Winkworth Franchising Ltd v Nicholas Goble
[2023] EWHC 2883 (Comm)
London Business House Limited & Anor v Pitman Training Limited & Anor
9 May 2023
[2023] EWHC 1077 (Comm)
High Court
A training franchisee (LBH) sued Pitman Training for letting a competitor use their brand in the same area, claiming this ruined their business. The judge agreed there was a minor rule-break, but said LBH couldn't prove it caused their problems and the contract let Pitman off the hook for most of the damages anyway, so LBH lost the case.
Key Facts
- •London Business House Limited (LBH) and Faisal Rehman (Mr. Rehman) claimed against Pitman Training Limited (a dormant company) and Pitman Training Group Limited for breach of contract and misrepresentation.
- •The claim arose from a franchising agreement where LBH operated a Pitman Training Centre in Nottingham.
- •LBH alleged that Pitman breached the agreement by allowing Derby Business College Limited (Derby) to use Pitman's materials and brand in the Nottingham territory.
- •LBH alleged misrepresentation based on pre-contractual assurances of exclusivity.
- •Pitman argued that the agreement did not grant exclusive rights and that Derby's activities did not cause LBH's business failure.
- •The court considered witness statements, emails, and expert accounting evidence.
Legal Principles
Construction of written agreements: an objective and contextual approach considering the whole contract and relevant background knowledge.
Rainy Sky SA v Kookmin Bank [2011] UKSC 50; Arnold v Britton [2015] UKSC 36; Wood v Capita Insurance Services Limited [2017] UKSC 24; Nigeria v JP Morgan Chase Bank NA [2019] EWHC 347 (Comm)
Unfair Contract Terms Act 1977, section 11: Reasonableness of exclusion clauses.
Unfair Contract Terms Act 1977
Misrepresentation: Liability for negligent or innocent misrepresentation may be excluded by reasonable clauses.
Unfair Contract Terms Act 1977 (implied)
Breach of contract: Causation and loss must be proven.
Common law
Repudiatory breach: A breach that goes to the root of the contract, entitling the innocent party to terminate.
Common law
Incorporation of external codes: Terms from external codes are not automatically incorporated into contracts unless explicitly stated.
Barton v Morris [2023] UKSC 3
Hearsay evidence: Admissibility and weight of hearsay evidence in the absence of a hearsay notice.
Civil Evidence Act 1995, section 2(4); CPR Part 33
Outcomes
Claim dismissed.
The misrepresentation claim failed because the pre-contractual statements did not misrepresent the position, and the contract's exclusion clauses were reasonable. The contract claim succeeded on liability to a limited extent, but failed on causation and loss because Derby's actions did not measurably affect LBH's profits. LBH's termination of the agreement was not valid.
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