Blue Bubble Alliance Limited v Taxis Palmerston North Limited
[2019] NZHC 1970
•15 July 2019
IN THE HIGH COURT OF NEW ZEALAND PALMERSTON NORTH REGISTRY
I TE KŌTI MATUA O AOTEAROA TE PAPAIOEA ROHE
CIV-2019-454-26
[2019] NZHC 1970
BETWEEN BLUE BUBBLE ALLIANCE LIMITED
Plaintiff
AND
TAXIS PALMERSTON NORTH LIMITED
Defendant
Hearing: 15 July 2019 Appearances:
S S Khan and M G Orange for Plaintiff
J D Haig and T P S O’Regan for Defendant
Judgment:
15 July 2019
JUDGMENT OF GRICE J
(Application for interim injunction)
Introduction1
[1] Blue Bubble Alliance Ltd (Blue Bubble) and Taxis Palmerston North Limited (Taxis PN) were parties to a franchise agreement dated 12 September 2012. Under that agreement Blue Bubble granted Taxis PN the licence to use the Blue Bubble brand which it owned.
[2] There is some dispute as to what rights that licence did grant. But it is common ground that it included the right to use the distinctive taxi top light with the Blue Bubble logo. This was the centre piece of the brand. The “Blue Bubble” logo is trademarked.
1 This decision was delivered orally on 15 July 2019. The written form has been appropriately edited and footnoted before distribution.
BLUE BUBBLE ALLIANCE LIMITED v TAXIS PALMERSTON NORTH LIMITED [2019] NZHC 1970 [15
July 2019]
[3] The object of the Blue Bubble franchise agreement Blue Bubble says was to develop a unified brand and carry out joint marketing of taxi services throughout New Zealand. Blue Bubble is a joint venture owned by the three largest individual taxi organisations in New Zealand: the Auckland Cooperative Taxi Society Ltd, Wellington Combined Taxis Ltd and Blue Star Taxis (Christchurch) Ltd. There is no dispute that the brand is recognisable and trusted as a brand nationally.
[4] Blue Bubble began entering franchise arrangements with individual taxi organisations around 2010. It says those agreements granted the franchisees a licence to use the Blue Bubble brand. Currently the Blue Bubble group operates over 2000 taxis all of which carry the top light designed with the blue logo.
[5] Taxis PN became a franchisee when it entered into a franchise agreement on 12 September 2012. Blue Bubble was not able to locate an executed copy of the agreement to put in its affidavit in support of this application sworn by Mr Wilkinson, the Chief Executive of Blue Bubble. Mr Lawless, the Chief Operating Officer, of Taxis PN was able to provide a copy. It is common ground that that copy of the executed franchise agreement is the governing document. The agreement is dated 12 September 2012. It provided for the various rights that I have referred to above, including the use of the top lights during the term of the agreement. The agreement had a term of three years. Therefore, it commenced on 1 October 2002. Its expiry date was 1 October 2015.
[6] Blue Bubble initially was mistaken in its evidence as to the commencement date which it indicated was 1 December 2011 as well as the expiry date which it had said was 1 December 2014. But it is now common ground that the correct dates are those set out in the executed agreement.
[7] It is agreed, that neither party gave written notice of renewal on the expiry of the initial term on 1 October 2015. The relationship between the two has now become strained and Blue Bubble gave notice terminating the franchise, first by notice of 31 January 2019 (when it gave a short notice period) and secondly when it gave notice of termination on a different basis on 22 February 2019. It confirmed the termination notice subsequently. Blue Bubble says that even if the period it allowed in those
various notices was not reasonable the effluxion of time pending the hearing of this application has made the notice period reasonable.
[8] Taxis PN say Blue Bubble cannot end the franchise in the manner in which it purports to do so. It refuses to accept that the franchise has been properly terminated.
[9] As a result Blue Bubble has filed proceedings including this application for an interim injunction requiring Taxis PN to cease using the Blue Bubble brand and any related property. It appears that the main benefit to Taxis PN is the use of the Blue Bubble logo and top light as well the trust associated with that national brand. Otherwise it does not appear there are other services offered by Blue Bubble which affect Taxis PN.
