Grow With Us Ltd v Green Thumb (UK) Ltd
| Jurisdiction | England & Wales |
| Judge | HIS HONOUR JUDGE SEYMOUR QC |
| Judgment Date | 17 February 2006 |
| Neutral Citation | [2006] EWHC 379 (QB) |
| Court | Queen's Bench Division |
| Docket Number | Case No: HQ6X00106 |
| Date | 17 February 2006 |
[2006] EWHC 379 (QB)
His Honour Judge Seymour QC
(Sitting as a Judge of the High Court)
Case No: HQ6X00106
IN THE HIGH COURT OF JUSTICE
QUEEN's BENCH DIVISION
MR. PHILIP COPPEL (instructed by TWM Solicitors LLP, Guildford) for the Claimant
MR. GRAHAM CUNNINGHAM (instructed by Hamilton Pratt, Birmingham) for the Defendant
Approved Judgment
In this action the claimant, Grow With Us Limited (to which I shall refer as “the franchisee”) claims against the defendant, Green Thumb (UK) Limited (to which I shall refer as “the franchisor”) relief which was expressed in the prayer to the particulars of claim in this way:
“(1) A mandatory injunction requiring the Defendant to perform its obligation under clause 4.1.20 of the Agreement by extending the term of the Agreement for a period of seven years on the day following 14 January 2006, that is to say for the period 15 January 2006 to 14 January 2013.
(2) Alternatively to (1), specific performance of the covenant in clause 4.1.20 of the Agreement to extend the term of the Agreement for a period of seven years on the day following 14 January 2006, that is to say for the period 15 January 2006 to 14 January 2013.
(3) Damages in lieu of or in addition to ( 1) or (2) or at common law.”
The business of the franchisor consists in large measure in the granting of permission by the mechanism of franchises to those desirous of obtaining them for the undertaking by the franchisees of the business of treating lawns in accordance with the method devised by the franchisor utilizing the intellectual property of the franchisor and being permitted to use as business names Green Thumb Lawn Service and Green Thumb Lawn Treatment Service. The franchisor also operates itself directly in some areas providing the services to the public which otherwise franchisees provide.
The agreement referred to in the prayer to the particulars of claim, to which I shall refer in this judgment as the agreement, was an agreement by which a franchise, for the purpose which I have just described, was granted by the franchisor to the franchisee. The sole business of the franchisee, as I understand it, is the carrying on of the franchised business. The parties to the agreement were the franchisor, the franchisee and three directors of and shareholders in the franchisee, respectively Mr. Michael Fabian, Mr. Timothy Agnew and Mr. Kim Tomlinson.
The agreement was in writing and dated 8th December 2000. The principal operative provision was contained in clause 2.1 which was in these terms:
“In consideration of the payment of the Initial Fee, the Marketing Promotion Contribution and the Continuing Fees by the Franchisee to the Franchisor on the Payment Dates and of and subject to the agreements on the part of the Franchisee and the Principal” that is to say Mr. Fabian, Mr. Agnew and Mr. Tomlinson “in this Agreement the Franchisor hereby grants to the Franchisee during the Term the sole and exclusive right and licence to carry on the Business under the Permitted Name in the Territory using the Intellectual Property in accordance with the Method and the Manual.”
Various of the expressions used in the subclause which I have just quoted were defined for the purposes of the agreement in clause 1. For the purposes of this judgment it is unnecessary to set out all of the definitions of defined expressions. However, it is material to set out these:
“'Business' the franchise business of lawn servicing to be carried on by the Franchisee within the Territory in accordance with the Method utilizing the Intellectual Property as more specifically described in the Manual;
'Commencement Date' 15 January, 2001 …
'Expiry Date' 14 January, 2006 or such later date as shall result from any extension of the Term under clause 4.1.20 …
'Manual' the Franchisor's standard operating manual as updated or amended by the Franchisor from time to time …
'Minimum Performance' the minimum performance requirements specified in clause 7 …
'Term' five years starting from the Commencement Date and ending on the Expiry Date unless extended or earlier determined as provided by this Agreement.”
The Permitted Name was in fact the two names to which I have already referred. The expression “Territory” was defined by reference to various post codes, but was essentially Guildford and Aldershot.
Clause 4 of the agreement was concerned with the obligations of the franchisor; that contained in clause 4.1.20 of the agreement was as follows:
“to extend the Term at the option of the Franchisee for further periods of seven years commencing on the day following the Expiry Date PROVIDED THAT the Franchisee;
4.1.20.1 has achieved the Minimum Performance Requirements throughout the Term as required by this Agreement.
