IN THE HIGH COURT OF THE REPUBLIC OF BOTSWANA

HELD AT LOBATSE

CVHLB-001021-08

In the matter between:

FIRST SUN ALLIANCE INSURANCE BROKERS (PTY) LTD PLAINTIFF

and

REMBRANDT CHENAYI JANGANO DEFENDANT

Mr Attorney D.C. Madembo for the Plaintiff

Mr Attorney M.R. Solomon for the Defendant

JUDGMENT

KIRBY J:

1. In this case the plaintiff First Sun Alliance Insurance Brokers (Pty) Ltd

(“First Sun”), an insurance broking company, sues its former Principal

Officer and employee (the defendant) for damages following his acts of

terminating their contract of employment and setting up his own

competing company, Mercantile and General Insurance Services (Pty) Ltd

(“Mercantile and General”). The defendant counterclaims for damages

arising from that termination and also from his alleged defamation by the

plaintiff.
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2. The case was registered on 18th June 2008 and has been fought on the

basis of the pleadings filed, as supplemented by facts formally admitted

by both parties. The parties also agreed, and it was so ordered that all

documentary exhibits in the agreed bundle could be referred to and relied

upon without formal production.

3. The plaintiff’s case, as set out in its declaration is that:

(1) The plaintiff employed the defendant under a written contract for a
fixed period of 3 years, from 1st January 2007 as its Assistant
General Manager and Principal Officer, a position requiring utmost
trust and good faith.

(2) On 22nd February 2008, the defendant wrongfully terminated his

employment.

(3) Whilst still in the plaintiff’s employment, the defendant breached

his contract by engaging in dishonest practices, and in particular –

(a) He started his own company to which he diverted the

plaintiff’s clients.

(b) He fraudulently diverted Renewal Business totaling P95,751-

61 (Claim A).

(c) He “misrepresented” (sic) Renewal Business on the plaintiff’s

books totaling P52,806-00 causing the plaintiff’s clients to
move to other agencies (Claim B).

(d) He diverted “pending quotations” (sic) to the value of

P48,807-05 from the plaintiff to his own agency (Claim C).

(4) In addition the plaintiff claims damages of P100,000 suffered as a

result of having to recruit and train a replacement for the
defendant (Claim D).
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4. In his plea the defendant denies that his termination of the contract was

wrongful, averring that he was entitled to terminate on the giving of one

month’s notice, which he duly tendered. He denies any dishonest

practices, and avers that in the absence of any restraint of trade he was

fully entitled after leaving to compete with the plaintiff. He denies any

fraudulent diversion of business, or the making of any misrepresentations

concerning the plaintiff, and further denies that any damages at all had

been suffered as a result of his termination of his employment contract.

5. On the contrary the defendant counterclaimes for P10,000 (Counterclaim

A) in notice pay, on the grounds that he was not permitted to serve his

notice, for P10,000 (Counterclaim B) in unpaid salary, and for P450,000

(Counterclaim C) in damages occasioned, he said, by the (plaintiff):

“maliciously, unlawfully, wrongfully and unjustifiably writing letters

to the entire insurance industry, (defendant’s) potential clients and
government departments with the intention to disadvantage,
disqualify, defame, cause (defendant) to lose potential clients and
business, ruin defendant’s reputation and financial standing,
alleg(ing) and imply(ing) inter alia fraud, dishonesty or dishonest
practices, and untrustworthiness, against the person of the
(defendant) and his business.”

He pleads further that:

“As a result of the plaintiff’s malicious, unlawful, wrongful,

unjustifiable false and defamatory utterances, the (defendant’s)
image and reputation as well as professional and financial standing
have been tarnished and additionally (the defendant) has lost
business when potential clients decided not to conclude business
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deals (with him) in the light of the plaintiff’s written utterances and
allegations.”

6. These pleadings contain a confusion of misplacements of the titles

‘plaintiff’ and ‘defendant’, and I have, in their reproduction above, stuck to

their original appellations in the main claim. They also do not set out the

actual words complained of, as is generally required in suits for

defamation or infurious falsehood. However the plaintiff has raised no

exception, and has understood them well enough to plead. It denies

instructing the defendant to leave without serving notice, it denies failing

to pay a month’s wages, admitting only, (and mistakenly as it

subsequently turned out) an outstanding sum owed of P126-15, and it

denies knowledge of the letter(s) referred to or that it/they defamed the

defendant in any way.

7. The signed pre-trial draft order, agreed between the parties at a well-

represented meeting clarifies the issue between the parties on the

defamation claim. Under the heading “RELEVANT FACTS NOT IN

DISPUTE”, the parties agree that:

“The plaintiff authored the letter(s) complained of and sent them to

all the intended recipients.”

The third issue of law identified as needing to be resolved at trial is:

“Whether the contents of the letter complained of are defamatory

of the defendant? If so, the quantum of damages.”
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8. It is common cause that the letter complained of is that from the plaintiff

to the General Manager, Botswana Insurance Company, dated 1 st April

2008, signed by P.S. Chitate as Managing Director, and marked as having

been copied to “All Insurers, Registrar of Insurance. Commissioner of

Labour”

9. I shall return to deal with the contents of that letter when Counterclaim

(C) is considered. To a lesser extent the letter dated 18 th April addressed

to DINARE BUILDING AND REFUSE is also impugned.

10. It is not entirely clear on the pleadings whether the plaintiff’s claims, or

some of these, are based solely on its written contract of employment

with the defendant, or also on the delict of injurious falsehood. In his

written submissions, counsel for the plaintiff makes it plain that the action

is based on breach of contract alone. There is no allegation of common

wrong-doing with any other person or of vicarious liability nor is any claim

raised against the competing company, Mercantile and General. The

claims are made personally against the defendant and against him alone.

11. Again, while the pleadings appear to rely upon acts and omissions of the

defendant which he committed “whilst still in the plaintiff’s employment”

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this too is not certain on a close reading and I have allowed the plaintiff to

argue that subsequent conduct of the defendant also amounted to an

actionable breach of contract. The strength or weakness of this argument

will be considered below.

THE LAW

BREACH OF FIDUCIARY DUTY

12. Each of Claims A, B and C is based upon the breach by the defendant of

his fiduciary duty, both during and after termination of his employment by

the plaintiff in a senior position of trust. Allegations of fraud and injurious

falsehood serve only, as counsel’s arguments make clear, to deepen the

breach and to enhance the damages suffered, rather than constituting

separate causes of action.

13. That an employee owes to his master a duty of fidelity is beyond question.

As was held in PREMIER MEDICAL AND INDUSTRIAL EQUIPMENT

(PTY) LTD vs WINKLER AND ANOTHER 1971 (3) SA 866 T.

“During the currency of his contract of employment the servant

owes a fiduciary duty to his master which involves an obligation not
to work against his master’s interests. It seems to be a self-
evident proposition, which applies even though there is not an
express term in the contract to that effect.”

But what is the obligation of a servant once he has left his master’s

employ?
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14. The earliest cases dealing with this issue were to the effect that the

fiduciary duty ended with the employment, and that preparations for a

competing business were not precluded even during the employment

contract. See ROBB vs GREEN (1895) 2QB 1 at 10 – 11 (confirmed

by the House of Lords, (1895 – 9) All ER 1053 CA). There it was held

that:

“The obligation to protect his master’s interests lasts until the last
hour.”

Hawkins J. went on as follows:

“In what I have said I do not intend to convey that while the
contract of service exists a person intending to enter into business
may not do anything by way of preparation, provided only that he
does not when serving his master, fraudulently undermine him by
breaking the confidence reposed in him. For instance he may
legitimately canvass, issue his circulars, have his place of business
in readiness, hire his servants & c.”

