After
selling Cambridge News for $280,000
and promising not to set up a rival publication, Mark and Te Rangi Nogaj fell
foul of the law when starting up their new Waikato paper Biz Hamilton.
The High Court ordered the Nogajs to stop
poaching in Cambridge until an agreed restraint of trade expires in May 2018. They were left free in the interim to publish
Biz Hamilton elsewhere in the Waikato but Justice Asher left open the
possibility that too could be in breach of the restraint of trade.
The court was told Mr and Mrs Nogaj sold Cambridge News in May 2015 for $280,000,
with $275,000 of that being payment for goodwill. Goodwill is payment for a share of
anticipated future profits based on the assumption an existing customer base
will remain. The Nogajs agreed not to
set up a rival business within the paper’s distribution area in the next three
years, and further agreed not to operate within thirty kilometres of Cambridge
in the next two years. Cambridge News prospered with turnover
increasing from $400,000 to $500,000 in the first year under new ownership.
Evidence was given that Biz Hamilton was first published one
year after the 2015 goodwill payment. It
is a free fortnightly newspaper. Some
copies were distributed in Cambridge.
Justice Asher said it was a similar publication to Cambridge News: printed on newsprint with colour photos, using a
chatty personalised style. While
predominately focussed on Hamilton businesses, content would appeal to local
residents.
He ordered the Nogajs to stop
distributing Biz Hamilton in
Cambridge until the three year restraint expires in 2018 and further ordered
them not to approach any advertisers which were existing customers of Cambridge News at the time of the 2015
sale agreement. He left open the
question of whether the separate two year, thirty kilometre, restraint was
enforceable. This requires a further
court hearing. A thirty kilometre
restraint takes in Hamilton city, a market that did not form part of Cambridge News’ distribution area when
sold.
Cambridge
News v. Mark Media – High Court (17.06.16)
16.093