Marx v Ruban

[2025] NZHC 594

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2024-404-3236

[2025] NZHC 594

UNDER

the Companies Act 1993 and the Copyright Act 1994

BETWEEN

ROHAN GREGORY MARX

First Plaintiff

SHUTTLE SOLUTIONS LIMITED
Intended Second Plaintiff

AND

DMITRY RUBAN

First Defendant

SHUTTLESOFT LIMITED

Second Defendant

Hearing:	3 March 2025
Appearances:	K T Glover and Mr W H E Burbidge for First Plaintiff M J W Lenihan for First and Second Defendants
Judgment:	21 March 2025

JUDGMENT OF O’GORMAN J

This judgment was delivered by me on 21 March 2025 at 12 pm pursuant to r 11.5 of the High Court Rules 2016.

Registrar/Deputy Registrar

…………………………………

Solicitors/Counsel:

Gilding Baker Law, Whangārei K T Glover, Auckland

M Lenihan, Auckland Cowan Law, Auckland

MARX v RUBAN [2025] NZHC 594 [21 March 2025]

Introduction

[1]    This dispute arises from a breakdown of the business relationship between Mr Marx and Mr Ruban, as directors and shareholders in a joint venture company called Shuttle Solutions Ltd (SSL).

[2]    SSL was incorporated on 19 February 2021. Its intended business was providing software to facilitate customer pick-ups by shuttles. Mr Ruban wrote the software, called “PickMeUp”. Mr Marx had expertise in sales and marketing, so his role was to source clients who would use the software as a service (SaaS).

[3]    Following disputes that arose between the two during 2024, Mr Ruban now intends to use the PickMeUp software himself in a new, competing business called Shuttlesoft Ltd.1 Mr Ruban contends that he is entitled to do so as the author of the software and owner of copyright. Mr Marx submits that Mr Ruban has no entitlement to do so, because the software was commissioned by SSL and ownership is vested in that company.

[4]Mr Marx applies for orders:

(a)granting permission to commence a derivative action on behalf of SSL;

(b)restraining Mr Ruban and his new company from:

(i)infringing SSL’s copyright by using software owned by the joint venture company;

(ii)otherwise breaching the duties that Mr Ruban owes to the company; and

(c)that Mr Ruban provide the source code for the PickMeUp software to SSL (in this context, Mr Marx or his nominee), to enable SSL to continue its business by licensing the software to third parties.

1      Shuttlesoft Ltd was incorporated on 15 October 2024, with Mr Ruban as its sole shareholder and director.

[5]The pleaded and proposed causes of action are as follows:

(a)Copyright infringement against Mr Ruban (by SSL).

(b)Copyright infringement against Shuttlesoft Ltd (by SSL).

(c)Breach of director duties against Mr Ruban (by SSL).

(d)Relief under s 164 of the Companies Act 1993 for breach of the Act by Mr Ruban (by Mr Marx).

(e)Relief under s 174 of the Companies Act for prejudicial conduct by Mr Ruban (by Mr Marx).

[6]    The application for interim relief is advanced by Mr Marx personally, as well as on behalf of SSL as the intended second plaintiff if the Court permits the derivative action.

Factual background

[7]    Mr Marx is also a director of East Coast Car Rentals (ECCR) in Australia. ECCR is an “off airport” car rental company, with most of its branches located within five kilometres of Australian airports, but not in the airport terminals or on airport land. ECCR has been SSL’s only licensee of the PickMeUp software, and Mr Marx’s role with ECCR is an important part of the factual background because of his time commitments to that company and concerns that potential clients have raised about conflicts.

[8]    Mr Marx and Mr Ruban have known each other since 2008 and considered themselves friends prior to these disputed issues arising.

[9]    Mr Marx came up with the idea for the software during a period of enforced downtime due to COVID-19 around the middle of 2020. During that time, he was discussing with other senior staff at ECCR potential IT projects that could improve ECCR’s operations. One potential project that was identified was the creation of a

web-based application for customers to order courtesy shuttles. This was to address a number of identified problems that would arise with the existing system of customers making a phone call to ECCR reservations to arrange shuttle pick-ups. Mr Marx and other senior managers within ECCR developed a brief that was sent to external software providers for further scoping and quotes. The response proposals were not regarded as satisfactory.

