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REPUBLIC OF SOUTH AFRICA

IN THE HIGH COURT OF SOUTH AFRICA

(GAUTENG LOCAL DIVISION, JOHANNESBURG)

CASE NO: 22449/2017

In the matter between:

VALUE group LIMITED                                                                             First Applicant

VALUE LOGISTICS LIMITED                                                              Second Applicant

CORE LOGISTIX (Pty) LIMITED                                                             Third Applicant

and

FRANCES ROOKS                                                                               First Respondent

AMY SINGH                                                                                     Second Respondent

SHONA JOHNSON                                                                             Third Respondent

Windsor logistics CC
(CK NO: 2005/030047/23)                                                                 Fourth Respondent

SHARON BUTLER                                                                               Fifth Respondent

ROSS BUTLER                                                                                   Sixth Respondent

D H DELIVERIES CC T/A EXPRESS WAY
(CK NO: 2000/048259/23)                                                              Seventh Respondent

JUDGMENT

KEIGHTLEY J

INTRODUCTION

1. This application started life as a semi-urgent application for interim relief against all of the above respondents.  After the application was instituted, the respondents agreed to be bound by the interim interdict sought in Part A of the notice of motion.  Subsequent thereto, only the first respondent (Ms Rooks) and the third respondent (Ms Johnson) continued actively to oppose the relief sought in Part B by filing answering affidavits.  The second respondent (Ms Singh) filed a notice of intention to oppose, but did not file any answering affidavit.  She appeared in person at the hearing.  An understanding was reached between the applicants and the fourth to sixth respondents, and the applicants no longer seek any relief against them.

2. The application was instituted on 23 June 2017.  The interim order was granted on 18 July 2017.  Ms Rooks filed her answering affidavit on 14 August 2017, and Ms Johnson on 10 August 2016.  The applicants’ replying affidavits were filed at the end of August 2017.  The matter was initially set down on the ordinary opposed motion court roll.  However, the parties were referred to the Deputy Judge President for an allocation on the special motion roll. This meant that the matter was ultimately set down for hearing only on 18 June 2018. 

3. In February 2018 Ms Rooks filed an application to strike out various parts of the applicants’ replying affidavit.  This was opposed by the applicants.  Shortly before the hearing commenced, I was advised by counsel that Ms Rooks did not intend persisting with her strike out application.

4. The first applicant is Value Group Limited (“Value Group”), which is a public company listed on the JSE.  Value Group owns 100% of the issued shares in the second applicant, Value Logistics Limited (“Value Logistics”), which in turn owned 80% of the issued shareholding in the third applicant, Core Logistics (Pty) Ltd (“Core”).  At the time that the application was instituted, Ms Rooks owned the remaining 20%.  When I make general reference to these companies, I simply use the term “Value”.

5. It is common cause that Value Logistics acquired the business then known as Nucleus Chain Store (Pty) Ltd (“Nucleus”) from Ms Rooks and her fellow shareholders in March 2015.  Ms Rooks, who was one of the directors of Nucleus, remained a director after the take-over, and the company subsequently became Core.  She received 20% shareholding in Core (or as it was then known, Coreteam Investments No 4 (Pty) Ltd), and was party to a shareholders’ agreement.  The shareholders’ agreement included a restraint of trade clause (“the ROTC”) and a non-solicitation clause (“the NSC”).  In addition, she became an employee of Core, as Managing Director.  Her contract of employment with Nucleus was taken over by Core with effect from 1 March 2015.

6. The other directors of Core are Mr Gottschalk, Mr Sackand Mr Padiyachy.

7. Ms Singh was initially employed by Nucleus as a general manager, and Ms Johnson was employed as an account manager.  Their contracts of employment were also taken over by Core with effect from 1 March 2015.

8. The employment contracts of Ms Rooks, Ms Singh and Ms Johnson contain a secrecy and confidentiality clause (“the confidentiality clause”) requiring them to keep all information relating to the company and its business acquired during the period of employment confidential and prohibiting them from disclosing any such information either directly or indirectly to any person either during or after the termination of their employment.

9. Ms Rooks was suspended from her employment with Core on 9 June 2017.  A disciplinary process was instituted against her after the application for Part A relief was instituted.  The hearing commenced on 10 July 2017.  Ms Rooks refused to participate and resigned on the same date.  The disciplinary proceedings went ahead, and Ms Rooks was found guilty on certain charges.  Her summary dismissal was recommended on 28 July 2017.  Thereafter, Value Logistics gave effect to a call-option clause in the shareholders’ agreement which entitled them to acquire Ms Rooks’ 20% shareholding in Core for R1 per share.

10. Ms Singh was suspended on 5 June 2017.  She tendered her resignation with immediate effect on 12 June 2017.  Ms Johnson tendered hers on 13 June 2017.  Initially this was subject to a 30-day notice period.  However, Ms Johnson subsequently terminated her employment with Core on 19 June 2017 with immediate effect.

RELIEF SOUGHT

11. The applicants seek final relief against all three of Ms Brooks, Ms Singh and Ms Johnson in the form of an interdict restraining them from using any confidential information concerning the business or affairs of Core which may have come to their knowledge during their employment with Core, and from disclosing such information either directly or indirectly to any person (including after the termination of their employment).  The information covered includes trade secrets, suppliers, principals, customers and trade connections, as well as any other information which is inherently of a confidential nature including information pertaining to the management and financial affairs of Core.  The basis of this relief is the confidentiality clause contained in their contracts of employment.

12. In addition, the applicants seek to enforce the NSC against Ms Rooks, more specifically, they seek to interdict her for a period of 36 months from (in summary):

a. Persuading or encouraging prescribed suppliers or clients to terminate or limit the extent of their business with any companies in the Value Group of Companies;

b. Persuading or encouraging (or attempting to do so) employees of the Value Group of Companies to become employed by any entity performing a competing service, or from terminating their employment with the Value Group of Companies;

13. They also seek to enforce the ROTC against Ms Rooks, more specifically by seeking to interdict her for a period fo 36 months from (in summary)

a. Being party to any attempt to entice employees away from their employment with Core, Value Logistics, or other subsidiary;

b. Being party to any attempt to dissuade clients or suppliers from continuing business dealings with Core, Value Logistics, or other subsidiary;

c. Encouraging clients or suppliers from reducing or terminating their business dealings with Core, Value Logistics, or other subsidiary;

d. Using or exploiting or knowingly divulging for use or exploitation any trade secrets or confidential information gained by Ms Rooks in connection with her association with Core.

14. The applicants assert that Ms Rooks, Ms Johnson and Ms Singh acted in breach of their obligations under the confidentiality clause.  Further, Ms Rooks acted in breach of her fiduciary duties as a director of Core, grossly abused her position as director, took personal advantage of confidential information and business opportunities of Core and acted in a manner that showed willful misconduct.  Allegations of fraudulent conduct are also made against her. 

MS ROOKS

The case against her

15. The application arose out of investigations conducted by the applicants into Ms Rooks and her fellow respondents.   The applicants describe the investigations as being extensive, involving voluminous documentation and numerous witnesses.  They say that the investigations showed substantial misconduct.

16. Much, although not all, of the allegations against Ms Rooks, Ms Singh and Ms Johnson relate to the activities of the fourth respondent, a close corporation called Windsor Logistics CC (“Windsor”).  The fifth respondent, Ms Butler was one of the two members of Windsor and the sixth respondent, her son Ross Butler, was employed by Windsor.  Initially, the applicants sought an interdict restraining the Butlers and Windsor from unlawfully competing with Core.  However, subsequent to the launch of the application, these respondents elected to co-operate with the applicants by providing them with information and signing affidavits annexed to the replying affidavit.  They also stated, under oath, that they had caused Windsor to cease trading.  They indicated that they had subsequently shifted the work that they had been conducting in the Polokwane/Mbombela areas, which had caused the applicants to institute the application against them, to another company controlled by them, viz. Expressway.  As I have already indicated, the applicants consequently no longer sought relief against them.

