CP De Leeuw Johannesburg (Pty) Ltd v Wheelwright and Others (J 229/22) [2022] ZALCJHB 107 (30 May 2022)

IN THE LABOUR COURT OF SOUTH AFRICA, JOHANNESBURG

Not reportable

CASE No: J 229/22

In the matter between:

CP DE LEEUW JOHANNESBURG (PTY) LTD

Applicant

and

WESTON ARTHUR DUDLEY WHEELWRIGHT

First Respondent

ANHEUSER-BUSCH InBEV SA/NV

Second Respondent

ANHEUSER-BUSCH InBEV AFRICA (PTY) LTD

Third Respondent

INTERNATIONAL BREWERIES PLC

Fourth Respondent

HIGH-TECH PROCESSING (PTY) LTD

Fifth Respondent

Heard: 24 and 25 March 2022

Delivered: 30 May 2022

Summary: Urgent application in terms of rule 8 of the Court Rules – restraint of trade application – whether a CCMA agreement in full and final settlement of all matters between the parties and any claims which the parties may have against each other extinguished the employer’s rights in terms of the restraint of trade agreement.

JUDGMENT

MKWIBISO, AJ

INTRODUCTION:

[1]. In this matter, the applicant (“the employer”) sought to enforce a restraint of trade agreement it had concluded with the first respondent (“the employee”).

[2]. The employee claimed that the rights contained in the restraint of trade agreement were extinguished by a settlement agreement concluded by the parties at the Commission for Conciliation Mediation and Arbitration (“the CCMA”). The employee further contended that he had not breached the restraint of trade agreement.

[3]. The employer sought no relief against the second to fifth respondents.

[4]. The issues are whether the settlement agreement extinguished the rights contained in the restraint of trade agreement, and whether the employee had breached the restraint of trade agreement. Determining the first issue in the affirmative would render the second issue non-existent.

RELEVANT FACTS:

[5]. The employer conducts the business of Quantity Surveying, Construction Project Management and Property Evaluating.

[6]. The employment relationship between the employer and the employee commenced in March 2004 when the employee commenced casual employment as a Student Quantity Surveyor.

[7]. In 2007, the employee was employed as a Quantity Surveyor on a fixed-term basis, with a termination date of 28 February 2010. By agreement, the employee’s employment was later made permanent.

[8]. On or about 10 September 2010, after the employee was promoted to the position of Associate Quantity Surveyor, the parties concluded a restraint of trade agreement (“the restraint agreement”). The relevant clause of the restraint agreement, upon which the employer founds its claim in this matter, is clause 2.

[9]. For a proper understanding of clause 2, I quote both clauses 1 and 2 of the restraint agreement, which read as follows:

“1. In the event of the termination of my employment with the COMPANY for any reason whatsoever, I shall not be entitled, for a period of 24 (twenty four) months after the date of termination of my employment with the COMPANY to be or become:

1.1 The proprietor of or partner in any business or firm;

1.2 A member or director of any company;

1.3 Connected in any way with any business, firm, company or other organization (other than as an employee);

which competes in any way with the COMPANY or which carries on the practice of a quantity surveyor or project manager within a radius of one hundred (100) kilometers from any place of business of the COMPANY

(currently Johannesburg, Bloemfontein & Rustenburg)

2. Neither shalI, for a period of 24 (twenty four) months following the date of termination of such employment, be entitled to conduct any business of the nature of the business conducted by the COMPANY, either on my own or as an employee of another business, with any person or business who was a Client of the COMPANY during the period of 5 (five) years immediately preceding the termination of my employment with the COMPANY. This shall include

being employed by such Client” (my emphasis).

[10]. In August 2015, the employee was appointed as a Director on the employer’s Board. He further purchased shares in the employer and ultimately became a 20% shareholder of the employer.

