Court name
High Court
Case number
285 of 2011
Title

Alieta Elizabeth Wiese t/a Support.com v Pastec Distribution & Training CC (285 of 2011) [2012] NAHC 37 (24 February 2012);

Media neutral citation
[2012] NAHC 37
Coram
Miller AJ













CASE NO.: A 285/2011



REPORTABLE








IN THE HIGH COURT OF
NAMIBIA













In the matter between:



ALIETA ELIZABETH WIESE
t/a SUPPORT.COM …..............................APPLICANT



vs








PASTEC DISTRIBUTION &
TRAINING CC …....................................RESPONDENT













CORAM: MILLER, AJ








Heard on: 14-15 November
2011, 22 November 2011, 23 January 2012,



26 January 2012



Delivered on: 24 February
2012








JUDGMENT:



MILLER, AJ:
[1] This is the return date of a rule nisi I granted in favour
of the applicant on 23 November 2011. The order I granted reads as
follows:











  1. That
    the Applicant’s non-compliance with the Rules, forms and
    services of this Honourable Court with regard to service and filling
    is condoned and that this matter be dealt with as one of urgency in
    terms of Rule 6(12) of the Rules of this Honourable Court.










  1. That
    a rule nisi , be issued, calling upon the Respondent to show
    cause, if any, on Tuesday, the 29th of November 2011, why
    an order in the following terms should not be made final:











    1. An
      order directing the Respondent to allow the Applicant to renew her
      Pastel International Forum Program’s Professional membership
      the year 2012;



    2. An
      order in terms of which the Respondent is restrained and
      interdicted from attempting to enforce, by whatsoever means and/or
      enforcing any of the trade restrictions placed on the Applicant in
      terms of the provisions of the entire Clause 18 of the Employment
      Contract between the parties.



    3. An
      order in terms of which the Respondent’s attempt to enforce,
      ad infinitum, the trade restrictions placed on the Applicant
      in terms of the provisions of Clause 18.3 of the Employment
      Contract between the parties be declared contrary to the public
      interest and ab initio null ad void;











  1. Issuing
    an order directing that the relief set out in paragraph 2.2, 2.3 and
    2.4 shall, subject to a further order of the Court, operate as
    immediate interim relief pending the finalization of this
    application.










  1. That
    the respondent is ordered to pay the costs of this application, such
    costs to include the costs of one instructing counsel and one
    instructed counsel.”









[2] The applicant who is
still represented by Ms. Visser seeks the confirmation of the rule
nisi
. The respondent which is represented by Mr. Geier, on the
other hand, seeks the discharge of the rule.








[3] In issue between the
parties is the enforceability or otherwise of certain restraint of
trade clauses contained in a written agreement of employment
concluded between the parties during February 2009. The restraints
are recorded in Clause 18 of the agreement and reads as follows:
















18.
RESTRICTIONS AFTER TERMINATION



18.1
For a period of 12 (twelve) months after the termination of the
Employee’s employment with the Corporation, whether by
effluxion of time or in any other way whatsoever, the Employee shall
not on behalf of him/herself or any other person canvass or solicit
orders from any person or firms who shall at any time during the
continuance of his/her employment with the Corporation have been a
customer/client of the Corporation.



18.2
The Employee shall also not directly or indirectly be concerned in
any competitive business involving the sale, distribution,
installation or support of Sage Pastel Software within the Khomas
Region or Erongo Region for a period of 12 (twelve) months after the
date of termination of the Employees employment with the Corporation.



18.3
In order to protect the proprietary interests of the Corporation and
its branch office, the Employee undertakes that he/she will not,
during or after the termination of his/her employment with the
Corporation, entice or attempt to entice customers/clients of the
Corporation and/or its branch office away from the Corporation.