The issues
[10] The crux of the argument is whether or not the franchise agreement was able to be terminated, whether by notice or otherwise; if so whether if it needed to be terminated by notice and what is reasonable notice.
[11] Blue Bubble also developed an argument before me based on the existence of renewal negotiations which had failed. Taxis PN said that this argument was outside the pleadings or the grounds put forward in the application that I am presently hearing. I will deal with that matter later.
[12] Blue Bubble took the position that the franchise agreement was terminated by the written notices given by it dated 31 January 2019 and/or 22 February 2019. These were confirmed by subsequent notices and letters sent by its solicitors.
[13] On the other hand Taxis PN says the franchise agreement does not allow Blue Bubble to unilaterally terminate the franchise agreement, but rather the franchise agreement remains on foot and will run until the end of another three year term commencing on 1 October 2018 and expiring on 1 October 2021. As an alternative it says that reasonable notice would be far longer than the three months that it was given. It says that it has eight years invested in the franchise and therefore it should be allowed a longer notice period.
[14] The parties do not agree on whether or not invoices for levies remained due and outstanding at the date of the filing of these proceedings. Blue Bubble claimed the levies had not been paid from March 2018. In response Taxis PN said that it had not received any invoice for levies. The parties agree that this is a disputed fact which in any event is not material to the present application and can be put to one side for the purposes of this hearing. The terms that they have agreed to do so are as follows:2
The plaintiff in its interim injunction application does not rely on the failure of the defendant to pay levies to the plaintiff (if in fact it did fail to pay) over the period since March 2018 to the date of hearing as a ground for the cancellation of the agreement nor is that alleged failure a ground relied upon in the application for interim injunction.
[15]I therefore do not consider that issue any further.
Approach to interim injunction applications
[16] The principles are well established. The issues to be considered for an interim injunction application addressed by the Court are:3
(a)Whether there is a serious question to be tried;
(b)Where the balance of convenience lies; and
(c)Where overall justice lies.
[17] It is not the Court’s function at this stage to resolve conflicts of evidence on affidavits as to facts on which the claims are based, nor delve into difficult questions of law which call for detailed arguments and mature consideration.4
[18]I now turn to consider the present situation in relation to those principles.
2 Blue Bubble Alliance Ltd v Taxis Palmerston North Ltd HC Palmerston North CIV-2019-454-26, 9 July 2019 (Minute of Grice J).
3 Klissers Farmhouse Bakeries v Harvest Bakeries Ltd [1985] 2 NZLR 129 (CA) at 142; American Cyanamid Co v Ethicon Ltd [1975] AC 396 (HL).
4 American Cyanamid Co v Ethicon Ltd, above n 2, at 407; Health Club Brands Ltd v Colven Botany Ltd [2013] NZHC 428 at [9]; Villa Maria Wines Ltd v Montana Wines Ltd [1984] 2 NZLR 422 (CA) at 425.
Is there a serious question to be tried?
[19] The first threshold that the plaintiff must satisfy me of is whether there is a serious question to be tried. A serious question to be tried was defined by Cooke J in Klissers Franchise Bakeries Ltd as a lower standard than a “prima facie” case.5
[20] There is no real contest between the parties that Blue Bubble has established a serious question to be tried nor that Taxis PN have also raised serious questions to be tried in relation to its defence and counterclaim. Both counsel properly conceded this. Despite this it is necessary to consider the claims and defences in some depth to properly consider the factual situation and the claims as they are relevant to this application.
[21] The claims pleaded by the plaintiff are breach of contract; infringement of trademark; passing off; and breaches of the Fair Trading Act 1986. The central issues in the claim are the meaning of the provisions in the franchise agreement providing for the term of the agreement, allowing for renewal, the termination clause and the effect of the dispute resolution clause.
[22] Taxis PN also claim that Blue Bubble is estopped from terminating the agreement, due to allowing it to run on after the expiry of the initial term. Taxis PN further points to the dispute resolution clause and says that Blue Bubble has wrongfully refused to follow the dispute resolution process and therefore the claim needs to be stayed to enable compliance with that clause.
