Although the former employer proved the restraint and the breach thereof the LC was not convinced that customer connections and goodwill of a brand such as Carlton amount to a proprietary interest.  ‘Part of the skills for which such a company employs stylists is their ability to foster customer connections for the employer’.  But no clients followed the former employee to the new employer, although the risk does exist.  The LC accepted that the former employee’s client base was between 20 to 30 persons which is negligible in relation to the entire client base of the former employer.  The restraint appeared to be a ‘one size fits all’ covenant and its ambit was not proportional in relation to all the former employer’s stylists.  It was in the same form when he was an apprentice.  There was no differentiation in the wording of the restraint in respect of different occupational levels of stylists.  The LC held that the restraint was unreasonable and against public policy, especially in respect of a junior employee, qualified for only 6 months and only aged 21.

PB Hairdressing Organisation (Pty) Ltd t/a Carlton Hair International v V (J2948/16) [2017] ZALCJHB 8 (16 January 2017) per Rabkin-Naicker J.

Excerpts without footnotes

[2]   At the commencement of proceedings before Court the first respondent brought a successful application to have certain annexures and paragraphs related thereto struck out of the replying papers on the basis that they were hearsay evidence.  The said material was unsupported by confirmatory affidavits or a statement by the deponent that he believed the hearsay evidence to be true and correct.

[3]   The applicant (Carlton) is a group of companies established in 1968, and currently operating 23 branches nationwide.  It has four hairdressing academies, which it operates throughout the country, training learners as well as already qualified hairstylists.  Carlton’s Hyde Park salon commenced trading in 1990.  Carlton’s stylists are trained to establish niche personal relationships with particular clients, in order to incentivise the client to return to the salon because of the relationship established with the stylist.

[4]   The deponent to the founding affidavit avers that it is a common feature of Carlton’s business model (and that of the hairdressing industry at large) that customers return every 6 to 8 weeks to the hairdressing salon at which they will be serviced by the particular stylist with whom they have established a personal relationship of trust and who knows and understands their unique needs and desired results.  This means according to Carlton that the goodwill and relationships established between its employees and clients is a valuable proprietary asset deserving of legal protection.  This is the rationale behind Carlton requiring its stylists to enter into a restraint of trade in terms of their employment contract.  The restraint is somewhat lengthy but bears recording as follows: . . . . .

. . . . .

Applicable legal principles

[9]   The law as it applies to restraints of trade was most usefully summarised by Mbha J (as he then was) in Experian South Africa (Pty) Ltd v Haynes and Another[1] as follows: . . . . .

[10]   The question for this Court to determine is whether on the facts of this matter, the applicant has an interest which is sufficiently deserving of protection and if so, whether any of the other enquiries laid down in Basson v Chilwan would lead the court to find the restraint unreasonable.

[11]   It is well established that the proprietary interests that can be protected by a restraint agreement are of two kinds.  The first consists of the relationships with customers, potential customers, suppliers and others that go to make up what is referred to as the ‘trade connections’ of the business, being an important aspect of its incorporeal property known as goodwill.  The second kind consists of all confidential matter which is useful for the carrying on of the business and which could therefore be used by a competitor, if disclosed to him, to gain a relative competitive advantage.  Such confidential material is sometimes referred to as ‘trade secrets’.  [1]

[12]   In Rawlins and Another v Caravantruck (Pty) Ltd [2] Nestadt JA stated that —

‘(t)he need of an employer to protect his trade connections arises where the employee has access to customers and is in a position to build up a particular relationship with the customers so that when he leaves the employer’s service he could easily induce the customers to follow him to a new business’.

[13]   In Aranda Textile Mills v Hurn & Another [2000] 4 All SA 183 (E) the court emphasised that proprietary interests sought to be protected must be properly described as belonging to the employer.  As explained by Kroon J:

“A man’s skills and abilities are a part of himself and he cannot ordinarily be precluded from making use of them by a contract in restraint of trade.  An employer who has been to the trouble and expense of training a workman in an established field of work, and who has thereby provided the workman with knowledge and skills in the public domain, which the workman might not otherwise have gained, has an obvious interest in retaining the services of the workmen.  In the eye of the law, however, such an interest is not in the nature of property in the hands of the employer.  It affords the employer no proprietary interest in the workmen, his know-how or skills.  Such know-how and skills in the public domain become attributes of the workman himself, do not belong in any way to the employer and the use thereof cannot be subjected to restriction by way of a restraint of trade provision.  Such a restriction, impinging as it would on the workman’s ability to compete freely and fairly in the market place, is unreasonable and contrary to public policy.”

[14]   It was stated in Rawlins v Caravantruck[1] that establishing customer connections depends on the notion that:-

“the employee, by contact with the customer, gets the customer so strongly attached to him that when the employee quits and joins a rival he automatically carries the customer with him in his pocket”.