18.4
The Employee acknowledges and agrees that:



18.4.1
The obligations imposed upon him/her in terms of clauses (18.1),
(18.2) and (18.3) above, are separate, severable and independent
obligations in favour of the Corporation;



18.4.2
The provisions of clauses (18.1), (18.2) and (18.3) supra
shall be construed as imposing separate, severable and independent
restraints in respect of-



18.4.2.1
The time period included in the restraint;



18.4.2.2
The activity within the ambit of the competitive business;



18.4.2.3
Namibia, Khomas and Erongo Regions.



18.4.3
The invalidity or unenforceability of any one or any combination of
restraints referred to above shall not affect the validity and
enforceability of the other restraints referred to in clauses (18.1),
(18.2) and (18.3) supra or any combination of such restraints;



18.4.4
The restraints contained herein are fair and reasonable under the
circumstances.



18.5
In consideration for the restraint imposed herein, the Employee
expressly acknowledges that the Corporation pays to the Employee a
specified sum of money every month over and above the Employees
normal salary, which said sum of money is paid to the Employee and
accepted as such, to be paid in pursuance of the imposed restraint,
and which serves the purpose of ensuring that the Employee will not
be left destitute during the period of restraint.”








[4] The applicant
remained an employee of the respondent until 31 October 2010, having
tendered her resignation on 10 October 2010. On 16 October 2010 the
respondent acknowledged receipt of the applicant’s resignation
and addressed a letter to her which reads as follows:








Dear
Mrs. Alieta Wiese,








Regarding:
Letter of
Resignation



We
hereby acknowledge receipt of your written resignation, dated the
15th October 2010 and confirm that your resignation has
been accepted with the provisions detailed below. Your last working
day is confirmed as 31st October 2010. Remuneration and
any other income due to yourself will be paid by the 10th
November 2010.



As
agreed, you will sign on as an I-Forum Member with Pastec
Distribution and Training cc. Your client base will be limited to the
client list as per Attachment “A” which will be linked to
your I-Forum Account. Any new clients will be added to this list.



Please
note that the above does not in any way indicate any relaxation of
the restrictions after termination (point 18) of your employment
contract signed 23rd February 2009.








We
would like to take this opportunity to thank you for your efforts and
wish you the best for your future endeavours.








We
hereby certify that you were employed by this company as a Support
Consultant for the period 1st January 2008 until 31st
October 2010.








Yours
sincerely,








On
behalf of the Pastec Distribution and Training








Peter
Hearne



Managing
Member








[5] Following her
resignation the applicant commenced her own business trading under
the name and style of Support.Com. The nature of her business is to
market Pastel computer software and to render the necessary technical
report. Since the respondent is the sole distributor of Pastel
software in Namibia, the applicant is compelled to source all the
software she requires from the respondent. What is of considerable
importance to the applicant on this aspect is the membership of
I-Forum to which reference is made in the respondent’s letter
dated 16 October 2010. Her membership entitles her to certain
discounts on the prices of the software she purchases from the
respondent, which in turn provides a profit margin when she re-sells
the software to the clients. This scheme is not confined to the
applicant but is extended to other entities like the applicant who do
similar business using Pastel products and who are I-Forum members.








[6] The relationship
between the applicant and the respondent remained ostensibly amicable
until the 31st of October 2010. On that day the respondent
wrote two letters to the applicant. They read as follows
respectively:



1)



Dear
Ms. Wiese



RE:
REVOCATION OF I-FORUM STATUS



The
above matter refers.



Kindly
note that you are hereby informed that Pastec Distribution and
Training CC is herewith revoking your i-forum status with immediate
effect.








The
reason therefore being that you deliberately, and with full knowledge
of the consequences of your actions, breached the turns upon which
Pastec Distribution and Training CC graciously agreed to relax a part
of the restraint of trade contractually applicable to you, which
restraint came into operation upon your termination of employment
with our offices.








As
a consequence of such revocation of your status you will no longer be
entitled to benefit from the discount applicable to i-forum members.








Furthermore,
and solely in the event of a referral of potential clients who have
never used the Pastel package you will be eligible for a referral
commission, however same is only payable upon the successful
conclusion of a transaction with such potential client.



Yours
faithfully,








PH
Hearne



Member








2)



Dear
Ms. Wiese



RE:
PROTECTION OF PROPRIETARY INTEREST



The
above matter refers.



Upon
your assumption of employment with Pastec Distribution and Training
CC you concluded an employment agreement with our offices, certain
conditions contained in the aforesaid contract and more specifically
clause 18.3 thereof specifically survived the termination of the
employment relationship.








