IN THE NATIONAL INDUSTRIAL COURT OF NIGERIA
IN THE KANO JUDICIAL DIVISION
HOLDEN AT KANO
Before His Lordship:-
HON. JUSTICE E.D. E ISELE – JUDGE
DATE: 23rd MAY, 2019 – SUIT NO: NICN/KN/11/2018
BETWEEN
M.N MAITASA GEN ENT. LTD – CLAIMANTS
MOTIVE FURNITURE LTD
AND
YUSUF UMAR DAWASA – DEFENDANT
IN THE MATTER OF INTERPRETATION OF DOCUMENT
REPRESENTATION: parties absent.
C.L Ohamuka for the claimant
A.I Mohammed for the Defendant.
JUDGMENT
The claimants commenced this action by way of an originating summons filed on an 20th of March 2018 which seeks the determination of the following questions:
Whether in the light of clause 11 and 12 of the Employment Contract dated 1st of January 2018 between M.N MAITASA GEN. ENT. LTD AND MOTIVE FURNITURE LTD and YUSUF UMAR DAWASA the Defendant is restrained from setting up a similar business with that of the claimants directly opposite the claimant’s place of business.
Whether in the light of clause 11 and 12 of Employment Contract dated 1st day of January 2018, the claimants are entitled to an order of injunction restraining the Defendant, his agents servants, privies and/or assigns whosoever and howsoever whether alone or in partnership from competing with the business of the claimants anywhere within 5 (five) kilometres radius from the claimant’s place of business.
If the answers to the above questions are in the affirmative, the claimant’s claim against the Defendant as follows:
A Declaration that the act of the Defendant to wit: competing with the claimants directly opposite the claimants place of business is a breach of the employment contract dated 1st January 2018.
A mandatory order of this Honourable Court compelling the Defendant to move his place of business from shop 127 Kantin Kwari Market Kano, Kano State.
An order of perpetual injunction restraining the Defendant whether personally or through his agents, servants, privies and/or assigns whether alone or in partnership from competing with the business of the claimants anywhere within five (5) kilometres radius from the claimant’s place of business.
From the affidavit of Mansur Maitasa the Director of the 1st and 2nd claimant companies in support of the originating summons. He averred that the claimants are corporate bodies in partnership carry on the business of curtain designing (among others) at shop 158 Gidan Alaramma Kantin Kwari Market Kano. That the Defendant is a curtain designer and was an employee of the claimants from 2016 to February 2018. For this the claimants exhibited the Defendants curriculum vitae as exhibit A: Exhibit B the Defendants letter of application to the claimants headed: “APPLICATION FOR CURTAIN DESIGNING”. Also exhibited is exhibiting C the Employment Contract made on 1st January 2018 and exhibit D the letter of notification by the claimant leaving work.
The Defendant in his counter affidavit had averred that it is not true that the claimants are corporate bodies in partnership as there was no evidence of registration and incorporation with the C.A.C. He also maintained that he was a curtain designer long before he met the claimant and he had learnt his curtain designing elsewhere and he had never been employed as a curtain designer with the claimant. And it was the claimant who approached him to work with it only as a vendor only selling curtains. And submissions of C.Vs and other credentials were long made after he had started working with the claimants.
He insisted that he had never worked as a curtain designer for the claimant but only worked as a vendor selling the claimants products and guiding customers on where to get their demands in response to the claimants averment that in 2017 its employees were asked to submit their written application for jobs and all necessary documentation and regulation from casual workers to permanent staff, the Defendant maintained that this was untrue as it was only a mischief and a trap to get him sign the service contract.
Regarding the notice he gave the claimant of his intention to resign from the claimant’s employ, he averred that seeing the nature of the application and terms he decided to resign and he did so since December 2017. That he was never satisfied with the new working conditions and he gave out a notice to resign from the job. He averred that after he gave his notice he was deceived by the manager to sign the contract of employment before tendering his letter of resignation and was misled and rushed into signing the contract of employment without further consultation.
