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Legal Talk

Legal Talk

Author: Fawzia Khan
Date: 2014-07-18
A restraint of trade application was brought on an urgent basis before the High Court recently by Ster Kinekor, described as the "largest movie exhibitor in Africa", where an ex-employee Basson was to be interdicted and restrained for a period of 18 months (alternatively 12 months) from date of his termination of employment, from being employed by Nu Metro, who was described as Ster Kinekor's "direct competitor in the market".

Both Nu Metro and Basson opposed the application. The facts of the matter were briefly as follows. Basson was employed by Ster Kinekor as General Manager from 2009 until February 2014. Whilst employed with Ster Kinekor, Basson signed two separate restraints of trade agreements, one in 2009 and the second in 2013.

In support of the restraint of trade application, it was argued that whilst employed with them, Basson had access to Ster Kinekor's confidential business information, which was protected in both restraint agreements signed by him. They also contended that there was a "higher or stricter duty of confidentiality" by Basson who was employed in senior management than there would be on 'ordinary' employees.

Some examples which Basson was said to be involved in was "the development, creation and implementation of the Ster Kinekor's 'five year catering strategy' including the unique innovations, such as the offering of a coffee shop at its Eikestad Cinema Complex, the 'flute dispensers for slush drinks; 'IMAX' and 'VIP Lounge' at Gateway.

In opposing the restraint of trade interdict both Nu Metro and Basson said that the product offered by both movie exhibitors was the same and neither had a 'chemical formula' which could be used to enhance the movie going experience' of its customers.

Basson said that he obtained his experience with Nu Metro Group from 2005 to 2009 and thereafter with Ster Kinekor from 2009 to 2014. Basson argued that all the skills he acquired over a period of 10 years were his own and not as a result of any secret technique or strategy used in the movie industry.

He denied that he used confidential information and said much of the documents from which he obtained his business acumen was the Internet. He said there was no manual for having the skills he obtained and thus there was no basis or justification for such a restraint of trade to be enforced.

The presiding judge held that restraint of trade agreements were prima facie (on the face of it) valid and enforceable unless they are unreasonable and offend against public policy. The judge found that even though Basson claimed he was self taught, he did not object to the contents of the restraints as being unreasonable or as having the potential of being prejudicial to him or against public policy".

The court granted an order of restraint of trade against Basson for a period of 12 months calculated from date of his termination of employment with Ster Kinekor.

Our law says that if an employee claims unenforceability of a restraint of trade or that it is contra bonis mores (against public policy), he (the employee) then bears the onus to prove this to the court on a balance of probabilities, i.e. that the restraint is unreasonable and offend against public policy.

Know your rights! The Law Desk of Fawzia Khan & Associates. We Know! We Care! We Deliver! Email fawzia@thelawdesk.co.za or call 031-5025670 for legal assistance.