Former worker and wife ordered not to use trade secrets or solicit clients

A freight company has successfully restrained a former employee and his wife from competing and diverting business away from it. The former employee had close relationships with 151 clients and the freight company was concerned he would solicit them away.

On Wednesday last week, the Johannesburg high court granted the freight company its urgent interdict to prohibit the couple from competing.

Rudolph Matthee and his wife, Elize, ran a transport and freight forwarding company, Clyroscan, which in 2022 ran into financial distress. Matthee then approached another freight company, Emlink, for assistance.

Gauteng-based Emlink has been operating for years servicing SA, Botswana, Namibia and other countries.

In July 2022, Emlink entered into an agreement with Matthee to bring in clients and he would then receive 10% of the Emlink shares and remuneration. He would be a consultant and salesperson for Emlink, dealing specifically with a group of 151 clients with whom he had close personal relationships. Meanwhile, Elize would continue to operate as a director of the Matthee’s previously distressed company, Clyroscan.

Both of the Matthees had access to Emlink’s database and other interests as part of their work with the company. Legally, these are trade secrets. The Matthees opted to leave Emlink’s employment in October 2023.

Emlink said that it had obtained evidence that the Matthees were in breach of the restraint clauses they agreed to in 2022. Emlink then approached the Johannesburg high court for an urgent interdict to stop the continuing breach it said it believed the Matthees were perpetuating.

On Wednesday, Johannesburg high court judge Leicester Adams ruled in Emlink’s favour, restraining the Matthees.

“As [an] agent of Emlink,” Adams wrote, “[Rudolph Matthee] cannot make a secret profit out of anything ... which belongs to (Emlink) ... The (Matthees) have throughout had personal contact with clients of Emlink and (Rudolph Matthee), in particular, has personal relationships with the said clients which he cannot exploit to (Emlink’s) detriment.”

Adams examined (unspecified) evidence put up by Emlink and concluded it “confirms that the (Matthees) are making use of their relationships and Emlink’s confidential information and trade secrets to solicit and canvass clients for third-party entities, including a company seemingly under the control of the (Rudolph Matthee’s) son.”

The judge said that the Matthees did not dispute that they “are causing to be diverted loads for transport for clients of Emlink to its competitors and this they do by making use of such trade secrets and confidential information”.

The restraint agreement was “unequivocal”, protecting Emlink’s intellectual property rights. Adams said that the Matthees are “not entitled to unlawfully compete with Emlink by using its confidential information and trade secrets”.

Adams also said that courts recognised a company’s “protectable interests” as being customer connections and confidential information.

“There are two kinds of proprietary interests that can be protected by a restraint of trade undertaking,” he said, citing previous court decisions. “The first is ‘the relationship with customers, potential customers, suppliers and others that go to make up what is compendiously referred to as the trade connections of the business, being an important aspect of its incorporeal property known as goodwill’. And the second is ‘all confidential matter which is useful for the carrying on of the business and which could therefore be used by a competitor, if disclosed to him, to gain a competitive advantage’.”

He therefore ruled that Emlink had made out a case and ordered the Matthees be prohibited for two years from being involved in transport services to any of Emlink’s clients. He also ordered them to provide details of the clients they had been in contact with, including to the point of handing over administrator control of WhatsApp groups.

The Matthees were ordered to pay Emlink’s legal costs.