15. In the context of that case “canvass” was clearly used in the context of

advertising for future clients, since the secret copying out of his master’s

list of customers for future use was held to be a wrong attracting

damages and an injunction. See also WESSEX DAIRIES LTD vs

SMITH (1935) 2 KB 80 where an employee was held liable for soliciting

his master’s customers to transfer their custom to himself, even though

the transfer was to take effect only after he terminated his services.
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16. In 1948 Lord Greene MR held in SALMAN ENGINEERING CO. LTD vs

CAMPBELL ENGINEERING CO. LTD 65 RPC 203 C.A. (Reported in

(1963) 3 All ER at P413) that:

“Even if there exists no contractual relationship between the

plaintiff and the defendant, if the defendant is proved to have used
confidential information directly or indirectly obtained from the
plaintiff without his consent, express or implied, he will be guilty of
an infringement of the plaintiff’s rights.”

17. From this evolved the so called ‘springboard principle’, which holds that a

person who has obtained information in confidence is not allowed to use it

as a springboard for activities detrimental to the person who made the

confidential communication. (See CRANLEIGH PRECISION

ENGINEERING (PTY) LTD vs BRYANT (1964) 3 All ER 289).

18. This principle was applied to a contract of employment in VENTILATOR

CO. (SA) (PTY) LTD vs LIEBENBERG & ANOTHER 1967 (1) SA 686

W, where it was held that:

“It is an implied condition in a contract of service that an employee

will not disclose confidential information which can harm his
employer’s business, and if he breaches this term, an employee or
an ex-employee is liable to be interdicted from doing so and to be
made to compensate for damages caused” (my emphasis)

19. What is information confidential to the employer whose disclosure would

be potentially damaging will, or course, depend upon the particular facts

of each case.
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20. This notwithstanding it was made clear in the PREMIER MEDICAL case

(supra) that where a written contract is in existence the court will not

lightly read into it an implied covenant in restraint of trade. Such a

covenant must, if intended, be specifically introduced for that purpose.

This does not imply any relaxation of the fiduciary duty while the

employment contract subsists. As Hiemstra J. remarked at p868:

“To go marauding amongst his master’s suppliers and customers in

order to build up his own business is certainly one of the grossest
breaches of fidelity that can come to mind.”

21. As regards post-employment conduct the learned judge was at pains to

point out that the springboard doctrine applied only to real trade secrets,

not to matters of common or readily ascertainable knowledge.

22. An example of “marauding among his master’s suppliers and customers”

by a sales manager, while still in employment is to be found in

PALMGROVE HOLDINGS (PTY) LTD vs JOHAN BURGER &

ANOTHER MAHLB-001333-08 (unreported).

23. A clear statement of the legal position in a situation similar to that in the

present case is to be found at pages 90/91 of S.A. HISTORICAL MINT

(PTY) LTD vs SUTCLIFFE & ANOTHER 1983 (2) SA 84 CPD, where

van den Heever J. said:

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“There is not and cannot be a general duty burdening an

employee, whether humble or at top management level, not to
compete with the company that formerly employed him. But in the
process of competing he may not “steal” what is the company’s
property – its trade secrets or confidential business information, or
“steal” the energy expended in efforts, whether or research or
negotiation, made to benefit it.

24. An example of the ‘stealing’ of a company’s secret trade or industrial

information is HARVEY TILING CO. (PTY) LTD vs RODOMAC (PTY)

LTD 1977 (1) SA 316 TPD where a former employee was interdicted

from utilizing for his own profit a complex but unpatented process

developed by his former employer.

25. The answer to the question of what is confidential business information

which a former employee cannot use or disclose for his own benefit is to

be found in FACCENDA CHICKENS LTD vs FOWLER (1986) All ER

617 CA, where the House of Lords upheld the High Court formulation

that information gained by an employee falls into three categories:

a) Information so accessible to the public that an employee is at

liberty to impart it to anyone during his employment or afterwards,

b) Confidential information which he could not use or disclose during

his employment without breaching his duty of fidelity to his
employer, but which in the absence of an express restrictive
covenant, he was at liberty to use thereafter; and

c) Specific trade secrets which he was not entitled to disclose or use

for anyone else’s benefit either during his employment or
thereafter.
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I would respectfully adopt that formulation which I find to be sensible and

in accordance with principle.

26. The court went on in that case to hold that there is no general restriction

on an ex-employee canvassing or doing business with customers of his

former employer, and that information concerning customers and

suppliers fell into the second category.

EARLY TERMINATION OF A FIXED TERM CONTRACT

27. The termination of a fixed term contract by an employee without notice is

dealt with by section 26(2) of the Employment Act Cap 47:01. This is only

permissible on the limited grounds set out in clauses (a), (b), (c), (d) and

(e) of that subsection, which refer to specified types of conduct by the

employer justifying such termination.

28. Termination of a fixed term contract by the giving of notice (or payment

of money in lieu thereof) is not provided for under the Act. The Court of

Appeal has held in RAKHUDU vs BOTSWANA BOOK CENTRE TRUST

AND OTHERS (2005) BLR 283 at 290, that the common law therefore

applies, which allows termination of any contract of employment, whether

for a fixed term or otherwise on reasonable notice without the giving of

reasons, unless there are terms express or implied, to the contrary. In

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that case, dealing with termination by notice during probation, the court

held that 14 days notice was reasonable, in line with the provisions of

section 20(2) of the Act.

29. In the present case the defendant was remunerated on a monthly basis,

and, in line with section 18(2)(b) of the Act, reasonable notice will

accordingly be one month. Neither party sought, in the event that

termination by notice was permissible to argue for any period of notice

longer or shorter than one month, nor did they point to any condition,

express or implied, to the contrary. In fact one Coram Mushuta was

permitted by the plaintiff in similar circumstances to serve out one

month’s notice and then to leave.

30. There is no suggestion that any of the grounds justifying termination

without notice were present in this case, so the sole issue for

determination is whether the defendant gave reasonable notice of

termination. If he did so, and this was accepted or waived, then neither

he nor the plaintiff has any claim under this head arising from his

departure. If he did not do so, but deserted his post, he will be liable in

damages to the plaintiff. If, on the other hand, the plaintiff repudiated

the contract by dismissing him without notice unprocedurally, then his

claim for payment of a month’s salary in lieu of notice will succeed.

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DEFAMATION

31. It is trite that to publish a statement defamatory of another is actionable.

A statement is defamatory if it is one which injures the person to whom it

refers by lowering him in the estimation of reasonable persons of ordinary

intelligence or right thinking members of the public generally (per

Schreiner JA in KGAFELA vs MAOTO (1992) BLR 256).

32. A range of defences are available in an action for defamation, but none of

these has been raised in the pleadings. Instead the plaintiff denies

writing or publishing any defamatory letter at all.

33. In an action for defamation the words complained of, the date of

publication, and the persons to whom the words were published must be

clearly set out. See: CHICOLE & OTHERS vs FRANCISTOWN

COUNCIL (2000) 2 BLR 171 CA.

34. The original particulars of claim, as quoted above fell far short of this

standard. However no exceptions were taken and no objections were

raised by the plaintiff. By the time the pleadings were closed and

admissions made both parties were clear on all issues. The letters

complained of were that of 1st April 2008 addressed to B.I.C. and copied
 14

to various others, and that of 18th April 2008 addressed to Dinare Building

and Refuse, both of which were produced ahead of the trial and admitted

by the parties.

35. In argument counsel for the plaintiff mounted a rearguard action, seeking

to rely upon the deficiencies described. He argued that the defamation

action was not properly pleaded, and should be dismissed. He also

argued that the defences of truth, justification and privilege excused his

client from liability. No amendment was sought to the pleadings, and in

my judgment those arguments cannot avail the plaintiff. On the material

submitted, and as agreed by the parties, the issue before the court is

whether or not the stated letters were defamatory of the defendant, and if

so, the quantum of damages.

