Mike Pero Real Estate Limited v Tafilipepe

[2017] NZHC 685

IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

CIV-2017-409-214 [2017] NZHC 685

UNDER

the Arbitration Act 1996 (Article 9 of

Schedule 3)

BETWEEN

MIKE PERO REAL ESTATE LIMITED Applicant

AND

SONIA TAFILIPEPE First Respondent

MPRE BELFAST LIMITED Second Respondent

Hearing:

7 April 2017

(By way of telephone conference)

Appearances:

R G Smedley for the Applicant
J R Smith for the Respondents

Judgment:

10 April 2017

JUDGMENT OF MANDER J

[1]      The applicant, Mike Pero Real Estate Ltd (Mike Pero), applied for an interim injunction restraining the first and second respondents, Ms Sonia Tafilipepe and her company,   MPRE   Belfast   Limited,   from   conducting   real   estate   activities   in accordance with a restraint on competition provision contained in a franchise agreement.

[2]      Mike Pero and Ms Tafilipepe have come into dispute regarding performance of the franchise agreement.   Relations between the parties deteriorated and notice

was given by Mike Pero of termination of the agreement.

MIKE PERO REAL ESTATE LIMITED v TAFILIPEPE [2017] NZHC 685 [10 April 2017]

[3]      Mike  Pero  alleges  that  Ms  Tafilipepe  is  in  breach  of  the  restraint  of competition by rebranding her real estate business in the name of Dynamic Realty in direct competition with Mike Pero; that she has been diverting customers of Mike Pero to Dynamic Realty; and refusing to provide an undertaking that she will comply with the restraint on competition.  Ms Tafilipepe denies these allegations.

[4]      By letter of 28 March 2017, Mike Pero gave notice to Ms Tafilipepe of alleged breaches of the restraint on competition.  In particular, that using the trading name Dynamic Realty, she was trading in breach of the restraint by listing properties within the 25 kilometre exclusion area specified in the restraint on competition.

[5]      Ms Tafilipepe was asked to provide a written undertaking that she would comply with the full terms and effects of the restraint on competition by end of business on 29 March.  There is some dispute between the parties as to whether Ms Tafilipepe was prepared to provide an undertaking, but, in any event, application was made for interlocutory relief in the form of an interim injunction to enforce the restraint on competition triggered on the termination of the franchise agreement. Mike Pero submitted the restraint on competition provision is a crucial aspect of a franchise system because of the intellectual property provided by the franchisor to the franchisee and the highly competitive nature of the New Zealand real estate industry.

[6]      On  Friday  afternoon  last,  a  telephone  conference  was  convened  for  the purpose of hearing Mike Pero’s application for an interim injunction to enforce the restraint of competition pending dispute resolution proceedings provided for in the franchise agreement.

[7]      After hearing from counsel, the telephone conference was adjourned to allow counsel  for  the  first  respondent,  Ms Tafilipepe,  to  obtain  further  instructions regarding her position.  This followed an acknowledgement that she did not intend to breach the restraint of competition requirement of the franchise agreement and clarification from the applicant that the orders sought did not go any further than the obligations imposed by the franchise agreement.

[8]      Upon the telephone conference reconvening, I was advised that Ms Tafilipepe was prepared to consent to the granting of interim relief.  It was indicated that she did not intend to contest the application, and no fixture inquiring further into the merits of the application would be required.

[9]      Accordingly, by consent, I made the following orders:

(a)     Granting an interim injunction restraining the first and second respondents from conducting the following activities in competition with the applicant within a 25 kilometre radius from outside the boundary of the territory (“Territory”) which is comprised of Belfast, Christchurch, as defined by Statistics New Zealand or the offices of the franchisee (whichever is the greater) for a period of four months from 17 March 2017;

(i)Directly  or  indirectly  canvass,  solicit  or  attempt  to  solicit, serve or act for any customer of the respondents’ business (being   the  business   of  the  second   respondent   whilst   a franchisee up until 17 March 2017) (“Business”); or

(ii)Personally  or  by  social  media,  circulars,  letters  or advertisements interfere with the Business or divulge to any person any information concerning the Business; or

(iii)Use the respondents’ telephone or facsimile numbers and any other numbers used by customers of the Business to contact the respondents; or

(iv)Be concerned or interested in any capacity whatsoever in any business (including by rebranding as Dynamic Realty) conducted in competition with the business of the applicant (or its other franchisees) where such business relates to the provision of real estate services and related services.

(b)Granting an interim injunction restraining the first and second respondents from conducting the following activities in competition with the applicant within a three kilometre radius from the outside boundary of the Territory, or the office of the franchisee (whichever is the greater) for a period of two years from 17 March 2017:

(i)Directly  or  indirectly  canvass,  solicit  or  attempt  to  solicit, serve or act for any customer of the respondents’ Business whilst a franchisee of the applicant until 17 March 2017; or

(ii)Personally or by circulars, letters or advertisements interfere with the Business or divulge to any person any information concerning the Business; or

(iii)Use the respondents’ telephone or facsimile numbers and other numbers  used by customers  of the Business  to  contact  the respondents; or

(iv)Be concerned or interested in any capacity whatsoever in any business (including by rebranding as Dynamic Realty) conducted in competition with the business of the Applicant (or its other franchisees) where such business relates to the provision of real estate services and related services.

[10]     Leave was granted to the applicant to revert to this Court should there be any concern the terms of the injunctive relief go beyond the restraint of competition obligation imposed by the franchise agreement.

[11]     In  relation  to  costs,  I record  the  respondents’ acknowledgement  that  the applicant is entitled to costs in the ordinary way following the event.  Counsel have been provided with the opportunity to discuss the issue of costs.  In the absence of agreement between the parties, they are to exchange and file memoranda (not more than three pages), in which case the Court will determine costs on the papers.

Solicitors:

Anthony Harper, Christchurch

Rhodes & Co, Christchurch