Internet Traders Ltd v Williams - [2014] NZHC 3407

IN THE HIGH COURT OF NEW ZEALAND TAURANGA REGISTRY

CIV 2014-470-158 [2014] NZHC 3407

BETWEEN
INTERNET TRADERS LTD AND ORS

Plaintiffs

AND

NICOLE JEAN WILLIAMS AND ORS Defendants

Hearing: 16 December 2014

Counsel:

J P Temm and K Patterson for Plaintiffs
R E Harrison QC for Defendants

Judgment:

23 December 2014

JUDGMENT OF HEATH J

This judgment was delivered by me on 23 December 2014 at 1.30pm pursuant to
Rule 11.5 of the High Court Rules
Registrar/Deputy Registrar

Solicitors:
Ken Patterson, Tauranga
Abernathy Broatch law, Mount Maunganui
Counsel:
J Temm, Rotorua
R E Harrison QC, Auckland

INTERNET TRADERS LTD AND ORS v WILLIAMS AND ORS [2014] NZHC 3407 [23 December 2014]

The application

[1] Mr John Heale, a pharmacist, and Ms Nicole Williams, a business woman, formed a fruitful professional relationship as long ago as September 1999. At that time, they identified a business opportunity, whereby medical supplies were to be purchased from wholesale suppliers in New Zealand and exported overseas. Their point of difference was that the business would be carried on over the Internet. That meant that the significant costs involved in commencing business and in acquiring assets in New Zealand, were set-off by the absence of any need for the business to carry stock.

[2] Two companies were incorporated to undertake the business venture; Internet Traders Ltd, on 15 September 1999, and IT Pharmaceutical Supplies Ltd (IT Pharmaceutical) on 17 September 1999. A written shareholders’ agreement (the Shareholders’ Agreement), dated 11 November 1999, was executed by trustees of trusts associated with Mr Heale and Ms Williams who were to hold shares in Internet Traders, as well as two other parties to whom no further reference needs to be made at this time.

[3] Mr Heale and Ms Williams were directors of each company. Ms Williams was employed as managing director of Internet Traders. Her labour was made available to IT Pharmaceutical, by a contractual arrangement between the two companies.

[4] The business relationship between Ms Williams and Mr Heale came to an abrupt end at 11.00am on 23 June 2014, when Ms Williams resigned her positions as directors of both companies and as an employee of Internet Traders.1 She had given no prior warning to Mr Heale of her pending resignation. Up to that point, the business of IT Pharmaceutical was trading profitably. The acrimonious dispute that has arisen following Ms Williams resignations has led to the present proceeding.

[5] Internet Traders, IT Pharmaceutical and Mr Heale seek an interim injunction to restrain Ms Williams, and three companies associated with her, Glencove (2014)

1 Ms Williams’ resignation letter of that date is set out at para [40] below.

Ltd (Glencove),2 Tentacle Enterprises Ltd (Tentacle) and KiwiPharma Ltd from carrying on business in competition with them. On the evidence, only KiwiPharma seems to fall into the category of a competitor, at this time.

[6] The interim orders sought, all pending further orders of the Court, by Mr

Temm, for the plaintiffs are:

(a) Ms Williams, Glencove,…

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 Internet Traders Ltd v Williams

Details

AGLC: Internet Traders Ltd v Williams [2014] NZHC 3407
Case: [2014] NZHC 3407
Decision Date: 23 December 2014

CaseChat Overview and Summary

Internet Traders Ltd, IT Pharmaceutical Supplies Ltd, and Mr John Heale, commenced proceedings against Nicole Jean Williams, Glencove (2014) Ltd, Tentacle Enterprises Ltd, and KiwiPharma Ltd. The plaintiffs sought an interim injunction to prevent the defendants from using confidential information, engaging in business competition, contacting suppliers and customers, applying for a Ministry of Health licence, and misappropriating funds. The defendants opposed the application for interim relief. The central issue was whether the defendants had breached fiduciary duties owed to the plaintiffs. The judge held that while there was a seriously arguable case against the defendants, the balance of convenience favoured the defendants. The application for interim relief was dismissed.

Orders