Johannesburg, 27 August 2012
In a ruling delivered in the North Gauteng High Court on 24 August 2012, Justice S. Baqwa ruled in favour of Reunert and granted a final interdict against John Holdsworth and his new company AppChat. Holdsworth and AppChat were ordered to pay Reunert’s legal costs.
This follows the interim interdict granted by Acting Justice Hiemstra on 17 April 2012 in the same matter. The interim interdict prohibited Holdsworth and AppChat from employing current and former Nashua ECN staff and from making any announcements in the press regarding the launch of AppChat.
Reunert originally brought the application for an interdict in March 2012 after AppChat employed ten of Nashua ECN’s key technical staff.
The final interdict of 24 August 2012 enforces Holdsworth’s contractual restraint of trade undertaking until 30 August 2012.
In addition, in terms of the High Court ruling, Holdsworth and AppChat are precluded indefinitely from:
- soliciting employees and customers of Nashua ECN;
- disclosing Reunert’s confidential information;
- usurping or diverting any corporate opportunities belonging to Reunert (which includes the business of AppChat); and
- competing unlawfully or carrying on acts of corporate sabotage against Reunert.
Quotes from the ruling
The High Court found that:
- “[Holdsworth] was aware of the strategic details of Nashua ECN’s mobile VOIP application”;
- “In [the Court’s] view [Reunert] has a clear right to protect its proprietary interests in confidential information and customer connections by way of restraint and confidentiality undertakings”;
- “[Reunert] had acted as a prudent businessman in securing the restraint of trade against [Holdsworth]”;
- “[The Court] is satisfied that the business that [Holdsworth] proposes contravenes the restraint in material respects”;
- “It is not necessary for purposes of this judgement to deal with each and every employee who left [Nashua ECN’s] employment. Suffice it to say there is a pattern of solicitation that emerges from the various examples given”;
- “We have here a case of solicitation of both employees and customers. Coupled with the statements which [Holdsworth] is alleged to have made to the customers and employees this … puts it in the realm of unlawful competition”;
- “It is patently clear that [Holdsworth] acted in contravention of clauses 11 [confidentiality], 12 [intellectual property] and 13 [restraint of trade] of the restraint of trade agreement. He did this by more particularly soliciting employees and customers from the very business that he had sold. It is particularly significant that of a purchase price of R172 million paid for ECN, R107 million of that was paid for goodwill”;
- [The Court quoted Justice Corbett in the case of Dun and Bradstreet (Pty) Ltd vs. SA Merchants’ Combined Credit Bureau (Cape):]
‘Fairness and honesty are themselves somewhat vague and elastic terms but [while] they may not provide a scientific and indeed infallible guide in all the cases to the limits of competition, they are relevant criteria which have been used in the past and which, in my view, may be used in the future in the development of the law relating to competition and trade’.
“In the present case [Holdsworth] would have done well to heed the business behavioural norm encapsulated in the excerpt quoted above”.