[10]   On 7 September 2020, Mr Marx exchanged emails with a friend who suggested using Mr Ruban.

[11]   Mr Marx emailed Mr Ruban on 21 October 2020, providing an initial scope and reiterating a point made in their telephone conversation that Mr Marx believed this was something that should be owned in-house at ECCR or potentially in a new company. This would be to give separation if the plan was to on-sell to other potential car rental, motor home rental and tourism operators who have enough regular customers requiring pick-ups and drop-offs.

[12]   After several discussions, Mr Marx, Mr Ruban and ECCR management agreed that it would be better for a new company to be formed with equal shareholding that would be independent of ECCR ownership and management. That new company would then provide the software to ECCR on a SaaS basis. From ECCR’s perspective, it would be like renting the software instead of buying it outright. This model suited ECCR because its cash flow was adversely impacted by reduced trade due to COVID-19.

[13]   Mr Marx says that he and Mr Ruban talked about trying to on-sell the solution to other companies in Australasia and possibly globally once they got to the point of having a stable beta release used by ECCR. The aim was to leverage the success of the solution with ECCR and use that as a reference to attract further customers.

[14]   Mr Marx says that he and Mr Ruban started scoping the shuttle bus management solution that became the PickMeUp software in late November 2020. The evidence includes screenshots from what Mr Marx believes was the first scoping session. The scoping process continued in December 2020 and resumed in

February 2021, with Mr Marx and Mr Ruban using paper and whiteboards to develop what eventually became the first scoping document, with some input from ECCR staff as the foundation client for the beta release. The finalised document is entitled “Brief for External designer for “Pick Me Up” app owned by Shuttle Solutions Ltd”. The second line reads: “Copyright: Shuttle Solutions Ltd”.

[15]   SSL was incorporated on 19 February 2021 after most of the initial scoping work was completed. Mr Marx says he spoke to Mr Ruban about the need to get legal documents like a shareholder agreement and a company constitution, but Mr Ruban did not want to spend the money on that until there was an income stream from paying clients in addition to ECCR.

[16]   Some external design work was done by Sliday Ltd, a third party. That company signed a non-disclosure agreement on 27 August 2021 with the parties being SSL as the “Discloser” and Sliday Ltd as the “Receiver”. Clause 2 contained an acknowledgement that the confidential information supplied is the absolute property of the discloser.

[17]   ECCR began with  the beta launch of  the PickMeUp system  in  May 2022.  It was a staged release, beginning with one location, then expanding to three, and by around July 2022 covering all airport-servicing locations.

[18]   From June 2020 into early 2023, many modifications were made to the software based on feedback from ECCR and end users, as well as using ideas for improvement from Mr Marx and Mr Ruban.

[19]   There was no written contract between SSL and ECCR, but there was a verbal agreement that the software would be provided on a SaaS-based fee model, triggered by customer interactions. Monthly reports of customer interactions were produced by Mr Ruban and included with an invoice issued by SSL to ECCR from July 2022 onwards, with ECCR in turn paying those monthly invoices.

[20]   From around August 2022, Mr Marx began contacting other potential customers for the software, but no additional customers were signed up beyond ECCR. A variety of reasons were provided, but in some cases the potential customers had a concern about whether the PickMeUp system was sufficiently independent given   Mr Marx’s dual roles as ECCR’s director and owner, as well as SSL’s account manager and director.

[21]   During 2023, Mr Marx was fully engaged with his responsibilities at ECCR and did not have much time to work on the SSL startup. Mr Marx says he proposed engaging a salesperson but Mr Ruban did not agree.

[22]   The parties remained friends, but tensions increased during 2023. In part, this stemmed from Mr Ruban’s frustration that Mr Marx had been unable to secure any new customers and was only devoting limited time to SSL. They sought to find a resolution to this in email exchanges during November and December 2023.

