Case summary written by Megan Brook and checked by Simone Jansen van Rensburg
22 February 2021
Background facts
Hestelle De Bruyn (“First Respondent”) and Michelle Anthony (“Second Respondent”) were employed by Trendy Greenies (Pty) Ltd t/a Sorbet George (“Applicant”) in 2018. The First and Second Respondents received extensive training in cosmetic products in the course of their employment and were graded as level one therapists. The First and Second Respondents’ contracts of employment included, inter alia, identical restraint of trade agreements (“Agreement”) which were applicable within a defined area and for a period of 1 (one) year commencing on the date of termination of employment. The Agreement barred the First and Second Respondents from soliciting former clients, canvassing business or engaging in competitive activity which is the same or similar to that of the Applicant. Essentially, the Agreement prohibited them from taking employment with anyone else engaged in similar services in a certain area.
The First and Second Respondent both tendered their resignations in August 2020 and started working for You Are Worthy (Pty) Ltd (“Third Respondent”) in September and October 2020 respectively. After catching wind of the First and Second Respondents’ employment with the Third Respondent, the Applicant issued a warning to the Respondents stating that the Applicant would seek an interdict if the First and Second Respondents continued with their employment with the Third Applicant. Following an exchange of letters, on 3 October 2020, the Applicant launched an urgent application in the Labour Court of South Africa, held at Cape Town (“Court”), which application was opposed by the First and Second Respondents.
The issue of contention before the Court was the interpretation of the Agreement, particularly the definition of the geographic scope of the restraint. The Agreement defined the “prescribed area” as “any area which falls within a 10 (ten) kilometre radius measured from any location at which you rendered services at during the prescribed period.” Therefore, the Court was required to determine whether the business premises of the Third Respondent fell within the geographical scope of the restraint.
The Applicant contended that the Third Respondents premises was 9,91 kilometres from the Applicant’s premises and supported this contention by attaching a Google maps distance measurement, showing the distance measured on a straight line between the two premises. The Respondents disputed the foresaid distance, stating that the distance was in fact 13.1 kilometres according to the distance travelled by road.
Held
The Court highlighted that it was evident from the map attached to the founding affidavit that both stores were contained within the same urban area with a network of roads between them and that clients might approach either establishment on this network of roads from a number of different directions and suburbs.
In determining the geographical scope, the Court made reference to the case of Holland v Commissioner of Crown Lands and Public Works[1]as well as the case of Malan en Andere v Van Jaarsveld en ‘n Ander[2], both judgements concluding that the actual road distance travelled was the correct measure and that a “direct and practical approach” should be applied.
The Court provided that the meaning of a “radius” when applied to an area, means “a circular area of which the extent is measured by the length of the radius of the circle which bounds it“. As a result, the Court provided that any distance by road between the two premises in this particular case would be further than 9.91 kilometres, except in the unlikely event of a road actually following a direct line between the two locations. However, the Court stated there was no evidence that the shortest route between the two stores was necessarily more than 10 (ten) kilometres.
The Court stated that in the Malan case, it was determined that the centre of the area of 50 miles describing the geographical scope of the restraint necessarily referred to the town of Riversdale and not the district. Therefore, there was concern with determining the boundaries of the restraint area beyond the town limits, which itself was not a single geographical point. The Court too provided that this was in the context of determining how far a rural medical practice could extend its patient catchment area, which would be reached along a limited number of public roads. It was not dealing with patients and doctors located within a single agglomeration of suburbs.
Accordingly, the Court provided that the practicality of using road distance as a way of delineating the boundaries of a rural medical practice is obvious but it is, however, not a practical approach in the context of a much smaller area with interlocking suburban road networks. The Court stated that it was possible that a competitor which establishes itself within a geographical radius of seven kilometres of a practice or business could still be more than ten kilometres distant from that establishment, measured by the shortest path by road between the two establishments. The Court acknowledged that the advantage of using the ordinary meaning of an area determined by a radius from a point is that it results in a much clearer boundary than an irregular boundary determined by all those points in a network of urban roads which are ten kilometres distant from a particular establishment.
Consequently, the Court was satisfied that the ordinary meaning of an area defined by a radius from a fixed point is the most practical interpretation of the way in which the geographical scope of this restraint should be measured, and that is what the parties intended when using the term ‘radius‘ as a method of measurement.
As a result, the First and Second Respondents were in breach of their respective Agreements and were interdicted from directly or indirectly, in any capacity whatsoever, working for the Third Respondent, or any competitor of the Applicant, or engage in any competitive activities, as defined in the restraint agreements, within a radius of 10 kilometres of the Applicant’s premises, as the crow flies (a distance away measured in a straight line).
Value
That the meaning of “radius,” as defined in restraint of trade agreement, and in the context of a suburban environment, bears the ordinary meaning of a straight-line distance (as opposed to a measurement taken by actual distance travelled by road).
[1] 1877 Buch 105
[2] 1972 (2) SA 243 (C).
