Kerry Co-Operative Creameries Ltd v an Bord Bainne

• Jurisdiction: Ireland
• Court: Supreme Court
• Judgment Date: 01 January 1991
• Date: 01 January 1991

(S.C.)

(H.C.)

Kerry Co-Operative Creameries Ltd

and

An Bord Bainne

- Power of society to amend rules - Whether shareholders a property right in the assets of the society - Whether amendment ultra vires. Restraint of trade - Contract - Whether rules of an industrial and provident society which benefit members who trade with that society over those who prefer not to do so are in restraint of trade - Whether the existence of an express covenant or condition in a contract is a precondition for the application of the doctrine - Constitution of Ireland, 1937, Art. 45. European Community - Question of EC law arising -Function of Supreme Court - Whether resolution of the question necessary to enable court to give judgment - Whether question should be referred to Court of Justice - Whether appropriate for court to express any view on such question - EEC Treaty, Article 177.

An Bord Bainne Co-Operative Ltd. (the board) was established as an industrial and provident society in 1972 with the purpose of marketing Irish dairy produce abroad. Its membership consisted of co-operative societies of farmer producers. Members made a nominal subscription for shares calculated by reference to the value of milk intake in their respective creameries in the previous year. The rest of the board's capital was raised by means of levies, the issue of deferred shares or loans. With the full consent of its members, the board never paid any dividends on its members' shares, maximised prices for the produce it bought and adopted a policy of using profits to reward those members who traded with it. The members of the board agreed upon a set of operating principles which provided, inter alia, that each member would get the same price for products of similar quality produced at the same time regardless of the ultimate market in which the product was sold and irrespective of when it was sold. Whilst members were obliged to sell export dairy products to the board and any breach of this obligation made them liable to have their membership terminated, no member had been expelled and there was no effective sanction to force members to fulfil their obligations. By means of waiver of the 1975 rules rather than any amendment thereof new purchasing arrangements were adopted by the board in 1981 to allow members a free choice as to whether to use the board's services or to export products directly. In 1987, the directors of the board commenced discussions with its members concerning the...