[23]   In February 2024, Mr Ruban said he wanted to leave SSL at the end of the financial year. In an email sent in March, Mr Ruban said “I am sure I have all the rights to the code I wrote”. Mr Marx says this was the first time that Mr Ruban suggested he owned the software himself. Efforts to discuss and resolve the disputed issues continued from March through to July 2024. Despite these tensions, Mr Ruban attended Mr Marx’s wedding in April 2024.

[24]   On 1 November 2024, Mr Marx approached Mr Ruban again to address matters. This  led  to  Mr Ruban  agreeing  to  provide the  software to  ECCR  after 1 January 2025, albeit through a different entity. The ownership dispute was not resolved, but this removed the urgency in terms of ECCR having viable software on an ongoing basis.

[25]   That changed, however, after Mr Marx was told that Mr Ruban had appointed a former colleague of Mr Marx and Mr Ruban to sell the software in Europe. Mr Marx contacted the former colleague to say that Mr Ruban was acting without Mr Marx. The former colleague subsequently told Mr Ruban that he was not interested.

[26]   Mr Ruban then  told  Mr  Marx  and  ECCR  that  the  termination  date  of  31 December 2024 would apply. In his email to ECCR, he said that this was as a result of what he called “recent intervention”, referring specifically to Mr Marx having spoken to the former colleague and this being an “adversarial approach”.

[27]   Given the uncertainties about whether SSL would continue providing the software after 31 December 2024, from mid-November 2024, ECCR made contingency plans for developing its own software.

[28]   In parallel, Mr Marx (through his solicitors) asked Mr Ruban to provide undertakings that he would enable SSL to continue to provide the software to ECCR after 31 December 2024. Mr Ruban refused to do so. He was only prepared to allow the software to be used if Mr Marx agreed to Mr Ruban having ownership of the software in return for a 10 per cent stake in his new company. Attempts to de-couple discussions about supply after 31 December 2024 from those regarding ownership were rebuffed.

[29]   Following the commencement of these proceedings and an urgent hearing on 18 December 2024 about interim issues, Mr Ruban provided undertakings to the Court that he would enable SSL to provide the software until 1 March 2025 while work on ECCR’s alternative was being completed. By the time of the scheduled injunction hearing on 3 March 2025, the interim undertaking lapsed without the need for extension (because by then ECCR had its own software).

Substantive claim – legal principles

Copyright

[30]   A plaintiff in a copyright claim must prove that the defendant infringed copyright subsisting in a work that the plaintiff owns. The plaintiff must begin by accurately identifying the work and establishing that it falls within one of the categories in s 14(1) of the Copyright Act 1994, which include a “literary work”.

For software, source and object code are recognised as forms of literary work attracting copyright protection.2

[31]   Section 21 of the Copyright Act provides that the author of a work is the first owner of the copyright, subject to subsections about (among other things) employment and commissions.

[32]   For the person who commissions a work to be the first owner of the work produced:3

(a)he or she must pay or agree to pay for the making of the work;

(b)the work must fall within the categories of work listed in s 21(3), which includes the making of a “computer program”; and

(c)the work must be “made” in the performance of the commission.

[33]   No “formal” contract of commission is required — such a relationship may be implied.4

[34]   If s 21(3) does not apply, the normal rule is that the author will be deemed the first owner under s 21(1). However, this does not exclude, in appropriate circumstances, the contract between the parties being interpreted as acting as an assignment of the (existing) copyright in the works.5

Corporate opportunity doctrine

[35]   In Leckie v Beverley¸ the Court of Appeal recognised and applied the “corporate opportunity” doctrine, that directors may not pursue for their own benefit

2      Karum Group LLC v Fisher & Paykel Financial Services Ltd [2014] NZCA 389, [2014] 3 NZLR 421 at [101], referencing International Business Machines Corp v Computer Imports Ltd [1989] 2 NZLR 395 (HC) at 411–413.

3      Copyright Act 1994, s 21(3).

4      Clive Elliott and others Intellectual Property Law (online ed, LexisNexis) at [COP21.5], referencing Hansen v Humes-Maclon Plastics Ltd (1984) 1 NZIPR 557 (HC) at 570; and Alwinco Products Ltd v Crystal Glass Industries Ltd [1985] 1 NZLR 716 (CA) at 719.

