Betty Martin Financial Services Ltd v EBS DAC

JurisdictionIreland
JudgeMr Justice Maurice Collins
Judgment Date18 December 2019
Neutral Citation[2019] IECA 327
CourtCourt of Appeal (Ireland)
Docket Number[2019 No. 99]
Date18 December 2019
BETWEEN
BETTY MARTIN FINANCIAL SERVICES LIMITED
RESPONDENT
AND
EBS DAC
APPELLANT

[2019] IECA 327

Whelan J.

McGovern J.

Collins J.

[2019 No. 99]

THE COURT OF APPEAL

Injunctive relief – Tied agency agreements – Termination – Appellant seeking to appeal against the judgment and order of the High Court restraining the termination by the appellant of a number of tied agency agreements with the respondent – Whether the balance of convenience lay in favour of granting the injunctions

Facts: The appellant, EBS DAC, appealed to the Court of Appeal against the judgment and order of the High Court (Jordan J) of 13 February 2019 (as varied by order of 21 February 2019) whereby, for the reasons set out in its reserved judgment, the Court made various orders the effect of which was to restrain the termination by the EBS of a number of tied agency agreements with the respondent, Betty Martin Financial Services Ltd (the Agent), and to restrain the taking of any steps on foot of a notice of termination that had been served by the EBS, pending the trial of this action. Those agreements related to agencies operated by the Agent in Lucan, Athlone and Longford, all of which operated from premises owned by the EBS. On 19 February 2018, the EBS gave 12 months’ notice of termination of those Agreements (in terms said to be ineffective because of alleged non-compliance with the mandatory requirements of the Tied Agency Agreements), in reliance on an express power to terminate on the giving of such notice contained, in identical terms, in each of the Tied Agency Agreements. Having heard the parties on his judgment, the judge made an order for costs in favour of the Agent. That order was also the subject of appeal by the EBS.

Held by Collins J that he agreed with the High Court judge that there was a serious question to be tried that the termination was unlawful, both on the basis of the Agent’s argument that the form of the notice did not comply with the mandatory requirements of the Tied Agency Agreements and a further argument that the notice had not been served in accordance with the Agreements, and by reference to a number of arguments made by the Agent to the effect that the termination was substantively unlawful. Collins J agreed with the judge that damages would not be an adequate remedy for the Agent because damages would not adequately compensate the damages to its reputation, and that of its principals, that had been established over a lengthy period. Collins J agreed with the judge’s view that the balance of convenience lay decisively in favour of granting the injunctions. Collins J also considered and rejected the EBS’s argument that the relief sought should be refused on grounds of delay. At the commencement of the hearing of the appeal, the Court of Appeal indicated that it was minded to defer consideration of the EBS’s appeal against the order for costs made by the judge.

Collins J held that he would dismiss the EBS’s appeal against the injunctive relief granted by the judge (in the terms as varied by him on 21 February 2019).

Appeal dismissed.

JUDGMENT of Mr Justice Maurice Collins delivered on 18 December 2019
PRELIMINARY
1

EBS DAC (EBS“) appeals against the Judgment and Order of the High Court (Jordan J) of 13 February 2019 (as varied by Order of 21 February 2019) whereby, for the reasons set out in its reserved judgment, the Court made various orders the effect of which was to restrain the termination by the EBS of a number of Tied Agency Agreements with the Plaintiff ( “the Agent”) and to restrain the taking of any steps on foot of a notice of termination that had been served by the EBS, pending the trial of this action. Those Agreements related to agencies operated by the Agent in Lucan, Athlone and Longford, all of which operate from premises owned by the EBS.

2

On 19 February 2018 the EBS gave 12 months’ notice of termination of those Agreements (in terms said to be ineffective because of alleged non-compliance with the mandatory requirements of the Tied Agency Agreements), in reliance on an express power to terminate on the giving of such notice contained, in identical terms, in each of the Tied Agency Agreements.

