Wesumat (Ireland) Ltd v Topaz Energy Ltd

• Jurisdiction: Ireland
• Judge: Mr Justice Michael Peart
• Judgment Date: 17 June 2008
• Neutral Citation: [2008] IEHC 185
• Docket Number: Record Number: No. 4365P/2008
• Court: High Court
• Date: 17 June 2008

[2008] IEHC 185

THE HIGH COURT

Record Number: No. 4365P/2008

Wesumat (Ireland) Ltd v Topaz Energy Ltd

Between:

Wesumat (Ireland) Limited

Plaintiff

And

Topaz Energy Limited

Defendant

CAMPUS OIL LTD v MIN FOR INDUSTRY (NO 2) 1983 IR 88

IRISH LIFE v DUBLIN LAND SECURITIES 1989 IR 253

CURUST FINANCIAL SERVICES v LOEWE 1994 1 IR 450

INJUNCTIONS

Interlocutory

Contract - Termination - Principles to be applied - Fair issue to be tried - Whether damages adequate remedy - Campus Oil Ltd v. Minister for Industry and Energy [1983] IR 88 and Curust Financial Services Ltd v Loewe-Lack-Werk [1994] 1 IR 450 applied - Injunction refused (2008/4365P - Peart J - 17/6/2008) [2008] IEHC 185

Wesumat (Ireland) Ltd v Topaz Energy Ltd

Facts: The plaintiff sought an interlocutory injunction restraining the termination of a maintenance agreement pending the hearing of proceedings for declaratory relief. The plaintiff had previously entered into a maintenance and service agreement with Statoil, prior to its acquisition by the defendant company. The plaintiff later entered into a maintenance agreement with the defendant, which the defendant sought to terminate by way of fax message sent on 6 March 2008, giving three months notice of termination. The plaintiff alleged that the agreement was not validly terminated and submitted that the agreement could only be terminated if there was fault on the part of the plaintiff. The defendant argued that the agreement could be terminated at will having regard to clause 16 of the agreement. The maintenance contracts with the defendant generated 26% of all the plaintiff’s annual maintenance revenues, amounting to €150,000. The plaintiff submitted that if these proceedings are unsuccessful and its maintenance contract with the defendant is terminated, the plaintiff company will be forced into liquidation. However, it was accepted that the defendant would be a mark for any award of damages.

Held by Peart J. in refusing the application: That there was a fair issue to be tried. There was at least an arguable case made out by the plaintiff that the agreement operated by the parties did not contain in the version of the agreement being operated at the time of the proceedings, the provisions as to termination in clause 16. Since the losses were clearly quantifiable, and were purely commercial in nature, and the defendant was a mark for those damages, an award of damages would be an adequate remedy, even if a winding up of the plaintiff company was inevitable.

Reporter: L.O’S.

Judgment of

Mr Justice Michael Peart

1 This is an application for an interlocutory injunction pending the hearing of these proceedings which were commenced by way of Plenary Summons issued on the 29^th May 2008.

2 In the General Endorsement on the Plenary Summons issued herein on the 29^th May 2008, the plaintiff seeks three declarations as follows:

3 1. A declaration that the maintenance and service agreement entered into on or about the 12^th of February 2007 between the plaintiff and the defendant ("the Agreement") has not been validly terminated and that same continues to subsist.

4 2. A declaration that the defendant is estopped from purporting to terminate the Agreement by its letter dated the 6^th day of March 2008

5 3. A declaration that the defendant has wrongfully sought to terminate the Agreement.

6 In addition, certain injunctive reliefs are sought to restrain the termination of the Agreement, and the appointment of any other person or entity to carry on the services provided by the plaintiff under the Agreement.

7 More recently the defendant has been put on notice that the plaintiff seeks leave to amend the General Endorsement of Claim by the addition of the following claim, in the alternative, for rectification of the Agreement in question as follows:

"(g) In the alternative an Order rectifying clause 16 of the Agreement by deleting the first paragraph thereof and by including the following in lieu thereof:"

8 'The Service Provider or Customer may terminate this contract upon giving 2 months notice to the other at the last known address for any non-performance of its obligations or non-payment under the contract and all monies due shall remain owing under the contract'."