5      Intellectual Property Law, above n 4, at [COP21.5], referencing Pacific Software Technology Ltd v Perry Group Ltd [2004] 1 NZLR 164 (CA).

business opportunities that are connected with the company’s business, unless the company consents.6 It upheld the High Court’s decision that each of the derivative plaintiffs had a reasonably arguable claim that Messrs Leckie and Morrison acted in breach of their fiduciary and statutory duties in establishing the Forest Partners Ltd Partnership and associated management structure for their own benefit and without regard to the best interests of the derivative plaintiffs. In that case, the pleaded causes of action were:7

(a)breach of the duty to act in good faith and in the best interests of the companies under s 131 of the Act;

(b)breach of the duty of loyalty and failing to act with due care, diligence and skill in breach of s 137 of the Act;

(c)misuse of company information in breach of s 145 of the Act; and

(d)breach of fiduciary duty — not to place themselves in a position of conflict, not to profit, and not to prefer their own interests to those of the derivative plaintiffs.8

[36]   Such a claim for diversion of a corporate opportunity can be pursued even where the prospects of the company being able to take up that opportunity are remote or even non-existent.9

6      Leckie v Beverley [2023] NZCA 570 at [61]; referencing He v Chen [2014] NZCA 153, [2015] NZAR 437 at [35] citing Peter Watts “Liability for Profiting” in Peter Watts, Neil Campbell and Christopher Hare Company Law in New Zealand (1st ed, LexisNexis, Wellington, 2011) 495 at [14.1.2]. See also Peter Watts Directors’ Powers and Duties (3rd ed, LexisNexis, Wellington, 2022) at [7.1.2] and [7.4].

7      Leckie v Beverley, above n 6, at [30].

8      See He v Chen, above n 6, at [38] and [39]. See also Directors’ Powers and Duties, above n 6, at [7.1.3] and [7.6] regarding whether the statutory duties were intended as a code, and in any event common law principles being relevant for interpreting the express provisions.

9      Leckie v Beverley, above n 6, at [34], referencing Kawhia Offshore Services Ltd v Rutherford HC Hamilton CP61-99, 24 April 2022 at [25].

Derivative action

Legal principles

[37]   Leave to commence a derivative action is governed by s 165 of the Companies Act which provides:

165    Derivative actions

(1)Subject to subsection (3), the court may, on the application of a shareholder or director of a company, grant leave to that shareholder or director to—

(a)   bring proceedings in the name and on behalf of the company or any related company; or

(b)   intervene in proceedings to which the company or any related company is a party for the purpose of continuing, defending, or discontinuing the proceedings on behalf of the company or related company, as the case may be.

(2)Without limiting subsection (1), in determining whether to grant leave under that subsection, the court shall have regard to—

(a)      the likelihood of the proceedings succeeding:

(b)      the costs of the proceedings in relation to the relief likely to be obtained:

(c)      any action already taken by the company or related company to obtain relief:

(d)      the interests of the company or related company in the proceedings being commenced, continued, defended, or discontinued, as the case may be.

(3)Leave to bring proceedings or intervene in proceedings may be granted under subsection (1), only if the court is satisfied that either—

(a)      the company or related company does not intend to bring, diligently continue or defend, or discontinue the proceedings, as the case may be; or

(b)      it is in the interests of the company or related company that the conduct of the proceedings should not be left to the directors or to the determination of the shareholders as a whole.

…

[38]   The order in this case is sought under s 165(1)(a), because the actions complained of have been taken, and will be taken, by one of SSL’s two directors and his new company. The company is thus in deadlock in terms of subs (3)(a) and so cannot achieve the unanimity of directors required to bring proceedings.

[39]   The Court has a broad discretion in relation to granting leave but must have regard to the factors in s 165(2). The Court of Appeal analysed those obligations in He v Chen as follows:10

[30] [Section 165(2)] requires the court to assess each consideration separately. The relative weight each carries will depend on the facts of the case. In assessing each statutory criterion the court should adopt the standard “which would be exercised by a prudent business person in the conduct of his or her own affairs when deciding whether to bring a claim”. It is very well established by High Court authority, which we endorse, that the prudent business person standard applies to an assessment of s 165(2)(a). It has also consistently informed the Court’s assessment of the remaining three criteria. While we emphasise it is the express words of each statutory consideration which the Court must have regard to, we consider it helpful to assess whether each criterion applies to the prudent business person standard.

