Green Cabs Limited v Naidu

[2014] NZHC 2749

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2014-404-002177 [2014] NZHC 2749

BETWEEN

GREEN CABS LIMITED

Plaintiff

AND

PARSHU RAM NAIDU First Defendant

SMART CABS LIMITED Second Defendant

Hearing:	5 November 2014
Appearances:	O Lund for Plaintiff R Keenan for First Defendant No appearance by or on behalf of Second Defendant
Judgment:	5 November 2014

ORAL JUDGMENT OF WOOLFORD J

Solicitors:           Duncan Cotterill, Barristers & Solicitors, PO Box 10-376, Wellington 6143

Liberty Law Chambers, PO Box 28161, Remuera, Auckland 1541

David Rice & Associates, PO Box 72266, Papakura, Auckland 2244

GREEN CABS LIMITED v PARSHU RAM NAIDU [2014] NZHC 2749 [5 November 2014]

Introduction

[1]      The  plaintiff,  Green  Cabs  Limited  (Green  Cabs),  applies  for  an  interim injunction prior to trial against Parshu Ram Naidu (Mr Naidu), a former independent contractor to Green Cabs, and Smart Cabs Limited (Smart Cabs), to whom Mr Naidu is currently contracted. The following orders are sought:

(a)      Mr Naidu is to repaint his vehicle within one month in a colour that is not associated with Green Cabs;

(b)Mr Naidu is to refrain from driving his vehicle as a taxi until such repaint has taken place;

(c)      Smart Cabs is to be prohibited from allowing Mr Naidu to drive the vehicle as a taxi for Smart Cabs until Mr Naidu has repainted the vehicle; and

(d)Mr Naidu and Smart Cabs are to pay Green Cabs the costs of this application in such proportions as the Court thinks fit.

Factual background

[2]      Mr Naidu was a taxi driver contracted by Green Cabs under an independent driver’s contract dated 14 May 2012.  The contract contained a clause that required him, on termination of the contract with Green Cabs, to remove any identification that in any way associated him with Green Cabs and to change his vehicle colour.

[3]      While an independent contractor to Green Cabs, Mr Naidu drove a Toyota Camry hybrid motor vehicle, registration GGJ30.   It was painted in Green Cabs’ distinctive green paint, Pantone 368C.

[4]      Mr Naidu resigned from Green Cabs and his contract was terminated on

18 October 2012.  Mr Naidu told the Auckland Operations Manager for Green Cabs that  he would  repaint  his  vehicle in  the week  following  the termination  of his contract.

[5]      On 29 October 2012, Mr Naidu was seen operating his vehicle at a taxi rank near the Viaduct Harbour in Auckland.  He had removed the Green Cabs signage and identification from his vehicle, but it was still painted green.  He was driving for Sail Taxis Limited (Sail Taxis) and there was an A3 sized magnetic sticker on the driver’s door with the triangular logo of Sail Taxis.

[6]      On 7 November 2012, Green Cabs sent Mr Naidu a letter giving him seven days to repaint his vehicle.  On 27 November 2012, the solicitors acting for Green Cabs sent cease and desist letters to Mr Naidu and Sail Taxis.

[7]      No further action was taken by Green Cabs at the time because in December

2012 Mr Naidu was convicted of drink driving.  He was disqualified from holding or obtaining a driver’s licence for a period of six months.  Although he regained his driver’s licence in July 2013 when his disqualification expired, his P-endorsement, which  enabled  him  to  carry passengers,  was  not  renewed  by the  New  Zealand Transport Agency until February 2014.

[8]      In around March 2014 Mr Naidu started driving for Smart Cabs.  His vehicle was still green, but there were two A4 sized black and white stickers on the front doors on which the words “Smart Cabs Ltd” and a telephone number was printed. He was seen driving his vehicle with its distinctive green paint on 19 March 2014, at the end of March or the start of April 2014, on 10 April 2014, on 20 April 2014, on

25 June 2014 and on 23 July 2014.

[9]      On 14 April 2014, the solicitors acting for Green Cabs sent cease and desist letters to Mr Naidu and Smart Cabs.

