ascertainment of a clearly defined "area". Mr. Pringle, for the respondent, conceded that, if that exercise were undertaken in the instant case, the result would look "something like the coastline of Greece and its islands", as he put it. [32] In this matter by contrast, the context and the evidence suggests only one possibility the place where the respondents worked. There is not the slightest indication that the centre of the radius could have been another point whether it be the city hall, the airport, the post office or any other point. I am accordingly of the view that clause 13 is not vague. 24 At 602A-E.

14 14 [33] If I am wrong in this regard, I take the view that it is, in any event, a tacit term of clause 13 that the restraint operates within a 50 kilometre radius of the clinic at which the respondents worked. I use the words tacit term in the sense used in Alfred McAlpine and Son (Pty) Ltd v Transvaal Provincial Administration, 25 namely to denote an unexpressed provision of the contract which derives from the common intention of the parties, as inferred by the court from the express terms of the contract and the surrounding circumstances. Such an inference is, in my view, necessary to ensure the efficacy of the contract of employment and is so self evident as to go without saying. 26 My conclusion is strengthened by the respondents own understanding of clause 13. In her answering affidavit, the first respondent stated that it was apparent on a plain reading of this clause that applicants omitted to insert the words of the salon after the word radius. [34] I therefore conclude, on two alternative bases, that clause 13 is not unenforceable because of the omission of an express provision as to the centre of the radius of 50 kilometres. (b) Determining the Disputed Facts [35] An application has been brought by the respondents to strike out certain paragraphs and sentences of the replying affidavit. One sentence the second sentence of paragraph 21.6 is hearsay and is struck out. [36] For the rest, the attack on the admissibility of the paragraphs and sentences under challenged is based on the assertion that they constitute new matter that the applicants seek to make out a case in reply that should have been made out in the founding papers (3) SA 506 (A), 531H. 26 See Wilkens NO v Voges 1994 (3) SA 130 (A), 136H-137D. 27 See Titty s Bar and Bottle Store (Pty) Ltd v A.B.C. Garage (Pty) Ltd and others 1974 (4) SA 362 (T), 368H.

15 15 [37] The facts that are sought to be struck out relate to whether the respondents attempted to entice the applicants clients to their new business, the respondents access to information concerning the running of the applicants business and the ordering of stock and their knowledge of the applicants pricing of its products. As a result of the view that I take on the first issue, it will not be necessary for me to deal with the remaining issues. [38] In her founding affidavit, the first applicant stated that the respondents had during their employment become privy to all information of a proprietary nature of and regarding the salon and its products, treatments, pricing and customer base so much so that they have built up meaningful relationships with many of the salon s clients which they are in a position to use to induce the salon s clients to do business with them instead and in so doing take advantage of the salon s trade connections and knowledge of its client base. She states further that the salon has a right to protect the information and prevent it from falling into the hands of its competitors and that it is unavoidable that the respondents will use all their knowledge and information they have [acquired] via and from the salon to their unfair advantage and to the prejudice of the salon. She concluded that the applicants had a well founded and real apprehension that it will suffer ongoing harm from the business of the respondents which they now conduct in unlawful breach of the express terms of their agreements with applicants. It is clear from this that the applicants assert that the respondents had access to the applicants client lists and that they would use this information. [39] The respondents response to this and similar allegations to the effect that the respondents had access to the applicants client lists and had built up relationships with the applicants clients consist of the following averments. They conceded that they had access to the applicants data base but denied that this gave them a competitive advantage; that they added information to the data base while working for the applicants; that [t]here is no evidence to suggest that we ever exported any information from the data base, nor did we make or export any

