Sime Darby Hudson and Knight (Pty) Ltd v Lerena (9293/2013) [2018] ZAWCHC 94; (2018) 39 ILJ 2413 (WCC); [2018] 4 All SA 446 (WCC) (30 July 2018)

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[2018] ZAWCHC 94
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Sime Darby Hudson and Knight (Pty) Ltd v Lerena (9293/2013) [2018] ZAWCHC 94; (2018) 39 ILJ 2413 (WCC); [2018] 4 All SA 446 (WCC) (30 July 2018)

THE
REPUBLIC OF SOUTH AFRICA
IN
THE HIGH COURT OF SOUTH AFRICA
(WESTERN
CAPE DIVISION, CAPE TOWN)
Case
No:  9293/2013
Before
the Hon. Mr Justice Bozalek
Hearing:
26 – 28 February 2018; 1, 6 – 8, 13, 14 March 2018;
16
– 20, 23, 24 April 2018; 4, 6 and 7 June 2018
Delivered:
30 July 2018
In
the matter between:
SIME
DARBY HUDSON & KNIGHT (PTY) LTD

Plaintiff
and
JUAN
PIERRE LERENA
Defendant
JUDGMENT
BOZALEK J
[1]
The
plaintiff, a manufacturer and seller of a range of fat and oil
products, sued the defendant, a former employee, for damages
in the
amount of R9 407 651.05 together with interests and costs
as well as an order directing the defendant to disgorge
secret
profits made by him at the expense of the plaintiff in the amount of
some R33 million.
[2]
The
defendant disputes the claims in their entirety and defended the
action. He was legally represented only during the pleadings
stage
and defended himself throughout the trial in which the evidence of
the parties was heard over 19 days.
Background
[3]
The
plaintiff’s claim covers the period from May 2005 when the
defendant was first employed by it as its Key Accounts Manager,

responsible for the sales of Crispa Sunflower Oil and Palm Oil
products on its behalf, until his dismissal in May 2012. In this

position the defendant was responsible for the management of the
plaintiff’s commercial relationship with its many customers
in
relation to the marketing and sale of Crispa Gold Sunflower Oil
products (‘Crispa Gold’ or ‘Crispa’).
Flowing
from his appointment the defendant’s responsibilities included
procuring sales of Crispa for its benefit and following
up sales
opportunities.
[4]
In
a nutshell, the plaintiff’s case was that the defendant
breached these obligations by diverting sales opportunities to
two
companies that he owned or controlled, Fast Track Marketing CC (‘Fast
Track’) and FDC Distributors CC (‘FDC’),
and in so
doing abusing his position with the plaintiff to procure a reduction
in price for Crispa Gold which he then sold to the
plaintiff’s
customers via his companies for his own personal benefit. The
consequences, the plaintiff’s case proceeds,
is that the
plaintiff sold substantial quantities of Crispa Gold to two
particular customers, Seafood Botswana and Saania, at prices
that
were too low. Secondly, the defendant made a substantial personal
profit out of sales to the plaintiff’s customers or
prospective
customers without the plaintiff’s knowledge or consent. Based
on these facts the plaintiff pursues its damages
claim against the
defendant as well as its claim for disgorgement of secret profits.
The
evidence
[5]
Before
summarising the evidence it is appropriate to consider in greater
detail the pleaded basis of the plaintiff’s damages
claim and
its claim for secret profits. The plaintiff’s claim for damages
is calculated on the basis of what it referred
to  as ‘the
Makro benchmark’ being the price at which it sold Crispa Gold
to Makro, one of its main customers,
from time to time. Its case was
that this price represented the base plate price being the most
competitive price at which the
plaintiff could achieve its required
margin. Further, its business objectives were best served if Crispa
Gold was sold to other
customers at or above the Makro price. Such
other customers should only be offered a price better than the Makro
price if this
were justified by reason of special circumstances and
only on limited occasions. Notwithstanding the existence of the Makro
price
benchmark, during his period of employment the defendant
allowed two customers, Saania Distributors (‘Saania’) and
Seafood Wholesale Botswana (‘Seafood Botswana’) to buy
Crispa Gold at prices markedly and consistently lower than the
Makro
price. This the defendant did in order to further his secret
profit-making activities. The plaintiff’s case for damages
was
further that if the defendant had complied with his obligations and
used the Makro benchmark in relation to these two customers,
the
plaintiff would have sold the same quantities of Crispa Gold but at a
higher price.
[6]
In
calculating its damages claim it compared the price received from
Saania and Seafood Botswana over the relevant period with the
price
received from Makro over the same period. The difference between
these two prices represented the damages that it alleged
it suffered.
[7]
In
terms of its claim for the plaintiff to disgorge secret profits (the
‘
secret
profits’
claim), the plaintiff seeks disgorgement of R33 291 599.24,
representing the full amount of the secret profit or benefit
received
by the defendant through his two companies; alternatively the
immediate disgorgement of R6 733 042.27 and then

disgorgement of such further profits as may be found owing after a
statement and debatement of account. It alleges that between
January
2007 and April 2012 the defendant secretly set up and operated a
scheme with the object of making a profit for himself
out of the sale
of Crispa Gold. The plaintiff’s case is further that the
defendant did so by utilising Fast Track, of which
he was the sole
member, and by establishing FDC which he controlled and of which he
was the beneficial owner. It is alleged that
the defendant
dishonestly advised certain customers that they were not entitled,
alternatively, were not well advised, to order
Crispa Gold directly
from the plaintiff and should rather place orders either through Fast
Track or FDC, or that it would be in
their best interests to do so.
It was further alleged that the defendant secured a reduction in the
price received by the plaintiff
in respect of orders placed either
directly via FDC or Fast Track or by Fast Track through Saania
Distributors.
[8]
It
was common cause that throughout his employment (at least prior to
his suspension) the defendant did not disclose his interest
in Fast
Track or FDC. The plaintiff’s allegation is that he used both
corporations to order and on-sell Crispa Gold from
another of the
plaintiff’s customers, Saania, in the process procuring,
through various means, that the price per drum of
Crispa Gold sold by
the plaintiff to Saania was substantially reduced by various means.
One such method was that Saania were allowed
to order excessive
quantities of stock at old prices before price increases and to pay
for and take delivery of that stock at times
when all other customers
were required to pay for stock at the higher price. The plaintiff
alleges further that the defendant approved
so-called ‘
guaranteed
margins’
and ‘
low
margin’
claims to certain customers for the purposes of benefitting his own
private interests. In paragraph 9.9 of the particulars of claim
it
was alleged that the defendant ‘
earned
a secret profit for himself in the form of distributions out of FDC
and Fast Track, which amounts were available as profits
because they
constituted the difference between the price received by FDC and Fast
Track for the plaintiff’s products from
customers and the
amount paid, directly or via Saania, to the plaintiff in respect of
those products’
.
[9]
The
defendant filed a brief plea admitting the terms of his letter of
appointment and that he was the sole member of Fast Track.
Apart from
that he denied the remaining contents of plaintiff’s
particulars of claim.
The issues
[10]
The
following issues arise in relation to the plaintiff’s claim for
damages:
(a)
whether
the plaintiff in fact used the Makro benchmark as a ‘
base
plate price’
;
(b)
whether
the defendant caused the plaintiff to sell Crispa Gold to Saania and
Seafood Botswana at a lower price than the Makro price
and by how
much;
(c)
whether,
if proved, that was a breach of his employment contract;
(d)
whether,
but for the defendant’s breach of contract, the same quantities
of oil would have been sold at no less than the Makro
price.
[11]
In
relation to the secret profits claim the following issues arise:
(a)
whether
the defendant stood in a position of confidence in relation to the
plaintiff and owed it a fiduciary obligation inter alia
not to place
himself in a position where his personal interests might conflict
with his duty and the interests of the plaintiff
and which entailed
that he was not entitled to make a secret profit out of the
plaintiff’s corporate opportunities;
(b)
whether
his activities through Fast Track and FDC in relation to the sale of
Crispa Gold breached any such fiduciary duties, this
in turn
requiring a determination of whether he so sold the product without
the plaintiff’s knowledge or whether he made
a secret profit
therefrom and whether such sales were corporate opportunities
belonging to the plaintiff;
(c)
the
extent of any secret profit made.
The
plaintiff’s evidence
[12]
The
plaintiff called seven witnesses whilst the defendant testified on
his own behalf and called one witness.
Mr
Chris Schulz
[13]
Plaintiff’s
main witness was Mr Chris Schulz, a well-qualified forensic
investigator specialising in financial analysis with
a fraud
perspective. In 2012/2013 he was briefed by the plaintiff’s
instructing attorneys to conduct a financial analysis
of the sales of
Crispa Gold by the plaintiff to two wholesalers, Saania and Seafood
Botswana, and to do a price comparison with
Makro. Shortly before
trial he was also given sets of bank statements relating to Fast
Track and FDC to analyse in relation to
the secret profits claim.
[14]
In
regard to the damages claim, Mr Schulz’s task was to determine
an average nett price and, if there was a significant difference

between the nett price of sales to these two customers, compare it to
the average nett price to Makro over the same period. In
so doing he
had to take account of the various rebates and discounts obtained by
these customers off the value of the invoices
presented to them. He
recorded a summary of his findings on page 1.1 in the ‘
Damages
Bundle’
and which he divided into two periods – January 2007 –
February 2011 and March 2011 up to the termination of the defendant’s

employment with the plaintiff. He found that total difference between
what these two customers paid for the Crispa Gold which they

purchased versus the prevailing Makro price was the sum of
R9 935 990.01. His method in arriving at these figures was

to obtain all the invoices showing the number of units sold to these
customers and the value after which he isolated all the rebates,

advertising discounts etc. and deducted these from the total invoice
value. He would then divide that figure by the number of units
sold
and get a claim per unit price for Seafood Botswana, Saania and
Makro. He then subtracted the difference and multiplied out
by the
units sold in the case of Saania and Seafood Botswana to find what
the plaintiff would have received had they sold the product
in
question to the two customers at no lower than the Makro price. As
will be seen from the supporting documents Mr Schulz’s

calculations appear to have been meticulously done. The defendant did
not materially dispute these figures, the thrust of his defence
being
that there was no such thing as a Makro base plate price and that he
had sold Crispa to these customers at bona fide prices.
[15]
The
other main area of Mr Schulz’s evidence was an analysis of Fast
Track and FDC’s bank statements, which were only
obtained by
subpoena from the bank by the plaintiff shortly before trial, in
conjunction with the plaintiff’s financial statements
in an
effort to determine what income and expenditure was received by these
two corporations from the sale of Crispa Gold. The
difficulties that
the witness experienced in this particular exercise were manifold. In
the first place no other financial documentation
relating to the
affairs of these two corporations was available to him; secondly, the
bank statements themselves were in many respects
lacking in
description and particularity making it difficult to determine the
source of many of the deposits and, lastly, the recipients
of many
payments could not be identified since they are not described in the
bank statements and nor were the cheques stubs or
the cheques
available. To complicate matters further, as will be described more
fully later, the defendant either could not or
would not furnish the
vast bulk of the missing information regarding the financial affairs
of Fast Track and FDC. Yet another complicating
factor was that the
defendant had, throughout the period in question, used Fast Track as
a vehicle to conduct other business, namely,
property restorations
and sales, property rental, sales of motor vehicles, and sales and
trading in forex. What is more, he had
by his own account used the
Fast Track account interchangeably with his personal account,
receiving funds into it in his personal
capacity and making payments
in respect of personal expenses.
[16]
Be
that as it may, Mr Schulz was able to determine that during the
period in question income from sales of Crispa Gold in a total
amount
of R36 669 308.46 had flowed into Fast Track and FDC’s
bank accounts. The bulk of this, R33 255 172.32
was
deposited into Fast Track’s account.
[17]
Mr
Schulz was also able to determine the monies expended by the
defendant in generating the disputed sales of Crispa Gold. These

expenses, as they appeared in the bank statements of both companies,
amounted to R3 377 709.22, the bulk thereof, R2 746 802.25

being in FDC’s books. The great unknown, however, was payments
by way of cheques from the two corporations to unknown parties
in a
total amount of R26 558 556.97. The bulk of this amount,
R25 762 852.70, comprised payments from Fast
Track. The
defendant cross-examined Mr Schulz at length but was not able to dent
the figures that he presented. A striking feature
of the defendant’s
cross-examination was his disinclination to furnish any information
relating to the financial statements
whilst at the same time
repeatedly and inappropriately asking the witness to give him more
information about these payments. The
reply he invariably received
from Mr Schulz was ‘
I
don’t know Mr Lerena, only you will know’
,
but to no avail.
[18]
Mr
Schulz was an excellent witness who had clearly made a careful
evaluation of all the financial documentation which he had studied.