[40]   The Court’s role when exercising its s 165 jurisdiction is necessarily limited. Its function is not to determine the ultimate merits of the claim or conduct an interim trial.11 The Court must simply consider whether the causes of action are arguable.

Likelihood of proceeding succeeding

[41]   I accept that the proposed derivative actions by SSL for breach of copyright and breach of director duties are reasonably arguable.

[42]   Mr Ruban says that there is a “complete absence of any evidence regarding commissioning by SSL”, and there is no evidence of any agreement that Mr Ruban would provide the software in return for getting 50 per cent of the shares in SSL. Some of the background steps in terms of initial scoping occurred before SSL’s incorporation, so Mr Ruban seems to say that material is irrelevant. Mr Ruban also says that Mr Marx was slow to challenge Mr Ruban’s assertion that he owned the

10     He v Chen, above n 6 (footnotes omitted), cited in Parkinson v O’Brien [2021] NZCA 309 at [34].

11     Parkinson v O’Brien, above n 10, at [35].

software. He suggests that this amounts to a tacit concession that SSL may not own the software.

[43]   I acknowledge that the parties took a very informal approach to specifying the terms of their joint venture,  probably  because they trusted each  other  as  friends.  It seems the financial arrangements were not documented directly in any formal sense. However, this does not preclude the Court from examining the substance of what occurred, based on the contemporaneous materials.

[44]   Even if not documented directly, there is evidence to substantiate that the intention was for SSL to own the copyright and/or take an assignment of all of the rights so that the software would be the main asset of the company for the purposes of marketing it and receiving the corresponding revenue, not only to ECCR but also other potential users both in New Zealand and overseas. Among other things:

(a)the wording of the finalised scoping document is consistent with SSL owning the software and related copyright;

(b)SSL was the relevant disclosing party and owner of confidential information in the non-disclosure agreement; and

(c)invoicing by SSL to ECCR is consistent with the company granting the SaaS licence — there is no evidence of any sub-licensing arrangements put in place by Mr Ruban.

[45]   In terms of an agreement to pay for the making of the work under s 21(3) of the Copyright Act, I accept it is reasonably arguable that Mr Ruban was to be paid through his shareholding interests in SSL and/or by payments for the hours worked writing the software:

(a)Under the joint venture arrangements, he became a 50 per cent shareholder.

(b)An affidavit of Mr Marx dated 3 March 2025 annexed a completed tax return for the year ending 31 March 2022, prepared by Mr Ruban. Those accounts show expenses for “research and development” and contractor and subcontractor payments totalling $109,970.05 and a corresponding asset of “intangibles” of a similar amount. The accounts also record current account balances of $120,000.

(c)Before those accounts were submitted with the IRD, Mr Ruban corresponded with Mr Marx about their respective contributions in terms of hours spent on the business. It seems they settled on those giving rise to a current account entitlement for payment.

(d)Mr Ruban has filed a further affidavit dated 13 March 2025 saying that he prepared the 2022 tax return after speaking with an accountant he knew, but without taking proper accounting advice and therefore those accounts may be wrong. He nevertheless acknowledges that he and Mr Marx were looking to determine who had done what, and how liability for the work done by each of them could be recorded and compensated.

(e)Whether the accounts were correct or not, this evidence substantiates that Mr Ruban expected to receive payment from SSL for his hours writing the software. Correspondingly, those accounts show the intangible of software as an asset of the company (albeit that no attempt was made to assess a market value for it).

[46]   Overall, I accept there is a good arguable case under the copyright causes of action.

[47]   In addition, I accept there is a good arguable case that the “corporate opportunity” doctrine was engaged. The entire purpose of the newly incorporated company SSL was to be the vehicle for developing and licensing the software, both in New Zealand and overseas. In agreeing to adopt a company structure for that purpose,

both directors were prohibited from pursuing those very business opportunities for their own benefit, unless the company consented.