17. The affidavits supporting the application are lengthy.  They contain a variety of allegations against, in particular, Ms Rooks (and to a lesser extent, Ms Johnson and Ms Singh).  The allegations are supported by numerous documents, including trails of emails, invoices, texts of voice notes, and affidavits by a number of parties.

18. Ms Rooks initially denied that the allegations were true, and took the stance that she had not acted in breach of any of her obligations towards Core.  This was her stance right up to the time that the matter was heard.  In her written heads of argument (filed some time before the hearing) she labelled the applicants’ allegations as being based on assumptions and inferences without any factual foundation.  Consistent with this stance was her application to strike out, among other things, the affidavit Ms Butler had provided to the applicants.

19. At the hearing of the matter I was advised by Ms Rooks’ new counsel, Mr Cilliers, that his client’s opposition was no longer based on these denials.  He advised me that for the sake of the argument he intended to address, I could proceed on the assumption that the allegations made by the applicants were correct.

20. This being the case, it is no longer necessary (at least in so far as Ms Rooks is concerned) to traverse the details of what was discovered during the course of the applicants’ investigation into Ms Rooks and the activities of Windsor.  I will restrict myself to a broad outline of what was uncovered.

21. What the founding and replying affidavits establish is that Ms Rooks was centrally involved in the establishment of offices for Windsor in both Polokwane and Mbombela.  Core, unlike Value Logistics, historically has operated on the basis of using a system of owner/drivers to effect distributions.  Windsor, like Core, is a company offering logistics and distribution services, and like Core, it also uses a system of owner/drivers to effect deliveries.  It can hardly be denied that they offer competing services to those offered by Core.

22. Ms Rooks proposed the establishment of Windsor in these two cities to Ms Butler and to Mr Ouzman, who held the remaining 50% of the members’ shares in Windsor at the time.  This was towards the end of 2016.  Mr Ouzman, who also provided an affidavit attached to the applicants’ replying affidavit, told Ms Rooks that he was not interested in getting involved in a business beyond Kwa Zulu-Natal.  However, he said that if Ms Rooks and Ms Butler wanted to start the venture, they could do so under Windsor, as he did not want to be involved.  He said that Ms Rooks could take over his share in Windsor if she wanted to work with Ms Butler on the project.  According to Mr Ouzman, Ms Rooks told him that she could not take over his member’s interest at that stage, but that she would be in a position to register his membership interest in her name in the future.

23. It is common cause that the share transfer to Ms Rooks never eventuated, but it is clear from the affidavits of Ms Butler and Mr Ouzman that Ms Rooks fully intended formally to acquire 50% of the members’ share in Windsor.  Her conduct from that time on to the time she was suspended was undoubtedly, as the applicants allege, the conduct of someone who was working to establish and foster the business of Windsor in anticipation that this would inure to her personal benefit.

24. Mr Ouzman stated in his affidavit that it was Ms Rooks who asked them to open up depots in Polokwane and Mbombela, and to do so urgently.  She also assured him and Ms Butler that the best way to conduct the business was via the owner/driver system.  As I have already indicated, this is the system under which Core operates.  As Mr Ouzman and Ms Butler were unfamiliar with this system, having never used it before in their existing business, Ms Rooks assured them that she would render whatever assistance was necessary including staff training, financial controls of the owner/drivers and other operational aspects of the business.  She also undertook to pay Windsor for services rendered by it on presentation of statements of account.  This, it appears, was not in accordance with Core’s normal practice.  Mr Ouzman states:

“Absent the promise of assistance which Rooks undertook to render, Sharon (Ms Butler) and I would never have started the new venture.”

25. The email trails confirm that Ms Rooks was central to the planning and implementation of the establishment of Windsor from around February 2017.  Among other things, she traveled to Mbombela and Polokwane to meet with potential Windsor clients, she gave instructions to Core staff to provide Windsor with furniture and computer equipment from the Core office, she instructed Mr Lebang, who was employed by Core, to travel to the two offices of Windsor to give training to Windsor staff on the Winfreight system.  He spent five weeks in all doing this training with car hire paid for by Core.

26. There is evidence of her sharing confidential information with Windsor: for example, she shared the rates Core charged to an existing client, UTI, with Ms Butler.  She was also instrumental in moving an existing client of Core, All Four Global, onto Windsor, and causing Windsor credit application forms to be forwarded to the company to complete.  She arranged for Ms Johnson to carry out work for Windsor on her personal lap top, and to be paid in excess of R12 000 by Windsor for work she completed after hours for that company.

27. Her defence in her answering affidavit was that in supporting Windsor, she was doing no more than carrying out Core’s long-standing practice of supporting businesses with whom Core could enjoy a “symbiotic” relationship.  She referred to Windsor as being a “branch” of Core, and that Core’s support of Windsor was to its (Core’s) ultimate  benefit.

28. The applicants denied the suggestion that this was standard practice for Core.  What lends credence to this denial is that Ms Rooks orchestrated all of this while she was the managing director of Core, and while she owed a clear fiduciary duty to Core.  She did not disclose any of these activities and the use of Core resources to her co-directors.  No records were kept of Mr Lebang’s time spent training staff members of Windsor.

29. Furthermore, and critically, at no stage did she disclose to her co-directors that she anticipated a personal benefit from Windsor’s activities.  The affidavits by Ms Butler and Mr Ouzman make it quite clear that Mr Rooks held a personal interest in Windsor, and that she anticipated that she would formally acquire a half share in the business with Ms Butler when the time was ripe.  She had clearly factored this into her planning and no doubt hoped to achieve this once she had succeeded in buying back Core (which also never eventuated).

30. I am satisfied from the evidence provided by the applicants that there is no merit in Ms Rooks’ protestation that her conduct in connection with Windsor was for the benefit of Core and consistent with the obligations she owed to Core.  On a full conspectus of the evidence, her version is so untenable that it falls to be rejected.   Even if she had not elected to restrict her defence at the hearing, I would have been satisfied of this: Ms Rooks breached her obligation of confidentiality to Core, and she breached her fiduciary duties to the company.

31. In addition, there is strong evidence of fraud committed by Ms Rooks against Core.  While numerous allegations are made against Ms Rooks by the applicants, I refer to only a couple of incidents.

32. In the first instance, Ms Butler confirms under oath that in about November 2016 Ms Rooks requested her to increase a statement for commission owed by Core to Ms Butler by R30 000. 00.  She complied.  When the payment of R38 000 (instead of R8 000 owing) was made, Ms Rooks telephoned Ms Butler and asked her to pay over the sum of R30 000 into a Nedbank account.  After the applicants launched their investigation, they spoke to Ms Butler about the inflated payment.  Ms Rooks advised Ms Butler in May 2017 not to worry as the account that she had asked her to make payment of the R30 000 into was her mother’s account.  She would arrange for her mother to send Ms Butler an invoice for R30 000 for goods ostensibly purchased by Ms Butler from Ms Rooks’ mother.  The invoice duly arrived.  Ms Butler confirmed in her affidavit that it was fraudulent, as she had never bought the items invoiced from Ms Rooks’ mother.

33. In another incident, Ms Moller (another logistics company operator whom Ms Rooks claimed to assist in order to benefit Core) recorded a conversation she had with Ms Rooks.  The transcript of the conversation was annexed to the replying affidavit, and Ms Moller provided a confirmatory affidavit.  In this conversation, Ms Rooks requested Ms Moller to issue two fraudulent invoices to Core for R20 000, as she wanted to use the money for a Christmas party.  Ms Moller refused the request.  In addition, Ms Rooks asked her in a later conversation, not to disclose to Core that she (Ms Moller) had referred a certain client to Core, and to say instead that a broker, Gary (Rahme, who received extensive commissions from Core) had referred the client.

34. I note, too, that in the same conversation, Ms Rooks disclosed details to Ms Moller about the “storm” that was brewing at Core once the investigation had been launched.  She told her about staff being fired, section C notices being issued, and that management was “gunning” for her (Ms Rooks).  This would seem to me quite clearly to be confidential information relating to the business that Ms Rooks was obliged under her contract of employment not to divulge.

