CASE LAW UPDATE

Facts: As part of the French government’s on-going campaign against drink-driving, it enacted a Decree which made it mandatory, subject to limited exceptions, for every motor vehicle driver in France to possess an unused portable testing device capable of analysing a person’s breath to determine his/her blood alcohol level (breathalyzers). The practical effect of the requirement that each motor vehicle contains an unused breathalyzer was that each motor vehicle was required to have two, in the event that one was used. Mr Van der Bergh (plaintiff) contends that he controlled the production of the breathalyzers in Cape Town through Redline Products (Pty) Ltd, one of only two producers in the world of the sort that were required. The plaintiff contends that there was an agreement with the French government (defendant) to supply the breathalyzers and that Redline incurred substantial liabilities and expenses gearing up for the anticipated supply of the breathalyzers.

Claim: Another Decree was enacted which confirmed the indefinite postponement of the payment of a fine for not having an unused breathalyzer in a vehicle whilst driving in France. The demand for the breathalyzer collapsed. Since there were no consequences for the breach of the Decree, defendant, distributors and customers refused to take any further deliveries from plaintiff. This, according to plaintiff, amounted to defendant repudiating its contract with plaintiff. Plaintiff instituted action against the defendant for payment of the sum of R244,761,227 and interest thereon.

Discussion: Defendant has lodged an exception to plaintiff’s particulars of claim on the basis that this court does not have jurisdiction, given the immunity which defendant enjoys as a foreign state. Foreign states are, as a general proposition, immune from the jurisdiction of South African courts due to the provisions of section 2(1) of the Foreign States Immunities Act 87 of 1981. Given the particulars of claim and plaintiff’s argument before this court, it appears that plaintiff has attempted to bring his action within this court’s jurisdiction by alleging that his cause of action is based on a commercial transaction and is, therefore, a lawful exception, as provided for in section 4(1)(a) of the Act, to the general immunity provided to foreign states.

Findings: In essence, what plaintiff is claiming is that it supplied breathalyzers to defendant for which it was paid but that defendant reneged on its obligation to ensure that the Decree would remain in force and contain a penalty provision for non-compliance in perpetuity. The principal difficulty with plaintiff’s submission is that the enactment of legislation, or the amendment or repeal thereof, is primarily political in nature and involves the exercise of sovereign authority. From what is stated in the particulars of claim, it is apparent that the Decree was meant to apply to all drivers in France and was designed to achieve a public objective. Certainly, it appears that the purpose of the Decree was not to enact a law in order that plaintiff may profit therefrom in perpetuity. The Decree was a political or governmental act that fell outside the ambit of the definition of “commercial transaction” under the Act.

Order: The exception is upheld with costs. Plaintiff is afforded an opportunity, within 14 days of this order, to amend his pleadings should he be able to establish any facts upon which this court could find that there is an exception to the immunity of defendant in terms of section 4 of the Foreign States Immunities Act 87 of 1981.

FRANCIS J

Facts: SPPE describes itself as the leader in procurement and distribution of quality and application specific products that protect people's health and safety, commonly known as Personal Protective Equipment (PPE). SPPE also provides a wide range of services relating to PPE. Over years of conducting business, SPPE has formulated and established an online PPE cloud-based solution (system), housed on a secure IT platform, which is controlled by SPPE and subject to access control. This system obviously contains valuable information and data concerning the use of PPE by each end-user customer of SPPE. Holmes was employed as an infrastructure technician. He progressed to become the information infrastructure co-ordinator at SPPE, in 2016, and he occupied this post at the time of termination of employment. Upon Holmes being appointed as information infrastructure co-ordinator, SPPE and Holmes concluded a written contract of employment, a restraint agreement, and a confidentiality agreement.

Application: The applicant brought an urgent application to enforce a restraint of trade covenant against the respondent (Holmes), a former employee of the applicant. It was common cause that the respondent has commenced employment with Universal Safety Products (USP), which conduct the applicant considers to be in violation of the restraint of trade. The applicant effectively seeks an interdict against the respondent, to prevent him from continuing his employment with USP. The applicant also seeks further relief in the form of an order directing the respondent to keep the applicant’s confidential information, confidential.