THE EVIDENCE

36. It is common cause from the documents filed that the plaintiff entered

into a written contract of employment with the defendant on 23rd

November 2006 in terms of which the defendant was employed for three

years with effect from 1st January 2007 as a Senior Accounts Executive,

subject to a three month probationary period. On 24th September 2007

the contract was varied inter alia by extending its duration to 31st July

2010 (a further seven months), by promoting the defendant to Assistant

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General Manager (Short Term) and Principal Officer of the company, and

by increasing the salary payable.

37. In terms of the contract the defendant was to promote and extend the

business of the company, to ensure that its interests were protected, and

to take charge of a major part of its operations. As Principal Officer he

took responsibility for compliance with applicable legislation and was

answerable to the Registrar of Insurance. There is no dispute that his

was a very senior position carrying with it a duty of utmost loyalty and

good faith. The defendant also signed a confidentiality form undertaking

not to disclose “confidential information to do with the company” upon

pain of dismissal.

38. In early February 2008 the defendant, together with Coram Mushuta

(“Coram”) another senior employee of the company clandestinely

registered their own company, Mercantile & General, preparatory to

launching a competing insurance brokerage of their own. This new

company was duly licensed on 27th March 2008 as an insurance agent for

Botswana Insurance Company (“B.I.C.”) and commenced business on 1st

April 2008. Meanwhile on 22nd February 2008 the defendant and Coram

each submitted his letter of resignation to the plaintiff.

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39. In his the defendant stated that:

“I confirm that I am resigning from First Sun Alliance with effect

from 1st March 2008. There are a couple of outstanding matters
which need to be cleared workwise and I am willing to serve my
notice period as stipulated in my contract if the directors are
comfortable with this.”

40. There is a dispute as to the meaning of these words and as to the

circumstances of his departure, but it is agreed that on 22nd February

2008 the defendant cleared his desk and left, while Coram remained to

serve out a month’s notice before leaving to join Mercantile and General

when it opened its doors on April Fools Day 2008.

41. To establish its claims of unlawful diversion of business, the plaintiff gave

notice that it would call an impressive tally of seventeen witnesses,

comprising mainly clients said to have been dishonestly lured away by the

defendant. In the event it was able to muster only three witnesses, none

of whom was a client.

42. Its Managing Director, Paul Chitate, after outlining recruitment and

contractual details, told the court that First Sun and the defendant parted

ways on 22nd February 2008, when he delivered his resignation letter.

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43. He had at that time recently been appointed the Principal Officer of First

Sun and his cheque signing powers were being negotiated since Mr

Chitate (the witness) was moving to South Africa to open a branch there.

44. Since the contract did not provide for termination by notice, he informed

the defendant that he did not accept his resignation, and would refer the

matter to his lawyers, who would write to him. The defendant left there

and then and only returned to pick up the lawyer’s letter (which was

dated 25th February 2008) at the beginning of March. The letter informed

him that the plaintiff accepted his resignation but claimed damages for

failure to honour his three year contract. He responded on 5th March 2008

stating that he had been out of the country, and that he was claiming his

salary for February plus a month’s notice pay “since your Managing

Director refused that I serve notice.” His claim was denied, and was also

refused before the Labour Department. Instead he was given a

breakdown of February salary and benefits less sums owing, which

showed him to be indebted to the plaintiff in the sum of P126-15. The

defendant never returned to serve notice, unlike Coram who worked for

the month of March.

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45. Paul Chitate then took back the mantle of Principal Officer, only to

discover, he said, a number of irregularities, which he then listed in terms

of the claims made:

A. CLAIM A (95,751-61)
Under this head short term business was transacted by First Sun
but policy renewals were issued under Mercantile and General.
Extensive spade-work and relationship building had been done in
each case by First Sun.

(i) DINARE BUILDING (P50,287-50)

The broker was Coram. The renewal attracted a commission of
P50,287-50 and was due on 1st April 2008. A renewal invitation
was issued by B.I.C. on 13th February 2008 for Coram’s attention.
Coram wrote to Dinare on behalf of First Sun on 25th March 2008,
enclosing a tax invoice, and inviting renewal. Dinare did not
respond. On 1st April 2008, Dinare signed a letter appointing
Mercantile and General as its insurance agent, for the purpose of
renewing its policies. On the same day the defendant wrote to
B.I.C. confirming the renewal and attaching a renewal schedule,
which he said he had obtained from the client. On 14th April 2008
B.I.C. issued a renewal certificate, which named Mercantile and
General as the agent, to whom commission was payable. On 16th
April the witness discussed the matter with Mr Mmereki, the
Managing Director of Dinare. He stated that Coram had told him
First Sun was relocating to South Africa and advised him to insure
directly with B.I.C. Later a short muscular bespectacled man of
dark complexion came, saying he was from B.I.C. and he decided
to insure directly with B.I.C. He ended up insuring through
Mercantile and General. His payment (as in the case of all
insurance arranged by agents) was in fact paid direct to B.I.C. A
long letter on 17th April from First Sun claiming that Coram had had
his services terminated for serious misconduct and a follow-up
letter on 18th April, failed to sway Mr Mmereki.

(ii) INDIAN GRACE (P2,200)

This was a First Sun client whose portfolio was due for renewal on
1st April 2008. Coram dispatched a renewal confirmation on 31st
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March 2008, with a pro forma invoice for P31,590. On 3rd April
2008 Coram wrote them another renewal quotation, this time on
behalf of Mercantile and General, listing a reduced number of
vehicles and quoting a premium of P19,160, on which the premium
would be P2,200. A letter of appointment in favour of Indian Grace
was also signed in favour of Mercantile and General on 3 rd April
2008. The renewal was placed with Mercantile and General, who
received the commission.

(iii) ISAAC SELOKO (P2,727) (not claimed)

On 18th March 2008 B.I.C. sent to First Sun, for the attention of
Coram, a set of documents confirming professional indemnity cover
of P2,000,000 in favour of Isaac Seloko Attorneys, and attached an
invoice for a premium of P30,000. The commission on that was
P2,727, and the client was to collect the documents on payment.
The client’s accountant told the witness that they had been told to
pay direct to B.I.C. as First Sun had problems, which they did. This
was organized by Mercantile and General, who were credited with
the commission. On the witness complaining to B.I.C. the
commission was reversed, and paid instead to First Sun, so he was
not claiming that amount.

(iv) SPOT-ON LIQUOR (P9,450) (not claimed)

Renewal of Spot-on’s policy was negotiated by Coram on behalf of
First Sun for renewal on 10th February 2008. For some reason the
cheque was not collected and in April 2008 Mercantile and General
tried to change the policy to show themselves as agents/brokers.
The commission of P9,450 was initially paid to Mercantile and
General by B.I.C., but this was subsequently reversed in favour of
First Sun, and was no longer claimed.

(v) EASY-FEET (P5,150)

Easy Feet, a sister company to Spot-on was also included in Claim
A as a previous client of First Sun. Its policy was renewed on 8th or
10th April 2008, which was after Mercantile and General was
licensed. B.I.C. refused to reverse the commission of P5,150 paid
to Mercantile and General, as they considered it properly earned.
No documentation was submitted in respect of that claim.

(vi) U-QUIP SPARES (P2,008)

After Coram left, the witness found a file copy of a letter written by
Coram to U-Quip on 18th February 2008 renewing its policy and
attaching a summary recording the renewal premium as P10,044-
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19. On the letter Coram had written “company closing down”, but
U-Quip was still on First Sun’s debtors list, so he included it in the
claim. U-Quip was no longer a client.

(vii) ACCESS HOLDINGS (P15,200)

Mr Chitate told the court that Access Holdings was First Sun’s
client. Its portfolio was renewed in December 2007. The
defendant was responsible, but failed to collect the premium. This
was subsequently recovered from Mutual Federal, the insurers, but
he claimed the premium of P15,200 because in April 2008
Mercantile and General arranged the insurance of Access with
B.I.C. No documentation evidencing First Sun’s earlier relationship
was tendered.

