Vision Personal Training Franchises Pty Limited v Williams
[2023] NZHC 2848
•11 October 2023
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2023-404-001329
[2023] NZHC 2848
UNDER the Copyright At 1994 BETWEEN
VISION PERSONAL TRAINING FRANCHISES PTY LIMITED
First Plaintiff
VISION PT IP PTY LIMITED
Second PlaintiffAND
DEAN MAURICE WILLIAMS
First Defendant
MRDW LIMITED
Second Defendant
KRDW LIMITED
Third Defendant
Hearing: 11 September 2023 Appearances:
J Glover and L Carter for the Plaintiffs A Gilchrist for the Defendant
Judgment:
11 October 2023
JUDGMENT OF WALKER J
This judgment was delivered by me on 11 October 2023 at 4 pm Pursuant to Rule 11.5 High Court Rules
Registrar/Deputy Registrar
VISION PERSONAL TRAINING v WILLIAMS [2023] NZHC 2848 [11 October 2023]
[1] This is an application for interim injunction by Vision Personal Training Franchises Pty Limited and Vision PT IP Pty Limited (together, Vision PT). Vision PT characterises the form of interim injunction it seeks as a “springboard injunction”. That is, an injunction designed to remove the advantage of a head start that a person has gained through illegitimate activity. The objective of a springboard injunction is to level the playing field between the parties by placing a defendant back in the position it would have been in but for the breach.
[2] The Vision PT business is a personal training franchise in Australia and New Zealand. The first plaintiff operates the franchise. The second plaintiff is an intellectual property holding company.
[3] There are 48 Vision PT franchises in Australia. The first defendant, Dean Williams, operates the three New Zealand Vision PT franchises in Ponsonby, Parnell and Takapuna. These are the only Vision PT franchises in New Zealand. He is the named key person and guarantor in two of the three franchise agreements between Vision Personal Training Franchises Pty Limited and the New Zealand franchisee entity. He is a director and shareholder of the three franchisee companies.
[4] The second defendant (MRDW) operates a personal training studio called “The Right Fit”. It is located in Epsom. The third defendant (KRDW) operates a personal training studio also called “The Right Fit” on Shortland Street in the Auckland central business district. The current directors of each of those companies are friends and former employees of Mr Williams in the Vision PT franchises. Mr Williams was a director of both companies but is no longer one. The companies’ names continue to bear his initials combined with the initials of the other director - Matthew Rolleston in the case of MRDW, and Keaton Ryder in the case of KRDW.
[5] The plaintiffs claim that Mr Williams, whilst remaining within the Vision PT franchise group, is attempting to set up a separate competing franchise system branded as “The Right Fit”. They say that Mr Williams, MRDW and KRDW are utilising the plaintiffs’ confidential information and copyright materials.
[6] Without admitting any liability or conceding anything, MRDW and KRDW have consented to the making of interim orders. This resolves the interim position against those entities. The orders to which they have consented, and which have been made, are set out in Schedule 1 to this judgment.
[7] Mr Williams also consents to the making of most of the orders in the plaintiffs’ application. His position is that he has not done and has no intention of doing any of the things which the plaintiffs seek to restrain him from doing. He too does not make any admission or concede any liability. He also acknowledges that he has existing obligations to the plaintiffs under the franchise agreements.
[8] Mr Williams’ stated position significantly narrows the issues before this Court at this interim stage. The only opposed interim order to be determined is an order that:
The first defendant is restrained from having any involvement, including acting as a director, manager, consultant, trainer, investor or advisor, whether directly or indirectly, and whether remunerated or otherwise, with The Right Fit business.
[9] Mr Williams argues that this order is too imprecise and far-reaching, has no evidential basis and would potentially mean that Mr Williams breaches the order if he has any conversation with anyone involved in The Right Fit business. In particular, he objects to the references to ‘consultant and/or trainer’ because he intends to continue to offer training to personal trainers in New Zealand through his company, Strive To Be Healthy Limited (Strive). This includes training to those within The Right Fit business. I apprehend that Mr William’s involvement in Strive comes as a surprise to the plaintiffs. Ms Glover signalled that the plaintiffs will wish to consider joining Strive to this proceeding.
[10] The issue before the Court is whether, in the light of the other undertakings given by Mr Williams and the evidence before the Court, the plaintiffs have made out grounds for the order in [8] above.
