Flowcentric Mining Technology (Pty) Ltd v Smit and Others (2023-059986) [2023] ZAGPPHC 760 (11 July 2023)

IN THE HIGH COURT OF SOUTH AFRICA

DELETE WHICHEVER IS NOT APPLICABLE

(1) REPORTABLE: NO

(2) OF INTEREST TO OTHER JUDGES: NO

(3) REVISED: NO

(4) Date: 11 July 2023 Signature:_______________

Date: 19 March 2021 Signature: _________________

____________________ ____________________

DATE SIGNATURE

GAUTENG DIVISION, PRETORIA

CASE NO 2023-059986

In the matter between:

FLOWCENTRIC MINING TECHNOLOGY (PTY) LTD Applicant

And

TESSA SMIT 1^st Respondent

KUPHELA ENVIRONMENTAL SOLUTIONS (PTY) LTD 2^nd Respondent

PHATSEMA MINING (PTY) LTD 3^rd Respondent

JUDGMENT

nyathi j

A. INTRODUCTION

[1] The Applicant brought this application on an urgent basis to enforce a confidentiality clause as well as a restraint clause of the Employment Agreement between it and the First Respondent.

[2] The first respondent has since the beginning of June 2023 been employed at the second respondent.

[3] The relief sought against the Second and Third Respondents flow out of the reasonable apprehension of further harm that will be suffered by the Applicant, because of unlawful competition, mainly in respect of:

3.1 Misuse of confidential information to advance their own business interests and activities at the expense of the Applicant.

3.2 Unfair use of the Applicant's fruits and labour; and/or

3.3 Interference with the contractual relationship between the Applicant and First Respondent by virtue of inducing or procuring a breach of the contract by the First Respondent.

[4] The first and second respondents opposed the application while the third respondent filed a notice to abide by the outcome of the application.

[5] Since this application is brought as an urgent application in terms of rule 6 (12) and since the 1st and 2nd respondents raised two points in limine in objection, contending that this application is not urgent. The issue of urgency was addressed first.

B. BACKGROUND

[6] This background is necessary because the facts around the merits are the same facts that are relevant to determining whether the application itself is urgent or not.

[7] The first respondent’s employment with the applicant terminated on 30 November 2022. The period of the restraint imposed on the first respondent in terms of clause 10 of the Employment Agreement was for 1 year from the date of termination of the Employment Agreement.

[8] The applicant, on 14 June 2023, through information obtained from Vonique Smit (“Ms Smit”), for the first time obtained verifiable information that the first respondent had, both while in the employ of the applicant and thereafter, acted contrary to the terms of clause 10 of the Employment Agreement in respect of her dealings for and on behalf of the third respondent.

[9] In its founding affidavit, the applicant alleges that on 2 June 2023 it became aware of the first respondent’s employment with the second respondent.

[10] After contacting the first respondent, the first respondent informed the applicant that she is employed and that the second respondent is not and was never a client or supplier of the applicant.

[11] The applicant then on 14 June 2023 by way of a letter sought an undertaking by the third respondent and the first respondent by close of business, 19 June 2023.

[12] After some backwards and forth communications in which the breach of the restraint clause and the soliciting of clients from the applicant was denied, the first respondent did provide an undertaking in the following terms:

"For the period of her restraint she will not disclose to Kuphela (the second respondent) any confidential information that she may have come by during the course of her employment that FCMT (the applicant)."

[13] The first and second respondents thus contend that this undertaking took away any urgency that may have existed.

[14] The applicant alleges that this undertaking fell well short of the terms of the Employment Agreement, both in respect of its failure to address the restraint fully and in respect of the fact that the First Respondent was supposed to surrender all confidential information to the Applicant at the termination of her employment.

[15] The first and second respondents maintained their contention that the applicant has failed to comply with the practice directives and has not made out a case for urgency and as such the matter ought to be struck off the roll with punitive costs.

[16] The second point in limine concerned the non-compliance with the Justices of the Peace and Commissioners of Oaths Act. This arose from a scrutiny of the confirmatory affidavit by Vonique Smit, whose evidence is relied upon by the applicant. She testifies about the alleged wrongdoing and breach of the restraint clause by the first respondent and links the first respondent with the third respondent.

[17] Mr. Prinsloo alleged on behalf of the first and second respondents that the applicant has adopted an extremely sloppy approach to adduce evidence from Ms. Smit. The purported affidavit refers to Vonique Smit as a male in the attestation clause and this ought not to be allowed.

.

