Corporate Cabs Limited v MacKay

[2019] NZHC 897

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-A-TARA ROHE

CIV-2019-485-217

[2019] NZHC 897

IN THE MATTER

of Breach of Contract and Restraint of Trade

BETWEEN

CORPORATE CABS LIMITED

Plaintiff

AND

GEOFFREY MACKAY

Defendant

Hearing:	On the papers
Counsel:	J M Skinner for Applicant
Judgment:	18 April 2019

JUDGMENT OF CLARK J

[1]    This application for an interim injunction was filed on a Pickwick basis on the afternoon of 17 April 2019. The application is made without notice. As at 18 April 2019 the originals of most of the documents have not been filed. The exception is an affidavit sworn by James Hart, Wellington Operations Manager for Corporate Cabs Ltd. I propose to deal with the application notwithstanding this procedural imperfection. All of the documents are signed and, in particular, the two affidavits are sworn. The second affidavit is sworn by Collin Samson, Chief Executive, Corporate Cabs.

[2]    My first inclination was to simply direct service of the application and accompanying documents on the defendant, Geoffrey MacKay. Having read, however, the evidence of the defendant’s apparent breaches of his contract with Corporate Cabs I consider it appropriate to grant for a strictly limited time, an order restraining the defendant.

CORPORATE CABS LIMITED v MACKAY [2019] NZHC 897 [18 April 2019]

[3]    The contract between the parties contains the following restraint of trade clause:

17. The Contract Holder shall not at any time, during the term of this contract or for a period of three months after the termination of this contract for any reason, carry on or be connected, engaged or interested either directly or indirectly or alone or with any other person or persons and whether as a principal, partner, agent, director, shareholder, employee or otherwise in any passenger carrying business which is carried on within the great Wellington Metropolitan Area as defined by the map attached hereto, without the express written consent of the Company, provided that such consent shall not be unreasonably withheld.

[4]    On 4 February 2019 Corporate Cabs’ lawyers, gave to the defendant a “Notice to Remedy Breach of Independent Driver’s Contract”. The letter set out the results of an investigation undertaken on 22 January 2019 by Mr Hart, the Operations Manager. Essentially, the defendant had removed all Corporate Cabs signage from his vehicle and parked it in the parking bay designated for Corporate Cabs at the Wellington International Airport. He had stood in the drivers’ “meet and greet” area in the arrivals hall holding a signboard with the names of two passengers. Although the defendant was standing alongside other Corporate Cabs operators and was wearing his full uniform but not his name badge. Photographs of the vehicle and the defendant in the arrivals hall were attached to the notice dated 4 February 2019.

[5]    The defendant was observed collecting passengers and their luggage and assisting them into the rear seats of his vehicle. The passengers were transported to the Bolton Hotel. At no time during this particular event was the defendant logged into the Corporate Cabs automated dispatch system nor was the job registered through the Corporate Cabs call centre. The concern for Corporate Cabs is that the defendant is taking the company’s customers without passing on the income.

[6]    The company met with the  defendant  on  25 January 2019  to  discuss  the 22 January 2019 incident.

[7]    The notice to the defendant of 4 February 2019 required the defendant to remedy the breach by providing a signed written undertaking by 11 February. The defendant did so. The undertaking is in the following terms:

I acknowledge receipt of notification dated 4th February 2019 alleging breach of my Independent Driver’s Contract.

This letter is sent in compliance with section 7 of the letter and to state that I undertake to comply with and to abide by the obligations and terms of my Drivers Contract for the remainder of its term and for three months following its termination.

[8]    The section of the letter with which the defendant said he was complying is in the following terms:

Manner and timeframe to remedy Breach

7.TAKE FURTHER NOTICE that in order to remedy the breach described in paragraph 6 of this Notice, Corporate Cabs requires that you:

a.By no later than 5pm on Monday 11th February 2019, provide Corporate Cabs with a signed written undertaking that for the remainder of the term of the Contract you will not carry on or be connected, engaged or interested either directly or indirectly or alone or with any other person or persons and whether as a principal, partner, agent, director, shareholder, employee or otherwise in any passenger carrying business which is carried on within the greater Wellington metropolitan area, without the express written consent of Corporate Cabs; and

b.For the remainder of the term of the Contract, fully comply with all of your obligations described in the Contract (including, without limitation, the obligations described in clauses 16.1 and 17 of the Contract).

