Australian-owned business Open2View took its time challenging New Plymouth real estate photographer Deane Riddick’s actions in setting up in competition, causing Justice Isac to suggest there was some ulterior motive behind its deferred legal action when he refused an interim injunction to bring Riddick’s new business to a halt.
In 2006, Mr Riddick bought into an Open2View franchise for the Taranaki. Over subsequent years this extended to all of the lower North Island, excluding Wellington. After 14 years operation, Open2View’s New Zealand franchisor On-line Digital Solutions Ltd terminated Mr Riddick’s franchise rights on one month’s notice and sued, alleging he was in breach of a restraint of trade prohibiting him from setting up in competition.
The High Court was told there had been ongoing niggles between Open2View and Mr Riddick for a period of time. Mr Riddick said attempts to sell off his franchise rights were being thwarted by Open2View. Mr Riddick set up business on his own, initially continuing to use an Open2View Facebook page and mobile phone contact. There was evidence that some New Plymouth real estate agents were sympathetic to Mr Riddick, expressing the view he was being ‘screwed over’ by Open2View. Over thirty former Open2View clients transferred their business to Mr Riddick personally. Lawyers fronted up in court.
Open2View said the 2006 franchise agreement required renewal every five years. Mr Riddick had never given notice of renewal. After the first five year term expired, the franchise simply ran on as a monthly agreement and could be terminated on one month’s notice, it said.
Mr Riddick said Open2View had never required formal notice of renewal. It was in breach of contract by firing him on one month’s notice and a consequence of this breach was that any restraint of trade did not apply.
Justice Isac said Mr Riddick has an arguable case that Open2View was in breach of contract by giving only one month’s notice. He questioned why Open2View took so long to take legal action, waiting for nine months after firing Mr Riddick before challenging his right to set up a rival business. He was critical of it not disclosing evidence supporting Mr Riddick’s case. He ruled Mr Riddick could continue operating his rival business pending a full trial into the dispute.
A restraint of trade clause in the Open2View franchise agreement supposedly prohibits Mr Riddick from ever working again anywhere in New Zealand in real estate photography.
On-Line Digital Solutions Ltd v. Riddick – High Court (26.11.21)
22.006