Local couple take rural delivery stoush to court
NZ Post defends contract termination
Arural delivery company has sought an injunction against NZ Post for breach of contract, claiming the state-owned enterprise is using thirdparty couriers to reduce its mail run and income.
But NZ Post denies deliberately redirecting freight and instead says it has proof contracts existed with key businesses and other operators prior to signing with Te Awamutu couple Ian and Danielle Kennedy.
The Kennedys, who operate the RD3 route around the Waikato, own Three Hills Group, which was in the High Court at Hamilton on Monday seeking an injunction to stop the termination of their contract until the case can get to trial.
However, just how long it would take to get to trial, and its duration, remains unknown. It’s possibly years.
To be granted an injunction, a High Court judge needs to be satisfied “on the balance of probabilities” that there is a serious issue to be tried and whether Three Hills Group ( THG) would be more inconvenienced than NZ Post.
THG’s lawyer, Paul dePledge, said his clients would not only be inconvenienced, but they would suffer “irreparable damage”.
“Not only will Three Hills Group lose its only source of income, it will lose its investment capital and goodwill . . . they were heavily mortgaged when they purchased this business . . . that will be left as just a debt payable.
“This is one rural delivery driver out of 150. [The injunction] would not prejudice NZ Post’s position at all.”
At the heart of the dispute was the Kennedys’ claim NZ Post has been redirecting mail and freight from their run since shortly after the couple began operating in April 2019.
Documents show the couple poured $490,000 into buying the business and vans.
The RD3 run is the largest in Waikato and includes schools, rest homes, a golf course, Hamilton Airport, shops, restaurants and cafes, and myriad wholesale and retail businesses, as well as rural residents of Tamahere, a fast-growing lifestyle suburb between Hamilton and Cambridge.
DePledge submitted NZ Post had still been using its own courier drivers, along with third-party courier drivers to deliver freight in the area, despite signing a contract with THG it would operate exclusively in that boundary.
THG sought legal advice and wrote to NZ Post, but “nothing changed” and the behaviour had been “consistent throughout”.
“[The Kennedys] were encouraged and approved to enter into this contract and granted exclusive territory following a rigorous approval process . . . but nothing changed as a result of the letter and evidence of other couriers operating in the area continued to be collected by Three Hills Group.”
He produced an affidavit from the delivery run’s previous owner who confirmed he knew nothing of NZ Post having contracts with other drivers in the RD3 area.
The companies attended mediation but it proved fruitless, and in April the company and six of its drivers went on strike.
NZ Post then issued a termination of its contract with THG effective as of October 13.
DePledge said NZ Post used its own courier drivers for two of its bigger clients, trucking company Regal Haulage and Tamahere Model Country School, dating back to mid-2019, as well as for St Peter’s School and Tamahere Eventide.
Before axing a contract, a financial review should have been carried out to determine compensation.
“We didn’t know if there was any [compensation] because there was no financial review.”
NZ Post lawyer Bridie McKinnon said it had tried to settle the issues several times, including with mediation, but it was unsuccessful. She submitted there was no serious case to answer as the termination was in line with the clause of THG’s contract.
She said THG couldn’t meet all the needs of NZ Post’s delivery cycle.
The company had brought up possible termination, without response, in correspondence many months before the April letter, and, when it did give notice, it gave twice the usual length of six months, as opposed to 90 days. That was proof of the company being reasonable.
“NZ Post has acted reasonably and in good faith.” She said it was worth noting that the volume of mail in dispute was “about 1 per cent of the total mail delivered in that area”.
Co-counsel Brooke Marriner submitted it had evidence courier contracts with St Peter’s School and the velodrome went back to 2015, and 2016 for Regal Haulage and Tamahere School.
The granting of an injunction would impact NZ Post as it would have to manually sort couriers for that area, rather than allocate parcels to any courier available.
Marriner said there was no evidence that THG’s business would be unsellable due to the legal action.
Instead, NZ Post had its own evidence that THG’s business had a $200,000 increase in payments between 2019 and 2022.
“THG’s own evidence is that RD3 has grown with 500 new delivery points,” she said.
Justice Gault reserved his decision. Prior to the hearing, Danielle Kennedy told NZME the run was reduced to 2400 delivery points instead of growing to more than 4000 as they had expected.
She claimed in the affidavit the reduced run impacted the couple’s income so significantly that it reduced it to minimum wage.
Kennedy said they had mortgaged their home to “fight this” and so far it had cost $70,000 in legal fees.
“We stand to lose so much I don’t feel like we’ve got a choice.”
We stand to lose so much I don’t feel like we’ve got a choice. Danielle Kennedy