The High Court has granted an interlocutory injunction against former floor-sanding franchisee Martin O’Callaghan in a dispute with Tejo Ventures International Limited over a business covering West Cork and Kerry.
Miss Justice Laffoy held that Tejo Ventures had established a fair issue to be tried over whether Mr O’Callaghan breached post-termination restrictions in a franchise agreement dated 28 September 2007. The injunction will apply pending the full trial of the action.
The franchise business involved sanding and refinishing wooden floors and selling floor-maintenance products. The agreement contained restrictions preventing the franchisee from competing for defined periods and within specified areas after termination. These included a six-month restriction covering the Republic of Ireland and a 12-month restriction relating to the franchise territory of West Cork and Kerry. Separate provisions restricted solicitation of customers and staff.
The franchise ended by agreement on 27 February 2009. Tejo Ventures alleged that Mr O’Callaghan then established a competing business called Munster Floor Sanding Services, providing similar or identical services and products.
Mr O’Callaghan disputed the application. He argued, among other things, that the termination arrangements released him from the restrictions, that the restraints were unlawful at common law or under competition law, and that the non-compete provisions were invalid. He had also offered to observe the non-solicitation provisions for 12 months throughout Ireland.
The court did not finally decide those legal disputes. At the interlocutory stage, the test was whether there was a serious issue requiring trial, rather than whether Tejo Ventures would ultimately win.
Miss Justice Laffoy found there was a fair issue over the validity and alleged breach of the restrictions. She also held that damage to the plaintiff’s business, goodwill and reputation could not adequately be compensated by damages alone.
The balance of convenience therefore favoured an injunction. The court granted the orders sought in paragraph 5 of the motion but refused the declaratory relief sought at that stage.