The Court of Appeal has overturned a High Court award of €464,000 to Ray Dolan and Annaliese McConnell, guarantors of the dissolved company Ranzett Ltd, and dismissed their counterclaim against ADM Londis plc. The appeal concerned the High Court’s findings on contractual liability and damages after ADM Londis ended its supply and franchise arrangements with Ranzett in December 2008.
Ranzett ran a Londis-branded shop outside Drogheda. By December 2008, its account was about €430,000 in arrears, agreed direct debit payments had been returned unpaid and a promised charge over Mr Dolan’s property had not been put in place. ADM Londis suspended credit and repossessed stock. It also removed the Londis signage. The shop closed and did not reopen for retail trade.
The High Court had found that ADM Londis wrongfully terminated the arrangements without adequate notice, and that it owed Ranzett fiduciary duties requiring it to allow time to arrange another supplier. It awarded €420,000 for the destruction of the business and forfeiture of the lease, plus €44,000 for Londis goods left uncollected. The award was set off against ADM Londis’s claim for unpaid goods and services. Ranzett had been dissolved in 2011.
The Court of Appeal held that the High Court was entitled to find ADM Londis had terminated the contractual relationship. But it rejected the conclusion that the contracts required a two-week waiting period. The termination clauses allowed ADM Londis to terminate “forthwith” by giving written notice; the written notice requirement meant communicating the immediate decision in writing, not allowing time before it took effect. Although ADM Londis did not formally notify the termination in writing, the court found no loss flowed from that breach because the relevant parties had been informed of what was happening.
The court also rejected the finding that the contracts made ADM Londis a fiduciary of Ranzett. It said the “fiduciary” wording in the trading terms was intended to protect ADM Londis in relation to its goods and their sale proceeds, and did not impose a general duty on the supplier to protect the retailer’s interests.
The court found the signage removal breached the contract and amounted to trespass because it occurred without the owner’s consent. However, it said no resulting loss had been established. It also rejected the claim for the value of uncollected stock, finding no contractual duty on ADM Londis to recover every item it owned.
The court considered that Ranzett’s financial position made it improbable that it could continue trading with another supplier. It also noted the lease was held by Mr Dolan, rather than the company, and there was no real evidence about the forfeiture or any claim for relief. The court allowed ADM Londis’s appeal against the High Court judgments and orders and dismissed the counterclaim. The judgment did not determine the final balance, if any, payable on ADM Londis’s separate debt claim.