Factual background
[11] There are three franchise agreements between Vision Personal Training Franchises Pty Limited and companies owned or part-owned by Mr Williams. The Takapuna studio franchisee is OGDW Limited (OGDW) following transfer to OGDW on 1 May 2020. As part of that transfer, Mr Williams became the guarantor of that agreement. Mr Williams is the sole director of OGDW. He was originally the sole shareholder.
[12] Mr Williams is the sole director and shareholder of Vision PT Ponsonby Limited, the Ponsonby studio franchisee. He is named as the key person and manager. He is also a guarantor of that agreement.
[13] The franchisee of the Parnell studio is TCDW Limited (TCDW). Mr Williams is named as key person and manager of the Parnell studio. He is also a guarantor. He is one of two directors of TCDW and a shareholder.
[14] Each of the franchisees bears the initials of Mr Williams and one other person just as the second and third defendants do.
[15] As part of its franchise business, Vision PT makes certain intellectual property and confidential information available to its franchisees on terms stipulated in the franchise agreements. The franchise agreements define intellectual property, confidential information and, among other things, impose obligations in respect of preserving the value and validity of the intellectual property.
[16] The franchise terms are comprehensive. They include non-compete provisions. They also contain a dispute resolution provision. This explicitly provides that, in addition to any other remedy available at law or in equity, the franchisor shall be entitled to interim, interlocutory and permanent injunctive relief.
[17] I have skated over the provisions of the franchise agreements rather than set them out in detail because the causes of action pleaded against Mr Williams is not contractual breach but breach of copyright and breach of an equitable duty of
confidence. Nonetheless, Ms Glover properly accepts that the scope of the pleaded equitable obligation of confidence is informed by the contractual obligations.
[18] A further part of the backdrop to the current dispute is tension between Mr Williams and Vision PT arising out of Vision PT’s approach to fee relief during the COVID lockdown. Dissatisfaction on the part of franchisees led to a mediation in December 2021. Mr Williams nominated himself to a peer-elected franchise group named the Vision Personal Training Leadership Council. Vision PT considered that Mr Williams did not meet the requirements in view of the state of their relationship. Mr Williams indicated then that he wished to part ways with Vision PT and exit the New Zealand franchises.
Pleaded claim
[19] The statement of claim pleads that during the term of the Vision PT franchise agreements, Vision PT have disclosed confidential information to the New Zealand franchises and/or Mr Williams. This includes:
(a)the Vision PT operations manual;
(b)financial information;
(c)information about staff members’ terms and condition of employment;
(d)Vision PT’s staff training and development material, including materials relating to courses for personal trainers so that they can meet the accreditation requirements of the New Zealand Register of Exercise Professionals (NZ Reps); and
(e)Vision PT’s client database.
[20] The plaintiffs say the Vision PT operations manual falls within the definition of confidential information in the franchise agreements and is gated content. This means it is only made available to franchisees via password and multi-factor authorisation. It also includes various statements indicating that it is not to be copied,
is for use strictly in accordance with the franchise agreement, and that it is to be returned once the franchise agreement comes to an end. The Takapuna, Ponsonby and Parnell franchise agreements stipulate that the operations manual and other confidential material is to be disclosed to officers, employees and professional advisers of the franchises on a “need-to-know” basis. Vision PT staff are required to sign confidentiality agreements. The Vision PT training materials are also included in the definition of confidential information in the Takapuna, Ponsonby and Parnell agreements.
[21] The plaintiffs assert copyright ownership in, among other things, the Vision PT operations manual, training and development content for staff and promotional material relation to the Vision PT business as literary works.1
[22] The statement of claim pleads two causes of action against Mr Williams. The first is breach of confidence. Vision PT pleads:
[Mr Williams] received the Confidential Information in circumstances importing an obligation of confidence, and he knew that it was not to be disclosed to third parties.
In breach of his obligations of confidence, [Mr Williams] disclosed the Confidential Information, or parts of it, directly or indirectly to the second and/or third defendants, and encouraged the second and/or third defendants or their directors, agents, employees or contractors to use it in the course of the businesses of the second and/or third defendants.
The unauthorised misuse and/or disclosure of the Confidential Information by Dean Williams has caused and/or is likely to cause loss to the plaintiffs.
[23] The second cause of action against Mr Williams alleges primary copyright infringement by the copying of substantial parts of the copyright works.
