Feng v Liu - [2017] NZHC 2479

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2017-404-002164 [2017] NZHC 2479

BETWEEN
QIN FENG

Plaintiff

AND

BENLONG LIU AND ZHANPENG SU First Defendants

MAJESTIC SL LIMITED, YONGNAN SHI and SHAOYING LI

Second Defendants

Hearing: 6 October 2017

Appearances:

A C Sorrell for Plaintiff
A Barker QC for Respondents

Judgment:

10 October 2017

JUDGMENT OF VENNING J

This judgment was delivered by me on 10 October 2017 at 3.15 pm, pursuant to Rule 11.5 of the High
Court Rules.

Registrar/Deputy Registrar

Date……………

Solicitors: Croftfield Law Ltd, Auckland
Glaister Ennor, Auckland

Copy to: A C Sorrell, Auckland
A Barker QC, Auckland

FENG v LIU & ORS [2017] NZHC 2479 [10 October 2017]

[1] The plaintiff seeks an interim injunction against the defendants preventing them from working in or carrying out the business of making kitchen and other household commercial joinery.

[2] The plaintiff Qin Feng (Feng) and the first defendants Benlong Liu (Liu) and Zhanpeng Su (Su) were shareholders and directors in Ideal Projects Limited (Ideal), a kitchen joinery business. Mr Liu held 35 per cent and Mr Su held 30 per cent of the shares. Mr Feng held the other 35 per cent. On 19 December 2016 Messrs Su and Liu agreed to sell their shares to Mr Feng. Under the terms of the agreement dated 19 December 2016 Mr Feng paid Mr Su and Mr Liu $150,000 each. Mr Feng also indemnified Messrs Su and Liu for their personal guarantees of the premises lease and agreed to pay the balances due on two motor vehicle financing transactions totalling just over $80,000. To finance the purchase of the shareholding Mr Feng and his partner, Sherria Chen agreed that a property held in her name would be transferred to their joint names and the mortgage increased by $140,000. Ms Chen then took 40% of the shares in Ideal.

[3] The agreement contained a restraint of trade clause:

7.1In consideration for entering into this agreement, Vendor 1 and Vendor 2 hereby personally and severally covenants that they will not, and that none of their respective associated persons shall, without the prior written consent of the Purchaser, for a period of two years from the date of this agreement and for a radius of 30 kilometers either directly or indirectly carry on or in any way assist or be interested in either alone or in partnership with or as a manager, director or shareholder in any business similar to the Company. In addition Vendor 1 and Vendor 2 shall not:

(a) Order on account or as an agent of any person, canvass or solicitor or accept orders for any goods or services similar to or competing with the goods or services which have been or are in the time sold or supplied in the ordinary course of the Company, or the normal operations of the Company.

(b) Directly or indirectly or on behalf of or in conjunction with any person, solicit or…

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 Feng v Liu

Details

AGLC: Feng v Liu [2017] NZHC 2479
Case: [2017] NZHC 2479
Decision Date: 10 October 2017

CaseChat Overview and Summary

The case of Feng v Liu involves a dispute between Qin Feng, the plaintiff, and Benlong Liu, Zhanpeng Su, Majestic SL Limited, Yongnan Shi, and Shaoying Li, the defendants. The plaintiff seeks an interim injunction to prevent the defendants from engaging in business activities similar to the plaintiff's kitchen and household commercial joinery business, Ideal Projects Limited. The defendants argue that the restraint of trade clause in the agreement is unreasonable and that they have not solicited the plaintiff's clients or used confidential information.

The court had to determine whether the plaintiff had established a serious question to be tried regarding the enforceability of the restraint of trade clause and whether the balance of convenience and the interests of justice favored the issuance of an interim injunction. The court found that the plaintiff had a strong prima facie case for breach of the restraint by Messrs Liu and Su and that there was sufficient evidence to support a seriously arguable claim for inducement of breach of contract against all defendants. The court also considered the balance of convenience and the interests of justice, finding that the balance of convenience and interests of justice supported the issuance of the injunction.

The court issued an interim injunction, enjoining the defendants and their respective associated persons from directly or indirectly carrying on or in any way assisting or being interested in any business similar to that carried on by Ideal until December 19, 2018, within 30 kilometers of Ideal's premises. The court also ordered that the defendants and their associated persons shall not order, canvass, solicit, or accept orders for any goods or services similar to or competing with the goods or services which have been or are at present sold or supplied in the ordinary course of Ideal or in the normal operations of Ideal, directly or indirectly on behalf of or in conjunction with any person solicit or entice any of the employees or contractors of Ideal or any clients of Ideal, and use or disclose information of a secret or confidential nature relating to the affairs of Ideal. The court reserved leave for the parties to seek amended orders by consent if a sensible arrangement could be achieved to deal with existing contracts.

Orders