(viii) MABINA FARMING (P6,500)

Mabina Farming, according to the witness, renewed its policy
through First Sun in December and the premium was paid to
Mutuals and Federal Insurance by a cheque signed by Chitate for
First Sun, but authorized by the defendant. The defendant did not
collect the premium. This was his responsibility as Principal Officer.
In April a new policy was issued by B.I.C. to cover Mabina, and
Mercantile and General received the commission of P6,500. No
documentation on First Sun’s dealing with Mabina Farming was
produced.

(ix) C.T.I. TECH (P11,97O)

This company was a client of First Sun and its renewal terms were
given to it in February/March, either from B.I.C. or from Mutual and
Federal. Mr Jack Wu, the client, told the witness that Coram
informed him that First Sun was facing challenges, and he should
insure direct with B.I.C., who would send a representative. They
did so, and he insured direct. Mr Wu did not reveal that on 1st April
2008 he had signed a letter of appointment authorizing Mercantile
and General to handle his insurance portfolio. His premium of
P74,536 was paid to B.I.C. on 2nd April 2008. Commission lost to
First Sun was P11,970.

46. That concluded the witnesses’ evidence on Claim A, under which he now

claimed P68,125-50 in total. He claimed from the defendant and not from

Coram or Mercantile and General because in his view, the defendant took
 21

responsibility as the Principal Officer of Mercantile and General. He

believed that although Coram was still with First Sun in March 2008, he

was in cahoots with the defendant.

B. CLAIM B (P52,806)
The witness explained that Claim B, arose from First Sun’s renewal
business which clients moved elsewhere, because of
misrepresentations made to them by the defendant.

(i) HI PERFORMANCE (P17,800)

A renewal notice was sent to Hi Performance by First Sun in April
2008. When they did not renew Mr Chitate saw their director, Mr
Tlhokwane, and was informed that in March 2008 Coram and the
defendant came to see him and advised him that First Sun was in
difficulties and was relocating to South Africa, but he could move to
Mercantile and General. He decided not to re-insure through either
company. The commission lost to First Sun was P17,800.

(ii) LOGAN & ASSOCIATES (P33,000)

These too were clients of First Sun and were sent a quotation for
the renewal of the policy of their group. When they did not renew
Mr Chitate saw Mr Logan in April 2008, who told him that Coram
and the defendant had approached him and advised him of
problems at First Sun, and that it was relocating to South Africa.
Mr Logan did not accept Mr Chitate’s explanation, and issued a
letter of appointment to Mercantile and General on 15th May 2008.
Thus a commission of P33,000 was lost to First Sun. No
documentation was produced in this regard, save for the letter
appointing Mercantile and General.

C. CLAIM C (P48,807-05)
This, the witness said, was the value of quotations pending from
First Sun, which were diverted by the defendant to his own agency.
The First Sun quotation book had disappeared and he believed that
the defendant had taken it, and redirected the business to
Mercantile and General. However, the information was recovered
from First Sun’s computer records.
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(i) RRAMMUTLE (PTY) LTD (P5,600)

The quotation was for P28,000, upon which commission of P5,600
would have been earned, if accepted.

(ii) J & G BUSES (P28,000)

The premium quoted in April 2008 was P280,000, which would
have earned a commission of P28,000.

(iii) TAU AGRICULTURAL SERVICE CENTRE (P8,702)

The quotation was for P69,617, sent out by Coram, and would, if
accepted, have earned commission of P6,469.

(iv) WINGS OF AFRICA (P6,469)

The quotation was for P41,270, to earn a commission of P6,469.

47. The witness did not know if any misinformation was given to the clients.

He did not follow-up the quotations. He believed that defendant had

taken the quotation book and should be held responsible.

D. CLAIM D (P100,000)
The witness claimed general damages of P100,000 for costs
incurred in recruiting and training a replacement for the defendant.
He annexed an analysis of costs relating to one Walter Motapuri
(the replacement) totaling P186,729-24, but admitted that only the
first three items in his list, totaling P8,631-20, were directly related
to recruitment and training. He had also suffered losses in aborting
the planned South African branch of First Sun, but these were
neither quantified nor claimed.

48. Under cross-examination Paul Chitate conceded that many of his

seventeen witnesses were not available to testify. Even where former

clients had signed letters of appointment in favour of Mercantile and

General after they opened on 1st April 2008, he considered that he was
 23

defrauded, although clients were at liberty to change brokers. He

regarded the defendant, Mercantile and General, and Coram as being

“one and the same”, and felt that he could sue the defendant for all of

them. The defendant was also responsible, he said, for the acts of Coram

during March 2008, when Coram was still with First Sun. As to his general

damages claim for P100,000, he was unable to quantify this at all, saying

it arose from “all sorts of things.” He did not rely on his annexed list of

expenses, nor did he claim for lost expense in South Africa. He regarded

the letters written to B.I.C. and copied to others in the industry as being

honest and justified, notwithstanding his imputations of dishonesty,

possible fraud, and immorality.

49. He admitted, though, that B.I.C. found no evidence of fraud, and

regarded negotiations carried out by the defendant after 1st April 2008 as

being regular. It was when he discovered on 21st February 2008 that

Rembrandt and Coram had a new company, that he confronted them, and

they came next day to resign. He admitted that registration of a company

alone did not entitle them to do business. They needed certification from

the authorities first. It was his view that new brokers who had set up

after leaving another should not be allowed to start business for six

months, although this was not in the law. He conceded that letters of

appointment and letters of authority from clients entitle a new broker to

 24

get all existing information from the insurance company servicing the

client. That would not be unlawful.

50. Ms Lorraine Fourie, the Operations Executive of B.I.C. testified that it was

she who dealt with brokers and agents to negotiate rates. In the case of

agents, cheques for premiums were made out directly to B.I.C. and

commissions were paid monthly by B.I.C. An agent could serve only one

company, unlike a broker who received the premiums itself and could

place the business with any insurer.

51. In or about February 2008 she received an application for appointment as

an agent from Mercantile and General represented by the defendant. The

application was successful, and when they were subsequently licensed,

B.I.C. did business with Mercantile and General from April 2008. In April

B.I.C. received the letter dated 3rd April 2008 from the plaintiff. She

regarded it as being a legitimate communication from a company

concerned that its business was being siphoned off. Her Managing

Director refused to cease doing business with Mercantile and General as

requested in the letter, asking for proof of wrong doing or fraud to be

supplied. It was not supplied. Mercantile and General did not lose

business from B.I.C. as a result of the letter. She did, however, detect

two instances of untoward behaviour from Mercantile and General. She

 25

reversed commissions paid to them, following the amendment of two

policies, Spot-on Wholesalers and Isaac Seloko Attorneys, which had been

brokered by First Sun, but on which Mercantile and General attempted to

claim the commission as agents. This they did by asking that new policies

be issued effective from 1st April 2008. She reprimanded the defendant

and Coram for unethical conduct.

52. Mrs Fourie told the court that she had heard from a certain Mr Hamid of

Mr Veg during a flight from Francistown that Coram had come to him in

2008 to tell him that First Sun was closing down and that Mercantile and

General would take over its business. Later Rembrandt came, saying he

was from B.I.C. She reported this incident to her Managing Director.

53. Cross-examined, she stated that she informed Coram and Rembrandt that

B.I.C. would not accept backdated business from Mercantile and General –

only business from 1st April onwards. To shift commission from previously

transacted business was unethical. She conceded that clients could

change of their own volition, following the person they had been dealing

with. She had no direct knowledge of either Coram or Rembrandt

soliciting committed clients, but only heard from others. The letter

received from First Sun concerning Rembrandt was the first intimation she

had of him being immoral or unethical. She regarded these as unproven

 26

allegations. She believed it to be a confidential letter to B.I.C. No

evidence of fraudulent behaviour was ever brought to B.I.C. by First Sun,

and B.I.C. continued to deal with Mercantile and General to this day.