At no stage did he make any unwarranted claims or assumptions and he
readily made concessions where these were justified. On occasions
he
recalculated figures to take into account factors which were
favourable to the defendant. I have no hesitation in accepting
his
evidence.
Mr
Gareth Thomas
[19]
Mr
Thomas was the plaintiff’s National Sales Manager from 2010
until he left its employ in 2014. The plaintiff is a Malaysian

company whose business in South Africa is the manufacture and sale of
oils and fats. This it does, inter alia, through a refinery
in
Boksburg which it purchased from Unilever and through which it makes
cooking oil from sunflower and palm oil which it purchases
either
locally or from overseas sources. Crispa Gold is one of the brand
names in the plaintiff’s food division and under
which name it
sold cooking oil made from sunflower and palm oil in 20 litre
buckets. The defendant reported directly to the witness
and the
plaintiff’s general manager, and his responsibilities were to
ensure the sale and profitability of Crispa Gold. This,
Mr Thomas,
testified was a very strong brand going back some 35 years. Sales
representatives from the Eastern Cape, Western Cape,
Kwa-Zulu Natal
and Gauteng all reported to the defendant.
[20]
The
witness testified that the price of crude oil could fluctuate on a
daily basis and so pricing for Crispa Gold is managed by
the
Financial Manager and pricing parameters are set between certain
dates. He explained the various discounts, rebates and allowances

which could be granted to a customer to reduce the invoice price and
explained that there were different pricing structures for
different
Crispa Gold customers. These pricing parameters were set by the
Financial Manager and the defendant, the latter being
the person who
concluded agreements with various customers on price and on the
various allowances, discounts and rebates. In this
area the defendant
had a great deal of discretion and was trusted to run things within
the price parameters established by the
financial manager and in the
best interests of the plaintiff.
[21]
Mr
Thomas explained that what was referred to at times as the ‘
Makro
Rule’
was an unwritten rule in place even before he joined the plaintiff,
and was probably still in place, to the effect that no customer

should get a better price than Makro. This was because Makro was one
of the plaintiff’s most substantial customers and was
treated
with kid gloves. As a result the nett price paid by Makro was seen as
a benchmark price. Unless there was a special deal
or promotion or
some other special reason, no smaller customer should get a better
price than the nett price Makro was required
to pay for Crispa Gold.
[22]
The
witness was shown certain email correspondence from a customer in
January 2012 which led to an investigation into the defendant
trading
in Crispa Gold through Fast Track and FDC. A suspension meeting was
held with the defendant on 12 April 2012, the minutes
of which were
put before the Court and pursuant to which the defendant was
suspended from his position pending a full scale disciplinary

enquiry. During the meeting the defendant presented a picture of
himself being minimally involved in FDC’s business activities.

A disciplinary enquiry was held at a later stage where the defendant
pleaded not guilty to two charges but guilty to a third charge
of
giving considerable free product i.e. Crispa Gold, to certain of Fast
Track’s customers. Mr Thomas led the case for the
plaintiff at
the disciplinary enquiry. It was chaired by an independent chair who
ultimately recommended the defendant’s
dismissal. The witness
identified email documentation which had come to light showing the
defendant directing and advising customers
and potential customers to
purchase Crispa Gold through Fast Track or FDC rather than through
the plaintiff. In cross-examination,
the defendant drew the witness’
attention to documentation emanating from the plaintiff indicating
customers who were enjoying
a lower price of Crispa Gold than Makro.
Mr Thomas pointed out, however, that the important price is the
remittance price i.e.
that actually paid by the customer after
rebates and discounts. Even on this basis the documentation suggested
that at times several
customers were paying less than Makro by way of
remittance price. In this regard Mr Thomas testified that there was
no computerised
system that enforced the Makro rule by disallowing
lower remittance prices to other customers. The defendant put it to
the witness
that there was no Makro rule, written or unwritten, but
could obtain no concession or admission in this regard.
[23]
Mr
Thomas was an open and honest witness, also prepared to make
concessions where appropriate and he appeared to have no axe to
grind
with the defendant.
Ms
Gemma Wright-Ingle
[24]
The
witness was 19 or 20 years of age in 2010 when she was interviewed by
the defendant for a job as an office administrator after
responding
to an advertisement in an Edenvale newspaper. She testified that she
was successful in the interview and began work
at a small office in
Edenvale attached to a hairdressing salon. Her responsibilities were
to take calls, do some data capturing
relating to debtors and
creditors and to prepare invoices for sales acting on instructions
from the defendant. No one else involved
in the business gave her any
instructions other than the defendant. The only other employee was a
driver known only to her as Samuel.
The invoices and sales related
only to cooking oil, Crispa Gold, and she would simply pass invoices
on to ‘
Samuel’
to make deliveries of Crispa Gold. In the beginning the defendant
came to the premises every day and thereafter only once or twice
a
week. Her understanding was that she was working for the defendant
and his company and that Fast Track Marketing and FDC were
one and
the same company. She worked for the defendant for less than a year.
Ms Wright-Ingle testified that her employment commenced
sometime in
October 2010 and she only ever worked for the defendant during her
employment and that she parted on good terms with
him. She never took
an instruction in any shape or form from Samuel the driver who did
not appear to be in any position of authority.
The witness confirmed
that she received incoming calls from certain companies placing
orders for oil and that she and the defendant
also communicated via
cellphone.
[25]
Ms
Wright-Ingle had a reasonably good recollection of her employment
eight years previously although at times she was a little vague
in
relation to the detail thereof. Her evidence was not dented in
cross-examination and I accept it without reservation.
Ms
Kate Ramocheke
[26]
From
2009 to December 2013, Ms Ramocheke worked for the plaintiff as a
call centre agent. Her job was to take orders from customers
which
she received by way of email or over the phone or from the defendant
or sales representatives reporting to him as Key Accounts
Manager.
The orders were for all of the plaintiff’s products but
included Crispa Gold. She would capture the information
on the
computer, namely, price, quantity and delivery date. The price would
be obtained from the defendant or from the call centre
operator
supervisor, Charmaine Burger. The computer system had a price for
every customer for Crispa Gold. It was possible to enter
a lower
price on the system but then only with the approval of Burger or of
the defendant after some paperwork was done. This happened
often.
[27]
The
witness recalled that the defendant placed orders for FDC and Saania.
Saania would take three truckloads at a time. Generally
these orders
would be for a lower than listed price and would be accompanied by a
deal sheet and order form, the latter containing
the higher price but
the deal sheet, signed off by the defendant, containing a lower
price. The witness also arranged deliveries
using a range of private
transporters and all delivery costs were for the account of the
plaintiff. The minimum delivery the plaintiff
would do in
Johannesburg would be three pallets but in other centres the minimum
was only one pallet. Ms Ramocheke was shown email
correspondence from
a certain Connie from Ace Distributors which indicated that the
customer had been very confused as to whether
she was dealing with
the plaintiff or with FDC. When Ms Ramocheke spoke to her supervisor,
Charmaine, about this she was told that
she must do whatever the
defendant told her should be done. She understood FDC to be the
plaintiff’s customer and had not
understood why other customers
were buying from FDC if the plaintiff was supplying Crispa Gold. She
had not known who was running
FDC. The witness was also shown emails
indicating Saania treating Crispa Gold as being transferred to and
from Saania. She could
give no logical explanation for this because
Saania never called to say that they were sitting with excess stock
of Crispa Gold.
[28]
Ms
Ramocheke was a good witness whose evidence was not damaged in
cross-examination
.
Ms
Penelope De Freitas
[29]
Ms
De Freitas testified that she had been the plaintiff’s HR
Operations Manager from 2004 to date. She had known the defendant

since his pre-employment interview in 2005. The witness was involved
in both the defendant’s pre-suspension hearing and his

disciplinary enquiry. She took the notes relating to the former and
confirmed that it was 100% accurate. The proceedings of the

disciplinary enquiry were audio-taped and subsequently transcribed.
[30]
One
of the statements made by the defendant in the disciplinary enquiry
were that there was no evidence that he would put forward
to prove
the company wrong as regards their case against him relating to Fast
Track. Another statement he made was that Fast Track
bought stock
from the plaintiff’s customers who already had the stock and
sold that stock onto other people and that he ‘
would
have made some money from that’
.
[31]
The
charge to which the defendant pleaded guilty was that he acted in
conflict with the interests of the plaintiff in setting up
Fast Track
when he offered the plaintiff’s customers significant
quantities of free product through Fast Track which had
the effect of
significantly reducing the selling price of the company’s
product and thus financial losses being sustained
by plaintiff.
[32]
The
witness confirmed that the plaintiff had at all material times a code
of business conduct. All employees received a booklet
incorporating
that code in December 2011. Paragraph 6.1 of the Code of Conduct
which deals with avoiding conflicts of interests
provides that such a
conflict arises:
‘
When
you have a personal interest that could be seen to have the potential
to interfere with your objectivity and performing duties
or
exercising judgment on behalf of the Group. You should avoid
conflicts of interest.’
[33]
Paragraph
6.2 covers dealings with suppliers, customers, agents and competitors
and provides that any employee must not have ‘
any
financial interest in a supplier, customer, agent or competitor of
the Group’
.
[34]
In
cross-examination, Ms De Freitas testified that the defendant called
her after his dismissal and told her that if the plaintiff
litigated
against him it would ‘
open
the flood gates’
.
In an attempt to show malice on the part of the plaintiff in the
litigation, the defendant himself drew to the witness’

attention that after his dismissal he had sent a complaint to the
South African Bureau of Standards regarding the plaintiff’s

ethics and referred a complaint against it to the Competition
Commission. The witness confirmed that as a result of the complaint

the plaintiff had paid a fine of some R30 million and had to invest
an even more substantial sum into a BEE packaging facility.
Ms De
Freitas testified nonetheless that these complaints had not
influenced the plaintiff’s decision to proceed with the
present
litigation against the defendant.
[35]
Ms
De Freitas was a good and credible witness whose evidence was not
shaken in any way. I accept her evidence without qualification.
Mr
Thabo Mosomane
[36]
The
witness was the manager of the small business services department at
the Edenvale branch of Nedbank Limited. He was shown documentation

relating to the authorised signatories on the FDC account which had
been opened on or about 30 June 2002. The first two signatories
were
the defendant and one S Kgatla. He testified that the defendant was
thus able to operate the account fully from its date of
opening. In
addition,  internet banking access to the account was
immediately created and became available for use by the
defendant.
The witness met the defendant a month or two before the trial when he
came into the branch wanting to reactivate the
internet banking
facility on the account. This could not be permitted because only a
registered director or member could do so.
The account was still open
and functioning, the registered officer being Mr Kgatla. Previously
the account had been closed on 6
November 2015 with a negative
balance. When the defendant made this request the internet banking
facility had apparently been blocked
since 27 December 2017. The
witness’ evidence was not contentious and was not challenged.
Mr
Laurie Milne
[37]
Mr
Milne worked for Unilever between 1970 and his retirement in 2002.
The plaintiff formed part of Unilever until 2004 when it was
bought
out by an entity known as Golden Hope. There was then an
international merger and the plaintiff as it is presently constituted

came into existence. In 2004, the witness (Milne) was appointed by
the plaintiff as National Sales and Marketing Manager with a
brief to
get the disintegrating business back on its feet. It was only 14
months later that Crispa Gold became a Golden Hope product
after
purchasing the brand from Unilever. Crispa Gold was used in the
catering market and Golden Hope had to change its distribution
and
marketing strategy to deal with the new product. To that end it
employed a number of sales reps and sales managers. In due
course the
defendant was placed in charge of this enterprise. Before this
occurred the witness had to develop a new distribution
strategy
involving fast food clients, cash and carry clients (such as the
Makro Group) and catering distributors. After the defendant’s

appointment, Mr Milne introduced him to the Crispa Gold side of the
plaintiff’s business. They worked together for a while
but the
defendant proved very competent and in due course was running the
Crispa Gold product section single-handedly. By 2012
the witness had
been replaced by Mr Gareth Thomas and was only working two to three
days per week. During that year whilst on leave
he was asked by Mr
Thomas to return immediately because the defendant was about to be
suspended and he was needed to take on the
Crispa Gold business
again. As a result he effectively stepped into the defendant’s
shoes. The idea was that he would first
see as many of the Crispa
Gold customers as possible. Almost immediately upon his return he was
presented with documentation to
approve substantial credit notes for
Seafood Botswana which he refused to do after baulking at the size
and number of the credits.
He then pulled the figures received for
Seafood Botswana and noticed large discrepancies in their monthly
purchases. When he contacted
the customer he was told that the
defendant had told them to make their purchases through FDC. The
witness could see no justification
for the defendant having done this
since Seafood Botswana was a very important client and there was no
reason why it should not
be kept within the plaintiff’s
accounting structure. He went to see Seafood Botswana’s
management on several occasions
and eventually the customer ‘
came
back on board’
and sales of Crispa Gold to them went back to their original levels.
He also contacted I&J Oil Traders, another customer, but
they
were not interested in making any purchases of Crispa Gold because
they had got a ‘
better
deal’
from the defendant. Mr Milne also contacted Saania and spoke to a
certain Yunus, who initially did not want to do any business
with the
plaintiff or to talk about prices at all. The witness left him with a
‘
deal
sheet’
and he eventually ordered some stock about two weeks later. Mr Milne
retired about two years after stepping back into the defendant’s

shoes but over this period Saania’s purchases declined
dramatically compared to the levels at which it had purchased during

the defendant’s time.
[38]
The
witness was shown documentation relating to various Crispa Gold
transactions between the plaintiff and customers during the

defendant’s employment. He expressed astonishment at an
instance where Saania was credited with 633 free drums of Crispa

