Times Of Swaziland: AFROX WINS RESTRAINT OF TRADE AGREEMENT APPEAL

AFROX WINS RESTRAINT OF TRADE AGREEMENT APPEAL
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BY KWANELE DLAMINI on 14/05/2019 22:00:00


MBABANE - African Oxygen Limited (Afrox) has succeeded in its appeal against a
decision of the High Court dismissing its application to enforce a restraint of
trade agreement on its former branch manager.
Tony Coster was employed by African Oxygen but he resigned and joined Elcor
Industries (Pty) Limited. According to African Oxygen, Coster’s act of joining
Elcor Industries was in direct breach of the Restraint of Trade Agreement he and
his former employer signed when he was employed in 2014.
These companies are in direct competition and they sell and distribute liquid
petroleum gas. In terms of the agreement, Coster was not to disclose to any
person whatsoever any information of a confidential or protected nature without
the prior consent of African Oxygen.
He was also not expected to engage in business with African Oxygen’s
competitors in which he may use his specialist knowledge to the disadvantage of
his former employer within a period of six months from the termination of his
employment contract and within a radius of 100km from the branch for which the
company was responsible.
According to African Oxygen’s submission, when Coster resigned from African
Oxygen, he informed the company that he intended to join his stepfather in their
timber business. However, he joined Elcor Industries, which is located a
stone’s throw from Oxygen Africa, in direct breach of the Restraint Trade
Agreement.
African Oxygen told the court that at the end of June 2018, it was surprised to
learn that Coster was actively pursuing its customers to do business with Elcor
Industries by offering low prices than those that were offered by his former
employer. They submitted that Coster was able to do this because he had intimate
knowledge of the customers’ requirement, the pricing and trade secrets since
he had gained same during his course of employment with the former.
“First respondent (Coster) is unlawfully and constantly utilising the
information he got from his employment by the appellant (African Oxygen) to the
benefit of second respondent (Elcor Industries) which information constitutes
trade secrets of the appellant,” argued African Oxygen.
Coster denied this and submitted that he had gained his skills and working
knowledge in his 23 years experience. He also denied breaching the Restraint
Trade Agreement and submitted that the agreement was unreasonable in so far as
it relates to the 100km radius.  He further denied using the information to the
prejudice of his former employer.
In the High Court, Judge Maxine Langwenya dismissed African Oxygen’s
application to restrain Coster from breaching the trade agreement. The judge
considered that the agreement banished Coster from finding employment in the
country.
African Oxygen filed an appeal of the decision and Supreme Court Judge
Majahenkhaba Dlamini said the High Court viewed Coster’s freedom to trade as
more important than his contractual obligations. In his reasoning, Dlamini JA
stated that the judge in the High Court considered the lack of employment caused
by the 100km radius.
This, according to Dlaminin JA, ‘does not seem justified in light of the
nature of the interest the applicant established it has’. Dlamini stated that
African Oxygen’s interests were purely contractual arising from the restraint
of trade agreement.