54. Kopano Mokgathi was an employee of First Sun at all material times. He

told the Court that Coram was in charge of the Dinare portfolio, which

was due for renewal on 1st April 2008. When it was not renewed he

accompanied Paul Chitate to a meeting with Dinare’s Managing Director,

Mr Mmereki to try to persuade him to renew. Mr Mmeriki expressed

surprise. He said he had decided to deal directly with B.I.C. He had been

told that First Sun did not pay over premiums and that it was closing

down as it had opened a branch in South Africa. He did not say who told

him that, but said that in March 2008 a man came who said he was from

B.I.C. He (Kopano) and Mr Chitate believed it to be Rembrandt from the

description he gave. Mr Chitate wrote to Mr Mmereki to explain the

situation, but to no avail as Dinare now insured with Mercantile and

General. Their premium would have been in the region of P500,000,

attracting a commission of about P50,000. Under cross-examination he

conceded that it would not be wrong for an agent to say he represented

B.I.C.

That concluded the plaintiff’s case.

 27

55. For the defendant, Rembrandt, Coram and a certain Kitso Nkwe gave

evidence. None of these was a former client of First Sun either so the

court did not have the opportunity to hear from a single client of First Sun

as to the circumstances under which he, she or it had moved a portfolio to

Mercantile and General.

56. The defendant (Rembrandt) told the court that he was a director and the

Principal Officer of Mercantile and General. Coram was his co-director and

co-shareholder in the company, which opened for business on 1st April

2008. Prior to that he was the Assistant General Manager of First Sun

until Friday 22nd February 2008. On that date he tendered his resignation

letter, in which he offered to serve notice. This he believed to be 30 days

notice commencing on 1st March 2008. Instead his employment was

terminated there and then. He was told to clear his desk and hand over

his keys, which he did. He resigned together with Coram, who was also

told to hand over his keys. On the following Monday Coram was recalled

to serve notice, but he was not so recalled. Since, in his view, his service

was terminated without notice, he demanded payment of P10,000, being

salary in lieu of notice. He abandoned his additional claim of P10,000 for

February 2008 salary. He had terminated a previous contract to join First

Sun, in the same way as he now terminated his First Sun contract to start
 28

his own company. He found nothing wrong in that. At the time he left,

First Sun had made application for his appointment as Principal Officer,

but this had not yet been approved.

57. As to Claim A:

- He had never met Mr Mmereki of Dinare at all, until August or

September of 2008, and made no representations to him. It was
Coram who dealt with him.

- Indian Grace was Coram’s client. Mercantile and General was able
to offer a lower quotation than First Sun because the properties to
be insured were reduced. He made no representations to induce
them to move from First Sun.

- Isaac Seloko was also Coram’s client and he (Rembrandt) had

made no representations to his accountant. In his view B.I.C. were
wrong to reverse the commission because Seloko had signed up
with Mercantile and General before committing to First Sun by
picking up the policy and paying for it.

- Spot-On Liquor was Coram’s client too, and was dealt with in the
same way. They could not argue as they were dependant upon
B.I.C. for all their business.

- U-Quip Spares he had never dealt with at all.

- Easy-Fit was serviced by Coram, and he never handled their

renewal at all.

- As to Access Holdings (the cancelled policy) he could not recall

authorizing payment at First Sun. They were a client of Coram’s
both then and at present.

- Mabina Farming was handled by Coram as well. He could not recall

authorizing payment or Mutual and Federal for the policy
(subsequently cancelled for non-payment), but it was possible as
he authorized from lists presented to him.
 29

- CTI Tech was Coram’s client, and he (Rembrandt) never met Jack
Wu at all.

58. As to Claim B:

- He denied ever telling Mr Tlhokwane of Hi-Performance that First

Sun was closing down, although Hi-Performance was handled by
him at First Sun. Hi-Performance was not a client of Mercantile and
General.

- As to the Logan Group (including IT-Zone) he made no

representations to Mr Logan at all concerning First Sun. Coram
brought them over as his clients to Mercantile and General.

59. The witness explained that Insurance Broking was all about building

personal relationships. There was nothing untoward about a client

following a broker to his new firm, as long as proper letters of

appointment and of authority to access insurance information were

obtained. This could be, and was, achieved in several cases on 1st April

2008 when Mercantile and General opened for business. This was

accepted by B.I.C.

60. As to Claim C – no quotations given to First Sun clients were diverted to

Mercantile and General. None of the named clients was a client of

Mercantile and General at all.

61. In regard to Claim D, the witness denied that the plaintiff had suffered

damages at all. There was no training involved in being a Principal

 30

Officer. What was needed were qualifications and experience. It was

easy to recruit such persons, and Paul Chitate had done so. Further, he

regarded his termination of contract as being lawful on his side.

62. The defendant’s counterclaim for damages for defamation was based

principally on the plaintiff’s letter of 1st April 2008 addressed to B.I.C. and

copied to all insurers, Registrar of Insurance and Commissioner of Labour.

A later letter, in the same terms, was sent to B.I.C. on 3rd April 2008, but

was not copied to anyone else. The witness claimed that another

purportedly defamatory letter was addressed by First Sun to all its clients

as well but he was unable to substantiate this, save to produce a letter

dated 17th April 2008 addressed to Dinare Building alleging that Coram

“and his immediate supervisor” had had their employment “terminated for

serious misconduct”. The letter dealt with complaints about Coram, and

did not mention Rembrandt at all.

63. The widely circulated letter of 1st April, he said, referred to him as

dishonest and immoral and this had caused people to view him in this

light. He had had an eighteen year career in insurance, holding senior

positions and had been appointed Principal Officer because of his

reputation for honesty. Some clients would not deal with him as a result.

To justify his claim for P450,000 he told the court that he listed all
 31

potential clients he believed would have appointed him but for the letter

and calculated that income lost to the company totaled P270,000.

Business placed with other insurers who would not deal with him would

have brought the company another P150,000. The other P30,000 was for

pain and suffering. He named several potential clients whom he claimed

to have told him that they received “the letter.” These were not

Insurance Companies. As insurers who would not deal with Mercantile

and General, he named Hollard and Regent. In support of this he

produced a letter from each declining to appoint Mercantile and General

as an Agent/Broker. Both were sent in May 2008, but the applications

made were not put in evidence.

64. Under cross-examination Rembrandt conceded that it had not been put to

Paul Chitate that letters defaming him had been sent out to clients other

than Dinare, and that Dinare’s business was not lost as a result of the

letter sent to it. He claimed that hiding from his employer that he was

registering a rival company was not dishonest and was “normal practice”,

even though he was First Sun’s Principal Officer. He conceded also that

the letters from Hollard and Regent were in response to his own letters

seeking appointment notwithstanding that Mercantile and General was at

the time an agent pledged to deal only on behalf of B.I.C. The letter to
 32

B.I.C. did not disqualify him and B.I.C. continued to do business with

Mercantile and General.

65. On his claim for notice pay, he conceded that his contract made no

reference to notice pay, but claimed that under the labour law he was

entitled to 30 days notice. A fixed term contract was, he said, tantamount

to slavery. It was after a confrontation with Mr Chitate, who claimed that

he was attempting to divert business from Syno-Hydro, that he resigned

there and then, although he had intended to do so shortly anyway, to

start his own business. The confrontation was on Thursday and his letter

of resignation was handed in the following day, when he cleared his desk,

and went away to seek finance outside the country. As to the various

clients he was alleged to have diverted, he maintained his position that

these were Coram’s clients who followed him to Mercantile and General.