[11]. In 2015, the employer was appointed by the second respondent to perform quantity surveying services in respect of the construction and development of a brewery in Sagamu, Nigeria. The second respondent is a multinational brewing company, hence its involvement in the construction and development of the brewery in Sagamu, Nigeria. The project was divided into phases one and two, with the first phase commencing in 2015 and ending in October 2018 and the second phase commencing in August 2019 and ending in January 2021. In respect of the first phase, the employer was appointed directly by the second respondent, whilst in respect of the second phase the employer was appointed by the fourth respondent acting as the second respondent’s agent. The second respondent was, thus, the employer’s client from 2015.

[12]. The employee became integrally involved in the Nigeria project and was able to secure connections with the second respondent during the course of the project.

[13]. In April 2020, due to the economic downturn caused by the COVID-19 pandemic, the employer reduced the salaries of staff members including the Directors who sat on the Board. On 30 April 2020, the employee indicated that he did not accept the reduction in his salary as it was in breach of his contract and proposed that he be retrenched.

[14]. In May 2020, the employee had already incorporated his own Quantity Surveying company, by the name of WCS Quantity Surveyors.

[15]. On 03 May 2020, the employer and the employee had a meeting wherein it was agreed in principle that the applicant would be retrenched and his employment was to terminate on 30 June 2020. The parties were to agree on the amount of severance pay payable upon the retrenchment and it seems the retrenchment was conditional upon an agreement on the severance pay. When the parties did not agree on the severance pay, the employer decided to forge ahead with the termination of employment on 30 June 2021 allegedly based on its operational requirements, despite the fact that on its own version, its intention was never to retrench the employee.

[16]. Both parties had by this stage engaged their respective attorneys of record. The employer’s attorneys had, on 24 June 2021, informed the employee’s attorneys that the employer would hold the employee to his restraint of trade obligations.

[17]. Upon the termination of his employment, the employee referred an unfair dismissal dispute to the CCMA. Conciliation did not resolve the dispute and it was scheduled for arbitration at the employee’s request.

[18]. In the meantime, and subsequent to the completion of the Nigeria brewery project in January 2021, a decision was made to increase the brewing capacity of the brewery in Nigeria. The second respondent, this time around, engaged the fifth respondent as its agent to secure the services of Quantity Surveyors and other professionals. On 16 August 2021, Mr Richard Barrow who was a Projects Director of the fifth respondent sent an email to the employer requesting pricing information from a quantity surveying perspective, in respect of the upgrade of the Nigeria brewery. The email of Mr Barrow was sent to the email address that the employee had used while still employed by the employer.

[19]. On 17 August 2021, the employer informed Mr Barrow that the employee had left its employ and that the employee was subject to a restraint of trade agreement. Several correspondence were then exchanged between Mr Barrow and the employer, which included:

19.1 Correspondence on 29 November 2021 confirming that the employer’s costing had been accepted;

19.2 Correspondence on 29 November 2021 requiring the employer to sign a non-disclosure agreement in respect of the upgrade project;

19.3 Correspondence on 08 December 2021 enclosing a purchase order for the employer’s attention; and

19.4 Correspondence on 09 December 2021 informing the employer of a site visit that had taken place and confirming that the upgrade project would commence in the new year.

[20]. On 21 October 2021, at the arbitration hearing between the employer and the employee, the parties decided to enter into a settlement agreement which included an annexure. The employee seeks to rely on the following clauses of the annexure to the settlement agreement in order to avoid liability in terms of the restraint of trade agreement:

“2. The Parties have agreed to the full and final settlement of all matters between them and wish to record the terms of the settlement in this Agreement.

…

5. This Agreement is in full and final settlement of all and any claims which the Parties may have against each other whether such claims arise from contract, delict, operation of law, equity, fairness or otherwise” (my emphasis).

[21]. On 24 January 2022, Mr Barrow of the fifth respondent made a U-turn in his dealings with the employer. In an email on that date, Mr Barrow informed the employer of the following:

“Hi Gary

I trust 2022 has started well and I wish you all the best!

