Automated Summary
Key Facts
A.I.G Sales (Pty) Ltd (A.I.G) sought enforcement of a 12-month restraint of trade against Ms Kelly Ann Hutt (Ms Hutt) after she resigned to join Quality Tube Services CC, a competitor. The restraint prohibited Ms Hutt from working for competitors, soliciting A.I.G's customers, or using confidential information. The court found that the confidentiality of pricing data had diminished over time, the threat of solicitation was reduced by an existing interdict against Quality Tube, and the restraint was unreasonable given the constrained economic climate. The rule nisi issued on 13 August 2020 was discharged on 17 December 2020.
Issues
- Whether A.I.G's unilateral reduction of Ms Hutt's salary by 30% and subsequent failure to pay the difference through TERS constitutes an election (approbation and reprobation), thereby waiving their right to enforce the restraint of trade provisions.
- Whether A.I.G's non-payment of the difference between Ms Hutt's actual salary and TERS amounts during the lockdown period renders the restraint provisions unenforceable due to lack of consideration.
- Whether the restraint of trade provisions are reciprocal given A.I.G's failure to honor its obligation to pay the difference between Ms Hutt's actual salary and TERS amounts during the lockdown period.
- Whether enforcing the restraint of trade provisions would be against public policy (contra bonos mores) given the diminished threat of Ms Hutt using confidential information and the constrained economic climate.
Holdings
- A.I.G failed to demonstrate that its confidential information still required protection, as the threat of soliciting customers had diminished by the final interdict against the new employer.
- The rule nisi issued by Coetzee AJ on 13 August 2020 is discharged.
- Each party is ordered to bear its own costs, as the issues raised had constitutional merit and the court exercises discretion to avoid a chilling effect on constitutional litigation.
- The restraint provisions were found to be unreasonable and against public policy, as they sought to prevent Ms Hutt from being economically active in a constrained job market without sufficient justification for the risk to A.I.G's proprietary interests.
Remedies
- The rule nisi issued by Coetzee AJ on 13 August 2020 is discharged, meaning the applicant's request for a final order is denied.
- There is no order as to costs, indicating that neither party is required to pay the other's costs in this matter.
Legal Principles
- Ms Hutt relied on the exceptio non adimpleti contractus defense, claiming A.I.G's failure to pay TERS amounts rendered the restraint provisions unenforceable. The court rejected this, noting the TERS payment dispute remained unresolved and that reciprocity in restraint agreements requires clear, mutual obligations. A.I.G's salary reduction was justified by lockdown regulations, not a breach of contract.
- The court applied the principle of approbation and reprobation, which holds that a party cannot benefit from a position they previously opposed. Ms Hutt argued A.I.G unilaterally reduced her salary and failed to pay TERS amounts, yet later enforced restraint provisions. The court found this argument unconvincing, as A.I.G's actions were tied to mandatory lockdown regulations, not arbitrary unilateral changes.
Precedent Name
- Basson v Chilwan and Others
- Experian South Africa (Pty) Ltd v Haynes and Another
- Road Accident Fund v Mothupi
- Magna Alloys and Research SA (Pty) Ltd v Ellis
- IIR South Africa BV v Tarita and Others
- Reddy v Siemens Telecommunications (Pty) Ltd
- Labournet (Pty) Ltd v Jankielsohn and Another
- Den Braven SA (Pty) Ltd v Pillay and Another
- Borstlap v Spangenberg en Andere
- Handico (Pty) Ltd v Vallabh and Another
- Feinstein v Niggli and Another
- Sibex Engineering Services (Pty) Limited v Van Wyk and Another
- FirstRand Bank Ltd v Soni
- International Executive Communications Ltd v Turnley and Another
- BK Tooling (Edms) Bpk v Scope Precision Engineering (Edms) Bpk
- Maltz v Meyerthal
- IIR South Africa BV v Hall (aka Baghas) and Another
Cited Statute
- Constitution of South Africa
- Disaster Management Act, 2002
Judge Name
P. Nkutha-Nkontwana
Passage Text
- [28] As such, the applicant failed show that its confidential information still require protection.
- [33] In all the circumstances, A.I.G has not made a case for the confirmation of the rule nisi issued on 13 August 2020.
- [32] In my view, quantitatively and qualitatively, the interest of the Ms Hutt surpasses that of A.I.G. While it is true that public policy requires contracts to be enforced, the restraint covenants in the present matter are against public policy and should not be enforced as the terms are unreasonable.