Estate agency business – Plaintiff granting defendant right to use franchise name – Plaintiff terminating right – Defendant continuing to use name – Plaintiff obtaining injunction against use – Defendant changing name – Whether plaintiff served with proceedings – Whether injunction to be discharged – Whether plaintiff to be committed – Applications dismissed
The plaintiff carried on business in franchising estate agency businesses under various names including “Adam Kennedy Estate Agency Agents Ltd” which was sometimes abbreviated to “Adam Kennedy” (the names). By a franchise dated February 13 1996 the plaintiff granted to the defendant the right to use the names for a business to be carried out at 64 High Street, Waltham Cross, Hertfordshire. The agreement provided that on termination by notice, by clause 18.2, the defendant as franchisee was to cease to be entitled to use the franchise name in any manner and for any purpose whatsoever and, by clause 18.3, the defendant was prohibited from holding himself or any business or venture out as being in any way a representative or otherwise connected or associated with the plaintiff. In October 1996 the plaintiff served notice terminating the agreement. The parties came to an agreement whereby the defendant was to comply with clause 18 by January 31 1997.
The plaintiff considered that the defendant had failed to comply with that agreement in particular because the defendant continued to use the name Adam Kennedy on a facia board and on stationery. The plaintiff issued a writ claiming damages for breach of contract and passing off and applied for an interlocutory injunction. An injunction was granted at a hearing where the defendant did not appear. The defendant claimed that the writ had not been properly served and that he had known nothing about the injunction until he had received a copy. He applied for the order to be set aside. Meanwhile the name on the facia and stationery was changed to “AK Property Services” and an advertisement appeared in a newspaper advertising the defendant’s business as “AK Property Services” and stating that it had formerly been known as Adam Kennedy. The plaintiff claimed that the use of the name AK and the advertisement had been in breach of the injunction and applied for committal of the defendant.
Held The plaintiff’s and the defendant’s applications were dismissed.
1. Proper service of the writ had not been effected and therefore the defendant had not had notice of the application for an injunction. The court had granted the injunction on an ex parte basis in the belief it had been on an inter partes basis and accordingly the appropriate course was to reconsider the application for an injunction.
2. There was not a sufficiently arguable case that the use of the name AK Property Services was in breach of clause 18.2 because that precluded the use of the full name. However there was an arguable case in passing off and for breach of clause 18.3 since the names were so similar people might think that the businesses were connected: see American Cyanamid v Ethicon Ltd [1975] AC 396. Therefore the injunction was to be continued.
3. It could not be concluded that the defendant had been in breach of the injunction and therefore the application for committal was to be dismissed.
Jonathan Arkush (instructed by Dibb Lupton Alsop, of Birmingham) appeared for the plaintiffs; Thomas Jefferies (instructed by Bentleys) appeared for the defendant.