High Court proceedings

[10]     On 29 August 2014, Green Cabs filed the present proceedings.  The statement of claim alleges that Mr Naidu’s conduct is in breach of his contract with Green Cabs and that his conduct has caused Green Cabs to suffer diversion of trade, damage to its reputation/good will and dilution of its brand.  The statement of claim also alleges that Mr Naidu’s conduct amounts to conduct which is misleading or deceptive or likely to mislead or deceive in breach of s 9 of the Fair Trading Act 1986, in that his

conduct is likely to lead consumers to believe that he has a connection with Green Cabs’ business.   Again, Green Cabs alleges that Mr Naidu’s conduct has caused Green Cabs to suffer diversion of trade, damage to its reputation/goodwill and dilution of its brand.

[11]     The third of cause of action in the statement of claim is one of passing off. The statement of claim alleges that the shade of green with which Green Cabs are painted has a distinctive character, which the Auckland taxi market recognises as being associated with Green Cabs’ business.  It is alleged that Mr Naidu’s conduct amounts to imitation and copying by him of Green Cabs’ distinctive colour. As such, it amounts to misrepresentation by Mr Naidu to Green Cabs’ prospective customers, that Mr Naidu is associated with Green Cabs’ business.   It is further alleged that Mr Naidu’s conduct is calculated to injure Green Cabs’ business and/or goodwill as well as causing confusion in the market.  Again, Green Cabs alleges that Mr Naidu’s conduct has caused Green Cabs to suffer diversion of trade, damage to its reputation/goodwill and dilution of its brand.

Mr Naidu’s response

[12]     In his affidavit affirmed 6 October 2014, Mr Naidu says, on resigning from Green Cabs he had his vehicle painted another green colour.  He attaches an invoice, which he says was given to him at the time, but says the painter who did the work for him is no longer in business.   The invoice is in handwriting.   It is addressed to “Naidu” and is dated 22/09/12.  The body of the invoice reads: “We have painted Toyota Camery GGJ-30 with colour code – KE53 with black boarder code 209.” The cost is said to be $1,700.  There is also the name James with a mobile number handwritten on the invoice.

[13]     Mr Naidu also says that at the end of 2012 he had a slight accident with his vehicle when somebody drove into the back of it, which meant that he had to have some panel and paint work done on the back bumper of the car. As it is explained by Mr Naidu, the painters mixed the paint to match.  He says this work was done by Auckland Panel and Paint Group Limited and that they used a colour code SG008-45

– not Pantone 368C.

[14]     Then in April 2014, Mr Naidu says he had the wheel hubs of his vehicle painted green.  This, he says, was done by Baird and Whyte (2004) Limited and that the wheels were not painted in a Pantone colour, but a Dulux powder coating colour called Telecom Green – code 288 58566.

[15]     Mr Naidu says he does not believe that his conduct has affected Green Cabs name or reputation or caused a dilution of its brand.  He says there are significant differences between the appearance of his vehicle and a Green Cabs taxi.  He says there is no large green signage on top of the vehicle.  Instead, he has a small white sign with black lettering with the Smart Cabs phone number.  He also says he has no Green Cabs lettering on the side of the car with a large blue world.  Finally, he also says that he has no Green Cabs signage on the back of the vehicle.   He attaches photographs of his vehicle and a Green Cabs vehicle.

Legal test

[16]     The general principles in determining whether an interim injunction should be ordered are not in dispute. These are:1

(a)       whether there is a serious question to be tried in the proceeding; (b)   where the balance of convenience lies; and

(c)       the overall justice of the matter.