He also averred that the shop the claimants want closed and relocated does not belong to him, not being a partnership, that it belonged to one Abubakar Iliyasu and that he never learnt any of his skills from the claimant as he was only employed as a vendor and nothing more.
The Defendant denied taking of the claimant’s client and he had not dealt with any of them. That the whole of Kantin Kwari Market is not up to 5 km radius that what the claimant is claiming is unjust, unfair and unreasonable considering the fact that his current employment with his current employer is for tailoring services and not as a vendor.
He maintained further that he was never employed as curtain designer or taylor by the claimants and the contract of employment was never specific on the terms of his work with the claimant.
The claimant on the other hand maintained in the further and better affidavit that they are duly registered with the CAC as R C No:1087922 which can easily be seen on the CAC website . The claimants also referred to the Defendant’s application letter for work as a curtain designer. They also maintained that the contract of employment did not in any way prevent the defendant from doing business. That it only sought to prevent the defendant from carrying on business either personally or in partnership anywhere within five (5) kilometre radius from the claimants place of business. That the Defendant was not telling the truth in the counter affidavit.
THE WRITTEN ADDRESSES OF THE PARTIES
In the written address of the claimant the courts attention was drawn to paragraphs (clause) 11 and 12 of the employment contract in exhibit C which reads:
“11. the employee shall not whether alone or in partnership, compete with the business of the employer, after the term of his employment, anywhere within five (5) kilometres radius from the place of business of the employer.
12. The phrase “not competes with the business of” as used herein shall mean that the employee shall not own, manage, operate, act as consultant to or be employed in a business substantially similar to and in competition with any business of the company of which the Employee had detailed and material knowledge…..”
The claimant contended that for a non-compete agreement to be considered valid and enforceable it must have the following elements amongst others:
Be supported by consideration
Protect a legitimate business interest
If there is no breach of the contract from the employer i.e. if the employee simply resigns.
The claimant also contended that the business of the claimant in this suit is a legitimate business and the claimant was paying salary to the Defendant as an employee of the company, making the non-compete agreement valid and enforceable, citing KOU MOULIS V.A.G LEVENTIS MOTORS LTD (1973) ALL N.L.R 789, where it was held that the non-compete covenant the subject of complaint was reasonably necessary for the protection of the business interest of the respondent and was therefore valid and enforceable in law.
The claimants reiterated paragraph 9 of their supporting affidavit where it was averred that after the Defendant left the claimant’s place of business, he set up a competing business directly opposite the claimant’s place of business using the knowledge and information acquired from the claimant’s company as well as taking away all the claimants clients from the claimant which caused the claimant to suffer loss which may lead to the claimants going bankrupt.
In response the Defendant in his written address formulated the following issues for determination.
Whether clauses 11 and 12 of the said employment contract dated 1st day of January 2018 between the claimant and the Defendant are void ab initio.
Whether in the light of clauses 11 and 12 of the said contract dated 1st day of January 2018, the claimant is entitled to an order of injunction restraining the Defendant, his agents, servants, privies and or assigns whosoever whether alone or in partnership from competing with the business of the claimants anywhere within 5 kilometres radius from the claimant’s place of business.
Whether the action if the claimants discloses a reasonable cause of action against the Defendant. In paragraph regard to the 1st issue the Defendant contended it be answered in the affirmative and the court should hold that clause 11 and 12 are void on the ground that it is contrary to the Fundamental Objectives and Directive Principles of State Policy and also on the ground that it is contrary to public policy.
The Defendant stated that by virtue of section 16(1)(a) of the 1999 Constitution (as amended), the said clauses 11 and 12 of the Employment Agreement cannot stand the test of economic objectives in the constitution which provides as follows:
“The state shall within the context of the ideals and objectives for which provisions are made in this constitution.
Harness the resources of the nation and promote national prosperity and an efficient, a dynamic and self reliant economy to every citizen on the basis of social justice and equality of status and opportunity.”