16 16 customer list ; and that their sudden decision to resign and then to leave without serving notice renders it highly improbable that we made or could have made a list. [40] In direct answer to the paragraph of the founding affidavit that I have cited above, the respondents furnished a bare denial which they said was consistent with their views that there were no valid employment contracts in existence between them and the applicants; that, in any event, the restraints of trade contained therein were unenforceable; that they were not in direct competition with the applicants business; that the applicants made their continued employment intolerable, thereby necessitating the repudiation thereof ; that the applicants had no proprietary interest worthy of protection ; that if such an interest was found to exist, the restraints of trade were, in any event, unreasonable; and the duration of the restraints of trade were also unreasonable. [41] In reply, the first applicant stated and this is not the subject of the application to strike out that the respondents statements that they were not exposed to all facets of the business was transparently false as is their assertion that they have not sought to exploit information to which they were privy during their employment with me. She then alluded to supporting affidavits which the respondents want struck out to support her allegation that they had, in fact, actively sought to solicit my existing client base since leaving my employment. [42] In dealing specifically with the answering affidavit, the first applicant pointed out that the respondents conceded that they had access to the data base but their claim that it would provide them with no competitive advantage was obviously incorrect. She then referred to information she had received concerning approaches made by the respondents to some of her clients and referred to affidavits deposed to by three of them. She concluded as follows: Self evidently, respondents would only have been able to make contact

17 17 with my clients if they had obtained their contact numbers from my data base and I have no doubt that they did so in preparation for their leaving my employment and setting themselves up in business in opposition. It is noteworthy that respondents admit that they had free access to my data base which they have obviously now used unlawfully and in flagrant breach of the terms of their restraint of trade. [43] I have set out in detail the allegations in the founding affidavit, the respondents answer to them and the reply. From this it emerges that the applicants raised in their founding papers that customer lists would be used by the respondents, that their answer to this was, while not a denial that they used this information (to which they had access), but an assertion that there was no evidence that they had exported the customer lists. In reply to this the applicants stated that they had made use of the information, attaching affidavits from three clients who stated that they had been contacted by the respondents. [44] In my view, there is no basis for the striking out of the paragraphs referred to by the respondents. They do not constitute new matter in the sense that the issue of the respondents using customer lists was pertinently raised in the founding affidavit and the reply does no more than refute the denial if it can be called that of the respondents. (The other paragraphs that the respondents wish to have struck out were also properly raised in the founding papers, dealt with properly in reply and do not constitute new matter.) [45] The approach to the determination of the facts in motion proceedings when final relief is sought is well-known but worthy of repetition. In Plascon-Evans Paints Ltd v Van Riebeeck Paints (Pty) Ltd, 28 Corbett JA said: It is correct that, where in proceedings on notice of motion disputes of fact have arisen on the affidavits, a final order, whether it be an interdict or some other form of relief, may be granted if those facts averred in the (3) SA 623 (A), 634H-635C. See too Administrator, Transvaal and others v Theletsane and others 1991 (2) SA 192 (A), 197A-C.

18 18 applicant's affidavits which have been admitted by the respondent, together with the facts alleged by the respondent, justify such an order. The power of the Court to give such final relief on the papers before it is, however, not confined to such a situation. In certain instances the denial by respondent of a fact alleged by the applicant may not be such as to raise a real, genuine or bona fide dispute of fact. If in such a case the respondent has not availed himself of his right to apply for the deponents concerned to be called for cross-examination under Rule 6(5)(g) of the Uniform Rules of Court and the Court is satisfied as to the inherent credibility of the applicant's factual averment, it may proceed on the basis of the correctness thereof and include this fact among those upon which it determines whether the applicant is entitled to the final relief which he seeks. Moreover, there may be exceptions to this general rule, as, for example, where the allegations or denials of the respondent are so farfetched or clearly untenable that the Court is justified in rejecting them merely on the papers. [46] Plascon-Evans thus contemplates two exceptions to the general rule that the facts in motion proceedings consist of the respondent s version plus the applicant s averments that he or she admits or does not dispute. They are first, where no real, genuine or bona fide dispute of fact is raised, as where a respondent contents himself or herself with a bare denial; 29 and secondly, where the respondent s version is so untenable that it can be rejected on the papers. 30 [47] Wightman t/a JW Construction v Headfour (Pty) Ltd and another 31 dealt with when and how a real, genuine and bona fide dispute of fact may arise. Heher JA stated: 32 A real, genuine and bona fide dispute of fact can exist only where the 29 See for instance Room Hire Co (Pty) Ltd v Jeppe Street Mansions (Pty) Ltd 1949 (3) SA 1155 (T), See Yarram Trading CC t/a Tijuana Spur v ABSA Bank Ltd 2007 (2) SA 570 (SCA), para (3) SA 371 (SCA). 32 Para 13.