[23] Taxis PN seek a declaratory judgment that the term was not terminable at will nor on reasonable notice, that it rolled over and was impliedly renewed so it remains on foot until 1 October 2021. That is a further term of three years from the last renewal date.6
[24] As I mentioned, Taxis PN also takes the position in its argument that Blue Bubble should be limited in its submissions today to the position it has taken in
5 Klissers Farmhouse Bakeries v Harvest Bakeries Ltd, above n 3, at 141.
6 It was not renewed on 1 October 2018. However, the first date upon which it was due to be renewed was 1 October 2015. Therefore, the next three-year term ends on 1 October 2021.
its pleadings. Therefore, it says Blue Bubble cannot raise an argument based on it having now triggered the renewal negotiations under cl 8 of the franchise agreement. That argument was that the renewal negotiations were ultimately unsuccessful entitling Blue Bubble to terminate under cl 7.
The franchise agreement
[25]The written franchise agreement provided as follows:
8.1 Upon expiry of the initial period specified in paragraph 2 of Schedule 1, either party may by written notice request a renewal of the term of this Agreement. To avoid doubt, the Franchisor may refuse any such request made by the Franchisee for any reason (including if the Franchisee is in breach of its obligations under this Agreement).
[26] Also relevant to termination is cl 10 which provides specific grounds for termination as follows:
10TERMINATION
10.1Grounds for termination: This Agreement may be terminated by the Franchisor immediatelyon notice to the Franchisee, if:
(a)the Franchisee breaches clause 16.1 (Including by undergoing a change of corporate control to which the Franchisor has not given prior written consent for any reason whatsoever);
(b)the Franchisee commits any other breach of this Agreement and fails to remedy that breach within 10 days after receipt of notice requiring the breach to be remedied;
(c)the Franchisee is subject toan Insolvency Event;
(d)the Franchisee ceases to be an Eligible Participant;
(e)the Franchisee fails to pay money due under this Agreement within 30 clays from the due date for payment
[27]The consequences of termination are as follows:
11.CONSEQUENCES OF TERMINATION
11.1No release from obligations: Termination of this Agreement does not relieve the Franchisee from liability for prior breaches of the Agreement or of its obligations to pay all money owed by it to·the Franchisor on any account whatsoever, which money is payable immediately upon termination notwithstanding that the date for payment of the money may not have arrived.
11.2Immediate steps upon termination: Upon expiry or termination of this Agreement for any reason, all rights of the Franchisee granted by this Agreement terminate and the Franchisee will not be entitled to receive any rebate or refund of the whole or any part of the money paid pursuant to this Agreement. The Franchisee must immediately comply with the following requirements:
(a)the Franchisee will pay to the Franchisor all outstanding money payable under this Agreement;
(b)subject to sub-clause 11.2(d) below, the Franchisee will stop all use of the Brand;
(c)the Franchisee will immediately ensure that all taxi operators In Its fleet cease the wearing of the Franchise uniform, and return all uniform Items, both used and new, to the Franchisor at no cost to the Franchisor;
(d)within twenty-eight (28) days of the data of termination or expiry, the Franchisee will remove, obliterate or cover up all uses of the Trade Marks and any other signage, livery and other features associated with the Brand (Including by rebranding all vehicles in its fleet and destroying au territorial advertising and promotional material which uses the Trade Marks or any other element of the Brand) and shall certify in writing that It has done so;
(e)the Franchisee will terminate any registration, record or public entry (including any statement on its website or in any other collateral) which Indicates any association of the Franchisee with the Franchisor; and
(f)the Franchisee will return to the Franchisor (without retaining copies of them) the Manual and all other material, unused stationery, Invoices, notes, data, Instructions and other papers, samples, materials and property supplied by the Franchisor to the Franchisee.
11.3No damage to goodwill: The Franchisee will not, during the Term or at any time following its expiry or termination for any reason, disparage or do anything calculated to damage the Franchisor's goodwill, reputation or the Brand.
[28]Also of relevance is the dispute resolution clause that provides:
15.4 Dispute resolution: If there is a dispute between the parties in relation to this Agreement, either party may give the other party notice of the nature and details of the dispute. Within 10 days of receipt of the notice of dispute, senior managers of the parties shall meet to endeavour to resolve the dispute. If the dispute is not resolved within 20 days of receipt of the notice of dispute, either party may by notice to the other party refer the dispute to mediation. The mediation will be In Wellington and conducted under the LEADR New Zealand Incorporated (“LEADR”) standard mediation agreement. If the parties do not agree on a mediator or the mediator's fees within 5 days of receipt of the notice of mediation, the mediator shall be appointed or the fees sat by the chair of LEADR (or his/her nominee) at the request of either party.
