ADM Londis Plc v Ranzett Ltd and Others (No. 3)
| Jurisdiction | Ireland |
| Judge | Mr. Justice Gerard Hogan |
| Judgment Date | 19 December 2014 |
| Neutral Citation | [2014] IEHC 660 |
| Court | High Court |
| Date | 19 December 2014 |
[2014] IEHC 660
THE HIGH COURT
AND
Costs – Loss of income – Leasing equipment – Plaintiff seeking payment for unpaid invoices – Whether defendant is entitled to damages for loss of salary
Facts: The plaintiff, ADM Londis plc, terminated a franchise at a retail outlet at the Black Bull premises, Dublin Road, Drogheda, Co. Louth in December 2008. The franchisees were Mr Dolan and Ms McConnell, the second and third defendants. The first defendant, Ranzett Ltd, was the corporate vehicle by which the retailing business was operated by them. As a result of an over-ambitious expansion, November and December 2008, Mr Dolan and Ranzett Ltd found themselves in a precarious position. Arrears on the trading account with Londis had grown to some €430,000 and the bank was refusing to honour direct debits. At the hearing of the plenary action, evidence was given to the effect that the total sum which ADM Londis was owed was €561,283.91 in respect of unpaid invoices. The defendants did not seriously dispute this figure and the High Court gave judgment against the second and third defendants qua guarantors for the further sum of €161,283.91. The High Court further ruled that ADM Londis was also entitled to Courts Act interest. The High Court also ruled that the plaintiff was in breach of contract with regard to the giving of notice, the abrupt termination of the agreement and the closure of the trading account and the de-branding of the Black Bull premises in December 2008. It was these breaches of contract which had brought about the total cessation of the defendants” business and the effective destruction of whatever value still remained in the business and its assets, especially by reason of the abrupt and immediate termination of the trading relationship between the parties. It was the very abrupt termination of the trading relationship which the High Court found to be at the heart of the unlawful termination of the contract. This High Court judgment was supplementary to the two earlier judgments; the three remaining issues for determination were the claims in respect of the leasing equipment, Mr Dolan”s claim regarding a loss of income and issues of costs.
Held by Hogan J that it is unnecessary to rule on the leasing equipment point because he was informed in the course of the hearing by the defendants that they did not intend to lead any further evidence on this question. In those circumstances, his original adjudication must therefore stand; this amounted to saying that as the defendants cannot establish that they suffered any loss in respect of the disposals of these items of equipment, they are not entitled to any claim for damages in respect of this item on the counter-claim. Hogan J thought it implicit in the second judgment that the reason why he did not award Mr Dolan damages in respect of his loss of salary was that he did not think that Ranzett was in a position to pay that salary given its precarious financial position; the real loss to the company was the abrupt termination of the franchise which triggered the loss of the lease and other losses consequent upon that fact. It was for this reason that Hogan J rejected the claim based on a loss of salary. Having considered Veolia Water UK plc v Fingal County Council (No.2) [2006] IEHC 240, Hogan J held that the costs should be apportioned; the plaintiff had established that it was entitled to summary judgment in respect of a large part of its claim for payment on the unpaid invoices.
Hogan J held that he should make an award of 7 days costs only in favour of the defendants, reflecting the fact that there were issues in respect of which they did not succeed which added somewhat to the length of the hearing. Hogan J awarded the plaintiff the costs of the summary judgment application and one half day”s costs in respect of the main action and directed that these costs be set off as against each other.
Application refused in part.
Mr. Justice Gerard Hogan delivered the 19th day of December 2014
1. This judgment is supplementary to two earlier judgments already delivered by me in respect of the circumstances surrounding the termination of a franchise by the plaintiff, ADM Londis in December 2008. In the first of these judgments, ADM Londis plc v. Ranzett Ltd. [2013] IEHC 63, I held that the plaintiff was entitled to judgment as against the defendants in the sum of €561,283.91 in respect of unpaid invoices. I further held that the defendants succeeded in part in respect of their counter-claim as against the plaintiff by reason of what I held was the unlawful termination of a franchise agreement.
