Steven Ellis & Ors v John Benson Limited

On Tuesday 5 August 2025, the court handed down judgment in this case. The Represented Claimants succeeded on three preliminary issues. The consequence is that the counterclaim will be dismissed.

The consequential matters to be determined are as follows:

The Represented Claimants draw attention to CPR 44.2 which says that the Court will have regard to the conduct of the parties.

“(4)

In deciding what order (if any) to make about costs, the court will have regard to all the circumstances, including –

the conduct of all the parties;

(b)

whether a party has succeeded on part of its case, even if that party has not been wholly successful; and

(c)

any admissible offer to settle made by a party which is drawn to the court’s attention, and which is not an offer to which costs consequences under Part 36 apply.

….

“(5)

The conduct of the parties includes –

(a)

conduct before, as well as during, the proceedings and in particular the extent to which the parties followed the Practice Direction – Pre-Action Conduct or any relevant pre-action protocol;

(b)

whether it was reasonable for a party to raise, pursue or contest a particular allegation or issue;

(c)

the manner in which a party has pursued or defended its case or a particular allegation or issue;

…

It is not necessary to rehearse the law relating to indemnity costs. It is sufficient to cite three paragraphs of the Represented Claimants’ submissions at [17-19] which are as follows:

17.

As Coulson J said in Noorani v Calver [2009] EWHC 592:

“… the court must decide whether there is something in the conduct of the action or the circumstances of the case in question which takes it out of the norm in a way which justifies an order for indemnity costs.

18.

‘Out of the norm’ means “outside the ordinary and reasonable conduct of proceedings” (Whaleys (Bradford) Ltd v Bennett and another [2017] EWCA Civ 2143).

19.

As Coulson J held in Noorani, if despite strong evidence to the contrary a losing party refuses to concede issues, that is something which may:

“…on its own (justify) an order … for indemnity costs.”

As regards offers to settle, there was no Part 36 offer. Prior to the commencement of the proceedings, there was a Calderbank offer on 13 October 2020 under which the first nine Claimants offered to pay JBL the sum of £105,000 in full and final settlement of all claims (“the first offer”). Two days later that was increased to a sum of £150,000 (“the second offer”). These offers were not accepted. On 2 March 2021, by which time there were twenty Claimants, a Calderbank offer of no order (sometimes referred to as “drop hands”) was made by the Claimants to JBL (“the third offer”). The third offer was not accepted.

At a late stage of the proceedings but prior to the trial, on 26 February 2025, an offer was made of no order being made other than a payment by JBL to the Claimants of £195,000 towards their costs (“the fourth offer”).

In order for the refusal of an offer - to attract an order for assessment on the indemnity basis, the paying parties’ refusal to accept the offer would generally have to constitute unreasonable conduct of a high degree: see the cases referred to in the first paragraph of the commentary in the White Book (2025) at para. 44.3.12. There was nothing out of the norm about the refusal to accept the first two offers, bearing in mind that JBL would have been concerned about the position as regards other franchisees who had not yet come forward.

As regards the third offer, this was made before the claim had been served. The particulars of claim were not served until about 3 weeks after the offer had lapsed. Further, the offer was predicated on the basis of a case that was not the same as the way in which the case was thereafter pleaded. The fourth offer was made shortly before the start of the trial at a time when the precise costs incurred to that stage were not known.

In my judgment, the refusal to accept those offers or any of them did not constitute unreasonable conduct of a high degree nor did the fact that the offers were not accepted take this case outside the ordinary and reasonable conduct of proceedings, nor did it take the case out of the norm in a way which justifies an order for indemnity costs.

The Represented Claimants submit that there were fanciful pleas in the course of the case. They point to only two of them when there were many allegations in the case. Whilst the Court did not accept the submissions that were made in respect of those two allegations, this does not take the case out of the norm. It was submitted in respect of another two averments out of the many that they were untrue. It is not accepted that there was anything in the rejection of the JBL’s case in this regard that took the case out of the norm. This was a hard-fought piece of litigation where not every point of the Claimants was accepted. It is a common incident of litigation of this kind that not all the points succeed and some are decisively rejected.

The Represented Claimants relied upon a notice to admit which was served on 2 February 2022. The document was not a conventional notice to admit in that it was not confined to the admission of facts. It was a notice to admit that various facts, if proven, would amount to a breach or breaches of contract. Had it been the case that there had been a notice to admit various facts, and the proof of those facts was unnecessary but added substantially to the cost of the litigation, then different considerations might apply. In the instant case, the failure to accede to the notice to admit was not unreasonable and/or did not merit a special order as to costs, let alone indemnity costs.