Our Project Team along with the Client Project Team had the kickoff meetings on site for the Gateway FEP Design Project last week.

The Client expressed their desire to continue with the same QS who was contracted at the time of the Greenfields Build, and they

specifically requested that we make use of Weston on this one. It is a difficult call for us to make as we had already negotiated and committed to De Leeuw however we respectfully request that we adhere to the Client’s request and cancel the PO that we have issued to yourselves

We trust that you understand we have had to make this decision in the best interest of the Project and the Client’s wishes” (my emphasis).

[22]. Further correspondence between Mr Barrow and the employer culminated in Mr Barrow confirming that the fifth respondent would contract with the employee based on an understanding that the CCMA settlement agreement extinguished the restraint of trade agreement between the employer and the employee. Mr Barrow informed the employer to take up any concerns he had regarding the proper interpretation of the settlement agreement with the employee. This position was expressed by Mr Barrow in two emails, dated 03 February 2022 and 15 February 2022.

[23]. On 18 February 2022, the employer’s attorneys wrote a letter to the employee’s attorneys, demanding an undertaking that the employee would not work on the Nigeria brewery upgrade project. On 21 February 2022, the employee’s attorneys responded by refusing to provide the undertaking sought. This led to the filing of the urgent application in this matter on 28 February 2022.

EVALUATION

[24]. Rule 8 of the Court Rules provides the following:

“8 Urgent relief

(1) A party that applies for urgent relief must file an application that complies with the requirements of rules 7(1), 7(2), 7(3) and, if applicable, 7(7).

(2) The affidavit in support of the application must also contain-

(a) The reasons for urgency and why urgent relief is necessary;

(b) The reasons why the requirements of the rules were not complied with, if that is the case; and

(c) If a party brings an application in a shorter period than that provided for in terms of section 68(2) of the Act, the party must provide reasons why a shorter period of notice should be permitted”.

[25]. The employer’s application in this matter was launched on 28 February 2022, which was less than two weeks after Mr Barrow had informed it to take up its concerns with the employee and a week after the employee had refused to give an undertaking to not work on the Nigeria brewery upgrade project. I have discretion to hear this matter on an urgent basis, which discretion I must exercise judiciously. I consider the employer to have acted with sufficient speed from the time it was informed to take up its concerns with the employee. It is trite that applications for restraint of trade are inherently urgent. Having this matter heard in the normal course would mean the 24 months period would have expired by the time the matter is heard in the normal course and the purpose of the application would have been defeated. As a result, I consider this matter to be urgent.

[26]. The employer effectively sought final relief and the requirements of such relief are the following: (a) a clear right; (b) an injury actually committed or reasonably apprehended; and (c) the absence of an adequate alternative remedy.[1]

[27]. Whether or not the employer has a clear right depends on two issues, namely: whether the employer waived its rights to the restraint of trade agreement by entering into the CCMA settlement agreement; and whether the employee acted in breach of the restraint of trade agreement.

[28]. With regard to the first issue, the employee contends that the employer waived its rights because when it concluded the CCMA settlement agreement, it was aware of the issue of the restraint of trade but it failed to expressly carve the restraint of trade rights out of the settlement agreement. The employment contract had also terminated and the operation of clause 2 of the restraint of trade agreement had been triggered by the time the settlement agreement was concluded.

[29]. The employee further contends that reference to “full and final settlement of all matters between them” in clause 2 of the annexure to the CCMA settlement agreement covers matters arising out of the restraint of trade agreement, which prohibits the employer from enforcing its rights in terms of the restraint of trade agreement.

[30]. The employee, furthermore, contends that reference to “full and final settlement of all and any claims which the Parties may have against each other” in clause 5 of the annexure to the settlement agreement includes claims that existed at the time of the settlement agreement and future claims that did not exist at the time of the settlement agreement. In this regard, the employee relies on the judgment of Coetzee AJ in Toerien,[2] which was handed down one year ago. The employee relies on the following passage from Toerien to nullify the contention that the settlement agreement was only meant to resolve the matters that were referred to the CCMA:

“[25] The applicant contends that he only settled a claim, in terms of the settlement agreement, if an when it arose from his employment and the matter referred to conciliation and the termination of his employment.

