Covenant Not To Resell Car Claimed Invalid

Press, Volume CIII, Issue 30535, 2 September 1964, Page 3

Covenant Not To Resell Car Claimed Invalid

(New Zealand Press Association) AUCKLAND, Sept, 1. Defence evidence was heard in the Supreme Court at Auckland today in a claim by an Auckland motor firm for damages of £lOOO for alleged breach of covenant regarding the resale of a car. The hearing is before Mr Justice Richmond.

The plaintiff is Campbell Motors, Ltd., represented by Mr D. S. Beattie and Mr B. K. Shenkin. The firm cites Eric James Claude Storey, a railways employee (Mr R. W. Gill), as. first defendant, and James Kirkpatrick, Ltd, trading as Midland Motors (Mr J. S. Alexander) as second defendant. The plaintiff alleges that in 1962 it sold a car to Storey, and that Storey immediately resold it to Midland Motors in breach of covenant between them not to do so within six months. The plaintiff also alleges that Storey and the second defendant conspired to breach the covenant, and seeks damages of The allegations are denied. Used-car Market Today Arnold James Hay, general manager of Campbell Motors’, said that covenants for the sale of cars were drawn up because his firm had been troubled by vehicles finding their way on to the used-car market.

“People who were trying to get delivery of new cars were continually ringing us up and saying: Why can’t we get a car when we can see cars with delivery mileage only advertised in the papers?” he said.

Hay said transactions such as that with Storey could have had a considerable effect on his firm’s reputation. To Mr Alexander the witness said the covenants were introduced in late 1961. Mr Gill, for Storey, said he would submit that the plaintiff had failed to prove the validity of the covenant—which the first defendant

would say was Illegal—end had also failed to prove its allegations of conspiracy to breach the covenant. Storey said in evidence that he decided to buy a new car in 1960. He placed an order for one with Campbell Motors, and paid a deposit of £lO. He said he decided later not to get this particular model of car since it was no longer what he required. In a discussion with Mr Kirkpatrick in late 1961, or early 1962, he mentioned the covenant Campbell Motors would require him to sign if he bought the car, and Mr Kirkpatrick told him it was not legal—it was a lot of bluff.

Storey said it was arranged that he would buy the car for Kirkpatrick and Kirkpatrick gave him a bank cheque for this purpose. He said he bought the car with this cheque, took the car to Midland Motors, and was given a cheque for £2o—£lo to cover his deposit, and £lO for his trouble. Covenant Mr Alexander, for the second defendant, said it was submitted for his client that the covenant was unenforceable since it was illegal, and there was no conspiracy, and that the second defendant

was not guilty of Inducing a breach of contract. James Stewart Kirkpatrick, managing-director of the second defendant, said that before the transaction with Storey he had never seen a covenant of the type Storey had been required to sign. In particular, he did not know a covenant was required of purchasers by Campbell Motors. The witness said that three weeks to a month before the transaction. Storey came into the premises of his firm and said he had a deposit on a Peugeot car. Storey said he thought the car would be worth £lOO over list price to a dealer. After a discussion it was agreed that if Storey took delivery of the car witness's firm would pay him £5O over the list price for it No covenant was mentioned, said the witness. In the week that Storey got the car there was another discussion in which he told Storey he would pay £lO over the list price. They bad a fairly good stock on hand at that time. The witness said he obtained a bank cheque and gave this to Storey to pay Campbell Motors for the car.

The hearing will be continued tomorrow.