In the light of the above position it was submitted that the clauses 11 and 12 seeking to restrain the equal right and freedom of the Defendant to take a job with any person or company involved in business similar to the one run by the Claimant is contrary to the afore stated provision of the Constitution and urged this Court to so hold.
The Defendant submitted further that the said clauses 11 and 12 of the employment contract were void for being contrary to public policy, reason being that it is injurious to the economic development of the society citing the case of LEONTARITIS V. NIGERIAN TEXTILE MILLS LTD (1967) NCLR 114 where it was held that a contract in restraint of trade is valid if it satisfies the following conditions:
It is reasonably necessary to protect the interest of the person in whose favour it is imposed.
It is not unreasonable as regards the person restrained.
It is not injurious to the public.
The Defendants contended that in the instant case, the Claimant woefully failed to prove that:
They the Claimants have any interest to protect or at all any benefit to derive by restraining the Defendant from taking the tailoring job at his present place of job.
It is not unreasonable, unfair and injurious to the Defendant if the said clauses 11 and 12 of the employment contract are enforced.
That public interest will not be adversely affected and injured by enforcing the said clauses 11 and 12.
With regards to the 2nd issue which the Defendant stated should be answered in the negative. He maintained that the position of the law is that on clauses and covenants in a legal, valid, binding and enforceable contract can be enforced in a Court of Law, that where a contract is void no Court of Law will give it any binding force in any of its covenants or clauses. Citing CAMPAGNIE FRANCAISE DE L’AFRIQUE OCCIDENTALE V. GEORGE E. LEAUBA (1918) 3 NLR 67. Based on this authority the Defendants submitted that the contract sought to be relied upon by the Claimant being a void contract, the Claimants are not entitled to any injunction against the Defendants and urged the Court to so hold and dismiss the action.
On issue no 3 the Defendants answered this in the negative stating that a reasonable cause of action is defined as:
“The cause of action is the situation or state of fact which entitles a party to maintain an action in a judicial tribunal which may be a primary right of the Plaintiff actually violated by the Defendant . . .”
The Defendant contended and submitted that no reasonable cause of action is shown by the Claimants action because the Defendants line of work with the Claimant was vendor services i.e. selling Plaintiffs products to its customers while the Defendant’s appointment with his current employers is that of tailoring and not that of vendor services.
In the reply on points of law the Claimant had formulated that sole issue for determination:
“Whether the Defendant is entitled to the relief sought in the written address”
There the Claimant submitted that the Defendant is not entitled to the reliefs sought in his Counter Affidavit and the accompanying written address. The Claimant maintained that it is trite that an employer can lawfully prohibit the employee from setting up on his own, or accepting a position with one of the employer’s competitors, so as to be likely to destroy the employer’s trade connection by misuse of his acquaintance with the employer’s customers or clients and business secrets. That in KOUMOULIS V. LEVENTIS (supra) the Supreme Court had held that:
“In relation of master and servant it is a well established principle of law that a covenant in restraint is viewed by the Courts with utmost jealousy. It is therefore the employer who seeks to enforce it against the servant to show that it is designed for the protection of some exceptional proprietary interest of the employer. If the covenant affords adequate protection to the covenantee, the requirement that it must be reasonable in the interest of the parties is satisfied as the Court will not enquire into the adequacy of the consideration of the covenant. And depending on how the covenant is framed, an employer can lawfully prohibit the employee from setting up on his own, or accepting a position with one of the employer’s competitors, so as to be likely to destroy the employer’s customers or clients.”
The Claimant contended further that in the present suit, the Defendant who was an employee of the Claimant after acquiring information and skills from the Claimant’s company set up his own business directly opposite the Claimant’s company and he took their clients thereby causing loss to the Claimant’s business.
On reasonable cause of action the Claimant contended that it had a legal right which is the right to protect his trade from being destroyed and relied on the cases of RINCO CONSTRUCTION COMPANY LTD V. VEEPEE INDUSTRIES & ANOR (2005) LPELR 2949 (SC) and SPDC NIGERIA LTD & ANOR V. X. M FEDERAL LTD & ANOR (2006) LPELR – 3047 (SC).
