Restraint of Trade in the Teaching Profession: is There a Protectable Interest?

In Ashton International College Ballito (Pty) Ltd v Petrus Cornelius Johannes Erasmus & One Other, Ashton College sought to interdict Mr Erasmus from breaching a so-called restraint of trade agreement and taking up employment with Curro Salt Rock Primary School (Pty) Ltd, for a period of eight (8) months, with effect from 15 December 2022.

Written By of Cowan-Harper-Madikizela Attorneys

The Facts

Mr Erasmus commenced employment with Ashton College as its headmaster in January 2010. In January 2017 he was promoted to Managing Director, and in May 2020 purchased 6% of the shares in Aston College. He resigned in August 2021 and Ashton announced that he was taking early retirement.

For the next 16 months or so Mr Erasmus was effectively retired. Towards the end of 2022, Curro College announced that he had been appointed as the head of the primary school and Mr Erasmus said he hoped to take up that position at the start of January 2023.

On 2 December 2022, Ashton College’s attorney sent an e-mail to Mr Erasmus in which she contended that he was in breach of the ‘Confidentiality and Restraint Undertakings’ contained in a Mutual Separation Agreement which he and Ashton College concluded in August 2021 and demanded that he sign an undertaking that he would honour those terms. He declined to sign it on the basis of advice from his attorney that he was under no obligation to do so.

An application to enforce the restraint and interdict of Mr Erasmus was launched on 6 December 2022. The agreement that Ashton College relied on had been concluded on the 17th of August 2021. It recorded that Mr Erasmus wanted to go on early retirement with immediate effect, it provided that Mr Erasmus would not for a period of two (2) years be employed by any company which carries on business within a radius of 50 km and renders competing services.

Ashton College contended that Mr Erasmus had breached a material term of the agreement, the consequence of which the agreement became null and void.

The Judgment

The Court took issue with Ashton College’s attempt to enforce a restraint of trade clause in the Separation Agreement. Ashton College had also sought to cancel the purchase of shares but still be entitled to enforce the restraint clause.

The second difficulty with Ashton College’s case was that it did not have a protectable interest. It was held that the restraint of trade that it wanted to enforce was against public policy as its sole aim was to stifle competition.

It was held that public policy demands that businesses should be allowed to compete, and individuals to work and ply their trade freely, wherever they choose.

The law requires a protectable interest for a restraint of trade to be enforceable. It is to protect, amongst other things, the employer’s confidential information from falling into the hands of a competitor.

The Court found that there were no trade secrets, connections with customers and suppliers, or indeed any of the so-called confidential information.

There was no evidence to suggest that the Aston College curriculum was confidential or that the identity of its customers and suppliers was confidential. As a matter of probability, the Court found, a school’s curriculum is available to any parent who is considering sending a child there, and a mere say so that information is confidential is not enough.

The Court criticised what it viewed as a ‘cut and paste’ product of what Ashton College contended was confidential information since such information had no relevance to the school context.

The Court upheld Mr Erasmus’ contention that there was nothing confidential about Ashton College’s curriculum as it is a curriculum set by the Independent Examinations Board as well as the Cambridge Curriculum. The application was dismissed with costs.

Key Lessons from the Case

The case highlights, once again, that restraints of trade are enforceable in circumstances where there is a protectable interest involved. Employers should consider which of their employees may be exposed to their confidential and proprietary information and conclude appropriate agreements to protect their interests. Such agreements should not be concluded without the assistance of attorneys.

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