The reason why the judgment highlighted the conduct of Mr Benson in the witness box was because it was consistent with the allegations of his intimidatory conduct vis-à-vis the franchisees. The costs were not increased by the combative nature of Mr Benson's evidence. Whilst a significant part of his conduct in the witness box was overbearing, the Court does not consider that it takes the case outside the norm such as to merit an order for indemnity costs.

The Court will not make an order for indemnity costs in respect of the breach of the embargo. The costs are relatively small compared to the action as a whole. Further, I take into account the fact that Mr Benson was not trying to breach the embargo, and he showed contrition following the breach.

The Represented Claimants did not succeed in each of their allegations. That does not mean that they were not overall the successful party. In Sharp v Blank [2020] EWHC 1870 at para. 7, Sir Alastair Norris said the following:

“(a)

It is a commonplace that a successful party will not succeed on every aspect of its case. But notwithstanding that very frequent occurrence in litigation, the general rule still applies. Costs are determined by reference to overall success.

(b)

Although no authority is needed to support that observation, the point was pithily summarised by Gloster J. in HPL Kidson's v Lloyds Underwriters [2008] 3 Costs LR 427 at [11].

(c)

A degree of caution is needed against a too-ready departure from the general rule for the reasons explained by Jackson LJ in Fox v Foundation Piling [2011] EWCA 790 at [62].”

It is said that the evidence was imprecise. This was a legitimate criticism, but it does not justify a departure from the “general rule that the unsuccessful party will be ordered to pay the costs of the successful party.”

JBL refers to arguments on which the Represented Claimants did not succeed, and submits that there should be a reduction from the costs to be awarded to the Represented Claimants to reflect that partial lack of success. In my judgment, those arguments on which the Represented Claimants did not succeed do not justify a reduction. Whilst the Represented Claimants succeeded on implied terms in fact rather than implied terms in law, it was an important or useful part of the analysis to consider implied terms at law. In the judgment at para 294, there is quoted Chitty on Contracts about the ambiguity that sometimes exists between implied terms in fact and in law. Whilst in this case implied terms were found in fact and not in law, this shows how closely connected the different formulations were. In essence, the Represented Claimants succeeded in establishing the implied terms.

The Represented Claimants did not succeed on the tax allegations. However, the very unusual approach of Mr Benson to cash in the business led the Court to conclude that whilst the allegation was not made out, “if there has been misunderstanding, it has been contributed to by the emphasis on and prominence of cash in the culture of JBL and in the words and conduct of Mr Benson.”: see Judgment at para. 456. The fact that this allegation of breach of contract was not established does not on the facts of this case justify a reduction.

There are criticisms made of two aspects of disclosure, namely the non-disclosure of the existence of a WhatsApp group formed by the Claimants and the late production of a print out over WhatsApp exchange between Suzanne Summers and Linda Sharpe. I do not find that there was anything deliberate about this or that they had an appreciable effect on the litigation such as to warrant a reduction.

The Court is also mindful of the dicta in Sharp v Blank above and finds that they have a particular resonance in connection with the issue of whether there should be a reduction in this case. JBL seeks cumulatively a 20% reduction, but in the circumstances there will be no reduction.

The Represented Claimants seek 90% of the budgeted costs on the basis of an award of indemnity costs. I have not ordered indemnity costs. Nonetheless, it is appropriate to grant a higher percentage than the usual in a case where costs have been budgeted. That is because the Court is entitled to assume that a large percentage of the approved cost budget will be recoverable. The relevant provision is CPR 44.28 which provides where the court orders a party to pay costs “subject to detailed assessment, it will order that party to pay a reasonable sum on account of costs, unless there is good reason not to do so.” Even in cases where the order is for cost to be paid on the standard basis, the courts have ordered a payment on account of 90% of an approved costs budget: see MacInnes v Gross 2017 EWHC 127 (QB) and Sheeran v Chokri [2022] EWHC 1528 (Ch). In the latter case, Zacaroli J (as he then was) said at [41]:

“That is because on a detailed assessment the court will not depart from an agreed or approved budget unless satisfied that there is good reason to do so. I propose to adopt the same approach taken by Birss J in Thomas Pink Ltd v Victoria's Secret UK Ltd [2014] EWHC 3258 (Ch) and, taking into account the vagaries of litigation and the possibility of at least some departure on detailed assessment, I will order 90% of those cost which were included in the agreed budget as estimates. That comes to the sum of £810,000.”