[26] This interpretation does not make sense. If that was the case then there was no need to refer to anything else but the matter before the CCMA”.[3]

[31]. The employer, on the other hand, contends that it did not waive its rights and the CCMA settlement agreement was meant to only settle the matters that were referred to the CCMA. According to the employer, both clauses 2 and 5 of the annexure to the settlement agreement relate to claims that existed at the time of entering into the settlement agreement and do not include future claims. The claim of breach of the restraint agreement, according to the employer, only arose after the signing of the CCMA settlement agreement and as such was not a claim in existence at the time of the CCMA settlement agreement.

[32]. The employer contends further that reliance on Toerien is misplaced because the “full and final settlement” clause in that case specifically referred to claims that existed “whether now or in the future” and the following dicta from the judgment in Toerien must have the opposite effect in the current matter:

“[29] The second phrase that must have a meaning is ‘whether now or in the future’.

[30] This phrase is rendered superfluous and without meaning if the settlement agreement only regulated those pending claims at the time. The only meaningful interpretation of this phrase is that the settlement agreement also covered any claim of whatsoever nature made in the future arising from the employment of the applicant.

[31] The current claim arises from the applicant’s employment with the respondent. The applicant undertook not to pursue any claim arising from his employment then or in the future”.[4]

[33]. The starting point when dealing with the interpretation of a contract is to rely on the guiding principles that were laid by the Supreme Court of Appeal in this oft-cited passage:

“[18] … Interpretation is the process of attributing meaning to the words used in a document, be it legislation, some other statutory instrument, or contract, having regard to the context provided by reading the particular provision or provisions in the light of the document as a whole and the circumstances attendant upon its coming into existence. Whatever the nature of the document, consideration must be given to the language used in the light of the ordinary rules of grammar and syntax; the context in which the provision appears; the apparent purpose to which it is directed and the material known to those responsible for its production. Where more than one meaning is possible each possibility must be weighed in the light of all these factors. The process is objective not subjective. A sensible meaning is to be preferred to one that leads to insensible or unbusinesslike results or undermines the apparent purpose of the document. Judges must be alert to, and guard against, the temptation to substitute what they regard as reasonable, sensible or businesslike for the words actually used. To do so in regard to a statute or statutory instrument is to cross the divide between interpretation and legislation. In a contractual context it is to make a contract for the parties other than the one they in fact made. The ‘inevitable point of departure is the language of the provision itself’, read in context and having regard to the purpose of the provision and the background to the preparation and production of the document”.[5]

[34]. It is trite that interpretation is a matter of law, and is a matter for the Court and not the witnesses.[6]

[35]. In my view, this matter is distinguishable from Toerien, wherein the parties had specifically agreed to settle both current claims and claims that could arise in the future.

[36]. Both waiver and the settlement of future claims are drastic measures that should not be lightly inferred. In respect of waiver in particular, the Constitutional Court in Lufuno Mphaphuli and Associates held as follows:

“[81] … Waiver is first and foremost a matter of intention; the test to determine intention to waive is objective, the alleged intention being judged by its outward manifestations adjudicated from the perspective of the other party, as a reasonable person. Our courts take cognisance of the fact that persons do not as a rule lightly abandon their rights. Waiver is not presumed; it must be alleged and proved; not only must the acts allegedly constituting the wavier be shown to have occurred, but it must also appear clearly and unequivocally from those facts or otherwise that there was an intention to waive. The onus is strictly on the party asserting waiver; it must be shown that the other party with full knowledge of the right decided to abandon it, whether expressly or by conduct plainly inconsistent with the intention to enforce it. Waiver is a question of fact and is difficult to establish”.[7]

[37]. I am in agreement with the employer that it did not waive its rights in terms of the restraint agreement. The surrounding circumstances demonstrate that the employer wanted to enforce its rights in terms of the restraint agreement by reminding the employee of his obligations in terms of that agreement both before and after the conclusion of the CCMA settlement agreement. The terms of the CCMA settlement agreement are not enough to upset this conclusion on the employer’s intention.

