Esso Ireland Ltd and Another v 911 Retail Ltd

• Jurisdiction: Ireland
• Judge: Mr. Justice Kelly
• Judgment Date: 04 July 2013
• Neutral Citation: [2013] IEHC 389
• Judgment citation (vLex): [2013] 7 JIC 0407
• Court: High Court
• Date: 04 July 2013

[2013] IEHC 389

THE HIGH COURT

[No. 6119 P/2013]

Esso Irl Ltd & Ireland ROC Ltd v 911 Retail Ltd

COMMERCIAL

BETWEEN

ESSO IRELAND LIMITED AND IRELAND ROC LIMITED

PLAINTIFFS

AND

911 RETAIL LIMITED

DEFENDANT

AMERICAN CYANAMID CO v ETHICON LTD (NO 1) 1975 AC 396 1975 2 WLR 316 1975 1 AER 504

THE MOORCOCK, IN RE 1889 14 PD 64 1886-90 AER REP 530

DAKOTA PACKAGING LTD v AHP MANUFACTURING BV T/A WYETH MEDICA LTD 2005 2 IR 54

RAINY SKY SA v KOOKMIN BANK 2011 1 WLR 2900 2012 1 AER 1137 2012 1 AER (COMM) 1 2012 BUS LR 313 2011 2 CLC 923 2011 UKSC 50

SWEENEY v DUGGAN 1997 2 IR 531 1997 2 ILRM 211 1997/6/2236

BARRY v BUCKLEY 1981 IR 306 1981/9/1485

CHAN v OSSEOUS LTD 1992 1 IR 425 1991/10/2412

IRISH SHELL & BP LTD v JOHN COSTELLO LTD 1981 ILRM 66 1981/5/751

KENNY HOMES LTD v LEONARD & LECORN LTD UNREP COSTELLO 11.12.1997 1998/23/8779

GATIEN MOTOR CO LTD v CONTINENTAL OIL CO OF IRELAND LTD 1979 IR 406

Commercial - Landlord and tenant – Licence - Interlocutory relief - Possession - Contractual agreement - Implied term - Defence - Interim order - Balance of convenience - Fair issue to be tried

Facts: The defendant was a company that operated food service facilities on the premises of 32 ESSO filling stations that were owned by the first named plaintiff and operated by the second named plaintiff. The defendant had been operating on the premises for 11 years pursuant to an operating agreement. Separate licence agreements were in place for 31 of the filling stations, with the last filling station governed by a concession agreement that was similar in nature to the licences. The plaintiffs brought proceedings in order to eject the defendant from all 32 premises in light of it”s refusal to vacate. These proceedings concerned an application brought by the plaintiffs who sought an interlocutory injunction requiring the defendant to vacate all premises until there was a full hearing of the action.

In determining whether to grant interlocutory relief, the court had to consider whether there was a bona fide issue to be tried, whether damages at the conclusion of the substantive hearing would be inadequate to compensate the plaintiff if the relief sought was refused but he was ultimately successful in the proceedings, and where the balance of convenience lay. In terms of the first consideration, the defendant had conceded that the plaintiffs had established, to the relevant threshold of proof, that there was a serious issue to be tried. However, on the second and third considerations, it had been conceded by the plaintiffs that they were unable to demonstrate that damages would be inadequate as compensation at the conclusion of proceedings if the relief sought was refused or that the balance of convenience lay in favour of granting the application. Despite this, the plaintiffs argued all the agreements between the plaintiffs and the defendant had expired on the 20th June 2013 therefore the defendant was a trespasser with no right or entitlement to remain on any of the premises. The plaintiffs argued (and which was accepted by the defendant) that the defendant therefore had to show a serious issue for trial on the question of whether it was entitled to remain in possession of these premises. The defendant argued that there was an implied term within the operating agreement that both parties were obliged to negotiate any new agreements in good faith. It was also argued that when negotiations broke down in October 2012, there was an implied term in the operating agreement that required the plaintiff to serve a termination notice of one year”s duration. It was said that the defendant would be in lawful possession until one year after such a notice was served.