C.THE LAW ON URGENCY

[18] When considering whether a matter is urgent, the following circumstances are relevant:

18.1 The applicant must show that it will not otherwise be afforded substantial redress at a hearing in due course.¹

18.2 “Urgency of commercial interests may justify the invocation of Uniform Rule of Court 6(12) no less than any other interests.”²

18.3 An applicant cannot rely on urgency that was self-created through its earlier inaction.³

18.4 When an applicant first seeks compliance from the respondent prior to lodging the application, it cannot be said that the applicant had delayed bringing the application or that the urgency was self-created.⁴

18.5 An application based on a breach of restraint of trade is inherently urgent.⁵

[19] The applicant justifies his bringing this application on an urgent basis during this specific week during recess, on the facts stated in the background above.

D.THE LAW ON COMMISSIONING OF AFFIDAVITS

[20] the Justices of the Peace and Commissioners of Oaths Act 16 of 1963 and the Regulations promulgated thereunder provides the requirements for the proper commissioning of affidavits.⁶

[21] In terms of Regulation 2(1), read with 2(2), before a commissioner of oaths administers the oath to any person, he or she shall ask the deponent: (a) whether he or she knows and understands the contents of the declaration; (b) whether he or she has any objection to taking the prescribed oath; and (c) whether he or she considers the prescribed oath to be binding on his or her conscience. In the event of the deponent answering the aforesaid questions in the affirmative, the commissioner of oaths shall administer the oath.

[22] Regulation 3 provides that the deponent shall sign the declaration in the presence of the commissioner of oaths. This presupposes that the commissioner is able, at face value at least, to determine the gender of the deponent that she or he administers the oath to.

[23] The court retains a discretion to refuse an affidavit which does not comply with the Regulations. This is dependent on the facts of each individual case, and a court may find in a particular instance that there has been substantial compliance with the Regulations, and condone whatever error, and accept the affidavit.⁷

[24] The decision in ABSA Bank v Botha N.O.⁸ is often cited by practitioners (as was the case here) as authority for the proposition that affidavits are invalid simply if there is a disparity between the gender selected by the deponent and that selected by the Commissioner of Oaths. This is not so,⁹ particularly if one has regard to the fact that in ABSA Bank v Botha, the court was dealing with an error concerning gender in an affidavit in the context of an application for a summary judgment which, if granted by the court, would have brought finality to litigation as an extraordinary procedural step.¹⁰

[25] As far back as 1973, the full court in S v Munn¹¹ confirmed that the Regulations are directory only and that non-compliance would not invalidate an affidavit if there was substantial compliance with the formalities in such a way as to give effect to the purpose of obtaining the deponent’s signature to an affidavit, which primarily is to obtain irrefutable evidence that the relevant deposition was indeed sworn to.

E. FINDINGS ON POINTS IN LIMINE

[26] Having regard to the above submissions and the legal framework, I exercised my discretion and made the finding that this application lends itself to be heard on an urgent basis.

F. THE MERITS: RESTRAINT OF TRADE

[27] Agreements in restraint of trade are valid and enforceable unless their enforcement is contrary to public policy. It is contrary to public policy to enforce a covenant which is unreasonable.¹²

[28] In Reddy v Siemens the facts were in brief, that Reddy had left the employment of Siemens and joined a competitor. This prompted Siemens to approach the court to enforce the restraint clause in Reddy’s contract of employment. The court found that the information in Reddy’s possession, if disclosed, could be used to the disadvantage of Siemens. The risk of disclosure alone, was considered by the court to be sufficient, and Reddy was accordingly held to his contractual undertakings.

[29] Is the restraint reasonable? i.e., is it against public policy or not? This question was reconsidered in Reddy v Siemens with reference to the earlier decision of Basson v Chilwan and others¹³ where four principles were enunciated, namely:

29.1 Does the one party have an interest that deserves protection after termination of the agreement?

29.2 If so, is that interest threatened by the other party?

29.3 In that case, does such interest weigh qualitatively and quantitively against the interest of the other party not to be economically inactive and unproductive?

29.4 Is there an aspect of public policy having nothing to do with the relationship between the parties that requires the restraint be maintained or rejected?

[30] A fifth principle has been stated in some cases, namely, “Is the restriction necessary to protect the interests, or does it go further than is necessary?”¹⁴

[31] If the former employee alleges that the covenant is unreasonable, the onus rests on him or her to prove unreasonableness.

G. FACTS

[32] The applicant is a specialist material supplier in the dust suppression and spontaneous combustion prevention application in the mining industry.

[33] The first respondent took up full time employment with the applicant on 1 April 2017 in the position of Sales Consultant.

[34] On the 24^th of October 2023, the first respondent resigned from the applicant, with a four-week notice period and, thereby, terminated her employment with the applicant and served her last day of employment on the 30^th of November 2022.

