ADM Londis Plc v Ranzett Ltd and Others (No. 2)
| Jurisdiction | Ireland |
| Judge | Mr. Justice Gerard Hogan |
| Judgment Date | 15 July 2014 |
| Neutral Citation | [2014] IEHC 659 |
| Court | High Court |
| Date | 15 July 2014 |
[2014] IEHC 659
THE HIGH COURT
AND
Franchise agreement – Unlawful termination – Measure of damages - Financial position – Arrears – Cessation of business – Reasons for cessation – Breach of contract – Giving of notice – Abrupt termination – Closure of trading account – De-branding of trading premises – Forfeiture of lease- Value of company- Value of goods
Facts Question to be determined: here a franchisor unlawfully terminates a contractual 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 franchise agreement. The franchisees were Ray Dolan and Annaliese McConnell, the second and third defendants. The first named defendant, Ranzett Ltd., was the corporate vehicle by which the retailing business was operated by them. Mr Dolan was a talented retailer who had been operating under the Londis franchise for many years. However, by November 2008, Mr Dolan and his company, Ranzett Ltd., found themselves in financial difficulties. Arrears on the trading account with Londis had grown to some €430,000. The total sum owed to ADM Londis was €561,283.91 in respect of unpaid invoices. However, in the earlier judgment the judge ruled that the plaintiff was in breach of contract in relation to the giving of notice; the abrupt termination of the agreement; the closure of the trading account and the de-branding of the Black Bull premises. The judge said it was these breaches of contract which had brought about the total cessation of the defendant”s business. The judge referred to the losses which resulted directly from the termination of the franchise and the inability of Ranzett Ltd. to trade during that critical period. He referred to the losses which flowed from the subsequent forfeiture of the lease at the Black Bull premises. And lastly, to the losses which arose following the separation out of the Londis goods from the non-Londis goods.
Held The judge awarded the defendants €420,000 in respect of the value of the company and the forfeiture of the lease, along with the sum of €44,000 in respect of the value of the goods which were not re-possessed following the retention of title exercise. The combined sum of €464,000 would be set off against the award of €561,283.91 already awarded to the plaintiff. The judge said he would give the parties an opportunity to adduce evidence regarding the value of the re-possessed leasing equipment if it were to have been disposed of in an open market in 2009 or 2010.
Where a franchisor unlawfully terminates a contractual relationship with a franchisee, what is the measure of damages which flows from this breach? This is, in essence, the question which I am now required to determine in the wake of my earlier judgment in these proceedings delivered on 15th February 2013: see ADM Londis plc v. Ranzett Ltd. [2013] IEHC 63. This judgment may be regarded as supplementary to that earlier judgment and should be read in conjunction with it.
The present 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.
I do not propose to rehearse again at any length the complex set of circumstances which led to the termination of the franchise agreement, since these details are set out at considerable length in the first judgment. It suffices to say for present purposes that Mr. Dolan was an accomplished retailer who had been operating under the Londis franchise for some years. However, by 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.
At that hearing, 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 (of course, this figure 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 from the date on which payment was originally demanded, namely, 2nd June, 2009.
In my judgment, however, I also ruled that the plaintiff was in breach of contract with regarding 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 defendant's 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.
At this juncture I should pause to observe that while counsel for the plaintiff, Mr. Buttanshaw, urged that in assessing damages I should have regard to the fact that, insofar as there were losses, they were the loss of Ranzett Ltd. and not those of either Mr. Dolan and Ms. McConnell, it is not, I think, necessary for me to undertake any disquisition on the implications of Saloman v. Saloman & Co. for this purpose. It is sufficient to say that under the contractual relationship between the parties, Mr. Dolan and Ms. McConnell have primary obligations vis-à-vis the plaintiff in respect of these contractual obligations as principal obligors. In these circumstances, I propose to treat the fate of the three defendants as entirely intertwined for the purposes of this damages claim.
There are, accordingly, really three separate heads of losses which fall for consideration. First, there are the losses which resulted directly from the termination of the franchise and the inability of Ranzett Ltd. to trade during that critical period. Second, there are the losses which flowed from the subsequent forfeiture of the lease at the Black Bull premises. Third, there are the losses which arose following the separation out of the Londis goods from the non-Londis goods for the purposes of the performance of the retention of title exercise. I propose to consider each of these categories...
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Dispute Resolution Update: Damages For Breach Of Contract: Astrology And Economics
...has been guilty of fault or contributory negligence. ADM Londis Plc v Ranzett Limited, Ray Dolan and Annaliese McConnell (No 2) [2014] IEHC 659 This was one of a series of three cases where the High Court dealt with a situation where a franchisor had unlawfully terminated a contractual rela......