IN THE NATIONAL INDUSTRIAL COURT OF NIGERIA
IN THE LAGOS JUDICIAL DIVISION
HOLDEN AT LAGOS
BEFORE HIS LORDSHIP HON. JUSTICE B. B. KANYIP, PHD
DATE: JULY 11, 2018
SUIT NO. NICN/LA/170/2014
BETWEEN
Infinity Tyres Limited
Claimant
AND
1. Mr Sanjay Kumar
2. Kewalram Nigeria Limited
3. Asahi Brand Limited
4. Tanzanite Limited
Defendants
REPRESENTATION
Tokunbo Davies, with Miss Mariam Pedro and T. Ibidapo-Obe, for the claimant.
Joel Ogundere, with Tunji Oyedokun and Miss Anike Ige, for the defendants.
JUDGMENT
1. The claimant filed this suit by way of a complaint on 11th April 2014. The complaint is accompanied with the list of witnesses, witness statement on oath, list and copies of documents to be relied on at the trial. By order of Court granted on 12th July 2016, the claimant was permitted to amend its statement of facts, substitute its witness on record and file a written statement on oath of the new witness; and on 13th December 2016, the claimant was further allowed to file and serve additional documents. By the amended statement of facts field on 18th August 2016, the claimant is praying for the following reliefs:
(a) A declaration that the employment of the 1st defendant by the 2nd, 3rd and 4th defendants is a breach of the Non-Compete Clause of the Contract of Employment between the claimant and the 1st defendant.
(b) An order of cessation of employment of the 1st defendant with the 2nd, 3rd and 4th defendants as the said employment is wrongful and unlawful.
(c) An order restraining the 1st defendant from further breach of the Contract of Employment between the claimant and the 1st defendant by taking up employment in the 2nd, 3rd and 4th defendants howsoever or in any other competing company or entity whatsoever trading in the supply of tyres and batteries for a period of 1 (one) year from 4th April, 2014 in accordance with the Contract of Employment between the claimant and the 1st defendant.
(d) An order restraining the 2nd, 3rd and 4th defendants from further inducing the breach of the Contract of Employment between the claimant and the 1st defendant and/or from unlawfully interfering with the Contract of employment between the claimant and the 1st defendant, by immediately terminating the employment of the 1st defendant in their companies.
(e) An order for the payment of the sum of N100,000,000.00 (One Hundred Million Naira only) against the defendants jointly and severally in favour of the claimant as damages for the breach and inducement of breach of the Non-Compete Clause of the Contract of Employment between the claimant and the 1st defendant.
(f) The cost of this action as accessed by the Court.
(g) Interest on all sums due to the claimant at the rate of 21% per annum from the date of the institution of this action till judgment is delivered and thereafter at the same rate or any other rate this Court deems fit till final liquidation of the judgment sum.
2. In reaction, the defendant filed its statement of defence and counterclaim, list of witnesses, witness statement on oath of the 1st defendant, list and copies of documents to be relied on. To this, the claimant filed a reply to the statement of defence/defence to counterclaim of the defendants.
3. By their statement of defence and counterclaim, the 1st defendant is counterclaiming against the claimant the following reliefs:
(a) A declaration that the contract of employment between the claimant and the 1st defendant which was to the effect that the 1st defendant cannot take up employment with any other company in Nigeria for a period of one year after ceasing to work for the claimant constitutes an illegal contract.
(b) A declaration that the contract of employment between the claimant and the 1st defendant which was to the effect that the 1st defendant cannot take up employment with any other company in Nigeria for a period of one year after ceasing to work for the claimant constitutes an infringement on the fundamental right of employment of the 1st defendant to work under equitable and favourable condition.
(c) A declaration that the act of the claimant writing the 1st defendants’ new employer in respect of the 1st defendant’s erstwhile employment with them (the claimant) constitutes an embarrassment to the 1st defendant.
(d) A declaration that the 2nd, 3rd and 4th defendants are not privy to the contract of employment between the claimant and the 1st defendant and as such cannot be bound over by same.
(e) An order restraining the claimant from further engaging in acts meant to embarrass or tarnish the image of the 1st defendant before his new employer.
(f) An order for the claimant to pay the 1st defendant his five (5) month salary for the months of July to November 2013 at the rate of USD 2,750 amounting to USD 13,750 plus N125,000.00 sustenance allowance.
(g) The sum of N20,000,000.00 (Twenty Million Naira) as exemplary damages against the claimant for embarrassing the 1st defendant and tarnishing his image before his current employees and for forcefully seizing and withholding his personal properties.
(h) An order for the claimant to pay the 1st defendant his one (1) month local salary for the month November 2013 being the sum of N125,000.00.
(i) An order for the claimant to pay the 1st defendant the sum of USD 800 being the air ticket for his annual leave for the year 2013.
(j) An order for the claimant to return the handset belonging to the 1st defendant to him or in the alternative pay the sum of N150,00.00.
(k) The cost of this action.
4. In paragraph 14 of the witness statement on oath of the 1st defendant sworn to on 4th July 2014, the 1st defendant narrowed his counterclaims to only counterclaims (a) to (g) and (k), erroneously renaming counterclaims (g) and (k) as (e) and (f) effectively having two counterclaims (e) and two counterclaims (f). In not depositing to as to counterclaims (h), (i) and (j), I take it that the 1st defendant has abandoned his counterclaims (h) to (j); and this remains so despite that the defendants’ counsel reiterated in paragraph 1.02 of the defendants’ final written address counterclaims (a) to (k). Counterclaims (h) to (j) shall accordingly not be considered as such in this judgment. They are unsupported by any evidence of the 1st defendant. The law is that pleadings cannot constitute evidence; as averments in pleadings on which no evidence is adduced are deemed to have been abandoned for mere averments without proof of facts pleadings do not constitute proof of such facts unless such facts are admitted. See Ifeta v. SPDC [2006] LPELR-1436(SC); [2006] 8 NWLR (Pt. 983) 585. Counterclaims (h) to (j) are accordingly dismissed.
5. At the trial Juttu Singh, the General Manager of the claimant, testified for the claimant as CW, while the 1st defendant testified for the defendants as DW. The claimant’s documents were admitted and marked as Exhibits C1 to C17, while the only document of the defendants was admitted and marked as Exhibit D1. At the close of trial, parties filed their respective final written addresses. The defendants’ final written address was filed on 12th December 2017, while the claimant’s was filed on 16th March 2018. The defendants’ reply on points of law was filed on 14th May 2018.
THE CASE OF THE CLAIMANT
6. The claimant’s case is that it entered into a contract of employment with the 1st defendant dated 21st June 2011. By the said contract of employment, the 1st defendant willingly agreed not to join any other company in Nigeria in direct competition with the claimant for one year immediately after leaving the employment of the claimant (non-compete clause). On the basis of this agreement, the claimant procured the necessary work permit for the 1st defendant (being an Indian) to work in Nigeria. The claimant also renewed the 1st defendant’s work permit and all other necessary documents to enable the 1st defendant continue working with the claimant in Nigeria. It must be noted that the 1st defendant had, prior to being employed by the claimant, worked all his life in India. That it was the claimant’s employment and other efforts that brought the 1st defendant into Nigeria. That sometime in 2013, the claimant received information that the 1st defendant had been involved in acts of financial misappropriation which were acts amounting to gross misconduct. Consequently, the claimant, by a letter dated 29th November 2013 (Exhibit C15) queried the 1st defendant and requested for his response to same. In reaction to the claimant’s query, that the 1st defendant, by a letter dated 29th November 2013 (Exhibit C17) admitted the allegations contained in the query and apologised for his acts of financial misappropriation. Upon receipt of the response of the 1st defendant, the claimant proceeded to terminate the 1st defendant’s employment. That before the period of one year had lapsed, as agreed by the claimant and the 1st defendant, the 1st defendant took up employment with the 2nd – 4th defendants who, the defendants have admitted, are in direct competition with the claimant. That upon becoming aware of this fact, the claimant immediately forwarded a letter to the 1st defendant reminding him of his contract which he had by his recent employment breached. That the claimant also informed the 2nd – 4th defendants of the 1st defendant’s contract and demanded that the said defendants, to avoid being liable for instigation of a breach, should terminate the employment of the 1st defendant. That the grouse of the claimant was amongst others that prior to the aforesaid termination of the 1st defendant, the claimant had, in reliance on the non-compete clause, allowed the 1st defendant have access to all its trade secrets which include Sales Strategy, Clientele database, organisation structure of the claimant and dealer network. That these were the same trade secrets the 1st defendant used for the benefit of the 2nd – 4th defendants. That due to the failure of the defendants to comply with the claimant’s demands as aforesaid, the claimant commenced the instant action.
