Estuary Logistics and Distribution Company Ltd t/a L.S. Sales v Lowenergy Solutions Ltd and James Tangney

• Jurisdiction: Ireland
• Judge: Mr. Justice Clarke
• Judgment Date: 06 December 2007
• Neutral Citation: [2007] IEHC 410
• Docket Number: [2006 No. 3535P]
• Court: High Court
• Date: 06 December 2007

Estuary Logistics and Distribution Company Ltd (t/a L.S. Sales) v Lowenergy Solutions Ltd & Tangey

BETWEEN

ESTUARY LOGISTICS AND DISTRIBUTION COMPANY LIMITED T/A L.S. SALES

PLAINTIFFS

AND

LOWENERGY SOLUTIONS LIMITED AND JAMES TANGNEY

DEFENDANTS

[2007] IEHC 410

[No. 3535P/2006]

THE HIGH COURT

CHELTENHAM & GLOUCESTER BUILDING SOCIETY v RICKETTS & ORS 1993 1 WLR 1545

FINANCIERA AVENIDA v SHIBLAQ 14.1.1991 TLR

COLUMBIA PICTURE INDUSTRIES INC & ORS v ROBINSON & ORS 1986 3 AER 338 1987 CH 38

NORWEST HOLST CIVIL ENGINEERING LTD v POLYSIUS LTD 23.7.1987 TLR

AIR EXPRESS LTD v ANSETT TRANSPORT INDUSTRIES (OPERATIONS) PTY LTD 1979 146 CLR 249

1. Introduction

2 2 1.1 These, and connected, proceedings have been the subject of a significant number of interlocutory applications over the last number of months. By way of background it should be noted that the proceedings generally involve disputes arising out of commercial arrangements for the distribution of heating devices. There would appear to have been a complete breakdown in relations between the parties to those agreements, resulting in significant litigation. At the core of the dispute between the parties remains an issue as to whether the ongoing supply of product in accordance with the commercial arrangements between the parties ceased by virtue of, on the one hand, non-payment or, on the other hand, non supply. As I have frequently pointed out during interlocutory hearings and judgments to date, the truth of the contentions of the parties in respect of that core issue is a matter which will have to await a full trial.

3 3 1.2 However the issue which I have to determine today concerns only one aspect of the history of the relevant litigation but nonetheless raises an important point of law. As part of the process to date the plaintiff ( "Estuary Logistics") obtained an interlocutory junction on 15 ^th of February, 2007 which had the effect of requiring the defendant ( "Lowenergy Solutions") to continue to supply product, subject to a regime for payment which is set out in the schedule to the order which I made on that date. In the ordinary way, as part of the price which had to be paid for securing that interlocutory injunction, Estuary Logistics gave the usual undertaking as to damages in that it undertook "to abide by any Order which this Court may hereafter make us to damages in the event of this Court being of opinion that the first named Defendant shall have suffered any damage by reason of this Order which the Plaintiff ought to pay". Thereafter on 29 ^th May, 2007, for reasons which it will be necessary to set out in more detail later in the course of this judgment, I ordered that the injunction granted by the previous order of 15 ^th February, 2007 should be discharged.

4 4 1.3 In those circumstances the question of how properly to deal with the undertaking as to damages given by Estuary Logistics has now been raised.

5 5 1.4 Finally, by way of background, it should be noted that Lowenergy Solutions is now in liquidation. The application which I have to determine is brought by that company but, in substance, by its liquidator. However at all times material to the events giving rise to the issues generally between the parties and, in particular, the grant and subsequent discharge of the interlocutory injunction with which I am concerned, Lowenergy Solutions was under the control of the second named defendant ( "Mr Tangney").

2. The Application

2 2 2.1 In its notice of motion Lowenergy Solutions seeks an order compelling Estuary Logistics to make an immediate payment in the amount of €109, 500.54 to Lowenergy Solutions on foot of the undertaking as to damages. An additional claim was brought in respect of monies which were believed to have been in the hands of Messrs Actons Solicitors who, at one stage, held monies on behalf of Estuary Logistics. However it is now clear that no such monies were held as of the date of this application or are any longer held and that aspect of the application was not, therefore, pursued.

3 3 2.2 Against that background, it is appropriate to turn to the principles by reference to which an application of this type should be judged.

I, therefore, turn to the legal principles applicable.

3. The Law

2 2 3.1 There does not appear to be any direct authority in this jurisdiction on the precise issue. However in Cheltenham & Gloucester Building Society v Ricketts [1993] 1 WLR 1545, the Court of Appeal in the United Kingdom set out the relevant principles to be applied in considering the enforcement of an undertaking as to damages. At pp. 1551/1552 Neill L.J., having reviewed all relevant authorities, set out the following principles concerning the enforcement of an undertaking as to damages:-

"(1) Save in special cases an undertaking as to damages is the price which the person asking for an interlocutory injunction has to pay for its grant. The court cannot compel an applicant to give an undertaking but it can refuse to grant an injunction unless he does. (2) The undertaking, though described as an undertaking as to damages, does not found any cause of action. It does, however, enable the party enjoined to apply to the court for compensation if it is subsequently established that the interlocutory injunction should not have been granted. (3) The undertaking is not given to the party enjoined but to the court. (4) In a case where it is determined that the injunction should not have been granted the undertaking is likely to be enforced, though the court retains discretion not to do so. (5) The time at which the court should determine whether or not the interlocutory injunction should have been granted will vary from case to case. It is important to underline the fact that the question whether the undertaking should be enforced is a separate question from the question whether the injunction should be discharged or continued. (6) In many cases injunctions will remain in being until the trial and in such cases the propriety of its original grant and the question of the enforcement of the undertaking will not be considered before the conclusion of the trial. Even then, as Lloyd L.J. pointed out in Financiera Avenida v. Shiblaq, The Times, 14 January 1991; Court of Appeal (Civil Division) Transcript No. 973 of 1990 the court may occasionally wish to postpone the question of enforcement to a later date. (7) Where an interlocutory injunction is discharged before the trial the court at the time of discharge is faced with a number of possibilities. (a) The court can determine forthwith that the undertaking as to damages should be enforced and can proceed at once to make an assessment of the damages. It seems probable that it will only be in rare cases that the court can take this course because the relevant evidence of damages is unlikely to be available. It is to be noted, however, that in Columbia Pictures Industries Inc v. Robinson [1987] Ch. 38. Scott J. was able, following the trial of an action, to make an immediate assessment of damages arising from the wrongful grant of an Anton Piller order. He pointed out that the evidence at the trial could not be relied on to justify ex post facto the making of an ex parte order if, at the time the order was made, it ought not to have been made (see [1987] 3 All ER 338 at 378, [1987] Ch 38 at 85). (b) The court may determine that the undertaking should be enforced but then direct an inquiry as to damages in which issues of causation and quantum will have to be considered. It is likely that the order will include directions as to pleadings and discovery in the inquiry. In the...