Emerald Meats Ltd v Minister for Agriculture and Others

• Jurisdiction: Ireland
• Judge: Mr. Justice Feeney
• Judgment Date: 08 October 2007
• Neutral Citation: [2007] IEHC 331
• Docket Number: [No. 1510 P/1990]
• Date: 08 October 2007
• Court: High Court

EMERALD MEATS LTD v MIN FOR AGRICULTURE IRELAND & ORS

BETWEEN

EMERALD MEATS LIMITED

PLAINTIFF

AND

MINISTER FOR AGRICULTURE IRELAND AND THE ATTORNEY GENERAL, RANGELAND MEATS LIMITED AND GOLDSTAR MEATS LIMITED

DEFENDANTS

[2007] IEHC 331

[No. 1510 P/1990]

THE HIGH COURT

DAMAGES

Assessment

Special damage - Principles to be applied - Restitutio in integrum - Factors to be considered - Loss of business reputation - Ability to trade - Disruption to cash flow - Loss of management time - General loss of business - Whether damages can be assessed with certainty - Breach of statutory duty - General damages - Meat export quotas - Allocation of quota - Alteration of quota allocation scheme - Level of damages plaintiff entitled to for breach of statutory duty - Council Regulation EEC/4024/89 - €2,450,000 general damages awarded to plaintiff (1990/1510P - Feeney J - 8/10/2007) [2007] IEHC 331

Emerald Meats Ltd v Minister for Agriculture

EEC REG 3889/1989

EEC REG 4024/1989 ART 6

EMERALD MEATS LTD v MIN AGRICULTURE 1997 1 IR 1 1997 2 ILRM 275 1997 8 2914

EEC REG 4024/1989 ART 4

EMERALD MEATS LTD v MIN AGRICULTURE 1993 2 IR 443 1992 7 1990

EMERALD MEATS LTD v COMMISSION OF THE EUROPEAN COMMUNITIES 1993 ECR I-290

RATCLIFFE v EVANS 1892 2 QB 524

CALLINAN v VHI UNREP SUPREME 28.7.1994 1994/8/2192

MCGREGOR ON DAMAGES 15ED 1988 PARA 344

JUDGMENT of

Mr. Justice Feeney

1 delivered on the 8th day of October, 2007.

2 The Plaintiff in this case is Emerald Meats Limited. It is a company which was incorporated in Ireland in 1983. The company was established, operated and at all times controlled by a Mr. John McCarthy. It operated in the meat business and prior to its incorporation Mr. McCarthy had developed an expertise and knowledge of that business.

3 As a young man in 1975, John McCarthy became involved in the meat business. He obtained a job with a meat trading company known as Sanger Dublin Limited. That company was a wholly owned subsidiary of an international meat trading company known as JE Sanger Limited which had offices in Europe, America and Australia. In the period from 1975 to 1980 Mr. McCarthy worked as a meat trader. The parent company JE Sanger Limited got into financial difficulties in 1980 and went into liquidation. The Irish company was a solvent entity and its assets were bought out by Eamon Waldron and his company Waldron Meats Limited. Mr. McCarthy worked for Waldron Meats Limited from 1980 to 1983 and became a share holder in that company.

4 During the period from 1975 to 1983 Mr. McCarthy developed a considerable knowledge of meat trading. By 1983, Mr. McCarthy, in his own words, had determined "to become self employed". He set up his own company Emerald Meats Limited which was incorporated in 1983. The incentive for Mr. McCarthy to set up his own business was not only the fact that he had developed expertise and a good reputation but that by 1983, he was making "very substantial profits for the company I used to work for".

5 In establishing his own company Mr. McCarthy recognised that experience and reputation were important but that credit worthiness was critical. The meat trading business involved participation in a highly competitive market with small margins and was a business where contracts were often obtained as a result of personal contacts. Against that background a reputation for prompt payment was "imperative". As Mr. McCarthy stated in his evidence it was a business in which you did not survive "If you don't pay". "There is no room for mistakes." In the years from 1983 to 1990, Emerald Meats became established as a trading company and Mr. McCarthy's reputation grew. Emerald Meats prospered and as turnover increased it's reputation for meeting its financial responsibilities became established and the credit facilities available to the company increased. Initially the credit facility of the company was £20,000 and by 1986 that had increased to a sum of £50,000. Allied Irish Banks further increased the credit limit from £50,000 to £130,000 in 1987 and by 1989 the credit limit had expanded to £200,000.

6 Access to credit was not only a vital ingredient of a meat trading business but also the extent of the credit available to a company impacted on its capacity to trade. Indeed Mr. McCarthy was of the personal view that he could always have done more business if the funding available to him had permitted him to do so.