19 19 court is satisfied that the party who purports to raise the dispute has in his affidavit seriously and unambiguously addressed the fact said to be disputed. There will of course be instances where a bare denial meets the requirement because there is no other way open to the disputing party and nothing more can therefore be expected of him. But even that may not be sufficient if the fact averred lies purely within the knowledge of the averring party and no basis is laid for disputing the veracity or accuracy of the averment. When the facts averred are such that the disputing party must necessarily possess knowledge of them and be able to provide an answer (or countervailing evidence) if they be not true or accurate but, instead of doing so, rests his case on a bare or ambiguous denial the court will generally have difficulty in finding that the test is satisfied. I say generally because factual averments seldom stand apart from a broader matrix of circumstances all of which needs to be borne in mind when arriving at a decision. A litigant may not necessarily recognise or understand the nuances of a bare or general denial as against a real attempt to grapple with all relevant factual allegations made by the other party. But when he signs the answering affidavit, he commits himself to its contents, inadequate as they may be, and will only in exceptional circumstances be permitted to disavow them. There is thus a serious duty imposed upon a legal adviser who settles an answering affidavit to ascertain and engage with facts which his client disputes and to reflect such disputes fully and accurately in the answering affidavit. If that does not happen it should come as no surprise that the court takes a robust view of the matter. [48] In Soffiantini v Mould, 33 a decision of a full bench of the Eastern Cape Provincial Division, Price JP proposed a robust approach to the determination of facts in motion proceedings in order to make those proceedings effective. He stated: 34 If by a mere denial in general terms a respondent can defeat or delay an (4) SA 150 (E) 34 At 154G-H.

20 20 applicant who comes to Court on motion, then motion proceedings are worthless, for a respondent can always defeat or delay a petitioner by such a device. It is necessary to make a robust, common-sense approach to a dispute on motion as otherwise the effective functioning of the Court can be hamstrung and circumvented by the most simple and blatant stratagem. The Court must not hesitate to decide an issue of fact on affidavit merely because it may be difficult to do so. Justice can be defeated or seriously impeded and delayed by an over-fastidious approach to a dispute raised in affidavits. This robust, common sense approach in appropriate cases has received the endorsement of the Supreme Court of Appeal in South African Veterinary Council and Another v Szymanski. 35 [49] I turn now to determine whether the respondents answer to the applicants averments that they intended to, and did, try to entice the applicants clients to their new business raises a real, genuine and bona fide dispute of fact. Once I have dealt with that I shall consider whether their answer can be said to be tenable. [50] As I have shown above, the respondents have conceded that they had access to the applicants data base which would include their client lists but say there is no evidence to suggest that we ever exported any information from the data base, nor did we make or export any customer list. They point to this being improbable on the basis that their resignations were decided upon suddenly. Then follows a bare denial that they made use of the data base as can be seen from the factual situation, described further on in these papers and a statement that we did not have or could not exert any influence over the applicants clients any[way] (4) SA 42 (SCA), para 26.