He could not recall authorizing cheques to insurance companies while at

First Sun to renew policies for Access Holdings and Mabina Farms, since

he authorized many renewals. He conceded that in the case of the two

policies where commissions were reversed by Mrs Fourie, their conduct

could be considered improper, as she reprimanded them. In the case of

all the policies issued on 1st April 2008 Coram came with letters of

appointment which entitled them to access information supplied by clients

to previous insurers. This was not improper and was accepted by B.I.C.
 33

Coram, but not he, had had earlier contact with the clients. After he left

First Sun he did approach clients to tell them he was starting his own

business but that was all. He did not solicit as Mercantile and General

was not registered. He had his own quotation book at First Sun, but left it

there when he resigned.

He did not agree that Mr Chitate had suffered damages on account of his

resigning as Principal Officer, since he could just take over himself.

66. Under re-examination he made the telling admission that “I think it (his

departure) was agreed between the three of us, Coram, plaintiff and me,

late at night” – and he submitted his letter of resignation next morning.

67. The next defence witness was Kitso Nkwe, who had also left First Sun to

join Mercantile and General. He testified that Rembrandt, who was his

boss, was dismissed on 22nd February 2008 after management found out

he and Coram registered an agency. The staff were called and asked

their views, and most left it to management to decide. Mr Chitate said he

would dismiss Rembrandt but “let Coram stick around”. Rembrandt was

asked to hand over the keys, as far as he could recall. He was unaware

of the meeting the night before that preceded Rembrandt’s departure.

 34

68. Finally, Coram testified, quite frankly, that while he was serving his one

month’s notice with First Sun he informed his clients that he had resigned

and that anyone who wanted to do business with him should contact him

on 1st April 2008. All the clients referred to in Claim A were his clients

who moved with him to Mercantile and General. They knew cheques

would be made direct to B.I.C. since they were agents, not brokers. It

was he who approached the clients, not Rembrandt at all; and no

misrepresentations at all concerning First Sun were made. In each case a

proper letter of appointment or authority in favour of Mercantile and

General was obtained by him on or after 1st April 2008. Rembrandt did

the paper work in the office while he dealt with the clients. He was

overwhelmed by calls from clients who wanted to move with him to

Mercantile and General.

69. Of the Claim B clients, neither he nor Rembrandt had ever met Mr

Thokwane of Hi-Performance, which was not and never had been their

client. The Logan Group consisted of a number of companies. They were

his clients and moved when he approached them to do so.

70. As to the missing quotation book, and the persons named in Claim C,

none of these was known to him, nor were they clients of Mercantile and

General. He admitted that he and Rembrandt approached Mr Hamid of Mr

 35

Veg, but this was in May 2008, and no misrepresentations concerning First

Sun were made. He had never told any clients that First Sun was closing,

and nor had Rembrandt done so.

71. Cross-examined, Coram stated that on receipt of their letters of

resignation, Paul Chitate first wanted them both to go forthwith but later

he asked Coram to remain to serve notice. They had planned to give one

month’s notice on 1st March 2008 and to leave on 31st March, but Paul

Chitate found out about their company and this caused the confrontation

which precipitated their resignation letters on 22nd February 2008. By that

time Mercantile and General was not licensed to operate, so there was no

conflict. After telling them to leave, Paul told them they would hear from

his lawyers. They both did receive such letters, claiming damages, but no

damages claim was instituted against him, and he served his notice. In

early March, however, the files of the big clients, including Dinare, were

removed from him and he remained attending to claim queries,

endorsements and training. When asked why the premiums were not

collected on behalf of First Sun from Mabina and Access, who had both

renewed with Mutual and Federal through First Sun in November 2007, he

replied that farmers normally paid later, when they marketed their

harvest. That is why he did not collect the premiums. It was Mr Chitate’s

decision to pay Mutual and Federal on their behalf, but it was the client’s
 36

own decision to move with him and take out new policies with Mercantile

and General from 1st April 2008. In his view payments at First Sun were

only recommended by Rembrandt, it was Paul Chitate who authorized

payment and signed the cheques. At Mercantile and General

Commissions were earned by the company, and were of ultimate benefit

to the shareholders

72. He insisted that at all times both he and Rembrandt acted professionally

in dealing with clients, B.I.C. and First Sun. They did what Mr Chitate had

himself done, as he was a Manager at Omega and moved to form his own

company. In answer to a final question, he denied that he was “taking

the bullet” for the defendant.

THE CLAIMS

73. It is clear on the evidence that the defendant, together with Coram, in

February 2008 clandestinely registered Mercantile and General as a

company and commenced the process of licensing this company as an

Insurance Agent. This the defendant did while still employed in a senior

position of trust by the plaintiff. In doing so, he breached his duty of

utmost good faith, since he intended in due course, to enter into

competition with his employer, although only after leaving First Sun. He

freely conceded that he did not inform the plaintiff because had he done
 37

so he would most likely have been fired. Indeed it was the discovery that

Mercantile and General had been registered that precipitated a

confrontation between the plaintiff and the pair, and led to their

premature letters of resignation. The defendant’s act of registering

Mercantile and General was in preparation for the launch of his own

business. In keeping this secret he acted underhandedly, but not, on the

authority of ROBB vs GREEN (supra), unlawfully.

74. It is common cause that the defendant left the plaintiff’s employ on 22nd

February 2008. From then on he was entitled in law to compete with his

former employer in the absence of a restraint of trade agreement (See

HISTORICAL MINT vs SUTCLIFF – supra). Here there was no

restraint clause in the defendant’s contract of service. The “Declaration of

Confidentiality” signed by the defendant bound him not to disclose

confidential company information on pain of dismissal. This clearly

applied to his conduct while an employee of the plaintiff, since a former

employee cannot be dismissed. After leaving First Sun the defendant

could also lawfully canvass for the business of his former employer’s

customers (FACCENDA CHICKENS – supra).

75. A general point, repeatedly made during the trial, and which I accept, is

that Insurance Broking entails the building of personal relationships

 38

between customer and client. Just as a lawyer who joins a new practice

may carry with him a number of clients of his former firm, who wish to

retain his services, so too a broker changing firms is likely to move with

some of the clients he had been serving. This was tacitly recognized by

Paul Chitate when in his letter of complaint to B.I.C. he revealed that he

was lobbying the Brokers Association to impose a six month restraint

period on brokers leaving employment. This he had failed to do

contractually with the defendant, as he might, depending upon the terms

of the restraint, have been able to do. B.I.C., too, saw nothing wrong in

Mercantile and General taking over former clients of First Sun after

opening for business.

76. The next question to be answered, is what is the information which is

confidential to an Insurance Broker, and cannot be divulged either during

or after a contract of employment? In terms of the FACCENDA

CHICKEN rules, information concerning customers and suppliers falls

within the second category, that is, it may not be used or disclosed during

employment, but an ex-employee is at liberty to use it thereafter. This

information would include the identity of clients, the nature of their

portfolios, and the premiums which they have enjoyed (or suffered). I

can think of no information held by an insurance broker which would

qualify as a trade secret so exclusive to the broker that it would fall into
 39

the third category, protected from use or disclosure after the employment

relationship had ended, nor was any evidence tendered of such. There is

no room in the case of an insurance broker for the application of the

springboard principle in which exclusive trade secrets, designs or formulae

are ‘stolen’ for the purpose of setting up a competing business.

77. It is also noteworthy that in a client/broker relationship the information

shared is in the main that of the client, who would expect the broker to

keep it confidential. The client is at liberty to disclose it, including his

premium rates, to anybody he pleases. The results or fruits of

relationship building in a client/broker relationship are to be found in the

insurance policy issued or renewed and in the premium paid (and thus the

commission earned). The work of building the relationship is not

proprietary to the broking firm, since the client can at any time seek a

more favourable policy or premium from another broker or company and

in doing so grant authority to the new broker to access all his insurance

information from the company which issued his policy. This will enable

the new broker, quite legitimately, to use that same information to source

and offer a more favourable premium or more favourable terms.

78. What does constitute an actionable breach of the duty of fidelity is for the

employee, while still in employment, to “go marauding amongst his

 40

master’s suppliers and customers in order to build up his own business.”