Nothing in this clause 15.4 will preclude a party from seeking urgent interlocutory relief before a court
[29] Other clauses were considered in the course of argument but are only peripherally relevant to the present issues.
What is the effect of the relevant clauses in the franchise agreement
[30] The four causes of actions pleaded by the plaintiff as I have noted were breach of contract, infringement of trademark, passing off and breach of the Fair Trading Act. The latter three only arise if Blue Bubble is found to have validly terminated the franchise agreement.
[31] Therefore, the first focus for consideration in this application is whether the franchise agreement has been terminated.
[32]Blue Bubble says:
(a)The franchise agreement granting the rights to use the trademark was a written agreement executed by both parties in September 2012 with a commencement date of 1 October 2012.
(b)The initial term was for three years with an ability to renew.
(c)The initial term expired on 1 October 2015 and was never renewed again.
(d)Neither party took steps to renew the agreement.
(e)The parties commenced negotiations for renewal in late 2016 but were unable to agree on the terms of a renewed franchise agreement. This is the argument that Taxis PN says is outside the scope of this application.
(f)Blue Bubble gave written notice purporting to terminate the franchise agreement on 31 January and then a notice on 22 February 2019 which overtook the first notice. The latter notice said it was effective as at 21
March 2019. Further notice was given on 31 March 2019 stating an effective date for termination three months away.
(g)The termination notice, or at least the first two, were addressed to the director and representative of Taxis PN, Mr Lawless. It was addressed to him using the name of another taxi company in which Mr Lawless was involved and which featured on his letterhead used during his communications with Blue Bubble.
[33] Therefore, Blue Bubble argues that on the face of it the agreement period expired on 1 October 2015. It was not renewed but if it had been renewed the next term would have been for a further three years until 1 October 2018.
[34] It is common ground that no notice was given at the expiry of term in 2015 under cl 8 nor immediately before or after 1 October 2018. Nevertheless, Blue Bubble is likely to argue, as that given the negotiations for renewal between the parties since 2016, they should be treated as a written request under cl 8 for the purposes of renewal.
[35] Blue Bubble puts considerable emphasis on the fact that under cl 8.1 (see above at [25]) it was entitled to refuse the request to renew for any reason. Blue Bubble said the words “the franchisor may refuse any such request made by the Franchisee for any reason (including if the Franchisee is in breach of its obligations under this Agreement)” make it quite clear that it could for any reason, or any commercial reason, it could refuse to renew. These may include personal reasons such as an inability to get on with the franchisee.
[36] Nevertheless, it is open to Taxis PN to raise arguments at trial such as, for instance, that the refusal must be reasonable which it was not in this case.
[37] I accept that if the request for renewal was validly refused, then the termination clause applies. Clause 11.2 sets out the consequences which include as I have set out a number of compliance requirements including to return the property and remove trademarks, signage, delivery and associated features (presumably including the top lights) within 28 days of that requirement.
[38] Taxis PN raised an issue that at least one of the purported notices sent to David Lawless on 13 February 2019 was defective due to being addressed to him at “New Zealand Taxi Communications”. The subject line of those notices also refers to the Blue Bubble franchise agreement being between Blue Bubble and “New Zealand Taxi Communications Ltd” and refers to an end date of 1 December 2011. Those particulars are incorrect. However, I do not consider that anything turns on those points. I think it is quite clear that Mr Lawless had been negotiating for and was the voice of Taxis PN throughout these negotiations and discussions. There was no confusion by him about which franchise agreement was being referred to. And, in any event, a later notice addressed to the correct body (Taxis PN Ltd) was sent by Blue Bubble’s lawyers. This would have remedied any defect attaching to the original notices. As I have said, in my view little turns on it in this application.