35. Ms Butler further explained, and provided proof of this, that Ms Rooks had generated (or caused to be generated) false invoices apparently emanating from Windsor for services rendered to Core.  The amounts in the false invoices mirrored amounts for which Windsor had, in reality, billed Core.  The purpose of the false invoices was in order to facilitate the promise Ms Rooks had made to Windsor that their invoices would be paid on presentation, rather than within the normal payment period, which involved a delay.

36. In summary, the allegations made by the applicants, which I accept, paint a picture of ongoing duplicity, grave misconduct (including breaches of confidentiality), and breaches of her fiduciary duties by Ms Rooks in the manner in which she acted as managing director of Core.

Ms Rooks’ defence

37. At the hearing, Mr Cillers indicated to the court that he would proceed with three main defences on behalf of his client:

a. The main defence was that, assuming that the allegations of breach against his client were accepted, the applicants were not entitled to enforce the protection of their rights under the ROTC as there were no suggestions in the papers that Ms Rooks had breached, or threatened to breach, the applicants’ protectable interest after her employment had been terminated.

b. Alternatively, even if this were not so, his client advanced two arguments pertaining to the issue of costs.  The first was that the application was unreasonably substantial: the applicants could have sought to protect their interests by enforcing the ROTC on brief supporting affidavits.  Accordingly, they should not be entitled to their full costs.

c. The second costs argument was that the applicants were not entitled to costs on an attorney-client scale, as sought by them.

38. As to the main defence, Mr Cillers pointed to the minutes of a board meeting held after the applicants had commenced their investigations.  A copy of the minutes was attached to Ms Rooks’ answering affidavit.  Mr Cilliers drew attention to Ms Rooks’ acceptance at that meeting (which was held on 22 June 2017, shortly before the application was launched) that: “I have no interest whatsoever in tackling Value’s clients, tackling its trade secrets, tackling anything.  You can restrain me for my three years, Steven, that is how much I have no interest in this industry anymore.”

39. Mr Cilliers also pointed out that in her answering affidavit, Ms Rooks had reiterated that:

“I will refrain to interfere with any customers of Core, as stipulated in the agreements whether it was existing customers or new customers landed.  In as much as I am restrained in terms of the shareholders agreement or my employment agreement not to do anything as provided for in the said agreements, I will refrain from doing so.”

40. Mr Cilliers submitted on behalf of his client that once these undertakings were made, it must be clear that the applicants’ rights are no longer under any threat from Ms Rooks and, accordingly, they have failed to show a need to obtain an order enforcing their rights against her.  He pointed out, too, that since the launch of the proceedings and the termination of her employment, there was no evidence that she had conducted herself contrary to her obligations.  Once again, this meant that an interdict was not justified.  All the evidence, he submitted, related to her past breach, not to any breach more recently.

41. There are a number of reasons why I am not persuaded by this line of defence.  To begin with, one must look at the context both within which the application was made and pursued, and within which Ms Rooks gave the undertakings relied on her now.

42. As to the remarks by Ms Brooks at the board meeting on 22 June 2017, it is important to have reference to the whole context in which they were made.  Her “undertaking” (that applicants could restrain her)  was preceded by the following comments from her:

“I had absolutely no involvement in terms of a business with Windsor Logistics.  Okay.  Don’t confuse supporting a supplier with being an owner of a business.  I certainly have never been an owner of Windsor Logistics and don’t wish to be.  I have no interest in the business.  I’ve never gained any interest from the business.  I think in terms of what they do. They are a small pathetic business that hasn’t even taken off the ground.  I actually fell pretty sorry for these people, because I think they are being bamboozled in terms of what they are trying to achieve.  They have very few clients.  I think Core was their biggest client.  To me, it doesn’t interest me, it doesn’t serve a purpose.  I don’t wish to take on Value clients.  I don’t wish to be in this industry anymore, quite frankly.” (my emphasis)

43. This extract demonstrates that Ms Rooks was not playing open cards with her co-directors about her interest in Windsor.  She was, as we now know, not being truthful in stating that she had no interest in Windsor’s business.  The applicants can hardly be faulted for not being prepared to take Ms Rooks’ further protestation, that she had no more interest in the logistics business or in Values clients, at face value and believing them.

44. As to Ms Rook’s undertaking to be bound by the ROTC in her answering affidavit, this must be seen in the context of the grave dishonesty, including fraud carried out by Ms Rooks against Core, uncovered in the investigation.  It seems to me to be axiomatic that where a respondent is shown to be guilty of egregious conduct such as this, an applicant ought not to be prevented from taking legal steps to protect their rights.  Ms Rooks was invited more than once by the applicants to file an affidavit answering, among other things, the allegations of fraud made by Ms Butler and Ms Moller in the replying affidavit.  Ms Rooks insisted, instead, on filing an application to strike out.  Subsequently, she abandoned that application.  In the circumstances, the allegations of fraud against her remain unchallenged.  It rings hollow for Ms Rooks to now insist that the applicants should be non-suited from seeking legal enforcement of their rights because she says that she understands she is bound by her obligations.

45. The fact of the matter is that Ms Rooks has been shown to have acted dishonestly in a number of respects towards the company to whom she owed a fiduciary duty.  Yet, until the hearing, she insisted on denying these allegations.  Her acknowledgement of her obligations in her answering affidavit were coupled with averments that the allegations against her were unfounded, that Mr Gottshalk did not understand the Core business, and that her co-directors had treated her unfairly in their dealings with her.  Given her response, and her full-fronted defence of the case against her, the applicants were, in my view, entitled to take the stance that they should persist in seeking an order to protect their rights.

46. It is also relevant, in my view, that Ms Rooks committed the second instance of fraud involving Ms Butler and the payment of R30 000 after the application was instituted.  Ms Butler states that she was advised by Ms Rooks on 27 June 2017 that the payment by Ms Butler had gone into her mother’s account, and that she would provide an invoice to cover the payment.  Ms Butler received the fraudulent invoice from Ms Rooks’ mother on 29 June 2017.  This was after her suspension, and she was clearly trying to cover her tracks by committing a further fraud against Core.  It is also clear from the final transcript of the telephone conversations provided by Ms Moller that Ms Rooks was desperate to find out from Ms Moller what had transpired after she (Ms Moller) had spoken to the applicants.  Once again, this was after Ms Rooks had been suspended.  Ms Moller refused to give Ms Rooks feedback, despite Ms Rooks assuring her that it was a “safe line” and that no-one would know.  Such conduct is not consistent with a litigant who understands what their legal obligations are and who is being truthful in giving an undertaking to abide by them.

47. For all of these reasons, I find no merit in the main submission made on behalf of Ms Rooks.  Her conduct was such, both prior to, and after the launch of proceedings, as to warrant the enforcement of the applicants’ rights by way of an interdict against her.

48. I turn, then, to consider the costs arguments.  First, were the applicants entitled to launch their proceedings on the scale that they did so?

49. The founding papers in the application were over 500 pages long, including annexures.  I have already described the nature of the annexures, and the fact that according to the applicants, they were uncovered during the course of what they say was an exhaustive investigation carried out by them.  Ms Rooks’ answering affidavit, with annexures, was about 100 pages long, and the applicants’ replying affidavit, with annexures, was about 150 pages long.

50. I cannot agree with Mr Cilliers’ submission that the applicants could have made out a case against Ms Rooks in a few pages.  To begin with, the applicants sought to make out a case against six respondents, not only Ms Rooks.  In order to support the relief sought against them, the applicants had to paint a full picture of the involvement of all the respondents in establishing Windsor, and in the use of Core’s resources to do so.  The picture was not a simple one but had to be pieced together.  The case against Ms Rooks did not only relate to her involvement with Windsor: other aspects of her conduct were also included, such as the questions around the payment of commissions to brokers, the use of Core resources to fund a plane ticket for Ms Rooks’ mother, and the creation of a credit note from Core for a supplier who had provided services to Ms Rooks and her fiancé personally, to name a few.  These issues related to the applicants’ case that Ms Rooks had been involved, on an ongoing basis, of acting in breach of her fiduciary and other duties to Core, and that they were entitled to take legal action to protect their interests against further possible breach.