[17]     I also accept the general principle that where a plaintiff brings an action and in it seeks an interim injunction on the basis that the defendant has breached the former’s rights, then justice requires that that defendant should be entitled to dispute the plaintiff’s claim at trial and if the grant of an injunction would preclude this, then

it should not be granted on an interim basis.2

[18]     In  that  regard,  I  note  that  the  first  order  sought  by  Green  Cabs  is  for

Mr Naidu to repaint his vehicle within one month in a colour that is not associated

1      American Cyanamid Co v Ethicon Ltd [1975] AC 396; [1975] 1 All ER 504 (HL); Klissers

Farmhouse Bakeries Ltd v Harvest Bakeries Ltd [1985] 2 NZLR 143, (1985) 1 TCLR 294 (HC).

2      Cayne v Global Natural Resources Plc [1984] 1 All ER 225 (CA) at 238.

with Green Cabs.  This order would preclude Mr Naidu from disputing Green Cabs claim at trial.   It is not therefore an order that should ordinarily be made in the present circumstances.

Discussion

[19]     I am of the view that the essence of the problem is that Mr Naidu continues to drive the vehicle he drove for Green Cabs with a distinctive green colour, which is the same or almost indistinguishable from Pantone 368C, which Green Cabs requires of all its independent contractors.  I accept that its green livery is a major point of difference between Green Cabs and all other taxi companies.

[20]     I am unpersuaded by Mr Naidu’s claim to have repainted his vehicle since he left Green Cabs.  If the vehicle has been repainted, it has been repainted in a colour which is almost indistinguishable from Pantone 368C.  First, he claims to have had it repainted on 22 September 2012 with a colour called KE53 with a black trim.  The handwritten invoice he attaches to his affidavit is from a painter who he says is no longer in business.  On 22 September 2012, Mr Naidu was still with Green Cabs.  If he changed the colour of his vehicle while still an independent contractor for Green Cabs, its management did not notice the difference.  Furthermore, when Green Cabs accepted his letter of resignation effective on 18 October 2012, Mr Naidu told the Auckland Operations Manager for Green Cabs that he was going to repaint his vehicle in the week beginning 23 October 2012.   He did not tell the operations manager that he had already repainted his vehicle three weeks earlier.  Finally, there is no evidence of what colour KE53 actually is.

[21]     Secondly, Mr Naidu says that he had a slight accident in his vehicle in late

2012 which required some panel and paint work to the back bumper of his vehicle. Mr Naidu says that the painters he used, Auckland Panel and Paint Group Limited, mixed the paint to match the existing colour of the vehicle.  In doing so, the colour they used was SG008-45, not Pantone 368C.  I am of the view that this is however irrelevant as Mr Naidu concedes that the colour was matched to the existing colour of his vehicle.

[22]     Thirdly, Mr Naidu says that he had the wheel hubs of his vehicle painted, but that the painters he used, Baird and Whyte (2004) Limited, used a green colour, Telecom green – code 288 58566.  Again, I am of the view that this is irrelevant because it is obvious from the colour photographs provided that the green of the wheel hubs is the same, or almost indistinguishable, from the colour of the vehicle itself.  Fourthly, when Mr Naidu was attempting to sell his vehicle with assistance from Green Cabs, he apparently told the potential buyers of the vehicle that it was painted Green Cabs green.

[23]     I am therefore of the view that the threshold for an interim injunction, namely that there is a serious question to be tried, is met in respect of all three causes of action set out in the statement of claim, namely, contract, Fair Trading Act and passing-off.

[24]     Mr Naidu’s vehicle is painted in a distinctive green colour, although counsel for Mr Naidu argues that his vehicle cannot be mistaken for a Green Cabs taxi because there is no signage or other identification associated with Green Cabs.  She submits that the vehicle is, in fact, clearly identified as a Smart Cabs taxi.   I do, however, agree with the comments of Gendall J in Wellington Combined Taxis Ltd v

Wellington Ace Taxis Ltd & Ors,3  that what is important is what catches the eye

generally and to compare points of similarity or difference one by one is not always helpful.  I am of the view that in the present case what catches the eye generally is the distinctive green colour of the vehicle.  It is, in my view, a significant point of difference between Green Cabs and all other taxi companies.   Environmentally- minded consumers will also look out for taxis painted green because the Green Cabs fleet is made up of hybrids and low emission common rail diesels.  Green Cabs has also provided evidence of a consumer who mistakenly entered another taxi painted green in the belief that it was a Green Cabs taxi.  In that case, the driver of the taxi was a former contractor to Green Cabs who has subsequently agreed to repaint his

vehicle.

