ADM Londis Plc v Ranzett Ltd and Others
Jurisdiction | Ireland |
Judge | Mr. Justice Hogan |
Judgment Date | 15 February 2013 |
Neutral Citation | [2013] IEHC 63 |
Judgment citation (vLex) | [2013] 2 JIC 1503 |
Court | High Court |
Date | 15 February 2013 |
[2013] IEHC 63
THE HIGH COURT
AND
PHILLIPS & O'DONOVAN THE MODERN CONTRACT OF GUARANTEE 2ED P676
PRENDERGAST v BIDDLE UNREP SUPREME 31.7.1957
ADM LONDIS PLC v ARMAN RETAIL LTD & ARMAN UNREP CLARKE 12.7.2006 2006/3/475 2006 IEHC 309
CELLULOSE PRODUCTS PTY v TRUDA 1970 92 WN (NSW) 561
SUPREME COURT OF JUDICATURE (IRELAND) ACT 1877
RSC O.84
ANDREWS & MILLETT LAW OF GUARANTEES 5ED
MOOHAN v S & R MOTORS (DONEGAL) LTD 2008 3 IR 650
NATIONAL WESTMINSTER BANK PLC v SKELTON 1993 1 WLR 72
BOC GROUP LTD v CENTEON 1999 1 AER COMM 53
DWA LTD v GILLAM 2012 NZHC 1875
HALSBURYS LAWS OF ENGLAND 4ED VOL. 20 PARA 190
HYUNDAI SHIPBUILDING & HEAVY INDUSTRIES v POURNARAS 1978 2 LLR 502
FOSS v HARBOTTLE 1843 2 HARE 461
MCDERMOTT CONTRACT LAW DUBLIN 2001 PARA 21.96
AFOVOS SHIPPING CO v PAGNAN 1983 1 WLR 195
O'BRIEN v SPECIAL CRIMINAL COURT 2008 4 IR 514
OFFENCES AGAINST THE STATE ACT 1939 S30(A)(3)
CONTRACT
Franchising
Breach - Debt - Guarantee - Equitable set off - Misrepresentation - Termination - Retention of title - Debranding - Whether franchisor entitled to terminate franchise agreement - Whether guarantor entitled to claim equitable set off on behalf of liquidated principal - Whether collateral contract regarding stocking loan existing - Whether misrepresentations made - Whether franchisor retaining title of stock delivered until paid in full - Whether agreement terminated by franchisor or franchisee - Whether franchisee required to debrand on termination of agreemetn - Whether entering of franchisee store to remove branding lawful - Whether notice of termination given - Whether contract wrongfully terminated - O'Brien v Special Criminal Court [2007] IESC 45, [2008] 4 IR 514 and Cellulose Product Pty v Truda [1970] 92 WN (NSW) 561 approved - Prendergast v Biddle (Unrep, SC, 31/7/1957); ADM Londis plc v Arman Retail Ltd [2006] IEHC 309, (Unrep, Clarke J, 12/7/2006); Moohan v S & R Motors (Donegal) Ltd [2007] IEHC 435, [2008] 3 IR 650; National Westminster Bank plc v Skelton [1993] 1 WLR 72; BOC Group Ltd v Centeon [1999] 1 All ER Comm 53; DWA Ltd v Gillam [2012] NZHC 1875; Hyundai Shipbuilding and Heavy Industries v Pournaras [1978] 2 LLR 502; Foss v Harbottle (1843) 2 Hare 461 and Afovos Shipping Co v Pagnan [1983] 1 WLR 195 considered - Supreme Court of Judicature (Ireland) Act 1877 (No 57) - Offences Against the State Act 1939 (No 13), s 30 - Judgment granted (2009/2354S - Hogan J - 15/2/2013) [2013] IEHC 63
ADM Londis plc v Ranzett Limited
Facts The plaintiff provided retail services to supermarkets and had entered into an agreement with the second-named defendant in relation to the running and stocking of a retail outlet as a franchise of the plaintiff. The plaintiff had terminated the relationship and had sought the repayment of monies. It was the contention of the plaintiff that the company that had been set up to run the outlet (the first-named defendant) was an under-capitalised company which had never been sufficiently robust to trade successfully. The defendants contended that they had been induced by misrepresentation to enter the franchise contract and that the contract had been unlawfully terminated without sufficient notice by the plaintiff. Summary judgment had already been granted to Londis in respect of €400,000 with the balance remitted to plenary hearing. The hearing was primarily concerned with the merits of the defendants” counter-claim for misrepresentation and breach of contract.
Held by Hogan J in giving judgment in favour of the plaintiff on one issue and against on another: Judgment would be given against the second and third defendants as qua guarantors for the balance of €161,283.91. There had been a number of misunderstandings which had led to difficulties between the parties. The second and third-named defendants were entitled to bring a cross-claim on behalf of the first-named defendant. There had been no evidence of a collateral contract regarding the provision of a stocking loan. Both sides were in breach of their obligations under the relevant contract. The decision by Londis to terminate the contract was wrongful because it did not give the necessary notice as required by the relevant agreement. Given the breach of contract that had occurred the plaintiff would be liable to the defendants for the losses that had occurred. The court would require a further hearing to determine same.