THE CASE OF THE DEFENDANTS
7. To the defendants, the non-compete clause was not breached and is unenforceable. That the claimant did not give the agreed one month’s notice before terminating the appointment of the 1st defendant. That from the moment the 1st defendant’s appointment was terminated without notice, the 1st defendant owes no contractual obligations to the claimant; and the 2nd to 4th defendants are not privy to the contract of employment between the claimant and the 1st defendant and are not unlawfully interfering with the said contract or at all inducing any breach of same. The 1st defendant proceeded to counterclaim against the claimant oversea salary, salary arrears not paid, one month local pay and air ticket.
THE SUBMISSIONS OF THE DEFENDANTS
8. The defendants submitted two issues for determination, namely:
(a) Whether the claimant has made out a successful case to entitle it to judgment in respect of the reliefs claimed by it.
(b) Whether the counterclaim of the 1st defendant/counterclaimant ought to be granted.
9. On issue (a), the defendants submitted that having regard to the averments pleaded in paragraphs 6 to 30, 32 and 33 of the amended statement of facts of the claimant the onus of proof by preponderance of credible and cogent evidence is on the claimant in respect of the reliefs sought by him in paragraph 33(a) (b) (c) (d) (e) (f) and (g) of the said amended statement of facts, citing sections 131, 132 and 133(i) of the Evidence Act 2011. Accordingly, that the claimant must prove that:
(i) The non-compete clause of the contract of employment between the claimant and the 1st defendant is not onerous unreasonable, illegal and unlawful. To the defendants, the non-compete clause is a violation of the fundamental right of the 1st defendant to dignity of labour as enshrined in section 34(1)(c) of the 1999 Constitution effectively amounting to force labour.
(ii) The 1st defendant was employed by the 2nd, 3rd and 4th defendants and that the said employment was wrongful and unlawful.
(iii) The 1st defendant committed breach of his contract of employment against it by taking up employment with the 2nd, 3rd and 4th defendants before the restrictive period in Exhibit C1.
(iv) It is entitled to an order restraining the 1st defendant from further breach of contract of employment between it and the 1st defendant by taking employment in the 2nd, 3rd and 4th defendants howsoever or an entity whatsoever or in any other competing company or entity whatsoever, trading in the supply of tyres and batteries five period on (1) year from 4th April 2014 in accordance with the said contract of employment.
(v) The 2nd, 3rd and 4th defendants introduced the 1st defendant to breach the only employment between it and the 1st defendant.
10. The defendants went on that in respect of the declaratory relief claimed by the claimant (with respect to breach of the non-compete clause of the contract of employment between the claimant and the 1st defendant) a declaratory relief is not granted in default of defence or even on admission without hearing evidence and the Court being satisfied by cogent and credible evidence adduced by the claimant that he is indeed entitled to such declaratory relief, citing Yahaya v. Chukura [2002] 3 NWLR (Pt. 765) 68 and Motunwase v. Sorungbe (1998) 4 NWLR (Pt. 92) 90. That apart from the foregoing on the strength of the averments pleaded in the amended statement of facts, the claimant is bound to succeed on the strength of his case and not on the weakness of the defence put up by the defendants, though where the case of the defendants support that of the claimant he can take advantage of same. That the claimant has failed to lead cogent and credible and satisfactory evidence to convince this Court that it is entitled to the said declaratory relief sought by it in paragraph 33(a) of the amended statement of facts and there is no feature in the defence put up by the defendants which support the case of the claimant which it can take advantage of in establishing its case.
11. The defendants continued that the claimant’s sole witness, Mr. Jittu Singh, at the trial tendered Exhibit C1 which is the contract of employment of the 1st defendant which contained the non-complete clause to the effect that, “Please note that all the terms and conditions are subject to you agreeing not to join any other company in Nigeria one year if you cease working with us”, and testified that the 1st defendant breached the said non-compete clause of his contract of employment with the claimant when it took up employment with the 2nd, 3rd and 4th defendants shortly after his disengagement from the claimant during the prohibitive period in one of their branches sometime in January 2014. That he also testified under cross-examination that the expected not work by the said non-compete clause is that the 1st defendant should not work with any organization in Nigeria. That the non-compete clause barred the 1st defendant from working for any organization whatsoever, whether in the line of business or not with the claimant. To the defendants, the question is whether the provision of the non-compete clause is not onerous, unreasonable and illegal. The defendants answered in the affirmative, submitting that the provision of the non-compete clause contained in Exhibits C1 is a contract in restraint of trade and, therefore, illegal unenforceable. That the position of the law is that generally all covenants in restraint of trade are prima facie unenforceable in common law; they are enforceable only if they are reasonable with reference to the parties concerned and of the public, citing Esso Petroleum Company Limited v. Harper’s Garage Stockport Limited [1976] 2 WLR 871, Nordenfelt v. Maxim Nordengelt Guns and Amunition Co. Ltd (1894) AC 536 and Koumoulls v. Leventis Motors [1973] BKSCC 557 at 561 – 562 (this law report is unknown ti this Court).
12. To the defendants, the restraint as stated in the non-compete clause of employment of the 1st defendant with the claimant which sought to restrain the 1st defendant from joining any other company in Nigeria for a period of the year after ceasing work for the claimant cannot be rationalized by the claimant under any special circumstances as same was not designed, to protect some special exceptional proprietary interest of the claimant. Rather it was specially designed to prevent and/or restrain the 1st defendant from taking up employment with any company whatsoever whether in similar line of business or not of one year of his ceasing to work for the claimant. That the claimant’s sole witness under cross-examination confirmed this. That the provisions of the non-compete clause is therefore contrary to public policy for being onerous in the part of the 1st defendant and thus unreasonable, illegal and unenforceable. The defendant accordingly urged the Court to hold that the claimant has failed to establish that the restriction imposed on the 1st defendant in the provisions of the non-compete contract of his employment with the claimant is justifiable and reasonable in the circumstances of this case.
