Carpet Barn Hamilton Limited v Jobe

[2017] NZHC 2920

IN THE HIGH COURT OF NEW ZEALAND HAMILTON REGISTRY

I TE KŌTI MATUA O AOTEAROA KIRIKIRIROA ROHE

CIV-2017-419-168

[2017] NZHC 2920

IN THE MATTER

of an appeal against the decision of the District Court at Hamilton

BETWEEN

THE CARPET BARN - HAMILTON- LIMITED

Appellant

AND

BIANCA HELGA MARIA JOBE

Respondent

Hearing:	27 November 2017
Counsel:	M D Branch and K F Shaw for Appellant T M Braun for Respondent
Judgment:	27 November 2017

JUDGMENT (NO.2) OF BREWER J

This judgment was delivered by me on 27 November 2017 at 4:00 pm pursuant to Rule 11.5 High Court Rules.

Registrar/Deputy Registrar

Solicitors:

THE CARPET BARN HAMILTON LTD v JOBE [2017] NZHC 2920 [27 November 2017]

Harkness Henry (Hamilton) for Appellant Whitfield Braun (Hamilton) for Respondent

[1]                 In my judgment delivered on 25 October 2017,1 I allowed Carpet Barn’s appeal:

[44]      The appeal is allowed. I make the following interim interlocutory orders:

(a)Ms Jobe is restrained from:

(i)intentionally soliciting or diverting any clients, customers or employees of Carpet Barn; and

(ii)being concerned with any business that is in competition with Carpet Barn in a capacity that does, or might reasonably be expected to, assist such competition.

(b)The period  of  this  restraint  shall  expire  at  2:15  pm  on  2 February 2018 unless Carpet Barn has previously filed an application for its extension, in which case the restraint will continue until further order of the Court.

(c)A condition for any extension of the period of this restraint is that Carpet Barn must satisfy the Court that it has, prior to its application, taken all reasonable steps to advance its substantive proceeding.

[45]      Leave is reserved to Ms Jobe to make application, on five days’ notice, to rescind or vary the restraint on the grounds:

(a)of economic hardship; and/or

(b)of the unreasonable declining by the majority shareholders of a sale of her shares to a third party; and/or

(c)of unreasonable delay by Carpet Barn in advancing its substantive proceeding.

[2]                 These orders were not in the form sought by Carpet Barn in the District Court and which Carpet Barn asked me to make on appeal. In particular, Carpet Barn sought to prevent Ms Jobe from working at all for a competitor, Flooring Design. As I explained in my Judgment, I was concerned to make the restraints as least restrictive as reasonable.

1      The Carpet Barn Hamilton Ltd v Jobe [2017] NZHC 2608.

[3]                 Almost immediately, the parties began to dispute the ambit or interpretation of [44](a)(ii). Ms Jobe continued to work for Flooring Design but changed the scope of her work. This led to the current application by Carpet Barn for a further interim injunction and a finding that Ms Jobe is in contempt of Court.

[4]                 I explained to counsel at the beginning of today’s hearing that my intention in making the restraints set out in [44](a) was to remove Ms Jobe from direct competition with Carpet Barn. However, I did not extend the restraint to involvement in any capacity with a competitor. In other words, performing “back room” tasks that might indirectly be competitive was not intended by me to be restrained.

[5]                 I observed further to counsel that, having read the materials describing the current dispute, it seemed to me that the only aspect of Ms Jobe’s conduct which might breach her restraints is her contact with carpet installers. From the affidavits, carpet installers seem to have real significance in the conduct of a carpet supply business.

[6]                 Counsel, responsibly, decided to attempt to reach agreement on the outcome of this proceeding on the basis of the indications I had given. They were successful in doing so, save for the issue of costs.

[7]                 By consent, I make the following interim interlocutory orders which will take effect as though they were part of [44] of my judgment:

(a)Ms Jobe is further restrained as follows:

(i)If contacted by a customer, potential customer or installer, Ms Jobe will advise the person: ‘I am subject to a non- competition injunction which means that I cannot have direct contact with you. I will transfer you to [X]’; or ‘[X’s] contact details are’;

(ii)Ms Jobe will have no direct involvement in the installation of flooring products which, in particular, means no contact with installers, customers or other contractors;

(iii)Ms Jobe will not have any involvement on the shop floor during times when the store is open to the public or open to customers.

Costs

[8]                 Mr Branch for Carpet Barn seeks solicitor/client costs against Ms Jobe. He submits that Ms Jobe’s conduct has been deliberate and therefore it is not necessary to show that she knew she was in breach of the terms of the injunction in order for her to be in contempt. Mr Branch relies on the decision of the Court of Appeal in Siemer v Stiassney.2

[9]                 Mr Braun for Ms Jobe submits that his client has acted reasonably and that, if anything, costs should be awarded in her favour.

[10]              I accept that Ms Jobe took legal advice on the interpretation of the interim restraining orders and acted in accordance with that advice. Ms Jobe was open with Carpet Barn about the basis on which she was now working for Flooring Design.

[11]              I also accept that the resolution by agreement of the current proceeding is more limited than the ambit of Carpet Barn’s application. Carpet Barn sought an order stopping Ms Jobe from being employed by or attending the premises of Flooring Design. It also sought a finding that Ms Jobe is in contempt of Court.

[12]              However, it was Ms Jobe’s responsibility to comply with the Court ordered restraints. It was open to her to seek legal advice on how she could remain in the employment of Flooring Design and then to act in reliance on that advice. But when Carpet Barn protested it was at her risk that she  continued with  her employment.  Mr Braun submits that if Carpet Barn had responded to Ms Jobe’s query as to what she could do differently with a proposal more nuanced than prohibition of employment by Flooring Design, then this current proceeding would not have been necessary. But that misses the point. It was Ms Jobe’s responsibility to comply, not Carpet Barn’s to propose. Carpet Barn has succeeded in part in this proceeding. Ms Jobe will have to pay costs.

[13]              The award of costs is discretionary. I will not find Ms Jobe in contempt of Court, although I acknowledge that deliberate conduct amounting to a breach of a

2      Siemer v Stiassny [2008] 1 NZLR 150 at 153.

Court order can be contempt notwithstanding lack of intent to breach. Nevertheless, a finding of contempt is a finding made when it is necessary to uphold the authority of the Court. In the circumstances as I have described them, I see no such necessity.

[14]              It follows that I do not find that this is a case where solicitor/client costs should be ordered. I detect from the affidavits an animus between the parties that has led to litigation of a type which was unnecessary. Ms Jobe could have sought clarification from the Court as to whether the terms of her changed employment were proscribed by the restraining orders. With the co-operation of counsel, this could have been done by a simple joint memorandum setting out the contending points of view. Failing that, Ms Jobe could have made an application on notice.

[15]In all the circumstances, I award costs to Carpet Barn on a 2B basis.

Extension of restraint period

[16]              In [44](b), I stipulate that the period of the restraint shall expire at 2:15 pm on 2 February 2018 unless a prior application for extension has been made. Mr Branch seeks an enlargement of that period by 30 days on the basis that Ms Jobe, because of her decision to work with installers, was in breach of her restraint for about that period.

[17]              I will not do that. The purpose of the period of restraint is to give Carpet Barn a reasonable opportunity to demonstrate its commitment to resolving the dispute at a substantive hearing. This is because delay would favour Carpet Barn’s interests while prolonging Ms Jobe’s inability to fully earn her living. This purpose has not changed.

Brewer J