Pre-Trial Injunctions
Cases
Merck Sharp & Dohme Corp v Clonmel Healthcare Ltd
[2019] IESC 65
Clarke C.J.
O’Donnell J.
McKechnie J.
Dunne J.
O’Malley J.
Between/
Merck Sharp & Dohme Corporation
Plaintiff/Appellant
AND
Clonmel Healthcare Limited
Defendant/Respondent
Judgment of O’Donnell J. delivered the 31st day of July, 2019.
Introduction
1 The appellant, Merck Sharp & Dohme Corporation (“Merck”), appeals against the decision of the Court of Appeal (Peart and Whelan JJ., Hogan J. dissenting) upholding the judgment of the High Court (Haughton J.) refusing an interlocutory injunction restraining the infringement by the respondent, Clonmel Healthcare Limited (“Clonmel”), of a Supplementary Protection Certificate (“S.P.C.”), which itself had expired before the hearing of this appeal. As such, it might appear to be a matter of, at best, academic interest, and then only to the specialist. However, this appeal raises important questions as to the proper approach to the application for an interlocutory injunction, which is an important remedy in many different disputes.
Facts
2 Merck (or its corporate parent), was the holder of a number of patents and S.P.C.s which are relevant to these proceedings. The earliest relevant patent was European Patent No. 0 033 538 (“the 538 patent”) relating to simvastatin, a statin for the treatment of cholesterol. The patent was filed in 1981 and an S.P.C. obtained, which expired in turn in May 2003. Merck (or its corporate parent) is also the proprietor of European Patent No. 0 720 599 (“the 599 patent”) which, it is agreed, covered the active ingredient ezetimibe. The 599 patent expired on 14 September 2014. S.P.C. No. 2003/014 was granted in 2003 (“the 014 S.P.C.”) in respect of ezetimibe, which itself expired on 16 April 2018.
3 Merck marketed both simvastatin and ezetimibe as monotherapies, but these proceedings concern a product marketed under the name Inegy , which was a combination of the two, and which it is accepted had greater therapeutic effect in the reduction of cholesterol. Merck maintained, and still maintains, that the combination was covered by the 599 patent, and, accordingly, obtained a separate S.P.C. No. 2005/2001 (“the 001 S.P.C.”). The 001 S.P.C. was due to expire, in turn, on 1 April 2019. This case concerns the window period between the expiry of the 014 S.P.C. on 16 April 2018 and the expiry of the contested 001 S.P.C. on 1 April 2019. Clonmel does not dispute that Inegy was protected by the 599 patent and by the 014 S.P.C., since it contained the active ingredient ezetimibe, but argues that the 001 S.P.C. is invalid. Accordingly, it argues that it was entitled to launch a generic competitor to Inegy, which it did on 17 April 2018, the day after the expiry of the 014 S.P.C. There had been some correspondence between the parties’ lawyers in Ireland culminating with Clonmel’s solicitors notifying Merck’s lawyers of the launch of its generic competitor and maintaining that “the balance of convenience clearly lies with our client and damages will fully compensate your client should an infringement be found to have occurred (which infringement is denied)”.
4 The High Court (McGovern J.) granted an interim injunction on the ex parte application by Merck, but Haughton J. refused the application for an interlocutory injunction. The Court of Appeal, by a majority, upheld that decision (see [2018] IECA 177). There was, however, a significant difference in approach between the different judgments. Haughton J. had considered that damages were an adequate remedy for Merck in the event that it succeeded in establishing the validity of the 001 S.P.C., and consequently an infringement, and, therefore, it was not necessary to go further and consider any question of the balance of convenience (including whether damages would have been an adequate remedy for Clonmel). In the Court of Appeal, Peart J. considered that damages would be an adequate remedy for Merck but would not adequately compensate Clonmel on the assumption that it was restrained by an injunction pending trial, but nevertheless succeeded at the trial. He considered that Clonmel would lose its first mover advantage and an opportunity to become the “incumbent generic” on the expiry of the monopoly. Whelan J., for her part, considered that the case should be approached on the basis that the grant of the injunction at the interlocutory stage would dispose of the case as a whole. Relying on the decision of this court in Curust Financial Services Ltd. v. Loewe-Lack-Werk [1994] 1 I.R. 450, she held that that the damages Merck might suffer in the event that an injunction was refused and the challenge to the validity of the 001 S.P.C. was rejected were nevertheless pre-eminently a commercial loss, since the 001 S.P.C. was so close to expiration. On the other hand, she considered that Clonmel, in the event that it was restrained by injunction but nevertheless succeeded at trial, would lose the benefit of the first mover advantage and its standing as the market leader in the critical post-monopoly stage, which was something that could not be adequately compensated for by damages. Hogan J. (dissenting), for his part, laid emphasis on the nature of the property right at issue, and considered that damages were not an adequate remedy for a breach of that right in the event that it was determined that the 001 S.P.C. was valid. In the circumstances, he considered that some modification of the test in Campus Oil v. The Minister for Industry (No. 2) [1983] I.R. 88 was required, and that weight should be given in such circumstances to the existence of the 001 S.P.C. and to the at least tentative view which he had formed as to the likely merits of the claim on invalidity. He considered that Clonmel’s claim of invalidity was not likely to succeed, and that accordingly an injunction should be granted.
5 This case has proceeded with commendable speed through the system of the courts. Indeed, the Court of Appeal heard the appeal before the full written judgment in the High Court was available. Nevertheless, it became clear in the course of case management of this appeal that it was unlikely that it would be possible to have a hearing and a decision in this case much before the expiry of the 001 S.P.C. However, Merck in particular, maintained that the appeal raised important points of principle in relation to the grant of injunctions in respect of S.P.C.s which were due to expire. While Merck itself held a number of such S.P.C.s, this was a matter of general interest in the pharmaceutical sector. Accordingly, it pressed for a hearing of the appeal. It was agreed at case management, however, that the appeal should proceed on the basis that Merck would not argue that, if it was successful on the appeal, any injunction ought to be dissolved. This effectively conceded to Clonmel the benefit of having no threat of an injunction prior to April 2019, when it would have been free, on any view, to market its product, and meant that it was not essential that the matter be determined before the expiry of the S.P.C. It was also agreed, therefore, that the court could approach the case on the basis of the matters as they stood at the date of the initial application for an interlocutory injunction. Accordingly, it would not be necessary to have a further round of evidence as to developments since the launch of Clonmel’s product in April 2018, and furthermore, the analysis could be approached free of any constraints which might be contended to apply when an appellate court is invited to review the decision of a trial court on an interlocutory application. The net, albeit difficult, issue to which this appeal was confined was whether or not an interlocutory injunction should have been granted to Merck as the position then stood when this application came before the High Court in April 2018.
The Supplementary Protection Certificate
6 It is well known that the underlying objective justifying the grant of a patent is to provide a monopoly for a limited period in order to encourage invention and the dissemination of knowledge, which is beneficial to the wider community. However, the grant of a valid patent does not in itself lead inevitably to a commercially viable product. Because of the necessity to seek a patent at the earliest viable stage, claims are made at a point where it may not be clear how the invention may ultimately be marketed, if at all. Particularly in the medicinal and pharmaceutical field, the process of obtaining authorisation for the marketing of a product is lengthy and demanding. Accordingly, it may be some time before a commercial product can be launched to exploit the monopoly granted by the patent. Even then, there is no guarantee that the product will be successful, since other competing products may have been launched in the intervening time. Furthermore, even if a product is successfully launched, the length of time in obtaining marketing authorisation has the effect of significantly reducing the period during which patent protection is of benefit. This difficulty was recognised by the European Union, which made provision for the grant of Supplementary Protection Certificates by Regulation 469/2009 concerning the supplementary protection certificate for medicinal products (“the Regulation”).
Regulation 469/2009
7 Recitals 3 and 4 of the Regulation set out the essential justification for the establishment of a regime permitting the grant of S.P.C.s:-
“(3) Medicinal products, especially those that are the result of long, costly research will not continue to be developed in the Community and in Europe unless they are covered by favourable rules that provide for sufficient protection to encourage such research.
(4) At the moment, the period that elapses between the filing of an application for a patent for a new medicinal product and authorisation to place the medicinal product on the market makes the period of effective protection under the patent insufficient to cover the investment put into the research.”
8 There was a risk of research centres moving between Member States or outside the Union. It was proposed that an S.P.C. should be granted under the same conditions by each Member State at the request of the holder of a national or European patent relating to a medicinal product in respect of which market authorisation had been granted. The duration of the protection should be such that a holder of a patent and S.P.C. should be able to enjoy an overall maximum period of 15 years of exclusivity from the time the product first obtained authorisation to be placed on the market in a Member State. However, a certificate could not be granted for a period exceeding five years. Furthermore, the protection granted should be “strictly confined to the product which obtained authorisation to be placed on the market as a medicinal product”.
9 A careful balance is sought to be achieved by the Regulation. It did not simply extend the life of the patent granted by a specific period. Rather, the S.P.C. was to be confined to a product which itself would obtain authorisation and had been placed on the market. Subject to that significant limitation, the S.P.C. conferred the same rights as were conferred by the basic patent. The area of monopoly was cut down and limited to the product which had market authorisation, but in respect of that product, the monopoly rights continued. The legal requirements for the grant of a certificate were set out at Article 3, as follows:-
“Conditions for obtaining a certificate.
A certificate shall be granted if, in the Member State in which the application referred to in Article 7 is submitted and at the date of that application:
(a) the product is protected by a basic patent in force;
(b) a valid authorisation to place the product on the market as a medicinal product has been granted in accordance with Directive 2001/83/EC or Directive 2001/82/EC, as appropriate;
(c) the product has not already been the subject of a certificate;
(d) the authorisation referred to in point (b) is the first authorisation to place the product on the market as a medicinal product.”
10 The conditions relating to product authorisation at subparagraphs (b) and (d) are capable of ready proof, and subparagraph (c) should not pose many difficulties. The main argument in a case in which the validity of an S.P.C. is challenged relates to the question of whether it can be said the product in this case, Inegy , being a combination of simvastatin and ezetimibe, was protected by the 599 patent. The difficulty here relates to the difference between a patent relating to claims and inventions and a product which can benefit from an S.P.C.. While there appears to be some difference between the characterisation of the issue in the judgments in the Court of Appeal, as I understand it, the essential claim made by Clonmel is that the Inegy product was not protected by the 599 patent. As is common in cases of this type, this issue has been raised and litigated in other jurisdictions. It is accepted for the purposes of this case that there is a serious issue to be tried in relation to the validity of the S.P.C.
The dispute in these proceedings
11 Inegy is a widely prescribed pharmaceutical medicine in Ireland. It is number six in the Merck portfolio of products in Ireland and approximately 15,000 patients take it each month. This is a very stable figure, and Inegy sales in Ireland have remained at about €8 million worth of the product in recent years. The simvastatin ingredient of the product is produced at the Merck plant at Ballydine in County Tipperary. Simvastatin represents the majority of the output of that plant. In addition, eight people, including a marketing manager, are employed by Merck for the marketing and selling of the Inegy product alone in Ireland. Prior to the launch of the Clonmel product, Inegy’s price to pharmacists was approximately €41 to €44. Merck did not reveal its precise profits from the sales of Inegy for the purposes of these proceedings, but the High Court assumed, prudently in my view, that the product was profitable.
12 Inegy is on the list of interchangeable medicines established pursuant to the Health (Pricing and Supply of Medical Goods) Act 2013 (“the 2013 Act”), which means that it can be substituted by generic alternatives by pharmacists on their own decision once, of course, such generic alternatives are lawfully available. In addition to Clonmel, four other generic manufacturers had obtained marketing authorisations for a combined simvastatin-ezetimibe product, which could be substituted for Inegy pursuant to the regime established under the 2013 Act. There were, accordingly, perhaps five generic manufacturers poised to enter the market, or at least in a position to do so, once any valid intellectual property protection for Inegy expired. The law in Ireland, as in many other countries, seeks in this regard to reconcile two competing public interests. Patent law and patent extension by S.P.C. provide a monopoly as a reward and incentive for innovation and for the disclosure of the teaching involved, leading in this case to the development of beneficial products. However, once a monopoly comes to an end, whether by natural expiration, or by determination of invalidity, there is a strong competing public interest in encouraging entry to the market by generic alternatives, particularly since in Ireland, as in many European countries, the bulk of the cost of the drugs is met from the public purse. When a pharmacist substitutes a generic alternative for a branded product, the cost to the health budget is correspondently reduced.
13 Clonmel launched its product at a price of €16 to €18, which is already a significant discount compared to the price point for Inegy , but in addition offered the product to pharmacists at a further steep discount of 80 per cent of its retail price so that the price to pharmacists was in the region of €3 to €3.50. Pharmacists therefore had a considerable incentive to offer the Clonmel product as a substitute for Inegy. It seems clear that in setting the price at this level, Clonmel was not pricing against the incumbent in this case, Merck, but rather against the other prospective generic entrants. The object appears to have been for Clonmel to establish itself as what Peart J. in the Court of Appeal called the “incumbent generic”.
14 The legal argument from each side in this case is clear. Clonmel argued that the market for Inegy was very stable. Therefore, the S.P.C., even if valid, gave Merck what could properly be described as an income stream, i.e. the right to obtain profits from the sale of a product in a stable market up to the date of expiry of the S.P.C. It was said that if an injunction was refused, but it should transpire that the S.P.C. was held valid at the trial of the action (or on appeal), damages were readily quantifiable and would be an adequate remedy, as it would be possible to quantify the loss of profits in the lost sales to Merck from the date of Clonmel’s entry into the market until the date of expiry of the S.P.C. Clonmel placed considerable reliance in this regard on the decision in Curust Financial Services Ltd. v. Loewe-Lack-Werk [1994] 1 I.R. 450 and, in particular, the oft-quoted phrase that the damage to Merck was therefore “clearly and exclusively a commercial loss … in a stable and well established market”. Accordingly, it was said that an injunction should not be granted since damages could readily be assessed considering that, as set out in Curust :-
“Difficulty, as distinct from complete impossibility, in the assessment of such damages should not … be a ground for characterising the award of damages as an inadequate remedy”.
15 Clonmel also placed reliance on the application of the Curust approach in the field of intellectual property (and in particular patents) by Kelly J. in SmithKline Beecham plc v. Genthon B.V. , (Unreported, High Court, Kelly J., 28 February 2003), and by Barniville J. in Teva Pharmaceutical Industries Ltd. v. Mylan Teo . [2018] IEHC 324, (Unreported, High Court, Barniville J., 5 June 2018). It followed, Clonmel said, that damages were an adequate remedy for Merck should it succeed at the trial of the action, and accordingly an injunction ought to be refused.
16 The strongest version of the argument for Clonmel, and that which succeeded in the High Court, was that once it was determined that damages would be an adequate remedy for Merck, that resolved the matter and an injunction could not be granted. Even if, however, it was necessary to go further, it was contended that Clonmel, by contrast, would suffer a damage which could not be compensated adequately by the award of damages pursuant to any undertaking for damages that Merck would be required to offer, should an injunction be granted and Clonmel succeed at the trial of the action. That was because Clonmel, it was said, would lose its first mover advantage. It would no longer be able to enter the market as it hoped to in April 2018, but would rather be required to enter the market with the other generic competitors. It would be difficult, if not impossible, to assess how the market would have developed had Clonmel been able to enter the market in April 2018.
17 Merck, for its part, relies heavily, in this court at least, on authorities from the United Kingdom courts dealing with claims for injunctions by S.P.C. holders seeking to restrain entry by generic competitors. This current of authority favours the grant of an injunction restraining generic entry and has become so well established that it could be summarised in the recent edition of Terrell on the Law of Patents (18th ed., Sweet & Maxwell, 2016) at paras. 19-88 and 19-89 as follows:-
“Adequacy of damages
Many patent cases are not appropriate ones for the grant of an interim injunction because damages would be an adequate remedy for the patentee. Where the infringement causes the patentee to lose sales, provided the defendant keeps proper records of the sales they have made, the court can award damages based upon its assessment of the proportion of the defendant’s sales that the patentee would have made and the patentee’s unusual profit margin.
However, there is a well-established line of patent cases in which interim injunctions are commonly granted. These all concern the launch of a generic pharmaceutical product. Although each case turns on its own facts, the court has shown itself to be ready to accept an argument that the launch of a generic pharmaceutical product will cause substantial and unquantifiable loss to the patentee because it will permanently depress the patentee’s price. The argument goes that entry of the generic product(s) will result in a downwards spiral in the price of the product and that even if the patentee were to be successful at trial and remove the generic products from the market, they will not be able to put the price back to previous levels. Examples of cases where this argument has been accepted are listed in the footnote.”
18 The footnote referred to in the text cites in particular the decision of the Court of Appeal of England and Wales in SmithKline Beecham plc v. Apotex Europe Ltd. [2003] EWCA Civ 137, [2003] FSR 31, and Novartis A.G. v. Hospira U.K. Ltd. [2013] EWCA Civ 583, [2014] 1 WLR 1264. An early case in this line of authority appears to be the decision of Jacob J. in SmithKline Beecham plc v. Apotex Europe Ltd. [2002] EWHC 2556 (Pat) (Unreported, High Court of England and Wales, Jacob J., 28 November 2002). He considered that there would be formidable difficulties in the plaintiff’s way if it tried to get back to his present position after a major collapse of prices. He was firmly convinced that “the damage caused by entry into the market on a substantial scale will be both very, very substantial and not adequately quantifiable”. Jacob J. was also influenced by the fact that the defendant had not moved to determine either that their product did not infringe the patent or that the patent in question was invalid. In an earlier case. SmithKline Beecham v. Generics U.K. Ltd [2001] EWHC 563 (Pat), he had said it was “purely commercial common sense. If there may be an obstacle in your way, clear it out. To my mind this is a case where the retention of the status quo was a rational thing to do. It was something that could have been avoided by the defendants; they chose not to do it”. The defendant had been, as he put it, eyeing the U.K. market for a long time. There was bound to be litigation unless the case was hopeless: both sides were aware of it, and he considered that if the defendant intended to introduce its product, it could avoid all the problems of an interlocutory injunction if it cleared the way first where litigation was bound to ensue. That was what the procedures for revocation and declaration for non-infringement were for. Accordingly, he granted the injunction.
19 The same analysis has been applied in a series of subsequent cases such as Warner-Lambert Company L.L.C. v. Teva U.K. Ltd. [2011] EWHC 1691 (Patent), (Unreported, High Court of England and Wales, Floyd J., 27 June 2011). That case involved the launch of a generic, Atorvastatin, ahead of the anticipated expiry date of the S.P.C. held by the plaintiffs. In Novartis A.G. v. Hospira U.K. Ltd. [2013] EWCA Civ 583, [2014] 1 WLR 1264, the Court of Appeal of England and Wales (Lewison, Kitchin, and Floyd L.JJ.) granted an injunction pending appeal in circumstances where the High Court had found the patent in question to be invalid. At paras. 52 to 54 of the judgment Floyd L.J. cited with approval the SmithKline Beecham approach:-
“52. This proposition rings particularly true in the pharmaceutical industry. In [ SmithKline Beecham plc v. Generics U.K. Ltd . [[2001] EWHC 563 (Pat)], Jacob J. articulated the need in the pharmaceutical industry for a generic manufacturer who makes plans to launch a generic medicine, to take steps to clear the obstacles facing its manufacture out of the way before it is launched. He said:
‘You would have to be very naïve in the pharmaceutical industry to think that the patentee, with a product as important as this, would not, if it had anything other than a frivolous chance of success, take action.'”
20 At para. 53 of his judgment Floyd L.J. quoted the portion from the judgment in SmithKline Beecham already set out above and continued at para. 54:-
“54. The way to market for a generic manufacturer is not clear until all arguable objections from the patentee have been eliminated. If the generic manufacturer allows the trial of the action at first instance to coincide with the intended launch date he runs the risk that a successful appeal could get in the way, even if judgment at first instance is given in his favour.”
21 In Teva Pharmaceutical Industries Ltd. v. Actavis U.K. Ltd. [2015] EWHC 2604 (Pat.), (Unreported, High Court of England and Wales, Arnold J., 9 September 2015), Arnold J. dealt with a number of the arguments raised in this case. He acknowledged that the defendant was the first generic entrant into the market and therefore had the advantage of being the “incumbent generic supplier”, a position which allowed the first entrants to establish relationships with customers for the generic product in question and thereby obtain a market advantage as compared to the later entrants. He considered accordingly that he was faced with a familiar dilemma that “on both of the contrasting hypotheses, one side is going to suffer harm which will be difficult to quantify, and therefore the risk of irreparable harm. In those circumstances, the court’s task is to adopt the course which appears least likely to cause the risk of ultimate injustice”. In doing so, he considered it was a counsel of prudence to preserve the status quo :-
“In that connection, it seems to me that an important factor to take into account is Actavis’ [sic] failure to undertake what is a familiarly known as ‘clearing the path'”.
22 In Warner-Lambert Company L.L.C. v. Sandoz GmbH [2015] EWHC 3153 (Pat), (Unreported, High Court of England and Wales, Arnold J., 4 November 2015), Arnold J. granted an injunction restraining the defendants from infringing a European patent by dealing a generic pregabalin product. At para. 103 of the judgment he concluded:
“In my judgment, granting the relief sought by Warner-Lambert would create a lesser risk of irremediable harm than refusing it. This is for two main reasons. First, I consider that there is a greater risk of Warner-Lambert suffering unquantifiable and irremediable loss if an injunction is refused than there is of Sandoz suffering unquantifiable and irremediable loss if an injunction is granted. Secondly, I consider that there is a strong case for preservation of the status quo pending trial … If no injunction is granted, the arrival of full label generic pregabalin on the market will make it significantly more difficult for the Court to ensure appropriate compensation for those parties which it is finally determined merit compensation.”
23 A similar approach was taken in the Scottish case of AstraZeneca A.B. v. Teva U.K. Ltd. [2017] CSOH 150, 2018 S.L.T. 52, where Lord Bannatyne observed that if the case fell into the classic category of generic pharmaceutical litigation there was “a clear line of authority that interim relief should be granted.” It is therefore apparent that the proposition in Terrell (op. cit.) now applies with, if anything, greater force in the courts of the United Kingdom.
24 I infer from the absence of reference to these U.K. cases in the judgments of the Court of Appeal and the High Court that they were not relied on, or relied on as forcefully, in those courts. However, the existence of these decisions creates a striking dichotomy between the arguments on either side. To some extent, the arguments are ships that pass in the night without engaging with each other. Merck rely heavily on the U.K. authorities and downplay the Irish cases, in particular the decision in Curust Financial Services Ltd. v. Loewe-Lack-Werk [1994] 1 I.R. 450, which is treated as a case on a contractual issue alone and of little relevance in the field of patents. On the other hand, Clonmel rely heavily on the trend in the Irish authorities and place particular emphasis on the Curust approach and tend to downplay the U.K. authorities. Indeed, they are sceptical of the factual basis of the arguments relating to a downward price spiral and the failure to clear the way. In addition, it was argued that Merck’s claim here sought to superficially cut and paste the arguments which had succeeded in the U.K., without regard to the facts of the case, and that there was in this case little if any evidence to support the arguments beyond mere assertion.
25 The stark difference between the approaches is illustrated by the fact that if either argument is accepted it would establish a very strong presumption indeed, if not an absolute rule, either in favour of or against the grant of an injunction in cases where an injunction is sought to restrain infringement of an S.P.C. prior to its expiry. If an S.P.C. is considered as merely protecting an income stream in a stable market, then it will normally almost always follow that an injunction should be refused since on this view damages would be an adequate remedy. On the other hand, if the entry by a generic competitor would lead inevitably to a downward price spiral that cannot be recovered from, and there has, by definition, been a failure to clear the way, then, as the U.K. cases show, an injunction will, invariably, be granted. What is indeed even more striking is, however, that these diametrically opposed results are both said to follow from the same legal source: that is the observations of the then House of Lords on the principles to be applied on the grant of interim or interlocutory injunctions in American Cyanamid Co. v. Ethicon Ltd. [1975] AC 396, adopted with approval in this jurisdiction in Campus Oil v. The Minister for Industry (No. 2) [1983] I.R. 88 (referred to hereinafter, for convenience, as ” Campus Oil” and ” American Cyanamid “). American Cyanamid , it might be noted for good measure, is itself a patent case in which a patent holder obtained an interlocutory injunction restraining the entry on to the market of a competing product.
26 Before addressing the legal issues, it may be useful to observe that there are some distinct features which will nearly always arise when a competitor seeks to enter a market with the product contending that an S.P.C. granted in respect of the incumbent product is invalid. As already observed, when a patent is granted, there is no guarantee that it will be capable of commercially viable exploitation. However, an S.P.C. can only be granted for a product in respect of which a marketing authorisation has been granted. Normally, it follows that the producer of the product is benefitting from the monopoly granted by the original patent and by the S.P.C. As has also been observed, the later period of the patent and S.P.C. protection is normally the most profitable for the holder of the rights since the product has been launched, and has acquired a market share and can exclude competitors. It follows from this also, however, that the market will attract generics who will seek to enter it when the S.P.C. expires, or if the S.P.C. is determined to be invalid. Since generic competitors have to seek and obtain market authorisation, their intentions are likely to be known in advance of expiry. Where it is sought to contend that the S.P.C. does not prevent entry by the generic competitor, the range of legal arguments is smaller than those which will apply in a classic patent case. There can, by definition, be no question of a dispute as to the fact of infringement (other than perhaps in relation to an intention to enter the market). The whole object of a generic manufacturer is to produce a copycat product which can accordingly benefit from the market authorisation, and which can be entered in the register of substitutable products. Accordingly, it seems that in most cases the only argument that could be made will relate to the validity of the S.P.C., which normally would involve a consideration of whether Article 3 of the Regulation had been satisfied. While that can be a difficult task, it does not have the range of complexity that is involved in disputes where it is contended that there has been no infringement, or where there has been a challenge to the validity, and perhaps where there are claims for amendment of the patent. More importantly, for present purposes, the features of (1) a successful product enjoying a monopoly, (2) that success attracting generic competitors, (3) the knowledge that such competitors will likely enter the market on the expiration of the S.P.C., and (4) the fact that entry before the date of expiry can only be achieved if it can be successfully contended that the S.P.C. is invalid , are all features which arise in any such case. To that extent, a presumptive approach is perhaps unavoidable.
The decision in American Cyanamid
27 The grant of an injunction is an equitable remedy. While statutory authority for the grant of an injunction when a court considers it just and convenient to do so can be traced to the provision of the Judicature Acts, the injunction nevertheless retains its origins in the law of equity administered in the Courts of Chancery. It has always been a flexible remedy and is one of the most important ways in which equity tempered the rigidity of the common law. But, law develops incrementally and rarely proceeds in a straight line. Instead, there is an almost endless process of refinement, qualification, correction, and (sometimes) overcorrection. There is also a discernible tendency to reduce the approach taken in cases to rules which sometimes become calcified so it becomes necessary periodically to reassert the essential flexibility of the remedy. This process is visible in the decision in American Cyanamid itself, where Lord Diplock observed that there had been a rule of practice that where a patent was not well established, an injunction would not be granted if it was stated that the defendant intended to challenge the validity of the patent. This reflected the common law’s traditional hostility to monopoly and it was some time before the appreciation of the administrative procedure leading to the grant of a patent led to a change in this approach.
28 The decision in American Cyanamid was principally concerned with another rule of thumb that had become an almost fixed and immutable rule: namely, that before an interlocutory injunction could be granted in any case, it was necessary to establish a prima facie case: that is, that on the balance of probabilities it was more likely than not that the plaintiff would succeed at the trial of the action. That rule was reflected in this jurisdiction and was discernible in the decisions in Educational Company of Ireland Ltd. v. Fitzpatrick [1961] I.R. 323 and Esso Petroleum Co. (Ireland) Ltd. v. Fogarty [1965] I.R. 531.
29 Lord Diplock’s speech comprehensively dismantled the basis for any such supposed rule. The logic of an interlocutory application is that it is heard and determined in advance of the trial. It would make little sense for valuable and expensive court time to be used in an attempt to predict, on the balance of probabilities, the outcome of a case which is yet to be heard, where the evidence had not been ascertained and, more relevantly, had only been adduced on affidavit, and where the arguments were not fully developed. Accordingly, Lord Diplock concluded that there was no rule that a prima facie case should be established before an injunction could be granted. Instead, the court should consider whether a fair issue was to be tried, which means no more than the case not being frivolous or vexatious. If so, the court should then proceed to consider how the matters should best be regulated pending the trial which involved a consideration of the balance of convenience.
30 Lawyers, whether judges, practitioners, teachers, or students, tend to favour propositions which can be reduced to some simple formulae that can be readily understood, remembered, and applied. The lucidity of the admirably short judgment in American Cyanamid has lent itself to the reduction to some apparently simple and logical steps. Once it is established that there is a serious issue to be tried, then it was normally no part of a court’s function when considering an application for an interlocutory injunction to attempt to anticipate the outcome of the case. Instead, the court should proceed to assess the balance of convenience. As to that the governing principle related to the adequacy of damages, this involved considering two hypotheses and balancing the outcome. If the plaintiff was refused an injunction but succeeded at the trial would he or she be adequately compensated by the award of damages at the trial? On the other hand, if the defendant was restrained by injunction, but nevertheless succeeded at the trial, would he or she be adequately compensated by the award of damages pursuant to the undertaking for damages which the plaintiff would have been required to give at the time of the grant of the injunction? In either case, it was also relevant to consider if the party was capable of meeting any award of damages if made.
31 This has been the basic approach which resolves many applications for interlocutory injunctions, and remains a valuable guide to analysis of any application. There is a clear logic to it. As long as the outcome of the case is unknown, a court must take steps to avoid any possible injustice being created by the length of time it will be necessary to take before a decision can be rendered. A claimant may have what appears to be a strong case, but if damages will be a complete remedy and there is the possibility of some irreparable harm to the defendant if he or she is restrained pending the hearing, then justice will be served by refusing an injunction and making the plaintiff wait until the trial of the action for his or her remedy. Similarly, a case may appear weak, but if it is demonstrable that irreparable harm would be caused if an injunction is not granted, then justice may require the grant of an injunction, and in the event that the plaintiff now fails at the trial of the action, that the court be in a position to take steps to adjust the position of the parties in a way which insures that the defendant has not been harmed irreparably by the grant of the injunction.
32 If there is doubt as to the outcome of the analysis of the respective decision to the parties, then other factors may come into play. For example, where other matters appeared balanced, it was a counsel of prudence to take such measures as were calculated to preserve the status quo . If the defendant was restrained from doing something which he or she had previously not done, the only effect of the interlocutory injunction would be to postpone the date on which he or she was able to embark on that course. Other than in “the simplest cases”, there would be some disadvantages to either party which would not be compensated fully by an award of damages. If the uncompensatable damage to each party did not differ widely, it might not be improper to take into account in tipping the balance the relative strength of each party’s case as revealed by the affidavit evidence. This was only appropriate, however, if there was no credible dispute that the strength of one party’s case was disproportionate to that of the other.
33 While the decision in American Cyanamid, adopted in Campus Oil , has been distilled over subsequent years and reduced to some simple, readily understood, and helpful rules of thumb, it is important, in my view, to note that the essence of the decision was negative: it rejected the prima facie case test. Second, the underlying theme of the decision was to reassert the flexibility of the remedy and the essential function of an interlocutory injunction in finding a just solution pending the hearing of the action. Even though the judgment is lucidly and succinctly expressed, it should not, in my view, be approached as though it were the laying down of strict mechanical rules for the control of future cases. It is apparent, for example, that there is some ambiguity in the judgment about a matter which arises in this case, which is whether the question of adequacy of damages is part of or antecedent to the balances.
Adequacy of damages and the balance of convenience
34 Clarke J. (as he then was) observed in Metro International S.A. v. Independent News & Media plc [2005] IEHC 309, [2006] 1 ILRM 414 that this is largely a semantic issue, and I agree that in most cases either approach would lead to the same conclusion. It is apparent, however, that Clonmel, for example, lay some stress on the argument that if damages are an adequate remedy for the plaintiff, then an injunction should be refused without any further inquiry as to the balance of convenience or indeed other factors. While I consider it as an error to treat the observations in American Cyanamid and Campus Oil as akin to statutory rules, it is nevertheless necessary to consider if the judgment supports this approach. At para. 408B of the report of the judgment in American Cyanamid , the judgment stated that unless the material available to the court at the hearing of the application for an interlocutory injunction fails to disclose that the plaintiff has any real prospect of succeeding in his claim for a permanent injunction at the trial, “the court should go on to consider … the balance of convenience”. As to that, the “governing principle” is the adequacy of damages. This implies that the adequacy of damages is part of the balance of convenience. However, at para. 408F Lord Diplock states:- “It is where there is doubt as to the adequacy of the respective remedies in damages … that the question of [the] balance of convenience arises”. This suggests that adequacy of damages comes before the balance of convenience, which on this approach would involve a consideration of a number of unusual factors. The ambiguity in this regard is an indicator that the decision was not intended to lay down strict guidelines: instead, it was intended to remove the existing guideline of a requirement of a prima facie case which had become entrenched, and reassert the flexible nature of the remedy.
35 In my view, the preferable approach is to consider adequacy of damages as part of the balance of convenience, or the balance of justice, as it is sometimes called. That approach tends to reinforce the essential flexibility of the remedy. It is not simply a question of asking whether damages are an adequate remedy. As observed by Lord Diplock, in other than the simplest cases, it may always be the case that there is some element of unquantifiable damage. It is not an absolute matter: it is relative. There may be cases where both parties can be said to be likely to suffer some irreparable harm, but in one case it may be much more significant than the other. On the other hand, it is conceivable that while it can be said that one party may suffer some irreparable harm if an injunction is granted or refused, as the case may be, there are nevertheless a number of other factors to apply that may tip the balance in favour of the opposing party. This, in my view, reflects the reality of the approach taken by most judges when weighing up all the factors involved.
36 A further noteworthy feature of the judgment for present purposes, is Lord Diplock’s acknowledgement that, save in the simplest cases, both parties will be able to show that they would suffer some damage that cannot be adequately compensated for in damages. Even if a very structured and sequential approach is taken, therefore, it is important to keep in mind that, while the end point of most civil cases is the award of damages, the interests that the law exists to protect often extend beyond the purely financial. In the aftermath of the decision in American Cyanamid it was, however, recognised (though more slowly in Ireland) that the judgment could not be treated as single test for the grant of interlocutory injunctions applicable in all circumstances, and instead required sometimes substantial qualifications and exceptions. The so-called rule in Doherty v. Allman (1878) 3 App. Cas. 709 or Dublin Port and Docks Board v. Britannia Dredging Co. Ltd. [1968] I.R. 136 may, in truth, be seen as a corollary to the American Cyanamid test rather than an exception to it. If there is no dispute, then a court will normally grant an injunction (if that is the appropriate remedy) without regard to any question of the consideration of the balance of convenience. It has also been recognised that the traditional rule against prior restraint is unaffected by the American Cyanamid and Campus Oil approach: if a publisher indicates that they intend to plead justification, or indeed any recognised defence, and have ground for doing so, then an injunction will be refused without any assessment of the balance of convenience. A number of other exceptions and qualifications are set out in Bean, Parry, & Burns, Injunctions (13th edn., Sweet & Maxwell, 2018) at pages 38 to 41, such as injunctions to restrain trade disputes (now covered by statute), claims in relation to covenants in restraint of trade, and claims to restrain the exercise of public functions. The observation of this court in Okunade v. Minister for Justice [2012] IESC 49, [2012] 3 IR 152 that a court should, in an appropriate case, give weight to the public interest in the orderly implementation of measures which were prima facie valid is an example in this jurisdiction of a similar approach. Although these cases could be described as exceptions to the basic approach, they do not indicate any weakness in the internal logic of the decision, but simply illustrate the boundary of its field of application. In particular, the underlying assumption on which the decision proceeds is that the interlocutory injunction is to be considered pending trial, which it is assumed will take place and finally resolve the merits of the action. If, however, it is unlikely that a trial will take place (for example, if the injunction sought is the entire remedy, such as an injunction restraining a strike or other industrial action, or restraining some form of public protest), then the grant of the injunction will almost always determine the case and the parties will have little practical incentive to proceed to trial and incur the time and expense necessary to do so. In N.W.L. Ltd. v. Woods [1979] 1 W.L.R. 1294, only four years after the decision in American Cyanamid , the House of Lords itself decided that the principles did not apply to the grant or withholding of an interlocutory injunction in a trade dispute case where it was unlikely that there would ever be a trial on the merits. Accordingly, the court could not simply take the approach of considering whether there was a fair issue to be tried, but rather was required to make its best estimate of the strength of the respective parties’ case. This decision is entirely consistent with the logic of the American Cyanamid case. If the American Cyanamid principles were applied in such circumstances, then there would be a real risk of injustice, since a party with perhaps a flimsy case might obtain an injunction that was effectively permanent against the other party, and perhaps, for good measure, on the basis that that defendant had insufficient assets to pay any damages, the plaintiff might recover (where on this hypothesis any damages would be highly unlikely). The decision in N.W.L. Ltd. v. Woods was approved by Clarke J. in his judgment in Allied Irish Banks plc v. Diamond [2011] IEHC 505, [2012] 3 I.R. 549. It is noteworthy that authors of Bean (op. cit.) observe at para. 3.34 that these special cases comprise a high proportion of cases in which interlocutory injunctions are sought.
37 While it is not perhaps in the same stark category it is nevertheless important to recognise that the American Cyanamid and Campus Oil approach is predicated on the basis that a trial will occur. It should be recognised, however, that even outside the trade dispute type cases, trials do not occur in all cases where interlocutory injunctions are sought. This is not simply because of the issue such as occurred in N.W.L. Ltd. v. Woods [1979] 1 W.L.R. 1294, but also because commercial and practical reality means it may be sensible to compromise the claim. Parties who have been restrained by an injunction are often understandably unwilling to devote time and resources to a further hearing at some time in the future simply to establish that the plaintiff was wrong and that an injunction ought not to have been granted. The existence of an interlocutory injunction in such circumstances may therefore have a significant impact upon the party’s position in such negotiations. Courts should be aware of this possibility on an application for interlocutory injunction which is a further reason why the test must be, and normally is, applied with a degree of flexibility and sensitivity.
38 If approach in American Cyanamid and Campus Oil is not applied with some degree of flexibility, it can have a distorting effect on the application itself. A party seeking an interlocutory injunction will normally be concerned with its contention that the defendant is acting wrongfully and unlawfully, and, furthermore, the substantial damage that will be done and might be avoided by an injunction. However, affidavits drafted with one eye on the American Cyanamid criteria will tend to downplay these aspects of the case and emphasise sometimes peripheral features with a view to establishing the much sought after irreparable harm which may trigger the grant of the interlocutory injunction. Furthermore, an interlocutory injunction can be such a powerful weapon in commercial and other disputes that the possibility of a decisive first strike can be irresistible. There are, as Lord Diplock recognised, some cases which are so simple and clear cut that it is apparent that damages will be a wholly adequate remedy. There may also be other cases where it may be more convenient (in the broadest sense of the word) and where there may be less risk of injustice if events simply proceed, and the court can adjudicate on the merits when the facts are known and established and award remedies based on established facts, rather than the speculation involved in any injunction application. Curust Financial Services Ltd. v. Loewe-Lack-Werk [1994] 1 I.R. 450 can be seen in this light, and as a corrective against the temptation to dress up standard commercial disputes about money into more high octane disputes about interlocutory injunctions.
The decision in Curust
39 While the facts in Curust Financial Services Ltd. v. Loewe-Lack-Werk [1994] 1 I.R. 450 were in dispute, and the legal consequences of the disputed facts were hotly debated, the underlying contention was not complex. Curust argued that it had an exclusive distribution agreement for the defendant’s product and was, therefore, entitled to restrain the defendant whether by itself or the second named defendant from selling or supplying the product until the agreement was lawfully terminated. The market was by definition stable. The products were identical. There was no question of damage to either reputation by the existence of the other product on the market. The measure of damages was simple. The plaintiff would be able to measure the impact of the defendant’s sales either by showing the diminution of its own sales, or by calculating the profit it would have made on the sales achieved by the second named defendant who had agreed to keep an account. There were no longer term implications. There was a fundamental and basic dispute as to whether the agreement had been terminated, and subsidiary disputes as to the entitlement of the plaintiff to have a product manufactured by a third party without the consent of the defendant. However, the arguments about an interlocutory injunction risked erecting an elaborate structure when it was more sensible to seek to resolve the single underlying issue. O’Flaherty J. considered that the case was finely balanced, but that the crucial matter was that Curust would not be deprived of access to the market but simply obliged to share it in competition with the second named defendant. It was preferable to allow this position to obtain pending the trial of the action, rather than exclude the second named defendant from the market. Viewed in this way, the decision was a robust and pragmatic approach to the regulation of the period between the commencement of the proceedings and the trial of the action.
40 In my view, the oft-quoted passage from the judgment of Finlay C.J. at pp. 468 and 469 should be understood in this context and should not be understood as establishing a rule of general application that if damages may be awarded an injunction must be refused. However, significant reliance is placed upon the last sentence of the paragraph:-
“Difficulty, as distinct from complete impossibility, in the assessment of such damages should not … be a ground for characterising the award of damages as an inadequate remedy”.
It is accordingly necessary to consider the question in greater detail.
41 There may be circumstances where it can be said that the calculation of damages involves a complicated formula with a number of component parts but that there is no dispute about the correct formula or the figure it would produce in a particular case. In that sense, I would agree that the difficulty of the calculation does not itself mean that damages are not an adequate remedy. However, the sentence has also been relied on as suggesting that it must be completely impossible to assess damages before such damages can be said to be an inadequate remedy for a plaintiff, so that an injunction could be granted. I doubt that this was what was intended, or indeed that it is regularly applied in this way, but if it is so capable of being so understood, then, and with respect, I consider it requires some qualification.
42 There is a conundrum in any case in which an interlocutory injunction is sought. The parties at the interlocutory hearing vie with each other in arguing that they will suffer a loss or damages which cannot be compensated for by the award of monetary damages if they succeed at trial. Nevertheless, if the trial of the action proceeds then the plaintiff will put forward a claim for damages, and the defendant would be in a position to make a claim for damages under the plaintiff’s undertaking, if the defendant succeeded in defeating the plaintiff’s claim. In either case, a court will award damages and it cannot be suggested that the outcome is not to do justice to both parties. It is rarely, if ever, asserted by a successful plaintiff that it is simply impossible to award damages to compensate it for its loss, and rarer for any plaintiff to maintain that position at trial. On the other hand, the fact that it is possible to award damages does not preclude the grant of a permanent injunction, and should not be understood as an absolute bar to the grant of an interlocutory order. To take an extreme example, the assessment of damages for certain personal injuries is well developed, and there is considerable guidance now available in respect of the damages which can be assessed for certain routine injuries. It could not, however, be suggested that this would be a valid ground to refuse an interlocutory injunction restraining conduct which it was alleged was wrongful and could give rise to such injuries. The position is more nuanced.
43 There are some cases, of which the personal injuries example may be one, where the interest protected by the law can be said to extend further than the obligation to pay compensation to the injured party when a wrong is carried out. Traditionally that is why permanent injunctions are granted in certain classes of action. But even in the field of a purely commercial transaction, a court, if it establishes a breach of contract, may grant damages for prior breach and, if appropriate, an injunction restraining a continuing or future breach.
44 To take an example closer to this case, if the alleged infringement had occurred early in the life of the S.P.C. and a very speedy trial was held so that there was a significant period of the S.P.C. still to run, then if the court at trial concluded that the S.P.C. was indeed valid, it would be likely to award damages for prior breach, but could certainly grant an injunction restraining future breach. However, inadequacy of damages is a ground upon which a permanent injunction may be refused. It must follow, therefore, that damages are not a perfect remedy, and cannot be a complete answer to an application for an injunction whether permanent or interlocutory. It should be recalled that the basic role for the intervention of equity in any case, is that the common law remedy is inadequate. I consider that the correct test is that set out at p. 58 of Spry, Equitable Remedies (4th edn., Sweet & Maxwell, 1990):-
“The precise question that has been asked is whether the relegation of the plaintiff to such remedies as he has in damages or other legal remedies would leave him in as favourable position in all relevant respects as would exist if the obligation in question was performed in specie.”
45 There is still substances in the test advanced by Lord Redesdale in Harnett v Yielding (1805) 2 Sch. & Lef. 549 at 553:-
“Unquestionably the original foundation of these decrees was simply this: that damages at law would not give the party the compensation to which he was entitled, that is, would not put him in a situation as beneficial to him as if the agreement were specifically performed. On this ground, the court in a variety of cases, has refused to interfere where, from the nature of the case, the damages must necessarily be commensurate to the injuries sustained.”
46 This does not mean that an equitable remedy, whether specific performance or injunction, must be granted, but simply that since in the exercise of the court’s discretion, it may decide to award damages rather than relief in specie, and other discretionary considerations may mean that it is just to leave a party to his or remedy in damages. The sole question at this stage, however, is whether the remedy in damages can be said to be necessarily commensurate with any possible injury so as to preclude the possibility of the grant of an injunction. In that regard, it is noteworthy that in American Cyanamid itself, at p. 408H of the report, Lord Diplock observed that “save in the simplest cases, the decision to grant or refuse an interlocutory injunction will cause to whichever party is unsuccessful in the application some disadvantages which is ultimate success at a trial may show he ought to have been spared and the disadvantage may be such that the recovery of damages to which he would then be entitled either in the action or under the plaintiff’s undertaking would not be sufficient to compensate him fully for any of them”.
47 Difficulty of calculation of damages may be relevant at the interlocutory stage because the more complex the calculation and the greater the number of variables involved, the more likely it is that a court at trial would be forced to make an estimate or indeed to compound one hypothesis with another to arrive at its best assessment of damages to do justice in the case. But that necessarily increases the risk that the award of damages, although the best the court can do, may be something less than the doing of justice to either the plaintiff or indeed the defendant. In such a case, it may be more convenient not to leave one or other party to the possibility of an assessment of damages which is theoretically possible, but highly imprecise, speculative and therefore inconvenient. The fact that it is in theory possible to gather every feather does not mean that it is not more convenient to stop the pillow being punctured in the first place. Thus, if the action of the defendant which the plaintiff seeks to restrain would involve contact with many other businesses or members of the public, which it would be necessary to restrain if the plaintiff succeeded at the trial of the action, then, if no other factors are present, it may be more convenient, and therefore more conducive, to the capacity to do full justice in the case to simply restrain the defendant from doing so pending trial. The fact that it is not completely impossible to assess damages should not preclude the grant of an injunction to the plaintiff in an appropriate case. Accordingly, I cannot agree that it is possible to resolve this case merely by determining that it is not completely impossible to assess the damages which the plaintiff might obtain, and therefore that it is not necessary to consider further any other aspects of the case. An injunction should not be granted merely because an applicant can tick the relevant boxes of arguable case, inadequacy of damages, and ability to provide an undertaking as to damages, and by the same token should not be refused merely because damages may be awarded at trial. This approach is consistent with, and in my view accurately describes, the practice of the courts.
48 It is necessary however to address the defendant’s arguments, that the decision in Curust Financial Services Ltd. v. Loewe-Lack-Werk [1994] 1 I.R. 450 has been applied in a series of cases in the area of intellectual property, and establishes a general principle that damages are an adequate remedy for a claim of breach of infringement of a patent or S.P.C. SmithKline Beecham plc v. Genthon B.V. (Unreported, High Court, Kelly J., 28 February 2003) is often cited for this proposition. In that case, the plaintiff was refused an injunction and undoubtedly reliance was placed on the decision in Curust . However, the admirable ex tempore judgment delivered by Kelly J. on that application deserves closer analysis. In particular, at p. 13, he specifically rejected a contention by the defendant “to the effect that a claim for patent infringement is almost always remedial by an award of damages” and adopted with approval the observations of Laddie J. in the English case of Unilever plc v Frisa N.V. [2000] F.S.R. 708. He stated specifically that “there is no hostility, inherent or otherwise, to the grant of interlocutory injunctions in patent infringement proceedings”. In that case in question, the defendant had challenged the validity of the plaintiff’s patent both before the European Patent Court (where the claim had failed but been appealed), and perhaps significantly, in the High Court of England and Wales, where, applying a very similar regime to that which would apply in Ireland, Jacobs J. had found the patent invalid. Furthermore, the defendant had commenced proceedings some months prior to the launch of its product, seeking a revocation of the plaintiff’s patent. Perhaps most significantly, both parties agreed that possibly in light of the extensive litigation of the issue in other jurisdictions, the case was capable of being tried in a matter of months. The judgment of the interlocutory application was delivered at the end of February, and it was accepted that the case could be tried in July. In all the circumstances of the case, Kelly J. refused an injunction pending the trial.
49 The matter was subject to comprehensive review more recently in a detailed judgment in the High Court by Barniville J. in Teva Pharmaceutical Industries Ltd. v. Mylan Teo. [2018] IEHC 324, (Unreported, High Court, Barniville J., 5 June 2018). Again, that was a somewhat usual case. Teva, part of an international pharmaceutical company, was the holder of an Irish patent which covered a product for the treatment of multiple sclerosis (“M.S . “). Mylan is an international generic producer which had the facilities in Ireland where it manufactured a generic drug to complete with the plaintiff’s Copaxone 40mg which was launched by Mylan in the United States on 4 October 2017. Significantly, while Mylan’s 40mg product is manufactured in Ireland, it does not have authorisation to be sold in Ireland. It is exported to the United States where it is supplied and prescribed to M.S. patients.
50 Mylan sought permission in the U.S. to market its generic drug by way of the A.N.D.A. procedure: that is, the Abbreviated New Drug Application with the Food and Drugs Administration (“F.D.A.”) in that jurisdiction. Teva responded by bringing proceedings for alleging infringement of its patents in the U.S. The United States District Court for the District of Delaware found that the four patents relied on by Teva were invalid. That decision was appealed to the United States Court of Appeal, but the District Court refused to stay its order, and no application for an injunction or stay pending the determination of the appeal was made in the Court of Appeal. Indeed, in relation to a slightly different drug (the 20mg product) the United States Supreme Court itself refused a stay on the grounds of the adequacy of damages. Having carefully and comprehensively reviewed both the detailed facts of the case, the complications of the proceedings in other jurisdictions, and the relevant law, Barniville J. refused the interlocutory injunction sought by Teva. He did so for a number of different reasons, including reliance upon Curust Financial Services Ltd. v. Loewe-Lack-Werk [1994] 1 I.R. 450, in concluding that damages would be an adequate remedy for Teva, and also refusing to consider that the failure to clear the way (in Ireland) by bringing proceedings for the revocation of the Teva patent was fatal to Mylan’s case. However, perhaps the most significant feature of the case lay in its international dimension. The claim being brought was an attempt to rely on the American Cyanamid rules to obtain an injunction which would have the effect of preventing Mylan from selling a product in a jurisdiction (the U.S.) where it was not only lawful to do so, but the corresponding patents had been declared invalid in proceedings directed to that object. Barniville J. quoted with approval the judgment of McCracken in Griggs Group Ltd. v. Dunnes Stores Ireland Co. (Unreported, High Court, McCracken J., 4 October 1996):-
“What influences me more is that this is part of a world-wide campaign by the plaintiffs to establish a monopoly in a certain design of footwear. While the outcome of the action eventually depends only on the reputation of the plaintiffs in this jurisdiction, nevertheless I am entitled to take into account that this is a small battlefield in a world war, and that the attack in this battle is against what I might call a secondary target – namely a retailer – while no real attack is mounted against the primary target, namely, the manufacturers.
The granting of an injunction is an equitable remedy and the concept of the balance of convenience is an equitable concept. It seems to me inherently inequitable in this case that the proceedings should be brought against the retailer which, on the evidence before me, bona fide purchased these goods from two manufacturers […] while no action is taken against the manufacturers.”
51 Barniville J. saw a resonance with that case, in particular in the statement that the proceedings were a small battlefield in a world war, and that it would be inherently inequitable to grant the relief sought against Mylan in this jurisdiction in circumstances where the entirety of the losses and virtually all of the relevant evidence in relation to those losses were alleged to arise in and emanate from the U.S., and where there was no legal or regulatory restraint on the supply and prescription of the Mylan product on that market.
52 Both SmithKline Beecham plc v. Genthon B.V. (Unreported, High Court, Kelly J., 28 February 2003) and Teva Pharmaceutical Industries Ltd. v. Mylan Teo . [2018] IEHC 324, (Unreported, High Court, Barniville J., 5 June 2018) were, in my view, correctly decided and are, when analysed, examples of careful and nuanced applications of the test relating to the grant of interlocutory injunction. It is true that both cases are examples of a court refusing an application for an interlocutory injunction with the effect that a plaintiff was left to the remedy in damages in the event that they should succeed, and in that regard, it is understandable that reliance is placed upon Curust Financial Services Ltd. v. Loewe-Lack-Werk [1994] 1 I.R. 450. However, the decisions cannot be understood, in my view, as extending the application of that case, or still less establishing some general principle that interlocutory injunctions are inappropriate in the field of patents, S.P.C.s, or intellectual property more generally.
The balance of convenience in this case
53 The assessment of the balance of convenience is more difficult and finely balanced, in my view, than the judgments in the High Court and the majority judgment in the Court of Appeal would allow. There is something of an inconsistency, in my view, in considering that any damage to the Merck would be met by an award of monetary damages, whereas any damages Clonmel might suffer if wrongly restrained would not. Both parties are large commercial enterprises engaged in businesses with the ultimate objective of obtaining profit from the sale of their products. Furthermore, the rights and interests they both assert are intended to protect that business. In principle, therefore, monetary damages would go a considerable distance to compensate Merck if Clonmel was wrongly permitted to launch its product, or to compensate Clonmel if they were wrongly restrained from doing so.
54 Furthermore, it is perhaps not necessary to go to the lengths of placing a constitutional right in the balance to agree with Hogan J. in the Court of Appeal that the majority judgments do not give appropriate weight to the right involved from the S.P.C. holder’s point of view. It is, in my view, incorrect both to depreciate the 001 S.P.C. as being no more than a right to an income stream, and at the same time elevate Clonmel’s interest in becoming the incumbent generic to the key status of an interest which, if damaged, cannot be compensated by the award of monetary damages. The interests of the S.P.C. holder and the interests of the generic challenger are both interests in acquiring a position in the market. The difference between them is that the S.P.C. holder has a right conferred by a process of law which is presumptively valid: something which, if anything ought perhaps to favour Merck.
55 I recognise that the interest of Clonmel in exploiting a first mover advantage is something of value which is to be considered and given weight in the application for an interlocutory injunction, since it will necessarily be lost if an injunction is granted. If Clonmel is correct, therefore, in its belief that the S.P.C. is invalid, then it should be entitled to reap the commercial reward for its acumen in identifying the frailty in the S.P.C. and being willing to back its judgement by investing in the product to the point of making both the regulatory application for approval and the practical preparations to launch a product in April 2018 rather than await the expiry of the 001 S.P.C. a year later. That, however, is the high point of Clonmel’s case. If it is wrong in its contention that the 001 S.P.C. is invalid, then its conduct constitutes an actionable wrong. However, I cannot see how that interest can be said to outweigh the right of Merck (if it in turn is correct) to exploit its monopoly, granted, on this hypothesis, in accordance with law. The interest of Clonmel in exploiting the possible frailty of the 001 S.P.C. depends, indeed, on two things – the existence of the S.P.C. (and a prior patent granting monopoly to Merck and therefore excluding all others from the field) and the observation of that monopoly by other market contenders. It is only if both these features are present that Clonmel can hope to exploit what it describes as its first mover advantage and achieve a position of practical (if not legal) monopoly as the only generic in the field, and at one and the same time capturing the bulk of the market previously held by Merck by a deep price discount, while deterring entry by generic competitors. In a way, therefore, Clonmel’s interest is dependent on and derivative of the assumption of validity of the 001 S.P.C. I do not see, therefore, that the case can be resolved by preferring that interest (which may or may not be valid) to the legal right to monopoly of Merck (which itself may or may not be invalid). The fact, indeed, that Merck’s right is one which arises pursuant to a lawful procedure for the grant of a patent and S.P.C. and which is valid until otherwise declared invalid by a court, is also relevant to the balance of convenience.
56 On the other hand, I would, with respect, doubt that the question can be resolved quite as simply as the text in Terrell (op. cit.) might suggest. In any event, the difficulty of restoring a price after a successful trial cannot apply with the same force here, since it was always apparent that the S.P.C. was likely to expire before there could be any determination of the proceedings in the High Court, and long before the matter was finally settled. Similarly, while I consider that weight should be given to the “clearing the path” argument, it cannot be accepted without qualification as dispositive of the issue. Lawyers tend to value order and process, but if full weight is to be given to Clonmel’s interest in capturing a first mover advantage, then it must be recognised that clearing the way poses some problems for Clonmel and any other generic, since, of necessity, any such proceedings would clear the way not just for Clonmel itself, but for any other generic who would be to that extent a free ride on Clonmel’s action. I also doubt that it can be said that, in every case, the damage to an S.P.C. holder is necessarily more unquantifiable than the damage which may be suffered by a prospective generic entrant.
57 Finally, I should say that, while the majority of Court of Appeal considered that the case fell within the line of jurisprudence which can be traced to N.W.L. Ltd. v. Woods [1979] 1 W.L.R. 1294, and was a case where there was no likelihood of a trial of the substantive issue, I cannot agree. It is true that by the time of the trial of any action, and certainly by the time of any appeal process, the S.P.C. would have long expired and the court would not be able to grant an injunction, since any future presence in the market would not constitute an infringement of the non-expired S.P.C. But that does not mean that the trial would not take place (and indeed a trial has taken place), since the question of damages would remain a very live issue. This would require the court to determine the issue of the validity of the 001 S.P.C. In any event, the majority judgments did not go on to consider the strength of the parties’ cases, which should occur where it is determined that a trial is unlikely. The reference to this question does not appear relevant, therefore.
Balance of convenience considered
58 Part of the difficulty in this case is that each party asserts an interest which, if valid, is something encouraged by the law. The resolution of the same issue – the validity of the 001 S.P.C. – will determine which interest is to prevail. If the 001 S.P.C. is valid, then it is a monopoly which the law accords for good reason to an inventor. If the 001 S.P.C. is invalid, then a generic entry into the market with consequent competition is to be positively encouraged. There is, therefore, a symmetry of interests which turns on the question of which interest is to prevail, and this case depends on the resolution of the same question. That, in itself, is a reason to approach this case by seeking the earliest possible trial of that single issue, rather than protracted debate that must necessarily depend on a number of hypotheses and which does not advance the determination of that fundamental issue.
59 Given the essential symmetry of the parties interests, I consider it appropriate to conclude that in neither case will damages be a fully adequate remedy, and, furthermore, the likelihood of some irreparable harm being occasioned to the successful party is also equally balanced between the parties. Both seek to maintain rights in respect of a stable market with 15,000 patients using a combination therapy of simvastatin and ezetimibe. In the real world, is it possible to rerun events like a laboratory experiment and consider what would or should have transpired had an injunction not been granted (if Merck succeeds at trial) or if an injunction is granted but it transpires that the 001 S.P.C. was invalid. It is true that if Clonmel were restrained pending the trial and the 001 S.P.C. is nevertheless determined to be invalid, Clonmel will never be able to gain the position of a first mover generic manufacturer which it sought to achieve by its launch in April 2018, and it will therefore be necessary to attempt a difficult estimation of both its likely profit if it had done so, and its position in the market, which would necessarily extend beyond the April 2019 expiry date. On the other hand, a similarly difficult calculation may have to be made if Merck succeed at the trial, but did not obtain an interlocutory injunction. Merck’s right was not simply to recover income and profit pending the expiry of the 001 S.P.C. The rights of a valid S.P.C. holder are to exclude all competitors with products covered by the S.P.C. until the last day of the S.P.C. It follows that the S.P.C. holder will know the precise date on which its rights will expire, and one of those rights, therefore, is to be able to plan for that eventuality so that it may maximise its position in the market both until that period and the period immediately after expiry. If Clonmel is held to have wrongfully launched its product and yet was not restrained by injunction, then Merck would lose that significant benefit. The expiry of the S.P.C., as a matter of fact, if not law, would be determined by the fact of entry by Clonmel: a circumstance for which Merck would not be able to plan or take defensive steps in advance. In the event that no injunction was granted, but the validity of the S.P.C. was upheld, it would be necessary, therefore, to carry out essentially the same speculative calculation in reverse, and attempt to assess how Merck might have exploited its monopoly position pending expiry and defended its position in the market post-expiry, if it had not been deprived of the ability to control the date of expiry of the 001 S.P.C. In other words, it would be necessary to take the information in relation to the development of the market between April 2018 and 2019 and thereafter, and then hypothesise as to what would have occurred had Clonmel been restricted from entering until April 2019 when other generics might also have entered the market. Both parties must accept that this is not a case, as Curust Financial Services Ltd. v. Loewe-Lack-Werk [1994] 1 I.R. 450 was, where a market for a single product was shared between two parties. Instead the calculation is complicated further by the possibility of entry by up to four other generic producers.
60 I consider that this is a case where damages, while available, cannot be considered to be said to be a full or adequate remedy for Merck so as to exclude the necessity to seek an injunction. I also consider that damages will not be an adequate or full remedy for Clonmel if an interlocutory injunction is granted and it is then determined that the S.P.C. was invalid. Furthermore, it is plain that both parties have sufficient resources to pay any damages awarded. I do not consider, therefore, that the balance of potential irreparable harm favours either party decisively. While the question of the adequacy of damages to either party and the capacity of the parties to pay them is often the largest single element in the balance of convenience, and will often be decisive in most cases, there are other factors which are relevant and which, in a closely balanced case, may tip the balance.
61 One feature of this case, to which, in my view, weight should be given, can be viewed in three different, though related, ways. That is the fact that Merck is the holder of an S.P.C. granted pursuant to an authorisation process provided for by law and which involves the consideration both of the application for the 599 patent by the Controller of Patents, and the subsequent application for the S.P.C. As a matter of law, the S.P.C. is valid and effective until declared invalid by a court of competent jurisdiction. Just as in Okunade v. Minister for Justice [2012] IESC 49, [2012] 3 IR 152 it was recognised that it was appropriate to take into account the fact that an order had been made in accordance with law, by a body established and authorised by law to do so , and which must be treated as valid unless and until determined otherwise by a court or body, it is, in my view, not unreasonable to give this greater weight in the balance than the interests of Clonmel which only arise after it is determined that the S.P.C. is invalid. Another way of valuing this factor is that it represents the status quo ante. In this case, there was no unreasonable delay in the commencement of the proceedings, and the status quo must therefore be taken to be the position which existed prior to Clonmel’s launch. Finally, the same factor comes into play if consideration is given to the question of clearing the way. For the reasons discussed above, this cannot be treated as a single dispositive argument and, for example, in cases where the defendant might plausibly contend that his product did not infringe a patent, it might be of lesser weight. Here, however, the only issue is validity and, moreover, that issue itself is to be determined within the limited confines of Article 3 of the regulation. Since, by definition, any generic challenger will have to have taken preparatory steps both of a practical and regulatory nature it is, in my view, a legitimate factor to which weight should be given to consider that no steps have been taken to clarify the essential matters upon which Clonmel’s right to launch the product depends: those concerning the question of the validity of the S.P.C.
62 In cases where the balance of convenience may be finely balanced, it may be appropriate to have regard, even on a preliminary basis, to the strength of the rival arguments as they may appear to the court. Certainly, if it was apparent that Clonmel’s case for invalidity was strong, and/or if there had been successive determinations in Clonmel’s favour of a similar challenge in other jurisdictions, then that might weigh against the grant of an injunction. In intellectual property matters where the same issue may have been addressed in other European countries, or the same issues adjudicated on in other comparable jurisdictions, it may be appropriate to take into account the outcome of such litigation. It is recognised in the decision in American Cyanimid that if the question of adequacy of damages is evenly balance, it may not be inappropriate to consider the relative strengths and merits of each party’s case as it may appear at the interlocutory stage. Courts are correctly reluctant to express views on cases which are to come to trial. However, it would be absurd if this rule of abstention were to result in a court conducting an agonised and necessarily imperfect assessment of a number of variable factors in a field with which it has little familiarity and where the evidence is indirect, written, and untested, all the while averting its attention from the area (perhaps of pure law) in which it can justifiably claim expertise. For this reason, I consider that Hogan J, taking the view he did of the balance of convenience, was quite correct to form some tentative view of the merits. However, it is, in this case, sufficient to say that Clonmel’s case has not been shown to have that degree of strength which would outweigh the factors in favour of the grant of injunction. Accordingly, I consider that if the case was considered as of April 2018, then an interlocutory injunction ought to have been granted, subject to the Merck’s undertaking in respect of damages, and a direction for a speedy trial on the issue of validity.
63 I am conscious that, although expressed in perhaps a nuanced way emphasising the flexibility of the remedy, this decision is nevertheless capable of being read as suggesting that in every case in which an S.P.C. holder seeks an injunction against a threatened challenge by a generic competitor, then an interlocutory injunction ought to normally be granted. Given the fact that a number of the features are common to any such claim, this is inevitable. I would, however, emphasise that the balance is a fine one, and is capable of being affected by the circumstances of particular cases and by a range of factors, such as the outcome of similar litigation in other jurisdictions, which may lead to a different outcome.
64 Finally, at the risk of perhaps creating a further rule that will require subsequent qualification and correction, it may be useful to outline the steps which might be followed in a case such this:-
(1) First, the court should consider whether, if the plaintiff succeeded at the trial, a permanent injunction might be granted. If not, then it is extremely unlikely that an interlocutory injunction seeking the same relief upon ending the trial could be granted;
(2) The court should then consider if it has been established that there is a fair question to be tried, which may also involve a consideration of whether the case will probably go to trial. In many cases, the straightforward application of the American Cyanimid and Campus Oil approach will yield the correct outcome. However, the qualification of that approach should be kept in mind. Even then, if the claim is of a nature that could be tried, the court, in considering the balance of convenience or balance of justice, should do so with an awareness that cases may not go to trial, and that the presence or absence of an injunction may be a significant tactical benefit;
(3) If there is a fair issue to be tried (and it probably will be tried), the court should consider how best the matter should be arranged pending the trial, which involves a consideration of the balance of convenience and the balance of justice;
(4) The most important element in that balance is, in most cases, the question of adequacy of damages;
(5) In commercial cases where breach of contract is claimed, courts should be robustly sceptical of a claim that damages are not an adequate remedy;
(6) Nevertheless, difficulty in assessing damages may be a factor which can be taken account of and lead to the grant of an interlocutory injunction, particularly where the difficulty in calculation and assessment makes it more likely that any damages awarded will not be a precise and perfect remedy. In such cases, it may be just and convenient to grant an interlocutory injunction, even though damages are an available remedy at trial.
(7) While the adequacy of damages is the most important component of any assessment of the balance of convenience or balance of justice, a number of other factors may come into play and may properly be considered and weighed in the balance in considering how matters are to be held most fairly pending a trial, and recognising the possibility that there may be no trial;
(8) While a structured approach facilitates analysis and, if necessary, review, any application should be approached with a recognition of the essential flexibility of the remedy and the fundamental objective in seeking to minimise injustice, in circumstances where the legal rights of the parties have yet to be determined.
65 If the matter was still live, I would, for the reasons set out above, allow the appeal against the orders of the High Court and the Court of Appeal and grant an interlocutory injunction pending the hearing. In the circumstances of this appeal, as outlined at the outset of this judgment, however, it is sufficient simply to allow the appeal.
Campus Oil Ltd v Minister For Energy (No 2)
[1983] IR 88
O Higgins CJ: The plaintiffs in these proceedings, five of whom are the Appellants on this appeal, are companies engaged in the importation and sale of fuel oils who together constitute an association known as the Irish Independent Petroleum Association . The main defendants are the Minister for Industry and Energy (hereinafter referred to as the Minister ) and the Irish National Petroleum Corporation (hereinafter referred to as the Corporation ) established by the State in 1979 for the purpose of the purchase and importation of oil products and which now owns and operates, on behalf of the State, the oil refinery at Whitegate, Co Cork (hereinafter referred to as Whitegate ). Ireland and the Attorney General have also been joined as defendants for procedural reasons. Before dealing with the issue which arises on this appeal it is necessary to refer to the legal steps which have already been taken in this litigation so that this issue can be considered in its proper background.
In these proceedings the plaintiffs challenge the validity of a statutory instrument entitled Fuels (Control of Supplies) Order 1982 (hereinafter referred to as the Order ) made by the Minister on the 25th August 1982 pursuant to the provisions of the Fuels (Control of Supplies) Acts 1971 to 1982. Under the powers contained in the Order the Minister has required all traders in imported fuel oils to purchase 35 per cent of their requirements from Whitegate and to do so at prices and subject to terms fixed by the Corporation. This scheme or directive is known as the mandatory regime . Its operation has been strongly resisted and opposed by the plaintiffs who, in September 1982, commenced these proceedings, challenging the validity of the Order, when the directive was first sought to be imposed by the Minister. The challenge is based on the claim that the mandatory regime is contrary to the provisions of the Treaty Establishing the European Economic Community (the EEC Treaty) and in particular to Articles 30 and 31 thereof. Having commenced these proceedings the plaintiffs applied in the High Court for an interlocutory injunction restraining the defendants, pending the trial of the action, from implementing the mandatory regime. This application was heard by Mr Justice Murphy and was refused by him for reasons which he outlined in a reserved judgment delivered on the 22nd September 1982. The Statement of Claim in the action was then delivered by the plaintiffs as was the defendants defence and the plaintiffs reply. The proceedings were then re-listed before Mr Justice Murphy for the purpose of considering an application by the plaintiffs, which was opposed by the defendants, that the Court should seek a preliminary ruling from the Court of Justice of the European Communities as to whether Articles 30 and 31 of the Treaty are to be interpreted as applying to the system or regime established by the Order. The defendants, while opposing the application, suggested that if such a preliminary question were asked a further question should also go as to the application of Article 36 of the Treaty to the system or regime in the event of the first question being answered in the affirmative. Mr Justice Murphy having considered the matter decided to seek a preliminary ruling on both questions, if necessary, from the Court of Justice. In so doing he was availing himself of the procedure laid down in Article 177 of the EEC Treaty which is in the following terms:
Articles 177. The Court of Justice shall have jurisdiction to give preliminary rulings concerning:
(a)the interpretation of this Treaty
(b)the validity and interpretation of Acts of the institutions of the Community
(c)the interpretation of the statutes of bodies established by an Act of the Council, where those statutes so provide. Where such a question is raised before any court or tribunal of a member state, that court or tribunal may, if it considers that decision on the question is necessary to enable it to give judgment, request the Court of Justice to give a ruling thereon. Where any such question is raised in a case pending before a court or tribunal of a member state, against whose decision there is no judicial remedy under national law, the court or tribunal shall bring the matter before the Court of Justice.
It is apparent from this Article that Mr Justice Murphy had a discretion as to whether or not to make the reference sought. However, he concluded that he ought to seek a preliminary ruling and in so doing adjudged that the preliminary decision on the question was necessary to enable him to give judgment in the action between the parties. The defendants appealed against this decision to the Supreme Court but their appeal was dismissed. Consequent on the decision to seek the preliminary ruling the further hearing and trial of the action has been adjourned.
In so far as the defendants were concerned, when these steps had concluded they decided to seek full observance of the mandatory regime. This they concluded to be necessary in order to maintain Whitegate. Their decision was complied with by the large multi-national oil companies who were trading in this country (known as the Majors ) but was resisted by five of the plaintiff companies. The fifth-named plaintiff complied with the defendants decision, with the result that it is not involved in the Order made in the High Court, nor is it involved on this appeal. The other five plaintiff companies continued to import their requirements without taking any percentage from Whitegate. The Minister and the Corporation were concerned that a continuance of this situation might lead to the Majors also pulling out of the mandatory regime. If this occurred it would result in the immediate closing of Whitegate with considerable disorganisation and damage to the Corporation s plans for the maintenance of Whitegate as a viable refinery. For this reason, having sought leave to amend the Defence by adding a counter-claim, the defendants applied to the High Court for interlocutory injunctions against the five plaintiffs who were so refusing to comply with the Order. This application was heard by Mr Justice Keane in the High Court. Having considered the issue very carefully, he decided to grant the injunction sought on the grounds stated in his reserved judgment dated the 24th March 1983. Against his decision this appeal has been brought.