Gold. He testified that although the plaintiff would quite often give
5 or 10 free drums of oil to a customer as part of a promotion
or
allowance, 633 free drums of oil was an extraordinarily large
quantity having a value of approximately R140 000. Another

practice of the plaintiff was to give credits for allowances to
customers in respect of store openings. Upon being shown an invoice

from FDC claiming R60 000 in respect of six store openings which
had been approved by the defendant, the witness commented
that it
looked ‘
a
bit dodgy’
.
He was also shown invoices relating to dealings between Saania and
Global Trading the effect of which would be to transfer a debit
from
Global Trading to the plaintiff, to Saania. He commented that there
would have to have been documentation to support this
transaction and
that it made no sense unless there was a physical delivery to Saania.
[39]
Mr
Milne testified that Crispa Gold was a key value item in the
plaintiff’s product range and enjoyed a price premium in the

market of approximately 15%, which the plaintiff sought to maintain.
The product had a 20 to 30 year history of quality, consistency
and
reliability. His evidence relating to the plaintiff’s customer,
Makro, was of particular importance. Makro was far and
away the
plaintiff’s largest cash and carry customer and it gave Crispa
Gold great benefit in the form of promotional activities.
It had the
most outlets and was keen to develop its catering business. Makro was
sometimes in the plaintiff’s top 5 customers
overall and often
in their top 10 for purchases of Crispa Gold. Every customer would
‘
squeeze’
the plaintiff for a good price but Makro was transparent in its
pricing and advertised widely which was very beneficial to the

plaintiff as it would carry a picture of Crispa Gold in their
broadsheet and display ads. The price at which Crispa Gold was sold

to Makro was significant because the plaintiff used it as a ‘
base
plate’
and cascaded from that price down to other customers. Overall the
price of Crispa Gold was watched by all in the market like hawks

because it carried a 10 – 15% premium over competitors. If, for
example, the price of a drum of Crispa Gold to Makro was
R240 and if
the plaintiff sold to Seafood Botswana at below that price they would
receive a call from Makro to come and see them
‘
in
ten minutes’
.
Although the plaintiff had to please as many customers as possible it
had to pay particular attention to big customers. If competitors

started selling their product competing with Crispa Gold at well
below the Makro base plate price, then the plaintiff’s price

could be reduced. However, big deviations in plaintiff’s price
affected its integrity.
[40]
The
witness’ evidence regarding price increases in Crispa Gold was
also significant. Generally the plaintiff gave customers
six weeks
warning of a price increase since they needed time to prepare
themselves and to make orders ahead of the price increase.
Prior to
the announcement of any price increase the plaintiff would calculate
how much stock they could allow customers to order
at the old price
and deal this out equally. Orders at the old price had to be
delivered within four weeks of the new price coming
in. It was highly
unlikely that customers would not take up their allocations at the
old price.
[41]
In
cross-examination, Mr Milne stated that he did not regard Crispa Gold
as a ‘
commodity’
to be traded as the defendant claimed to see it. He also disagreed
with the defendant in other respects, stating that there was
no
reason why the plaintiff would give away its 15% margin or price
premium on Crispa Gold which was viewed as the ‘
Rolls
Royce’
of cooking oils. When the defendant put to him that there were no
quotas or allocations of Crispa Gold stock to clients at old
prices
before price increase introductions, Mr Milne strongly disagreed.
Shown once again the invoice for R60 000 from FDC
for six store
openings the witness stated that what were referred to were not new
store openings and the allowance in each case
was excessive.
[42]
The
defendant raised with the witness that portion of the plaintiff’s
particulars of claim referring to the Makro rule and
averring that
Crispa Gold would generally not be sold to other customers at less
than the Makro price. The witness’ response
was that the use of
the word ‘
rule’
was too strong and he would rather regard it as a base plate price.
Exceptions to the Makro base plate price i.e. those who got
a better
price, would be kept to a minimum and only in exceptional
circumstances. Asked by the Court to put figures to this the
witness
stated that if 10% of the Crispa Gold that was not sold to Makro was
being sold at below the Makro price he would be asking
questions but
at 5% he would be comfortable. The witness agreed that during the
time that their employment had overlapped, the
defendant had met his
volumes and profits and his key performance indicators and had been
rewarded with regular salary increases.
The defendant had had a
volume target for Crispa Gold but Mr Milne could not recall if nett
proceeds of sale was part of the defendant’s
key performance
indicators. He emphasised that if the defendant had reached his
target this did not mean he could relax as all
staff were obliged to
sell as much and as profitably as possible.
[43]
The
witness conceded that the Makro base plate price regime was not
contained in anyone’s contract of employment but according
to
him it was well understood by all involved. He repeated his evidence
that the reasons why the plaintiff used the Makro Crispa
Gold price
as a base plate was Makro’s pricing transparency with the
result that everyone in the trade would know at what
price Makro was
selling the product. The other factor was that Makro had a nationwide
presence. For these reasons the Makro price
was an ideal indicator of
a minimum or competitive price for Crispa Gold.
[44]
Mr
Milne was a very good witness whose evidence was credible in all
aspects. Where appropriate he made concessions readily and he

appeared to be fair-minded in relation to the issues in dispute. He
was clearly very experienced and completely conversant with
the
requirements of the defendant’s job and in particular with all
aspects of the sale and marketing of Crispa Gold.
The
defendant’s case
Mr
Tebogo Mofolo
[45]
Mr
Mofolo was a former employee of the plaintiff, who worked for it for
ten years until 2015 as a Regional Account representative
in the
Gauteng area, handling a number of products including Crispa Gold.
For much of his employment he reported to the defendant
and his
duties were to call on existing and potential customers to discuss
pricing, resolve any problems, arrange deliveries and
make sure the
product was on their shelves and visible. Testifying about Crispa
Gold he confirmed various discounts and bulk allowances
available to
customers. The witness confirmed that the plaintiff’s cash and
carry customers, including Makro, were transparent
in their pricing
but testified that he had never heard of the concept of the Makro
price being a base plate price. Led by the defendant
he was shown
documentation identifying a number of customers apparently enjoying a
better price than Makro. His explanation was
these customers bought
bigger truckloads whereas Makro’s orders were placed by stores
individually and thus were for smaller
amounts. Mr Mofolo confirmed
that when sales representatives such as himself wanted to agree a
price outside of the established
parameters for a particular
customer, the ultimate arbiter of prices was the defendant. He
appeared to testify that after the defendant
was dismissed Laurie
Milne had implemented a Makro price strategy because Makro had
developed their warehousing and were thus ordering
significant
quantities and distributing them to their stores. Led by the
defendant he testified that 14% of Crispa Gold production
was sold to
the cash and carry sector and that Makro took 8% of total production
of Crispa Gold i.e. more than 50% of the stock
sold to cash and carry
customers. Mr Mofolo testified that customers were given
approximately a month’s notice of price increase
so that they
could prepare themselves by placing orders to stockpile. In these
circumstances customers would often double their
normal orders.
According to him there were no specific allocations to
customers at such times and customers would strive
to get as much as
possible as long as the plaintiff had stock. However, he conceded
that if there was not enough stock for the
orders coming in that
stock would be shared out between customers. He seemed to testify
moreover that under Laurie Milne’s
management between 2012 and
2014 allocations of old stock, which could be ordered by customers
ahead of a price increase, were
made.
[46]
Under
cross-examination much of the witness’ evidence was cut back,
as I will describe more fully at a later stage. He agreed
that
pricing for Makro was agreed at a national level as it was for other
large cash and carries. Asked about FDC he stated, after
a long
pause, that he knew FDC as a small distributor on the plaintiff’s
buying list but did not negotiate or deal with them.
Regarding free
stock Mr Mofolo confirmed that small amounts were given as an
incentive but that he had never heard of as much as
150 free drums
being given – at most, 64 drums i.e. one pallet. Giving free
stock in the amount of 677 free drums would amount
to a producer
giving its stock away. He knew of Fast Track but to this day does not
know who the persons were behind it. The position
was the same
regarding FDC. Shown emails regarding a transaction between Saania
and Global Trading involving 432 drums of Crispa
Gold, he testified
that it would only make sense if Global had stocks of Crispa Gold,
the other customer did not have and wanted
such stock and there was a
physical transfer of the stock.
Mr
Juan Pierre Lerena
[47]
The
defendant started working in 1992 as a sales rep for his father’s
company. After five years and some part time study in
the fields of
sales and marketing he began working for a series of manufacturers in
sales or marketing positions. In approximately
2004 he joined the
plaintiff’s predecessor. In July 2005 the plaintiff became the
owner of the Crispa Gold brand. Initially
he worked very closely with
Laurie Milne, visiting every customer and concluding trading term
agreements with them. After a while
Mr Milne stepped back to
concentrate on the bulk business and Crispa Gold became the
defendant’s sole responsibility. He
testified that the
plaintiff’s price policy remained the same throughout all his
years of employment and that there was no
such thing as the Makro
rule. He tried not to give Makro the best price nationally in order
to leave some room for negotiation
downwards. Every month a document
was generated within the plaintiff’s system setting out the
prevailing prices to customers.
This document was available to all in
management.
[48]
Fast
Track was registered by himself and his father in 1992 but he (the
defendant) eventually acquired all the shareholding. Its
accountant
was a Mr Herman. When the defendant took sole control of Fast Track
he used it to engage in the property business and
the sale and
purchase of motor vehicles. Attempting to explain the lack of any
financial statements for Fast Track, the defendant
testified that Mr
Herman passed away in 2008/2009 at a stage when he was far behind in
drawing up Fast Track’s accounts.
The defendant did not hear
from the accountant for a long time and when he went to physically
look for him found that Mr Herman
had ‘
disappeared’
with all the financial documentation relating to Fast Track. In 2009
he was introduced to someone from a bookkeeping company and
explained
to her his problems of having no financial statements for Fast Track
or FDC. Between them they reconstructed some financial
statements
which were not very accurate but met the CIPRO requirements for all
the years that Mr Herman had missed. I pause to
observe that the
defendant did not even discover these roughly approximated financial
statements. In fact he discovered no financial
statements for either
company, at all. Fast Track had purchased vehicles and scooters which
were rented out and it had an average
of 3 – 4 permanent
employees as well as agents and partners.
[49]
Dealing
with Crispa Gold the defendant sought to explain his unusual dealings
in the product vis-à-vis Global Trading and
Saania. He
testified that pricing of Crispa Gold was volatile with some years
when the price was either too high or too low. A
consequence was that
some customers would stockpile ahead of price increases, a prime
example being Saania. The apparently suspicious
transaction involving
Global Trading and Saania was when Global asked to sell back or
return existing stock which it could not
sell because it was too
expensive. This the witness eventually arranged by allocating stock
to Global which had been ordered by
Saania at the old (lesser) price
but which had not been delivered to it. This was accomplished through
debit and credit notes i.e.
without any physical transfer of Crispa
Gold and through the defendant satisfying Saania’s
representative, one Yunus, that
the defendant, acting through Fast
Track, would guarantee that Saania would receive payment. I pause to
observe that this convoluted
explanation of the transaction makes no
commercial sense at all.
[50]
The
defendant testified that Saania may have made a ‘
back
end’
profit out of the transaction but that overall Fast Track made no
profit out of its dealings in Crispa Gold and in fact incurred
a
loss. According to the defendant, the plaintiff did not make a loss
in regard to this transaction. Again I interpolate to observe
that
the defendant’s explanation of how more expensively priced
stock with a customer was replaced with cheaper stock emanating
from
a customer without any physical delivery taking place, these
customers being in Johannesburg and Port Elizabeth respectively,
with
Fast Track guaranteeing the price and being responsible for payment,
but with no party making any profit was simply illogical
and not
credible. The example of this transaction has particular importance
in that it would appear that similar transactions accounted
for the
extremely substantial sums of money being deposited into Fast Track
and FDC’s accounts arising out of sales of Crispa
Gold.
[51]
Fast
Track’s registered office and physical presence was in
Edenvale, where Ms Wright-Ingle worked. The defendant explained
how
FDC came into being which began with him meeting Mr Kgatla in
2008/2009. The latter was an owner/driver distributing car parts
and
the defendant assisted him by developing his business to distribute
Crispa Gold and collect used cooking oil at the same time.
Mr Kgatla
had been buying Crispa Gold from Makro and other cash and carry
businesses and was initially no more than an informal
trader selling
to customers along a route. According to the defendant he noted
potential in Mr Kgatla and started to mentor him.
He suggested that
Mr Kgatla should formalise the business and proceeded to do this on
the latter’s behalf by incorporating
Fast Track, setting up its
bank account and arranging for Ms Wright-Ingle to be employed to do
the administrative work. The defendant
had also noticed that large
catering customers for Crispa Gold such as Bidvest were charging
their own customers ‘
too
much’
for Crispa Gold and such customers were not able to buy the product
elsewhere because of their agreements with Bidvest. The defendant
saw
an opportunity to form a buying group i.e. FDC through which smaller
Crispa Gold customers could purchase the product and get
a better
price which could be collectively bargained. The plan had two
objectives, namely to get the customers to implement an
oil
collection system and to obtain a better price from the plaintiff for
Crispa Gold. In some way, never clearly explained by
the defendant,
the implementation of such a scheme would enable the plaintiff to
better manage pricing of Crispa Gold both through
its existing
systems and through FDC. In this way plaintiff would not ‘
have
to do anything’
and he, the defendant, would manage both the input price and output
price for Crispa Gold. He arranged for Mr Kgatla to open an
account
directly with the plaintiff, as FDC and they both had joint signing
powers on its account. FDC operated for about 18 months
before the
disciplinary enquiry which led to his dismissal.
[52]
In
cross-examination, it was put to the defendant that the plaintiff’s
case was that, save for that evidence of the defendant
which was
admitted or corroborated by other evidence, his evidence was false
and he must view the cross-examination in that light.
The defendant
stated that he did not know where Mr Kgatla was presently. He
testified that he had negotiated the trading term agreements
between
FDC and the plaintiff with himself. This of course means that he was
negotiating with himself. He admitted that he had
used the Makro
price as a market price indicator in his evidence in chief but stated
(illogically) that he could have just as easily
have used another
cash and carry customer. The defendant testified that he only became
MD of FDC after he left the plaintiff’s
employment but it was
put to him that he fabricated this evidence when he saw his
predicament, namely that he was MD of FDC while
still employed by the
plaintiff. He was shown the Nedbank account documentation and
appeared to admit that he and Mr Kgatla had
gone to the bank together
at the inception of the account and that the critical letter to the
bank regarding signing powers had
been drafted by himself. When
documents apparently drafted by him relating to FDC were shown to him
the defendant initially ascribed
them to other employees. When
pressed on this he conceded that he had told them exactly what to
write in the document. When portions
of the disciplinary enquiry
transcript were put to him containing admissions against his interest
the defendant stated that he
had told Ms De Freitas that the minutes
were not accurate. He accepted that in certain important instances
the minutes were at
odds with his present testimony. It was further
put to him that he had not advised the suspension enquiry of a number
of critical
aspects of his relationship with FDC. The witness’
response was that he had not lied to the suspension enquiry –
he
had simply not given a comprehensive answer.
[53]
This
was a revealing insight into the defendant’s thinking, namely,
that when he gave an explanation to his employer which
omitted
material aspects this was not a lie but simply an omission. It was
put to him that his behaviour pattern was to give information
but not
all information, precisely in order to mislead. When it was put to
the witness that he had not revealed the existence of
Fast Track and
FDC to his employer because of the impossible conflicts of interest
which they created for him, his answer was that
there had been no
conflict of interest because the operation of these companies was
beneficial to the plaintiff.
[54]
Significantly,
the defendant agreed that when payments were made to Fast Track from
various customers of the plaintiff he accepted
that these were orders
which the plaintiff would ordinarily accept from such customers and
that it would want such business. The
defendant stated that he would
seldom get involved with a potential customer, except Saania. He
conceded that within the plaintiff
his nickname was ‘
Mr
Crispa’
and that he had enjoyed a free hand to achieve corporate objectives.
He also had an almost unlimited discretion to do what was
in the best
interests of the plaintiff. He maintained that although no one had to
approve the deals which he struck with customers,
everyone had access
to them because it was a transparent system. He conceded, however,
that the plaintiff’s management had
not followed the details of
his transactions.
[55]
The
defendant insisted that Fast Track was never in a conflict of
interest situation but he conceded that in retrospect he should
never
have used Fast Track to invoice customers for Crispa Gold. Upon being
shown an email where he offered two options to a customer
to buy
either through the plaintiff or at a cheaper price through Fast
Track, he conceded that any customer would take the cheaper
option.
[56]
The
defendant testified that he never made a profit out of any Fast Track
deal; the only reason Fast Track got involved was to guarantee

