SUPATREATS ASIA PTE LTD v GRACE & GLORY LTD [2018] NZHC 1612

SUPATREATS ASIA PTE LTD v GRACE & GLORY LTD [2018] NZHC 1612

The Court found there was a serious question to be tried on contract breaches and inducement to breach, and that the balance of convenience and overall justice favoured granting interim injunctions because damages were an inadequate remedy given the risk of loss of goodwill and difficulty of quantification and potential inability of defendants to satisfy damages; accordingly interim injunctions were granted with a six‑week compliance period and orders for delivery up of franchise materials, and costs were awarded to plaintiffs.

Citation
[2018] NZHC 1612
Parties
First Plaintiff: Supatreats Asia Pte Limited; Second Plaintiff: Supatreats NZ Limited; First Defendant: Grace & Glory Limited; Second Defendant: Redneps Limited; Third Defendant: Zhe Xu; Fourth Defendant: J & S Spender; Fifth Defendant: Chang Xi; Sixth Defendant: Shake Shed & Co NZ Limited; Seventh Defendant: Zhenyu Zhong
Court
High Court
Jurisdiction
New Zealand
Judgment Date
2 July 2018
Procedural Posture
Interim Injunction Application (franchise Dispute) / Interlocutory (application for Interim Injunction)
Outcome
Interim injunctions granted in part; delivery up orders made; costs awarded to plaintiffs (one party only)
Legal Topics
Interim Injunctions, Restraint of Trade Clauses, Inducement to Breach of Contract, Passing Off, Misappropriation of Confidential Information, Assignment of Franchise Agreements, Delivery Up of Documents, Balance of Convenience
Franchise Law Contract Law Tort (inducement to Breach) Restraint of Trade Confidential Information Fair Trading Law Civil Procedure Interim Injunctions +7 more

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Parties

Supatreats Asia Pte Limited

First Plaintiff

Supatreats NZ Limited

Second Plaintiff

Grace & Glory Limited

First Defendant

Redneps Limited

Second Defendant

Zhe Xu

Third Defendant

J & S Spender

Fourth Defendant

Chang Xi

Fifth Defendant

Shake Shed & Co NZ Limited

Sixth Defendant

Zhenyu Zhong

Seventh Defendant

Procedural Posture

Interim Injunction Application (franchise Dispute) / Interlocutory (application for Interim Injunction)

Legal Issues

  1. 1 Whether there is a serious question to be tried on breach and inducement to breach franchise agreements
  2. 2 Enforceability and reasonableness of restraint of trade provisions
  3. 3 Whether Supatreats repudiated the franchise agreements by changing supplier

Ratio Decidendi

The Court found there was a serious question to be tried on contract breaches and inducement to breach, and that the balance of convenience and overall justice favoured granting interim injunctions because damages were an inadequate remedy given the risk of loss of goodwill and difficulty of quantification and potential inability of defendants to satisfy damages; accordingly interim injunctions were granted with a six‑week compliance period and orders for delivery up of franchise materials, and costs were awarded to plaintiffs.

Court Disposition

Interim injunctions granted in part; delivery up orders made; costs awarded to plaintiffs (one party only)

Orders

  • As from six weeks after judgment and pending further order, first to fourth defendants prohibited from competing with, engaging in or being involved in any business in competition with or interfering with plaintiffs' Wendy's Supa Sundaes business
  • As from six weeks after judgment, first and second defendants required to remove all signage, branding and paraphernalia identifying their premises as Shake Shed & Co