[38]. I further agree with the employer’s position that the CCMA settlement agreement did not include the settlement of future claims. Had the parties intended to include such future claims, they would have said so in the CCMA settlement agreement. Unlike in Toerien, they decided not to do so.

[39]. The claim in the current matter, relating to the employee doing work on the Nigeria brewery upgrade project in breach of the restraint agreement, was not in existence at the time when the parties entered into the CCMA settlement agreement on 21 October 2021. The employer had on that date not yet made that claim and was not even in a position to make such a claim because it was not aware of the employee’s actions in that regard. The employee’s answering affidavit provides no assistance on this issue – it merely alleges that on 16 August 2021 Mr Barrow of the fifth respondent sent him an email asking if he “would be interested in the QS services” and also alleges that the employee contracted with the fifth respondent, without stating whether he had contracted with the fifth respondent by 21 October 2021 when the CCMA settlement agreement was concluded and whether the employer was aware of his actions. My conclusion in this paragraph is in line with the ordinary and grammatical meaning of the term “claim”, defined by the High Court in Boshoff as follows:

“The natural meaning of claim is ‘a demand for something as due; an assertion of a right to something’ (Shorter Oxford Dictionary), and it does not include an occurrence in respect of which some indemnity might be sought”.[8]

[40]. As a result, the restraint agreement remained alive even after the parties had concluded the CCMA settlement agreement of 21 October 2021.

[41]. With regard to the issue whether the employee breached the restraint agreement, the employee’s defence is that his contract is with the fifth respondent who is not a client of the employer. On the other hand, the employer argues that in substance a finding should be made that the employee was doing work for the second respondent who was its client.

[42]. It is not in dispute that the employee is contracted to the fifth respondent, the fifth respondent was the second respondent’s agent, and it was the second respondent who wanted the services of the employee and caused Mr Barrow of the fifth respondent to be in contact with him. Essentially, the employee conducted business with the second respondent, through the fifth respondent, in breach of clause 2 of the restraint agreement. It is trite that he who acts through another commits the act himself – qui facit per alium facit per se. The second respondent, when acting through the fifth respondent to secure the employee’s services on its project, in substance conducted business with the employee.

[43]. The employee, thus, breached clause 2 of the restraint agreement by substantively conducting business with the second respondent – a client of the employer – in respect of the Nigeria brewery upgrade project.

[44]. It is not in dispute that the employee had access to the employer’s clients (particularly the second respondent) as a result of the performance of his duties while employed by the employer. The employer, thus, had a protectable interest in the form of client connections, which justified clause 2 of the restraint agreement.[9] The clarity of clause 2 of the restraint agreement and the parties’ intentions expressed therein cannot be gainsaid.

[45]. In Ball, the Labour Appeal Court dealt with the reasonableness and enforceability of a restraint of trade agreement in the following terms:

“[15] The enquiry into the reasonableness of a restraint is a value judgment that involves a consideration of two policy considerations namely, the public interest, which requires that parties to a contract must comply with their contractual obligations (i.e. pacta servanda sunt) and the principle, that a citizen should be free to engage or follow a trade, occupation or profession of her choice.

