Ex-Tekkie Town shareholders: We'll take restraint of trade battle with Pepkor to ConCourt

Tekkie Town (GETTY)
Tekkie Town (GETTY)
  • Former shareholders of Tekkie Town sought leave to appeal an interim restraint of trade, but the Supreme Court of Appeal rejected their application. 
  • The Western Cape High Court ruled in 2018 that the group, who had started their own new business called Mr Tekkie, were not allowed to trade certain footwear. 
  • But the shareholders say the order was unclear.
  • Now, they want to take their challenge to the Constitutional Court.


Former shareholders of Tekkie Town took a blow in the Supreme Court of Appeal (SCA) in a drawn-out legal battle with Pepkor this week, when their bid to seek leave to appeal an interim restraint of trade failed.

The SCA rejected their application to appeal a previous court order, saying the findings were clear.

The application for leave to appeal was brought by Tekkie Town founder Braam van Huyssteen; the former CEO and shareholder in the company Bernard Mostert; plus three other former shareholders; against Pepkor Speciality and Pepkor Holdings - formerly Steinhoff Africa Retail.

The original interim order - given in the Western Cape High Court in 2018 - had ruled that the former Tekkie Town shareholders, who had since started their own new business called Mr Tekkie, were not allowed to trade a list of footwear annexed to the order.

But the list was not attached to the order and has not since been provided to the former shareholders. A subsequent attempt by Pepkor to have the court order amended to include a list, was dismissed.

In 2018, Pepkor delivered a list of Tekkie Town footwear to Mr Tekkie's attorneys that it said the latter retailer was prohibited from stocking. A statement by Pepkor said the list was confidential, but "lengthy and comprehensive", Fin24 reported at the time.

The appeal court found on Tuesday that the previous order was sufficiently clear and not meaningless or unjust. The application for leave to appeal was struck from the roll.

In reaction to their Supreme Court of Appeal victory, Pepkor commented that that the urgent restraint of trade interdict it obtained in 2018 specified that a range of footwear should be removed from the shelves of Mr Tekkie stores was now confirmed by the Supreme Court of Appeal.

The Supreme Court of Appeal found that the order made by the lower court conveys with sufficient clarity what is required of the previous owners and management of Tekkie Town, namely not to be involved in any business like Mr Tekkie, that offers for sale footwear that the Tekkie Town business offered for sale on 1 October 2016 or before.

"The practical result of this ruling is to confirm that Van Huyssteen and Mosterts's Mr Tekkie, which they started after selling Tekkie Town to Steinhoff and Markus Jooste, have to remove all the stock as stipulated by judge Baartman in her ruling from the shop floor," Pepkor said in a statement on Thursday.

"This is the second judgement in recent months where the courts have ruled in favour of Pepkor and the group is very satisfied with these outcomes which displays a fair commercial environment where the rule of law prevails. The Pepkor group will continue to protect its rights and interests and is confident that the legal process and system will continue to deliver justice."

Long battle, long history

The Supreme Court of Appeal judgment sets out the history behind the legal battle between the former shareholders of Tekkie Town and Pepkor.

Mainly selling branded footwear, Tekkie Town was operating more than 300 retail stores by 2016. In August 2016, the former shareholders entered into an agreement with Steinhoff International Holdings, incorporated in the Netherlands.

The former Tekkie Town shareholders, in essence, exchanged all their shares in a claim against Tekkie Town for 43 million shares in Steinhoff, which had a value of about R3.3 billion at the time.

Shortly afterwards, the Steinhoff audit scandal broke, and the value of the company's shares plummeted, leading to the former Tekkie Town shareholders claiming they were misled by Steinhoff and its former CEO Markus Jooste at the time of negotiating the share swap deal in 2016.

Conditions

The conditions of the share swap agreement included confidentiality and restraint of trade provisions. Steinhoff transferred the shares in Tekkie Town to Pepkor Holdings, and Tekkie Town became a wholly owned subsidiary of Pepkor.

In October 2017, Tekkie Town sold and transferred the Tekkie Town business to Pepkor Speciality as a going concern.

In May 2018, the former shareholders started legal proceedings against Steinhoff in the Western Cape High Court, alleging that the exchange agreement had been prompted by the misrepresentations of Steinhoff and Jooste.

Unfair competition?

Pepkor claims Mr Tekkie competes directly with Tekkie Town and approached the High Court in September 2018 to enforce a restraint of trade pending the outcome of the action by the former Tekkie Town shareholders against Steinhoff for the return of the shareholding.

Former Tekkie Town CEO and Mr Tekkie shareholder Bernard Mostert told Fin24 on Tuesday evening that he and the other former shareholders of Tekkie Town are now going to turn to the Constitutional Court to appeal the interim order against them that requires them not to sell footwear described in a list which they have never seen - since it was not attached to the interim order and no list was ever before the court.

"We believe it is important to be responsible citizens and not to make light of an order that is unclear and that does not stipulate clearly what we are allegedly allowed to do and what we can't do," said Mostert.

"We remain focused on our main legal action, which is to restore our controlling interest and ownership in Tekkie Town. This case is still set to be heard in due course."

* This article was updated to add comment from Pepkor.

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