Practice and procedure – Application for declaration – Dispute over effect of franchise agreement for estate agency and lettings agency business – Dispute between parties resolved – Whether court should still grant declaration as to effect of agreement – Whether such declaration serving real purpose in declaring parties’ rights and obligations – Claim dismissed
The claimant ran an estate agency and letting agency business in Orpington, Kent, under the “Bairstow Eves Countrywide” trade name and trademark pursuant to two franchise agreements with the defendant franchisor. The defendant had similar agreements with approximately 90 franchise outlets.
In 2011, the defendant was sold to another company that operated its own estate agency and lettings agency business under the name “Hunters”. The defendant was renamed following the sale. It was suggested that the defendant’s franchisees, including the claimant, would also have to be rebranded as Hunters.
The claimant sought declarations that the defendant was not entitled to insist on such rebranding and that to do so would constitute a derogation from grant and a repudiation of the franchise agreements. Following mediation, the defendant made arrangements to transfer the claimant’s two franchises to another company that still traded under the Bairstow Eves name and conceded that it would not be entitled to require the claimant to cease using that name. However, the claimant maintained its claim for a declaration that, on the true construction of the franchise agreement, the franchisor did not have the right to instruct or otherwise require the claimant to cease using or being associated with the Bairstow Eves Countrywide trade name or trade marks. It contended that the court still had jurisdiction to grant the declaration and should do so since it would serve a real purpose in declaring the parties’ rights and obligations under the franchise agreements, which was important both for the claimant and for the many other franchisees.
Held: The claim was dismissed.
It was always a matter for the discretion of the court whether to grant a declaration and there was no entitlement to one as of right. In considering whether to grant a declaration, the court should proceed with caution and according to the principles set out in the notes and authorities referred to in CPR 40.20.2. Given the new developments and the change in the defendant’s position, the determination of the substantive issues in relation to the declaration sought by the claimant would not serve any sufficient useful purpose. There was no longer any existing dispute between the claimant and the defendant or, at least, any continuing dispute had been rendered academic and theoretical. There was no compelling reason for the court to provide a binding decision on what had become an academic point. Although the defendant’s change of position concerned only the present parties and did not assist the other franchisees, whose position remained uncertain, those other franchisees were not parties to the proceedings and there was no agreement that they would be bound by any decision that the court might make. Although any such decision might have some persuasive value, it would not be binding on any future High Court judge as a matter of precedent and its persuasive value was not sufficient to warrant the court in making such a determination. On the contrary, the fact that the other franchisees had chosen not to be parties to the proceedings, despite the fact that many of them were represented by the same solicitor, was an important consideration against making a determination in the instant proceedings in the absence of any agreement by them to be bound by that determination.
Jason Evans-Tovey (instructed by Cubism Law) appeared for the claimant; Nigel Jones QC (instructed by Hamilton Pratt) appeared for the defendant.
Sally Dobson, barrister
