Smooth and Easy wins $30,000 exclusivity award
A former business owner has been ordered to pay almost $30,000 after the Supreme Court found he sold exclusive rights to a paint brand he did not have.
The court heard Roger Royden Richardson sold Gary Wolffe his business, Triple R Paint Supply, for $50,000 in 2010. Mr Wolffe, the owner of Smooth and Easy Limited, claimed he agreed to the purchase only because he had been assured Triple R had exclusivity on the Benjamin Moore paint brand in Bermuda and that the exclusivity would pass on to him.
Triple R had been the only licensed seller of the paint at the time of the sale, but Mr Wolffe said he later discovered there had not been any exclusivity deal in place.
Mr Wolffe said he was told by a representative of Benjamin Moore in 2011, that an exclusivity deal would be “contrary to the way Benjamin Moore has transacted business since its inception”, and the company was in talks with another local paint seller, Rowe Spurling Paint Company. He said in an affidavit the Triple R store in Hamilton was “unable to hold its own financially” and he had to shut it down.
“The first six months, I funded from the Warwick store,” he said. “However, as it became apparent that the Hamilton store could not support itself, Mr Richardson gave us notice to quit the premises.
“Everything was moved to Warwick. Very shortly after that, we found that Rowe Spurling were going to be granted a distributorship.
“There was no question that, had I known that Triple R did not have an exclusive distributorship agreement, I would never have entered into the contract.”
Mr Richardson denied that he ever claimed to be the exclusive dealer of the paint and it was not reasonable for Mr Wolffe to expect to receive exclusivity under the contract.
Through his legal council he referenced an unsigned 2009 agreement between the parties. Part of that agreement said the “exclusive rights and distributorship” would be handled by a “formal and legal agreement between Mr Richardson, Benjamin Moore and Smooth and Easy”.
He argued the passage made it clear to Mr Wolffe that Benjamin Moore would have to be a party to any discussion of exclusivity. Mr Richardson claimed that the final agreement was written by Mr Wolffe and that he had been rushed to sign without reviewing it.
Puisne Judge Shade Subair Williams said in a judgment, delivered on September 23, that she believed Mr Wolffe “on a balance of probabilities”.
“I accept the evidence, that Mr Richardson caused him to reasonably believe that he had exclusive BM rights, and that he would transfer these exclusive BM rights, in consideration for Mr Wolffe’s payment of the price of the agreement,” she said.
She also refused the suggestion that Mr Richardson was “somehow unaware or tricked” about the agreement he signed.
The judge added: “It seems far more likely to me that Mr Richardson, knowing he was and had long been, the sole supplier of Benjamin Moore paint products, caused and allowed Mr Wolffe to believe that this meant he had exclusive BM rights, which he did not.”
Mrs Justice Subair Williams said the “express references to ‘exclusive’ in the pre-agreement correspondence and the agreement itself” show the parties intended the exclusive rights were part of the contract. Mrs Justice Subair Williams said Mr Wolffe had received a reputable business, the right to use the Triple R trade name and a non-exclusive supply of paint.
She estimated the value of the “exclusivity” at $25,000, and that the rest of the $50,000 purchase price went towards the goods and “goodwill” of Triple R purchased by Mr Wolffe.
The judge ordered Mr Richardson to pay $29,275, made up of the $25,000, $1,000 in marketing costs and $3,275 in legal costs for the drafting of the agreement, with a 3.5 per cent interest rate.
• To view the Supreme Court judgment, click on the PDF link under “Related Media”
•It is The Royal Gazette’s policy not to allow comments on stories regarding court cases. As we are legally liable for any libellous or defamatory comments made on our website, this move is for our protection as well as that of our readers.
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