MLS Bank Ltd v Imperial Bank Ltd and Others (14292/03) [2003] ZAGPHC 5 (11 June 2003)

NOT

REPORTABLE

IN

THE HIGH COURT OF SOUTH AFRICA

(WITWATERSRAND LOCAL DIVISION)

JOHANNESBURG

CASE NO: 14292/03

DATE:2003-06-11

In the matter between

MLS

BANK LTD............................................................................................................ Applicant

and

IMPERIAL

BANK LTD AND OTHERS....................................................................Respondents

JUDGMENT

WILLIS. J: In the application of MLS Bank Ltd and Imperial Bank Ltd and Others, the applicant has approached the court by way of urgency seeking the following relief:

"1. That pending the finalisation of an application or action for final relief:

1.1 the first respondent is interdicted from

1.1.1 approaching any of the employees of the applicant with the intention of recruiting or

employing them directly or through a related company;

1.1.2 employing any persons who were employees of the applicant on 1 st June 2003 accepting the second and third respondents, directly or through a related company;

1.1.3 alternatively to 1.1.1 and 1.1.2 marketing and providing, lending and insurance products to medical and dental practitioners or private hospitals, including home loans, instalment/asset finance, personal loans, financing of companies or close corporations of medical and dental practitioners, financing of their properties and finance for the construction of hospitals and acquisition of medical equipment.

1.2 The second and third respondents are interdicted from:

1.2.1approaching any of the employees of the applicant with the intention of recruiting them on behalf of the first respondent or any related company;

1.2.2 procuring the employment of any persons who were employees of the applicant on 1st June 2003 by the respondent or any related company.

2. That the application or action referred to in the preceding paragraph be instituted by the applicant against all or any of the respondents by no later than 30 June 2003.

3. That the costs of this application be costs in the application or the action referred to in paragraph 1 above."

The case of the applicant is that the respondent has mounted a systematic campaign against it, inter alia by recruiting staff of the applicant for employment in the first respondent. The word "poaching" of staff has been used on several occasions in the founding affidavit.

There is no dispute that the first respondent has indeed employed a number of employees previously employed by the first respondent. The respondents, however, deny any malicious intention and indeed protest that a number of former employees of the applicant have actively sought out employment with the first respondent without even having been solicited for this purpose.

The leading case on unlawful competition with regard to the issues that are the subject matter of this particular dispute is Atlas Organic Fertilisers v Ptkkewyn Ghwano 1981 (2) SA 173(T1. At 200E Van Dijkhorst J says as follows:-

"This poses the following question. Is it unfair competition to induce an employee to terminate his contract of employment lawfully? Put differently, can it be unlawful conduct to exhort someone to do something lawfully? This proposition falls strange on the ear. In our competitive economy it is normal for employers to bid for their labour, the price of which is subject to the law of supply and demand. As long as the employee is free to leave others are entitled to offer him better terms of employment. The fact that the loss of the employee might cause damage to the employer is incidental and irrelevant. See New Klipfontein Co Ltd v Superintendent of Labourers 1 904TS 241. This does not mean that should a businessman systematically induce his competitor's employees to leave, his conduct would necessarily be lawful. In my view, public policy would dictate that, where the aim in inducing an competitor's employees to terminate their employment is not to benefit from their services but to cripple or eliminate the competitor, this action be branded as unlawful competition. Cf Caffmann (supra) Vol (ii) para 33.1(a)."

It is clear that in this particular case the applicant and the first respondent are competitors. Nowhere is it alleged in the founding

papers that the first respondent had no intention of benefitting from the services of the employees which it has engaged and who were previously employees of the applicant. It is not as though there is no commercial rationale to the conduct of the first respondent.

The following order is made:

The application is dismissed with costs.