(See PREMIER MEDICAL – supra). If it can be shown in any of the

claims that the defendant did so, he will be liable in damages.

79. The general submission of the plaintiff that Coram and the defendant

were “one and the same”, partners in Mercantile and General, and that

Coram stayed on as an “inside man” unlawfully diverting clients to

Mercantile and General cannot in my judgment avail it. The claims are

based upon an employment contract personal to the defendant. Coram

too had his own employment contract, which endured for the month of

March 2008, after the termination of Rembrandt’s contract. The plaintiff

may or may not have a separate claim against Coram, but that is not an

issue presently before the court.

80. Under Claim A, the evidence of the defendant, confirmed by Coram, was

that Dinare, Indian Grace, Isaac Seloko, Spot-On Liquor, U-Quip Spares,

Easy-Fit, Access Holdings, Mabina Farming and CTI Tech were all Coram’s

clients and he had no personal contact with any of them while he was still

employed by First Sun. Nor did he approach any of them at any time

before Mercantile and General opened for business in April 2008. The

plaintiff was unable to call a single customer to controvert that nor could

he offer direct testimony himself. He could only tender hearsay evidence,

 41

unconfirmed by those who conveyed it to him, that at various times,

mainly in March 2008, Coram approached some of these clients to tell

them that First Sun was closing down, and that they should insure directly

with B.I.C. Subsequently another person approached them claiming to be

from B.I.C., and that this was Rembrandt, the defendant. In this way

they lured away First Sun clients. This was denied by Coram and by the

defendant, who were able to produce in virtually all cases letters of

appointment or authority in favour of Mercantile and General, as agents of

B.I.C. The direct evidence of two witnesses is stronger than the hearsay

offered by the plaintiff especially since that direct evidence was not

shaken in cross-examination. The plaintiff has failed to establish on a

balance of probabilities that misrepresentations were made by the

defendant to siphon off First Sun’s clients. It is common cause that even

after Mr Chitate complained, most of these clients, with the exception of

Seloko Attorneys, remained with Mercantile and General.

81. In the case of Isaac Seloko Attorneys and Spot-On Liquor, I consider that

both Coram and the defendant were guilty of sharp practice, although

both deny that what they did was wrong. In both cases First Sun had

negotiated, issued, and invoiced policies for the clients. Mercantile and

General attempted successfully to claim the commissions for itself. This

was discovered, and Coram and the defendant were summoned to B.I.C.,
 42

where they were reprimanded by Mrs Fourie, who reversed the

commissions. She did say, however, that in her view their behaviour had

been unethical, but not fraudulent. First Sun suffered no loss from these

transactions.

82. In the case of Access Holdings and Mabina Farming it was alleged that

First Sun renewed and paid for their policies with Mutual and Federal

Insurance in December 2007. The cheques were authorized by the

defendant and signed by Paul Chitate, however the defendant failed to

collect the premiums. The clients later cancelled the policies and took out

new ones effective from 1st April with Mercantile and General. The

defendant could not recall if he authorized the cheques, as he was given

lists to authorize, and it was not he, but the broker (in this case Coram)

who was to collect premiums. First Sun was able to recover the premiums

paid from Mutual and Federal.

83. I hold that in none of the cases relied upon under Claim A has the plaintiff

been able to establish that the defendant breached his duty of fidelity

during his employment by diverting business for his own benefit. Claim A

accordingly fails.
 43

84. In Claim B the plaintiff sought to prove that the defendant made

misrepresentations concerning First Sun to two clients, which caused them

not to renew their policies, but to move their business elsewhere. To

attract liability such activities would also have to have occurred when the

defendant was still employed by the plaintiff, that is, before 22 nd February

2008.

85. The first such client was Hi-Performance. A renewed notice was sent by

First Sun in April 2008. Its director, Mr Thokwane, according to Paul

Chitate, told him that this was because Coram and Rembrandt approached

him in March 2008 and told him First Sun was closing down. This was

hearsay, and was denied by both when they testified. The alleged

behaviour also took place when the defendant had already left the employ

of First Sun.

86. The second client Logan and Associates also did not renew. Paul Chitate

claimed that in April Mr Logan gave him a similar explanation to Mr

Thokwane. Again this was denied in evidence by Coram and the

defendant. There was no allegation that any approach was made prior to

22nd February 2008. In May 2008 Logan and Associates issued a letter of

appointment to Mercantile and General.

 44

In neither case was any wrongful act proved against the defendant either

before 22nd February 2008 or at all, and Claim B must fail.

87. Claim C was vague in the extreme Paul Chitate told the court that a

quotation book had disappeared and he believed the defendant had taken

it. He offered no evidence of this, but surmised that quotations may have

been accepted and diverted to Mercantile and General. He recovered

some of these quotations from the computer, but did not follow them up

on behalf of First Sun at all. Coram and the defendant testified that none

of the four clients who were named as having been diverted was a client

of Mercantile and General at all. Counsel for the plaintiff conceded that

his case on Claim C was weak. It was more than that. No direct evidence

at all was led, and that claim too must fail.

88. In the light of the Court of Appeal’s decision in Rakhudu’s case, Claim D

has scant prospects of success. In order to claim damages for breach of

contract, a breach must be proved. The breach alleged is the unlawful

termination of the contract before its term of three years had elapsed.

Even if the defendant had departed the job abruptly and without notice,

the measure of the plaintiff’s damages would have been its loss for the

period he should have served before departing lawfully. Since, on the

strength of Rakhudu’s case he could have departed lawfully after serving

 45

reasonable notice, the damages recovered would have been severely

limited in any event, since reasonable notice amounted to one month.

But what was the effect of the defendant’s offer in his resignation letter to

serve notice? What he actually said was:

“I am resigning from First Sun Alliance with effect from 1st March
2008. There are a couple of matters which need to be cleared
workwise and I am willing to serve my notice period as stipulated
in my contract if the directors are comfortable with this.”

89. It is true that the contract made no provision for any notice period, but

the defendant’s willingness to serve notice is clearly indicated. There is a

dispute as to whether the defendant deserted his post on 22 nd February

2009 or whether he was told by Paul Chitate to leave. On this issue,

although there was room perhaps for misunderstandings, the probabilities

favour the version of the defendant. This was that he was told to go and

to await a letter from First Sun’s lawyers, and that he did so. That

lawyer’s letter duly arrived, and was produced in court. It purported to

accept the defendant’s repudiation of the employment contract, and to set

out an extravagant claim for damages. It was the evidence of defence

witness Kitso Nkwe that Paul Chitate told the staff that he would dismiss

Rembrandt, but allow Coram to serve out his notice. The impression

Chitate gave in his letter to Dinare was also that the employment of

Rembrandt had been terminated.

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90. In my judgment the true import of the letter was that the defendant

wished to resign with effect from 1st March 2008, but tendered to serve

notice at the option of the plaintiff. The plaintiff waived its right to notice

and allowed him to depart forthwith. In those circumstances the

termination was mutually agreed to be immediate and neither party has

any claim against the other arising therefrom. Claim D must therefore

also fail.

I turn now to the counterclaims raised by the defendant.

91. Claim A is for P10,000 in notice pay, due he says, because the plaintiff

wrongfully told him to leave and did not permit him to serve one month’s

notice. This claim is, in my judgment, without merit as dealt with above.

The defendant left of his own volition to set up his own competing

business, and the plaintiff relieved him of his obligation to serve notice.

He set off immediately to raise finance for his new company, and was not

wronged nor did he suffer damages. Claim A fails.

92. Claim B, for February salary, was not pursued, and rightly so, since there

was no evidence that he was indeed paid for February 2008 by set off of

sums due by him to First Sun.

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93. As to Claim C, two allegedly defamatory letters were relied upon – that to

B.I.C. of 1st April 2008 and that to Dinare of 18th April 2008.