51. It may be easy in hindsight to say that the papers could have been shorter.  However, given the complexities of the alleged breaches and the number of parties involved, that would not have been a fair assessment at the time the application was instituted.

52. In my view, the applicants cannot be criticised on this score.

53. I turn, finally, to the question of the scale of costs as regards Ms Rooks.  The applicants sought an order of costs against Ms Rooks on an attorney and client scale.  Due notice of this was given to her in the founding affidavit.  The applicants aver that a punitive costs order is warranted on the basis of Ms Rooks’ dishonest and fraudulent conduct, and in view of the breach by her of her fiduciary duties owed to Core.

54. The applicants have succeeded in establishing that Ms Rooks had an undisclosed personal interest in the establishment of Windsor.  Albeit that she had not yet formally taken transfer of Mr Ouzman’s member’s interest, Ms Butler and Mr Ouzman’s affidavits establish that this was Ms Rooks’ intention.  Without disclosing this interest to her co-directors, she instructed that Core’s resources be used to facilitate the establishment of Windsor, and she participated in the activities of Windsor by, for example, vetting depots, and meeting potential clients.  She disclosed, or caused to be disclosed, price lists to Windsor.  She did not disclose to her co-directors any of this involvement, nor did she disclose to them that Core’s resources were being extensively used to support Windsor.  Even after allegations arose with the investigations by the applicants, at the board meeting on 26 June 2017, Ms Rooks again denied that she had any interest in Windsor.  She attempted to paint them as a “pathetic” outfit, implying that Core should not be concerned by their activities.  This was patently misleading, given her extensive involvement in trying to get Windsor off the ground.  This was conduct amounting to an egregious breach of the fiduciary duties owed by Ms Rooks to Core and her co-directors.

55. In addition to this misconduct, Ms Rooks cannot dispute the allegations of fraud involving the R30 000 payment to Ms Butler, and then the on-payment, at Ms Rooks’ request, of the amount to a bank account held by Ms Rooks’ mother.  Coupled to this was the second related fraud, of the false invoice arranged by Ms Rooks from her mother to Ms Butler.  To compound the seriousness of this latter conduct, it occurred after the application had been instituted against Ms Brooks.  There is, of course, the attempted fraud involving the two R20 000 invoices Ms Rooks sought to extract from Ms Moller.  I mention only these examples of the proven fraudulent conduct on the part of Ms Rooks.

56. A court does not lightly order costs on an attorney and client scale against a litigant.  However, where a litigant is shown to have been guilty of dishonesty or fraud a punitive costs order will be warranted.^[1]  In this case, Ms Rooks’ conduct has been shown to fall into this category.  What is more, instead of trying to meet the concrete proof provided in the replying affidavit, she instead sought to strike out the relevant evidence, and then later abandoned her strike-out application.

57. Mr Cilliers submitted that Ms Rooks has been punished enough: she has lost her shareholding in Core for the nominal price of R1 per share, and she has lost her employment.  However, the objective of a punitive costs order is not merely to punish the losing party.  It is intended to mark the displeasure of the court and to provide justice by ensuring, in an appropriate case, that the successful party is not out of pocket as a result of having to seek relief from the court to protect against the conduct in question.^[2]  Fraud on the part of a managing director of a company, and egregious breaches of the fiduciary duties owed by her are matters of important public interest.  Where there are clear breaches in these respects, it is fitting that the court should make its displeasure known by awarding a punitive costs order.  In addition, companies should not be put out of pocket when they take steps to deal with such conduct in legal proceedings.  In my view, this is one of those special cases where an attorney-client costs order is warranted against Ms Rooks.

MS JOHNSON

58. Ms Johnson was employed at Core as an accounts’ manager.  As she explained in her answering affidavit, she was effectively a debtor’s manager whose duties included invoicing clients, following up on outstanding payments from clients, loading new rates onto the billing system, capturing payments received from debtors into the in-house computer system, handling client queries, and dealing with client credit notes.

59. It is common cause that she assisted in the process of establishing Windsor’s operations in Polokwane and Mbombela.  She was involved from around March 2017 until early June 2017.  Her activities included the following:

a. At the request of Ms Rooks she set up the Winfreight system (the billing system used by Core and others in the logistics business) for Windsor.

b. In the main, she did this after hours and she was paid two amounts totaling over R12 000 by Windsor for her services.  This was while she was employed by Core.

c. The setup for Windsor included setting up Windsor’s details onto Winfreight, loading Windsor’s clients’ details onto the system, importing the rates onto the system, running checks to ensure that the rates calculated correctly, and checking invoices, statements and debtor aging for Windsor.

d. She brought her personal laptop into work at Core so that she could connect and make the necessary changes to the Windsor system.

e. She used a personal gmail address (logisticsbillings@gmail.com) and her personal laptop for communications involving Windsor.  Ms Rooks, on occasion, used Ms Johnson’s personal laptop and email address to reply to communications from Ms Butler that were primarily meant for Ms Rooks.

f. She advised Windsor what to bill Core in respect of deliveries done by Windsor for Core in Polokwane and Mbombela.  She loaded these rates onto the Winfreight system for Windsor.  She provided Ms Butler with a tally of the turnover that Windsor had earned by doing deliveries for Core in Polokwane and Mbombela in April 2017.  Once again, this was done via Ms Johnson’s gmail address.

g. At first, she manually captured the relevant information onto the Winfreight system for Windsor.

h. She undertook to do the nighttime capturing at Core of two of Windsor’s clients, Easylife Kitchens and Queenspark.  These were customers for whom Core did deliveries on behalf of Windsor.

i. At Windsor’s request, she provided Ms Butler with the billing calculations for the owner/drivers used by Windsor for April 2017.  The email with the relevant spreadsheet attached was sent from Ms Johnson’s gmail address.

j. Ms Johnson stated in her answering affidavit that Ms Butler habitually included her in many of the mails between Ms Butler, Ms Rooks, Ms Singh and Mr Ross, concerning Windsor.  This was on her gmail address.

k. She undertook to Ms Butler that she would follow up with the Core customer services department to see what options there were for someone at Core who could be used as a contact person for Windsor clients.  This was in an email exchange on 5 April 2017, using Ms Johnson’s gmail address.

l. Ms Johnson provided a Core customer, All Four Logistics, with Windsor documentation (including VAT and banking details) so that All Four Logistics could make payment to Windsor for services rendered.  When the customer stated that she was confused, as she understood that All Four Logistics dealt with Core and needed to pay Core, Ms Johnson responded: “I am not sure around the specifics but the account is open under Windsor, the billings and invoicing/statement is under Windsor.” This email was sent from Ms Johnson’s gmail account.  The applicants contend that All Four Logistics were diverted from Core to Windsor, although Core carried out the services and billed Windsor for this, and that Ms Johnson was complicit in misleading Core’s customers in this way so that Windsor could benefit unfairly.  Ms Johnson disputes this.

m.  At the request of Expressway (the other logistics company operated by Ms Butler and Mr Ouzman) Ms Johnson provided the new rates listing Core would charge Expressway and Windsor for logistics services carried out for them.  The exchange of emails in this regard was done through Ms Johnson’s Core email address, not her private gmail address.  I note that from a perusal of these documents, it seems that they were intended to be forwarded to clients, and in my view, save for Ms Johnson’s use of the gmail address rather than her Core address (which may appear suspicious), this information was not confidential.  I make no more reference to this incident.

