A recent High Court ruling confirms that restraint of trade agreements can remain enforceable against former employees even while appeals are pending – reinforcing the courts’ readiness to protect brokers’ business interests against competitive harm.
The judgment, Simah Risk Advisors (Pty) Ltd v Van Niekerk and Others, handed down in the High Court in Cape Town, stems from an earlier dispute involving two former Simah employees, Michiel van Niekerk and Anneli Jonker, who resigned and joined competitor Mountsure Brokers (Pty) Ltd.
Read: Restraint of trade binding on a consultant, High Court finds
In July 2024, Judge Derek Wille granted Simah’s urgent application to enforce confidentiality and restraint of trade undertakings, and interdicted Van Niekerk and Jonker – along with Mountsure – from using Simah’s confidential information or working for another brokerage.
In response, the employees sought leave to appeal that decision. Simah, in turn, launched an urgent implementation application under the Superior Courts Act, asking the Court to confirm that its original order would remain in effect while any appeals were pending – including potential appeals to the Supreme Court of Appeal.
According to Donald Dinnie, a director at Norton Rose Fulbright, and Richard Marais, an associate at the firm, who analysed the ruling, the Court heard both the application for leave to appeal and the implementation application together. Although the employees’ leave to appeal was ultimately dismissed, Judge Wille considered whether exceptional circumstances justified allowing the restraint to remain in force.
“To be successful, an applicant must demonstrate exceptional circumstances, that the applicant will suffer irreparable harm if an order is not made, and that the respondents will not suffer irreparable harm if an order is made,” Dinnie and Marais explained.
The Court found that such exceptional circumstances did exist. It reasoned that even if the employees later succeeded in having an appeal heard, the restraint periods would likely have expired by then – rendering any appeal meaningless and depriving Simah of its protection. In the meantime, their continued non-compliance had already caused “considerable harm” to the broker.
Judge Wille found that this harm was ongoing and unlikely to be recoverable, while any losses suffered by the employees could be recouped from the broker if the order were overturned later.
As a result, the Court ruled that Simah’s implementation application must succeed, confirming that the original restraint of trade order would not be suspended and would remain enforceable throughout any future appeal proceedings.
Dinnie and Marais noted, however, that “in making the order, it is unclear if the Court considered that the Superior Courts Act affords an automatic right of appeal to the aggrieved party (in this case, the employees) in these circumstances and provides that the order confirming implementation would be automatically suspended pending the outcome of such an appeal”.
Earlier ruling clarified how restraints apply to consultants
In the earlier 2024 ruling, Judge Wille addressed whether the classification of an individual as a consultant excludes them from restraint of trade obligations – and found that it does not.
Van Niekerk argued that because he was engaged as a consultant, not an employee, the restraint covenant could not be enforced. The Court disagreed, holding that the Sale of Business and Cession Agreements expressly entitled Simah to enforce the restraint, regardless of his employment status.
Judge Wille dismissed the distinction as “artificial”, noting that the purpose of the restraint was to protect Simah’s confidential information and business relationships, not to define employment categories.
The Court found that the agreements were comprehensive and specifically intended to prevent Van Niekerk from joining a direct competitor. It reaffirmed that consultants, like employees, can be bound by restraint of trade clauses when they have access to sensitive business information – and that public policy generally supports the enforcement of voluntarily entered contracts.
