Irish Shell Ltd v Elm Motors Ltd

• Jurisdiction: Ireland
• Court: Supreme Court
• Judgment Date: 01 January 1984
• Docket Number: [1982 No. 3465P]
• Date: 01 January 1984

(H.C., S.C.)

Irish Shell Ltd

and

Elm Motors Ltd

Balance of convenience - Contract - Terms - Enforcement - Restraint of trade - Covenant in lease -Covenant in positive form - Solus agreement with oil company - Lessor's remedy for breach of covenant - Mandatory and prohibitory injunctions - Interlocutory relief.

The defendants carried on a garage and petrol service business and the plaintiffs, an oil company, sold petroleum products. In the year 1969 the defendants bought a six-acre plot beside a public road and adjoining an acre plot which belonged to the plaintiffs. The plaintiffs had obtained planning permission for the development of their plot as a petrol and service station. The defendants' application for a similar permission for their plot was refused; they appealed against the refusal but withdrew the appeal after they had obtained the plaintiffs' agreement to grant the defendants a lease of the plaintiffs' plot. Subsequently, the defendants applied for and, on the 24 July, 1970, obtained planning permission to develop the combined plots as a petrol and service station. By a lease dated the 30 October, 1973, the plaintiffs demised their plot to the defendants for a term of 42 years. The lease contained covenants by the defendants to use the demised plot and their plot only for the purpose of a motor garage, sales room and petrol and service station; to buy from the plaintiffs exclusively all petroleum products required by the defendants for sale or use on the combined plots; to exhibit on the combined plots the plaintiffs' signs and advertising matter and to decorate the combined plots in the plaintiff's standard colours. The defendants built a service station and installed several petrol pumps mainly, it would appear, on their own plot. On the 1 March, 1982, the defendants ceased all trading with the plaintiffs and began to buy the supplies for their business from a new supplier; the defendants removed all the plaintiffs' insignia and advertising signs from the combined plots. The plaintiffs claimed in the High Court mandatory and prohibitory injunctions compelling the defendants to comply with their covenants in the lease. By notice of motion dated the 23 March, 1982, the plaintiffs applied for interlocutory relief, in the terms of the endorsement of claim on their summons, pending the hearing of their action. Held by Costello J., in granting the interlocutory relief sought by the plaintiffs, 1, that where a lessee first acquires...