Triode Newhill LHP Ltd v Superintendent Murray
| Jurisdiction | Ireland |
| Judge | MR. JUSTICE MICHAEL PEART |
| Judgment Date | 15 November 2018 |
| Neutral Citation | [2018] IECA 356 |
| Court | Court of Appeal (Ireland) |
| Docket Number | [C.A. No. 102 of 2018],Neutral Citation Number: [2018] IECA 356 Record Number: 2018/102 |
| Date | 15 November 2018 |
[2018] IECA 356
THE COURT OF APPEAL
Peart J.
Peart J.
Irvine J.
Whelan J.
Neutral Citation Number: [2018] IECA 356
Record Number: 2018/102
AND
Licencing – Interim transfer applications – Off-licences – Whether franchise agreement prevented grant of applications
Facts: The applicants were party to a franchise agreement in respect of the operation of trading under the Spar brand. Applications were made to the District Court for the interim transfer of alcohol licences and a case was stated to the High Court whether the franchise agreement prevented the grant of the application. The notice party considered that the High Court had answered the case stated incorrectly and now appealed.
Held by the Court, that the appeal would be allowed. As the applicant Triode was not going to be the active trading party in the premises, it could not be the licence holder and the question posed by the District Court would be answered in the affirmative.
This is an appeal against the order made by the High Court (Barrett J.) dated the 20th February 2018 in answer to a Consultative Case Stated to the High Court by District Judge Seamus Hughes arising from applications made to him for the ad interim transfer of two wine, beer and spirit off-licences attaching to two separate premises in County Westmeath which trade under the well-known Spar brand.
By his said order, and for the reasons explained in his written judgment dated 1st February 2018, the trial judge answered in the negative the following question raised by the District Judge:
‘Does a franchise agreement between the applicant for an ad interim transfer and its nominee, in the terms presented to me, preclude the grant of the applications before the [District] Court?’
The Appellant notice party considers that the High Court has given an incorrect answer to the question raised, and submits that as a matter of law the District Judge must refuse the ad interim applications before him given the nature of the relationship created between Triode Newhill LHP Ltd (‘Triode’ or ‘the franchisor’) and each of its named nominees, namely Campus Retail Management Ltd, and MKP Stores Ltd (‘the franchisees’) by the particular franchise agreements presented to the District Judge.
Triode is part of a group of companies within the BWG Group which holds a leasehold interest in a large number of retail premises throughout the country from which other entities are permitted to trade under the Spar brand in accordance with the terms of a franchise agreement.
Each franchise agreement is in identical terms. It specifically provides that the agreement constitutes a licence to trade from the premises and that it does not create a tenancy or any other interest in the premises. The terms and conditions under which the business may be conducted by the franchisee under the Spar brand are set forth, and importantly it contains a clause stating that the franchisee is not the agent of the franchisor. These important facts are not in controversy.
Normally there is no difficulty about an assignee or transferee, of even the lowest estate or interest in a licensed premises, such as under a short lease, sub-lease or tenancy agreement, from being granted an ad interim transfer of the licence (provided the statutory requirements are fulfilled, and no objection is raised) because the applicant is in lawful occupation of the licensed premises, and is the entity which will be selling the intoxicating liquor.
In such cases, the applicant for the licence and the occupier of the premises will be the same legal entity, be it a natural person or a limited liability company. It is uncontroversial by now that a limited liability company may hold an intoxicating liquor licence in its own name, though it is equally the case that it may hold its licence in the name of its nominee. That nominee will be an employee of the company, such as its manager of the particular premises from which the intoxicating liquor is being sold. There is no statutory provision which provides that a company may hold its licence through a nominee, and there is no statutory definition of a nominee, but it has long been recognised that the nominee must be the servant or agent of the company holding the licence. Section 28 of the Intoxicating Liquor Act, 1960 makes specific provision for an application by the body corporate to transfer the licence held by the company's nominee to such other person as the body corporate may nominate. This provision is availed of where, for example, the nominee may have died, or may have left the employment of the body corporate, and the company wishes to appoint a new nominee to hold its licence. The section is silent as to the circumstances in which such an application might be made, but those to which I have referred are certainly the most usual that occur in practice.
