THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA

JUDGMENT

CASE NO: 722/2007
No precedential significance

DIGICORE FLEET MANAGEMENT (PTY) LTD
Appellant

and

MARYANNE STEYN
1st Respondent
SMARTSURV WIRELESS (PTY) LTD
2nd Respondent

Neutral citation:  Digicore Fleet Management v Steyn (722/2007) [2008]
ZASCA 105 (22 September 2008)

Coram:
SCOTT, BRAND, LEWIS, JAFTA JJA MHLANTLA  AJA

Heard:
8 September 2008

Delivered:
22   September 2008

Summary:
Appeal against order refusing enforcement of contract in
restraint of trade dismissed: proprietary interest of appellant not
threatened by first respondent after termination of her employment with

appellant and on her employment by a competitor, the second
respondent.

______________________________________________________________
ORDER
On appeal from:  High Court, Durban (Van der Reyden J sitting as court of
first instance)
The appeal is dismissed with costs.

JUDGMENT
LEWIS JA (Scott, Brand and Jafta JJA and Mhlanthla AJA concurring)
[1] The appellant, Digicore Fleet Management (Pty) Ltd (Digicore), seeks
to enforce an undertaking in restraint of trade made in its favour by the
respondent, Ms Maryanne Steyn. Digicore applied for an interdict,
alternatively interim relief, restraining Steyn from working for the second
respondent, Smartsurv Wireless (Pty) Ltd, a competitor of Digicore, for a
period of 24 months from the termination of her employment with Digicore, in
the greater Durban area. The high court refused the relief sought, finding that
the undertaking in restraint of trade was unenforceable. Van der Reyden J
granted leave to appeal to this court, however, on the basis that another court
might reach a different conclusion especially in so far as interim relief is
concerned. Smartsurv has played no role in this appeal.

[2] The facts in issue are largely undisputed and I shall deal with them only
briefly. Steyn was employed by Digicore from May to December 2006 as a
‘sales executive’ for motor vehicle tracking devices. She signed a contract of
employment that required her to maintain confidentiality in her work during the

course of her employment, and that restrained her from competing with
Digicore after the termination of her employment.

[3] Digicore’s business consists in the main of selling various kinds of
vehicle tracking systems to vehicle owners.  It sells to fleet owner clients that
require systems to track vehicles in a fleet; to corporate clients that require
vehicle recovery systems to protect against theft, and trace stolen vehicles;
and to individual customers who purchase the second kind of tracking
systems for themselves.

[4] When Steyn joined Digicore she had previous experience in selling
tracking systems, and had also worked in the insurance business for a while.
She was particularly attractive and useful to Digicore because of her contacts
with insurance brokers in the Durban area who would refer potential clients to
her when they acquired new vehicles and wished to insure them against theft.

[5] The period of Steyn’s employment with Digicore was short: she was
approached by Smartsurv towards the end of 2006 and offered a more
lucrative position. She gave notice to Digicore and commenced working for
Smartsurv in January 2007. Digicore learned of approaches to two of their
clients by Steyn in early 2007 and commenced proceedings to prevent her
from working for Smartsurv or to compete with it for the period of the restraint
undertaking that she had made.

[6] The restraint provision in the employment contract reads:

‘19 RESTRAINT UNDERTAKINGS
19.1 The employee shall be restrained for a period of 2 years from the date of
termination of this Agreement from working within a 200km radius of the Durban
North area and / or be:
19.1.1 Directly or indirectly having any interest  in (sic), involvement with, connection
to or being employed by any company, corporation, firm, partnership, association or
other form of business entity, whether incorporated or unincorporated (for
convenience “Competing Business”), which conducts business along lines similar to
or in competition with that of the employer; and
19.1.2 Acting as employee, director, shareholder, member, partner, consultant,
financier, agent or advisor to any Competing Business in respect of the Restrained
Activities in the aforementioned areas; and
19.1.3 Directly or indirectly soliciting or offering employment to any employee of the
employer who was an employee as at the date of signature of this Agreement, or at
any time within 3 (three) months preceding the date of signature of this Agreement,
nor shall they attempt to do so;
19.2 The employee acknowledges that these restraint of trade undertakings and
covenants are reasonable as to the period, the area of restraint and the nature and
extent of the Restrained Activities.’

[7] It is now trite that provisions in restraint of trade are enforceable unless
shown by the person wishing to escape an undertaking to be unreasonable
and hence contrary to public policy. It is not necessary to rehearse the
principles that have been set out by this and other courts governing
agreements in restraint of trade. Suffice it to say that Steyn, in order to escape
her contractual undertaking, must show that Digicore has no proprietary
interest that is threatened by her working for a competitor of Digicore.

[8] Digicore contends that the restraint is reasonably necessary to protect
its interest in its customer base because, when Steyn commenced her
employment with it, she underwent an induction programme and had training
and support that enabled her to market and sell Digicore’s stolen vehicle
recovery systems. They contend that she was provided with a client list with
names and contact details, including the information on the products
previously acquired by clients. Such information was alleged to be confidential
and part of Digicore’s goodwill. Moreover, Digicore argues, Steyn had access
not just to client information but also to details regarding confidential discounts
given to certain clients.

[9] Steyn’s response (which we must accept, these being motion
proceceedings) is that she was not trained by Digicore and did not undergo
any induction programme. She was given no support save for receiving a
laptop computer, a cellular telephone, and brochures describing Digicore’s
products. She was given no confidential client information save for the details
of about 20 clients whom a previous sales executive had cultivated.  Digicore
had previously concentrated on corporate and fleet management clients. By
contrast, she had brought with her contacts with insurance brokers, and had
continued to cultivate those contacts. She had also shared the information
that she had with another sales executive at Digicore, Mr Stanley Strydom,
with whom she worked. During her employment with Digicore she continued
to work on her contacts and had followed them up when she started working
for Smartsurv.