21 21 [51] Further on in the answering affidavit, a bare denial is resorted to in answer to the assertion that they are in a position to induce the applicants clients to switch allegiance, and this denial is then linked to the argument that the contracts of employment and the restraints of trade are unenforceable. [52] In my view, these denials fall short of creating a real, genuine and bona fide dispute of fact. When viewed in context they amount to little more than an assertion that the applicants have not caught them making use of information about clients, even though they had access to this information. Rather than them stating unequivocally that they never tried to entice clients away from the applicants business, the first respondent says that it is highly improbable that they would have, or could have, made lists of customers. [53] Even if it could be said that this is sufficient to create a real, genuine and bona fide dispute of fact, I am of the view that the respondents version is so untenable that it can be rejected on the papers. Their version that they did not know about the restraints of trade until very late in the day is clearly false. They sought advice from Winterbach on the enforceability of clause 13. When they received the advice that clause 13 was unenforceable, they resigned. That was a day after receiving the advice. This establishes the falsity of their assertion, as part of their denial, that it was improbable that they would have taken client lists because their resignations were not planned. They tried to create the impression that they resigned, not to start their own business, but because of disputes with the applicants. That is gainsaid by their letters of resignation, both of which expressed thanks to the first applicant and said that they had enjoyed working for her. From these facts, the inference is compelling that the respondents resigned to start their own business, having been advised that the restraints of trade did not bind them. [54] That accounts for it being improbable that they would not have taken advantage of their access to the applicants client lists. They claimed to have

22 22 brought clients with them to the applicants business but then claimed that they had no influence over the clients of the applicants with whom they had contact. When it is considered that they stated that their relationships with these clients had been positive and close, and when the rather intimate nature of their work is considered, it is extremely unlikely that they failed to develop similar relationships with the applicants clients. Their denial is, finally, exposed to be untrue by the affidavits of Ms Talbot, Ms Hanker and Ms Duncan who, in the reply, all state that they were contacted by the respondents about the opening of their business. All were clients of the applicants. [55] In these circumstances where the respondents answers amount to a catch me if you can type of defence, do not engage with the true issues raised and, as Mr De La Harpe submitted, are glib -- their admitted access to client lists, their adamant belief that the restraints of trade were unenforceable and the evidence of these independent witnesses that they were contacted in an effort to entice them away from the applicants business leads me to the conclusion that the respondents version that they did not attempt to entice the applicants clients to their business is so untenable that I can reject it on the papers. (c) Are the Restraints Reasonable? [56] I turn now to whether, in the light of this finding, the restraints can be said to be unreasonable and hence unenforceable. [57] A restraint of trade will not be enforceable if its sole purpose is to prevent competition: the party seeking to enforce it must have an interest worthy of protection. 36 One such interest which may legitimately be protected by a restraint of trade is an employer s trade connections. The position is encapsulated thus by Van Rensburg J in Branco and another t/a Mr Cool v Gale: Branco and another t/a Mr Cool v Gale 1996 (1) SA 163 (E), 176A-C. 37 Note 36, 177C. See too Rawlins and another v Caravantruck (Pty) Ltd 1993 (1) SA 537 (A), 541D-I; Paragon Business Forms (Pty) Ltd v Du Preez 1994 (1) SA 434 (SE), 444A-F.

23 23 As I see the position, when an employee has access to the customers of a business and is in a position to build up a particular relationship with customers, with the result that when he leaves his employer s service he could easily influence customers to follow him and trade with him at the expense of his erstwhile employer, there is no reason why, in principle, a restraint should not be enforced to protect the employer s trade connections. [58] In this case, the facts establish that the respondents had access to the applicants client lists and contacted some of their clients with a view to enticing them to their business. The applicants have a protectable interest in preventing the respondents from using their trade connections and it is clear that the respondents have threatened that interest. [59] Despite the respondents suggestions to the contrary, they entered into employment with the applicants with their eyes open. They applied for positions when they heard that the applicants intended opening a clinic at the Hemmingway s Mall and were interviewed by the first applicant. When employment was offered to them they left their employment at another beauty salon. Although they suggest that they were unaware of the restraints of trade until some time after they had taken up employment with the applicants, that cannot be laid at the door of the applicants: if the respondents failed to read their contracts of employment, they have no-one to blame but themselves. Both appear to be well qualified and experienced therapists. In these circumstances, it cannot be said that there was an inequality of bargaining power between them and the respondents that would render the enforcement of the restraints of trade unreasonable. [60] It is true that the restraints of trade preclude the respondents from being economically active in competition with the applicants within a radius of 50 kilometres of the clinic at which they worked but it is also clear that other