[24] Alongside injunctive relief, there is a claim for damages or, at the plaintiffs’ election, an account of profits; additional damages pursuant to s 121 of the Copyright Act; and interest.
1 Copyright Act 1994, s 2.
Evidence
[25] The application is supported by affidavits from Rebecca Carson and Andrew Simmons.2 Ms Carson is the general manager of the first plaintiff. Mr Simmons is the sole director of the first plaintiff and the sole director and shareholder of the second plaintiff.
[26] Mr Williams has filed evidence in opposition, as has Matthew Rolleston, director of the second defendant and Keaton Ryder, director of the third defendant.
Preliminary matters
[27] Mr Williams objects to paragraphs in Ms Carson’s first affidavit as inadmissible hearsay.
[28] The objection relates to information from a whistle blower. The whistle blower was originally an employee of Vision PT in New Zealand. Ms Carson did not identify the whistle blower in her first affidavit but made his identity known after the whistle- blower reached a settlement agreement with Mr Williams and/or Mr Williams’ companies. It is common ground that the whistle blower is subject to confidentiality and non-disparagement obligations pursuant to that settlement agreement.
[29] Mr Gilchrist agreed that the Court should accept this material conditionally without needing to determine the question of admissibility as a preliminary matter.
[30] I accept Ms Glover’s submission that the objection falls away to an extent because the core challenged parts of Ms Carson’s evidence have been corroborated by the defendants. For example, the existence of The Right Fit operations manual is not denied by the defendant. What remains contested is the key matter of the alleged involvement of Mr Williams in the preparation of The Right Fit operations manual.
2 Ms Carson has filed two affidavits. The first was sworn on 28 June 2023. The second is a reply affidavit sworn on 16 August 2023.
[31] Ms Glover and Ms Carter summarised the information sourced from the whistle blower since confirmed to be accurate in whole or part by the defendant save for explanatory context:
(a)That on 16 and 17 January 2022, Mr Williams conducted a training session to employees of both Vision PT and The Right Fit;
(b)Mr Williams wore a Vision PT uniform to carry out the training sessions on 16 and 17 January 2022;
(c)Those training sessions were carried out at The Right Fit premises in Epsom;
(d)On 14 February 2022, the whistle blower was provided an offer of employment signed by Dean Williams as “director” although Mr Williams does not admit that the offer was from The Right Fit business and says “I do not believe that there is any reference to The Right Fit business on the documentation”;
(e)On 27 January 2023, Mr Williams attended a development day where he addressed trainers from both The Right Fit and Vision PT;
(f)On the development day on 27 January 2023, Mr Williams presented information from a handout which carried The Right Fit branding. The defendants accept that Mr Williams and Matt Rolleston presented a motivational seminar on that date and that a handout carrying The Right Fit branding was distributed but Mr Williams says it was Mr Rolleston who presented the handout and “that he should not have done so”.
(g)Monthly development meetings with all Vision PT staff are held at The Right Fit studio in Epsom;
(h)Mr Williams is undertaking his own internship programmes which are 16 weeks long and delivered to Vision PT employees using The Right Fit documentation;
(i)The whistle-blower supplied the plaintiffs with a copy of The Right Fit’s operations manual;
(j)Vision PT staff had been instructed not to tag Mr Williams in anything associated with The Right Fit on social media or forums.
[32] To the extent that any material sourced from the whistle blower has not now been accepted or verified by the defendants, Ms Glover relies on ss 18 and 20 of the Evidence Act 2006 and r 7.30 of the High Court Rules 2016. I have determined that it is not necessary to deal with the rump of the challenged evidence so I do not address the arguments in this judgment.
[33] A second preliminary issue is that the law of New South Wales governs the franchise agreement.3 Mr Gilchrist submits that the evidence of the law of New South Wales is an important ingredient in establishing a serious question to be tried yet the plaintiffs have not adduced evidence as what those laws are. He maintains that on this basis alone the application for interim relief should fail.
[34] There is a short answer to this point. The pleaded cause of action is not contractual breach but an equitable obligation of confidence and copyright infringement. The contract remains relevant but only to provide context. The applicable law is the law of New Zealand and the alleged breaches are determined under New Zealand law.
Legal principles
[35] The principles governing interim injunctions are well known.4 The plaintiffs’ application turns on:5
(a)whether there is a serious question to be tried;
3 Clause 52 of each franchise agreement provides that “This Agreement is deemed to have been made in New South Wales, and is governed by the Laws of New South Wales …”.