The basic contention of the Appellants has been that Mr Justice Keane in granting interlocutory relief on the application for the defendants failed to have regard to the correct criteria to be applied in considering an application for an interlocutory injunction and in particular in considering an application for an injunction which was of a mandatory nature. In particular they submit that he was in error in failing to require of the defendants that they should establish a substantial question to be tried and a probability that the plaintiffs would fail at the trial in relation to such a question. It seems to me that these contentions raise a question of some importance as to the manner in which a court should act in considering interlocutory relief.
Interlocutory relief is granted where what is complained of is continuing and is causing harm or injury which may be irreparable in the sense that it may not fairly or properly be compensated for in damages. It is given because a period must necessarily elapse before the action can come for trial and for the purpose of keeping matters in status quo until the hearing. The application is made on motion supported by affidavit. It frequently happens that neither the plaintiff s right nor the fact of its violation is disputed by the person whose acts are sought to be restrained. In such case an injunction may be given almost as of course. Often also, the application for the interlocutory injunction is, by consent, treated as the trial of the action. When this happens the rights of the parties are finally determined on the interlocutory motion. In cases, however, where rights are disputed and challenged and where a significant period must elapse before the trial, the Court must exercise its discretion whether to grant interlocutory relief with due regard to certain well-established principles. Not only will it have regard to what is complained of and whether damages would be an appropriate remedy, but it will also consider what inconvenience, loss and damage might be caused to the other party, and ask whether he who seeks relief has shown that the balance of convenience is in his favour. None of these matters, however, are directly in issue on this appeal. Here, interlocutory relief was granted to the defendants in pursuance of their counter-claim seeking a permanent injunction at the trial. The plaintiffs, against whom it was granted contend that the learned trial Judge should have required the defendants to establish a probability that the counter-claim would succeed at the trial and that the defendants claim would be dismissed. Mr Fitzsimons on their behalf argued that the existence of such a probability test as a guide to the granting of interlocutory relief was recognised by the former Supreme Court in Educational Company of Ireland Limited v Fitzpatrick and Ors [1961] IR 323. In particular he relied on the judgment of Lavery J in that case. I must say at once that I do not agree. In my opinion, the judgments in that case do not support this argument. It is true that there is one reference to probability contained in an extract from Kerr on Injunctions (6th Edition) which was quoted by Lavery J. This reference, however, in its context, is of doubtful significance. Lavery J, however, in his judgment, at p 337 clearly laid down what he regarded as the proper test when he said:
The plaintiffs have to establish that there is a fair question raised to be decided at the trial. The arguments, lasting three days in this Court, show, I think, that there is such a question to be determined.
In any event I would regard the application of such a test as contrary to principle. As I have already mentioned, interlocutory relief is intended to keep matters in status quo until the trial and to do no more. No rights are determined nor are issues decided. I think the principle is stated correctly in the following passage from Kerr on Injunctions (6th Edition p 2) which was noted by Lavery J in The Educational Company of Ireland Limited v Fitzpatrick.
In interfering by interlocutory injunction, the Court does not, in general, profess to anticipate the determination of the right, but merely gives it as its opinion that there is a substantial question to be tried, and that till the question is ripe for trial, a case has been made out for the preservation of the property in the meantime in statu quo.
The application of the criterion suggested by the Appellants in this case would involve the Court in a determination on an application for interlocutory relief of an issue which properly arises for determination at the trial of the action. In my view, the test to be applied is whether a fair bona fide question has been raised by the person seeking relief. If such a question has been raised it is not for the Court on an interlocutory application to determine that question: that remains to be decided at the trial. Once a fair question has been raised, in the manner in which I have indicated, then the Court should consider the other matters appropriate to the exercise of its discretion as to whether to grant interlocutory relief. I note in this regard the views expressed by Lord Diplock, with the concurrence of the other members of the House of Lords, at p 407 of the Report of the English case of American Cyanamid v Ethicon [1975] AC 396. I merely say that I entirely agree with what he said.
In my view, therefore, the learned trial Judge, in considering whether the Applicants had raised a fair question as to whether their rights had been violated, applied the correct test. I must add that, in my view, such a question had been raised and that he was correct in this respect in approaching the exercise of discretion on that basis.
The Appellants also argue that in so far as the relief which was granted was mandatory in nature, such should not have been given by way of interlocutory relief. It is correct that a mandatory injunction does not usually issue prior to the trial of an action. There are, however, exceptions and, in my view, this case is one of these. The Order which is challenged was made under the provisions of an Act of the Oireachtas. It is, therefore, on its face, valid and is to be regarded as a part of the law of the land, unless and until its invalidity is established. It is and has been implemented amongst traders in fuel, but the Appellants have stood aside and have openly defied its implementation. Their action clearly, on the evidence, threatens the continued operation of the regime established by the Order in question. This is so because the other oil companies, particularly the Majors, have threatened to pull out of the regime unless it is observed by all traders. It seems to me that in such circumstances it was proper to direct, by way of mandatory injunction, compliance with the Order. If this were not done the existing position, in so far as the operation of the Order is concerned, could not be preserved, and on the evidence before the learned trial Judge, there was a grave danger of very great and extensive damage being caused to Whitegate. Therefore, although one of the injunctions granted was mandatory in its nature, I think it was proper in the circumstances of this case that it should have been granted by way of interlocutory relief. For these reasons, in my view, this appeal should be dismissed.
Griffin J: I agree with the judgment of the Chief Justice. I would however like to add some observations of my own.
Mr Fitzsimons on behalf of the plaintiffs submitted that, as the provisions of the Treaty Establishing the European Community (the EEC Treaty) forms part of the domestic law of the State, before determining whether or not the interlocutory injunction sought by the defendants should be granted, this Court should first interpret Articles 30, 31 and 36 of that Treaty. This should be done, they say, for the purpose of determining whether Articles 30 and 31 apply to a system such as that established by the Fuels (Control of Supplies) Order 1982, and, it they did, whether such a system is exempt by the provisions of Article 36. These are the precise matters which, at the instance of the plaintiffs, Murphy J, pursuant to Article 177 of the EEC Treaty, referred to the Court of Justice of the European Communities at Luxembourg ( the EEC Court ) for the preliminary rulings of that Court. Before doing so, he had to determine that the ruling of the EEC Court is necessary to enable him to give judgment on the issues in dispute between the parties in this action. The plaintiffs stood over and successfully defended his order of referral on the defendants appeal to this Court against the making of that order.
In my opinion, it would be highly undesirable, to put it at its lowest, for this Court to interpret those Articles in anticipation of the rulings of the EEC Court and the plaintiffs should not be allowed to blow hot and cold in the course of the same proceedings between the same parties. It is for the EEC Court to interpret the provisions of the EEC Treaty, and it is for our courts to apply it. Mr Fennelly was in my opinion correct in pointing out that the primary object of Article 177 is to ensure uniform interpretation of Community law within all member states, as otherwise the application of Community law by the national courts of the member states could lead to divergent application in different member states, or even to application which would be contrary to the principles of Community law. It is for this reason that although national courts, other than the court of last instance, have a discretion to seek preliminary rulings under Article 177, the courts of last instance, whose cases set the important precedents, are obliged to refer to the EEC Court any questions of Community law raised.
On the question of the principles to be applied in the granting or refusing of an interlocutory injunction, Mr Fitzsimons sought to rely on the judgment of Lavery J in the Educational Company of Ireland Limited v Fitzpatrick and Others [1961] IR 323 as establishing that the plaintiffs seeking the injunction must satisfy the Court that the probability is in favour of the defendants case ultimately failing in the final issue of the suit. An analysis of the judgments in that case is of interest. Lavery J cited with approval two passages in Kerr on Injunctions, (6th Edn p 2 and pp 15/16 respectively) as settling the principles on which an interlocutory injunction will be granted. These passages are fully set out in the judgment of Keane J, and I do not propose to repeat them. In the first passage, reference is made to the necessity of there being a substantial question to be tried , and a fair question to raise as to the existence of the right alleged. In the second passage the requirement of there being a fair question to raise as to the existence of the right which the party seeking the injunction sets up is repeated, and then reference is made to the requirement that the Court must, before disturbing any man s legal right or stripping him of any of the rights with which the law has clothed him, be satisfied that the probability is in favour of his case ultimately failing in the final issue of the suit.
Having cited the two passages referred to, Lavery J dealt with the issues that arose in the case. He referred to the requirement that the plaintiffs have to establish that there is a fair question raised to be decided at the trial , and gave as his opinion that the issues raised a question and a difficult one. And at p 338 he said that In this case there may well be further facts elicited at the trial, but there can be no doubt that a serious question of law arises , but he did not deal with the question of whether or not the probability test had been satisfied.
Maguire CJ, who dissented, cited with approval the passage at p 15 in Kerr of which Lavery J approved, but he omitted that portion of it which dealt with the probability of success at the trial. Although he based his decision on the ground that the plaintiffs had not shown that there were substantial grounds for doubting the existence of a trade dispute, he did, however, say that on the other point argued he was not satisfied from what had been said on that point that it was probable that the plaintiffs would establish it.
Kingsmill Moore J at p 342 said that it appeared to him that a very important and difficult question of law was involved and one which required the most careful consideration. He cited Smyth and Another v Beirne and Another (unreported) in which the Court unanimously held that on the facts as accepted by the Judge of first instance a serious question of law arose as to whether a trade dispute existed and that this warranted the granting of an interlocutory injunction, where the balance of convenience was in favour of granting it. He said:
Mr Costello for the plaintiffs does not accept that all relevant facts have been established and says that there are further facts which he hopes to establish if the case goes to a full hearing, and if he can avail himself of discovery, interrogatories, and cross-examination to elicit them. I am of opinion that a plaintiff is entitled to have his case fully investigated in the ordinary course of legal procedure and that it would be undesirable in the absence of consent to decide a legal question of this magnitude merely on the affidavits filed for the purpose of the interlocutory motion.
D laigh J said that he inclined to the view that the constitutional issue raised by the plaintiffs is prima facie sufficient to turn the scales in their favour, and that accordingly the only remaining matter was the balance of convenience, Maguire J agreed with Lavery J, and also with Kingsmill Moore and D laigh JJ.
It would appear therefore that the Chief Justice, who dissented, impliedly accepted the probability test, that Lavery J stated but does not seem to have applied it, and that Kingsmill Moore J and D laigh J were satisfied that there was a serious question to be tried.
Subsequently, in Esso Petroleum Company (Ireland) Limited v Fogarty [1965] IR 531, D laigh CJ, with whom Lavery J agreed, accepted that the principles to be applied are well summarised in the passages from Kerr cited in the judgment of Lavery J in the Educational Company of Ireland Limited case. Having stated that the plaintiffs were required to show that in the language of Kerr there are substantial grounds for doubting the existence of the alleged legal right of the defendant, the exercise of which they seek to prevent, he said at p 539:
The Court before stripping him of this right must be satisfied that the probability is in favour of the defendant s case ultimately failing in the final issue of this suit.
On the other hand, Walsh J, at p 541, stated the principle applicable as follows:
The principles upon which interlocutory injunctions are granted are well established and a Court will grant one when a case has been made out for the preservation of the property in statu quo pending the trial of the action if it is of opinion that there is a substantial question to be tried.
This is a clear and concise statement of the principles to be applied in such cases.
The question was also considered by the House of Lords some ten years later in American Cyanamid v Ethicon Ltd. [1975] AC 396. It was there laid down that the Court in exercising its discretion as to granting or refusing an interlocutory injunction, ought not to weigh up the relative strengths of the parties cases on the evidence available at the interlocutory stage, that evidence being then necessarily incomplete. Lord Diplock, with whose speech the other members of the House agreed, referred at p 407 to what he called the supposed rule that the Court is not entitled to take any account of the balance of convenience unless it has first been satisfied that if the case went to trial on no other evidence than is before the Court at the hearing of the application the plaintiff would be entitled to judgment for a permanent injunction in the same terms as the interlocutory injunction sought. He then continued:
Your Lordships should in my view take this opportunity of declaring that there is no such rule. The use of such expressions as a probability , a prima facie case , or a strong prima facie case in the context of the exercise of a discretionary power to grant an interlocutory injunction leads to confusion as to the object sought to be achieved by this form of temporary relief. The Court no doubt must be satisfied that the claim is not frivolous or vexatious; in other words, that there is a serious question to be tried.
It is no part of the court s function at this stage of the litigation to try to resolve conflicts of evidence on affidavit as to facts on which the claims of either party may ultimately depend nor to decide difficult questions of law which call for detailed argument and mature considerations. These are matters to be dealt with at the trial. One of the reasons for the introduction of the practice of requiring an undertaking as to damages on the grant of an interlocutory injunction was that it aided the court in doing that which was its great object, viz abstaining from expressing any opinion upon the merits of the case until the hearing (Wakefield v Duke of Buccleuch). So unless the material available to the court at the hearing of the application for an interlocutory injunction fails to disclose that the plaintiff has any real prospect of succeeding in his claim for a permanent injunction at the trial, the court should go on to consider whether the balance of convenience lies in favour of granting or refusing the interlocutory relief that he sought.
It was submitted on behalf of the plaintiffs that there are differences between the test applied in the American Cyanamid case and those applied in the Educational Company of Ireland Limited and the Esso Petroleum Company (Ireland) Limited cases but, as Murphy J said in his judgment in the application for an interlocutory judgment by the plaintiffs in this case, any such differences are more apparent than real. The tests applied by Lavery J ( that there is a fair question raised to be decided at the trial ); by Kingsmill Moore J ( that a serious question of law arose ); by Walsh J ( that there is a substantial question to be tried ) and by Lord Diplock ( that there is a serious question to be tried ) are essentially the same. A similar view was taken by Finlay P in Rex Pet Foods Limited and Another v Lamb Brothers (Dublin) Limited and Others, (unreported, 26th August 1982), where he stated that the statement of principles contained in these decisions do not differ but to some extent each complements the other in certain aspects of the questions raised.
It seems to me that the passage from the speech of Lord Diplock to which I have referred has much to recommend it in logic, common sense and principle and I would respectfully adopt it as being a correct statement of the law to be applied in cases of this kind. In a number of cases in recent years this Court has applied, as the true test, whether a fair or serious question has been raised to be decided at the trial, and, if so, whether the balance of convenience was in favour of granting or refusing the interlocutory injunction sought. The latest of these cases was TMG Group Ltd v Al-Babtain Trading and Contracting Company and Another, (28th March 1980), but in none of them was judgment reserved by reason of their extremely urgent nature.
Keane J held that there is a fair question to be tried on the hearing of this action, and there undoubtedly is. He also held that in terms of the balance of convenience between the parties and the preservation of the status quo, he should exercise his discretion in favour of granting the interlocutory injunction sought. There was evidence before him on which he was in my opinion justified in coming to that conclusion.
I would dismiss this appeal.
[2006] I.E.H.C. 171, Mac-Menamin J.JUDGMENT of Mr. Justice John MacMenamin dated the 17th day of February 2006.
The plaintiff in these proceedings was incorporated some 25 years ago and then operated from rented premises in Cabra. For the duration of its period in operation the plaintiff has engaged in the business of supplying the defendant with a variety of stock. The arrangement entered into was that the defendant agreed to open an account on the basis that the plaintiff would buy the stock and sell it to the defendant at a mutually agreeable margin on credit terms. Until recently there have been agreed terms and margins with the defendant’s buyer and these have been adhered to, although on occasion reviewed in a manner later described. The defendant is the only customer of the plaintiff. The advantage of the arrangements from the Defendants point of view is that it dealt with one rather than a multiplicity of suppliers with a substantial reduction in staff overheads and paperwork. The Plaintiff derived its profit from the margin between purchase price from suppliers and resale to the Defendant.
It is now necessary to refer in greater detail to the two elements of the arrangement between the parties.
Textile Products
The case advanced is that in or about May, 2003 the parties entered into a contract for the warehousing and distribution of textile products. The essential term of this agreement was, that the plaintiff would provide warehousing and distribution of a sizeable portion of the defendant’s textile business and that, in consideration thereof, a rate of €1.45 per cubic foot would be paid to the plaintiff by the defendant. The relevant credit terms for the payment were to be two weeks after the week of delivery. It is asserted that there was an implied term of this contract, through common understanding between the parties and by reason of the previous dealings between them, that these rates would continue for an indefinite period subject to variation only on mutual agreement between the parties and terminable only on reasonable notice. It is submitted that a reasonable notice period to give the plaintiff, given that the defendant is its only customer, that it has 477 employees, and has invested upwards of €15m in its business, should be a period of twelve months.
Frozen and chilled foods
Turning to the second element of the arrangement, the plaintiffs say that in or about October, 2005 the parties entered a contract for the warehousing and distribution of all frozen and chilled foods. The essential term of this contract, was that the plaintiff would provide transportation and warehousing for a substantial proportion of the defendant’s chilled and frozen foods. The consideration for this service was that a rate of €1.69 per case for frozen food and €1.12 per case for chilled foods would be paid by the defendant. The relevant credit terms were for payment within two weeks of the month end. Similar contentions are made as to this aspect of the agreement regarding duration, review and notice.
Further background
Although no longer in issue for these interlocutory proceedings, a director, Mr. Padraig Whelan Snr. has deposed on behalf of the plaintiff that, for the latter half of 2005, the defendant engaged in an effort either to put the plaintiff out of business, or sought as an illegitimate tool to drive down the plaintiff’s rates by unilaterally breaking agreements and withholding substantial sums of money owing under the two agreements. At one stage he says the sums in question reached a total of €14.1 m. This matter is no longer part of the matrix of facts relevant in this application for an interlocutory injunction because, on 31st January last, the plaintiff accepts that it received cheques from the defendant totalling a sum of €14.1 m. in respect of monies withheld.
Variation of the agreements
It is the plaintiff’s case that the defendant has sought to make a unilateral variation of the two contracts entered into between the plaintiff and defendant.
The issue crystallised on 18th November, 2005, when the plaintiff received an email from a Mr. Eoin McGettigan of the defendant, advising of reductions whereby the defendant proposed to implement, with effect from 1st November, 2005, reductions to the “textile rate” from €1.45 to €1.30; and to the overall Food Rate by some 7%, based on an average of a mix of the frozen and chilled rates. Such deductions, were sought to be backdated to 1st November, 2005. The plaintiff says that Mr. McGettigan advised that he intended “to deduct these new rates from the account rather than complicate the invoicing costing arrangements at this stage”. After receiving this email the plaintiff and defendant continued to negotiate. Mr. Whelan Snr. says that he told the defendants representatives on a number of occasions that the rates which they were unilaterally imposing on the plaintiff were not sustainable and would eventually put the plaintiff out of business. He says that, despite their protests and despite an ongoing process of negotiations between the parties, the defendant proceeded to implement the above variations from in or about 20th December, 2005. It is submitted now that this constitutes a unilateral variation of the contract entered into with the plaintiff which variation, is thereby null and void.
The plaintiffs also say that the defendant has unlawfully withheld substantial sums due to the plaintiff pursuant to the two contracts aforesaid, and that the total sum deducted, as of 3rd February, 2006, is €656,777.34.
Additionally, there is a claim for incurred losses in the sum of approximately €1 m. as a result of instructions conveyed to the plaintiff by the defendant under a number of headings since the year 2000.
These claims include:
(a) Inducing the plaintiff to enter into a sub-lease which it contends was commercially illegal and on foot of which it has incurred losses in the sum of €447,319.00;
(b) obtaining and providing extra warehousing on the instruction of the defendant which was not ultimately justified on the basis of the volumes which they were assured they would obtain, giving rise to a loss of €218,107.00; and
(c) a direction that the plaintiff pay a third party warehouse provider a 35% rate increase. As a result of what is contended to be an “enforced arrangement” the plaintiff contends that it has lost the sum of €290,079.00 under this heading.
The plaintiff further complains that, between October, 2005 and January, 2006, the defendant has wrongfully interfered with the internal business affairs of the plaintiff by using “economic duress” as a negotiating tool to obtain information about the plaintiff’s accounts in order to direct the plaintiff how to manage its business and how to account therefor. By reason of this conduct the defendant has wrongfully undermined the independence of the plaintiff. An instance of this conduct is alleged to have occurred on Monday, 16th January, 2006, when Mr. Frank Dunne, a substantial shareholder of the defendant, telephoned the plaintiff and said that he had spent the weekend looking at the plaintiff’s forecasts and that he needed to take action on the basis that the plaintiff was too inefficient. Mr. Whelan says that Mr. Dunne said that it was not acceptable to have massive amounts of overtime and that this should be dealt with through shift work. As a result, Mr. Whelan contends that Mr. Dunne stated that he was going to “halve” the plaintiffs business and thus it would have to reduce its costs.
A number of other issues are canvassed in the course of Mr. Whelan’s affidavit, some going back as far as 1992. While these issues (whether explained or unexplained) may form part of the background, I am satisfied that for the purposes of this application they form no part of the issues to be considered. Similar considerations arise in relation to an issue of undercharging which, it is alleged occurred in January, 2003.
Other alleged variations
The plaintiff says that the events of November 2005 were not the first time that unilateral action has been taken by the defendant. It is contended that the withholding of a cheque in the year 2003 lengthened the plaintiff’s credit terms by one week.
It is also said that in March 2003 the defendant released a tender document to distribution companies in the areas of textile and grocery warehousing and distribution. The plaintiff replied to the tender with reduced rates as the plaintiff was conscious of various commercial commitments entered into relating to a warehouse. Mr. Whelan says that on 2nd May, 2003 a fax was sent to the plaintiff from the defendant reducing the textile rate by 15% and dramatically changing payment terms. This is stated to have been a unilateral decision and to have ignored the response made by his company to the tender. A number of other areas of similar complaint in the year 2003 are outlined.
By January, 2004 it appears, the plaintiff was the largest distributor of the defendant’s textile distribution service and was making a significant profit. In January, of that year the plaintiff says that the defendant notified it that a new milk distribution margin payable was to be introduced. This was to be the second of two reductions made in the space of six months and represented when annualised, a contribution to loss of a substantial sum of money. It is contended that, because the plaintiff company did not receive the volumes which had been assured to it, it sustained losses.
Meetings and contacts
It is common case that a series of contacts and meetings on this issue of variation have taken place over the last year. It is unnecessary to outline in detail all those which took place between Mr. Whelan and his son Patrick Whelan Jnr. on behalf of the plaintiff, and Mr. Andrew Street and Mr. Eoin McGettigan and others representing the defendant. Suffice it to say that a number of such contacts took place between these particularly parties between October and November 2005 in relation to the profitability and margins of the plaintiff company. Telephone calls took place between Mr. Whelan and Mr. Noel Fox, a director of the defendant. From 11th October, 2005 to November of that year, a series of meetings took place. This culminated in Mr. McGettigan suggesting a number of actions to be taken by the plaintiff company to improve its financial position. The Defendants say that the negotiation process can be dated back to much earlier, in the same year, regarding a new basis for the trading relationship between the parties.
On 10th November, 2005 a meeting took place between Messrs. Whelan Jnr. and Snr. and Andrew Street and Eoin McGettigan. At that meeting Mr. Whelan Snr. said that the plaintiff was in a perilous position due to the effects of the withholding of credit and the imposition of reduced rates. He says that the new Food Rate arose from a tender document dating back to February, 2005. Mr. McGettigan disagrees and maintains that the new rates agreed during the course of the year for implementation on 1st November arose from the necessity to change the pricing methodology from margins to case rates. Mr. Whelan says that Mr. McGettigan asserted that the plaintiff’s balance sheet was too strong and that it arose solely from the business generated by the defendant. The Defendant believed the plaintiff was generating excessive profits and that it defendant was therefore overpaying for the service. During the course of this meeting it is said Mr. McGettigan, on behalf of the defendant, stated that he felt that if there were difficulties, these were of the plaintiff’s own making, and that the plaintiff had €15 m. worth of assets on its balance sheet and had previously made very substantial profits. Mr. Whelan says that he made the case that the plaintiff company was now close to trading recklessly. He did not accept that the company should borrow money in order to finance the situation. At the conclusion of the meeting, the plaintiff agreed to provide a substantial amount of financial information by Friday, 13th January, 2006 and requested that the defendant release the credit due to them as a goodwill gesture.
On 18th November last, the plaintiff company received a call, confirmed by email, from Mr. Eoin McGettigan advising of reductions which the defendant proposed to implement with effect from 1st November, and to reduce the textile rate in a manner which has been outlined earlier in the course of this judgment. During December, 2005 a further series of negotiations took place between the plaintiff company and the defendant. But no consensus was established.
It was on 16th January, 2006, that Mr. Whelan says that the conversation previously described between himself and Mr. Frank Dunne took place. In addition to the remarks made earlier, Mr. Whelan imputes to Mr. Dunne the view that “It was no wonder that the plaintiff was losing so much money and that he knew it would be bankrupt if he did not take action”. Mr. Whelan says that he said that the new rates caused the losses, and that as far as he was concerned the plaintiff had one of the cheapest cost bases available. During the course of the conversation Mr. Whelan contends that Mr. Dunne stated that (a) the plaintiff was “too big a part of the defendant” for him not to take action; (b) that there were others “out there” who could do the job cheaper;
(c) that he was going to tender out part of the plaintiff’s business. No replying affidavit from Mr. Dunne has been filed, either on these issues or his intentions allegedly halve the volumes of tenders available to the plaintiff.
The plaintiff contends that the effect of the alterations will be to reduce an operating profit to an annual loss of approximately €1,250,000. In the circumstances it claims that the defendant is well aware that the plaintiff could not continue to trade in a position where its directors might be potentially in breach of the Companies Acts, 1963 to 2001.
At paragraph 81 of the Mr. Whelan’s Snr. grounding affidavit, he says that if the contracts are varied, the consequences will be as follows:
(1) the plaintiff will be insolvent;
(2) 477 direct redundancies will arise from the closure of the company. It is deposed that approximately 300 of these employees are non-national and non-English speaking people who work as general operatives and drivers.
The Defendants evidence
On behalf of the defendant, affidavits have been sworn by a number, but not all, of the participants in the negotiations. Mr. Vincent Hutton, described as head of Food Finance, describes a highly fluid negotiation process wherein a series of quotations based on varying criteria and counter-quotations were exchanged from as far back as February, 2005. He describes one suggested alteration which arose during the course of negotiations, whereby the defendant would move to a “stock ownership” system, that is that the plaintiff would effectively act as a logistics conduit rather than, as now, purchasing the goods and thereafter selling them on to the defendant. Instead it was proposed that the Defendant itself would purchase the goods. The proposal for this “stock ownership” system was postponed on 28th September, 2005. However, it was subsequently proposed that the defendant would nonetheless apply the rates devised by analogy with those which had been envisaged for the stock ownership project had it proceeded, but strictly on an interim basis only. Mr. Hutton points out and emphasises the usage of the word ‘interim’ in an email of the 28th September, 2005 and states that by reason thereof, he does not consider that the plaintiff could have reasonably thought that he was purporting to enter into any long term contractual agreement regarding rates, binding on the defendant in the future. It is clear from the remainder of Mr. Hutton’s affidavit that, in the defendant’s contention, no final agreement was reached as to any new long term defined rate applicable to the plaintiff.
In an affidavit sworn on 16th February, 2006, Mr. Dick Reeves, Director of Food in the defendant, makes a number of points. First that the plaintiff has not sufficiently identified the terms of the agreement(s). Second, that the plaintiff has not indicated upon what basis it, (the defendant) is not entitled to review the agreements at this time. Third, that there is no contractual provision which allows the plaintiff to insist that Dunnes Stores must accept a particular level of rates indefinitely. A core feature of the relationship that has pertained between the parties, is that the rates payable to the plaintiff in respect of the services which it provides to Dunnes Stores are subject to review and, if appropriate, revision. Mr. Reeves points to a number of prior occasions, where without objection, Dunnes Stores have varied the contracts. He particularly refers to tenders which were issued by the defendant company without objection from the plaintiff. Fourth, he says the essence of the stance taken by the defendant in 2005 was that it sought to adopt a “stock ownership system” whereby it would acquire title to goods supplied directly, and pay the plaintiff for logistic services only. This would avoid what were contended to be the undesirable aspects of the margin system, that is that the profit element could be disproportionate to the cost of obtaining the goods from the supplier to the defendant and that the defendant itself had no real means of determining whether the margin was disproportionately tilted in favour of profit. Attempts to move the stock ownership project forward proved abortive and, while Dunnes Stores allowed the plaintiff to apply an average or “blended” rate of €1.26 per carton (comprising €1.69 for frozen food, €1.12 for chilled food and €1.05 for ambient goods) over and above the price of the goods, it was made clear in the email from Mr. Hutton to the plaintiff on 28th September, 2005 (to which reference has been made earlier) that this was an interim measure only with the rate being based by an analogy with what had been envisaged would apply if the stock ownership project had proceeded.
At a meeting in October 2005 with Mr. Whelan Snr. and his son Padraig Whelan Jnr., representatives of Dunnes Stores stated that the plaintiff was deriving an unmerited level of profit from its dealings with the defendants. The plaintiffs directors in turn had not offered any insight into the operation of the affairs of their company to suggest that matters were otherwise. On the contrary, such information as was to hand suggested to the defendant that there was overspending on directors’ fees which could easily be brought down to sensible levels if the plaintiffs’ management chose to do so.
The rate fixed on 20th December 2005
In those circumstances, on 20th December, 2005, the defendant reduced the amount which it would pay to the plaintiff to a blended rate of €1.17 for grocery and €1.30 per cu.ft. for textiles. These figures were drawn from calculations which were carried out on behalf of the defendant.
The defendant specifically contests the items of loss, some of them historical, which the plaintiff contends it has sustained. It is stated that they represent once-off costs incurred by the plaintiff in servicing the business of the defendant and from which no liability lies on the defendant.
While maintaining that the defendant was entitled to take an extra week of credit, Mr. Reeves states that this has been restored to the plaintiff by letter from the defendant’s solicitors dated 30th January, 2006.
Adequacy of damages
It is now necessary to deal with one aspect of the case in a little more detail. That is the material which has been put before the court in relation to the issue of the adequacy of damages. On behalf of the defendant, Mr. Michael Cush S.C. submits that the evidence on this issue is unspecific, or at least remained so until affidavits (which the Defendants contest) were sworn by Mr. Des Peelo, accountant, retained on behalf of the plaintiff. The defendant retained Mr. Liam Dowdall Accountant of BDO Simpson Xavier to review such financial information as it had to hand. It is the defendant’s case based on extrapolation from certain figures available to them that the “blended rate” of €1.17 per carton for groceries and €1.30 per cu. ft. for textiles would not leave the plaintiff with dangerously reduced cash flow or threaten the continuation of its business. Mr. Dowdall, says in evidence that the Plaintiff company was solvent at 31st January, 2006, having projected profits of €358,000 and trading cash flows of over €3.32 m. As at 31st January, 2006, the company’s capital and reserves were in excess of €7 m. It is pointed out that the plaintiff company in 2005 made €1.7 m. gross profit and generated €4 m. in trading cash flows.
Mr. Dowdall identifies what he contends are a number of exceptional items included in the 2005 statutory accounts. These are, he states, one-off or excessive charges which distort the overall trading results of the plaintiff. These include sums allocated as exceptional provisions; pension top-up for the directors of the plaintiff; and what are contended to be excessive directors’ salaries and fees. He also points to an insurance write-back relating to 2004. Taking these factors together, he calculates in total, these items a total sum of €1.498 m.
In the course of submissions, Mr. Cush S.C. has also identified headings of depreciation in the next management forecast of the plaintiff company in relation to plant and equipment, motor and administrative costs which together, he contends, come to €1.768 m. and which need not be applied in the manner the plaintiffs contend for the assessment of solvency.
Mr. Dowdall states that, having discussed the impact of the rate reduction with the defendant and based on his discussions with them, the amount resulting from a rate reduction based on 2005 volumes would be in the order of €2,145,633.00. His estimate, based on 2005 volumes, would be that the plaintiff company might expect a loss, (if no adjustments were made to costs/overheads) of €334,000.00 and trading cash flows (after add-back depreciation) of €1,400,000.00.
On behalf of the plaintiff Mr. Des Peelo states that, while the turnover of the company in the year 2005 was €188,874,917.00, the pre-tax profits as a percentage of turnover amounts to 0.59% in that year and that, on an anticipated increased turnover in 2006, the pre-tax profits as percentage of turnover would amount to 0.55%. These figures are based on extracts from management accounts up to 31st December, 2005 and an estimate in respect of the month ended 31st January, 2006. Mr. Peelo states that the trading record of the company shows that the pre-tax profit margin has been well below 1% of turnover in the last three financial years. He states that any significant adverse change in the pre-tax profit margin or in the debtor/creditor relationship would quickly impact on the company’s cash flows and thereby on its ability to continue trading. In particular, Mr. Peelo points to the company’s borrowings of approximately €12.6 m. vis-à-vis the shareholder’s funds of circa €7 m., a debt/equity ratio of approximately 180%. Mr. Peelo says that in his experience a ratio of this type indicates that the company is at, or close to, its borrowing capacity, having regard to the nature and circumstances of its business. Mr. Peelo says that the introduction of the “imposed rates” i.e. grocery at €1.17 and drapery at €1.30, compared to the previous rates of €1.26 and €1.45 respectively, would have resulted in the following changes in the trading profit and loss accounts as follows:
12 months ended 31st January, 2005:
Actual: €1,110,481.00
Revised: (€1,035,152.00)
12 months ended 31st January, 2006:
Actual: €1,105,125.00
Revised: (€1,048,122.00)
Mr. Paul Gallagher S.C., on behalf of the plaintiff, points to losses on the part of his client on an ongoing basis as of 3rd February, 2006 of €656,000 allegedly attributable to the price variations made by the defendants, to be seen in the context of the claim for €1 m. for earlier losses to which reference has been made.
On behalf of the defendant, Mr. Cush S.C., contends that the real issue which arises in this application is in relation to the adequacy of damages as a remedy, although he submits that there is no written agreement between the parties, that the terms alleged are uncertain and that there is no stipulation in relation to when reviews might take place. He also says that the rates which were agreed were part of a proposal to move on to a different agreement with regard to frozen products, although this was never actually implemented. However, he accepts, correctly, that the court will find that there is a fair issue to be tried in accordance with the accepted legal principles, as outlined in Company Oil Ltd. v. Minister for Energy (No. 2) [1983] I.R. 88.
However, as to the adequacy of damages as a remedy, Mr. Cush submits that the changes which have taken place are in the rate of payment only. Thus, he submits that the damages which might arise therefrom (if a breach of contract be established) can be calculated with exactitude. It is not contended by the plaintiffs that the defendant is not a good mark for damages. On any reading the agreement is determinable on what would be accepted by the plaintiff as being a reasonable period, i.e. a period between nine or twelve months. In particular, relying on the evidence to which reference has been made earlier, Mr. Cush says that, with proper financial management, the case which was made by the plaintiff regarding the real risk of insolvency is ill-founded.
On behalf of the plaintiff, Mr. Gallagher, S.C., submits that the test which must be applied on this issue is whether, on the evidence there is a real risk of financial collapse. The application for an interlocutory injunction, and the realities of the issues must be seen against a backdrop where there has been a trading relationship of some 25 years between the plaintiff and the defendant company. Thus, he contends, it is now “a do or die issue” so far as the plaintiff is concerned. The opinion of the plaintiff regarding the effect of these changes is supported by an independent accountant in consultation with the directors and that there are already quantifiable losses.
With regard to the balance of convenience, guidelines in Campus Oil, Mr. Gallagher submits that this issue was not referred to in the course of the defendant’s arguments in any detail. He asks rhetorically how can the defendant be damnified if an injunction is granted at this stage, especially in the context of the withholding of sums? He further submits that the defendant has not dealt with the issue of the readjustment in the textile rates. If the rates were not agreed then the status quo ante should apply.
The law
If any proposed variation in an agreement makes substantial or fundamental changes to the contract, it is tantamount to a declaration by the proposing party that it does not intend to continue to perform the contract in the unvaried form. Therefore, the proposed variation may amount to anticipatory repudiatory breach of the contract or, if insisted upon, will amount to a repudiation of the contract. It therefore follows that the party choosing not to accept the proposed variation will be put to its election to accept the repudiation or to call expressly for the performance of the contract prior to variation in its unaltered form. Accepting the existence of the contract in this case, this is the position which the plaintiff has sought to advance.
Turning then to the authorities which relate to the general issues or at stake, the judgment of McCracken J. in the case of Private Research Limited v. Paul Brosnan and Network Financial Services Limited: [1996] I.L.R.M. at p. 32, is illustrative of the approach taken where assessment of damages presents difficulties. But it also illustrates the interplay of the three guidelines normally applicable and the manner and sequence in which the guidelines in Campus Oil may be applied; further that in the assessment of balance of convenience, the Court should strive to preserve the status quo, though that is by no means an immutable principle. I now will refer to a number of other authorities cited and thereafter deal with the principles to be adduced therefrom and applied herein on the evidence.
The issue as to adequacy of damages was considered in detail in Curust Financial Services Limited v. LOEWE-LACK-WERK [1994] 1 I.R.
In the course of that decision the Supreme Court (Finlay C.J.) held that difficulty, as distinct from complete impossibility, of assessment was not a ground for characterising the awarding of damages as an inadequate remedy. The plaintiffs’ loss in that case, were they to be denied the relief sought, was exclusively a commercial loss in what had been a stable and well-established market. No insuperable difficulties of quantification arose with regard to the assessment of future damages in respect of any period after the trial of the action whilst the plaintiffs were recovering their share of the market; it was reasonable to suppose that evidence could be adduced which would enable the trial judge to assess such future losses.
At p. 471 of his judgment, Finlay C.J. stated:
“… it is necessary that I should reach a conclusion on the affidavit as to whether it has, as a matter of probability, been established at this stage for the purpose of the interlocutory injunction that damages would not be an adequate remedy by reason of the real risk (emphasis added) of the financial collapse of the Curust Companies. In my view, having regard to all the factors which I have outlined, there has not been established such a case as a matter of probability. No information is forthcoming about the general position of the companies with regard to their indebtedness or net asset situation. No attempt has been made to assess the probable result of competition between Curust and Sales Ltd. in relation to this market for rust primer except on averment on affidavit that Sales Ltd. is underselling Curust with regard to the cost of the rust primer being offered for sale. In these circumstances, where damages can be quantified, the loss is quite clearly a commercial loss, there is no doubt about the capacity of the defendants to pay any damages awarded against the and there is no element of new or expanding business which may make quantification particularly difficult as a matter of principle. I conclude that damages must be deemed to be an adequate remedy in this case …”
In the course of his judgment in the same case, O’Flaherty J., having held that the crucial matter was whether the plaintiff would or would not be deprived of access to the market, stated:
“Were it not for that factor I would hold that the matter was so finely balanced as to require a further inquiry as to where the balance of convenience lay. I would not, except for that circumstance regard damages as an adequate remedy. Then I would look to the status quo ante which I would regard as comprising the longstanding relationship that existed between the parties, the equilibrium of which was affected not by any default by Curust in relation to the 1986 agreement (on which agreement Curust relies) but on alleged tardiness in making payments in relation to a subsidiary agreement or agreements…”
Additional factors are identified in the case of Hart v. Kelly, (High Court) the decision of Laffoy J. on 16th July, 1997. Having discussed the series of employment injunction cases, prior to her decision Laffoy J. stated:
“It was submitted that the common thread which runs through all of those cases is that the plaintiff was totally dependent on his income as an employee of the defendant and would be destitute without such income pending the hearing of the action.”
Having discussed the issue of the plaintiff’s means that judge went on to state:
“In my view the entitlement to the type of order granted in the Fennelly case is not limited to a situation in which the plaintiff can establish that he will face penury if such an order is not made. The rationale of the decision is that it is unjust to leave a person who alleges that his dismissal has been wrongful without his salary pending the trial of the action and merely with his prospect of an award of damages at the trial of the action. The prospect of the destitution of the plaintiff pending the trial of his action was certainly a factual consideration in the Fennelly case…”
Thus two additional issues arise clearly: the justice of the case and the financial position of the parties inter se.
It will then be recollected that in the course of the judgment in American Cyanamid Company, Appellants and Ethicon Limited, Respondents [1975], A.C. the House of Lords held that in all cases, including patent cases, the court must determine the matter on the balance of convenience, there being no rule that it could not do so unless first satisfied that, if the case went to trial on no other evidence than that available at the hearing of the application, the plaintiff would be entitled to a permanent injunction in the terms of the interlocutory injunction sought; where there was a doubt as to the parties’ respective remedies and damages being adequate to compensate them for loss occasioned by any restraint imposed on them, it would prudent to preserve the status quo. In the course of his speech Lord Diplock stated:
“The governing principle is that the court should first consider whether, if the plaintiff were to succeed at the trial in establishing his right to a permanent injunction he would be adequately compensated by an award of damages for the loss he would have sustained as a result of the defendants continuing to do what was sought to be enjoined between the time of the application and the time of the trial. If damages in the measure recoverable at common law would be adequate remedy and the defendant would be in a financial position to pay them, no interlocutory injunction should normally be granted however strong the plaintiff’s claim appeared to be at that stage. If on the other hand damages would not provide an adequate remedy for the plaintiff in the event of his succeeding at the trial, the court should then consider whether on the contrary hypothesis that the defendant were to succeed at the trial in establishing his right to do that which was sought to be enjoined he would be adequately compensated under the plaintiff’s undertaking as to damages for the loss he would have sustained by being prevented from doing so between the time of the application and the time of the trial. If damages in the measure recoverable under such an undertaking would be an adequate remedy and the plaintiff would be in a financial position to pay them there would be no reason upon this ground to refuse an interlocutory injunction.”
He continued:
“It is where there is a doubt as to the adequacy of the respective remedies in damages available to either party or to both that the question of balance of convenience arises. It would be unwise to attempt even to list all of the various matters which may need to be taken into consideration in deciding where the balance lies, let alone to suggest the relative weight to be attached to them. These will vary from case to case.
Where other factors appear to be evenly balanced, it is a counsel of prudence to take such measures as are calculated to preserve the status quo. If the defendant is enjoined temporarily from doing something that he has not done before, the only effect of the interlocutory injunction in the event of his succeeding at the trial, is to postpone the date at which he is able to embark upon a course of action which he had not previously found it necessary to undertake: whereas to interrupt him in the conduct of an established enterprise would cause much greater inconvenience to him since he would have to start again to establish it in the event of his succeeding at the trial.”
In his judgment in the case of Cayne v. Global Natural Resources [1984] 1 All E.R. at p. 237, having dealt with citation quoted on guidelines in Lord Diplock’s speech in American Cyanamid, May L.J. stated at (page 237):
“It is only thereafter, if damages after a trial are thought to be inadequate, that one is then enjoined to look at what is described as the ‘balance of convenience’, that is the phrase which, of course, is always used in this type of application. It is, if I may say so, a useful shorthand but in truth, and as Lord Diplock himself made clear in the N.W.L. case, the balance that one is seeking to make is more fundamental, more weighty than mere ‘convenience’. I think it is quite clear from both cases that although the phrase may be substantially less elegant, the ‘balance of the risk of doing an injustice’ better describes the process involved…”
I have been also referred to the case of Noel O’Murchu t/a Talknology, appellant and Eircell Limited, respondent, a judgment of the Supreme Court delivered on 21st February, 2001. Speaking for the court, Geoghegan J. stated in the context of an injunction sought to compel the respondent until further order to continue supplying or permitting a supply of telephones to the appellant and to treat the appellant as an authorised agent for that purpose, as follows:
“I move on to the question of whether damages would be an adequate remedy. The learned High Court judge clearly thought it was and I would have to agree with him. In every case in which there is a breach of an agency or distribution agreement the task of assessing damages will be difficult, this does not mean that it cannot be done. The respondent is a viable company and is financially in a position to meet any award in damages that may be made against it.”
But it is clear there that the appellant’s loss was essentially financial and quantifiable. A feature of that case was that much of the argument put forward on behalf of the appellant in the High Court was that the Christmas trade was absolutely vital and that without it he would go out of business. The plaintiff was still in business. But even if were to go out of business as a result of losing the agency, his losses could be assessed in money terms.
That judge continued:
“There is a further reason why I think that damages are an adequate remedy. If there is an implied or oral agency agreement, that agreement would be terminable upon reasonable notice and I doubt very much that the appellant would be able successfully to argue that the length of that notice could be more than six months. Depending on the evidence of the trade it might be less. Any damages to be assessed therefore would be confined within a limited period. I am not, of course, expressing any view as to how damages are to be assessed in the event of a finding of infringement of the Competition Act as that is not before the court. But insofar as the appellant is complaining of breach of contract the damages would be limited in the manner which I have suggested. That should not make them too difficult to assess.”
It is important, however, to have regard to the next paragraph of Geoghegan J.’s judgment because he added:
“… But even if I had doubts as to whether damages were an adequate remedy I am satisfied that the balance of convenience favours refusing the injunction. First of all there is the well known principle that in general the courts will not grant an injunction which would involve ongoing supervision. A court, therefore, is very slow to grant injunctions in either service contracts or trading contracts because it is very difficult to assess at any given time thereafter as to whether such injunctions are being obeyed or not. It is also usually impractical and undesirable that two parties be compelled to trade with one another when one, for reasons which are perfectly rational does not want to carry on such trading. The appellant’s bad debt situation and the unsatisfactory nature of his relationship with the respondent make it prima facie reasonable that the respondent would not want to continue trading with him and I doubt that it would be practicable for a court to force such continued trading.”
One can therefore observe that the evidence on financial viability and quantification of loss was in both Curust and O’Murchu very different from that which arises here. Here there is even now an ongoing relationship between the parties which while imperfect does not, I am satisfied raise the spectre of the need for any supervision by a Court of its order on an ongoing basis pending trial.
But the distinctions between those two authorities and the instant case are far more fundamental. This is an issue which can be illustrated in conjunction with the further principles applicable.
First as a principle, therefore, in the balance of convenience it is clear that as a general rule a court should where possible strive to maintain the status quo. However, this is but one element in weighing the balance of convenience. Second, the court must always have regard to the fact that as illustrated in Curust the onus lies upon the plaintiff to establish as a matter of probability that damages will not be an adequate remedy. There should be evidence which establishes this proposition, both as to the general position of the company, its indebtedness and net asset situation and whether a real risk exists to solvency. In the instant case I consider there is such evidence, albeit disputed, and weight can be given thereto by reason of the fact that Mr. Peelo has had access to a far broader range of relevant information than Mr. Dowdall. It can by no means be criticised therefore as mere assertion. The balance is affected further because of the probable results of the acts of the defendant in the context of its effect upon the plaintiff. The plaintiff and his advisors say the company will become insolvent, and the jobs of many people will be put at risk. But here there is also the added and uncontroverted evidence as to the intentions of Mr. Frank Dunne, to halve the plaintiffs volumes at some point undefined.
The issue of the balance of convenience involves as an inquiry, whether damages would be an adequate remedy. On the basis of the plaintiffs evidence even when balanced against that of the defendant, the issue is as to a risk of insolvency as contrasted to the maintenance of the status quo which in this case inter alia involves the long trading relationship which existed between the parties. I accept that one factor which must be borne in mind is the nature of notice which might be necessary to terminate an agreement of this type. In this connection it would appear common case that such reasonable period would be either nine or twelve months. But this must be seen in the light of potential consequences to the parties if no order is made.
A further issue to be borne in mind is the financial standing of each of the parties. The plaintiff is solely and entirely dependent on the defendant for its business. The court should have regard to the effect of the absence of an injunction on the respective positions of the plaintiff and the undoubtedly financially secure defendant, and on the evidence on these points referred to, then look to the justice of the case.
Where there is doubt as to the adequacy of damages, then the court should look at the question of balance of convenience. It will be a matter for the court to determine the relative weight in establishing or deciding where the balance lies. Where other factors appear to be evenly balanced, it is a counsel of prudence to take such measures as are calculated to preserve the status quo. One of the tests which the court must apply is “the balance of the risk of doing an injustice”
Having regard to these principles, it is common case that a fair issue has been established. If, as here, there must on the evidence be a real doubt as to the adequacy of damages, the question of balance of convenience arises. I do not think that this is a matter which is dealt with in detail in the defendant’s affidavits at all. The evidence in the application points only one way, that is in favour of an injunction, even having regard to any point which might be made as to the duration of any notice period. The adequacy of damages as a remedy must been seen as predicated on the continued existence of the parties as going concerning to the trial of the full action. If there is credible evidence of a real risk to solvency as against mere reversion to status quo ante pending trial, the arguments of the defendant become unsustainable.
In essence, taking each and all of the evidential factors into account and weighing them in the balance of convenience, the detrimental effect on the plaintiff of the absence of an injunction, on balance, significantly outweighs the effect of the failure to grant such an injunction. The granting of an injunction will, on the other hand, so far as concerns the defendant merely maintain a position which is effectively the status quo ante, until the hearing. A further issue to which the court may also have regard is a degree of uncertainty as to when the hearing of the plenary action will take place, even having regard to the desire of both parties to achieve an early hearing. The court cannot ignore the difficulties which may arise in the preparation of discovery or the assignment of a date when the court calendar will be free.
Having regard to all the factors therefor as outlined, the court will grant an interlocutory injunction in the terms of paras. (a) and (b) of the notice of motion of 6th February, 2006.
There will be an interlocutory injunction restraining the defendant from proceeding with the unilateral variation of:
(a) the contract entered into between the plaintiff and the defendant in or about October, 2005 for warehousing and distribution of all frozen and chilled foods together with
(b) the contract entered into between the plaintiff and the defendant in or about May, 2003 for warehousing and distribution of all textile products.
On final matter requires determination, that is the precise status quo to be maintained pending hearing. With regard to the relief claimed at (a) above I consider that this should be the rate whether “agreed” or “interim” set for the month of October 2005 of:
Total case costs Frozen rate: €1.69
Chilled rate: €1.12
With regard to (b), the textile rate to be maintained is that of €1.45 per cubic foot and based on carton size, as pertained from 2nd May, 2003.
The credit terms in each instance will be payment within two weeks of months end.
Irish School of Yoga Ltd v Murphy [2012] IEHC 218
Judgment of Ms. Justice Laffoy delivered on 28th day of May, 2012.
1. The applications
1.1 There are two applications before the Court in these proceedings, which were initiated by plenary summons which issued on 13th February, 2012.
1.2 The first in time is the application of the plaintiff for various forms of injunctive relief against the defendant, which was initiated by a notice of motion dated 13th February, 2012, which was returnable for 17th February, 2012. Because of various undertakings which the defendant has given through her solicitors, Kenny Stephenson Chapman, in correspondence and through her counsel at the hearing of the interlocutory application, and the manner in which the Court has indicated it will deal with the undertakings, in reality the interlocutory injunctive relief which the plaintiff now seeks and which is the subject of this judgment has been whittled down to one issue as to whether the plaintiff is entitled to a specific order against the defendant in terms which I will outline later on an interlocutory basis.
1.3 The proceedings arise out of a franchise agreement dated 28th March, 2008 (the Franchise Agreement) made between Marie Quail, the predecessor of the plaintiff, of the one part and the defendant of the other part. The “Business” which is the subject of the Franchise Agreement is therein defined as the franchise business of “Yttc’s 1st Level Teacher Training Course”. In essence, the business in respect of which the plaintiffs predecessor, as franchisor, granted the defendant, as franchisee, the right and licence to operate is the training of student customers to become Yoga Teachers to 1st Level in accordance with a course system developed and owned by the franchisor, using manuals, products and services provided by YTTC, and its “Proprietary Marks” defined as meaning trademarks, insignias and logos owned and used by YTTC, and trading under the name YTTC. “YTTC” is an abbreviation of “Yoga Therapy and Teaching Centre”.
1.4 In order to understand the undertakings given by the defendant and the remaining relief claimed by the plaintiff on an interlocutory basis, the following provisions of the Franchise Agreement are pertinent:
(a) Clause 3, wherein the franchisor granted the defendant, as franchisee, the right and licence to operate the “Business” anywhere within Co. Cork and Munster or within a fifty mile radius of Co. Cork and Munster on the terms and conditions of the agreement.
(b) Clause 4, which provided that the Franchise Agreement should remain in force unless terminated by either party under the terms of the agreement, so that it was not for a fixed term.
(c) Clause 15.1, which provided that the franchisor might terminate the agreement forthwith by giving notice in writing to the franchisee, if the franchisee failed to comply with any obligations under the agreement and the failure, if capable of being remedied, remained unremedied for ten days after being called to the attention of the franchisee by written notice from the franchisor.
(d) Clause 16.1, which was headed “Consequences of Termination” and provided that, upon termination or expiration of the Franchise Agreement for any reason, the franchisee should, inter alia-
(i) immediately cease to operate “the Business”,
(ii) not hold herself out as franchisee of the franchisor,
(iii) immediately cease to use the trademarks and suchlike of the franchisor, and
(iv) return to the franchisor or otherwise dispose of or destroy, as the franchisor should direct, all signs, advertising materials, records, data and suchlike concerning “the Business” or bearing its Proprietary Marks.
(e) Clause 8.2, which was in the following terms:
“The Franchisee shall not during the continuance of this agreement for whatever reason directly or indirectly carry on alone or in partnership or as agent or servant of any other person within a fifty mile radius of the Premises any business competitive with or similar to the Business.”
(f) Clause 8.3, which was in the following terms:
“The Franchisee shall both during this agreement and after its termination keep confidential and not (except as authorised or required for the purposes of this agreement) use or disclose or attempt to disclose any confidential information.”
1.5 Certain features of the Franchise Agreement, which have been pointed to by counsel for the defendant as being of significance for present purposes, are that –
(i) it did not contain an express provision whereby the franchisee could terminate the agreement on notice, although it contained a provision (Clause 15.2) which provides for automatic termination on the death or insolvency of the franchisee, which has no application on the facts of this case,
(ii) the “non-compete” provision in Clause 8.2 was expressed to apply “during the continuance of’ the agreement, not post-termination, whereas the restriction on disclosure of confidential information was expressed to apply both during and after the termination of the agreement, and
(iii) while it contained a definitions clause (Clause 1), which defined various expressions used therein, it contained no definition of the term “Confidential Information”.
1.6 At the hearing of these applications, counsel for the defendant confirmed that the defendant would give to the Court the following undertakings pending the hearing of the substantive action, namely:
(a) the undertakings proffered in a letter dated 1ih February, 2012 from Kenny Stephenson Chapman to the plaintiffs solicitors, Fitzgibbon & Co., “on a strictly ‘without prejudice basis’ (and without any admission whatsoever of liability)” that is to say-
(i) that the defendant will not in any manner whatsoever represent or hold herself out as being, in any way, connected with the plaintiff or his business,
(ii) that the defendant will not make any use of any intellectual property rights being asserted by the plaintiff, and
(iii) that the defendant will not make any positive use of any data base or customer records which the plaintiff claims as his property;
(b) subject to the exception outlined later, an undertaking to deliver to the plaintiff all materials in the possession of the defendant in relation to the franchised business by dispatching the same to the plaintiff on that day; and
(c) to extend the undertaking in terms set out at (a)(iii) above to nineteen former students of the YTTC course, who had already been contacted by the defendant in October 2001, whom the defendant understood required further teaching sessions to achieve accreditation from the Yoga Alliance although they had completed their course, but only to the extent that the defendant will not personally make contact with any of the said persons in relation to providing services to them, and provided, however, that the defendant does not undertake not to provide services to a person in that category who may “turn up” unsolicited seeking such services.
As regards the exception to the undertaking referred to at para. (b) above, the defendant, because of her concern in relation to the implications of the provisions of the Data Protection Acts 1988 to 2003 if she were to give such an undertaking, was not prepared to give an undertaking to deliver the completed application forms of the students of the defendant, which it was contended contain personal data, to the plaintiff. However, it was made clear that the defendant would be prepared to deliver the material in question to the plaintiff under the protection of a Court order. I propose making an order to that effect, because I am satisfied that it was implicit in the application form that the information supplied by a student customer on the application form would be furnished to YTTC, in that the form required the applicant to be a member of YTTC and to enclose €45 in respect of membership.
1.7 It was acknowledged on behalf of the plaintiff that, provided the undertakings and the order outlined in the next preceding paragraph are in place pending the trial of the substantive proceedings, the only issue which remains is whether the plaintiff is entitled to an interlocutory injunction in the following terms:
“An injunction prohibiting the defendant its servants and/or agents from operating yoga teacher training courses in respect of students enrolled by the defendant during the operation of the Franchise Agreement when they were enrolled in the level 1 teacher training course as students of the ‘YTTC’ or ‘Yoga Therapy and Training Centre’ in (1) [the] 2010-2012 group and (2) [the] 2011-2013 group.”
While that formulation is a slight variation of the wording in the notice of motion, as I understand the position, both sides agreed that the issue which the Court has to determine on the interlocutory application is whether an order in those terms should be granted.
1.8 The second application before the Court is the defendant’s application on foot of a notice of motion dated 5th March, 2012 for an order pursuant to the provisions of Order 56A of the Rules of the Superior Courts 1986 (the Rules) adjourning the plaintiffs application for an interlocutory injunction and inviting the parties to use an ADR process, namely, mediation, to settle or determine the plaintiffs application for an interlocutory injunction and the entirety of the issues in dispute between the parties and, if necessary, inviting the parties to attend such information session on the use of mediation as the Court might specify.
2. The application for an interlocutory injunction
2.1 The application for the interlocutory injunction has generated an enormous amount of documentation and has absorbed a lot of court time. Leaving aside the affidavits sworn by allies of the litigant on each side and by the solicitors on each side, the following affidavits are before the Court:
(a) the affidavit of Roy Griffin, a director of the plaintiff, which was sworn on 13th February, 2012 and which runs to forty paragraphs;
(b) a replying affidavit of the defendant, which was sworn on 24th February, 2012 and runs to forty nine paragraphs;
(c) a further affidavit of Mr. Griffin sworn on 6th March, 2012, which runs to forty paragraphs;
(d) a further affidavit of the defendant sworn on 29th March, 2012 which runs to fifty three paragraphs; and
(e) a final affidavit sworn by Mr. Griffin on 5th April, 2012 which runs to twenty one paragraphs.
As one would expect, those affidavits give rise to serious factual conflicts and, indeed, some highly controversial material, which the parties, on reflection, may consider should have been omitted. The factual conflicts cannot be resolved on this application. However, the factual matrix within which the remaining element of the injunctive relief originally sought falls to be determined, as set out at paragraph 1.7 above, is fairly compact.
2.2 Prior to October 2011, there was dissatisfaction on each side in relation to the implementation of their contractual relationship and there are allegations of wrongdoing on each side. Mr. Griffin, on behalf of the plaintiff, has averred that the defendant was in breach of her obligations under the Franchise Agreement. The defendant, on the other hand, has averred that the plaintiff was not fulfilling its obligations under the Franchise Agreement and was in serious breach of contract and intends to counterclaim in these proceedings against the plaintiff. No view can be formed on this application as to whether either side was in breach of the Franchise Agreement.
2.3 The course of events which led to these proceedings was as follows:
(a) The defendant by e-mail dated 20th October, 2011 to Mr. Griffin, informed him that she had no longer faith in his directorship of the YTTC. The purpose of the e-mail was to notify him that she was terminating the Franchise Agreement and would no longer be operating as a YTTC franchisee. She stated that, if Mr. Griffin wished to reply, he should contact a nominated solicitor, who is not the solicitor on record for the defendant in these proceedings.
(b) By letter dated 10th November, 2011, the plaintiffs solicitors wrote to the nominated solicitor. In that letter it was alleged that the defendant was in breach of the Franchise Agreement. It was stated that the plaintiff accepted that the defendant was no longer a franchisee in respect of the YTTC business for Cork and Munster. The plaintiff has alleged that the defendant’s termination was in breach of the Franchise Agreement. On the other hand, the defendant complains that the letter of 10th November, 2011 does not indicate from what date acceptance of the termination took effect. For present purposes, what is of significance is that from the perspective of both parties the Franchise Agreement was at an end by 10th November, 2011.
(c) In the letter of 10th November, 2011 the plaintiff made certain demands in respect of the defendant’s course which commenced in Autumn 2010 and also the defendant’s course which commenced in Autumn 2011, the thrust of which was that the plaintiff intended taking over the remainder of those courses. There was demanded on behalf of the plaintiff that the defendant remit to the plaintiff a combination of franchise fees in respect of the students who had commenced in Autumn 2010 (which under the Franchise Agreement represented 10% of the fees paid to the franchisee), membership fees and the cost of extra training which those students would require. In the case of the students who enrolled in Autumn 2011, there was a request for details of the students, and remission of all the membership fees paid, and the deposits and instalments of course fees already paid by them. Whether the plaintiff was entitled to the sums demanded cannot be determined on this application. In any event, the defendant did not comply with the requests.
2.4 However, as appears from the evidence put before the Court by the defendant, on 15th October, 2011 she advised the students who had commenced the course in Autumn 2011 that she had “left the YTCC”. On that occasion she refunded to them their membership deposits on the basis that there was no other option open to her having regard to the nature of the course being offered. There were eighteen students enrolled in that course. Later, the defendant averred that there were, in fact, twenty two students enrolled for that course, but four were repeat students in respect of whom no course fee was payable and there were four more students who were ”pro bono” students, who were enrolled for free for “altruistic” reasons. Accordingly, only fourteen students had paid deposits of €600 each in respect of course fees. The membership deposits she collected in respect of that class amounted to €720 and she returned those deposits. However, the position appears to be that she has been in receipt of, whether by way of refund by her to them coupled with repayment to her by the students, of the deposits in respect of the course fees paid by the students and, presumably, the instalments of the fees which became due thereafter.
2.5 In relation to the class which enrolled in Autumn 2010 the position is somewhat different. Of the fifteen students in that class, eight of the fifteen students remained with the defendant and seven students transferred to the plaintiff.
2.6 Accordingly, the remaining relief sought by the plaintiff relates to the entitlement of the defendant to operate yoga teacher training courses for the eight students from the Autumn 2010 class, who remained with the defendant, and who are due to complete their course around now, and sixteen of the eighteen students in the Autumn 2011 class who remained with the defendant, two students in that class having left “for personal reasons”. The plaintiff has acknowledged that on the acceptance by it of the termination of the Franchise Agreement, the defendant was at liberty to set up her own business, even in competition to the plaintiff. The plaintiffs case is that, in contravention of Clause 8.3 of the Franchise Agreement, the defendant retained confidential information, such as the student lists and used that information to “springboard” her new business.
2.7 The Court has been furnished with comprehensive legal submissions by counsel for the plaintiff and counsel for the defendant. As was pointed out by counsel for the defendant, the legal context of many of the authorities relied on by counsel for the plaintiff was an employer/employee contractual relationship. That was the case in the two most recent Irish cases relied on by the plaintiff: Allied Irish Banks Plc & Ors. v. Diamond & Ors. [2011] IEHC 505, in which Clarke J. explained the underlying rationale for the grant of a so-called “springboard” injunction; and the decision of Dunne J. in Net Affinity Ltd. v. Conaghan & Anor. [2011] IEHC 160. As regards a remedy in the form of an interlocutory injunction to restrain breach of a non-compete or a non-use of confidential information obligation in an agreement, in my view, it is apt to have regard to distinctions that undoubtedly exist between relationships based on contracts of employment and relationships which arise under franchise agreements. It is also true that in many of the authorities in which the relevant relationship was that created by a franchise agreement, the focus was on the enforceability of posttermination restraint of trade clause. As Mr. Griffin properly acknowledged on behalf of the plaintiff in this case, there is no post-termination non-compete obligation on the defendant under the Franchise Agreement.
2.8 In relation to the remaining injunctive relief which the plaintiff is now seeking against the defendant, the first question which arises, in applying the well established principles laid down by the Supreme Court in Campus Oil v. Minister for Energy (No. 2) [1983] 2 I.R. 88, is a very simple question. It is whether there is a fair issue to be tried that in operating the yoga teacher training courses for students enrolled by her during the operation of the Franchise Agreement in Autumn 2010 and Autumn 2011, the defendant is in breach of the terms of the Franchise Agreement.
2.9 There are certainly deficiencies in the Franchise Agreement from the perspective of both the franchisor and the franchisee. Clause 4 clearly envisages the franchisee having a right to terminate the Agreement, but that is not expressly provided for. The consequences of that deficiency are not material for present purposes, because the plaintiff accepted by the letter of 10th November, 2011 that termination had taken place. From the perspective of the plaintiff, as the successor of the franchisor, one would have expected to find a valid non-compete post-termination clause, but that is not provided for in Clause 8.2. Again, in my view, that deficiency is not material to the issue which arises here. The clause which is at issue here is Clause 8.3 and the restraint provided for in that clause applies both during and after the termination of the Franchise Agreement. I am satisfied that there is a fair issue to be tried that, by her conduct in using the information she had –
(a) as to the identity of the students who had commenced the course with her in Autumn 2010 and, who, as a matter of probability, would be continuing the course in the Autumn of 2011, and
(b) as to the identity of the customers who intended to become students and enrol for the course in Autumn 2011,
to procure customer students for the courses which she operated following the termination of the Franchise Agreement, she was acting in breach of Clause 8.3. There is a fair issue to be tried that, on a plain reading of Clause 8.3, the expression “Confidential Information” must cover information as to the identity of potential customers for the business the subject of the Franchise Agreement. As regards the identity of the potential customers for the 2011 course, the defendant withheld that information (allegedly in breach of Clause 16.1, on which point I think there is also a fair issue to be tried) from the defendant and used it for her own benefit.
2.10 The second question which arises on the basis of the application of the Campus Oil principles is whether damages would be an adequate remedy for the plaintiff in the event that the injunctive relief sought was refused but the plaintiff was successful on the issue of the breach of Clause 8.3 at the trial of the action. Counsel for the defendant made the point that, in reality, all that is at issue here is the loss to the plaintiff of franchise fees in relation to twenty four students. In my view, the fact that the capacity of the defendant to use the confidential information in relation to the students in question is finite because, as counsel for the defendant put it, the number of students involved is static, is not determinative. This is a case in which the plaintiff contends that, in consequence of the actions of the defendant, the goodwill, business and reputation of its franchise enterprise is being damaged and seeks damages for various forms of alleged wrongdoing, including passing off. While it was submitted that the plaintiff had offered no evidence to support the contention that any loss would accrue to the plaintiff other than the loss of franchise fees in respect of the students in question, in my view, having regard to the nature of the plaintiffs business the Court is entitled to draw certain inferences in determining whether the damages would be an adequate remedy. As Clarke J. observed in Metro International S.A. v. Independent News and Media Plc [2006] 1 ILRM 414 (at p. 424)-
“… the court can and should have regard to the question of whether the right sought to be enforced or protected by interlocutory injunction is one which is of a type which the court will normally protect by injunction even though it might, in one sense, be possible to value the extinguishment or diminution of that right in monetary terms.”
If this were the substantive hearing of the action and if the plaintiff had established, on the balance of probabilities, a continuing breach of Clause 8.3, notwithstanding that the breach could only continue for approximately another year, nonetheless, in my view, the Court would grant a permanent injunction to restrain the breach. In the circumstances, I consider it appropriate to conclude that damages would not be an adequate remedy for the plaintiff, should an injunction be refused and the plaintiff be successful in the substantive action.
2.11 On the other hand, the plaintiff has given the usual undertaking as to damages on the basis of which the defendant will be entitled to obtain redress, if it transpires that the interlocutory injunction should not have been granted. While the defendant has taken issue with the ability of the plaintiff to meet a claim by the defendant on foot of the undertaking as to damages, if it transpires that the injunction should not have been granted, on the basis of the evidence put before the Court, including the plaintiffs abridged accounts for the year ended 31st December, 2010 and in the light of the likely quantum of the loss which the defendant would be able to prove, I am satisfied that the plaintiffs undertaking as to damages will provide adequate redress for the defendant, if the interlocutory injunction should not have been granted.
2.12 In submitting that the balance of convenience lies against the grant of an interlocutory injunction, it was submitted on behalf of the defendant that the Court should have regard to the impact of such an order on the students who are currently attending the courses run by the plaintiff, which are the subject of the application for an injunction. While the students in question may be adversely affected, the issues before the Court arise between the plaintiff franchisor and the defendant former franchisee. Whatever commitments the defendant has engaged in with third parties is not a factor to be taken into consideration. Moreover, even if it is true, the assertion on behalf of the defendant that an interlocutory injunction will put her out of business is not a factor to be taken into account. I would point out that at an early stage in these proceedings the plaintiff acknowledged that the defendant can set up a business in competition with it. The issue before the Court is whether the contractual rights which the plaintiff contends it has against the defendant should be protected at this juncture by interlocutory injunction. I am satisfied that, in accordance with well established principles, they should.
2.13 Accordingly, there will be an injunction until the hearing of the action in the terms set out in paragraph 1.7 above and also an order in the terms referred to at the end of para. 1.6 above. Further, the undertakings outlined in para. 1.6 proffered by the defendant will be noted in the order.
3. The defendant’s motion
3.1 Order 56A, rule 2(1) of the Rules of the Superior Courts 1986, as inserted by S.I. No. 502 of 2010, provides:
“The Court, on the application of any of the parties or of its own motion, may, when it considers it appropriate and having regard to all the circumstances of the case, order that the proceedings or any issue therein be adjourned for such time as the Court considers just and convenient and –
(i) invite the parties to use an ADR process to settle or determine the proceedings or issue, or
(ii) where the parties consent, refer the proceedings or issue to such process,
and may, for the purposes of such invitation or reference, invite the parties to attend such information session on the use of mediation, if any, as the Court may specify.”
In rule 1, the expression “an ADR process” is defined as meaning mediation, conciliation or another dispute resolution process approved by the Court, but does not include arbitration.
3.2 The only sanction which the Court can impose for failure to accept such an invitation when given is to be found in rule 1B of Order 99 of the Rules, inserted by S.I. 502 of 2010, which provides that, in considering the awarding of costs of any action, the Court may, where it considers it just, have regard to the refusal or failure without good reason of a party to participate in any ADR process where an order has been made under Order 56A, rule 2.
3.3 I can understand why the plaintiff wished to continue with the interlocutory application in Court after the defendant’s motion for an order pursuant to Order 56A was issued on 5th March, 2012. However, now that an interlocutory injunction has been granted, I think prudence dictates that the parties should process the remainder of their differences through an ADR process. What is at stake in these proceedings is totally disproportionate to the costs which will be incurred in pursuing a High Court action.
3.4 Accordingly, there will be an order under Order 56A inviting the parties to use an ADR process.
Curust Financial Services Limited v. Loewe-Lack-Werk Otto Loewe GmbH
Curust Financial Services Limited and Curust Industries Limited v. Loewe-Lack-Werk Otto Loewe GmbH & Co., K.G. and R.S. Sales Limited,
[1994] IR 450
[1992 No. 4108P]
Supreme Court 2nd November 1992
Barron J.
3rd July 1992
The first defendant is the manufacturer of a rust primer. The plaintiffs have for many years marketed this product inter alia on the Irish market. They do so under the first defendant’s trademark for which they are registered. The plaintiffs bring these proceedings as against the first defendant to enforce the terms of an exclusive manufacturing and distributorship agreement dated 27th November, 1986, and as against the second defendant in effect to prevent that defendant from dealing in the goods.
The essential facts giving rise to these proceedings are as follows:
The plaintiffs who had manufactured the product in this country in accordance with agreements between them and the first defendant suspended manufacture and by agreement bought direct from the first defendant. On the 27th July, 1990, a price agreement was entered into between the parties setting out prices and conditions for payment. Following upon the making of this agreement the parties fell out over the time of payment and the first defendant, on the 5th October, 1990, purported to cancel all agreements between the parties as from that date. Notwithstanding this, the first defendant continued to supply the plaintiff with product until the 31st December, 1991, being the date upon which the price agreement was in accordance with its provisions to have determined. Early in 1992 the plaintiffs recommenced manufacture of the first defendant’s product, though somewhat later than envisaged by the price agreement. Early in June, 1992, the second defendant placed on the market under its own trade name the first defendant’s product.
Having discovered this latter fact, the plaintiffs commenced these proceedings and now seek interlocutory relief which will in effect leave them free to be the sole party marketing the first defendant’s product in this jurisdiction.
