Judgment: 2013-02-15 · Court archive

Londis ordered to pay further €161,283.91 as court finds franchise termination wrongful

The High Court found that Londis breached its contractual obligations when it abruptly ended the Black Bull store’s franchise in December 2008. The defendants’ claimed losses remain for a further hearing.

High Court · [2013] IEHC 63

Who, what, where, when and why

Who
  • ADM Londis plc (Plaintiff)
  • Ray Dolan
  • Annaliese McConnell (Defendant)
What

The High Court found that Londis breached its contractual obligations when it abruptly ended the Black Bull store’s franchise in December 2008. The defendants’ claimed losses remain for a further hearing.

Where

Places mentioned in the report

  • Black Bull premises
  • Drogheda
When

Judgment:

Other dates in the report
  • 5 December 2008

    The dispute centred on the events of 3–5 December 2008. Ranzett’s arrears had grown to about €430,000, direct debits had been returned unpaid, and a second charge over a property owned by Mr Dolan had not been completed by the agreed deadline. Londis suspended the company’s credit facilities and sought to recover stock under a retention-of-title clause. After the parties disagreed over access and which goods Londis could take, Mr Dolan closed the shop on 4 December. Londis removed the signage the following day.

Why

Reasons reported in the judgment

In a judgment delivered on 15 February 2013, Mr Justice Hogan also found that Londis wrongfully terminated its franchise agreements with Ranzett, which operated a Londis store at the Black Bull premises on Dublin Road, Drogheda. The judge ruled that Londis was entitled to terminate because Ranzett had seriously breached its payment obligations, but it did not give the written notice required by the contracts. The court also found that removing the store’s Londis signage before proper termination was unauthorised.

The High Court has awarded ADM Londis plc a further €161,283.91 against Ray Dolan and Annaliese McConnell as guarantors of debts owed by Ranzett Ltd., bringing the judgment for unpaid goods and services to €561,283.91, plus interest from 2 June 2009. The court had already granted Londis summary judgment for €400,000 in 2010.

In a judgment delivered on 15 February 2013, Mr Justice Hogan also found that Londis wrongfully terminated its franchise agreements with Ranzett, which operated a Londis store at the Black Bull premises on Dublin Road, Drogheda. The judge ruled that Londis was entitled to terminate because Ranzett had seriously breached its payment obligations, but it did not give the written notice required by the contracts. The court also found that removing the store’s Londis signage before proper termination was unauthorised.

The dispute centred on the events of 3–5 December 2008. Ranzett’s arrears had grown to about €430,000, direct debits had been returned unpaid, and a second charge over a property owned by Mr Dolan had not been completed by the agreed deadline. Londis suspended the company’s credit facilities and sought to recover stock under a retention-of-title clause. After the parties disagreed over access and which goods Londis could take, Mr Dolan closed the shop on 4 December. Londis removed the signage the following day.

Mr Dolan and Ms McConnell argued that the franchise had been induced by promises of a €250,000 stocking loan and that Londis had ended the arrangement without sufficient notice. The judge rejected the claim that Londis had promised a stocking loan of that size, finding that the amount would have required approval by its credit committee. He accepted that Mr Dolan did not know Londis intended to repossess stock until a friend called him in the early hours of 4 December.

The court found that the abrupt termination denied the franchisee the opportunity to arrange alternative supplies. It also found that misunderstandings over stock recovery contributed to the shop remaining closed for more than a week, with serious consequences for Ranzett. The judgment does not determine how much, if anything, the defendants can recover for those breaches. That question was left for a further hearing.

Read the original court judgment

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