[39] On 31 January 2019 (the first notice of termination) Mr Wilkinson for Blue Bubble wrote to say it was time for Blue Bubble Alliance and Taxis PN “to part ways”. He said:
We believe the time has come for Blue Bubble Alliance and Taxis PN to part ways. While it is extremely disappointing to lose a Blue Bubble member we believe that your actions around the ACC RFP and active support of a competing bid leave us with no option.
[40] I interpolate that Accident Compensation RFP (Request for Proposal) referred to the Accident Compensation Corporation tender out for bids by taxi companies and groups to provide taxi services for it. In that letter Mr Wilkinson goes on further to say that he believes the transition should be simple and achievable by the next week (8 February 2019). He asks that all reference to Taxis PN on any Blue Bubble material including the website be removed, that the Blue Bubble uniforms not be worn and Blue Bubble signage be removed. Otherwise the Blue Bubble owned top lights and bases together with other materials such as the franchise manual were to be collected, he said.
[41] Mr Lawless for Taxis PN responds to Mr Wilkinson’s letter on the same date acknowledging Mr Wilkinson’s letter and expressing his concern that there had been no discussion or correspondence over the matters raised and that it was an entirely new position taken by Blue Bubble. Mr Lawless then raises the provisions of the dispute
resolution clause. He says a dispute has been raised about the Accident Compensation RFP but there is no breach by Taxis PN under cl 10 of the agreement.
[42] Then follows a letter of 13 February 2019 where Mr Wilkinson for Blue Bubble refers to no party taking any steps in relation to giving notice at the expiry of the term of the agreement. He therefore said the arrangement was continued on the basis of a 90 day billing cycle and he gave notice that the agreement would come to an end after the next billing cycle due to end on 31 March 2019. He said arrangements would be made for uplifting the Blue Bubble property after 1 April.
[43]He goes on to say in the final paragraph of that letter:
We remind you that until the end of the agreement NZTC is bound by the terms therein and any breach which causes damages to BBA or its brand will attract appropriate responses. BBA may appoint a new franchisee to take over the territory on expiry of the agreement with NZTC.
Relationship
[44] The parties or their predecessors have been in a commercial relationship dating back to 2011. While there have been minor issues which had arisen between the parties over the years, it seems matters really came to a head in the course of negotiations over the new franchise agreement which had been sent to Taxis PN in late 2016. It appears to have also been sent to all the other Blue Bubble franchisees. That correspondence in 2016 did not refer to the cl 8 renewal process.
[45] The cause of the tension appears to be that Taxis PN has other relationships and brands which it uses at the same time as using the Blue Bubble brand and logo. Blue Bubble took the view that Taxis PN was a “rogue” franchisee. It did not support Blue Bubble’s attempts to create a cohesive brand. For instance it failed to adopt the Blue Bubble uniform. Blue Bubble was also of the view that Taxis PN failed to support Blue Bubble’s commercial ventures such as iHail as well as the Accident Compensation Corporation RFP tendering process. In that process Blue Bubble had tendered a bid but apparently Taxis PN had backed another operator.
[46] On the other hand Taxis PN says that it is not required to do what Blue Bubble wanted it to do in relation to the issues that Blue Bubble referred to in its letter of 31
January. It says it was offered, along with other franchisees, a renewal of the franchise on 12 December 2016 and it just wanted to negotiate the terms of that general offer with Blue Bubble. It was not therefore in the course of negotiating its renewal in terms of cl 8.
[47] Mr Lawless, for Taxis PN, disputes Mr Wilkinson’s statement that Blue Bubble had realised the franchise agreement had expired in late 2016 and had intentionally instigated the process of negotiation in 2016 as part of the negotiations for renewal in terms of cl 8.
[48] Mr Lawless says that in relation to the dispute about the Accident Compensation tender he had been expressly told by Blue Bubble that Taxis PN and all other franchisees could make an independent approach to ACC. He says that being told this was in dispute in the notice of 31 January for Blue Bubble was a surprise to him. The dispute triggered the dispute resolution process.
[49] Clearly there are a number of factual matters in dispute here. Not only as put forward as part of Blue Bubble’s claim but also by virtue of an argument based on estoppel raised by Taxis PN.