Prima facie the 1986 agreement gives them the rights which they seek. It is accordingly necessary to consider the submissions made on behalf of the defendants. The first defendant contests the existence of the 1986 agreement but accepts that for the purposes of an application for interlocutory relief the plaintiffs have established the existence of a triable issue as to its having been made. It submits however that it was validly terminated on the 5th October, 1990. At that date there was a genuine dispute as to the time of the payment and a delay in payment caused by a bank in Germany for which the plaintiffs were not responsible. In my view the defendants must show a clear repudiation of the 1986 agreement before this ground can succeed. The plaintiffs only need to show a triable issue that their conduct did not repudiate the 1986 agreement, and in my view they have so done.
This defendant next contends that the 1986 agreement was contrary to art. 85 (1) of the Treaty of Rome. The relevant question is whether or not upholding the agreement will have an appreciable effect upon trade in the particular product insofar as it is envisaged by the agreement. This defendant submits that on the plaintiffs’ own evidence the product became market leader. The plaintiffs submit that this was a historical reference and that the figures given by this defendant for sales to the plaintiff are shown to be tiny. The evidence as to the relevant trade and the extent to which it is affected by the agreement is not before the court. The plaintiffs say that the onus of proof of establishing that the agreement is void lies on the defendant, whereas the defendant submits that prima facie the agreement is void and that therefore the onus of showing that it has no appreciable effect lies on the plaintiffs. In my view the provisions of the Treaty are a matter of defence but once raised as a matter of defence the onus reverts to the plaintiffs to establish that they can bring themselves outside the terms of the Treaty. On the evidence before me, which is slight, it does seem to me that the amount of trade involved is small and that accordingly the plaintiffs have established a triable issue on the point.
The next issue is whether or not damages would be an adequate remedy. Damages are clearly an adequate remedy if they are liquidated in circumstances where there is no particular interest in the plaintiff to maintain the right save to obtain such damages. Save in the situation envisaged by Lord Cairns’ Act where the damage is small, damages which are not readily susceptible to accurate measurement are not usually an appropriate remedy. A rich man has never been entitled to buy out the rights of a poor man just because he wishes to do so. For example the owner of premises which would be devalued by a readily ascertainable amount cannot be forced to accept that sum in lieu of an injunction to restrain a defendant from infringing that right. In my view that in essence is what the defendants are saying here: if there is a breach of the 1986 agreement, then the first defendant can pay the plaintiffs the value of the business which they will lose as a result. I do not accept such a proposition.
I was referred in argument to Westman Holdings Ltd. v. McCormack [1992] 1 I.R. 151. In that case the question of the adequacy of damages as an alternative to an interlocutory injunction arose for consideration.
The court took the view that in the particular case it was unlikely that the defendants would be in a position to pay such damages to the plaintiffs and found that the balance of convenience was in favour of granting an injunction. However, it does seem to me that there is nothing in that case which suggests that the test for the adequacy of damages in the interlocutory period should be any different from the test as to the adequacy of damages before a final judgment is given. Where trade is involved, as in this case, it is always difficult to determine whether trade has been lost by reason of the failure to obtain the injunction or whether it has been lost through other causes, and equally, it is difficult if the injunction is ultimately given tstablish whether or not all the trade which was lost has come back and if it has not, why it has not. In such cases it is also fairly notorious that people once they change over from a product which they have been using do not always return to that product when they are free to do so. Having regard to these views and to what I regard to be the general principles as to the adequacy of damages it seems to me that damages would not be an adequate remedy in the present case.
In this case there is an additional complication by reason of the fact that the second defendant is marketing the product. The plaintiffs say that this defendant ought to have been aware that it might be infringing the plaintiffs’ rights, and that it should have made inquiries of the plaintiffs before putting the product on the market. Perhaps so, but it has not induced any breach of contract. It merely fills a void created by the first defendant and no more. It has submitted that damages would be an adequate remedy for the plaintiff. It seems to me equally that therefore damages would be an adequate remedy for the second defendant. However, as I have indicated, I do not regard damages as being an adequate remedy and this would apply as much to the second defendant as to the plaintiffs. In the circumstances the issue seems to me to be as to whether or not I should preserve the status quo ante rather than to permit the second defendant and the plaintiffs to sell the product in competition. It seems to me that it would be more reasonable to require the maintenance of the status quo ante.
It is submitted that the plaintiffs have delayed in seeking relief. There is no doubt that they did not place their claim to rely upon the 1986 agreement in the forefront of their relationship with the first defendant. Nevertheless, when the first defendant in March threatened proceedings against them, they countered by claiming that they would manufacture and were entitled to do so. In that state of affairs it seems to me that the obligation to commence proceedings lay on the first defendant and not the plaintiffs.
The present manufacturing of the product is without the express agreement of the first defendant. I can understand the plaintiffs’ failure to seek consent; they would hardly have been given it in the light of the stance taken by the first defendant. Nevertheless, if consent could now properly be withheld, then this would disentitle the plaintiffs to market the product as presently manufactured. The relief which I propose to grant is subject to the plaintiffs applying for consent in accordance with the 1986 agreement, and an undertaking by them to abide by any requirement in relation to manufacture of the product which the first defendant would be entitled to impose by virtue of the provisions of the 1986 agreement. This consent should be sought within seven days of the making of this order and there will be liberty to apply in relation to that aspect of the matter.
The defendants appealed the judgment and order of the High Court by notices of appeal dated the 13th and 15th July, 1992.
Finlay C.J.
2nd November 1992
These are two appeals brought by the first and second defendants against an order made in the High Court by Barron J. on the 3rd June, 1992, by way of interlocutory injunction.
The proceedings arise out of a dispute originating between the plaintiffs (to whom I will jointly refer as Curust), and the first defendant (to which I will refer as Loewe) concerning what Curust alleges to be a breach by Loewe of an agreement dated the 27th November, 1986, made between it and Loewe, whereby Loewe granted to Curust the sole and exclusive licence to manufacture, market, sell and distribute the goods manufactured or distributed by it from time to time, in certain areas, including Ireland. The second defendant (to which I will refer to as Sales Ltd.) became involved in the action by reason of accepting appointment as a distributor from Loewe. The particular product with which this case is concerned is a product known as Loewe Rust Primer, a paint sold under the trademark of Loewe in Ireland, being a paint for application to prevent rust on objects to which it is applied. It is stated by all the parties to this action to be the major rust primer sold on the Irish market in the retail shops and in what is described as the D.I.Y. trade.
The commercial relationship between Curust and Loewe has existed for over thirty years, and prior to November, 1986, it is agreed that Curust manufactured and distributed Loewe Rust Primer in Ireland, using the trade mark of Loewe under a series of licences or agreements.
The plenary summons was issued on the 17th June, 1992, and claimed a declaration that Loewe was bound by the terms of the agreement of the 27th November, 1986, and a series of injunctions restraining Loewe, its servants and agents from what was claimed were breaches of that agreement. Further injunctions were sought restraining Sales Ltd. from carrying out activities which would, in effect, constitute a breach of the agreement and an invasion of what is alleged to be the sole right of Curust to manufacture, sell and distribute these products. The hearing of the application for an interlocutory injunction was on affidavit, and by his order, Barron J. restrained Loewe, pending the trial of the action, from appointing or purporting to appoint Sales Ltd. or any other person as a licensee for the manufacture, distribution or sale in Ireland and in other territories of all or any of the products manufactured by Loewe, and from supplying Loewe Rust Primer or any other product manufactured or distributed by it to Sales Ltd., or to any other person for distribution or sale within the territory. The order further restrained Sales Ltd., pending the trial of the action, without the permission of Curust, from manufacturing, distributing, selling or offering for sale in Ireland or in the United Kingdom all or any of the products manufactured or distributed by Loewe, including Loewe Rust Primer.
In the order it was provided that the relief granted to Curust was subject to its applying for the consent of Loewe, in accordance with the exclusive manufacturing and distribution agreement of the 27th November, 1986, in relation to the manufacture of the product the subject matter of the proceedings, by an agent on behalf of Curust. This condition and the issues arising in it do not form part of the subject matter of this appeal.
Whilst on the affidavits filed and on the submissions made both in the High Court and on this appeal there are a number of disputed issues of both law and fact, it is possible to trace an uncontroversial broad history of the matters arising in this appeal.
From the early 1960s Curust had a sole manufacturing and distribution agreement from Loewe which covered Loewe Rust Primer.
Up to the end of the year 1988, Curust manufactured and put into tins the Loewe Rust Primer in Ireland from formulae provided to it and in accordance with processes of which it was informed and instructed by Loewe, with a raw material sold to it by Loewe at cost price. Curust then paid to Loewe a commission on the products sold by it. At the end of 1988 Curust ceased the manufacture of the primer by reason of the fact that a change in the specification required different methods of production, and it was necessary for it to reorganise its manufacturing process in order to comply with that.
An agreement was then entered into for the supply by Loewe to Curust of the finished product of Loewe rust primer to be put into tins and sold and distributed in Ireland. This agreement contained terms with regard to price and with regard to credit, and disputes have arisen with regard to those precise terms. It was expressed, or appears to have been expressed, to conclude at the end of the year 1991, when it was anticipated that Curust would have returned to manufacture of the Loewe rust primer.
During the currency of that agreement and in the years 1990 and 1991, disputes arose between the parties concerning the payments, the amount of credit to be allowed and the date of payments, and eventually Loewe purported to repudiate all agreements, including the agreement of November, 1986, and stated that all agreements were at an end between the parties, and that it would, after the expiry of the agreement for the supply of the finished product at the conclusion of 1991, cease to supply any further products or raw materials to Curust.
At some time which is not identified in the affidavits Loewe entered into an agreement with Sales Ltd. for the sale and distribution by it of Loewe’s product in Ireland, and this was put on the market at the end of May and beginning of June of this year by Sales Ltd., under the name Durabond, in a tin similar to that used by Curust. What is in that tin is, undoubtedly, the Loewe Rust Primer and, on the evidence, it is being sold as such by the retailers to whom it has been distributed.
It was provided by clause 9 of the agreement of November, 1986, that either party might assign, sub-licence or sub-contract all or part of its obligations or benefits under the agreement, subject to the prior written consent of the other party. In addition, Curust undertook by virtue of the agreement that it would not, at any time otherwise than for the purpose of the rights given to them, including, of course, the right of sub-contracting, divulge any information in relation to the goods, methods of manufacture, price structure or affairs, business or methods of carrying on business of Loewe without written consent of Loewe.
On the evidence before the learned trial judge, which he accepted and which is not disputed on the affidavits, in March, 1992, at an interview between Mr. Brocklesby representing Curust and Mr. Schoening representing Loewe, Mr. Brocklesby informed Mr. Schoening that it was the intention of Curust, if possible, to enter into an arrangement with a third party involving the resumption of the manufacture in Ireland of the Loewe rust primer product, and he asked (according to his affidavit) Mr. Schoening to give him an assurance that if he informed him of the identity of that party, he, Mr. Schoening, and his company, would not try and intimidate that person from entering into an arrangement. This conversation was in the light of an assertion then being made, and still being made, by Loewe that all contractual relationships between the two companies had ceased, and that Curust had no right to sell, distribute or manufacture the product of Loewe. Mr. Schoening refused to give any such assurance, and, accordingly, he was not informed of the identity of the third party. Apparently, subsequent to that, an arrangement was entered into between Curust and a company known as International Coating Ltd. for the manufacture of the product Loewe Rust Primer in Ireland, and that has been done and Curust has put that on the market in tins clearly marked Loewe Rust Primer.
On these broad facts, Loewe sought in the High Court to resist the making of an interlocutory injunction on a number of grounds.
1. It asserted that an agreement had not been concluded between the parties in November, 1986, and in the absence of the production by Curust of the original of that agreement which it says has been mislaid, it challenged the validity of a produced copy of it.
2. It asserted that if the agreement was concluded it was void having regard to the provisions of art. 85 (1) of the Treaty of Rome, and, in the alternative, that Curust had not established a triable issue that the agreement did not have an appreciable effect upon trade and competition in the product the subject matter of the agreement so as to bring it outside the invalidity arising from the said article of the Treaty.
3. That damages would be an adequate remedy for Curust, and that, therefore, it should not be entitled to an injunction.
4. That Curust, by reason of its delay in seeking relief, was disentitled to an injunction.
5. That the admitted breach by Curust of the agreement of 1986, consisting of its entering into arrangements with a third party for the manufacture and supply of Loewe Rust Primer in Ireland without the prior written consent of Loewe, disentitled it to an injunction.
6. That if damages were not an adequate remedy, then the balance of convenience did not favour the granting of relief.
Judgment of the High Court
In deciding to grant the injunction Barron J. reached the following conclusions concerning the issues which had been raised before him.
1. Dealing with the question of the conclusion of the agreement in November, 1986, he held that, on the facts, there was a triable issue concerning that. Although in the notice of appeal filed by Loewe a ground was inserted appealing against that decision, this was not pursued on the hearing of the appeal before us.
With regard to the issue arising under the Treaty of Rome, the learned trial judge found as follows:
“In my view the provisions of the Treaty are a matter of defence but once raised as a matter of defence the onus reverts to the plaintiffs to establish that they can bring themselves outside the terms of the Treaty. On the evidence before me, which is slight, it does seem to me that the amount of trade involved is small and that accordingly the plaintiffs have established a triable issue on this point.”
Loewe on the hearing of this appeal did not pursue a contention that this Court could or should at this stage hold that the agreement of November, 1986, was void having regard to the provisions of art. 85 (1) of the Treaty, but did contend that the learned trial judge’s finding that there was a triable issue as to the avoidance of that invalidity, by reason of the smallness of the trade, was not supported by the evidence.
The learned trial judge in holding that damages would not be an adequate remedy for the plaintiffs stated at p. 456 as follows:
“The next issue is whether or not damages would be an adequate remedy. Damages are clearly an adequate remedy if they are liquidated in circumstances where there is no particular interest in the plaintiff to maintain the right save to obtain such damages. Save in the situation envisaged by Lord Cairns’ Act where the damage is small, damages which are not readily susceptible to accurate measurements are not usually an appropriate remedy. A rich man has never been entitled to buy out the rights of a poor man just because he wishes to do so. For example the owner of premises which would be devalued by a readily ascertainable amount cannot be forced to accept that sum in lieu of an injunction to restrain a defendant from infringing that right. In my view that in essence is what the defendants are saying here: if there is a breach of the 1986 agreement, then the first defendant can pay the plaintiffs the value of the business which they will lose as a result. I do not accept such a proposition.”
Dealing further with the question of adequacy, the learned trial judge stated at p. 457 as follows:
“Where trade is involved, as in this case, it is always difficult to determine whether trade has been lost by reason of the failure to obtain the injunction or whether it has been lost through other causes, and equally, it is difficult if the injunction is ultimately given to establish whether or not all the trade which was lost has come back and if it has not why it has not. In such cases it is also fairly notorious that people once they change over from a product which they have been using do not always return to that product when they are free to do so. Having regard to these views and to what I regard to be the general principles as to the adequacy of damages it seems to me that damages would not be an adequate remedy in the present case.”
Dealing with the position of Sales Ltd., who are also appellants and who pursue most of the grounds of appeal pursued by Loewe, the learned trial judge on this issue came to the following conclusion at p. 457:
“However, as I have indicated, I do not regard damages as being an adequate remedy and this would apply as much to the second defendant as to the plaintiffs. In the circumstances the issue seems to me to be as to whether or not I should preserve the status quo ante rather than to permit the second defendant and the plaintiffs to sell the product in competition. It seems to me that it would be more reasonable to require the maintenance of the status quo ante.”
The learned trial judge rejected the contention made in the High Court that Curust had delayed too long and would be, therefore, disentitled to the relief claimed. This ground was not pursued as a separate ground of appeal, but it was contended that it was the date of the issue of the summons, at which date it had already placed the Loewe Rust Primer under the name of Durabond on the market, that was the material date if the court came to the question of the balance of convenience, and, in particular, if the court was viewing it in the light of trying to deal with the status quo ante.
The learned trial judge rejected the contention that Curust by its action in subcontracting the manufacture of the rust primer in March, 1992, were disentitled to an injunction.
The decision
Since Sales Ltd., in essence, supported the grounds of appeal put forward by Loewe, merely adding the factual assertion that it was unaware of any difficulty or problem arising from accepting the agreement for the distribution of the rust primer concerned, and was unaware of any subsisting licence to Curust, I deal with all the issues raised by both appellants in a single series of decisions.
(1) Is there a triable issue concerning the exemption of the agreement of 1986 from the prohibition contained in art. 85 (1) of the Treaty of Rome?
No cross-appeal has been entered against the ruling by the learned trial judge in the High Court that once Loewe had raised the question of the prohibition contained in art. 85 (1) as a defence (and presumably had shown prima facie that the article applied to the agreement) the onus of establishing an exemption or avoidance of that prohibition rested on Curust. That being so, without making any decision on the question, I proceed on the basis that the onus is on Curust to establish a triable issue as to whether, by reason of the smallness of the market in Ireland for the product concerned, the agreement relating to it is outside art. 85 (1). Dealing with this issue, which was raised in the affidavit of Mr. Schoening, Mr. Brocklesby in a supplemental affidavit, at paragraph 6, stated as follows:
“With regard to paragraph 11 of Mr. Schoening’s affidavit, I do not accept that the 1986 agreement is void, having regard to the provisions of art. 85 of the Treaty of Rome. It is my belief that the agreement is one of minor importance which does not have any material affect on inter-community trade. The plaintiffs have only a tiny share of the sales of metal primer paint and rust paint in the relevant part of the territory in the community, that is, Ireland and the United Kingdom. The plaintiffs even have a very small and minor share of that part of the patent market concerned with metal priming and rust protection, being largely confined to the D.I.Y. market, rather than the steel industry. In industry generally and in transport, there are significant sales of comparable products. I am unaware of the precise turnover of the first defendant, but even by Irish standards, and certainly by European standards, the plaintiff companies are extremely small.”
I would accept the learned trial judge’s classification of these averments as being slight evidence, but at the same time I would also accept his conclusion that they do establish a triable issue which, undoubtedly, at the hearing of the action would have to be gone into in much greater detail. In those circumstances I am satisfied that he was correct in rejecting that ground as a ground for refusing to grant an injunction.
(2) Does a breach by Curust of the agreement of 1986, consisting of their sub-contracting the manufacture of the product without the prior written consent of Loewe, disentitle them to an injunction?
On this issue I have come to the following conclusions. I accept that, the granting of an injunction being an equitable remedy, the court has a discretion, where it is satisfied that a person has come to the court, as it is so frequently expressed, otherwise than “with clean hands”, by that fact alone to refuse the equitable relief of an injunction. It seems to me, however, that this phrase must of necessity involve an element of turpitude and cannot necessarily be equated with a mere breach of contract.
If Curust is correct in the contention which it is making, Loewe in March of 1992 was still bound by the agreement of November, 1986, and was prohibited by the terms of that agreement from entering into any agreement with any other supplier to manufacture or distribute these products in Ireland, and was furthermore obliged not unreasonably to withhold its consent to the sub-contracting by Curust of any part of its rights or obligations under that agreement. It must be on the basis that Curust may succeed in establishing such a case finally at the hearing that the question of an interlocutory injunction must be viewed. If it does, then obviously Loewe in March of 1992 was quite wrong in asserting that it had no obligation to Curust, and quite wrong in proceeding, as it obviously was proceeding, to enter into arrangements with another party to sell this product in Ireland. Having regard to those facts, it seems to me that it was entirely justifiable for the representative of Curust to seek an assurance from the representative of Loewe that he would not interfere with or, presumably, intimidate any person with whom Curust were negotiating in order to sub-contract the manufacturing of this product. Having regard to that view, I conclude that it would be unreasonable to say that what may be established as a breach by Curust of the agreement not to sub-contract without prior consent, which may also be established as having been provoked by a repudiation which was wrongful on the part of Loewe of the existing contractual obligations subsisting under the 1986 agreement, and a refusal, which would also have been wrongful, to undertake not to interfere with what would appear to be almost certainly a right on the part of Curust at least to negotiate in general terms with other parties, should disentitle it to an injunction if it was otherwise entitled to it. I would, therefore agree with the view of the learned trial judge that this did not constitute a ground for rejecting the claim for an injunction.
(3) Are damages an adequate remedy for Curust?
I am satisfied the following considerations apply to this issue which, in my view, is the most difficult issue arising on this appeal.
(a) No suggestion has been made that if Curust was to obtain a decree for damages arising out of Loewe’s breach of contract, Loewe would not be in a position to pay the amount of such damages.
(b) Whilst the loss likely to be sustained by Curust in the event of an injunction not being granted is purely and simply a commercial loss arising from a diminution in trade and, therefore, ostensibly capable of quantification and assessment, it asserts that there would be considerable difficulty in such quantification and a real risk that damages assessed in accordance with the evidence would not be adequate. This assertion largely consists of an assertion that whilst it might be possible to calculate, between the time of the advent into the market of Sales Ltd. and the time of the successful conclusion by Curust of their action and the obtaining of a permanent injunction, the loss of trade and, therefore, the loss of profits sustained by Curust, it would be extremely difficult, if not impossible, to quantify into the future the loss of profits which would continue to be sustained until such time as Curust recovered its pre-1992 share of the market.
(c) It is asserted on behalf of Curust that if it loses the substantial market in these products, which it had up to the end of 1991, and continues to suffer that loss up to the date of the determination of the action, having regard to the proportion which the sales of this product constituted of both their turnover and gross profits, they might not survive as a solvent, trading unit.
To these issues the following general principles apply. The loss to be incurred by Curust if it succeeds in the action and no interlocutory injunction is granted to them, is clearly and exclusively a commercial loss, in what had been, apparently, a stable and well-established market. In those circumstances, prima facie, it is a loss which should be capable of being assessed in damages both under the heading of loss actually suffered up to the date when such damages would fall to be assessed and also under the heading of probable future loss. Difficulty, as distinct from complete impossibility, in the assessment of such damages should not, in my view, be a ground for characterising the awarding of damages as an inadequate remedy.
With regard to the particular question of the agreement of damages in respect of any period after the granting of a permanent injunction to Curust while its share of the market is being recovered, it does not seem to me that insuperable difficulties of quantification could arise. The extent of the market to which Curust was accustomed before an interruption in its exclusive rights of sale and distribution is ascertainable; the quantity sold by Sales Ltd. from April, 1992, until the conclusion of the action would also be ascertainable, as would its value. Evidence in such a situation could surely be adduced which would permit a judge to make a reasonable forecast of the period during which Curust may suffer a continued diminution of trade and the approximate extent of that. In those circumstances, I do not see, by reason of difficulties in quantification, any ground for holding that damages are not an adequate remedy. So much of the learned trial judge’s judgment on this issue as refers to Lord Cairns’ Act and the question of an injunction being in many ways preferable to the awarding of damages, except in cases where damages are very small, relates more correctly, in my view, to the final decision as to whether relief being claimed for a breach of contract which is continuing should be in the form of a permanent injunction or in the form of an assessment of damages, but is not strictly relevant to the issues which arise with regard to an interlocutory injunction.
There remains the question as to whether, on the evidence which was before the learned trial judge, it was open to him to conclude that damages would not constitute an adequate remedy by reason of a real risk that the postponement of their payment necessarily involved until after the determination of the action, would lead to the collapse, from a financial point of view, of Curust. Although this issue was submitted in the High Court and is the subject matter of certain averments in the affidavits, it was not decided by the learned trial judge because, for other reasons, he concluded that damages would not be an adequate remedy and proceeded on to consider the balance of convenience.
The factual information contained in the affidavits which is relevant to this issue is as follows. Mr. Brocklesby in his affidavit of the 15th June, 1992, stated as follows:
“31. Further, although Curust sells a range of hardware products, including turpentine, brush cleaner, teak oil, penetrating oil and a range of branded locks and door catches, Curust’s principal business is with Loewe Rust Primer and with white spirits. The rust primer not only gives the best margin but sales of rust primer also tend to lead to sales of all other products.
32. In the circumstances, I am extremely concerned that if R.S. Sales is allowed to continue sales of rust primer pending the hearing of the action, there will not only be very serious direct results as a result of loss of sales of Loewe Rust Primer, but there will be consequential reduction in turnover of other products. This would be likely to prejudice the viability of both Curust Industries and Curust Financial Services. Loewe Rust Primer has been a mainstay of Curust’s business since the early 1960s and considerable advance planning would be required to build up other aspects of the business or introduce new products to replace it without doing very great longterm damage to the viability of both the plaintiff companies. Further, the paint market is seasonal, and the prime selling period is April to October.”
In the same affidavit Mr. Brocklesby stated a turnover figure for the plaintiff companies of £650,000 per annum.
In paragraph 20 of Mr. Schoening’s affidavit, dated the 25th June, 1992, he stated as follows:
“I beg to refer to paragraph 32 of Mr. Brocklesby’s said affidavit wherein he avers that the loss of sale of Loewe Rust Primer ‘would be likely to prejudice the viability of both Curust Industries and Curust Financial Services’. Having regard to both the turnover figure of £650,000 per annum given at paragraph 4 of Mr. Brocklesby’s said affidavit and the sales figures in relation to the supply of primer by the first defendant to the plaintiffs for the past three years I am at a loss to understand this averment.”
The deponent then went on, in the form of Deutschmarks converted to Irish pounds, to give the figure for supply of primer for the three years as follows:
“1989
DM 104,828 =
IR£39,155.83
1990
DM 61,814 =
IR£23,089.04
1991
DM 157,920 =
IR£58,987.01.”
He further explained that the figures were somewhat deceptive in that those for 1991 included both an item which would ordinarily have been costed into the 1990 year, and an item which would have been costed into 1992 year. The average for the three years would appear to be slightly more than £40,000. In the supplemental affidavit of Mr. Brocklesby, dated the 26th June, 1992, he dealt with this issue at paragraph 12, in the following terms:
“With regard to paragraph 20, I have not had time to check the figures which are given by Mr. Schoening in respect of the value to Loewe of sales for the years 1989 to 1991, but I am able to say that in 1988 Curust’s turnover was £575,000 of which £145,000 was attributable to Loewe Rust Primer. In 1989 the turnover was £632,000, of which £153,700 was attributable to Loewe Rust Primer. In the same year the total gross profit of Curust was £259,000 of which £88,000 (more than a quarter) is attributable to Loewe Rust Primer. In 1990 the proportion was even higher. The total gross profit was £200,606, of which £92,000 was attributable to Loewe. In 1991 the total gross profit was £220,000, of which £99,000 was attributable to Loewe.”
Considering these facts, it is necessary to add in as a relevant factor that it is anticipated that the substantive action, in which a statement of claim has been filed and in which, we are informed, the defence is almost ready, is likely to be heard, on the state of the High Court list, some time in the Spring of 1993. If the injunction were now set aside, Curust would not be deprived of access to the market in rust primer, but rather would be obliged to share it in competition with Sales Ltd.
Since this issue on affidavit and the inferences to be drawn from it was not decided in the High Court, by reason of the learned trial judge’s view that damages were for other reasons not an adequate remedy, and since I find myself in disagreement with that view, it is necessary that I should reach a conclusion on the affidavit evidence as to whether it has, as a matter of probability, been established at this stage for the purpose of the interlocutory injunction that damages would not be an adequate remedy, by reason of the real risk of the financial collapse of the Curust companies. In my view, having regard to all the factors which I have outlined, there has not been established such a case as a matter of probability. No information is forthcoming about the general position of the companies with regard to their indebtedness or net assets situation. No attempt has been made to assess the probable result of competition between Curust and Sales Ltd. in relation to this market for rust primer, except an averment on affidavit that Sales Ltd. is underselling Curust with regard to the cost of the rust primer being offered for sale. In these circumstances, where damages can be quantified, the loss is quite clearly a commercial loss, there is no doubt about the capacity of the defendants to pay any damages awarded against them and there is no element of new or expanding business which may make quantification particularly difficult, as a matter of principle, I conclude that damages must be deemed to be an adequate remedy in this case, and I would therefore allow the appeal and set aside the order made in the High Court. In so doing, however, I have as a factor taken into consideration an estimate of the probable date on which this case will come on for hearing and, having regard to that fact, would request that all parties should inform the High Court of a request emanating from this Court that the proceedings should be given a speedy trial, and that both parties should expedite the completion of pleadings to facilitate such an event.
O’Flaherty J.
It was found by the learned High Court judge and not disputed before us that Curust had made out a fair case to be tried concerning the binding effect of the 1986 agreement. Further evidence, slight though the learned trial judge held it to be at this stage of the case, went to show that there was no breach of art. 85 of the Treaty of Rome.
In general, the court’s function at the hearing of the application for an interlocutory injunction is to determine whether there is a fair question to be tried and, if there is, where the balance of convenience lies. In my judgment, there are cases, however, where the breach of contract, which is the matter in issue in this case, is so clear or the party attempting to resist the application for an injunction so devoid of merits that the court should immediately provide a remedy by way of injunction: see Doherty v. Allman (1878) 3 App. Cas. 709; Dublin Port & Docks Board v. Brittania Dredging Co. Ltd. [1968] I.R. 136 and Irish Shell v. Elm Motors [1984] I.R. 200 at page 225.
As I understand the submissions made to us, it is not asserted that this is such a case. It seems to be agreed by both sides that complex questions of law and fact remain outstanding. Perhaps that is so and, therefore, I must abstain from offering any view on the strength of the case for the enforcement by Curust of the 1986 agreement.
I then turn to the question of the balance of convenience. That involves as a first inquiry whether damages would be an adequate remedy for Curust should Curust ultimately succeed at the plenary hearing. I agree with the Chief Justice’s reasoning that it would be in the circumstances of this case. The crucial matter, in my judgment, is that Curust is not to be deprived of access to the market in rust primer, but rather would be obliged to share it in competition with Sales Ltd.
Were it not for that factor I would hold that the matter was so finely balanced as to require a further inquiry as to where the balance of convenience lay. I would not, except for that circumstance, regard damages as an adequate remedy. Then I would look to the status quo ante which I would regard as comprising the long trading relationship that existed between the parties, the equilibrium of which was affected not by any direct default by Curust in relation to the 1986 agreement (on which agreement Curust relies) but on alleged tardiness in making payments in relation to a subsidiary agreement or agreements. In that situation I would have upheld the order of the High Court. However, in the conclusion that I have reached, in concurring with the Chief Justice on the matter of the adequacy of damages, I would allow the appeal and I would join with the Chief Justice in the proposal that he has made in relation to the early disposal of the substantive case.
Egan J.
I agree with the judgment delivered by the Chief Justice.
Jenkins v MXSweep Ltd
[2011] IEHC 101
Judgment of Miss Justice Laffoy delivered on the 14th day of February, 2011.
1. The application
1.1 The launch pad for these proceedings, which were initiated by a plenary summons issued on 12th August, 2010, is the settlement of two previous actions in this Court, namely:
(a) a plenary action brought by the plaintiff against the defendant (Record No. 2008/10922P) (the plenary proceedings), wherein the plaintiff sought relief against the defendant for the alleged wrongful dismissal of the plaintiff from his employment with the defendant; and
(b) proceedings under s. 205 of the Companies Act 1963 between the plaintiff, as petitioner, and Eugene Murtagh, Paul Murtagh, Edward Grant and the defendant, as respondents (Record No. 2009/87 COS) (the Companies Act proceedings) in which the plaintiff, as a shareholder of the defendant, made various allegations against the respondents and sought various reliefs, including an order directing the purchase by the respondents of his shares in the defendant.
1.2 On this application the plaintiff is pursuing the following reliefs sought in the notice of motion which was presented to the Court on 18th August, 2009, namely:
(a) an interlocutory injunction pending the trial of the action restraining the defendant its servants or agents from making any further allegations against any party of software theft, improper conduct and/or illegal copying which allegations arise from, were considered in and/or relate to the plenary proceedings and the Companies Act proceedings; and
(b) an interlocutory injunction pending the trial of the action restraining the defendant from prosecuting its complaints of software theft against V-Clouds Ltd. (V-Clouds) and Enable Software Ltd. (Enable) to the Federation Against Software Theft Ltd. (FAST).
The Court was informed that the plaintiff was not pursuing the remainder of the reliefs sought in the notice of motion at this interlocutory stage.
1.3 On 12th August, 2010, on foot of an ex parte application made by the plaintiff, it was ordered by this Court (McMahon J.) that the defendant its servants or agents be restrained until further order from making any further allegations against the plaintiff and/or companies associated with him of software theft, improper conduct and/or illegal copying which allegations arise from, were considered in/or relate to the plenary proceedings and the Companies Act proceedings. That order has continued in being. Although it is not clear on the face of the order, I am satisfied that an undertaking as to damages was given on behalf of the plaintiff to the Court as a condition of the granting of the interim order.
2. The historic facts
2.1 The terms of settlement (the settlement) of the plenary proceedings and the Companies Act proceedings were dated 21st January, 2010 and were signed by Edward Grant on behalf of the defendant and the respondents. In clause 1 it was agreed that the defendant and the other respondents in the Companies Act proceedings would pay a certain sum of money to the plaintiff. Clause 2 provided:
“The said payment is to be in full and final settlement of all claims between the Parties made in or arising out the above entitled proceedings by the [plaintiff] against the [defendant], its directors and shareholders and in full and final settlement of the [defendant’s] counterclaim against the [plaintiff].”
As part of the settlement the plaintiff’s shareholding in the defendant was to be transferred to one of the respondents in the Companies Act proceedings. Clause 8 of the settlement provided:
“This Agreement shall be confidential as between the Parties and their respective advisers save for such disclosure as may be required in accordance with law.”
2.2 In order to ascertain the scope of the settlement, it is necessary to consider the pleadings in the proceedings which were thereby compromised and, in particular, the defence and counterclaim in the plenary proceedings. In its defence delivered in the plenary proceedings, the defendant had pleaded reliance on various matters in mitigation or extinction of any award for damages and costs to the plaintiff. The matters relied on included allegations that the plaintiff had:
(a) used, or procured the use of, the defendant’s software and source code to develop software for a rival company,
(b) encouraged the defendant to exit from a contractual arrangement and business opportunity with a client, a company known as TTAsia (TTA), and had then provided a service to that company in his personal capacity and/or through the auspices of a company, Enable t/a Enable TS, and
(c) permitted TTA to use the defendant’s software without the defendant’s knowledge or permission.
In its counterclaim the defendant justified the termination of the plaintiff’s contract of employment on the basis, inter alia, of an allegation that the plaintiff had been engaged in misconduct of so fundamental a character as to show repudiation of his contract of employment, to wit, the setting up of a rival company and the procurement and use of the defendant’s intellectual property, including source codes, to design and build a rival software product.
3. The plaintiff’s case for relief
3.1 The plaintiff’s complaints of breach of the settlement at the core of these proceedings are based on the actions on the part of the defendant subsequent to the settlement outlined below:
3.2 First, sometime prior to 26th April, 2010 the defendant made a complaint to FAST, which describes itself as a not for profit company, which I understand to be registered in the United Kingdom, representing “software publishers, resellers and other producers in the IT industry”, the object of which is to safeguard the intellectual property rights in law of its members. The defendant is a member of FAST. While the defendant’s position is that the complaint was not against the plaintiff personally, by letter dated 26th April, 2010 from FAST, which was addressed to “Mr. Daniel Jenkins Director Enable Software Ltd.” at the plaintiff’s home address in Ireland, which was expressed to be written on behalf of the defendant, it was stated that the defendant was concerned that there had been an unauthorised copying and subsequent development of software owned by it and it appeared that it involved “your company”. The letter went on to state:
“We understand that employees and/or directors in/of your company, Enable …, t/a Enable TS (“the Company”), during their time at MXSweep and/or using their relationship, acted without permission and or the required authority facilitating the access and copying of source code owned by MXSweep, leading to unauthorised use and development.”
The letter went on to state that it was further alleged that, following unauthorised copying of the source code, it was subsequently used to develop the software “that the Company used to build its current market offerings upon”. The evidence which had been furnished to FAST was then described as –
“… evidence produced by experts through testimony given in court which appears to verify that the origin of the source code and its use within the software used by the Company, originated with the source code owned by [the defendant].”
It was then stated that FAST had been advised that –
“… your company may have made use of such unauthorised copying and development to supply services to, amongst others, a former client of [the defendant], namely [TTA]”.
Following correspondence from the plaintiff’s solicitors to FAST referring to the earlier litigation and the settlement, FAST, in a response dated 4th June, 2010, sought to protect its own position on the basis that it at all times had acted in good faith. However, it did not state that it was not pursuing the investigation of the complaint. Further, it refused to disclose the material which the defendant had furnished to it.
3.3 Secondly, the plaintiff has averred that the defendant made a similar complaint against V-Clouds to FAST. I am somewhat puzzled by that averment as the only letter from FAST which has been exhibited does not refer to V-Clouds, although in the defendant’s replying affidavit sworn by Mr. Grant on 23rd September, 2010 it is acknowledged that FAST sought information from V-Clouds. Further, in his second affidavit sworn on 15th October, 2010 the plaintiff explained why he was seeking an order restraining the further prosecution of a complaint of software theft against V-Clouds. If I understand the evidence on affidavit from the plaintiff correctly, he has become associated with V-Clouds since the settlement of the earlier proceedings.
3.4 Thirdly, FAST copied the letter of 26th April, 2010 “to a shareholder of Enable TS” (sic) and the plaintiff contends that this was done with a view to causing damage to the plaintiff’s business and his relationships. The letter in question was addressed to David Lovatt as “CEO” of a company which is now known as Cloud Centric Systems Inc. The plaintiff has averred that Mr. Lovatt is his “associate”.
3.5 Fourthly, through Mr. Lovatt the plaintiff became aware that the defendant informed a customer of V-Clouds and Enable of the FAST investigation. That this happened was acknowledged on behalf of the defendant by Mr. Grant, in the replying affidavit, in which he averred that he had a discussion with a representative of a named company in relation to a possible technology partnership between the defendant and the named company. It had come to the attention of the defendant that the named company had partnered V-Clouds. The named company was informed that the defendant “would not consider a partnership with them whilst the FAST investigation was taking place”.
3.6 Fifthly, on 25th June, 2010 the defendant wrote to the Chief Executive Officer of TTA in Hong Kong alleging that there was a joint venture, the implication being that the joint venture involved both the plaintiff, through Enable or otherwise, and TTA, which had developed software which included “the use of MXSweep software as a basis for at very least parts of” its development. The foundation of that allegation was stated to be, inter alia, evidence given at the trial of the plenary proceedings and the Companies Act proceedings in November 2009 and in January 2010. Having referred to a response from TTA dated 16th June, 2009 to an earlier complaint made on behalf of the defendant, in which it had been stated that the software development relationship between TTA and Enable TS “did not involve any Intellectual Property” of the defendant, the letter of 25th June, 2010 went on to state:
“Unfortunately, it is now established that this is untrue as it would appear from the evidence of two directors of Enable TS and/or related companies, Mr. Danny Jenkins and Mr. David Lovatt as well as two expert witnesses, that Enable TS was using at least parts of the MXSweep software.”
The “key evidence” was then summarised and there was attached to the letter, inter alia, copies of selected extracts from the transcripts of the hearing which led to the settlement, including the evidence of witnesses and an observation of the trial judge, all taken out of context.
4. The defendant’s response
4.1 The essence of the defendant’s answer to the plaintiff’s case as set out in the replying affidavit of Mr. Grant is that the defendant has made no allegation whatsoever against the plaintiff personally. It appears from Mr. Grant’s replying affidavit that the same material as was furnished to TTA had been furnished to FAST, although on the basis that “it was made clear to FAST that the plaintiff had no case to answer”. Mr. Grant has also averred that the defendant’s letter to TTA “does not make any allegation against the plaintiff”. He denied targeting customers of Enable or V-Clouds.
4.2 Further, the defendant’s position, as set forth in the replying affidavit, appears to be that the factual circumstances have altered to a certain extent since the interim order was made. As regards the complaint to FAST, in his replying affidavit Mr. Grant has averred that he understands that FAST has ceased its investigation and he has ascribed that to lack of co-operation from Enable, V-Clouds and TTA. However, Mr. Jenkins, in his second affidavit has averred that he has at all times co-operated and sought to vindicate his rights through the FAST procedure. He has also averred that neither V-Clouds nor Enable has received any confirmation from FAST that the complaints against them have been withdrawn, and the defendant has refused to withdraw its complaints to FAST when requested to do so by the plaintiff. As regards the dispute between the defendant and TTA, the response dated 18th August, 2010 of TTA to the defendant’s letter of 25th June, 2010, in which it was stated that Enable had developed the software for TTA and had warranted that it was the sole and absolute owner thereof and had indemnified it in relation to any infringement of copyright, is the final communication put in evidence by the defendant. It is not clear whether that dispute in ongoing.
4.3 Finally, Mr. Grant has made averments which appear to be based on hearsay evidence that V-Clouds was actively pursuing the defendant’s customers and giving erroneous information and that the plaintiff provided confidential information in relation to the defendant to a competitor. I do not consider it proper to reach any conclusion on the basis of that hearsay evidence, when the facts alleged are denied by the plaintiff.
5. The issues
5.1 The issues on this interlocutory application are:
(a) whether the plaintiff has demonstrated that there is a fair issue to be tried between the parties;
(b) whether –
(i) damages would be an adequate remedy for the plaintiff if an injunction is not granted and the plaintiff is ultimately successful against the defendant; or
(ii) alternatively, if an injunction is granted and the defendant has to seek redress in reliance on the plaintiff’s undertaking as to damages if it is ultimately successful, it would be adequately protected; and
(c) where the balance of convenience lies.
I will deal with each of those issues in turn.
6. Fair issue to be tried?
6.1 It is the plaintiff’s case that there is a fair issue to be tried that the actions of the defendant complained of by the plaintiff, which I have outlined in para. 3 above, amount to a breach on the part of the defendant of its obligations to the plaintiff under the settlement, so that the relief sought by the plaintiff is to restrain a breach of contract. The defendant’s answer is that the settlement merely ended the dispute between the plaintiff and the defendant and that the defendant has not, and will not, pursue allegations against the plaintiff personally contrary to the settlement. Further, the defendant contends in Mr. Grant’s replying affidavit that, when the settlement was being negotiated, it was made clear to the plaintiff’s legal advisers that there would be no warranty or agreement given by the defendant in relation to not pursuing Enable or any other company and none was given and that the allegation that the software code had been copied would not be withdrawn. In support of that contention, what occurred during the course of the trial of the plenary proceedings and the Companies Act proceedings on the sixth, seventh, eighth and ninth days, including certain elements of without prejudice negotiations which were taking place, has been averred to by Mr. Grant and is being relied on. In particular, an e-mail from the defendant’s wife is exhibited.
6.2 Issues of fact, for example, whether the defendant’s wife had authority to send the e-mail, and difficult questions of law as to the admissibility of the evidence of Mr. Grant in relation to the negotiations prior to the settlement and, in particular, the admissibility of the e-mail in question, underlie the fundamental question as to whether the defendant is in breach of the settlement. Referring to Foskett on The Law and Practice of Compromise, 7th Ed., at para. 5.10, counsel for the defendant acknowledged that it is established law that, in order to determine the common intention of the parties to an agreement reduced to writing, evidence of pre-contractual negotiations as an aid to construction is inadmissible. However, he pointed out that Foskett states at para. 5.14 that it has always been the case that extrinsic evidence may be admitted to assist in identifying the commercial purposes of the contract and in the context of compromise such evidence has been admitted (a) to explain the meaning to be attached to an ambiguous word or expression and (b) to identify the disputes which the parties, by their agreement, were endeavouring to resolve. While accepting that those principles are relevant to the issue of admissibility, it is no part of the Court’s function at this stage in the process to attempt to apply them to the controverted affidavit evidence before the Court.
6.3 What cannot be controverted is that clause 2 of the settlement is explicit in stating that it was in full and final settlement of the defendant’s counterclaim against the plaintiff. As the extracts from the defence and counterclaim to which I have referred earlier illustrate, the plaintiff’s involvement with Enable, and the plaintiff’s and that company’s involvement with TTA, were issues in the proceedings and they were issues on the basis of which the defendant’s cause of action in its counterclaim against the plaintiff was grounded. The instigation by the defendant of the FAST investigation, which on the face of the letter of 26th April, 2010 and, in particular, the paragraph thereof which I have first quoted earlier, was directed at the plaintiff, albeit through the medium of Enable, was expressly directed to the matters which were issues in the plenary proceedings. Accordingly, I am satisfied that the plaintiff has established that there is a fair issue to be tried that, following the execution of the settlement, the defendant was precluded from pursuing those issues in any guise any further in any forum and has acted in breach of the settlement in making the complaint to FAST.
6.4 It was contended on behalf of the defendant that there is a lacuna in the plaintiff’s approach in that the settlement covers only relations between the parties to the proceedings, that is to say, the plaintiff and the defendant and that the plaintiff has conflated the position of the plaintiff and companies with which the plaintiff is associated. I do not accept that such contention is an answer to the plaintiff’s case that there is a fair issue to be tried. The complaints of the defendant against the plaintiff which were issues in the plenary proceedings specifically encompassed the plaintiff’s actions through the medium of the companies with which he had an involvement or connection before the settlement was executed, namely, Enable and TTA. In his affidavit Mr. Grant has averred that it was always the defendant’s intention to investigate and address any illegal use of the defendant’s software by third parties. That approach is wholly understandable. However, I consider it utterly disingenuous, if not naïve, on the part of Mr. Grant to represent the defendant’s complaint to FAST and the letter of 25th June, 2010 to TTA, both of which concern the very same allegations as were made against the plaintiff in the defence and counterclaim in the plenary proceedings, as not reiterating those allegations against the plaintiff.
6.5 Insofar as the factual situation has changed since the grant of the interlocutory injunction, the question as to whether there is still a fair issue to be tried was addressed by counsel for the plaintiff by reference to the decision of Clarke J. in Collen Construction Ltd. v. BATU [2006] IEHC 159 and, in particular, paras. 3.2 and 3.3 of the judgment. I find it unnecessary to explore this issue in any depth because it was not pressed by counsel for the defendant at the hearing of the application. However, I feel constrained to comment that the attitude evinced by Mr. Grant in his affidavit as to the scope of the settlement raises a concern that the defendant intends to persist in making allegations which are based on the allegations made in the earlier proceedings, which may, in due course, be found to be directed at the plaintiff and in breach of the settlement.
6.6 While Mr. Lovatt testified at the hearing of the plenary proceedings and the Companies Act proceedings, and while the plaintiff’s connection with V-Clouds was explored in the evidence, and notwithstanding that the plaintiff may now be associated with V-Clouds, I am not satisfied that the plaintiff has established that there is a fair issue to be tried that a complaint against V-Clouds of alleged software misappropriation would be precluded by the settlement agreement. Therefore, insofar as the plaintiff has an entitlement to an interlocutory injunction, I consider that it must be limited to complaints against the plaintiff, either directly or indirectly through Enable or otherwise, in relation to matters which were issues in the earlier proceedings and, in particular, the plaintiff’s involvement or connection with the TTA.
7. Adequacy of damages?
7.1 It was contended on behalf of the defendant that there was no evidence of any damage to the plaintiff personally, as distinct from damage to Enable or other companies with which he is associated. This ignores the damage which the plaintiff, as a shareholder, may suffer through the medium of Enable through which he is carrying on his business, by reason of that company not being able to raise finance or being inhibited in attracting new customers by reason of the allegations of the defendant. While any such loss incurred by the plaintiff via Enable would be primarily pecuniary loss, which could be adequately compensated in damages, that would not be the position in relation to the reputational damage to Enable, which would inevitably tarnish the plaintiff. Aside from the likelihood of damage to the plaintiff as a result of reputational damage to Enable, the most significant damage which is likely to ensue from the defendant’s allegations is reputational damage to the plaintiff personally. Despite the defendant’s assertions to the contrary, prima facie, the FAST investigation can only be construed as having been designed to impugn the plaintiff, the plaintiff being the only employee or director of Enable who spent “time at MXSweep”. On a plain reading of the FAST letter of 26th April, 2010, the plaintiff must be the person against whom FAST made the allegation of copying the source code and using and developing it without authority. Accordingly, the plaintiff is at risk of serious reputational damage for which damages would not be an adequate remedy because of the impossibility of quantifying damages which would adequately compensate him for such loss in a breach of contract context.
7.2 Referring to the decision of the Supreme Court in Westman Holdings Ltd. v. McCormack [1992] 1 I.R. 151, counsel for the defendant raised issues as to the ability of the plaintiff to meet a claim for compensation in the event that the defendant would wish to pursue it on foot of the plaintiff’s undertaking as to damages if, an interlocutory junction having been granted, it should transpire at the hearing of the action that it should not have been granted. The type of analysis carried out by the Supreme Court in the Westman Holdings case – consideration of the damages which the plaintiff would incur if an injunction was not granted to restrain picketing of its licensed premises against the ability of the defendant picketers to compensate for the damage in the event that the defendant trade union would establish statutory immunity – is not possible here. There is no evidence on the basis of which it is possible to form a view on the likelihood, or the probable level, of damage which the defendant would incur if it is restrained from pursuing complaints against the plaintiff or Enable pending the trial of the action and it transpires in due course that it should not have been. In view of the fact that the defendant’s complaints relate to matters which arose prior to the settlement of the plenary proceedings and the Companies Act proceedings and on which the defendant was prepared to compromise with the plaintiff, albeit in his personal capacity, it is difficult to conclude that the defendant would be inadequately compensated or irrecoverably damaged if it was restrained from pursuing those complaints further pending the trial of the action.
7.3 The fact that the plaintiff now resides in Malta, which is within the European Union, is not a factor which should give rise to prejudice to the defendant.
8. Balance of convenience?
8.1 Consideration of where the balance of convenience lies in determining whether the defendant should or should not be restrained from alleging software theft and other wrongdoing against the plaintiff, either directly or indirectly through Enable or otherwise, turns largely on the issues addressed in the preceding paragraph concerning adequacy of damages. For the reasons set out in addressing those issues, I am of the view that the balance of convenience lies in favour of granting the injunction pending the trial of the action.
9. Form of the order
9.1 The order I propose making against the defendant will be in the following terms:
An order restraining the defendant its servants or agents from making any further allegations or prosecuting any complaints in any forum against the plaintiff either directly or indirectly through Enable Software Limited or otherwise of software theft, improper conduct or illegal copying in relation to matters which arise from, were considered in or relate to the proceedings in this Court bearing Record No. 2008/10922P and 2009/97 COS, including the plaintiff’s involvement or connection with TTAsia Limited until the trial of the action.
The plaintiff’s undertaking as to damages will be noted in the order.
Dun Laoghaire Rathdown County Council v Shackleton
, unreported, High Court, O’Sullivan J., January 23, 2002
Judgment of O’Sullivan J delivered the 23rd day of January, 2002
1. In this application the plaintiff local authority seeks an interlocutory injunction preventing the first defendant as statutory arbitrator from embarking on hearing a claim for assessment of compensation by the second defendant in respect of the compulsory acquisition of some 24 acres of its land by the plaintiff in connection with the construction of the south eastern motorway in south County Dublin.
2. In its proceedings the plaintiff claims, inter alia, a declaration that the aforesaid claim for compensation which is predicated on a rezoning of the relevant lands from agricultural to industrial use in the 1998 County Development Plan constitutes a claim for unjust enrichment and further claims a declaration that any award on foot of such a claim constitutes unjust enrichment.
3. The basis of this claim is information made known by the Tribunal of Inquiry into Certain Planning Matters and Payments (“the Tribunal”) showing that the Tribunal has received information to the effect that substantial monies were paid to elected members of Dublin County Council by and on behalf of Paisley Park Investments Limited and/or Jackson Way Properties Limited for the purpose of securing the rezoning of land (including the lands being compulsorily acquired from the second Defendant) prior to the making of the 1993 Dublin County Development Plan and the current Dun Laoghaire/Rathdown Development Plan. The Tribunal has also indicated that it is inquiring into this matter pursuant to its terms of reference.
4. Mr Collins, SC, submits on behalf of the plaintiff that if the foregoing allegation of bribery is made out against the second defendant then the said claim and any award on foot of it would constitute unjust enrichment of the second defendant. Any such alleged bribery is strongly denied by and on behalf of the second defendant. In these proceedings there is therefore an issue of fact relating to this allegation.
5. On the 22nd October, 2001, the first defendant suggested that he would commence the arbitration on the 14th January, 2002. On the 19th November, 2001, the law agent of the plaintiff wrote to the first defendant requesting him not to fix any date pending the outcome of the allegations before the Tribunal but on the 23rd November the first defendant wrote back pointing out that the was satisfied that he was correctly appointed; that the second defendant was entitled to refer the matter to him for arbitration and asserting that he would commence the hearing as proposed.
6. I am informed by Mr Collins that the first defendant then considered its legal position, took advice from Counsel who became ill and ultimately warned the second defendant on the 7th January, 2002, that it would apply on the 11th January for an interim order prohibiting the commencement of the arbitration on Monday the 14th. An interim order was granted on the 11th January and on the 14th extended for one week to the 21st January when the matter came on before me.
7. Mr Collins, SC, has submitted that he has an arguable case to show that his client has a good cause of action. He has referred to a number of authorities to which I will allude later in this judgment. He has frankly acknowledged, however, that the evidence upon which he intends to base the pleaded cause of action is not yet to hand and may indeed never come to hand in the event that the Tribunal rejects the allegations referred to. He accepts, as he must, that even if the Tribunal were to find as a fact that the second defendant had been involved in bribery as alleged this would not of itself constitute evidence in the present proceedings. It would, however, assist him by identifying witnesses and/or other evidence, which he would intend calling or proving in the present proceedings. On this basis he submits that he has a good cause of action.
8. With regard to the balance of convenience he says that this weighs heavily in favour of granting the injunction. If as a result of an award money is paid to the second defendant which is substantially in excess of what is admittedly due and if subsequently it is shown to have been wrongly paid then the plaintiff may well have serious difficulties in recovering the excess. It is true, he acknowledges, that the second defendant has said that it is the owner of some additional 80 acres in the vicinity of the lands being taken in support of its assertion that this is sufficient guarantee to repay any excess monies. Mr Collins submits however that this is land owned by a company outside the jurisdiction in respect of which there is a complex not to say Byzantine ownership structure, that the plaintiff has been told nothing of the status of this land – whether it is mortgaged or whatever – and that it might prove necessary to put the second defendant into liquidation and that the plaintiff simply does not know what sort of dividend the plaintiff as an unsecured creditor might receive in such eventuality.
9. On the other side he points out that because the plaintiff has already entered into the land the second defendant is entitled to interest at the rate of 4.5% (Mr O’Neill, SC, says 4%) on whatever award is ultimately made from the date of entry onto the lands. This therefore is a protection to the second defendant against any delay in receiving monies to which it is legitimately entitled. Furthermore if, over and above that, the second defendant could demonstrate that it was at a further loss, the plaintiff has given an undertaking as to damages which is entirely reliable given its status as a local authority. In addition, there is a public dimension to the plaintiff’s application in that it would be entirely repugnant that an arbitration should be permitted to proceed when the Tribunal has taken the allegation seriously enough to assert that the Tribunal will itself investigate it (thereby, says Mr Collins, indicating that the allegation is not frivolous or vexatious) and where the Oireachtas has determined that this allegation, among others, constitutes a matter of serious and urgent public importance sufficient to justify the appointment of the Tribunal to inquire into it.
10. Mr O’Neill, SC, has submitted on behalf of the second defendant that the action itself is entirely misconceived as is the application for an interlocutory injunction. He says that his client is entitled under statute to claim compensation, that the first defendant is obliged to proceed to assess his claim given that there is no challenge to the validity of the first defendant’s appointment. He questions the authority, that is to say the jurisdiction, of this court to intervene at all. He submits that the plaintiff is not claiming that there is unjust enrichment if the arbitration goes ahead but rather that there might be in a certain eventuality.
11. He further submits that even if the Tribunal determines that there was wrongdoing the first defendant would still have to determine the amount of the second defendant’s claim on the basis of the existing zoning of the lands as he is obliged so to do under the relevant statutory provisions.
12. The court’s jurisdiction to intervene, he submits, in the conduct of an arbitration is effectively limited to where there is a challenge to the appointment of the arbitrator or where there is a dispute regarding the provisions of the contract (and by analogy the statutory provisions) giving rise to the arbitrator’s appointment. He makes the point that the plaintiff is not asserting any wrongdoing on the part of the second defendant and he makes the general point that the authorities relied upon by Mr Collins to establish the existence of a cause of action in unjust enrichment are all cases where the issue of unjust enrichment was not in question in the sense that the facts giving rise to the claims were in existence at the time of the making of the claim. He further makes the point that these zoning alterations in fact enhanced the value of the second defendant’s lands so that there was no increase in the claim as a result of the rezoning and in this connection he refers to the opinion of a valuer who has sworn an affidavit in this matter. Mr Collins disputes the logic of this. I will not proceed on the basis that the second defendants’ valuers’ submission on this point must be accepted by the first Defendant
13. Mr O’Neill also relies on delay on the part of the applicant. There was a delay of some three weeks from the time (22nd October 2001) when the first defendant first appointed the 14th of January, 2002, as the date until the applicant wrote (18th November) requesting him not to determine the arbitration until the Tribunal had reported on the allegation before it. Secondly and more importantly there was a delay between the 23rd November when the first defendant wrote back insisting that he would commence the arbitration on the 14th of January, 2002, and the 7th January 2002, when the applicant first intimated that it would apply for an injunction. During this time the parties had been readying themselves for the arbitration and had committed themselves for a period estimated at two weeks from the 14th.
14. In response Mr Collins insisted that the plaintiff is indeed making allegations on its own behalf and accepts that he will have to adduce evidence in support of them. He submits that any delay on the part of his client would not cause undue hardship to the second defendant given that any preparatory work undertaken by the second defendant for the 14th of January would still be relevant when the arbitration did in fact proceed. He pointed out that the second defendant had given no comfort whatsoever with regard to the status of the additional 80 acres owned by it or in relation to the beneficial ownership of the property of the second defendant. They were simply leaving the plaintiff to its remedy in the event (which of course they deny) that wrongdoing by them is ultimately established in these proceedings. He took fundamental issue with Mr O’Neill’s assertion that the first defendant would have to embark on the arbitration upon the basis now current even in the event that it is established that the relevant zoning had been wrongfully procured by the second defendant. It was a fundamental principle of equity that a party could not benefit from its own wrongdoing.
Conclusions
Cause of Action
15. I am aware that there is a transcript of the argument in this application which would, I assume, include references to the authorities which were opened before me. There are also books of authorities which have been handed in by both sides. I have considered all this material.
16. In light of these authorities it seems to me that as pleaded the plaintiff does have a cause of action for unjust enrichment. It certainly, in my view, has an arguable case to so assert and that is all that is required on an application such as this.
17. The greatest difficulty on the application arises in relation to the evidence which the plaintiff frankly acknowledges does not at present exist and may not exist. Can it be said, therefore, that the plaintiff has a good cause of action? I have been referred to no precedent on point. Mr O’Neill has referred me to “The Oranie” [1966]: 1: Lloyd’s Reports 477 where a court refused to prohibit a litigant before it from taking any step in an arbitration pending the final determination of two other actions in which it was involved which had been commenced in France. In particular I was referred to the speech of Lord Justice Salmon where he said that whilst there was in principle jurisdiction in the court to stay arbitration proceedings “it seems to me that before the courts will exercise this jurisdiction there must at any rate be some prima facie evidence before the court that the agreements are impeachable”. There was delay in that case and there was no such prima facie evidence and the court refused to intervene. Mr O’Neill submits that there is delay in this case, there is no attack on the basis upon which the first defendant is to proceed to conduct the arbitration and the court should, likewise, refuse to intervene.
18. I do not think the case is on all fours with the present situation. There is indeed delay in this case and I will deal with that separately. However I cannot accept that in the event that the assertions made on the pleadings prove to be correct, that this does not constitute an attack on the basis upon which the arbitration would proceed. It seems to me at the very least arguable that in the event that it is established that the second defendant procured by bribery the zoning which now affects its lands being taken by the plaintiff then this arbitration as currently set up should not proceed.
19. In the absence of direct precedent on all fours with the present situation, I have come to the view that the court should take into account the fact that the Tribunal has itself decided to investigate the allegation. This is not to say, of course, that these allegations are in the same status as if they were allegations supported by affidavit evidence in an interlocutory injunction before the court. Indeed I have some doubt as to what weight to give the decision by the Tribunal to investigate them: it seems, however, that on balance I should acknowledge and take into account the fact that the Tribunal has made a formal indication that it will investigate these allegations. I hold, therefore, that the plaintiff has made out a good cause of action.
Balance of Convenience
20. I have taken into account all the submissions made by both sides and it seems to me that the balance of convenience weighs heavily in favour of granting the injunction sought, subject to one qualification. The plaintiff acknowledges that the second defendant is entitled to some level of compensation based, as I understand it, on the zoning (or use) of the second defendant’s lands prior to the change of zoning which is impugned. At the hearing before me Counsel for the first defendant indicated his client’s readiness to make an interim award on some such basis. It seems to me that arrangements should be made for an assessment of such value and payment thereof notwithstanding any stay on the arbitration.
Delay
21. Has there been such delay as would prohibit a court from granting an order which it would otherwise grant? I have set out the delay in question. No doubt it came as a bombshell to the second defendant to hear on the 7th January that an application was being made on the 11th for an interim injunction. The period of delay included some time, I am prepared to infer, which elapsed due to the illness of Counsel and also some other time during the Christmas holiday. In my opinion the delay was not such as to prohibit the making of an order which the court would otherwise make.
Public Interest
22. I emphasise that in reaching my conclusion in relation to delay and also my conclusion that the plaintiff has made out a good cause of action I have been influenced by the public interest considerations which apply to this case. The Oireachtas has identified the general issue of bribery of which the allegation made against the second defendant comprises part as a matter of urgent public importance. It appointed a tribunal which itself has indicated that it intends to investigate the specific allegations against the second defendant. There is clearly grave public concern that these matters be inquired into and determined as soon as reasonably possible. It is also, in my opinion, of importance to the public that a reasonable opportunity be afforded to the plaintiff to procure evidence, if such there be, in support of its allegations made in these proceedings against the second defendant.
23. Finally I wish to emphasise that this decision of mine in no way implies an acceptance of or any kind of judgment as to the weight to be attached to the allegations made to the Tribunal against the second defendant. I have taken account, in reaching my decision, not such allegations or any evidence in support of them (if such there be: I do not know), but rather the determination of the Tribunal itself to inquire into them.
24. Accordingly there will be an order as sought by the plaintiff subject to a proviso that in the absence of agreement between the plaintiff and the second defendant arrangements should be made for the assessment of the compensation admittedly due by the plaintiff to the second defendant. I am facilitated in making this proviso by the indication of Counsel for the first defendant that he would be prepared to make an interim reward in that regard.
Electricity Supply Board v Harrington
, unreported, Supreme Court, May 9, 2002
Judgment of Denham J. delivered on Thursday the 9th day of May, 2002. [Nem Diss.]
1. Appeal
1. This is an appeal by the defendants/appellants, hereinafter referred to as ‘the defendants’, from the Order of the High Court (O Caoimh J.) made on the 20th February, 2002. The first named defendant is the owner of the lands in question and the second named defendant is the occupier pursuant to a lease.
2. Injunction
2. At issue is an interlocutory injunction granted by the High Court. Application having been made by motion on notice by counsel on behalf of the plaintiff, the High Court made an order as sought by the plaintiff. The High Court ordered that until the trial of the action or further Order the defendants their servants or agents or anyone whosoever be restrained from obstructing or preventing the plaintiff its servants or agents from entering upon the defendants’ lands situate at Newtown Farm, Shandrum More, Bantry in the County of Cork pursuant to its power conferred by s. 53(9), Electricity (Supply) Act, 1927 as amended, for the purpose of erecting a 110 kV overhead electricity line as defined by s. 46, Electricity (Supply) (Amendment) Act, 1945.
3. Pending the Determination
3. Against that order of the High Court the defendants have appealed. Originally they brought a motion seeking a stay on the said order pending the appeal, but by consent the appeal was expedited and heard on the 8th March, 2002. Counsel on behalf of the plaintiff indicated that the plaintiff would not proceed with the line pending the determination of this appeal.
4. Plenary Summons
4. The plenary summons in these proceedings seeks the following relief:
5. An injunction restraining the defendants, their servants or agents, or anyone whomsoever from preventing the plaintiff, its servants or agents from entering on the defendants’ lands situate at Newtown Farm, Shandrum More, Bantry, County Cork, for the purpose of erecting a 110 kV overhead electricity line across and on the said lands together with a supporting angle mast.
Damages.
Further and other relief.
Costs.
6. Consequently, the relief sought and granted on the motion, the injunction, is substantially the issue in the action.
5. New 110kV Electricity Line
7. The plaintiffs plan a new 110 kV electricity line to provide what is described as a badly needed voltage injection into the West Cork/Kerry networks, relieving any 38 kV network
capacity problems. This new line will greatly improve the quality and security of the electricity supply in the West Cork/Kerry region. It is expected that domestic, commercial and industrial electricity supply requirements will increase at a rate of 6% per annum over the next five years and that the new 110 kV line will be a great benefit to the region.
6. Facts
8. There were a number of affidavits filed and facts disputed. However, some facts are not in issue. On the 16th June, 1999, planning permission was granted by Cork County Council (upheld by An Bord Pleanála on the 1st February, 2000) for the electricity line. That permission allowed for some alteration in the proposed location by agreement with the planning authority prior to the development. It is alleged by the plaintiff and denied by the first named defendant that a Wayleave Notice was served on her on the 19th April, 2000. There were discussions between officials of the plaintiff and the first named defendant about the line in the year 2000. There were discussions between officials of the plaintiff and the second named defendant about the line in December, 2000 and January, 2001. I am satisfied, leaving aside the detail of the discussions, and the disagreement between the deposers of the affidavits filed on some of these details, that in those discussions both defendants were informed of the line and its placement. The second named defendant had raised two concerns, one as to the effect of the location of the line and mast on his proposed equestrian centre, and the second as to health concerns with regard to electromagnetic fields. The second named defendant has applied for and obtained a grant of outline planning permission (which was issued on the 29th August, 2001) for an equestrian development on the lands.
9. It is submitted by the plaintiff that at all times the officials of the plaintiff indicated that it was not possible to move the mast from its present location. Larry Donald, secretary of the plaintiff, deposed in his affidavit sworn on the 8th November, 2001:
“21. I say and am advised that many discussions have been held with both of the Defendants and their solicitor over the past three and a half years and the impossibility of moving the Board’s line and in particular the location of the angle mast has been explained at length. Further, the Board has at all times, both verbally and in writing, assured the Defendants and their solicitor that they will be compensated for any agreed loss arising due to the presence or the building of the line.”
. . .
23. I say and am advised that the route chosen for this line is the best from an economic, technical and environmental point of view.
24. I say and am advised that the building of this line across the first Defendant’s land is now a matter of urgency . . .”
10. Kieran Cogan, a High Voltage Services Engineer of the plaintiff, swore on affidavit on the 8th day of November, 2001. In paragraph 15 he deposed:
“15. I say that an ESB crew attended on the First Named Defendant’s land on the 29th of January 2001 and were refused entry by the Second Named Defendant and his brothers. Later that day, I met the Second Named Defendant at the first Defendant’s home. He stated that he did not accept that the development could co-exist with the line. I stated that in this instance the line could not be raised or altered – in the event of an impact between the line and the proposed development. I also pointed out as there was as yet no Planning Permission for the Equestrian development, the Board could only guarantee that the Defendant would be compensated for any loss arising to him if the Equestrian Centre was impacted by the presence of the line. I also pointed out that, in accordance with the ESB Acts, any dispute regarding the amount of such compensation could be adjudicated upon by the property arbitrator. In the meantime, I stated that the Board would reluctantly use its statutory powers to erect the line. I drew the second named Defendant’s attention to the Board’s Policy Towards Landowners in respect of overhead lines ‘which guarantees compensation if a development is impacted by a line’. . . .”
11. The second named defendant filed two affidavits in the matter. He makes it clear that he wishes to have a hearing by the Board of the plaintiff subsequent to the serving of the Wayleave Notices on the 31st August, 2001. In his affidavit sworn on the 8th December, 2001, the second named defendants deposed:
“36. I say that at all material times I am not opposed to the routing of a line across my lands and all I seek is a minor modification to the route whereby it would be altered in the order of 50 to 60 metres or so to move away from the proposed equestrian centre which I intend to develop. I say that this is not unreasonable but I say that throughout the affidavit the plaintiff contends that it is refusing even to consider moving the line and that it must be located to precisely where it intends it to be, notwithstanding that the planning permission confers upon them an express power to move it and seek only informally, the consent of the Local Authority and that it does not require a new application.”
12. The second named defendant is seeking a hearing by the Board of the plaintiff. He stated in his affidavit sworn on the 15th February, 2002, paragraph 12:
“. . . I am not seeking in any way to frustrate the Plaintiffs in the construction of this line across my land but only ask that it be modified in the interest of allowing my development for which I have permission to construct, which permission was granted subsequent to that of the Plaintiffs in this case, to proceed. I say that indeed I seek even less than that, which is the opportunity to make appropriate submissions to the Board of the Respondent which has been represented is available to me but which facility has been consistently denied.”
7. Wayleave Notice
13. The Wayleave Notice was in the form of a letter. The Wayleave Notice was not in contention on this appeal. Counsel for the defendants accepted that Wayleave Notice was served on the 31st August, 2001. No procedural issue was raised on this notice.
8. Wayleave Notice Letter
14. The Wayleave Notice was in the letter dated the 31st August, 2001. It stated:
“WAYLEAVE NOTICE
Electricity (Supply) Act, 1927, and Subsequent Amending Acts
Dear Mrs. Harrington,
I hereby give you notice that the Electricity Supply Board, pursuant to the powers conferred on the Board by Section 53 of the Electricity (Supply) Act, 1927, as amended by subsequent Acts, intends to place an electric line, as defined by Section 46 of the Electricity (Supply) (Amendment) Act, 1945, above ground across your lands situate in the:-
Townland of Shandrum-More
Barony of Bantry
County of Cork
The nature of the said line and the position and manner in which it is intended that it be placed is set forth in the Schedule hereto attached.
If within seven days from the receipt of this Notice you consent to such entry the same will be on the terms of the Board’s policy endorsed on the back hereof. If you do not to so consent the Board will erect the line as authorised by Section 53(5) of the Electricity (Supply) Act, 1927 as amended. In this event the Board will be prepared to act in accordance with the same terms of the said policy, (excluding the provisions of Clause 6 thereof), and you will be entitled to have compensation assessed by agreement or in accordance with the said Act.
I also give notice that the Electricity Supply Board, pursuant to the power conferred on the Board by Section 98 of the Electricity (Supply) Act, 1941, intends after a period of seven days from the date of service of this Notice to lop or cut certain trees, shrubs or hedges which obstruct or interfere with the electric wires or with the erection of such wires.
The location of the said trees, shrubs and hedges and the extent of the intended lopping or cutting is set forth in the Schedule hereto attached.
Yours faithfully,”
9. Policy
15. The policy of the plaintiff was set out on the back of the letter. The policy as stated was:-
“POLICY TOWARDS LANDOWNERS FOR OVERHEAD LINES
1. Whenever agreement cannot be reached between a landowner or occupier and the Board’s staff as to the route of the line or to the position of the masts, the Board will give all parties an opportunity of being heard and may consent, with or without conditions, or withhold its consent, to the placing of the line in the manner and position proposed in the Notice.
. . .
3. The Board will, on request, cut up any trees that may be felled into transportable lengths and bring them to the farmyard or other adjacent storage place.
4. The Board will dispose of rubbish, surplus clay and all debris from tree and hedge cutting.
5. The Board will be responsible for any injury to or loss of livestock arising from any action which can be directly attributed to its employees or from the presence of the line.
6. The Board will make an annual payment as fixed from time to time by the Board for interference by lattice steel masts and double wood poles on arable land.
7. (i) If in future the line interferes with any viable development of land other than cultivation of the soil and the Board is so satisfied the Board will either:-
– raise or otherwise alter the line to permit the development in full, or
– pay for the loss caused by interference of the line with the
development, or
– raise or otherwise alter the line to permit partial development and pay for the loss caused by interference of the altered line with the development.