payment to Saania by Global or another customer. Shown admissions in
the disciplinary enquiry that he made money out of Fast Track
he says
that his present evidence to the contrary is not a lie because after
the disciplinary enquiry when he went back and examined
his books
(undiscovered by him) he realised that Fast Track had made huge
losses. He was shown a series of Saania invoices and
conceded that
these are only a fraction of the business that was conducted between
Saania and Fast Track.
[57]
In
an effort to explain his almost complete lack of documentation
relating to Fast Track and FDC’s business he says that he
fell
upon hard times after his dismissal and lived in his car for a month
so the preservation of documents was not a high priority.
When he
testified that the private companies which he utilised were never
intended to make a profit it was put to him that the
plaintiff only
has his word for that. He was shown emails from an employee of his,
one Brian, concerning sales of Crispa Gold and
it was put to him that
they were written as if the stock belonged to Fast Track or FDC. It
was put to the defendant that Fast Track
was trading in Crispa Gold
and was doing so by getting Saania to order and hold stock on its
behalf. It was put further that in
truth he had been buying stock of
the product from the plaintiff cheaply through Saania for himself and
Fast Track. The defendant
was constrained at one point to state
although this looked to be the case, it was not so. When it was put
to him that Mr Schulz’s
investigations and calculations showed
that Saania got more favourable terms than Makro to the tune of R9
million, he conceded
that it ‘
certainly
looks like that’
.
[58]
The
defendant was taken to the bank statements relating to Fast Track and
FDC and it was put to him that he had barely engaged with
their
contents notwithstanding his lengthy evidence in chief. It was
further put that he did not do so because the more he dealt
with them
the worse the picture became for him. It was also put to the witness
that he made at least R4 million out of the monies
deposited into
Fast Track and FDC for Crispa Gold purchases by way of private
expenses, drawings and the like; further that, once
he was dismissed
from the plaintiff, the deposits into these two bank accounts rapidly
diminished and petered out by November 2015.
It was put to the
defendant that in other words without access to the plaintiff’s
stock and his ability to manipulate prices,
the huge volumes of
transactions through these two bank accounts diminished to nothing.
The defendant’s explanation was that
the plaintiff would not
deal with FDC after his dismissal and it reverted to being a cash
business. It was further put to him that
a large portion of the R37
million that flowed into the two accounts over the relevant period
were payments for Crispa Gold purchases.
[59]
Regarding
pricing the defendant testified that his two main goals whilst with
the plaintiff were to not sell Crispa Gold at a loss
and to establish
consistency in pricing in the market. It was put to him that when one
customer, Saania, had a huge amount of old
stock that created
problems for consistency of pricing in the market. The defendant did
not accept this. He was shown further emails
which he wrote during
his employment with the plaintiff citing Makro as a base price.
Notwithstanding this the defendant would
not concede that there
existed anything like the Makro rule or base plate price.
[60]
The
defendant was also taxed with various threats that he made against
the plaintiff after his dismissal. All these were written
between
October and December 2012 and he described them as a ‘
lash
out’
following his threat to Ms de Freitas that if the plaintiff did not
stop ‘
badmouthing
him’
he would report them to various authorities. One document is
particularly interesting. It reflects the plaintiff’s trading

arrangements with a range of customers and providing confidential
details of maximum rebates, settlement discounts and distribution

allowances as at December 2012. The top half of the document is
clearly part of a document purloined from the plaintiff. To it
had
been added the following text:
‘
If
you believe that your business opportunities have been undermined by
Sime Darby Hudson and Knight’s market pricing and
customer
trading arrangements and that Sime Darby Hudson and Knight have not
afforded you an equal opportunity to participate and
compete fairly
in the market, it is your time to take action in the following ways:
1.
Boycott
Sime Darby Hudson and Knight products;
2.
Lodge
a complaint with the Competition Commission of South Africa’.
[61]
There
follows a smaller table by the anonymous author of the above message
which sets out the pricing for Massmart, Bidvest and
independent
distributors for six pallets of Crispa Gold after rebates and
allowances i.e. the nett price. Significantly the Massmart/Walmart

Group price (also known as the Makro price) is the lowest price at
R327.84. The document clearly indicates that as at December
2012 the
Makro price was the lowest price by some margin and that what the
anonymous author was urging was a boycott campaign or
the lodging of
a complaint against the plaintiff because it was offering
differential nett prices to customers, the lowest being
to the
Massmart/Walmart (the Makro Group). The defendant denied that he was
the author of the document. He conceded that he had
been accused of
being the author of this letter in a letter from the plaintiff’s
legal representatives and that he had not
bothered to reply thereto.
The defendant was shown correspondence from the plaintiff’s
attorneys indicating that the first
letter of demand that he received
in relation to the present litigation was 30 November 2012 and that
on 13 December 2012 he received
the letter of complaint from the
plaintiff’s attorneys regarding the anonymous document.
[62]
The
defendant testified that he met monthly with Saania’s
representative, Yunus, to set that account in order. Its claims
for
deductions off the invoice price would be presented to him and if he
considered them justified, he would sign them off there
and then. The
defendant was shown various claims which he signed off in this
regard, many of which were for appreciable sums: a
R63 000
credit, another claim for R145 000 for an advertising subsidy
and many other generous discounts. Another telling
instance put to
the defendant was one where Fast Track invoiced Seafood Botswana for
Crispa Gold in the amount of R250 000
which was collected by it
from Saania but at the same time Saania was given credit for 667 free
drums of oil. The nett result was
that Fast Track received R250 000
from Seafood Botswana but apparently had to pay only R40 000 to
Saania for the stock
which it delivered to, or had been collected by,
Seafood Botswana. This would mean, if correct, that Fast Track (to
all intents
and purposes, the defendant) would have made a clear
profit of some R200 000 on this transaction alone. It was again
put to
the defendant that he used Seafood Botswana and Saania to
create profit opportunities for Fast Track and that Saania’s
orders
for large amounts of stock at low prices were in fact
disguised orders from Fast Track. It was further put to him that all
this
was kept secret by him not least by concealing from the
plaintiff his ownership or relationship with Fast Track and FDC.
[63]
When
the defendant was asked why he concealed his involvement with Fast
Track and FDC from his employer, his only (and improbable)
response
was that he could not say what he was thinking back then. He was
asked why he did not call Mr Kgatla as a witness and
he responded
that he had fallen out with him. When it was put to him that he had
advised many of the plaintiff’s customers
to buy through Fast
Track he denied this even when the customers were named. It was
further put to him that he used his position
at the plaintiff to
reduce the price payable by Saania and Seafood Botswana through
subsidies and allowances which only he could
approve, using them as
tools for his, and not for the plaintiff’s, benefit. His
response was that this was counsel’s
opinion. The defendant
testified that using the Makro price as a base plate would not be a
fair basis to evaluate any damages suffered
by the plaintiff but was
unable to suggest any fairer basis. It was pointed out to him that of
all the witnesses he was the only
one who stated that there was no
Makro price.
[64]
At
the conclusion of the defendant’s evidence it was pointed out
to him that he had failed to deal with the bank statements
relating
to Fast Track and FDC. He was given a further opportunity by the
Court to do so by drawing up a document with written
remarks or
explanations relating to those bank entries in the two accounts which
were devoid of any meaningful descriptions and
therefore difficult to
characterise or analyse. He would have to confirm that account under
oath.
[65]
When
the defendant resumed his evidence on 4 June 2018, having been
afforded this second bite at the cherry, he handed up a schedule

where selected transactions in the bank statements were dealt with
together with a summary page. However, the main thrust of his

document was to allocate some of the expenses analysed by Mr Schulz
and attributed to Crispa Gold and reallocate them to non-Crispa
Gold
business transactions. He testified further that he put R1.5 million
back into the company which led him to the conclusion
that Fast Track
and/or FDC owed him R180 000 after the correct allocation of his
private expenses. Plaintiff’s counsel
went through the new
documentation and isolated those which had nothing to do with
generating the income passing through the account
in relation to
Crispa Gold sales. In the result, very few expenses could be
identified by the defendant as relating to Crispa Gold.
The
defendant’s evidence was characterised by considerable
vagueness and a lack of particularity. It was put to him that
the
plaintiff was not a general partner of his in the property and
vehicle business which he apparently conducted through Fast
Track.
The defendant was not able to shed any further light on the unknown
‘
payments’
to the tune of some R26 million recorded in the books of Fast Track
and FDC.
[66]
The
defendant is clearly an intelligent and articulate person as
evidenced by the fact that he was able to present his case without

