Steven Ellis v John Benson Ltd

Hearing dates: 6, 7, 13, 14, 17, 18, 19, 20, 21, 24, 25, 26, 27, 28 March and 3 & 4 April 2025

Further written submissions: 17 and 22 April 2025.

Judgment distributed in draft: 28 July 2025

Approved Judgment

This judgment was handed down remotely at 10.30am on Wednesday 6 August 2025 by circulation to the parties or their representatives by e-mail and by release to the National Archives.

I Introduction

This is a dispute between the Defendant, a driving school (“JBL”), and the Claimants, twenty driving instructors, who were former franchisees of JBL. The case raises an issue as to whether the franchise relationship was based on expectations of trust and confidence going beyond an ordinary commercial relationship under which the parties owed a duty to conduct themselves in good faith and to deal fairly with one another. It was the case of the Claimants among other things that JBL's managing director Mr. John Benson created an abusive and intimidating environment in which each of the claimants found it intolerable to continue to work for JBL. It is their case that JBL was in breach of each of the franchise agreements in the way in which each of the franchisees respectively were treated by JBL.

In late 2020, each of the Claimants terminated their contracts with JBL alleging that they were entitled to do so because of breaches of those implied terms. JBL denies that the contracts were subject to the implied terms alleged and denies breaches in any event. It contends that the Claimants had no right to terminate their contracts with JBL and that their terminations amounted to repudiatory breaches giving rise to counterclaims in damages.

The battleground is therefore that the Claimants seek declarations that their terminations were lawful and that they are discharged from their franchise agreements with JBL. JBL says that the terminations were unlawful and themselves amounted to breaches of contract. It counterclaims damages under contract or at common law comprising “the sum which would have been payable by way of franchise fees and other charges had the agreement not been terminated as a consequence of your breach.” It is this which explains the very large sums counterclaimed against the franchisees in many cases several tens of thousands of pounds, in some cases over £100,000 and in one case, more or less than £300,000 (depending on how the damages were calculated).

II The preliminary issues

A trial of preliminary issues has been ordered. Although agreed to be tried as such, they are issues which go to the heart of liability in this case. The issues have been amended, with the agreement of the Court, and are as follows:

(1) were the contracts entered into between the Claimants and the Defendant contracts under which the parties owed a duty to conduct themselves in good faith and to deal fairly with one another?

(2) were express or implied terms of those contracts breached, and if so by whom?

(3) were the contracts, or any of them, lawfully discharged, and if so by whom?

It had been the case in respect of the first issue that the contracts were described as “relational contracts”, but since that is a potentially problematic formulation, the expression has been omitted entirely from the first issue. This followed, in particular, the concern of Fancourt J in UTB LLC v Sheffield United Ltd. [2019] EWHC 2322 (Ch) at para. 202, namely that “ There is a danger in using the term “relational contract” that one is not clear about what exactly is meant by it.”

There was a suggestion at trial on the part of the Defendant that the Court could decide the contractual question, being the first of the above issues. It was submitted that the Court could decide this as a matter of law without having to hear the evidence of all the complaints of the franchisees. The Court refused to take the course. The reasons were as follows:

(1) the Court would need to hear about the factual matrix against which the contracts were entered into, and each contract needs to be considered separately. The scope of the evidence may be different in the event that the implied terms contended for were implied in fact rather than implied terms in law. To the extent that they were contended to be implied terms in fact, a significant part of the witness evidence would still be required;

(2) if the Court ruled that no duty arose, but an appeal followed where the appeal court took a different view, the Court was concerned that the case would then be remitted for the second and third issues to be determined. It would be undesirable for that to occur at that stage when the parties were prepared for the oral evidence to be given at this stage.

For these reasons, rather than have a belated short cut which might be regretted, it seemed better to take the course always intended of trying all three preliminary issues.

III The parties

It is convenient...