Plumpton v Terry - [2015] NZHC 1089

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2015-404-562 [2015] NZHC 1089

BETWEEN
KEVIN IAN PLUMPTON

First Plaintiff/Applicant

UCFX LTD
Second Plaintiff/Applicant

AND

JAMES TERRY
First Defendant/Respondent

BRENT DAVID COLBERT Second Defendant/Respondent

SCOTT MAYNARD

Third Defendant/Respondent

Hearing: 24 April 2015

Counsel:

D M Hughes and J V R James for Applicants
S O McAnally for Respondents

Judgment:

20 May 2015

JUDGMENT OF BREWER J

This judgment was delivered by me on 20 May 2015 at 4:30 pm pursuant to Rule 11.5 High Court Rules.

Registrar/Deputy Registrar

Solicitors: Anthony Harper (Auckland) for Applicants
Keegan Alexander (Auckland) for Respondent

PLUMPTON v TERRY [2015] NZHC 1089 [20 May 2015]

Introduction

[1] The plaintiffs seek interim injunctions.

[2] The statement of claim has four causes of action:

(a) Breach of ss 131 and 145 of the Companies Act 1993. The pleading is that the defendants, as de facto directors of the second plaintiff (UCFX), when exercising powers or performing duties, failed to act in good faith and in what they believed to be the best interests of UCFX. Additionally, it is pleaded that the defendants disclosed information belonging to UCFX which they obtained in their capacity as a director or an employee.

(b)Breach of fiduciary duties. It is pleaded that the defendants breached fiduciary obligations to UCFX not to profit from their position as de facto directors of UCFX and not to take personal advantage of UCFX’s business opportunities at the expense of UCFX.

(c) Intentional interference with contractual relations. The plaintiffs allege that the defendants have intentionally interfered with various contractual arrangements between UCFX and specified parties.

(d)Breach of s 174 of the Companies Act 1993. The pleaded allegation is that the defendants, as agents of UCFX, have caused it to conduct its business in a manner which is unfairly prejudicial to the first plaintiff in his capacity as a shareholder of UCFX.

[3] With regard to the first and second causes of action, the plaintiffs seek injunctions permanently stopping the defendants from contacting present clients and from making use of confidential information owned by UCFX. They also seek monetary compensation. The third and fourth causes of action are essentially monetary claims.

[4] On 19 March 2015, on the urgent ex parte application of the plaintiffs, I made the following order against the defendants:1

The respondents will not, directly or indirectly, canvass, solicit, or attempt to solicit, serve or act for any present client of UCFX including, but not limited to, those set out in the schedule filed by the applicants.

[5] The order was limited as to time. It was stated to be an interim response to the application for interim injunctions. The order remains current and whether it continues in effect is decided by this judgment.

[6] The orders by way of interim injunction sought by the plaintiffs now are as follows:

(a) That the first to third respondents, James Terry, Brent David Colbert and Scott Maynard (together the ‘Respondents’) cease directly or indirectly canvassing, soliciting or…

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 Plumpton v Terry

Details

AGLC: Plumpton v Terry [2015] NZHC 1089
Case: [2015] NZHC 1089
Decision Date: 20 May 2015

CaseChat Overview and Summary

In the High Court of New Zealand, the plaintiffs, Kevin Ian Plumpton and UCFX Ltd, sought interim injunctions against the defendants, James Terry, Brent David Colbert, and Scott Maynard. The plaintiffs claimed that the defendants, as de facto directors of UCFX, breached their fiduciary duties, disclosed confidential information, and interfered with contractual relations, all in an attempt to establish a competing business. The plaintiffs sought a range of injunctions, including restrictions on contacting UCFX's clients and using its confidential information.

The central legal issues were whether there was a serious question to be tried in the proceeding, where the balance of convenience lay, and what form the interim relief should take. The court found that there was a serious question to be tried regarding the defendants' alleged misuse of confidential information and breach of fiduciary duties. The balance of convenience favoured the plaintiffs, as the potential damage to UCFX outweighed the defendants' need to earn a living. The court concluded that interim relief should be granted to prevent the defendants from competing unfairly with UCFX.

The court granted interim injunctions restraining the defendants from contacting UCFX's clients, using confidential information, and acting as directors of UCFX for two months. The court also ordered the defendants to deliver up any confidential information in their possession and to cease using it. The plaintiffs were awarded costs on a 2B basis, meaning the defendants would pay the plaintiffs' costs if they lost the case. The interim order made on 19 March 2015 was discharged.

Orders