4 Mr Gilchrist did not argue that any other standard may be applicable to a “springboard injunction”. Indeed, Mr Gilchrist’s submission was that the order sought is not a springboard injunction at all.
5 NZ Tax Refunds Ltd v Brooks Homes Ltd [2013] NZCA 90 at [12].
(b)the balance of convenience, meaning assessing which course of action (granting or refusing injunctive relief) is likely to involve the least risk of injustice if it turns out the course taken is wrong;
(c)the overall justice of the case.
[36] It is not the role of any court at an interim injunction stage to try to resolve conflicts of evidence presented in affidavits. The litigation is at an early stage and more evidence from all parties on the ultimate issues can be expected at the substantive stage. Nothing I say on the facts is intended to be determinative.6
[37] Ms Glover submitted there are similarities between the facts of this case and those in QBE Management Services (UK) Limited v Dymoke.7 That case dealt with the concept of the springboard injunction, the purpose of which is to ensure that downstream benefit does not flow to a party as a result of that party’s unlawfulness.8
[38] In QBE, three senior employees had covertly planned the resignation of other employees with a view to moving them and QBE’s clients to a rival business. The rival business had been incorporated and financed for the very purpose of competing with QBE. The three senior employees were working together to achieve this both during their employment at QBE and during a period of garden leave. They managed to poach colleagues, enjoy constant access to QBE’s confidential information and had solicited customers. None of those activities were disclosed to QBE. The Judge described the conduct of the employees as follows:9
… [I]t was concerted, covert action by them over many months to further a detailed plan, conceived jointly to “rip the heart” out of their own employer’s business by setting up a new entity outside, comprising a virtual “mirror business” in direct competition with their employer, using their own employer’s key people and materials …
[39] Springboard injunctions have been recognised and ordered in New Zealand, for example in the recent case of Plumpton v Terry.10 That too arose from an
6 American Cyanamid Co v Ethicon Ltd [1975] AC 396 (HL).
7 QBE Management Services (UK) Ltd v Dymoke [2012] EWHC 80 (QB).
8 Plumpton v Terry [2015] NZHC 1089 at [36].
9 QBE Management Services (UK) Ltd v Dymoke, above n 7, at [257].
10 Plumpton v Terry, above n 8.
employment relationship and was a classic “springboard” case in which a defendant’s breach of confidence or breach of contract results in a potential competitive advantage lasting beyond the end of the employment relationship.
[40] The court in these cases recognises that termination of the relationship does not necessarily mean the end of the illegitimately obtained competitive advantage. The “springboard” relief is adjunct relief on top of orders restraining the unlawful conduct (for example, use of confidential information) recognising that, but for that conduct, a defendant would not be in a position to compete with the plaintiff. A finite period of time to rebalance the playing field or level the playing field is imposed. In assessing the length of the springboard period, the question is how much of a march the defendant has stolen as a result of its wrongdoing. Generally, the length of time is measured by the period it would have taken the wrongdoer to achieve lawfully what they in fact achieved unlawfully, relative to the plaintiff.11
[41] The fact that in the present case there is an ongoing franchisor/franchisee relationship distinguishes it from the classic springboard injunction.
[42] The second distinguishing feature of QBE is that it was the grant of a final springboard injunction rather than an interim springboard injunction. Additional factors here then come into play such as the likely date when judgment might be handed down after a substantive trial because courts are required to evaluate what is a finite period of advantage.12
[43] While I accept that there are elements of springboard advantage engaged I do not consider this is quintessentially a springboard injunction case.
A serious question to be tried—copyright infringement and/or breach of confidence by Mr Williams?
[44] Ms Glover submits that the evidence demonstrates overwhelmingly that the defendants’ explanations are not reliable or truthful. She refers to:
11 QBE Management Services (UK) Ltd v Dymoke, above n 8, at [285].
12 See for instance Forse v Secarma Ltd [2019] EWCA Civ 215. See also Create Financial Management LLP v Lee [2020] EWHC 1933 (QB).
(a)large sections of the The Right Fit’s operations manual which are the same as the Vision PT operations manual, even to the extent of wholesale replication of some sections;
(b)The Right Fit’s use of a series of advertisements copied from Vision PT material;
(c)The Right Fit’s use of a copy of the Vision PT’s health history form which appears in both the The Right Fit manual and in Mr William’s training materials;
(d)the manner in which the defendants appear to operate the Vision Pty New Zealand studios and The Right Fit studios as a combined business.