24 24 opportunities are available to them which would not fall foul of the restraints of trade. For instance, the second respondent practiced overseas and on board a cruise ship. While I accept that they may not want to take up that specific type of employment, the fact remains that these and other opportunities -- for instance, in a town outside of the 50 kilometre radius are available to people of their qualifications and experience. I am sure that there are other opportunities within the industry that are not in competition with the applicants that the respondents could make use of. It may be inconvenient for them to take up such opportunities but that has to be considered against the legitimate interests of the applicants who have, after all, spent a great deal of time and effort building a successful business over a number of years. [61] I also take into account that restraints of trade are common in the industry and, according to the first applicant, are common for a good reason: therapists develop relationships with their clients which are easily transported in the event that the therapist should, for whatever reason, take up employment elsewhere. Finally, when consideration is given to all of these factors, it is my view that the restraints of trade do not go further, in respect of their nature, extent and duration, than is necessary to protect the protectable interest of the applicants. I accordingly conclude that the restraints of trade are not unreasonable and are, as a result, valid and enforceable. [D] THE REQUIREMENTS OF A FINAL INTERDICT [62] In order to be entitled to a final interdict, an applicant must establish a clear right, an injury actually committed or reasonably apprehended and the absence of any other satisfactory remedy. 38 In Huey Extreme Club v McDonald t/a Sport Helicopter and Marine Services (Pty) Ltd and others, 39 Howie P made it clear that by the term injury in the classic formulation of the requirements for an interdict in 38 Setlogelo v Setlogele 1914 AD 221, 227; Sanachem (Pty) Ltd v Farmers Agri-Care (Pty) Ltd and Others 1995 (2) SA 781 (SCA), 789B-D (1) SA 252 (SCA), para 21.

25 25 Setlogelo was meant something actually done which is prejudicial to or interferes with the applicants right. [63] The restraints of trade vest in the applicants a right to be protected against the respondents working in opposition to them, provided of course that the interest they wish to protect is a legitimate one. As I have found that the interest protected by the restraints of trade is, indeed, legitimate and thus protectable, the first element of a final interdict a clear right -- is satisfied. [64] On the facts that I have found proved, it has been established that the respondents had access to the applicants client lists, and that, whether they actually copied the list or not, they contacted three people on that list to entice them away from the applicants and to their own business. This establishes the second element, the actual interference with the applicants right and an apprehension that, by continuing to work in opposition to them, that the interference will continue. [65] Finally, no other suitable remedy is available to prevent the ongoing interference, so the third requirement of a final interdict has been established. [E] THE ORDER [66] For the reasons set out above, the following order is made. (a) The respondents are interdicted from carrying on business, directly or indirectly, as an employee, director or member of, or from being associated with, the business Stay Beautiful Beauty Salon or any other business competing with the applicants for a period of one year from 3 May 2010 and within a radius of 50 kilometres from the Health and Skin Care Clinic, Shop UG03, Hemmingway s Mall, corner of Western Avenue and Two Rivers Road, East London.

26 26 (b) The respondents are directed to pay the applicants costs of suit. C. PLASKET JUDGE OF THE HIGH COURT APPEARANCES For the applicants: Mr D. De La Harpe instructed by Drake, Flemmer and Orsmond Inc For the respondent: Mr S. Cole instructed by Pierre Naude and Associates

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