60. The applicants contend that Ms Johnson was also involved in an incident that did not have anything to do with Windsor.  In September 2016 she prepared a tax credit note from Core for a company called Eva-Last in the amount of approximately R40 000 (VAT inclusive).  The credit note gives the reference number, followed by “(Frances Rooks-R35 241, 71)”.  The credit note was done in Excel, rather than on the ordinary Core NUC001 account (the Core no-charge account).  Nor was it processed in Core’s accounting package, Embrace.  Eva-Last did not have a supplier account or a customer account with Core.  Ms Johnson did this at the request of Ms Rooks, who told her that Eva-Last had done “some work in Durban”.  Ms Johnson assumed that the work was for Core’s Durban branch.  The applicants contend that the tax credit note was fraudulent.  Eva-Last did some private work for Ms Rooks at her property in Durban in exchange for free deliveries by Core.

61. What I have stated above is common cause: the averments are in many instances taken from Ms Johnson’s answering affidavit.  Of course, Ms Johnson denies that her conduct, as described, constituted any wrongdoing on her part or entitles the applicants to the relief they seek.  I will deal with Ms Johnson’s defence in more detail later.

62. The applicants’s case is premised on the contention that Ms Rooks, Ms Singh and Ms Johnson worked in concert to divert Core’s business to Windsor.  By their actions, and together with Windsor, Ms Butler and Ross Butler, they competed unlawfully with Core through the use of Core’s confidential information, the use of Core’s facilities to favour Windsor in order for it to compete with Core, and through the misappropriation of Core’s funds or assets to the benefit of Windsor.  Together, they used Core as a springboard for Windsor.  The applicants contended that through her conduct, Ms Johnson was complicit in the intention of Ms Rooks, Ms Butler and Ms Singh to solicit Core’s customers.  She was also complicit in the generally underhand and dishonest manner in which the respondents acted towards Core. 

63. They contended further that while Ms Johnson was an employee of Core, she was secretly employed by, and received a salary from, Windsor.  In its oral submissions to the court, Core submitted that this was contrary to Ms Johnson’s contract of employment in that in terms of clause 10, Ms Johnson was required to:

“...devote the whole of (her) time and attention during normal business hours to the business of the Company” (clause 10.1.2)

64. Further, clause 10.1.3 provided that she:

“shall not, except with prior written consent of the Company, undertake any additional employment or remuneration outside the service of the Company ... (and provided further that before giving its consent) the Company will have to be satisfied that the employee’s duties (for) the Company will not be affected in any way”.

65. As for the incident involving the credit note in favour of Eva-Last, the applicants averred that this demonstrates that Ms Rooks, in cahoots with other employees of Core, committed fraud against the company.  Given Ms Johnson’s having provided the credit note at the request of Ms Rooks, it is fair to say that she would have been one of the employees alleged to have acted complicit with Ms Rooks in this regards.

66. On this basis, they say that Ms Johnson breached the duty of confidentiality she owed to Core in terms of her employment contract, and she breached her general duty of trust that she owed to her employer.  As an accounts manager she had access to customer details, rates charged by Core, contact personnel at Core’s customers and the identities and contact details of all owners/drivers and carriers used by Core.  The applicants say that this is information confidential to Core and is capable of being used to Core’s detriment.

67. The applicants allege that Ms Johnson’s conduct caused obvious harm to Core, which was the victim of unfair competition from Windsor.  Consequently, the applicants say that Ms Johnson should be interdicted from further possible breaches that may cause harm to Core.

Ms Johnson’s defence

68. At the commencement of Ms Johnson’s answering affidavit she stated that she had no interest in the application save that the applicants sought a costs order against her, and they had accused her of fraud.  She said that she did not wish to take sides in the dispute.  After the application was launched, her attorney had informed the applicants that she did not intend to disclose any alleged confidential information, and that she had no interest in Windsor.  She said that the applicants’ response was belligerent, and they threatened to seek a punitive costs order against her.  Essentially, Ms Johnson’s stance in this regard was that she has been forced to defend herself in the application because of the applicants’ unreasonable behavior.  She submitted that the relief sought against her was frivolous and vexatious, and she asked for a punitive costs order against the applicants.

69. As to the substance of the application, as I have indicated, Ms Johnson denies that there was anything untoward in her conduct.  She said that she was approached by Ms Rooks in about March 2017 and requested to assist Ms Rooks in the setup of Winfreight for Windsor.  According to Ms Johnson, Ms Rooks confirmed that Windsor was a client of Core, and would be doing deliveries for Core to Mbombela and Polokwane.  Ms Rooks said that this would give Core much needed savings.  Ms Johnson thought that by assisting Windsor, she would be facilitating the business of Core.

70. Ms Johnson told Ms Rooks that she was too busy during the day with Core work, but Ms Rooks told her she could do the work during the evenings on her personal laptop, and Windsor would pay her directly.  Ms Johnson saw nothing wrong with this as she had previously been asked by Ms Rooks to assist another of Values companies.  Ms Johnson provided no further details as to what this alleged previous assistance had involved, and whether it was comparable to what she was expected to do for Windsor.

71. Ms Johnson’s version was that she acted on the instructions of her Managing Director for the growth of Core.  She did not regard the instruction as unethical.  To the best of her knowledge, getting Windsor up and running was to the benefit of Core.

72. Ms Johnson admitted receiving an email on her gmail address from Ms Butler on 5 April 2017.  This was the email that, among other things, asked for a customer services department employee at Core with whom Windsor clients could deal with directly.  She said that there was nothing wrong with her giving thought to trying to identify a customer services department employee at Core, because Windsor was a client of Core.  The same email gave a rundown of Ross Butler’s activities for Windsor.  This included meeting and following up with various prospective clients for Windsor.  In each instance, Ms Butler wrote that “Ross will report back to Fran”.  Fran is Ms Rooks.  The email was sent to Ms Johnson’s address but written to “Fran/Amy”.  Amy is Ms Singh.

73. Ms Johnson explained that the email was not addressed to her, and did not really concern her.  However, she clearly read it, as she replied to Ms Butler.  On the same day, Ms Butler wrote another email to Ms Rooks on Ms Johnson’s email address.  In it she (Ms Butler) said that she was coming up to Johannesburg and:

“... Ross and I can come with you to Nelspruit and Polokwane next week.  Cobus has a client we can visit.  He says he can set up some appointments.  Please confirm what time we will get to Nelspruit and how many appointments he can make for us. .. What do you think?  Please confirm.”

74. Ms Johnson explained that the response to this email, although sent from her gmail address, was actually from Ms Rooks.  It said: “if possible I would like to go Monday return late Tuesday.”  Ms Johnson was either sent directly, or copied in on a string of subsequent emails finalising details of the visit.   In all of these emails it is clear that Ms Rooks is regarded as the lynchpin of the Windsor operation.

75. Ms Johnson was also copied (via her gmail address) on updates about setting up Windsor depots in Polokwane and Mbombela.   The same email, which was also sent to Ms Singh, asked Ms Singh: “...have you come right with KemKlean?”  Ms Johnson confirmed in her answering affidavit that Kemklean was a Core client.  The email clearly implies that Ms Singh was expected to approach KemKlean on behalf of Windsor.  Ms Johnson does not explain or comment further.

76. Ms Johnson was also sent an email in which Ms Butler wrote: “OK guys - we are approaching month end - these are expenses we will be facing.  I will let you know what is available in the bank by close of business tomorrow. ... (Ms Johnson) can give us a tally on the Core turnover at a later date, and the new accounts billing will only be due for payment end May.”  Ms Johnson explained that the “Core turnover” referred to the amount Core owed Windsor for deliveries done by Windsor for Core in Polokwane and Mbombela.  She explained that she had to advise Windsor on the amount to bill Core.  Part of her scope of work for Windsor was to load the rates onto Winfreight that Windsor would bill Core.  The email attachment showed a list of expenses, with an amount of R8 000 for “Shona” (Ms Johnson).  This was the first of the amounts paid to her by Windsor.

77. Ms Johnson’s response to her inclusion in the emails was that Ms Butler habitually copied her in on these emails, even though they were meant for Ms Rooks or others.  She does not seem to have questioned why Ms Rooks would use her (Ms Johnson’s) gmail address and personal laptop as an intermediary in communicating with Ms Butler if Ms Rooks was simply carrying out Core business.

