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Datacentrix loses court bid

A court ruling has gone against Datacentrix after it tried to enforce a restraint of trade.
A court ruling has gone against Datacentrix after it tried to enforce a restraint of trade.

Datacentrix has unsuccessfully tried to stop a former staff member from joining the First Technology Group, after a judge found it did not live up to its side of the bargain.

The listed company approached the Port Elizabeth High Court to stop Michael Duffy from joining First Technology until the end of a 15-month restraint of trade period, which was set to kick in at the end of February.

Datacentrix also wanted to stop Duffy from joining "any other entity that trades in competition with it" in the Port Elizabeth area during the restraint period, and stop Duffy from sharing trade secrets or other confidential information with First Technology.

Duffy was hired last March, and resigned in January, before moving to First Technology, which Datacentrix says competes against it.

The judge ruled against the listed company, because it had not honoured its side of the bargain to provide Duffy with 5 000 shares in its trust. Datacentrix, which was trading at 409c yesterday, is worth R840 million on the market.

The parties had entered into a restraint of trade and confidentiality agreement, but Duffy's lawyer argued it was not binding, because Datacentrix never delivered 5 000 shares in the Datacentrix Holdings Trust.

Datacentrix's lawyers unsuccessfully argued that the responsibility to allocate the stock lay with the trust, so this could not be raised as a defence.

However, the judge said the argument was "untenable" and found the restraint could not be enforced if Datacentrix did not fulfil its part. The appeal was dismissed with costs.

Datacentrix CEO Ahmed Mahomed contends the shares were transferred to Duffy, and the company's failure to prove this during the trial was probably due to a miscommunication. He says the company is looking at its options in terms of an appeal and may do so if it has grounds.

Mahomed adds Datacentrix's restraints of trade have been successfully enforced in other cases, and are fair and valid.

Datacentrix turns over around R2 billion a year and made a R77 million profit in its last financial year. It expects 2014's results, to be published on Tuesday, to show basic earnings per share and headline earnings per share between 10% and 20% higher than last year.

It provides IT solutions to SA's corporate and public sectors, which includes infrastructure and related IT services, as well as business solutions and outsourcing. It has three units: Infrastructure, Managed Services and Business Solutions.

First Technology supplies and implements hardware and software solutions "that are complemented by the provision of associated support services and solutions".

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