[35] During her last day of employment, the first Respondent informed a Mr Coetzee of the applicant, that she was going to work at Polomino Plant, which, allegedly, was not a competitor to the applicant.

[36] Whilst the first respondent was still serving notice, some of the applicant’s customers started terminating their agreements with the applicant.

[37] On investigating the sudden terminations, the applicant came to know that a sales consultant from the third respondent, a certain Ms. Vonique Smit has been approaching their clients with critical information prior to them terminating their contracts with the applicant.

[38] Applicant was alarmed that Ms. Smit, who he had never heard of, from an unfamiliar company suddenly showed up at one of the applicant's clients and knew exactly what product they required, how much they required and how much they would save compared to the applicant's products.

[39] Applicant eventually pieced together the events and social media posts made by the first respondent that Vonique was a stepdaughter of the second applicant and was acting to advance the latter’s interests in the third respondent. Second applicant turned out to be a so-called “sleeping partner” in third respondent.

[40] the Applicant conducted its own investigation in respect of the products and services offered by the second respondent and ascertained that the second respondent is a competitor of the applicant in that it also supplies dust suppression products and a compound to prevent spontaneous combustion in the mining sector.

[41] Dealing with the merits, Mr Prinsloo submitted as follows:

41.1 That a lot of the information stems from the affidavit of Vonique Smit.

41.2 That the evidence submitted by the applicant with its founding affidavit including photographs, WhatsApp messages and emails prove nothing against the second respondent.

41.3 That the undertaking submitted by the first respondent is adequate to cover the applicant’s possible concerns.

41.4 That the decision in Special Investigation Unit v. Engineering Systems Solutions¹⁵ where the SCA referred to the method wherein a litigant adduced hearsay allegations by a deponent and supported it with a so-called ‘confirmatory affidavit’ as “sloppy’. This should in the urgent application being dismissed, it was submitted.

41.5 That there was no proof of a breach of the restraint clause.

41.6 That Vonique acted on a frolic of her own.

41.7 It was finally contended that the restraint is directed solely at the restriction of fair competition, with the covenantee that is not, at the time of enforcement, reasonably necessary for the legitimate protection of the covenantee's predictable proprietary interests (goodwill or trade secrets) is against the public interest.¹⁶

H. DISCUSSION

[42] The evidence summed up above is culled from the various affidavits of the applicant and the respondents. The exigencies of this matter require that it be dealt with without delay. It thus becomes impracticable to effectively summarize each iota of the evidence deposed to above. I have therefore decided to deal holistically with the whole evidence and submissions.

[43] Applicant presented a real-life scenario of how over a period of four years it had conceptualized, researched, and developed at great cost to itself, an anti-combustive product called “Flowcentric Heatshield”. The first respondent was fully aware of and involved in the development of the Heatshield project as an employee of the applicant. Shortly after the resignation of the first respondent, the applicant suddenly realized that the second respondent was now offering a competing product named “KUP-SEAL-X-PLUS-Foam Seal” alleging that it “is a specialized sealant that is designed to prevent spontaneous combustion in the mining sectors.”¹⁷

[44] The above and similar allegations are denied in broad, sweeping terms by the first respondent with nothing of substance presented to counter them. The first and second respondents’ response to very serious allegations are on the main technicalities, which cannot be sustained.

[45] As Reddy v Siemens has shown above, the applicant does not have to prove actual breach of the restraint clause to succeed but the mere risk that the information in the possession of the first respondent, if disclosed, could be used to the disadvantage of the applicant is enough. The situation in this application is worse, as has been demonstrated with the incident of the Heatshield product and the poaching of existing clients.

[46] The case for the application to succeed has been made on the probabilities. The requirements for a final interdict have been made. The applicant has demonstrated a clear right as well as its breach with an injury actually committed already and probably continuing. I find that there is no other satisfactory remedy available to the applicant.¹⁸

The application succeeds with costs on an attorney and client scale, as more fully set out in the draft order filed on CaseLines 071-1 to 071- 5, which is made an order of this court. (Attached hereto marked “ X”)

_________________________

J.S. NYATHI

Judge of the High Court

Gauteng Division, Pretoria

Date of hearing: 05 July 2023

Date of Judgment: 11 July 2023

On behalf of the Applicant: Adv. E. Mann.

Instructed by: S. Roux Incorporated. PRETORIA

E-mail: tiaan@rouxlaw.co.za

On behalf of the Respondent: Adv. J. Prinsloo.

Instructed by: PJS Inc. Attorneys, PRETORIA

E-mail: pieter@pjsinc.co.za

Delivery: This judgment was handed down electronically by circulation to the parties' legal representatives by email and uploaded on the CaseLines electronic platform. The date for hand-down is deemed to be 11 July 2023.