ON APPEAL FROM STAINES COUNTY COURT
District Judge Trigg
Strand, London, WC2A 2LL
B e f o r e :
LORD JUSTICE McCOMBE
LORD JUSTICE RYDER
| THORNEY PARK GOLF LIMITED
(t/a LALEHAM GOLF CLUB)
|- and -
|MYERS CATERING LTD
(Transcript of the Handed Down Judgment of
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Susannah Markandya (instructed by Endeavour Partnership LLP) for the Defendant/Appellant
Hearing date: 20 January 2015
Crown Copyright ©
Lord Justice McCombe:
(B) Background Facts
(C) Relevant terms of the Agreement
"2. This agreement takes effect from 1st June 2009 if mutually agreed by yourself and the company. This agreement outlines the basic principles of terms and will be amended and updated regularly by mutual agreement as the nature of the business develops.
3. The fee of £500 per week (plus vat at the current rate) must be paid in advance in four weekly instalments upon production of an invoice supplied by the company. This fee will be valid from 1st June 2009 until 31st March 2010. This fee will be reviewed in March 2010 with consideration given to the current finances and situations of both parties.
4. In order for this contract to be reasonable for both parties to develop and invest in a viable business development plan an initial term of three years (with the fee reviewed annually) must be agreed. Upon agreeing these terms the company will allow and undertake the following……"
Clause 4 then sets out the specific obligations to be assumed by Thorney Park in a number of "bullet points", which include the obligation to provide the facilities with suitably fitted kitchen and storage, with such facilities being maintained by it, and so forth.
"6. The club may terminate this agreement immediately if the caterers:
- Commit any act of gross misconduct or continue or repeat after written warnings any other material breach of your obligations under this agreement.
- Are guilty of any conduct which in the reasonable opinion of the company brings you or respective employees the club or its members or guests into disrepute.
- Commit any acts of dishonesty or convicted of any criminal offence.
- Become bankrupt or insolvent or make any arrangement with your creditors.
Otherwise either party may terminate this agreement without given reason in writing giving four months notice or any such period that is mutual to both parties."
(D) The Judgment
"4. The defendant makes a number of very persuasive submissions. The defendant says that a fixed term is commercially inconsistent with an implied term of notice and relies upon the Jani King case on that point. That is not the case I have in front of me. What I have in front of me is a case which includes an express term giving notice. The defendant also says that the leading textbook on franchising law by Martin Mendelssohn to which I have been referred states that a lengthy initial period is common in a franchise agreement. However, in this case there was no large franchise fee being paid up in front as there are in many franchise agreements. The defendant says clause 4 is a new term inserted by the claimant, and indeed it is, but clause 6 was also imported into the 2009 franchise agreement from the earlier agreement in its entirety. The defendant says that if the claimant could serve notice at any time that would be commercially disastrous for the defendant, but the defendant could also have served notice and both parties would have four months in which to make alternative arrangements – an increase from three months in the earlier contract.
5. It therefore follows that I accept the claimant's submissions that: one, the wording of the contract is clear and, two, the meaning of the contract is clear. For both parties an initial term of three years, (with the fee to be reviewed annually), must be agreed. However, the club may terminate immediately for misconduct. Otherwise, either party may terminate without giving a reason in writing, giving four months notice or any other such period that is it is mutually agreed by both parties. The ordinary meaning of the express terms of the agreement when read as a whole was that the parties were not in fact locked into a three year agreement and that they both had an exit strategy at any time upon four months written notice."
(E) The Appeal and my Conclusions
"Otherwise either party may terminate this agreement, but only after the expiry of the initial term of three years, without given [sic] reason in writing giving four months notice of any such period that is mutual to both parties."
Lord Justice Ryder:
Lord Justice Longmore: