Simpson v Blythe [2013] NZHC 497 (15 March 2013)

Last Updated: 27 March 2013

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2013-404-1337 [2013] NZHC 497

UNDER Part 18 of the High Court Rules

AND

UNDER Sections 164 and 174 of the Companies Act

1993

BETWEEN ANNA LEIGH SIMPSON Plaintiff

AND DARREN BLYTHE Defendant

Hearing: 15 March 2013

Counsel: A Barker for the Plaintiff

R J Hooker for the Defendant

Judgment: 15 March 2013

_{(ORAL) JUDGMENT OF WOODHOUSE J}

Counsel:

Mr A Barker, Barrister, Auckland

Mr R J Hooker, Vallant Hooker & Partners, Solicitors, Auckland

Instructing Solicitors:

Mr S Langton (for the plaintiff), Langton Hudson Butcher, Solicitors, Auckland

SIMPSON V BLYTHE HC AK CIV-2013-404-1337 [15 March 2013]

[1] This is an application for an interim injunction pending the filing of any opposition by the defendant and a full hearing into the application. For convenience it may be called an application for a provisional injunction.

[2] The plaintiff, Ms Simpson, and the defendant, Mr Blythe, were in a de facto relationship. They separated at the beginning of 2012. In her affidavit (which is the only evidence at the moment before the Court) Ms Simpson says that the break-up of the relationship has been acrimonious and difficult.

[3] Ms Simpson and Mr Blythe are equal shareholders, and the only shareholders, in Life Recruitment Ltd. They are also the only directors of the company. The company’s business is recruiting nurses, doctors and other specialist personnel for health care facilities and private homes. There are seven full time employees. There are around 150 contractors providing services. Ms Simpson refers to important business relationships which have been developed. She says that the company is profitable in the sense that it is not operating at a loss. She says that based on the present accounts she anticipates a year end profit, before tax, of

$85,000 after payment of salaries to herself and Mr Blythe of $80,000 each. Ms Simpson has produced an estimate of value of the business, provided by a company called Business Advisory Services, of approximately $640,000 to $660,000.

[4] The present application has arisen out of a threat made by Mr Blyth peremptorily to close down the business. As I have already indicated, Mr Blythe has had no opportunity to respond with evidence to Ms Simpson’s application for the interim injunction. However, Mr Hooker has appeared this morning on his behalf and conveyed instructions he has from Mr Blythe. It is not disputed that Mr Blythe made a threat to close down the business. It is in the face of this threat that Ms Simpson has sought the injunction to restrain Mr Blythe in the meantime from taking any steps along those lines or otherwise contrary to the best interests of the company or contrary to Mr Blythe’s obligations as a director.

[5] Mr Hooker, given the relationship property background, urged me not to make interim orders. He submitted that this would be pouring oil on what is the existing fire of the difficult relationship property dealings.

[6] I readily understand the need in a general sense for caution in the way in which difficult personal relationships may be handled. However, I am not persuaded on the basis of the present evidence that the threat Mr Blythe made can be described as one which was obviously hollow. It was not simply a threat in anger or in haste to Ms Simpson. There was advice to the staff that a meeting would be called today at

3:00 pm to discuss the future of the company.

[7] Mr Hooker’s memorandum, provided this morning, records Mr Blythe’s acknowledgement that his emails were sent in anger and frustration at what he considers to be a failure by Ms Simpson to deal with issues relating to the division of relationship property. But in the memorandum Mr Hooker has indicated that Mr Blythe, notwithstanding this acknowledgement, was unwilling to provide undertakings and opposed the application.

[8] The grounds for what I have called a provisional interim injunction are made out. The only factor that would in my judgment cause the Court to hesitate before making a provisional order is the relationship property background. However, that is not a factor sufficient to persuade me that the orders sought should not be made on the basis that they can be reviewed once Mr Blythe’s opposition and evidence has been filed. In addition, Ms Simpson must also ensure that all steps she takes in relation to the general management of the business of the company and its future are steps consistent with her obligations as a director and, beyond that, her obligations as a co-shareholder with Mr Blythe. I note that the application and the statement of claim is founded on obligations under the Companies Act and made pursuant to ss 164 and 174 of the Companies Act. But underlying that are the rights and obligations of Ms Simpson and Mr Blythe arising out of both their personal relationship and their business relationship as co-shareholders.

[9] Having regard to these matters there are the following orders which will remain in force pending further order of the Court:

(a) That the defendant not make any statement, or have any communication or meeting with staff or contractors to Life Recruitment Ltd, to the effect that the business of Life Recruitment Ltd is to cease or that their employment or relationship with Life Recruitment is to cease.

(b) That the defendant not make any statement, or have any communication or meeting with clients of Life Recruitment Ltd, to the effect that the business of Life Recruitment Ltd is to cease or that their contract or relationship with Life Recruitment is to cease.

[10] There are the following directions:

(a) Any notice of opposition and affidavit for the defendant is to be filed and served within 10 days.

(b) The proceeding is to be listed for mention and any further directions in the Duty Judge list on the first available date in or after the week commencing 8 April 2013.

_{[11] Costs of and incidental to the present application are reserved.}

Woodhouse J