2. In the second judgment, ADM Londis plc v. Ranzett Ltd. (No.2) [2014] IEHC 000, I made an award of €464,000 in favour of the defendants on their counter-claim, along with a direction that the two sums could be mutually set off against each other. In addition, I also gave the parties an opportunity to adduce evidence regarding the value of certain repossessed leasing equipment if it were to have been disposed of in an open market in 2009 or 2010.
3. While the present judgment must also be read in conjunction with the earlier two judgments, it probably suffices to say this dispute concerns the termination of a franchise' by the well known retail company, ADM Londis plc ("Londis") of a Londis franchise at a retail outlet at the Black Bull premises, Dublin Road, Drogheda, Co. Louth in December 2008. The franchisees were Ray Dolan and Annaliese McConnell, the second and third defendants. This couple married in June 2007. The first named defendant, Ranzett Ltd., was the corporate vehicle by which the retailing business was operated by them.
4. As I observed in the second judgment, quite possibly as a result of an over-ambitious expansion, by the dates which are germane to these proceedings - namely, November and December 2008 - Mr. Dolan and his company, Ranzett Ltd., found themselves in a precarious position. Arrears on the trading account with Londis had grown to some €430,000 and the bank was refusing to honour direct debits.
5. At the hearing of the plenary action, evidence was given by Ms. O'Dea, the plaintiff's financial officer, to the effect that the total sum which ADM Londis was owed was€561,283.91 in respect of unpaid invoices (which figure of course also includes the sum of €400,000 in respect of which I had already given judgment). The defendants did not seriously dispute this figure and I gave judgment against the second and third defendants qua guarantors (the first defendant having been dissolved) for the further sum of €161,283.91. I further ruled that ADM Londis was also entitled to Courts Act interest.
6. In my judgment, however, I also ruled that the plaintiff was in breach of contract with regard to the giving of notice, the abrupt termination of the agreement and the closure of the trading account and the de-branding of the Black Bull premises on 4th December 2008: see paragraphs 131 et seq. of the first judgment. It was these breaches of contract which had brought about the total cessation of the defendants' business and the effective destruction of whatever value still remained in the business and (more especially, perhaps) its assets, especially by reason of the abrupt and immediate termination of the trading relationship between the parties. It was the very abrupt termination of the trading relationship which I found to be at the heart of the unlawful termination of the contract.
7. There are now three remaining issues for determination which I can summarise as follows:
(i) The claims in respect of the leasing equipment.
(ii) Mr. Dolan's claim regarding a loss of income.
(iii) Issues of costs.
8. I propose to address these issues in turn
9. At the first hearing, Mr. Dolan, the second named defendant and the principal of the company, claimed that one consequence of the termination of the franchise was that expensive refrigeration equipment was re-possessed by the plaintiff and sold off at fire sale prices, thus crystallising a significant loss for the first defendant company, Ranzett Ltd. No other evidence was led on this point during the first hearing.
10. In the course of the second judgment assessing the damages, I indicated that I would give the parties a further opportunity to adduce further evidence on this point if desired. The reason I took that view was that I found myself simply unable to form any realistic view as to the extent of those losses based simply on what, with respect, was the purely general assertions of Mr. Dolan regarding the extent of such claimed losses.
11. As it happens, counsel for the plaintiff, Mr. Buttanshaw, urged that I could not properly have taken such a step at that juncture, as it was effectively inviting me to conduct a form of appeal from my own judgment. The defendants had had their opportunity to present evidence: it was not for this court to step into their shoes and enable them to bolster their evidence by giving them a supplementary opportunity of this kind.
12. In the end, it is unnecessary to rule on this point because, which or whether, I was informed in the course of the present hearing by Mr. Conlan Smyth S.C., counsel for the defendants, that his clients did not intend to lead any further evidence on this question. In these circumstances, my original adjudication must therefore stand. This amounts to saying that as the defendants cannot establish that they suffered any loss in respect of the disposals of these items of equipment, they are not entitled to any claim for...
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