Ryan v Mason

[2012] NZHC 3105

IN THE HIGH COURT OF NEW ZEALAND HAMILTON REGISTRY

CIV 2011-419-000083 [2012] NZHC 3105

BETWEEN  FREDERICK MICHAEL RYAN First Plaintiff

ANDFMML LIMITED Second Plaintiff

ANDSEAN DILLON MASON Defendant

Hearing:         30, 31 July; 1-3 August; 24 September 2012

Appearances: GHJ Brant and RJT Robertson for Plaintiffs

C T Gudsell QC and D Nielsen for Defendant

Judgment:      21 November 2012

(RESERVED) JUDGMENT OF ANDREWS J [As to liability]

This judgment is delivered by me on 21 November 2012 at 3pm pursuant to r 11.5 of the High Court Rules.

..................................................... Registrar / Deputy Registrar

Solicitors/Counsel:

Stace Hammond              :           PO Box 19101, Hamilton 3244 DX GP20026
Nielsen Law  :           PO Box 1108, Hamilton 3240

C T Gudsell QC               :           PO Box 19085, Hamilton 2001 DX GP20058

RYAN & ANOR V MASON HC HAM CIV 2011-419-000083 [21 November 2012]

Table of Contents

Para No Introduction ..........................................................................................................[1] Factual background .............................................................................................[4] The plaintiffs’ claims: introduction ..................................................................[28] Is the 22 July 2008 agreement binding?

Submissions ..........................................................................................................[32]

(a)     Section 9 of the Property Law Act – is the 22 July 2008 agreement a valid deed? ...................................................................................................................[34] (b)   Is the 22 July 2008 agreement valid and binding as a contract? ..............[41] The non-solicitation clause and geographical restraint of trade

Introduction ..........................................................................................................[49]

Restraint clauses: law ..........................................................................................[51]

Are the restraint clauses void for lack of consideration?

Submissions ..........................................................................................................[57]

Discussion ............................................................................................................[59]

Are the restraint clauses reasonable?

Submissions ..........................................................................................................[61]

Is the geographical restraint of trade reasonable? ..............................................[65] Is the non-solicitation clause reasonable? ...........................................................[78] Has Mr Mason breached the non-solicitation clause? ........................................[84] Has Mr Mason breached fiduciary duties owed to Mr Ryan and FMML? [101] A further alleged breach ..................................................................................[105] Result .................................................................................................................[109]

Introduction

[1]      The first plaintiff, Mr Ryan, and the defendant, Mr Mason, are solicitors. Between 22 July 2008 and 17 December 2010, Mr Mason was in partnership with Mr Ryan in the firm Ryan Law, as a salaried partner employed by Ryan Law.  On 10

January 2011, Mr Mason commenced practice in Morrinsville on his own account. [2]        Mr Ryan claims against Mr Mason under three causes of action:1

(a)       under the  first  cause of  action,  that  Mr  Mason  is  in  breach  of  a

restraint of trade covenant which prevents his practising law within 20 kilometres   of   Morrinsville   for   a   period   of   five   years   (“the geographical restraint of trade”);

(b)under the second cause of action, that Mr Mason is in breach of a non- solicitation  covenant  which  prevents  his  soliciting clients  of Ryan Law for a period of five years (“the non-solicitation clause”); and

(c)      under  the  fourth  cause  of  action,  that  Mr  Mason  is  in  breach  of fiduciary duties of fidelity and confidence owed to both Mr Ryan and FMML Ltd.

[3]      Mr Mason denies that he is liable to Mr Ryan or FMML Ltd, on any of the causes of action.  This judgment is concerned with liability only.   Counsel agreed that in the event that I uphold Mr Ryan’s claims, there will be a separate quantum hearing.

Factual background

[4]      Mr Ryan has practised law in Te Aroha since 1977.…