Discussion: Answering the question whether employment of Holmes with USP constitutes breach of the restraint is very much dependent on answering whether USP is a competitor of SPPE. This is because the restraint agreement specifically prohibits the employment of Holmes with any business that "carries on any business which is similar to, or which competes" with the business of SPPE. This kind of clause contemplates a comparison, on the facts, between the business of SPPE and the business of USP, as the businesses currently stand. There is a material difference between the nature of the two businesses. USP is a manufacturer of some PPE, whilst SPPE is a retailer of a broad range of PPE which it gets from multiple suppliers without itself manufacturing anything. USP sells the PPE manufactured by it to PPE retailers or wholesales, such as SPPE, and not to end-user customers. SPPE sells a broad range of PPE specifically to end-user customers, and the very systems it is so adamant is essential to its business and needs to be protected, is only geared at doing just that. USP would be a manufacturer that is a supplier to SPPE, and not a competitor to it.

Findings: There is no legitimate basis for contending that the businesses are the same or similar or in competition with one another, even though the common denominator is selected PPE products. The best that SPPE could offer as to the alleged change in business direction of USP is in reality nothing else but conjecture and speculation. There is not a single shred of evidence provided of any sales proposal for PPE being made by USP to any end-customer of SPPE. The employment of Holmes with USP does not constitute a breach of his restraint of trade with SPPE. The reason for this, in a nutshell, is that USP is not a competing business to that of SPPE. SPPE cannot overcome the undeniable reality that USP is not a retailer of PPE to end-user customers. USP is simply a manufacturer of certain limited PPE and does not sell such PPE to any end-user customers. USP only sells the PPE it manufactures to retailers such as SPPE itself, which ironically, is still a customer of USP where it comes to U-Mask. SPPE and USP simply do not compete with one another in the open market. As such, the employment of Holmes with USP cannot be a breach of his restraint of trade. The confidential information that Holmes may have is effectively bespoke to SPPE, and simply cannot be deployed or utilised in USP, and has no value to it.

Order: Save for the relief granted below, the applicant’s application is dismissed. The first respondent is interdicted and restrained from disclosing, whether directly or indirectly, any confidential information acquired from the applicant, in respect of which the applicant has exclusive rights.

SNYMAN AJ

Facts: Mr Ntuli commenced his employment with Ferroglobe in 1991 as an Electrician. He held various positions at Ferroglobe, and when he was dismissed in 2018, he held the position of engineering superintendent. In 2015, Mr Ntuli became a member of AMCU. AMCU and Ferroglobe concluded a recognition agreement in terms of which Mr Ntuli was recognised as a shop steward and branch chairperson, representing AMCU members. Mr Ntuli was charged in 2018 with poor work performance in that: he failed to do his tasks after several poor work performance counselling sessions; conflict of interest in that Mr Ntuli disregarded and worked against management decisions and the company policies, neglected his managerial duties and preferred to attend disciplinary hearings and other meetings; and disorderly conduct in that Mr Ntuli led employees on an unprotected strike. Mr Ntuli was found guilty as charged and dismissed. AMCU referred a dispute of unfair dismissal to the CCMA. The conciliation at the CCMA was unsuccessful and the dispute was referred to arbitration. The arbitrator ruled that the CCMA lacked jurisdiction to arbitrate the matter because Mr Ntuli was alleging that he was unfairly discriminated against, hence these proceedings.

Application: The applicant (AMCU) is challenging the dismissal of Mr Ntuli, its member, on the basis that it was automatically unfair as envisaged in section 187(1)(d) and (f) of the Labour Relations Act 66 of 1995; alternatively, that the dismissal was substantively unfair. It primarily contends that Mr Ntuli was discriminated against based on his position as the AMCU branch chairperson and shop steward. The respondent (Ferroglobe) disputes that it discriminated against Mr Ntuli and contends that he was dismissed for poor performance and misconduct consequent to a disciplinary hearing that found him guilty. The main issue for determination is the reason for the dismissal of Mr Ntuli.

Discussion: The crux of Mr Ntuli's version is that he was charged, found guilty and dismissed because of his duties as a shop steward and AMCU branch chairperson. That is the basis for his claim that his dismissal was automatically unfair. Ferroglobe, on the other hand, contends that Mr Ntuli departed substantially from the performance standard required of him as a senior employee and an engineering superintendent. He was offered counselling, training, instructions, and ample time to improve but failed to meet the required performance standard. In addition, Mr Ntuli exceeded the limits of his role as a shop steward by misconducting himself by attending to his union responsibilities in a manner that conflicted with his duties as a senior employee and in breach of the obligations as set out in the recognition agreement. The pertinent complaints that led to the poor work performance counselling sessions and dismissal were that Mr Ntuli failed to attend to his projects on time and there were delays in their finalisation. Mr Ntuli was also accused of delaying projects by refusing to properly plan, scope and prepare paperwork like project scoping forms and project management bar charts. Even though he had commenced utilising the scoping form after the first counselling session, Mr Pereira testified that he did so half-heartedly and inconsistently. He, Mr Pereira, had to correct the project scoping forms Mr Ntuli submitted.

