Braddon Mc Cleland (Pty) Ltd t/a Network Associates v Le Roux (CA61/2023) [2024] ZAECMKHC 49 (7 May 2024)

Braddon Mc Cleland (Pty) Ltd t/a Network Associates v Le Roux (CA61/2023) [2024] ZAECMKHC 49 (7 May 2024)

The respondent breached the restraint and confidentiality clauses by soliciting a customer of the appellant shortly after joining a competitor. The penalty clause, requiring payment of 12 months’ salary, was admitted to be a penalty as envisaged by section 3 of the Conventional Penalties Act. The respondent bore the onus to prove that the penalty was out of proportion to the prejudice suffered by the appellant and to establish the extent of any disproportionality. The evidence showed that the respondent had developed a close relationship with the customer and was well placed to solicit business for his new employer, thereby intruding upon the appellant’s customer goodwill. The respondent...

Citation
[2024] ZAECMKHC 49
Parties
Appellant: Braddon Mc Cleland (Pty) Ltd t/a Network Associates; Respondent: Calvin Le Roux
Court
Eastern Cape High Court, Makhanda
Jurisdiction
South Africa
Judgment Date
7 May 2024
Case Number
CA61/2023
Procedural Posture
Civil Appeal / Appeal From Magistrate's Court Judgment
Outcome
Appeal upheld; magistrate’s order set aside and replaced with judgment for the appellant enforcing the penalty clause.
Judges
J W Eksteen, D O Potgieter
Legal Topics
Restraint of Trade, Contractual Penalty, Conventional Penalties Act, Customer Relationships, Burden of Proof
Labour Law Commercial and Corporate Restraint of Trade Contractual Penalty Conventional Penalties Act Customer Relationships Burden of Proof

Case Brief

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Parties

Braddon Mc Cleland (Pty) Ltd t/a Network Associates

Appellant

Calvin Le Roux

Respondent

Procedural Posture

Civil Appeal / Appeal From Magistrate's Court Judgment

Legal Issues

  1. 1 Whether the respondent breached the restraint and confidentiality clauses of his employment contract.
  2. 2 Whether the penalty clause requiring payment of 12 months’ salary is out of proportion to the prejudice suffered by the appellant.
  3. 3 Whether the respondent discharged the onus under section 3 of the Conventional Penalties Act to show the penalty was excessive.

Ratio Decidendi

The respondent breached the restraint and confidentiality clauses by soliciting a customer of the appellant shortly after joining a competitor. The penalty clause, requiring payment of 12 months’ salary, was admitted to be a penalty as envisaged by section 3 of the Conventional Penalties Act. The respondent bore the onus to prove that the penalty was out of proportion to the prejudice suffered by the appellant and to establish the extent of any disproportionality. The evidence showed that the respondent had developed a close relationship with the customer and was well placed to solicit business for his new employer, thereby intruding upon the appellant’s customer goodwill. The respondent...

Court Disposition

Appeal upheld; magistrate’s order set aside and replaced with judgment for the appellant enforcing the penalty clause.

Orders

  • The respondent is ordered to pay the appellant R122,100, together with interest at the legal rate a tempore morae to the date of payment.
  • The respondent is ordered to pay the appellant’s costs of suit.