13. Furthermore, that the claimant has failed to show by credible evidence that the 2nd defendant is the holding company of the 3rd defendant and that the 4th defendant is one of the subsidiaries of the 2nd defendant. That no particulars of shareholding structures or firm of the 3rd and 4th defendants were tendered by the claimant to prove the facts pleaded in paragraphs 3 and 5 of the statement. That assuming but without necessarily admitting that the 2nd defendant is a holding company of the 3rd defendant and that the 4th defendant is one of its subsidiaries, the question is whether the employment of the 1st defendant by the 2nd defendant means that the 1st defendant is also an employee of the 3rd and 4th defendant as alleged by the claimant. To the defendants, since 2nd, 3rd and 4th defendants are each separate legal entities in law, the alleged employment of the 1st defendant by the 2nd defendant cannot be regarded that the 1st defendant is automatically employee of the 3rd defendant, which the claimant alleged is a holding company of the 2nd defendant nor does it mean that the 1st defendant is an employee of the 4th defendant, which is a subsidiary company of the 2nd defendant. That the claimant has, therefore, failed to discharge the onus of proof to show that the 1st defendant is an employee of the 3rd and 4th defendants. That from the foregoing the claimant has failed to provide any evidence whether oral or documentary which shows that the employment of the 1st defendant in the company of the 2nd defendant is automatically his employment in the 3rd and 4th defendants, urging the Court to hold that the claimant has failed to discharge the onus of proof on it. However, that in his evidence in chief the 1st defendant admitted being in the employment of the 3rd defendant. That facts admitted need no further proof. However, that the question is whether the employment of the 1st defendant by the 3rd defendant is wrongful as alleged by the claimant; a question the defendants answered in the negative.
14. The defendants relied on the non-compete clause in Exhibit C1 (contract of employment of the 1st defendant). That the provision of the non-compete clause is very clear and unambiguous. That it did not restrain the 1st defendant from working with “any other competing company or entity trading in the supply of tyres and batteries or other companies in the similar line of business like the claimant for a period of one (1) year after cessation of the employment of the 1st defendant with the claimant” but what the 1st defendant was restrained from doing is not to join any other company in Nigeria if he ceases to work with the claimant. To the defendants, this kind of restraint is on cross, far too wide in scope and not limited to the nature of the covenantee’s (i.e. the 1st defendant’s) employment with the claimant and it is, therefore, void as it is oppressive, unreasonable and against public policy to say the least highly onerous, void ab initio. Therefore, that the claimant cannot rely on an illegal and void provision in that employment to contend that the employment of the 1st defendant by the 3rd defendant is illegal or wrongful.
15. On the claim of inducing breach of contract of employment alleged against the 2nd, 3rd and 4th defendants, the defendant submitted that the position of the law is that procuring breach of contract of employment is sustainable in tort. However, the claimant can only sustain an action for inducing breach of contract if it can show that the 2nd, 3rd and 4th defendants knew and intentionally procured the 1st defendant to breach the non-compete clause of his contract of employment with it without reasonable justification or excuse, citing Quinn v. Leathem [1901] AC 510, Clark and Lindsell on Torts (Sweet and Maxwell) at page 1267 and Lumley v. Gye (1853) 2 E & B 126. To the defendants, the act of inducement is not itself actionable; the procurer must act with requisite knowledge of the existence of the contract and intention to interfere with its performance and the claimant must show that there was an intentional invasion of his contracting right not merely that the breach of contract was natural consequence of the defendant’s conduct, referring to Clark and Lindsell on Torts (Sweet and Maxwell) 18th Edition at page 1268. That in the instant case, the claimant not only failed to plead in its statement of facts that the, 2nd, 3rd and 4th defendants were aware of the provision of the non-compete clause contained in the contract of employment of the 1st defendant with it but also failed to lead any shred of evidence to show that they had knowledge of same; and notwithstanding the said knowledge, intentionally procured the 1st defendant to breach same. That the claimant is accordingly not entitled to its reliefs (d) to (g) given also that where interest is claimed it must be proved before it can granted, citing Intercontinental Bank Ltd v. Brifinal Ltd [2012] 13 NWLR (Pt. 1316) 1 at 23, NMCB (Nig.) Ltd v. Obi [2010] 14 NWLR (Pt. 1213) 169 and SAFP & U v. UBA Plc [2010] 17 NWLR (Pt. 1221) 192 SC. Moreover, that the law is that interest may be awarded on a debt if such interest: is contemplated by the agreement of the parties, which is not the ease in this instant suit as no evidence of such contemplation was led by the claimant; it comes within some mercantile customers that binds the parties, which in the instant suit is not the case at any rate as no such mercantile custom was pleaded and proved by evidence by the claimant in this suit; or can be awarded under some principle of equity applicable to the circumstance of the case, which in this instant suit the claimant failed to plead and identify by credible evidence citing Ekwunife v. Wayne (WA) Ltd [1987] 5 NWLR (Pt. 122) 422.
16. The defendants went on that there is no privity of contract between the claimant and the 2nd and 4th defendants in respect of his contractual relationship with the 3rd defendant. That the 1st defendant has equally discharged the burden of proof in that respect and his evidence in respect of same remained unchallenged and “contradicted” by the claimant. Therefore, that the letter written to the 1st defendant’s new employer (i.e. the 3rd defendant) and the 2nd and 4th defendants who did not have a contractual relationship with the 1st defendant constitute an embarrassment to the 1st defendant. That it is, therefore, necessary for the Court to grant an order restraining the claimant from further embarrassing and/or tarnishing the image of the 1st defendant before his new employer and the 2nd and 4th defendants with whom he did not have any contractual relationship with. On the basis of these arguments and the legal authorities cited in respect of same, the defendants urged the Court to resolve issue (a) against the claimant.
17. Issue (b) is whether the counterclaim can be granted. Here, the defendants submitted that it is the duty of the 1st defendant/counterclaimant to prove that:
(a) The contract of employment between 1st defendant and the claimant required him not take up employment with any other company in Nigeria for a period of one (1) year ceasing to work for the claimant constitutes an illegal contract; and that the 1st defendant has discharged the burden of proving that the non-compete clause contained in his contract of employment with the claimant is an illegal contract, same being against the interest of the parties to the contract, unreasonable and contrary to public policy. Here, the defendants relied on their submissions in respect of issue (a).
(b) The provision of the non-compete clause of his contract of employment with the claimant constitutes an infringement on his fundamental right of employment under equitable and favourable condition. That the 1st defendant has discharged this burden of proof, referring to paragraphs 1, 6, 7, 9 and 10 of the written deposition of the 1st defendant in respect of the counterclaim deposed to on 4/7/2014 and which he adopted as his evidence-in-chief at the trial. That the evidence of the 1st defendant in that respect was not contradicted, challenged and or shaken under cross-examination by the claimant. That the position of the law that where the evidence of a witness is not challenged, contradicted or shaken under cross-examination and his evidence is not inadmissible in law and the evidence is in line with the facts pleaded as in this instant case, such evidence must be admitted as the current version of what it says, referring to American Cynamide Company v. Vitality Pharmaceuticals Ltd [1992] 12 NWLR (Pt. 171) 15 at 18 – 19 and Arabambi & anor v. Advanced Beverages Industries Ltd [2008] 19 NWLR (Pt. 953) 1 at 33.
18. The defendants continued that the claimant filed a reply to the statement of defence and defence to the counterclaim wherein it:
(i) Admitted the averments pleaded in paragraphs of the counterclaim to the effect that contracted the 1st defendant under condition that the 1st defendant cannot take up employment with any other company in Nigeria for a period of one year of the 1st defendant ceasing to work with it. That this admission is also contained in paragraph 17 of the defence to counterclaim. That the position of the law is that admitted facts need no further proof.
(ii) Did not directly or by necessary implication deny the averment in paragraph 6 of the counter claim. That it is also instructive for the Court to bear in mind no additional written statement was filed and adopted by the claimant as his evidence-in-chief. Consequently, there is no evidence to prove all the averments contained in the reply to the statement of defence and defence to the counterclaim.
