Francis v Hannam
[2025] NZHC 356
•28 February 2025
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2025-404-467
[2025] NZHC 356
IN THE MATTER OF Olivado Limited (administrators appointed) BETWEEN
BENJAMIN BRIAN FRANCIS and
GARRY CECIL WHIMP as voluntary administrators of OLIVADO LIMITED (IN VOLUNTARY ADMINISTRATION)
ApplicantsAND
GARY KEITH HANNAM
First Respondent
PATRICIA JOY DRAPER
Second RespondentHOPETOUN HOLDINGS GMBH
Third Respondent
TANLAY AG
Fourth Respondent
Hearing: On the papers Counsel:
C Jiang and K A Mills for Applicants
Judgment:
28 February 2025
JUDGMENT OF O’GORMAN J
This judgment was delivered by me on 28 February 2025 at 3 pm pursuant to r 11.5 of the High Court Rules 2016.
Registrar/Deputy Registrar
…………………………………
Solicitors:
Tompkins Wake, Auckland
FRANCIS v HANNAM [2025] NZHC 356 [28 February 2025]
[1] The administrators of Olivado Ltd (Olivado) apply in this proceeding for an interim injunction:
(a)restraining the respondents from terminating the administrators’ ongoing use of Olivado’s website and email server; and
(b)restraining the respondents from terminating Microsoft licensing services to Olivado.
[2] Olivado is a fruit processing business that processes, packages and distributes various types of oil domestically and overseas. Olivado’s commercial premises are located outside of Kerikeri.
[3] On 23 January 2025, the applicants, Mr Francis and Mr Whimp, were appointed as administrators of Olivado by a secured creditor, Seeka Ltd.
[4] On 5 February 2025, the administrators held the first creditors’ meeting and their appointment was confirmed. The watershed meeting for Olivado is scheduled to be held on 4 March 2025 at 11 am.
[5] The first and second respondents are Olivado’s directors, Gary Keith Hannam and Patricia Joy Draper. Mr Hannam is Olivado’s sole shareholder. The administrators understand that Mr Hannam and Ms Draper are husband and wife or de facto partners.
[6] The first respondent resides in Switzerland, but Ms Draper has told the administrators that Mr Hannam is currently in Kenya. The second respondent is in New Zealand, and her only known physical address is the one she has listed on the Companies Office website.
[7] The third and fourth respondent companies are registered in Switzerland, but the administrators believe they are substantively controlled by Mr Hannam. It appears to the administrators that the third respondent (Hopetoun) purports to own the “Olivado” brand and trademark. The fourth defendant (Tanlay) provides IT services to Olivado, including Microsoft 365 licences (including email access via Outlook).
[8] The administrators have been trading Olivado’s business, pending a sale of the business assets, which is currently being negotiated. Mr Hannam had previously agreed to the administrators continuing to use the Olivado trademark and branded labelling. However, on 27 February 2025, Mr Hannam sent an email to the administrators. In that email:
(a)Mr Hannam stated that the licensing arrangements in relation to use of the brand “Olivado” were terminated immediately.
(b)Mr Hannam threatened to terminate Olivado’s Microsoft 365 licences (including Outlook) on 28 February 2025 for non-payment of an invoice for the period from December to February 2025 (most of which was pre-administration on 23 January 2025).
(c)Further, Mr Hannam asked Olivado to stop using the olivado.com email server, implying that he would terminate Olivado’s use of its email server.
[9] The administrators do not know who owns the “olivado.com” domain and associated email server, but believe it is likely to be owned or controlled by one or more of the respondents.
[10] If Mr Hannam and/or the third and fourth respondents take these threatened steps, then Olivado’s business operations will be halted, causing losses to Olivado, jeopardising the sale of Olivado’s assets, and causing loss to the secured creditors. The administrators do not have time to set up a new domain, create a new email server, set up Microsoft 365 and migrate all documents to a new server. Accordingly, they have commenced the current proceeding seeking urgent interim injunction orders.
Grounds for interim injunction
[11]The administrators submit that the requirements for an injunction are satisfied.
[12]There is a serious question to be tried:
(a)Mr Hannam has not produced any signed agreement between Olivado and Tanlay in relation to the supply of the Microsoft 365 licences. The administrators do not believe any terms would allow termination on one day’s notice, so Tanlay may well be in an anticipatory breach.
