TMA Group of Companies Limited v Coleman HC Auckland CIV-2011-404-3208

[2011] NZHC 847

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2011-404-3208

BETWEEN  TMA GROUP OF COMPANIES LIMITED First Plaintiff

ANDPREMIER BUSINESS FORMS NZ LIMITED

Second Plaintiff

ANDKEITH ANDREW COLEMAN AND BRADLEY TRUSTEE COMPANY LIMITED

First Defendant

ANDLORNA MARY COLEMAN, DANIEL ANDREW COLEMAN AND PRINCE & PARTNERS TRUSTEE COMPANY LIMITED

Second Defendant

ANDKEITH ANDREW COLEMAN Third Defendant

ANDLORNA MARY COLEMAN Fourth Defendant

Hearing:         2 August 2011

Counsel:         D Hurd and B Spiers for the Plaintiffs

C Elliott for intended Fifth Defendant

Judgment:      4 August 2011 at 11:30 AM

RESERVED JUDGMENT OF ASSOCIATE JUDGE FAIRE

Solicitors:     Dawson Harford & Partners, PO Box 106347, Auckland

Duncan Cotterill, PO Box 5326, Auckland

Counsel:       D Hurd, 34 Bath Street, Parnell, Auckland 1052

C Elliott, PO Box 4338, Auckland 1140

TMA GROUP OF COMPANIES LIMITED V COLEMAN HC AK CIV-2011-404-3208 4 August 2011

[1]      The plaintiffs apply to join Sato New Zealand Limited as a fifth defendant to this proceeding.

[2]      This proceeding concerns an alleged breach of non-compete provisions by the second-named second defendant, Daniel Coleman, contained in an agreement for the sale and purchase of shares in Premier Business Forms (NZ) Limited, under which Mr Coleman was a seller.

[3]      Under the agreement the first plaintiff purchased all of the shares in Premier Business Forms (NZ) Limited from the first and second defendants.  The third and fourth defendants were guarantors under the agreement.

[4]      The plaintiffs allege that Daniel Coleman is in breach of the non-compete provisions as he has taken up employment with a competitor of Premier Business Forms (NZ) Limited, namely Sato New Zealand Limited.

[5]      The plaintiffs issued proceedings against the defendants on 1 June 2011.  At the same time as issuing proceedings, the plaintiffs also filed an interlocutory application for an interim injunction.  That application was heard before Peters J on

20 June 2011.  Her Honour declined the application but ordered a three day fixture for the substantive proceeding to commence in the week of 19 September 2011. Arrangements were made for the file to be placed in a Duty Judge List for the purpose of giving trial directions.

[6]      It is common ground that although the current application seeks leave to file an amended statement of claim, no cause of action is pleaded against the intended fifth defendant.  Nor is any specific relief sought against the fifth defendant.   The plaintiffs however, are anxious to obtain the fifth defendant’s documents.   That question by itself could be the subject of a separate application pursuant to r 8.26 and without the need for any order for joinder as a defendant to be made.

[7]      The proposed fifth defendant opposes joinder.   It has filed an application seeking leave to be heard.  That part of its application is not opposed.  I was advised that it is most unlikely that the proposed fifth defendant would plead to any amended

statement of claim in view of the fact that there is no cause of action pleaded against it or relief sought from it.   Indeed, without a cause of action or prayer for relief pleaded against the proposed fifth defendant, there would seem little point in the proposed fifth defendant pleading to such amended statement of claim.

[8]      The application is made in reliance on r 4.56 of the High Court Rules.  Rule

4.56 provides:

4.56     Striking out and adding parties

(1)     A Judge may, at any stage of a proceeding, order that—

(a)     the name of a party be struck out as a plaintiff or defendant because the party was improperly or mistakenly joined; or

(b)     the  name  of  a  person  be  added  as  a  plaintiff  or  defendant because—

(i)     the person ought to have been joined; or

(ii)     the person's presence before the court may be necessary to adjudicate on and settle all questions involved in the proceeding.

(2)     An order does not require an application and may be made on terms the court considers just.

(3)     Despite  subclause  (1)(b),  no  person  may  be  added  as  a  plaintiff without that person's consent.

[9]      Mr Hurd drew to my attention that the rule does not require;

(a)       A cause of action to be pleaded against a proposed additional party; or

(b)      Relief to be sought against that party.

[10]     Mr Hurd referred to a number of decisions.[1]    None of the decisions referred to deal with the position where a proposed defendant opposes joinder in a situation where no cause of action and no prayer for relief is pleaded against that proposed

party.

[1] Mainzeal Corporation Ltd  v Contractors Bonding Ltd (1989) 2 PRNZ 47; Penang Mining Co Ltd v Choong San (1969) 2 NLJ 52; Proprietors of Taharoa C v Mäori Trustee (1993) 7 PRNZ 236, Barker J; Business Associates Ltd v Telecom Corporation of NZ Ltd (1990) TPRNZ 317.

[11]     Counsel confirmed that  their research  had been able to  uncover no  case where a defendant had  been joined in a situation where the defendant opposed joinder and where no cause of action and no prayer for relief is proposed to be pleaded against the party to be joined.

[12]     I am not surprised that counsel’s research could find no such case.   That arises from the fact that a party who is resisting joinder would be entitled to rely on the power to dismiss a proceeding which disclosed no reasonably arguable cause of action or case appropriate to the nature of the pleading.

[13]     Rule 15.1 of the High Court Rules provides:

15.1   Dismissing or staying all or part of proceeding

(1)     The court may strike out all or part of a pleading if it—

(a)     discloses no reasonably arguable cause of action, defence, or case appropriate to the nature of the pleading; or

(b)     is likely to cause prejudice or delay; or

(c)     is frivolous or vexatious; or

(d)     is otherwise an abuse of the process of the court.

(2)     If the court strikes out a statement of claim or a counterclaim under subclause (1), it may by the same or a subsequent order dismiss the proceeding or the counterclaim.

(3)     Instead of striking out all or part of a pleading under subclause (1), the court  may stay all  or  part  of  the  proceeding on  such  conditions  as  are considered just.

(4)     This rule does not affect the court's inherent jurisdiction.

[14]     I  reach  the  conclusion  that  there  is  no  justification  for  exercising  the discretion to join the intended fifth defendant in this case, particularly as there is no cause of action and no prayer for relief recorded against that party and the party opposes the joinder.

[15]     Accordingly, the application to join the proposed fifth party is declined.

Costs

[16]     This judgment disposes of two applications being the plaintiff ’s application and the intended fifth defendant’s application.  I reserve costs to enable counsel to agree.   In the event that counsel are unable to agree, memoranda in support, opposition and reply on the question of costs shall be filed and served at seven day intervals.  On receipt of the reply memorandum the file shall be referred to me for

the entry of judgment on costs.

JA Faire

Associate Judge