Osmond Ireland on Farm Business Ltd v Fergal McFarland

JurisdictionIreland
JudgeMiss Justice Laffoy
Judgment Date30 June 2010
Neutral Citation[2010] IEHC 295
CourtHigh Court
Date30 June 2010

[2010] IEHC 295

THE HIGH COURT

[No. 5368 P/2010]
Osmond Ireland on Farm Business Ltd v McFarland

BETWEEN

OSMOND IRELAND ON FARM BUSINESS LIMITED
PLAINTIFF

AND

FERGAL MCFARLAND
DEFENDANT

EUROPEAN COMMUNITIES (ANIMAL REMEDIES)(NO2) REG 2007 SI 786/2007 REG 36(3)(B)

ARBITRATION ACT 2010 SCHED 1 ART 8(1)

ARBITRATION ACT 1980 S5(1)

ARBITRATION ACT 2010 S4(2)

ARBITRATION ACT 2010 S1(2)

ARBITRATION ACT 2010 S3

ARBITRATION ACT 2010 S4(1)

ARBITRATION ACT 2010 S4(2)

ARBITRATION ACT 2010 S4(3)

ARBITRATION ACT 2010 S6

ARBITRATION ACT 2010 SCHED 1

ARBITRATION ACT 2010 ART 8.1

ARBITRATION ACT 2010 S11

ARBITRATION ACT 2010 S10

ARBITRATION ACT 2010 ART 9(2)

ARBITRATION ACT 2010 S6

ARBITRATION ACT 1954 S22(1)

TELENOR INVEST AS v IIU NOMINEES LTD & ESAT TELECOM HOLDINGS LTD UNREP O'SULLIVAN 20.7.1999 1999/23/7666

SHELBOURNE HOTEL HOLDINGS LTD v TORRIAM HOTEL OPERATING COMP LTD UNREP KELLY 18.12.2008 2008/58/12162 2008 IEHC 376

CAMPUS OIL LTD v MIN FOR INDUSTRY & ENERGY NO2 1983 IR 88

AMERICAN CYANAMID v ETHICON LTD 1975 AC 396

MURGITROYD & CO LTD v PURDY 2005 3 IR 12 2005 IEHC 110

EUROPEAN PAINT IMPORTERS LTD v O'CALLAGHAN & ORS UNREP PEART 10.08.2005 2005/23/4851 2005 IEHC 280

CURUST FINANCIAL SERVICES LTD v LOEWE- LACK- WERK OTTO LOEWE GMBH 1994 1 IR 450

ARBITRATION

Procedure

Arbitration clause - Application of Act - Operative date - Agency agreement - Non- solicit clause - Breach of agreement - Construction and application of clauses - Interim measures - Contra proferentem rule - Damages - Balance of convenience - Laches - Whether proceedings commenced after Act of 2010 came into operation - Whether right to arbitration waived - Whether interim measure included interlocutory injunction - Whether bona fide question to be tried - Whether damages adequate remedy - Whether defendant in breach of clause - Whether plaintiff guilty of laches - Campus Oil Ltd v Minister for Industry and Energy (No 2) [1983] IR 88 and American Cyanamid v Ethicon Ltd [1975] AC 396 applied; Telenor Invest AS v IIU Nominees Ltd [1999] IEHC 188; Shelbourne Hotel Holdings Ltd v Torriam Hotel Operating Company Ltd [2008] IEHC 376; Murgitroyd & Co Ltd v Purdy [2005] IEHC 110; European Paint Importers Ltd v O'Callaghan & Ors [2005] IEHC 280 and Curust Financial Services Ltd v Loewe- Lack- Werk [1994] 1 IR 450 considered - Arbitration Act 2010 (No 1) - Arbitration Act 1954 (No 26), s 22 - European Communities (Animal Remedies) (No 2) Regulations 2007 (SI 144/2007), reg 36(3)(b) - Defendant's motion to stay proceedings allowed (2010/5368P - Laffoy J - 30/6/2010) [2010] IEHC 295

Osmond Ireland v McFarland

Facts: The proceedings related to the construction and application of two clauses in an agency agreement entered into by the defendant with Cross Vetfarm Group Limited in 2001. The format of the agreement was a letter with conditions attached thereto. The defendant was informed by Cross in 2010 that the 2001 Agreement was to be assigned to Cross and that he would be operating as an agent of the plaintiff in accordance with a "Solicit orders" (SO) licence.

Held by Laffoy J. that having regard to the limited function of a representative operating under a "SO" licence, the plaintiff had not demonstrated that damages would be an inadequate remedy. The limited duration of the relevant clauses, the degree of regulation and the limited nature of the activity of a representative within the animal remedy sector and the fact that the dispute was to be referred to arbitration, the balance of convenience did not favour the granting of an injunction. The plaintiff had not been guilty of laches so as to disentitle them to relief. There would be an order referring the parties to arbitration and an order dismissing the application of the plaintiff.

Reporter: E.F.

