King's / Queen's Bench Division of the High Court

KB-2021-000741 - [2025] EWHC 2096 (KB)

Fecha: 06-Ago-2025

II The preliminary issues

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.