AppChat to forge ahead?
CEO of start-up AppChat, John Holdsworth says the company may still have a future despite a high court ruling against the tech entrepreneur on Friday (24 August).
Judge Selby Baqwa at the Pretoria court ruled in favour of listed ICT company Reunert over matters of unlawful competition by former employee, Holdsworth.
In late March, Reunert instituted proceedings against Holdsworth, seeking to prevent him from soliciting or employing staff at subsidiary firm, ECN Telecommunications (now Nashua ECN), where Holdsworth had previously served as CEO.
Holdsworth had looked to set up a rival business to ECN Nashua, called AppChat, following Reunert’s acquisition of ECN Telecommunications business for R172 million (R107 million was allocated to goodwill).
Reunert also sought to prevent him from engaging in the dilution of goodwill of ECN and using confidential information and proprietary interest of Nashua ECN.
In announcing AppChat to the media, Holdsworth said that he intended to offer Voice Over Internet Protocol (VOIP) services to mobile customers, which was perceived by Reunert to be in direct competition with its business of Nashua ECN as VOIP service providers.
Holdsworth however, denied that his new venture was the same as Nashua ECN. He said that the product developed for AppChat was different.
In court papers released on Friday, the ruling read: “It is quite clear from the documents filed that the first respondent (Holdsworth) in his capacity as founder and chief executive of ECN, and subsequently as consultant and chairman of the bard of Nashua ECN, he was quite aware of the strategy and plans of Nashua ECN to enter the mobile market.”
“He was also aware of the intention of Nashua ECN to launch VOIP application for mobile phones. I am satisfied that the business that applicant proposes contravenes the restraint in material respects,” Baqwa said.
Following the ruling, Holdsworth said: “We are studying the judgement and will provide detailed comment at a later stage. Clearly the judgement did not go our way and we are very disappointed at the result.”
“I can honestly tell you I had no idea that ECN were developing a Mobile VOIP application, obviously we were not convincing enough, because the judge did not believe us.”
“Will this judgement stop AppChat from going ahead in the future – unlikely,” he said.
The court ruled that, through Holdsworth’s actions, Reunert “could run the Nashua ECN Business to the ground if allowed to continue unchecked with solicitations of customers and clients of applicant.”
The judge ruled that Holdsworth solicited employees and customers from the very business that he sold.
“Had the first respondent (Holdsworth) proceeded to prepare to open business with the intention of sourcing his own employees and establishing his own customers, the applicant (Reunert) would have no cause of action against him even if the new company would be competing with applicant,” the court ruling read.
Holdsworth was ordered to pay the “wasted costs”, including the costs of two counsel.
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