Curust Financial Services Ltd v Loewe-Lack-Werk

• Jurisdiction: Ireland
• Judge: FINLAY C.J.,O'FLAHERTY J.
• Judgment Date: 01 January 1994
• Neutral Citation: 1992 WJSC-SC 3321
• Court: Supreme Court
• Docket Number: [1992 No. 4108P]
• Date: 01 January 1994

CURUST FINANCIAL SERVICES LTD v. LOEWE-LACK-WERK OTTO LOEWE GMBH

BETWEEN

CURUST FINANCIAL SERVICES LIMITED and CURUST INDUSTRIESLIMITED

Plaintiffs/

Respondents

and

LOEWE-LACK-WERK OTTO LOEWE GmbH & Co., K.G.

First-named

Defendant/Appellant

and

R. S. SALES LIMITED

Second-named

Defendant/Appellant

1992 WJSC-SC 3321

Finlay C.J.

O'Flaherty J.

Egan J.

228 & 236/92

THE SUPREME COURT

Synopsis:

INJUNCTION

Interlocutory

Fair question - Convenience - Balance - Goods - Manufacture - Distribution - Exclusive rights - Foreign licence - Termination - Manufacture of Loewe rust primer - Damages a sufficient remedy if plaintiffs successful at trial of action - (228, 236/92 - Supreme Court - 2/11/92) - [1994] 1 I.R. 458 - [1993] ILRM 723

|Curust Financial Services Ltd. v. Loewe-Lack-Werk Otto Loewe

Gmbh|

DAMAGES

Assessment

Remedy - Sufficiency - Injunction - Interlocutory - Plaintiff's application - Damages a sufficient remedy if plaintiff successful at trial of action - (228, 336/92 - Supreme Court - 2/11/92)

|Curust Financial Services Ltd. v. Loewe-Lack-Werk Otto Loewe GmbH|

EQUITY

Relief

Condition - Claimant - Clean hands - Requirement - Meaning - Interlocutory injunction claimed by plaintiff - Plaintiff's breach of contract - Absence of turpitude - (228, 236/92 - Supreme Court - 2/11/92) - [1994] 1 I.R. 458 - [1993] ILRM 723

|Curust Financial Services Ltd. v. Loewe-Lack-Werk Otto Loewe GmbH|

Citations:

TREATY OF ROME ART 85(1)

DOHERTY V ALLMAN 1878 3 AC 709

DUBLIN PORT & DOCKS BOARD V BRITTANIA DREDGING CO LTD 1968 IR 136

IRISH SHELL V ELM MOTORS 1984 IR 200

1 JUDGMENT delivered on the 2nd day of November 1992by FINLAY C.J.[EGAN CONC]

2 These are two appeals brought by the first and second named Defendants against an order made in the High Court by Barron J. on the 3rd June 1992, by way of interlocutory injunction.

3 The proceedings arise out of a dispute originating between the Plaintiffs (which I will jointly refer to as Curust), and the first-named Defendant (which I will refer to as Loewe) concerning what Curust allege to be a breach by Loewe of an Agreement dated the 27th November 1986 made between them and Loewe, whereby Loewe granted to Curust the sole and exclusive licence to manufacture, market, sell and distribute the goods manufactured or distributed by them from time to time, in certain areas, including Ireland. The second-named Defendant (which I will refer to as Sales Ltd.) became involved in the action by reason of accepting appointment as a distributor from Loewe. The particular product with which this case is concerned is a product known as Loewe Rust Primer, a paint sold under the trademark of Loewe in Ireland, being a paint for application to prevent rust on objects to which it is applied. It is stated by all the parties to this action to be the major rust primer sold on the Irish market in the retail shopsandin what is described as the DIY trade.

4 The commercial relationship between Curust and Loewe has existed for over thirty years, and prior to November 1986 it is agreed that Curust manufactured and distributed Loewe Rust Primer in Ireland, using the trade mark of Loewe under a series of licences or agreements.

5 The plenary summons was issued on the 17th June 1992, and claimed a declaration that Loewe was bound by the terms of the agreement of the 27th November 1986 and claimed a series of injunctions restraining Loewe, its servants and agents from what were claimed were breaches of that agreement. Further injunctions were sought restraining Sales Ltd. from carrying out activities which would, in effect, constitute a breach of the Agreement and an invasion of what is alleged to be the sole right of Curust to manufacture, sell and distribute these products. The hearing of the application for an interlocutory injunction was on affidavit, and by hisorder, Barron J. restrained Loewe, pending the trial of the action, from appointing or purporting to appoint Sales Ltd. or any other person as a licensee for the manufacture, distribution or sale in Ireland and in other territories of all or any of the products manufactured by Loewe and from supplying Loewe Rust Primer or any other product manufactured or distributed by them to Sales Ltd., or to any other person for distribution or sale within the territory. The order further restrained Sales Ltd., pending the trial of the action, without permission of Curust, from manufacturing, distributing, selling or offering for sale in Ireland or in the United Kingdom all or any of the products manufactured or distributed by Loewe, including Loewe Rust Primer.

