Taking
steps to transfer his travel agency across to House of Travel in breach of a
contract with Travel Managers Group cost Gregory Southcombe and his business
$615,000 for profits otherwise due on three years remaining of the Travel
Managers contract.
The High Court was told Mr Southcombe and
his travel business, then called Travel Café, had worked with Travel Managers
since 2009. Travel Café was the retail
arm, booking travel through facilities provided by Travel Managers. Other Southcombe family members owned and ran
Travel Managers.
Evidence was given of delicate family
negotiations in respect of a $115,365 debt owed Travel Managers by Gregory
Southcombe. It was agreed the debt would
be cleared by having Travel Café put all its business through Travel Managers
up to March 2017 with commissions and overrides applied in reduction of the
debt. Commissions are made on travel
booked. Overrides are rebates paid by
airlines after travel commences if specified levels of volume and value are
achieved.
In August 2013, Mr Southcombe signalled
to Travel Managers he was looking to go elsewhere unless current trading terms
were renegotiated. Four months later, he
was in discussions with House of Travel.
Travel Managers later discovered that Travel Café had signed up
independently for the Amadeus online airline reservation system, had received
an advance payment from Amadeus of $138,000 and had diverted commissions totalling over $51,000 otherwise
payable to Travel Managers.
In the High Court, Justice Woodhouse ruled
that Travel Café had repudiated the Travel Managers contract by carrying out
steps to take its business elsewhere.
Travel Café, and Mr Southcombe as guarantor, were held liable for
$40,300 still owing on the original $115,365 debt and were further held liable
for the commissions and overrides Travel Managers would have received if the
contract had run its course through to 2017.
Travel
Managers Group v. 123Kiwi.com – High Court (27.11.15)
16.013