legal representation, notwithstanding the complexity of some of the
evidence and issues. He has an easy and engaging manner and
it is not
difficult to see why, at least up until 2012, he had such a
successful career in sales and marketing. The defendant testified
at
length in a plausible and assured manner. However, notwithstanding
these attributes and the apparent plausibility of some of
his
evidence, the defendant proved to be anything but a credible or
reliable witness. Much of his evidence was notable for its
vagueness
when he was pressed for any meaningful detail and was unsupported by
any objective evidence, whether documentary or
viva
voce
,
in circumstances where common sense suggested that such corroborating
evidence would be available. For example, the defendant
conducted
extensive business operations through Fast Track and FDC over a four
or five year period yet produced no documentation
recording any
details of these transactions. This was also not in keeping with the
generally well organised manner in which the
defendant appeared to
conduct his affairs and how he conducted his case in the trial.
Virtually every document placed before the
Court relating to these
dealings and the defendant’s sale of huge quantities of Crispa
Gold oil through these companies was
produced by the plaintiff. The
defendant’s explanations were always vague, sometimes
contradictory and seldom credible. There
were important witnesses who
the defendant could have called to substantiate his version of
disputed events, such as his ex-wife,
his former business partner, Mr
S Kgatla, or various professional people who had done work for the
defendant. None of these witnesses
were called and the explanations
given were generally vague and unsatisfactory. Ultimately an
acceptance of the defendant’s
version of events on disputed
points relies on accepting his word. That would be a hazardous step
since the defendant had no difficulty
in giving evidence which could
not conceivably be true. For example, he testified that there was no
conflict of interest in him
using his private companies to sell
Crispa Gold. He also testified that he made no profit at all in these
activities when it was
shown that in just one transaction he appeared
to have derived a benefit of R200 000. His statement that he
made no profit
through his private sales was also directly
contradicted by his evidence in the disciplinary enquiry. When
confronted with his
own contradictory testimony the defendant showed
a great facility for producing a glib or evasive answer. So, for
example, he disputed
the accuracy of the minutes at the suspension
enquiry but without providing any detail thereof. In short I find
that the defendant
was quite prepared to give false evidence and did
so in many respects. In general he was not a credible or reliable
witness. Only
where his evidence is corroborated by other evidence or
aligns with the evidence which the plaintiff presented can it be
treated
with anything approaching confidence.
The
claim for damages
[67]
The
plaintiff’s claim for damages was based on the defendant’s
alleged breach of contract in selling Crispa Gold to
selected
customers at prices lower than the prevailing Makro price, in so
doing breaching his contract of employment and causing
harm or loss
to the plaintiff. The plaintiff pleaded the following implied or
tacit terms in that contract:
‘
4.3.1
to procure sales of Crispa Gold Sunflower Oil for the benefit of the
plaintiff;
…
4.3.4
to negotiate and agree prices with customers within the limits of his
authority;
4.3.5
to grant customers rebates within the limits of his authority and
according to the standard business practice
of the plaintiff.’
[68]
It
was further pleaded that:
‘
4.4
the defendant represented the plaintiff as its agent in its dealings
with customers, and stood
in the position of confidence in relation
to the plaintiff. As a result he was under a fiduciary obligation to
the plaintiff which
entailed that:
4.4.1
the defendant was obliged to promote and protect the plaintiff’s
best interest and not to work against
the plaintiff’s
interest.’
[69]
In
paragraphs 5 and 6 of its particulars of claim, the plaintiff pleaded
the existence of the Makro pricing benchmark, representing
the most
competitive price at which the plaintiff could achieve its required
margin and below which price other cash and carry
or distributor
customers should, generally, not be charged unless this was justified
by special circumstances. It further pleaded
that the defendant was
obliged in terms of his contract to employ the Makro benchmark ‘
which
meant that generally he was obliged to ensure that the price at which
he sold to other customers should be equal to or higher
than the
price at which products were sold to Makro …’
[70]
All
of these allegations were denied by the defendant or must be taken to
have been so denied. One must turn to the evidence to
establish
whether these allegations have been proven. The content of the
defendant’s responsibilities as pleaded above is
self-evident
and became common cause. The bulk of the evidence regarding the
disputed aspects referred to above comes from the
defendant’s
two managers during his employment, Mr Laurie Milne and Mr Gareth
Thomas.
[71]
A
much disputed aspect was the existence or otherwise of the Makro
benchmark. As set out earlier Mr Thomas confirmed the existence
of
the Makro benchmark which he described as an ‘
unwritten
rule’
.
Mr Milne testified of the importance of Makro to the plaintiff as its
largest cash and carry customer and the transparency of
Makro’s
pricing of Crispa Gold. He confirmed that the plaintiff used the
Makro price as a base plate price to cascade down
from for other
customers. He testified of the very limited circumstances in which,
based on the plaintiff’s practices, he
would expect a customer
to enjoy a better price than that Makro base plate price.
[72]
In
cross-examination Mr Milne was shown the original formulation in the
particulars of claim which referred to the so-called ‘
Makro
rule’
.
His fair concession was to state that describing the practice as a
rule was too strong but he confirmed that this was the practice.
The
only other evidence regarding the Makro rule was that of the
defendant himself. He strongly disputed the existence of the Makro

rule or base plate price. In general his evidence was that there was
virtually no pricing policy, only an infinite series of ‘
deals’
which he concluded with customers as and when he saw fit, allegedly
in the best interests of the plaintiff. This was aptly described
by
plaintiff’s counsel as the ‘
chaos
theory’
of pricing. But the defendant had to admit that in various instances
he had (inadvertently) used or referred to the Makro price
as a
market price indicator, a matter I will return to. He also relied on
the fact that on a regular basis prevailing pricing arrangements

which he arrived at with customers were committed to paper and
circulated to management figures, including Messrs Milne and Thomas.
[73]
The
defendant’s witness, Mr Tebogo Mofolo, initially testified that
there was no such thing as the Makro rule or benchmark
price and that
it did not always pay the lowest price for Crispa Gold. He stated
that the price which Makro received differed from
store to store,
although he appeared to testify that after the defendant left the
plaintiff’s employment, Mr Milne did implement
the Makro price
strategy. In cross-examination, however, Mr Mofolo’s evidence
on these aspects did not stand up to scrutiny.
He conceded that
Makro’s pricing was agreed at a national level and that he
would not know what bulk or settlement discounts
and the like Makro
would receive and therefore he would not know what Makro’s nett
price was. When his estimate of Makro’s
nett price at a certain
time was contrasted with Mr Schulz’s evidence of its average
nett price he quickly backed off his
evidence in this regard.
[74]
As
previously mentioned the defendant denied the existence of any Makro
rule or base plate price. I understood his evidence to be
that
nothing was fixed in his system of pricing. Notwithstanding this
evidence it was pointed out to him that there were instances
where he
himself had used the Makro price as a base plate or benchmark, a
prime example being the anonymous circular urging customers
to
boycott the plaintiff or complain if they were paying more than the
Makro (Massmart) price. It was also put to him that if he
had
breached his obligations to the plaintiff by selling Crispa Gold at
less than the minimum or benchmark price, the best way
to calculate
that would be to use the Makro price. The defendant was unable to
suggest a fairer basis, which in itself is telling.
[75]
Moreover,
the defendant himself put the following proposition to Mr Thomas: ‘
Do
you think Makro would be a good customer to choose sort of what the
general market pricing is out in the market?
’
Elsewhere he testified: ‘
I
was the person using Makro as a peg in the ground; the Makro price is
deemed to be sort of the market price at that day’
.
The defendant was unable to offer any sensible explanation why, if
the Makro price for Crispa Gold on its shelves represented
the market
price at the retail level, then the price at which the plaintiff sold
to Makro should not represent the market price
from a wholesale point
of view. Given his acceptance that the Makro shelf price was a good
indicator of the market price and that
the goals of price setting
were to achieve the necessary profit and price consistency, the
defendant was not really able to counter
the commercial logic of the
Makro benchmark practice. Other reasons that Mr Milne gave for Makro
being the plaintiff’s most
favoured customer in the cash and
carry and distributor sector of the market was because it had offered
the plaintiff much in terms
of promotional activities. It advertised
widely and gave good exposure to the Crispa product. Its orders were
consistent and it
was easy to see what price it was selling at, as
anyone could see its shelf price. Thus Messrs Milne and Thomas gave
consistent
evidence about the Makro benchmark, namely, that it was
not a strict rule but rather a guideline indicating that in the
absence
of special circumstances no other customer should get a more
favourable price for Crispa Gold than the prevailing nett Makro
price.
[76]
Having
regard to the probabilities, the plaintiff’s evidence as to the
Makro base plate price must be preferred. The evidence
of Messrs
Milne and Thomas, neither of whom are currently employed by the
plaintiff, largely coincided on this aspect although
it was by no
means a carbon copy of the other’s evidence. They have no
apparent interest in falsely confirming a practice
which could lead
to a successful damages claim against the defendant. The defendant’s
evidence that the Makro benchmark practice
never existed is not
surprising since it is a
sine
qua non
for the plaintiff’s damages action. What is more, as I have
found, the defendant was not a truthful witness and his mere
say so
that no Makro benchmark price was ever utilised carries very limited
weight. In fact his own evidence, as well as certain
propositions he
put to witnesses, suggest that the Makro price was a benchmark.
Lastly in this regard, the anonymous circular is
perhaps the best
proof that Makro generally, if not invariably, got the best price for
Crispa Gold. On the probabilities the defendant
was the author of the
circular. The timing and content implicates him and issuing such a
circular to the plaintiff’s customers
was in keeping with other
vindictive steps the defendant took against the plaintiff after his
dismissal. Just as importantly, the
pricing practice confirmed by the
evidence of Messrs Milne and Thomas makes commercial sense insofar as
it would contribute to
ensuring that the plaintiff achieved its
profit margins and ensured price stability in the market as opposed
to the defendant’s
‘
chaos
theory’
of pricing. Having regard to these factors, as well as the
defendant’s own frequent and, no doubt, inadvertent references

to the Makro price as indicative of the product’s market value,
both in correspondence and in evidence, I consider that the

plaintiff’s evidence on this aspect must prevail.
[77]
The
next issue to be addressed in respect of the damages claim is whether
the defendant breached his contract by failing to adhere
to the Makro
benchmark pricing policy, by selling Crispa Gold to Saania and
Seafood Botswana at a price lower than the Makro price
as alleged by
the plaintiff, and if so by how much. This was the subject of the
initial mandate given to Mr Schulz in his forensic
investigation. He
gave effect to this by examining the plaintiff’s books of
account in detail in respect of all the sales
invoices for Seafood
Botswana, Saania and Makro. He also extracted all the documents he
could find pertaining to rebates or discounts,
promotion and
advertising and added all of these amounts together. Using these
figures he calculated an average price per drum
of Crispa Gold sold
to these three customers, to arrive at a unit price per drum and was
able to compare the unit price per drum
of the same product sold to
Seafood Botswana, Saania and Makro for each year. He then took the
total number of units sold to Saania
and Seafood Botswana and
multiplied those by the difference between the Makro price and the
prices actually paid by Seafood Botswana
and Saania. That exercise
produced the figure of R9 935 990.01, being the amount the
plaintiff would have received if
sales of Crispa Gold to Seafood
Botswana and Saania had taken place, as they should have, at no less
than the Makro price.
[78]
Mr
Schulz conducted an exhaustive investigation using, wherever
possible, source documentation. He was at pains to tilt any
assumptions
in the accounting exercise in favour of the defendant.
The latter did not raise any meaningful challenge to Mr Schulz’s
evidence,
being content to maintain throughout that he was quite
entitled to sell to any customer at a price lower than the Makro
price.
In this regard his evidence implied that Saania somehow
displayed a commercial acumen which their competitors lacked by
always
purchasing large amounts of stock at the old price and
therefore always paid lower prices than other customers.
[79]
Having
regard to this body of evidence, I find that the plaintiff has
established to my satisfaction that Crispa Gold was sold to
Saania
and Seafood Botswana at a price below the Makro price over the
relevant period to the tune of R9 935 990.01.
[80]
The
next issue is whether the defendant caused this price difference.
Here the evidence is clear. The defendant was the National
Key
Accounts manager for Crispa Gold and all sales representatives
reported to him. He had complete authority to run the day to
day
business in Crispa Gold albeit subject to pricing parameters set by
the financial manager. Mr Thomas testified as follows regarding
the
defendant’s role: ‘
Mr
Lerena basically had the leeway and the day to day running of who
should be what based on his relationships, volume etc’
.
No other managers signed off or approved the deals which the
defendant concluded with customers. Unfortunately, it would seem
that
nobody checked whether he kept within the parameters laid down by the
financial manager. The reason for this was probably
that the
defendant was completely trusted to run his portfolio in the best
interest of the company. Ms Ramocheke gave evidence
that where any
deal rebate or discount was approved by the defendant i.e. bore his
signature, then effect was unquestioningly given
to that. The
evidence was further that no one other than the defendant set and
agreed prices with customers. There was no countervailing
evidence
from the defendant that the prices at which Crispa Gold was sold to
Saania and Seafood Botswana were set by anyone other
than him. In the
result, it could only have been the defendant who caused these two
customers to buy product at prices lower than
the Makro price.
[81]
A
further issue is whether, in selling at a price below the Makro
benchmark, the defendant breached his employment contract. The

