Irish Shell and B.P. Ltd v Ryan and Another

• Jurisdiction: Ireland
• Judgment Date: 13 July 1966
• Date: 13 July 1966
• Docket Number: (1966 No. 1111 P.)
• Court: High Court

Irish Shell and BP Ltd. v. Ryan.

IRISH SHELL AND BP LIMITED

Plaintiffs

and

NOEL RYAN and MAURA RYAN

Defendants.

(1966 No. 1111 P.)

Restraint of trade - Injunction - Petrol service station - Supply (or solus) agreement - Hire-purchase agreements in respect of equipment - Money advanced by petroleum suppliers - Advances secured by mortgage deeds - Breach of agreements by service station proprietors - Service station proprietors changing over to products of rival suppliers - Principles governing granting of interlocutory injunction - Balance of convenience - Irreparable damage - Restrictive Trade Practices Act, 1953 (No. 14 of 1953), s. 9 -Restrictive Trade Practices (Motor Spirit and Motor Vehicle Lubricating Oil) Order, 1961 (S.I., 1961, No. 294), Arts. 6 and 13 - Restrictive Trade Practices (Motor Spirit and Motor Vehicle Lubricating Oil) Order, 1961(Amendment) Order, 1962 (S.I., 1962, No. 62) - Restrictive Trade Practices (Confirmation of Orders) Act, 1962 (No. 16 of 1962).

The plaintiffs were wholesalers of motor fuel, lubricating oil and other petroleum products. The defendants, husband and wife, were proprietors of a petrol filling station in Dublin. In order to develop the site, the defendants sought financial aid from the plaintiffs who advanced to them a total of £7,000, which advances were secured by two indentures of mortgage, dated respectively the 11th December, 1963, and the 8th May, 1964. A supply (or solus) agreement, dated the 9th September, 1963, provided for the supply of motor fuel by the plaintiffs to the defendants over a five-year period. The pumps and tanks at the site were held by the defendants from the plaintiffs under two hire-purchase agreements, dated respectively the 9th January, 1964, and the 30th August, 1965. The mortgage indenture of the 11th December, 1963 (the terms of which were made applicable to the mortgage indenture of the 8th May, 1964), contained a compulsory trading clause, a clause similar in effect to a continuity clause and a retail price maintenance clause. Clause 3 thereof prevented the repayment of the principal sum before the 11th December, 1979, a period of 16 years. The supply agreement contained a tying covenant, a compulsory trading covenant and a continuity covenant. The tie was for five years. The hire-purchase agreements contained a tying clause and a compulsory trading covenant; the duration of one agreement was for five years, the other for ten years. The defendants admitted being in breach of the several agreements in that they had ceased to sell the plaintiffs' products known under the trade name, "Shell," and had changed over to "Golden" products which were marketed by I.M.F.D. Ltd., trade competitors of the plaintiffs. The plaintiffs conceded that the financial loss sustained by them through loss of profits on sales was negligible, having regard to the size and magnitude of their business. They contended, however, that damage was being done to their trading reputation as a result of the change-over by the defendants. They claimed that the site was known to the public as a "Shell" site; that the impression created in the public mind by the change-over must be that the quality of "Shell" petrol had deteriorated; and that another impression that could have been created was that"Shell" was in business with the sellers of "Golden" petrol, whereas they were rivals. In so far as the defendants were concerned, the service station appeared to be their only means of livelihood. They claimed that they had no personal income out of the service station, despite working long hours, while selling "Shell": that the gross average weekly profit from selling"Shell" was £25 compared with £350 from selling "Golden": in addition, they were required to pay the sum of £3,000 in compromise of litigation concerning part of the site; that a loan to discharge that sum would be backed by I.M.F.D. Ltd., if they were not enjoined from selling "Golden";that if the loan were not forthcoming, the said part of the site might be reentered by the debtors and the station would have to close. The plaintiffs applied to the High Court for an interlocutory injunction to restrain the defendants from purchasing or selling at the service station motor fuel other than "Shell," and from committing other breaches of the various agreements until judgment in the action.

Held by Budd J. 1, that covenants in restraint of trade are prima facieinvalid and the onus is on the party upholding the restraint to show that the restraint imposed is no more than is reasonable in the interests of the parties concerned.

2, That the plaintiffs had not adduced any detailed evidence indicating that a restrictive period of five years was no more than adequate to protect their legitimate interests.