4.1.20.2 has properly observed and performed his obligations under this Agreement throughout the Term;
4.1.20.3 pays to the Franchisor a renewal fee of 1% (one per cent) of the Gross Turnover for the calendar year prior to the Expiry Date;
4.1.20.4 serves a notice on the Franchisor requiring such extension no more than six calendar months and not less than 90 days before the Expiry Date;
4.1.20.5 accepts that the terms of this Agreement shall apply to any extension of the Term under this clause 4.1.20 with uplifted Minimum Performance Requirements or executes a new agreement on the Franchisor's standard terms current at the Expiry Date which agreement (save for variation to Minimum Performance Requirements) shall not be substantially more onerous to any of the parties than the terms of this agreement;
4.1.20.6 re-equips the Business with such new or improved equipment as shall be determined as reasonably necessary by the Franchisor to maintain the required standard of the Business.”
The case for the franchisee was that it had by a letter dated 5th August 2005 written by its solicitors, TWM Solicitors LLP, to the franchisor sought to exercise the option for which clause 4.1.20 of the agreement provided. It was contended on behalf of the franchisee that it had complied with all the requirements of clause 4.1.20 to be satisfied before the option could be exercised.
That rather simple statement conceals what were in fact the major issues in the trial. It was actually common ground that no uplifted minimum performance requirements had been agreed for the purpose of clause 4.1.20.5. The position adopted on behalf of the franchisor was that the setting of uplifted minimum performance requirements was a matter exclusively within its province, that the franchisee had declined the proposals as to uplifted minimum performance requirements put forward by the franchisor and thus that, as Mr. Graham Cunningham, who appeared on behalf of the franchisor, put it in his written skeleton argument at paragraph 13:
“In summary, C cannot sustain an argument for renewal on the grounds that a fundamental term of the renewal agreement was never agreed.”
On the basis of that submission Mr. Cunningham contended that the position as between the parties was very simple, namely that the agreement came to an end on 14th January 2006 in accordance with its terms, no extension having been agreed. He went on to submit that it was essential, if that were not to be the case, that an extension had been agreed prior to 15th January 2006 which could take effect as from that date.
The position in relation to the consequences of there being no agreed uplifted minimum performance requirements adopted by the franchisee was different. It was said by Mr. Philip Coppel, who appeared on its behalf, that the franchisee had put forward, as indeed it had, proposals as to what should be the “uplifted minimum performance requirements”, although those proposals had been rejected. There was no definition in the agreement of the expression uplifted minimum performance requirements and no procedure for establishing what they should be, but they could be fixed by adjudication or arbitration. The agreement in fact contained no provision for either adjudication or arbitration.
Mr. Coppel went on to submit that the critical question was whether the franchisor had been correct in asserting that the fixing of uplifted minimum performance requirements was a matter exclusively for it. If I found that the assertion of the franchisor was wrong as a matter of law, Mr. Coppel submitted that I should determine that the position adopted on behalf of the franchisee as to what were appropriate uplifted minimum performance requirements was correct. How I should approach that task and what the other options available were he set out in supplementary written opening at paragraph 7 in this way:
“To ask whether what was proposed by the claimant in its 5th August 2005 renewal letter constituted uplifted minimum performance requirements within the meaning of clause 40.1.20.5 of the agreement. In relation to this the claimant relies on the MPRs proposed in the 5th August 2005 letter being materially greater than the MPRs that had applied for the initial term and were therefore uplifted; the MPRs proposed in the 5th August 2005 letter going further by offering not just an annual increase of penetration; and the defendant not having alleged or put in evidence that the uplifted MPRs offered in the 5th August 2005 letter were less onerous than the original MPRs in terms of securing market growth.
Appendix B to the defendant's opening is concerned with showing the viability of the defendant's 8.5% penetration requirement which is not the point and if the court finds that what was proposed by the...
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Fitzroy Robinson Ltd v Mentmore Towers Ltd & Others
...circumstances where the provision would be difficult to operate in practice. A relatively extreme example of such a case is Grow With Us Ltd v Green Thumb (UK) Ltd [2006] EWCA Civ 1201 where Buxton LJ refused to imply the term requested and said: “Mr Coppel by contrast said that that task ......
- Grow With Us Ltd v Green Thumb (UK) Ltd