[10] Steyn, as I have said, came to Digicore with experience in the field of
tracking devices: she had previously been employed by a company referred to
as Tracker Network, and subsequently by Bandit Vehicle Tracking. She had
also worked for an insurance brokerage. When she left Digicore she took with
her no more than she had brought to the business in the first place:
experience in the field and contacts with insurance brokers in the Durban
area. It can hardly be said, in the circumstances, that Digicore had any
proprietary right that was in jeopardy when she left to work for a competitor.

[11] There are two particular instances where Digicore alleges that Steyn
did approach its fleet management clients:  she contacted Mr Rob Currie, a
client of Digicore, to canvas his business for Smartsurv, and she contacted Mr
Dieter Coetzee, also a Digicore client, and suggested that he move his
business to Smartsurv. Steyn denies any knowledge of Currie, and although
admitting that she contacted Coetzee, points out that he declined to move his
company’s business to Smartsurv. In neither case, therefore, can it be said
that she breached any obligation to Digicore.

[12] Steyn contends – and Digicore does not dispute this – that her value to
Digicore lay in her contacts with insurance brokers, a source of business
previously untapped by Digicore. Digicore accordingly had no proprietary
interest in her contacts and thus no right to prevent her from using them. She
maintains also that she did not acquire any confidential information while
working at Digicore. Although Digicore claimed that she had access to their

databases, Steyn denies that she had access to anything that was not in the
public domain.

[13] Accordingly this matter is entirely different from that in Reddy v
Siemens Telecommunications (Pty) Ltd,1 relied on by counsel for Digicore,
where a restraint was enforced on the basis that the employee had in fact
undergone extensive training and acquired confidential information which
warranted protection.

[14] It seems to me that, on the facts that are common cause, Steyn has
shown that Digicore did not have any proprietary interest that warranted
protection. It is useful to invoke the fourfold test enunciated by Nienaber JA in
Basson v Chilwan:2
(a) Is there an interest of the one party (Digicore) which pursuant to the
agreement warrants protection?
(b) Is that interest threatened by the other party (Steyn)?
(c) If so, does that interest weigh qualitatively and quantitatively against the
interest of the other so that he or she will be economically inactive and
unproductive?
(d) Is there another aspect of public interest that does not affect the parties
but does require that the restraint not be invoked?

[15] The answers to these questions in this case are in my view clear.
Digicore does have a proprietary interest in its client base, and information

1 2007 (2) SA 486 (SCA).
2 1993 (3) SA 742 (A) at 768F-H.

about it, that deserves protection. However, Steyn presents no threat to that
interest: she is using only her own contacts and information, acquired before
joining Digicore, and not making improper use of information that is
confidential to Digicore. Indeed, Digicore’s admitted main business is its fleet
management systems. Steyn had no experience of them or the fleet
management clients either before or after she joined Digicore, and made no
attempt to break into that area of the business.

[16] To the third question I would suggest that given the very short period of
Steyn’s employment by Digicore, the fact that she was recruited for her
contacts with insurance brokers, and that she was doing no more than
cultivating them when she worked there and then subsequently for Smartsurv,
Digicore’s interest cannot be regarded qualitatively or quantitatively as
warranting protection.3 To prevent Steyn from being economically active – by
enforcing the restraint – would not be reasonable. There is no commercial
justification for enforcing the provision in restraint of trade against Steyn. The
fourth question does not arise here.

[17] Accordingly the high court rightly found that any threat that Steyn’s
employment with Smartsurv might have posed did not ‘weigh qualitatively and
quantatively against her interest to be economically active and productive’ and
correctly refused to interdict her from working for Smartsurv or working in the
vehicle tracking business.

3 See in this regard Rawlins v Caravantruck (Pty) Ltd 1993 (1) SA 537 (A) at 541F-I.

[18] In so far as the alternative relief sought – the interim interdict – is
concerned, Digicore has shown neither an apprehension that any right will be
infringed by Steyn, nor that the balance of convenience favours interim relief
in its favour.

[19] The appeal is dismissed with costs.
______________
C H Lewis
Judge of Appeal

Appearances:
For Appellant:
F H Tereblanche SC

H R Fourie

Instructed by:

Edelstein Bosman Inc, Durban

Israel & Sackstein Matsepe Inc, Bloemfontein

For Respondent:
F Rautenbach

Instructed by:

Irish Ashman Attorneys, Durban

Lovius Block, Bloemfontein

THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA

MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL

22 September 2008
STATUS: Immediate
Digicore Fleet Management v Steyn
Please note that the media summary is intended for the benefit of the media
and does not form part of the judgment of the Supreme Court of Appeal

The Supreme Court of Appeal today dismissed an appeal against a decision
of the Durban High Court, refusing an interdict restraining Mrs Maryanne
Steyn from working for a competitor after leaving the employment of Digicore.
Although Steyn had signed an agreement in which she undertook not to work
for a competitor of Digicore for two years after the termination of her
employment, in the greater Durban area, the court found that Digicore did not
have a proprietary interest that was threatened by Steyn. She had acquired
no confidential information while in the employ of Digicore, and had taken with
her when she left no more than she had brought to Digicore in the first place –
her own experience, expertise and contacts. The restraint was thus not
reasonable and was accordingly unenforceable.
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