Court grants injunctions sought by Pacifica

Press, 2 May 1985, Page 22

Court grants injunctions sought by Pacifica

PA Wellington Breaches of duty and misuse of information had enabled a company to be set up in New Zealand in substantial competition with Pacifica Shipping Company, Ltd, sooner than it would otherwise have been able to, said the Chief Justice, Sir Ronald Davison. In a reserved judgment in the High Court at Wellington, Sir Ronald has granted injunctions sought by Pacifica against three defendants to deprive them of the advantage they had allegedly wrongfully gained by their breaches of duty and misuse of confidential information. He awarded Pacifica costs and witnesses’ expenses as fixed by the registrar. In his 48-page judgment. Sir Ronald said that Pacifica Shipping sought an injunction against the first defendant, Oddvar Andersen, shipping consultant of Wellington; the second defendant, John Anthony Johnston, marine engineer, of

Wellington; and the two first-named third defendants, Per Sand, ship owner, of Oslo, Norway, and K/S Shipping A/S restraining them from participating in the use of the ship Seadrake in New Zealand coastal waters for a period of two years. Sir Ronald said Pacifica also sought to restrain Mr Andersen and Mr Johnston for a similar period from making use of, or divulging to any other persons, information acquired in circumstances of confidence as director and consultant respectively of Pacifica. “Pacifica came into being as a result of the initiative of Mr R. B. McKenzie, who is its chairman of directors and managing director,” his Honour said. “Mr Mckenzie in mid-1980 began investigations into the feasibility of establishing a coastal shipping freight service in New Zealand to operate mainly the Wellington-Lyttelton route.” Sir Ronald said that at all times relevant to the case, the shareholders of Pacifica were the Union Shipping Company, holding 57 per cent of the shares; Andersen Finne and Company, holding 25 per cent; and Mr McKenzie, holding 18 per cent. Sir Ronald said the first defendant, Andersen, was the former director. The second defendant, Johnston, was a consultant marine engineer. He remained as chief engineer for about six months and was then appointed operations manager, which position he retained until March-April, 1984, when he became technical consultant to the company, working a minimum of two days a week. That arrangement terminated last January.

The third defendants, Sands, were owners of the ship Seadrake with which the action was concerned.

“Pacifica through its solicitors on January 18, 1985, wrote to Andersen calling on him to cease the promotion of a new shipping venture to use the Seadrake on the New Zealand coast in competition with Pacifica’s present or planned operations,” Sir Ronald said. “Andersen’s solicitors replied on January 23, 1985, that Andersen had no intention of abandoning his participation in the proposed new shipping venture.”

Sir Ronald said the defendants had proceeded to incorporate a company known as Kiwi Shipping Company, Ltd, with a nominal capital of $500,000. The present shareholders were Andersen, Johnston, and Sand. A readjustment of the shareholdings was proposed in the future in order to enable three further shareholders to participate in the venture.

The defendants had arranged a charter of Seadrake to that company and the ship was at present en route to New Zealand. The company proposed to establish a New Zealand coastal freight service on a weekly timetable calling successively at the ports of Gisborne, Napier, Wellington, Nelson, Wellington, Lyttelton, and Timaru. Sir Ronald said that Pacifica in the proceedings sought injunctions for a period of two years or such lesser period as the Court considered appropriate, restraining each of the defendants, Andersen and Johnston, from making use, of or divulging information, acquired by them as director and consultant respectively of Pacifica, or from participating in any arrangments for the use of Seadrake in New Zealand waters, and restraining Sand from participating in any shipping service in New Zealand in competition with that run by that company.

Sir Ronald said he found that Pacifica Shipping had established its causes of action against all three defendants so as to entitle it to relief.

It had established against Mr Andersen breach of his fiduciary duties as a director and former director of Pacifica by exploiting for himself Pacifica’s business opportunity and applying Pacifica’s company property for his own personal benefit. Sir Ronald said Pacifica had established against Mr Johnston a breach of his fiduciary duty as agent for Pacifica and misuse of confidential information.

It had established against Sand’s misuse of confidential information acquired in the course of business negotiations. By reason of the breaches of duty and the misuse of information referred to, the defendants were in their various ways able to arrive at decisions relating to the charter of Seadrake and the setting up of a company in New Zealand to trade the Seadrake on routes in substantial competition with Pacifica much sooner than they would have been able to otherwise do, Sir Ronald said.

He said Pacifica sought injunctions to restrain the defendants in the manner set out in the amended statement of claim so as to deprive them of the advantage which they had wrongfully gained by their breaches of duty and misuse of confidential information. Sir Ronald said Pacifica would therefore be granted the injunctions sought, for terms expiring on September 30, 1985, against Mr Andersen:

From making any use of or divulging to any others any information acquired by him in his capacity as a director of Pacifica Shipping or acquired because of that position, relating in any way to the establishment of a shipping service wholly or substantially in competition with the shipping service operated by Pacifica; and from participating personally or through any company or firm with which he is associated, or through any nominee in any form of charter or other arrangements for the use of the vessel Seadrake in New Zealand coastal waters.

Against Mr Johnston: From making any use of or divulging to any others any information acquired by him in his capacity as a consultant for Pacifica relating in any way to the Seadrake; from participating personally or through any company or firm with which he is associated, or through any nominee in any form of charter or other arrangements for the use of the Seadrake in New Zealand coastal waters.

Against Per Sand and K/S Sand Shipping A/S: From participating personally or by any agent or nominee in any shipping service in New Zealand that is wholly or substantially in competition with the shipping service run by Pacifica.