(ii) The agreement of the Board to alter the line or make a payment is
subject to the co-operation of the landowner with the Board in devising an arrangement of the line and of the development which reduces the overall cost to a minimum. This necessitates an approach to the Board at the earliest stage to ascertain the limits for development of the kind envisaged near the particular part of the line in question and to discuss the possibility of altering the line and probable time required to carry out an alteration. The Board will give every assistance in planning the layout of a development which impinges on the line as it stands or on any feasible alteration to it.
(iii) The total cost to the Board of altering the line and/or of payment is
limited to that for the arrangement which gives minimum cost. If the landowner prefers a more expensive arrangement he must bear the increase in cost.
(iv) Before commencing any alteration the Board will need proof that the proposed development will proceed and it may require security for repayment of the cost of the alteration if the development is not carried out within a reasonable time.
(v) The basis of payment will be agreed in advance, but payment will be made only when development has reached an advanced stage.
(vi) When a development is totally prevented payment will be made only when there is clear proof to the satisfaction of the Board that a genuine and viable development has in fact been prevented solely by the presence of the line. A line will not be taken as preventing development if it could be carried out on other available land subject to payment for any consequent increase in cost.
(vii) Payment for the full loss may not be made if the Board had not been fully consulted in advance or if the land had been purchased at a reduced price because it was encumbered by the line.
(viii) A decision to alter the line or make a payment may be subject to obtaining an easement in respect of the land affected.
(ix) Any disagreement as to the amount of payment will be referred to arbitration.
. . .
9. The Board and the Irish Farmers Association have an agreed Code of Practice for survey, construction and maintenance of overhead lines in relation to the rights of landowners. The above Policy is incorporated in this Code of Practice – copies available in local E.S.B. or I.F.A. Offices.
10. Defendants’ Letter
On the Wayleave Notice being received by the defendants the solicitors for the defendants
responded by letter dated the 6th September, 2001. That letter stated:
“Dear Sirs,
We confirm that we act on behalf of the above named Brian Harrington and Mary Harrington, the occupier and owner respectively of lands situate at Shandrum More, Bantry, County Cork.
Our clients have received Way Leave Notices from the ESB on Monday 3rd September, 2001 and dated 31st August 2001 relating to their lands at Shandrum More which advise that it is the intention of the Board to enter onto such lands for the purpose of erecting a Steel Pylon and poles, together with high voltage power lines, as part of the Ballylickey – Bantry 110 kV Power line. We note that it is the intention of the ESB to enter onto such lands on Monday next, 10th September 2001 at 10.00 a.m. for the purposes of carrying out such works.
Please be advised our clients and each of them do not consent to the entry onto their lands by the ESB or to the entry by any servant and/or agent of the ESB or by any authorised undertaking for and on behalf of the ESB for the purposes of carrying out such works. In accordance with Section 53 of the Electricity (Supply) Act 1927, as amended, our clients respectfully request that the Board of the ESB formally reconsider its intention to place a steel pylon/poles and high voltage power line on and over our clients’ lands at Shandrum More. Our clients further respectfully request that the Board of the ESB consider changing the route of the power line and the positioning of the Steel Pylon and poles (if any) as set forth in the Way Leave Notices and Schedules therefore, so that the power line and such Pylon and pole(s) do not impinge upon and interfere with our clients’ lands and their proposed development of such lands as a Tourist based Equestrian Sentre, [sic] for which they have obtained Planning Permission.
In accordance with the stated policy of the ESB towards Landowners, as endorsed on the rear of the Way Leave Notices, our clients wish to be heard and represented at any meeting of the Board held to so consider or reconsider the routing and positioning of the power line, Pylon and poles.
In the meantime, please be advised that any entry, or attempt to enter onto the lands will be regarded as an act of Trespass.
Yours faithfully,
CASEY & COMPANY”
16. Subsequently an ESB crew attempted to enter the lands and were prevented from doing so.
17. These proceedings were then commenced.
11. High Court Judgment
18. There is a counsels’ note of the judgment delivered by the High Court on the 15th February,
2002. It included the following:
“3. The learned Judge accepted the Plaintiff Counsel’s argument that the subsequent way-leave notices served by the ESB on 31st August, 2001 meant that these were now the way-leave notices.
4. Essentially, the issue for determination before the Court was:
(a) the construction of the letter dated 6th September, 2001 from the
Respondent’s solicitors to the ESB; and
(b) whether the aforesaid letter constituted a consent subject to conditions.
The learned Judge concluded that the aforesaid letter did not constitute a consent but rather a refusal of consent. Reference was made to the words ‘do not consent ’ in the body of the letter. In the circumstances, it was held by the learned Trial Judge that section 53, sub-section (4) of the Electricity Supply Act, 1927, did not apply to this case.
5. The learned Judge also held that, in the way-leave notice, certain procedures and policies are to be followed. He found that, because there had not been a consent on the part of the Defendants to the way-leave notice, paragraph 1 of the Board’s policy towards landowners, as set out on the back of the way-leave notice, cannot apply and must be excluded.
6. The learned Trial Judge accepted the Plaintiff’s argument that the balance of convenience in this case rested with the Electricity Supply Board and an injunction was granted in the terms of paragraph 1 of the Notice of Motion with costs of the application reserved. On the Defendants’ application, the learned Trial Judge granted a stay on the interlocutory order to Wednesday, 20th February, 2002.
7. In answer to a submission made on behalf of the Defendants that they had a legitimate expectation, having regard to the policy statement printed on the rear of the way-leave notice, the learned Trial Judge held that the aforesaid notice did not give such an expectation and, therefore, there had been no breach of any legitimate expectation by the Plaintiff. In those circumstances, the learned Trial Judge did not consider the proposed entry onto the Defendants’ lands, which was scheduled to take place on 10th September, 2001, as being unauthorised.”
12. Defendants’ Submissions
19. Counsel on behalf of the defendants filed full written submissions and oral submissions were also made. (a) In essence it was submitted that the relief sought on the motion determines the action and the type of injunction granted at the interlocutory stage in this case can only be made if there is no possibility of success by the defendants. It was submitted that that is not the case, that the High Court erred in determining that there was no substantive issue to be tried, that there are serious issues to be tried. (b) It was submitted that in the terms of the plaintiff’s letter and policy there is provision for agreeing alterations in the line and that the letter of the 6th September, 2001 of the defendants’ solicitor was in terms that, if they have a right to refuse, they refused, and if not, they wished the line and mast moved i.e. that it was a conditional consent. (c) It was submitted that the defendants are entitled to a hearing by the Board itself of their wishes as to the moving of the line etc. (d) It was submitted that the plaintiff by its own procedures, with the promise of proceedings in its policy, had raised a situation where the defendants had a legitimate expectation to a hearing. (e) Even if the policy of the plaintiff as set out in the document was not such as to give rise to a legitimate expectation, it would be a factor for the court to consider. It would, it was submitted, be inappropriate for the court to grant an injunction to the plaintiff to enable it to act contrary to its own stated policy. (f) It was submitted that an injunction is a discretionary remedy – it should be granted only when a court of equity should interfere and that, in this case, the plaintiff exercised power of entry in June, 2001 when they knew they had not complied with the statutory procedure. Counsel for the defendants submitted that there was a fair question to be tried. Reference was made to Irish Shell Limited v Elm Motors Ltd. [1984] IR 200. Counsel submitted that the plaintiff was not entitled to the interlocutory injunction in this case.
13. Plaintiff’s Submissions
20. Counsel for the plaintiff submitted that the only entitlement of the defendants was to compensation and that the policy statement as to a hearing applies only if there is consent to enter. Counsel submitted that the letter of the 6th September, 2001 was a failure to consent. There had been previous meetings between the defendants and the staff of the plaintiff. It was submitted that where there is no consent to entry on the land the defendants are entitled to compensation by agreement or in accordance with the provisions as established by the 1985 Act. It was submitted that the letter of the 6th September, 2001 was a formal refusal by the solicitor for the defendants, and that once there was such a refusal the plaintiff was entitled to act pursuant to s. 53(5) of the 1927 Act as amended. There had been many communications between the plaintiff and defendants which failed to find agreement. It was submitted that it was urgent that the plaintiff proceed with the line, that the Act provided for no hearing by the Board, that the balance of convenience lay, in view of the urgency of the line and the public interest, in granting the injunction and that the balance of convenience also favours the plaintiff, as in essence, the defendants only argue for a right of hearing.
14. Law
(a) Electricity Line
21. This case raises for consideration s. 53 of the Electricity (Supply) Act, 1927 as amended. The section, as amended, is as follows:
1. The Board . . . may subject to the provisions of this section . . . place any electric line [the expression electric line is deemed to have had effect as meaning any wire, conductor . . . and including any post, pole, stay, erection or structure supporting any one or more of the things hereinbefore mentioned] [1] above or below ground, across any land not being a street, road, railway or tramway . . .”
3. Before placing any electric line across any land . . . under this Section, the Board shall serve . . . on the owner and on the occupier of such land, a notice in writing stating its . . . intention so to place the line or attach the fixture . . . and giving a description of the nature of the line . . . and/of the position and the manner in which it is intended to be placed or attached.
4. If within (7) [2] days after such service of such notice, the owner and the occupier of such land or building give their consent to the placing of such line or the attaching of such fixture in accordance with such notice, either unconditionally or with conditions acceptable to the Board, the Board . . . may proceed to place such line across such land . . . ;
5. If the owner or occupier of such land or building fails within the seven days aforesaid to give his consent in accordance with the foregoing subsection, the Board or the authorised undertaker with the consent of the Board but not otherwise may place such line across such land or attach such fixture to such building in the position and manner stated in the said notice, subject to the entitlement of such owner or occupier to be paid compensation in respect of the exercise by the Board or authorised undertaker of the powers conferred by this subsection and of the powers conferred by subsection (9) of this section, such compensation to be assessed in default of agreement under the provisions of the Acquisition of Land (Assessment of Compensation) Act, 1919, the Board for this purpose being deemed to be a public authority.
S. 53 (5) of the Electricity (Supply) (Amendment) Act, 1985 was inserted as a consequence of E.S.B. v Gormley [1985] IR 129. In E.S.B. v Gormley Finlay C.J. recognised the benefits of an electricity line. He stated, at p. 150:
“Having regard to the social benefits of electricity and its contribution to the economic welfare of the State, the uncontradicted evidence adduced in this case of the necessity for and value of this transmission line to the national supply system leads to an inescapable conclusion that the power to lay it compulsorily is a requirement of the common good.”
However, E.S.B. v Gormley established the right to compensation for such compulsory action. Consequently, s. 53 (5) was inserted by the Electricity (Supply) (Amendment) Act, 1985.
(b) Injunction
22. An injunction is an equitable remedy. In an interlocutory injunction, such as is in issue in this case, the court is not called upon to determine the issue of the substantive action and indeed should resist coming to any such conclusion. Rather it is for the court to determine the matter on the application for an interlocutory injunction in a concise manner on the facts before the court.
(i) The first issue is whether there is a fair question to be tried. In the circumstances of this case the court has to consider whether the material before the court discloses that the defendants have a real prospect of succeeding on their defence to a claim for a permanent injunction. If the material fails to disclose that the defendants have a real prospect of succeeding in their defence to a claim for a permanent injunction then that determines the matter.
(ii) If however, the defendants have raised a substantive issue to be tried then the court should go on to consider the balance of convenience.
(iii) It is no part of the court’s function at this stage of the litigation to resolve conflicts of fact.
(iv) Nor is it part of the jurisdiction to decide complex questions of law. These are matters for the trial.
(v) As to whether damages are an adequate remedy is a factor for the court.
(vi) All of the circumstances of the application should be considered in determining the application of this remedy, which is rooted in equity.
15. Decision
23. The first matters for decision are whether the materials available to the court on the hearing for an interlocutory injunction fail to disclose that the defendants have any real prospect of succeeding in their defence to a claim for a permanent injunction at the trial. Is there a fair question to be tried? Does doubt exist as to the plaintiff’s right? The High Court held that there was no substantive issue to be tried. Against that finding the defendants have appealed.
24. The questions raised relate to the placing of the line. First there is the matter of notice. The relevant law is to be found in s. 53 of the Electricity (Supply) Act, 1927 as amended. The relevant portion is set out previously in this judgment. Under that statute the plaintiff may place any electric line across any land not being a street, road, railway or tramway, subject to the provisions of s. 53. The provisions of s. 53(3) require prior notice in writing of the placing of the line, the nature of the line, and the position and manner in which it is intended to be placed or attached. Wayleave Notice was given in this case on the 31st August, 2001 and no issue arises in that notice. Thus this provision of s. 53(3) is met.
25. Next there is the matter of consent. Section 54(4) provides for the situation where consent by the landowners and occupiers to the placing of the line is given. Section 54(5) relates to the position where there is no consent by the owner or occupier. The learned High Court judge construed the letter of the solicitors of the defendants dated the 6th September, 2001, as not giving consent but rather as a refusal of consent. There was evidence upon which he could come to this construction. I agree with this construction. The words of the letter are plain, and include the following:
“Please be advised our clients and each of them do not consent to the entry onto their lands by the ESB . . .”
26. Further, the letter concluded with the words
“In the meantime, please be advised that any entry, or attempt to enter onto the lands will be regarded as an act of trespass.”
27. I am satisfied that the defendants did not consent to the placing of the line. Section 53(4) refers to unconditional acceptance. Clearly that does not apply. The said section refers to “conditions acceptable to the Board”. This does not arise in this case either. There were no conditions acceptable to the Board.
28. In this case the defendants did not give their consent to the line. Thus s. 53(5) of the Electricity (Supply) Act, 1927, as amended, is the applicable law. Under this statute law, the defendants having failed within the seven days to give consent, the plaintiff may place the line across their lands, subject to the defendants’ right to compensation. If those were all the facts of the case then the matter would not need any further consideration and the defendants would fail. The only right under the statute for the defendants is compensation.
29. However, the defendants were served with the Wayleave Notice dated the 31st August, 2001 and the defendants were referred to several matters in the Wayleave letter. The Wayleave Notice letter referred to the fact that if within seven days from the receipt of the notice the defendants gave consent to such entry then such entry would be in terms of the Board’s policy endorsed on the back of the notice. As no consent was given this statement is not applicable to this case.
30. However, as to the position when there is no consent, as here, the Wayleave Notice stated:
“If you do not consent the Board will erect the line as authorised by section 53(5) of the Electricity (Supply) Act, 1927, as amended.”
31. Thus the Wayleave Notice states clearly that in the absence of consent the plaintiff will erect the line as authorised by statute. The statute is clear. Section 53(5) provides that if the owner or occupier fails within seven days to give his consent, the plaintiff may place such line across the land. The only proviso is the defendants’ right to compensation. Thus, the statute and letter are clear that, consent not being given within seven days, the plaintiff may place the line on the land. If these were the sole facts before the court the issue would be clear – the defendants would not succeed on the first aspect of the test in relation to an interlocutory injunction. The material would not disclose that the defendants had a real prospect of succeeding in their defence to a claim for a permanent injunction. There would be no fair question to be tried. However, the Wayleave Notice referred to the absence of consent, and stated:
“In this event the Board will be prepared to act in accordance with the same terms of the said policy, (excluding the provisions of clause 6 thereof), and you will be entitled to have compensation assessed by agreement or in accordance with the said Act.”
32. The words “In this event . . . ” refer to the absence of consent. Thus, the succeeding words of the policy are applicable to such a situation. That situation has also been specifically referred to in the statute law and the Wayleave letter. Both state that in such a situation the plaintiffs are entitled to proceed to lay the line. On those words, it is clear that the defendants have no rights other than to compensation. However, the policy of the plaintiffs raises the matter claimed for by the defendants, the issue of the hearing.
33. The defendants claim that they have a right to a hearing by the Board itself as to their wishes in regard to the line. This right does not arise under the Act. This right does not arise under the Wayleave Notice per se . It is claimed that this right arises out of the reference in the said notice to and the policy of the plaintiff as set out on the rear of the notice.
34. The precise terms of the policy are:
“Wherever agreement cannot be reached between a landowner or occupier and the Board’s staff as to the route of the line or to the position of the mast, the Board will give all parties an opportunity of being heard and may consent, with or without conditions, or withhold its consent, to the placing of the line in the matter and position proposed in the notice.”
35. It is clear on the plain meaning of the words that this policy applies wherever agreement cannot be reached between a landowner or occupier and the Board’s staff. It is thus applicable to the defendants.
36. The clause refers to “the Board will give all parties an opportunity to be heard”. Counsel for the defendants submitted that the Board itself should hear the defendants.
37. However, I am satisfied that whatever opportunity is given to the defendants by this policy document it is not a right to a hearing by the Board itself of the defendants. The policy refers to several matters and indicates that action will be taken. Thus, clauses 3 and 4 state:
“The Board will, on request, cut up any trees that may be felled into transportable lengths and bring them to the farm yard or other adjacent storage place.
The Board will dispose of rubbish, surplus clay and all debris from tree and hedge cutting.”
38. No one would expect the Board itself to do the above. A literal interpretation of the policy would lead to an absurd conclusion. It is clear that the Board of the plaintiff has indicated in its policy that it will ensure that such matters are attended to. A logical and common sense approach, which I favour, means that the Board has set out in its policy specific matters which will be done on its behalf.
39. Similarly, in relation to the opportunity to be heard. The policy provides that such opportunity of being heard will be granted to the defendants. However, taking the same construction of the word ‘Board’ as I do for other clauses of the policy, this hearing may be conducted by a person or persons other than the Board but under the direction of the Board. Officials of the Board would be the probable persons giving this opportunity of being heard. Consequently, I would dismiss the submissions that any such hearing should be heard by the Board.
40. However, the defendants are left with the stated policy as to an opportunity to be heard by officials of the plaintiff as to the position and placing of the line proposed in the Notice.
41. The question then is whether this refers to an opportunity to be heard after the Notice or whether it could refer to previous communications. The words of the policy are clear – they refer to the placing of the line in the manner and position proposed in the Notice. There is thus specific reference to the Notice. This would appear to raise the possibility of the hearing to a time after the Notice. However, a construction which is also open is that the reference to the route is described in the Notice but is not determinative of the time of the hearing. Thus, if there have been significant communications previously on the proposed line, they may be considered as the hearing. There is no doubt that there have been communications and meetings between the parties. The position of the line and mast were the subject of the communications. However, if the hearing by the officials is to take place after the Notice then the decisions specifically referred to in the policy are open; these include consent with conditions or the withholding of consent to the placing of the line in the manner and position proposed in the Notice. Thus, the policy may specifically envisage a change to the position of the line in the Notice. That being the case it raises the interpretation that the hearing should be after the Notice. However, the statute and Notice clearly state that the line may be placed within seven days. There may be an inherent contradiction here.
42. I am satisfied that the defendants have raised a fair question to be tried. The materials available to the court do not fail to disclose that the defendants have any real prospect of succeeding in their defence as to the claim for a permanent injunction. Even if the issue is only the right to a hearing, the policy itself may envisage a possible change after such notice and hearing.
43. Thus, it is necessary to proceed to consider the balance of convenience. If the court holds that the defendants have a right to be heard further on the position of the line there must be the consequence that there may be a possibility that the placing of the line may be altered as stated in the policy. However, the evidence of the plaintiffs is that at all times the placing of this line and mast could not be altered and that the only relief for the defendants was compensation, including compensation in relation to the equestrian development. The statute law is clear that the defendants’ only right is to compensation.
44. In considering the balance of convenience from the defendants’ viewpoint it is clear that if they have a hearing and if there is a change in the line as a consequence it would favour withholding the injunction. However, I am swayed by factors such as the affidavits of the plaintiff as to urgency of the electricity line, as to the deposed fact that the positioning of this line can not be altered, as to the considerable degree of communication over the last few years, and to the policy and clear words of the Act giving to the plaintiff the right to place the line on the lands, subject to the defendants’ right to compensation.
45. It is appropriate that the plaintiff has a policy as to communication and to hearing the views of the landowners. However, that has to be balanced against conflicting interests, including the common good.
46. Ultimately damages would be an adequate remedy for the defendants. If it is held that they had a right to be heard after the Notice, and if it were considered that there was a real possibility of an alteration in the line as requested, these would perhaps be factors additional to the right to compensation which already exists. The level of compensation may be increased by the exact location of the line and mast. It may well be that the level would be less if the route of the line were altered as requested by the defendants. This means also that the level may be higher if the route is not altered.
16. Conclusion
47. For the reasons stated I would dismiss the appeal. Consequently, the interlocutory injunction ordered by the High Court is extant.
Dunne v Dun Laoghaire-Rathdown County Council
[2003] 2 I.L.R.M. 147
JUDGMENT of Hardiman J. delivered the 24th day of February, 2003., [Nem Diss].
1. The Plaintiffs object to the proposed removal by the defendants, as part of a road building scheme, of certain parts of a monument constituting the remains of Carrickmines Castle, Co. Dublin. By Notice of Motion issued shortly prior to the 10th February, 2003 they sought:-
“(1) Interim/interlocutory injunction restraining the defendant … from demolishing or removing or disfiguring defacing altering or in any manner injuring or interfering with the national monument and/or archaeological remains situated on lands owned by the defendants, forming part of Folio 5005…
(2) An interim/interlocutory injunction restraining the defendant … from excavating, digging, ploughing or otherwise disturbing the ground within, around or in proximity to the national monument situated on lands owned by the defendants and forming part of Folio 5005…”.
The statutory background.
2. The relief claimed mirrors the wording of the National Monuments Act, 1930 as amended. Section 14 of that Statute provides:-
(1) “It shall not be lawful for any person … to do any of the following things in relation to a national monument of which the Commissioners or a local authority are the owners or the guardians …, that is to say:
(a) To demolish or remove wholly or in part or to disfigure, deface, alter, or in any manner injure or interfere with any such national monument without or otherwise than in accordance with the consent hereinafter mentioned or
(b) To excavate dig plough or otherwise disturb the ground within around or in proximity to any such national monument without or otherwise than in accordance with the consent hereinafter mentioned …
(2) The consent herein before mentioned is … in the case of a national monument of which a local authority are the owners or the guardians, the joint consent in writing of the Commissioners and such local authority.
(3) The Commissioners and every local authority are hereby respectively authorised to give such consent as is mentioned in the foregoing subsection if and whenever they think it expedient in the interests of archaeology or for any other reason to do so and are hereby further authorised to attach to any such consent all such conditions and restrictions as they think fit.”
3. The Act was subsequently amended, by Section 15 of the National Monuments (Amendment) Act 1994 by the insertion of new subsections after sub-s. (3), of which the following are relevant:-
“(3A) The consent referred to in sub-s. (2) of this Section shall not be given by the Commissioners or the Commissioners and a local authority, in a case referred to in paragraph (a) of sub-s. (1) of this Section, unless it is in the interests of archaeology to do so or the Minister has approved of the giving of that consent.
(3C) On being requested to approve of a consent under this Section, the Minister may approve of the consent referred to in sub-s. (3A) of this Section in a case referred to in paragraph (a) of sub-s. (1) of this Section where he thinks it expedient to do so in the interests of public health or safety”.
4. It will be seen that this amendment considerably reduces the scope for the granting of consent by the substitution of the above for the former power to consent if the Commissioners thought it “expedient in the interests of archaeology or for any other reason”. In other words, the very wide residual discretion in the Act of 1930, has been replaced by a strictly confined discretion, and the matters to be considered have been strictly limited.
5. By the Heritage (Transfer of Functions of Divisionals of Public Works in Ireland) Order 1996, the Taoiseach transferred the functions of the Commissioners under, inter alia, the National Monuments Act to the Minister for Arts, Culture and the Gaelteacht. By the Heritage (Transfer of Departmental Administration and Ministerial functions) Order 2002 the Taoiseach transferred the functions of that Minister, inter alia, to the Department of Environment and Local Government, where it remains.
6. The effect of the foregoing is that the consent of the defendant local authority and of the Minister for the Environment is required if any of the matters mentioned in sub-s. (1)(a) of s.14 of the National Monuments Act, 1930 are lawfully to be done. The consent must be the joint consent of the Minister and the local authority and each are constrained in the way set out in the statutory citations above in the reasons by reference to which they can grant consent. It is undisputed that the defendant County Council is the owner of the relevant lands.
Contentions of the parties.
7. The plaintiff says that the defendant, in the course of a huge road building project, is about to contravene s.14. Specifically, and without limiting their contentions in any way they say that the defendants are admittedly about to remove the revetments of a medieval fosse. They say that this, together with the other remains of Carrickmines Castle, is a “national monument” and that interference with it is a criminal offence under s.14 of the 1930 Act. They seek the relief claimed to prevent this unlawful Act.
8. The defendants say they will dispute that the relevant remains of Carrickmines Castle are a national monument, or part of such a monument. However, they concede that an arguable case has been made for the view that they are a national monument. They say that no case “can now be made, by virtue of the efflux of time, and to the continuation of licensed excavation to near completion”, for the relief the plaintiffs claim. They contend that the Minister has already exercised an independent function under the Acts by granting a licence under s.26 of the National Monument Act, 1930, for excavation and by doing so has evidenced his consent in writing. They say that the plaintiffs have been guilty of delay and that the balance of convenience hugely favours the local authority especially having regard to the considerable expense which would or might be incurred if work is stopped. They dispute the adequacy of the plaintiffs’ undertaking as to damages.
A National Monument?
9. As noted above, the defendants concede that an arguable case has been made out for the proposition that the relevant remains at Carrickmines constitute a national monument, though they deny that in fact they do so. This rather odd position was necessitated by the present state of the evidence in the case. In my view it is of some relevance in the assessment of the strength of the case to consider briefly what that evidence is.
10. The case made by both parties relies heavily on expert evidence, that of Dr. Sean Duffy FTCD for the plaintiff and that of Ms. Valerie J. Keely, proprietor of Valerie J. Keely Ltd. Archaeological Consultants, on behalf of the defendant. Dr. Duffy’s affidavit asserted in strong terms that the archaeology on the relevant site “is a national monument”. Furthermore, at paragraph 27 of his affidavit he referred to the fosse where the revetments previously referred to are found and said that “If the only feature found at Carrickmines was the fosse and the other parts of the defensive structure, such remains would constitute a national monument within the meaning of the national monuments legislation. This elaborate defence structure is unique in Ireland and unknown in Britain or continental Europe”.
11. Furthermore, the first quoted averment was preceded by eleven paragraphs of material supportive of the conclusion quoted. Moreover, at the beginning of his affidavit Dr. Duffy stated specifically, by way of flagging, that he intended to offer an opinion as to the status of the archaeology on the site in terms of the National Monuments Acts.
12. Against this background it is in my opinion remarkable that Ms. Keely in a lengthy and closely reasoned affidavit in which she takes detailed issue with some quite minor points in Dr. Duffy’s affidavit, does not address this central question at all. On the contrary, she goes into considerable detail about the surveys carried out by her firm over the past ten years on behalf of the defendants and the excavations carried out by the firm in the period between July, 2000 and January 2003. It is stressed that all of these excavations were carried out under the terms of a licence pursuant to s.26 of the National Monuments Act. In fact, s.26 of the Act is headed “Restriction of excavations for archaeological purposes”. It provides that a licence is required before any person can excavate in or under land “for the purpose of searching generally for archaeological objects or of searching for, exposing or examining any particular structure or thing…”. In the course of argument in this Court it was accepted, as apparently was not in the High Court, that the existence of a s.26 licence was a neutral factor and did not dispense one from obtaining a s.14 consent if one wanted to remove or alter wholly or in part a national monument.
13. Nor do I think that the finding of the High Court judge: “Section 14 of the National Monuments Act, 1930 has to be read and assessed with all the work carried out to date, in context of the reports and respective duties of “Duchas and the Minister”, can be supported as a statement of the law. It appears to me that the requirement of s.14 is a freestanding one. Equally significantly, the powers of the local authority and the Minister in considering whether to grant the joint consent referred to in the Section are severely limited in a way that Duchas and the Minister are not limited in other contexts.
14. The Act of 1930 defines the term “monument” and there is no doubt that – and it has been conceded – that the Carrickmines remains constitute a monument. It goes on to define “national monument” as “a monument or the remains of a monument the preservation of which is a matter of national importance by reason of the historical, architectural, traditional, artistic or archaeological interest attaching thereto…”.
15. Plainly there is scope for differences of opinion as to whether the preservation of any particular monument is a matter of national importance. But it is essential to the resolution of the present case to note that the strongly expressed and closely argued conclusion of Dr. Duffy to the effect that it is a national monument is uncontradicted by any expert evidence. It must therefore be accepted for the purposes of the present application. It is also difficult to close ones eyes to the fact that a committed expert in a uniquely good position to form a view on this topic, Ms. Keely, has omitted to express any view on this topic on affidavit. This, although she takes issue in a pointed and trenchant manner with other, much less significant, opinions of Dr. Duffy.
16. Insofar as there is any challenge to the expert qualifications of Dr. Duffy in the relevant area, I consider them fully and modestly answered in paragraph 2 of his replying affidavit.
17. Accordingly, I believe that the Court must approach this application on the basis that there is no issue raised, on the present state of the evidence, as to whether or not the relevant site is a national monument. This does not preclude the defendants from taking issue with this proposition at any trial, but for present purposes we must assume that the premises are a national monument and (which is undisputed) that it is proposed to remove or alter it without the consent required by s.14 of the National Monuments Act, 1930, as amended. This provision is part of the law of the land which the Court is bound to uphold.
18. The defendants affidavits are also silent on the significant points as to whether the question of the monuments possible status as a national monument, or the possible need to seek s.14 consent, was ever considered by them.
Standing of the plaintiffs.
19. It was argued by the defendant that, assuming the site to be a national monument, s.14 created a public and not a private right, which the individual plaintiffs had no standing to enforce. Moreover, the Section was a penal one, creating an offence and this must be regarded as the sole method of enforcement.
20. There is learned discussion on the rights of an individual to maintain an action for breach of a public right in Hogan and Morgan “Administrative law in Ireland” 3rd edition pp. 758 – 764, where the evolving state of the law on this matter is traced. However, for the purposes of this interlocutory application I consider it indisputable that an arguable case for the plaintiffs standing has been established. In The Attorney General (at the relation of Frank McGarry and Ors.) v. Sligo County Council [1991] 1 IR 99, relief was granted against the development of a dump in Sligo inter alia on the basis that to do so would be to contravene s.14 of the 1930 Act. Although this was a relator action, the individual plaintiffs had been granted an interlocutory injunction before the Attorney General became party to the action. Moreover, McCarthy J. who gave the judgment of the Court stated that “… I am not to be taken as supporting or otherwise the apparent view of the High Court Judge that it was necessary to bring these proceedings as a relator action”. In fact, the individual plaintiffs undertook at the interlocutory stage to seek the authority of the Attorney General to institute relater proceedings in respect of certain public rights, and it is open to these parties to do so as well.
Laches and balance of convenience.
21. These points were trenchantly urged by the defendant. They emphasise, firstly, the importance of the project on which they are engaged, the South Eastern Motorway, being the final part of the M50 ring motorway around Dublin. It is part of Euro Route EO1, which will eventually extend from Rosslare via Dublin and Belfast to Larne. This motorway consists of ten kilometres of dual two lane motorway, four motorway interchanges, sixteen bridges and two underpasses. It is a strategic element of the national road network. The Dunlaoghaire-Rathdown County Council South Eastern Motorway scheme of 1997 was approved by the Minister for the Environment in 1999. The Council entered on the lands in August, 2000 and expect to complete it in 2005. An environmental impact statement was prepared on or about the 19th October, 1998. Ms. Valerie Keely’s consultancy has been employed on the scheme since 1992 and has proferred eight archaeological assessment reports. Carrickmines Castle was at all times regarded as an important archaeological site, even before the excavations and was recommended for investigation. The approach favoured by the environmental impact statement was to “resolve” any newly discovered archaeological features by excavation and recording in accordance with proper archaeological practice. Other archaeological aspects were preserved. Concerns such as those of the plaintiffs, it was said, should have been raised at a much earlier stage.
22. It appears that in July 2002 An Taisce submitted a proposal for, amongst other things, the movement of the line of the motorway in order to preserve archaeological features at Carrickmines. The defendant and the National Roads Authority in response produced a report entitled “Preservation of Archaeology at Carrickmines” in August, 2002. The Minister for Transport considered this and “in around September 2002” he approved of the scheme currently being followed.
23. On the 30th September, 2002 the solicitors for the plaintiffs wrote to the defendant raising a number of issues in relation to the scheme, including the s.14 issue. The date of this letter is significant because it was conceded on the hearing of this appeal that, having regard to the date on which the Minister approved the report of the defendants and the National Road Authority, that letter was timely. Accordingly it would appear that the allegation of laches must focus on the period since then. The letter also asked for confirmation of the legal status of the Minister for Transport’s then recent proposals (the approved report) to reduce damage to archaeological remains.
24. The letter specifically called on the council and the National Roads Authority “firstly to confirm by return that the consents referred to above have in fact been obtained and the statutory provisions complied with in full and secondly, to furnish copies of the requisite consents”.
25. This letter was replied to on the 7th October, by Messrs. McCann Fitzgerald solicitors for the defendant. This letter first made the point that the defendant’s contractor had entered the site, not for the purpose of carrying road development works but for the purpose of carrying out archaeological works approved by Duchas, under an archaeological licence made pursuant to the National Monuments Acts. This was the s.26 licence. The defendant’s solicitors letter then summarised the changes of statutory function, detailed earlier in this judgment, and said:-
“We are seeking detailed instructions on the specific points raised by you and will respond in due course but wish to note for the record that the works to be carried out on behalf of Dunlaoghaire-Rathdown County Council will be done with the full approval of the relevant government department, that is the Department of the Environment and Local Government”.
26. The letter ended by reiterating that “as indicated above we will communicate further with you when we have received full instructions from our clients on the matter”.
27. The correspondence rested there until the 23rd January, 2003, which was a few days before the completion of the archaeological excavations by Ms. Keely’s company. On that day, the plaintiffs solicitors wrote again to the defendant and the National Roads Authority stating that their clients understood that the defendants intended to enter “that part of the site not already being utilised for the purposes of the works shortly, on completion of the archaeological excavation, for the purpose of carrying out road development work …”. They went on to say that the defendants “have failed to confirm whether an appropriate written consent has been obtained for the carrying out of works, which works will injure and/or interfere with the National Monument” which they said was required under s.14 of the 1930 Act as amended. They again threatened proceedings. Shortly after this a number of persons, including one of the plaintiffs, trespassed on the site with a view to preventing works on the fosse. This led to injunction proceedings in which the current defendants were plaintiffs. These were apparently resolved by undertaking and there is now no trespass or occupation on the site. The present proceedings were instituted by a plenary summons issued on the 5th February, 2003.
28. It thus appears that the objection that the works required consent under s.14 was raised by the plaintiffs more than four months before the proceedings were instituted. At that time, as the defendants correspondence makes clear, their contractors were not on the relevant part of the site for road building purposes, but in connection with further archaeological works which did not conclude until the 26th January, 2003. It would therefore have been open to the defendants then to apply for the consent under s.14 if they thought it necessary or prudent to do so or positively to decide not to do so and inform the plaintiffs of this, leaving them to proceed as they thought fit. Given that the archaeological works on the site were to proceed for a further period of just under four months from the 30th September, there was ample time to take either of these courses without prejudice to road works on the relevant part of the site. The County Council had been asked in terms whether they had a s.14 consent, and if so to produce it. They did neither of these things but said, through their solicitors, that in relation to these specific points they would “respond in due course” and “communicate further with your when we have received full instructions from our clients on the matter”. This was never done.
29. I cannot see, in that sequence of events, evidence of laches on the part of the plaintiffs. There was a clear opportunity to resolve the issue of whether s.14 consents were necessary or not, and if necessary to apply for such consent, without interfering with the road building programme, within the period when the site was still in the hands of the archaeologists. In this connection, I note that the defendants consultants obtained additional excavation licenses covering first a period of four week commencing on the 25th November, 2002 and, secondly a period of four weeks commencing on the 15th January, 2003.
30. The defendants solicitors did make the point that everything they were doing or intended to do had the approval of the Department of the Environment and Local Government. But this was not approval under s.14 and specifically was not a consent to remove or alter a national monument or any part of it. It was approval under s.26 as far as archaeological digging was concerned and presumably under the Roads legislation as far as the proposed road building was concerned. Running through the defendants submissions on this appeal was the suggestion that it was pointless to complain about the lack of a s.14 consent. The written submissions quote Dr. Duffy’s affidavit where he stated, in support of the view that a s.14 licence was required that “it is appropriate that the Minister and his officials, being independent of the County Council be given the opportunity to advise on the issues in the context of an application for consent”. The Council then said:-
“The responsible Minister/Duchas has exercised its independent function under the Acts by granting the appropriate consent, by way of licence under s.26 of the Acts”.
31. This, it seems to me, amounts to a suggestion that a licence under s.26 could in some way, in law, do duty for a consent under s.14. This ignores the essential facts, firstly that what is authorised under a s.14 consent (including removal or altering a national monument) it is different from what is authorised under a s.26 licence, and secondly, that the Minister in considering whether to consent under s.14 as amended is limited to quite a narrow set of criteria which do not appear to constrain him in any other capacity.
32. If, in addition, there is a suggestion that it would be pointless to seek s.14 consent because the Minister, having approved the road alignment and having granted the s.26 licences, would be virtually bound to grant the s.14 consent, I would reject that view entirely. Firstly, it is incidental that the Minister for the Environment now discharges the functions, in relation to giving consent under s.14, which were formerly to be discharged originally by the Commissioners of Public Works and subsequently by the Minister for Arts, Culture and the Gaelteacht. No doubt it is a somewhat odd position that a Minister with an interest in the road building programme is the person who requires to give consent under the National Monuments Act, even in relation to a monument whose removal or alteration in whole or in part is proposed for road building purposes. But the Court must presume that the Minister would correctly direct himself, if asked for consent under s.14, that he was then discharging a freestanding statutory function to which many of the considerations which properly influenced him in other capacities were irrelevant or improper to consider. Some might think it better if the function of deciding on an application to remove or alter a national monument in whole or in part was decided by another authority but we must take the statutes as we find them.
Alternative remedies.
33. The defendant argued that, if the plaintiffs are successful in the end, damages will be an adequate remedy for them. They also argue that the Statute provides a remedy for breach of s.14 – criminal prosecution, and the Court should not impose another remedy in the form of an injunction.
34. The plaintiffs do not seek damages in the plenary summons. This is surely realistic, for the claim is to assert a public right and not a private one. Their personal connection with the matter is as citizens. The Attorney General v. Sligo County Council has already been cited: there, a private action by the plaintiffs individually proceeded in tandem with the Attorney General’s proceedings at their relation and no suggestion of an adequate remedy in damages was made. Here, the plaintiffs do not allege they have suffered any substantial individual compensable harm. To use the old terms, they claim they will suffer injuria but only national domnum. Damages are not so much inadequate as irrelevant to their cause of action.
35. The McGarry case also concerned s.14, inter alia, and no suggestion was made that the availability of a criminal remedy prevented injunctive relief. This is surely realistic. The imposition of criminal penalties on a defendant proved to have contravened s.14 will not restore the status quo ante.
Balance of convenience and financial loss.
36. This matter is addressed in the affidavit of Mr. O’Hare, on behalf of the defendants, especially at para. 18. He says:-
“I say that the estimated cost to the council arising from the disruption and delay will be in the region of between €50,000 and €100,000 per week and the contractors claims for disruption to the road construction programme due to the extension of the time allowed for archaeological excavation could increase costs further and in this regard the tender price for construction of the South Eastern Motorway was €144,000,000”.
Later he says:-
“Any further delay in the Council’s contractor taking possession of the site will cause great prejudice to the Council and give rise to significant losses under the contract as previously set out. In addition, there is urgent public need in the interests of the common good that the scheme proceed to completion at the earliest possible date”.
He goes on to refer to the importance of the scheme and the disruption it causes to already overcrowded routes. I have no doubt that, as Mr. O’Hare says, the scheme is one of the largest and most important infrastructural schemes in the history of the State.
37. He goes on to take issue with the adequacy of the plaintiffs undertakings as to damages.
38. These are important and weighty matters, very proper to be considered by the Court in an application of this kind. But in order to be decisive in terms of the balance of convenience on this application they must be specifically related to the relief actually sought. I do not think that the defendants averments do this with sufficient precision. It is stated that delay in the motorway project would be expensive and more generally prejudicial, and there is no doubt that this is so. But there is no statement as to the precise way in which this claimed injunction and the proceedings commenced will delay the motorway. Nor have the defendants advanced any precise legal or factual basis for the losses they say will be incurred should an injunction be granted. The contract with the contractors has not been produced nor any basis of calculation or estimation suggested. The mention of the huge sum of €144,000,000 as the contract price of the South Eastern Motorway is, no doubt properly, calculated to make any court hesitate on the threshold of interlocutory relief. But neither this figure nor the much smaller still very significant weekly figure quoted have been related in any way to the actual scope of the proposed injunction. Specifically there is no averment that it would cause total stoppage of works that there is no other work capable of being done by the contractor or that, by virtue of any clause in the contract, the level of restriction constituted by the claimed injunction will trigger any particular claim by the contractor. If any of these things were features of the case, Mr. O’Hare is certainly in a position to know it. In my view it is not sufficient, either from the point of view of establishing a balance of convenience or attacking the undertaking, simply to mention huge sums of money without relating them either to the specific relief sought or to the specific liability for which the plaintiffs, by virtue of their undertaking, may become responsible.
Criteria for relief.
39. It remains to consider the above facts and findings in the context of the criteria for the grant of interlocutory relief. These have been authoritatively expressed in Campus Oil Ltd. v. Minister for Industry and Energy [1983] IR 88 and in a line of cases proceeding from it, of which the defendant has particularly referred to Clane Hospital Ltd. and Ors. v. Voluntary Health Insurance Board (High Court Quirke J. unreported 22nd May, 1998). The first question is as to whether the applicant has established a fair and bona fide question for determination. For the reasons set out above it is clear that they have done so. In view of the defendants failure to challenge their principle assertion in relation to the applicability of s.14 I would also consider that they have met the higher criterion for which the loosing party in Campus Oil contended, a probability of success at the trial. That, at least, is so in the present state of the evidence, though it must be recalled that the defendants stated that they would challenge at trial whether the site was, or included, a national monument.
40. As to adequacy of damages, I cannot see how, in a case where no damages are claimed and where the right asserted is a public right, it can be said that damages would be an adequate remedy to the plaintiffs.
41. The balance of convenience is said by the defendants to be a critical factor in this case. Clearly, the relief sought by the plaintiff is the preservation of the status quo, and this is normally considered to be an important aspect of the balance of convenience. The defendants say however that the plaintiffs have come very late and that the relief sought would involve a disproportionate interference with a huge public project with consequent expense and prejudice.
42. I stress that these matters are to be assessed on the evidence presented by the parties and not in an intuitive fashion. There are, in my opinion, grave deficiencies in the defendants evidence on the balance of convenience. There is no doubt that the scheme is a huge one, and an important part of our infrastructural development. The plaintiffs are not concerned to deny this. But there has been a failure to establish that the relief sought would interfere with the scheme, would give rise to a liability to the contractors or to anyone else or would prevent any work on the motorway continuing. The question of balance of convenience is a most important one in considering a large civil engineering project. But the purported damage and expense must, in my view, be established and not simply invoked. I have already referred to the freestanding mention of the huge sum of €144,000,000, in the affidavit of Mr. O’Hare. This sum is in no way related to the injunction claimed and Mr. O’Hare does not suggest that it is. The mere mention of an enormous sum of money as the total cost of the scheme does not in any way constitute evidence as to the balance of convenience of this particular case. No doubt there will be inconvenience rising from the grant of an injunction but the defendant has not adduced evidence from which one could rationally assess whether this will be of a trivial, or of a near catastrophic nature. If there is any question of the latter, one would expect that detailed evidence of that proposition would be available.
43. This point is also relevant, it seems to me, to the objection taken to the adequacy of the undertaking as to damages. The plaintiffs have offered such an undertaking and have not concealed that they are people of relatively modest means, being a heavy goods vehicle driver and a student respectively. But the attack on the undertaking as to damages, like the attempt to influence the balance of convenience, has not been supported by any sufficiently convincing statement of the actual costs of the present injunction.
Interlocutory relief.
44. It is important to emphasise that, in dealing with an interlocutory motion, the Court is not finally deciding any factual or legal aspect of this controversy. On a full hearing the evidence may be different and more ample. The law will be debated at greater length and, we are told, the question of the site’s national monument status will be put properly in issue, as it has not been here.
45. The difficulty for a court in dealing with any case on an interlocutory basis is that there is an ever present risk, either in granting or in withholding relief, of doing an injustice to the party who succeeds in the end. One has to balance the risks of injustice to the respective parties. In this context it is significant that, if no relief is granted, the Court will be effectively deciding the issue by inaction, since the apprehended interference with the alleged national monument will be complete long before the action can be tried.
46. The sole basis on which the plaintiffs can make a case approaching the strength required for interlocutory relief is in relation to the absence of a s.14 consent. The Court is not finally deciding that a s.14 consent is necessary, but on the present state of the evidence that appears to be so. This state of affairs is an essential element of the plaintiffs claim to relief. Accordingly it seems appropriate to grant relief restraining until further order the actions referred to in para. 1 of the Notice of Motion but with the addition of the words “without a valid consent under s.14 of the National Monuments Act, 1930 as amended”. There will be liberty to apply to the High Court. If it transpires that a consent under s.14 is sought and granted one would expect such an application to be made.
Templeville Developments Ltd v Leopardstown Club Ltd
High Court, December 12, 2003, O’Sullivan J.
JUDGMENT of O’Sullivan J. delivered on the 10th day of December 2003
The first defendant owns and operates a racecourse over a large tract of land at Leopardstown, County Dublin. The plaintiff, by lease of the 5th June, 1998 holds part of these lands upon which are constructed, inter alia, a large and complex sports facility, several outdoor tennis courts, indoor tennis courts underneath two air filled domes and ancillary buildings. They also enjoy, in common with the defendant, the right to have their patrons park their cars in two identified car parks at all times and on “race days” (approximately twenty two per annum) on further car park or parks designated by the defendant and on non-race days on a parcel of land herein after called the yellow hatched land which lies to the south of the complex of buildings just referred to and to the north of the motorway CPO take acquired or to be acquired by the second defendant and already anticipated in the lease of 1998. The yellow hatched lands are defined so as to exclude the area affected by the CPO and also so as to exclude an area to be identified and known under the 1998 lease as the “new site”.
The “new site” was intended to be an alternative site to accommodate the plaintiff’s structures and tennis courts either built or to be built which would be
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affected by the then expected but as yet to be determined area of the proposed motorway take.
On the same date in 1998 the parties, aware of the impending compulsory purchase order of the second defendant and that it would in all probability affect the yellow hatched area and conceivably the entire or a significant amount thereof, entered into a supplemental licence agreement intended to be temporary governing the plaintiff’s rights to develop its sports facilities including the air filled Domes to cover proposed tennis courts, outdoor tennis courts and car parking in the context of the impending CPO. The essential idea behind the licence agreement was that any structures already built by the plaintiff under the lease affected by the CPO take would have to be moved onto the “new site” at the expense of the licensor which would also have to accommodate those of the plaintiff’s yet to be constructed tennis courts which it was entitled to construct under the lease.
I will return with greater precision to the arrangements in the lease and in the licence insofar as is necessary for this interlocutory application at a later point.
As it transpired the CPO take of the second defendant did affect the yellow hatched area by encroaching into it from the south and the motorway plans included a bridge over the proposed motorway servicing a large car park to the south of the motorway and accessed from the north via a ramp which, it came to the attention of the plaintiff shortly before the initiating of this interlocutory application, will extend beyond the second defendant’s acquisition line into the yellow hatched area by some distance and which will displace a number of car parks marked on a hard surface and shown on photographs in the course of the hearing before me. This number appears to be somewhere in the mid to high twenties and the defendant accepts that it will have to provide alternative car parking spaces for the plaintiff’s patrons to enjoy, in
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common with the defendant’s patrons, on the “new site”. It also came to the attention of the plaintiff in October (the injunction application having been adjourned by consent from July last in the context of the defendant’s assurance that the proposed works referred to were not imminent at that stage) that the access ramp will be supported by a solid substructure with the result that there would be no access under it eastwards from the west into the remainder of the yellow hatched area over which the plaintiff claims to enjoy parking rights (in common with the defendant).
Under the licence agreement as already indicated the plaintiff was entitled in the events which have happened to the benefit of a “new site” sufficient to accommodate yet to be developed structures which it may build under the lease of 1998 comprising seven outdoor tennis courts and also sufficient to accommodate its joint car parking rights on the balance of the yellow hatched area remaining apart from the motorway take and the area of the “new site”. The licence provided that any disagreement in relation to the proposed new site should be referred to arbitration. The defendant has identified an area for seven tennis courts situate in the balance of the yellow hatched area to the east of the existing dome number two and the existing (4) outdoor tennis courts already constructed on the yellow hatched area and there are disputes between the parties in relation to this proposed “new site”. These are to be referred to arbitration and it is further agreed between the parties that if they are unable to reach agreement about the specific questions or some of them to be referred to arbitration it may be necessary that that particular matter should be dealt with by the High Court. Also referred to arbitration will be the question whether under the licence the defendant is entitled to have the second defendant as its agent build the ramp, described above, over an area which is outside the second defendant’s CPO
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take and which affects portion of the yellow hatched area over which the plaintiff has joint car parking rights.
The result of the arbitration, accordingly, will be a determination whether the proposed “new site” offered by the defendant pursuant to its obligations under the licence satisfies those obligations and also whether it is entitled to build the access ramp in the manner proposed and described above.
The instant application is for an interlocutory order to restrain the construction of the proposed ramp pending the outcome of this arbitration.
The plaintiff submits first that it has raised an arguable case, at least, to say that the defendant is not entitled to construct a ramp which firstly intrudes over some twenty five or thirty of its car parks to which it has a joint right, and secondly which prohibits access into the yellow hatched area over which it has also rights for car parking. These rights are, it is submitted, established under the lease and are clearly intended to survive the temporary arrangements created by the licence. It is further submitted that damages will not be an adequate remedy because it will be impossible for the plaintiff to distinguish at the trial any reduction in its business referable either to its own less attractive car parking facilities in the event that the ramp is constructed on the one hand, or on the other, competition arising from a recently established sports facility in the vicinity.
It is further submitted that such estimate of loss as is advanced by the defendant in the context of its case that any delay in the construction of the ramp might cost it thousands of euro per week (the situation apparently being that the overall motorway project is being carried out by the well known construction company, Ascon and in regard to this the plaintiff says that this is an ascertainable sum unlike the damage which it will suffer and one which if necessary can be met by
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a payment pursuant to the plaintiff’s undertaking as to damages. The plaintiff submits that if the court is satisfied that there is a substantial question of law to be decided, I should first consider whether the plaintiff if now refused could be adequately satisfied by an award of damages. If so then it is accepted that normally an injunction will not be granted no matter how strong the plaintiff’s claim might be. On the other hand if damages would not provide an adequate remedy it is submitted I should next consider whether if the defendant were now enjoined and subsequently established a right to build the ramp it would be adequately compensated under the plaintiff’s undertaking as to damages. Once again if damages were to be an adequate remedy for the defendant on this hypothesis there would be no reason on this ground it is submitted to refuse the interlocutory injunction, and an injunction should issue without any further consideration of the balance of convenience.
The plaintiff submits that in the present case once it is accepted that there is a substantial question to be tried it is clear that damages will not be an adequate compensation for the plaintiff’s loss which is not capable of computation as identified above. On the other hand damages would be an adequate compensation for the defendant’s loss if now enjoined from building the ramp if it is subsequently held that it is entitled so to do because of the plaintiff’s undertaking as to damages and the readily quantifiable character of the losses identified by the defendant.
The plaintiff further submits, however, that if contrary to the foregoing I consider that I should move on to weigh up the balance of convenience in this case, that too clearly shows that the injunction should be granted. Such rights as the plaintiff enjoys over the balance of the yellow hatched area will survive the temporary licence agreement and continue for the remainder of the thirty five year term of the 1998 lease: it is unlikely that an arbitrator would make an order directing the removal
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of an already constructed ramp and the construction thereof would therefore permanently inhibit and curtail the joint car parking rights of the plaintiff into the balance of the term of the lease. On the other side, it is said, the defendant would merely be delayed in constructing a ramp accessing the bridge over the proposed motorway and if appropriate can be adequately compensated for this delay.
In response to the foregoing the defendant submits that the instant application is unmeritorious. It is the second attempt to bring such an injunction, the real purpose of which is to force the first defendant into yielding a more favourable agreement in relation to the car parking and other facilities at Leopardstown than the plaintiff is entitled to. A first attempt at an injunction was brought when the second defendant’s contractor’s vehicles first entered the site in January, 2002 and were allegedly encroaching on the plaintiff’s rights on the yellow hatched area and also interfering with and depositing mud and debris on the vehicle access ways within the site. It is alleged that these proceedings were abandoned (this is strongly denied by the plaintiff). It is further said that the application is grounded on a fortuitous mistake, namely the fact that the original take line of the CPO would have meant that the access ramp was too steep and therefore the ramp had to be extended beyond the take and into an area in respect of which the plaintiff was able to make a technical argument that it eliminated car parking rights and impeded access to further rights.
As part of the submission that this injunction application is really part of an overall strategy by the plaintiff to pressurise the defendant into conceding a more favourable deal on re-locating the plaintiff’s sports facilities, it is pointed out that the plaintiff is some nine months in arrears of rent in an amount of approximately €250,000.00. This was not denied by the plaintiff: rather it was pointed out that there
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were many disputes and disagreements in relation to this matter which should not be rehearsed here as they are not directly relevant.
It is further submitted that the plaintiff has not indicated a sufficient risk of damages at all and has indicated no credible apprehension of damage at least in respect of the balance of the yellow hatched area. In this regard it is pointed out that this area has been fenced off as part of the construction work requirements of the CPO for the last eighteen months or more and the plaintiff has not indicated any loss arising out of this curtailment of its access to the yellow hatched area nor has it attempted to provide itself with an alternative parking facility. The exterior flood lighting erected in this area by the plaintiff is for security purposes according to the defendant (the plaintiff says that this is to facilitate night time parking). The defendant submits that the reason why the plaintiff has been unable to point to any specific losses arising from its inability to access the yellow hatched area for car parking in the last year and a half is because there are plenty of other areas where its patrons park everyday. The defendant says that the plaintiff has sustained no credible loss whatsoever under this heading and therefore there is no need for an injunction to prevent such loss. With regard to the specific loss of twenty five or six car parking spaces under the foot print of the extended ramp the defendant accepts that the plaintiff will have to be compensated for this and submits that such compensation will be provided under the licence agreement whereby that issue is referred to arbitration. The defendant accepts that the plaintiff must be provided with additional car parking to substitute and replace these lost car parks and that issue will be or can be referred to arbitration under the licence agreement.
The defendant points to the background to the dispute and to the fact that there is an unambiguously worded arbitration clause and to the fact that the plaintiff refused
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to have these issues referred to arbitration for well in excess of a year while these proceedings were being processed and has therefore been delaying the resolution of this issue. Now it agreed at the last minute when this injunction application came to court to have these matters referred to arbitration. If the plaintiff had accepted the arbitration clause eighteen months ago then these matters would have been determined and there would now be no need for an injunction. This delay is merely a tactical ploy to put pressure on the defendant to yield a better agreement in respect of the new site than the plaintiff is entitled to achieve. Moreover, it is clear that an alternative access route can be provided for patrons of the plaintiff into the balance of the yellow hatched area even if the ramp is constructed but it is fair to point out that the plaintiff hotly disputes the viability of this alternative access route. The defendant submits that the whole difficulty arises out of the CPO and indeed the plaintiff has acknowledged as much in his affidavit and that it is clear that same was intended under the licence agreement to either curtail the plaintiff’s rights over the yellow hatched area or if there was a disagreement about it such difficulty should be referred to arbitration. The defendant disagrees that the plaintiff is entitled to a demise over the yellow hatched area or the balance thereof left over the CPO and the new site had been taken out of it as claimed by the plaintiff.
In reality the loss claimed by the plaintiff is de minimis in the overall context of the car parking available to it at Leopardstown and given that the defendant is obliged to compensate the plaintiff by providing equivalent or alternative facilities in the new site under the licence. It was also submitted that the evidence in relation to the ramp is that the original ramp which turned out to be too steep would itself have blocked off access into the yellow hatched area for the plaintiff’s patrons’ car parking but in this context counsel for the plaintiff asked that I would bear in mind that this
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evidence was produced in a last minute affidavit filed with liberty of the court by the defendant and that the plaintiff’s instructions on this point would differ with that conclusion.
Conclusions
Fair question to be tried?
The 1998 lease demises to the plaintiff inter alia
“The right to park motorcars and motor vehicles on non-race days on the parcel of land… cross hatched in yellow which does not form part of the new site and which is not affected by the CPO”.
Such is the description of part of the rights conferred on the plaintiff under Clause 2 of that lease.
Clause 2 of the licence provides inter alia as follows:
“And provided always (for the avoidance of any doubts), the parking rights conferred on the licensee under Clause 2 of the lease, which relates to the parts of land which is shown on map number 1 attached thereto and thereon cross hatched in yellow and which is not affected by the CPO will subsist in every respect beyond the grant and demise referred to above notwithstanding the provisions of Clause 3.11 hereof”.
(Clause 3.11 provided that on the expiration or earlier termination of the licence the licensee covenanted to cease to occupy and use the licensed area and to fully vacate the same and hand up possession thereof).
It seems to me that it is at least arguable that the lease conferred parking rights on the balance of the yellow hatched area which were acknowledged in the licence and intended under both instruments to survive the temporary existence and termination of the latter. In those circumstances in my view it must be likewise
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arguable that the plaintiff now enjoys rights over the balance of the yellow hatched area and is entitled not to have those rights imperilled or infringed. The parties are in the process of refining their agreement to refer to arbitration issues as to the adequacy of the proposed new site and also as to the entitlement of the defendant to build the ramp as now proposed. In my view the plaintiff has raised an arguable case as specified above and in compliance with the established jurisprudence in this regard I do not intend to say anything more about it given that the purpose of the plaintiff’s undertaking as to damages is to enable the court to avoid answering such a question at this interlocutory stage.
On the question of the adequacy of damages as a remedy for any loss that the plaintiff might sustain if I refuse to grant the injunction and hereafter it is established that the construction of the ramp has wrongfully interfered with the plaintiff’s rights it seems to me that there is force in the contention that the relevant period for consideration should be the balance of the thirty five year period dating from June 1998 because if the ramp is constructed as intended it is likely to be a permanent structure in respect of which there must be at least some doubt that it will ever be removed. I do acknowledge that the defendant has proposed an alternative access route for the plaintiff’s patron’s vehicles to access car parking in the balance of the yellow hatched area. This is a proposal which has been developed late in these proceedings and has been subjected to adverse criticism on behalf of the plaintiff. In my opinion the construction of the ramp is capable of curtailing the range of alternative car parking facilities to be made available to the plaintiff which curtailment I consider should be viewed as a potentially permanent diminution of the plaintiff’s car parking entitlements. This diminution may in the event be slight but it is not so slight in my view as to be unworthy of being weighed in the balance at this
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stage of these proceedings. I am also persuaded by the submission that it would be difficult if not impossible to quantify in damages the amount of any loss to the plaintiff arising because of this diminution in his car parking or alternative car parking entitlements and for this reason I do not think damages would be an adequate remedy for such loss as the plaintiff might sustain were I to refuse the injunction.
On the other hand I am satisfied that damages would be an adequate remedy for any losses which the defendant would sustain and that these would be an amount which would be capable of being met by the plaintiff pursuant to its undertaking as to damages.
In these circumstances it is appropriate that I grant the injunction sought and I purpose so to do: that is to say to make an order prohibiting the defendant or its servants or agents from constructing the ramp at the western extremity of the yellow hatched area pending the outcome of the arbitration referred to in this judgment.
I consider however that a substantial amount of the disputed rent arrears should be placed on joint-deposit with the parties’ respective solicitors or otherwise by agreement pending further order of the Court. The amount to be so lodged should be €150,000.00 and the proposed injunction should take effect from the date of such lodgement subject to the proviso that the amount be lodged before 31st December, 2003.
In reaching the foregoing conclusion I wish to make it clear that I am specifically following the authority of the Supreme Court judgment delivered per Blayney J. in Ferris v. Ward [1998] 2 I.R. 194 at 201/2 as follows:-
“In the circumstances what the court has to do is to look at the balance of convenience and the manner in which this should be approached is set out
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with great precision in the same judgment of Diplock L.J. in a passage immediately following that already cited:-
‘As to that, the governing principle is that the court should first consider whether, if the plaintiff were to succeed at the trial in establishing his right to a permanent injunction, he would be adequately compensated by an award of damages for the loss he would have sustained as a result of the defendant’s continuing to do what was sought to be enjoined between the time of the application and the time of the trial. If damages in the measure recoverable at common law would be adequate remedy and the defendant would be in a financial position to pay them, no interlocutory injunction should normally be granted, however strong the plaintiff’s claim appeared to be at that stage. If, on the other hand, damages would not provide an adequate remedy for the plaintiff in the event of his succeeding at the trial, the court should then consider whether, on the contrary hypothesis that the defendant were to succeed at the trial in establishing his right to do what was sought to be enjoined, he would be adequately compensated under the plaintiff’s undertaking as to damages for the loss he would have sustained by being prevented from doing so between the time of the application and the time of the trial. If damages in the measure recoverable under such an undertaking would be an adequate remedy and the plaintiff would be in a financial position to pay them, there would be no reason upon this ground to refuse an interlocutory injunction.
It is where there is doubt as to the adequacy of the respective remedies in damages available to either party or to both, that the question of the
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balance of convenience arises. It would be unwise to attempt even to list all the various matters which may need to be taken into consideration in deciding where the balance lies, let alone to suggest the relative weight to be attached to them. These will vary from case to case.’
I do not think that there is any doubt here as to the respective remedies in damages. It is clear that the receiver’s remedy would not be adequate: not because damages could not adequately compensate him, but because Mr. Ward could not be relied upon to have the financial means to pay the damages. On the other hand, I think there is no doubt that Mr. Ward would be adequately compensated by an award of damages since the loss he would suffer as a result of an injunction being granted would be entirely pecuniary and the receiver would be in a position to pay whatever damages he might be awarded. There is accordingly no reason to refuse the receiver an injunction. It follows that I would dismiss Mr. Ward’s appeal against the injunction granted to the receiver.”
I also wish to make it clear that if I am incorrect in reaching the foregoing conclusion and if had been appropriate for me to further consider the balance of convenience (which I understand to become appropriate only if there is a doubt as to the adequacy of the respective remedies in damages – in respect of which I entertain no doubt as already indicated) I would hold that the balance of convenience also favours the granting of an injunction because it seems to me that the construction of a permanent ramp as proposed by or on behalf of the defendant would bring about a situation unlikely to be reversed whereby the range of possible alternative car parking facilities that could be made available to the plaintiff by the defendant pursuant to its
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obligations under the licence would be diminished and that this would be an injustice not capable of being remedied in damages. On the other hand a temporary hold-up in the construction of the ramp would be a wrong which would be capable of remedy firstly in the sense that it could be compensated in damages as I have already held and secondly in the sense that no permanent harm would be done to the defendants’ rights.
The plaintiff’s motion for judgment in default of defence
The defendant says that the plaintiff should have agreed at once to arbitration and that the motion for judgment in default of defence was artificial and indeed an attempted ruse to trick the defendant into taking a step which would have disentitled it from proceeding to arbitration. The plaintiff says that the defendant is even now not ready to identify the issues for arbitration and that in any event there are certain issues apart from the arbitration issues which should be litigated in these proceedings.
In my opinion the plaintiff is not entitled to judgment in default of defence and I would dismiss the plaintiff’s motion with costs thereof to the defendant to be taxed in default of agreement.
With regard to costs of the interlocutory application for an injunction I will in the usual way reserve these to the trial judge.
Metro International SA v Independent News and Media plc
[2006] 1 I.L.R.M. 414 Clarke J. JUDGMENT of Mr. Justice Clarke delivered the 7th October, 2005.
1. INTRODUCTION
1.1 The third named plaintiff (“Fortunegreen”) is about to launch a free newspaper which it intends to call “Metro” and which it intends will be distributed by hand at busy locations in Dublin. Fortunegreen is a joint venture between the first plaintiffs (“Metro”) and Associated Newspapers Limited (“Associated Newspapers”). Metro is the parent company of the Metro International Group of Companies, which, it would appear, publishes 57 daily free newspaper editions under the name “Metro” in 81 cities in 18 countries across Europe, North and South America and Asia. Associated Newspapers similarly publishes and distributes a free newspaper called “Metro” in the United Kingdom in the 13 largest cities in that jurisdiction including London, Manchester, Birmingham, Glasgow and Edinburgh. On the evidence available at this stage it would appear that a similar method of publication and distribution is adopted both by Metro and by Associated Newspapers.
It is intended that Fortunegreen will publish, in Ireland, a similar free newspaper using the title “Metro”.
1.2 The second named plaintiff (which is a wholly owned subsidiary of Metro) holds a registered trade mark in Ireland in respect of a Metro device or stylised mark. That mark is registered under No. 219849 and was applied for in 1998. The device is a representation of the word Metro with the O depicted in the form of a globe. The registered device appears in the following form:
{Logo}METRO{Logo}
1.3 In fact the newspaper that Fortunegreen intends to publish, is likely to bear a masthead which is similar to those used by Associated Newspapers in the United Kingdom and which, it will be seen, differs to some extent from the registered mark. The United Kingdom masthead is in the following form:
{Masthead} Free METRO {Masthead}
1.4 The proceedings stem from the stated intent of the defendants (“Independent”) to launch their own free newspaper under the title “Herald Metro Edition”. In the
course of these proceedings Independent caused to be exhibited a copy of the
masthead under which their free newspaper is intended to be published and marketed.
It appears as follows:
{Masthead} FREE Herald Metro edition {Masthead}
1.5 Independent is, of course, the publisher of, amongst other prominent titles, the “Evening Herald” which, as was pointed out both in the affidavit evidence tendered
on Independent’s behalf, and in argument, is a newspaper which has been in publication for a century and is Ireland’s largest selling evening newspaper, selling an average of in excess 93,000 copies per day Monday to Friday. As can be seen from the above masthead the “Herald” logo (which appears in red on the original exhibit of the intended masthead), is borrowed directly both as to colour and typescript from the masthead of the existing “Evening Herald” newspaper.
I .6 It was also established in evidence that Independent has made use of the term “Metro” in describing certain editions of some of its newspapers or in relation to certain supplements or segments of such newspapers. It would obviously be inappropriate to reach any concluded view as to the extent to which it may be said that Independent has established a use of the term “Metro” in respect of its newspapers to the extent that it may have an effect on any of the legal rights involved in the dispute between these parties. Such a matter can only be resolved at the full trial of the action in this case. However at this stage it should also be noted that the plaintiffs, correctly in my view, draw attention to the fact that the apparent use of the term “Metro” by Independent in the past has been confined either to a relatively small (in size) description of a particular edition of an individual newspaper for the purposes of distinguishing it from other editions of the same newspaper or to describing individual segments or supplements of a newspaper rather than in respect of the principal title thereof. This latter fact is emphasised by an application which Independent has made for the registration of a trade mark comprising of the name “Metro” which is stated to be in respect of “newspaper supplements”. There does not, at this stage, appear to be any evidence of a previous use of the term “Metro” in what might be called the main title of a substantive newspaper.
1.7 It should also be noted that it is common case that the intention of Independent to publish its free sheet newspaper is, at least in significant part, a reaction to the proposal by Fortunegreen to publish its “Metro”. As is pointed out by Joseph Webb, the Deputy Managing Director of Independent, Independent “resolved that in the event that any third party began to publish a free sheet newspaper within the Dublin Metropolitan Area (Independent) would also do so, in order to protect its legitimate business interests and develop its existing titles, in particular the Evening Herald”. There is nothing, of course, inappropriate in Independent seeking to protect its legitimate business interests by launching a competing free newspaper to that contemplated by the plaintiffs. The issue in this case is as to whether it can do so making use of the term “Metro”.
1.8 In those circumstances the plaintiffs have commenced proceedings which contend, amongst other things, that by publishing and distributing a newspaper under such a masthead Independent would infringe the trade mark referred to above. The case has come before the court as an urgent application for interlocutory relief in circumstances where the plaintiffs wish to commence publication in very early course (that is to say within a small number of days) and where the stated position of Independent would appear to be that it would be their intention to publish their free newspaper as an immediate response to the publication by the plaintiffs of the Metro free newspaper. So far as the interlocutory application, currently before the court, is concerned the only basis upon which publication in that form is sought to be restrained is as an alleged infringement of the trade mark to which I have referred. While the plaintiffs general endorsement includes a claim in respect of an injunction restraining and damages for passing off and while Independent has contended in correspondence that it, in turn, may issue proceedings in respect of passing off as against the plaintiffs the only legal issue with which I am concerned at this interlocutory application is, therefore, the plaintiffs claim for an injunction in respect of what they contend would be an infringement of their trade mark.
2. SERIOUS ISSUE (THE TEST)
2.1 While there was some significant debate at the hearing before me as to whether special circumstances may apply in the consideration of an application for an interlocutory injunction in relation to trademark and passing off matters it was not contended that the basic questions which need to be addressed in such an application are those which have been established in relation to interlocutory injunction applications generally. The above debate, to which I will return, centres on whether the approach of the court in respect of certain aspects of the tests which have been developed for the grant or refusal of interlocutory relief may be somewhat different in such cases.
2.2 However it is clear that the first question which needs to be addressed, as always, is as to whether the plaintiffs have established a serious issue to be tried. In those circumstances it is necessary to consider the plaintiffs case for infringement. 2.3 Section 14(2) of the Trade Marks Act 1996 provides that:-
“A person shall infringe a registered trademark if that person uses in the course of trade a sign where because –
…
(b) the sign is similar to the trademark and is used in relation to goods or services identical with or similar to those for which the trademark is registered,
there exists a likelihood of confusion on the part of the public which includes the likelihood of association of the sign with the trademark.”
2.4 As was pointed out by McCracken J. in Smithkline v. Antigen Pharmaceuticals Limited [1999] 2 ILRM 190 the above section introduced a totally new concept into the definition of infringement (being the idea of “association”) which does not appear to have been considered by the courts in this jurisdiction. As was further pointed out by McCracken J. in Smithkline it is not for the court, at an interlocutory stage, to say whether there is, in fact, a likelihood of association of the defendants sign with the plaintiffs registered trade mark but it is necessary for the court to determine whether there is a serious issue to be tried in that regard. The relevant provisions of the Trade Marks Act 1996 were derived from the first council directive (89/104/EC)of the 21st December 1988 to approximate the laws of the member states relating to trade marks. Therefore in interpreting the provisions of the Trade Marks Act 1996 significant regard has to be had to the jurisprudence of the courts of the European Union in respect of the interpretation of the directive.
2.5 In that context it is of particular relevance to refer to Sabel BV v. Puma AG and Others (Case C – 251/95) where the Court of Justice in its decision had the following to say:-
“As pointed out in paragraph 18 of this judgment, Article 4(1)(b) of the directive does not apply where there is no likelihood of confusion on the part of the public. In that respect it is clear from the 10th recital to the preamble to the directive that the appreciation of the likelihood of confusion “depends on numerous elements and, in particular, on the recognition of the trademark on the market, of the association which can be made with the used or registered sign, of the degree of similarity between the trademark and the sign and between the goods or services identified”. The likelihood of confusion must therefore be appreciated globally, taking into account all factors relevant to the circumstances of the case.
That global appreciation of the visual, aural or conceptual similarity of the marks in question must be based on the overall impression given by the marks, bearing in mind, in particular, their distinctive and dominant components. The wording of Article 4(1)(b) of the directive – “there exists a likelihood of confusion on the part of the public”, – shows that the perception of marks in the mind of the average consumer of the type of goods or services in question plays a decisive role in the global appreciation of the likelihood of confusion. The average consumer normally perceives the mark as a whole and does not proceed to analyse its various details”.
2.6 Applying that test to the instant case it is necessary to ask whether there is a serious issue to be tried as to whether a global appreciation of the various relevant characteristics of the marks would give rise to the likelihood of confusion on the part of the ordinary consumers of the goods in question.