(b)Section 275 of the Companies Act 1993 provides that the supplier of essential services (such as telecommunications services) may not discontinue the supply of services because an amount owing prior to the liquidation is owing. While that provision has not been expressly extended to administrators, it is arguable that the Court should be able to make similar orders under s 239ADO.1 This is because if the utility supplier is essential to the success of the administration (where it is trading), then the administrator should not be held to ransom by the utility supplier in relation to pre-administration claims.
(c)There is no signed agreement that has been produced by the respondents setting out the terms of Olivado’s use of the olivado.com domain and associated email, but it does not seem credible that this could be terminated on one day’s notice.
(d)Section 239ABD of the Companies Act precludes an owner of property that was used or occupied by, or is in the possession of, a company from taking possession of the property of otherwise recovering it, except with the administrator’s written consent or with the permission of the Court. Rather, a process for giving notice only is provided for under s 239 ABT of the Companies Act.
[13]The overall balance of convenience favours the interests of the applicants:
(a)the orders sought will maintain the status quo;
1 Heath and Whale on Insolvency (online ed, LexisNexis) at [17.38], referring to the fact that an equivalent provision is extended to administrators in Australia under the Corporations Act 2001 (Cth), s 600F.
(b)there is insufficient time (one day’s notice) for the administrators to set up alternatives; and
(c)damages will not be an adequate remedy in circumstances where most of the respondents are based overseas, and the administrators already assess that the liquidator may have claims available against the directors.
[14] The administrators have also applied for orders of substituted service given the difficulties with serving the first, third and fourth respondents (all located overseas). All of the administrators’ communications with Olivado’s directors have been via their email addresses.
Legal principles
[15] The leading case on the jurisdiction to grant interim injunction orders against overseas defendants is Commerce Commission v Viagogo AG.2 In that proceeding, the Commerce Commission has sought without notice interim injunction restraining orders against Viagogo AG, a company registered in Switzerland, seeking to prevent it from making certain types of representations to New Zealand consumers through its website.
[16] On appeal, the Court of Appeal held that the grant of interim relief did not involve accepting that the Court had jurisdiction to hear and determine a proceeding on the merits. It was sufficient that there was a real prospect that the Court would proceed to hear and determine the proceeding on the merits, and that it was in the interests of justice to grant relief designed to ensure that, if and when the Court did hear the proceeding, it was in a position to do substantial justice between the parties.3 The ability to grant interim relief before service on an overseas defendant, in order to preserve the position pending a possible hearing before the New Zealand courts, is necessary to do substantial justice between the parties in most cases where it does ultimately hear and determine the proceeding.4
2 Commerce Commission v Viagogo AG [2019] NZCA 472, [2019] 3 NZLR 559.
3 At [61].
4 At [73].
[17] In due course, a proceeding must be properly served on a defendant outside New Zealand in accordance with the High Court Rules 2016, but the mere fact that service has not yet occurred does not preclude the grant of interim relief.5 The amenability of the defendant to service outside New Zealand is relevant to the assessment of whether interim relief should be granted. The power to grant an interim injunction in these circumstances is available under r 7.53 of the High Court Rules, and as a matter of inherent jurisdiction.6
[18] There are obvious difficulties in enforcing injunctions issued against a person without a presence in New Zealand, but the Court should not assume that merely because a defendant is outside New Zealand, the order will not be complied with.7 Effective sanctions in New Zealand may include the contempt jurisdiction against a individual defendant on their return to New Zealand, debarring the defendant from defending the proceedings on the merits, or bringing the order to the attention of others present in New Zealand in order to deter them from facilitating breaches by the defendant and exposing themselves to the contempt jurisdiction of the Court as a result.
[19] Where a defendant is to be served abroad without leave under r 6.27, and the Court is asked to grant interim relief against the defendant before service, the Court should consider on a preliminary basis, the matters set out in r 6.29:
(a)Is there a good arguable case that the claim falls wholly within one or more of the paragraphs of r 6.27?
(b)Is there a serious issue to be tried on the merits?
(c)Is New Zealand the appropriate forum for the trial of the proceeding?
(d)Are there any other circumstances relevant to whether the New Zealand court should exercise jurisdiction?