78. Ms Johnson averred that she did not keep secret the payments she received from Windsor, as she had done so with the knowledge of Ms Rooks, who was the MD of Core.  She said she did most of the work after hours.

79. As to the issue involving All Four Global, Ms Johnson said that Value did not approve its credit application.  Ms Rooks confirmed to Ms Johnson that the work would instead go through Windsor, but that Core would do the distribution and bill Windsor.  This meant that Windsor, rather than All Four Global would be Core’s client, and the relationship between Windsor and All Four Global would be unrelated to Core.  Ms Johnson said that she was not a party to the decision. 

80. Ms Johnson denied that Core had any trade secrets, or that she was exposed to any in her employment at Core.  According to Ms Johnson, she was not involved in marketing to customers at Core, although she knew who Core’s customers were from an accounts’ perspective.  She accessed Core’s rates from its network and has no independent knowledge of its rates, and no longer has access to them since she left Core’s employment.  Ms Johnson stated that she had not disclosed anything confidential regarding Core to any other party as she would have had no reason to do so.

81. She stated that after she resigned from Core Ms Rooks referred her to a company called Tragar Logistics.  She worked there for a week without a contract, until she was called by Nucleus Mining Logistics (Pty) Ltd, who asked if she was interested in a position.  She took up employment with that company on 3 July 2017.  Ms Johnson says that the company is limited to doing logistics in the mining industry.  She does not believe that they share any common customers with Core.

82. In her submissions to court, Ms Johnson relied on the following main points in opposing the interdict sought by the applicants against her:

a. She pointed out that she was a respondent in an application for final relief. As such, the test formulated in Plascon-Evans,^[3] and applied in numerous subsequent cases was applicable, and any material factual disputes ought to be determined on her version.  On her version, no case for relief is made out against her.

b. She submitted that an interdict is not an appropriate remedy in that insofar as the applicants are able to establish an injury to their rights by Johnson, this was restricted to the past: the injury had already occurred, and there was nothing on the papers to suggest that there was a threat of further injury by her.   She relied on the following dictum by Harms J in Stauffer Chemicals Chemcial Products Division of Cheesbrough-Ponds (Pty) Ltd v Monsanto Co:^[4]

“ ... the basis of an interdict is the threat, actual or implied, on the part of a defendant that he is about to do an act which is in violation of the plaintiff’s right and ... an interdict is not a remedy for past invasions of rights.”

In short, Ms Johnson submitted that the proverbial horse had bolted, and that an interdict was an inappropriate remedy in this case.

c. She also submitted that the application was vexatious, and was persisted with as a stratagem to obtain a version of events from her under oath for the applicants’ own purposes.

83. Ms Johnson submitted that application should be dismissed and that a punitive costs order should be granted against the applicants.

Have the applicants made out a case for an interdict against Ms Johnson?

84. I am satisfied that Core has a right to be protected from unlawful competition, and from breaches of its confidential information.  This is particularly so when the conduct complained of was carried out by Core’s own employees, who are bound by employment contracts protecting these rights.  Core also had a right under its employment contract with Ms Johnson to require her to devote all of her time and attention during business hours to the business of Core.  And they had a right to expect that Ms Johnson would comply only with reasonable and legitimate instructions given to her.  Implicit in this was a duty on the part of Ms Johnson not to conduct herself in such a manner that she undermined the business of Core by facilitating the business of a competitor.

85. Counsel for Ms Johnson submitted that the applicants could not rely on clause 10.1 of her employment contract, as these had not been properly pleaded in their founding and replying affidavits. This is not a good point: in her answering affidavit Ms Johnson was very careful to point out that she had carried out most of her work for Windsor after hours, and that in doing so she was acting on the instructions of Ms Rooks.  This demonstrates that Ms Johnson herself was keenly aware of the obligations on her under clause 10.1 and dealt with the relevant issues.

86. I turn to the question of whether the applicants have established that their rights were harmed by Ms Johnson’s conduct.  Ms Johnson does not deny that Ms Rooks had a personal interest in Windsor, or that Windsor was a competitor of Core, or that it was established through means of unfair competition with Core.  She also does not deny that Ms Rooks worked together with Ms Butler, Ross Butler and Ms Singh to set up Windsor, and that Core’s resources were used to facilitate Windsor’s operations.  The gist of her defence seems to be that she knew none of this and was merely acting on instructions from Ms Rooks to do work that she understood was ultimately for the benefit of Core.

87. Although she is a respondent in an application for final relief, the applicant is entitled to question her version with a view to determining two things: first, does her version raise genuine, bona fide disputes of fact and, second, if it does, is her version so far-fetched or untenable as to be rejected?^[5]

88. It is fundamental to the applicant’s case that Ms Johnson’s conduct must be viewed as part of the broader context:  she did not act alone, and the applicants do not seek to impugn Ms Johnson’s isolated actions.  Whether or not she was complicit in the harm caused to Core by Windsor’s activities must be judged from the full context in which the events unfolded, and from her actions cumulatively.

89. As I have already indicated, much of Ms Johnson’s conduct is common cause.  Where any dispute lies it is in the inferences to be drawn from her conduct, rather than from material facts.  Unlike Ms Rooks, Ms Johnson was not at the forefront of establishing Windsor and getting it up and running.  I accept her version that she acted at the request of Ms Rooks.  However, this does not mean that I must also accept her version that she did not think that what she was doing was against Core’s interests, and that she was simply following the instructions of her superior. 

90. Even on Ms Johnson’s version that many of the emails from Ms Butler to Ms Johnson’s gmail address were not primarily meant for her, the email strings attached to the applicants’ papers show that she was regarded by what might be called “the Windsor team” as being an important member.  It was her gmail address that was used to communicate with Ms Rooks.  She was asked to do important work for Windsor, such as providing the Core turnover (or the amounts owed by Core to Windsor), and calculating the amounts due to the owner/drivers.  This means that Ms Johnson must have known that part of the Windsor business plan was to earn money from Core.  It also means that she did much more for Windsor than simply helping them set up the Winfreight system after hours, as she claimed.

91. Further, even though some of the emails may not have been directed at her, they contained information that at the very least should have raised serious red flags for Ms Johnson as to what Ms Rooks was really up to.  As I pointed out earlier, she knew from the emails that Ms Rooks was planning to travel to Polokwane and Mbombela to meet with prospective clients for Windsor.  She gives no explanation as to why she might reasonably have considered this to fall within Ms Rooks’ normal sphere of operations for Core.  Surely she must have wondered why Ms Rooks would go so far to assist another company?

92. To make matters worse, as I have also pointed out, the emails about the business trip were written to Ms Rooks but sent via Ms Johnson’s gmail account.  Surely Ms Johnson must have wondered why this was necessary: the emails were sent during the ordinary business day and there was no reason why, if Ms Rook’s involvement with Windsor was above board (as Ms Johnson says she believed), Ms Butler simply did not email Ms Rooks directly on her Core email account.  Ms Johnson gives no explanation for this.

93. Ms Johnson knew that Windsor was offering distribution services using the owner/driver system.  She knew this because she actually calculated for April 2017 the amounts Windsor owed to the owner/drivers it used.  It is common cause that Core’s business model historically was built primarily around an owner/driver system, involving the use of owner/diver contractors.   It is also not disputed that this was not historically how Ms Butler conducted her business.  Ms Johnson must have known that Windsor was adopting the same model as that used by Core.  Further, she must have known that Windsor had picked up at least one client (Easy Life) with offices in Woodmead, which is within Core’s sphere of operations.  This was stated in one of the emails from Ms Butler.  In fact, Ms Johnson told Ms Butler that she would be doing the nighttime capturing for Easy Life.  Why did Ms Johnson not wonder why Ms Rooks would be supporting Windsor in taking a client that could easily have been taken on by Core?  In doing the nighttime capturing, and being paid for doing so, of Easy Life for Windsor, Ms Johnson was in effect working against Core’s interests.

