Christensen v Gordon - [2021] NZHC 1737

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV 2020-404-000710

[2021] NZHC 1737

BETWEEN
TONY CHRISTENSEN and ROSALIND

MARY CHRISTENSEN as trustees of the CHRISTENSEN FAMILY TRUST TWO
First Plaintiffs

AND

WOODY ROBERT PURDOM, LEANNE GILLIAN RUBY CLOUGH and PROFESSIONAL TRUSTEE SERVICES

2019 LIMITED as trustees of the PURDOM FAMILY TRUST

Second Plaintiffs

AND

TIMOTHY PAUL GORDON

First Defendant

AND

PARTITION SOLUTIONS LIMITED

Second Defendant

AND

ANGELA GORDON

Third Defendant

Hearing: 28 April 2021

Appearances:

P Amaranathan for the Plaintiffs S P Maloney for the Defendants

Judgment:

12 July 2021

JUDGMENT OF VAN BOHEMEN J

This judgment was delivered by me on 12 July 2021 at 4.00pm Pursuant to Rule 11.5 of the High Court Rules

Solicitors/Counsel:
Mackie & Co Limited
E St John, Barrister, Auckland Rice Craig, Auckland

…………………………
Registrar/Deputy Registrar

CHRISTENSEN v GORDON [2021] NZHC 1737 [12 July 2021]

Introduction

[1] In a judgment delivered on 16 March 2021,1 Palmer J found that the first and third defendants, Timothy Gordon and Angela Gordon (the Gordons), and by extension, the second defendant, Aluminate Solutions Ltd (Aluminate), had breached a three-year restraint of trade which the Gordons had entered into when selling their shares in Trans-Space Industries Ltd (Trans-Space) to Tony and Rosalind Christensen and Woody Purdom and Leanne Clough, who, as trustees of the Christensen Family Trust Two and the Purdom Family Trust, are the first and second plaintiffs.2

[2] Palmer J issued an injunction restraining the Gordons from being involved the activities identified in the injunction and from being involved in the business of Aluminate until after 6 December 2022.3

[3] The plaintiffs now apply for a freezing order in respect of all of the assets of Aluminate pending determination of costs and the quantum of damages to be awarded to the plaintiffs. The defendants oppose the application for a freezing order.

[4] Meanwhile, the defendants have filed a notice of appeal of Palmer J’s decision in the Court of Appeal and apply to this Court for a stay of Palmer J’s decision pending the outcome of the appeal. The defendants also seek an order that any hearing on quantum is deferred until after the appeal has been determined. The plaintiffs oppose the application for a stay.

[5]The two applications were heard before me on 28 April 2021.

Relevant background

[6] In November 2019, Mr Gordon sold his shares in Trans-Space to the plaintiffs. The agreements for sale and purchase between Mr Gordon on the one hand and Mr and Mrs Christensen on the other, and between Mr Gordon on the one hand and Mr Purdom and Ms Clough on the other, each contained a clause under which the Gordons

1      Christensen v Gordon [2021] NZHC 490.
2      It has been accepted in this proceeding that the plaintiffs, in their capacities as trustees, completed the agreements with Mr Gordon for purchase of shares in Trans-Space.
3      Christensen v Gordon, above n 1, at [41].

covenanted that…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Christensen v Gordon

Details

AGLC: Christensen v Gordon [2021] NZHC 1737
Case: [2021] NZHC 1737
Decision Date: 12 July 2021

CaseChat Overview and Summary

Christensen v Gordon involved a dispute between the plaintiffs, who had purchased shares in a business called Trans-Space, and the former shareholders, Timothy Gordon and Angela Gordon (the Gordons), who had entered into a three-year restraint of trade agreement. The Gordons were found to have breached the restraint of trade by entering into a competing business through the company, Aluminate Solutions Ltd (Aluminate). The court issued an injunction restraining the Gordons from being involved in the business of Aluminate until 6 December 2022. The plaintiffs then applied for a freezing order in respect of Aluminate's assets pending determination of costs and quantum of damages. The defendants opposed the application for a freezing order and filed a notice of appeal against Palmer J's decision. They also applied for a stay of Palmer J's decision pending the outcome of the appeal and sought an order that any hearing on quantum is deferred until after the appeal has been determined. The plaintiffs opposed the application for a stay.

The court dismissed the plaintiffs' application for a freezing order over Aluminate's assets, finding that there was no arguable case against Aluminate and that the plaintiffs only had an arguable case against the Gordons. The court considered that the assets of a company are owned by the company and the shareholders have no rights to those assets other than a right to share in the distribution of surplus assets. The court granted the defendants' application for a stay of Palmer J's judgment, finding that the factors in favour of a stay outweighed those against granting a stay. The court also ordered that any hearing on the quantum of the defendants' liability to the plaintiffs be deferred until after the defendants' appeal has been determined. The defendants were awarded costs on both applications on a 2B basis.

Orders