Brothers running sales and lettings business – Brothers entering agreement for one brother to run sales business and other brother to run lettings business – Whether lettings business was entitled to continue to use the name of sales business – Whether brother running sales business was entitled to declaratory and injunctive relief and damages – Brother entitled to declaratory relief only
Benham & Reeves Estate Agency was set up in Hampstead in 1958, and in 1968 was acquired by two brothers, Alan Brown, the second plaintiff, and Cyril Brown, the first defendant. In 1976 they joined forces with N and R who carried on a lettings business, and set up Benham & Reeves Lettings Office. In 1978 it was decided that Alan would carry on the sales business on his own, and that Cyril would form a new partnership with N and R to carry on the lettings business. A deed was executed and by clause 12(1) Cyril was not to permit others to use the name Benham & Reeves without the authorisation of Alan, except as provided by clause 12(2). By clause 12(2) Cyril could use the name for a lettings agency and by clause 12(3) Cyril was not to transfer his clause 12(2) right without offering Alan the option to purchase the exclusive right to the name.
In 1979 Alan commenced proceedings against Cyril for using the name, which were subsequently settled. With effect from August 1989 the sales business was carried on by Benhams Ltd, the first plaintiff. The right of the name was transferred to the third plaintiff who granted Benhams the right to use the name. N and R left the lettings business and Cyril went in to partnership with Mr and Mrs M and the second defendant, B&R Residential Lettings Ltd (‘B&R’), was formed. In 1983 Cyril transferred all the assets of the lettings business including the goodwill to B&R and purported to transfer the clause 12(2) right to B&R. By 1986 both businesses started to use writing paper with the same logo and Alan knew that the lettings business was being carried on by B&R using the name. By 1989 the relationship between the brothers had deteriorated and the plaintiffs issued proceedings against the defendants seeking declaratory and injunctive relief and damages.
Held The plaintiffs’ application was allowed in part.
1. Although Cyril had purported to transfer his clause 12(2) right he had not observed the clause 12(3) right, and therefore the transfer of the 12(2) had been ineffective. However, the plaintiffs had authorised the use of the name in connection with the letting business by B&R and therefore they were not entitled to damages or injunctive relief.
2. The plaintiffs’ authorisation was not revocable at will because it would have defeated the purpose of clause 12 and would have allowed plaintiffs to put an end to Cyril’s right to use the name without Cyril being entitled to compensation.
3. Cyril had led Alan to believe that he was not transferring his clause 12(2) right, and therefore Cyril and B&R were estopped from contending that the plaintiffs had been deprived of their clause 12(3) right. If B&R wished to transfer the name to a third party, Cyril would have to offer the plaintiffs the right to purchase the name.
Romie Tager QC and Michelle Stevens-Hoare (instructed by Cawdery Kaye Fireman & Taylor) appeared for the plaintiffs; Martin Mann QC and Helen Galley (instructed by Friedman Muir Harden & Arnold) appeared for the defendants.