(e)advertising of the opening of the “Epsom Studio” in a Vision PT Ponsonby client newsletter;
(f)joint training and development sessions where The Right Fit branded material has been distributed;
(g)similarities between material at mentor development training sessions Mr Williams delivered to Vision PT and The Right Fit staff.
[45] Mr Gilchrist submits that the plaintiffs may have some evidence of the second and third defendants’ use of the plaintiffs’ confidential information (although Mr Williams does not accept that is so) but no cogent evidence of Mr Williams having done so. Mr Gilchrist argues that Mr Williams remains a Vision PT franchisee with three different studios and ongoing obligations to the plaintiffs, all of which is inconsistent with “springboarding” into a new competing company. He says that the notion that Mr Williams is running the Vision franchises and The Right Fit as a combined business does not make commercial common sense in view of the ongoing liabilities to the plaintiffs including the fixed franchise fee which is not linked to revenues.
[46] Mr Gilchrist submits that the training and development sessions delivered by Strive to personal trainers explain the presence of The Right Fit personnel wearing branded material “as no doubt others from other organisations may wear their own branded clothing.”
Discussion
[47] In my assessment, there is a serious issue to be tried as to Mr Williams’ involvement with The Right Fit and its use of confidential proprietary material. The multiple explanations provided by Mr Williams and the second and third defendants individually may hold water but collectively point to a head start obtained by use of the plaintiffs’ proprietary materials and Mr Williams’ involvement in The Right Fit business.
[48] First, Mr Williams does not provide any cogent explanation for the references to Strive in the The Right Fit manual and references to his background. For example:
Roles at HQ
Whenever we open up a new studio 100 shares are added to our overarching company Strive. Each person who holds a share will get a rebate equal to the share that they hold. Eg if someone owns 40 % of a studio and it is our 5th studio. Strive would have 500 shares and they would be entitled to a rebate from 40 shares or approx. 8% of any profits Strive distributes.
Using the same principle if someone was a partner and owned 40% of 5 studios and Strive had 15 studios in total. Strive would have 1500 shares and they would be entitled to 200 shares worth of rebates or 13% worth of any profits that Strive distributes.
[49]And:
Our 3rd mission is to deliver a 100% return to our shareholders every four years … it is important to remember who our shareholders are, they are your teammates, some of your clients, your managers, in time you, and myself. The reason I became a personal trainer back in 2008 is because I loved health and fitness and wanted to help people. The reason I opened my first business in 2012 is because I wanted to live a great life whilst doing it.
[50] These biographical details match those of Mr Williams rather than Mr Rolleston.
[51] Secondly, the responses to letters sent on behalf of Mr Williams before proceedings were brought are inconsistent with his evidence. On 7 February 2023, Mr Williams’ solicitors in a letter addressing specific queries by the plaintiffs’ solicitors, states:
Other than the fact that Mr Rolleston is, as well as a former work colleague, a personal friend of Mr Williams (he was the best man at Mr Williams’ wedding, and is Godfather to his son), there has been no formal support (there may have been the odd informal discussion about running a gym), and no cooperation or training.
[52] The position now advanced by Mr Williams that he provides training to TRF trainers along with others through his Strive business. This inconsistency has not been adequately explained.
[53] Thirdly, the training material or content delivered by Mr Williams to conjoint training sessions refers to the businesses (the three Vision PT New Zealand franchisees and the two The Right Fit studios) operating as a single unit . That material is signed off by Messrs Williams, Rolleston and Ryder. For instance, the The Right Fit operations manual refers to the setting of targets for the Ponsonby, Parnell, Takapuna and Epsom studios.
[54] I conclude that the plaintiffs have shown there is a serious question to be tried as to whether the plaintiffs’ confidential information and copyright works have been misused by Mr Williams.
Balance of convenience
[55] Ms Glover submits that the orders sought are narrowly drawn and do not prevent continuation of the defendants’ businesses. The only material impact of the order now sought against Mr Williams is that Strive could no longer provide training services to TRF pending trial.