In
terms of the aforesaid clause you undertook and contractually bound
yourself not to, either before or after the termination of this
employment relationship, entice or attempt to entice away
customers/clients of Pastec Distribution and Training CC and/or its
branch office.








You
are hereby informed that Pastec Distribution and Training CC will
strictly be enforcing this restriction ad infinitum. Absolutely no
relaxation and/or waiver of this restriction will be granted, and
under no circumstances will any breach of this restriction be
countenanced.








In
the event of you electing to infringe upon Pastec Distribution and
Training CC’s proprietary rights we shall be constrained to
approach the appropriate forum for the necessary relief.








Yours
faithfully,








PD
Hearne



Member








[7] It was this turn of
events and the failure to resolve the disputes which arose which
prompted the applicant to file this application.








[8] Applicant contends
that Clause 18.3 of the Contract of Employment should not be enforced
as it is against public policy firstly and secondly it is in contrast
to her constitutional right to carry on a trade or profession as
enacted in Article 21(1)(j) of the Constitution. As regards the
latter point, it must be remembered that the fundamental right of
freedom to trade is not an unlimited right. In my view the
constitutional right does not per se preclude agreements which
has the effect that the freedom to trade is in some sense or other
restricted. It follows that the attack on this basis must fail.








[9] I turn to consider
whether Clause 18.3 is against public policy. Clauses 18.1 and 18.2
are no longer in force. In Alpine Caterers Namibia (Pty) Ltd v
Owen & Others (2) 1991 NR 341, Frank J
stated the general
principles as follows on p. 346 and 347 (a-f):





Before
I deal with the particular restraints in this matter it is perhaps
apposite that I state certain principles relating to restraints in
general.




  1. The
    position in our law is that each agreement should be examined with
    regard to its own circumstances to ascertain whether the enforcement
    of the agreement would be contrary to public policy, in which case
    it would be unenforceable. Although public policy requires that
    agreements freely entered into should be honoured, it also requires,
    generally, that everyone should be free to seek fulfilment in the
    business and professional world. An unreasonable restriction of a
    person’s freedom of trade would probably also be contrary to
    public policy should it be enforced.”




See
: Magna Alloys and Research (S) (Pty) Ltd v Ellis 1984 (4) SA
874 (A)
at 875H and 897I-898B and
Book v Davidson 1989 (1) SA 638 (ZS).




  1. Public
    policy or public interest can vary from time to time and does not
    remain static. Furthermore, the fact that a certain provision is
    regarded as contrary to the public interest in South Africa would
    not necessarily mean that it would be contrary thereto in Namibia.




See
the Magna Alloys case supra at 891H.




  1. A
    restraint invoked purely for the purpose of avoiding competition and
    not to protect some proprietary interest would be unreasonable and
    against the public interest. I respectfully agree with Stegmann J
    where he states the position as follows in Sibex Engineering
    Services (Pty) Ltd v van Wyk and Another 1991 (2) SA 482 (T)

    at 502J-503B.




A
contractual restraint curtailing the freedom of a former employee to
do the work for which he is qualified will be held to be unreasonable
, contrary to the public interest and therefore unenforceable on
grounds of public policy if the ex-employee (the covenanter) proves
that at the time enforcement is sought, the restraint is directed
solely to the restriction of fair competition with the ex-employer
(the covenantee); and that the restraint is not at that time
reasonably necessary for the legitimate protection of the
covenantee’s protectable proprietary interests, being his
goodwill in the form of trade connection, and his trade secrets.”



The
terms “trade connection” and “trade secrets”
are used in the same extended sense as was done by Stegmann J, and as
appears in the Sibex case supra at 502A-F.



That
this approach is the one to follow in Namibia is further strengthened
by the Constitution.



Article
21 (1)(j) of the Constitution under the heading of “Fundamental
Freedoms” stated as follows:



All
persons shall have the right to: practise any profession, or carry on
any occupation, trade or business.”




  1. Whether
    a covenant is contrary to public policy is a factual issue. See the
    Sibex case supra at 486H.



  2. The
    Court will have regard to the circumstances pertaining at the time
    when it is asked to enforce the restriction. See the Magna Alloys
    supra at 895E-I.