19. The defendants proceeded that Article 15 of the African Charter on Human and People’s Rights (Ratification and Enforcement) Act which has now been domesticated as one of the Laws of the Federal Republic of Nigeria provides that African workers shall be entitled to work under equitable and favourable conditions. In other words, that the right to work is a fundamental right under the provision of the Act. That it is a trite law that fundamental rights cannot be waived, citing Olga Tellis v. Bombay Municipal Corporation & ors v. AIR [1986] SC 180. To the defendants, the provision of the non-compete clause is a violation of the fundamental right of the 1st defendant to employment which is not only against public policy and unreasonable but also onerous and constitutes illegality. That the position of the law is that a party to an illegal contract cannot be bound by same. That the 1st defendant duly exercised his fundamental right by taking up employment in another company after cessation of his employment with the claimant. That the fundamental right of the 1st defendant cannot be expunged by the provisions of the non-compete clause of his contract of employment with the claimant, which is clearly illegal, citing Melwani v. Chandira Corp. [1995] 6 NWLR (Pt. 402) 438 at 460. In conclusion, the defendants urged the Court to dismiss the claimant’s case and grant the counterclaim.
THE SUBMISSIONS OF THE CLAIMANT
20. The claimant submitted two issues for determination, namely:
(1) Whether the Non-Compete clause contained in the contract of employment dated 21st June 2011 willingly entered into by the 1st defendant is reasonable and enforceable thereby entitling the claimant to the reliefs sought.
(2) Whether the counterclaim of the defendants ought not to be dismissed.
21. In addressing issue (1), the claimant first submitted that the defendants did not file a consequential amended statement of defence to the claimant’s amended statement of claim. Consequently, that the defendants are bound by their pleadings of 4th July 2014, citing John Holt Plc v. Allen [2014] 17 NWLR (Pt. 1437) 443. That the effect of the state of the pleadings in relation to the amended statement of claim and the statement of defence is that at paragraph 2 of the statement of defence, the defendants admitted paragraphs 1 to 8, 12 and 14 of the statement of facts. That paragraphs 6, 7, 8, 12 and 14 of the amended statement of facts are to the effect that:
(6) The 1st Defendant was brought into Nigeria from India by the Claimant and for the sole purpose of the 1st Defendant’s employment with the Claimant.
(7) The 1st Defendant had prior to his engagement in the Claimant represented to the Claimant vide his CV that he had worked all his life in India in several companies.
(8) The 1st Defendant was employed by the Claimant as a branch manager, a very senior and sensitive position of the Claimant Company, with effect from 21st June, 2011.
(12) The 1st Defendant whilst in the employment of the Claimant, had access to the following information;
a) Dealer network
b) Organisation and structure of the Claimant
c) Range of products
d) Pricing policies
e) Sales strategy
f) Clientele database
(14) The 1st Defendant’s employment with the Claimant was determined on the 29th November, 2013 for gross misconduct.
To the claimant, it is no longer novel that where a party admits a fact in issue, such fact in issue requires no further proof, citing Al-Hassan v. Ishaku [2016] 10 NWLR (Pt. 1520) 230 and FBN Plc v. LASCA (Nig) Ltd [2015] 3 NWLR (Pt. 1445) 1.
22. The claimant continued that it is now a very settled principle of law that parties are bound by the conditions and terms of contracts or agreements freely and voluntarily entered into by them (pacta sunt servanda – agreements must be kept), referring to Panabiz International Ltd v. Addidon Nig. Ltd & anor [2016] LPELR-41350(CA), Kaydee Ventures Ltd v. Min. FCT [2010] 7 NWLR (Pt. 1192) 171 and Isheno v. Julius Berger (Nig.) Plc [2008] 6 NWLR (Pt. 1084) 582. That the 1st defendant, upon appending his signature on Exhibit C1 (contract of employment dated 21st June 2011) became bound by it, urging the Court to so hold. That by Exhibit C1, the claimant and the 1st defendant agreed to be bound by the non-compete clause to the effect that: “Please note that all the above terms and conditions are subject to you agreeing not to join any other company in Nigeria for one year if you cease working with us”. That the instant case is predicated on the above non-compete clause which is generally presumed to be unreasonable and unenforceable, citing Nordenfelt v. Maxim Nordenfelt (1894) AC 535; (1891 – 4) All ER Rep. 1.111. However, that despite the strict principle as laid down in the aforementioned case, the Courts in recent times have deviated from this strict principle. That in whittling down the strict common law position on restraint of trade clause, certain principles have evolved in guiding Courts in determining the reasonableness or otherwise of restrain clauses, citing Smile Inc Dental Surgeons v. Lui Andrew Stewart [2011] SGHC 266, which, borrowing from Man Financial (S) Pte Ltd v. Wong Bark Chuan David [2008] 1 SLR(R) 663, held that the interest that must be considered when a court is asked to enforce a restraint of trade clause include inter alia:
1) The duration of the clause being imposed and the size of the geographical area.
2) The employer’s interest in protecting confidential information.
3) The interests of the employee in being able to earn a living using his or her legitimately obtained skill, experience and knowledge.
23. To the claimant, the essence of a non-compete clause in contracts is not for the purpose of preventing competition. That an employer has a legitimate interest in protecting trade secrets, confidential information and customer relationships; this is the core reason why an employer who has employed an individual whose duties include sales, profitability strategy and future plans of the company would restrict such employee from taking up employment in a company engaging in business similar to that of the employer and/or from using knowledge or experience gained while under the employment against the employer while working for the competitor.
24. On the duration of the clause being imposed and the size of the geographical area, the claimant submitted that the scope of coverage of a restraint clause in terms of geography is a cardinal requirement in determining the reasonableness or otherwise of such clause. That if an agreement in restraint of trade is intended to cover a range and period too wide and longer than is necessary for the protection of an employer’s business, the Court would not give effect to it. That it has been held that where the operation of a company covers the entire spectrum of a given country, a restraint clause that cuts across the breath and length of the country will be reasonable and valid, citing Foster & Son Ltd v. Suggett [1918] 35 TLR 87, Esso Petroleum Co. Ltd v. Harper’s Grace Ltd [1966] AC (page not supplied) and Andrews Advertising Pty Ltd v. Andrews [2014] NSWSC 318.
25. The claimant went on that a perusal of the defendants’ pleadings and indeed the whole gamut of their final address is predicated on the fact that the non-compete clause is too wide as it seeks to restrain the 1st defendant from working in any company in Nigeria for one year. That it must be noted that the length of period has not been made an issue, neither has the interest to be protected been made an issue. That all that the defendants contended is that the restraint is too wide in applicability. To the claimant, the narrow issue to be addressed in this case is in relation to the interpretation of the non-compete clause in relation to its applicability in scope. The non-compete clause in the instant case provides that:
Please note that all the above terms and conditions are subject to you agreeing not to join any other company in Nigeria for one year if you cease working with us.
To the claimant, granted that from a literal interpretation of the above clause, reference is made to any other company, the reference to any other company was understood by the parties to mean “any other company competing company”.
26. That the defendants have contended that the said clause is unreasonable because it seeks to restrain the 1st defendant from taking up employment in any other company in Nigeria without specifying the area of business such other company should be engaged in. That by this, the defendants are relying on the literal rule of interpretation perhaps not being mindful that where reliance on the literal interpretation of wordings will lead to absurdity, a Court is permitted to depart from that principle of interpretation, citing NNPC v. Zaria & anor [2014] LPELR-22362, AG, Ekiti & ors v. Adewumi & anor. [2002] LPELR-3160 and Littlewoods Organisation Ltd v. Harris [1977] 1 WLR 1472. The claimant accordingly submitted that the Court should in interpreting this clause employ the common law tool of interpretation, that is, the “objective” theory of contracts; that which would be understood by an objective reasonable third party, citing Motors Liquidation Co. 460 B.R 203 Burtcy S.D.N.Y, 28th November 2011 and Convergent Wealth Advisors LLC v. Lydian Holdings Co 2012 WL 2148221 S.D.N.Y; June 13. That the whole essence of the objective theory of contracts is that the Court should look to see whether when the clause is viewed objectively by a reasonably intelligent person who has examined the context of the entire integrated agreement and facts of the case, it is possible to infer as in this case, that the claimant’s intention was merely to restrain the 1st defendant from taking employment in the same or similar field of business of the claimant in Nigeria in a bid to protect the claimant’s trade secrets and other confidential information.