Effect of the Restrictive Trade Practices (Motor Spirit and Motor Vehicle Lubricating Oil) Order, 1961 (S.I., No. 294 of 1961), considered.

Observations of Stamp J. in Regent Oil Company Ltd. v. J. T. Leavesley, Ltd., [1966] 2 All E. R. 454, at p. 457, applied.

3, That having regard to two decisions of the Court of Appeal in England, viz., Petrofina (Great Britain) Ltd. v. Martin, [1966] 2. W. L. R. 318 andEsso Petroleum Company Ltd. v. Harper's Garage (Stourport) Ltd., [1966] 1 All E. R. 725, and since there does not at present appear to be any difference in the law relating to restraint of trade in the two countries, the supply agreements and the mortgage deeds may be held to be invalid at the trial of the action.

Per curiam:—While the hire-purchase agreements are not in the same category as the supply agreement, "I am not prepared to go so far as to say that the nature of the restrictions imposed by these agreements, extending as they do over periods of five and ten years respectively, are of so limited a nature in their application that the probability is that the defendants' case on these agreements will ultimately fail."

4, That even if the plaintiffs would suffer irreparable damage, the balance of convenience is still the determining factor. Per Budd J.:—"All that is meant by the term, 'irreparable damage,' is that the injury is material and not adequately reparable by damages in that the amount of damage cannot be accurately ascertained in money's worth."

5, That on the balance of convenience, on the evidence, the nature of the injury which the defendants would suffer if the injunction were granted and should they ultimately turn out to be right would be greater than that which the plaintiffs would suffer if the injunction were refused and they should ultimately turn out to be right.

Dicta of Ó Dálaigh ó dálaigh C.J. and Walsh J. in Esso Petroleum Company (Ireland) Ltd. v. Fogarty[1965] I. R. 531 and of Lavery J. in Educational Company of Ireland Ltd. v. Fitzpatrick and Others, [1961] I. R. 323, at pp. 336, 337, considered and applied.

Notice of Motion.

The plaintiffs, Irish Shell and BP Ltd., commenced proceedings against the defendants, Noel Ryan and Maura Ryan, by plenary summons, wherein they claimed declarations that a supply agreement of the 9th September, 1963, and two hirepurchase agreements, dated respectively the 9th January 1964, and the 30th August, 1965, were valid and binding agreements between the plaintiffs and the defendants. The plaintiffs also sought injunctions restraining the defendants from purchasing or selling at the King's Inn Service Station, 20-24 Bolton Street, Dublin, motor fuel other than the plaintiffs' brands of motor fuel and from selling through the pumps situate at the said service station any brand of motor fuel other than the plaintiffs' brands of motor fuel or from committing any other breach of their contracts with the plaintiffs. By notice of motion, dated the 23rd May, 1966, the plaintiffs sought against the defendants interlocutory injunctions in the same terms until judgment in the action.

The facts have been summarised in the headnote and are fully stated in the judgment of Budd J., post.

Cur. adv. vult.

Budd J. :—

The plaintiffs in these proceedings are wholesalers of motor fuel, lubricating oil and other petroleum products. The defendants, husband and wife, are the proprietors of a petrol filling station, situate at 20 to 24 Bolton Street, Dublin, known as the King's Inn Service Station.

Prior to 1964, the defendants acquired some old houses on the site, demolished them and laid out the site. They own the freehold interest in the site but the Irish Sisters of Charity own the leasehold interest in the area formerly covered by No. 22 Bolton Street. This part of the site has been the subject-matter of litigation which was compromised on certain terms whereby, in short, the lease of that part of the site was to be surrendered to the defendants on their making a payment in respect thereof of £3,000 within three months from the 3rd February, 1966, which said sum has not yet been paid.

Certain agreements and deeds have been entered into between the parties which I shall refer to hereafter in detail. The main issue in the proceedings proper is whether or not these agreements are invalid as being in restraint of trade.

The motion at present before me is one in which the plaintiffs seek to have the defendants restrained until judgment in the action from committing various alleged breaches of these agreements.

For the purpose of enabling them to lay out, develop and equip the site the defendants sought financial aid from the plaintiffs who made monetary advances to them. These advances were secured by two indentures of mortgage, dated respectively the 11th December 1963, and the 8th May, 1964. The defendants also entered into an agreement with the plaintiffs, dated the 9th September, 1963, to come into operation on the 20th October, 1964, which provided for the supply of motor fuel to the defendants on certain terms over a five-year period. This agreement is herein referred to as"the supply agreement."

There are at present on the site...