94. Ms Johnson was also privy to emails in which Ms Singh was asked whether she had “come right with KemKlean”, an existing client of Core.  She also knew that Ms Rooks had diverted All Four Logistics from Core to Windsor, that Core would nonetheless do the deliveries for All Four Logistics, and that Core would have to recover its fees from Windsor.  Despite all of this knowledge, Ms Johnson was not prompted, it would seem, to wonder whether Windsor’s activities would truly benefit Core.  She was never prompted to ask why Core employees (including her) were being used to assist Windsor in building client relationships.  The reasonable employee in this position would surely have questioned whether Windsor was not effectively competing with Core for business, and using Core staff to do so.  Further, and in light of the knowledge Ms Johnson had as to the involvement of Ms Rooks in Windsor’s activities, the reasonable employee would surely have questioned whether Ms Rook’s requests/instructions to her were legitimate and authorised by Core and her co-directors.

95. In their founding affidavit, the applicants averred that on 3 March 2017 Ms Johnson had forwarded to Value Logistics a credit application for Windsor.  Ms Rooks was designated as the sales representative on the account.  A credit limit of R150 000 was requested.  However, as there were insufficient credit references, Mr Wardill of Value Logistics only opened an account for R50 000.  Ms Rooks wrote to Mr Wardill asking him please open the account “ASAP” for various reasons, one of which is that Core was already trading with Windsor (despite the absence of an account and credit facilities).

96. I have no reason to doubt Ms Johnson’s explanation that it was her job to forward credit applications to Value and this is what she did with Windsor.  However, from her answering affidavit it is clear that she knew that Value initially refused to extend Windsor credit.  She says Ms Rooks took this up with Mr Wardell.  She was privy to the emails from Ms Rooks to Mr Wardill, and thus she must have known that Windsor was only granted a small credit limit.  The emails show that Ms Johnson knew that Windsor could only provide one trade reference, and this was in respect of Expressway, rather than Windsor itself.  Ms Johnson was emailed directly by the Value debtors’ department asking whether there were any more references they could call in respect of Windsor.  However, it was Ms Rooks, not Ms Johnson, who replied, saying that there was no risk because: “we own them more money at any one stage”.  Ms Johnson was copied in on this email.  By the time the application was launched, Windsor owed Core over R200 000.  The statement annexed to the founding affidavit reflects that Windsor had not made any payments to Core.

97. Again, Ms Johnson does not seem to have questioned why Ms Rooks was going to such lengths to support Windsor’s start-up when it did not even qualify for a greater credit limit from Value and had no trade references itself.  Ms Johnson does not explain why, as a debtors’ manager, she did not question Ms Rooks’ assurances that Core owed more to Windsor than the other way around.  If this were so, it is inexplicable why Windsor would not have settled its debts to Core.  I would have expected that Ms Johnson’s position as a debtors’ manager would have placed her in good standing to assess whether these assurances were accurate and, if not, to question why Ms Rooks was giving misleading assurances to Value.

98. In all of these respects, Ms Johnson’s version raises more questions than it gives answers.  There are just too many gaps in her explanations for her conduct.  If her conduct is viewed overall it is difficult to reconcile it with the conduct of a bona fide employee who was simply carrying out the instructions of a superior.  As such, her explanation that she believed that she was acting in Core’s interests and was simply following instructions is untenable.  At the very least, Ms Johnson seems to have been guilty of a “willful blindness” as to what was really going on between Ms Rooks, Windsor and Core.  Even in this respect, she was complicit in the broader conduct that harmed Core’s rights.

99. The next question is whether, given the past nature of Ms Johnson’s harmful conduct, an interdict is an appropriate remedy.  Ordinarily, it may be expected that once an employee has left her employment, there is no prospect that she can cause further harm to her employers’ rights.  Ms Johnson submitted that the applicants premised their application against her on the basis that she was employed by Windsor when they launched the application, and that, as she is not so employed, there can be no prospect of her continuing to harm Core’s rights.

100. While at the time the application was launched the applicants may have been concerned, by her previously earning money from Windsor while she was employed by Core, that Ms Johnson would take up employment with Windsor, this was not the only basis for seeking an interdict against her.  It is also the case that it was only a considerable time after the application was instituted, that Windsor gave an undertaking not to continue with its business, and hence, implicitly, not to engage any of Core’s previous employees.  Certainly, at the time the application was launched, the applicants had no such comfort.

101. On 4 July 2017, Ms Johnson’s attorneys wrote to the applicants’ attorney confirming that Ms Johnson had no interest in Windsor, and that she did not intend to disclose any of Core’s alleged confidential information, business or other affairs.  She did not intend to act contrary to the relief sought in prayer 2.1 of the Notice of Motion and would consent to an order provided the applicants did not seek an order of costs against her. She also revealed that she had been employed by Tragar but had since resigned.

102. The applicants responded by saying that in view of the egregious nature of Ms Johnson’s conduct they would only be prepared to reconsider the question of costs if Ms Johnson were to agree to a final interdict and to make a full, open and bona fide disclosure of all her conduct.  Ms Johnson regarded this as unreasonable, as I earlier recorded, and decided to fight the matter.

103. It was ultimately only by the time that the replying affidavits were filed (by the end of August 2017 that the applicants had succeeded in obtaining the co-operation of Ms Butler and Windsor, and the assurance that Windsor was no longer operating.  By that time, the gauntlet had been thrown down between Ms Johnson and the applicants.  Ms Johnson had elected not to comply with the applicants’ suggestion that she should make a full and bona fide disclosure of her involvement in the Windsor matter.

104. It is now common cause that Ms Johnson is not employed at Windsor, nor is she any longer an employee of Core.  As such, it cannot be said that there is still a risk that she might conspire in the workplace as a Core employee, or as a Windsor employee, to undermine Core’s interests.  However, that is not the end of the matter.  Her employment contract with Core bound her to refrain from disclosing confidential information even after the termination of her employment contract. The contract also defines confidential information quite broadly: it includes “know-how, ideas, trade secrets, suppliers, principles, customers, and trade connections and any other information which is inherently of a confidential nature, including information pertaining to the management and financial affairs of the Company or of its customers or business associates.”

105. On her own admission, Ms Johnson has knowledge of Core’s customers.  She also has knowledge of the owner/driver model, and the contractors used by Core in this regard.  Her complicity in what transpired with Windsor, when customers were diverted, to her knowledge, to Windsor, at the very least gives the applicants reasonable cause for concern that a risk of similar conduct remains, despite her leaving the employ of Core.

106. There are other factors that in this case that make this risk more than merely speculative.  On Ms Johnson’s own version, it was Ms Rooks who secured a connection for her with Tragar, where she worked for a short while.  It is undisputed that subsequent to Ms Rooks, Ms Singh and Ms Johnson leaving the employment of Core, Tragar managed to secure the transfer to them of a number of Core’s customers.  I am not suggesting that Ms Johnson was responsible for this.  I make the point to illustrate two things: first, Ms Johnson and Ms Rooks have retained a close connection; and second, there is clearly a continuing risk for Core posed by the relationship between Ms Johnson and Ms Rooks and the latter’s connections in the logistics industry.  Ms Johnson states that she now works for Nucleus Mining.  She does not divulge whether this company has connections to the Nucleus group of companies to which she and Ms Rooks were previously connected.  The facts also show that, to begin with at least, Ms Rooks and Ms Johnson shared the same attorney of record.  While Ms Johnson’s counsel argued that I could not place too much store on this latter fact, when the facts are taken altogether, it is clear to me that Ms Johnson has not been entirely open about her relationship with Ms Rooks.

107. Ms Rooks has demonstrated that she has an axe to grind with the applicants. This is manifest from her answering affidavit.   Coupled with this is the fact that Ms Johnson did not leave Core on good terms.   Although she said that she left because she was no longer happy with the working environment at Core, she also disclosed in her answering affidavit that she knew it was likely that she would face a hearing and that this was a contributing factor.   Her affidavit makes it clear that she did not approve of the way in which Core dealt with its employees or Ms Rooks’ management of the business.