[9]    Subsequent to the defendant’s signed undertaking of 7 February 2019, there were further incidents. The defendant continued to collect and carry passengers in his ostensible capacity as a driver for Corporate Cabs but logging himself in and out of the system with the consequence the company received no income from those passenger services. Mr Hart describes emailing the defendant on 15 March 2019 explaining the company’s concerns and meeting with the defendant on 19 March 2019 to discuss the incidents, but it is said the defendant refused to answer any questions or provide any explanations.

[10]   It seems that on 25 March 2019 the defendant was once again parked in his unmarked vehicle, in the company’s parking bay at the airport, but not logged into the company’s system. Mr Hart located the defendant at the arrivals gate in full Corporate

Cab uniform, holding a board with the names of passengers for whom he was waiting. Photographs are attached to Mr Hart’s affidavit. When Mr Hart approached the defendant to ask what he was doing there, the defendant said he was picking up a friend. Mr Hart deposes to confirming with the passengers that the defendant was not their friend, but their driver. The defendant was observed collecting the bags from the carousel and wheeling a suitcase to his operating vehicle.

[11]   On 26 March 2019 the company issued to the defendant a notice of suspension under his contract. The notice cited cl 6.1 of the contract which required compliance with the company’s operating rules. The notice explained, in the following terms, the effect of the immediate suspension while the company considered what further action (if any) it would take in relation to the defendant’s breaches of contract:

·The Services provided to you by Corporate Cabs will be immediately

suspended. In other words, Corporate Cabs will immediately cease supplying you with the Operator Support Package and will deactivate the Corporate Cabs installed equipment;

·You are not entitled to operate as a transport services operator, and you must immediately cease operating either as a taxi or a limousine or drive the vehicle either with or without signage or whilst in the Corporate Cabs uniform

[12]   It seems that there were reports of further similar incidents in April 2018 and towards the end of 2018 but there is no evidence that these incidents were taken up with the defendant. The evidence of the defendant’s responses to the questions and correspondence and during meetings shows:

(a)On 25 January 2019 when Mr Hart questioned the defendant about the 22 January incident, the defendant simply said “no comment”.

(b)The defendant complied with the notice to remedy his breach by signing an undertaking on 7 February 2019.

(c)When Mr Hart emailed the defendant on 8 March 2019 regarding two recent jobs which he carried out in uniform but without logging into the company’s system, the defendant did not respond to the request for an explanation.

(d)When the defendant met with Mr Hart on 19 March 2019 at Mr Hart’s request the defendant refused to answer any questions or provide any explanation for the incidents.

[13]   I have considered the fact this application is made without notice (on a Pickwick basis), and whether undue delay or prejudice would be caused to the applicant by requiring it to proceed on notice. I consider the defendant must be served. But I also consider cl 17 of the contract is clear, as is the notice to remedy breach dated 4 February 2019 in response to which the defendant provided the requested signed undertaking.

[14]   The defendant both contracted and undertook during the term of his contract or for a period of three months after the termination of the contract, not to —

… carry on or be connected, engaged or interested either directly or indirectly or alone or with any other person or persons and whether as a principal, partner, agent, director, shareholder, employee or otherwise in any passenger carrying business which is carried on within the greater Wellington metropolitan area as defined by the map [attached to the contract to which the notice to remedy breach referred] without the express written consent of the Company …

[15]   The evidence before the Court shows the defendant operating in breach of both the undertaking and restraint of trade clause in the contract. It is appropriate that the defendant be restrained from his continuing and injurious breaches at least in the short term. The order I propose to make does no more than give effect to the contract between the parties and defendant’s undertaking. It will be for the Judge who hears the application for the interim injunction to determine whether the interim order I now make should continue.

[16]The following directions and orders are made:

(a)Pending further court order the defendant, Geoffrey MacKay, is restrained from carrying on or being connected, engaged or interested either directly or indirectly or alone or with any other persons and whether as a principal, partner, agent, director, shareholder, employee or otherwise in any passenger carrying business which is carried on

within the greater Wellington Metropolitan Area as defined by the map attached and marked “A”.

(b)The interlocutory application and all documents filed in the High Court on 17 April by email, are to be served on the defendant no later than  3 pm, Monday 22 April 2019.

(c)The matter is set down for telephone conference at 11 am on 30 April 2019 for the purpose of timetabling steps towards a hearing of the application for interim injunction.

(d)Costs are reserved.

Karen Clark J

Solicitors:

Skinners Law, Takapuna for Plaintiff