defendant was clearly under a general obligation to do his best for
his employer and to conduct the plaintiff’s business
in good
faith and for its benefit. The defendant’s conduct in selling
Crispa Gold to the two customers at less than the Makro
benchmark was
more than a simple failure to comply with a workplace procedure or
practice. In the larger context of this matter,
the reduced prices to
Seafood Botswana and Saania could only have been designed to advance
the defendant’s personal interests,
more particularly, his
profit-making ventures conducted through Fast Track and FDC. Seen in
this light, the defendant was in breach
of his fundamental obligation
of loyalty and good faith which he owed to the plaintiff as his
employer. The defendant was unable
to put any credible evidence
before the Court of a valid business reason to consistently and
extensively under-price the Crispa
Gold which he sold to Saania and
Seafood Botswana. In these circumstances, I consider that the
defendant was in breach of his employment
of contract in so doing.
Seafood
Botswana
[82]
Although
its seems clear that the defendant used Saania to assist him in
purchasing Crispa Gold from the plaintiff at a reduced
cost and then
on-selling it in order to make a profit for himself, the role and
involvement of Seafood Botswana was initially not
so clear. At the
Court’s request the plaintiff’s counsel filed a
supplementary note specifically dealing with its role
and
involvement.
[83]
Firstly,
an analysis of the financial documentation put before the Court shows
that approximately one third (in total R10 419 468)
of all
the Crispa Gold income received by Fast Track emanated from Seafood
Botswana. Over the four year period, Seafood Botswana
obtained a
consistently better price from the plaintiff for Crispa Gold than did
Makro. For example, in the year ending February
2008 its nett price
was R197.61 against Makro’s nett price of R244.68 and in March
to February 2011 the respective nett prices
were R209.06 versus
R245.51.
[84]
Mr
Milne testified that Seafood Botswana was treated as a local company
i.e. on the same footing as South African customers, with
the
consequence that the Makro benchmark applied to it. The defendant
furnished no explanation for his favourable pricing treatment
of
Seafood Botswana or of any special circumstances which justified this
treatment of Seafood Botswana. Mr Milne also testified
that he was
able to restore a normal relationship with Seafood Botswana after the
defendant’s dismissal. This alone indicates
that there was no
legitimate commercial reason for it to have received preferential
treatment from the defendant.
[85]
It
is not known how the defendant took advantage of his reduced pricing
to Seafood Botswana for his own benefit or even whether
he did,
although this seems likely. It is possible he was simply looking
after one of his biggest personal customers. But even
if this was the
case he was doing this for his own benefit and not for the
plaintiff’s.
[86]
In
the result, I am satisfied the damages suffered by the plaintiff
arising from reduced price sales to Seafood Botswana must also
be
brought into account.
[87]
The
next question to be addressed is whether the plaintiff has
established that it would have sold the same quantities of Crispa

Gold to these two or other customers had it been priced at no less
than the Makro price. It is of course not possible to answer
this
question with certainty since it is essentially hypothetical.
However, it was established in the evidence that Crispa Gold
was a
sought after product by reason of its quality and consistency. This
allowed the plaintiff’s management, except where
this was
breached by the defendant, to have a pricing policy which sought to
maintain a 15% pricing premium above competitors.
There was evidence
furthermore that smaller distributors and cash and carry outlets
would likely stock Crispa oil since if they
did not, customers would
go elsewhere to satisfy not only their cooking oil needs but other
purchases. After the defendant’s
departure the plaintiff
restored and maintained its commercial relationship with Seafood
Botswana although not with Saania where
purchases declined
dramatically compared to when the defendant ran their account. Saania
was a distributor, however, and not a
user of Crispa Gold. Whichever
vehicle was used it is clear that any customers who purchased Crispa
Gold from Fast Track or FDC
paid a significantly higher margin than
whatever nett price had been paid by Saania to the plaintiff. That
difference would have
been represented by the margins which Fast
Track, FDC and Saania received for their parts in the scheme of
selling Crispa Gold
purchased at below the commercial (Makro
benchmark) price.
[88]
It
was contended on behalf of the plaintiff that inasmuch as the
products delivered to Saania Distributors ended up being sold to

numerous customers, including Seafood Botswana itself, on the
probabilities these sales would have taken place even if the stock

was priced at the Makro benchmark price. In my view the probabilities
favour this proposition since such customers were, after
all, not
receiving the benefit of the reduced price to Saania but were paying
a higher price thereby inadvertently creating the
margin available
for the defendant and Saania.
[89]
Once
it is accepted that damages have been suffered, and provided the
plaintiff has placed all of the available evidence before
the Court,
the Court will do its best to assess the extent of the damages and
will not lightly determine that no damages have been
proved. See
Aaron’s
Whale Rock Trust v Murray and Robinson Ltd
.
[1]
Where the quantification of pecuniary losses cannot be done exactly
or mathematically, the plaintiff should not be non-suited because
in
the nature of things the damages cannot be computed in exact figures.
See
Esso
Standard SA (Pty) Ltd v Katz
.
[2]
[90]
In
my view the evidence establishes on the probabilities that the sales
made by the defendant through Fast Track and FDC would have
been made
by the plaintiff but for the defendant’s conduct. Ultimately
all the final sales of the product i.e. as opposed
to the sales to
Saania, involved customers who wanted the product and were prepared
to pay for it and did so at a rate that included
a margin for Fast
Track and Saania distributors. The damages are already computed on a
conservative basis, namely, that the stock
would have been sold at
the Makro benchmark price i.e. at the most favourable price which the
plaintiff would ordinarily have sold
its stock to its most favoured
customer in the cash and carry/distributor sector of the market. In
the result, accepting that mathematical
certainty is not possible, I
find that the plaintiff has established that were it not for the
defendant’s conduct the stock
in question would have been sold
anyway but at no less than the Makro price.
[91]
An
award for damages calculated on the basis computed by the plaintiff
in an amount of R9 407 651.05 will place the plaintiff
in
the same position it would have been had the defendant complied with
the provisions of his contract. See in this regard
Mostert
N.O. v Old Mutual Life Assurance Company SA Ltd
.
[3]
The
plaintiff’s claim for disgorgement of profits
[92]
It
is as well to have regard to the general principles applicable where
an employer sues an employee for disgorgement of secret
profits. It
is the duty of an employee when rendering his or her services always
to act exclusively in the interest of the employer.
See
Robinson
v Randfontein Estates Gold Mining and Company Ltd
[4]
where Innes CJ stated as
follows:
‘
Where
one man stands to another in a position of confidence involving a
duty to protect the interests of that other, he is not allowed
to
make a secret profit at the other's expense or place himself in a
position where his interests conflict with his duty. The principle

underlies an extensive field of legal relationship. A guardian to his
ward, a solicitor to his client, an agent to his principal,
afford
examples of persons occupying such a position. As was pointed out in
The
Aberdeen Railway Company v Blaikie Bros
.
… the doctrine is to be found in the civil law … and
must of necessity form part of every civilised system of
jurisprudence.
It prevents an agent from properly entering into any
transaction which would cause his interests and his duty to clash. If
employed
to buy, he cannot sell his own property; if employed to
sell, he cannot buy his own property; nor can he make any profit from
his
agency save the agreed remuneration; all such profit belongs not
to him, but to his principal. There is only one way by which such

transactions can be validated and that is by the free consent of the
principal following upon a full disclosure by the agent.’
[93]
Thus
it is that an employee is not entitled to use his or her employment
relationship with the employer without the employer’s

permission to make a profit or earn commission for his or her own
account. See
Stewart
Wrightson (Pty) Ltd v Thorpe
[5]
and
Phillips
v Fieldstone Africa (Pty) Ltd and Another
.
[6]
In the latter case Heher JA summarised the law relating to a breach
of fiduciary duty and its consequences as follows:
‘
The
rule is a strict one which allows little room for exceptions …
It extends not only to actual conflicts of interest but
also to those
which are a real sensible possibility … The defences open to a
fiduciary who breaches his trust are very limited:
only the free
consent of the principal after full disclosure will suffice. …
Because the fiduciary who acquires for himself
is deemed to have
acquired for the trust, …  once proof of a breach of a
fiduciary duty is adduced it is of no relevance
that (1) the trust
has suffered no loss or damage …; (2) the trust could not
itself have made use of the information, opportunity
etc … or
probably would not have done so …; (3) the trust, although it
could have used the information, opportunity
etc has refused it or
would do so …; (4) there is no privity between the principal
and the party with whom the agent or
servant is employed to contract
business and the money would not have gone into the principal's hands
in the first instance …;
(5) it was no part of the fiduciary's
duty to obtain the benefit for the trust …; or (6) the
fiduciary acted honestly and
reasonably … The duty may extend
beyond the term of the employment ...’
[7]
[94]
In
the context of the duties of directors and officers of companies it
has been held that the rule against the making of secret
profits has
been held to be an inflexible one, its object being to prevent
directors from placing themselves in a position where
they may be
tempted to prefer their own interest to those of their company. In
Transvaal
Cold Storage Company Ltd v Palmer,
[8]
it was held that whenever an agent in the course of or by means of
the agency acquires any profit or benefit without the consent
of the
principal, such profit or benefit is deemed to be received for the
principal’s use, and the amount must be accounted
and paid over
to the principal.
[95]
In
order to succeed in its claim for a disgorgement of profits the
plaintiff must establish that the defendant owed it a fiduciary

obligation; that in breach of that obligation the defendant placed
himself in a position where his duty and his personal interest
were
in conflict and, finally that the defendant made a secret profit out
of corporate opportunities belonging to the plaintiff.
I deal with
these requirements in turn.
[96]
In
its particulars of claim the plaintiff pleaded that the defendant
represented it as its agent in its dealings with customers
and stood
in a position of confidence in relation to it. As a result he was
under a fiduciary obligation to the plaintiff inter
alia to promote
and protect the plaintiff’s best interests, not to place
himself in a position where his personal interests
might conflict
with his duty and the interests of the plaintiff; further that he was
not entitled to profit from the sales of Crispa
Gold (except by way
of his agreed remuneration) and was not entitled to make a secret
profit out of the plaintiff’s corporate
opportunities without
its knowledge and consent. These allegations were all denied by the
defendant in his plea.
[97]
In
Fieldstone,
the Court held that where an employee is sued for the disgorgement of
an alleged secret profit the following approach commended
itself as a
practical way of dealing with such cases:
‘
(1)
the facts and circumstances had to be carefully examined to see
whether in fact a purported agent
and even a confidential agent was
in a fiduciary relationship to his principal;
(2)
once it is established that there is such a relationship, that
relationship must be examined
to see what duties are thereby imposed
on an agent, to see what is the scope and ambit of the duties charged
on him;
(3)
having defined the scope of those duties, one must see whether he has
committed some breach thereof
by placing himself within the scope and
ambit of those duties in a position where his duty and interest may
possibly conflict.
It is only at this stage that any question of
accountability arises; and
(4)
finally, having established
accountability, it only goes so far as to render the agent
accountable
for profits made within the scope and ambit of  his
duty.
’
[9]
[98]
A
primary question is whether the defendant owed a fiduciary obligation
to the plaintiff. In
Fieldstone,
the Court approved a dictum from
Hodgkinson
v Simms
to the following effect:
‘
It
is the nature of the relationship, not the specific category of actor
involved, that gives rise to the fiduciary duty. The categories
of
fiduciary, like those of negligence, should not be considered
closed.’
[10]
[99]
The
Court also approved a dictum to the effect that the relationship in
which a fiduciary obligation has been imposed are marked
by three
characteristics:
‘
(1)
a scope for the exercise of some discretion or power;
(2) that power or
discretion can be used unilaterally so as to effect the beneficiary's
legal or practical interests; and
(3)
a particular vulnerability to the exercise of that discretion or
power.’
[11]
[100]
The
Court in
Fieldstone
added that such an analysis can be implied in the employment context
as easily as in relationships giving rise to more obvious
duties of
trust.
[12]
By the time of
argument, the evidence on these aspects was largely common cause. The
defendant admitted in the pleadings that he
acted as the plaintiff’s
agent in its dealings with customers. The evidence led from various
of the plaintiff’s witnesses,
not least Messrs Thomas and
Milne, established that the defendant was responsible for all aspects
of the conclusion of agreements
with customers in relation to Crispa
Gold and was entitled to do so without reverting to management.
Within a short time of entering
into the plaintiff’s employment
the defendant was trusted to run the Crispa Gold portfolio without
close oversight by management.
He had the power to unilaterally
conclude agreements with customers at certain prices and also to
approve payments of claims by
customers for discounts, rebates,
allowances and the like. Although, as this Court has found, the
defendant’s authority was
subject to compliance with the Makro
benchmark price (save in exceptional circumstances), his power to
agree different and lower
prices with customers was, in practice,
unfettered. On the other hand it is quite clear that the defendant
was not employed by
the plaintiff to enable him to set up a secret
oil trading or distribution business for his own benefit. The fact
that as soon
as the plaintiff gained an inkling that the defendant
was running his own business within the plaintiff’s business it
commenced
an investigation, suspended him and ultimately dismissed
him, alone testifies to this. As plaintiff’s counsel submitted,
and as was fully borne out by the evidence, the plaintiff relaxed its
vigilance and supervision because it trusted the defendant
to act in
its best interest.
[101]
The
circumstances of the defendant’s position were also marked by
the three characteristics identified by Wilson J in
Frame
v Smith
and endorsed by Heher J in
Fieldstone
.
The defendant exercised wide discretionary power in regard to the
pricing of Crispa Gold for customers, he was able to use that
power
of discretion unilaterally to effect the legal or practical interests
of himself, the customer and the plaintiff and his
wide power left
the plaintiff particularly vulnerable to its exercise when not used
by the defendant in its best interests. In
the result, I find that
the defendant clearly did owe a fiduciary duty to the plaintiff as
alleged in the particulars of claim.
[102]
The
next issue is whether the defendant did in fact make a secret profit
out of the plaintiff’s corporate opportunities.
[103]
Details
of the scheme utilised by the defendant to make a secret profit
emerged as through distorted and dark glass, during the
course of the
evidence. What was striking was how little information was provided
by the defendant on the secret business he ran
selling Crispa Gold
through Fast Track and FDC. The result was that the plaintiff had to
try and piece together a picture using
no more than the bank
statements over the relevant period for the defendant’s two
companies, a number of incriminating emails
found on the defendant’s
computer after he left the plaintiff’s employment and sundry
pieces of information either
winkled out of the defendant in evidence
or which emerged from the evidence of the plaintiff’s
witnesses.
[104]
Of
primary importance is what emerges from the bank statements which, in
essence, is that Fast Track and FDC received deposits totalling

