Following revelations this week of a leaked Nashua ECN document that may change the outcome of the infamous Reunert vs. AppChat legal battle, AppChat founder and chief executive officer John Holdsworth speaks to HumanIPO about the weight of the new evidence, the impact of the allegations on AppChat and his hopes for the future of the company and telecommunications in South Africa.
HumanIPO: What nature of evidence do you have to support your claims that Reunert purposely misled the court?
John Holdsworth: “Smoking gun” evidence.
In order to enforce my restraint of trade agreement Reunert had to prove that AppChat was competing with them in the mobile market. They did this by persuading the court that Nashua ECN was developing a mobile VoIP application and was about to enter the mobile market. Please see below:
“…This product, if launched by AppChat, would compete directly with Nashua ECN’s mobile VoIP application, which has been developed over approximately 15 months and is about to be launched into the market…” (FA paragraph 20);
“…Nashua ECN’s mobile VoIP application which can be described as a “mature” product, almost ready for marketing. In fact, the launch of these products by Nashua ECN and, in particular the mobile VoIP application, is imminent… “ (FA paragraph 27);
“…It has taken ECN approximately 15 months to develop its mobile VoIP application… “ (FA paragraph 38);
Unfortunately despite a clear lack of evidence to support their case they miraculously managed to convince the learned judge who ruled in their favour, not once, but three times.
However, subsequent to the judgements of the Court a quo, documentary evidence came into my possession that irrefutably proves that Reunert lied to the court. A whistleblower working in Nashua ECN’s financial department, acting purely out of conscience, provided AppChat with a copy of Nashua ECN’s annual budget for financial year 1 October 2011 to September 2012 under the Protected Disclosures Act. This document is crucial as it covers the period of my restraint which ended on 28 August 2012.
How does the evidence change the facts currently accepted by the court?
The evidence proves that contrary to both its founding affidavit and its version in reply, Reunert had not projected any income or budgeted any expenditure for mobile or mobile VoIP. The only revenue and expenditure in the budget was for its traditional fixed line business. It is clear from the budget that Reunert did not have any plans whatsoever to develop a mobile VoIP application or enter the mobile market. It would appear that its claims were merely concocted for the purposes of its application.
In the court papers Reunert does not dispute that the budget document which we seek to introduce at the appeal is Nashua ECN’s official budget for financial year 2012. Nor does it dispute that this budget was approved by Reunert’s Board of Directors on 28 July 2011 and excludes any revenue or expenditure for mobile or mobile VoIP. Please see below:
“…The document attached by AppChat was a budget that was presented to the Reunerts board of directors on 28 July 2011 by Pieter Kruger (Nashua ECN’s Financial Director at the time and I. This budget was approved by Reunerts board of directors. However, this budget expressly excluded any budget for new products [mobile VoIP]…” (Reunert Answering Affidavit paragraph 72).
Caught out by the disclosure of the budget, Reunert it is now claiming that a new budget was approved by Reunert’s Board of Directors for mobile VoIP in the 2012 financial year. Please see below:
“…However, a budget incorporating figures in relation to new products [including mobile VoIP], was developed and presented to and approved by Reunert’s board of directors in January 2012…” (Reunert Answering Affidavit paragraph 75).
However, even if Reunert’s unlikely story is to be believed that a new budget incorporating mobile VoIP was approved by Reunert’s Board of Directors in January 2012 (and it is contrary to Reunerts own internal procedures and ISO9000 status) it clearly contradicts Reunert’s High Court version. One cannot only approve a budget for the development of a mobile VoIP application in January 2012 and then say that the very same mobile VoIP application is mature and has been in development for 15 months in March 2012, a mere two months later in an affidavit before the High Court. That is why we say that Reunert has committed a fraud upon the court and upon AppChat.
What do you hope to achieve by bringing the claims?
Reunert’s legal documents are a web of half truths and lies. It has been very difficult and frustrating watching their enormous and expensive legal team in court hearing, after court hearing, get away with those lies and half truths. The disclosure of Nashua ECN’s annual budget for financial year 1 October 2011 to September 2012, is the ‘smoking gun’ evidence that finally blows their elaborate fraud out of the water. I think post this case people need to realise that large JSE listed corporates do tell lies and should not just be believed.
However, this is just the tip of the iceberg, observers will be shocked at the tactics they are prepared to adopt and the depths they are prepared to plumb to get their way. All will be revealed soon.
How have the extended legal proceedings impacted upon your business plans?
Negatively. AppChat’s product development and launch plans have been severely impacted. My reputation has been damaged by Reunert’s untrue allegations and AppChat has been placed in a very difficult if not impossible position. Start-up’s are very difficult at the best of times, most fail without having to deal with the problems we face on a daily basis. Reunert are very litigious, have huge financial resources and a large and aggressive legal team who work very hard to make our lives as difficult as possible. Ultimately they will not rest until they have shut AppChat down and had me thrown into prison for contempt of court. These guys are utterly ruthless and have adopted a win at all costs approach. I tried to settle but they refused. It really is a case of fight or die.
Is there still a chance for AppChat to thrive on the market following the legal battles?
Absolutely. Not only will we launch, but when we do, we will change the Telco landscape in this market forever, it will never look the same again. Our strategy is reduce the overall cost of telecommunications by as much as 80%.
In October you were reported as saying that AppChat would launch commercially in February 2013, when do you expect to launch now?
I will make an announcement in due course, in the interim we intend to abide by the court order and pursue our appeal. The interdicts granted by the learned judge in favour of Reunert are wide ranging in their ambit and unclear in terms of precisely what conduct falls within their scope. This is a problem for both Reunert and AppChat.
What do you hope to achieve through appealing the court’s decision?
Demonstrate that a David can take on a Goliath in South Africa and win. Inspire the little guys out there not to give in to intimidation and bullying. I would also like to see a change in the law. I would like to see Restraints of Trade declared prima facie illegal. I do not believe that employees are the property of their employers. In my view Restraints of Trade should be restricted to protecting the proprietary interests of organizations’ i.e. confidential information, trade secrets and/or intellectual property. Providing that employees do not steal the confidential information, trade secrets and/or intellectual property of their employers, they should be entitled to work for who they wish, including competitors. I am going to take this all the way to constitutional court even if I win the appeal.
