Solar-powered electricity systems have become so common in South Africa, and so many firms offer supply and installation, that it was really just a matter of time until a dispute about restraint of trade in such a business made it to the courts. But this one ended up being about something else as well: the questionable tactics a company seems to have used to prevent a staff member from working for anyone else in a similar business.
Read the judgment here: https://www.saflii.org/za/cases/ZAGPPHC/2023/749.html
Tyrique Lleyds was officially termed an ‘energy sales consultant’ by Solarwize Africa when he started working for them in May 2022. As you can guess from the name, the company imports, supplies and installs the elements that customers would need to install solar alternatives to Eskom’s electricity supply. Among others, Solarwize Africa deals with solar panels, solar inverters, solar batteries and solar installations accessories.
A little more than a year into the job, Lleyds resigned from Solarwize, and joined Afristar Lighting as a sales representative.
While he had worked at Solarwize, Lleyds had signed an employment contract with that company, and it was the nature and content of that contract that would become crucial to the case the court had to consider.
Competitors operating in the same market
Obviously, said the judge, Leicester Adams, there could be no doubt that the various Afristar component companies on the one hand, and Solarwize Africa on the other, were ‘competitors operating in the same market and in the same industry’.
Against that background, what Solarwize wanted from the court was an order ‘interdicting the infringement of an alleged written restraint of trade’ that it and Lleyds had signed. In terms of this restraint of trade, the order they wanted the court to issue would apply against Lleyds for 36 months.
During that time, he was not to be employed by Afristar or its associated companies or any other company that supplies solar panels, inverters, batteries and installation accessories or ‘electrical goods’ in any part of Gauteng.
There was also a long list of information, said to be part of Solarwize’s intellectual property or trade secrets, that Lleyds wasn’t allowed to ‘distribute, retain or sell’ during this period of restraint of trade.
Denied he signed the restraint agreement
But before he got to dealing with Solarwize’s list of things that Lleyds shouldn’t be allowed to do, there was a critical prior issue for the judge to resolve: while the case brought by Solarwize was based on its claim of a restraint of trade agreement between the parties, Lleyds denied that he had been a signatory to any such restraint agreement.
This meant, said the judge, that if he found there wasn’t in fact a restraint of trade agreement between Lleyds and Solarwize Africa, then the company’s action against its former employee would fail.
So, what did Lleyds say about the restraint agreement?
Photographs of the document he signed
According to the company, the agreement was ‘incorporated’ into the employment contract between Solarwize and Lleyds. But Lleyds ‘vehemently denied’ that this was so.
He claimed that when he signed the employment contract, during November 2022, he was given a document to sign that didn’t include a restraint of trade clause. And Lleyds had apparent proof of this to offer the court, he had taken photographs of the document that was given to him to sign and it was clear from the pictures that the four-page contract didn’t include a restraint of trade clause.
He told the court that he had started to work for Solarwize in April 2022, but was only given the employment contract to sign some months later – in November 2022.
And again, he could prove this because the camera that he used to photograph the contract, date-stamped the pictures. It also indicates the address where the photo was taken – the business premises of Solarwize.
Fabrication and insertion fraudulent
In view of all this, Lleyds contended that the restraint of trade clause, relied on by Solarwize, ‘is a fabrication and was fraudulently inserted’ after the employment contract had been signed.
This meant that the dispute between the two sides was no longer about the impact of the restraint of trade agreement. Rather, it was about which of the two versions heard by the court, ought to be accepted.
The judge noted that, in an application like this, when there is a factual dispute, the general rule is that a court ‘will only accept those facts alleged by the applicant [Solarwize] which accord with the respondent’s [Lleyds’s] version of events. There were exceptions to this rule, one of which is that the court may accept the applicant’s version of the facts where the respondent’s version ‘is so far-fetched as to be rejected on the papers’.
Ring of truth to it
Solarwize argued that Lleyds’s version should be rejected on the papers, but the judge said he disagreed. It couldn’t possibly be said that the version put up by Lleyds was ‘so far-fetched that it can be rejected on the papers.’
More than that, the judge said the Lleyds’s story ‘has a ring of truth to it’, and his version seemed to be confirmed by the document relied on by Solarwize. This document – according to the company it was the written employment contract and included the restraint of trade clause – had numbering inconsistencies and duplications of headings. Taken together, these oddities about the Solarwize document meant that the Lleyds’s story ‘may very well be true’, said the judge.
However, he looked at the matter and the evidence before him, he couldn’t come to the conclusion that Lleyds’s version was ‘far-fetched’. This meant that the judge refused to reject this version, and that in turn meant that the Solarwize application had to be dismissed.
But even if he were to accept that Solarwize partly based its case on the ‘confidentiality clause’ in the employment agreement, rather than solely on the alleged restraint of trade clause, the application would still fail, Adams said. This was because the company hadn’t made out a case for the ‘legitimate protection of its confidential information’ via a restraint of trade order against Lleyds.
‘Little technical knowledge’
Lleyds was a sales consultant whose job was to ‘sell the products’, rather than to manufacture them, said the judge. ‘He has very little technical knowledge’ that would be relevant to the Solarwize technical operation. Ordinary general information about a business wasn’t confidential simply because the owner defined it as such, Adams said.
For information to qualify as ‘confidential’, three requirements had to be satisfied. It had to be useful. It must be known only to a restricted number of people. Finally, and objectively determined, the information had to be of economic value to the person seeking to protect it.
In his view, the company hadn’t persuaded him that the confidential information they wanted to protect would qualify in terms of this test.
Finally, the court ordered that the company should pay Lleyds’s costs for the urgent application.
Urgent application was doomed
It’s always interesting to see how courts will decide what information qualifies as ‘confidential’ and when they will be prepared to issue an order of restraint of trade. Restraint applications generally have a high win rate for employers. That tide is starting to turn. Restraints are very much still enforceable, but employers need to ensure that the restraint is capable of enforcement as getting your desired order is no longer a given.
Resorting to desperate measures, such as fraudulently inserting a restraint which does not exist, is doomed to fail.
But in this case, the matter hardly even reached the point where this had to be decided: the company’s application was doomed by the court’s finding that the version of Lleyds, who claimed the restraint agreement was a fraudulent fabrication, could quite possibly be true.
There’s a clear warning here for employers, and any other litigants. Don’t launch legal action based on documentation that isn’t genuine.
B Soc Sc LLB
LLB
B Com LLB
B Soc Sc Hons (Psych) LLB
B Com LLB
