- Fidelity’s application for leave to appeal a restraint of trade judgment was dismissed with costs.
- The judge found no evidence that the former employee’s knowledge gave him an unfair competitive advantage.
- The court ruled that the employee’s right to earn a living outweighed any protectable interest claimed by Fidelity.
Fidelity Services Group (Pty) Ltd and Fidelity ADT (Pty) Ltd have failed in their latest attempt to enforce a restraint-of-trade agreement against former employee Robin Richard Goveia.
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The dispute arose from an earlier urgent application in which Fidelity sought to enforce a restraint-of-trade agreement against Goveia, a former regional sales manager in the Western Cape, and his business, Mach 1 Security CC.
Fidelity argued that Goveia had acquired confidential information during his employment and that another court could reasonably conclude that the companies possessed a protectable interest deserving of enforcement through the restraint agreement.
However, the judge found that the applicants had failed to establish that the information relied upon would provide Goveia or Mach 1 Security with a meaningful competitive advantage.
Confidential information not enough
The judgment records that Fidelity identified approximately 22 categories of information that it considered confidential. During his employment, Goveia attended weekly review meetings and was exposed to information relating to sales, sales strategies, cost-cutting measures, profit margins and other aspects of the company’s operations.
The judge accepted that Goveia had access to confidential information during his employment, noting that “when the first respondent was employed by the second applicant, he became privy to information which was confidential to the second applicant. This included knowledge relating to sales, sales strategies, cost-cutting strategies, profit margins and the like.”
Despite this, the judge found that Fidelity had not demonstrated that possession of the information would provide the respondents with a competitive advantage.
The judge said, “The difficulty which the applicants face is that there is no evidence to suggest that knowledge of this information in the hands of either of the respondents is of such a nature that it would give them a relative competitive advantage over the applicants.”
The judge found that the applicants had failed to show that the information could now provide a meaningful competitive benefit to the respondents.
Industry experience cannot be restrained
Fidelity also argued that Goveia had been able to establish a monitoring and response business because of his knowledge of the applicants’ confidential information.
The judge rejected that argument, saying, “He has been able to do so because of the experience and skills which he has gained during his 21 years of employment in the security industry with the applicants’ predecessor and the applicants.”
The judgment emphasised that employees cannot be prevented from using skills and experience acquired during their careers.
The judge added, “He cannot be restrained from using his industry experience, and there is no prospect that another court will come to a different conclusion in this regard.”
Right to earn a living outweighs restraint
The judge further found that even if Fidelity possessed a protectable interest, that interest did not outweigh Goveia’s right to remain economically active. In assessing the competing interests, the court noted the substantial differences between the businesses.
Fidelity operates nationally and provides 24-hour response and CCTV services to thousands of customers across South Africa. The group maintains an extensive client base and sizeable vehicle fleet.
Mach 1 Security operates in the Deep South area of the Cape Peninsula, provides monitoring and response services, does not offer armed patrols and operates with only two vehicles.
The judge found that Fidelity had failed to show why its interests should outweigh Goveia’s ability to earn a living through a small local business.
The judgment states, “There is no prospect that another court would find that the applicants’ protectable interest outweighs the first respondent’s interest to earn a living on these facts.”
Appeal bid dismissed with costs
After considering the grounds advanced by Fidelity, the judge concluded that there was no reasonable prospect that another court would reach a different outcome.
The application for leave to appeal was therefore dismissed with costs, including the costs of counsel on scale C.
The ruling leaves intact the earlier judgment refusing to enforce the restraint of trade agreement against Goveia and Mach 1 Security.
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