Findings: Mr Ntuli ought to have assessed and appreciated that he was not performing according to what was expected of a senior employee. Yet, Ferroglobe gave him training, counselling and the opportunity to improve, but to no avail. Mr Ntuli failed to appreciate the seriousness of his deviation from the performance standards. That is so, especially in relation to the projects that involved external regulatory authorities like the Department of Environmental Affairs and the Department of Water and Sanitation where non-compliance had serious consequences. Another major challenge to Mr Ntuli’s overall performance, it would seem, was the fact that he had over-committed his time to his union duties. As a result, he failed to attend his contractual duties. Mr Ntuli failed to attend to management meetings and briefing sessions with service providers that he (Mr Ntuli) had arranged. Ferroglobe was not unreasonable in expecting Mr Ntuli to attend to his contractual duties like any other employee, particularly as a senior employee. Mr Ntuli neglected his contractual duties and as such misconducted himself. Mr Ntuli led the band of AMCU members to the administration building with no other purpose but to disrupt the disciplinary proceedings, intimidate the management and disrupt the overall company operations. That conduct fell outside the protected scope of normal duties and obligations of a shop steward in terms of the recognition agreement and prescripts.

Order: The applicant’s automatically unfair dismissal claim is dismissed. The dismissal of Mr Ntuli was substantively fair.

NKUTHA-NKONTWANA J

Facts: The appellant is the body corporate of a sectional title scheme known as San Sydney. The scheme comprises of eight registered units. The appellant wishes to implement an agreement whereby it sells the right to complete buildings 9, 10 and 11 on the common property and to divide such buildings into sections to a third party, HF Property Investments (HFP). The appellant concluded that such a sale would require the written consent, contemplated in section 5(1)(b) of the Sectional Titles Schemes Management Act 8 of 2011 (STSMA) read with section 25(6) of the Sectional Titles Act 95 of 1986 (STA), of each owner and bondholder in respect of the registered units in the scheme, and that such consents may not be withheld “without good cause in law”. When the required consents were not all forthcoming, the appellant approached the High Court.

Appeal: Ms Singh (first respondent) opposed the application successfully. The application was dismissed with costs. The High Court concluded that: to implement the agreement entailed the alienation of common property and a right of extension of the scheme; to conclude the agreement, additional powers had to be conferred upon the appellant by the direction of the registered owners; such additional powers had not been obtained; further, a decision to alienate, exercise or cede such right of extension could only be made by the owners if they had all relevant material information before them; the owners had not been provided with all the information; and, the respondent accordingly was not withholding her approval without good cause in law.

Was there alienation of common property? The respondent viewed the transfer of the three buildings by cession of the appellant’s right to extend the scheme to HFP to amount to an alienation of a portion of the common property. The extension of a scheme, by the erection of further buildings on “common property” will affect the participation quotas, diluting the percentage of the floor areas of owners expressed as a percentage, and hence their undivided share of ownership of the common property, but the extension of the scheme on common property does not involve an alienation of the common property. The respondent and the High Court erred in concluding that the agreement involved a sale of common property which required compliance with the provisions of section 5(1)(a) of the STSMA. The respondent was not entitled to withhold her consent to the agreement based on the sale of the right of extension contained therein not having been authorised by a unanimous resolution.

Withholding of approval: There is a relationship between the appellant as the body corporate, and the respondent as unit owner and the other unit owners inter se, to co-operate in relation to their bound sectional ownership. The affidavits from both parties reflect a measure of distrust. The predicament faced by the parties is one that called for considerably more transparency and co-operation between the appellant and the respondent. With a full and candid disclosure, a mutually acceptable arrangement, with the consent of all the relevant parties, should be possible. In the spirit of communal ownership and the legal obligations it imposes in matters where sectional title ownership is implicated, the parties needed to engage constructively to achieve a mutually acceptable resolution of their dispute. They had not done so. Both the appellant and the respondent are, to a greater or lesser extent to blame for that situation.

Order: The appeal is upheld to the extent set out below but is otherwise dismissed. The order of the High Court is set aside and substituted with an order directing the respondents to sign whatever consent is required for the applicant to obtain a Certificate of Real Right in respect of the extension of the San Sydney Sectional Title scheme, by the addition of the buildings that have been erected on the common property of the scheme , depicted as sections 9, 10 and 11.

KOEN AJA (DAMBUZA JA, SMITH JA, MOLOPA-SETHOSA AJA and MOLITSOANE AJA concurring)