Emerald Meats Ltd v Minister for Agriculture and Others

• Jurisdiction: Ireland
• Judge: O'Donnell J.
• Judgment Date: 30 July 2012
• Neutral Citation: [2012] IESC 48
• Court: Supreme Court
• Date: 30 July 2012

Emerald Meats Ltd v Minister For Agriculture & Ors

Between:

Emerald Meats Limited

Plaintiff

And

The Minister for Agriculture, Ireland and the Attorney General

Defendants

[2012] IESC 48

Hardiman J.

O'Donnell J.

McKechnie J.

Record Nos. 362 & 372/07

THE SUPREME COURT

Agriculture - Imports - Licencing - Dispute concerning licence to import substantial quantities of meat - Lengthy litigation resulting in award of general damages - Appeal and cross-appeal against award of damages by High Court

Facts: The plaintiff was a meat trading company involved in the import of meat into the State. Following changes in the EU regulatory regime, a dispute arose regarding the grant of a licence by the first defendant for the import of meat under the GATT quota. The plaintiff's application for a quota in regards of 177 tons of meat was refused, which the plaintiff sought to challenge.

After a considerable period of litigation, the High Court awarded the plaintiff €2.45 million in general damages in respect of the defendant's refusal to grant the plaintiff's application. The plaintiff and defendant now sought to appeal and cross-appeal respectively against the High Court's award.

Held by O'Donnell J, that the delay of nine years between the Supreme Court's first judgment and the assessment of damages by the High Court was unsatisfactory and unacceptable. The parties' respective experts' reports were almost irrelevant to the current appeals, as well as having been rejected by the High Court at first instance. The Court was entitled to expect that experts will not simply accept their client's instructions but critically evaluate them in the light of their expertise.

Having considered the methodology adopted by the High Court, the Court considered the methodology was required due to the unsatisfactory nature of the evidence submitted by both parties. Applying the test set out in earlier case law, the plaintiff's application to adduce fresh evidence as to losses would be refused. The plaintiff's other grounds of appeal were also dismissed. Lynagh v Mackin [1970] IR 180 applied.

In respect of the defendant's cross-appeal, the defendant would have to show the High Court erred in adopting the methodology or that the damages awarded was not reasonable or plausible. The Court considered that the decision of the High Court could not be criticised, given the evidence before it, and also dismissed the cross-appeal.

EMERALD MEATS LTD v MIN FOR AGRICULTURE 1992 1 CMLR 462

EMERALD MEATS LTD v MIN FOR AGRICULTURE 1997 1 IR 1

EC COMMISSION v EC COUNCIL 1988 ECR 5459

EEC REG 3889/1989 ART 2(1)(B)

MURPHY v MIN FOR DEFENCE 1991 2 IR 161

LYNAGH v MACKIN 1970 IR 180

RADCLIFFE v EVANS 1892 2 QB 524

PREHN v ROYAL BANK OF LIVERPOOL 1870 LR 5 EX 92

MCGREGOR ON DAMAGES 15ED 1988 P14

1 Judgment of O'Donnell J. delivered the 30th day of July 2012

2 Judgment Delivered by O'Donnell J. [Nem diss]

3 1 This appeal marks the latest stage in a legal battle between the parties in respect of events that occurred more than 20 years ago. In a lengthy judgment delivered on the 8 ^th October, 2007, Feeney J. awarded to the plaintiff company the sum of €2.45 million by way of general damages in respect of a breach by the State of its duty to grant to the plaintiff company a licence for the importation of 277 tonnes of GATT meat for the year 1990. The plaintiff ("Emerald") has appealed against the award and the defendant ("the Department") has cross-appealed.

