01/07/2026
๐๐จ๐ฐ ๐ญ๐จ ๐๐ซ๐จ๐ญ๐๐๐ญ ๐๐จ๐ฎ๐ซ ๐๐จ๐ฆ๐ฉ๐๐ง๐ฒ ๐๐ซ๐จ๐ฆ ๐๐ง๐ฅ๐๐ฐ๐๐ฎ๐ฅ ๐๐ฉ๐ซ๐ข๐ง๐ ๐๐จ๐๐ซ๐๐ข๐ง๐
"๐๐ญ๐ญโ๐ด ๐ง๐ข๐ช๐ณ ๐ช๐ฏ ๐ญ๐ฐ๐ท๐ฆ ๐ข๐ฏ๐ฅ ๐ธ๐ข๐ณ, ๐ฃ๐ถ๐ต ๐ฏ๐ฐ๐ต ๐ช๐ฏ ๐ฃ๐ถ๐ด๐ช๐ฏ๐ฆ๐ด๐ด." (๐๐ฐ๐ฅ๐ฆ๐ณ๐ฏ ๐ต๐ธ๐ช๐ด๐ต ๐ฐ๐ฏ ๐ต๐ฉ๐ฆ ๐ฐ๐ญ๐ฅ ๐ฑ๐ณ๐ฐ๐ท๐ฆ๐ณ๐ฃ)
Your business is flying after years of hard work and personal sacrifice. Suddenly, your most trusted employees resign and set up in direct opposition to you. The speed with which they do so makes you realise thereโs something fishy going on.
Sure enough, they are brazenly using your confidential knowledge, resources and client relationships against you.
A recent High Court decision provides a perfect illustration of how our law can and will protect you from that sort of unfair competition.
๐ ๐ป๐ฒ๐ ๐ฏ๐๐๐ถ๐ป๐ฒ๐๐ ๐ฎ๐ป๐ฑ ๐๐ผ๐ณ๐๐๐ฎ๐ฟ๐ฒ ๐ถ๐ป ๐ญ๐ญ ๐ฑ๐ฎ๐๐? ๐ฆ๐ผ๐บ๐ฒ๐๐ต๐ถ๐ป๐ดโ๐ ๐ณ๐ถ๐๐ต๐
This unhappy saga starts with a company in the niche business of measuring and analysing diesel engine emissions. Monitoring these emissions is important in several industries, most notably the underground mining industry. Itโs the first and only such business in South Africa thanks largely to two factors: firstly, its exclusive Africa-wide distribution agreement with a German supplier of specialised equipment, and secondly, its founderโs development of custom software.
All went well until two of the companyโs senior managers resigned from their positions. Just 11 days later they had set up their own business in direct opposition to their erstwhile employer. One can only imagine his distress and anger when he realised that they were using the fruits of his technical expertise and hard work to try to poach his clients from him.
He lost no time in taking legal steps, and when the managers refused point blank to stop trading, he asked the High Court for an order forcing them to do so.
๐ช๐ต๐ฎ๐ ๐ถ๐ ๐๐ฝ๐ฟ๐ถ๐ป๐ด๐ฏ๐ผ๐ฎ๐ฟ๐ฑ๐ถ๐ป๐ด?
โ๐๐ฑ๐ณ๐ช๐ฏ๐จ๐ฃ๐ฐ๐ข๐ณ๐ฅ๐ช๐ฏ๐จโ, as the Court put it, โentails not starting at the beginning at developing a technique, process, piece of equipment or product, but using as a starting point the fruits of someone else's labour.โ
Competition and entrepreneurship are of course healthy and to be encouraged, but only if they are lawful. Springboarding grounded in unlawful conduct is prohibited.
๐๐ฟ๐ผ๐บ ๐๐ฝ๐ฟ๐ถ๐ป๐ด๐ฏ๐ผ๐ฎ๐ฟ๐ฑ๐ฒ๐ฟ ๐๐ผ ๐ฏ๐ฒ๐น๐น๐ ๐ณ๐น๐ผ๐ฝ๐ฝ๐ฒ๐ฟ
The evidence of unlawful conduct in this case was overwhelming. For example, one of the managers had months previously been suspended under suspicion of planning a competing business after a budget for a new venture, including a provision to buy the specialised German equipment, was found on his laptop. In due course their new company duly bought the equipment, despite them having full knowledge of the distribution agreement in favour of their employer (they couldnโt deny knowledge, having actually signed the agreement on behalf of the employer).
The Court was also sceptical of the new companyโs claim to have developed its own independent software in a matter of weeks, especially in light of evidence that, shortly before resigning, one of the managers had emailed his employerโs software to himself.
The final nail in the managersโ coffin was that their marketing presentations to two of the employerโs clients were sufficiently similar to the employerโs presentations for the Court to conclude that they were using its business model, methodology, equipment and software against it.
As regards their terms of employment, only one of the employees had signed a contract (it included a confidentiality clause). But what mattered was not their contracts, but that as employees they had a general fiduciary duty to act in good faith and in their employerโs best interests.
Referring to the abundant evidence of their misuse of confidential information gained during their employment, the Court slammed the managers and their new company with a series of orders that will presumably cripple their new venture, at least for now.
