Plumpton v Terry

[2015] NZHC 527

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2015-404-562 [2015] NZHC 527

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:	(On the papers)
Counsel:	DM Hughes and JVR James for Plaintiffs
Judgment:	19 March 2015

JUDGMENT OF BREWER J

Solicitors:           Anthony Harper (Auckland) for Plaintiffs

PLUMPTON v TERRY [2015] NZHC 527 [19 March 2015]

[1]      The applicants apply for ex parte interim injunction orders.

[2]      The basis of the application is that the respondents owe fiduciary duties to the second applicant as de facto directors thereof.   Essentially, it is alleged that the respondents, in breach of their fiduciary duties, are intentionally seeking to damage the  second  applicant   by  undermining  its  reputation  in  the  business  world, approaching customers with the intention of persuading them to give their business to another entity with which they are connected and attempting to persuade valuable employees of the second applicant to resign and transfer to the employment of the respondents or an entity associated with them.

[3]      The law relating to granting an interlocutory injunction is well settled.   Its purpose is to protect applicants against injury by violation of their rights for which they could not be adequately compensated in damages recoverable in the action if the case were resolved in their favour at the trial.   An applicant’s need for such protection must be weighed against a respondent’s need to be protected against injury resulting from being prevented from exercising legal rights for which the respondent could not be adequately compensated under the applicant’s undertaking in damages if the case were resolved in the respondent’s favour at the trial.   The Court must weigh one need against another and determine where the balance of

convenience lies.1

[4]      A two-stage approach is required.  I must decide whether there is a serious question to be tried in the proceeding and, if there is, where the balance of convenience lies.  Within the latter examination will be a focus on the adequacy of damages as a remedy available to the applicant.

[5]      Finally, the decision whether to grant an interim injunction must (of course)

be taken in the context of the overall justice of the case.2

[6]      The granting of an interim injunction without notice is allowed for by r 7.46 of the High Court Rules.   In this case, I can grant the application only if I am

1      American Cyanamid Co v Ethicon Ltd [1975] AC 396 (HL) at 408, per Lord Diplock.

2      Klissers Farmhouse Bakeries Ltd v Harvest Bakeries Ltd [1985] 2 NZLR 129 (CA).

satisfied that requiring the applicants to proceed on notice would cause them undue delay or prejudice.

[7]      I am satisfied that there is a serious question to be tried on the basis of the affidavit of Mr Plumpton affirmed earlier today.  The issue is where the balance of convenience lies.  Normally, where a party alleges that, for some time, respondents have been acting to undermine or damage a business in violation of fiduciary duties, there would need to be some imminent and serious harm identified before the Court would be justified, ex parte, in restraining the respondents from acting in a particular way.  Here, the only imminent event in which the respondents, if they acted in breach of fiduciary duties, might harm the applicants is the Microsoft New Zealand Partner Awards to be held at the Pullman Hotel tonight.  Apparently, important customers of the second applicant will be present or represented, as will employees of the second applicant.

[8]      I am not prepared to make all of the orders sought by the applicants without hearing from the respondents.  The applicants have made clear that the respondents have a legitimate business interest in the second applicant.

[9]      I am prepared to make the following limited order because at this stage I find the balance of convenience tilts towards the applicants and I am satisfied that not making it would cause undue prejudice:

(a)      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.

[10]     This  order  will  expire  at  4:00  pm  on  26  March  2015  unless  otherwise renewed.

[11]     This is an interim response to the application.  It does not dispose of it.

[12]     The applicants are to serve the respondents with the proceedings.   Upon confirmation of service, the registry is to schedule an urgent telephone conference with me for the purpose of setting a timetable for the disposition of the rest of the

applicants’ applications for interlocutory injunctions.

Brewer J