Redcoats v Day

[2023] NZHC 1037

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-A-TARA ROHE

CIV-2023-485-000188

[2023] NZHC 1037

BETWEEN

REDCOATS LIMITED

Plaintiff

AND

CHRISTOPHER DAY

First Defendant

AND

ANDCO REALTY LIMITED

Second Defendant

Judgment on the

papers:

3 May 2023

JUDGMENT OF GENDALL J

[1]    Before the Court filed late yesterday, 2 May 2023, is an application by the plaintiff (Redcoats) for an interim injunction against the  first  defendant,  Christopher Day (Mr Day) and the second defendant, Andco Realty Limited (Andco). The application has been brought according to counsel for Redcoats, Mr Dewar, as a matter of urgency. He confirms that all Redcoats documents here have been supplied on a Pickwick basis to the solicitors acting for the defendants.

[2]    Redcoats operates a real estate agency in Wellington, Lower Hutt, and elsewhere, trading as The Professionals Redcoats. Andco in turn operates a real estate agency in the same general areas under the name Lowe & Co.

[3]    On 19 September 2014, Redcoats, as real estate agents, and Mr Day, as the salesperson, entered into a contract for services for Mr Day to act as a real estate salesperson for Redcoats (the Contract). The Contract contained a restraint of trade

REDCOATS LIMITED v CHRISTOPHER DAY [2023] NZHC 1037 [3 May 2023]

clause against Mr Day requiring him not to compete against Redcoats in the event of him leaving them as a salesperson, although that restraint was short, only some three months, and it was limited to a 15 kilometre radius from Redcoats’ place of business.

[4]    Evidence before the Court in support of this application from John Stewart Ross, a director of Redcoats, and Charles Lindsay, manager of the Redcoats Wellington office, indicates that Mr Day was Redcoats’ leading Central Wellington sales agent up to 11 April 2023 when he announced that he was resigning. They say that for the nine year period from the commencement of his Contract, Mr Day benefitted from considerable mentoring, training, and professional development as he came to the Redcoats team in 2014 with limited real estate experience.

[5]    When Mr Day announced on 11 April 2023 that he was resigning from Redcoats, he gave 20 days’ notice with a stated termination date he calculated of 30 April 2023.

[6]    Of particular interest here is clause 2.2 of the Contract. This requires that, for termination in circumstances such as the present, 20 working days’ notice in writing from the salesperson of his intention to terminate is required. This obligation, Redcoats say, was not in any way waived, and the contractual notice period in any event will now only expire on or about 10 May 2023.

[7]    After receiving his 11 April 2023 notice of resignation, Redcoats say they learned that Mr Day was to go and work for Andco in its competing Lowe & Co real estate business, at which point Redcoats reminded Mr Day he was required not to compete for a three month period.

[8]    Redcoats say Mr Day has now simply ignored that and commenced employment with Andco on Monday 1 May 2023. They maintain too he is immediately aggressively promoting his services on behalf of Lowe & Co in the market.

[9]    In its present application for the interim injunction, Redcoats seeks the following orders:

1.     An order against the first defendant, restraining the first defendant from undertaking any private business or employment which directly competes with that of the plaintiff within a 15 kilometre radius of the plaintiff’s Wellington business premises at 27 Buller Street, Te Aro, Wellington, for a period of three months, commencing from 2 May 2023, ending on 10 August 2023.

2.     That the second defendant refrain from employing the first defendant in any capacity to undertake work that competes with the plaintiff on the same terms as are set out in paragraph 1 above.

3.    Costs against the first and second defendant.

[10]   Applications for an injunction of this type are addressed in R 7.53 of the  High Court Rules 2016. McGechan on Procedure at HR7.53.04 sets out the general principles to apply in this way:

HR7.53.04

There are three stages to the consideration of an application for an interlocutory or interim injunction:

(1)The applicant must establish that there is a serious question to be tried or, put another way, that the claim is not frivolous or vexatious;

(2)Next, the balance of convenience must be considered, which requires consideration of the impact on the parties of the granting of, and the refusal to grant, an order;

(3)Finally, an assessment of the overall justice of the position is required as a check.

