FIRMLY FENCED IN

A restraint of trade agreement may have gone missing mysteriously, but that didn’t let a former employee get away with an unscrupulous business practice

Imagine this: a key staffer makes off with your company’s trade secrets in his head and filches a customer as well as a whole work team — and the restraint of trade agreement he supposedly signed has mysteriously “disappeared”.

Just a few months ago, this particular nightmare became only too real for security fencing installation company Perimifence.

In June 2018, the company hired Karish Naidoo as office administrator and project co-ordinator. This crucial position gave him access to information about the company’s entire administration, finances and business practices.

Perimifence would later explain to the court that the fencing business is hugely competitive, so developing and maintaining precise costing data is critical.

Naidoo was exposed to all the information he needed for proper quoting on jobs and liaising with customers.

Because he ordered from suppliers, he knew the comparative prices of the material needed. He also scheduled projects and was in charge of the staff payroll.

On February 5 2019, after he had taken a crew to work in Orkney, Naidoo gave notice to the company’s operations manager, saying the work had become too much for him because of certain family problems.

The manager said he should take the day off and reconsider. But the next day neither Naidoo nor the installation team came to work.

The following day they were also absent and their phones were switched off. “Plainly, they had deserted,” commented judge

Roland Sutherland.

A private investigator tracked them to a school in Volksrust, where they were putting up a fence for a regular Perimifence client. One of that client’s staff members confirmed Naidoo had organised the job, arranging for the material to be delivered on site on February 5 — the very day Naidoo had “resigned” and the crew had disappeared.

At the end of the Volksrust job the team — minus Naidoo — returned to Perimifence.

Naidoo disputed none of this, but claimed the Volksrust job was arranged only after he quit, something the court described as “utterly implausible” given the facts, including phone and e-mail records.

Against this background, Perimifence wanted to enforce its restraint of trade agreement with Naidoo. However, the company’s copy had mysteriously disappeared — the only such document missing from the company’s records — and Naidoo claimed he had never signed such an agreement.

The company alleged that Naidoo had taken it. But the mere fact that the contract was not available meant Perimifence could not enforce a restraint of trade agreement to protect itself from any further attempts by Naidoo to make use of company contacts and confidential information.

Alternative remedy

There was, however, another way of holding Naidoo to account. SA law recognises that all employees have a fiduciary duty towards their employer, and Naidoo was said to have breached that duty by “filching economic opportunities that were the property” of Perimifence. Moreover, there was evidence that he planned to do so in relation to other opportunities as well.

Sutherland said it was “beyond doubt” that an employee was bound by a fiduciary duty and that this kind of relief was available to protect the employer’s interests.

The judge interdicted Naidoo from “pursuing or accepting” any work for which he quoted using information obtained from Perimifence. He was also interdicted from using the company’s pricing system and other information.

In addition, the dispute over whether Naidoo had signed a restraint of trade agreement — and, if so, the whereabouts of that document — was referred to an urgent hearing of oral evidence, with the court setting strict preparatory deadlines.

Then came the stinger that I, at least, had been hoping for: given Naidoo’s “rank deceit and betrayal” it would also be appropriate to order punitive legal costs against him, said Sutherland.

Given Naidoo’s ‘rank deceit and betrayal’, it would be appropriate to order punitive legal costs