108. Ms Johnson has previously been complicit in Ms Rooks’ underhand dealings with Core. Ms Johnson does not have a good relationship with her previous employer, Core. Ms Johnson by all accounts has retained contact, and in all likelihood some form of relationship with, Ms Rooks.  She elected not to play open cards with the applicants, or with the court.  In these circumstances it seems to me that Core cannot reasonably be expected to take Ms Johnson at her word that she will not act contrary to the confidentiality clause in her employment contract with Core.

109. For these reasons I am satisfied that there is a reasonable apprehension of further harm to the applicants’ rights and that an interdict against Ms Johnson is warranted.

110. On the question of costs, the applicants are adamant that Ms Johnson ought to be ordered to pay them on a punitive scale.   They point to the duplicity involved in the scheme in which Ms Johnson was complicit.  I have given the issue of costs as regards Ms Johnson much thought.  It is so that Ms Johnson played a part in a scheme that was aimed at undermining the applicants’ interests. It is also so that she has not been fully open about her role in the matter.

111. However, I cannot ignore the fact that Ms Johnson’s role was not like that of Ms Rooks, who was the mastermind of the scheme, and who ultimately stood to gain the most from it. While Ms Johnson earned some money from her work for Windsor, this was small in comparison to what Ms Rooks stood to gain. I take into account too the fact that the evidence does not show that Ms Johnson was directly involved in the misappropriation of Core’s assets or in Mr Lebang being deployed for weeks to train Core staff.  She did, however, seem to have turned a blind eye to Ms Rooks’ facilitating, through her, a credit note from a private supplier who was not on Core’s system. This indicates the extent to which Ms Johnson was willing to follow Ms Rooks’ directions without demur. Undoubtedly, for whatever reason, she was under the considerable power of Ms Rooks.

112. On balance, and having given the matter much thought, I am of the view that a punitive costs order would not be in the interests of justice insofar as Ms Johnson is concerned.

MS SINGH

113. I can deal with Ms Singh briefly as she did not file an answering affidavit. Although, like Ms Johnson, she was under the authority of Ms Rooks, she played an even more central role than did Ms Johnson in the establishment and operations of Windsor.  This is demonstrated clearly by the email strings attached to the founding affidavit.

114. She was actively and centrally involved in dispatching Core assets to Windsor and in arranging for Mr Lebang to spend many weeks training Windsor staff.  It was Ms Singh who was tasked by Ms Butler to talk to an existing client of Core, Kemklean.  Ms Butler also reported to Ms Singh in an email on 18 April 2017 that they were attempting to get another existing client of Core, Beyond, “on board”.  She also undertook business trips to Mbombela and Polokwane with Ms Rooks and Ms Butler for the purpose of setting up Windsor in those areas.  The accommodation and car hire costs were billed to Core.

115. There can be no doubt of Ms Singh’s role in undermining Core’s rights for the benefit of Windsor.  In my view an interdict against her is entirely justifiable.

116. The applicants only seek costs against Ms Singh on the unopposed scale as between party and party up to the date of the service upon her of the founding papers.  As such, I need not consider the costs issue further as regards her.

ORDER

I make the following order:

AS AGAINST THE FIRST RESPONDENT

1. The first respondent is interdicted and restrained from utilising any confidential information concerning the business or affairs of the third applicant and is ordered not to disclose any such information either directly or indirectly to any person, which confidential information shall include trade secrets, suppliers, principals, customers and trade connection and any other information which is inherently of a confidential nature including information pertaining to the management and financial affairs of the third applicant, its customers or business associates.

2. The first respondent is interdicted and restrained until 28 July 2020, either directly or indirectly or whether for reward or not and whether for herself or as an agent or employee of any other person from:

2.1. Persuading, inducing, soliciting or encouraging any prescribed supplier or prescribed client of the first, second or third applicants to terminate, or to reduce or limit the extent of that prescribed supplier’s or prescribed client’s business or investments with the first, second or third applicant or attempting to do so;

2.2. Persuading, inducing, soliciting or encouraging any employee of the first second or third applicant to :

2.2.1. become directly or indirectly employed by or directly or indirectly interested in any manner whatever in or agreement with any person (collectively referred as “any concern”), which carries on, renders or performs a service which competes with the first, second or third applicant;  or

2.2.2. terminate his or her employment or relationship with the first, second or third applicant; or

2.2.3. furnish any information or advice to anyone or use any other means which is directly or indirectly designed or calculated to result in any employee of the first, second or third applicant terminating his or her employment with the first, second or third applicant, or becoming directly or indirectly employed by, or directly or indirectly interested in any manner in, or contracting with, any concern that carries on, renders o performs a service that competes with the first, second or third applicant;

2.3. The first respondent is interdicted and restrained until 28 July 2020, either directly or indirectly or whether for reward or not and whether as a proprietor, principal, member, agent, partner, representative, shareholder, director, manager, employee, consultant, adviser, financier, administrator and/or otherwise from:

2.3.1.  making or being party to any attempt or other move to entice any person employed by the first, second or third applicant away from such employment;

2.3.2.  making or being party to any attempt or other move to dissuade any prescribed client or prescribed supplier from continuing its business dealings with the first, second or third applicant;

2.3.3.  encouraging any prescribed client or prescribed supplier to terminate or reduce its business dealings with the first second or third applicant;

2.3.4.  using, exploiting or otherwise turning to account, or knowingly divulge for use, exploitation or otherwise turning into account, any knowledge or information gained by her as a result of or in connection with her association with the third applicant which can truly be regarded as a trade secret of the third applicant or as the third applicant’s confidential property;

AS AGAINST THE SECOND AND THIRD RESPONDENTS

3. The second and third respondents are interdicted and restrained from utilising any confidential information concerning the business or affairs of the third applicant and are ordered not to disclose any such information either directly or indirectly to any person, which confidential information shall include trade secrets, suppliers, principals, customers and trade connection and any other information which is inherently of a confidential nature including information pertaining to the management and financial affairs of the third applicant, its customers or business associates.

COSTS AS AGAINST THE FIRST RESPONDENT

4. The first respondent is ordered to pay the applicants’ costs, including the costs attendant upon the employment of two counsel, on the scale as between attorney and client.

5. The order for costs against the first respondent for her pro-rata portion of the costs of the application shall rank jointly and severally with the order for costs against the second and third respondents.

COSTS AGAINST THE THIRD RESPONDENT

6. The third respondent is ordered to pay the applicants’ costs, including the costs attendant upon the employment of two counsel, on the scale as between party and party.

7. The order for costs against the third respondent for her pro-rata portion of the costs of the application shall rank jointly and severally with the order for costs against the first and second respondents.

COSTS AGAINST SECOND RESPONDENT

8. The second respondent is ordered to pay the applicants’ costs including the costs attendant upon the employment of two counsel, on the unopposed scale as between party and party up to the date of the service upon her of the founding papers.

9. The order for costs against the second respondent for her pro-rata portion of the costs of the application shall rank jointly and severally with the order for costs against the first and third respondents.

 

 

R M, KEIGHTLEY

JUDGE OF THE HIGH COURT OF SOUTH AFRICA,

GAUTENG LOCAL DIVISION, JOHANNESBURG

 

DATE OF HEARING : 18 JUNE 2018

DATE OF JUDGMENT : 11 JUNE 2018

  

 APPEARANCES

APPLICANT’S COUNSEL : G HOFFMAN (SC); JL KAPLAN

INSTRUCTED BY : SADIYAH SAMROD ATTORNEYS

1^ST RESPONDENT’S COUNSEL : J CILLIERS

INSTRUCTED BY : J.A PIETERSE ATTORNEYS

3^RD RESPONDENT’S COUNSEL : J MOORCRAFT

INSTRUCTED BY : WJ MAYHEW ATTORNEYS

 

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