EWP Sales Limited v Tibbitts - [2015] NZHC 619

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2015-404-0488 [2015] NZHC 619

BETWEEN
EWP SALES LIMITED

First Plaintiff

UP2IT ACCESS HIRE LIMITED Second Plaintiff

AND

TERRY TIBBITTS First Defendant

KAREN WILLIAMS Second Defendant

ELEVATED ACCESS NEW ZEALAND LIMITED

Third Defendant

Hearing: 25 March 2015

Appearances:

R Amaranathan for plaintiffs
B A Smith for Defendants

Judgment:

31 March 2015

JUDGMENT OF LANG J

[on application for interim injunction]

This judgment was delivered by me on 31 March at 2.30 pm, pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Date……………

EWP SALES LIMITED v TIBBITTS [2015] NZHC 619 [31 March 2015]

[1] The first defendant, Mr Tibbitts, was formerly an employee of both the plaintiffs in this proceeding. He ceased working for the second plaintiff, UP2IT Access Hire Limited (UP2IT) in April 2014. He was then made redundant by the first plaintiff, EWP Sales Limited (EWP), when it ceased to trade on 28 November
2014.

[2] Both plaintiffs were involved in businesses relating to elevated work platform machines. EWP sold such machines, and was also involved in training programmes relating to their use. UP2IT was involved in the hire and leasing of such machines. When EWP ceased to trade in November 2014, it sold its remaining stock of machines to UP2IT. UP2IT also took over the training programmes that EWP had formerly offered to customers.

The application for an interim injunction

[3] This proceeding is concerned with issues that have arisen after Mr Tibbitts was made redundant by EWP. These arise because the employment contracts that Mr Tibbitts entered into with the plaintiffs contained confidentiality provisions, as well as provisions prohibiting him from acquiring any interest in a business that competed with the plaintiffs for a period of twelve months after ceasing to be employed by them.

[4] The second defendant, Ms Williams, is Mr Tibbitt’s partner. She is the shareholder and director of the third defendant, Elevated Access New Zealand Limited (Elevated Access). Mr Tibbitts was responsible for incorporating Elevated Access on 1 December 2014, and he is currently employed by Elevated Access as its National Sales Manager. Elevated Access sells elevated work platform machines, and it also offers training programmes in respect of their use.

[5] Mr Tibbitts and Ms Williams accept that Mr Tibbitts breached his contractual obligations to the plaintiffs by soliciting work on behalf of Elevated Access from one of EWP’s clients. They have provided undertakings that they and Elevated Access will not take any steps, either directly or indirectly, to solicit work from the clients of

UP2IT until 16 April 2015, and will similarly not solicit work from EWP’s clients until 28 November 2015. Those are the dates upon which the restraint of trade provisions in Mr Tibbitts’ employment contracts will cease to have effect. In addition, Mr Tibbits and Ms Williams have agreed that the Court can make orders by consent to the same effect. I record that I made orders in those terms during the hearing on 25 March 2015.

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.

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Details

Case: [2015] NZHC 619
Decision Date: 31 March 2015

CaseChat Overview and Summary

In this case, the plaintiffs, EWP Sales Limited and UP2IT Access Hire Limited, sought an interim injunction against the defendants, Terry Tibbitts, Karen Williams, and Elevated Access New Zealand Limited. The plaintiffs claimed that Tibbitts, a former employee, breached his employment contracts' confidentiality and non-compete provisions by working for Elevated Access, a business that competes with the plaintiffs. The plaintiffs also alleged that Tibbitts took confidential information from his former employers and used a domain name that belonged to them. The defendants argued that the court should not intervene in the matter, as it was an employment dispute that should be handled by the Employment Relations Authority (ERA).

The court had to decide whether it had jurisdiction to hear the case, as well as whether there was a serious issue to be tried and whether the balance of convenience favoured granting an interim injunction. The court found that it had jurisdiction to hear the claims against Elevated Access, but not those against Tibbitts, as they were employment-related matters that should be dealt with by the ERA. The court also found that there was a serious issue to be tried regarding Elevated Access's competition with the plaintiffs and Tibbitts's alleged breach of his employment contracts. However, the court concluded that the balance of convenience did not favour granting an interim injunction against Elevated Access, as the restraint of trade provisions in Tibbitts's contracts would soon expire, and the plaintiffs' businesses were not significantly affected by Elevated Access's activities.

The court dismissed the application for an interim injunction against Elevated Access and the claim regarding the domain name. The court also declined to make any order regarding the costs of the proceeding, inviting the parties to file short memoranda if they disagreed with its preliminary impression that costs should lie where they fell. The next event in the proceeding would be a case management conference before an Associate Judge, to be held in late May 2015, once the outcome of the applications before the ERA was known.

Orders