27. The claimant continued that the objective of a non-compete clause is to prevent an employee from exploiting resources, knowledge and/or leads that were gained from a previous employer. That where else can such resources, knowledge and/or leads be exploited other than another company in similar operations as the previous employer? That in the instant case, the 1st defendant who was employed as the Branch Manager of the claimant company was by his contract of employment employed on the basis that he will not take up employment with competing companies in Nigeria within one year of ceasing to work with the claimant. Citing Clarke v. Newland [1991] 1 All ER 397 at 402 and Home Counties Dairies Ltd v. Skilton [1970] 1 WLR 526 at 537, the claimant submitted that in construing a covenant in restraint of trade between parties, it was been held that: the question of construction should be approached in the first instance without regard to the question of legality or illegality; the clause should be construed with reference to the object sought to be obtained; the object is the protection of one of the parties against rivalry in trade; and the clause should be construed in its context and in the light of the factual matrix when the agreement was made. Further citing Jumbo King Ltd v. Faithful Properties Ltd [1999] HKCFAR 279, the claimant submitted that the parties did not intend the clause to prohibit the 1st defendant from working in any other company in Nigeria but to restrain the said defendant from working in any other company in Nigeria which is in direct competition with the claimant. That the 1st defendant was free to have taken up employment with Nestle, Pepsi, NBC, DSTV or any other company not in direct competition with the claimant. To confirm that this was the intention of the parties, the claimant referred to Exhibits C17, C3, C3(a) C3(b) and C3(c), all letters stressing that the 1st defendant took up employment with competitors but that were not replied to. Furthermore, that the 1st defendant had admitted under cross-examination that he had been in discussion with the 3rd defendant (Asahi Brand Limited) since September 2012.
28. The claimant proceeded that the 1st defendant who was in the know of his non-compete clause thereafter tendered an apology through a letter of apology to the claimant for his discussions with the 2nd – 4th defendants. That it is clear from all of this that the 1st defendant was not only aware of the fact that the 2nd – 4th defendants were direct competitors of the claimant but was aware of his conduct which was in violence to the non-compete clause. Therefore, that the 1st defendant was aware of the extent and implication of the non-compete clause. The claimant then urged the Court to hold that the reasonable interpretation of the above clause is to the effect that the 1st defendant agreed with the claimant not to take up employment with any other company in Nigeria in competition with the claimant for a limited period of one year if he ceases to work for the claimant; and that the duration of the clause and the size of the geographical application of same is reasonable and enforceable.
29. On the employer’s interest in protecting confidential information, the claimant submitted that
before a non-compete clause can be made enforceable, the claimant must show what interest it is seeking to protect and the losses or damages it will suffer if not protected. That the interests of the claimant sought to be protected in the instant suit can be categorised into confidential information and trade secrets, citing Littlewoods Organisation Ltd v. Harris (no citation supplied), which advised that it is proper to restrain employees from going to work for a competing company as this was the best way to protect confidential information and trade secrets. That in the instant case, the 1st defendant was employed by the claimant as the Branch Manager which is a very senior and sensitive position of the claimant company; and the nature of his duties as branch manager included but was not limited to sales, growth and profitability strategy of the claimant as well as its day-to-day operations and future plans. That as earlier highlighted, the 1st defendant admitted in its statement of defence that whilst in the employment of the claimant, he had access to the following information: dealer network, organisation and structure of the claimant, range of products, pricing policies, sales strategy and clientele database, all of which are sensitive and confidential business information capable of jeopardizing the business of the claimant if made known to a competing organization.
30. That on the state of the pleadings, parties are ad-idem on the fact that the 2nd – 4th defendants engage in the same business with the claimant and are in direct competition with the claimant, referring to paragraphs 1 – 4 of the statement of claim, which was not denied by the defendants. That by the said paragraphs, the claimant averred that it engages in the business of importation and sales of tyres. That the claimant also averred that the said defendants were into the importation and sales of tyres. That under cross-examination, the 1st defendant confirmed this fact. Also, that the 1st defendant under cross-examination confirmed that he had the same responsibilities as he did when he was under the employment of the claimant. That it cannot be disputed that customer relations, clientele database, pricing policies and growth strategy are considered an asset to an employer; in fact, they are considered trade secrets. That the claimant, having shown that the 1st defendant has its trade secrets and confidential information in his possession and same is being used by the 1st defendant to the benefit of another, the claimant has a legitimate interest to protect.
31. Regarding the interests of the employee in being able to earn a living using his or her legitimately obtained skill, experience and knowledge, the claimant submitted that the ability of an employee to use his skill and experience to earn a living after leaving an employment also plays a crucial role in determining whether or not a restraint clause would be upheld. That the Courts in upholding a restraint clause or otherwise must take into consideration the capacity of such employee to earn a living if the clause is upheld. That the claimant in the instant suit only seeks to restrain the 1st defendant from a particular line of employment which is not a professional calling. Furthermore, that it is in evidence that the 1st defendant, prior to his employment with the claimant, had worked for other companies in India; therefore, he can earn a living conveniently in any other industry. That the 1st defendant can also take up employment with other beverage companies such as Cadbury, Nestle, etc which are not in competition with the claimant. In any event, that the period of restraint is for a short period of one year. That having established that the claimant indeed has an interest to protect, the duration of the restraint is reasonable and the 1st defendant can employ his skills and knowledge to earn a living, this Court should hold that the restraint clause is reasonable in the circumstance and of this case and uphold same; and so resolve issue (1) in favour of the claimant.
32. The claimant went on that having established that the non-compete clause is reasonable and enforceable, the 2nd – 4th defendants, particularly the 3rd defendant, who had knowledge of the existence of the said non-compete clause, are liable for the inducement of the continuous breach of the clause by the 1st defendant. That I. E. Sagay in his textbook on Nigerian Law of Contract (the page is not supplied) stated that the interference with contractual rights by inducing a breach of same is one of the exceptions to the doctrine of privity of contract, referring to British Motor Trade Association v. Salvador [1949] Ch. 556. That Pacific Gas & Electric Co. v. Bear Stearns & Co. (1990) 50 Ca1.3d 1118 at 1126 outlined the ingredients of inducement of breach of contract, which are:
(1) A valid contract between the plaintiff and a third party. That the claimant has been able to establish that the non-compete clause is valid and enforceable against the 1st defendant thus fulfilling the condition of the existence of a valid contract.
(2) Defendant’s knowledge of this contract. That by virtue of Exhibits C3(a) and C3(b), which are letters dated 3rd and 17th February 2014, the 2nd – 4th defendants were notified of the existing contract between the claimant and the 1st defendant. That a perusal of the said letters will also reveal that the claimant demanded that the 2nd – 4th defendants terminate the employment of the 1st defendant which amounted to a continuous inducement of a breach of the said clause by the claimant. That it must be noted that receipt of the aforesaid letters was never denied by the defendants. This, to the claimant, has fulfilled the condition of knowledge of the existence of the contract, citing British Motor Trade Association v. Salvador (supra).
(3) Defendant’s intentional acts designed to induce a breach or disruption of the contractual relationship. That upon becoming aware of the existence of the contract between the claimant and the 1st defendant, the 2nd – 4th defendants continued in the act of inducing a breach of same by failing to terminate the employment of the 1st defendant. That this was an intentional act of the said defendants aimed at disrupting the contractual relationship between the claimant and the 1st defendant.