4 2 The methodology ultimately adopted by the trial judge in calculating damages was relatively simple. Since Emerald had effectively ceased trading, the claim was for loss of profits from business which was not carried on over the succeeding years. This is a necessarily speculative exercise. Having rejected the primary submissions made by both Emerald and the Department as to the correct approach to this calculation, Feeney J. accepted that an appropriate method was to seek to measure Emerald's loss by reference to a comparator business that had continued to trade in the market in which Emerald claimed it would have traded and thrived but for the wrongdoing of the Department in 1990. He accepted that Emerald could be compared with another meat trading company, NWL, which had traded since 1990. On the approach taken by the judge, 1989 was the last period during which NWL and Emerald were both trading in a market unaffected by the Department's wrongdoing. During this period NWL was some seven times larger in turnover terms than Emerald. In addition, an adjustment was made to the available turnover figures for NWL to arrive at a turnover for the period matching Emerald's claim, that is for the period between 1991 and 2001. That process produced an adjusted turnover figure for NWL over the period of IR£402.5 million. Applying a one-seventh ration to that would suggest a turnover for Emerald of IR£57.5 million. From that figure was subtracted a figure for turnover of Emerald actually achieved between October 1990 and September 1991 of IR£4.9 million, leaving an estimated loss of turnover of IR£52.6 million. There was some dispute as to the appropriate net profit margin to be applied. The court applied a figure of three percent because it accepted that it was probable that Emerald's overall profit margin would have been higher than the margin achieved within the Irish industry as a whole including NWL, or indeed that of Emerald London, a company closely related to Emerald. The application of the three percent profit margin to the net turnover figure produced a loss of profit figure of IR£1.578 million as of 2001, which converted to a figure of €2,003,346.60. The trial judge also accepted that Emerald was entitled to interest on that amount to compensate for the fact that damages assessed as of 2001 were being awarded in 2007. In the words of the trial judge, the figure for interest was not an exact calculation "but represents a realistic approximation that results in a total figure of €2,450,000". This is indeed an apt description of the process of calculation of loss as a whole. It is apparent therefore that there were a number of assumptions underlying the assessment of damages in this case. To understand how the judge came to assess damages in this way, and indeed why he was engaged in assessing general damages for the period 1991 to 2001 and the criticisms made by both parties to the outcome, it is necessary to set out in some detail the background to this litigation.

5 3 It can be said that the history of Emerald has been one of a relatively short period of successful trading in a niche market, principally between 1986 and 1989, with a very protracted period of litigation thereafter. One of the few beneficial by products of this process is that the background to the dispute has been the subject of consideration in judgments of Irish courts, and indeed courts further afield. For a very detailed and lucid account of the circumstances giving rise to Emerald's first claim, reference may be made to the comprehensive judgment delivered by Costello J. on the 9 ^th July, 1991 and reported at [1992] 1 C.M.L.R. 462. That judgment was upheld in a unanimous judgment of the Supreme Court delivered by Blayney J. and reported at [1997] 1 I.R. 1. What follows is therefore a necessarily truncated account of a complex dispute.

6 4 The origins of this dispute lie in the Common Agricultural Policy of the European Community, in particular as it affected Ireland in the late 1980s. The structure of the Community at that time required the removal of internal barriers to trade, the support of prices for Community produced agricultural products, and the imposition of tariffs on imports. Beef was a particularly important product in Ireland because as of the time of this dispute Ireland was a net exporter of considerable quantities of beef. This difficulty was compounded by the fact that in Ireland, the beef trade was predominantly grass based, and therefore suffered from a problem of seasonality of supply. The advent of the European Community with an enlarged market for the beef being produced in Ireland, together with a market support mechanism, had a very significant impact upon Irish cattle producing and meat processing businesses, which rapidly adapted to the fact that developments at the European Community level would have very significant impact upon the opportunities and profits available.

7 5 The meat business in Ireland was competitive and tough. It involved large cash flow, small profit margins, and required a continuous ability to match fluctuating supply from farmers with the demands of a large number of disparate customers. It has been characterised by considerable success and spectacular failures. At a micro level, the purchase of cattle at too high a price, or the sale of the meat at too low a price, or the failure to sell all the meat produced, could each destroy any profit margin, and rapidly render a business unprofitable. One consequence of this was that meat traders could operate successfully in a market with such continuous fluctuations, since they could seek to match potential customers with suppliers of meat which those suppliers needed to sell.

8 6 Emerald was effectively a one man business. Mr. John McCarthy was an able businessman. As a young man in 1975 he became involved in the meat business and learnt the business of meat trading. In 1983 he set up his own business as Emerald Meats. The relative success of the business is illustrated by the fact that the credit facilities allowed to the company by his bankers steadily increased from a figure of IR£20,000 in the early stages to IR£200,000 by 1989. In the words of the trial judge, Mr. McCarthy had demonstrated "an astute and inventive business mind...