Mediaflow Limited v Marin - [2023] NZHC 2636

IN THE HIGH COURT OF NEW ZEALAND INVERCARGILL REGISTRY

I TE KŌTI MATUA O AOTEAROA WAIHŌPAI ROHE

CIV-2023-425-80

[2023] NZHC 2636

BETWEEN
MEDIAFLOW LIMITED

Plaintiff

AND

LUCAS MARIN

Defendant

Hearing: On the papers

Appearances:

M R Walker and B B Gresson for Plaintiff

Judgment:

21 September 2023

JUDGMENT OF DUNNINGHAM J

This judgment was delivered by me on 21 September 2023 at 10.30 am, pursuant to r 11.5 of the High Court Rules

Registrar/Deputy Registrar Date:

[1] The applicant, Mediaflow Ltd (Mediaflow), has filed a without notice application for an interim injunction under s 164 of the Companies Act 1993 (the Act). The injunction is sought to restrain the respondent, Lucas Marin, from withdrawing more than $2,800 per month from Mediaflow’s bank account until further order of the Court.

MEDIAFLOW LIMITED v MARIN [2023] NZHC 2636 [21 September 2023]

Background

[2] Mediaflow was incorporated on 7 July 2020. At the time, its directors were Mr Marin, David Akal, and Nahuel Lukomski. The three directors were also equal shareholders in Mediaflow.

[3] Mediaflow was incorporated for the purpose of providing digital photo and video recording systems to tourism operators in the Queenstown District. As part of the operation of Mediaflow’s business, the directors created and developed the software and hardware for a digital video recorder (DVR) system. Mediaflow would then contract with tourism operators who would pay for the rights to use the DVR system.

[4] Mr Akal says all three directors were involved in developing the business. He and Mr Lukomski left their previous employment and were working full time developing the DVR and media recording software. When Mr Marin joined them, Mr Akal and Mr Lukomski agreed to be responsible for installing, building and maintaining the hardware and system and dealing with clients and customer service, while Mr Marin focused on development of the backend software.

[5] In or around July 2020, the directors agreed to pay themselves, as shareholders, remuneration of $2,000 per month for their work. On or around July 2022, the shareholders’ remuneration increased to $2,800 each per month.

[6] In late 2021, conflicts arose between the directors regarding the operation of Mediaflow’s business. Mr Marin restricted access to Mediaflow’s software and source code hosted by Amazon Web Services, which meant Mr Akal was unable to view or use the software, or provide system installation, maintenance or client support, as those tasks required access to the software. In 2022, despite requests from the other directors, Mr Marin refused to restore Mr Akal’s access.

[7] In September 2022, as a result of the breakdown in the parties’ relationship and the inability to effectively carry out Mediaflow’s business, Mr Akal and Mr Lukomski resigned as directors.

[8]Following their resignation, Mr Lukomski and Mr Akal say that Mr Marin:

(a)completely locked them out of the business;

(b)prevented them from accessing Mediaflow’s software;

(c)prevented them from accessing their individual Mediaflow email accounts and customer service email account;

(d)prevented their access to all Mediaflow’s resources and services; and

(e)prevented their access…

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 Mediaflow Limited v Marin

Details

AGLC: Mediaflow Limited v Marin [2023] NZHC 2636
Case: [2023] NZHC 2636
Decision Date: 21 September 2023

CaseChat Overview and Summary

Mediaflow Limited applied for an interim injunction to prevent Lucas Marin, one of its directors and shareholders, from withdrawing more than $2,800 per month from the company’s bank account until further order of the Court. This application was made under section 164 of the Companies Act 1993. The injunction was sought to address the potential financial instability caused by the substantial payments Marin was making to himself. The court was required to determine whether there were sufficient grounds to grant the injunction based on the allegations that Marin had not complied with the statutory requirements for remuneration and had restricted access to the company's intellectual property.

The court considered the statutory requirements of section 161 of the Companies Act 1993, which mandates that a director must certify that entering into an employment contract and the payments made pursuant to that contract are fair to the company. Marin had not provided such a certification, and the payments he was making to himself appeared to exceed the company’s turnover. Additionally, the court had to assess whether the solvency of Mediaflow was at risk due to these payments. The court acknowledged the complexity of the situation, particularly given the overlap between the directors' duties under the Act and Marin's purported employment relationship with the company. Given these factors, the court concluded that the statutory purpose of restraining contraventions of the Act could not be achieved without giving Marin an opportunity to be heard. Consequently, the court refused to grant the injunction without notice and directed that Marin be served promptly with the application and any opposition.

The court ordered that any notice of opposition to the interim injunction is to be filed, along with any supporting affidavit, within 10 working days of service of the application. If opposition is filed, the matter will be scheduled for a telephone conference to make timetabling orders for an urgent hearing on the interim injunction application.

Orders