3. ASSESSMENT OF THE PLAINTIFFS CASE
3.1 In making such an assessment in the current case it is necessary to have regard, amongst other things, to the following factors:-
(a) the products in respect of which both marks are intended to be used would appear to be likely to be virtually identical being free newspapers concerned with the same broad range of material and distributed in largely identical ways;
(b) it is at least possible, having regard to the manner in which newspapers are generally recognised by and described to the public, that a newspaper title bearing a number of words in it’s name will be reduced in the common parlance of the marketplace to a single word. Therefore regard must be had to the possible manner in which consumers may actually identify newspapers of the type concerned;
(c) it is at least possible that, having regard to the fact that the defendants will continue to market and promote their “Evening Herald” newspaper, which will continue, as heretofore, to be sold, rather than distributed free, that it will be necessary in the marketplace for a distinction to be drawn between the traditional “for sale” Evening Herald and the free Herald Metro edition. In those circumstances it is possible, given that the word “edition” is unlikely to provide any adequate distinction, that the term Metro would become a significant distinguishing feature between the traditional “Evening Herald” and the free “Herald Metro edition”. In that context it is worth noting that the United Kingdom courts held in Guardian Media Groups plc v. Associated Newspapers Ltd (Unreported, 14 January, 2000 (High Court) and 20 January 2000 (Court of Appeal)) that the existence of two newspapers with different mastheads but with titles of “Manchester Metro News” and “Metro Northwest” respectively was likely to give rise to confusion sufficient to establish a serious issue to be tried as to passing off;
(d) It is common case, and is in fact the appropriate legal position, that the question of confusion must be judged as against the registered mark rather than any variation thereof that may actually be intended to be used by Fortunegreen in their publication. In that context it should be noted that certain of the distinguishing features of the registered mark (and in particular the global “O”) are not intended to be used.
3.2 Notwithstanding this latter fact it seems to me that I must necessarily conclude that there is a serious issue to be tried as to whether the above factors might lead the court to take the view, at trial, that there is a sufficient likelihood of confusion so as to meet the test for infringement. I must, therefore, conclude that the plaintiff has established that there is a serious issue to be tried.
4. ADEQUACY OF DAMAGES/BALANCE OF CONVENIENCE
4.1 In those circumstances it is necessary to turn to the question of the adequacy of damages and the balance of convenience. The approach of the court to these issues was fully but succinctly set out by McCracken J. in B & S Limited v. Irish Autotrader Limited [1995] 2 I.R. 142 which has the merit of being a case involving analogous issues concerning an allegation of passing off and which also relates to the titles of potentially competing publications.
4.2 At p. 145 McCracken J. set out a summary of the test to be applied in circumstances where it has been shown, as here, that there is a serious issue to be tried in the following terms:-
“1. An interlocutory injunction should be refused if damages would adequately compensate the plaintiff for any loss suffered between the hearing of the interlocutory injunction and the trial of the action provided the defendant would be in a position to pay such damages.
2. Should this test be answered in the negative an interlocutory injunction should be granted if the plaintiffs undertaking as to damages would adequately compensate the defendant should he be successful at the trial in respect of any loss suffered by him due to the injunction being in force between the date of the application for the interlocutory injunction and the trial, again assuming that the plaintiff would be in a position to pay such damages.
3. If damages would not fully compensate either party then the court may consider all relevant matters in determining where the balance of convenience lies but these will vary depending on the facts of each case.
4. It is normally a council of prudence, although not a fixed rule, that if all other matters are equally balanced the court should preserve the status quo.
5. Again where the arguments are finally balanced, the court may consider the relative strength of each parties case as revealed by the affidavit evidence adduced at the interlocutory stage where the strength of ones parties case is disproportionate to that of the other.”
As to the overall approach of the court McCracken J. went on to say at p. 146 that:-
“While Lord Diplock only used the phrase “balance of convenience” when considering the position if damages were not an adequate remedy for either party, I would be more inclined to the view that the entire test rests on a balance of convenience, but that the adequacy of damages is a very important element, and may frequently be the decisive element, in considering where the balance of convenience lies.”
4.3 The same test was applied by Laffoy J. in Symonds Cider and Another v. Showerings (Ireland) Limited [1997] 1 ILRM 481 while possibly, by inference, querying whether it was open to this court to have regard to the fifth item identified by McCracken J. (i.e. the possibility of assessing the strength of the case on the affidavit evidence in an otherwise equally balanced case) having regard to the judgment of the Supreme Court in Westman Holdings Limited v. McCormack [1992] 1 I.R. 151. Whether one views the above set of criteria as identifying a single test of the balance of convenience (of which the adequacy of damages is a potentially significant part) or as two separate tests whereby one first considers the adequacy of damages and only then moves on to weighing the balance of convenience, seems to be more a matter of semantics than substance in that it is clear from the judgment of McCracken J. in Irish Autotrader that in a case where the plaintiff can be adequately compensated in damages and the defendant is a mark for such damages the balance of convenience will inevitably favour the rejection of the application for an injunction.
4.4 It is also, perhaps, important to note the nature of the type of loss which must be assessed as to whether it might be compensatable in damages. As is pointed out by McCracken J. at item 1 of the test set out above it is the loss which would flow between an injunction being granted at the interlocutory stage on the basis of the plaintiff having established a fair issue to be tried up to the time of trial where that issue was ultimately found against the plaintiff. There are, of course, cases where even at trial damages would be an adequate remedy and where, in accordance with the established jurisprudence of the courts, an injunction will not normally be granted even though the plaintiff succeeds in establishing wrongdoing. There are, however, on the other hand, cases where the courts have traditionally not been prepared to award damages even though there is a sense in which any relevant loss could be calculated in monetary terms. Thus in many cases where a plaintiff alleges an infringement of his property rights the court will intervene by injunction where those property rights have been established rather than compensate the plaintiff for the loss of those property rights. To take an extreme but illustrative example a person who owns a house and whose house is occupied by others (assuming them to be a mark for the value of the house) would undoubtedly be entitled to an injunction to restrain such wrongful occupation even though there is a sense in which the aggrieved party could be fully compensated by being awarded as compensation as against a defendant of means the value of the house together with any additional sums that might be necessary to compensate for the disruption caused. Thus the mere fact that a property right (or indeed a diminution in such a right) can be valued in monetary terms does not of itself mean that damages for an infringement of that property right can necessarily be said to be an adequate remedy.
4.5 While it may well be that a temporary short term interference with a disputed property right (resulting from a failure to grant an interlocutory junction) may not give rise to quite such a clear-cut situation, it is, nonetheless, in my view important for the court to take into account in addressing the question of whether damages may be an adequate remedy (for the period identified by McCracken J. in Irish Autotrader) whether the nature of the matter which is alleged to be interfered with is the kind of matter which the courts have traditionally held should be protected by injunction rather than simply compensated for in damages. Clearly property rights are one such category which is the probable explanation for what was described by Costello J. in Mitchelstown Co-Operative Agricultural Society Limited v. Golden Vale Products Limited (Unreported, High Court, Costello J. 12th December, 1985), as the “axiom” that in most passing off actions damages are not an adequate remedy for a successful plaintiff. A passing off action is, of course, designed to protect the property right in goodwill. While addressing the question of whether that rule should apply on the particular facts of the case under consideration, Laffoy J. in DSG Retail Limited v. PC World Limited and Others (Unreported High Court, Laffoy J. 13th January 1998) having referred to Mitchelstown concluded that what she described as “the normal axiom in passing off actions, that damages would not be an adequate remedy for the plaintiff” should apply on the facts of that case.
4.6 Similarly in Dublin Port and Docks Board v. Britannia Dredging Company Limited [1968] I.R. 136 the Supreme Court, following Doherty v. Allman 3 App Cas 709 accepted that where it is established that a party has agreed to a negative covenant a court, at least at the trial of an action, will prima facie enforce that covenant even though it may be possible to measure the loss that would be attributable to its non performance in monetary terms. Thus enforcement of a negative covenant may be another type of case where the court leans in favour of enforcement by injunction rather than compensation.
4.7 In Irish Shell Limited v. JH McLoughlin (Balbriggan) Limited (Unreported, High Court, Clarke J. 4th August, 2005) I had regard to the latter above principle in respect of a negative covenant as a factor to be taken into account in the grant of an interlocutory injunction when taken in conjunction with the fact that, in that case, a permanent injunction might well have been of little benefit if obtained at trial having regard to the purpose for which the covenant concerned had allegedly being entered into.
4.8 While fully accepting, therefore, that the primary consideration of the court in assessing the adequacy or otherwise of damages at the interlocutory stage is the loss that might be sustained in the period between the refusal of an interlocutory injunction (or indeed its grant and the reliance by a defendant upon the undertaking as to damages given to secure it) and the trial I am nonetheless of the view that in assessing the adequacy or otherwise of such damages as a remedy the court can and should have regard to the question of whether the right sought to be enforced or protected by interlocutory injunction is one which is of a type which the court will normally protect by injunction even though it might, in one sense, be possible to value the extinguishment or diminution of that right in monetary terms.
5. APPLICATION TO THIS CASE
5.1 Applying that test to the facts of this case I have come to the following views.
The market for free newspapers of the type which both parties now seek to publish is, to all intents and purposes, unexplored in Ireland at this stage. While there is, in the affidavit evidence, reference to certain instances of free newspapers being published such cases are both limited and relate to a significantly different type of business than that contemplated by both of the parties to this litigation. It is important to remember, therefore, that any question of damages, to either side, will require to be assessed against a significantly speculative background. We are not here dealing with an established market where the parameters of that market can be readily established in evidence and from which there is, therefore, an appropriate starting point to assess the effects of either an injunction which is ultimately found to be inappropriate or a failure to injunct in circumstances where the plaintiff ultimately succeeds. It would appear to be common case amongst the deponents of the affidavits filed on both sides that the early period of the publication of newspapers such as those contemplated by both sides is of crucial importance. This must be particularly so where both would seek to enter what is in essence virgin territory. Even in cases where there is an established market there will always be difficult questions as to whether the business which the intruder (that is to say the party who intervenes in a wrongful fashion by passing off or infringing a trademark) has gained is the precise level of business which the incumbent may be said to have lost.
5.2 As was pointed out by Laffoy J. in DSG Retail.
“in any alleged passing off situation where the plaintiff has no control over the activity of the defendant, there would be a potential for unquantifiable damage to the plaintiffs goodwill and reputation and for the dilution of the value of the mark to the plaintiff”.
That situation is exacerbated in circumstances where there is a new and unexploited market with all to play for and where it would be virtually impossible to ascertain with any degree of accuracy how that market would, theoretically, have developed in the various different scenarios which the court might have to consider.
5.3 If the plaintiff succeeds in obtaining an injunction then it is clear that it is highly probable that it will go ahead and publish its edition of “Metro” in very early course indeed. In those circumstances two alternative scenarios arise in that Independent may choose to await the outcome of the trial before publishing its own free newspaper on the basis that it would then have certainty as to whether it could or could not use “Metro” in the title. Alternatively Independent might choose to publish a competing newspaper using a title which did not contravene the terms of the injunction reserving unto itself the right to incorporate Metro into the title should it succeed at the trial and should it then feel that it was to its advantage so to do. On the evidence it is clear that there is at least a possibility that in the event that the plaintiffs do not secure an interlocutory injunction at this stage they will decide, for commercial reasons, not to publish “Metro” until after the trial and whatever judgment may be delivered thereafter. Even with the best cooperation of all parties and the court it seems unlikely that effective publication significantly in advance of Christmas could be achieved in that scenario. In those circumstances the effect on both parties of commencing publication at a time which, on the evidence, would appear to be far from optimum would also need to be assessed. Given the stated position of Independent it seems unlikely that Independent would publish its edition in the event that the plaintiffs chose not to. On the other hand notwithstanding the refusal of an injunction the plaintiffs may choose to publish nonetheless and take their chances. In that eventuality they would have had the benefit of publishing at their chosen time but would have to compete with a rival newspaper which would, on the basis of the plaintiffs argument, be engaged in wrongful competition by reason of the contended for infringement of the trade mark. How any or all of the above scenarios would impact upon the possible growth of the market for free newspapers of the type contemplated by both parties makes any attempt to retrospectively ascertain losses attributable on either side to the presence or absence of an injunction all the more impossible of calculation.
5.4 In those circumstances I am satisfied that damages would not be an adequate remedy to compensate the plaintiff for the harm which it will establish if it succeeds at trial but has failed to obtain an interlocutory injunction. In those circumstances the plaintiffs would have been exposed to detriment either:-
(1) by having had to launch its product using its property right in its mark against the competition of a competing infringing mark with virtually unidentifiable consequences for the market as a whole (let alone its share of that market) in contrast to the situation where it ought, (on the assumption that it succeeds at trial) to have been permitted to launch in the market free of competition which involved the use, to a significant degree, of the term “Metro” in the masthead or title of that opposition publication; or
(2) by having to postpone its launch until after the trial.
Anyone with experience in commercial litigation will be all too well aware of the difficulty of establishing the extent of loss attributable to a wrongful interference with a contemplated business which is wrongfully damaged prior to or at the point of its inception.
While it is frequently true, and, as pointed out by counsel for Independent is the case here, that most new ventures will have carefully prepared projections as to the likely way in which the business will evolve, such projections are no more than their name implies. At least a projection for the continuation of an existing business is capable of being assessed as to realism having regard to the previous history of the business and the likely impact of any new factors on its performance into the future. Where the business has not yet got off the ground such assessments are necessarily all the more speculative. Where, as here, not only has the plaintiffs business not yet commenced but it is intending to establish itself in an as yet unexploited marketplace, the assessment of any consequence of a wrongful interference with it in its critical start up period would, in my view, extend beyond the speculative and difficult (though perhaps possible of calculation), to the entirely unquantifiable.
5.5 For that reason alone, I would not regard damages as being an adequate remedy for the plaintiff for detriment during the period between a failure to grant an injunction on this application and a successful trial. When also taking into account the fact that the plaintiff here seeks to support a property right which should not, in the ordinary way, be capable of being “bought off” by damages then I am strengthened in that view. It is therefore necessary to answer the first test identified by McCracken J. in Irish Autotrader by indicating that damages would not be an adequate remedy for the loss identified in that test and that an interlocutory injunction should not be refused on that basis.
5.6 However for similar reasons I agree with the submission made by counsel on behalf of the plaintiffs that it necessarily follows that the plaintiffs undertaking as to damages would not adequately compensate Independent, should it be successful at the trial, in respect of any loss suffered by it due to an injunction being in force between now and the date of trial. It again would be impossible to disentangle the way in which this new market would have evolved in the event that Independent had been permitted to compete with Fortunegreen by means of a publication giving prominence to the word “metro” as opposed to being confined by the injunction either to not competing at all or competing by the use of a differently titled publication.
6. THE BALANCE
6.1 This case, therefore, comes down to the third question identified by McCracken J. in that for the reasons indicated above I am satisfied that damages would not fully compensate either party and I must, therefore, consider where the balance of convenience lies considering all of the facts of the case.
6.2 It seems to me that in relation to this case it is of particular importance to seek to analyse the basis upon which either party might succeed at trial. If Independent succeeds at trial then it is almost certain that it will have persuaded the court that there was not a likelihood of confusion in the relevant marketplace between two free newspapers of similar target audience marketed and distributed in the same way and bearing the titles indicated above. As emphasised by counsel for Independent there is considerable prominence given in the title of Independent’s intended newspaper to the word “Herald” printed in the familiar way which almost all would associate with the existing “Evening Herald” newspaper. While not confined to this argument it is, of course, a significant part of Independent’s case that the principal identification or association of a notional consumer with the masthead of their intended publication will be with the Herald theme to a sufficient extent that there would be no likelihood of confusion between it and Fortunegreen’s competing paper. It would, of course, be inappropriate at this stage to express any view of the likelihood of that or any other arguments succeeding. However in order for the question of the “inconvenience” of Independent to arise it is, of course, necessary that it should succeed at trial and that the court would be persuaded by some such argument. On that basis the court would necessarily have come to the view that not only was the presence of the “Herald” title a significant factor in the Independent’s free title but a factor of such significance that it removed a likelihood of confusion between the “metro” portion of the full Independent title and the use of the same word as the totality of the Fortunegreen title.
6.3 If that should turn out to be the case then it necessarily follows that any loss that would be suffered by Independent by being deprived of the use of the therefore subsidiary term “metro” would be correspondingly reduced. It seems to me that counsel for the plaintiff was correct when he argued that Independent cannot have it both ways. Either the presence of the term “metro” in Independent’s will play a significant role in marketing and establishing the title with the public or it will not. If it will then it is hard to see how there would not be a significant risk, to the point of likelihood, of confusion. If it will not then it is hard to see how a significant weight can be attached to its absence.
6.4 That is not to say that Independent might well not suffer some loss and that that loss may not be capable of being calculated. If it were otherwise then it would not have been necessary to move on to the third of the tests identified in Irish Autotrader. As counsel for Independent pointed out it may be difficult for Independent to obtain any value from the use of the term “Metro” if it is only permitted to commence using it sometime after the launch of the competing paper. However I am now concerned with the weight to be attached to such potential loss. For the reasons indicated above it seems to me that in the event that Independent succeeds it will necessarily follow that the court will be satisfied that the presence of the term “metro” could not have been critical to the identification of the Independent publication. In that context it is relevant to note that, in his affidavit, Mr. Webb (of Independent) describes a product without the term “Metro” as “inherently less attractive”. That is as far as he puts it.
6.5 On the plaintiffs side there is, in my view, a more significant inconvenience. It is, of course, true to state that in the event of the plaintiffs succeeding and in particular if an early trial can be assured (an issue to which I will return) Fortunegreen will, from that time onwards be in a position where it will be able to exploit what will then have been established (on the assumption that it has succeeded at trial) to be its property right in its trade mark without further infringement on the part of Independent. However the evidence suggests that the start up period is critical. The evidence further suggests that the period in the immediate run up to Christmas is an especially important period from an advertising perspective and is thus of particular importance to a newspaper whose entire funding is intended to be derived from advertising.
6.6 For the reasons indicated earlier in the course of this judgment the precise effect on the marketplace as a whole and the share of Fortunegreen in it by virtue of being exposed to what would (in the event of it succeeding at trial) have been established to have been wrongful competition at a critical early stage is not only incalculable (for the reasons analysed above) but also likely to be of some considerable significance.
6.7 In those circumstances I am satisfied that while there would be an undoubted inconvenience on both parties the likelihood is that the consequences for Fortunegreen of not obtaining an interlocutory injunction at this stage but succeeding at trial would be significantly greater than the corresponding consequences for Independent of being injuncted pending trial but being released from that injunction upon being successful.
7. DISCRETION
7.1 I have also considered whether it would be appropriate to exercise the courts discretion in the same way as was done by the Courts of the United Kingdom in Nationwide Building Society v. Nationwide Estate Agents Limited (1987) FSR 579. In that case the Building Society of that name sought to stop certain estate agents from using the name “Nationwide”. Sir Nicholas Browne-Wilkinson (VC) required, before he was prepared to grant an injunction, that the Building Society itself undertook not to go into the estate agency field under the name pending trial. Otherwise he thought that the court would be used, as he put it, to tie one of the two competitors to the starting post while the other one gets rather more than a head start. That principle was approved and explained by the United Kingdom Court of Appeal in Guardian Media Group plc and Others v. Associated Newspapers Limited (decision of 20th January, 2000) which concerned, as it happens, a dispute similar to the one with which I am concerned and, indeed, involved at least some of the same personnel (in the shape of Associated Newspapers). However it seems to me that the situation is different in this case. To require the plaintiffs to give an undertaking that they would not commence publication prior to trial as a condition for the grant of an injunction would be to potentially deprive the plaintiffs of the opportunity to launch at a time of their choosing and with the benefit of such advantages as they may be able to obtain by so doing. It would not, therefore, create the even playing field contemplated in Nationwide if the net effect of the plaintiff being granted the interlocutory injunction sought, on terms, was that it was forced to postpone publication to what is, at the least arguably, a less advantageous start up time.
7.2 Equally the order sought by the plaintiffs would not preclude the publication of a competing free newspaper but would simply restrict, until trial, the title of such paper. Both scenarios obviously have the potential to represent an imbalance in favour of one or other party. However it is the very measurement of the relative weight to be attached to the respective imbalances which required to be analysed when assessing the balance of convenience. In those circumstances it does not seem to me that it would be an appropriate case to refuse an injunction in the exercise of the courts discretion.
8. THE RELIEF
8.1 For those reasons it appears to me that it is appropriate to grant an interlocutory injunction. The plaintiff has sought, at paragraph 1 of the notice of motion, an order restraining the defendant:-
“From infringing the second plaintiffs registered trademark METRO (stylised mark), registered under No. 219849, by making available to the public a free newspaper incorporating the word “Metro” in the name and masthead, or advertising such a free newspaper.”
8.2 Subject to one caveat I am satisfied that the plaintiff is entitled to an interlocutory injunction in those terms. Clearly the question of whether the presence of the word “metro” in the title would be such as was likely to cause confusion, is one of degree having regard to the prominence of the word. For the reasons indicated above I am satisfied that a masthead of the type proposed by the defendants is arguably an infringement sufficient to establish a serious issue to be tried. As no other, less prominent, use of the term “Metro” is proposed I am prepared to grant the plaintiffs an injunction in the terms sought. However it may be that it would be possible to devise a masthead which might include the word Metro but not in such a way as would give rise to a serious issue to be tried to the effect that there was any likelihood of confusion sufficient to establish infringement. It may, therefore, be that an alternative masthead coupled with undertakings sufficient to satisfy that it was unlikely that the word Metro would become synonymous with the Independent free newspaper might lead to a different conclusion as to whether there was a serious issue to be tried. It would be wrong and impossible for me at this stage to be prescriptive as to precisely what, if any, variation might suffice. In the circumstances it seems to me that the best course of action is to give Independent liberty to apply in the event that they wish to invite the court to vary the order made to permit publication under an alternative masthead which they may wish to urge upon the court does not give rise to a serious issue to be tried as to infringement.
9. EARLY TRIAL
Finally having taken the view that the plaintiff is entitled to an injunction it seems to me that in all the circumstances of the case it is incumbent upon all of the parties, but most particularly the plaintiff as the successful party, to take all steps to ensure that the case comes to trial and reaches a definite conclusion at the earliest possible time. I have already put in place directions to ensure that pleadings are closed by Wednesday of next week. If the parties wish to make an application to have the case adopted by the Commercial Court then it seems likely that the ordinary process of that court would lead to a very early trial indeed. If the parties do not wish to adopt that process I would propose managing the case to ensure a similar outcome.
Approved: Clarke J.
Dun Laoghaire Rathdown County Council v Shackleton
, unreported, High Court, O’Sullivan J., January 23, 2002
Judgment of O’Sullivan J delivered the 23rd day of January, 2002
1. In this application the plaintiff local authority seeks an interlocutory injunction preventing the first defendant as statutory arbitrator from embarking on hearing a claim for assessment of compensation by the second defendant in respect of the compulsory acquisition of some 24 acres of its land by the plaintiff in connection with the construction of the south eastern motorway in south County Dublin.
2. In its proceedings the plaintiff claims, inter alia, a declaration that the aforesaid claim for compensation which is predicated on a rezoning of the relevant lands from agricultural to industrial use in the 1998 County Development Plan constitutes a claim for unjust enrichment and further claims a declaration that any award on foot of such a claim constitutes unjust enrichment.
3. The basis of this claim is information made known by the Tribunal of Inquiry into Certain Planning Matters and Payments (“the Tribunal”) showing that the Tribunal has received information to the effect that substantial monies were paid to elected members of Dublin County Council by and on behalf of Paisley Park Investments Limited and/or Jackson Way Properties Limited for the purpose of securing the rezoning of land (including the lands being compulsorily acquired from the second Defendant) prior to the making of the 1993 Dublin County Development Plan and the current Dun Laoghaire/Rathdown Development Plan. The Tribunal has also indicated that it is inquiring into this matter pursuant to its terms of reference.
4. Mr Collins, SC, submits on behalf of the plaintiff that if the foregoing allegation of bribery is made out against the second defendant then the said claim and any award on foot of it would constitute unjust enrichment of the second defendant. Any such alleged bribery is strongly denied by and on behalf of the second defendant. In these proceedings there is therefore an issue of fact relating to this allegation.
5. On the 22nd October, 2001, the first defendant suggested that he would commence the arbitration on the 14th January, 2002. On the 19th November, 2001, the law agent of the plaintiff wrote to the first defendant requesting him not to fix any date pending the outcome of the allegations before the Tribunal but on the 23rd November the first defendant wrote back pointing out that the was satisfied that he was correctly appointed; that the second defendant was entitled to refer the matter to him for arbitration and asserting that he would commence the hearing as proposed.
6. I am informed by Mr Collins that the first defendant then considered its legal position, took advice from Counsel who became ill and ultimately warned the second defendant on the 7th January, 2002, that it would apply on the 11th January for an interim order prohibiting the commencement of the arbitration on Monday the 14th. An interim order was granted on the 11th January and on the 14th extended for one week to the 21st January when the matter came on before me.
7. Mr Collins, SC, has submitted that he has an arguable case to show that his client has a good cause of action. He has referred to a number of authorities to which I will allude later in this judgment. He has frankly acknowledged, however, that the evidence upon which he intends to base the pleaded cause of action is not yet to hand and may indeed never come to hand in the event that the Tribunal rejects the allegations referred to. He accepts, as he must, that even if the Tribunal were to find as a fact that the second defendant had been involved in bribery as alleged this would not of itself constitute evidence in the present proceedings. It would, however, assist him by identifying witnesses and/or other evidence, which he would intend calling or proving in the present proceedings. On this basis he submits that he has a good cause of action.
8. With regard to the balance of convenience he says that this weighs heavily in favour of granting the injunction. If as a result of an award money is paid to the second defendant which is substantially in excess of what is admittedly due and if subsequently it is shown to have been wrongly paid then the plaintiff may well have serious difficulties in recovering the excess. It is true, he acknowledges, that the second defendant has said that it is the owner of some additional 80 acres in the vicinity of the lands being taken in support of its assertion that this is sufficient guarantee to repay any excess monies. Mr Collins submits however that this is land owned by a company outside the jurisdiction in respect of which there is a complex not to say Byzantine ownership structure, that the plaintiff has been told nothing of the status of this land – whether it is mortgaged or whatever – and that it might prove necessary to put the second defendant into liquidation and that the plaintiff simply does not know what sort of dividend the plaintiff as an unsecured creditor might receive in such eventuality.
9. On the other side he points out that because the plaintiff has already entered into the land the second defendant is entitled to interest at the rate of 4.5% (Mr O’Neill, SC, says 4%) on whatever award is ultimately made from the date of entry onto the lands. This therefore is a protection to the second defendant against any delay in receiving monies to which it is legitimately entitled. Furthermore if, over and above that, the second defendant could demonstrate that it was at a further loss, the plaintiff has given an undertaking as to damages which is entirely reliable given its status as a local authority. In addition, there is a public dimension to the plaintiff’s application in that it would be entirely repugnant that an arbitration should be permitted to proceed when the Tribunal has taken the allegation seriously enough to assert that the Tribunal will itself investigate it (thereby, says Mr Collins, indicating that the allegation is not frivolous or vexatious) and where the Oireachtas has determined that this allegation, among others, constitutes a matter of serious and urgent public importance sufficient to justify the appointment of the Tribunal to inquire into it.
10. Mr O’Neill, SC, has submitted on behalf of the second defendant that the action itself is entirely misconceived as is the application for an interlocutory injunction. He says that his client is entitled under statute to claim compensation, that the first defendant is obliged to proceed to assess his claim given that there is no challenge to the validity of the first defendant’s appointment. He questions the authority, that is to say the jurisdiction, of this court to intervene at all. He submits that the plaintiff is not claiming that there is unjust enrichment if the arbitration goes ahead but rather that there might be in a certain eventuality.
11. He further submits that even if the Tribunal determines that there was wrongdoing the first defendant would still have to determine the amount of the second defendant’s claim on the basis of the existing zoning of the lands as he is obliged so to do under the relevant statutory provisions.
12. The court’s jurisdiction to intervene, he submits, in the conduct of an arbitration is effectively limited to where there is a challenge to the appointment of the arbitrator or where there is a dispute regarding the provisions of the contract (and by analogy the statutory provisions) giving rise to the arbitrator’s appointment. He makes the point that the plaintiff is not asserting any wrongdoing on the part of the second defendant and he makes the general point that the authorities relied upon by Mr Collins to establish the existence of a cause of action in unjust enrichment are all cases where the issue of unjust enrichment was not in question in the sense that the facts giving rise to the claims were in existence at the time of the making of the claim. He further makes the point that these zoning alterations in fact enhanced the value of the second defendant’s lands so that there was no increase in the claim as a result of the rezoning and in this connection he refers to the opinion of a valuer who has sworn an affidavit in this matter. Mr Collins disputes the logic of this. I will not proceed on the basis that the second defendants’ valuers’ submission on this point must be accepted by the first Defendant
13. Mr O’Neill also relies on delay on the part of the applicant. There was a delay of some three weeks from the time (22nd October 2001) when the first defendant first appointed the 14th of January, 2002, as the date until the applicant wrote (18th November) requesting him not to determine the arbitration until the Tribunal had reported on the allegation before it. Secondly and more importantly there was a delay between the 23rd November when the first defendant wrote back insisting that he would commence the arbitration on the 14th of January, 2002, and the 7th January 2002, when the applicant first intimated that it would apply for an injunction. During this time the parties had been readying themselves for the arbitration and had committed themselves for a period estimated at two weeks from the 14th.
14. In response Mr Collins insisted that the plaintiff is indeed making allegations on its own behalf and accepts that he will have to adduce evidence in support of them. He submits that any delay on the part of his client would not cause undue hardship to the second defendant given that any preparatory work undertaken by the second defendant for the 14th of January would still be relevant when the arbitration did in fact proceed. He pointed out that the second defendant had given no comfort whatsoever with regard to the status of the additional 80 acres owned by it or in relation to the beneficial ownership of the property of the second defendant. They were simply leaving the plaintiff to its remedy in the event (which of course they deny) that wrongdoing by them is ultimately established in these proceedings. He took fundamental issue with Mr O’Neill’s assertion that the first defendant would have to embark on the arbitration upon the basis now current even in the event that it is established that the relevant zoning had been wrongfully procured by the second defendant. It was a fundamental principle of equity that a party could not benefit from its own wrongdoing.
Conclusions
Cause of Action
15. I am aware that there is a transcript of the argument in this application which would, I assume, include references to the authorities which were opened before me. There are also books of authorities which have been handed in by both sides. I have considered all this material.
16. In light of these authorities it seems to me that as pleaded the plaintiff does have a cause of action for unjust enrichment. It certainly, in my view, has an arguable case to so assert and that is all that is required on an application such as this.
17. The greatest difficulty on the application arises in relation to the evidence which the plaintiff frankly acknowledges does not at present exist and may not exist. Can it be said, therefore, that the plaintiff has a good cause of action? I have been referred to no precedent on point. Mr O’Neill has referred me to “The Oranie” [1966]: 1: Lloyd’s Reports 477 where a court refused to prohibit a litigant before it from taking any step in an arbitration pending the final determination of two other actions in which it was involved which had been commenced in France. In particular I was referred to the speech of Lord Justice Salmon where he said that whilst there was in principle jurisdiction in the court to stay arbitration proceedings “it seems to me that before the courts will exercise this jurisdiction there must at any rate be some prima facie evidence before the court that the agreements are impeachable”. There was delay in that case and there was no such prima facie evidence and the court refused to intervene. Mr O’Neill submits that there is delay in this case, there is no attack on the basis upon which the first defendant is to proceed to conduct the arbitration and the court should, likewise, refuse to intervene.
18. I do not think the case is on all fours with the present situation. There is indeed delay in this case and I will deal with that separately. However I cannot accept that in the event that the assertions made on the pleadings prove to be correct, that this does not constitute an attack on the basis upon which the arbitration would proceed. It seems to me at the very least arguable that in the event that it is established that the second defendant procured by bribery the zoning which now affects its lands being taken by the plaintiff then this arbitration as currently set up should not proceed.
19. In the absence of direct precedent on all fours with the present situation, I have come to the view that the court should take into account the fact that the Tribunal has itself decided to investigate the allegation. This is not to say, of course, that these allegations are in the same status as if they were allegations supported by affidavit evidence in an interlocutory injunction before the court. Indeed I have some doubt as to what weight to give the decision by the Tribunal to investigate them: it seems, however, that on balance I should acknowledge and take into account the fact that the Tribunal has made a formal indication that it will investigate these allegations. I hold, therefore, that the plaintiff has made out a good cause of action.
Balance of Convenience
20. I have taken into account all the submissions made by both sides and it seems to me that the balance of convenience weighs heavily in favour of granting the injunction sought, subject to one qualification. The plaintiff acknowledges that the second defendant is entitled to some level of compensation based, as I understand it, on the zoning (or use) of the second defendant’s lands prior to the change of zoning which is impugned. At the hearing before me Counsel for the first defendant indicated his client’s readiness to make an interim award on some such basis. It seems to me that arrangements should be made for an assessment of such value and payment thereof notwithstanding any stay on the arbitration.
Delay
21. Has there been such delay as would prohibit a court from granting an order which it would otherwise grant? I have set out the delay in question. No doubt it came as a bombshell to the second defendant to hear on the 7th January that an application was being made on the 11th for an interim injunction. The period of delay included some time, I am prepared to infer, which elapsed due to the illness of Counsel and also some other time during the Christmas holiday. In my opinion the delay was not such as to prohibit the making of an order which the court would otherwise make.
Public Interest
22. I emphasise that in reaching my conclusion in relation to delay and also my conclusion that the plaintiff has made out a good cause of action I have been influenced by the public interest considerations which apply to this case. The Oireachtas has identified the general issue of bribery of which the allegation made against the second defendant comprises part as a matter of urgent public importance. It appointed a tribunal which itself has indicated that it intends to investigate the specific allegations against the second defendant. There is clearly grave public concern that these matters be inquired into and determined as soon as reasonably possible. It is also, in my opinion, of importance to the public that a reasonable opportunity be afforded to the plaintiff to procure evidence, if such there be, in support of its allegations made in these proceedings against the second defendant.
23. Finally I wish to emphasise that this decision of mine in no way implies an acceptance of or any kind of judgment as to the weight to be attached to the allegations made to the Tribunal against the second defendant. I have taken account, in reaching my decision, not such allegations or any evidence in support of them (if such there be: I do not know), but rather the determination of the Tribunal itself to inquire into them.
24. Accordingly there will be an order as sought by the plaintiff subject to a proviso that in the absence of agreement between the plaintiff and the second defendant arrangements should be made for the assessment of the compensation admittedly due by the plaintiff to the second defendant. I am facilitated in making this proviso by the indication of Counsel for the first defendant that he would be prepared to make an interim reward in that regard.
Electricity Supply Board v Harrington
, unreported, Supreme Court, May 9, 2002
Judgment of Denham J. delivered on Thursday the 9th day of May, 2002. [Nem Diss.]
1. Appeal
1. This is an appeal by the defendants/appellants, hereinafter referred to as ‘the defendants’, from the Order of the High Court (O Caoimh J.) made on the 20th February, 2002. The first named defendant is the owner of the lands in question and the second named defendant is the occupier pursuant to a lease.
2. Injunction
2. At issue is an interlocutory injunction granted by the High Court. Application having been made by motion on notice by counsel on behalf of the plaintiff, the High Court made an order as sought by the plaintiff. The High Court ordered that until the trial of the action or further Order the defendants their servants or agents or anyone whosoever be restrained from obstructing or preventing the plaintiff its servants or agents from entering upon the defendants’ lands situate at Newtown Farm, Shandrum More, Bantry in the County of Cork pursuant to its power conferred by s. 53(9), Electricity (Supply) Act, 1927 as amended, for the purpose of erecting a 110 kV overhead electricity line as defined by s. 46, Electricity (Supply) (Amendment) Act, 1945.
3. Pending the Determination
3. Against that order of the High Court the defendants have appealed. Originally they brought a motion seeking a stay on the said order pending the appeal, but by consent the appeal was expedited and heard on the 8th March, 2002. Counsel on behalf of the plaintiff indicated that the plaintiff would not proceed with the line pending the determination of this appeal.
4. Plenary Summons
4. The plenary summons in these proceedings seeks the following relief:
5. An injunction restraining the defendants, their servants or agents, or anyone whomsoever from preventing the plaintiff, its servants or agents from entering on the defendants’ lands situate at Newtown Farm, Shandrum More, Bantry, County Cork, for the purpose of erecting a 110 kV overhead electricity line across and on the said lands together with a supporting angle mast.
Damages.
Further and other relief.
Costs.
6. Consequently, the relief sought and granted on the motion, the injunction, is substantially the issue in the action.
5. New 110kV Electricity Line
7. The plaintiffs plan a new 110 kV electricity line to provide what is described as a badly needed voltage injection into the West Cork/Kerry networks, relieving any 38 kV network
capacity problems. This new line will greatly improve the quality and security of the electricity supply in the West Cork/Kerry region. It is expected that domestic, commercial and industrial electricity supply requirements will increase at a rate of 6% per annum over the next five years and that the new 110 kV line will be a great benefit to the region.
6. Facts
8. There were a number of affidavits filed and facts disputed. However, some facts are not in issue. On the 16th June, 1999, planning permission was granted by Cork County Council (upheld by An Bord Pleanála on the 1st February, 2000) for the electricity line. That permission allowed for some alteration in the proposed location by agreement with the planning authority prior to the development. It is alleged by the plaintiff and denied by the first named defendant that a Wayleave Notice was served on her on the 19th April, 2000. There were discussions between officials of the plaintiff and the first named defendant about the line in the year 2000. There were discussions between officials of the plaintiff and the second named defendant about the line in December, 2000 and January, 2001. I am satisfied, leaving aside the detail of the discussions, and the disagreement between the deposers of the affidavits filed on some of these details, that in those discussions both defendants were informed of the line and its placement. The second named defendant had raised two concerns, one as to the effect of the location of the line and mast on his proposed equestrian centre, and the second as to health concerns with regard to electromagnetic fields. The second named defendant has applied for and obtained a grant of outline planning permission (which was issued on the 29th August, 2001) for an equestrian development on the lands.
9. It is submitted by the plaintiff that at all times the officials of the plaintiff indicated that it was not possible to move the mast from its present location. Larry Donald, secretary of the plaintiff, deposed in his affidavit sworn on the 8th November, 2001:
“21. I say and am advised that many discussions have been held with both of the Defendants and their solicitor over the past three and a half years and the impossibility of moving the Board’s line and in particular the location of the angle mast has been explained at length. Further, the Board has at all times, both verbally and in writing, assured the Defendants and their solicitor that they will be compensated for any agreed loss arising due to the presence or the building of the line.”
. . .
23. I say and am advised that the route chosen for this line is the best from an economic, technical and environmental point of view.
24. I say and am advised that the building of this line across the first Defendant’s land is now a matter of urgency . . .”
10. Kieran Cogan, a High Voltage Services Engineer of the plaintiff, swore on affidavit on the 8th day of November, 2001. In paragraph 15 he deposed:
“15. I say that an ESB crew attended on the First Named Defendant’s land on the 29th of January 2001 and were refused entry by the Second Named Defendant and his brothers. Later that day, I met the Second Named Defendant at the first Defendant’s home. He stated that he did not accept that the development could co-exist with the line. I stated that in this instance the line could not be raised or altered – in the event of an impact between the line and the proposed development. I also pointed out as there was as yet no Planning Permission for the Equestrian development, the Board could only guarantee that the Defendant would be compensated for any loss arising to him if the Equestrian Centre was impacted by the presence of the line. I also pointed out that, in accordance with the ESB Acts, any dispute regarding the amount of such compensation could be adjudicated upon by the property arbitrator. In the meantime, I stated that the Board would reluctantly use its statutory powers to erect the line. I drew the second named Defendant’s attention to the Board’s Policy Towards Landowners in respect of overhead lines ‘which guarantees compensation if a development is impacted by a line’. . . .”
11. The second named defendant filed two affidavits in the matter. He makes it clear that he wishes to have a hearing by the Board of the plaintiff subsequent to the serving of the Wayleave Notices on the 31st August, 2001. In his affidavit sworn on the 8th December, 2001, the second named defendants deposed:
“36. I say that at all material times I am not opposed to the routing of a line across my lands and all I seek is a minor modification to the route whereby it would be altered in the order of 50 to 60 metres or so to move away from the proposed equestrian centre which I intend to develop. I say that this is not unreasonable but I say that throughout the affidavit the plaintiff contends that it is refusing even to consider moving the line and that it must be located to precisely where it intends it to be, notwithstanding that the planning permission confers upon them an express power to move it and seek only informally, the consent of the Local Authority and that it does not require a new application.”
12. The second named defendant is seeking a hearing by the Board of the plaintiff. He stated in his affidavit sworn on the 15th February, 2002, paragraph 12:
“. . . I am not seeking in any way to frustrate the Plaintiffs in the construction of this line across my land but only ask that it be modified in the interest of allowing my development for which I have permission to construct, which permission was granted subsequent to that of the Plaintiffs in this case, to proceed. I say that indeed I seek even less than that, which is the opportunity to make appropriate submissions to the Board of the Respondent which has been represented is available to me but which facility has been consistently denied.”
7. Wayleave Notice
13. The Wayleave Notice was in the form of a letter. The Wayleave Notice was not in contention on this appeal. Counsel for the defendants accepted that Wayleave Notice was served on the 31st August, 2001. No procedural issue was raised on this notice.
8. Wayleave Notice Letter
14. The Wayleave Notice was in the letter dated the 31st August, 2001. It stated:
“WAYLEAVE NOTICE
Electricity (Supply) Act, 1927, and Subsequent Amending Acts
Dear Mrs. Harrington,
I hereby give you notice that the Electricity Supply Board, pursuant to the powers conferred on the Board by Section 53 of the Electricity (Supply) Act, 1927, as amended by subsequent Acts, intends to place an electric line, as defined by Section 46 of the Electricity (Supply) (Amendment) Act, 1945, above ground across your lands situate in the:-
Townland of Shandrum-More
Barony of Bantry
County of Cork
The nature of the said line and the position and manner in which it is intended that it be placed is set forth in the Schedule hereto attached.
If within seven days from the receipt of this Notice you consent to such entry the same will be on the terms of the Board’s policy endorsed on the back hereof. If you do not to so consent the Board will erect the line as authorised by Section 53(5) of the Electricity (Supply) Act, 1927 as amended. In this event the Board will be prepared to act in accordance with the same terms of the said policy, (excluding the provisions of Clause 6 thereof), and you will be entitled to have compensation assessed by agreement or in accordance with the said Act.
I also give notice that the Electricity Supply Board, pursuant to the power conferred on the Board by Section 98 of the Electricity (Supply) Act, 1941, intends after a period of seven days from the date of service of this Notice to lop or cut certain trees, shrubs or hedges which obstruct or interfere with the electric wires or with the erection of such wires.
The location of the said trees, shrubs and hedges and the extent of the intended lopping or cutting is set forth in the Schedule hereto attached.
Yours faithfully,”
9. Policy
15. The policy of the plaintiff was set out on the back of the letter. The policy as stated was:-
“POLICY TOWARDS LANDOWNERS FOR OVERHEAD LINES
1. Whenever agreement cannot be reached between a landowner or occupier and the Board’s staff as to the route of the line or to the position of the masts, the Board will give all parties an opportunity of being heard and may consent, with or without conditions, or withhold its consent, to the placing of the line in the manner and position proposed in the Notice.
. . .
3. The Board will, on request, cut up any trees that may be felled into transportable lengths and bring them to the farmyard or other adjacent storage place.
4. The Board will dispose of rubbish, surplus clay and all debris from tree and hedge cutting.
5. The Board will be responsible for any injury to or loss of livestock arising from any action which can be directly attributed to its employees or from the presence of the line.
6. The Board will make an annual payment as fixed from time to time by the Board for interference by lattice steel masts and double wood poles on arable land.
7. (i) If in future the line interferes with any viable development of land other than cultivation of the soil and the Board is so satisfied the Board will either:-
– raise or otherwise alter the line to permit the development in full, or
– pay for the loss caused by interference of the line with the
development, or
– raise or otherwise alter the line to permit partial development and pay for the loss caused by interference of the altered line with the development.
(ii) The agreement of the Board to alter the line or make a payment is
subject to the co-operation of the landowner with the Board in devising an arrangement of the line and of the development which reduces the overall cost to a minimum. This necessitates an approach to the Board at the earliest stage to ascertain the limits for development of the kind envisaged near the particular part of the line in question and to discuss the possibility of altering the line and probable time required to carry out an alteration. The Board will give every assistance in planning the layout of a development which impinges on the line as it stands or on any feasible alteration to it.
(iii) The total cost to the Board of altering the line and/or of payment is
limited to that for the arrangement which gives minimum cost. If the landowner prefers a more expensive arrangement he must bear the increase in cost.
(iv) Before commencing any alteration the Board will need proof that the proposed development will proceed and it may require security for repayment of the cost of the alteration if the development is not carried out within a reasonable time.
(v) The basis of payment will be agreed in advance, but payment will be made only when development has reached an advanced stage.
(vi) When a development is totally prevented payment will be made only when there is clear proof to the satisfaction of the Board that a genuine and viable development has in fact been prevented solely by the presence of the line. A line will not be taken as preventing development if it could be carried out on other available land subject to payment for any consequent increase in cost.
(vii) Payment for the full loss may not be made if the Board had not been fully consulted in advance or if the land had been purchased at a reduced price because it was encumbered by the line.
(viii) A decision to alter the line or make a payment may be subject to obtaining an easement in respect of the land affected.
(ix) Any disagreement as to the amount of payment will be referred to arbitration.
. . .
9. The Board and the Irish Farmers Association have an agreed Code of Practice for survey, construction and maintenance of overhead lines in relation to the rights of landowners. The above Policy is incorporated in this Code of Practice – copies available in local E.S.B. or I.F.A. Offices.
10. Defendants’ Letter
On the Wayleave Notice being received by the defendants the solicitors for the defendants
responded by letter dated the 6th September, 2001. That letter stated:
“Dear Sirs,
We confirm that we act on behalf of the above named Brian Harrington and Mary Harrington, the occupier and owner respectively of lands situate at Shandrum More, Bantry, County Cork.
Our clients have received Way Leave Notices from the ESB on Monday 3rd September, 2001 and dated 31st August 2001 relating to their lands at Shandrum More which advise that it is the intention of the Board to enter onto such lands for the purpose of erecting a Steel Pylon and poles, together with high voltage power lines, as part of the Ballylickey – Bantry 110 kV Power line. We note that it is the intention of the ESB to enter onto such lands on Monday next, 10th September 2001 at 10.00 a.m. for the purposes of carrying out such works.
Please be advised our clients and each of them do not consent to the entry onto their lands by the ESB or to the entry by any servant and/or agent of the ESB or by any authorised undertaking for and on behalf of the ESB for the purposes of carrying out such works. In accordance with Section 53 of the Electricity (Supply) Act 1927, as amended, our clients respectfully request that the Board of the ESB formally reconsider its intention to place a steel pylon/poles and high voltage power line on and over our clients’ lands at Shandrum More. Our clients further respectfully request that the Board of the ESB consider changing the route of the power line and the positioning of the Steel Pylon and poles (if any) as set forth in the Way Leave Notices and Schedules therefore, so that the power line and such Pylon and pole(s) do not impinge upon and interfere with our clients’ lands and their proposed development of such lands as a Tourist based Equestrian Sentre, [sic] for which they have obtained Planning Permission.
In accordance with the stated policy of the ESB towards Landowners, as endorsed on the rear of the Way Leave Notices, our clients wish to be heard and represented at any meeting of the Board held to so consider or reconsider the routing and positioning of the power line, Pylon and poles.
In the meantime, please be advised that any entry, or attempt to enter onto the lands will be regarded as an act of Trespass.
Yours faithfully,
CASEY & COMPANY”
16. Subsequently an ESB crew attempted to enter the lands and were prevented from doing so.
17. These proceedings were then commenced.
11. High Court Judgment
18. There is a counsels’ note of the judgment delivered by the High Court on the 15th February,
2002. It included the following:
“3. The learned Judge accepted the Plaintiff Counsel’s argument that the subsequent way-leave notices served by the ESB on 31st August, 2001 meant that these were now the way-leave notices.
4. Essentially, the issue for determination before the Court was:
(a) the construction of the letter dated 6th September, 2001 from the
Respondent’s solicitors to the ESB; and
(b) whether the aforesaid letter constituted a consent subject to conditions.
The learned Judge concluded that the aforesaid letter did not constitute a consent but rather a refusal of consent. Reference was made to the words ‘do not consent ’ in the body of the letter. In the circumstances, it was held by the learned Trial Judge that section 53, sub-section (4) of the Electricity Supply Act, 1927, did not apply to this case.
5. The learned Judge also held that, in the way-leave notice, certain procedures and policies are to be followed. He found that, because there had not been a consent on the part of the Defendants to the way-leave notice, paragraph 1 of the Board’s policy towards landowners, as set out on the back of the way-leave notice, cannot apply and must be excluded.
6. The learned Trial Judge accepted the Plaintiff’s argument that the balance of convenience in this case rested with the Electricity Supply Board and an injunction was granted in the terms of paragraph 1 of the Notice of Motion with costs of the application reserved. On the Defendants’ application, the learned Trial Judge granted a stay on the interlocutory order to Wednesday, 20th February, 2002.
7. In answer to a submission made on behalf of the Defendants that they had a legitimate expectation, having regard to the policy statement printed on the rear of the way-leave notice, the learned Trial Judge held that the aforesaid notice did not give such an expectation and, therefore, there had been no breach of any legitimate expectation by the Plaintiff. In those circumstances, the learned Trial Judge did not consider the proposed entry onto the Defendants’ lands, which was scheduled to take place on 10th September, 2001, as being unauthorised.”
12. Defendants’ Submissions
19. Counsel on behalf of the defendants filed full written submissions and oral submissions were also made. (a) In essence it was submitted that the relief sought on the motion determines the action and the type of injunction granted at the interlocutory stage in this case can only be made if there is no possibility of success by the defendants. It was submitted that that is not the case, that the High Court erred in determining that there was no substantive issue to be tried, that there are serious issues to be tried. (b) It was submitted that in the terms of the plaintiff’s letter and policy there is provision for agreeing alterations in the line and that the letter of the 6th September, 2001 of the defendants’ solicitor was in terms that, if they have a right to refuse, they refused, and if not, they wished the line and mast moved i.e. that it was a conditional consent. (c) It was submitted that the defendants are entitled to a hearing by the Board itself of their wishes as to the moving of the line etc. (d) It was submitted that the plaintiff by its own procedures, with the promise of proceedings in its policy, had raised a situation where the defendants had a legitimate expectation to a hearing. (e) Even if the policy of the plaintiff as set out in the document was not such as to give rise to a legitimate expectation, it would be a factor for the court to consider. It would, it was submitted, be inappropriate for the court to grant an injunction to the plaintiff to enable it to act contrary to its own stated policy. (f) It was submitted that an injunction is a discretionary remedy – it should be granted only when a court of equity should interfere and that, in this case, the plaintiff exercised power of entry in June, 2001 when they knew they had not complied with the statutory procedure. Counsel for the defendants submitted that there was a fair question to be tried. Reference was made to Irish Shell Limited v Elm Motors Ltd. [1984] IR 200. Counsel submitted that the plaintiff was not entitled to the interlocutory injunction in this case.
13. Plaintiff’s Submissions
20. Counsel for the plaintiff submitted that the only entitlement of the defendants was to compensation and that the policy statement as to a hearing applies only if there is consent to enter. Counsel submitted that the letter of the 6th September, 2001 was a failure to consent. There had been previous meetings between the defendants and the staff of the plaintiff. It was submitted that where there is no consent to entry on the land the defendants are entitled to compensation by agreement or in accordance with the provisions as established by the 1985 Act. It was submitted that the letter of the 6th September, 2001 was a formal refusal by the solicitor for the defendants, and that once there was such a refusal the plaintiff was entitled to act pursuant to s. 53(5) of the 1927 Act as amended. There had been many communications between the plaintiff and defendants which failed to find agreement. It was submitted that it was urgent that the plaintiff proceed with the line, that the Act provided for no hearing by the Board, that the balance of convenience lay, in view of the urgency of the line and the public interest, in granting the injunction and that the balance of convenience also favours the plaintiff, as in essence, the defendants only argue for a right of hearing.
14. Law
(a) Electricity Line
21. This case raises for consideration s. 53 of the Electricity (Supply) Act, 1927 as amended. The section, as amended, is as follows:
1. The Board . . . may subject to the provisions of this section . . . place any electric line [the expression electric line is deemed to have had effect as meaning any wire, conductor . . . and including any post, pole, stay, erection or structure supporting any one or more of the things hereinbefore mentioned] [1] above or below ground, across any land not being a street, road, railway or tramway . . .”
3. Before placing any electric line across any land . . . under this Section, the Board shall serve . . . on the owner and on the occupier of such land, a notice in writing stating its . . . intention so to place the line or attach the fixture . . . and giving a description of the nature of the line . . . and/of the position and the manner in which it is intended to be placed or attached.
4. If within (7) [2] days after such service of such notice, the owner and the occupier of such land or building give their consent to the placing of such line or the attaching of such fixture in accordance with such notice, either unconditionally or with conditions acceptable to the Board, the Board . . . may proceed to place such line across such land . . . ;
5. If the owner or occupier of such land or building fails within the seven days aforesaid to give his consent in accordance with the foregoing subsection, the Board or the authorised undertaker with the consent of the Board but not otherwise may place such line across such land or attach such fixture to such building in the position and manner stated in the said notice, subject to the entitlement of such owner or occupier to be paid compensation in respect of the exercise by the Board or authorised undertaker of the powers conferred by this subsection and of the powers conferred by subsection (9) of this section, such compensation to be assessed in default of agreement under the provisions of the Acquisition of Land (Assessment of Compensation) Act, 1919, the Board for this purpose being deemed to be a public authority.
S. 53 (5) of the Electricity (Supply) (Amendment) Act, 1985 was inserted as a consequence of E.S.B. v Gormley [1985] IR 129. In E.S.B. v Gormley Finlay C.J. recognised the benefits of an electricity line. He stated, at p. 150:
“Having regard to the social benefits of electricity and its contribution to the economic welfare of the State, the uncontradicted evidence adduced in this case of the necessity for and value of this transmission line to the national supply system leads to an inescapable conclusion that the power to lay it compulsorily is a requirement of the common good.”
However, E.S.B. v Gormley established the right to compensation for such compulsory action. Consequently, s. 53 (5) was inserted by the Electricity (Supply) (Amendment) Act, 1985.
(b) Injunction
22. An injunction is an equitable remedy. In an interlocutory injunction, such as is in issue in this case, the court is not called upon to determine the issue of the substantive action and indeed should resist coming to any such conclusion. Rather it is for the court to determine the matter on the application for an interlocutory injunction in a concise manner on the facts before the court.
(i) The first issue is whether there is a fair question to be tried. In the circumstances of this case the court has to consider whether the material before the court discloses that the defendants have a real prospect of succeeding on their defence to a claim for a permanent injunction. If the material fails to disclose that the defendants have a real prospect of succeeding in their defence to a claim for a permanent injunction then that determines the matter.
(ii) If however, the defendants have raised a substantive issue to be tried then the court should go on to consider the balance of convenience.
(iii) It is no part of the court’s function at this stage of the litigation to resolve conflicts of fact.
(iv) Nor is it part of the jurisdiction to decide complex questions of law. These are matters for the trial.
(v) As to whether damages are an adequate remedy is a factor for the court.
(vi) All of the circumstances of the application should be considered in determining the application of this remedy, which is rooted in equity.
15. Decision
23. The first matters for decision are whether the materials available to the court on the hearing for an interlocutory injunction fail to disclose that the defendants have any real prospect of succeeding in their defence to a claim for a permanent injunction at the trial. Is there a fair question to be tried? Does doubt exist as to the plaintiff’s right? The High Court held that there was no substantive issue to be tried. Against that finding the defendants have appealed.
24. The questions raised relate to the placing of the line. First there is the matter of notice. The relevant law is to be found in s. 53 of the Electricity (Supply) Act, 1927 as amended. The relevant portion is set out previously in this judgment. Under that statute the plaintiff may place any electric line across any land not being a street, road, railway or tramway, subject to the provisions of s. 53. The provisions of s. 53(3) require prior notice in writing of the placing of the line, the nature of the line, and the position and manner in which it is intended to be placed or attached. Wayleave Notice was given in this case on the 31st August, 2001 and no issue arises in that notice. Thus this provision of s. 53(3) is met.
25. Next there is the matter of consent. Section 54(4) provides for the situation where consent by the landowners and occupiers to the placing of the line is given. Section 54(5) relates to the position where there is no consent by the owner or occupier. The learned High Court judge construed the letter of the solicitors of the defendants dated the 6th September, 2001, as not giving consent but rather as a refusal of consent. There was evidence upon which he could come to this construction. I agree with this construction. The words of the letter are plain, and include the following:
“Please be advised our clients and each of them do not consent to the entry onto their lands by the ESB . . .”
26. Further, the letter concluded with the words
“In the meantime, please be advised that any entry, or attempt to enter onto the lands will be regarded as an act of trespass.”
27. I am satisfied that the defendants did not consent to the placing of the line. Section 53(4) refers to unconditional acceptance. Clearly that does not apply. The said section refers to “conditions acceptable to the Board”. This does not arise in this case either. There were no conditions acceptable to the Board.
28. In this case the defendants did not give their consent to the line. Thus s. 53(5) of the Electricity (Supply) Act, 1927, as amended, is the applicable law. Under this statute law, the defendants having failed within the seven days to give consent, the plaintiff may place the line across their lands, subject to the defendants’ right to compensation. If those were all the facts of the case then the matter would not need any further consideration and the defendants would fail. The only right under the statute for the defendants is compensation.
29. However, the defendants were served with the Wayleave Notice dated the 31st August, 2001 and the defendants were referred to several matters in the Wayleave letter. The Wayleave Notice letter referred to the fact that if within seven days from the receipt of the notice the defendants gave consent to such entry then such entry would be in terms of the Board’s policy endorsed on the back of the notice. As no consent was given this statement is not applicable to this case.
30. However, as to the position when there is no consent, as here, the Wayleave Notice stated:
“If you do not consent the Board will erect the line as authorised by section 53(5) of the Electricity (Supply) Act, 1927, as amended.”
31. Thus the Wayleave Notice states clearly that in the absence of consent the plaintiff will erect the line as authorised by statute. The statute is clear. Section 53(5) provides that if the owner or occupier fails within seven days to give his consent, the plaintiff may place such line across the land. The only proviso is the defendants’ right to compensation. Thus, the statute and letter are clear that, consent not being given within seven days, the plaintiff may place the line on the land. If these were the sole facts before the court the issue would be clear – the defendants would not succeed on the first aspect of the test in relation to an interlocutory injunction. The material would not disclose that the defendants had a real prospect of succeeding in their defence to a claim for a permanent injunction. There would be no fair question to be tried. However, the Wayleave Notice referred to the absence of consent, and stated:
“In this event the Board will be prepared to act in accordance with the same terms of the said policy, (excluding the provisions of clause 6 thereof), and you will be entitled to have compensation assessed by agreement or in accordance with the said Act.”
32. The words “In this event . . . ” refer to the absence of consent. Thus, the succeeding words of the policy are applicable to such a situation. That situation has also been specifically referred to in the statute law and the Wayleave letter. Both state that in such a situation the plaintiffs are entitled to proceed to lay the line. On those words, it is clear that the defendants have no rights other than to compensation. However, the policy of the plaintiffs raises the matter claimed for by the defendants, the issue of the hearing.
33. The defendants claim that they have a right to a hearing by the Board itself as to their wishes in regard to the line. This right does not arise under the Act. This right does not arise under the Wayleave Notice per se . It is claimed that this right arises out of the reference in the said notice to and the policy of the plaintiff as set out on the rear of the notice.
34. The precise terms of the policy are:
“Wherever agreement cannot be reached between a landowner or occupier and the Board’s staff as to the route of the line or to the position of the mast, the Board will give all parties an opportunity of being heard and may consent, with or without conditions, or withhold its consent, to the placing of the line in the matter and position proposed in the notice.”
35. It is clear on the plain meaning of the words that this policy applies wherever agreement cannot be reached between a landowner or occupier and the Board’s staff. It is thus applicable to the defendants.
36. The clause refers to “the Board will give all parties an opportunity to be heard”. Counsel for the defendants submitted that the Board itself should hear the defendants.
37. However, I am satisfied that whatever opportunity is given to the defendants by this policy document it is not a right to a hearing by the Board itself of the defendants. The policy refers to several matters and indicates that action will be taken. Thus, clauses 3 and 4 state:
“The Board will, on request, cut up any trees that may be felled into transportable lengths and bring them to the farm yard or other adjacent storage place.
The Board will dispose of rubbish, surplus clay and all debris from tree and hedge cutting.”
38. No one would expect the Board itself to do the above. A literal interpretation of the policy would lead to an absurd conclusion. It is clear that the Board of the plaintiff has indicated in its policy that it will ensure that such matters are attended to. A logical and common sense approach, which I favour, means that the Board has set out in its policy specific matters which will be done on its behalf.
39. Similarly, in relation to the opportunity to be heard. The policy provides that such opportunity of being heard will be granted to the defendants. However, taking the same construction of the word ‘Board’ as I do for other clauses of the policy, this hearing may be conducted by a person or persons other than the Board but under the direction of the Board. Officials of the Board would be the probable persons giving this opportunity of being heard. Consequently, I would dismiss the submissions that any such hearing should be heard by the Board.
40. However, the defendants are left with the stated policy as to an opportunity to be heard by officials of the plaintiff as to the position and placing of the line proposed in the Notice.
41. The question then is whether this refers to an opportunity to be heard after the Notice or whether it could refer to previous communications. The words of the policy are clear – they refer to the placing of the line in the manner and position proposed in the Notice. There is thus specific reference to the Notice. This would appear to raise the possibility of the hearing to a time after the Notice. However, a construction which is also open is that the reference to the route is described in the Notice but is not determinative of the time of the hearing. Thus, if there have been significant communications previously on the proposed line, they may be considered as the hearing. There is no doubt that there have been communications and meetings between the parties. The position of the line and mast were the subject of the communications. However, if the hearing by the officials is to take place after the Notice then the decisions specifically referred to in the policy are open; these include consent with conditions or the withholding of consent to the placing of the line in the manner and position proposed in the Notice. Thus, the policy may specifically envisage a change to the position of the line in the Notice. That being the case it raises the interpretation that the hearing should be after the Notice. However, the statute and Notice clearly state that the line may be placed within seven days. There may be an inherent contradiction here.
42. I am satisfied that the defendants have raised a fair question to be tried. The materials available to the court do not fail to disclose that the defendants have any real prospect of succeeding in their defence as to the claim for a permanent injunction. Even if the issue is only the right to a hearing, the policy itself may envisage a possible change after such notice and hearing.
43. Thus, it is necessary to proceed to consider the balance of convenience. If the court holds that the defendants have a right to be heard further on the position of the line there must be the consequence that there may be a possibility that the placing of the line may be altered as stated in the policy. However, the evidence of the plaintiffs is that at all times the placing of this line and mast could not be altered and that the only relief for the defendants was compensation, including compensation in relation to the equestrian development. The statute law is clear that the defendants’ only right is to compensation.
44. In considering the balance of convenience from the defendants’ viewpoint it is clear that if they have a hearing and if there is a change in the line as a consequence it would favour withholding the injunction. However, I am swayed by factors such as the affidavits of the plaintiff as to urgency of the electricity line, as to the deposed fact that the positioning of this line can not be altered, as to the considerable degree of communication over the last few years, and to the policy and clear words of the Act giving to the plaintiff the right to place the line on the lands, subject to the defendants’ right to compensation.
45. It is appropriate that the plaintiff has a policy as to communication and to hearing the views of the landowners. However, that has to be balanced against conflicting interests, including the common good.
46. Ultimately damages would be an adequate remedy for the defendants. If it is held that they had a right to be heard after the Notice, and if it were considered that there was a real possibility of an alteration in the line as requested, these would perhaps be factors additional to the right to compensation which already exists. The level of compensation may be increased by the exact location of the line and mast. It may well be that the level would be less if the route of the line were altered as requested by the defendants. This means also that the level may be higher if the route is not altered.
16. Conclusion
47. For the reasons stated I would dismiss the appeal. Consequently, the interlocutory injunction ordered by the High Court is extant.
Dunne v Dun Laoghaire-Rathdown County Council
[2003] 2 I.L.R.M. 147
JUDGMENT of Hardiman J. delivered the 24th day of February, 2003., [Nem Diss].
1. The Plaintiffs object to the proposed removal by the defendants, as part of a road building scheme, of certain parts of a monument constituting the remains of Carrickmines Castle, Co. Dublin. By Notice of Motion issued shortly prior to the 10th February, 2003 they sought:-
“(1) Interim/interlocutory injunction restraining the defendant … from demolishing or removing or disfiguring defacing altering or in any manner injuring or interfering with the national monument and/or archaeological remains situated on lands owned by the defendants, forming part of Folio 5005…
(2) An interim/interlocutory injunction restraining the defendant … from excavating, digging, ploughing or otherwise disturbing the ground within, around or in proximity to the national monument situated on lands owned by the defendants and forming part of Folio 5005…”.
The statutory background.
2. The relief claimed mirrors the wording of the National Monuments Act, 1930 as amended. Section 14 of that Statute provides:-
(1) “It shall not be lawful for any person … to do any of the following things in relation to a national monument of which the Commissioners or a local authority are the owners or the guardians …, that is to say:
(a) To demolish or remove wholly or in part or to disfigure, deface, alter, or in any manner injure or interfere with any such national monument without or otherwise than in accordance with the consent hereinafter mentioned or
(b) To excavate dig plough or otherwise disturb the ground within around or in proximity to any such national monument without or otherwise than in accordance with the consent hereinafter mentioned …
(2) The consent herein before mentioned is … in the case of a national monument of which a local authority are the owners or the guardians, the joint consent in writing of the Commissioners and such local authority.
(3) The Commissioners and every local authority are hereby respectively authorised to give such consent as is mentioned in the foregoing subsection if and whenever they think it expedient in the interests of archaeology or for any other reason to do so and are hereby further authorised to attach to any such consent all such conditions and restrictions as they think fit.”
3. The Act was subsequently amended, by Section 15 of the National Monuments (Amendment) Act 1994 by the insertion of new subsections after sub-s. (3), of which the following are relevant:-
“(3A) The consent referred to in sub-s. (2) of this Section shall not be given by the Commissioners or the Commissioners and a local authority, in a case referred to in paragraph (a) of sub-s. (1) of this Section, unless it is in the interests of archaeology to do so or the Minister has approved of the giving of that consent.
(3C) On being requested to approve of a consent under this Section, the Minister may approve of the consent referred to in sub-s. (3A) of this Section in a case referred to in paragraph (a) of sub-s. (1) of this Section where he thinks it expedient to do so in the interests of public health or safety”.
4. It will be seen that this amendment considerably reduces the scope for the granting of consent by the substitution of the above for the former power to consent if the Commissioners thought it “expedient in the interests of archaeology or for any other reason”. In other words, the very wide residual discretion in the Act of 1930, has been replaced by a strictly confined discretion, and the matters to be considered have been strictly limited.
5. By the Heritage (Transfer of Functions of Divisionals of Public Works in Ireland) Order 1996, the Taoiseach transferred the functions of the Commissioners under, inter alia, the National Monuments Act to the Minister for Arts, Culture and the Gaelteacht. By the Heritage (Transfer of Departmental Administration and Ministerial functions) Order 2002 the Taoiseach transferred the functions of that Minister, inter alia, to the Department of Environment and Local Government, where it remains.
6. The effect of the foregoing is that the consent of the defendant local authority and of the Minister for the Environment is required if any of the matters mentioned in sub-s. (1)(a) of s.14 of the National Monuments Act, 1930 are lawfully to be done. The consent must be the joint consent of the Minister and the local authority and each are constrained in the way set out in the statutory citations above in the reasons by reference to which they can grant consent. It is undisputed that the defendant County Council is the owner of the relevant lands.
Contentions of the parties.
7. The plaintiff says that the defendant, in the course of a huge road building project, is about to contravene s.14. Specifically, and without limiting their contentions in any way they say that the defendants are admittedly about to remove the revetments of a medieval fosse. They say that this, together with the other remains of Carrickmines Castle, is a “national monument” and that interference with it is a criminal offence under s.14 of the 1930 Act. They seek the relief claimed to prevent this unlawful Act.
8. The defendants say they will dispute that the relevant remains of Carrickmines Castle are a national monument, or part of such a monument. However, they concede that an arguable case has been made for the view that they are a national monument. They say that no case “can now be made, by virtue of the efflux of time, and to the continuation of licensed excavation to near completion”, for the relief the plaintiffs claim. They contend that the Minister has already exercised an independent function under the Acts by granting a licence under s.26 of the National Monument Act, 1930, for excavation and by doing so has evidenced his consent in writing. They say that the plaintiffs have been guilty of delay and that the balance of convenience hugely favours the local authority especially having regard to the considerable expense which would or might be incurred if work is stopped. They dispute the adequacy of the plaintiffs’ undertaking as to damages.
A National Monument?
9. As noted above, the defendants concede that an arguable case has been made out for the proposition that the relevant remains at Carrickmines constitute a national monument, though they deny that in fact they do so. This rather odd position was necessitated by the present state of the evidence in the case. In my view it is of some relevance in the assessment of the strength of the case to consider briefly what that evidence is.
10. The case made by both parties relies heavily on expert evidence, that of Dr. Sean Duffy FTCD for the plaintiff and that of Ms. Valerie J. Keely, proprietor of Valerie J. Keely Ltd. Archaeological Consultants, on behalf of the defendant. Dr. Duffy’s affidavit asserted in strong terms that the archaeology on the relevant site “is a national monument”. Furthermore, at paragraph 27 of his affidavit he referred to the fosse where the revetments previously referred to are found and said that “If the only feature found at Carrickmines was the fosse and the other parts of the defensive structure, such remains would constitute a national monument within the meaning of the national monuments legislation. This elaborate defence structure is unique in Ireland and unknown in Britain or continental Europe”.
11. Furthermore, the first quoted averment was preceded by eleven paragraphs of material supportive of the conclusion quoted. Moreover, at the beginning of his affidavit Dr. Duffy stated specifically, by way of flagging, that he intended to offer an opinion as to the status of the archaeology on the site in terms of the National Monuments Acts.
12. Against this background it is in my opinion remarkable that Ms. Keely in a lengthy and closely reasoned affidavit in which she takes detailed issue with some quite minor points in Dr. Duffy’s affidavit, does not address this central question at all. On the contrary, she goes into considerable detail about the surveys carried out by her firm over the past ten years on behalf of the defendants and the excavations carried out by the firm in the period between July, 2000 and January 2003. It is stressed that all of these excavations were carried out under the terms of a licence pursuant to s.26 of the National Monuments Act. In fact, s.26 of the Act is headed “Restriction of excavations for archaeological purposes”. It provides that a licence is required before any person can excavate in or under land “for the purpose of searching generally for archaeological objects or of searching for, exposing or examining any particular structure or thing…”. In the course of argument in this Court it was accepted, as apparently was not in the High Court, that the existence of a s.26 licence was a neutral factor and did not dispense one from obtaining a s.14 consent if one wanted to remove or alter wholly or in part a national monument.
13. Nor do I think that the finding of the High Court judge: “Section 14 of the National Monuments Act, 1930 has to be read and assessed with all the work carried out to date, in context of the reports and respective duties of “Duchas and the Minister”, can be supported as a statement of the law. It appears to me that the requirement of s.14 is a freestanding one. Equally significantly, the powers of the local authority and the Minister in considering whether to grant the joint consent referred to in the Section are severely limited in a way that Duchas and the Minister are not limited in other contexts.
14. The Act of 1930 defines the term “monument” and there is no doubt that – and it has been conceded – that the Carrickmines remains constitute a monument. It goes on to define “national monument” as “a monument or the remains of a monument the preservation of which is a matter of national importance by reason of the historical, architectural, traditional, artistic or archaeological interest attaching thereto…”.
