LABOUR – Restraint – Trade secrets – Restaurant business – Development manager having had access to business cases for existing and prospective restaurants and other information – Intending to take up employment with direct competitor – Applicant’s proprietary interests are directly and substantially prejudiced by respondent’s intended employment – Respondent has not established that he will suffer any significant prejudice if the restraint is upheld – Restraint granted.
Facts: Mr Montgomery (respondent) commenced employment with Spur group (applicant) as an Area Manager in 2010 and in 2012 was promoted to Development Manager, chiefly responsible for the Panarottis Pizza Pasta and Casa Bella brands. The market in which Spur operates is highly competitive and its development teams are engaged in constantly identifying prospective new sites for restaurants throughout the country. In May 2022 respondent tendered his resignation and he intends to take up employment with, or to render consultancy services to, Bossa Café. Bossa is a direct competitor, operates 17 restaurants and is aiming to “aggressively expand its franchise operations”.
Application: To enforce a restraint of trade agreement on an urgent basis.
Discussion: The terms of the restraint; how respondent sought the admission of what were termed “confirmatory affidavits”; that respondent had access to applicant’s internal server which included the business cases for all existing and prospective restaurants, business plans, franchise applications and other information; that respondent also seeks to rely on the fact that the applicant has not enforced restraint of trade covenants against former employees in the past; and respondent’s contention that his knowledge of the workings of the applicant is now “stale” after nine months.
Findings: The court is satisfied that applicant’s proprietary interests are directly and substantially prejudiced by respondent’s intended employment by Bossa. Applicant argued that if respondent had taken up employment with another player in the market that does not that does not pose such a threat, he would likely be able to do so, without facing the enforcement of the restraint against him. Respondent has not established that he will suffer any significant prejudice if the restraint is upheld. He has not discharged his onus to prove the enforcement of his restraint agreement is unreasonable or contrary to public policy.
Order: Respondent is restrained until 31 May 2024 from being employed by or rendering any service to Bossa and restrained from acting in breach of the restraint clauses of the Employment Agreement.
PROPERTY – Sale of land – Formalities – Whole contract with all its material terms to be reduced to writing and signed – Material terms not confined to essentialia – Whether term constitutes material term determined with reference to its effect on rights and obligations of parties – Subdivision in this instance constitutes material term – Failure to reduce such material term to writing signed by or on behalf of parties results in non-compliance – Lack of consensus between the parties – Contract null and void – Alienation of Land Act 68 of 1981, s 2(1).
Facts: The liquidators of Nomic 151 (Pty) Ltd and Curro concluded a written sale of land agreement in terms whereof the liquidators sold certain land that fell into the estate of Nomic to Curro as part of the winding up of Nomic’s affairs. One of the erven is a private ring road that provides access to various erven, including other subdivided erven that do not fall within the estate of Nomic. The liquidators sought declaratory relief from the High Court that the agreement was invalid for non-compliance with section 2(1) of the Alienation of Land Act 68 of 1981 or for lack of consensus in respect of the merx.
Appeal: Against the dismissal of the application, the court finding that the agreement complied with section 2(1) of the Act, that there was such consensus and that it was not validly cancelled.
Discussion: How the erroneous recordal of the ring road’s erf number was detected; the proposed subdivision of the ring road; that it was only after the conclusion of the agreement that Curro realised that the part of the ring road that extends out would also vest in Curro if effect was given to the agreement; and whether at the time of the conclusion of the agreement both the liquidators and Curro intended to sell and buy the whole of the ring road.
Findings: The agreement is null and void ab initio for want of consensus in respect of the merx at the time of its conclusion. Section 2(1) requires the whole contract of sale – its material terms – to be reduced to writing signed by or on behalf of the parties. The possibility of a subdivision of the ring road was only raised for the first time some six months after the agreement had been signed. The whole of the land, including the ring road, fell into the estate of Nomic and had to be sold as part of the process of winding up its affairs for its demise to result. The rights and obligations following subdivision, or the failure of its approval, were not dealt with.
Order: The appeal is upheld and the order of the High Court replaced with one declaring the written sale of land agreement void ab initio due to non-compliance with section 2(1) of the Alienation of Land Act 68 of 1981 and for want of consensus between them in respect of the merx.
MEYER JA (ZONDI JA, MOCUMIE JA, MOTHLE JA and MOLEFE JA concurring)
ARBITRATION – Review – Gross irregularity – Arbitrator deciding on issue of entitlement to account before deciding other claims – Contended that he determined crucial issues before the party could present evidence – Award based solely on pleadings and documents annexed – Rules of natural justice complied with – Audi alteram partem rights not infringed – Arbitrator did not prejudge or determine the merits – Arbitration Act 42 of 1965, s 33.
Facts: Altech (applicant) and Aeonova (respondent) are engaged in an arbitration before Retired Justice Southwood (the arbitrator) in terms of the Commercial Rules of the Arbitration Foundation of Southern Africa (AFSA). Aeonova brought seven claims against Altech, together with claims for interest and costs. The first six claims arise out of alleged breaches of contract and the seventh is a claim for information and a statement and debatement of account. The arbitrator envisaged that the claims for information in the first six claims may be dependent on the main claim for the rendering and abatement, which was claim seven. He requested heads and proceeded to resolve the issue of Aeonova’s entitlement to an account. The arbitrator ordered Altech to provide a full and proper account of the amounts of the statement of claim in respect of claims 1, 2, 4, 5, and 6.
Application: For the review of the arbitrator’s award, Altech arguing that the arbitrator’s award prejudges or determines crucial issues between the parties before Altech has had an opportunity to present evidence and argument on those issues.
Discussion: The statutory review provisions of section 33 of the Arbitration Act 42 of 1965; the discretion and powers of the arbitrator in article 11 of the AFSA Commercial Rules; the decision to direct that the arbitration proceed on documents only; the contention that the arbitrator committed a gross irregularity by making the award; and the arbitrator’s analysis of Doyle v Fleet Motors.
Findings: The arbitrator did not prejudge the merits and did not determine the merits in his award. He makes it clear that his award is based solely on the pleadings and the documents annexed to the pleadings that are common cause documents. He made no finding as to whether Aeonova complied with its obligations. The rules of natural justice were complied with, and in particular the applicant’s audi alteram partem rights were not infringed. None of the merit issues have been decided.
Order: The application is dismissed.
ABOUT THE EDITOR
Louis Podbielski spent ten years at Juta working on various law reports and has read many thousands of judgments for case selection. He has considerable experience in writing flynotes and headnotes, compiling case annotations, and in refining subject indexes. During his four years at LexisNexis he was involved with legal data, analytics and in developing various legal tech solutions. He now runs his own case law service Louis Case Law
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