Winkworth Franchising Ltd v Nicholas Goble

For summary judgment, a claim has a realistic prospect of success where it carries some degree of conviction and is more than merely arguable. The court may decide a short point of law or construction where the evidence is complete and the parties have had a proper opportunity to address it.

Where parties expressly agree that breach of an information obligation is fundamental and goes to the root of the contract, the court should give effect to that characterisation rather than impose an additional materiality test. A contractual obligation to produce existing rent receipts does not ordinarily require the franchisee to procure receipts or provide alternative proof of payment.

Winkworth Franchising Ltd sought summary judgment concerning five franchise agreements with Nicholas Goble. The agreements provided for an initial 20-year term, subject to an extension right, and permitted refusal of extension where the franchisee was in material breach.

WFL relied principally on failures to provide accounts and rent-payment documentation. It contended that those failures engaged clauses 14.11, 14.12 and 5.6(b), entitling it to serve counter-notices under clause 18.3. Other allegations, including repudiatory breach and waiver, were unsuitable for summary determination.

The central issues were whether the information requests were contractually effective, whether the alleged breaches were material, and whether the rent provision required production of documents that did not exist.

1. Summary judgment. The principles in Easyair Ltd (t/a Openair) v Opal Telecom Ltd were applicable. The court could determine the construction issues because the relevant documents were before it and no further evidence was needed. The issues were suitable for summary judgment.
2. Accounts. Clause 14.12 was treated, for the application, as operating where another express obligation to provide information existed, including clause 14.11. The franchisee had an absolute obligation under clause 14.11 to supply accounts within the stipulated period.
3. Clause 14.12 expressly characterised the relevant obligation as fundamental and going to the root of the agreement. Following Lombard North Central Plc v Butterworth, there was no legal basis for imposing an additional materiality test or rewriting the parties’ bargain. The requests for draft accounts were sufficiently clear, and the failure to provide accounts until after the counter-notice constituted a material breach for clause 18.3(a) and an entitlement to terminate under clause 19.
4. The obligations in clauses 14.10 and 14.11 were freestanding. Performance by WFL of its accounting obligation under clause 14.6 was not a precondition to the Defendant’s obligation to provide his own accounts.
5. Estoppel. The pleaded estoppel by convention concerned audited accounts, not the time for supplying accounts. Since no accounts were supplied despite WFL’s agreement to accept drafts, the estoppel did not affect the breach issue. The principles in HM Revenue and Customs v Benchdollar Ltd, as modified in Stena Line Ltd v Merchant Navy Ratings Pension Fund Trustees Ltd and approved in Tinkler v Revenue & Customs, were considered.
6. Rent receipts. Clause 5.6(b) naturally required production of the last receipts that existed. It did not require the Defendant to procure receipts or provide alternative proof of payment. Since no receipts existed, WFL could not rely on clause 14.12 on that basis.
7. CN1 validly and effectively terminated the franchise agreements without extension on 25 October 2022. A declaration was granted in the terms sought to that extent. The remaining claims concerning early termination, repudiation and possible waiver were left for later determination.