Held by Kelly J that it was clear from the operating agreement that the agreement itself would expire on the 20 ^th June 2012. It was further clear that on the 4 ^th May 2012, a supplemental agreement was made between the parties whereby it was agreed that the operating agreement would remain in force for a further 12 months until the 20 ^th June 2013. It had been revealed in correspondence that the operating agreement had been extended to facilitate the parties negotiating a new 10 year agreement. However, when no agreement had been reached by the 25 ^th October 2012, the first named plaintiff informed the defendant that it would be seeking to enter negotiations with new parties who could licence the relevant premises after the 20 ^th June 2013. It was also stipulated in the operating agreement that the terms of the 31 licence agreements coincided with that of the operating agreement therefore they would terminate at the same time as the operating agreement. In regards to the concession agreement, it had been an agreed term that either party could terminate the agreement with one calendar month”s notice. Such notice had been given by the plaintiffs to the defendant on the 14 ^th May 2013 that the agreement would terminate on the 20 ^th June 2013.

Because this was an interlocutory application and not the substantive hearing, it was held that the court was not required to determine the strength of the proposed defence, but merely whether the defence had any prospects of success. It was determined that the defendant may have difficulties convincing a court of the existence of the alleged implied terms of the operating agreement. However, the court was not prepared to rule that the defence had no prospect of success. On that basis, and because of the fact the plaintiff had rightly conceded it was unable to prove that damages at the conclusion of the substantive proceedings would be inadequate if the application was refused or that the balance of convenience lay in the plaintiff”s favour, the application was refused.

Interlocutory injunction refused

Introduction

1 1. This is an application for a series of interlocutory injunctions arising from the defendant's refusal to vacate 32 ESSO filing stations owned by the first plaintiff and operated by the second. The defendant in turn operates food service facilities from those premises and has been doing so for the last eleven years.

2 2. In respect of all but one of the 32 premises, the defendant has been working on foot of an operating agreement and 31 separate licence agreements entered into between the second plaintiff and the defendant. In respect of the 32 ^nd premises known as the "Belmont premises ", the defendant operates under a concession agreement entered into in 2001, the operation of which is, in effect, similar to the operating and licence agreements in the other 31 premises.

Principles Applicable

3 3. There is no dispute between the parties as to the principles which have to be applied on an application for an interlocutory injunction. First, it is necessary that the plaintiffs demonstrate a serious issue for trial. In the present case it is conceded that that threshold of proof has been achieved. Indeed it is conceded that the plaintiff has demonstrated not merely a serious issue for trial but has shown a strong case. Even if one were to consider the form of injunctive relief sought as being mandatory in nature it is conceded that the arguably higher threshold of proof which has to be achieved in such as case has been met.

4 4. Second, the plaintiff has to demonstrate that damages are an inadequate remedy. The plaintiff concedes that in the circumstances of this case it is unable to discharge that onus of proof.

5 5. The third matter which has to be demonstrated is that the balance of convenience lies in favour of the grant rather than the refusal of the injunction. Again, the plaintiff concedes that at this interlocutory stage it is unable to discharge that onus of proof having regard to the particular circumstances which obtain.

6 6. In due course I will touch upon why those concessions were made. In my view it was sensible to make those concessions having regard to the facts.

7 7. Given that the plaintiffs accept that they cannot discharge two of the three proofs normally required for an application of this sort one might ask on what basis is interlocutory relief sought?

8 8. The argument made by the plaintiffs is that the agreements governing their relationship with the defendant have all expired by efflux of time as of 20 ^th June, 2013. Therefore, the defendant is a trespasser with no right or entitlement to remain on the premises in question.

9 9. It is important to point out that this is my judgment on an interlocutory application only. Whilst the plaintiffs were prepared to treat the interlocutory hearing as the trial of the action, no such concession was made by the defendant. Accordingly, the court is constrained to remain strictly within the limits of what is permitted on an interlocutory application. Those limits are identified in the speech of Lord Diplock in American Cyanamid v. Ethicon [1975] 1 All E.R. 504 at 510, where he says:-

"It is no part of the court's function at this stage of the litigation to try to resolve conflicts of evidence on affidavit as to facts on which the claims of either party may ultimately depend nor to decide difficult questions of law which call for detailed argument and mature considerations. These are matters to be dealt with at the trial."

10 10. Notwithstanding that constraint the plaintiffs say that the defendant is so devoid of any arguable case supportive of an entitlement to remain in occupation of the premises that the relief sought should be granted.

11 11. In examining the question of what defence is demonstrated by the defendant it is accepted that a low threshold of proof needs to be discharged. It is only necessary that the defendant should demonstrate an argument which would survive an application to have it struck out under the inherent jurisdiction of the court as having no...