Mike Pero Real Estate Limited v Tauranga Realty Limited

[2015] NZHC 175

IN THE HIGH COURT OF NEW ZEALAND TAURANGA REGISTRY

CIV-2015-470-9 [2015] NZHC 175

BETWEEN

MIKE PERO REAL ESTATE LIMITED

Plaintiff

AND

TAURANGA REALTY LIMITED First Defendant

AND

DARREN YOUNG Second Defendant

Hearing:

10 and 13 February 2015 (by telephone conference)

Appearances:

PJ Woods and EE Gerring for plaintiff

D Young, self represented and as lay representative of the first defendant

Judgment:

13 February 2015

JUDGMENT OF TOOGOOD J

This judgment was delivered by me on 13 February 2015 at 3:00 pm

Pursuant to Rule 11.5 High Court Rules

Registrar/Deputy Registrar

MIKE PERO REAL ESTATE LIMITED v TAURANGA REALTY LIMITED [2015] NZHC 175 [13 February 2015]

[1]      The plaintiff carries on business throughout New Zealand as a provider of real estate services both directly to the public and through a network of franchises under which the plaintiff is the franchisor.  The first defendant (“TRL”) was one of the franchisees, pursuant to an agreement dated 2 September 2013.  Mr Young, the second defendant, is the sole director of TRL and the covenantor in the franchise agreement which binds him jointly and severally to the franchisee’s obligations.

[2]      The plaintiff alleges that on 19 January 2015 Mr Young, on behalf of TRL, advised the plaintiff that he would be rebranding as Remax, a real estate agency which is said to compete with the plaintiff, from 2 February 2015, and that TRL would exercise its right to terminate the franchise agreement.

[3]      The franchise agreement contains a restraint of trade covenant which, the plaintiff claims, prevents TRL from competing with the plaintiff’s business within a defined territory comprising Tauranga Central, Sulphur Point, Tauranga Hospital and Tauranga South.  The restraint period is for four months in respect of a 25 kilometre radius around the defined territory and for a period of five years within the territory.

[4]      Among the conditions applying upon termination of the franchise agreement, the plaintiff claims, is a requirement that TRL and Mr Young should assign to the plaintiff all telephone numbers used in the business under the franchise agreement, including a cell phone number.

[5]      A  statement  of  claim  alleging  breaches  of  the  franchise  agreement  and seeking injunctive relief and damages was filed by the plaintiff on 4 February 2015. On the same day, the plaintiff made an interlocutory application without notice for interim relief seeking orders in terms by which it seeks to enforce the restraint of trade covenant pending a full hearing of the claims.

[6]      Pursuant to a direction of Muir J in a Minute dated 9 February 2015, a copy of the papers filed on the Court were served on Mr Young.

[7]      Counsel for the plaintiff and Mr Young participated in a telephone conference on  10 February  2015.    Mr  Young  sought  to  represent  both  himself  and  TRL,

notwithstanding that companies are usually required to appear by counsel.  Because of the circumstances, Mr Woods did not object and I approve the lay representation for present purposes.

[8]      During the first telephone conference, Mr Young confirmed  that it is his intention not to compete with the plaintiff’s business in Tauranga, in the immediate future at least, but instead to take up employment as a real estate sales person in Auckland.  He indicated during the telephone conference that he would be prepared to give an appropriate undertaking to the Court, the terms of which may be sufficient to address the plaintiff ’s immediate concerns.

[9]      The parties did not appear to be far apart in terms of interim arrangements which would satisfy the plaintiff’s concerns but leave Mr Young free to pursue employment in Auckland.  The telephone conference was adjourned to this morning and the parties have exchanged draft undertakings.

[10]     When   the   conference   was   reconvened,   Mr   Young   demonstrated   a commendable degree of co-operation.   He had submitted on behalf of TRL and himself a formal undertaking which addressed, albeit in slightly different language, most  of  the  plaintiff’s  claims  for  interim  relief  except  to  the  extent  that  the defendants  did  not  wish  undertake  to  relinquish  the  mobile  telephone  number,

027 487 3131, which Mr Young said had been personal to him since the 1990’s.

[11]    After discussion, Mr Young acknowledged that the franchise agreement provided the  plaintiff  with  the ability to  demand the  transfer of the  cell  phone number but  expressed continued  concern that  doing so  would  give the  plaintiff access to the history of the use of the cell phone including private and personal use going back over many years.

[12]     Mr Woods assured Mr Young and the Court that the plaintiff had no interest in historical records.  Mr Woods also explained that the wording of the orders sought by the plaintiff was intended to reflect the terms of the agreement, and he resiled from an attempt to add specific references to Mr Young’s proposed new employer.

[13]     I am satisfied that it was reasonable for the plaintiff to apply for orders in terms of the bargain struck by the parties.   Mr Young accepted that if he had any doubts as to the implications of the orders made in terms of the agreement, from a practical point of view, he should seek legal advice.  He indicated he would consent to the orders sought by the plaintiff, subject to the condition that the plaintiff shall not access or attempt to access records or data relating to the prior use of the cell phone number 027 487 3131.

[14]     I am satisfied on the balance of convenience that it is appropriate that orders should be made by consent.

[15]     By consent, therefore, I order:

(a)      For  a  period  of  four  months  from  29 January 2015,  the  first  and second defendants shall refrain from conducting the following activities in competition with the plaintiff within a 25 kilometre radius of  the  territory  as  described  in  the  franchise  agreement  dated  2

September 2013; namely, Tauranga Central, Sulphur Point, Tauranga

Hospital and Tauranga South -

(i)directly or indirectly canvass, solicit or attempt to solicit, serve or act for any customer of the defendants’ business (being the business  of  the  first  defendant  while  a  franchisee  up  until

29 January 2015); 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  defendants’ telephone  or  facsimile  numbers  or  any other numbers used by customers of the business to contact the defendants (subject to the condition that the plaintiff shall not access or attempt to access records or data relating to the use

of the cell phone number 027 487 3131 at any time prior to the date of this order); or

(iv)be concerned or interested in any capacity whatsoever in any business conducted in competition with the business of the plaintiff (or its other franchisees) where such business relates to the provision of real estate services and related services.

[16]     I direct the Registrar to convene a conference of the parties with the Court on

26 May 2015 at 9:00 am.  The conference shall be by telephone conference unless the Court otherwise directs.  The parties shall file memoranda prior to the conference to inform the Court of the matters that will need to be addressed.

[17]     Costs  on  the  interlocutory  application  are  reserved.    The  parties  have indicated that the purpose of the four months duration of the orders is to enable them to seek resolution through mediation or arbitration; they are encouraged to address questions of costs in that context.  In the absence of agreement, any party may apply by memorandum for an order for costs on the interlocutory proceeding.

……………………….

Toogood J