My provisional view is to order a large payment on account of costs. It should contain a reduction to take into account that just under £13,000 of the costs may be attributed to the Unrepresented Claimants. In the event that JBL wish to persuade the Court to take a different view, they may do so in a very brief submission. I have in mind at the moment a payment on account of 85% of the budgeted costs. Since the handing down of this judgment in draft, the parties have accepted that the payment on account should be by reference to 85% of the budgeted costs, removing such costs as are attributable to the Unrepresented Claimants, but there are issues which may arise as to a stay which have not yet been resolved.

JBL seeks permission to appeal. Without fettering the precise way in which an appeal may be put, they advance three grounds of challenge, namely:

The decision was by reference to the facts peculiar to this case. It is a fact specific case. There have been detailed findings of fact such that this is not a case which defines what happens in all franchising cases or even in a typical franchising case. Each case has to be seen on its own facts, as is apparent by way of example from the analysis of the decisions in respect of franchise agreements: see paras. 208-216 of the judgment. This was a case of an agreement which was closer to an employment contract than to a commercial agreement for the reasons set out in the judgment, especially at paras. 217-248.

As regards the first ground about implied terms, they were implied terms in fact based upon the peculiar facts of the agreements in question, and in the context of a close relationship of cooperation between the franchisor and the franchisee: see especially the legal analysis at paras. 249-265 of the judgment. The emphasis in the application for permission on previous cases such as Jani-King (GB) Ltd v Pula Enterprises Ltd [2007] EWHC 2433 (QB) ignores the fact specific nature of each case, and the findings specific to the instant case. Indeed, Jani-King is distinguished expressly at paras 211, 223-224 and 241-242 of the instant judgment.

As regards the second ground that the actions were not breaches of the implied terms, this is to limit unduly implied terms of good faith and fair dealing to dishonest conduct and the like. Case law to contrary effect is quoted in the judgment. By way of example only, see the cases at paras. 255 and 256 of the judgment, and the quotations therein from Sheikh Al Nehayan v Kent [2018] EWHC 333 (Comm) per Leggatt LJ at [175] and D & G Cars Ltd v Essex Police Authority [2015] EWHC 226 (QB) per Dove J. at [175]. It will not be useful to summarise in a few paragraphs the analysis of the judgment in respect of the implied terms which is in section IX of the judgment at para. 204 and following.

As regards the second and the third ground about the nature and overall seriousness of the breaches, these are based on a very fact specific analysis which emerged from the evidence of the seventeen franchisees who gave evidence, from the evidence of Mr Benson himself and from about ten further witnesses. The submission that the conduct was not a breach of the implied terms or that it was not sufficient to amount to a repudiatory breach does not identify the points of law as opposed to being an attempt to re-argue the case. Likewise, it is not accepted that the challenge to the application of the law to the facts raises appeal points with a real prospect of success. The findings about the evidence are set out in detail because they derive from a large body of evidence. There is a history to tell which has been set out at section XII of the judgment at paras. 322 and following.

The overall answer to the point that there was no repudiatory breach is contained especially in the case law at paras. 460-466 of the judgment and in the findings of breach at paras. 467-475 of the judgment. One analysis of the case is that in Force India Formula One Team Ltd v Etihad Airways PJSC [2010] EWCA Civ 1051 of Rix LJ at [87]) that there had been “a series of repeated, or continuing, breaches which were sooner or later but ultimately repudiatory”.

For the purpose of the determination of the permission to appeal application, it is not intended to deal point by point with the matters raised in the application for permission to appeal. This would be to rehearse the findings in the judgment, which turn on a case peculiar to its own facts, and which is not susceptible to categorisation or summaries making less serious the breaches than they actually were in nature and effect.

The submissions of JBL specifically address three of the many breaches which have led to the termination of the franchise agreements. It suffices to cross refer to the way in which this selection of breaches has been considered in the judgment, namely:

The above citations in the Judgment are to be seen not only as the reasoning for the findings ofbreach, but they stand to be considered in the context of the other breaches and the relationship as a whole. This goes to the nature, seriousness and effect of the breaches. The context points include the following paragraph reference numbers:

In the circumstances, the threshold for an appeal is not satisfied, and the application for permission to appeal is accordingly dismissed.

The parties are asked to consider this draft judgment for typographical errors. In the case of JBL in particular, they may make further brief submissions, if they wish, about the amount of the interim payment on account of costs. The parties are also asked to prepare a draft order to reflect the above.