Intergroup Limited v Pipe Vision NZ Limited - [2024] NZHC 159

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2023-404-2993

[2024] NZHC 159

BETWEEN
INTERGROUP LIMITED

Plaintiff

AND

PIPE VISION NZ LIMITED

Defendant

Hearing: 7 February 2024

Appearances:

B D Gustafson for Plaintiff

C E Harris and A Davison for Defendant

Judgment:

13 February 2024

JUDGMENT OF ANDERSON J

This judgment was delivered by me on 13 February 2024 at 3.30 pm pursuant to Rule 11.5 of the High Court Rules 2016.

……………………………… Registrar/Deputy Registrar

-

Solicitors: Speakman Law, Auckland

Jackson Russell, Auckland

INTERGROUP LTD v PIPE VISION NZ LTD [2024] NZHC 159 [13 February 2024]

The issue

[1] InterGroup Ltd brings claims against Pipe Vision NZ Ltd in the High Court. Pipe Vision protests this Court’s jurisdiction. It says InterGroup’s claim is within the exclusive jurisdiction of the Employment Relations Authority, applying the Supreme Court decision in FMV v TZB.1 I agree, for the reasons outlined below.

The underlying dispute

[2] InterGroup and Pipe Vision are competitors in the pipe cleaning and hydro-excavation industry. Until 29 July 2023, Mr Troy Andersen was employed by InterGroup in Cromwell as a “driver/operator” of specialised equipment InterGroup uses. His employment contract included a 12-month non-compete restraint and a non-solicitation restraint. On 25 September 2023, Mr Andersen started working for Pipe Vision as the Lower South Island Regional Manager of its new office in Cromwell. InterGroup claims that Pipe Vision induced or caused Mr Andersen to breach the restraints causing it to lose air excavation business in Cromwell.

[3] InterGroup’s proceedings against Pipe Vision claim in tort for inducing breach of contract and interference with contractual relations. InterGroup seeks an interim injunction in substance enforcing the restraints. The orders sought would preclude Pipe Vision using Mr Andersen for work in Cromwell until further order of the Court. Mr Andersen and his partner live in Cromwell. Mr Andersen is not a party to the proceeding.

[4] Due to how the matter was case-managed, I heard both the protest application and the interim injunction application sequentially. I did so on the basis that if the protest succeeded, I would not give any judgment on the interim injunction application.

[5] On the merits of the claim, Pipe Vision says that the restraints are unreasonable and therefore unenforceable. It says the restraints protect no legitimate interest given the nature of Mr Andersen’s role. If the restraints are enforceable at all, Pipe Vision

1 FMV v TZB [2021] NZSC 102, [2021] 1 NZLR 466 [FMV]. Footnote references to paragraph numbers are to paragraphs in FMV unless otherwise stated.

says no more than a two-month restraint is justified. It denies that Mr Andersen is in breach if and to the extent the restraints are enforceable. Pipe Vision also says it did not induce any breach nor unlawfully interfere and rejects that any breach is the cause of loss of business.

[6] Although a number of affidavits were filed, the key facts relevant to the protest are…

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: [2024] NZHC 159
Decision Date: 13 February 2024

CaseChat Overview and Summary

InterGroup Limited, a pipe cleaning and hydro-excavation company, initiated legal proceedings against Pipe Vision NZ Limited, a competitor in the same industry, in the High Court of New Zealand. InterGroup alleged that Pipe Vision induced or caused an employee, Mr Troy Andersen, to breach non-compete and non-solicitation restraints in his former employment contract with InterGroup. The case was brought following Mr Andersen's employment by Pipe Vision as Lower South Island Regional Manager in Cromwell, where InterGroup claimed loss of business due to Mr Andersen's alleged breaches. Pipe Vision contested the Court's jurisdiction, asserting that the Employment Relations Authority (ERA) had exclusive jurisdiction over employment relationship problems, including disputes about employment agreements and breaches.

The central legal issue was whether the High Court had jurisdiction to hear InterGroup's claims against Pipe Vision, given the ERA's exclusive jurisdiction as outlined in the Employment Relations Act 2000. The Court examined whether the claims related to or arose out of an employment relationship, focusing on the factual connection to the employment contract between InterGroup and Mr Andersen. The Court applied the "universalist" approach from the Supreme Court decision in FMV v TZB, which emphasised a factual assessment of the dispute's connection to an employment relationship.

The Court concluded that InterGroup's claims were indeed within the exclusive jurisdiction of the ERA. The claims were grounded in the interpretation and enforceability of the restraints in Mr Andersen's employment contract, and the connection to his employment relationship with InterGroup was significant. The involvement of Pipe Vision as a third party did not diminish the connection to the employment relationship. The Court also noted that the ERA had jurisdiction over disputes involving penalties for inciting breaches of employment agreements, further supporting the ERA's exclusive jurisdiction in this matter.

The Court upheld Pipe Vision's protest to jurisdiction and dismissed InterGroup's proceeding. The parties were directed to file a joint memorandum on costs within 14 days, with a further 14 days allowed for InterGroup to respond if costs could not be agreed.

Orders