The Court of Appeal has dismissed an appeal by Paul McCann, Stephen Tennant and Hakuba Limited against a High Court ruling that the operation of a Handprint coffee franchise in Unit 1 of Point Village breached an exclusivity clause in a side letter with Rexbay Limited, the Starbucks tenant at the centre.
The appeal concerned a High Court judgment delivered on 6 October 2023. The trial judge found the appellants liable for losses caused by the breach and awarded Rexbay €116,518, plus €9,959.81 in interest and costs. The appellants did not challenge the amount of damages on appeal.
The side letter barred the landlords from granting a first letting in the centre to specified coffee chains or a similar chain whose primary product was coffee. It allowed coffee sales where they were ancillary to a unit’s main or permitted use. The appellants argued that the clause applied to a whole unit, and that coffee sales were ancillary to the Freshii business operated by the same tenant, AA Fine Catering Limited.
The Court of Appeal agreed with the appellants on one point of interpretation: “any part of the Centre” referred to where a leased unit was located and did not mean that the clause applied to a separately considered part of a unit. But it said that did not resolve the case. The court accepted that the actual trading operations in Unit 1 could be considered, rather than looking only at the wording of the lease to AA Fine Catering.
The court upheld the findings that Handprint was an excluded coffee chain and operated a business capable of standing independently from Freshii. The two franchises had separate counters, tills, receipts and franchise agreements. Handprint’s coffee stand occupied about 5.4 square metres, shared back-of-house facilities and gave customers access to a lounge area. The court said the small counter area did not make the operation ancillary; its sales were significant, and its 2018 total sales were about 40% of Freshii’s.
The judges also rejected the appeal on standing. The appellants argued that Rexbay did not trade from the premises and was not entitled to the Starbucks profits. The Court of Appeal upheld the trial judge’s finding that Rexbay controlled the relevant business and was entitled to its profits, noting that the profits and related tax liability were accounted for in Rexbay’s accounts.
The appeal was dismissed in full. On costs, the court gave a preliminary view that Rexbay should recover its appeal costs. The appellants may make written submissions seeking a different order within 14 days of judgment, with Rexbay permitted to reply within a further 14 days, excluding vacation days. The judgment does not record a final costs order.