R36 669 308.40, all of that being made up of payments by
customers for the purchase of Crispa Gold sunflower oil. The
great
bulk of this income was received into Fast Track whilst the balance,
some R3.5 million, was received into FDC. On the most
favourable
interpretation of the evidence, namely, the bank accounts and the
defendant’s belated and inadequate explanation
thereof, some
R3 291 556.24 can presently be attributed to the costs of
making the sales of Crispa oil, i.e. in order
to generate the income
in question. This amount reflects payments to Saania, to the
plaintiff directly, payments back to Crispa
customers, salaries to
employees of Fast Track or FDC and rental for the Edenvale office
that these entities used. Out of the total
Crispa cost of sales, a
total of R2 746 802.25 was incurred in FDC and R630 906.97
in Fast Track. This leaves an
amount of R33 291 599.24
which is the maximum amount of the claim the plaintiff has against
the defendant for disgorgement
of secret profits. A large component
of that amount is represented by ‘
unknown
cheques’
in the amount of R26 558 556-97 i.e. cheque payments made
by either Fast Track or FDC to unknown beneficiaries. Although
these
could be payments in respect of possible further Crispa Gold expenses
e.g. payments to Saania or Seafood Botswana for Crispa
Gold stock
which these customers purchased from the plaintiff but which Fast
Track or FDC on-sold to customers, they could equally
be payments to
other accounts held by the defendant or to other beneficiaries of
his. The plaintiff’s forensic investigator
was unable to
identify any of these sums as payments to the plaintiff in which
event they would accrue to the cost of sales and
reduce the
plaintiff’s claim. The defendant professed no knowledge as to
whom these payments were made and, accordingly,
in the absence of
proof that these constituted part of the Crispa costs of sales, they
must be taken as secret profits which the
defendant must disgorge.
The balance of the total nett Crispa Gold income, R6 733 042.27
comprises what the plaintiff
refers to as its minimum proved
disgorgement claim and represents the positive balance remaining
after Crispa Gold expenses and
possible Crispa Gold expenses (‘
the
unknown cheques’
)
are deducted from the total Crispa Gold income. According to the
plaintiff that amount, R6 733 042.27 is, by definition,
a
secret profit made out of Crispa Gold sales.
[105]
Against
this background the first issue is whether the defendant in fact made
a secret profit out of the plaintiff’s corporate
opportunities.
As was correctly observed by the plaintiff the evidence before the
Court revealed that the defendant’s activities
in selling
Crispa Gold through his two companies took a number of different
forms. No single methodology was used by him but that
fact is not
material to the plaintiff’s claim. What evidence there was
indicates that the primary method employed by the
defendant when
using Fast Track was to ensure that large quantities of Crispa Gold
were sold by the plaintiff to Saania at heavily
discounted prices.
The plaintiff’s witness, Ms Ramocheke testified that Saania
received about three full truckloads of the
product per week at
prices that were lower than any other customer. The defendant’s
explanation was that Saania placed large
orders for stock at the old
prices before price increases. However, this evidence was not
substantiated by that of the plaintiff’s
witnesses and runs
strongly against the probabilities. There would be no logical reason
why one comparatively unimportant customer
would be allowed to
regularly make huge orders of stock at the old price thereby
benefitting at the expense of all other customers,
including Makro,
who would also want to place large orders at the old price and have
them delivered to them well after the new
price had come into effect.
[106]
Mr
Milne’s evidence was that if orders for stock at the old price
threatened to get out of hand then what remained of the
old stock
would be allocated between customers to ensure some equality of
treatment and to avoid customers becoming disgruntled.
This makes
complete sense. In any event this evidence from the defendant to the
contrary was a mere assertion, in no way backed
up by detailed
evidence showing large orders being placed at old prices. The only
plausible explanation for Saania receiving a
consistently lower price
in large volumes is that the defendant deliberately granted it this
favourable treatment but for his own
private purposes. This in turn
is borne out by the fact that the defendant used the stocks of cheap
Crispa Gold in the warehouse
at Saania Distributors to carry out
irregular transactions, some of which were highlighted by the
plaintiff. One notable such transaction
was in May 2011 when the
plaintiff had already delivered an invoice for 432 drums of Crispa
Gold to Global in East London. On 11
May 2011, the defendant
instructed the plaintiff’s staff to credit Global and debit
Saania for the amount invoiced. The effect
thereof was that the
plaintiff would no longer regard Global as its creditor but would
look to Saania for payment of the invoice.
Fast Track would then
invoice Global at a price lower than the price initially invoiced by
the plaintiff which amount was paid
directly by Global to Fast Track.
On the probabilities the debit owing by Saania would have been
reduced by the defendant through
the granting of rebates and
allowances to Saania. In another example, the defendant put a similar
arrangement into place for IJ
Oil Traders and made the deal more
attractive for it by giving it 173 drums of Crispa Gold at no
charge.
[13]
[107]
The
defendant’s own evidence was that he sat with ‘
Yunus’
of Saania Distributors (or the latter’s assistant) once a month
and agreed discounts, rebates and allowances for the credit
of
Saania. It was thus in his power to reduce the amount that would
ultimately be paid by Saania to the plaintiff. In other words,
by
moving debts from certain customers of the plaintiff to Saania
Distributors, the defendant placed himself in a position where
it was
easy for him to reduce the ultimate amount paid over to the
plaintiff. He hid, and then reduced the debt in Saania’s

account and took the benefit of the customers payment for his own
companies. It is likely that Saania must have gained some real

benefit from concluding these transactions with the defendant,
perhaps in the form of a sharing of the profits, but no details
of
this emerged and were certainly not disclosed by the defendant. He
maintained throughout that these were simply normal business
dealings
between himself, representing the plaintiff, and Saania. Of course
this does not explain why, after defendant left the
plaintiff’s
employment, all business with Saania very soon dried up.
[108]
As
far as Seafood Botswana is concerned, it purchased extensively
through Saania but also directly from the plaintiff. Mr Schulz’s

evidence showed that even in the direct transactions between the
plaintiff and Seafood Botswana, the defendant agreed on reduced

prices for Crispa Gold i.e. below the Makro benchmark price. The only
plausible explanation why the defendant did this was that
he was
favouring Seafood Botswana since it was a lucrative source of income
to Fast Track, via Saania Distributors. Most of these
transactions
were effected using Fast Track, a company completely owned and
controlled by the defendant.
[109]
A
different system appears to have applied to FDC which, on the face of
it, was nominally owned by Mr Samuel Kgatla. He does not
appear to
have been the beneficial owner, however, as is apparent from the fact
that on the defendant’s own evidence it was
he, the defendant,
who conceived the idea of incorporating FDC, arranged the
incorporation and chose the name. The only product
ever sold by this
company was Crispa Gold. According to Ms Wright-Ingle, she was
employed by the defendant and he was the only
person who ever gave
her instructions in relation to FDC business. At the beginning of her
employment he came into the office in
Edenvale every day and
thereafter once or twice a week. She regarded Mr Kgatla as no more
than the driver and not the type of person
who could have run the
company. He certainly never gave her any instructions and as the sole
member he earned a paltry salary.
It was the defendant who drafted
and set up the so-called buying group described in a letter to one of
their customers and which
expounded the virtues of belonging to the
group. Although FDC had an account with the plaintiff, none of the
plaintiff’s
other employees knew, until the defendant was
suspended, that it was his business or that he was involved with it.
Before this
came out and when the plaintiff sought financial
statements from the FDC because of its increased purchases, the
defendant changed
its method of business with the plaintiff so as to
avoid having to meet this requirement. It is thus abundantly clear
that FDC
was controlled and beneficially owned by the defendant and
that Mr Kgatla was largely a front for the defendant.
[110]
There
was no shortage of evidence that the defendant steered the
plaintiff’s customers towards FDC. He told various customers,

including Stefan Benade, Illovo and General Supply, that they were
either not allowed to buy directly from the plaintiff or that
they
should order or purchase from FDC. In doing so he more often than not
did so on the basis of falsehoods regarding the minimum
requirements
to do business with the plaintiff. All the members of the FDC buying
group are customers who could and should have
been purchasing
directly from the plaintiff.
[14]
In direct dealings between FDC and the plaintiff the defendant could
control the amount paid by FDC to the plaintiff through rebates
and
allowances which he could grant, such as bogus new store opening
allowances, as he in fact did. The incorporation of FDC appears
to
have been arranged so that the defendant could do business with the
plaintiff secretly but ‘
in
plain sight’
,
without the necessity of having to use Saania (and possibly to avoid
sharing his secret profits with it) as he had previously
done with
Fast Track. The defendant’s use of both of his companies
resulted in the plaintiff’s customers making payments
for
Crispa Gold into bank accounts controlled by the defendant and with
the plaintiff having no knowledge of the defendant’s

involvement with Fast Track and FDC.
[111]
As
discussed earlier the only defence open to a fiduciary who has
breached his trust is the free consent of the principal after
full
disclosure is made. A fiduciary who acquires for himself is deemed to
have acquired for the principal and therefore upon proof
of a breach
it is not relevant if the principal has suffered no loss or damage or
could not itself have made use of the corporate
opportunity or might
not have done so. In
Da
Silva and Others v CH Chemicals (Pty) Ltd,
[15]
Scott
JA stated as follows:
‘
But
the opportunity in question must be one which can properly be
categorised as a
“
corporate
opportunity”. While any attempt at an all-embracing definition
is likely to prove a fruitless task, a corporate
opportunity has been
variously described as one which the company was “actively
pursuing” …; or one which can
be said to fall within
“the company's existing or prospective business activities”
…; or which “related
to the operations of the company
within the scope of its business” …; or which falls
within its “line of business”….’
[citations
omitted]
[112]
In
the present matter, no difficulty arises in determining whether the
opportunities enjoyed by the defendant were ‘
corporate
opportunities’
for the purposes of a disgorgement claim. The opportunities which the
defendant used were to sell the plaintiff’s Crispa
Gold product
to its existing customers or, in a few cases, to new customers who
would naturally have formed part of the plaintiff’s
target
market because they wished to buy Crispa Gold. These opportunities
clearly fell within the plaintiff’s existing and
prospective
business activities. It follows from this that through his sales of
Crispa Gold using Fast Track and FDC, the defendant
made a secret
profit out of corporate opportunities belonging to the plaintiff, in
breach of his fiduciary duties to his employer.
The
extent of the secret profit
[113]
It
was initially contended on behalf of the plaintiff that it was
entitled to judgment for all the income received by the defendant

