Holdsworth loses legal battle with Reunert

The AppChat founder says he is studying the judgment but doesn't believe it will stop him from launching his new business. By Duncan McLeod.

AppChat founder and former Nashua ECN CEO John Holdsworth has lost a high court battle with ECN parent, the JSE-listed Reunert group. Judge Selby Baqwa found that Holdsworth breached his restraint of trade and actively solicited employees and customers of ECN in launching AppChat.

In the 22-page judgment, handed down on Friday, Baqwa found that Holdsworth was aware of Nashua ECN’s intention of entering the mobile voice market — the market AppChat intended to target — and that the restraint of trade he had signed with the company was relevant to the case.

Holdsworth on Friday told TechCentral that he must still study the judgment and that he would be in a position to comment in more detail, including how the ruling might affect AppChat, early next week. He said he had no idea ECN was developing a mobile voice application and said it was unlikely the judge’s decision would stop AppChat from going ahead.

He added he reserved the right to take the matter on appeal.

Reunert acquired ECN in 2010 in a deal worth R172m, R107m of which was in the form of “goodwill” paid over and above the net asset value of the company.

The judgment agreed with Reunert, which brought the urgent application against Holdsworth in March, that he solicited ECN employees to join AppChat.

Holdsworth had denied he actively solicited the employees, arguing that they applied to join his new company of their own volition.

However, the judgment found that there had been a “pattern of solicitation” that had emerged, including alleged attempts by Holdsworth actively to solicit the services of Nashua ECN head of networks Brett Hairbottle and other employees.

“Even in the face of strenuous denials by the first respondent that he did not act contrary to his contractual undertaking, it is patently clear that he acted in contravention … of the restraint of trade agreement,” the judgment said. “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 R172m paid for ECN, R107m of that was paid for goodwill.”

The judgment added that Holdsworth could “run the Nashua ECN business [in]to the ground if allowed to continue unchecked with the solicitations of customers and clients of [Nashua ECN’s]”.

Holdsworth and AppChat, trading under the name Altivex 295, have been ordered to pay “wasted costs”, including the cost of counsel.  — (c) 2012 NewsCentral Media