15. Plainly there is scope for differences of opinion as to whether the preservation of any particular monument is a matter of national importance. But it is essential to the resolution of the present case to note that the strongly expressed and closely argued conclusion of Dr. Duffy to the effect that it is a national monument is uncontradicted by any expert evidence. It must therefore be accepted for the purposes of the present application. It is also difficult to close ones eyes to the fact that a committed expert in a uniquely good position to form a view on this topic, Ms. Keely, has omitted to express any view on this topic on affidavit. This, although she takes issue in a pointed and trenchant manner with other, much less significant, opinions of Dr. Duffy.
16. Insofar as there is any challenge to the expert qualifications of Dr. Duffy in the relevant area, I consider them fully and modestly answered in paragraph 2 of his replying affidavit.
17. Accordingly, I believe that the Court must approach this application on the basis that there is no issue raised, on the present state of the evidence, as to whether or not the relevant site is a national monument. This does not preclude the defendants from taking issue with this proposition at any trial, but for present purposes we must assume that the premises are a national monument and (which is undisputed) that it is proposed to remove or alter it without the consent required by s.14 of the National Monuments Act, 1930, as amended. This provision is part of the law of the land which the Court is bound to uphold.
18. The defendants affidavits are also silent on the significant points as to whether the question of the monuments possible status as a national monument, or the possible need to seek s.14 consent, was ever considered by them.
Standing of the plaintiffs.
19. It was argued by the defendant that, assuming the site to be a national monument, s.14 created a public and not a private right, which the individual plaintiffs had no standing to enforce. Moreover, the Section was a penal one, creating an offence and this must be regarded as the sole method of enforcement.
20. There is learned discussion on the rights of an individual to maintain an action for breach of a public right in Hogan and Morgan “Administrative law in Ireland” 3rd edition pp. 758 – 764, where the evolving state of the law on this matter is traced. However, for the purposes of this interlocutory application I consider it indisputable that an arguable case for the plaintiffs standing has been established. In The Attorney General (at the relation of Frank McGarry and Ors.) v. Sligo County Council [1991] 1 IR 99, relief was granted against the development of a dump in Sligo inter alia on the basis that to do so would be to contravene s.14 of the 1930 Act. Although this was a relator action, the individual plaintiffs had been granted an interlocutory injunction before the Attorney General became party to the action. Moreover, McCarthy J. who gave the judgment of the Court stated that “… I am not to be taken as supporting or otherwise the apparent view of the High Court Judge that it was necessary to bring these proceedings as a relator action”. In fact, the individual plaintiffs undertook at the interlocutory stage to seek the authority of the Attorney General to institute relater proceedings in respect of certain public rights, and it is open to these parties to do so as well.
Laches and balance of convenience.
21. These points were trenchantly urged by the defendant. They emphasise, firstly, the importance of the project on which they are engaged, the South Eastern Motorway, being the final part of the M50 ring motorway around Dublin. It is part of Euro Route EO1, which will eventually extend from Rosslare via Dublin and Belfast to Larne. This motorway consists of ten kilometres of dual two lane motorway, four motorway interchanges, sixteen bridges and two underpasses. It is a strategic element of the national road network. The Dunlaoghaire-Rathdown County Council South Eastern Motorway scheme of 1997 was approved by the Minister for the Environment in 1999. The Council entered on the lands in August, 2000 and expect to complete it in 2005. An environmental impact statement was prepared on or about the 19th October, 1998. Ms. Valerie Keely’s consultancy has been employed on the scheme since 1992 and has proferred eight archaeological assessment reports. Carrickmines Castle was at all times regarded as an important archaeological site, even before the excavations and was recommended for investigation. The approach favoured by the environmental impact statement was to “resolve” any newly discovered archaeological features by excavation and recording in accordance with proper archaeological practice. Other archaeological aspects were preserved. Concerns such as those of the plaintiffs, it was said, should have been raised at a much earlier stage.
22. It appears that in July 2002 An Taisce submitted a proposal for, amongst other things, the movement of the line of the motorway in order to preserve archaeological features at Carrickmines. The defendant and the National Roads Authority in response produced a report entitled “Preservation of Archaeology at Carrickmines” in August, 2002. The Minister for Transport considered this and “in around September 2002” he approved of the scheme currently being followed.
23. On the 30th September, 2002 the solicitors for the plaintiffs wrote to the defendant raising a number of issues in relation to the scheme, including the s.14 issue. The date of this letter is significant because it was conceded on the hearing of this appeal that, having regard to the date on which the Minister approved the report of the defendants and the National Road Authority, that letter was timely. Accordingly it would appear that the allegation of laches must focus on the period since then. The letter also asked for confirmation of the legal status of the Minister for Transport’s then recent proposals (the approved report) to reduce damage to archaeological remains.
24. The letter specifically called on the council and the National Roads Authority “firstly to confirm by return that the consents referred to above have in fact been obtained and the statutory provisions complied with in full and secondly, to furnish copies of the requisite consents”.
25. This letter was replied to on the 7th October, by Messrs. McCann Fitzgerald solicitors for the defendant. This letter first made the point that the defendant’s contractor had entered the site, not for the purpose of carrying road development works but for the purpose of carrying out archaeological works approved by Duchas, under an archaeological licence made pursuant to the National Monuments Acts. This was the s.26 licence. The defendant’s solicitors letter then summarised the changes of statutory function, detailed earlier in this judgment, and said:-
“We are seeking detailed instructions on the specific points raised by you and will respond in due course but wish to note for the record that the works to be carried out on behalf of Dunlaoghaire-Rathdown County Council will be done with the full approval of the relevant government department, that is the Department of the Environment and Local Government”.
26. The letter ended by reiterating that “as indicated above we will communicate further with you when we have received full instructions from our clients on the matter”.
27. The correspondence rested there until the 23rd January, 2003, which was a few days before the completion of the archaeological excavations by Ms. Keely’s company. On that day, the plaintiffs solicitors wrote again to the defendant and the National Roads Authority stating that their clients understood that the defendants intended to enter “that part of the site not already being utilised for the purposes of the works shortly, on completion of the archaeological excavation, for the purpose of carrying out road development work …”. They went on to say that the defendants “have failed to confirm whether an appropriate written consent has been obtained for the carrying out of works, which works will injure and/or interfere with the National Monument” which they said was required under s.14 of the 1930 Act as amended. They again threatened proceedings. Shortly after this a number of persons, including one of the plaintiffs, trespassed on the site with a view to preventing works on the fosse. This led to injunction proceedings in which the current defendants were plaintiffs. These were apparently resolved by undertaking and there is now no trespass or occupation on the site. The present proceedings were instituted by a plenary summons issued on the 5th February, 2003.
28. It thus appears that the objection that the works required consent under s.14 was raised by the plaintiffs more than four months before the proceedings were instituted. At that time, as the defendants correspondence makes clear, their contractors were not on the relevant part of the site for road building purposes, but in connection with further archaeological works which did not conclude until the 26th January, 2003. It would therefore have been open to the defendants then to apply for the consent under s.14 if they thought it necessary or prudent to do so or positively to decide not to do so and inform the plaintiffs of this, leaving them to proceed as they thought fit. Given that the archaeological works on the site were to proceed for a further period of just under four months from the 30th September, there was ample time to take either of these courses without prejudice to road works on the relevant part of the site. The County Council had been asked in terms whether they had a s.14 consent, and if so to produce it. They did neither of these things but said, through their solicitors, that in relation to these specific points they would “respond in due course” and “communicate further with your when we have received full instructions from our clients on the matter”. This was never done.
29. I cannot see, in that sequence of events, evidence of laches on the part of the plaintiffs. There was a clear opportunity to resolve the issue of whether s.14 consents were necessary or not, and if necessary to apply for such consent, without interfering with the road building programme, within the period when the site was still in the hands of the archaeologists. In this connection, I note that the defendants consultants obtained additional excavation licenses covering first a period of four week commencing on the 25th November, 2002 and, secondly a period of four weeks commencing on the 15th January, 2003.
30. The defendants solicitors did make the point that everything they were doing or intended to do had the approval of the Department of the Environment and Local Government. But this was not approval under s.14 and specifically was not a consent to remove or alter a national monument or any part of it. It was approval under s.26 as far as archaeological digging was concerned and presumably under the Roads legislation as far as the proposed road building was concerned. Running through the defendants submissions on this appeal was the suggestion that it was pointless to complain about the lack of a s.14 consent. The written submissions quote Dr. Duffy’s affidavit where he stated, in support of the view that a s.14 licence was required that “it is appropriate that the Minister and his officials, being independent of the County Council be given the opportunity to advise on the issues in the context of an application for consent”. The Council then said:-
“The responsible Minister/Duchas has exercised its independent function under the Acts by granting the appropriate consent, by way of licence under s.26 of the Acts”.
31. This, it seems to me, amounts to a suggestion that a licence under s.26 could in some way, in law, do duty for a consent under s.14. This ignores the essential facts, firstly that what is authorised under a s.14 consent (including removal or altering a national monument) it is different from what is authorised under a s.26 licence, and secondly, that the Minister in considering whether to consent under s.14 as amended is limited to quite a narrow set of criteria which do not appear to constrain him in any other capacity.
32. If, in addition, there is a suggestion that it would be pointless to seek s.14 consent because the Minister, having approved the road alignment and having granted the s.26 licences, would be virtually bound to grant the s.14 consent, I would reject that view entirely. Firstly, it is incidental that the Minister for the Environment now discharges the functions, in relation to giving consent under s.14, which were formerly to be discharged originally by the Commissioners of Public Works and subsequently by the Minister for Arts, Culture and the Gaelteacht. No doubt it is a somewhat odd position that a Minister with an interest in the road building programme is the person who requires to give consent under the National Monuments Act, even in relation to a monument whose removal or alteration in whole or in part is proposed for road building purposes. But the Court must presume that the Minister would correctly direct himself, if asked for consent under s.14, that he was then discharging a freestanding statutory function to which many of the considerations which properly influenced him in other capacities were irrelevant or improper to consider. Some might think it better if the function of deciding on an application to remove or alter a national monument in whole or in part was decided by another authority but we must take the statutes as we find them.
Alternative remedies.
33. The defendant argued that, if the plaintiffs are successful in the end, damages will be an adequate remedy for them. They also argue that the Statute provides a remedy for breach of s.14 – criminal prosecution, and the Court should not impose another remedy in the form of an injunction.
34. The plaintiffs do not seek damages in the plenary summons. This is surely realistic, for the claim is to assert a public right and not a private one. Their personal connection with the matter is as citizens. The Attorney General v. Sligo County Council has already been cited: there, a private action by the plaintiffs individually proceeded in tandem with the Attorney General’s proceedings at their relation and no suggestion of an adequate remedy in damages was made. Here, the plaintiffs do not allege they have suffered any substantial individual compensable harm. To use the old terms, they claim they will suffer injuria but only national domnum. Damages are not so much inadequate as irrelevant to their cause of action.
35. The McGarry case also concerned s.14, inter alia, and no suggestion was made that the availability of a criminal remedy prevented injunctive relief. This is surely realistic. The imposition of criminal penalties on a defendant proved to have contravened s.14 will not restore the status quo ante.
Balance of convenience and financial loss.
36. This matter is addressed in the affidavit of Mr. O’Hare, on behalf of the defendants, especially at para. 18. He says:-
“I say that the estimated cost to the council arising from the disruption and delay will be in the region of between €50,000 and €100,000 per week and the contractors claims for disruption to the road construction programme due to the extension of the time allowed for archaeological excavation could increase costs further and in this regard the tender price for construction of the South Eastern Motorway was €144,000,000”.
Later he says:-
“Any further delay in the Council’s contractor taking possession of the site will cause great prejudice to the Council and give rise to significant losses under the contract as previously set out. In addition, there is urgent public need in the interests of the common good that the scheme proceed to completion at the earliest possible date”.
He goes on to refer to the importance of the scheme and the disruption it causes to already overcrowded routes. I have no doubt that, as Mr. O’Hare says, the scheme is one of the largest and most important infrastructural schemes in the history of the State.
37. He goes on to take issue with the adequacy of the plaintiffs undertakings as to damages.
38. These are important and weighty matters, very proper to be considered by the Court in an application of this kind. But in order to be decisive in terms of the balance of convenience on this application they must be specifically related to the relief actually sought. I do not think that the defendants averments do this with sufficient precision. It is stated that delay in the motorway project would be expensive and more generally prejudicial, and there is no doubt that this is so. But there is no statement as to the precise way in which this claimed injunction and the proceedings commenced will delay the motorway. Nor have the defendants advanced any precise legal or factual basis for the losses they say will be incurred should an injunction be granted. The contract with the contractors has not been produced nor any basis of calculation or estimation suggested. The mention of the huge sum of €144,000,000 as the contract price of the South Eastern Motorway is, no doubt properly, calculated to make any court hesitate on the threshold of interlocutory relief. But neither this figure nor the much smaller still very significant weekly figure quoted have been related in any way to the actual scope of the proposed injunction. Specifically there is no averment that it would cause total stoppage of works that there is no other work capable of being done by the contractor or that, by virtue of any clause in the contract, the level of restriction constituted by the claimed injunction will trigger any particular claim by the contractor. If any of these things were features of the case, Mr. O’Hare is certainly in a position to know it. In my view it is not sufficient, either from the point of view of establishing a balance of convenience or attacking the undertaking, simply to mention huge sums of money without relating them either to the specific relief sought or to the specific liability for which the plaintiffs, by virtue of their undertaking, may become responsible.
Criteria for relief.
39. It remains to consider the above facts and findings in the context of the criteria for the grant of interlocutory relief. These have been authoritatively expressed in Campus Oil Ltd. v. Minister for Industry and Energy [1983] IR 88 and in a line of cases proceeding from it, of which the defendant has particularly referred to Clane Hospital Ltd. and Ors. v. Voluntary Health Insurance Board (High Court Quirke J. unreported 22nd May, 1998). The first question is as to whether the applicant has established a fair and bona fide question for determination. For the reasons set out above it is clear that they have done so. In view of the defendants failure to challenge their principle assertion in relation to the applicability of s.14 I would also consider that they have met the higher criterion for which the loosing party in Campus Oil contended, a probability of success at the trial. That, at least, is so in the present state of the evidence, though it must be recalled that the defendants stated that they would challenge at trial whether the site was, or included, a national monument.
40. As to adequacy of damages, I cannot see how, in a case where no damages are claimed and where the right asserted is a public right, it can be said that damages would be an adequate remedy to the plaintiffs.
41. The balance of convenience is said by the defendants to be a critical factor in this case. Clearly, the relief sought by the plaintiff is the preservation of the status quo, and this is normally considered to be an important aspect of the balance of convenience. The defendants say however that the plaintiffs have come very late and that the relief sought would involve a disproportionate interference with a huge public project with consequent expense and prejudice.
42. I stress that these matters are to be assessed on the evidence presented by the parties and not in an intuitive fashion. There are, in my opinion, grave deficiencies in the defendants evidence on the balance of convenience. There is no doubt that the scheme is a huge one, and an important part of our infrastructural development. The plaintiffs are not concerned to deny this. But there has been a failure to establish that the relief sought would interfere with the scheme, would give rise to a liability to the contractors or to anyone else or would prevent any work on the motorway continuing. The question of balance of convenience is a most important one in considering a large civil engineering project. But the purported damage and expense must, in my view, be established and not simply invoked. I have already referred to the freestanding mention of the huge sum of €144,000,000, in the affidavit of Mr. O’Hare. This sum is in no way related to the injunction claimed and Mr. O’Hare does not suggest that it is. The mere mention of an enormous sum of money as the total cost of the scheme does not in any way constitute evidence as to the balance of convenience of this particular case. No doubt there will be inconvenience rising from the grant of an injunction but the defendant has not adduced evidence from which one could rationally assess whether this will be of a trivial, or of a near catastrophic nature. If there is any question of the latter, one would expect that detailed evidence of that proposition would be available.
43. This point is also relevant, it seems to me, to the objection taken to the adequacy of the undertaking as to damages. The plaintiffs have offered such an undertaking and have not concealed that they are people of relatively modest means, being a heavy goods vehicle driver and a student respectively. But the attack on the undertaking as to damages, like the attempt to influence the balance of convenience, has not been supported by any sufficiently convincing statement of the actual costs of the present injunction.
Interlocutory relief.
44. It is important to emphasise that, in dealing with an interlocutory motion, the Court is not finally deciding any factual or legal aspect of this controversy. On a full hearing the evidence may be different and more ample. The law will be debated at greater length and, we are told, the question of the site’s national monument status will be put properly in issue, as it has not been here.
45. The difficulty for a court in dealing with any case on an interlocutory basis is that there is an ever present risk, either in granting or in withholding relief, of doing an injustice to the party who succeeds in the end. One has to balance the risks of injustice to the respective parties. In this context it is significant that, if no relief is granted, the Court will be effectively deciding the issue by inaction, since the apprehended interference with the alleged national monument will be complete long before the action can be tried.
46. The sole basis on which the plaintiffs can make a case approaching the strength required for interlocutory relief is in relation to the absence of a s.14 consent. The Court is not finally deciding that a s.14 consent is necessary, but on the present state of the evidence that appears to be so. This state of affairs is an essential element of the plaintiffs claim to relief. Accordingly it seems appropriate to grant relief restraining until further order the actions referred to in para. 1 of the Notice of Motion but with the addition of the words “without a valid consent under s.14 of the National Monuments Act, 1930 as amended”. There will be liberty to apply to the High Court. If it transpires that a consent under s.14 is sought and granted one would expect such an application to be made.
Templeville Developments Ltd v Leopardstown Club Ltd
, High Court, December 12, 2003, O’Sullivan J.
JUDGMENT of O’Sullivan J. delivered on the 10th day of December 2003
The first defendant owns and operates a racecourse over a large tract of land at Leopardstown, County Dublin. The plaintiff, by lease of the 5th June, 1998 holds part of these lands upon which are constructed, inter alia, a large and complex sports facility, several outdoor tennis courts, indoor tennis courts underneath two air filled domes and ancillary buildings. They also enjoy, in common with the defendant, the right to have their patrons park their cars in two identified car parks at all times and on “race days” (approximately twenty two per annum) on further car park or parks designated by the defendant and on non-race days on a parcel of land herein after called the yellow hatched land which lies to the south of the complex of buildings just referred to and to the north of the motorway CPO take acquired or to be acquired by the second defendant and already anticipated in the lease of 1998. The yellow hatched lands are defined so as to exclude the area affected by the CPO and also so as to exclude an area to be identified and known under the 1998 lease as the “new site”.
The “new site” was intended to be an alternative site to accommodate the plaintiff’s structures and tennis courts either built or to be built which would be
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affected by the then expected but as yet to be determined area of the proposed motorway take.
On the same date in 1998 the parties, aware of the impending compulsory purchase order of the second defendant and that it would in all probability affect the yellow hatched area and conceivably the entire or a significant amount thereof, entered into a supplemental licence agreement intended to be temporary governing the plaintiff’s rights to develop its sports facilities including the air filled Domes to cover proposed tennis courts, outdoor tennis courts and car parking in the context of the impending CPO. The essential idea behind the licence agreement was that any structures already built by the plaintiff under the lease affected by the CPO take would have to be moved onto the “new site” at the expense of the licensor which would also have to accommodate those of the plaintiff’s yet to be constructed tennis courts which it was entitled to construct under the lease.
I will return with greater precision to the arrangements in the lease and in the licence insofar as is necessary for this interlocutory application at a later point.
As it transpired the CPO take of the second defendant did affect the yellow hatched area by encroaching into it from the south and the motorway plans included a bridge over the proposed motorway servicing a large car park to the south of the motorway and accessed from the north via a ramp which, it came to the attention of the plaintiff shortly before the initiating of this interlocutory application, will extend beyond the second defendant’s acquisition line into the yellow hatched area by some distance and which will displace a number of car parks marked on a hard surface and shown on photographs in the course of the hearing before me. This number appears to be somewhere in the mid to high twenties and the defendant accepts that it will have to provide alternative car parking spaces for the plaintiff’s patrons to enjoy, in
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common with the defendant’s patrons, on the “new site”. It also came to the attention of the plaintiff in October (the injunction application having been adjourned by consent from July last in the context of the defendant’s assurance that the proposed works referred to were not imminent at that stage) that the access ramp will be supported by a solid substructure with the result that there would be no access under it eastwards from the west into the remainder of the yellow hatched area over which the plaintiff claims to enjoy parking rights (in common with the defendant).
Under the licence agreement as already indicated the plaintiff was entitled in the events which have happened to the benefit of a “new site” sufficient to accommodate yet to be developed structures which it may build under the lease of 1998 comprising seven outdoor tennis courts and also sufficient to accommodate its joint car parking rights on the balance of the yellow hatched area remaining apart from the motorway take and the area of the “new site”. The licence provided that any disagreement in relation to the proposed new site should be referred to arbitration. The defendant has identified an area for seven tennis courts situate in the balance of the yellow hatched area to the east of the existing dome number two and the existing (4) outdoor tennis courts already constructed on the yellow hatched area and there are disputes between the parties in relation to this proposed “new site”. These are to be referred to arbitration and it is further agreed between the parties that if they are unable to reach agreement about the specific questions or some of them to be referred to arbitration it may be necessary that that particular matter should be dealt with by the High Court. Also referred to arbitration will be the question whether under the licence the defendant is entitled to have the second defendant as its agent build the ramp, described above, over an area which is outside the second defendant’s CPO
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take and which affects portion of the yellow hatched area over which the plaintiff has joint car parking rights.
The result of the arbitration, accordingly, will be a determination whether the proposed “new site” offered by the defendant pursuant to its obligations under the licence satisfies those obligations and also whether it is entitled to build the access ramp in the manner proposed and described above.
The instant application is for an interlocutory order to restrain the construction of the proposed ramp pending the outcome of this arbitration.
The plaintiff submits first that it has raised an arguable case, at least, to say that the defendant is not entitled to construct a ramp which firstly intrudes over some twenty five or thirty of its car parks to which it has a joint right, and secondly which prohibits access into the yellow hatched area over which it has also rights for car parking. These rights are, it is submitted, established under the lease and are clearly intended to survive the temporary arrangements created by the licence. It is further submitted that damages will not be an adequate remedy because it will be impossible for the plaintiff to distinguish at the trial any reduction in its business referable either to its own less attractive car parking facilities in the event that the ramp is constructed on the one hand, or on the other, competition arising from a recently established sports facility in the vicinity.
It is further submitted that such estimate of loss as is advanced by the defendant in the context of its case that any delay in the construction of the ramp might cost it thousands of euro per week (the situation apparently being that the overall motorway project is being carried out by the well known construction company, Ascon and in regard to this the plaintiff says that this is an ascertainable sum unlike the damage which it will suffer and one which if necessary can be met by
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a payment pursuant to the plaintiff’s undertaking as to damages. The plaintiff submits that if the court is satisfied that there is a substantial question of law to be decided, I should first consider whether the plaintiff if now refused could be adequately satisfied by an award of damages. If so then it is accepted that normally an injunction will not be granted no matter how strong the plaintiff’s claim might be. On the other hand if damages would not provide an adequate remedy it is submitted I should next consider whether if the defendant were now enjoined and subsequently established a right to build the ramp it would be adequately compensated under the plaintiff’s undertaking as to damages. Once again if damages were to be an adequate remedy for the defendant on this hypothesis there would be no reason on this ground it is submitted to refuse the interlocutory injunction, and an injunction should issue without any further consideration of the balance of convenience.
The plaintiff submits that in the present case once it is accepted that there is a substantial question to be tried it is clear that damages will not be an adequate compensation for the plaintiff’s loss which is not capable of computation as identified above. On the other hand damages would be an adequate compensation for the defendant’s loss if now enjoined from building the ramp if it is subsequently held that it is entitled so to do because of the plaintiff’s undertaking as to damages and the readily quantifiable character of the losses identified by the defendant.
The plaintiff further submits, however, that if contrary to the foregoing I consider that I should move on to weigh up the balance of convenience in this case, that too clearly shows that the injunction should be granted. Such rights as the plaintiff enjoys over the balance of the yellow hatched area will survive the temporary licence agreement and continue for the remainder of the thirty five year term of the 1998 lease: it is unlikely that an arbitrator would make an order directing the removal
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of an already constructed ramp and the construction thereof would therefore permanently inhibit and curtail the joint car parking rights of the plaintiff into the balance of the term of the lease. On the other side, it is said, the defendant would merely be delayed in constructing a ramp accessing the bridge over the proposed motorway and if appropriate can be adequately compensated for this delay.
In response to the foregoing the defendant submits that the instant application is unmeritorious. It is the second attempt to bring such an injunction, the real purpose of which is to force the first defendant into yielding a more favourable agreement in relation to the car parking and other facilities at Leopardstown than the plaintiff is entitled to. A first attempt at an injunction was brought when the second defendant’s contractor’s vehicles first entered the site in January, 2002 and were allegedly encroaching on the plaintiff’s rights on the yellow hatched area and also interfering with and depositing mud and debris on the vehicle access ways within the site. It is alleged that these proceedings were abandoned (this is strongly denied by the plaintiff). It is further said that the application is grounded on a fortuitous mistake, namely the fact that the original take line of the CPO would have meant that the access ramp was too steep and therefore the ramp had to be extended beyond the take and into an area in respect of which the plaintiff was able to make a technical argument that it eliminated car parking rights and impeded access to further rights.
As part of the submission that this injunction application is really part of an overall strategy by the plaintiff to pressurise the defendant into conceding a more favourable deal on re-locating the plaintiff’s sports facilities, it is pointed out that the plaintiff is some nine months in arrears of rent in an amount of approximately €250,000.00. This was not denied by the plaintiff: rather it was pointed out that there
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were many disputes and disagreements in relation to this matter which should not be rehearsed here as they are not directly relevant.
It is further submitted that the plaintiff has not indicated a sufficient risk of damages at all and has indicated no credible apprehension of damage at least in respect of the balance of the yellow hatched area. In this regard it is pointed out that this area has been fenced off as part of the construction work requirements of the CPO for the last eighteen months or more and the plaintiff has not indicated any loss arising out of this curtailment of its access to the yellow hatched area nor has it attempted to provide itself with an alternative parking facility. The exterior flood lighting erected in this area by the plaintiff is for security purposes according to the defendant (the plaintiff says that this is to facilitate night time parking). The defendant submits that the reason why the plaintiff has been unable to point to any specific losses arising from its inability to access the yellow hatched area for car parking in the last year and a half is because there are plenty of other areas where its patrons park everyday. The defendant says that the plaintiff has sustained no credible loss whatsoever under this heading and therefore there is no need for an injunction to prevent such loss. With regard to the specific loss of twenty five or six car parking spaces under the foot print of the extended ramp the defendant accepts that the plaintiff will have to be compensated for this and submits that such compensation will be provided under the licence agreement whereby that issue is referred to arbitration. The defendant accepts that the plaintiff must be provided with additional car parking to substitute and replace these lost car parks and that issue will be or can be referred to arbitration under the licence agreement.
The defendant points to the background to the dispute and to the fact that there is an unambiguously worded arbitration clause and to the fact that the plaintiff refused
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to have these issues referred to arbitration for well in excess of a year while these proceedings were being processed and has therefore been delaying the resolution of this issue. Now it agreed at the last minute when this injunction application came to court to have these matters referred to arbitration. If the plaintiff had accepted the arbitration clause eighteen months ago then these matters would have been determined and there would now be no need for an injunction. This delay is merely a tactical ploy to put pressure on the defendant to yield a better agreement in respect of the new site than the plaintiff is entitled to achieve. Moreover, it is clear that an alternative access route can be provided for patrons of the plaintiff into the balance of the yellow hatched area even if the ramp is constructed but it is fair to point out that the plaintiff hotly disputes the viability of this alternative access route. The defendant submits that the whole difficulty arises out of the CPO and indeed the plaintiff has acknowledged as much in his affidavit and that it is clear that same was intended under the licence agreement to either curtail the plaintiff’s rights over the yellow hatched area or if there was a disagreement about it such difficulty should be referred to arbitration. The defendant disagrees that the plaintiff is entitled to a demise over the yellow hatched area or the balance thereof left over the CPO and the new site had been taken out of it as claimed by the plaintiff.
In reality the loss claimed by the plaintiff is de minimis in the overall context of the car parking available to it at Leopardstown and given that the defendant is obliged to compensate the plaintiff by providing equivalent or alternative facilities in the new site under the licence. It was also submitted that the evidence in relation to the ramp is that the original ramp which turned out to be too steep would itself have blocked off access into the yellow hatched area for the plaintiff’s patrons’ car parking but in this context counsel for the plaintiff asked that I would bear in mind that this
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evidence was produced in a last minute affidavit filed with liberty of the court by the defendant and that the plaintiff’s instructions on this point would differ with that conclusion.
Conclusions
Fair question to be tried?
The 1998 lease demises to the plaintiff inter alia
“The right to park motorcars and motor vehicles on non-race days on the parcel of land… cross hatched in yellow which does not form part of the new site and which is not affected by the CPO”.
Such is the description of part of the rights conferred on the plaintiff under Clause 2 of that lease.
Clause 2 of the licence provides inter alia as follows:
“And provided always (for the avoidance of any doubts), the parking rights conferred on the licensee under Clause 2 of the lease, which relates to the parts of land which is shown on map number 1 attached thereto and thereon cross hatched in yellow and which is not affected by the CPO will subsist in every respect beyond the grant and demise referred to above notwithstanding the provisions of Clause 3.11 hereof”.
(Clause 3.11 provided that on the expiration or earlier termination of the licence the licensee covenanted to cease to occupy and use the licensed area and to fully vacate the same and hand up possession thereof).
It seems to me that it is at least arguable that the lease conferred parking rights on the balance of the yellow hatched area which were acknowledged in the licence and intended under both instruments to survive the temporary existence and termination of the latter. In those circumstances in my view it must be likewise
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arguable that the plaintiff now enjoys rights over the balance of the yellow hatched area and is entitled not to have those rights imperilled or infringed. The parties are in the process of refining their agreement to refer to arbitration issues as to the adequacy of the proposed new site and also as to the entitlement of the defendant to build the ramp as now proposed. In my view the plaintiff has raised an arguable case as specified above and in compliance with the established jurisprudence in this regard I do not intend to say anything more about it given that the purpose of the plaintiff’s undertaking as to damages is to enable the court to avoid answering such a question at this interlocutory stage.
On the question of the adequacy of damages as a remedy for any loss that the plaintiff might sustain if I refuse to grant the injunction and hereafter it is established that the construction of the ramp has wrongfully interfered with the plaintiff’s rights it seems to me that there is force in the contention that the relevant period for consideration should be the balance of the thirty five year period dating from June 1998 because if the ramp is constructed as intended it is likely to be a permanent structure in respect of which there must be at least some doubt that it will ever be removed. I do acknowledge that the defendant has proposed an alternative access route for the plaintiff’s patron’s vehicles to access car parking in the balance of the yellow hatched area. This is a proposal which has been developed late in these proceedings and has been subjected to adverse criticism on behalf of the plaintiff. In my opinion the construction of the ramp is capable of curtailing the range of alternative car parking facilities to be made available to the plaintiff which curtailment I consider should be viewed as a potentially permanent diminution of the plaintiff’s car parking entitlements. This diminution may in the event be slight but it is not so slight in my view as to be unworthy of being weighed in the balance at this
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stage of these proceedings. I am also persuaded by the submission that it would be difficult if not impossible to quantify in damages the amount of any loss to the plaintiff arising because of this diminution in his car parking or alternative car parking entitlements and for this reason I do not think damages would be an adequate remedy for such loss as the plaintiff might sustain were I to refuse the injunction.
On the other hand I am satisfied that damages would be an adequate remedy for any losses which the defendant would sustain and that these would be an amount which would be capable of being met by the plaintiff pursuant to its undertaking as to damages.
In these circumstances it is appropriate that I grant the injunction sought and I purpose so to do: that is to say to make an order prohibiting the defendant or its servants or agents from constructing the ramp at the western extremity of the yellow hatched area pending the outcome of the arbitration referred to in this judgment.
I consider however that a substantial amount of the disputed rent arrears should be placed on joint-deposit with the parties’ respective solicitors or otherwise by agreement pending further order of the Court. The amount to be so lodged should be €150,000.00 and the proposed injunction should take effect from the date of such lodgement subject to the proviso that the amount be lodged before 31st December, 2003.
In reaching the foregoing conclusion I wish to make it clear that I am specifically following the authority of the Supreme Court judgment delivered per Blayney J. in Ferris v. Ward [1998] 2 I.R. 194 at 201/2 as follows:-
“In the circumstances what the court has to do is to look at the balance of convenience and the manner in which this should be approached is set out
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with great precision in the same judgment of Diplock L.J. in a passage immediately following that already cited:-
‘As to that, the governing principle is that the court should first consider whether, if the plaintiff were to succeed at the trial in establishing his right to a permanent injunction, he would be adequately compensated by an award of damages for the loss he would have sustained as a result of the defendant’s continuing to do what was sought to be enjoined between the time of the application and the time of the trial. If damages in the measure recoverable at common law would be adequate remedy and the defendant would be in a financial position to pay them, no interlocutory injunction should normally be granted, however strong the plaintiff’s claim appeared to be at that stage. If, on the other hand, damages would not provide an adequate remedy for the plaintiff in the event of his succeeding at the trial, the court should then consider whether, on the contrary hypothesis that the defendant were to succeed at the trial in establishing his right to do what was sought to be enjoined, he would be adequately compensated under the plaintiff’s undertaking as to damages for the loss he would have sustained by being prevented from doing so between the time of the application and the time of the trial. If damages in the measure recoverable under such an undertaking would be an adequate remedy and the plaintiff would be in a financial position to pay them, there would be no reason upon this ground to refuse an interlocutory injunction.
It is where there is doubt as to the adequacy of the respective remedies in damages available to either party or to both, that the question of the
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balance of convenience arises. It would be unwise to attempt even to list all the various matters which may need to be taken into consideration in deciding where the balance lies, let alone to suggest the relative weight to be attached to them. These will vary from case to case.’
I do not think that there is any doubt here as to the respective remedies in damages. It is clear that the receiver’s remedy would not be adequate: not because damages could not adequately compensate him, but because Mr. Ward could not be relied upon to have the financial means to pay the damages. On the other hand, I think there is no doubt that Mr. Ward would be adequately compensated by an award of damages since the loss he would suffer as a result of an injunction being granted would be entirely pecuniary and the receiver would be in a position to pay whatever damages he might be awarded. There is accordingly no reason to refuse the receiver an injunction. It follows that I would dismiss Mr. Ward’s appeal against the injunction granted to the receiver.”
I also wish to make it clear that if I am incorrect in reaching the foregoing conclusion and if had been appropriate for me to further consider the balance of convenience (which I understand to become appropriate only if there is a doubt as to the adequacy of the respective remedies in damages – in respect of which I entertain no doubt as already indicated) I would hold that the balance of convenience also favours the granting of an injunction because it seems to me that the construction of a permanent ramp as proposed by or on behalf of the defendant would bring about a situation unlikely to be reversed whereby the range of possible alternative car parking facilities that could be made available to the plaintiff by the defendant pursuant to its
– 14 –
obligations under the licence would be diminished and that this would be an injustice not capable of being remedied in damages. On the other hand a temporary hold-up in the construction of the ramp would be a wrong which would be capable of remedy firstly in the sense that it could be compensated in damages as I have already held and secondly in the sense that no permanent harm would be done to the defendants’ rights.
The plaintiff’s motion for judgment in default of defence
The defendant says that the plaintiff should have agreed at once to arbitration and that the motion for judgment in default of defence was artificial and indeed an attempted ruse to trick the defendant into taking a step which would have disentitled it from proceeding to arbitration. The plaintiff says that the defendant is even now not ready to identify the issues for arbitration and that in any event there are certain issues apart from the arbitration issues which should be litigated in these proceedings.
In my opinion the plaintiff is not entitled to judgment in default of defence and I would dismiss the plaintiff’s motion with costs thereof to the defendant to be taxed in default of agreement.
With regard to costs of the interlocutory application for an injunction I will in the usual way reserve these to the trial judge.
Metro International SA v Independent News and Media plc
[2006] 1 I.L.R.M. 414 Clarke J. JUDGMENT of Mr. Justice Clarke delivered the 7th October, 2005.
1. INTRODUCTION
1.1 The third named plaintiff (“Fortunegreen”) is about to launch a free newspaper which it intends to call “Metro” and which it intends will be distributed by hand at busy locations in Dublin. Fortunegreen is a joint venture between the first plaintiffs (“Metro”) and Associated Newspapers Limited (“Associated Newspapers”). Metro is the parent company of the Metro International Group of Companies, which, it would appear, publishes 57 daily free newspaper editions under the name “Metro” in 81 cities in 18 countries across Europe, North and South America and Asia. Associated Newspapers similarly publishes and distributes a free newspaper called “Metro” in the United Kingdom in the 13 largest cities in that jurisdiction including London, Manchester, Birmingham, Glasgow and Edinburgh. On the evidence available at this stage it would appear that a similar method of publication and distribution is adopted both by Metro and by Associated Newspapers.
It is intended that Fortunegreen will publish, in Ireland, a similar free newspaper using the title “Metro”.
1.2 The second named plaintiff (which is a wholly owned subsidiary of Metro) holds a registered trade mark in Ireland in respect of a Metro device or stylised mark. That mark is registered under No. 219849 and was applied for in 1998. The device is a representation of the word Metro with the O depicted in the form of a globe. The registered device appears in the following form:
{Logo}METRO{Logo}
1.3 In fact the newspaper that Fortunegreen intends to publish, is likely to bear a masthead which is similar to those used by Associated Newspapers in the United Kingdom and which, it will be seen, differs to some extent from the registered mark. The United Kingdom masthead is in the following form:
{Masthead} Free METRO {Masthead}
1.4 The proceedings stem from the stated intent of the defendants (“Independent”) to launch their own free newspaper under the title “Herald Metro Edition”. In the
course of these proceedings Independent caused to be exhibited a copy of the
masthead under which their free newspaper is intended to be published and marketed.
It appears as follows:
{Masthead} FREE Herald Metro edition {Masthead}
1.5 Independent is, of course, the publisher of, amongst other prominent titles, the “Evening Herald” which, as was pointed out both in the affidavit evidence tendered
on Independent’s behalf, and in argument, is a newspaper which has been in publication for a century and is Ireland’s largest selling evening newspaper, selling an average of in excess 93,000 copies per day Monday to Friday. As can be seen from the above masthead the “Herald” logo (which appears in red on the original exhibit of the intended masthead), is borrowed directly both as to colour and typescript from the masthead of the existing “Evening Herald” newspaper.
I .6 It was also established in evidence that Independent has made use of the term “Metro” in describing certain editions of some of its newspapers or in relation to certain supplements or segments of such newspapers. It would obviously be inappropriate to reach any concluded view as to the extent to which it may be said that Independent has established a use of the term “Metro” in respect of its newspapers to the extent that it may have an effect on any of the legal rights involved in the dispute between these parties. Such a matter can only be resolved at the full trial of the action in this case. However at this stage it should also be noted that the plaintiffs, correctly in my view, draw attention to the fact that the apparent use of the term “Metro” by Independent in the past has been confined either to a relatively small (in size) description of a particular edition of an individual newspaper for the purposes of distinguishing it from other editions of the same newspaper or to describing individual segments or supplements of a newspaper rather than in respect of the principal title thereof. This latter fact is emphasised by an application which Independent has made for the registration of a trade mark comprising of the name “Metro” which is stated to be in respect of “newspaper supplements”. There does not, at this stage, appear to be any evidence of a previous use of the term “Metro” in what might be called the main title of a substantive newspaper.
1.7 It should also be noted that it is common case that the intention of Independent to publish its free sheet newspaper is, at least in significant part, a reaction to the proposal by Fortunegreen to publish its “Metro”. As is pointed out by Joseph Webb, the Deputy Managing Director of Independent, Independent “resolved that in the event that any third party began to publish a free sheet newspaper within the Dublin Metropolitan Area (Independent) would also do so, in order to protect its legitimate business interests and develop its existing titles, in particular the Evening Herald”. There is nothing, of course, inappropriate in Independent seeking to protect its legitimate business interests by launching a competing free newspaper to that contemplated by the plaintiffs. The issue in this case is as to whether it can do so making use of the term “Metro”.
1.8 In those circumstances the plaintiffs have commenced proceedings which contend, amongst other things, that by publishing and distributing a newspaper under such a masthead Independent would infringe the trade mark referred to above. The case has come before the court as an urgent application for interlocutory relief in circumstances where the plaintiffs wish to commence publication in very early course (that is to say within a small number of days) and where the stated position of Independent would appear to be that it would be their intention to publish their free newspaper as an immediate response to the publication by the plaintiffs of the Metro free newspaper. So far as the interlocutory application, currently before the court, is concerned the only basis upon which publication in that form is sought to be restrained is as an alleged infringement of the trade mark to which I have referred. While the plaintiffs general endorsement includes a claim in respect of an injunction restraining and damages for passing off and while Independent has contended in correspondence that it, in turn, may issue proceedings in respect of passing off as against the plaintiffs the only legal issue with which I am concerned at this interlocutory application is, therefore, the plaintiffs claim for an injunction in respect of what they contend would be an infringement of their trade mark.
2. SERIOUS ISSUE (THE TEST)
2.1 While there was some significant debate at the hearing before me as to whether special circumstances may apply in the consideration of an application for an interlocutory injunction in relation to trademark and passing off matters it was not contended that the basic questions which need to be addressed in such an application are those which have been established in relation to interlocutory injunction applications generally. The above debate, to which I will return, centres on whether the approach of the court in respect of certain aspects of the tests which have been developed for the grant or refusal of interlocutory relief may be somewhat different in such cases.
2.2 However it is clear that the first question which needs to be addressed, as always, is as to whether the plaintiffs have established a serious issue to be tried. In those circumstances it is necessary to consider the plaintiffs case for infringement. 2.3 Section 14(2) of the Trade Marks Act 1996 provides that:-
“A person shall infringe a registered trademark if that person uses in the course of trade a sign where because –
…
(b) the sign is similar to the trademark and is used in relation to goods or services identical with or similar to those for which the trademark is registered,
there exists a likelihood of confusion on the part of the public which includes the likelihood of association of the sign with the trademark.”
2.4 As was pointed out by McCracken J. in Smithkline v. Antigen Pharmaceuticals Limited [1999] 2 ILRM 190 the above section introduced a totally new concept into the definition of infringement (being the idea of “association”) which does not appear to have been considered by the courts in this jurisdiction. As was further pointed out by McCracken J. in Smithkline it is not for the court, at an interlocutory stage, to say whether there is, in fact, a likelihood of association of the defendants sign with the plaintiffs registered trade mark but it is necessary for the court to determine whether there is a serious issue to be tried in that regard. The relevant provisions of the Trade Marks Act 1996 were derived from the first council directive (89/104/EC)of the 21st December 1988 to approximate the laws of the member states relating to trade marks. Therefore in interpreting the provisions of the Trade Marks Act 1996 significant regard has to be had to the jurisprudence of the courts of the European Union in respect of the interpretation of the directive.
2.5 In that context it is of particular relevance to refer to Sabel BV v. Puma AG and Others (Case C – 251/95) where the Court of Justice in its decision had the following to say:-
“As pointed out in paragraph 18 of this judgment, Article 4(1)(b) of the directive does not apply where there is no likelihood of confusion on the part of the public. In that respect it is clear from the 10th recital to the preamble to the directive that the appreciation of the likelihood of confusion “depends on numerous elements and, in particular, on the recognition of the trademark on the market, of the association which can be made with the used or registered sign, of the degree of similarity between the trademark and the sign and between the goods or services identified”. The likelihood of confusion must therefore be appreciated globally, taking into account all factors relevant to the circumstances of the case.
That global appreciation of the visual, aural or conceptual similarity of the marks in question must be based on the overall impression given by the marks, bearing in mind, in particular, their distinctive and dominant components. The wording of Article 4(1)(b) of the directive – “there exists a likelihood of confusion on the part of the public”, – shows that the perception of marks in the mind of the average consumer of the type of goods or services in question plays a decisive role in the global appreciation of the likelihood of confusion. The average consumer normally perceives the mark as a whole and does not proceed to analyse its various details”.
2.6 Applying that test to the instant case it is necessary to ask whether there is a serious issue to be tried as to whether a global appreciation of the various relevant characteristics of the marks would give rise to the likelihood of confusion on the part of the ordinary consumers of the goods in question.
3. ASSESSMENT OF THE PLAINTIFFS CASE
3.1 In making such an assessment in the current case it is necessary to have regard, amongst other things, to the following factors:-
(a) the products in respect of which both marks are intended to be used would appear to be likely to be virtually identical being free newspapers concerned with the same broad range of material and distributed in largely identical ways;
(b) it is at least possible, having regard to the manner in which newspapers are generally recognised by and described to the public, that a newspaper title bearing a number of words in it’s name will be reduced in the common parlance of the marketplace to a single word. Therefore regard must be had to the possible manner in which consumers may actually identify newspapers of the type concerned;
(c) it is at least possible that, having regard to the fact that the defendants will continue to market and promote their “Evening Herald” newspaper, which will continue, as heretofore, to be sold, rather than distributed free, that it will be necessary in the marketplace for a distinction to be drawn between the traditional “for sale” Evening Herald and the free Herald Metro edition. In those circumstances it is possible, given that the word “edition” is unlikely to provide any adequate distinction, that the term Metro would become a significant distinguishing feature between the traditional “Evening Herald” and the free “Herald Metro edition”. In that context it is worth noting that the United Kingdom courts held in Guardian Media Groups plc v. Associated Newspapers Ltd (Unreported, 14 January, 2000 (High Court) and 20 January 2000 (Court of Appeal)) that the existence of two newspapers with different mastheads but with titles of “Manchester Metro News” and “Metro Northwest” respectively was likely to give rise to confusion sufficient to establish a serious issue to be tried as to passing off;
(d) It is common case, and is in fact the appropriate legal position, that the question of confusion must be judged as against the registered mark rather than any variation thereof that may actually be intended to be used by Fortunegreen in their publication. In that context it should be noted that certain of the distinguishing features of the registered mark (and in particular the global “O”) are not intended to be used.
3.2 Notwithstanding this latter fact it seems to me that I must necessarily conclude that there is a serious issue to be tried as to whether the above factors might lead the court to take the view, at trial, that there is a sufficient likelihood of confusion so as to meet the test for infringement. I must, therefore, conclude that the plaintiff has established that there is a serious issue to be tried.
4. ADEQUACY OF DAMAGES/BALANCE OF CONVENIENCE
4.1 In those circumstances it is necessary to turn to the question of the adequacy of damages and the balance of convenience. The approach of the court to these issues was fully but succinctly set out by McCracken J. in B & S Limited v. Irish Autotrader Limited [1995] 2 I.R. 142 which has the merit of being a case involving analogous issues concerning an allegation of passing off and which also relates to the titles of potentially competing publications.
4.2 At p. 145 McCracken J. set out a summary of the test to be applied in circumstances where it has been shown, as here, that there is a serious issue to be tried in the following terms:-
“1. An interlocutory injunction should be refused if damages would adequately compensate the plaintiff for any loss suffered between the hearing of the interlocutory injunction and the trial of the action provided the defendant would be in a position to pay such damages.
2. Should this test be answered in the negative an interlocutory injunction should be granted if the plaintiffs undertaking as to damages would adequately compensate the defendant should he be successful at the trial in respect of any loss suffered by him due to the injunction being in force between the date of the application for the interlocutory injunction and the trial, again assuming that the plaintiff would be in a position to pay such damages.
3. If damages would not fully compensate either party then the court may consider all relevant matters in determining where the balance of convenience lies but these will vary depending on the facts of each case.
4. It is normally a council of prudence, although not a fixed rule, that if all other matters are equally balanced the court should preserve the status quo.
5. Again where the arguments are finally balanced, the court may consider the relative strength of each parties case as revealed by the affidavit evidence adduced at the interlocutory stage where the strength of ones parties case is disproportionate to that of the other.”
As to the overall approach of the court McCracken J. went on to say at p. 146 that:-
“While Lord Diplock only used the phrase “balance of convenience” when considering the position if damages were not an adequate remedy for either party, I would be more inclined to the view that the entire test rests on a balance of convenience, but that the adequacy of damages is a very important element, and may frequently be the decisive element, in considering where the balance of convenience lies.”
4.3 The same test was applied by Laffoy J. in Symonds Cider and Another v. Showerings (Ireland) Limited [1997] 1 ILRM 481 while possibly, by inference, querying whether it was open to this court to have regard to the fifth item identified by McCracken J. (i.e. the possibility of assessing the strength of the case on the affidavit evidence in an otherwise equally balanced case) having regard to the judgment of the Supreme Court in Westman Holdings Limited v. McCormack [1992] 1 I.R. 151. Whether one views the above set of criteria as identifying a single test of the balance of convenience (of which the adequacy of damages is a potentially significant part) or as two separate tests whereby one first considers the adequacy of damages and only then moves on to weighing the balance of convenience, seems to be more a matter of semantics than substance in that it is clear from the judgment of McCracken J. in Irish Autotrader that in a case where the plaintiff can be adequately compensated in damages and the defendant is a mark for such damages the balance of convenience will inevitably favour the rejection of the application for an injunction.
4.4 It is also, perhaps, important to note the nature of the type of loss which must be assessed as to whether it might be compensatable in damages. As is pointed out by McCracken J. at item 1 of the test set out above it is the loss which would flow between an injunction being granted at the interlocutory stage on the basis of the plaintiff having established a fair issue to be tried up to the time of trial where that issue was ultimately found against the plaintiff. There are, of course, cases where even at trial damages would be an adequate remedy and where, in accordance with the established jurisprudence of the courts, an injunction will not normally be granted even though the plaintiff succeeds in establishing wrongdoing. There are, however, on the other hand, cases where the courts have traditionally not been prepared to award damages even though there is a sense in which any relevant loss could be calculated in monetary terms. Thus in many cases where a plaintiff alleges an infringement of his property rights the court will intervene by injunction where those property rights have been established rather than compensate the plaintiff for the loss of those property rights. To take an extreme but illustrative example a person who owns a house and whose house is occupied by others (assuming them to be a mark for the value of the house) would undoubtedly be entitled to an injunction to restrain such wrongful occupation even though there is a sense in which the aggrieved party could be fully compensated by being awarded as compensation as against a defendant of means the value of the house together with any additional sums that might be necessary to compensate for the disruption caused. Thus the mere fact that a property right (or indeed a diminution in such a right) can be valued in monetary terms does not of itself mean that damages for an infringement of that property right can necessarily be said to be an adequate remedy.
4.5 While it may well be that a temporary short term interference with a disputed property right (resulting from a failure to grant an interlocutory junction) may not give rise to quite such a clear-cut situation, it is, nonetheless, in my view important for the court to take into account in addressing the question of whether damages may be an adequate remedy (for the period identified by McCracken J. in Irish Autotrader) whether the nature of the matter which is alleged to be interfered with is the kind of matter which the courts have traditionally held should be protected by injunction rather than simply compensated for in damages. Clearly property rights are one such category which is the probable explanation for what was described by Costello J. in Mitchelstown Co-Operative Agricultural Society Limited v. Golden Vale Products Limited (Unreported, High Court, Costello J. 12th December, 1985), as the “axiom” that in most passing off actions damages are not an adequate remedy for a successful plaintiff. A passing off action is, of course, designed to protect the property right in goodwill. While addressing the question of whether that rule should apply on the particular facts of the case under consideration, Laffoy J. in DSG Retail Limited v. PC World Limited and Others (Unreported High Court, Laffoy J. 13th January 1998) having referred to Mitchelstown concluded that what she described as “the normal axiom in passing off actions, that damages would not be an adequate remedy for the plaintiff” should apply on the facts of that case.
4.6 Similarly in Dublin Port and Docks Board v. Britannia Dredging Company Limited [1968] I.R. 136 the Supreme Court, following Doherty v. Allman 3 App Cas 709 accepted that where it is established that a party has agreed to a negative covenant a court, at least at the trial of an action, will prima facie enforce that covenant even though it may be possible to measure the loss that would be attributable to its non performance in monetary terms. Thus enforcement of a negative covenant may be another type of case where the court leans in favour of enforcement by injunction rather than compensation.
4.7 In Irish Shell Limited v. JH McLoughlin (Balbriggan) Limited (Unreported, High Court, Clarke J. 4th August, 2005) I had regard to the latter above principle in respect of a negative covenant as a factor to be taken into account in the grant of an interlocutory injunction when taken in conjunction with the fact that, in that case, a permanent injunction might well have been of little benefit if obtained at trial having regard to the purpose for which the covenant concerned had allegedly being entered into.
4.8 While fully accepting, therefore, that the primary consideration of the court in assessing the adequacy or otherwise of damages at the interlocutory stage is the loss that might be sustained in the period between the refusal of an interlocutory injunction (or indeed its grant and the reliance by a defendant upon the undertaking as to damages given to secure it) and the trial I am nonetheless of the view that in assessing the adequacy or otherwise of such damages as a remedy the court can and should have regard to the question of whether the right sought to be enforced or protected by interlocutory injunction is one which is of a type which the court will normally protect by injunction even though it might, in one sense, be possible to value the extinguishment or diminution of that right in monetary terms.
5. APPLICATION TO THIS CASE
5.1 Applying that test to the facts of this case I have come to the following views.
The market for free newspapers of the type which both parties now seek to publish is, to all intents and purposes, unexplored in Ireland at this stage. While there is, in the affidavit evidence, reference to certain instances of free newspapers being published such cases are both limited and relate to a significantly different type of business than that contemplated by both of the parties to this litigation. It is important to remember, therefore, that any question of damages, to either side, will require to be assessed against a significantly speculative background. We are not here dealing with an established market where the parameters of that market can be readily established in evidence and from which there is, therefore, an appropriate starting point to assess the effects of either an injunction which is ultimately found to be inappropriate or a failure to injunct in circumstances where the plaintiff ultimately succeeds. It would appear to be common case amongst the deponents of the affidavits filed on both sides that the early period of the publication of newspapers such as those contemplated by both sides is of crucial importance. This must be particularly so where both would seek to enter what is in essence virgin territory. Even in cases where there is an established market there will always be difficult questions as to whether the business which the intruder (that is to say the party who intervenes in a wrongful fashion by passing off or infringing a trademark) has gained is the precise level of business which the incumbent may be said to have lost.
5.2 As was pointed out by Laffoy J. in DSG Retail.
“in any alleged passing off situation where the plaintiff has no control over the activity of the defendant, there would be a potential for unquantifiable damage to the plaintiffs goodwill and reputation and for the dilution of the value of the mark to the plaintiff”.
That situation is exacerbated in circumstances where there is a new and unexploited market with all to play for and where it would be virtually impossible to ascertain with any degree of accuracy how that market would, theoretically, have developed in the various different scenarios which the court might have to consider.
5.3 If the plaintiff succeeds in obtaining an injunction then it is clear that it is highly probable that it will go ahead and publish its edition of “Metro” in very early course indeed. In those circumstances two alternative scenarios arise in that Independent may choose to await the outcome of the trial before publishing its own free newspaper on the basis that it would then have certainty as to whether it could or could not use “Metro” in the title. Alternatively Independent might choose to publish a competing newspaper using a title which did not contravene the terms of the injunction reserving unto itself the right to incorporate Metro into the title should it succeed at the trial and should it then feel that it was to its advantage so to do. On the evidence it is clear that there is at least a possibility that in the event that the plaintiffs do not secure an interlocutory injunction at this stage they will decide, for commercial reasons, not to publish “Metro” until after the trial and whatever judgment may be delivered thereafter. Even with the best cooperation of all parties and the court it seems unlikely that effective publication significantly in advance of Christmas could be achieved in that scenario. In those circumstances the effect on both parties of commencing publication at a time which, on the evidence, would appear to be far from optimum would also need to be assessed. Given the stated position of Independent it seems unlikely that Independent would publish its edition in the event that the plaintiffs chose not to. On the other hand notwithstanding the refusal of an injunction the plaintiffs may choose to publish nonetheless and take their chances. In that eventuality they would have had the benefit of publishing at their chosen time but would have to compete with a rival newspaper which would, on the basis of the plaintiffs argument, be engaged in wrongful competition by reason of the contended for infringement of the trade mark. How any or all of the above scenarios would impact upon the possible growth of the market for free newspapers of the type contemplated by both parties makes any attempt to retrospectively ascertain losses attributable on either side to the presence or absence of an injunction all the more impossible of calculation.
5.4 In those circumstances I am satisfied that damages would not be an adequate remedy to compensate the plaintiff for the harm which it will establish if it succeeds at trial but has failed to obtain an interlocutory injunction. In those circumstances the plaintiffs would have been exposed to detriment either:-
(1) by having had to launch its product using its property right in its mark against the competition of a competing infringing mark with virtually unidentifiable consequences for the market as a whole (let alone its share of that market) in contrast to the situation where it ought, (on the assumption that it succeeds at trial) to have been permitted to launch in the market free of competition which involved the use, to a significant degree, of the term “Metro” in the masthead or title of that opposition publication; or
(2) by having to postpone its launch until after the trial.
Anyone with experience in commercial litigation will be all too well aware of the difficulty of establishing the extent of loss attributable to a wrongful interference with a contemplated business which is wrongfully damaged prior to or at the point of its inception.
While it is frequently true, and, as pointed out by counsel for Independent is the case here, that most new ventures will have carefully prepared projections as to the likely way in which the business will evolve, such projections are no more than their name implies. At least a projection for the continuation of an existing business is capable of being assessed as to realism having regard to the previous history of the business and the likely impact of any new factors on its performance into the future. Where the business has not yet got off the ground such assessments are necessarily all the more speculative. Where, as here, not only has the plaintiffs business not yet commenced but it is intending to establish itself in an as yet unexploited marketplace, the assessment of any consequence of a wrongful interference with it in its critical start up period would, in my view, extend beyond the speculative and difficult (though perhaps possible of calculation), to the entirely unquantifiable.
5.5 For that reason alone, I would not regard damages as being an adequate remedy for the plaintiff for detriment during the period between a failure to grant an injunction on this application and a successful trial. When also taking into account the fact that the plaintiff here seeks to support a property right which should not, in the ordinary way, be capable of being “bought off” by damages then I am strengthened in that view. It is therefore necessary to answer the first test identified by McCracken J. in Irish Autotrader by indicating that damages would not be an adequate remedy for the loss identified in that test and that an interlocutory injunction should not be refused on that basis.
5.6 However for similar reasons I agree with the submission made by counsel on behalf of the plaintiffs that it necessarily follows that the plaintiffs undertaking as to damages would not adequately compensate Independent, should it be successful at the trial, in respect of any loss suffered by it due to an injunction being in force between now and the date of trial. It again would be impossible to disentangle the way in which this new market would have evolved in the event that Independent had been permitted to compete with Fortunegreen by means of a publication giving prominence to the word “metro” as opposed to being confined by the injunction either to not competing at all or competing by the use of a differently titled publication.
6. THE BALANCE
6.1 This case, therefore, comes down to the third question identified by McCracken J. in that for the reasons indicated above I am satisfied that damages would not fully compensate either party and I must, therefore, consider where the balance of convenience lies considering all of the facts of the case.
6.2 It seems to me that in relation to this case it is of particular importance to seek to analyse the basis upon which either party might succeed at trial. If Independent succeeds at trial then it is almost certain that it will have persuaded the court that there was not a likelihood of confusion in the relevant marketplace between two free newspapers of similar target audience marketed and distributed in the same way and bearing the titles indicated above. As emphasised by counsel for Independent there is considerable prominence given in the title of Independent’s intended newspaper to the word “Herald” printed in the familiar way which almost all would associate with the existing “Evening Herald” newspaper. While not confined to this argument it is, of course, a significant part of Independent’s case that the principal identification or association of a notional consumer with the masthead of their intended publication will be with the Herald theme to a sufficient extent that there would be no likelihood of confusion between it and Fortunegreen’s competing paper. It would, of course, be inappropriate at this stage to express any view of the likelihood of that or any other arguments succeeding. However in order for the question of the “inconvenience” of Independent to arise it is, of course, necessary that it should succeed at trial and that the court would be persuaded by some such argument. On that basis the court would necessarily have come to the view that not only was the presence of the “Herald” title a significant factor in the Independent’s free title but a factor of such significance that it removed a likelihood of confusion between the “metro” portion of the full Independent title and the use of the same word as the totality of the Fortunegreen title.
6.3 If that should turn out to be the case then it necessarily follows that any loss that would be suffered by Independent by being deprived of the use of the therefore subsidiary term “metro” would be correspondingly reduced. It seems to me that counsel for the plaintiff was correct when he argued that Independent cannot have it both ways. Either the presence of the term “metro” in Independent’s will play a significant role in marketing and establishing the title with the public or it will not. If it will then it is hard to see how there would not be a significant risk, to the point of likelihood, of confusion. If it will not then it is hard to see how a significant weight can be attached to its absence.
6.4 That is not to say that Independent might well not suffer some loss and that that loss may not be capable of being calculated. If it were otherwise then it would not have been necessary to move on to the third of the tests identified in Irish Autotrader. As counsel for Independent pointed out it may be difficult for Independent to obtain any value from the use of the term “Metro” if it is only permitted to commence using it sometime after the launch of the competing paper. However I am now concerned with the weight to be attached to such potential loss. For the reasons indicated above it seems to me that in the event that Independent succeeds it will necessarily follow that the court will be satisfied that the presence of the term “metro” could not have been critical to the identification of the Independent publication. In that context it is relevant to note that, in his affidavit, Mr. Webb (of Independent) describes a product without the term “Metro” as “inherently less attractive”. That is as far as he puts it.
6.5 On the plaintiffs side there is, in my view, a more significant inconvenience. It is, of course, true to state that in the event of the plaintiffs succeeding and in particular if an early trial can be assured (an issue to which I will return) Fortunegreen will, from that time onwards be in a position where it will be able to exploit what will then have been established (on the assumption that it has succeeded at trial) to be its property right in its trade mark without further infringement on the part of Independent. However the evidence suggests that the start up period is critical. The evidence further suggests that the period in the immediate run up to Christmas is an especially important period from an advertising perspective and is thus of particular importance to a newspaper whose entire funding is intended to be derived from advertising.
6.6 For the reasons indicated earlier in the course of this judgment the precise effect on the marketplace as a whole and the share of Fortunegreen in it by virtue of being exposed to what would (in the event of it succeeding at trial) have been established to have been wrongful competition at a critical early stage is not only incalculable (for the reasons analysed above) but also likely to be of some considerable significance.
6.7 In those circumstances I am satisfied that while there would be an undoubted inconvenience on both parties the likelihood is that the consequences for Fortunegreen of not obtaining an interlocutory injunction at this stage but succeeding at trial would be significantly greater than the corresponding consequences for Independent of being injuncted pending trial but being released from that injunction upon being successful.
7. DISCRETION
7.1 I have also considered whether it would be appropriate to exercise the courts discretion in the same way as was done by the Courts of the United Kingdom in Nationwide Building Society v. Nationwide Estate Agents Limited (1987) FSR 579. In that case the Building Society of that name sought to stop certain estate agents from using the name “Nationwide”. Sir Nicholas Browne-Wilkinson (VC) required, before he was prepared to grant an injunction, that the Building Society itself undertook not to go into the estate agency field under the name pending trial. Otherwise he thought that the court would be used, as he put it, to tie one of the two competitors to the starting post while the other one gets rather more than a head start. That principle was approved and explained by the United Kingdom Court of Appeal in Guardian Media Group plc and Others v. Associated Newspapers Limited (decision of 20th January, 2000) which concerned, as it happens, a dispute similar to the one with which I am concerned and, indeed, involved at least some of the same personnel (in the shape of Associated Newspapers). However it seems to me that the situation is different in this case. To require the plaintiffs to give an undertaking that they would not commence publication prior to trial as a condition for the grant of an injunction would be to potentially deprive the plaintiffs of the opportunity to launch at a time of their choosing and with the benefit of such advantages as they may be able to obtain by so doing. It would not, therefore, create the even playing field contemplated in Nationwide if the net effect of the plaintiff being granted the interlocutory injunction sought, on terms, was that it was forced to postpone publication to what is, at the least arguably, a less advantageous start up time.
7.2 Equally the order sought by the plaintiffs would not preclude the publication of a competing free newspaper but would simply restrict, until trial, the title of such paper. Both scenarios obviously have the potential to represent an imbalance in favour of one or other party. However it is the very measurement of the relative weight to be attached to the respective imbalances which required to be analysed when assessing the balance of convenience. In those circumstances it does not seem to me that it would be an appropriate case to refuse an injunction in the exercise of the courts discretion.
8. THE RELIEF
8.1 For those reasons it appears to me that it is appropriate to grant an interlocutory injunction. The plaintiff has sought, at paragraph 1 of the notice of motion, an order restraining the defendant:-
“From infringing the second plaintiffs registered trademark METRO (stylised mark), registered under No. 219849, by making available to the public a free newspaper incorporating the word “Metro” in the name and masthead, or advertising such a free newspaper.”
8.2 Subject to one caveat I am satisfied that the plaintiff is entitled to an interlocutory injunction in those terms. Clearly the question of whether the presence of the word “metro” in the title would be such as was likely to cause confusion, is one of degree having regard to the prominence of the word. For the reasons indicated above I am satisfied that a masthead of the type proposed by the defendants is arguably an infringement sufficient to establish a serious issue to be tried. As no other, less prominent, use of the term “Metro” is proposed I am prepared to grant the plaintiffs an injunction in the terms sought. However it may be that it would be possible to devise a masthead which might include the word Metro but not in such a way as would give rise to a serious issue to be tried to the effect that there was any likelihood of confusion sufficient to establish infringement. It may, therefore, be that an alternative masthead coupled with undertakings sufficient to satisfy that it was unlikely that the word Metro would become synonymous with the Independent free newspaper might lead to a different conclusion as to whether there was a serious issue to be tried. It would be wrong and impossible for me at this stage to be prescriptive as to precisely what, if any, variation might suffice. In the circumstances it seems to me that the best course of action is to give Independent liberty to apply in the event that they wish to invite the court to vary the order made to permit publication under an alternative masthead which they may wish to urge upon the court does not give rise to a serious issue to be tried as to infringement.
9. EARLY TRIAL
Finally having taken the view that the plaintiff is entitled to an injunction it seems to me that in all the circumstances of the case it is incumbent upon all of the parties, but most particularly the plaintiff as the successful party, to take all steps to ensure that the case comes to trial and reaches a definite conclusion at the earliest possible time. I have already put in place directions to ensure that pleadings are closed by Wednesday of next week. If the parties wish to make an application to have the case adopted by the Commercial Court then it seems likely that the ordinary process of that court would lead to a very early trial indeed. If the parties do not wish to adopt that process I would propose managing the case to ensure a similar outcome.
Approved: Clarke J.
Ryan & Ors v. Doyle & Ors
[2004] IEHC 80
JUDGMENT of Mr Justice Kelly delivered on the 23rd day of April, 2004.
The Application
The first defendant seeks an order striking out the plaintiffs’ claim pursuant to the inherent jurisdiction of the court on the grounds of prejudice resulting from inordinate and inexcusable delay in the institution and/or prosecution of the proceedings by the plaintiffs.
The second defendant seeks a similar order.
The third defendant sought an order that the plaintiffs’ claim against him be dismissed on the grounds that it is bound to fail. It was accepted that he was entitled to succeed on this application and during the course of the hearing an order was made striking him out of the proceedings.
Background
These proceedings began by the issue of a plenary summons on the 25th October, 2001. A statement of claim was delivered on the same day. The first defendant delivered a defence and counterclaim on the 18th July, 2002. The defence of the second defendant was delivered on the 27th September, 2002.
All of the plaintiffs are sisters of each other and of the late John Doyle Junior (Junior). The plaintiffs and Junior are all children of the late John Doyle Senior (Senior).
The first defendant is the widow and sole Executrix of Junior. She extracted a Grant of Probate on the 5th October, 2001 and is sued in her capacity as executrix of Junior’s estate. Senior died on the 15th December, 1985 having made his last will on the 19th October of that year. The first, second and third plaintiffs extracted a Grant of Probate in respect of Senior’s will on the 21st August, 1986.
At the time of Senior’s death he owned a substantial number of shares in a company called John Doyle and Co. (Horticultural Specialists) Limited (the company). The company had established and operated a nursery at Brennanstown Road in Cabinteely. It was incorporated in September, 1963 and the business was effectively run by Senior for many years.
Senior bequeathed his estate including the shareholding in the company to all of his children equally.
On the 24th October, 1986 the plaintiffs entered into a Deed of Arrangement whereby they, together with another daughter of Senior, one Hilary Hennessy, disclaimed their interest under the will of Senior together with their interest in the residue of his estate and any share of the estate which they might have been entitled to on intestacy in consideration of the payment of the sum of £12,260 to each of them.
By a further deed of the 28th April, 1987 the daughters of Senior appointed and confirmed to Junior the lands which formed part of the estate of Senior together with 1,831 shares in the company. The effect of these post mortem arrangements was to confer on Junior almost the entire legal and beneficial interest in the company and the residue of Senior’s estate.
The first part of the plaintiffs’ claim seeks a declaration that the agreements of October, 1986 and April, 1987 are void because they were allegedly procured under duress and undue influence or in the alternative constituted an improvident transaction or unconscionable bargain. An order is sought setting aside these transactions.
The second part of the plaintiffs’ claim is that there was a collateral agreement concluded at or about the time that the transactions in suit were made and executed between Junior and the plaintiffs the terms of which were that in consideration for the plaintiffs executing the relevant documents, the plaintiffs and each of them would remain entitled to receive an equal division of the proceeds of sale and/or rezoning and/or redevelopment and/revaluation of the lands which formed part of the estate of Senior.
The third part of the plaintiffs’ claim is an alternative one. In the event that the court refuses the reliefs sought against the first defendant there is a claim in negligence and breach of contract made against the second defendant. He is a solicitor who was at all relevant times a sole practitioner. The plaintiffs assert that he was negligent and in breach of duty and breach of contract towards them in respect of the advice given or not given as the case might be concerning the transactions and arrangements made between the plaintiffs and Junior subsequent to the death of Senior. A full defence has been delivered to this claim and it is asserted by the second defendant that at no time did he act on behalf of the plaintiffs in respect of the agreements in question nor was he asked to.
Each of the defendants now asks that the court exercise its inherent jurisdiction and strike out these proceedings. It is argued that the plaintiffs are now seeking to litigate arrangements and agreements entered into by them in 1986 and 1987 and are therefore guilty of both inordinate and inexcusable delay which has given rise to actual prejudice being suffered by the defendants in attempting to defend the case, most particularly by reference to the fact that Junior who was pivotal to the arrangements in suit is now dead.
Lengthy affidavits were sworn in respect of these motions. There is a good deal of conflict as to fact on those affidavits. It is not possible for the court to resolve those conflicts at this juncture.
I propose to try and identify the salient facts which are not in dispute.
The Undisputed Facts
Junior worked in the nursery business from his teenage years. As Senior’s health began to fail Junior took increasing responsibility for the management and operation of the business.
Senior died on the 15th December, 1985. Junior had an expectation that the nursery business would be left to him. Shortly before his death Senior executed his will bequeathing his estate, including his shareholding in the company, to all of his children equally.
Junior was aggrieved at this because he had worked in the business for about twenty years and had been largely responsible for its operation for a substantial part of that time.
Junior appears to have considered emigrating and disposing of his shareholding to his sister Hilary. Hilary has sworn an affidavit in these proceedings but apart from that is not privy to them. She had no means of funding the purchase of Junior’s shares. She appears to have acted as a sort of broker by suggesting to the other sisters that they should consider offering their interest in the nursery company to Junior.
It was in this context that the deeds of the 24th October, 1986 and the 28th April, 1987 were executed. One solicitor, namely the second named defendant, acted in the matter.
Junior ran the business until his untimely death at fifty years of age on the 20th May, 2001.
The plaintiffs were paid what they were entitled to under the terms of the deeds and it is alleged substantially in excess of that sum. These payments came from Junior.
No legal proceedings were ever brought to challenge Senior’s will nor were any proceedings instituted during the lifetime of Junior to contest the deeds in suit.
Issues
If this case is permitted to go to trial it is clear that the court is going to have to make a determination of whether or not the deeds in suit were procured under duress and undue influence exercised by Junior. The essence of the plaintiffs’ case is that Junior wrongfully procured the execution by them of the disclaimers and deeds which are now sought to be impugned.