through his two companies in respect of sales of Crispa Gold,
irrespective of what expenses he may have incurred in generating
that
income. It was later contended that the only credit which the
plaintiff contended the defendant should enjoy would be in respect
of
any amounts proved to have been paid to the plaintiff itself. But if
this concession is made, as I believe it must, then the
defendant
must also be given credit for amounts which have been paid to the
plaintiff by or through a third party for Crispa Gold
stock. In the
present case this would mean that if the defendant was trading in
stock which he acquired from Saania, which had
originally purchased
it from the plaintiff, the monies paid by Saania to the plaintiff
will have to be brought into account i.e.
deducted. If this was not
the case the plaintiff would be claiming double compensation, or a
windfall, which I do not consider
the disgorgement remedy to intend
to confer.
[114]
Initially
the plaintiff submitted that any other payments made by the defendant
in the course of running his business are irrelevant
since, if I
understood the argument correctly, taking into account other expenses
would be to call for an analysis of how profitably
the wrongdoer
conducted his illicit business.
[115]
Be
that as it may, by the time of final argument the plaintiff had
modified its stance so as to seek an award for no more than the

income received by the defendant in respect of the Crispa Gold sales
less the cost of generating those sales also referred to as
‘
Crispa
cost of sales’
.
These amounts which could be identified totalled R3 377 709.22
and comprised mainly payments to Saania, to the plaintiff
and
salaries and rental in respect of Fast Track’s and FDC’s
employees.
[116]
Coming
back to the question of the extent of the secret profit made by the
defendant, the difficulty arises with the bulk of the
payments made
by Fast Track and FDC, an amount of R26 558 556.97, to
unknown beneficiaries. In the nature of things the
plaintiff could
shed no light on the identity of the parties to whom these cheque
payments were made, there being no description
in the bank statements
which the plaintiff had acquired under subpoena from the defendant’s
bank. What was surprising was
that the defendant claimed that he was
not able to shed any light on this question either, beyond stating
that part thereof had
been paid to Saania. The result is that in the
final drafts of the two orders which the plaintiff put up, in the
alternative, for
consideration by the Court it sought, under the
disgorgement claim, judgment against the defendant for some R33
million odd ‘
in
respect of a disgorgement of profits made by him in respect of the
sales of Crispa Gold’
.
In its alternative formulation it sought under this head, judgment in
the amount of R6.7 million being the minimum proved disgorgement

amount, and a rule
nisi
in respect of the balance of the R27 million odd, with the order
making provision that the latter sum could be reduced, prior to
the
return date, by any amount the defendant could show and prove by
production of supporting vouchers or other acceptable evidence
to
have been amounts paid to Saania Distributors for the purchase of
Crispa Gold. This formulation was based on evidence by the
defendant
that some part of the R27 million odd was in fact paid to Saania.
[117]
In
the first place, however, the plaintiff sought judgment in the
greater sum of R33 million on an unqualified basis, on the

grounds that the defendant had been offered every opportunity to put
evidence before the Court concerning the nature of the unknown

payments or the identity of those beneficiaries and should be
afforded no further opportunity to do so.
[118]
At
a late stage in argument the defendant provided a schedule to the
Court in which he made the argument that using ‘
reverse
engineering’
of the plaintiff’s turnover and profit margins for Crispa Gold,
it would have been impossible for him to have made secret
profits
over the four year period in the order of R 33 million.
[119]
The
schedule is itself confusing. In it the defendant’s
calculations are based on Fast Track dealing in 511 tons of Crisp

Gold per year i.e. nearly 28 000 drums per year. It is not clear
whether this was a factual admission or a hypothesis. This and
other
matters requiring clarification could not be addressed by evidence
and cross-examination because this thesis was only raised
by the
defendant in argument after he effectively had two opportunities to
testify but did not raise this aspect of his case. The
schedule also
makes use of a table which was barely touched on in evidence as a
result of which its authorship and accuracy were
untested.
[16]
It appears, furthermore, to be a budget document reflecting annual
volumes of Crispa Gold production or sales. This makes it an
unstable
foundation for the further calculations which the defendant makes in
his argument. Furthermore, the defendant’s
calculations appear
to be founded upon the assumption that, at worst, he must only
disgorge ‘
pure
profit’
i.e. profits he made which the plaintiff did not make. This is to
misconstrue the remedy which does not require that the claimant
would
have earned the same profits but for the defendant’s activities
nor that only ‘
pure
profit’
must be disgorged. Flowing from the above it is also a misconception
to compare (as the defendant sought to do) the plaintiff’s

envisaged profit margin as a large scale manufacturer to that of a
small distributor. There was also no basis for a further assumption

made by the defendant in his calculations, namely, that Fast Track
sold at the same price as the plaintiff’s desired selling

price.
[120]
As
regards the general thrust of the defendant’s argument
viz
that it was unlikely if not impossible that he could have made a
secret profit of approximately R33 million over four years, it
is
worth noting that a secret profit of approximately R9 million per
year (excluding costs of sales) is relatively insignificant
when
compared to the plaintiff’s annual revenue from Crispa Gold
which, according to the defendant’s figures, was in
the region
of R860 million per year.
[121]
There
are other questionable assumptions in the defendant’s argument
based on his schedule and the budget document but it
is not necessary
to detail them. It suffices to state that had the schedule and its
underlying thesis been ventilated by the defendant
in his evidence,
it could have been tested and assessed. Having failed to do this,
limited, if any, weight can be given to the
argument especially given
the uncontroverted evidence of how much Crispa Gold income flowed
into the bank accounts of the defendant’s
companies but remains
unaccounted for.
[122]
As
previously stated by the end of the defendant’s second round of
testimony it was clear that the only other possible Crispa
Gold
expenses might be found in the unknown cheques. Coming back to the
‘
unknown
cheques’
the defendant testified that none of the ‘
unknown
cheques’
were paid to the plaintiff but some of them had been paid to Saania
but he could not (or would not) give any further detail.
[123]
The
question thus arises whether the plaintiff is entitled to judgment
for its minimum, proved disgorgement claim (R6 733 072.27)

plus a rule
nisi
for the balance pending further steps in the accounting and
debatement process, or for the main relief sought by the plaintiff,

namely, final judgment in the amount of R33 291 599.24 i.e.
its minimum proved disgorgement claim plus the full amount
of the
‘
unknown
cheques’
.
[124]
The
plaintiff’s rationale for seeking final relief in this form was
that in the circumstances of the present matter, the onus
of proving
any (further) expenses reasonably incurred by the defendant in
acquiring his secret profit from sales of Crispa Gold
lay upon him,
and he had failed to discharge this onus. Although there appears to
be no direct authority on this point, this analysis
of the onus
appears correct. Having regard to the nature of the disgorgement
remedy, the principal is entitled to disgorgement
of the secret
profit or benefit obtained by the agent whilst the latter is entitled
to be paid his reasonable expenses upon disgorgement
of his secret
profit or benefit. In order to render the disgorgement remedy
effective, and in accordance with established procedural
principles
relating to onus (for one – he who asserts must prove), the
onus of proving such expenses must rest with the agent
(in this case
the defendant).
[125]
The
defendant had ample opportunity during the trial to prove such
expenses and failed to do so. After he completed his evidence
he was
furnished a further opportunity (and a three week postponement) to
deal in detail with the content of the bank statements
relating to
Fast Track and FDC, most notably the unknown cheques. He made use of
this opportunity but ultimately put very little
further information
before the Court. In the result the trial has already seen a full
debatement of account albeit in circumstances
where the defendant has
been unable or unwilling to render an account of his secret profits.
The result has been that the plaintiff
had to do all the running in
this regard. Similarly there has been a full debatement of the
defendant’s expenses incurred
in producing the secret profits.
Here again the defendant put very little information before the Court
and has, to a large extent,
merely responded to information put
before the Court by the plaintiff. Nor is there any suggestion from
the defendant that given
a further opportunity he will be able to
produce any proof of such further expenses.
[126]
For
these reasons I consider that no good purpose will be served by
making only a provisional order at this stage of the proceedings.
In
order to provide for the situation that the defendant may nonetheless
see fit to prove such further expenses I propose to word
the order to
take account of that possibility.
[127]
There
will also be an order that the defendant is liable for the payment of
damages in the amount of R9.407 million, being the plaintiff’s

claim for damages arising out of the sale of Crispa Gold to Saania
Distributors and Seafood Botswana at a price less than the Makro

benchmark. That judgment will be concurrent with the judgment granted
in respect of the disgorgement claim, the rationale being
that the
plaintiff is not entitled to recover twice in respect of the same
underlying transactions.
Costs
[128]
It
follows that the plaintiff is entitled to the costs of the trial. The
plaintiff asked for costs on the attorney client scale.
Given the
secret and unlawful nature of the scheme which the defendant ran for
four years at the expense of his employer, such
an order is
appropriate. It sought also an order that all of the witnesses whom
it called be declared essential witnesses, presumably
with a view to
being reimbursed for their travel and accommodation. These witnesses
had to be brought from Johannesburg to testify.
Again, I see no
reason to deny the plaintiff these costs. Finally, it sought an order
for the costs of transcribing the record
of the evidence presented as
well as the costs of audio visual equipment used in court when Mr
Schulz’s financial evidence
was presented. This equipment
greatly facilitated the presentation of that important body of
evidence and no doubt considerably
shortened his evidence. I propose
to allow these latter costs but not the costs of the transcription
which was put to only limited
use in the proceedings.
[129]
Finally,
an order was sought to cover the travel and subsistence costs of the
plaintiff’s legal representatives in relation
to their
attendance at trial. Out of caution the defendant was sued in the
Court of the district where he was residing at the time
of issue of
summons. No objection to this step was received from the defendant
nor, I presume, was there any suggestion that the
matter be
transferred to a Gauteng Court. However, the plaintiff and its
witnesses were all based in Gauteng. In these circumstances
it was
not unreasonable that the plaintiff instructed attorneys and counsel
practising in Gauteng. In the result I will accede
to such an
order.
[130]
For
all these reasons there will be judgment for the plaintiff in the
following terms:
1.
Judgment
is granted against the defendant for payment of damages to the
plaintiff of R9 407 651.05 together with interest
thereon
at 15.5% per annum from date of demand, being 30 November 2012, to
date of final payment;
2.
Judgment
is granted against the defendant for payment of R33 291 599.24
together with interest thereon at 15.5% per annum
from date of
demand, being 30 November 2012, to date of final payment, in respect
of a disgorgement of profits made by him in respect
of Crispa Gold
Sunflower Oil, less any amount the defendant can (within a period of
three months from date hereof) show and prove
by production of
supporting vouchers to have been amounts paid in making such profits
(other than those already taken into account).
In this regard the
parties are given leave to approach this Court for directions in the
event that disputes arise in such process.
3.
The
order granted in 1 above is concurrent with the order granted in 2
above, in that upon payment of the plaintiff’s damages,
the
defendant shall be entitled to a credit in respect of his
disgorgement of secret profits.
4.
The
defendant is ordered to pay the plaintiff’s costs of suit on
the scale between attorney and client.
4.1
The following trial costs and witnesses who testified
for the plaintiff are declared to have been essential costs
incurred
in the trial and essential witnesses, and it is directed that the
plaintiff shall be entitled to recover these costs and
the witnesses’
travelling and subsistence costs in relation to their attendance at
the trial:
Witnesses
1.
Mr
Christiaan Schulz
2.
Mr
Gareth Thomas
3.
Ms
Gemma Wright-Ingle
4.
Ms
Kate Ramocheke
5.
Mr
Laurie Milne
6.
Mr
Thabo Mosomane
Audio
Visual Equipment
CCPP
Cape Town - (costs of audio visual equipment used in court when
evidence presented).
4.2
It is directed that the plaintiff shall be entitled to recover its
legal representatives’ travelling
and subsistence costs in
relation to their attendance at the trial.
____________________
BOZALEK
J
For
the Plaintiff

:           Adv A
Lamplough
As
Instructed by

:           ENS
For
the Defendant

:           In Person
[1]
1992 (1) SA
652
(C) at 655.
[2]
1981 (1) SA
964 (A).
[3]
2001 (4) SA
159 (SCA).
[4]
1921 AD 168
at 177-8.
[5]
1977 (2) SA
943 (A).
[6]
2004 (3) SA
465 (SCA).
[7]
Ibid
at para 31.
[8]
1904 TS 4.
[9]
Above at para
32, quoting
Boardman
v Phipps
[1966]
3 All ER 721 (HL).
[10]
Above at para
34 (482B), quoting
Hodgkinson
v Simms
[1994] 3 SCR 377 (SCC).
[11]
Above at para
34 (482C) with reference to
Frame
v Smith
[1987] 2 SCR 99
(SCC) at 136.
[12]
Ibid
.
[13]
See pages 149 and 150 of the
bundle.
[14]
See
page
108 of the bundle.
[15]
[2008] ZASCA 110
;
2008 (6) SA
620
(SCA) at page 627, para 19.
[16]
See page 1407 of the trial bundle.