Damages
[50] The issue of whether Taxis PN was able to pay damages (if in fact damages were ultimately awarded against it at a later date) was initially not an issue and not seriously disputed by Blue Bubble. Although Mr Khan did for Blue Bubble note that if Taxis PN lost the Blue Bubble franchise, given its expressed concern to keep the Blue Bubble logo, there may be an issue later about whether it could pay damages as its business may suffer from the loss of the logo.
Disputed evidence and pleadings
[51] At this stage it is not appropriate to embark on an assessment of the strength of the respective cases. As will be evident from my review of the facts before me there is a number of issues in dispute which can only be resolved by the hearing of evidence
and its testing in cross-examination. That is a matter for trial after the evidence has been heard and full consideration of the legal position has been undertaken.
[52] I also put aside the point taken by Taxis PN that Blue Bubble cannot argue that the issue of whether it had triggered a renewal negotiation is out of scope. Blue Bubble may well amend its pleadings following this hearing to include its arguments concerning triggering the renewal claims. In any event, in my view that does not take the issue any further either way for present purposes.
Balance of convenience
(a) Are damages an adequate remedy?
[53] In the usual course an important consideration in assessing an application for an interim injunction is whether damages would be an adequate remedy for either party if they succeeded in trial. In this case Blue Bubble says that damages are not an adequate remedy because:
(a)The losses of income to Taxis PN would only equate to an amount of lost income for the period of reasonable notice or at the latest until 1 October 2021, depending on when the Court determined the franchise agreement was properly terminated.
(b)Taxis PN and its operators are not dependent on the Blue Bubble franchise rights for custom. They have their own brands and relationships under which they trade so they are unlikely to suffer irreparable harm.
(c)Blue Bubble, however, could not be compensated in damages. It would be forced into a continuing relationship with Taxis PN when that relationship has totally soured.
[54] In response Taxis PN say its drivers have used the distinctive Blue Bubble logo and top light for some eight years in Palmerston North. It is a key part of its business and has significant goodwill in the area. It says the brand is important and it needs
time to rebrand. It says it is not feasible to rebrand should the interim injunction be granted and then later it was permitted to revert to the Blue Bubble branding if it succeeded at trial in establishing the agreement does not expire until the 1 October 2021 (or some other date beyond the trial).
[55] In addition, Taxis PN submits that there is an intention or at least a risk that Blue Bubble will establish a new franchise in Palmerston North in the event of an interim injunction being granted. This, Taxis PN, says would significantly complicate matters and the downstream effects for it. It would be unable to quantify in damages the damage to the business of Taxis PN should it be prevented from using the brand and a competitor come to town using it. It says Palmerston North is only a small town so any bad experiences or difficulties with the brand would tend to be known very quickly.
[56] Mr Lawless for Taxis PN says there have been no issues in it keeping the brand “clean” as it were and it is in its interests as much as in Blue Bubble’s to maintain the perception of the brand at a high level.
[57] Mr Wilkinson says he has taken no active steps or has he precipitated any action in relation to establishing a franchise. However, some drivers in Palmerston North approached him wanting to discuss the issue and he met with them. However, he said that was not at his initiative.
[58] Therefore, as Mr Khan indicated for Blue Bubble it would be open to it to establish another franchise in Palmerston North if it pursued its strategy is to have national coverage. Inevitably it must ensure that Palmerston North is serviced in the circumstances.
[59] Taxis PN also submitted that if an interim injunction were granted it would effectively resolve the matter and not allow it to have its day in court. This is because commercially it makes no sense to have to rebrand for the period of an interim injunction and then rebrand back again after trial. Of course a damages claim would remain and that would be determined at trial.
[60] I note in terms of considering the issue of adequacy of damages that Taxis PN assert that it is good for any damages and points to the recent payment of $20,000 of levies. The payment itself was not contested by Mr Khan although I have set out Mr Khan’s response above.
Analysis
[61]I now consider and analyse the competing positions.
[62] I consider the following factors are important in the balancing process that I must undertake in an application of this nature.