[17] The enquiry into reasonableness has been refined and elaborated on in cases such as Reddy and Basson. The enforceability of a restraint

essentially hinges on the nature of the activity that is prevented, the duration of the restraint, and the area of operation of the restraint. In particular, the determination of reasonableness is, essentially, a balancing of interests that is to be undertaken at the time of enforcement and includes a consideration of ‘the nature, extent and duration of the restraint and factors peculiar to the parties and their respective bargaining powers and interests’”.[10]

[46]. The period of the restraint was 24 months after the termination of employment, which means it became effective on 01 July 2021 and is due to expire on 30 June 2023. The employer can, thus, only enforce the remaining 13 months of the restraint period. The employee is not restrained to practice his profession as a Quantity Surveyor, but is merely compelled to practice his profession without contracting with entities or persons who were the employer’s clients during the period of 5 years prior to the termination of the employment relationship. The employee confirmed that he is a businessman and seemingly had sufficient bargaining power to enable him to conduct business with the second respondent through the agency of the fifth respondent. There is nothing to suggest that he would not be able to secure other work unrelated to the employer’s clients. Under all these circumstances, the 13 months period of restraint is in my view reasonable and clause 2 of the restraint agreement is enforceable.

[47]. I, therefore, find that the employee breached clause 2 of the restraint agreement and his conduct prejudiced a protectable interest of the employer to the extent that the employer lost work on the Nigeria brewery upgrade project and the revenue that would come with that work. This means the employer has established a clear right to the interdictory relief it seeks and an injury actually committed. There is no adequate alternative remedy available to the employer.

COSTS:

[48]. The employee genuinely but erroneously considered the settlement agreement to have extinguished the restraint of trade agreement. I had also expressed a prima facie view consistent with the employee’s position when the matter was argued, which view I evidently no longer hold after having applied my mind fully to this matter. Fairness does not justify an award of costs under those circumstances.

Order

1. The application is heard as one of urgency.

2. The first respondent is, from the date of this order until 30 June 2023, interdicted and restrained from conducting any business of the nature of the business conducted by the applicant, with the second and fourth respondents or any other person or business acting as agents of the second and fourth respondents, or any other person or business who was a client of the applicant during the period of five years immediately preceding the termination of the employment contract between the applicant and the first respondent.

3. The first respondent is, from the date of this order until 30 June 2023, prohibited from continuing to conduct business or contracting with the second, fourth and fifth respondents in respect of the Quantity Surveying services performed or to be performed in respect of the Gateway ph 123 uplift project, referred to as the Nigeria brewery upgrade project in this judgment.

4. There is no order as to costs.

VG Mkwibiso AJ

Acting Judge of the Labour Court

APPEARANCES

For the Applicant : Adv S Pincus SC

Instructed by Assenmacher Brandt Attorneys

For the Respondent : Adv S Swartz

Instructed by Webber Wentzel

[1] Setlogelo v Setlogelo 1914 AD 221, 227; IMATU obo Shihambi and Others v City of Ekurhuleni Metropolitan Municipality and Others (J1832/18) [2018] ZALCJHB 239 (6 June 2018) (saflii.org.za), paragraph [3].

[2] Toerien v University of Witwatersrand Johannesburg (2021) 42 ILJ 2010 (LC).

[3] Ibid, paragraphs [25] – [26].

[4] Ibid, paragraphs [29] – [31].

[5] Natal Joint Municipal Pension Fund v Endumeni Municipality 2012 (4) SA 593 (SCA), paragraph [18].

[6] Stopforth and Others v Nedbank Limited (HCAA20/2019) [2020] ZALMPPHC 95 (18 November 2020) (saflii.org), paragraph [15].

[7] Lufuno Mphaphuli and Associates v Andrews and Another 2009 (4) SA 529 (CC), paragraph [81].

[8] Boshoff v South British Insurance Co Ltd 1951 (3) SA 481 (T), 485E.

[9] Labournet (Pty) Ltd v Jankielsohn (2017) 38 ILJ 1302 (LAC), paragraph [41].

[10] Ball v Bambalela Bolts (Pty) Ltd and Another (2013) 34 ILJ 2821 (LAC); [2013] 9 BLLR 843 (LAC), paragraphs [15] and [17].