[48]   I appreciate that Mr Ruban was frustrated about Mr Marx’s lack of success in finding other customers, and the limited time devoted by Mr Marx to the company since 2023. However, those frustrations must be addressed in the usual way within the corporate structure (and such issues were addressed, at least to some degree, when considering compensation to reflect hours worked). They do not justify retaliatory breaches of fiduciary duty.

[49]   Even if the most realistic solution moving forward is liquidation, copyright entitlements and the obligations under the corporate opportunity doctrine continue, so it would be the role of the liquidator to seek to realise the value of the asset.12

[50]   Accordingly, I accept that there is an arguable case for all causes of action proposed for the derivative application.

Costs and relief

[51]   Mr Marx has not estimated the likely costs of pursuing this proceeding, nor the quantum of damages that SSL  might  obtain  if  interim  relief  were  not  granted. Mr Marx says the cost of the proceedings will not be out of the ordinary, let alone out of proportion, to the values at stake. Mr Marx refers to the fact that SSL received significant royalties paid by ECCR since July 2022. This indicates the potential value of the software if it is licensed to other businesses of similar size (acknowledging that value would reflect the present value of expected net profits, rather than gross profits). The costs of creating an initial beta platform were expected to be higher than the incremental costs of adding and servicing new customers.

[52]   Given that SSL will not have any ongoing income (with ECCR’s payments ending), I agree that proportionality issues are important. However, the proceeding has already been commenced by Mr Marx in his personal capacity, so costs for the additional derivative causes of action will be incremental only. No application has

12     See Directors’ Powers and Duties, above n 6, at [7.5.2].

been made under s 165 at this stage. Accordingly, the burden of funding will fall on Mr Marx in the first instance (assuming ongoing disputes about how the residual company funds should be disbursed).

[53]   Mr Ruban evidently sees material value in the software, given the steps he has taken to date, despite the disputed issues in this proceeding.

[54]   Taking these matters into account, I consider that the current value of the software would likely exceed the litigation costs in this proceeding. The parties on both sides have strong incentives to keep costs proportionate and/or pursue alternative dispute resolution if these appear out of alignment.

Action already taken

[55]   SSL has not taken any action because the directors and shareholders have been in deadlock. There is no prospect that the directors would take action by consensus, given the conflict of interest issues that arise.

Interests of company

[56]   I accept that it is in the interests of the company (as a distinct entity) that the decision of commencing the proceedings should not be left to director agreement.    If SSL may be the proper owner of the intellectual property and corporate opportunity, then it is in the interests of the company and third parties for these disputed issues to be resolved. In my view, commencing proceedings to resolve these disputed issues is a step that a prudent business person would take in the conduct of his or her own affairs.

[57]   Overall, I am satisfied that the requirements of a derivative action are met and that it is appropriate to grant leave to allow Mr Marx to bring the intended derivative action on behalf of SSL against Mr Ruban and Shuttlesoft Ltd.

Interim Relief

Legal principles

[58]   The principles regarding interim relief were recently summarised by the Court of Appeal in Bank of New Zealand v The Christian Church Community Trust and Others:13

(a)The ultimate question is whether the overall interests of justice require that an injunction be granted.

(b)In order to determine that question, the court will first consider whether there is a serious question to be tried.

(c)If that threshold is satisfied, the court will then go on to consider where the balance of convenience lies, and the overall interests of justice.

[59]   Consideration of the balance of convenience also includes the issue of delay. An interim injunction may be refused if the applicant does not come to the court with clean hands.14

Serious issue to be tried

[60]   I have already found that the claims proposed for the derivative action are reasonably arguable.

[61]   For the same reasons, I find there is a serious issue to be tried on the intended claims by SSL, and the claims pursued by Mr Marx in his own name for relief under s 164 of the Companies Act and relief under s 174 for prejudicial conduct.