5 At [75].
6 At [81].
7 At [91].
(e)The overall assessment is whether there is a real prospect that the New Zealand courts will exercise jurisdiction to hear the proceedings.
[20] Rule 6.8 permits an order to be made for substituted service if reasonable efforts have been made to serve a document by a method permitted or required under the rules, and either the document has come to the knowledge of the person to be served or it cannot be promptly served. In urgent cases, particularly those where it is not appropriate to serve the defendant before obtaining interim relief, the Court of Appeal observed that it is difficult to see how the “reasonable efforts” requirement could be met. Accordingly, r 6.8 cannot be used to do an “end run” around the rules in relation to service of proceedings on defendants outside New Zealand.8
Analysis
[21] I accept that there is a good arguable case that the claim falls wholly within one or more of the paragraphs in r 6.27, providing for when a proceeding may be served out of New Zealand without leave.
(a)The disputed issues involve questions falling within r 6.27(2)(b) about a contract sought to be cancelled, or for the breach of which damages or other relief is demanded, being a contract made or entered into in New Zealand, or made by or through an agent trading or residing within New Zealand, or wholly or in part performed in New Zealand, or by its terms or by implication to be given by New Zealand law.
(b)Furthermore, I consider there to be a good arguable case under r 6.27(c) that the disputed issues involve an alleged breach in New Zealand of the contracts.
(c)In addition, r 6.27(2)(j) applies to the statutory arguments that the alleged withdrawal of the essential services and owner withdrawal of property in possession at short notice constitutes a breach of, or should
8 At [98].
be restrained under, statutory provisions that apply when a company is in administration.
[22] I accept that there is a serious issue to be tried on the merits, and that the overall balance of convenience favours the orders being made, for the reasons outlined above. The directors had previously been cooperating with Olivado’s administrators seeking to sell its business and assets as a going concern, and one day of notice purporting to withdraw essential services (and related brand use) that underly the business seems entirely inconsistent with usual commercial terms that would apply. The respondents’ failure or refusal to provide the relevant contracts or terms for review give rise to an adverse inference for the present purposes of assessing the merits on an urgent basis.
[23] I consider that New Zealand is the appropriate forum for the disputed matters raised in the application for interim relief, and I do not consider there are any other circumstances indicating that a different jurisdiction would be more appropriate. Accordingly, there is a real prospect that the New Zealand courts will hear the proceedings. No other court has jurisdiction to consider the statutory provisions that apply to the administration of a New Zealand registered company.
[24] I consider that the making of without notice interim orders is essential in the circumstances, because of an urgency of the respondents’ own making. They have purported to give one day’s notice of termination, so these interim orders are necessary to preserve the position.
[25] However, I give directions below, to enable the respondents to appear and be heard when the application is called again next Tuesday, even if this is before formal service takes place. Meanwhile, I am giving directions for the documents to be sent by email, so the respondents can appoint counsel to appear on a Pickwick basis.9
9 This term is explained in Commerce Commission v Viagogo AG, above n 2, at fn 1.
Result
[26] I make an interim order that the first, second, third and fourth respondents must not take possession of, or otherwise recover, or interfere with the applicants’ and Olivado Ltd’s use and access of:
(a)the domain and
(b)the email server associated with the domain or @olivado.com,
until after termination of the voluntary administration of Olivado Ltd, or further order of the Court (whichever is earlier).
[27] I make an interim order that the first and fourth respondents must continue to provide the following essential IT services to Olivado:
(a)Microsoft 365: Business Basic licence;
(b)Microsoft 365: Business Standard licence;
(c)Microsoft Exchange Online (Plan 2);
(d)Microsoft 365: Exchange Online Archiving Licence; and/or
(e)Microsoft 365: Defender for Endpoint,
until after termination of the voluntary administration of Olivado Ltd, or further order of the Court (whichever is earlier).
[28]I decline to make orders for substituted service.
[29]I give the following directions:
(a)I direct the registry to list this matter before me at 4 pm on 4 March 2025 by telephone conference; and
(b)I direct that the applicants send this judgment and the documents filed in this proceeding to the email addresses set out in the application for substituted service, so the respondents have informal notice and may attend the above telephone conference on a Pickwick basis.
O’Gorman J
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