High Court of Ireland Decisions
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Cite as: [2015] IEHC 5
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Judgment
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Neutral Citation: [2015] IEHC 5 THE HIGH COURT RECORD NO. 2014 No.23S
PANSEA LIMITED Plaintiff - and -
HOME APPLIANCES TRADING AS DID ELECTRICAL Defendant Judgment of Mr. Justice Max Barrett dated 13th January, 2015 1. The issue arising in this case is whether Pansea Limited should be allowed to recover, by way of summary judgment, certain monies from DID Electrical that Pansea claims are owing to it pursuant to a franchise agreement executed between the parties to these proceedings on or about 8th October, 2011. Any views expressed herein are tentative in terms of the strength or weakness of any case that might be made by either side at plenary hearing. 2. The key clauses in issue in the franchise agreement are clauses 4.1 and 6.1. They provide as follows:
6.1 FRANCHISOR shall pay to the Franchisee a commission on sales of Products[4] and Services[5] with a guaranteed margin of 21% (excluding VAT). The manner in which the guaranteed margin is calculated is as set out in Schedule 1 to this Agreement.” [1]. The term “Products” is defined in clause 1.1 of the Franchise Agreement as “the products and services of the type and specification manufactured and/or sold by the Franchisor, together with any other products and services developed or from time to time distributed by FRANCHISOR and which FRANCHISOR may permit the Franchisee to promote and sell in the Territory.” The term “Territory” is defined in clause 1.1 as the area within a “30 (thirty) mile radius of the town of Clonmel, South Tipperary including Thurles, County Tipperary.” [2]. The term “Franchisee” is not defined in the Franchise Agreement but clearly is intended to mean Pansea Limited. [3]. Neither the term “Franchisor” nor “FRANCHISOR” is defined in the Franchise Agreement but both are clearly intended to mean DID Electrical. [4]. The term “Products” is defined in clause 1.1 of the Franchise Agreement as “the products and services of the type and specification manufactured and/or sold by the Franchisor, together with any other products and services developed or from time to time distributed by FRANCHISOR and which FRANCHISOR may permit the Franchisee to promote and sell in the Territory”. [5]. The term “Services” is defined in clause 1.1 of the Franchise Agreement as “the various services which will or may be provided by FRANCHISOR to or for the Franchisee in connection with the Business from time to time during the term of this Agreement.” The term “Business” is defined in clause 1.1 as “[t]he retail business in respect of which the activities of the Franchisee authorised under this Agreement may be conducted”. Pansea Calculation Item has list price of €123. After VAT is accounted for its list price is €100. Pansea sells the item for €90. Pansea gets €100 x 21% = €21. DID gets €90 - €21 = €69. DID Calculation Item has list price of €123. After VAT is accounted for its list price is €100. Pansea sells the item for €90. Pansea gets €90 x 21% = €18.90 DID gets €90 - €18.90 = €71.10 4. Clearly the competing interpretations of the Franchise Agreement have significant financial consequences for each of the parties. The court finds that there is sufficient ambiguity in the agreement to support the contentions of both parties. It is possible to read the last sentence of clause 4.1 as supporting DID’s contention that the guaranteed 21 per cent commission is to be calculated on the discounted sale figure. However, it is also possible to read the Franchise Agreement in such a manner as to favour the interpretation argued for by Pansea. Applicable law
7. Applying the tests propounded by Hardiman J., it is not very clear in the present case that the defendant has no case; on the contrary it is clear that the defendant has an arguable defence. It is not the case that there is no issue to be tried; there are issues of contractual construction, such as whether there has been a breach of contract by DID and whether, in the context of the ‘entire agreement’ clause included in clause 15 of the Franchise Agreement, it is appropriate to have regard to the pre-contractual negotiations to which the defendant refers in its defence. The defendant’s affidavits disclose an arguable defence.1 Thus, having regard to decision of the Supreme Court in Aer Rianta and the tests propounded therein and referred to above, it is clear that the within case handsomely crosses the threshold from one that can be dealt with by way of summary proceedings to one that is more appropriate for plenary hearing. 8. In Harrisrange Limited v. Michael Duncan [2003] 4 IR 1 at 7, McKechnie J. summarised the principles that he considered to be relevant when a court approaches the issue of whether or not to grant summary judgment, viz:
(ii) in deciding upon this issue the court should look at the entirety of the situation and consider the particular facts of each individual case… (iii) in so doing the court should assess not only the defendant’s response, but also in the context of that response, the cogency of the evidence adduced on behalf of the plaintiff… (iv) where truly there are no issues or issues of simplicity only or issues easily determinable, then this procedure is suitable for use; (v) where, however, there are issues of fact which, in themselves, are material to success or failure, then their resolution is unsuitable for this procedure; (vi) where there are issues of law, this summary process may be appropriate but only so if it is clear that fuller argument and greater thought is evidently not required for a better determination of such issues; (vii) the test to be applied, as now formulated is whether the defendant has satisfied the court that he has a fair or reasonable probability of having a real or bona fide defence; or as it is sometimes put, ‘is what the defendant says credible?’… (viii) the test is not the same as and should not be elevated into a threshold of a defendant having to prove that his defence will probably succeed or that success is not improbable, it being sufficient if there is an arguable defence; (ix) leave to defend should be granted unless it is very clear that there is no defence; (x) leave to defend should not be refused only because the court has reason to doubt the bona fides of the defendant or has reason to doubt whether he has a genuine cause of action; (xi) leave should not be granted where the only relevant averment is the totality of the evidence, is a mere assertion of a given situation which is to form the basis of a defence and finally; (xii) the overriding determinative factor, bearing in mind the constitutional basis of a person’s right of access to justice either to assert or respond to litigation, is the achievement of a just result whether that be liberty to enter judgment or leave to defend, as the case may be.” Conclusion 1.Clause 15 of the Franchise Agreement provides as follows: “ 15.1 This agreement constitutes the entire agreement between the parties and supersedes and extinguishes all previous drafts, agreements, arrangements and understandings between them, whether written or oral, relating to the subject matter. 15.2 Nothing in this clause shall limited or exclude any liability for fraudulent misrepresentation”. Thus, having regard to decision of the Supreme Court in Aer Rianta and the tests propounded therein and referred to above, it is clear that the within case handsomely crosses the threshold from one that can be dealt with by way of summary proceedings to one that is more appropriate for plenary hearing.
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