(4) Actual breach or disruption of the contractual relationship. That flowing from condition (3), the claimant has been able to prove that the said non-compete clause was breached hence the instant action.
(5) Resulting damage. That there is uncontroverted evidence before Your Lordship to the effect that the breach of the non-competitive clause of the contract of employment dated by the 1st defendant and the inducement of same by the 2nd – 4th defendants has occasioned substantial damage to the claimant’s business and put the claimant’s business in a disadvantaged position with its direct competitor. That a result, the 1st defendant has caused and will continue to cause the claimant substantial business and financial loss and damage and jeopardise the jobs of hundreds of Nigerian workers, unless the defendants are restrained. That it is the law that unchallenged evidence ought to be accepted by the Court, citing Philip v. Nigerian Army [2016] LPELR-40255(CA) and Ogunyade v. Oshunkeye [2007] 15 NWLR (Pt. 1057) 218. The claimant the urged the Court to act on the uncontroverted evidence to hold that the acts of the 2nd – 4th defendants resulted in damage to the claimant.
33. Issue (2) is whether the counterclaim ought not to be dismissed. To the claimant, the counterclaimant, by counterclaims (a) – (e), seeks to set aside the non-compete clause for being Illegal. That where the Court upholds the claims in this suit, these reliefs sought by the counterclaimant must as a matter of fact fail, urging the Court to so hold. That counterclaims (e) and (g) are in relation to the fact that the 1st defendant alleged that his image was tarnished before his employers and the claimant forcefully seized/withheld the 1st defendant’s personal properties. That no evidence was led in support of this fact. That the 1st defendant failed to demonstrate how he was embarrassed or how his image was tarnished; he also failed to show what his image was before the purported tarnish of same. In fact, that during cross-examination of the claimant’s witness, the witness confirmed that the 1st defendant was not embarrassed when he answered in the negative to the question whether he agrees that the letter will be embarrassing. The claimant then urged the Curt to dismiss the said reliefs.
34. Counterclaims (f) and (h) are in relation to the purported salaries alleged to be owed by the claimant to the 1st defendant. To the claimant, there is no shred of evidence before the Court upon which these reliefs can be granted. That the 1st defendant has not demonstrated by any iota of evidence how the said sums are due to him. Therefore, that the said reliefs are frivolous and ought to be dismissed because pleadings not supported by evidence are deemed abandoned, citing Rajco Int’l Limited v. Le Cavelier Motels & ors [2016] LPELR-40082(CA), UBA v. Astra Buildings (WA) Ltd [2010] 41 NSCQR (Pt. 2) 1016;\ and Buhari v. Obasanjo [2005] 2 NWLR (Pt. 910).
35. That counterclaim (j) is a monetary relief for a handset purported to belong to the 1st defendant which was seized by the claimant. Again, that there is no evidence in support of this relief warranting a grant of same. Therefore, that the same fate that befell counterclaims (f) and (h) will also apply to this relief.
36. The last counterclaim sought is counterclaim (i). That by this relief, the 1st defendant claims the sum of $800USD for his air ticket for his annual leave for the year 2013. In support of this counterclaim, the 1st defendant tendered Exhibit D1, copy of an e-ticket receipt No. 1574199255834. The claimant then asked if this piece of document, which was generated from a computer, is admissible. Citing section 84(1) and (2) of the Evidence Act 2011, Dickson v. Sylva [2017] 8 NWLR (Pt. 1567) 167 and Kubor v. Dickson [2013] 4 NWLR (Pt. 1345) 551, the claimant submitted that Exhibit D1 was not accompanied by a certificate and so is not admissible. The claimant then urged the Court to expunge Exhibit D1 from the records of Court. That where the said exhibit is expunged, there will be no form of documentary evidence to substantiate the claim of the 1st defendant in that regard; therefore, the relief must fail. That even if the document was admissible in law, the relief must still fail because the 1st defendant did not demonstrate at trial that he was entitled to the amount being claimed. Whichever way the issue is considered, that the counterclaim of the 1st defendant is bound to, and must as a matter of law, be dismissed.
37. The claimant went on that assuming for the sake of argument that the 1st defendant had a proper counterclaim before this Court, the terms and conditions of the 1st defendant’s offer letter dated 21st June 2011 to wit, remuneration, basic salary, accommodation, transportation, medical expenses, education, annual leave, termination/resignation, are all subject to the 1st defendant agreeing to the non-compete clause. That in view of the breach of the said clause, the 1st defendant is not entitled to the reliefs sought vide the counterclaim.
38. Finally, that no argument was proffered by the 1st defendant in relation to counterclaims (e) – (k). That it is the law according to Nwosu v. Mbadugha [1999] LPELR-6587(CA) and Dosumu v. NNPC [2014] 6 NWLR (Pt. 1403) 282 that where an issue is formulated but not argued or projected, and not a word is said in support of it, the issue is taken to have been abandoned. That by parity of reasoning, the failure of the defendants to proffer any argument in support of counterclaims (e) – (k) amounts to an abandonment of the said reliefs, urging the Court to dismiss them.
39. The claimant then referred to Exhibits C15 and C17 wherein the 1st defendant admitted that he was guilty of gross negligence leading to loss of kind and goods and personal loss; flouted the system and rules of the company; exhibited lack of control leading to subject audit; hid the facts from the management; caused monetary loss to the company; and engaged in acts of misconduct.
That this evidence is in support of the claimant’s defence to the counterclaim. That the 1st defendant is consequently not entitled to any relief sought in the counterclaim. The claimant then urged the Court to resolve issue (2) against the 1st defendant. And in conclusion, the claimant for judgment to be netted in its favour.
THE DEFENDANTS’ REPLY ON POINTS OF LAW
40. In replying on points of law, the defendants submitted that the claimant’s final written address should be confined to issues raised by the defendants’ in their final written address or matters where issues are joined and to which the Court has the benefit of adjudicating on. That the claimant’s final written address raised new points not argued by the defendants in their final written address. That in paragraph 4.03, the claimant argued that at paragraph 2 of the statement of defence, the defendants admitted paragraphs 1, 2, 3, 4, 5, 6, 7, 8, 12 and 14 of the amended statement of claim. To the defendants, this is misleading and erroneous in law. That paragraph 10 of the statement of facts filed at the initial stage of this suit is the same as paragraph 14 of the amended statement of facts to which the defendants have earlier denied in the statement of defence. That pleadings must be read holistically and not in isolation. That issues have been joined in respect of the above mentioned paragraph and as such it does not constitute a new issue before the Court.That the defendants never admitted paragraph 12 of the claimant’s amended statement of facts as same was contained in paragraph 10 of the old statement of facts filed at the time of instituting this action. It was only a slight change in paragraphs.
41. As for the reliefs before the Court, the defendants submitted that the claimant’s claim before the Court in relation to the “non-compete clause” is declaratory in nature, referring to Bulet International Nig Ltd v. Dr Omonike Olaniyi & anor [2017] Vol 6 – 12 MJSC (Pt. III) 6, which held that declaratory relief is never granted on the basis of admission or default of pleading; the party seeking declaratory reliefs has the burden of establishing his entitlement to such reliefs, and must succeed on the strength of his own case and not on the weakness of the defence, if any.
42. On the interpretation and meaning of the non-compete clause, the defendants submitted that it is trite law that an extraneous matter should not be imputed to a word in an agreement to which there is a clear meaning except in cases of ambiguity. That the interpretation given to the non-compete clause by the claimant is untenable in law as the clause is clear and unambiguous. That the phrase “not to join any other company in Nigeria” is clear and unambiguous to a reasonable man. To this extent, that the non-compete clause is onerous and thus void, urging the Court to so hold. The defendants then urged the Court to discountenance all the issues raised in the claimant’s final written address in disregard of the practice of pleadings. Finally, that it is trite that address of counsel no matter how brilliant cannot substitute for evidence that is placed by the Court in trial, citing Agbamu v. Ofili [2004] 5 NWLR (Pt. 807) 540 at 571.
