Conningham and Another v CSG Holdings Limited (9193/19P) [2020] ZAKZPHC 48 (28 August 2020)

Conningham and Another v CSG Holdings Limited (9193/19P) [2020] ZAKZPHC 48 (28 August 2020)

The court held that the arbitration agreement between the parties is sufficiently broad to encompass disputes regarding the validity and enforceability of the restraint of trade clause and the penalty imposed. The arbitrator is empowered to determine these issues under both the agreement and the applicable AFSA rules. The application for declaratory relief does not fall within the exceptions for urgent relief or interdicts that would allow court intervention under clause 20.9. The applicants did not seek an order under s 3(2)(b) of the Arbitration Act to exclude arbitration. The dispute should be determined by arbitration, and the application is stayed pending the outcome of those...

Citation
[2020] ZAKZPHC 48
Parties
Applicant: Matthew Thom Coningham; Applicant: Tamin Coningham; Respondent: CSG Holdings Limited
Court
Kwazulu-Natal High Court, Pietermaritzburg
Jurisdiction
South Africa
Judgment Date
28 August 2020
Case Number
9193/19P
Procedural Posture
Urgent Application / Application for Declaratory Relief and Stay Pending Arbitration
Outcome
Application stayed pending arbitration; costs reserved.
Judges
Bedderson AJ
Legal Topics
Restraint of Trade, Arbitration Agreement, Contract Enforceability, Public Policy, Conventional Penalties Act
Commercial and Corporate Civil Procedure Restraint of Trade Arbitration Agreement Contract Enforceability Public Policy Conventional Penalties Act

Case Brief

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Parties

Matthew Thom Coningham

Applicant

Tamin Coningham

Applicant

CSG Holdings Limited

Respondent

Procedural Posture

Urgent Application / Application for Declaratory Relief and Stay Pending Arbitration

Legal Issues

  1. 1 Whether the restraint of trade clause in the Sale of Shares Agreement is unconstitutional, contrary to public policy, and unreasonable as to duration and extent.
  2. 2 Whether the dispute regarding the restraint of trade clause should be determined by arbitration in terms of the agreement.
  3. 3 Whether the arbitrator has jurisdiction to determine the validity and enforceability of the restraint of trade clause and the penalty imposed.

Ratio Decidendi

The court held that the arbitration agreement between the parties is sufficiently broad to encompass disputes regarding the validity and enforceability of the restraint of trade clause and the penalty imposed. The arbitrator is empowered to determine these issues under both the agreement and the applicable AFSA rules. The application for declaratory relief does not fall within the exceptions for urgent relief or interdicts that would allow court intervention under clause 20.9. The applicants did not seek an order under s 3(2)(b) of the Arbitration Act to exclude arbitration. The dispute should be determined by arbitration, and the application is stayed pending the outcome of those...

Court Disposition

Application stayed pending arbitration; costs reserved.

Orders

  • The application to declare unconstitutional the restraint of trade clause in the Sale of Shares Agreement is stayed pending the outcome of arbitration proceedings to determine the dispute between the parties.
  • The costs of the application are reserved.