An Auckland construction company has accused a former director and two former workers of preparing to set up a rival business while still employed at the firm.
The building company, Eden Group, successfully obtained short-term freezing orders against the three men and the rival firm and has filed a claim against them in the Employment Court.
Chief Judge Graeme Colgan, when making the freezing orders in May, said there was evidence that Timothy Nigel Jackson, Phillip Andrew Kite and Christopher John Blackman had prepared to set up a competing business while still working at Eden Group.
All three men, according to Eden Group, formerly worked in the same division of the company, called Sector One.
Jackson resigned as a director of Eden Group last December while Kite and Blackman left the firm in February.
The trio, according to evidence presented by Eden Group to the Employment Court, are now all involved in the rival business, New Space.
"While some preparations to compete may not be unlawful when undertaken by an individual employee, there is substantial evidence of coordinated and deceptive establishment of a vehicle to do so that was in place, and in some instances arguably operating, while the individual respondents [Jackson, Kite, and Blackman] were still in employment with Eden Group," Judge Colgan said in a decision which was released publicly last week.
Preparations included organising offices and mobile phones for the new business, purchasing cars, making arrangements with Inland Revenue for the new company, engaging chartered accountants for New Space and arranging banking facilities for it, the judge said.
Eden Group estimated that this year it could lose up to 90 per cent of the work its division had previously done to New Space.
None of these men had restraint provisions in their contracts with Eden Group and are free to compete. Most of the people they dealt with previously have decided to follow them in their new business.
It said New Space was performing ongoing work for several longstanding customers of
Sector One who had cancelled arrangements with Eden Group.
Judge Colgan said Eden Group had provided evidence that in October or November last year Sector One's customer information and other confidential data was copied by one or more of the individual respondents from a shared laptop computer.
The freezing orders over Jackson's, Kite's and Blackman's assets expired last month, but the trio have given undertakings to the court about their property and Eden Group did not seek to have the orders extended.
They have filed their defence to Eden Group's claim in the Employment Court and two weeks in November has been set aside for the trial.
The trio, in a statement via lawyer, Brent O'Callahan, told the Herald:
"New Space is a joint venture between Tim Jackson, Phil Kite and Chris Blackman, who left Eden Group's Sector One business to set up their own enterprise after dissatisfaction with the management at Eden Group," they said.
"None of these men had restraint provisions in their contracts with Eden Group and are free to compete. Most of the people they dealt with previously have decided to follow them in their new business. New Space has returned old Sector One job records to Eden Group that came across with them at start-up," they said.
"The Employment Court claim brought by Eden Group for alleged breaches of employment agreements is being defended. An earlier injunction application signalled by Eden Group has been abandoned. If Eden Group decides to continue with the claim it will go to trial in November 2016."