That relationship of employer/employee or principal/agent is important to keep in mind in the context of nominees. In those situations, the licence will be issued to A.B as nominee of C.D. Limited. No difficulty arises on such applications to the District Court because the applicant for the licence ( i.e. the body corporate) is not only entitled to exclusive occupation of the premises but is also the entity that will be selling the intoxicating liquor product from the premises, as authorised by the licence. That situation is entirely and, indeed un-controversially, within the relevant statutory provisions.
In the present cases the factual position is different, and the question arises as to whether what is sought to be done by way of application to the District Court for the ad interim transfer is within the statutory scheme. It is different because, while Triode has a leasehold interest in the premises, it does not occupy the premises since it has granted that right of occupation to the franchisee. Neither is Triode the entity that sells the intoxicating liquor from the premises. Conversely, the entity selling the intoxicating liquor from the premises (the franchisee) does not, at least on the face of the franchise agreement hold any estate or interest in the premises. It merely has permission to use the premises.
It is useful at this point to set out the provisions of s. 1 of the Public House (Ireland) Act, 1855 from which the District Court derives its jurisdiction in relation to an ad interim transfer of an intoxicating licence. That section (extended to apply to a transfer of an off-licence by the provisions of s. 20 of the Intoxicating Liquor Act, 1960) provides, as relevant:
‘1. Upon the death of any person duly licensed to carry on the business of a licensed victualler, and to sell exciseable liquors by retail, to be consumed on the premises, in Ireland, or upon the removal of any such person from the house or premises at which he is authorised by any such licence to carry on such business as aforesaid in Ireland, or the sale of or assignment of his interest therein by operation of law or otherwise, it shall be lawful for the justices of the peace ……… to transfer, by endorsement thereon, any and every such licence as aforesaid then in force to any person, not disqualified by law, to whom it shall be proposed at the time of such application to transfer any such licence, to use, exercise, and carry on the business of a licensed victualler at the same house and on the same premises, and there to sell such exciseable liquors as might theretofore have been lawfully sold and retailed therein; and thereupon it shall be lawful for such person so to use, exercise, and carry on the said business at such house and premises, until the [Annual Licensing District Court].’ [Underlining provided to assist navigation through the section]
It would be helpful at this point also to draw attention to a number of features of the franchise agreements entered into between the parties:
• Clause 1: the franchisee is granted the ‘right to use the premises for the purpose of carrying on the businesses specified in the First Schedule …’. [emphasis provided]
• Clause G: the franchisee acknowledges and agrees ‘that he has no Estate, Rights or Entitlements whatsoever in the Premises, the Permitted Business (or any business carried out therein) or in the Goodwill of the said business which are the sole and exclusive properties of the [franchisor]’.
• Clause E: ‘Nothing in this agreement shall constitute or be deemed to constitute a partnership between the parties hereto or constitute or be deemed to constitute the [franchisee] as agent for the [franchisor] …’.
• Clause 2.2: ‘To take all supplies of products used for the purposes of the carrying on of the permitted businesses from a supplier or suppliers nominated and/or approved by the [franchisor] …’.
• Clause 2.9.1: ‘To pay to the [franchisor] a management fee of an agreed percentage of the total sales exclusive of VAT of the [franchisee] during each accounting month …’.
• Clause 2.11: ‘To allow the [franchisor's] authorised personnel to enter the premises at all times during business hours (or otherwise as agreed) to inspect the [franchisee's] stock operations and to facilitate for the purposes of determining whether the [franchisee] has complied with his obligations under this agreement and to a standard required by the [franchisor]’
• Clause 2.13: ‘To discharge forthwith all the debts of the permitted business (save those which are the responsibility of the [franchisor] it being agreed that all such debts are the personal responsibility of the [franchisee] …’.
• Clause 2.24: ‘To operate the permitted...
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