[56] I accept that the ambit of the order sought is relatively confined. Mr Williams says that delivering training to The Right Fit is only part of Strive’s business and Strive provides such training to other parties. Putting to one side the obligations Mr Williams has under the franchise agreements and whether there is any breach of those
obligations, the order itself would not prevent Strive delivering training to other entities provided there is no use of confidential information or copyright works. The Vision PT studios will not be negatively impacted by making the order. The impact of the injunction would therefore be limited to any business that The Right Fit provides Strive.
[57] There is also no evidence about what proportion of Strive’s business can be attributed to The Right Fit. It is apparent from the account of the three Vision PT franchisees that the fees paid annually to Strive by the Vision PT franchisees are not dissimilar to the franchise fees paid by the franchisees to the plaintiffs. This has not been explained in the evidence. There is also no evidence that personal trainers other than those associated with Vision PT and The Right Fit have attended the development training offered by Strive. That information must be known by Mr Williams but was not disclosed. As it was in his power to provide that evidence I infer that it would not have been of assistance to his defence. If Strive is indeed providing training to the public then it can still do so regardless of an injunction being granted.
[58] A further consideration is the adequacy of damages to the plaintiffs should they be vindicated and to compensate Mr Williams should he be vindicated at trial.
[59] Ms Glover submits that any erosion of Vision PT’s goodwill and intellectual property rights affects other current and potential franchisees within the Vision PT network. Mr Gilchrist counters that there is no evidence that, in the event of wrongdoing, damages would not be an adequate remedy.
[60] Quantifying loss of goodwill is a difficult exercise. On the other hand (adopting the defence position that the only involvement in The Right Fit is the delivery of training modules to The Right Fit and third parties), quantifying the loss from an inability to deliver training to The Right Fit could be based on the number of trainers employed by The Right Fit who would have otherwise attended a Strive training session. This factor also weighs in the plaintiffs’ favour.
[61] The relative strength of the parties’ cases is a relevant factor in the balance of convenience where it can appropriately be ascertained. Where other factors in the
assessment of balance of convenience are clear, it is usually unnecessary to resort to relative strength of claim and defence bearing in mind the early stage of the proceedings. I consider this a case that falls into that category.
[62] In sum, I am satisfied that the balance of convenience favours the plaintiffs by a clear margin.
Overall justice
[63] This assessment provides an overall check of the result reached following the first two steps.
[64] A plaintiff’s conduct can be relevant to injunctive relief in the equitable jurisdiction. Mr Gilchrist submits that the plaintiffs have adopted a bullying commercial approach and that the delay bringing these proceedings illustrates the tactical motivation. First, he points to the initial letter from the plaintiffs dated 27 January 2023 imposing a short deadline for response, follow up correspondence and then a gap of some five months before the proceedings were issued.
[65] Secondly, Mr Gilchrist submits that the plaintiffs have not availed themselves of their own dispute resolution mechanism in the franchise agreements. Mr Williams tried to invoke it but received no response before filing of his affidavit. However, I understand there is now an agreement to mediate on outstanding issues.
[66] Next, Mr Gilchrist submits that there can be no comfort about the undertaking as to damages given there is no more than a generalised statement that the plaintiffs are financially solvent and have been trading profitably in the last ten years.13
[67] Mr Gilchrist contends that these factors show lack of good faith and the overall justice of the case does not support the granting of the injunction.
13 Mr Williams has filed an application for security for costs. There was insufficient hearing tine available to deal with the application which is consequently deferred.
[68] Ms Glover submits that any delay was a result of the stonewalling by the defendants who provided different narratives over time. In addition, the plaintiffs were conscious of the need to protect the whistle blower. She uses the example of Mr Williams’ initial denial of any involvement in The Right Fit with the current position that he provides training services to The Right Fit through Strive to illustrate the evolving narrative on the part of the defendants.
[69] I consider that the overall justice favours the interim injunction being granted given its narrow terms. It will shore up the orders against the second and third defendants and the undertakings Mr Williams has said he is prepared to give. This is conditional however on the plaintiffs providing security to bolster their undertaking as to damages. This is for two reasons. First, because I accept Mr Gilchrist’s submission that there is only a generalised statement as to the profitability of the plaintiffs which does not provide sufficient comfort that there is substance behind that undertaking. Secondly, because the plaintiffs are resident in Australia.
