Esso Petroleum Company (Ireland) Ltd v Fogarty

• Jurisdiction: Ireland
• Court: Supreme Court
• Judgment Date: 21 December 1965
• Docket Number: (1965. No. 2289 P.)
• Date: 21 December 1965

Esso Petroleum Co. (Ireland) Ltd. v. Fogarty.

ESSO PETROLEUM COMPANY (IRELAND) LIMITED

Plaintiffs

and

JAMES PETER FOGARTY

Defendant.

(1965. No. 2289 P.)

Supreme Court.

Breach of contract - Solus agreement - Interlocutory injunction - Agreement by defendant to deal exclusively in petrol supplied by plaintiffs - Sub-demise by defendant of petrol pumps and storage tanks to third party - Purchase by third party of petrol supplied by another company.

By agreement, dated the 21st April, 1964, the defendant, for the consideration appearing therein, agreed to purchase his total requirements of motor fuel at his service station at Herbert Park, Dublin, exclusively from the plaintiff Company for a period of five years from the date of the agreement, and not to sell, or offer to sell, the said service station or the business carried on therein during the said period without first giving the plaintiff Company an opportunity of introducing a purchaser, and to use his best endeavours to ensure that any purchaser, assignee or transferee would enter into a similar agreement with the plaintiff Company.

On the 27th October, 1965, the defendant purchased and commenced selling a supply of Golden motor fuel from a company other than the plaintiffs. On the 29th October, 1965, the plaintiff Company, having issued a plenary summons claiming an injunction restraining the defendant from selling motor fuel in breach of the said agreement, applied for, and obtained, an interim injunction restraining the defendant by himself and his servants and agents from taking or receiving Golden motor fuels or any motor fuels other than Esso motor fuels, at the said station. This injunction was effective up to the 3rd November, 1965. On the 29th October, 1965, the plaintiff Company served notice of motion seeking an interlocutory injunction restraining the defendant from taking or receiving supplies of Golden motor fuel at the said station in breach of the said agreement. On the 8th November 1965, the defendant agreed with one, William Allen, to sub-let to Allen part of the service station containing the petrol pumps and storage tanks used for the supply and storage of petrol at the service station. On the 15th November, 1965, Kenny J. granted to the plaintiff Company an interlocutory injunction restraining the defendant from taking or receiving at the said service station deliveries of Golden motor fuels or any motor fuels other than Esso motor fuels purchased from and supplied by the plaintiff Company. On an appeal by the defendant to the Supreme Court, it was

Held by the Supreme Court ( Ó Dálaigh ó dálaigh C.J., Lavery and Walsh JJ.) that the plaintiffs having failed to show to any substantial degree that the contemplated sub-demise would be a breach of the agreement of the 21st April, 1964, and because the effect of an interlocutory injunction would not be to preserve the status quo, and having regard to the real nature of the case and the extent of the damage likely to be incurred by the plaintiff Company, the appeal should be allowed and the order for the injunction should be discharged.

Notice of Motion.

By notice of motion, dated the 29th October, 1965, the plaintiffs, Esso Petroleum Company (Ireland) Limited, applied to the High Court for an interlocutory injunction"restraining the defendant by himself, his servants or agents, from taking or receiving into his motor garage and service station, known as Herbert Garage or O'Brien's Garage, Herbert Park, Ballsbridge, in the City of Dublin, deliveries of Golden motor fuels or any motor fuels other than Esso motor fuels purchased from and supplied by the plaintiffs' Company in breach of the contractual obligations of the defendant to purchase his total requirements of motor fuels at the said motor garage and service station exclusively from the plaintiffs' Company now and during the currency of a certain agreement in writing dated the 21st day of April, 1964, entered into by the defendant with the plaintiffs' Company."

The relevant portions of the agreement of the 21st April 1964, were as follows:—

"IN CONSIDERATION of your agreeing to assist us in the following manner in connection with our business and premises at the above Service Station:—

to the extent of £500 (of which £..... has already been received) payable on our production of receipted accounts

WE HEREBY UNDERTAKE

1. To purchase our total requirements of Motor Fuels at the Service Station exclusively from you for the period of Five years from to-day's date and to give you at least two clear working days' notice of our requirements and to take supplies with a frequency of not more than once every two weeks and in quantities not less than 1,000 gallons.

2. To operate the Service Station as far as possible in accordance with the principles of the Esso Dealer Co-Operation Plan set out overleaf.

3. Not to sell or offer to sell the Service Station or our business carried on there during the period of Five years from to-day's date without first giving you the opportunity to introduce a purchaser and to use our best endeavours to ensure that any purchaser, assignee or transferee of the Service Station or the business will enter into an Agreement with you similar hereto.

IN THE EVENT OF OUR

(a) ceasing to occupy the Service Station for any reason whatsoever

(b) ceasing to carry on there the business of retailers of motor fuels

(c) failing to carry out any of our obligations hereunder, or

(d) making any arrangement with our creditors or becoming bankrupt/going into liquidation at any time during the Five year period referred to in clause 1 above then the sum of £500 shall be apportioned at the rate of £100 per year up to the date of any such event and we will refund to you any excess over this apportioned amount which you may have paid to us PROVIDED THAT any such refund shall be without prejudice to any rights or claims you may have against us in respect of any breach of any of our undertakings set out above."

In the course of the hearing of the motion in the High Court the defendant undertook to repay such part of the sum of £500 mentioned in the agreement as was repayable under the terms thereof.

From the above judgment and the order made thereunder the defendant appealed to the Supreme Court ( Ó Dálaigh ó dálaighC.J., Lavery and Walsh JJ.). The grounds of appeal were that the High Court Judge misdirected himself and was wrong in law "1, in granting (or continuing) the interim injunction already given in the terms of the said order of the High Court or as given in his said judgment;

2, In...