9 Since November 1999, the plaintiff has been in the business of selling car and truck washes to operators of retail petrol/diesel stations throughout Ireland, having been appointed as sole distributor of such products here by a German multi-national company, Washtec AG. ("Washtec") described by the plaintiff in its grounding affidavit as a world leader in the manufacture of such washers.

10 In addition to selling such products throughout this country, it appears that the purchaser will generally enter into a renewable contract with the plaintiff for the maintenance and repair of that product.

11 Relevant to this application is that the plaintiff avers that while the percentage of its business represented by car wash sales and that represented by its maintenance contracts differs from year to year, the former represents approximately 48% of its business, and 52% by the latter.

12 In 2005 the defendant company acquired the retail and commercial business of Shell in Ireland and Northern Ireland, and in November 2006 acquired the retail and commercial business of Statoil in Ireland, and currently operates 55 Shell service stations and 69 Statoil service stations throughout the country.

13 The plaintiff company had traded with Statoil since 1999, and on the 15^th March 2004 entered into a two year maintenance contract with Statoil which came to an end in March 2006 ("the 2004 Agreement). It is averred that since that date the agreement with Statoil continued to operate on the same terms.

14 In July 2006, (and therefore before the acquisition by the defendant of the Statoil business here), discussions had taken place between the plaintiff and Statoil in relation to a new maintenance contract for the washes supplied by the plaintiff to Statoil service stations in this country. The plaintiff says that the person with whom they were negotiating in Statoil at this time was Mr Ken Kearney.

15 Ultimately by October 2006, Statoil decided that it would put the contract out for tender to the plaintiff and other operators, and by letter dated 3^rd October 2006 the plaintiff was given the details and specification for such tender, including "Proposed service agreement outlining service requirements for all equipment". Tenders were required to be submitted by close of business on the 5^th November 2006.

16 The plaintiff has averred that during the course of the negotiations with Mr Kearney on behalf of Statoil they became aware that the Statoil business had been taken over by the defendant company herein, who were already operating Shell stations. As it happens, Mr Kearney then became an employee of the defendant company following its takeover of Statoil, and it appears that the plaintiff company was anxious at that time to know if the defendant would continue these negotiations or would discontinue same. In fact they continued, and furthermore were extended to include negotiation in relation to washes at some thirteen Shell stations being run by the defendant company.

17 The plaintiff was successful in that tender, and according to the plaintiff an agreement ("the Topaz Agreement") was entered into with the defendant in February 2007, even though the earlier drafts of the agreement had recited the parties as being the plaintiff and Statoil. I refer later to the fact that as late as 27^th April 2007 the draft agreement was still undergoing revision, and does not appear to have been finalised and executed by that date.

18 The precise terms of that agreement which related to how and in what circumstances it could be terminated are in controversy now since the plaintiff was informed through an e-mail dated 20^th June 2007 from its newly appointed procurement manager, Ms. Ita Murray, that she intended re-tendering all significant supply agreements, which included the maintenance agreement with the plaintiff company. Such tenders were sought only from multi-national companies, which therefore excluded the plaintiff company. However, Washtec AG, the company already referred to, which has appointed the plaintiff as its distributor of washes in this country, tendered on its own behalf. That tender was unsuccessful, and on the 26^th November 2007 the plaintiff received a telephone call from Ms. Murray that Washtec had been unsuccessful and that she intended terminating the plaintiff's existing agreement as and from the 31^st march 2008. The plaintiff company requested that she put that in writing, but it appears that through an oversight on her part, Ms. Murray failed to do so. However, on the 6^th March 2008 a telefax massage was sent by Topaz Energy Group Limited (not Topaz Energy Limited, the defendant) giving three months' notice of termination. Nothing in particular turns on the name of the company from which this communication emanated, but in her affidavit Ms. Murray states that it was Topaz Energy Group Limited which acquired Irish Shell Limited in 2005 and Statoil (Ireland) in 2006.

19 At the heart of this case are differing views on the part of the plaintiff and the defendant as to the basis on which the Topaz Agreement could be terminated by the defendant. The plaintiff states that it could be terminated only if there was fault on the part of the plaintiff, whereas the defendant states that it could be terminated at will. Relevant to that issue is the fact that even after February 2007 when the plaintiff states it commenced working this Agreement ahead of any execution thereof, the draft went through several revisions. Of relevance to the plaintiff's argument is that Mr Ken Kearney, the person in...