As the crow flies: the meaning of ‘radius’ in a restraint of trade case

Restraint of trade agreements are, with exception, valid and enforceable in South African law and have risen to considerable prominence, particularly in employment contracts. For ex-employees seeking to avoid their restraint clauses, there rests an onus on them to prove that enforcement would be unreasonable, and therefore contrary to the public interest. This frequent contest in our Courts has culminated in a generous body of case law and ever evolving legal arguments.

Once such challenge, relating to the geographic scope of the restraint clause was considered by the Labour Court in Trendy Greenies (Pty) Ltd t/a Sorbet George v Hestelle De Bruyn & Others (judgment handed down on 21 October 2020), where the employer caught wind of two of its former employees having taken up employment with a nearby rival.   

The case turned on the interpretation of what can be considered a fairly common definition in employment contracts for the term “prescribed area”, being “any area which falls within a 10 (ten) kilometre radius from any location at which you rendered services at during the prescribed period.”

The former employees pursued an argument that the distance between the two competing establishments was 13.1 kilometres “based on the distance travelled by road” but it appears did not motivate this further in their papers. On the other hand, the ex-employer contended that the distance should be measured in a straight line between the two premises, which is 9.91 kilometres.

 As you would have thought, the Court adopted a pragmatic approach in holding that the “advantage of using the ordinary meaning of an area determined by a radius from a point is that it results in a much clearer boundary than an irregular boundary determined by all those points in a network of urban roads which are ten kilometres distant from a particular establishment”.

In this way, the Court relied on the ordinary meaning of an area defined by a radius from a fixed point, and that this is what the parties had intended when using the term ‘radius’ as a method of measurement.

It follows that the two former employees were held bound to comply with their restraint of trade agreements with their ex-employer, having failed to establish that the restraints were unreasonable. Notably, the Court held further that the employees “had ample opportunity to reconsider and rectify” their respective breaches of contract and that legal costs were to be awarded against them.

This case highlights the importance of a well-motivated application to court; in addition, the significance of the actual terms used in restraint of trade agreements and the meaning that may be accorded to them.

We trust that you found this article informative, please email info@hjw.co.za for assistance with drafting or the review of restraint of trade agreements.

Rowan Bauer is an attorney specialising in employment law at HJW Attorneys, a boutique law firm based in Fourways, Johannesburg.

This article is provided for informational purposes only and should not be substituted for legal advice on any specific matter. Any opinions expressed herein are subject to the law as at the time of writing and will change in accordance with any change in the law. We recommend that you contact HJW Attorneys at info@hjw.co.za directly for advice applicable to your specific matter.