They and their new company are prohibited from unlawfully competing with the original business for eighteen months, they must return all confidential information and documentation (deleting electronic copies), and cannot disclose the information to anyone else. Whatโs more, the Court ordered them to pay costs on the punitive attorney and client cost scale.
๐ ๐ฐ๐ต๐ฒ๐ฐ๐ธ๐น๐ถ๐๐ ๐๐ผ ๐ฝ๐ฟ๐ผ๐๐ฒ๐ฐ๐ ๐๐ผ๐๐ฟ ๐ฏ๐๐๐ถ๐ป๐ฒ๐๐ ๐ณ๐ฟ๐ผ๐บ ๐๐ฝ๐ฟ๐ถ๐ป๐ด๐ฏ๐ผ๐ฎ๐ฟ๐ฑ๐ถ๐ป๐ด
The employer is victorious, but itโs taken him almost a year to get here, and inevitably his business (and he personally) will have suffered.
With prevention always being a great deal better than cure, you can protect your business from going through all the delay, cost, trauma and business risk of a court fight with this checklist:
โข ๐ช๐ฎ๐๐ฒ๐ฟ๐๐ถ๐ด๐ต๐ ๐ฐ๐ผ๐ป๐๐ฟ๐ฎ๐ฐ๐๐. Your employment contracts, particularly those relating to senior staff with access to vital confidential information, should contain strong confidentiality, non-disclosure, good faith, conflict of interest and restraint of trade clauses. This employer was able to rely on a breach of his employeesโ general fiduciary duties, but his position would have been that much stronger had both senior managers been bound contractually as well.
โข ๐ช๐ถ๐ฑ๐ฒ๐ป ๐๐ต๐ฒ ๐ป๐ฒ๐. Looking beyond employees, consider also other business partners like suppliers and contractors who might gain access to confidential information, and structure your agreements with them accordingly.
โข ๐ค๐๐ฎ๐ป๐๐ถ๐ณ๐ ๐๐ผ๐๐ฟ ๐๐ผ๐ฟ๐๐ต. Identify and list all your confidential information: intellectual property, technical know-how, client and other business relationships, pricing strategies, business strategies, trade secrets and any other sensitive information.
โข ๐๐ฒ ๐ฝ๐ฟ๐ฒ๐ฝ๐ฎ๐ฟ๐ฒ๐ฑ. Check that everything is held securely, that access is limited on a need-to-know basis to trusted personnel, and that access is recorded. This way, if you are stabbed in the back by an employee, youโll be able to prove misconduct and breach of fiduciary duty.
โข ๐ก๐ผ ๐๐๐ผ๐ป๐ฒ ๐๐ป๐๐๐ฟ๐ป๐ฒ๐ฑ. When staff leave, remind them (in writing) of their duties in regard to confidential information, and recover all company documentation, laptops etc before they leave.
โข ๐๐ฒ ๐๐ถ๐ด๐ถ๐น๐ฎ๐ป๐. Monitor for โinformation leaksโ and for any other possible misuse of confidential information. Increase your monitoring when staff resign. Keep an eye on your competition for any signs of them using information leaked from within your ranks.
๐๐๐ง๐๐๐ฅ๐จ ๐ข๐ค๐จ๐ฉ ๐๐ข๐ฅ๐ค๐ง๐ฉ๐๐ฃ๐ฉ๐ก๐ฎ, ๐๐๐ฉ ๐๐๐๐๐จ๐๐ซ๐๐ก๐ฎ ๐๐ฉ ๐ฉ๐๐ ๐๐๐ง๐จ๐ฉ ๐๐๐ฃ๐ฉ ๐ค๐ ๐ ๐จ๐ฅ๐ง๐๐ฃ๐๐๐ค๐๐ง๐๐๐ฃ๐ ๐๐ฉ๐ฉ๐๐ข๐ฅ๐ฉ. ๐ผ ๐ง๐ค๐๐ช๐จ๐ฉ ๐ก๐๐ฌ๐ฎ๐๐งโ๐จ ๐ก๐๐ฉ๐ฉ๐๐ง ๐ฌ๐๐ก๐ก ๐ค๐๐ฉ๐๐ฃ ๐๐ ๐๐ฃ๐ค๐ช๐๐ ๐ฉ๐ค ๐ฃ๐๐ฅ ๐ฉ๐๐ ๐ฅ๐ง๐ค๐๐ก๐๐ข ๐๐ฃ ๐ฉ๐๐ ๐๐ช๐.
๐๐ณ๐ฐ๐ท๐ช๐ฅ๐ฆ๐ฅ ๐ฃ๐บ ๐๐๐ ๐๐ฏ๐ค. ๐๐ต๐ต๐ฐ๐ณ๐ฏ๐ฆ๐บ๐ด
ยฉ ๐๐ฐ๐ต๐๐ฆ๐ธ๐ด. ๐๐ญ๐ญ ๐๐ช๐จ๐ฉ๐ต๐ด ๐๐ฆ๐ด๐ฆ๐ณ๐ท๐ฆ๐ฅ.
๐๐ข๐ฌ๐๐ฅ๐๐ข๐ฆ๐๐ซ
The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact us for professional, detailed and appropriate advice.