As an alternative to that claim they allege the existence of a collateral oral agreement concluded at or about the time that the deeds were executed. There is also an assertion that the primary transaction involving the execution of the deeds was improvident. Payments in excess of what is provided for in the written instruments appear to have been made, with such payments emanating from Junior in favour of his siblings.
There is on the affidavit evidence very considerable conflict and quite clearly much bitterness. Little is to be achieved by rehearsing any of this matter in this judgment since I am not in a position to adjudicate on where as a matter of probability the truth lies on the basis of affidavit evidence.
It is sufficient to record that the plaintiffs’ affidavits are replete with allegations that Junior was domineering, bullying and intimidating and thereby procured the execution of the deeds in question. If that indeed was the case it is perhaps a little surprising that the plaintiffs not merely did not bring any proceedings during Junior’s lifetime but apparently accepted assurances from him that he would honour the alleged collateral agreement and treat them fairly and properly. However, that is the case which they make and which they say explains the failure to bring proceedings until after Junior’s death when they realised that he had not looked after them properly in accordance with the collateral agreement. The allegation of bullying and intimidation is one made against Junior only and not against the first named defendant. She denies that he was a man of that disposition and that is a view supported to the limited extent that she can from her own knowledge, by Hilary Hennessy.
The Legal Principles Applicable
This is an application to have these proceedings struck out because of delay on the part of the plaintiffs in circumstances where such delay has resulted in prejudice being suffered by the defendants to such an extent that there is a real and serious risk of an unfair trial.
The first defendant accepts that the test to be applied on this application is that prescribed by the Supreme Court in Primor plc v Stokes Kennedy Crowley [1996] 2 I.R. 459. Although that case dealt with post commencement delay in proceedings it is accepted by the first defendant that it should apply here even though the bulk of the delay is pre commencement of proceedings.
It has been suggested that a different test applies to pre commencement delay, an issue to which I alluded in Kelly v O’Leary [2001] 2 I.R. 526. The test in such a case it was said was that to be gleaned from the decisions of the Supreme Court in O’Domhnaill v Merrick [1984] I.R. 151 and Toal v Duignan (No. 1) [1991] I.L.R.M. 135. The test prescribed in those cases is a wider one based on general principles of fairness regardless of whether the delay is excusable or not. As the first defendant accepts the burden of the more stringent test contained in Primor I will apply it in respect of that defendant. The second defendant does not accept that the Primor test applies.
In Primor the Supreme Court set forth the principles upon which this undoubted inherent jurisdiction ought to be exercised. A party seeking a dismissal of proceedings by reason of delay has to demonstrate that such delay was both inordinate and inexcusable. Even where delay can be so categorised the court must nonetheless exercise a judgment on whether, in its discretion, on the facts, the balance of justice is in favour of or against the case proceeding to trial.
In considering this obligation the court is entitled to take into consideration and have regard to the following – (1) the implied constitutional principles of basic fairness of procedures, (2) whether the delay and consequent prejudice in the special facts of the case are such as to make it unfair to the defendant to allow the action to proceed and to make it just to strike out the plaintiffs’ action, (3) any delay on the part of the defendant – because litigation is a two party operation, the conduct of both parties should be looked at, (4) whether any delay or conduct of the defendant amounts to acquiescence on the part of the defendant in the plaintiffs’ delay, (5) the fact that conduct by the defendant which induces the plaintiff to incur further expense in pursuing the action does not, in law, constitute an absolute bar preventing the defendant from obtaining a striking out order but is a relevant factor to be taken into account by the judge in exercising his discretion whether or not to strike out the claim, the weight to be attached to such conduct depending upon all the circumstances of the particular case, (6) whether the delay gives rise to a substantial risk that it is not possible to have a fair trial or is likely to cause or have caused serious prejudice to the defendant, (7) the fact that the prejudice of the defendant referred to in (6) may arise in many ways and be other than that merely caused by the delay, including damage to a defendant’s reputation and business.
Those principles were subsequently reiterated by the Supreme Court in Anglo Irish Beef Processors v Montgomery [2002] 3 IR 510.
Inordinate Delay
These proceedings were commenced in October, 2001. That was fifteen years after the execution of the deeds of October, 1986 and fourteen and a half years after the execution by some of the plaintiffs of the subsequent agreement of 28th April, 1987. Throughout that time it was open to the plaintiffs to bring proceedings but they did not do so. In my opinion the delay in commencing these proceedings was on any view inordinate.
Inexcusability
A number of reasons are advanced by way of excuse for the non-commencement of proceedings much earlier than they were and certainly during the lifetime of Junior.
In the principal grounding affidavit sworn by Catherine Ryan an attempt is made to excuse delay on the basis that it was not until the death of Junior that the plaintiffs’ cause of complaint arose, because it was only then that they realised that he had not honoured the terms of the collateral agreement.
That excuse has however to be seen in the light of the fact that the principal relief which is sought in the proceedings is not by reference to the collateral agreement but rather an assertion that the execution of the deeds in 1986 and 1987 was wrongly procured largely as a result of threats and bullying on the part of Junior. There is really no excuse proffered as to why proceedings seeking reliefs in respect of that conduct were not commenced save by reference to the alleged expectation that the collateral agreement would be honoured. There is of course an inherent contradiction in this line of argument because reliance upon a belief that Junior would act fairly and properly appears to be totally inconsistent with the complaints made by the plaintiffs concerning his conduct. Catherine Ryan says that at the time they executed the documents and for the remainder of his life Junior was very domineering, bullying and intimidating. He is also alleged to have been evasive. Why would one hold off instituting proceedings seeking to set aside the deeds by reference to a belief that a man of such character would honour his obligations?
The excuse is also inconsistent with the fact that the advice of Senior Counsel was sought by the plaintiffs in the year 2000 as to what is described as the meaning and effect of the documents. That was at a time when Junior’s death was not anticipated. The deponent was quite within her rights in claiming privilege in respect of that advice but what can be said about it is that no proceedings were instituted on foot of it and what is more to the point it raises the issue as to why such advice was not sought and obtained years beforehand.
A further excuse has been alluded to by reference to the health of the second and fourth plaintiffs. The position of the fourth plaintiff can be dealt with quite easily. There is no allegation that she is or was incapable of managing her affairs or is subject to any disability between the time of execution of the deeds and the commencement of these proceedings. She received treatment for depression in 1984 and again between April, 1986 and January, 1988. There is no evidence of any subsequent treatment save that she continues to take anti-depressant medication. I do not consider that any of that could constitute an excuse for not commencing the proceedings timeously.
It is asserted that the second named plaintiff is a person of unsound mind. The present proceedings have been instituted in her name suing by her next friend. I assume that it was her next friend who made the decision to institute these proceedings on her behalf. Such a decision could have been made at any time from 1987 onwards. If therefore she is a person under a disability being a person of unsound mind, in my view on the basis of the evidence before me that does not provide an excuse for not commencing the proceedings before 2001. Nothing has been heard from the next friend by whom she sues in this regard.
Having regard to the foregoing I am not satisfied that any of the excuses which have been proffered by way of explanation for the commencement of the proceedings as late as 2001 are valid and I therefore conclude that the delay in instituting the proceedings is both inordinate and inexcusable.
That of course is not an end of the matter, I must now go on to the third part of the Primor test namely the exercise of my discretion having regard to the facts.
Exercise of Discretion
Criticism has been made of delay which has occurred subsequent to the institution of the proceedings. The plaintiffs allege delay on the part of the defendants in delivering their defences and of further delay in bringing the present motion. Whilst there is some justification for these criticisms the delay involved is minor by comparison with the delay in the institution of proceedings. Furthermore there is no specific prejudice suffered by such minor delay apart from not getting the case into a list for trial.
The real delay with which I am concerned is that which occurred prior to proceedings being commenced. The real prejudice with which I am concerned is that which confronts the first defendant by reason of the death of Junior.
In attempting to stand over the validity of the agreements of October, 1986 and April, 1987 the first defendant has to do so without having available to her the evidence of Junior against whom the serious allegation of duress and undue influence and general improper and bullying conduct are made. She is likewise deprived of his evidence in attempting to deal with the collateral agreement allegedly made. The plaintiffs contend that this was an oral agreement made between them and Junior. How can any realistic forensic examination of that arrangement be carried out seventeen or eighteen years after the event and in the absence of Junior?
Insofar as the allegation of improvidence in the original transactions was concerned it is quite clear that there was a substantial sum of money agreed to be paid which was in fact paid to each of the plaintiffs. There are allegations that over and above that further sums were paid to them by Junior. But the fact and amount of such sums appears to be in dispute and the one person who could give evidence for the defence in respect of that element of the case is Junior. How can the first defendant demonstrate that the transaction was not improvident in the absence of evidence from him?
It appears likely that the first defendant will have available to her the evidence of Hilary Hennessy who quite clearly does not view matters in anything like the same light as the plaintiffs. Useful and all as her evidence might be it does not appear to me to be a substitute for the evidence which Junior could give had he been alive. Having regard to the views expressed by the Supreme Court in Anglo Irish Beef Processors Limited v. Montgomery it appears to me that I have to ask myself whether the absence of Junior gives rise to a substantial risk of an unfair trial. In my view that question has to be answered in the affirmative.
The plaintiffs contend that by reason of the relationship between them and Junior this is a case in which there is a legal presumption of undue influence. They further argue that if that is so no evidence of Junior would be required because that presumption would have to be rebutted by showing that the parties who yielded up their rights had independent advice. Even if such a presumption does exist it does not appear to me that it could be said that a fair trial could be had of the issues which arise on the pleadings here in the absence of Junior.
I am quite satisfied that if Junior were alive he would have been the principal witness for the defence. If the proceedings had been commenced in a timely fashion he would have been available to deal with them.
Despite the assertion made by the plaintiffs I do not accept that this case can be equated with one made under section 117 of the Succession Act, 1965. There a specific remedy and proceeding was created by the legislature which by its very nature has to be heard after the death of a deceased. Whilst there may be some similarity between the type of allegations that the court frequently has to deal with in such cases and a number of the contentions here it does appear to me that the two cases nor the legal principles applicable are analogous.
In these circumstances I am of the view that because of the inordinate and inexcusable delay in commencing these proceedings very substantial prejudice has been suffered by the first defendant in attempting to defend them. To allow the action to proceed to trial would be to put justice to the hazard and accordingly I propose to exercise my discretion by striking out the plaintiffs’ claims against the first defendant. I now proceed to consider the position of the second defendant.
The Second Defendant
This defendant says that the court ought not to apply the Primor test as against him since it is applicable only to post-commencement delays. Instead the court ought to approach the matter on the basis of the two decisions of the Supreme Court which I have already alluded to namely O’Domhnaill and Merrick and Toal v Duignan. Particular emphasis is placed on the latter case. This defendant contends that the Primor approach to delay involving a consideration of blameworthiness for delay it is not a feature of the Toal v Duignan test. The only matter with which the court is concerned is the existence of a clear and patent unfairness in asking a defendant to defend a case after a very long lapse of time.
This defendant may very well be correct in this assertion but it does not appear to me that it makes very much difference in the circumstances of the present case. The finding of inordinate delay in the institution of the proceedings and the lack of any excuse for so doing which I have already made insofar as the case against the first defendant is concerned is equally applicable as against the second defendant. It follows that regardless of which test I apply I am, insofar as this defendant is concerned, obliged to consider whether there is a real and serious risk of an unfair trial being had because of the prejudice which has been caused to this defendant by delay.
It is important to consider the basis of the case which is made against this defendant. First, it is quite clear from the statement of claim that the case against him arises only in the event of the court refusing the reliefs which are sought against the first defendant. The claim is an alternative claim. It is to the effect that any loss or damage or injury suffered by the plaintiffs was caused by his negligence, breach of duty and breach of contract.
The claim against the first defendant is two-fold. The first concerns the alleged coercion by Junior resulting in the plaintiffs entering into the agreements whereby they waived their entitlements to their father’s estate for what they say is inadequate consideration. Secondly, there is the allegation of the collateral oral agreement which was not honoured.
This second claim which is made against the first defendant forms no part of the case against the second defendant.
The essence of the case which is made against the second defendant is that he failed to advise the plaintiffs in respect of the agreement which they entered into with Junior. It is said that he was obliged to advise them to obtain independent legal advice and having failed to do so they, through the bullying of their brother, entered into an improvident transaction. This caused loss to them.
The second defendant says that he at no time acted on behalf of the plaintiffs in respect of the agreement nor was he asked to. He acted on behalf of the estate of Senior who had been a client of his prior to his death. He acted for the executrices to implement the agreement and took his instructions principally from the first plaintiff. Following Senior’s death he was contacted by her who asked him to act in the estate. He did so. In February, 1986 he received instructions that there had been a discussion between family members and the company’s accountants on foot of which they had agreed to the issue of bonus shares in the family company. He received instructions to draft the formal agreement to give effect to that decision and he did so. He sent copies of the draft agreement to Hilary Hennessy and to each of the second and third plaintiffs in the early part of 1986. The bonus share scheme had been agreed between the family and the accountants. No advice was sought from him regarding that agreement and he was never consulted as to why that scheme should not proceed. Towards the end of August, 1986 he was informed that the plaintiffs and Hilary Hennessy would instead disclaim their interest under the will in the family company. His instructions were limited to drafting the relevant paperwork and the obtaining of tax advice from accountants, which he did. On the 24th October, 1986 he attended Catherine Ryan, Imelda Quinn and Bernadette Feehan where the waivers were executed.
The administration of the estate was carried out between February, 1986 and April, 1987 when the administration accounts were finalised. Throughout the administration he dealt primarily with the first plaintiff but also with Junior and met the other two executrices Bernadette Feehan and Imelda Quinn. Hilary Hennessy instructed her own solicitor. During all of this time he never received any indication that there was any difficulty between family members. No suggestion was made then or later that Junior had exercised any undue influence of any nature over the plaintiffs in respect of the agreement entered into. Subsequently over the years from 1987 onwards he acted on behalf of both Bernadette Feehan and Imelda Quinn in respect of personal business. He also acted on behalf of the family company and dealt with Catherine Ryan in that regard. Until shortly before the present proceedings were initiated he was never advised that any of the plaintiffs had any complaint about the manner in which they were treated by Junior.
In these circumstances is there a real risk of an unfair trial insofar as this second defendant is concerned? In my view that question must be answered in the affirmative.
I come to that conclusion not merely because it would appear to be unjust to allow an alternative claim to proceed against him when the substantive and primary claim against the first defendant is being struck out because of a real risk of unfairness but also because actual prejudice is caused to this defendant in his attempt to defend himself. That prejudice arises directly from the death of Junior. Crucial to the plaintiffs’ complaints is that they suffered loss as a result of being permitted through the alleged negligence of the second defendant to enter into a transaction in respect of which inadequate consideration was paid. But it was Junior who provided and paid such consideration and it is alleged that sums in excess of what was contained in the actual agreement were paid. The second defendant cannot introduce evidence of such consideration actually paid to the plaintiffs because of the death of Junior. The first defendant avers that she is aware that the actual consideration paid by Junior exceeded significantly the consideration recited in the deed of arrangement. That view is confirmed by the evidence of Hilary Hennessy to the effect that she received £40,000. It is also supported by her averment that the arrangements which were made by the family after Senior’s death involved payments from Junior to her sisters and such were greater than the amounts stated in the relevant deeds and disclaimers. The effective evidence of this from the defence point of view would be from Junior. In his absence the second defendant cannot deal with the matter in an adequate fashion.
I am satisfied that given the lapse of time between the events complained of and the prejudice to this defendant arising principally from the death of Junior and thus his unavailability to give evidence a substantial risk to the ability to have a fair trial has been established. The second defendant cannot effectively defend himself on the principal issue which is whether the arrangements that were entered into were financially disadvantageous to the plaintiffs. He is also prejudiced by damage to his reputation and professional standing. He is being asked to defend this action at this remove in time without the presence of the one witness who could give evidence pertinent to the principal issue. That issue is the allegation by the plaintiffs that they received inadequate money for their disclaimers where it appears that sums in excess of that stipulated in the documents were allegedly paid to them from Junior who is not in a position to give evidence in that regard.
Conclusion
In my view the first and second defendants are entitled to the orders which they seek. The plaintiffs’ claim will be struck out.
Bambrick v Cobley
[2006] 1 I.L.R.M. 81. DEFENDANT
JUDGMENT of Mr. Justice Clarke delivered 25th February, 2005.
These proceedings arise out of a contract entered into between the defendant as vendor and the plaintiff as purchaser in respect of the sale of certain lands at Kilbline in the County of Kilkenny which contract was in writing and dated 11th day of June, 2004. In circumstances which I will outline more fully later in the course of this judgment the contract has now been completed. However a dispute exists between the parties as to the attribution of fault in relation to the fact that the contract did not close in the time contemplated and in those circumstances the plaintiff continues to maintain a claim in respect of damages for loss which he alleges flows from a breach of contract on the part of the defendant which, he alleges, stems from her delay in so closing. In this application he seeks a Mareva type order freezing part of the proceeds of sale.
The plaintiff issued proceedings on 16th May, 2004 in which he claimed specific performance of the above contract (which at that time had not been completed) and in the alternative damages in lieu thereof. For reasons set out in the respective affidavits of Jeremy Chugg (dated 25th June, 2004) and Michael F. Cornwall (dated 6th July, 2004) difficulty was encountered in effecting service of those proceedings. Those difficulties gave rise to an ex parte application on behalf of the plaintiff to this court on 5th July, 2004 as a result of which McKechnie J. refused an application which sought to deem good the purported service of the plenary summons in the circumstances set out in Mr. Chugg’s affidavit or in the alternative seeking substituted service. McKechnie J. observed that another attempt should be made to serve the proceedings directly. That attempt was made in the manner set out in Mr. Cornwall’s affidavit.
Parallel with those events on 28th May, 2004 the defendant’s solicitors served a 28 day notice to complete on the plaintiff.
At all material times the plaintiff was represented by the firm of solicitors Peter G. Crean and Company of which he was a member. The purchaser was represented by Messrs. Thomas A. Walsh and Company in relation to the conveyancing matters but the said firm indicated that they did not have authority to accept service of any proceedings. Lengthy correspondence has been exhibited in the affidavits before me passing between the two firms of solicitors. Suffice it to say that insofar as it relates to the substantive issues which will ultimately have to be resolved in these proceedings it is accepted by both sides that there are fair issues to be tried as to whether the defendant was in breach of contract in relation to the delay in closing and as to whether, as a result of same if it be established, the plaintiff can be said to have suffered loss and damage. However insofar as it is relevant to this application it is important to note that as the conveyancing aspect of the matter neared completion the plaintiff’s solicitors wrote to the defendant’s solicitors on 2nd August and having made general complaints about the conduct of the conveyancing transaction went on to state as follows:-
“could you also please confirm that your client is agreeable to leave a sufficient sum of money on joint deposit between our respective firms pending the outcome of High Court proceedings in this matter. We await hearing from you by immediate return”.
By reply dated the following day (August 3rd) the defendant’s solicitors stated as follows:-
“Further to our telephone conversation this morning I note you confirmed that you would lodge the balance purchase monies into our Anglo Irish Bank account upon receipt of an undertaking from this office to retain the sum of €50,000 until close of business on Thursday August 12th. I confirm that I called you back before lunch, as you requested, to ask where I was to fax this undertaking to, and I left a detailed message on your voicemail which you say you did not receive”.
There was also faxed on the same date an undertaking in the following terms:-
“We, M/S Thomas A. Walsh and Company solicitors for the vendor in the above matter, hereby undertake to retain a sum of €50,000 from the nett sale proceeds of the above mentioned property, until close of business on August 12th next unless otherwise instructed by the purchaser in the meantime.
This undertaking is furnished on the basis that the vendor has not authorised this office, to date, to put this money on joint deposit between the offices of the agents acting for the vendor and the purchaser herein.
We trust this is in order.”
On the 4th August a letter was written by the defendants solicitors to the plaintiffs solicitors concerning an ordinance survey map which is not material to the issues which I have to decide. On the 6th August a letter was written by the plaintiffs solicitors to the defendants solicitors which in material part states as follows:-
“Transfer of funds is authorised on the strict understanding that you will hold same in trust until at least close of business on the 12th day of August 2004, or if there be no sitting of the High Court on that date or there be a sitting and it be adjourned, then and in those circumstances to hold the said funds until the next sitting of the High Court and in the case of adjournment thereof to the adjourned date”.
This was in turn replied to on the 10th August by solicitors for the defendant in the following terms:-
“Further to yours of the 6th inst. we write to confirm in relation to the second paragraph of your letter that we are not, nor have we undertaken to hold the balance of the sale proceeds on trust for you. We have agreed and have furnished an undertaking to you to hold the sum of €50,000 only on trust as per our undertaking to you of August 3rd 2004.
With regard to the specific date until which we will hold this sum on trust we are writing to reaffirm our initial undertaking to retain this sum on trust for you until close of business on August 12th next, or in the alternative, until such time as agreement is reached between the parties as to whether this sum is to be placed on joint deposit between the two firms or alternatively, until such time as any order which is made in relation to this matter shall provide otherwise.”
The following day (11th August 2004) the plaintiff applied ex parte to the High Court for an order restraining the defendant from reducing her assets within the jurisdiction below €100,000 and further seeking an order that the said amount be deducted from the proceeds of sale/purchase between the parties and placed on joint deposit between the respective firms of solicitors. That application was grounded upon the affidavit of the plaintiff. The application was granted by Kelly J. and included, inter alia, liberty to the defendant to apply to discharge the order on 24 hours notice to the plaintiff and to the Court. That interim order was specified as being, in the absence of an order in the meantime, to continue until the 11th October 2004 when, it was contemplated, an application for an interlocutory order in the same terms would be moved.
It would appear that no copy of the aforementioned order was sent to the defendant prior to the 11th October 2004 nor was the affidavit grounding the injunction application received by that date. It would appear that on the 11th October Kelly J. indicated that he wished to hear from the solicitor dealing with the matter on behalf of the plaintiff on the following day (Tuesday 12th October) and upon that day the plaintiff himself appeared as solicitor and indicated that owing to the fact that he had been on holiday and as a result of a family bereavement he had been unable to transmit to the defendant and her legal advisers the appropriate paperwork. This explanation was accepted by the Court. Subsequently the interlocutory injunction application was adjourned from time to time and ultimately came before me on the 21st February.
In answer to the plaintiff’s application for an interlocutory injunction) in the same terms as the interim order already made the defendant in substance relies upon two matters:-
1. Lack of candour:
It is said that the plaintiff inappropriately failed to disclose in the grounding affidavit (upon which the court was moved to grant the interim injunction) the fact that there had been detailed discussions (as evidenced in the correspondence referred to earlier in the course of this judgment) concerning the terms upon which monies might be retained to meet the possible claim.
No real risk
2. It is also asserted that the plaintiff has failed to establish that there was a real risk that the assets of the defendant would either be dissipated or removed from the jurisdiction of the court with the view to evading their obligations to plaintiff in the event that the plaintiff should succeed.
The Law.
In Re: John Horgan Livestock Limited [1995] 2 IR 411 at 416 and 418 Hamilton C.J. in the Supreme Court approved of the criteria adopted by Murphy J. in the High Court in that case which in turn were derived from the criteria set out by Lord Denning in Third Chandris Shipping Corporation -v -Unimarine SA [1979] 2 All ER 972 at 984. The relevant criteria are as follows:-
“ i. The plaintiff should make full and frank disclosure of all material matters in his knowledge which are material for the judge to know.
ii The plaintiff should give particulars of his claim against the defendant stating the grounds of his claim and the amount thereof and fairly stating the points to be made against it by the defendant.
iii The plaintiff should give some grounds for believing that the defendant had assets within the jurisdiction. The existence of a bank account is normally sufficient.
iv The plaintiff should give some grounds for believing that there is a risk of the assets being removed or dissipated.
v The plaintiff must give an undertaking in damages in case he fails”.
Insofar as this application is concerned items (i) and (iv) would appear to be the relevant matters in that it is accepted by the defendant that the plaintiff has established an arguable case, has given an undertaking as to damages, and has clearly established that there are relevant assets within the jurisdiction being the portion of the proceeds which already stands frozen by the interim order.
Lack of Candour
In Tate Access Floors Inc. – v- Boswell [1990] 3 All ER 303 Sir. Nicholas Brown-Wilkinson V-C identified full and frank disclosure as being “the golden rule” when he said:-
“No rule is better established, and few more important, than the rule (the golden rule) that a plaintiff applying for ex parte relief must disclose to the court all matters relevant to the exercise of the court’s discretion whether or not to grant relief before giving the defendant an opportunity to be heard. If that duty is not observed by the plaintiff, the court will discharge the ex parte order and may, to mark its displeasure, refuse the plaintiff further inter partes relief even though the circumstances would otherwise justify the grant of such relief”.
In Production Association Minsk Tractor Works and Belarus Equipment (Ireland) Limited – v – Saenko (High Court unreported 25th February 1998) McCracken J. refused an application for an interlocutory injunction on a number of grounds including the fact that, as he found:-
“The amounts concerned are very large, almost £300,000 according to the grounding affidavit of this motion. It is a matter of some concern to me that after the interim order was granted, it was conceded in a replying affidavit that over £95,000 of this was in fact paid into an account of the first name plaintiff. This must have been known to the plaintiffs when the original affidavit was sworn.”
It therefore seems clear that there is a clear obligation on a plaintiff moving for a mareva type injunction to make full disclosure to the court of all matters relevant to the exercise of the courts discretion. Two questions therefore arise:-
(a) Did the plaintiff in this case fail to make appropriate disclosure; and
(b) If he did so fail what consequences should flow.
It seems to me to be clear that the plaintiff failed in his obligation to the court to, in the words of Brown-Wilkinson V.C., “disclose to the court all matters relevant to the exercise of the courts discretion”. In coming to that view I am mindful of the fact that, as Lord O’Hagan L.C. put it in Atkin-v-Moran [1871] I.R. 6 E.Q. 79
“The party applying is not to make himself the judge of whether a particular fact is material or not. If it is such as might in any way affect the mind of the court it is its duty to bring it forward.”
I am also mindful of the fact that the courts have noted (for example in Brink’s-Matt Limited –v- Elcom [1988] 3 ALL E.R. 188) that in particular in heavy commercial cases the borderline between material facts and non-material facts can be a somewhat uncertain one and that, without discounting the heavy duty of candour and care which falls upon persons making ex parte applications, the application of the principle of disclosure should not be carried to extreme lengths.
Taking those authorities it would seem that the test by reference to which materiality should be judged is one of whether objectively speaking the facts could reasonably be regarded as material wit materiality to be construed in a reasonable and not excessive manner.
The explanation given on behalf of the plaintiff for the non-disclosure of the correspondence and discussions concerning a possible agreement to lodge monies on joint deposit was that the undertaking given on behalf of the defendant was to last only till close of business on August 12th which, in the events that happened, was the day after the application for an ex parte order was made. While this is true it should also be noted that the undertaking when originally given was to last for a period of nine days and, perhaps more importantly, the sum which appears to have been agreed to be retained, insofar as one may infer an agreement from the correspondence, was a sum of €50,000 rather than the sum of €100,000 in respect of which an application to freeze was made. It is difficult to see how the fact that the parties had been discussing a retention of €50,000 would not have been a material factor in the exercise of the courts discretion as to the amount in respect of which the mareva injunction might have been granted. Whether an interim injunction would have been granted at all could also have been affected, if the court had know this, by the fact that the plaintiff had an adequate opportunity to seek to move the court on notice for an interlocutory order had he moved with expedition following the receipt of the undertaking of the 3rd August. While the relevant period was during the long vacation there is a duty judge sitting on each day during that period. It would at least have been possible to seek a short service of a motion returnable for any day prior to the 12th August so that an interlocutory application rather than an interim application could have been made. It is at least possible that a court might, in those circumstances, have been reluctant to make an ex parte order where the plaintiff had the benefit of a solicitors undertaking and thus was in no immediate danger of the assets being removed upon notice being given of an intention to apply for an interlocutory order.
For all of those reasons I am satisfied that there was a significant and material failure to disclose matters which should have been disclosed on the interim application. This leads to a consideration of the consequences.
The consequences of non-disclosure
In the ordinary way the rights of a defendant in respect of whom an adverse order has been made ex parte in circumstances where full disclosure has not been made it to apply to the court to have the order discharged. However for the reasons set out above the defendant was not aware of the contents of the grounding affidavit until the matter came back before the court by way of an interlocutory application order some two months later. In those circumstances the defendant, in her affidavit of the 30th November 2004, invites the court to discharge the interim order and also invites the court to decline to make an interlocutory order. That the consequences of non-disclosure are not automatic can be seen from Lloyds Bowmaker Limited –v- Britannia Arrow Holdings Limited (1988) 3 All ER 178 where Gildewell L.J. said:-
“Certainly on the more recent authorities it is my view that the High Court would have a discretion to grant a second mareva injunction, and it may well be that this court would have a discretion to preserve the status quo in the meantime pending such an application, or a discretion itself to grant a second mareva injunction”.
In the same case Dillon L.J. stated:-
“I find it a cumbersome procedure that the court should be bound, instead itself granting a fresh injunction, to discharge the existing injunction and stay the discharge until a fresh application is made, possibly in another court, and the court which is asked to discharge the injunction should not simply, as a mater of discretion in an appropriate case, refuse to discharge it if it feels that it would be appropriate to grant a fresh injunction. That leaves me to think that there is a discretion in the court on an application for discharge”.
In practice it is likely that an application for discharge will come on for hearing at the same time as an application for an interlocutory injunction. In the circumstances it seems to me that the approach of Dillon L.J. is to be preferred. Therefore it seems to me that the court has a discretion, in cases where failure to disclose has been established to refuse to grant the interlocutory injunction and to discharge the already granted interim injunction but is not necessarily obliged to do so.
It is therefore necessary to consider, in general terms, the criteria which the court should apply in the exercise of such discretion. Clearly the court should have regard to all the circumstances of the case. However the following factors appear to me to be the ones most likely to weigh heavily with the court in such circumstances:-
1. The materiality of the facts not disclosed.
2. The extent to which it may be said that the plaintiff is culpable in respect of a failure to disclose. A deliberate misleading of the court is likely to weigh more heavily in favour of the discretion being exercised against the continuance of an injunction than an innocent omission. There are obviously intermediate cases where the court may not be satisfied that there was a deliberate attempt to mislead but that the plaintiff was, nonetheless, significantly culpable in failing to disclose.
3. The overall circumstances of the case which lead to the application in the first place.
Applying those criteria to the facts of this case it does seem to me that the non-disclosed facts were of significant materiality. For the reasons set out above there is a very real possibility that the court would either have made no order or potentially required short service and considered an order only in respect of a significantly lesser sum had it been apprised of the full facts.
While I am not prepared to hold on the evidence that the plaintiff deliberately mislead the court I am constrained to the view that as a solicitor the plaintiff, in particular, ought to have been aware to his duty to disclose all material facts and must be regarded as significantly culpable in failing to bring to the attention of the court matters which on any objective view would have had the potential to influence the courts determination.
Insofar as there as there are other factors surrounding the case which might legitimately be taking into account it seems to me that they cut both ways. It is undoubtedly a legitimate criticism of the defendant that she seems to have placed significant barriers in the way of service being effected. It is equally true to state that the plaintiff was guilty of a significant failure in relation to his bringing the attention of the defendant to the existence of the interim order and the service of the relevant documentation. While it would be inappropriate for me to go behind the acceptance by Kelly J. of his explanation in that regard it should, nonetheless, be noted that a party who obtains an onerous order (and in particular a party obtains such an order ex parte) has a clear obligation to act with appropriate expedition.
In all the circumstances it seems to me that I should exercise my discretion in favour of the application by the defendant to discharge the interim order and against any consideration of the merits of granting a further order.
In case I should be found to be wrong in that view I should express an opinion as to whether, in the ordinary way, it would be appropriate to grant an interlocutory order. In this regard the only real issue is as to whether it has been established that the plaintiff has, in the words of O’Sullivan J. in Bennett Enterprises Inc. & Ors. –v- Lipton & Ors [1999] 2 IR 221, established that there was “a real risk that the assets of the defendants would either be dissipated or removed from the jurisdiction of the courts with a view to evading their obligations to the plaintiffs in the event that the plaintiffs should succeed”.
In this case there is no evidence of an intention to dissipate but there is clear evidence of an intention to remove certain assets from the jurisdiction being the balance of the nett proceeds of the sale of the property the subject of these proceedings. However the real question is as to whether it has been established that there is a real risk that such removal is “with a view to evading their obligations to the plaintiff in the event that the plaintiff should succeed”. In that regard the defendant draws attention to the fact that she retains in the jurisdiction a property which appears to be valued at €30,000. She further draws attention to the fact that the sum being discussed for retention prior to the institution of proceedings was only €50,000. Furthermore she draws attention to the fact that the balance of her assets will be available within the United Kingdom which is, of course, a country in respect of which the judgement convention operates so that any order of the court in this jurisdiction will be enforceable under the provisions of the convention in the United Kingdom. As this latter point raises a matter of principle I should express my views upon it.
It is trite to say that a plaintiff is not entitled to security for every claimed liability. The mareva injunction is not intended to provide plaintiffs with security in respect of all claims in relation to which they may be able to pass an arguebility test. The true basis of the jurisdiction is the exercise by the court of its inherent power to prevent parties from placing their assets beyond the likely reach of the court in the event of a successful action.
In answer to this latter point counsel for the plaintiff makes the undoubtedly correct assertion that notwithstanding the existence of the judgments convention it might prove difficult, in practice, to collect on foot a judgment of the court. Of course it should be pointed out that such a situation is not confined to persons outside the jurisdiction or whose assets are predominately outside the jurisdiction. Many plaintiffs experience difficulty in securing practical recovery on foot of court orders. However it seems to me that where a defendant has readily identifiable assets which are held in a convention country that is a factor which the court can properly take into account in assessing whether there is a real risk that the removal of further assets from this jurisdiction to another convention country can be said to be “with a view to evading obligations”. While the removal simplicitor of assets from this jurisdiction to another jurisdiction can, of itself, be such as to give rise to an inference of a reasonable risk of evasion of obligation that inference will weigh less strongly in a case where the second country is a convention country and where therefore, in the ordinary course, the judgment of this court will be as enforceable as within this jurisdiction.
Having regard to the weight which should, therefore, be properly attached to the removal of assets to the United Kingdom and the other factors identified above I am not satisfied that the plaintiff has discharged the onus of establishing that the removal of any further assets to the United Kingdom would be “with a view to evading obligations”. In the circumstances even if I did not consider it appropriate to exercise my discretion against considering the merits of the interlocutory application currently before me I would have refused same.
JRM Sports Ltd. (t/a Limerick Football Club) v Football Association of Ireland (High Court, Clarke J., January 31, 2007
“Limerick FC”), seeks a number of orders which, in
substance, are designed to ensure that Limerick FC is
permitted to play in the League of Ireland for the
forthcoming season in 2007, or alternatively to prevent
any other team playing in their stead, pending the
outcome of these proceedings. It will be necessary to
return to the type of orders sought in the course of
this judgment in that the form of the orders sought is
of some relevance to the issues which I have to
consider.
The application that is presently before the Court
seeks an interlocutory injunction designed to secure
those orders on a temporary basis pending a trial of
the case. Therefore, if successful, the orders sought
would require either that Limerick FC be permitted to
play in the League of Ireland for the forthcoming
season (which is due to start in March) or
alternatively that no other team be allowed take their
place in that season, it being the case that it would
be impractical to alter the composition of the league
in the course of a season.
The procedural history of the case commenced on
16 January of this year when Limerick FC made an
application to this Court, Peart J, for an interim
order. That order was given until what was then the
following Monday, 22 January 2007. The order prevented
the Defendant, (“the FAI”) from:
1. Negotiating or attempting to negotiate or
contracting or attempting to enter into any contract
and/or agreement with any third party for the granting
or issuing of a licence, whether permanent or
temporary, or otherwise to carry on and carry out the
functions of a Football Association of Ireland member
club in place or instead of Limerick Football Club.
2. Substituting or replacing or attempting to
substitute or replace the Plaintiff herein trading
under the style and title of Limerick Football Club as
the Football Association of Ireland club for the City
and County of Limerick pending the outcome of the
proceedings.
3. Convening and holding a signing participation
agreement in the absence of representatives of Limerick
Football Club signing any new or further club or other
identity in lieu of the Plaintiff.
In substance it will be seen that the order sought on
behalf of Limerick FC, and given by the Court on
16 January, prevented the arrangements then
contemplated for setting up the league for the current
season, by preventing the signing of the participation
agreement going ahead and also prevented the FAI from
exploring whether any other club might be admitted into
the League of Ireland for this season. It will be
necessary to return to the circumstances in which that
order was given in due course because one of the
complaints made by the FAI is that the Court was
seriously misled on the occasion when that order was
sought and given.
The background to the circumstances that gives rise to
the dispute between Limerick FC and the FAI stems in
part, from the historical way in which football was
organised in Ireland. Historically the FAI did not
organise the senior divisions of the league of Ireland
which were operated under the auspices of a separate
body; however, in recent years, in substance, the FAI
have taken over the management of the league and it is
clear from all of the documents put before the Court
that as part of that process the FAI has embarked upon
a procedure of attempting to introduce a higher level
of professionalism into the administration of football
in Ireland and has made clear that it intends imposing
tightened processes for that administration. In that
context it is important to note that all of the clubs
playing in the League of Ireland signed up to new
arrangements in the middle of last year and entered
into what are, in substance, contracts with the FAI to
comply with new and tightened rules, regulations and
procedures.
Before going on to the specific facts of this case,
I should also note that having had the opportunity to
review relevant portions of those rules, that is to say
the rules concerning the licensing of clubs which is at
the heart of these proceedings, it seems to me that it
can be fairly said that they are not couched in
legalese, jargon or technical terms and they are
written in a way that ought to be capable of easy
understanding by anyone who holds themselves out as
having a position of any significance in the
administration of football or football clubs in
Ireland.
It is now necessary to turn to the facts which give
rise to the dispute between the parties. It is clear
that amongst the measures adopted by the FAI for the
purposes of improving professionalism and tightening up
the processes of the administration of football in
Ireland included a tighter licensing régime to be put
in place for the season 2007. It is clear that that
fact was brought to the attention of all clubs and
there is ample correspondence passing between the F AI
and those in charge of Limerick FC from which it ought
to have been very clear to those in charge of Limerick
FC that those processes were being tightened up.
Furthermore it ought to have been clear that as the
licensing application by Limerick FC (for the licence
which would be necessary for them to play in the League
of Ireland in the 2007 season) was being considered
there were significant problems with the application,
which at least gave rise to the risk that the licence
sought and which was, as I indicated necessary for
Limerick FC to be able to play in the League of
Ireland, might well be refused.
I should note at this stage that it is commented in
fairly strong terms in a number of the affidavits filed
by the officers of Limerick FC that they were shocked
at the refusal of the licence. I have to say that
I find it very difficult indeed to understand how
anyone who had read the correspondence received from
the FAI could have been so shocked unless they had
placed their heads very firmly in the sand and had
refused to read or understand what was written in clear
terms.
In any event, the licence was refused by the
appropriate body, that is to say the licensing
committee of the FAI, and in those circumstances
Limerick FC had a right of an appeal to the appeal
body. The rules required that Limerick FC be informed
of that right of appeal and that they were so informed.
An appeal was put in to the appeal body. Again, it
seems to me that the rules of the FAI applicable to the
appeal body are perfectly clear and are not couched in,
as I have indicated, legalese or jargon which would
lead any reasonable person reading them to have any
doubt about what they mean. It is clear beyond any
doubt, and is stated on a number of occasions in those
rules, that the sole purpose of the review to be
carried out by the appeal body is to look at the
process that was carried out by the licensing committee
and decide was that fair and appropriate, and also to
consider whether the overall result was a fair or
reasonable result. Therefore, in substance there were
two types of appeals that could be brought, or indeed a
combination of both: Firstly, it could be suggested
that there was some unfairness in the way in which the
licensing body went about its business and clearly if
the appeal body was persuaded that that was so it had
appropriate powers to remedy that wrong. Secondly, it
might be suggested that while the process was fair and
the conclusions on what actually occurred by the
licensing committee were reasonable, nonetheless the
licensing committee had taken a too severe review of
whatever failings might have been identified.
Those parameters were set out in clear terms in the
rules and it is again difficult to understand how
anyone who had read the rules would not have been
immediately aware of the sort of appeal that could be
brought. In those circumstances it is again very
difficult to understand the repeated references in the
affidavits filed by the officers of Limerick FC to a
complaint to the effect that they thought that they
would be able to produce further evidence to the appeal
body. If they had taken the trouble to read the rules
it would have been abundantly clear that they did not
have that entitlement. Certain consequences flow from
the manner in which the case has been put to date to
which I will have to return in due course.
It is now necessary to turn to the specific complaints
made by Limerick FC about the process. I use the
term “complaints” advisedly because many of the points
raised seem to me, on the evidence currently before the
Court, to be either factually inaccurate, vague, based
on a misunderstanding of the process or amount to a
general complaint that they have been harshly treated.
It is firstly important to note that the arrangements
between Limerick FC and the FAI are, as was in my view
correctly argued by counsel for the FAI, a contract
between the parties. That contract is to be found in
the documents signed by Limerick FC which make it clear
that they accepted that they knew and understood the
rules to which they were signing up. I will have to
deal in due course with whether they in fact did know
and understand those rules, but the one thing that is
clear is that they signed a document making it clear
that they said they understood the rules. If they
signed such a document without having read the rules
and without having familiarised themselves with the
process they were signing up to, then any consequences
that flow are entirely their own fault.
I am prepared to accept, for the purposes of argument
at this stage, that there may be implied into the
contract between Limerick FC and the FAI an obligation
that the FAI will comply with at least some of the
rules of natural justice when considering applications
that could have adverse effects for clubs such as
Limerick. However, there is no doubt that any claim
that can be made in a Court must be confined to an
allegation that the FAI are in breach of their side of
the contract, are in breach of their side of the
bargain. Even if that contract is taken to bring with
it an obligation to act procedurally in a fair manner,
the contract makes it clear that the body that is to
decide on the merits as to whether a club is to receive
a licence is the FAI and its appropriate committees and
appeal boards and not the Court. I want to make it
perfectly clear that in accordance with the long
established jurisprudence of this Court it is not for
the Court to consider whether the view taken by either
the licensing committee or the appeal board was harsh,
went too far, was harsher than perhaps had been applied
in previous years. Those are matters for the FAI and
its appropriately designated committees and boards.
They are not for the Court. This is not an appeal to
the Court. The Court has no role in deciding the
merits or otherwise of who should be licensed.
Insofar as any case can be made to a Court that the
ultimate decision to refuse a licence was unduly harsh,
it could only be made, at the high watermark of the
position that might be adopted by a refused club, on
the basis of the jurisprudence of this Court concerning
irrationality as identified in the Supreme Court
decision in O’Keeffe -v- An Bord Pleanála. What is
clear from that decision, and has been applied in a
whole range of circumstances to decision making bodies
such as the FAI, is that the Court does not intervene
unless the decision made could not reasonably have been
made on the materials that were available.
There was ample material before the Licencing Committee
(and now put before the Court) which would have allowed
the licensing committee to take the view that it was
not appropriate to licence Limerick FC. It seems to me
that the decision made by the licensing committee and
by the appeal board was, therefore, well supported by
the documented failures of Limerick FC to comply with
the process. It is not for me to decide or indicate a
view as to what I would have done had I been the appeal
body. My role is simply confined to ensuring that the
decision was one that was open to the relevant bodies
and I conclude that it was.
The remainder of the complaints concern the process
that was engaged in and place particular focus on the
process before the appeal board. The complaints are
numerous, but most of them can be readily dismissed.
Firstly, a number of them are, and indeed some of them
are conceded to be, factually inaccurate. Firstly,
there is the question of the nature of the hearing
before the appeal board which I have already addressed.
While a number of complaints are made in the affidavits
about what was expected to be the case when the
representatives of Limerick FC went to the appeal
board, it is absolutely clear that if they had taken
the trouble to read the rules they would have known
that what they were expecting was not going to happen.
If they had not read the rules, then that is upon their
own head. Those complaints are simply factually
inaccurate.
Secondly, complaints were originally made about the
composition of the board. Apart from the clear factual
inaccuracy that was contained in the original affidavit
to the effect that the board was chaired by a Senior
Counsel, (it was not) I frankly find it difficult to
understand the nature of the complaint made which seems
to regard it as a criticism of the FAI that the appeal
board was “a fully composed appeal board”.
It is hard to see what else could have been expected.
Limerick FC had put in an appeal in accordance with the
procedures of the FAI. The FAI procedures said that
there was to be a properly composed board and I frankly
cannot understand how it is an issue of complaint that
Limerick FC were met with a properly composed board.
Thirdly, it is suggested by the representatives of
Limerick that they did not have any adequate prior
knowledge of the difficulty in which they found
themselves concerning the risk of not being licensed
and that they were taken aback by the decisions of the
two bodies. I have already indicated that anyone who
read the correspondence received by Limerick with even
something approximating to an open mind would have been
clear that Limerick were in difficulty and that there
was at least a risk that the licence would be refused.
Again that complaint is simply factually inaccurate.
Another series of complaints can at best be described
as either vague or based on a misunderstanding of the
rules. There are suggestions put in the vaguest of
terms about assurances that were given or indications
that were given as to aspects of the process. It is
acceptable in interlocutory applications, because of
the urgent nature of the application and the fact that
affidavits have to be filed which deal with all of the
relevant facts, for those swearing affidavits to give
hearsay evidence and sometimes not to give the level of
detail that might be expected if a case goes to trial
with witnesses. Nonetheless it is not acceptable to
simply state that the deponent has received an
assurance from an unnamed person and in vague and
indefinite terms. Those complaints are simply far too
vague to be treated as substantial.
Secondly, the suggestion is made that other clubs were
in financial difficulty. There seems little doubt that
that is so. Indeed, one would hardly have needed
evidence in this case to be aware that from time to
time a number of clubs, including some of the leading
clubs in the League of Ireland, have suffered
significant financial difficulties. Indeed it might
well be said that that background itself forms the
backdrop for the need to introduce the higher level of
professionalism and compliance with process that
underlies the attempts being made by the FAI at the
present time. However it seems to me that under this
heading the representatives of Limerick have
misunderstood the case being made by the FAI. It is
not the case, and a reading of the documents makes this
clear, that the FAI are suggesting that the reason why
Limerick FC was not licensed was because the Club was
in financial difficulties. The only reason why
financial difficulties are raised by the FAI is in the
context of the legal question known as the balance of
convenience which the Court may have to address as part
of an application such as this and where the Court has
to consider what would happen if it were to give an
injunction at this stage, but it were ultimately to
turn out that the injunction was not properly given
when the Court had an opportunity to fully consider the
case at trial. In those circumstances, there would be,
in the ordinary way, an obligation on Limerick to
compensate the FAI for any losses incurred and the
question of its ability to pay any such losses is
therefore a relevant factor in my consideration. It
was not and does not appear to have been an issue in
itself which led to the refusal of Limerick’s licensing
application and it is simply wrong to state that the
FAI took into account the financial weakness of
Limerick in coming to the conclusions which it did. It
is fair to say that some aspects of the financial
management of Limerick were a factor. Reliance was
placed by the licensing committee on the fact that
Limerick had seriously failed to comply with its
obligations to submit management accounts and also did
not at the time of its application, have in place an
appropriate financial officer. It was suggested in the
course of the hearing that these were merely
administrative matters. It seems to me that they go
much further. Attention was drawn in the course of the
replying affidavits to the fact that, in the course of
the last season one club disappeared, for financial
reasons, in the middle of the season. Apart from the
commercial consequences of such an event for the
running of the league, the sustaining of sponsorship
and the like, there are also sporting consequences of
such an eventuality and it clearly is in neither the
commercial nor the sporting interests of the FAI or
indeed anyone else involved in the administration of
football to contemplate clubs disappearing in the
middle of the season. Therefore ensuring that, while
perhaps in some financial difficulties, clubs are at
least able to live from hand to mouth is a legitimate
concern of the FAI not just for commercial, but also
for sporting reasons and it is that aspect of the
failure of Limerick to provide information to the FAI
that would allow the FAI to form a judgment on those
matters that was one of the grounds for refusing the
licence. Therefore, the complaints that place reliance
on the fact that other clubs have undoubtedly had their
own financial difficulties are misplaced.
A further complaint is made concerning the fact that
when the officers of Limerick attended before the
appeal board they were only asked questions by the
board as to whether they agreed that the licensing
committee had carried out its procedures and applied
the rules in an appropriate way. These matters were
undoubtedly some of the issues that had to be
considered by the board. It is stated as a complaint
that other questions were not asked concerning whether
the “punishment”, to use perhaps an inaccurate term, of
refusal of the licence was too severe given the
failings that had been established. It seems to me
again that those complaints misunderstand the process.
Limerick had been refused a licence. It was for
Limerick to appeal. The basis upon which it could
appeal was set out clearly in the rules. It was not
for the board to ask it questions, though it obviously
could if it wished, it was for Limerick to put forward
its case. The fact that certain questions were not
asked by the board does not mean that the board did not
consider all of the relevant matters. There is no
evidence that Limerick were refused an opportunity to
say what they wanted. Insofar as the Board seems to
have expressed a view that some matters advanced were
irrelevant the Board would seem, on the evidence
currently before the Court, to have been correct. That
leads to the one issue where there is at least a
factual basis for a possible claim made by Limerick FC
and in fairness to counsel for Limerick it was on this
issue that he focussed and it is the issue with which
I will have to deal.
The rules of the FAI concerning the conduct of appeals
make it clear that there is to be a report which is to
go to the appeals body and is to be given to each
member of that body and the appealing club, five days
in advance of the hearing. Two factual issues arise in
respect of that report. Firstly, it is common case
that it was not sent out until the day before the
Appeal hearing; however, that fact has to be seen in
the context of the agreement reached between the FAI
and Limerick FC that the appeal hearing would be
brought forward and it seems to me that it necessarily
follows from the bringing forward of the appeal hearing
that the five day’s notice could not have been provided
because it would not have been possible for the report
to be with Limerick five days in advance of the
expedited hearing that was given.
The second issue concerns the fact that it would
appear, on the evidence currently before the Court,
that the relevant report was e-mailed to the officers
of Limerick FC on the day before the hearing at a time
after they had left to travel to Dublin for the hearing
the next morning. It is said they did not receive or
see the report until after the hearing had concluded.
That is an issue to which I will return in due course,
but it seems to me to be, in reality, the only issue in
the case.
Before going on to consider that issue, it seems to me
that I need to address the question raised by counsel
for the FAI who places reliance on the fact that much
of the case, and in particular the case originally made
by Limerick when it brought an application before this
Court for an interim injunction, was factually
inaccurate. It is certainly the case that much of what
was contained in the original affidavit which persuaded
Peart J to give Limerick an interim order was factually
inaccurate.
I should note that the affidavit in question was sworn
by Limerick’s solicitor, but it has been made clear
that no possible criticism could be made of him in that
he was clearly swearing to facts which were not within
his own knowledge and was therefore swearing to facts
of which he had been informed by his clients.
The two possible explanations for the inaccuracies are:
That Limerick’s solicitor was deliberately given a
wrong account of much of the important factual basis
for the claim which he then, understandably,
incorporated into his affidavit, or alternatively that
the officers of Limerick knew so little about the
process in which they were engaged that they were in
the nature of innocents abroad and had a complete
misunderstanding of what was going on leading to them
to inadvertently give wrong instructions to their
solicitors.
Both of those explanations have consequences. The
first matter which I need to address is the law that
applies in relation to applications to the Court where
only one side is represented. It is clear from two
decisions which I have given in the last two years in
the cases of F. McK -v- DC [2006] IEHC 185 and Bambrick
-v- Cobley [2005] IEHC 143 that there is a clear duty
on any party who comes before the Court without the
other side being notified, to put before the Court not
only the facts that suit their case, but also any facts
that might influence the Court in refusing their
application. The reason for that rule is set out in
those cases, but it only stems from common sense.
Allowing people to go into Court and get an order
without the other side being told in advance is a
departure from the normal rule that both sides are
entitled to be heard. It is a necessary departure in
emergency situations, but the price which a party pays
for being able to do it, is that they have an
obligation of what is called in the cases ‘candour’ and
which means simply that they have to put all the cards
on the table. It is manifestly clear that not only
were not all the cards put on the table in this case,
but that some of the cards were in fact distorted. It
is clear in those circumstances that the Court has a
discretion to refuse an order which might otherwise
properly be given on the basis that parties have abused
their right of access to the Court by, in substance,
misleading the Court by not putting forward all of the
relevant facts.
As I indicated in paragraph 3.4 of my judgment in
Bambrick, the three principle factors which the Court
should take into account are firstly the extent or
materiality of the matters that are misstated or
omitted; secondly, whether the omissions were
deliberate or accidental and, thirdly, the question of
whether an order should in any event be given having
regard to all the circumstances of the case. It is
impossible to avoid the conclusion that the omissions
in this case were significantly material. At a
minimum, it must be the case that there would have been
significant doubt as to whether Peart J would have
given the order on the 16th had he been told the full
facts and it is equally clear that he was not told the
full facts and that indeed some of the facts that he
was told were simply wrong.
The question of the deliberateness or otherwise of the
circumstances that led to Peart J being told inaccurate
or misleading facts, is one on which it is impossible
for me to reach a definite conclusion at this stage.
For the purposes of this application I am prepared to
accept that the officers of Limerick just did not know
that what they were saying was inaccurate, but there
are consequences of that finding. If they did not know
that what they were saying was inaccurate then it
follows that they did not understand the process that
is clearly set out in the rules. If that process did
not live up to their expectations it was because they
had failed either to read the rules or to read them
with any degree of care.
In those circumstances it seems to me that much of the
argument put forward must fall away in that the only
basis upon which Limerick FC can survive the complaint
made by the FAI that they deliberately misled the Court
is that they just did not apply their minds to the
process with which they were engaged, had their head in
the sand and did not take the trouble to read the rules
of the process with which they were involved. I have
to say that I was myself given the papers in this case
the night before and read through them without having
seen any of the documents before and yet that process
was blindingly clear. Now, I appreciate that sometimes
it may be easier for those with legal training to read
documents and rules and understand them, but it seems
to me that the way in which these rules are set out are
such that anyone who had taken the trouble to read them
would have been well aware, at least in general terms,
as to the process with which they were engaged.
I now come to the one point which I indicated it would
be necessary for me to return to, and that is the
report to the appeal board. A number of comments need
to be made. Firstly, the likely existence of that
report and the fact that it should be given to the
appealing club is again clear from the rules so that if
the officers of Limerick had read the rules and did not
in fact have the report prior to the meeting then they
should have known that fact and should have raised that
question with the appeal board. It would have been the
simplest thing in the world for them to say ‘we haven’t
actually got the report’ and doubtless in those
circumstances the fact that it had been e-mailed to
them the previous day but had not come to their
attention would have been revealed and an appropriate
adjournment of the hearing could have taken place.
Instead, the affidavits are full of constant references
to the fact that Limerick had looked for minutes and
had not got minutes. It is absolutely clear that
minutes are a very different thing from the report. It
is again not a technical or jargon term, but the
minutes of a meeting are a recording by the secretary
or other officer of the body concerned of what happened
at the meeting. Sometimes minutes just record
decisions; sometimes they record the debate. The
report in this case, if you read the rules, is
perfectly clearly a document produced not only after
the meeting of the licensing committee, but after an
appeal has come in because it is meant to comment on
both. It is meant to say ‘here is what the licensing
committee decided, here is what the appeal is about’
and put forward the relevant materials to the appeal
body. No-one could be under any misunderstanding that
the report was not the minutes. Minutes were asked
for, they were not given. There was no obligation to
give minutes. Minutes could, for example, reveal the
fact that there had been a disagreement on the licence
committee with some taking one view and some taking
another. An appealing club is not entitled to that
information. Limerick FC was entitled to the report.
The report had been sent to it. It ought to have known
that it should have had a report and yet did not raise
the question. It seems to me, therefore, that the
lateness of the sending of the report was in accordance
with the agreement between the parties that there would
be an expedited hearing and the fact that Limerick had
not seen the report is due to its own fault in the
context of the fact that it knew or should have known
that there would be such a report and did not ask for
it. Indeed Limerick did not make appropriate
arrangements to ensure that anything that arrived for
them after they left for Dublin was forwarded to them
in the context of an undoubtedly expedited hearing when
it might be expected that documents would arrive up to
the last minute.
Finally, I should say that it seems to me that there
was nothing in the report which went beyond the
materials that were already obvious to all parties from
the text of the letter sent recording the decision of
the licensing committee and the appeal itself. While
it is true to state that, in superficial terms, as
noted in the affidavits, the report runs to three pages
and is longer in form than the letter setting out the
reasons for the refusal of the licence, it is clear on
any reading of the report that the issues referred to
in the report are the same issues that appear in the
letter noting the refusal with the addition of
reference to the matters that Limerick itself put up on
the appeal and sometimes adding some detail in
circumstances that could not have given rise to any
misunderstanding. For example, a significant portion
of the additional material in the report simply sets
out the details of the calculation of the amount of
fines that were due by Limerick, but there was never
any dispute but that those fines were due so the
calculations did not really add to the case. The only
issue which Limerick raised under that heading in this
appeal was that it, in effect, sought time to make the
payment of the fines. It does not seem to me therefore
that in any event having sight of the report could have
added anything to the ability to Limerick to present
its case at the appeal. Reliance was placed on the
fact that the report sets out the five criteria (taken
from the rules) which the board would be required to
consider, but of course those criteria are set out in
exactly the same terms in the rules themselves and if
the representatives of Limerick FC had taken the
trouble to read the rules then they would have known
those five criteria in any event.
In those circumstances I am not satisfied, on the
evidence currently before me, that Limerick FC have
made out any case that would entitle them to succeed in
these proceedings and in those circumstances and on
those grounds alone it would be appropriate to refuse
an interlocutory injunction.
Secondly, if I am wrong in that view, I would need to
consider the question of whether damages would be an
adequate remedy for either side. I am not satisfied
that damages would be an adequate remedy either for the
Limerick or indeed for the FAI. Obviously there are
important sporting considerations involved on both
sides that cannot easily be converted into money and
that leads me to the third question which I should
address in case I am wrong in relation to the other
views which I have taken and that is the balance of
convenience.
Under this heading what I need to consider is the
relative consequences of, on the one hand, giving
Limerick an injunction and it turning out, when there
has been a full hearing, that it was wrongly given, or
on the other hand refusing Limerick FC an injunction
and it turning out after a full hearing that the club
was entitled to it. In that context I do take into
account and agree with what is said in the final
affidavit sworn in these proceedings by Mr. Drew of
Limerick FC where he draws, legitimately in my view,
attention to the fact that there is more than simple
commerce involved in running a football team and that
there are interests at stake which go beyond the
commercial interests of a company running a football
team. I think there is no doubt that that is true and
it is an appropriate consideration to be taken into
account by any Court that is faced with a dispute
arising in a sporting context. While many sports, and
certainly all professional sports, have commercial
interests involved, there are also many other interests
involved which go beyond the commerce. Indeed, even
commercial entities in the sporting field frequently
are principally there not for the purposes of making
money but because of a love of the particular sport
concerned. It seems to me that that consideration also
applies to a body, such as the FAI, which is charged
with attempting to promote and manage a sport not only
for an individual club but for all other clubs and all
of those who have an interest in the sport concerned.
A significant weight has to be attached in any
balancing which the Court has to engage in under the
balance of convenience to allowing major sporting
bodies to get on with the job of administering the
sport with whose governance they are charged. That is
not to say that such bodies are above the law. Clearly
if they have been in breach of their legal obligations
then the Court must intervene. However in considering
whether it is appropriate to interfere, on a temporary
basis, with what would otherwise be the proper
administration of the sport concerned then it seems to
me that the Court has to regard any such significant
interference as a matter of importance. This will be
so particularly where the interference will have more
than a minimal short term effect. If every time a
party was able to pass the relatively low threshold of
suggesting that it had a legal case against a sporting
body and was able to interfere with the way in which
that sporting body carried out the management of the
sport on that basis it is likely that the
administration of major sports would grind to a halt.
Therefore, it seems to me, that the Court has to place
a significant weight in the balance of convenience on
factors such as the overall effect of the giving of the
order sought on the proper administration of the sport
concerned.
In this case it seems to me clear that what is, in
substance, being sought is a mandatory order. Limerick
does not have a licence. It says that it should have a
licence and it wants to persuade the Court that the
Court should direct that it get a licence. But the
fact is that by intervening at this stage the Court
would be imposing on the FAI an obligation either to
let Limerick in and allow it play in the current season
contrary to what (in the FAI’s view and it is, on the
evidence, at least a sustainable view) is in accordance
with the best interests of the sport. To impose that
is not simply a matter of no consequence. It means
that the league has to go ahead for an entire season on
a basis which those charged with managing the league
has decided is not the way in which it should go ahead.
In those circumstances, even if I had been satisfied
that there was a fair issue to be tried, I would not
have been prepared to grant an interlocutory injunction
because it seems to me the balance of convenience would
have been against it.
Therefore, in summary I have come to the view that the
conditions necessary to continue this injunction under
any of the relevant headings do not exist. I refrain
from refusing an injunction on the basis of the fact
that the Court was undoubtedly significantly misled on
the occasion of the interim application on the basis of
the possibility that that may have been inadvertent
even though serious and more importantly and in
addition on the basis that it is unnecessary to reach
such a harsh conclusion having regard to the fact that
I have come to the view that the injunction should not
be granted in any event.
In those circumstances I propose refusing the
interlocutory injunction and the interim order made by
Peart J is, therefore, clearly spent and the FAI is
free to deal with matters in accordance with the
decisions of its licensing committee and appeal board.
THE JUDGMENT CONCLUDED
ACC Loan Management Ltd v Stephens
[2017] IECA 229, Irvine J.JUDGMENT of Ms. Justice Irvine delivered on the 27th day of July 2017
1. This is the first named defendant’s (“Dr. Stephens”) appeal against the judgment and order of the High Court (Gilligan J.) dated the 11th November, 2015. By his order he declared, inter alia, that ACC Loan Management Limited (“ACC”) was entitled to a first legal charge over the defendants’ interest in the lands and premises comprised in Folio 11109F for the Register of Freeholders, County Mayo on foot of an agreement (“the loan facility”) entered into by Dr. Stephens and his wife, Maryanne Stephens (“Mrs. Stephens”) on the 6th February, 2004.
2. By his order the High Court Judge directed that Dr. Stephens complete an indenture of mortgage and charge dated the 18th February, 2004 and that, should he default in so doing, an officer of the court be directed to complete same on his behalf. He also made an order that ACC recover as against Dr. Stephens the costs of the proceedings, same to be taxed in default of agreement. An indenture of mortgage and charge was already executed on behalf of Mrs. Stephens pursuant to the Order of the High Court (Murphy J.) dated the 15th February, 2010 made in related proceedings and therefore, Mrs. Stephens is not a party to this appeal.
The High Court Proceedings
3. By proceedings commenced on the 12th June, 2008, ACC sought, inter alia, a declaration that on foot of a loan agreement for the sum of €400,000 made between the parties on the 6th February, 2004 it was entitled to a first legal charge over the defendants’ interest in the lands and premises comprised in Folio 11109F of the Register of Freeholders, County Mayo. ACC sought an order for specific performance of that agreement and an order directing Dr. and Mrs. Stephens to complete an indenture of mortgage and charge dated the 18th February, 2004 in respect of the aforementioned lands and premises.
4. ACC maintained that it was a term and condition of the loan facility that Dr. and Mrs. Stephens provide security to it in the form of a first legal charge in respect of their interests in the lands and dwelling house comprised in the aforementioned folio. ACC claimed that in reliance on the representations of its customers in this regard, it had advanced the sum of €400,000 which Dr. and Mrs. Stephens drew down on 1st March, 2004. ACC further claimed that, in breach of that agreement, they had refused to furnish the security as agreed.
5. The bank claimed that as a result of the breach of contract and misrepresentation on the part of Dr. and Mrs. Stephens it had suffered loss and damage insofar as it had been left without the security intended to support the aforementioned borrowings, namely the first legal charge over Folio 11109F of the Register of Freeholders, County Mayo.
Relevant background facts
6. Apart from the details provided in the preceding paragraphs, the following uncontroverted facts are also material to the appeal.
7. On the 13th February, 2004, Mr. Philip Clarke, a principal in the firm of Ledwidge Solicitors, executed a solicitor’s undertaking on behalf of his clients, Dr. and Mrs. Stephens, to issue, stamp and lodge for registration an indenture of mortgage and charge creating a first legal charge over Folio 11109F of the Register of Freeholders, County Mayo within one month following receipt of the loan cheque. In May 2004, Mr. Clarke paid out to Dr. and Mrs. Stephens the funds which had been drawn down on foot of the loan agreement. At that time, he believed his clients had signed the indenture of mortgage and charge. His retainer was later terminated in October 2004.
8. On 16th August, 2006, the bank’s solicitors, G.J. Moloney and Co. wrote requesting that the deed of mortgage and charge be executed urgently. Mr. Clarke replied stating that the undertaking earlier given would be complied with.
9. On 15th July, 2007, Dr. Stephens provided reassurance to ACC that he and his wife would execute the deed of mortgage and charge. In early 2009 however, and on the advice of an U.S. attorney, Dr. and Mrs. Stephens indicated that they would not sign the deed of mortgage and charge unless ACC increased the earlier loan facility to 65% of the value of the property, an ultimatum which the bank rejected.
10. On 2nd December, 2008, Mr. Clarke commenced plenary proceedings against his former clients seeking an order for specific performance directing them to execute the deed of mortgage and charge in favour of ACC. In the High Court, Murphy J. made such an order on 15th February, 2010 and further ordered that, in the event of default by the defendants in the execution of the deed, it should be executed by a named High Court Registrar on their behalf. Only Dr. Stephens appealed that order with the result that when Mrs. Stephens failed to execute the required deed of charge same was executed in her stead by Ms. Paula Healy, High Court registrar, as per the terms of the court order. ACC was not aware that the deed of mortgage and charge had been executed on behalf of Mrs. Stephens when it commenced these proceedings. It only became so aware in the course of the trial and as a result only sought the relief claimed against Dr. Stephens.
11. In May 2010, the Supreme Court set aside the order of Murphy J. insofar as it concerned Dr. Stephens and remitted Mr. Clarke’s claim for specific performance back for hearing in the High Court. Mr. Clarke did not continue further with those proceedings.
12. The final matter that needs to be mentioned is the fact that Dr. and Mrs. Stephens did not honour their repayment obligations on foot of the loan agreement. As a result of their default, ACC commenced summary summons proceedings against them. In those proceedings (Record No. 2007/2253S) by order of the High Court (Ryan J.) dated 31st May 2012, ACC was granted judgment against Dr. and Mrs. Stephens in the sum of €775,234.57, together with an order providing for its costs of the proceedings when taxed. That decision is under appeal to this court in separate proceedings.
13. Having regard to the submissions made by Dr. Stephens on this appeal, I have decided to set out in a brief chronology some of the dates that are material to my decision.
Chronology
17th December 2007: ACC issues summary summons proceedings against Dr. and Mrs. Stephens.
12th June 2008: Plenary summons
2nd December 2008: Mr. Clarke commenced plenary proceedings.
15th February 2010: The High Court granted judgment in default of defence against Dr. and Mrs. Stephens.
May 2010: Supreme Court set aside the order of Murphy J. against Dr. Stephens and remits the matter to the High Court for hearing.
14th August 2012: Dr. and Mrs. Stephens appeal the judgment of Ryan J. to the Supreme Court.
10th December 2012: ACC issued a motion to renew the plenary summons.
10th January 2013: Appearance of first defendant.
18th January 2013: Appearance of second defendant
5th June 2013: Judgment of Laffoy J. on ACC’s motion to renew its summons.
16th September 2013: Statement of Claim
2nd December 2013: Defence of first and second defendants
4th April 2014 Reply to defence
24th April 2015: Notice of trial
14th October 2015: Notice to produce
11th November 2015: Judgment of Gilligan J.
The issues in the within proceedings
14. It is important in the context of the present appeal to identify the issues which were live for the consideration of the High Court judge on the pleadings. Because the defence filed by Dr. and Mrs. Stephens was a limited one, for ease of reference I have decided to set it out full.
Defence: 2nd December 2013
1. The plaintiff is precluded from proceeding in this action under the doctrine of Res Judicata wherein:-
(a) judgment was given in favour of the Plaintiff in High Court 2007 No. 2253S precluding it from raising claims (in any future litigation) which were raised in (or could have been raised) in High Court 2007. No 2253S:
(b) the current High Court 2008 4753P and High Court No. 2007 to 2253S share a common at nucleus of operative fact:
(c) the parties in the above cases are identical:
(d) there is final judgment on the merits in the original litigation of High Court 2007 No. 2253S
2. The plaintiff is guilty of Laches wherein it exhibited a lack of diligence, inexcusable and unreasonable delay in its assertion of rights. The delay resulted in prejudice and economic injury to the Defendants. It precluded application of assets that earlier could have been used to satisfy the claim but distributed in the interim.
15. As can be seen from the aforementioned defence, the defendants did not seek to challenge the conditions that ACC maintained governed the drawdown of the loan for €400,000 nor their obligation to provide security for those borrowings in the form of a first legal charge over the lands and premises contained in Folio 11109F of the Register of Freeholders, County Mayo.
16. The proceedings, which were advanced solely as against Dr. Stephens, were heard before Gilligan J. over a period of four days in November 2015. Whilst Dr. Stephens cross examined a number of the witnesses called on behalf of ACC, he himself did not give evidence and neither did he call any evidence in support of his defence.
17. Also relevant to the within appeal is the fact that on the second day of the proceedings, the trial judge permitted Dr. Stephens to amend his defence to rely upon what he described as a “defence of no transaction”. No amended defence was delivered but the making of an order in those terms is recorded in the High Court Order of the 11th November, 2015. It is also material to this appeal that on day three of the trial, Dr. Stephens requested the trial judge to recuse himself from further hearing the claim on the grounds that he had, by the manner of his approach to the proceedings up to that time, demonstrated bias.
Judgment of the High Court Judge
18. In his judgment, the High Court judge recorded that it was accepted by Dr. Stephens that it was a term and condition of the loan agreement of February 2004 that ACC would be provided with a first legal charge on the defendants’ interest in the property and lands contained in Folio 11109F of the Register of Freeholders, County Mayo. He also referred to the fact that whilst ACC had, on the 31st July 2012, obtained summary judgment against both defendants for a sum of €775,234.57 it held no security in respect of that judgment.
19. Relevant to the order for specific performance claimed by ACC was the High Court judge’s acceptance of the evidence of Mr. Clarke to the effect that he had been authorised by Dr. and Mrs. Stephens to give the undertaking to ACC concerning the provision of the first legal charge over their interest in the aforementioned property and also that his retainer had later been terminated.
20. Material to the defence of laches advanced by Dr. Stephens was the trial judge’s acceptance of the evidence of Mr. Donnacha O’Donovan, solicitor of G.J. Moloney, that until 20th May, 2009 he had no reason to believe that the Stephens would not execute the deed of charge and that the reason he had not pursued the action on behalf of ACC seeking specific performance against Dr. and Mrs. Stephens was because Mr. Clarke had commenced an action looking for precisely that relief. However, when in 2012 those proceedings had not been progressed, he commenced proceedings on behalf of the bank.
21. The High Court judge rejected Dr. Stephens’ claim that ACC had been guilty of laches such that it should be denied the equitable relief sought. In doing so, he referred to the fact that initially ACC had received promises from the Stephens that they would execute the deed of mortgage and charge. The trial judge also relied upon the fact that when making her order of June 2013 permitting ACC to renew the plenary summons which it had issued on the 12th June 2008 Laffoy J. had concluded that the reasons advanced by the bank for failing to serve the summons over the previous period had been reasonable. He expressed himself satisfied that it was reasonable for the bank to have refrained from issuing proceedings, which would have duplicated those which had been commenced by Mr. Clarke. The trial judge concluded that once the plenary summons had been renewed, the claim had been heard relatively promptly in November 2015. Allied to this conclusion, the trial judge noted that Dr. Stephens had not identified any prejudice as a consequence of the delay complained of.