13     Bank of New Zealand v The Christian Church Community Trust and Others [2024] NZCA 645, [2024] NZCCLR 720 at [56].

14     Media Works NZ Ltd v Sky Television Network Ltd (2007) 74 IPR 205 (HC) at [106].

[62]   Mr Marx has standing to apply for relief under s 164(2)(b), as he is both a director and shareholder of SSL. The Court has express powers to make orders on an interim basis under s 164(5) for threatened breaches, which encompasses the current intention of Mr Ruban and his company to continue to exploit the software overseas.

Balance of convenience and overall justice

[63]   The reality is that SSL cannot market the software and achieve profits while the disputed issues are being litigated either.

[64]   In the interim, Mr Ruban suggests that the better course is to allow him and his company to do so:

(a)If Mr Marx is successful, then he will be able to disgorge the benefits by way of an account of profits. Assuming that all profits are properly accounted for, Mr Ruban says that calculation will be “straightforward”. He refers to the patent case of Ashmont Holdings Ltd v Bayer New Zealand Ltd,15 in which the plaintiff had already licensed its patent to other parties, so damages were regarded as reasonably quantifiable. Mr Ruban says that the same considerations apply here.

(b)On the other hand, if Mr Ruban is successful at trial, he says it will be much more difficult to prove the loss that he and his company incurred through not being able to market the software during the restricted period. Proving such a loss will necessarily be speculative and difficult.

[65]   Given the legal principles discussed above, I do not accept that it is appropriate for Mr Ruban to continue to exploit the opportunities associated with this software without first resolving the disputed issues.

15     Ashmont  Holdings  Ltd  v  Bayer   New   Zealand   Ltd   HC  Auckland   CIV-2007-404-3518, 10 September 2007.

(a)At present, despite initial efforts it seems that Mr Ruban and Shuttlesoft Ltd have not purported to license the software to third parties overseas.

(b)In my view, the starting position when dealing with the corporate opportunity doctrine is that the Court should not countenance further breaches. There is no principle of efficient breach underpinning remedies for breach of a fiduciary relationship.16 If exemplary damages might be available for breach of fiduciary duty,17 then such conduct should not generally be permitted on an interim basis (unless the parties agree).18

(c)The complexities in this case are higher because the intended new customers are offshore, and statutory copyright entitlements are territorial.19 Furthermore, third parties may be adversely affected if their licences are unauthorised and invalid. Issues of new contributions, liabilities and intermingling of assets may not be straightforward. These features distinguish Ashmont Holdings Ltd v Bayer New Zealand Ltd.20

(d)The effect on Mr Ruban and Shuttlesoft Ltd of granting an interim injunction will be one of delay. In my view, these disputed issues require determination anyway, so that delay is warranted.

16 Harris v Digital Pulse Pty Ltd [2003] NSWCA 10, (2003) 56 NSWLR 298 at [184].

17     In Paper Reclaim Ltd v Aotearoa International Ltd [2006] 3 NZLR 188 (CA) at [184] the Court of Appeal left the issue of availability of exemplary damages for another day. In A v D [2024] NZSC 161, [2024] 1 NZLR 579 at fn 61 the Supreme Court acknowledged that a general jurisdiction to award exemplary damages for breach of fiduciary duty is less settled, but referred to Aquaculture Corp v New Zealand Green Mussel Co Ltd [1990] 3 NZLR 299 (CA) at 301–302 per Cooke P, Richardson, Bisson and Hardie Boys JJ.

18 See Bradford Trust Ltd v Roebeck (2006) 4 NZELR 635 (HC) at [77].

19 See Atkinson Footwear Ltd v Hodgskin International Services Ltd (1994) 31 IPR 186 (HC) at 190; Gao v Zespri Group Ltd [2021] NZCA 442, [2022] 2 NZLR 219 at [106]–[110], [117]–[120] and [137]; and ESR Group (NZ) Ltd v Burden [2023] NZCA 335 at [4] and [104]–[108].

20 Ashmont Holdings Ltd v Bayer New Zealand Ltd, above n 15.

[66]   I note Mr Ruban’s submissions about liquidation of SSL being a necessary future step given the relationship breakdown. Even if that is the case, if Mr Marx is correct on the substantive issues, then the liquidator would realise the value of the software as an asset. This could include one or other of the directors purchasing the rights. Therefore, the possibility (or likelihood) of a future liquidation does not change my analysis.