1

Judgment of Miss Justice Laffoy delivered on the 30th day of June, 2010

1. Factual background
2

2 1.1 The issues which arise on the two motions now before the Court turn primarily on the construction and application of two clauses in an agency agreement entered into by the defendant with Cross Vetpharm Group Limited (Cross) on 26 th February, 2001 (the 2001 Agreement). The format of the 2001 Agreement was that in a letter dated 26 th February, 2001 addressed to the secretary of Cross, which was described as "Trading as Osmonds", which was signed by the defendant, the defendant accepted an appointment "to obtain business for Osmonds, a division of Cross … ("Osmonds")" and acknowledged that the conditions attached to the letter formed part of his appointment. The conditions, insofar as they are relevant for present purposes, provided as follows:

3

(a) Osmonds appointed the defendant to be its agent for the purpose of obtaining on behalf of Osmonds business upon the terms therein set out and in the letter. During the appointment the defendant would observe and perform the terms and conditions and would use his best endeavours to promote and extend the business of Osmonds in the area of Cavan/Monaghan, which was referred to as "the Area".

4

(b) The sole legal relationship created between Osmonds and the defendant was that of principal and agent.

5

(c) There was provision for termination of the appointment in clause 4.

6

(d) Clause 18(a), which is the provision invoked by the plaintiff in these proceedings, provided:

"For a period of one year after the termination of this Agreement for any cause whatsoever, the [defendant] shall not canvass, solicit or endeavour to take away from Osmonds in the Area business or any customers or clients of Osmonds in the Area who have been customers or clients of Osmonds in the Area prior to the termination of this Appointment. This restriction relates to the categories of products sold by the Representative on behalf of Osmonds."

7

The meaning of "categories of products" in that clause is a matter of controversy between the parties. Counsel for the defendant pointed to clause 6, which imposed certain constraints on the defendant during the continuance of the agreement and used different terminology, in that it provided that the defendant should not engage or be interested or concerned in any other business or trade "concerning goods or goods and services of the kind sold by Osmonds".

8

(e) Clause 21, which is the clause invoked by the defendant, dealt with arbitration and provided as follows:

"In the event of any dispute arising out of or in relation to this Appointment and this Agreement same shall be decided by arbitration in accordance with the provision ( sic) of the Arbitration Acts or any statutory modification or re-enactment thereof for the time being [in] force."

9

3 1.2 There is a lack of clarity on the affidavit evidence as to how the plaintiff stepped into the shoes of Cross as the principal under the 2001 Agreement. On the basis of the evidence put before the Court by the plaintiff it would appear that the plaintiff was incorporated in 2009. It has been averred in an affidavit sworn on 21 st June, 2010 by Paul Brady, the principal deponent on behalf of the plaintiff, that "Osmond" is a registered business name and not a registered corporate entity. It has been further averred by Mr. Brady that on or about 1 st January, 2010 Cross assigned the business name of Osmond to the plaintiff. Counsel for the defendant, adopting a reasonable approach, consented to a letter from Cross to the defendant dated 21 st December, 2009, on which there was endorsed an "Acknowledgement/Acceptance" signed by the defendant on 21 st January, 2010, to be put in evidence notwithstanding that it was not exhibited on affidavit. In that letter the defendant was informed by Cross that the 2001 Agreement was to be "assigned by Osmond's ( sic), a division of Cross … to [the plaintiff] (100% subsidiary of Cross …)" with effect from 1 st January, 2010. The purpose of the letter was to inform the defendant that from 1 st January, 2010 he would be operating as an agent of the plaintiff in accordance with what is known as a "Solicit orders" ("S.O.") licence from the Department of Agricultural, Fisheries and Food (the Department) dated 11 th December, 2009, in which he was named as a representative of the plaintiff and that he would be required to observe all of its obligations, provisions, terms and conditions. In the endorsement of 20 th January, 2010 the defendant agreed to be bound. I find it hard to believe that what transpired between Cross and the plaintiff with effect from 1 st January, 2010 merely involved an assignment of a registered business name.

10

4 1.3 It is convenient at this juncture to refer briefly to the significance of a "S.O." licence. The licence dated 11 th December, 2009 has not been exhibited but a later licence granted to the plaintiff and dated 15 th April, 2010 has been exhibited. That discloses that the "S.O." licence is granted by the Minister for Agriculture, Fisheries and Food under Regulation 36(3)(b) of the European Communities (Animal Remedies) (No. 2) Regulations 2007 (the 2007 Regulations). The licence authorises the named representatives of the licensee "to make visits from house to house for the sole purpose of soliciting, collecting or obtaining orders on behalf of the licensee". It is stipulated that orders "shall only be solicited for animal remedies with a designated route of supply 'licensed merchant' and 'companion animal medicine'", whatever that means. The licence is subject to conditions which stipulate the manner in which the representative or agent of the licensee may operate. What emerges from the conditions is that the agent's function is to solicit, collect or obtain an order, not to enter into a contract or to distribute the product. It is a very limited function.

11

5 1.4 The grounding affidavit of Mr. Brady sworn on 4 th June, 2010 suggests...

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