COURT’S DECISION
Having considered the cases of both parties and having carefully considered the averments in the opposing affidavits together with the legal arguments advanced in the written addresses and reply. And in determining the issues formulated. I find as a fact that the Claimants in the further and better affidavit they filed in response to the Counter affidavit did not make any denial or rebuttal to the averment made by the Defendant at paragraph 11 of the Counter affidavit. That paragraph reads:
“That paragraph 9 is not correct as the shop in contention never belonged to me and is never a partnership; it belongs to one Abubakar Iliyasu and (sic) never learnt any of my skills from Plaintiffs . . .”
Specifically, I find that if the shop where the Defendant is currently working is said by the Defendant to belong to a named person, Abubakar Iliyasu, that fact alone could have called for a strong rebuttal from the Claimant in the further and better affidavit which could have even necessitated the Court to order the matter proceed to trial but the Claimant did not address this point and the Court would best treat it by leaving it as said by the Defendant that the said shop belongs to another person not even a party to these proceedings which person the Defendant described as his current employer.
I also find as a fact that the Claimant having alleged a loss of business did not furnish details of these losses, there is nothing to show its business declined in any way leading to the filing of this action.
Thirdly, I find as a fact that the Kwantin Kwari market Kano does not ordinarily cover a radius of 5 kilometers being a public market for trade in textiles and allied fabrics. It may therefore be a little awkward in such an environment for the Defendant and Claimant to find themselves facing each other and no more. That is all I see to it, the awkwardness of the situation which I hold should be allowed to pass, as to do otherwise in my view, would be setting a dangerous precedent which the Court would not be drawn into.
In the case of APROFIM ENGINEERING CONSTRUCTION NIGERIA LTD V. JACQUES BIGOURET & ANOR (2012) FWLR (PT. 622) 1740 the Court held on the unconstitutionality of restrictive covenants in contracts of employment per Mbaba JCA at pp 176 – 1764 that:
“. . . I hold that the learned trial Chief Judge was right, as it is against the spirit of the Constitution, basic law, to castrate an able bodied man and render him unemployed and useless to himself and family. . . I think article 12 completely negates employee’s mobility in labour and bars his right to work and earn a living. . .”
Earlier in this judgment, the Court of Appeal had held the set article 12 to be a nullity for being an affront on Section 17 (2) (a) and (e) of the 1999 Constitution (as amended) which makes provision on social objectives of the Constitution. The Defendant had relied on the section 16 (i) (a) of the same Constitution on economic objectives at paragraphs 3.02 to 3.04 of his written address. Section 17 (2) (a) provides:
(2) In furtherance of the social order:
(a) Every citizen shall have equality of rights obligations and opportunities before the law. I hold that the said provisions apply to the present case.
And clauses 11 and 12 of the employment contact which I reproduced earlier in the judgment are consequently held to be restrictive covenants which should not be allowed to tie down the Claimant, or force him to a location of 5 kilometers radius essentially banishing him from the vicinity of the Kwantin Kwari market. Consequently both clauses are hereby found to be void and I do hold them as such.
The issues formulated for determination in response to the Originating summons are consequently determined in his favour. Regarding the case of KOUMOULIS V. LEVENTIS (Supra) cited and relied on by the Claimant in both the written address in support of the Originating summons and the reply having read through the dictum of the Court relied upon by the Claimant. It became even clearer to me that it did not avail the Claimant as I do not see that they have shown any “exceptional proprietary interest” of theirs which will be harmed.
The reliefs sought in the Originating summons are hereby refused and it is accordingly dismissed.
Judgment is entered accordingly.
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HON. JUSTICE E. D. E. ISELE
JUDGE
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HON. JUSTICE E. D. E. ISELE
JUDGE
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HON. JUSTICE E. D. E. ISELE
JUDGE
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HON. JUSTICE E. D. E. ISELE
JUDGE