Relevant strength of each party’s case

[67]   In an interim hearing, caution should be exercised with assessing the substantive merits. I have outlined my assessment of those issues above, to the extent required to determine the current applications. I reject Mr Ruban’s submission that he has a strong case.

Preservation of the status quo

[68]   The status quo was that SSL was held out by both directors as owning and intending to commercialise the software by licensing it in New Zealand and overseas. Mr Ruban is the one seeking to change the status quo by marketing the software through a new corporate vehicle.

Conduct of the parties

[69]   Mr Ruban alleges that Mr Marx should not be entitled to any interim relief because of his own breaches and delay in commencing these proceedings.

[70]   I do not accept that any alleged breaches by Mr Marx in not contributing sufficiently to SSL’s business are relevant to the clean hands doctrine. If pursued, those are issues to be resolved within the corporate structure, rather than factors disentitling interim relief or justifying retaliatory breach.

[71]   Mr Marx has explained the delay in commencing this proceeding. He was trying to avoid the costs of litigation by resolving matters directly. He took steps promptly at  the end  of  2024, once the potential  impact  on ECCR  became clear.    I do not consider these issues preclude interim relief being granted.

Possession of the software

[72]   In the interim injunction application, Mr Marx seeks orders requiring the first and second defendants to deliver up to SSL any media containing any copies of the PickMeUp software, or any software derived from the PickMeUp software, apart from those reasonably necessary for the purpose of providing support to SSL’s customers and users, and maintaining and developing the software for the sole benefit of SSL.

[73]   In the application for leave to commence the derivative action, the applicant also sought urgent orders for the delivery up (within 48 hours of service) of:

(a)an unencrypted, editable copy of the latest stable version of source code for the PickMeUp software;

(b)the code for the PickMeUp shuttle bus solution currently in place and used by ECCR, and any associated access codes;

(c)hosting credentials for the PickMeUp shuttle bus solution associated with ECCR;

(d)any associated documentation whether written into the code base or in electronic files separate from the code base;

(e)account access, account and payment details for all associated plug-ins used in the PickMeUp solution currently used by ECCR (including but not limited to the SMS text messaging provider(s), flight tracking provider, VoIP phone call provider(s), vehicle mapping provider); and

(f)continued access and ability to download if and when necessary the shuttle bus tablet app component of the PickMeUp system from the Android app / Google Play store.

[74]   The urgency of such steps fell away once ECCR was no longer using the PickMeUp software, and there are no other existing customers of SSL currently using the software.

[75]   Given that SSL is a closely held company with only Mr Marx and Mr Ruban as directors, I do not consider these orders are necessary on an interim basis. Naturally it is vital that all such evidence is preserved for discovery, and for complying with any final orders that might be made if the plaintiffs are successful in their substantive claims. However, I do not consider that there is otherwise any need to change the status quo regarding possession, given the scope of the interim orders that I make below restraining interim use of that intellectual property.

Conclusion on balance of convenience

[76]   For the above reasons, I accept that interim injunction orders are appropriate to best preserve the position of the parties and minimise adverse effects on third parties, but on terms that are different from what was sought in the two applications.

Result

[77]   I grant Mr Marx leave to commence the derivative action in the name of and on behalf of Shuttle Solutions Ltd against Mr Ruban and Shuttlesoft Ltd.

[78]   I grant an interim injunction in the following terms, to remain in place until further order of the Court:

(a)The first and second defendants are prohibited from marketing, purporting to license, purporting to sell, copying, using, or otherwise dealing with or disposing of the PickMeUp software, except for SSL’s purposes as approved by both of SSL’s directors.

(b)The first defendant is prohibited from directly or indirectly (including through the second defendant) competing against the second plaintiff using the PickMeUp software or any other software derived from it.

[79]   Mr Marx is entitled to costs. If the parties cannot agree, then he may file a memorandum within 10 working days, and the defendants may file their memorandum 10 working days later. I will then determine costs on the papers.

[80]   Meanwhile, this matter should be scheduled before an Associate Judge for case management in the usual way.

O’Gorman J