[63] First, the rationale for an interlocutory injunction is that irreparable harm will be done to the applicant. In this case I am of the view that there is not any irreparable harm demonstrated by Blue Bubble. There is no serious allegation that the brand will be damaged by either Taxis PN or the drivers. It is in Taxis PN’s interests as much as it is in Blue Bubble’s interest to ensure the brand is protected and that goodwill is maintained. The arrangement was running for almost eight years without any notice of termination or, notice of breach having been issued by Blue Bubble. There is no evidence of serious complaints about the operations of Taxis PN except as to its ongoing lack of use of the uniforms and similar complaints. However, Blue Bubble has not taken any specific steps in relation to those issues of compliance until its notice of 31 January 2016 when it referred to the failure to support the ACC RFP.
[64] Secondly, I consider it material that the parties have been content with the flexible arrangements in place between them for many years. This is demonstrated by the example I gave of Blue Bubble not enforcing the provision such as wearing the uniforms since the inception apparently of the franchise in 2012. This of course, may not affect the operation if written agreement between the parties, however, it forms some background as to interpretation.
[65] Thirdly, Blue Bubble did not appear to realise the renewal should have been triggered under cl 8 until its letter of February 2019. It did not refer to it in 2016 when it sent out a new franchise agreement nor did it refer to it in the notice of 31 January 2019 which specified the dispute. No doubt Blue Bubble had its reasons for not
wanting to trigger the agreement earlier or it may have been oversight. Whether that is relevant and the effect of it will be a matter for trial.
[66] As to the adequacy of damages. I consider that Blue Bubble would be able to calculate damages for any lost income from the franchise and any related other damage. It points to the loss of opportunities to make the most of its investment in the franchise but there is no suggestion of damage to its brand. In my view it is entitled to protect its investment and seek other franchisees7 but in my view any damages in the interim in this case are able to be calculated.
[67] I also note an issue raised by Mr Khan on behalf of Blue Bubble as to prejudice to third parties. Blue Bubble says the taxi drivers will be prejudiced if Blue Bubble cannot take on a new franchisee or accept their approaches. However, there was no concrete evidence as to the prejudice that this may entail from the drivers involved. I do not consider this is a strong factor in favour of Blue Bubble in this case.
[68] A further relevant factor is delay. On Blue Bubble’s version of events it has been unable to negotiate a deal for renewal with Taxis PN. Therefore, it has sat on its hands for considerable time before exercising what it says are its rights to now walk away from the renewal negotiations and to issue a notice in 31 January8 which purports to terminate the franchise.
[69] I am of the view that while that delay has some bearing in this matter I do not consider it has a great weight.
[70] It seems to me that the franchise agreement must come to an end at some stage in the circumstances, but I consider that it is arguable as to when and how that occurs. I consider there needs to be an exploration of the issues, a testing of the evidence, and that can only occur at trial. I accept that it may take some time to get to trial, however, Taxis PN is now clearly on notice of Blue Bubble’s position and whatever the outcome both parties are now aware of the issues.
7 Subject to the outcome of these proceedings.
8 This includes a reference to the other following notices.
[71] I consider that Taxis PN’s loss of the right to the brand in circumstances where it may be able to successfully argue a longer period of use would be commercially difficult for it and damage flowing from that would be arguably irreparable.
[72] There is a trial date available in Wellington for three days commencing on 16 September 2019. I recognise these are proceedings instituted in Palmerston North but counsel have indicated that it may well be heard in Wellington due to their location. It may be that trial date is to close for counsel. However, that date, having been made available if counsel were prepared to move to get the matter ready for trial and it can be dealt with then. The delays usually attendant on matters such as this would then be mitigated.
[73] Therefore, I am not persuaded the interim injunction should be granted. The overall justice of the case including my view that irreparable harm will not be caused to the plaintiff, that there are serious issues to be considered in relation to both parties and that damages are adequate as well as delay, and the fact that an interim order may pre-empt a decision as to the use of the brand before a full hearing, weighs in my view against the grant of an interim injunction.
[74]Accordingly, the application is declined.
Costs
[75] Following agreement between counsel, I order 2B costs on this application in favour of the defendant. In this case while opposed, I am of the view second counsel were justified for the interim injunction at a rate of 50 per cent only for the time of this hearing, in the circumstances.
Grice J
Solicitors:
Sievwrights Law, Barristers and Solicitors, Wellington Nowland Gordon & Associates, Solicitors, Wellington
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