COURT’S DECISION
43. I have carefully considered the processes filed and the submissions of the parties. The claimant’s case against the defendants is not a case of termination of employment. The evidence of the claimant under cross-examination that the 1st defendant was terminated for gross misconduct is immaterial to the determination of the claimant’s case. As the Supreme Court puts it in Gabriel Ativie v. Kabelmetal (Nig.) Ltd [2008] LPELR-591(SC); [2008] 10 NWLR (Pt. 1095) 399; [2008] 5 – 6 SC (Pt. II) 47, a claim is circumscribed by the reliefs claimed. From the claimant’s reliefs, its case is twofold: the 1st defendant breached his contract of employment with the claimant in terms of his covenant of non-compete in his contract of employment; and this breach of contract was induced by the 2nd to 4th defendants. Counterclaims (h) to (j) – counterclaims as to one month local salary of N125,000.00, airfare of USD 800 and return of handset or payment of N150,000 for it – had earlier been dismissed; as such the claimant’s arguments as to them go to no issue.
44. The claim of the claimant in terms of the 1st defendant’s breach of the non-compete clause in his contract of employment turns on the interpretation of the “Non-Compete Clause” itself, which can be found at the second page of Exhibit C1, the offer letter of 21st June 2011 to the 1st defendant whereby the 1st defendant was “selected as a Branch Manager for Infinity Tyres in Nigeria”. The said non-compete clause provides thus:
Please note that all the above terms and conditions are subject to you agreeing not to join any other company in Nigeria for one year if you cease working with us. Further, the Company has the right to debit to your account all the expenses incurred by the Company on your recruitment and other expenses from the time of joining till that date, should you leave before completion of two years.
The argument of the defendants is that this clause in asking the 1st defendant not to join any other company in Nigeria means that it is wider in scope beyond the range of business of the claimant. In other words, any company means just that – any company. The company may not even be in the line of business of the claimant, and the 1st defendant would still not be permitted to join. By this fact then, the defendants argue that the non-compete clause itself is unreasonable and illegal and so not enforceable.
45. The claimant on its part argues that it is reasonable and so enefioceable, relying on a number of case law authorities. The problem with the position of the claimant is Foster & Son Ltd v. Suggett [1918] 35 TLR 87 it cited dealt with a works engineer covenanting that he would not be employed by a competitor anywhere in the United Kingdom for five years after leaving the employment with the plaintiffs; the catch phrase here being “a competitor”. Andrews Advertising Pty Ltd v. Andrews [2014] NSWSC 318 also cited by the claimant dealt with the validity of a restraint of trade clause restraining a senior executive from working for another advertising agency anywhere in Australia; the point being that the two agencies in issue were advertising agencies. And the example given by the claimant when it cited Clarke v. Newland [1991] 1 All ER 397 at 402 and Home Counties Dairies Ltd v. Skilton [1970] 1 WLR 526 at 537 was first and foremost the case of a milkman entered into a covenant not to serve or sell “milk or dairy produce” to any customer of his ex-employer. The point is that in all of these cases, the non-compete clause calling for construction and application were all clauses restricting the employee from competing in like sectors as the employer’s.
46. To start with the law is that generally all covenants in restraint of trade are prima facie unenforceable in common law. They are enforceable only if they are reasonable with reference to the interest of the parties concerned and of the public. See Koumoulis v. Leventis Motors Limited [1973] LPELR-1710(SC); [1973] All N.L.R 789; [1973] 11 SC 100, Overland Airways Ltd v. Captain Raymond Jam [2015] 62 NLLR (Pt. 219) 525, The Market Research Consultancy Limited v. Mr Pradipta Kumar Mitra & anor unreported Suit No. NICN/LA/532/2014, the judgment of which delivered on 19th January 2017 and MRS Holdings Ltd v. Ibrahim Akar unreported Suit No. NICN/LA/225/2014, the judgment of which was delivered on 21st June 2016. What this means is that covenants in restraint of trade (non-compete clauses are actually covenants in restraint of trade) are unenforceable except it is shown to be reasonable; and it is the party seeking to enforce it that has the onus of proving that it is reasonable. In the instant case, it is the claimant who must show that the non-compete clause in Exhibit C1 is reasonable.
47. It is in showing the reasonability of the non-compete clause that the claimant submitted in paragraph 4.21 of its final written address that the reference to any other company in the non-compete clause was understood by the parties to mean “any other company competing company”. As couched, this phrase makes no meaning. It appears that what the claimant meant was “any other competing company”. If this is the case, or even if the phrase as couched by the claimant is taken, then by the claimant’s interpretation, the claimant is importing the phrase “competing” or “competing company” into the non-compete clause. A document speaks for itself; and counsel cannot add to it. Counsel cannot in the guise of interpretation add to a document. That will amount to giving evidence in a written address. The evidence before the Court is that CW under cross-examination affirmed that the restriction as per the non-compete clause was to all businesses whether the business was in line with the claimant’s or not; and that the non-compete clause bars the 1st defendant from working for any organization whatsoever, whether in the same line of business with the claimant’s or not. CW would, however, state that the non-compete clause is reasonable and fair. The claimant conceded that a non-compete clause is first and foremost a covenant in restraint of trade and so unenforceable except if it can be shown to be reasonable. The non-compete clause in Exhibit C1 is thus prima facie unenforceable. Like I pointed out, it is the claimant that must show that it is reasonable and hence enforceable. The claimant cannot prove the reasonableness of the non-compete clause by stretching and adding to the clause just to get a meaning it wants to justify the clause; after all ambiguity must be interpreted against the party that drafted a clause. See James Adekunle Owulade v. Nigerian Agip Oil Co. Ltd unreported Suit No. NICN/LA/41/2012 the judgment of which was delivered on 12th July 2016. The reliance of the claimant on an objective theory of contract is uncalled for since it is the claimant that is seeking to benefit from a clause that is prima facie unenforceable.
48. As admitted by CW, the literal interpretation of the non-compete clause in Exhibit C1 is very broad as to cover any organization whatsoever whether in the line of the claimant’s business or not. Whether or not a covenant in restraint of trade is reasonable is a question of fact and depends on the circumstances of each case; and reasonability is determined by reference to the geographical area of coverage, the economic activity covered and the duration of the applicability of the clause. The area of geographic coverage is Nigeria. This is reasonable. The duration of applicability is one year. This too is reasonable. However, the economic activity covered is “any other company in Nigeria”. This is too wide and unreasonable. The claimant wants this phrase to be read as “any other competing company in Nigeria”. Like I pointed out, nothing can be read into the contract. It is, therefore, my finding and holding that the non-compete clause in Exhibit C1 is too wide in stopping the 1st defendant from joining “any other company in Nigeria”; as such it is not reasonable and so is unenforceable.
49. The claimant in paragraph 4.37 of its final written address talked of the 1st defendant writing a letter of apology to it but did not disclose to the Court what exhibit the said letter of apology is. If it is Exhibit C17, a handwritten letter addressed to Mr SK Agarwal of Infinity Tryes Ltd, Lagos, it is undated and the signature on it is blurred and does not disclose the sender. There is a typed sheet of paper dated November 29, 2013 (marked as Exhibit C2) addressed to Sanjay Kumar (the 1st defendant), which is simply signed “Authorised Signatory” without indicating the name or nomenclature of the said “Authorised Signatory”. Aside this, it talks of a letter of the 1st defendant dated “28.09.2013”. Exhibit C17, the handwritten letter, talks of “…Clarification regarding issues raised through your notice dt. 29-11-13”. The handwritten letter (Exhibit C17) cannot be talking of responding to issues raised on “29-11-13” and still be dated “28.09.2013”. As it is, Exhibit C17 has no evidential value. It shall accordingly be discountenanced for purposes of this judgment. I so find and hold.
