Irish Shell Ltd v Elm Motors Ltd

• Jurisdiction: Ireland
• Judgment Date: 01 January 1982
• Date: 01 January 1982
• Court: High Court

(H.C.)

Irish Shell Ltd

and

Elm Motors Ltd

Exclusive trading covenant - Oil company leasing land to proprietor of petrol filling station - Exclusive purchase covenant - Breach - Whether enforceable - Whether common law doctrine of retraint of trade applicable to restrictions in leases - Injunction - Enforcement of negative covenants -Whether plaintiff disentitled to relief by reason of delay - Balance of convenience - Jurisdiction of court to grant mandatory injunction or interlocutory application.

In 1965, the plaintiff motor fuel distributors purchased a plot of ground near Limerick for the purpose of developing the site as a retail petrol filling station. The site had a valid planning permission for such a development. In 1969, the defendants purchased a 6 acre plot adjoining the plaintiff's land and applied for planning permission for a large development to include a garage. This application was refused. In February, 1970, the defendant requested the plaintiff to grant a lease of their land to them and to allow them to incorporate that land in their own proposed development. The plaintiffs agreed and on the strength of this agreement the defendants obtained a new planning permission in respect of a development which comprised a filling station covering both the plaintiff's and the defendant's land. The lease as finally engrossed included covenants by the defendant to, inter alia, erect a garage, sell only the petroleum products marketed by the plaintiffs, exhibit the plaintiff's advertising and identification signs, and decorate the garage in the plaintiff's colours. In January, 1982, the defendants informed the plaintiffs that they had been advised that the covenant obliging them to purchase the plaintiff's products exclusively was unlawful as being an unreasonable restraint of trade, and warned the plaintiffs that they intended to determine their obligation to the plaintiffs due to, inter alia, the lack of interest shown by the plaintiffs in their business. The plaintiffs contended that the common law doctrine of restraint of trade did not apply to the covenants in their...