7 One of the complicating factors in the issues of this case, to which I will return to later in this judgment, is that notwithstanding the importance of the availability of credit and the size of the credit limit Mr. McCarthy determined as early as 1985, to diversify part of company's available funds into property. The initial diversity into property arose in circumstances where Emerald Meats Limited was renting office space in Fitzwilliam Square for a sum of £45,000 per annum and a property became available to purchase at No. 8 Herbert Street in Dublin for the sum of £68,000. That property was bought. It was envisaged that the purchase of that property would enable the offices of Emerald Meats Limited to transfer to Herbert Street with the saving of rent resulting in a benefit to the cash flow position of the company within the short to medium term.

8 The diversification into property continued in 1987, when Mr. McCarthy used some of the funds and credit which were available to purchase No. 18 Lansdowne Road. A separate property company called Emerald Properties Ireland Limited was established. Further purchases of No.'s 20 and 22 Lansdowne Road/Park were made in 1989.

9 In 1987, a significant development in relation to the meat business took place when a company was established in London. That company was Emerald Meats London Limited (Emerald London) and it was set up by Mr. McCarthy in conjunction with a friend and former meat trading colleague by the name of Des Marshall. The London company was effectively a joint venture between Mr. Marshall and Mr. McCarthy and it commenced trading in October, 1987.

10 The Irish company, Emerald Meats Limited, the Plaintiff herein, continued to trade in meat throughout the period from 1983 to 1990. However in the later of those years Emerald Meats Limited increasingly directed its trading activities towards GATT Trading. The nature and concept of GATT Trading is dealt with in the earlier High Court judgment of Costello J. and the Supreme Court judgment of Blayney J. within these proceedings and it is unnecessary to repeat the details therein contained. GATT Trading was part of a European Community regime which was in place during the late 1980's and which was radically altered in 1990. The European Community had a regime which permitted a certain quantity of frozen beef and veal to be imported into the community each year free from the normal Community tariff but subject to a duty of 20%. In these proceedings the annual quantity permitted to be imported into the Community was referred to both in evidence and in the earlier judgments as the "GATT quota" and the meat imported pursuant to the quota was referred to as "GATT meat".

11 Due to a removal of a ban on imports it became possible to import GATT meat into Ireland in 1986. Ireland was allocated in 1986, a quota of 455 tonnes of GATT meat. That was reduced to 395 tonnes in 1987 and was increased to 418 tonnes the following year and in 1989, was reduced to 381 tonnes. The regime provided that the distribution of the Irish quota was to be the responsibility of the Department of Agriculture as the responsible authority for the State. The Department determined that the quota should be allocated between meat processors and the allocation was based upon the certified figures for usage of meat for processing.

12 The evidence at this hearing established that Emerald Meats Limited applied to the Department of Agriculture for an allocation of part of Ireland's quota of GATT meat but that such application was refused. This was due to the fact that the quota was allocated amongst meat processors and Emerald Meats Limited was a meat trader rather than a meat processor.

13 Mr. McCarthy acting on behalf of Emerald Meats Limited then set about obtaining part of the GATT quota by buying from the meat processors the quota which had been allocated to them. The motivation for purchasing such quota was that a quota had value in that, even after the 20% duty had been paid, the meat could still be sold within the European Community at approximately one half of the prevailing Community price. This was due to the relatively inexpensive cost of the meat in certain meat producing countries outside of the Community.

14 The evidence before this court establishes that in it's early years Emerald Meats' business consisted entirely of non-GATT meat. This was due to the fact that it was not until 1986, that GATT meat could be imported into Ireland. Thereafter Emerald Meats Limited rapidly developed its GATT meat business to the extent that by 1989/90, it was by far the most significant part of its business.

15 In 1987 and 1988, Mr. McCarthy acting on behalf of Emerald Meats Limited purchased a substantial portion of the total Irish GATT meat quota. In 1987, Mr. McCarthy and Emerald Meats Limited bought 177 tonnes of the Irish GATT meat quota and imported 159 tonnes of meat. 20 tonnes of the quota which was not used for imports were sold to another party. In 1988, the amount of quota purchased increased to 385 tonnes. The cost of purchasing the 177 tonnes of quota had amounted to approximately £160,000 in 1987 and the 385 tonnes of quota cost somewhat over £400,000 in 1988.

16 Mr. McCarthy had identified a potential profit source in meat trading in the purchase of GATT meat quota and the importation of GATT meat into Ireland. In 1988, Mr. McCarthy purchased nearly the...