It is also the case that in assessing whether there is a serious question to be tried, a plaintiff seeking interlocutory relief must adduce sufficiently precise factual evidence to satisfy the Court that there is a real prospect of succeeding in the claim for a permanent injunction at trial.

[11]   Here Redcoats have provided detailed affidavit evidence from Mr Ross and Mr Lindsay in support of the present application. Solicitors who have confirmed they are acting for the defendants have been made aware of Redcoats’ concerns and the bringing of this proceeding, but as I said have provided no effective response at this point.

[12]   Mr Day himself has, it seems, simply ignored warnings provided to him by Redcoats of his obligations under the Contract following his resignation, and he has commenced employment with Andco. On its face this is in direct breach of the reasonably limited restraint of trade he agreed to under the Contract and also the

requirement at clause 2.2 that he provide 20 working days’ notice (rather than simply 20 days’ notice as he has purported to do).

[13]   Redcoats have given its undertaking as to damages  and I am informed  by  Mr Dewar that it is in a position to meet any damages award that may be made.

[14]   I am satisfied from the reasonably extensive evidence provided by Redcoats in the affidavits filed in support of its application that it has a real prospect of succeeding in a claim for a permanent injunction at trial here, and therefore there is a serious question to be tried. On its face there is a clear breach of Contract by Mr Day here. I accept too damages would be an inadequate remedy here. In my view, the balance of convenience also favours an interim order being granted to compel Mr Day not to continue the actions he commenced on 1 May 2023 and to oblige Andco as his new “employer” to similarly comply.

[15]   To protect the overall position here given the urgency required in making the orders sought by Redcoats on this interim basis, it is appropriate, as I see it that the Court reserves leave for any party to apply to set aside the ex-parte order that will follow on 48 hours’ notice.

[16]   For all these reasons, Redcoats’ application succeeds. On the material before the Court, as I note, there seems little doubt that Mr Day is in clear breach of the Contract. So far as Andco is concerned the ancillary order made against it here, in my view is appropriate (notwithstanding that it is not a party to the Contract) on the interim basis provided. I say this given particularly its ability to apply to set aside the order against it on 48 hours’ notice pursuant to the leave reserved above.

Result

[17]This application succeeds.

[18]Orders are now made as follows:

(a)An order is made against  the first  defendant, Mr Day,  restraining  Mr Day from undertaking any private business or employment which

directly  competes  with  that  of  the  plaintiff  Redcoats  within  a   15 kilometre radius of the plaintiff’s Wellington business premises at 27 Buller Street, Te Aro, Wellington, for a period of three months commencing from 2 May 2023, ending on 10 August 2023.

(b)That the second defendant, Andco, refrain from employing the first defendant, Mr Day, in any capacity to undertake work that competes with the plaintiff Redcoats, in the same terms as are set out in paragraph 1 above.

(c)Leave is reserved for any party on 48 hours’ notice to apply to this Court to set aside the order made here against it.

Gendall J

Addendum:

[19]   As to costs, at this point these are reserved. If the parties are unable to agree on the issue of costs, then they may file, sequentially, written memoranda on costs (four pages maximum) which are to be referred to me, and I will give a decision on costs based upon the papers.

[20]   Subsequent to completion and signature of this judgment at 9.25 am this morning, 3 May 2023, I was made aware of a memorandum dated 3 May 2023 just filed by Mr Iorns, counsel for the defendants, essentially requesting further delay in this matter to enable the defendants to file an opposition to the plaintiffs’ interim application and evidence in support. I have briefly considered that memorandum and take the view that, in light of the urgency in the circumstances prevailing here, my within judgment should proceed. The leave reservation I note in para [18](c) above can properly cover the situation as I see it.