Result
[70] I make the following orders by consent (mirroring the undertakings Mr Williams said he would proffer):
(a)The first defendant is restrained from disclosing to the second and third defendants or any other party, whether directly or indirectly, any confidential information relating to the Vision PT business (Confidential Information), including the following items or any part thereof:
(i)Vision PT’s operations manual;
(ii)Vision PT’s financial information;
(iii)Information about staff members’ terms and conditions of employment;
(iv)Vision PT’s staff training and development material, including materials relating to courses for personal trainers so that they can meet the accreditation requirements of NZ Reps; and/or
(v)Vision PT’s client database.
(b)The first defendant is restrained from making unauthorised copies of copyright works or any part thereof belonging to Vision PT, including:
(i)Vision PT’s operations manual;
(ii)Vision PT’s staff training and development material; and/or
(iii)Vision PT’s social media or other promotional materials.
(c)The first defendant together with his agents, employees and contractors, is restrained from soliciting any Vision PT staff members to work in The Right Fit business.
[71] On confirmation of payment of security of $15,000 into a solicitor’s trust account to support the undertaking as to damages, I make an order that:
The first defendant is restrained from having any involvement, including acting as a director, manager, consultant, trainer, investor, or adviser, whether directly or indirectly, and whether remunerated or otherwise, with The Right Fit business.
[72] The parties have leave to apply and in particular to vary the order at [70](c) which is an abridged version of the orders sought against all defendants in the application.
[73] The condition of provision of security to support the undertaking as to damages does not in any way inform or determine the first defendant’s application for security for costs in relation to the substantive proceeding. That application is to be listed for mention at 2.15 pm on Friday 17 November 2023 for the purpose of timetabling directions.
Costs
[74] The plaintiffs are entitled to costs on a 2B basis against the first defendant. I urge agreement as to costs. In the event costs are not agreed, the plaintiffs may file a memorandum of no more than 3 pages. The first defendant is to file any brief memorandum in opposition within a further 14 days. Costs will in that event be determined on the papers.
............................................................
Walker J
Schedule 1
[1]The second and third defendants consent to orders in the following form:
(a)Pending further order of the Court, and with no admission as to whether any confidentiality exists for the benefit of the Plaintiffs, the second and third defendants, together with heir directors, employees, agents, or contractors, are restrained from receiving, possessing or using any of the following:
(i)information in Vision PT’s operations manual;
(ii)Vision PT’s financial information;
(iii)information about Vision PT’s staff members’ terms and conditions of employment;
(iv)Vision PT’s staff training and development material, including materials relating to courses for personal trainers so that they can meet the accreditation requirements of NZ Reps; and/or
(v)Vision PT’s client database.
(b)Pending further order of the Court, and wit no admission as to the subsistence, or ownership of the copyright claimed by the plaintiffs, the second and third defendants, together with their directors, employees, agents, or contractors, are restrained from copying, possessing in the course of a business and/or using the following:
(i)Vision PT’s operations manual;
(ii)Vision PT training and development content for staff; and/or
(iii)promotional material relating to the Vision PT business.
(c)The second and third defendants, together with their directors, agents, employees and contractors, are restrained for a six-month period from the date of these orders from:
(i)soliciting any persons known to them to be Vision PT clients or to have been Vision PT clients in the previous year;
(ii)soliciting any Vision PT staff members to work in The Right Fit business;
(iii)encouraging any Vision PT staff members to leave Vision PT; and
(iv)employing any staff members who were employed by Vision PT as at the date these orders were made, or who were employed by Vision Pt subsequently.
(d)The second and third defendants will provide, within five working days, by way of particular discovery, copies of The Right Fit manual dated December 2021, and the current version of The Right Fit manual, such documents to be viewed by counsel/solicitors only subject to agreement by the parties or further orders by the Court.
(e)The second and third defendants will preserve any or all documents, including electronic documents, which are relevant to the claims in this proceeding in terms of r 8.7 of the High Court Rules, and within five working days confirm by way of affidavit that no such documents have been destroyed to date (other than those referenced in the affidavit of Matthew Rolleston dated 2 August 2023 as being destroyed in December 2021).
(f)The second and third defendants will confirm by affidavit in respect of the single current staff member (and any previous staff members) who have moved from Vision PT to The Right Fit:
(i)who carried out the employment interviews and where such interviews took place; and
(ii)who signed the employment agreements on behalf of The Right Fit and managed any other onboarding processes with each staff member, such affidavit to be provided within five working days.
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