  3. A
    court would be entitled to cut down a restraint so as to enforce
    only that part of it which would be reasonable and not against
    public policy. See the Magna Alloys case supra at 896A-E.”









[10] Clause 18.3 is cast
in the widest possible terms. It is intended to one of unlimited
duration and prevents the applicant from ever seeking to conduct
business with any of the respondent’s clients and is in my view
directed solely to the restriction of fair competition with the
respondent. I find that Clause 18.3 is against public policy. I did
not understand Mr. Geier to contend otherwise. He correctly and
properly conceded the point.








[11] Instead Mr. Geier
argued that Clause 18.3 was amended in the manner stated in Paragraph
2 of the respondent’s letter dated 16 October 2010 inasmuch as
the applicant became entitled to trade with the clients mentioned in
the attached list: It is clear, however, that despite the relaxation
granted in respect of those clients, the respondent made it clear to
the applicant that “.... the above does not in any way indicate
any relaxation of the restriction after termination (point 18) of
your Employment Contract signed 23rd February 2009”.








[12] It is also
noteworthy that the respondent’s understanding of the term “new
client” mentioned in the letter dated 16 October 2010, is a
person who had never before used a Pastel product.








[13] I find that assuming
in favour of the respondent that Clause 18.3 was in fact amended, the
amended Clause still remains one against public policy. Its effect is
to restrict the applicant ad infinitum to do business with any
existing client or entity whose name does not appear on the list
attached to the letter dated 16 October 2010. As far as non-existing
clients are concerned the applicant is prohibited again ad
infinitum
from doing business with any person who at some stage
in the near or distance past used a Pastel product.








[14] The restriction also
has the effect that existing clients for instance, except those whose
names appear on the list, are prohibited from doing business with the
applicant even if they want to. Such a restrictive regime is against
public policy.








[15] The matter does not
end there. It is common cause that when the respondent decided to
enforce Clause 18.3 it did so on the understanding that Clause 18.3
survived in its original form and not in its amended form. Mr. Geier
submitted in argument that the respondent misunderstood the position
and only came to realize that the agreement had been amended, when it
consulted its lawyers after the application was filed. An attempt to
enforce a contract contrary to its terms in the manner the respondent
did constitutes a repudiation of the agreement and it is no answer to
say that the repudiating party was bona fide. In Datocolor
International (Pty) Ltd vs Intamarket (Pty) Ltd (2001) ALL SA 581,
Nienaber JA
said he following:








The
emphasis is not on the repudiating party’s state of mind; on
what he subjectively intended, but on what someone in the position of
the innocent party would think he intended to do; repudiation is
accordingly not a matter of intention, it is a matter of perception.”








[16] It follows in any
event that assuming that the agreement was amended and that it is not
against public policy, there was a repudiation thereof by the
respondent. In bringing this application seeking an interdict
restraining the respondent from enforcing the agreement, the
applicant clearly demonstrated an intention and election not to be
bound by the agreement any longer which she was entitled to do.
Although this issue was not raised directly on the applicant’s
papers, I raised it with Mr. Geier during the course of his argument.








[17] Some argument was
advanced for the first time during argument that Clause 18.3
contravenes the Competition Act, No. 2 of 2003. In view of my
findings it is not necessary to deal with those submissions.








[18] Finally it is
necessary that I deal with the applicant’s I-forum status. I
was informed during the hearing that the scheme was abolished and
replaced with a new scheme. In the circumstances and in view of my
findings it will be fair and reasonable that the applicant benefits
from the new scheme on the same basis as other entities if she meets
the objective requirements required.








[19] In the result I make
the following orders:









  1. Paragraphs 2.3 and 2.4
    of the Rule Nisi are confirmed.



  2. The respondent is
    directed to admit the applicant to the scheme which replaced the new
    defunct I-Forum if the applicant meets the objective requirements
    for admission.



  3. The respondent must pay
    the applicants costs of suit, which will include the costs of one
    instructing and one instructed counsel.














_________



MILLER AJ













ON BEHALF OF THE
APPLICANT: Ms. Visser



Instructed by:
Petherbridge Law Chambers













ON BEHALF OF DEFENDANTS:
Mr. Geier



Instructed by: du Pisani
Legal Practitioners