Telfer Electrical Nelson Limited v Trotter - [2017] NZHC 3155

IN THE HIGH COURT OF NEW ZEALAND NELSON REGISTRY

I TE KŌTI MATUA O AOTEAROA WHAKATŪ ROHE

CIV-2017-442-33

[2017] NZHC 3155

BETWEEN TELFER ELECTRICAL NELSON LIMITED
Plaintiff

AND

KENNETH JOHN TROTTER

First Defendant

DUNCAN COTTERILL NELSON TRUSTEE (2010) LIMITED, GAIL ELIZABETH TROTTER AND

KENNETH JOHN TROTTER as trustees of the K & G TRUST

Second Defendants

Hearing: 12 December 2017

Counsel:

C T Gudsell QC and G A Cooper for plaintiff J C Ironside and N A Ironside for defendants

Judgment:

15 December 2017

JUDGMENT OF CHURCHMAN J

Introduction

[1] By notice of interlocutory application dated 30 May 2017, the plaintiff, Telfer Electrical Nelson Limited (TENL) applied for an interim injunction restraining the first defendant Mr Trotter (KT) from being employed by NZ Electrical Solutions Limited (NZESL).

TELFER ELECTRICAL NELSON LIMITED v KENNETH JOHN TROTTER [2017] NZHC 3155 [15
December 2017]

[2] The application also sought an interim injunction restraining KT from being involved in any capacity in any other business in the greater Nelson area that is the same or similar to the business of TENL for 12 months from the date of the granting of the order, or alternatively from 14 February 2017.

[3] Simultaneously with the application for an interim injunction, the plaintiff filed a statement of claim. The relevant provisions of that document sought a declaration that the restraint of trade provision in cl 21 of a Shareholders Agreement between the plaintiff and the second defendant dated 27 May 2011 (the SA) is valid and enforceable on its existing terms.

[4] The statement of claim also sought injunctions. However, the injunctions did not specifically refer to a start point for the period of the restraint from 14 February 2017, but instead sought:

… a period of twelve (12) months from the date of the order or such other period determined by the Court.

[5] Neither the interim injunction application nor the substantive statement of claim specifically sought any relief under s 8 of the Illegal Contracts Act 1970 (this legislation has since been replaced by s 83 of the Contract and Commercial Law Act 2017, which came into effect on 1 September 2017).

[6] In addition to the cause of action in the statement of claim relating to the restraint of trade clause, the statement of claim contained three other causes of action.

[7] The defendants protested the jurisdiction of this Court to entertain the proceedings set out in the statement of claim. This was on the basis that TENL and KT had attended mediation before a Ministry of Business, Innovation and Employment (MBIE) mediator and had settled a number of employment relationship issues, and other issues which, although connected with the employment, did not fall squarely within the definition of employment relationship problems.

[8] On 17 October 2017, Dobson J issued a reserved judgment in relation to the protest to jurisdiction matter.1 He held that the first, third and fourth causes of action in the statement of claim did not constitute employment related problems and…

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.

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Details

Case: [2017] NZHC 3155
Decision Date: 15 December 2017

CaseChat Overview and Summary

Telfer Electrical Nelson Limited (TENL) sought an interim injunction against Kenneth Trotter (KT) to restrain him from being employed by NZ Electrical Solutions Limited (NZESL) for 12 months from the date of the order or 12 months from 14 February 2017. The basis of the claim was a restraint of trade provision in a shareholder's agreement. The court had to decide if the restraint of trade was reasonable and if the interim injunction should be granted. The court found that the restraint of trade was not reasonable due to its ambiguous duration, lack of independent legal advice, and the absence of a clear legitimate proprietary interest. The court also found that the businesses of TENL and NZESL were not similar, and damages would be an adequate remedy. Therefore, the application for an interim injunction was dismissed. The court invited the parties to settle costs as between themselves, with a preliminary view that costs should follow the event and be assessed on a 2B basis.

Orders