3      Wellington Combined Taxis Ltd v Wellington Ace Taxis Ltd & Ors HC Wellington CP265/96,

11 October 1996 at 4.

[25]     I turn then to the balance of convenience, which is really the balance of the risk of an injustice.4   In that regard, I agree with Wild J in Green Cabs Ltd v Siulua,5 when he stated:

[7]       … My task is to balance the injustice that will be caused to the plaintiff if I refuse it an interim injunction and it is ultimately granted a permanent injunction, against the injustice that will result to Mr Siulua if I grant an interim injunction against him but it is ultimately discharged at substantive hearing.

[26]     As noted further by Wild J:

[8]       In practical terms the balance of convenience really comes down to the adequacy of damages. Will damages be an adequate remedy for the plaintiff if it is denied an interim injunction, but is ultimately successful? On the other hand, will damages be an adequate remedy for Mr Siulua if I enjoin him from driving his green painted cab on the road, but he is ultimately successful?

[27]     In the present case, I am of the view that damages would not be an adequate remedy for Green Cabs.   I accept that Pantone 368C is a colour firmly associated with Green Cabs in the relevant taxi market and that Green Cabs has a strong reputation and significant goodwill.  Although difficult to put a monetary amount on any damage suffered by Green Cabs, I am of the view that by driving his vehicle with its distinctive green colour, Mr Naidu has prima facie caused some diversion of trade, possible damage to Green Cabs reputation/goodwill and some dilution of its brand.  There is no evidence that Mr Naidu could meet any award for damages, if they were subsequently sought by Green Cabs.

[28]     On the other hand, I am of the view that damages would be a sufficient remedy for Mr Naidu.   Mr Naidu drives his vehicle as a means of earning a livelihood.    Mr  Brown,  in  his  affidavit,  on  behalf  of  Green  Cabs,  annexes  the financial statements for Green Cabs.  They disclose that Green Cabs is well capable of meeting any award of damages if an injunction is discharged at a substantive

hearing of these proceedings.

4      Cayne v Global Natural Resources Plc, above n 2 at 237.

5      Green Cabs Ltd v Siulua HC Wellington CIV-2010-485-1723, 27 September 2010.

[29]     Standing back and looking at the overall interests of justice, I also note that Mr Naidu has not been able to drive his vehicle for a considerable period of time because of his drink driving conviction and therefore had to support his family through other means of economic endeavour.

[30]     Accordingly, I grant the interim injunction in the following terms:

(a)      Mr  Naidu  is  prohibited  from  operating  his  Toyota  Camry  hybrid motor vehicle, registration GGJ30, painted in its green colour, as a commercial passenger vehicle, effective immediately, until further order of the Court.   He is, however, able to drive his vehicle for private or family purposes, but may not drive it as a commercial passenger vehicle.

(b)The injunction will lapse if Mr Naidu chooses to repaint his vehicle a different shade of green or any other colour that is acceptable to Green Cabs.

[31]     No order is made against Smart Cabs, who have chosen not to take any part in these proceedings.  Although Green Cabs submits that Mr Naidu is the agent of Smart Cabs, he is an independent contractor and I have not heard full argument on whether Smart Cabs can be held responsible, in those circumstances, for Mr Naidu’s conduct.

[32]     Costs are reserved.  If they are to be pursued, memorandum should be filed within 10 days of the date of this judgment.

……………………………….

Woolford J