JUDGMENT of Mr. Justice Hogan delivered the 15th day of February, 2013
1. The role of the plaintiff company, ADM Londis plc ("Londis"), in delivering high quality retail services has been one of the striking features of the quiet revolution in the development of retail standards over the last fifteen years or so. The present case, however, arises from the effective termination of a Londis franchise at a retail outlet at the Black Bull premises, Dublin Road, Drogheda, Co. Louth in December 2008. What makes this dispute so unfortunate is that both sides commendably recognise the respective merits of their opponent. The witnesses for Londis (which included their chief executive and other senior personnel) acknowledge that the second-defendant. Mr. Ray Dolan, possesses acute retailing skills. Mr. Dolan for his part readily pays tribute to the quality of Londis as a brand and the assistance which he received in setting up his business.
2. How, then, did this dispute come about? In essence, the plaintiff's case is that the first defendant, Ranzett Ltd., was an under-capitalised company which was never sufficiently robust to trade successfully. At the time of its effective demise in December 2008, Ranzett (which was a franchisee of Londis) certainly owed Londis a significant sum in respect of its goods and services which it had purchased but for which it could not pay. Londis contend it could not reasonably be expected to trade with Ranzett in these circumstances and that for these reasons it lawfully suspended trading with that company on the 3 rd December 2008.
3. The defendants take a different position. They say, in essence, that they were induced by misrepresentation to enter the franchise contract and, moreover, that the contract was unlawfully terminated without sufficient notice by the plaintiff.
4. Because the underlying dispute involved a variety of different participants, it may be helpful first to identify the main dramatis personae before proceeding to outline the relevant sequence of events, in particular the events which occurred from August, 2008 to December, 2008.
5. Ray Dolan: Mr. Dolan is the central figure in this entire litigation. A much admired retailer, he opened and operated two Londis stores in Drogheda, Balls Grove and Black Bull. This litigation focuses on the debts which he incurred in respect of the second of these stores through the company Ranzett Ltd. and the circumstances in which his franchise with Londis came to an end in December, 2008.
Annaliese McConnell: Ms. McConnell and Mr. Dolan married in June, 2007. She and her husband executed personal guarantees in respect of the two businesses run by her husband. She otherwise played no direct role in the events of late 2008, but she is sued in her capacity as guarantor and she counter-claims both as a principal and as a guarantor.
Ranzett Ltd.: This was the company used by Mr. Dolan as the vehicle for running the Black Bull store and which operated under the Londis franchise. Mr. Dolan commenced trading at this store in February 2007, but by mid-2008 there were considerable trading difficulties. The endeavours to save this company between August, 2008 and December, 2008 are at the heart of this litigation. The company was formally dissolved in January, 2011, but it had effectively ceased trading on the 4 th December 2008, the day after its credit terms were suspended by Londis.
Mattóg Ltd.: This was the company used by Mr. Dolan as the vehicle for running a Londis franchised store at Ballsgrove, Drogheda between 2004 and August, 2008. The store was sold in a share purchase agreement in August, 2008.
Paddy Devlin: Mr. Devlin was formerly a regional manager with Londis, but sometime around 2005/2006 he assumed the role of development manager. In the latter capacity he was responsible for the development of new Londis stores and the renovation of existing stores. He was very friendly with Mr. Dolan, but the unpleasant task of effecting the retention of title clause and the taking back of stock on 4 th December and on succeeding days fell to him.
Paddy McGarry: Mr. McGarry joined Londis in 1972 and he became joint Manager Director in late 2003 before retiring in November, 2008. He became friendly with Mr. Dolan and had (and still has) a high opinion of him as a retailer
Mary Helen O'Dea: Ms. O'Dea is the chief financial officer with Londis. She was a member of the credit committee and reported to Mr. O'Riordan and to Mr. McGarry, the joint Chief Executive Officers of Londis.
Jackie Drew: Ms. Drew took up the position of finance manager with Londis in June, 2008. She reported to Ms. O'Dea and in September/October 2008 took over the functions which had previously been discharged by Ms. Smuts.. She had regularly monitored the Londis account and had important dealings with Mr. Dolan on the 2 nd and 3 rd December, 2008, in particular.
Deirdre Smuts: Ms. Smuts discharged the functions of credit manager until September/October 2008 when, following a re-organisation of duties within the Finance Department of ADM, her functions were taken over by Ms. Drew.
Paula Egan: Ms. Egan was the proprietor of the...
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ADM Londis Plc v Ranzett Ltd and Others (No. 3)
...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 f......
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ADM Londis Plc v Ranzett Ltd and Others (No. 2)
...relationship with a franchisee, what is the measure of damages which flows from this breach? (See ADM Londis plc v. Ranzett Ltd. [2013] IEHC 63) This judgment was supplementary to the earlier judgment and should be read in conjunction with it. The case concerned the termination of a franchi......