94. I shall deal with the second letter first as it may be shortly disposed of.

Publication of this was to Mr Mmereki of Dinare Building and Refuse. No

wider publication is alleged. No evidence was led to support an initial

claim that defamatory letters were sent to other of the defendant

potential clients.

95. The passage complained about reads as follows:

“As advised our officer, Mr Coram Mushuta, who has been charged
with the handling of your insurance portfolio has had his
employment terminated together with that of his immediate
supervisor for serious misconduct involving the attempted
divergence of business and the secretly setting up or a competing
insurance agency. They are now operating as direct agents for
Botswana Insurance Company, trading as Mercantile and General
Insurance Agency.”

96. The letter, which runs to four pages in length, goes on to make various

allegations against Coram alone, including that he was guilty of fraudulent

activities and of dishonesty. No further mention is made of his

“immediate supervisor.” On the evidence of Mr Chitate, Coram handled

the Dinare portfolio, and Rembrandt was apparently unknown at the time

to Mr Mmereki, who was reported to have said (although he did not

testify) that he had only been contacted at one stage by a “short muscular

man” whose identity he did not give. The defendant testified that he first
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met Mr Mmereki in August or September of 2008. This piece of evidence

undermined his own case since there was no way that Mr Mmereki could

have connected the impugned immediate superior with him. Further, Mr

Mmereki was apparently unimpressed with the letter because he

proceeded to insure with Mercantile and General. I hold that in respect of

the Dinare letter, no case of defamation has been made out, and no

damages have been suffered.

97. The letter to B.I.C. of 1st April 2008 is a different matter. This represented

an attempt to discourage B.I.C. from registering Coram and Rembrandt

(who were named) or Mercantile and General as its agents. The author,

Paul Chitate, First Sun’s Managing Director, was apparently unaware that

by that date Mercantile and General had already been registered as an

agent, and had also been appointed by B.I.C. The letter was addressed to

the General Manager of B.I.C. and was copied to All Insurers, Registrar of

Insurance and Commissioner of Labour. This publication is formally

admitted by the plaintiff in the filed pre-trial minute.

98. The letter contains the following statements of and concerning Coram and

the defendant under the heading “DISHONESTY”:

- “It is evident that the two were dishonest in accepting

responsibilities with FSA whilst at the same time setting up their
own agency. We have already noted serious issues of conflict of
interest and double dealing”
 49

- “It is noted that their action was meticulously planned over time
and that there are possible fraudulent activities which should
manifest in due course”

- “It is without doubt that their actions are completely immoral and
unethical”

The letter went on, under a different head to say:

“You may be interested to note that all our March and April
renewals have been sabotaged, and files have disappeared.”

and later

“We have commenced legal action against the two and we are
investigating possible fraudulent activities against then.”

99. The plaintiff pleads that it wrote and published no defamatory letter, but it

admits to writing this letter. It appears to be labouring under the

misapprehension that defamatory words are not defamatory if they are

true or uttered in justified circumstances. That is not so. These may, in

proper circumstances, represent valid defence to an action for defamation,

but none of them has been pleaded by the plaintiff as a defence. This

court is called upon merely to adjudge whether the letter, as it stands, is

defamatory of the defendant. I have no doubt that it is. To impute to

another dishonesty, fraud, immorality and a lack of ethics is per se

defamatory, and what remains is to quantify what, if any, damages the

defendant has suffered by being so defamed.

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It is in this context that the plaintiff’s arguments on truth, justification and

privilege may be considered, but no further.

100. The defendant claims damages in the sum of P450,000, a very large sum

by any standards. In his evidence he justified this sum as follows:

- In an eighteen year career in the insurance industry he had held

high positions requiring absolute honesty and had built up a
reputation as an honest broker.

- As a result of the letter he was viewed by people as dishonest and

immoral and some clients would not deal with him because of this.

- He had listed clients he believed would have insured with him, but
for the letter, and calculated income lost to the company at
P270,000.

- Business placed with other insurers but lost because of the letter
would have amounted to P150,000.

- The other P30,000 was for general damages for “pain and
suffering.”

101. Like Paul Chitate had done before him, the defendant relied on hearsay,

saying that several potential clients had told him they received the letter.

No clients were called to verify this, no list of clients was produced, and

on its face the letter of 1st April 2008 is not copied to clients at all. I have

already found that the letter to Dinare did not defame him, as its

identified target was Coram, and the defendant was not named. His claim

that the company lost P270,000 in this way has not been substantiated.

Nor has he substantiated any personal loss of this nature, it being self-
 51

evident that even if it had received P270,000 in income, Mercantile and

General would have had to account for its overheads and tax before

distributing any balance to all its shareholders (and not just to the

defendant). Finally, on the evidence it appears that Mercantile and

General hit the ground running and from their first day of operations had

numerous clients, including many from First Sun who could have been

expected to receive a letter from First Sun, if such was ever written to

them. The P270,000 damages so claimed by the defendant have not

been proven.

102. As regards business allegedly lost from insurers, whom the defendant

claimed were influenced by the letter of 1st April 2008 not to do business

with Mercantile and General, only Regent and Hollard, and no others are

named. In each case the defendant admitted under cross-examination

that the letters received by Mercantile and General in May declining to

appoint it, were in response to applications made to the companies for

appointment as their insurance agent. It is common cause that at that

time Mercantile and General was the appointed agent of B.I.C. and could

not in any event act on behalf of any other insurer. So no loss was

occasioned by their refusal at that time, even if they did refuse because

they received a copy of the letter of 1 st April 2008, which was copied to all

insurers. Equally the damages claimed would have been suffered by

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Mercantile and General and not by the defendant personally. No

breakdown was tendered as to how the figure of P150,000 under this

head was arrived at.

103. There remains the claim for P30,000 in general damages. The allegations

of fraud and dishonesty are serious in the context of an industry where

honesty is an essential attribute. I note, however, that this was softened

slightly by the statement that “fraudulent activities should (not would)

manifest in due course. In the event B.I.C., the principal addressee,

refused to cease doing business with Mercantile and General and the

defendant. It continues to do so to this day. It required proof of fraud

first, which was not forthcoming. So in its eyes, the reputation of the

defendant has not been irrevocably dented. It is true that the defendant

acted in an unethical and underhand way when he formed his competing

company secretly, while still working for the plaintiff, and in attempting to

claim commission for two clients already insured by First Sun. For this he

was reprimanded by Mrs Fourie, the Principal Officer of B.I.C. She also

considered the letter of 1st April 2008 to be justified in the circumstances,

as First Sun was, in her view, protecting its business and its client base. I

will take these circumstances into account in deciding upon an appropriate

measure of damages.
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104. The letter was also copied to the Registrar of Insurance, and to the

Commissioner of Labour. That the Registrar was not adversely influenced

is shown by the defendant’s evidence that Mercantile and General has

now graduated from being a registered agent, to being a registered

broker. The defendant himself remains registered and in business. The

Commissioner of Labour was not called, but he too seems not to have

acted on the letter, because the defendant remains working in Botswana,

and there is no evidence that his Work or Residence Permits were in any

way affected.

105. In all these circumstances I am persuaded by the submission of the

defendant’s counsel that a modest award of damages only is justified in

this case. I consider an appropriate award for the damages suffered to be

P5000. Since each party has been partially successful in regard to the

counterclaims, their costs should be shared.

In result:

(1) The plaintiff’s Claims A, B, C and D are dismissed.

(2) The defendant’s counterclaims A and B are dismissed.

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(3) The defendant’s counterclaim C succeeds to the extent that he is

awarded damages of P5000-00.

(4) The plaintiff shall pay the defendant’s costs of the action.

(5) Each party shall bear its own costs of the counterclaims.

DELIVERED IN OPEN COURT AT LOBATSE ON THIS 19TH DAY OF

FEBRUARY 2010.

____________________
I.S. KIRBY
[JUDGE]

Tafa & Co. for the Plaintiff

M.T. Garekwe Attorneys for the Defendant