3

The High Court Judge concluded that there was a serious question to be tried that the termination was unlawful, both on the basis flagged above – the Agent's argument that the form of the notice did not comply with the mandatory requirements of the Tied Agency Agreements and a further argument that the notice had not been served in accordance with the Agreements – and by reference to a number of arguments made by the Agent to the effect that the termination was substantively unlawful. The Judge considered that damages would not be an adequate remedy for the Agent because damages would not adequately compensate the damages to its reputation, and that of its principals, that had been established over a lengthy period. In the Judge's view, the balance of convenience lay decisively in favour of granting the injunctions. The Judge also considered and rejected the EBS's argument that the relief sought should be refused on grounds of delay. Having heard the parties on his Judgment, the Judge made an order for costs in favour of the Agent. That order is also the subject of appeal by the EBS.

4

The proceedings were commenced some 12 months ago. At the start of the hearing of the appeal, this Court was informed that the proceedings had been entered into the Commercial list but were nonetheless “ a long long way from trial” due, the Court was told, to ongoing dispute as to the proper scope of discovery and in particular the extent to which the Agent is entitled to EBS documents relating to agencies it has, or had, with third parties. That discovery dispute has yet to be determined by the High Court. The Court was also told that the EBS is seeking security for the costs of discovery.

5

It follows that, in event that the High Court injunctions are upheld, they are likely to remain in place for some considerable time, a fact to which I will return below.

THE TIED AGENCY AGREEMENTS
6

The three Tied Agency Agreements at issue were executed in April 2011. Each relates to a particular branch agency carried on by the Agent but they are otherwise in identical terms. The evidence before the Court discloses that the agencies were all operated by the Agent prior to 2011 and that the agency businesses had been established by the late Betty Martin. Betty Martin took over the EBS agency in Athlone in the 1990s and the agency in Longford some time after that. Mr Declan Martin (a director of the Agent and son of Mrs Martin) avers, without contradiction, that Betty Martin was the first woman to operate an EBS tied agency in Ireland. Betty Martin Financial Services Limited was established in 2004. In 2008, the Agent took over the Lucan branch of EBS. As mentioned, the Tied Agency Agreements at issue in these proceedings were entered into in April 2011, by which time Mrs Martin was less involved in the business due to illness. Sheila Martin, a daughter of Betty Martin, has been involved in the business since 2012.

7

Although operated through a corporate entity, it is argued on behalf of the Agent that its business was and is a family business and in his submissions to this Court, Declan McGrath SC for the Agents submits that Declan and Sheila Martin have a “huge emotional investment” in the business such as cannot properly or adequately be compensated by an award of damages in the event that the termination is permitted to proceed and that investment is lost (as it is argued would inevitably be the case).

8

The Tied Agency Agreements are detailed documents which, it appears, are in a standard form adopted by the EBS from time to time. For the purposes of this Judgment, only certain of the Agreements’ provisions require to be noticed, as follows:

• Clause 3 appoints the Agent, on a non-exclusive basis, to carry on the Agency Business (as defined)

• Clause 4.1 provides for the commencement of the Agreement and for its continuation “for the duration of the Term.” Clause 4.2 provides that the Agreement “may be terminated at any time in accordance with the provisions of Clause 15.” The effect of these provisions, along with the terms in which Term is defined, is that the Agreement effectively operates as a contract of indefinite duration, but subject to termination in accordance with Clause 15.

• There are a number of clauses that impose particular obligations, both positive and negative, on the Agent. Clause 6.1 provides that the Agent is to act as such “subject to and in accordance with the provisions of this Agreement and the Procedures.” Procedures is defined as the procedure notices issued by EBS from time to time. No such notices were before us but it seems reasonable to infer from the reference to Procedures in clause 6.49 (see below) that these procedures cover (inter alia) appropriate selling of financial products. Clause 6.13 requires the Agent to submit a Compliance Statement annually, in the form set out in Schedule which provides for the Agent's confirmation that it has “complied with all applicable laws and regulations” save to the extent disclosed on the form. Clause 6.49 (which is in a section of the Agreement head “Regulatory Compliance“) requires the Agent to comply “with Procedures regarding the sale of investment, saving and insurance related products to ensure such products are not mis-sold.” Clause 6.55 requires the Agent to notify the EBS of anything which has resulted or which may result in a material breach of any Laws (a term defined expansively to include codes of conduct, guidelines etc whether or not having the force of law) and which may result in proceedings against the EBS or investigations involving it. Finally, Clause 13.1 requires the Agent to comply with all Laws relating to the operation of the Agency and clause 13.2 -...

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