6 In the order it was provided that the relief granted to Curust was subject to their applying for consent in accordance with the exclusive manufacturing and distribution Agreement of the 27th November 1986, ofLoewe in relation to the manufacture of the product the subject matter of the proceedings, by an agent on behalf of Curust. This condition and the issues arising in it do not form part of the subject matter of thisappeal.

7 Whilst on the affidavits filed and on the submissions made both in the High Court and on this appeal there are a number of disputed issues of both law and fact, it is possible to trace an uncontroversial broad history of the matters arising in this appeal.

8 From the early 1960s Curust had a sole manufacturing and distribution agreement from Loewe which covered Loewe Rust Primer.

9 Up to the end of the year 1988, Curust manufactured and put into tins the Loewe Rust Primer in Ireland from formulae provided to them and in accordance with processes of which they were informed and instructed by Loewe, with a raw material sold to them by Loewe at cost price. Curust then paid to Loewe a commission on the products sold by them. At the endof 1988 Curust ceased the manufacture of the primer by reason of the fact that a change in the specification required different methods of production, and it was necessary for them to reorganise their manufacturing process in order to comply with that.

10 An agreement was then entered into for the supply by Loewe to Curust of the finished product of Loewe Rust Primer to be put into tins and sold and distributed in Ireland. This Agreement contained terms with regard to price and with regard to credit, and disputes have arisen with regard to those precise terms. It was expressed, or appears to have been expressed to conclude at the end of the year 1991 when it was anticipated that Curust would have returned to manufacturing of the Loewe Rust Primer.

11 During the currency of that agreement and in the years 1990 and 1991, disputes arose between the parties concerning the payments, the amount of credit to be allowed and the date of payments, and eventually Loewepurported to repudiate all Agreements, including the Agreement of Novmeber 1986, and stated that all Agreements were at an end between the parties, and that they would, after the expiry of the Agreement for the supply of the finished product at the conclusion of 1991, cease to supply any further products or raw materials to Curust.

12 At some time which is not identified in the affidavits Loewe entered into an agreement with Sales Ltd. for the sale and distribution by them of Loewe's product in Ireland, and this was put on the market at the end of May and beginning of June of this year by Sales Ltd., under the name Durabond, in a tin similar to that used by Curust. What is in that tin is, undoubtedly, the Loewe Rust Primer and, on the evidence, it is being sold as such by the retailers to whom it has been distributed.

13 It was provided by Clause 9 of the Agreement of November 1986 that either party might assign,sub-licence or sub-contract all or part of its obligations or benefits under the Agreement, subject to the prior, written consent of the other party. In addition, Curust undertook, by virtue of the Agreement that they would not, at any time otherwise than for the purpose of the rights given to them, including, of course, the right of sub-contracting, divulge any information in relation to the goods, methods of manufacture, price structure or the affairs, business or methods of carrying on business of Loewe without written consent of Loewe.

14 On the evidence before the learned trial Judge, which he accepted and which is not disputed on the affidavits, in March of 1992, at an interview between Mr. Brocklesby representing Curust and Mr. Schoening representing Loewe, Mr. Brocklesby informed Mr. Schoening that it was the intention of Curust, if possible, to enter into an arrangement with a third party involving the resumption of the manufacture inIreland of the Loewe prime rust product, and he asked (according to his affidavit) Mr. Schoening to give him an assurance that if he informed him of the identity of that party that he, Mr. Schoening and his company, would not try and intimidate that person from entering into an arrangement. This conversation was in the light of an assertion then being made, and still being made, by Loewe that all contractual relationships between the two companies had ceased, and that Curust had no right to sell, distribute or manufacture the product of Loewe. Mr. Schoening refused to give any such assurance, and, accordingly, he was not informed of the identity. Apparently, subsequent to that, an arrangement was entered into between Curust and a company known as International Coating Limited for the manufacture of the product Loewe Rust Primer in Ireland, and that has been done and Curust has put that on the market in tins clearly marked Loewe Rust Primer.

15 On these broad facts, Loewe sought in the HighCourt to resist the making of an interlocutory injunction on a number ofgrounds.

16 1. They asserted that an agreement had not been concluded between the parties in November 1986, and in the absence of the production by Curust of the original of that Agreement which they say has been mislaid,...