TCC Bayfair Limited v Swan - [2024] NZHC 2112

IN THE HIGH COURT OF NEW ZEALAND TAURANGA REGISTRY

I TE KŌTI MATUA O AOTEAROA TAURANGA MOANA ROHE

CIV-2024-470-40

[2024] NZHC 2112

UNDER Part 7 of the High Court Rules 2016

IN THE MATTER OF

an application for interim relief

BETWEEN

TCC BAYFAIR LIMITED

First Plaintiff

TCC TAURANGA CROSSING LIMITED
Second Plaintiff

AND

SARAH SWAN

Defendant

Hearing: On the papers

Counsel:

K W Clay for Plaintiffs

D M Fraundorfer for Defendant

Judgment:

31 July 2024

JUDGMENT OF O’GORMAN J

This judgment was delivered by me on 31 July 2024 at 12.30 pm pursuant to r 11.5 of the High Court Rules 2016.

Registrar/Deputy Registrar

…………………………………

Solicitors/Counsel:
K W Clay, Christchurch
Canterbury Legal, Christchurch D M Fraundorfer, Tauranga
JK Hamilton, Tauranga

TCC BAYFAIR LIMITED v SWAN [2024] NZHC 2112 [31 July 2024]

[1] This proceeding was commenced on 28 March 2024. TCC Bayfair Ltd (TCC Bayfair) and TCC Tauranga Crossing Ltd (TCC Crossing) pursue claims of breach of contract by Sarah Swan, who entered into two consecutive agreements with TCC Bayfair, and one with TCC Crossing. Under those contracts, Ms Swan was engaged to carry out services such as providing cosmetic treatments for TCC patients. The contracts included a non-solicitation clause, and other clauses that addressed confidential information and intellectual property.

[2] On or about 5 December 2023, Ms Swan emailed the plaintiffs to terminate the contracts, providing 30 days’ written notice. By agreement, the TCC Crossing contract was terminated immediately, with effect from 5 December 2023. The TCC Bayfair contract was terminated after 7 December 2023.

[3] The two causes of action in the plaintiffs’ statement of claim allege that, in breach of contract, the defendant:

(a)solicited or dealt with the plaintiffs’ patients or former patients during the six-month restraint period, by providing cosmetic services through her own business; and

(b)made use of the plaintiffs’ confidential information and intellectual property to market and promote her new business using before and after photographs of the plaintiffs’ clients.

[4] At the same time the proceeding was commenced, the plaintiffs filed a “without notice” application for an interim injunction. They sought to prohibit the defendant from soliciting or dealing with any of their patients or former patients (from within the prior 12-month period), and that the defendant disclose the names of any such clients with whom she had had communications or provided services since the dates of termination. The application also sought disclosure of financial documents relating to such services.

[5] On 28 March 2024, Johnstone J declined to deal with the interlocutory application on a without notice basis, so it was listed for mention on 9 April 2024.

[6] On 5 April 2024, counsel for the defendant filed a memorandum noting that the contracts have arbitration provisions, so at that stage the defendant did not submit to the Court’s jurisdiction. Counsel for the defendant also advised that there was an active matter before the Employment Relations Authority about whether the defendant was an employee of the plaintiffs rather than an independent contractor.…

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.

Keep reading for free

Create a free CaseChat account to read TCC Bayfair Limited v Swan and more:

Read every judgment in full
Ask AI and get answers linked to paragraphs
See how each paragraph was cited in later cases
Download judgments as PDF or Word

Continue with Google

One click creates your free account or signs you in.

By continuing you agree to the Terms and Privacy Policy.

Details

Case: [2024] NZHC 2112
Decision Date: 31 July 2024

CaseChat Overview and Summary

TCC Bayfair Limited and TCC Tauranga Crossing Limited brought this proceeding against Sarah Swan, alleging breaches of non-solicitation, confidentiality, and intellectual property clauses in contracts they had entered into with her. The plaintiffs sought an interim injunction to prevent Ms Swan from soliciting their patients, as well as disclosure of the names of patients she had contacted and financial documents relating to such services. The defendant opposed the injunction, arguing that the restraint was a non-solicitation clause rather than a non-compete obligation, that the restraint had less than two months to run, and that damages would be an adequate remedy. After negotiations, Ms Swan provided two undertakings to the Court: she would not identify the plaintiffs or mention her employment with them in her advertising until 8 June 2024, and she would not accept for business any previous clients of the plaintiffs, except for immediate family members and "friends" named on a list agreed upon by the parties.

The court was required to decide whether to make an order for costs on the interlocutory application for an injunction. The plaintiffs argued that they should be treated as the successful parties in the interlocutory application, while the defendant argued that no order for costs was appropriate as the interlocutory application had not been determined. The court accepted that the default position in r 14.8 of the High Court Rules did not apply, given that the Court did not determine the merits of an opposed interlocutory application. The interlocutory application was effectively treated as withdrawn because it had been resolved by agreement. The court also accepted that there were "special reasons" not to fix and order costs at this stage, as the appropriate award of costs for the injunction-related steps was better assessed in the context of the overall merits once the outcome of the proceeding was known.

The court decided that costs should be reserved (other than those already ordered to lie where they fall). If the proceeding is transferred to the District Court, then s 96 of the District Court Act 2016 will apply and a District Court Judge will have jurisdiction to determine these reserved cost issues at a suitable time.

Orders