50. I now turn to the second arm of the claimant’s claims, the claim against especially the 2nd to 4th defendants for damages for inducing the 1st defendant’s breach of his employment contract with the claimant in terms of the non-compete clause. To succeed here, the claimant must show the breach of a legal duty which resulted in proved damages. See Harka Air Services (Nig.) Limited v. Keazor Esq [2011] LPELR-1353(SC). The author, Paul Goulding QC (ed.) – Employee Competition: Covenants, Confidentiality, and garden Leave (Oxford University Press), 2007 at paragraph 2.234 at pages 63 – 64, states that a fundamental requirement for a finding of liability for the tort of inducing breach of contract is that there must be breach of contract; and if a covenant is unenforceable for being an unreasonable restraint of trade, it will not be tortious to induce breach of it – the same being true if the contract is voidable. In this sense, procuring a breach of contract creates “accessory liability”, dependent upon the primary wrongful act of the contracting party (the 1st defendant), Once there is no primary liability for the 1st defendant, there can be no accessory liability for the 2nd to 4th defendants. See OBG Limited v. Allan [2008] 1 AC 1, where Lord Hoffman stated:
To be liable for inducing breach of contract, you must know that you are inducing a breach of contract. It is not enough that you know that you are procuring an act which, as a matter of law or construction of the contract, is a breach. You must actually realize that it will have this effect. Nor does it matter that you ought reasonably to have done so.
If the breach of contract is not an end in itself nor a means to an end, but merely a foreseeable consequence of actions undertaken, then it cannot be said that the breach of contract was intended. Sparkling Breweries Ltd & ors v. UBN Ltd [2001] LPELR-3109(SC); [2001] All NLR 575; [2001] 7 SC (Pt. II) 146 held that the tort of unlawful interference with the business of another consists in one person using unlawful means with the aim and effect of causing damage to another; and to constitute the tort the means used must be unlawful otherwise the tort is not established. So given the earlier holding that the non-compete clause is unreasonable and so not enforceable, it means that there is no primary liability of the 1st defendant to necessitate the accessory liability for the 2nd to 4th defendants. The claimant accordingly cannot succeed in its claim for damages for inducing breach of contract against the defendants. I so find and hold. The claims of the claimant accordingly fail and are all dismissed.
51. I now turn to the 1st defendant’s counterclaims (a) to (g) and (k), counterclaims (h) to (j) having been dismissed. Counterclaims (a) (b) and (d) sound more as the defendant’s defence to the claimant’s claim that the 1st defendant’s breached his contract of employment with the claimant in terms of his covenant of non-compete in his contract of employment. Having held that there is no such breach, it is idle making the specific orders in terms of counterclaims (a), (b) and (d). The only point I need to make here relates to counterclaim (b) wherein the 1st defendant claimed that they non-compete clause is an infringement on his fundamental right of employment to work under equitable and favorable condition. In arguing his case, the 1st defendant relied on The African Charter on Human and Peoples’ Rights (Ratification and Enforcement) Act, which enforced the provisions of the African Charter on Human and Peoples’ Rights as set out in the Schedule to the Act, Article 15 of which provides thus: “Every individual shall have the right to work under equitable and satisfactory conditions and shall receive equal pay for equal work”. The Preamble to the African Charter on Human and Peoples’ Rights talks of “essential objectives for the achievement of the legitimate aspirations of the African peoples” and “the total liberation of Africa, the peoples of which are still struggling for their dignity and genuine independence”, thus suggesting that the rights inure to Africans. To give credence to this viewpoint, Adekeye, JCA (as Her Ladyship then was) in IGP v. ANPP [2007] 18 NWLR (Pt. 1066) 457 at 492 held thus:
The African Charter is an understanding between concerned African States to protect the human rights of their citizens within the territorial jurisdiction of their countries. It is now part of the domestic laws of Nigeria and like all other laws, the court must uphold it.
The 1st defendant is an Indian citizen. See the opening words of his deposition of 4th July 2014; Exhibit C11, the data page of his international passport; Exhibit C13, his entry visa to Nigeria; Exhibits C13(a), C13(b) and C13(c) his re-entry visas to Nigeria; and Exhibits C13(d) and C13(e), his Combined Expatriate Residence Permit and Alien Scheme. By this fact, the 1st defendant cannot rely on Article 15 of the African Charter on Human and Peoples’ Rights to make any claim. I so hold.
52. Counterclaims (c), (e) and (g) are claims for the embarrassment caused to the 1st defendant by the claimant writing letters to the 2nd to 4th defendants. In proof of his claim, the 1st defendant tendered only Exhibit D1, air ticket, which more appropriately relates to counterclaim (i) already dismissed. Exhibits C3(a), C3(b), C3(c) and C3(d) are the letters written to or copied the 2nd to 4th defendants notifying them of the breach of the 1st defendant’s employment contract with the claimant. The letters were written by counsel to the claimant and called for the immediate disengagement of the 1st defendant from the 2nd to 4th defendants. These are the letters that the 1st defendant argued are embarrassing and tarnishing his image before his current employers and for forcefully seizing and withholding his personal properties. It is for this that the 1st defendant is claiming damages in the sum of N20 Million. In paragraph 5 of his counterclaim as attached to the statement of defence, all the 1st defendant stated is that the claimant “has consistently been embarrassing the 1st defendant before his current employer by bringing fictitious and frivolous letters to them meant to tarnish the image of the 1st defendant”. The 1st defendant then repeated this statement in paragraph 5 of his deposition relating to the counterclaim of 4th July 2014. How are Exhibits C3(a), C3(b), C3(c) and C3(d) fictitious and frivolous? The 1st defendant did not tell the Court. Even if they are fictitious and frivolous, what damage did they cause the 1st defendant? The Court has also not been told. As it is, therefore, counterclaims (c), (e) and (g) have not been proved; as such they fail and are accordingly dismissed.
53 Counterclaim (f) is a claim for five (5) month salary for the months of July to November 2013 at the rate of USD 2,750 amounting to USD 13,750 plus N125,000.00 sustenance allowance. This is a claim for special damages which must be claimed specially and proved strictly. See NNPC v. Clifco Nigeria Ltd [2011] LPELR-2022(SC). I looked through the statement of defence and counterclaim of the defendants and I found no pleading whatsoever relating to the salary of the 1st defendant or sustenance allowance of the 1st defendant. The law is that evidence given which is not in line with the facts pleaded goes to no issue and so is of no help to the party that produces it. See The Shell Petroleum Development Company of Nigeria Limited v. Kwameh Ambah [1999] LPELR-3202(SC); [1999] 3 NWLR (Pt. 593) 1; [1999] 2 SC 129. In any event, the 1st defendant did not show to this Court how he came by the figures he brandished in counterclaim (f). Mr. Mohammed Dungus & ors v. ENL Consortium Ltd [2015] 60 NLLR (Pt. 208) 39 enjoins that in labour relations a claimant must show his/her entitlement and how he/she came by the figures claimed. This has not been done in the instant counterclaim. What all of this means, therefore, is that counterclaim (f) has not been proved. It fails and so is hereby dismissed.
54. On the whole, neither the claimant’s claims nor the defendants’ counterclaim succeed. Case is accordingly dismissed.
55. Judgment is entered accordingly. I make no order as to cost.
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Hon. Justice B. B. Kanyip, PhD
