The High Court refused Pansea Limited’s application for summary judgment against Home Appliances trading as DID Electrical, sending the dispute over franchise commissions to a plenary hearing. The court did not decide which interpretation of the franchise agreement was correct or whether DID had breached it.
The dispute concerns a franchise agreement made on or about 8 October 2011. Pansea says it is entitled to a 21 per cent commission calculated on the list price of products and services, even where it discounts them. DID says the parties intended Pansea to bear the cost of any discount.
The agreement provides for a guaranteed 21 per cent margin, excluding VAT. Pansea relied on a sample calculation in the agreement showing €21,000 commission on €100,000 in sales, with no distinction between discounted and full-price sales. DID argued that Pansea’s interpretation was commercially unrealistic because DID retained title to goods until they were marked “taken”.
The judgment illustrated the difference with a notional item listed at €123, or €100 excluding VAT, and sold by Pansea for €90. Under Pansea’s calculation, it would receive €21 and DID €69. Under DID’s calculation, Pansea would receive €18.90 and DID €71.10.
The court said the agreement was sufficiently ambiguous to support either side’s interpretation. It also identified issues requiring a fuller hearing, including contractual interpretation, whether DID had breached the agreement and whether pre-contract negotiations could be considered in light of the agreement’s entire-agreement clause.
Applying the summary-judgment test, the judge found it was not clear that DID had no case and that its affidavits disclosed an arguable defence. The court therefore refused Pansea’s summary judgment application and remitted the matter to plenary hearing. The judgment described its views as tentative and left the underlying dispute for that hearing.