22. The trial judge also rejected Dr. Stephens’ defence to the effect that the claim of ACC was res judicata by reason of its pursuit of its summary summons proceedings in which it had obtained judgment. That was, he concluded, a separate claim arising out of the failure of Dr. and Mrs. Stephens to make repayments of their borrowings on foot of the loan agreement. It was the trial judge’s view that the summary judgment did not create either cause of action or issue estoppel.
23. The High Court judge also rejected Dr. Stephens’ submission that the rule in Henderson v. Henderson (1843) 3 Hare 100 had any applicability to the facts of the present case and that being so, it could afford Dr. Stephens no defence to the relief sought.
24. Finally, Gilligan J. expressed himself satisfied that a valid and enforceable contract existed between the parties for which consideration had been provided and the written terms set out in the letter of loan sanction were sufficient for such purpose. That being so, ACC was entitled to the relief claimed with the result that he granted the declaratory relief sought and made the orders for specific performance as claimed.
The appeal and the submissions
25. By notice of appeal dated the 5th January 2016, Dr. Stephens seeks to challenge the judgment and order of Gilligan J. on seventeen stated grounds. Unfortunately, notwithstanding the fact that he was afforded several opportunities so to do, Dr. Stephens decided against filing any written submissions. For this reason it is more difficult to summarise the arguments he pursued on the appeal. That notwithstanding, what follows is what I consider to be a fair and reasonable synopsis of his submissions.
26. Dr. Stephens submits that the trial judge erred in law in the approach he took to his defence of laches. In particular, he complains that he failed to have regard for the delay on the part of ACC from the time it was aware it had a valid cause of action arising out of his failure to execute the deed of mortgage and charge in 2004. There was, according to Dr. Stephens, no justification for ACC’s failure to process its claim between 2004 and 2007. Likewise, Dr. Stephens submits that the ACC was not entitled to delay the pursuit of its claim against him for his failure to execute the deed of mortgage and charge based upon the hope that the proceedings commenced by his former solicitor, Mr. Clarke, would achieve that result on its behalf.
27. Dr. Stephens further submits that the trial judge erred in his treatment of his defence in reliance upon the doctrine of res judicata and based upon the rule in Henderson v. Henderson (1843) 3 Hare 100. Dr. Stephens argues that ACC should have brought all of its claims, including its claim for specific performance of his agreement to provide a first legal charge over the lands and premises contained in the relevant folio at the time it commenced its summary summons proceedings seeking judgment for the sum outstanding on the loan agreement. The parties to the summary summons proceedings were the same as those in the present proceedings and, according to Dr. Stephens, the facts and issues concerned therein were the same. That being so, in circumstances where ACC chose to pursue its action for summary judgment and at the same time did nothing to advance its claim seeking specific performance in respect of the deed of charge, it should in equity be precluded from maintaining the later claim. It is Dr. Stephens’ position that the judgment which ACC obtained in the summary summons proceedings put an end its entitlement to litigate the same issue again in the present proceedings.
28. Dr. Stephens also claims that he was not afforded a fair hearing by the High Court judge. He maintains that the High Court judge interfered with his cross examination of the witnesses called on behalf of ACC such that he was not in a position to bring to the court’s attention all of the facts which he considered material to the proper and just determination of the proceedings.
29. Finally, Dr. Stephens maintains that the trial judge, by the manner in which he conducted the proceedings, demonstrated bias with the result that he should have acceded to the application which he made that he discharge himself from hearing the case.
30. Written submissions were filed on behalf of the bank which may be summarised as follows. Counsel for ACC highlighted the fact that Dr. Stephens has not disputed the fact that he received the moneys and that he has not met his obligations in repaying that debt.
31. In response to Dr. Stephens’ argument in relation to laches in the period from 2004 to 2007, counsel for the bank submitted that they did not seek to commence proceedings as they had been given every indication from Dr. and Mrs. Stephens that they would execute the deed of charge. With regard to the alleged delay between 2008 and 2012 this was explained by the respondents as being due to the fact that Mr. Clarke had instituted proceedings seeking specific performance of the deed of charge and they felt it would be an unnecessary duplication for the bank to launch proceedings at that time. Once ACC became aware that Mr. Clarke was not continuing to pursue his claim, they did not delay in reactivating their own proceedings. The primary submission of the respondent in relation to the charge of laches is that this issue has already been decided by the High Court (Laffoy J.) when she allowed the bank to reissue the plenary summons and that decision has not been appealed. It was further submitted that Dr. Stephens cannot succeed in his claim of laches as any delay that may be established has not caused him any prejudice, he did not alter his position and he did not suffer any detriment.
32. In relation to Dr. Stephen’s res judicata argument, counsel for ACC submitted that the summary judgment proceedings (Record No. 2007/2253S) concerned the recovery of a debt while the instant proceedings relate to the different issue of the execution of a first legal charge over the relevant property. Counsel for the respondent submitted that Dr. Stephens’ submission in this regard may more properly fit under the rubric of the rule in Henderson v. Henderson (1843) 3 Hare 100. He outlined that the rule in Henderson v. Henderson is intended to prevent a situation where defendants would be subjected to recurrent litigation and that the facts of the instant case could not be characterised as such where the bank sought to recover its debt and when Dr. Stephens continued to refuse to pay they felt obliged to enforce his obligations in respect of the provision of the first legal charge over the property.
33. With regard to the “no transaction” defence, counsel for the bank submitted that Dr. Stephens’ argument is misconceived as “no transaction” cases are concerned with the issue of quantum where a court is asked to measure damages as if the transaction had not occurred. It was further submitted that the case relied upon by Dr. Stephens of ACC Bank plc v. Johnson [2010] 4 IR 605 was an action by the bank against its own solicitor arising out of his contract of retainer and it bears no resemblance to the present case.
34. In response to Dr. Stephens’ claim that he did not receive a fair hearing, counsel for the respondent accepted that the High Court judge did limit the issues that could be raised by Dr. Stephens during the trial. However, it was submitted that this was well within the authority and the function of the trial judge in order keep the appellant to the pleaded defence. Counsel for the bank submitted that the test to be applied in relation to bias on the part of the court is whether the reasonable person who is not unduly sensitive and has knowledge of the relevant facts would have a reasonable apprehension that the decision maker would not be fair and impartial. He further submitted that the High Court judge correctly applied this test upon the application for his recusal by Dr. Stephens and was correct in finding that Dr. Stephens had not met it.
Discussion and Decision
Laches
35. Having carefully considered the submissions of the parties, I can find no fault on the part of the trial judge in the manner of his approach to the defence raised by Dr. Stephens based upon the doctrine of laches.
36. Laches is of course an equitable doctrine open to a defendant who can establish that the plaintiff’s delay in the manner of their approach to their claim is unfair and unconscionable to the point that they should be denied the relief to which they would otherwise be lawfully entitled. For my part, I am quite satisfied that the trial judge was correct, as a matter of law and fact, when he concluded that Dr. Stephens could not benefit from the application of this doctrine on the facts of the present case.
37. First, insofar as Dr. Stephens relies upon the period 2004 to 2007, the court had evidence that throughout that period Dr. Stephens and his wife had reassured the bank that they were willing to execute the deed of mortgage and charge. The evidence from Mr. O’Donovan was that, as late as the 16th December, 2007, the bank had been given to understand that the defendants would discharge their indebtedness. That, of course, would have released Dr. and Mrs. Stephens of their obligations to execute the deed. As we know, however, they did not discharge their liabilities. Further, by letter dated the 15th July, 2008 the bank received written assurance that the deed of charge would be executed. Thus, Dr. and Mrs. Stephens can hardly complain that the bank did not pursue them in an action for specific performance over this period.
38. That this was the state of affairs between the parties in late 2008 is evidenced by a letter of the 15th December, 2008 written by Mr. O’Donovan of G.J. Moloney noting the preparedness of Dr. Stephens and his wife to execute the deed of charge in accordance with the agreement reached with ACC. In that letter, which enclosed the original deed of charge in duplicate together with the draft Family Home Declaration, Mr. O’Donovan had quite properly reminded Dr. Stephens to take advice on the documents prior to their execution. No issue was taken with that statement by Dr. Stephens in his letter of reply dated the 26th January, 2009 in which he reported having sent the documentation to his Attorney-at-Law for review following which he would revert.
39. It cannot therefore be asserted that ACC was guilty of any culpable delay in failing to issue proceedings seeking specific performance at a time when it appeared likely that the deed of charge would be completed without the necessity to resort to expensive litigation.
40. Second, I am satisfied that the High Court judge cannot be faulted for his conclusion that ACC had not acted unfairly in its failure to pursue Dr. and Mrs. Stephens for specific performance at a time when it was aware that Mr. Clarke was pursuing them for precisely the same relief and that if he was successful in that action it would, without further proceedings, obtain the security to which it was entitled. If the bank had taken a different view and had decided to pursue its own claim for specific performance, Dr. and Mrs. Stephens might well have felt rightly aggrieved in so far as they would have been exposed to the cost and inconvenience of defending two High Court actions destined to achieve precisely the same result, i.e. the execution of the deed of charge.
41. Third, I accept the submission made on behalf of ACC that the High Court judge was correct as a matter of law when he concluded that he was not entitled, when considering the defence laches, to go behind the judgment of Laffoy J. (ACC v. Stephens [2013] IEHC 264, 5th June 2013) wherein, in the context of the bank’s application to renew its plenary summons, she concluded that ACC had good reasons to hold back serving its proceedings until such time as it became aware that Mr. Clarke did not intend to pursue his High Court action against the Stephens any further. The judgment of Laffoy J. was not appealed by Dr. and Mrs. Stephens and was, in such circumstances, binding on Gilligan J. concerning the delay on the part of ACC between the issue of the plenary summons and its renewal.
42. Fourth, relevant also to the correctness of the decision of the High Court judge concerning the defence of laches is the fact that once ACC was made aware of the fact that Mr. Clarke was not pursuing the High Court proceedings against the Stephens following the remittal of the action to the High Court by the Supreme Court, the bank moved with reasonable expedition. That was a finding that was well supported by the evidence.
43. Finally, before concluding on this issue, I should say that even if Dr. Stephens was in a position to establish some error on the part of the High Court judge in his treatment of the delay on the part of ACC in pursuing its claim for specific performance, he could not in any event have succeeded on this aspect of his appeal as his submission is fundamentally flawed. For the purpose of determining whether a defence of laches can be sustained not only must a defendant prove that the plaintiff has delayed unreasonably in bringing their claim, but they must also be in a position to establish that as a result of that delay they have suffered some prejudice or detriment. (See for example Biehler, Equity and the Law of Trust in Ireland. 6th Ed., (Dublin, 2016)).
44. For the purposes of considering whether there was evidence upon which the trial judge could have concluded that Dr. Stephens suffered prejudice as a result of the bank’s delay, I have considered the transcript of the evidence of the High Court hearing. Having done so, I am fully satisfied that there was no evidence upon which the High Court judge could have found that Dr. Stevens had satisfied this necessary element of the laches test. Not only did Dr. Stephens not give any evidence or call any evidence for the purpose of seeking to establish prejudice resultant upon the bank’s delay but neither did he manage in the course of his cross examination to obtain any concession in this regard from the plaintiff’s witnesses.
45. In these circumstances I am quite satisfied that the High Court judge was correct in law when he concluded that the defence of laches as per para. 1 of Dr. Stephens’ defence had to fail.
Res Judicata: Consequences of Summary Summons Proceedings
46. As to Dr. Stephens’ submission that the High Court judge erred in law in failing to conclude that, because the summary summons proceedings had the same “nucleus” and the same parties as the specific performance proceedings, the doctrine of res judicata applied such that ACC had no entitlement to maintain the present proceedings, that is a submission which I must reject.
47. I fear from his submissions made in the course of this appeal that Dr. Stephens does not truly understanding of the doctrine of res judicata.
48. Res judicata is a doctrine that exists for the purposes of precluding the same parties from re-litigating an action that has already been finally determined by a court of competent jurisdiction. There are two aspects to the doctrine. The first concerns what is commonly called a “cause of action” estoppel which is destined to deny a party from re-litigating an action which has already been finally determined by another court. The second concerns “issue estoppel” which prevents parties to earlier proceedings litigating an essential feature or material issue, the subject matter of an earlier decision.
49. Accordingly, the starting point for this Court in relation to this aspect of Dr. Stephens’ appeal is to consider whether the cause of action and/or any issue decided in the summary summons proceedings are the same as the cause of action and/or any issues in these proceedings. The answer is a resounding “no”.
50. ACC’s cause of action in the summary summons proceedings is completely different from that which is the subject matter of the present proceedings. In the summary summons proceedings, the claim of ACC was for judgment in the sum to which it maintained it was entitled by reason of the failure of Dr. and Mrs. Stephens to meet their repayment obligations under the loan agreement. In contradistinction, in the present proceedings ACC claims to be entitled to seek the court’s assistance to procure compliance by Dr. and Mrs. Stephens with their obligation to provide it with a first legal charge over the lands and premises in Folio 11109F of the Register of Freeholders, County Mayo as security for the loan hereinbefore referred to.
51. It is undoubtedly true that common to both sets of proceedings was the loan agreement of the 6th February, 2004. However, that is where the overlap in the proceedings begins and ends. Not only are the causes of action different in both sets of proceedings, but the issues are entirely different. The summary summons proceedings did not touch upon any of the issues that required determination in these proceedings. The court was not asked to consider whether there was a binding agreement that required Dr. and Mrs. Stephens to provide security for the loan and if so, whether they were in default in that regard. Neither was it asked to make any orders requiring them to perform their obligations thereunder.
52. For these reasons, I am satisfied that the High Court judge was correct as a matter of law to conclude that the doctrine of res judicata had no application on the facts of the present case.
53. I also reject Dr. Stephens’ submission that the High Court judge erred in law in failing to conclude that the bank was not entitled to pursue the within proceedings because it had not sought an order for specific performance of the agreement concerning security for the loan transaction in its summary summons proceedings. This was an argument which Dr. Stephens sought to pursue in reliance upon the doctrine in Henderson v. Henderson. Once again, I am drawn to the conclusion that Dr. Stephens’ submission is based upon a misunderstanding of the legal principle upon which he seeks to rely.
54. The rule in Henderson v. Henderson (1843) 3 Hare 100 has its origins in the following extract from the decision of Wigram V.C. in that case were he stated as follows:-
“[W]here a given matter becomes the subject of litigation in, and of adjudication by, a court of competent jurisdiction, the court requires the parties to that litigation to bring forward their whole case, and will not (except under special circumstances) permit the same parties to open the same subject of litigation in respect of matter which might have been brought forward as part of the subject in contest, but which was not brought forward, only because they have, from negligence, inadvertent, or even accident, omitted part of their case. The plea of res judicata applies, except in special cases, not only to points upon which the court was actually required by the parties to form an opinion and pronounce a judgment, but to every point which properly belonged to the subject of litigation, and which the parties exercising reasonable diligence, might have brought forward at the time.”
55. Where the doctrine of res judicata differs from the rule in Henderson v. Henderson was set out by Clarke J. in Moffitt v. Agricultural Credit Corporation plc [2007] IEHC 245 at paras. 3.7 to 3.9:-
“Res judicata per se applies where the matter sought to be litigated has already been decided by a court of competent jurisdiction. (…) The rule in Henderson v. Henderson, on the other hand, applies where a new issue is raised which was not, therefore, decided in the previous proceedings but is one which the court determines could and should have been brought forward in the previous proceedings.
The importance of the distinction lies the consequences. If a matter is res judicata then, in the absence of a defence to the application of the doctrine such as fraud, the availability of fresh evidence in respect of issue estoppel only, or other special cases, the plea will necessarily succeed.
On the other hand, where reliance is placed on the rule in Henderson v. Henderson to the effect that it would be an abuse of process to now allow the party concerned to raise a different issue which could have been raised in the original proceedings, it is well settled that the court adopts a more broad-based approach.”
56. Bearing in mind the limited circumstances in which the rule in Henderson v. Henderson may be deployed, the question that this Court must consider is whether the High Court judge was correct when he concluded that the claim made by ACC in the present proceedings is not one that could and ought to have been made in the summary summons proceedings.
57. I have no doubt that the High Court judge was correct in the conclusion which he reached. First, only a limited class of claim may be pursued by way of summary summons (see Ord. 2 of the Rules of the Superior Courts). A plaintiff may not pursue declaratory relief or a claim for specific performance on a summary summons. Accordingly, it was not possible for the bank, in pursuing its summary summons proceedings, to have included a claim for the relief that has been sought in the present action.
58. Second, there was no obligation on the bank to bring forward its claim for specific performance at the time it issued its summary summons proceedings. If Dr. and Mrs. Stephens had responded to those proceedings and had decided to honour their agreement with ACC and discharge the judgment obtained against them, there would have been no need for the within proceedings. The bank was not obliged to anticipate that they would not repay their indebtedness once judgment was obtained. Further, it cannot reasonably be contended that these two actions taken by ACC against Dr. and Mrs. Stephens could ever be characterised as recurrent litigation because the claims are entirely different and the second being an action necessitated only by the default of the Stephens in their contractual obligation to pay the debt in the first instance and then to provide the legal charge by way of security. Further, Dr. and Mrs. Stephens appealed the summary judgment to this Court thus giving the bank further justification for pursuing its entitlement to the security agreed between the parties in 2004.
59. As to Dr. Stephens’ submission that ACC should have brought all possible claims open to them at the time they issued the summary summons proceedings, that is a submission for which there is no legal authority. What the rule in Henderson v. Henderson required is that a party who makes a particular claim and launches a particular cause of action will advance all of the arguments in support of that proposition in those proceedings. In other words, if a plaintiff seeks summary judgment against a defendant it behoves the plaintiff to put forward all of the facts and legal arguments in that action. Having lost the action, they may not commence a fresh summary summons action relying upon different grounds that might and ought to have been advanced in the first proceedings.
60. What we are concerning on this appeal are two entirely different causes of action. The first concerns the recovery of a debt and the second the bank’s right to obtain a first legal charge over certain property. There is no legal basis upon which it can be argued that the bank was under any obligation to pursue its claim for specific performance at the time it pursued the defendants for summary judgment.
61. It has to be said that there are many reasons why a bank, in circumstances such as those that pertained in the present case, may decide first to commence summary summons proceedings before considering whether it will take steps to enforce any security it may have. Often times, following a quick summary judgment, a defendant may discharge the entirety of the sum due in which case it is not necessary for the lender to pursue such rights as they may have on foot of any security they hold. Or, if the lender considers that its security may not cover the customer’s indebtedness, it may seek to obtain an expeditious summary judgment in order to register that judgment as a charge against some other property of the debtor.
62. My conclusions on this particular issue can be supported by reference to the decision of the English Court of Appeal in Securum Finance Ltd v. Ashton [2001] Ch 291 at 302 where Chadwick LJ. stated that it could not:-
“be argued that a secured creditor who chooses, in the first place, to sue for payment alone, is thereafter precluded from seeking to enforce his security in a separate action on the grounds that that was a claim that could have been advanced in the first action.”
63. The trial judge was in my view, correct when at para. 39 of his judgment he concluded that the legal rights and obligations of the parties, as voiced in the present proceedings, were not determined in any other earlier judgment.
“No Transaction” Defence
64. Dr. Stephens submits that the trial judge erred in law in failing to dismiss the claim of the ACC based upon his “no transaction” defence. He relies in this regard, as he did in the High Court, on the decision in ACC Bank v. Brian Johnston [2010] 4 IR 605. Dr. Stephens argues that the bank had no entitlement to the relief sought against him in these proceedings in circumstances where it had permitted the loan monies to be drawn down at a time when the security documentation had not been put in place by Mr. Clarke. ACC had made the loan monies available at a time when the paperwork, namely the security, was not in order. The transaction had not been completed as agreed as a result of Mr. Clarke’s default. Thus, ACC could not seek to enforce the agreement as against them and were left to pursue a remedy against Mr. Clarke for parting with the loan monies without first ensuring that the intended security was in place.
65. I have no difficulty in rejecting the submission made by Dr. Stephens based upon his “no transaction defence”. The decision in ACC Bank plc v. Johnson is of no relevance to the facts under consideration in these proceedings. That was a case in which the ACC sued its own solicitor arising out of his contract of retainer with the bank in circumstances where he had negligently released monies to a client of the bank prior to ensuring the security required was in place. It is a decision which is of significance only insofar as it identifies the proper approach to the assessment of damages where one party claims that but for the negligence of another party they would not have proceeded with a particular transaction.
66. The facts in ACC Bank plc v. Johnson could not be further from the facts of the present case. It seems to me that Dr. Stephens believes that somehow his agreement with ACC is unenforceable because he received the monies without executing the deed of charge. Thus he contends that the agreement between himself and ACC is in some sense to be considered at an end and unenforceable. However, what Dr. Stephens simply chooses to ignore is that he has never disputed that he concluded a contract with ACC whereby he agreed that in return for the loan of €400,000, which he received, he would provide ACC with a first legal charge over his interest and that of his wife in the lands and premises contained in Folio 11109F of the Register of Freeholders, County Mayo. He has never disputed that he entered into a contract on such terms or his alleged failure to meet his obligations thereunder. His default and that of his wife in respect of their obligations thereunder has necessitated ACC in issuing two sets of legal proceedings against them. It is the apparent determination on the part of Dr. Stephens to take the benefit of the loan monies from ACC and avoid his liabilities thereunder that has brought him to where he is today. Whether Mr. Clarke is or is not to be faulted for releasing the loan monies prior to ensuring that they had signed the deed of charge, affords Dr. Stephens no defence in the context of the present proceedings.
Fair hearing and bias
67. For the purposes of considering Dr. Stephens’ submission that he was not afforded a fair hearing by the trial judge, I have considered in detail the content of his notice of appeal, his oral submissions and the transcript of the High Court hearing. Having done so, I am satisfied that Dr. Stephens has not established that the hearing which was afforded to him was other than in accordance with the fair and proper administration of justice.
68. In coming to the aforementioned conclusion, I have paid particular attention to the specific parts of the transcript identified by Dr. Stephens in the course of his oral submissions to this Court. Dr. Stephens is correct when, in the course of his submissions, he states as a matter of fact that the High Court judge restricted him from pursuing certain matters with the bank’s witnesses. However, when such interventions are viewed in the context of the issues which the court had to determine, I am quite satisfied that the trial judge properly exercised his discretion to ensure that Dr. Stephens did not engage with matters which were outside of the parameters of the issues that required determination.
69. A trial judge is obliged to ensure that proceedings are conducted in an expeditious manner and consistent with the proper administration of justice. He or she must ensure that litigation is confined to the issues that need to be resolved. This is so for several reasons. First, litigation is costly and parties should not be subjected unnecessarily to costs beyond those that are unavoidably incurred in order that there may be a proper determination of the dispute. Second, the court’s own resources are limited and are in great demand and too much time spent on one case may deprive other litigants of an entitlement to be heard in other equally meritorious and perhaps even more meritorious claims. Third, judges must protect witnesses who come to give evidence from unjust attack unless same is warranted in the context of the proceedings.
70. Having read and considered the transcript, I am satisfied that on many occasions, Dr. Stephens tried to engage with issues which were not relevant to the proceedings and at times sought to make allegations of wrongdoing which were not central to the issues under consideration. Further, he appeared determined to adopt such an approach in circumstances where he was not prepared to expose himself to any cross examination concerning those matters nor was he willing to adduce any evidence to support his assertions.
71. Whilst I accept the submission made by Mr. Dunleavy SC that the trial judge acted favourably towards Dr. Stephens in agreeing to permit him amend his defence on day two of the hearing, that of course is not dispositive of Dr. Stephens’ complaint that the High Court judge was biased and did not provide him with a fair and just hearing.
72. That being so, for the purposes of considering Dr. Stephens’ submission to the effect that the evidence supports his contention that the High Court judge was guilty of bias such that he should have acceded to his application to recuse himself on the third day of the trial, I have reviewed the transcript bearing in mind the test for bias as set out in many of the leading decisions on the point such as Ryanair v. Terravision London Finance Limited [2011] I.R. 192. That test required the court to assess whether the hypothetical person, who was not unduly sensitive and had full knowledge of all of the relevant facts and circumstances, would have a reasonable apprehension that the decision maker would not be fair and impartial.
73. Reviewing the transcript of the High Court hearing and the interventions of the trial judge in the course of the proceedings and the manner of his engagement with Dr. Stephens, I am satisfied that Dr. Stephens’ submission that the High Court judge was biased must fail.
74. I recognise that there are contained in Dr. Stephens’ notice of appeal grounds of complaint additional to those which are dealt with in this judgment. However, such complaints are not properly constituted grounds of appeal and could not have any bearing on the decision which this Court is required to make on the appeal. That decision is whether, contrary to the assertions made by Dr. Stephens, the trial judge in the course of a properly conducted hearing was entitled to conclude that ACC had established its entitlement to the relief and orders sought in these proceedings. That being so, I have not found it necessary to address those matters.
75. For all of the aforementioned reasons, I would dismiss the appeal.
Cases Adequacy Damages
Claystone Ltd & Ors v Larkin & Ors
(High Court, Laffoy J., March 14, 2007) Judgment of Miss Justice Laffoy delivered on 14th March, 2007
The applications
This judgment deals with two applications:
(1) The plaintiff’s application on foot of a notice of motion dated 9th February, 2007 seeking an interlocutory injunction restraining the defendants from erecting on the lands known as Site No. 14 Redwood, Ratoath Road, Hollystown, Dublin 15 (the Site) any building or structure (or any part thereof) other than a detached dwelling house constructed in accordance with plans and drawings in respect of which planning permission has been granted by Fingal County Council under planning register reference No. S06A/0800 (the 2006 planning permission) pending further order of the court.
(2) The defendants’ application on foot of a notice of motion dated 21st February, 2006 seeking alternatively:
(a) an order pursuant to Order 19, rule 28 of the Rules of the Superior Courts, 1986 striking out the statement of claim herein on the grounds that it discloses no reasonable cause of action and/or on the grounds that the plaintiffs’ claim is frivolous and/or vexatious; or
(b) an order pursuant to the inherent jurisdiction of the court striking out the proceedings herein on the grounds that the plaintiffs’ claim is frivolous, vexatious and/or bound to fail.
The plaintiffs’ case as pleaded
The primary relief claimed by the plaintiffs on the plenary summons, which issued on 9th February, 2007, is specific performance of an agreement made between the plaintiffs and the first defendant whereunder the first defendant agreed to have the second and third defendants’ construct for the second and third plaintiffs a detached dwelling house on the Site in accordance with the plans and drawings in respect of the 2006 planning permission and to assure the Site with the completed dwelling house thereon to the second and third plaintiffs.
The statement of claim was delivered on 19th February, 2007. The facts set out in paras. 5 to 9 thereof, which are not in dispute, form the factual backdrop to the current dispute and disclose the following:
• By a contract in writing dated 20th April, 2004 made between the first plaintiff and the first defendant (in trust) the first defendant agreed to purchase certain lands at Hollystown, Dublin, 15 comprising approximately six acres from the first plaintiff for the sum of €3.45 million. It is clear on the evidence that the lands in question included the Site.
• That contract contained special condition 13, which provided as follows:
“The Purchaser agrees to sell to the Vendor or its nominees two completed four-bedroom dwelling houses in the proposed development by the Purchaser of the property in sale, for a consideration of €185,000 each, as soon as possible after receipt by the Purchaser of planning permission for the proposed development and after commencement of the site development works and this covenant shall be binding upon the Purchaser, its successors, administrators and assigns. The Purchaser shall enter into a Deed of Covenant with the Vendor in respect of the sale of the two dwelling houses in a form to be agreed by the Vendor prior to the completion of the sale herein. The Purchaser’s solicitors shall furnish a draft Deed of Covenant prior to completion for approval herein to the Vendor’s solicitors.”
• The purchase was completed on 11th November, 2004 when the purchase monies were paid and the lands (including the Site) were assured to the first defendant.
• For the purposes of special condition 13, the first plaintiff nominated the second and third plaintiffs as the parties to whom the houses were to be sold. On 11th November, 2004 the Deed of Covenant contemplated by the special condition was executed by both the first defendant and the second and third plaintiffs. On the same date a second Deed of Covenant was entered into by the same parties in relation to the building of a further detached dwelling house.
• It was agreed that once a layout plan was available showing the purchased lands divided into sites, the second and third plaintiffs would be entitled to choose two of the sites upon which the detached dwelling houses were to be built and the third site would be chosen by the first defendant.
It is not in issue that the Site was one of the two sites chosen by the second and third plaintiffs under the first Deed of Covenant of 11th November, 2004. It is an essential element of the plaintiffs’ case that the reason the Site was chosen was because it backed onto the residential property of the second and third plaintiffs, affording them an opportunity to enlarge the Site thereby rendering it likely that planning permission could be obtained for a larger house than was authorised by the planning permission which had been obtained by the defendants under planning register reference No. 505A/747 (the 2005 planning permission). It is also an essential part of the plaintiffs’ case that the second and third plaintiffs’ objective was to acquire a larger house which would be a suitable residence for their son, Ciaran Barry, his wife, Rose Barry, and their two young children. This is pleaded.
The core elements of the plaintiffs’ case are to be found in paras. 11 and 13 of the statement of claim. In para. 11 it is pleaded that in October, 2005 the possibility of enlarging the Site and obtaining planning permission for a larger dwelling house was discussed between the second plaintiff and the first defendant. It is alleged that it was agreed between them that an application would be made by the second defendant for planning permission for a larger house in accordance with plans and drawings which would be prepared in consultation between the defendants’ architects and Ciaran Barry. It is further alleged that it was agreed that in the event of a suitable planning permission being obtained the defendants would implement the same, the cost of €185,000 being increased pro rata by reference to the increase in the floor area of the house.
The planning application which led to the July planning permission was submitted to the planning authority by the defendants’ architects, John F. O’Connor & Associates, in the name of the second defendant. The 2006 planning permission issued on foot of a notification of decision to grant permission dated 25th July, 2006 for a change of house type from a two-storey, four-bed detached house with recreation room in the attic area (total 189.27 sq. mtrs.) to a two-storey, four-bed detached house with study and bedroom in attic area and with a sun room to the side (total 296 sq. mtrs.). It is clear on the evidence that the planning fees and the architect’s fees in connection with the application for the revised permission were discharged by Ciaran Barry.
In para. 13 the plaintiffs allege that, having obtained the July, 2006 planning permission, all necessary changes in and revision of specifications were discussed and agreed between Ciaran Barry and Michael Larkin, who is a son of the first defendant and a director of the corporate defendants, on diverse dates from the second half of August up to 11th December, 2006.
Before considering what the defendants have to say about the allegations contained in paras. 11 and 13 of their defence, it is useful to record how the dispute between the parties which gives rise to these proceedings has come about. Towards the end of October, 2006 the defendants commenced implementing the 2006 planning permission on the Site and laid the foundations for the larger house permitted under that planning permission. However, a dispute arose between the parties in January of this year. The nub of the dispute was that the defendants asserted that they were not contractually bound to build the larger house in accordance with the 2006 planning permission on the Site and they embarked on the development of the Site in accordance with the 2005 planning permission. The evidence adduced on the application for an interlocutory injunction discloses a serious conflict between the plaintiffs and the defendants as to what motivated that volte face. The plaintiffs’ evidence, in essence, is that it was retaliation by the defendants on account of actions, including the initiation of proceedings in this Court and the registration of a lis pendens, by the plaintiffs in relation to other issues concerning the development at Redwood estate, relations between the second plaintiff and the first defendant having deteriorated at the end of December, 2006. The defendants’ position is that it had nothing to do with that; that the defendants were frustrated by the delay and procrastination on the part of Ciaran Barry and Rose Barry in finalising the negotiations in relation to the specification for the larger house, negotiations which the defendants contend never reached the stage of a concluded agreement.
The defendants’ defence was delivered on 28th February, 2007. Apropos of what is pleaded in para. 11 of the statement of claim, the defendants deny that it was agreed that they would implement a planning permission other than the 2005 planning permission. They assert that, if there was such an agreement as alleged in para. 11, it is unenforceable by reason of non-compliance with s. 2 of the Statute of Frauds (Ireland) 1695. Apropos of the allegations made in para. 13 of the statement of claim, the defendants deny the existence of any agreement regarding changes in and/or revisions of specifications between Ciaran Barry and Michael Larkin or any other person acting by the defendants. Further, they assert that, if there was any such agreement reached, it is unenforceable by reason of non-compliance with the Statute of Frauds. The defendants admit that they are required to erect a house on the Site which has a floor area of not less than 1,900 sq. ft. They deny that the commencement of the development of the Site was done in accordance with the 2006 planning permission. For present purposes, there is uncontradicted evidence before the court in the form of an affidavit sworn by Mark Foran, Consulting Engineer, on 9th February, 2007 that the foundation measurements are consistent with the larger house permitted under the 2006 planning permission, but the block work being constructed on the foundations is for the smaller house permitted by the 2005 planning permission. Indeed, the affidavit of the first defendant sworn on 15th February, 2007 effectively corroborates that evidence.
The defendants’ application to strike out
I consider it logical to consider the defendants’ application first, notwithstanding that the plaintiffs’ application was first in time.
Order 19, rule 28 provides that the court may order any pleading to be struck out on the ground that it discloses no reasonable cause of action and in such case, or in the case of the action being shown by the pleadings to be frivolous or vexatious, the court may order the action to be stayed or dismissed as may be just.
Apart from the jurisdiction available under O. 19, r. 28 it is well established that the court has an inherent jurisdiction to stay proceedings. This jurisdiction was explained in the following passage from the judgment of Costello J., as he then was, in Barry v. Buckley [1981] I.R. 306 (at p. 308):
“But, apart from order 19, the Court has an inherent jurisdiction to stay proceedings and, on applications made to exercise it, the Court is not limited to the pleadings of the parties but is free to hear evidence on affidavit relating to the issues in the case: see Wylie’s Judicature Acts (1906) at pp. 34-37 and The Supreme Court Practice (1979) at para. 18/19/10. The principles on which the Court exercises this jurisdiction are well established. Basically its jurisdiction exists to ensure that an abuse of process of the courts does not take place. So, if the proceedings are frivolous or vexatious they will be stayed. They will also be stayed if it is clear that the plaintiff’s claim must fail …”
Costello J. went on to state that the jurisdiction should be exercised sparingly and only in clear cases.
The inherent jurisdiction was considered by the Supreme Court in Sun Fat Chan v. Osseous Limited [1992] 1 I.R. 425. McCarthy J., with whom the other two judges of the Supreme Court agreed, stated as follows at p. 428:
“In Barry v. Buckley [1981] I.R. 306 Costello J. held that the High Court has inherent jurisdiction in an appropriate case to dismiss an action on the basis that, on admitted facts, it cannot succeed. Counsel for the plaintiff has not challenged that decision or the ratio underlying it. The jurisdiction is different from that directly arising from the Rules … where a statement of claim discloses no cause of action or the proceedings constitute an abuse of process of the court, where, pursuant to section 27, sub-section (5) of the Judicature Act (Ireland) 1877, the court may grant a stay so far as may be necessary for the purpose of justice. In Barry v. Buckley Costello J. referred to the notes on that sub-section set out in Wylie on the Judicature Acts. Since the matter has not been debated, I express no view upon the decision in Barry v. Buckley save to comment that applying the underlying logic, a defendant may be denied the right to defend an action in a plenary hearing if the facts are clear and it is shown that the defence is unsustainable. This appears to have been the net effect in the decision in the High Court (Dixon J.) in Dolan v. Neligan (1959) reported in its second phase in [1967] I.R. 247. By way of qualification of the jurisdiction to dismiss an action at the statement of claim stage, I incline to the view that if the statement of claim admits of an amendment which might, so to speak, save it and the action founded on it, then the action should not be dismissed.
Generally, the High Court should be slow to entertain an application of this kind and grant the relief sought.
Experience has shown that the trial of an action will identify a variety of circumstances perhaps not entirely contemplated at earlier stages in the proceedings; often times it may appear that the facts are clear and established but the trial itself will disclose a different picture. With that qualification, however, I recognise the enforcement of a jurisdiction of this kind as a healthy development in our jurisprudence and one not to be disowned for its novelty though there may be a certain sense of disquiet at its rigour. The procedure is peculiarly appropriate to actions for the enforcement of contracts, since it is likely that the subject matter of the contract would, but for the existence of the action, be the focus of another contract.”
In relation to the last comment in that passage, while the usefulness of a procedure which unblocks a wrongful restraint on contracting, for example, by initiating proceedings for specific performance which cannot succeed and registering a lis pendens, cannot be gainsaid, no such consideration is at play here because it is common case that the defendants are bound to develop the Site for the plaintiffs and assure it to them or their nominee. What is at issue from the plaintiffs’ perspective is the house type to be constructed by the defendants. The only real issue from the defendants’ perspective could be the price they are paid for the construction of the larger house.
The court’s inherent jurisdiction to strike out was considered more recently by the Supreme Court in Supermac’s Ireland v. Katesan (Naas) Limited [2000] 4 I.R. 273 where the court returned to the theme of the imponderability at pleading stage of what the discovery process and the trial process may ultimately turn up. In his judgment, Hardiman J. stated at p. 277:
“There was no dispute between the parties as to the legal principles to be applied in considering this motion. These have been extensively set out in the judgment of the learned trial judge and I need only say that I agree with what she says. The position is aptly summarised in Lac Minerals v. Chevron Corporation [1995] 1 I.L.R.M. 161 as follows:
‘The judge acceding to an application to dismiss must be confident that no matter what may arise on discovery or at the trial of the action the course of the action will be resolved in a manner fatal to the plaintiff’s contention.’
This clearly is a very difficult hurdle for the defendants to clear.”
In his judgment in the Supermac’s case Geoghegan J. emphasised the importance of the following passage from the judgment of Barron J. in the Supreme Court in Jodifern Limited v. Fitzgerald [2003] 3 I.R. 321:
“Every case depends upon its own facts. For this reason, the nature of the evidence which should be considered upon the hearing of an application to strike out a claim is not really capable of definition. One thing is clear, disputed oral evidence of fact cannot be relied upon by a defendant to succeed in such an application. Again, while documentary evidence may well be sufficient for a defendant’s purpose, it may well not be if the proper construction of the documentary evidence is disputed. If the plaintiff’s claim is based upon allegations of fact which will have to be established at an oral hearing, it is hard to see how a claim can be treated as being an abuse of process of the court. It can only be contested by oral evidence to show that the facts cannot possibly be true. This however would involve trial of that particular factual issue.
Where the plaintiff’s claim is based upon a document as in the present case then clearly the document should be before the court upon an application of this nature. If that document clearly does not establish the case being made by the plaintiff then a defendant may well succeed. On the other hand, if it does, it is hard to see how a defendant can dispute this prima facie construction of a document without calling evidence and having a trial of that question.”
Geoghegan J. pointed out that, although the issue in the Jodifern case seems to have been abuse of the process of the court, the same principles would equally apply to an issue as to whether there was or was not a reasonable cause of action.
The case made by the defendants that the plaintiffs’ claim is bound to fail mirrored their defence, in that it advanced two propositions: that there is no concluded agreement between the parties on the lines which the plaintiff seeks to have specifically performed; and, even if there is, it is unenforceable for non-compliance with the Statute of Frauds.
In making the case that the plaintiffs’ claim is unsustainable the defendants referred to the defendants’ contractual obligations under the Deed of Covenant, under which the first defendant undertook to construct two detached dwelling houses, one of which it is acknowledged is to be constructed on the Site and to have a floor area of not less than 1,900 sq. ft. Counsel for the defendants emphasised the provision in the Deed of Covenant in relation to the plans, specification, finish and fit out of the dwelling houses agreed to be constructed which was in the following terms:
“The house plans and specification, finish and fit out for each such dwelling house shall be at least to the standard specification for houses of a comparable size which are to be erected on the Property in the course of its development as a residential estate.”
The defendants argued that there was no concluded agreement varying those terms which had been expressly agreed in writing, for a number of reasons.
First, they submitted that neither Ciaran Barry nor Michael Larkin were parties to the original agreement and, therefore, they could not vary the terms of the original agreement. I find this argument to be wholly without merit. It is quite clear from the plaintiffs’ case as pleaded that the involvement of Ciaran Barry in relation to the house to be constructed on the Site was with the authority of the plaintiffs and by express agreement between the second plaintiff and the first defendant. Further, the necessary implication from the plaintiffs’ case as pleaded is that Michael Larkin was acting on behalf of the first defendant and on behalf of the corporate defendants. The evidence put before the court on these applications, rather than suggesting that Michael Larkin did not have authority to bind the defendants, suggests the contrary.
Secondly, the defendants submitted that there was no agreement as to the varied specification for the larger house and that there was no agreement in relation to the price to be paid to the defendants for construction of that house having regard to the varied specification, finish and fit out. The defendants pointed to features of the evidence on this application which they contended show that the parties had never reached the stage where the price payable for the larger house with the varied specification, finish and fit out had been calculated or agreed.
The plaintiffs’ answer to the defendants’ contention that the plaintiffs could not get a decree of specific performance in the absence of an express agreement on the quantum of the increased price was that there was a mechanism for the determination of the price and that the court could specifically enforce the agreement by giving effect to that mechanism. In this regard the plaintiffs referred the court to the decision of the House of Lords in Sudbrook Trading Estate Limited v. Eggleton & Ors. [1982] 3 All E.R. 1. That case concerned the enforcement of a lessee’s option to purchase the freehold reversion at a price to be agreed by two valuers, one to be nominated by the lessor and the other by the lessee, and, in default of agreement, by an umpire to be appointed by the valuers, a minimum purchase price being specified. When the option was exercised, the lessor refused to appoint a valuer, so the purchase price could not be ascertained. The House of Lords held that, where the machinery by which the value of property was to be ascertained was subsidiary and non-essential to the main part of an agreement for the sale and purchase of property at a fair and reasonable price, the court could, if the machinery for ascertaining the value broke down, substitute other machinery to ascertain the price in order to ensure that the agreement was carried out. The plaintiffs relied in particular on the following passage from the speech of Lord Fraser at p. 10:
“In the present case the machinery provided for in the clause has broken down because the lessors have declined to appoint their valuer. In that sense the breakdown has been caused by their fault, in failing to implement an implied obligation to co-operate in making the machinery work. The case might be distinguishable in that respect from cases where the breakdown has occurred for some cause outside the control of either party, such as the death of an umpire, or his failure to complete the valuation by a stipulated date. But I do not rely on any such distinction. I prefer to rest my decision on the general principle that, where machinery is not essential, if it breaks down for any reason the court will substitute its own machinery.”
Applying that principle to this case, the plaintiffs contended that the parties agreed the machinery whereby the price of the larger house was to be ascertained: the price of €185,000 was to be increased pro rata by reference to the increase in the floor area of the house. As regards the varied specification and fit out, the evidence adduced by the plaintiffs was that the plaintiffs’ requirements were made known to the defendants. The final tranche of documents setting out the plaintiffs’ requirements had been furnished on 11th December, 2006 and there had been no complaint that the documentation was inadequate or late. While the defendants’ evidence was that no agreement was reached on the varied specification or price, that particular averment, contained in an affidavit sworn by Ciaran Barry on 22nd February, 2007, was not contradicted. In the same affidavit Ciaran Barry deposed to a conversation he had with the electrical contractor in relation to the electrical layout proposed by the plaintiffs and to the fact that the electrical contractor had referred to the job being an “at cost” job on the defendants’ instructions. The plaintiffs’ case on this application, as I understand it, was that the pricing mechanism in relation to the varied specification is based on cost. The ascertainment of the price payable to the defendants for the construction work can be objectively ascertained it was urged. Counsel for the defendants correctly submitted that the plaintiffs have not pleaded an agreement that variations over the standard specification would be priced on a cost basis. However, the dictum of McCarthy J. in the Sun Fat Chan case in relation to the possibility of amending a statement of claim is pertinent to that argument.
The question for the court at this juncture is whether it can be predicted with confidence that the plaintiffs will fail to establish a concluded agreement to construct a dwelling house on the Site in accordance with the 2006 planning permission and the plaintiffs’ requirements as set out in the documentation furnished to the defendants at a price which can be ascertained by reference to what the parties have agreed. I am satisfied that it cannot.
The defendants also made the case that the plaintiffs’ claim is bound to fail because the agreement they seek to specifically enforce, which they say is an agreement for the sale of lands, is not in writing and it is not evidenced by any note or memorandum signed by the defendants or an agent of the defendants sufficient to satisfy s. 2 of the Statute of Frauds. Counsel for the defendants submitted, citing the judgment of Kenny J. in McQuaid v. Lynam [1965] I.R. 564 as authority, that where the parties to an agreement for the sale of land intend their agreement to find expression in a written document, the subsequent oral variation of the contract is not effective unless it is evidenced by a memorandum or note in writing signed by the party to the charged therewith or some person authorised by him. As I have already stated, the position here is that the defendants accept that they are contractually bound by virtue of the Deed of Covenant to assure the Site, having erected a house thereon in accordance with the 2005 planning permission, to the second and third plaintiffs or their nominee. As I have already stated, the variation of the terms of the Deed of Covenant which the plaintiffs assert was agreed related to house type, although, of course, that has implications for the price the second and third plaintiffs or their nominees should pay.
The plaintiffs’ answer to the defendants’ contention that, even if there was an agreement on the lines contended for by the plaintiffs, it is not enforceable for non-compliance with the Statute of Frauds had two strands. First, the plaintiffs submitted that what they are seeking to enforce is a building contract, not a contract for the sale of land, and that, accordingly, the Statute of Frauds does not apply. This argument was based on the proposition that the Site is in some way subject to a trust in favour of the second and third plaintiffs by combined operation of the contract for sale of 20th April, 2004, the assurance on foot thereof and the Deed of Covenant of 11th November, 2004. The second strand, which was more vigorously pursued by the plaintiffs was that, in any event, there were sufficient acts of part performance on the part of the plaintiffs to render the agreement which they allege exists enforceable. For instance, they asserted that Ciaran Barry’s involvement in relation to the planning application which led to the 2006 planning permission, including discharging the relevant fees and costs, and the involvement of Ciaran Barry and Rose Barry in relation to finalising the specification and fit out for the larger house are sufficient acts of part performance to render the agreement they contend for enforceable. The defendants countered that argument by pointing to the fact that the plaintiffs have not pleaded part performance. In fact, the plaintiffs have pleaded neither compliance with the Statute of Frauds nor part performance in the statement of claim, presumably on the basis of their contention that what they are seeking to enforce is not a contract for the sale of land. It is open to the plaintiffs to join issue with the defendants’ contention that the contract is unenforceable in their reply, which is due for delivery shortly, and to assert the existence of sufficient acts of part performance to render the agreement they contend for enforceable.
Apart from the pleading point, the defendants asserted that the plaintiffs’ contention that they can answer a defence founded on the Statute of Frauds by reference to the doctrine of part performance is fundamentally misconceived. Counsel for the defendants cited two recent authorities on the doctrine of part performance. First, they referred to a passage from the judgment of Barron J. in the Supreme Court in Mackie v. Wilde (No. 2) [1998] 2 I.R. 578 at p. 586 in which the doctrine was explained as follows:
“It must not be forgotten that ultimately the court is seeking to ensure that a defendant is not, in relying upon the Statute, breaking faith with the plaintiff, not solely by refusing to perform the oral contract, but in the manner contemplated from the passage from the judgment of Simon L.J.
The doctrine is based upon principles of equity. There are three things to be considered:-
(1) the acts on the part of the plaintiff said to have been in part performance or of [sic] concluded agreement;
(2) the involvement of the defendant with respect to such acts;
(3) the oral agreement itself.
It is obvious that these considerations only relate to a contract of a type which the courts will decree ought to be specifically performed. Each of the three elements is essential. In my view, it does not matter in which order they are considered. Ultimately what is essential is that:
(1) there was a concluded oral contract;
(2) that the plaintiff acted in such a way that showed an intention to perform the contract;
(3) that the defendant induced such acts or stood by while they were being performed; and
(4) it would be unconscionable and a breach of good faith to allow the defendant to rely upon the terms of the Statute of Frauds to prevent the performance of the contract.”
The reference to the judgment of Simon L.J. is a reference to his judgment in Steadman v. Steadman [1976] A.C. 536 and to the passage a p. 558 in which Lord Simon outlined the intervention of equity and the evolution of the doctrine of part performance so that the Statute of Frauds could not “be used as an engine of fraud.”
The defendants also relied on a passage from the judgment of this Court (Finnegan P.) in Cosmoline Trading Limited v. D.H. Burke & Son Limited & Anor. [2006] IEHC 38 delivered on 8th February, 2006. Finnegan P. stated as follows:
“In order to obtain specific performance a party must first of all establish a contract and without this there can be no specific performance. In this case I am satisfied that there were negotiations but that the same never resulted in an entire and completed contract. Where there is no contract part performance does not arise and if in reliance on an incomplete contract a party performs some or more of the matters on which agreement has indeed been reached that will not cause the negotiations which were otherwise incomplete to mature into a completed contract. Where as here there was no consensus on material and essential terms there cannot be a contract. See Dore v. Stephenson [High Court, 24th April, 1980, Kenny J.].”
In my view, that authority has no relevance here. The plaintiffs have not relied on the doctrine of part performance with a view to shoring up an incomplete agreement. Their case was that there was a completed agreement. They invoked the equitable doctrine against the defendants’ charge of non-enforceability because of non-compliance with the Statute of Frauds.
On the facts of this case, the defendants submitted that acts relied on by the plaintiffs do not constitute acts of part performance within the equitable doctrine. While I do not consider it either necessary, or even appropriate, to comment on each point they made in relation to the acts of part performance alleged by the plaintiffs, they are quite right in their submission that activities alleged on the part of the defendants cannot constitute part performance by the plaintiffs although, of course, those activities may be evidentially significant. They also submitted that steps alleged to have been taken by Ciaran Barry and Rose Barry, who are neither contracting parties nor plaintiffs, must be excluded from the analysis as to whether there has been part performance. For the reasons stated earlier, it will be obvious that I consider that argument to be unmeritorious. As regards the defendants’ further submission that, on the evidence adduced by the plaintiffs, the negotiations on price and specification only started after the 2006 planning permission was granted, I do not read the evidence that way. In the affidavit sworn on 9th February, 2007 by the second plaintiff grounding the application for an interlocutory injunction, the second plaintiff averred that the pro rata increase on the price of €185,000 by reference to the increased floor area was made prior to any consultation by Ciaran Barry with the defendants’ architects in relation to the planning application which led to the 2006 planning permission.
Aside from those specific comments, if the issue of the enforceability of the agreement contended for by the plaintiffs were ultimately to fall to be determined on the basis of whether there have been acts of part performance on the part of the plaintiffs in a manner which complies with the requirements stipulated by Barron J. in Mackie v. Wilde, the outcome would depend on the assessment of the evidence adduced at the trial. On the basis of the submissions advanced by the defendants, it cannot be confidently predicted that the plaintiffs are bound to fail because the agreement they seek to specifically enforce is not in writing or evidenced in writing so as to comply with the Statute of Frauds.
However, there was a further point which was addressed by the plaintiffs in the context of their application for an interlocutory injunction which bears on the defendants’ application, namely, whether, if the agreement which the plaintiffs seek to specifically enforce is, as the plaintiffs contended, a building agreement rather than an agreement for the sale of land, it is of a type in respect of which a court would be prepared to grant specific performance. On this point, the plaintiffs referred the court to the decision of the Chancery Division of the English High Court (Farwell J.) in Carpenters Estates Limited v. Davies [1940] 1 All E.R. 13. In that case, the plaintiff had purchased building land from the defendant who, in the transfer, covenanted to make certain roads and sewers. The defendant was in breach of the covenant in relation to the sewers. The court held that the plaintiff would not be properly compensated for the defendant’s breach of covenant by an award of damages and was entitled to a decree for specific performance of the covenant. In his judgment, Farwell J. quoted from the judgments of A.L. Smith M.R. and Romer L.J. in Wolverhampton Corporation v. Emmons [1901] 1 K.B. 515. The passage from the judgment of Romer L.J. which he quoted was in the following terms:
“The question, which is not free from difficulty, is whether under the circumstances of this case, an order for specific performance should be made in favour of the plaintiffs. There is no doubt that as a general rule the court will not enforce specific performance of a building contract, but an exception from that rule has been recognised. It has, I think, for some time been held that, in order to bring himself within the exception, a plaintiff must establish three things. The first is that the building work, of which he seeks to enforce the performance, is defined by the contracts; that is to say, that the particulars of the work are so far definitely ascertained that the court can sufficiently see what is the exact nature of the work of which it is asked to order the performance. The second is that the plaintiff has a substantial interest in having the contract performed, which is of such a nature that he cannot adequately be compensated for breach of the contract by damages. The third is that the defendant has by the contract obtained possession of land on which the work is contracted to be done. …”
Farwell J. modified the third requirement, holding that it was sufficient that the defendant be in possession of the land on which the work is contracted to be done.
It seems to me that, having regard to the principles applied in that case, the plaintiffs have an arguable case that their agreement with the defendants is specifically enforceable.
In summary, the defendants have demonstrated that these proceedings raise a fundamental conflict of fact on the question of the variation of the house type and the specification, finish and fitting out of the house and the price the defendants are to receive for the work and they also raise difficult issues of law, which will have to be resolved in the plaintiffs’ favour if they are to succeed. However, these factors are not sufficient to allow the defendants succeed in their application. I have come to the conclusion that the defendants are not entitled to have the plaintiffs’ proceedings struck out or dismissed at this juncture either under O. 19, r. 28 or under the court’s inherent jurisdiction. As regards O. 19, r. 28, the defendants have not established that the statement of claim discloses no reasonable cause of action, nor has it been shown that the pleadings are frivolous or vexatious. In relation to the court’s inherent jurisdiction, having regard to the pleadings and the evidence adduced, I am not satisfied that the defendants have cleared the difficult hurdle of establishing that the plaintiffs’ case must fail.
The plaintiffs’ application for an interlocutory injunction
The plaintiffs’ application for an interlocutory injunction falls to be determined in accordance with the usual criteria: whether there is a fair bona fide question to be tried as between the parties; the adequacy of damages; and where the balance of convenience lies.
It is a corollary of the finding that the defendants have not established that the plaintiffs’ claim must fail that there is a fair bona fide question for determination raised by the plaintiffs.
The plaintiffs’ case is that only an order for specific performance compelling the construction of the larger house in accordance with the 2006 planning permission will provide them with an adequate remedy because of the location of the Site, the family arrangements between the second and third plaintiffs and Ciaran Barry and Rose Barry and the family circumstances of Ciaran Barry and Rose Barry. I consider that the plaintiffs have made out a case, on the peculiar circumstances of this case, that damages would not be an adequate remedy. Moreover, I consider that there is a high degree of probability that, if the proceedings were prosecuted by the plaintiffs to a successful conclusion without an interlocutory injunction having been sought, the only remedy the court would grant would be a decree for damages if construction of the smaller house on the Site were completed at the time the matter came to hearing. I think it highly unlikely that any court would order the demolition of a constructed dwelling house. The court was informed that the defendants are prepared to give an undertaking to the court to demolish the smaller house if the plaintiffs succeed in the action. Apart from the unnecessary waste which that would entail, planning permission would be necessary for the demolition of the house. Therefore, it could not be assumed that the defendants would be able to comply with the undertaking.
On the other hand, damages would be an adequate remedy if it were to transpire that the plaintiff is not entitled to specific performance as claimed. The first defendant, in his affidavit sworn on 15th February, 2007, has outlined the pecuniary loss which the defendants will incur if, because of the existence of an interlocutory injunction, they are prevented from completing the construction work on the Site and finalising the development of Redwood estate. It has not been suggested that the plaintiffs could not meet that loss if they were constrained to do so on foot of the undertaking as to damages which they must give the court as a precondition of being granted an interlocutory injunction.
Having regard to the factors which I have outlined in dealing with the question of the adequacy of damages, in my view, the balance of convenience lies in favour of granting the injunction.
General observations
I think it is appropriate when dealing with an application for an interlocutory injunction to apprise the parties of the court’s function at this early stage in the litigation. As Lord Diplock pointed out in American Cyanamid Company v. Ethicon Limited [1975] 1 All ER 504 at p. 510, it is no part of the court’s function at this stage to try and resolve conflicts of evidence on affidavit as to facts on which the claims of either party may ultimately depend nor to decide difficult questions of law which call for detailed argument and mature consideration. These are matters to be dealt with at the trial. The affidavits in this case have thrown up conflicts of evidence on crucial matters. The context in which the dispute between the parties has arisen and the nature of the remedy being pursued by the plaintiffs raises difficult issues of law, some of which have been considered in connection with the defendants’ application but only to the extent necessary to form a view as to whether the plaintiffs’ claim is hopeless. The purpose of the interlocutory injunction is to maintain the status quo pending the trial of the action and the resolution of the factual conflicts and the determination of the issues of law.
Orders
There will be an order on the defendants’ motion dismissing. An interlocutory injunction in the terms sought will be granted on the plaintiffs’ their application application, subject to the undertaking as to damages.
Approved: Laffoy J.aving regHH
O’Sullivan Pharmacies and Beauticians (Sarsfield Street) Ltd v HSE
, High Court, Laffoy J., March 14, 2008, Laffoy J
I suppose, to get down to basics, the purpose of seeking an interlocutory injunction is to preserve the status quo between the parties pending the trial of the action. What the Court has to consider at this juncture is whether there is a fair issue to be tried between the parties, whether damages would be an adequate remedy for the party seeking the injunction, and where the balance of convenience lies.
Now, the dispute between the parties as outlined by Mr. Hogan is a contractual dispute. He says the questions are whether there was a clear trading arrangement between these Plaintiffs and the HSE, whether under the 1996 Agreement or otherwise, that part of their remuneration was this margin of 17.66% of the ex factory price; secondly, whether there has been any invocation of Clause 12(1) and Clause 19(3) of the Community Pharmacy Contractors’ Agreement and, thirdly, whether there has been a unilateral variation of the contractual arrangements between the parties in relation to the proposed change of the 17.66 percentage down to 15% in 2006 and down to 8% on 1st March 2007 and with the further reduction to 7% later this year, at the end of this year, whether that constitutes a unilateral variation of the contractual terms between the parties so as to constitute a breach of contract and be unlawful. Now, I have absolutely no doubt that there is a fair issue to be tried in relation to all of those questions and Mr. Gordon very properly concedes as much. I am not expressing any view on the strength or otherwise of the Plaintiff’s case because that is not the role of the Court on an application for an interlocutory injunction and we are reminded frequently by the Supreme Court that that is the case.
The second question is a question of adequacy of damages and that is really an aspect of the balance of convenience issue. As I have enunciated this afternoon, it seems to me that the real question in this case is whether the change which is being implemented will have such an effect on the turnover and profitability of these Plaintiffs that it will tilt them over the edge into insolvency and into liquidation. Now, Mr. Gordon complains about the nature of the evidence which has been adduced by the Plaintiffs, on the basis of which they suggest that they are likely to lose profits to the extent of €258,000 on a dispensing turnover of roughly 5.1 million in a year as a result of the proposed changes or the changes which the HSE has purported to implement. He says the evidence is not satisfactory and he relies on Mr. Jackson’s affidavit, which outlines the evidence which should be produced. In an ideal world, the evidence which Mr. Jackson has outlined should be produced. But an application for an interlocutory injunction of this type is not made in ideal circumstances and the type of definition and precision of evidence really is not practicable on an application such as this. It does seem to me that the evidence contained in the affidavit of Mr. O’Sullivan and in the affidavit of the accountant, Mr. Somers, is sufficiently indicative that this company as a matter of probability will be pushed over the edge if the arrangements in relation to remuneration are changed in the manner proposed. So I think the balance of convenience lies in favour of granting the injunction.
Mr. Gordon also raises the question of delay. Of course, an injunction is an equitable remedy and you are supposed to come as quickly as possible. I don’t think there has been delay of the nature which would justify refusing the injunction in this case. There has been caution. There may be some reliance on riding home on the basis of the Hickey and Mullally proceedings and, as well as that, there has been a movement in terms of implementation of this plan on the part of the HSE. So, for all of those reasons, I do not think the delay is such as to justify refusing the injunction.
The argument on mitigation that the Plaintiffs should have accepted the interim contract which provides for an increase in the dispensing fee from the €3.26 to €5 and in that way mitigated their loss I think is not an argument that can be made on an application for an interlocutory injunction. As I said at the outset, the object of the exercise in an application for an interlocutory injunction is to preserve the status quo and what the Plaintiffs have come here to seek is to preserve what they say is their contractual entitlement under their contractual arrangements with the HSE. In my view, they cannot be faulted for not accepting the interim arrangements which they say the HSE is not entitled to force on them.
Then there is, finally, the question in relation to the undertaking as to damages given by the Plaintiffs. Mr. Gordon says it is worthless. Hopefully, it is not, but the object of this process and the object of seeking an injunction is to ensure that it won’t be worthless. So I don’t think that argument stands up either. So, for all of those reasons, it seems to me that the Plaintiff is entitled to an injunction.
Ó Murchu t/a Talknology v. Eircell Ltd.
[2001] IESC 15 (21st February, 2001)
McGuinness J.
Hardiman J.
Geoghegan J.
3
Judgment of Mr. Justice Geoghegan delivered the 21st day of February 2001 [nem. diss.]
1. This is an appeal from an order of the High Court (Kearns J.) refusing a number of interlocutory injunctions, the effect of which would have been to compel the respondent, until further order, to continue supplying or permitting the supply of “ Ready to Go Mobile Phones” to the appellant and treat the appellant as an authorised agent for this purpose.
2. There is a very substantial factual background to this application, but I am satisfied that for the purposes of considering the question of whether injunctions should be granted or not it is neither necessary nor desirable that I should set out detailed particulars of all the facts in this judgment. The following skeleton outline of facts is sufficient.
3. The appellant carried on the business of selling mobile phones in a number of outlets in the south of Ireland, mostly in Co. Kerry. He had a history of expanding his business and opening additional shops. The appellant maintains that at all material times as and from May, 1998 he acted as an authorised agent of the respondent. The system was that by arrangement with the respondent the appellant purchased prepaid “ Ready to Go” phones from a company called Sigma Telecom Limited, through which the “Ready to Go” mobile phones were exclusively channelled by the respondent. There was a different system and a different company involved in relation to contract or bill pay phones. The appellant alleges in his first grounding affidavit that the nature of his agency was that he bought the product from Eircell supply lines and that then he, as a retailer, brought customers to Eircell, whether by way of contract customers (bill payers) or by way of “ Ready to Go” customers. If, however, a customer connected to the Eircell network failed to pay his or her bill for a period of six months the respondent charged the appellant a claw back penalty. The appellant alleges that he attended agent conferences, arranged by the respondent, and that he was supplied with agent signs. He also had a special agent code number.
4. In the summer of 2000 a considerable problem of indebtedness had arisen between the respondent and the appellant when schemes were entered into for the repayment of the debt owing to the respondent by the appellant. Around about the same time the respondent demanded that the appellant enter into standard form agency agreements which were prepared, and indeed, it is suggested that as part and parcel of the rescheduling of the indebtedness the appellant undertook to sign these agreements. However, in the event, the appellant refused to do so allegedly on the grounds that the proposed agent’s agreement was for a period of six months and might be renewed for a further period of up to six months. The appellant claimed that in the context of his liabilities under commercial leases etc. in relation to his shops, these periods were too short and not viable from his point of view. The respondent then threatened to cease dealing with the appellant, but despite this threat the appellant claims that he continued to purchase the respondent’s goods from Sigma Telecom and he has exhibited a statement dated 26th of November, 2000 bearing this out. It is unnecessary to go into all the details of what happened then. It is sufficient to state that at a stage when the appellant wanted to make a large order for the Christmas sales the respondent refused to allow the Ready to Go Phones to be supplied to him. The appellant then instituted these proceedings and moved for interlocutory injunctions because he claimed that his trade would be ruined particularly having regard to the loss of the Christmas business.
5. There is an approved counsel’s note of the ex tempore judgment of Kearns J. who heard the injunction application. The note reads as follows:
“In my opinion, this is not an appropriate case in which to grant an interlocutory injunction.
I would adopt the observations of my colleague, Mr. Justice McCracken, to the effect that it is a matter for the plaintiff to make out a case that he has a subsisting contract with the defendant. As Mr. Gallagher says, what is the contract relied on by the plaintiff? He was offered a written contract by the defendant but refused that contract. In those circumstances, it is not clear on what basis the court could properly determine that any contract existed with specific terms (including quantities to be supplied).
This application is brought against the background of credit concerns on the part of Eircell which arose before determination of the plaintiff’s right to sell Ready to Go handsets. Eircell gave the plaintiff a number of opportunities to regularise his position but these were not availed of.
Furthermore, having regard to the contents of the affidavit of Moore McDowell I am not at all convinced that there is any case for relief under the Competition Act, 1991.
As I have said already, I am of the opinion that this is not an appropriate case for an interlocutory injunction. In my opinion, if there is any arguable case that can be established at the hearing of these proceedings, damages can deal adequately with any loss to the plaintiff.”
6. In considering the correctness or otherwise of that judgment it is important to address the argument, which was put forward in both courts, that what was being sought here were mandatory interlocutory injunctions and that on the well established principles the court should be very slow to grant such an injunction. Kearns J. does not really refer to this argument in his judgment and he may have considered, as I do, that it really has no force in this case. There are different kinds of mandatory injunctions. Undoubtedly, if a plaintiff is looking for a mandatory injunction requiring a wall to be knocked down he may in fact be attempting to obtain at an interlocutory stage what effectively is his final relief. Once the wall is gone it may not be practicable to rebuild it. That is the classic form of mandatory injunction which a court will rarely grant. Although the injunctions sought in this case may arguably be classified as “ mandatory” they are not of that type. They are directed simply towards retaining the status quo pending the outcome of the action, which is the normal purpose of a prohibitive injunction. I see no reason therefore why the traditional principles would not be relevant to this case.
7. It is, therefore, important to consider the three well known factors, that is to say:
1. Is there a serious issue to be tried?
2. Are damages an adequate remedy?
3. Does the balance of convenience favour the granting rather
than refusing of an injunction?
8. On the first element I take a different view than that taken by the learned High Court judge. It seems quite clear that the plaintiff has an arguable case, at least that he had some kind of contractual relationship with Eircell. The express or implied terms of that oral or implied agreement would in the main have been those referred to by the appellant in his affidavit. It was not a term of that agency agreement that he had to enter into some kind of written agency agreement, the form of which was prepared by the respondent whenever requested by the respondent to do so. Indeed, even if there was such a term it is doubtful that it would be enforceable because it would be effectively a contract to enter into another contract. Assuming therefore that the appellant had a contract with the respondent that contract is still alive unless either of the following two sets of circumstances apply:
(1) the agreement has been terminated by reasonable notice pursuant to an implied term or
(2) the appellant was in such serious breach of contract that the
respondent treated his breach as a repudiation of the contract
and accepted it as terminating the contract.
9. Such acceptance of repudiation, of course, could not be inferred if the respondent appeared to waive the breach by continuing to trade with the appellant.
10. It would seem on the documentation before this court that the appellant must, at the very least, have an arguable case that neither of the above sets of circumstances occurred and that therefore, the arguable contract, if it exists, continues to exist. But if it does continue to exist, then no matter what collateral disputes were in train between the appellant and respondent in relation to other monies owing it, was a breach of the agency agreement to prevent the supply of the Ready to Go handsets to the appellant. There must clearly, therefore, be a serious issue to be tried on the breach of contract issue.
11. As to whether there is a serious issue to be tried in relation to allegations which were also made in the proceedings that the respondent has been in breach of the Competition Act, 1991, as amended, I can only say that there is not enough evidence before this court to enable it to form a definite view on that, particularly in the light of the affidavit of the economist Mr. Moore McDowell. The onus is on the appellant and in my view the appellant has not, at this stage, produced sufficient evidence to satisfy this court that as a matter of probability that there is a serious issue to be tried under the Competition Act. But it may well be that at the trial of this action the appellant will be able to expand his evidence so that the competition point becomes a live issue. Nothing in this judgment is to be taken as expressing a view that there is definitely no cause of action arising from the Competition Act, 1991. But on the papers, at present before the court, it has not been established sufficiently that there is a serious issue to be tried on this matter to enable an injunction to be granted.
12. I move now to the question of whether damages would be an adequate remedy. The learned High Court judge clearly thought it was and I would have to agree with him. In every case in which there is a breach of an agency or distribution agreement the task of assessing damages will be difficult, but that does not mean that it cannot be done. The respondent is a viable company and is financially in a position to meet any award in damages that may be made against it. The appellant’s loss is essentially financial. An interesting feature of the case is that much of the argument put forward on behalf of the appellant in the High Court was that the Christmas trade was absolutely vital and that without it, he would go out of business. The plaintiff is still in business. But even if he does go out of business, as a result of losing the agency, his losses can be assessed in money terms. There is a further reason why I think that damages are an adequate remedy. If there is an implied or oral agency agreement, that agreement would be terminable upon reasonable notice and I doubt very much that the appellant would be able successfully to argue that the length of that notice could be more than six months. Depending on the evidence of the trade it might be less. Any damages to be assessed therefore would be confined within a limited period. I am not, of course, expressing any view as to how damages are to be assessed in the event of a finding of infringement of the Competition Act as that is not before this court. But in so far as the appellant is complaining of breach of contract the damages would be limited in the manner which I have suggested. That should not make them too difficult to assess.
13. I would, therefore, affirm the order of the High Court. But even if I had doubts as to whether damages were an adequate remedy I am satisfied that the balance of convenience favours refusing the injunction. First of all there is the well known principle that in general the courts will not grant an injunction which would involve ongoing supervision. A court, therefore, is very slow to grant injunctions in either service contracts or trading contracts because it is very difficult to assess, at any given time thereafter, as to whether such injunctions are being obeyed or not. It is also usually impracticable and undesirable that two parties be compelled to trade with one another when one, for reasons which are perfectly rational, does not want to carry on such trading. The appellant’s bad debt situation and the unsatisfactory nature of his relationship with the respondent make it prima facie reasonable, that the respondent would not want to continue trading with him and I doubt that it would be practicable for a court to force such continued trading.
Meridian Communications Ltd. v. Eircell Ltd.
[2001] IESC 42 (10th May, 2001)
THE SUPREME COURT
REASONS FOR THE ORDER OF THE COURT DATED 27TH APRIL 2001, DELIVERED BY MRS. JUSTICE McGUINNESS THE 10TH DAY OF MAY 2001 (NEM DISS)
1. This is an appeal from an order of Lavan J. whereby he refused the Appellants/Plaintiffs application for interlocutory relief.
2. By notice of motion dated the 18th April 2001 the Appellants/Plaintiffs, Meridian Communications Limited and Cellular Three Telecommunications Limited (“Meridian”) sought the following injunctive reliefs:-
“(1) An injunction restraining the Defendant by itself its servants or agents or otherwise howsoever from terminating the delivery of the supply of mobile telephony to the Plaintiff or any or its subscribers without the prior agreement of Meridian Communications Limited the first named Plaintiff.
(2) An order directing Eircell to recommence provision of international call services and premium services to Meridian pending further order.
(3) An order directing Eirecell to reconnect disconnected numbers pending further order.
(4) An order restraining Eircell from presenting a petition to wind-up Meridian without the leave of this honourable court.”
3. On 18th April 2001 the Plaintiffs made an ex-parte application to Herbert J. who made an interim order in the terms of paragraphs 1 and 4 of the Notice of Motion. The Plaintiffs gave the normal undertaking as to damages and in addition undertook not to transfer, assign or otherwise dispose of all or any part of their subscriber base pending the hearing of the interlocutory application for an injunction.
4. The matter then came on for hearing before Lavan J. on the 25th April 2001. The learned judge refused the relief sought and discharged the interim order made by Herbert J. The Appellants/Plaintiffs appealed to this Court. The appeal was heard as a matter of urgency on the 27th April 2001. Following the hearing the Court granted an interlocutory injunction in the terms of paragraphs 1 and 4 of the original notice of motion, such injunction to remain in force for a period of two weeks only expiring at 4 p.m. on Friday the 11th day of May 2001. A number of conditions, as set out in the order of this Court, were attached to the injunction. The matter was listed for mention on the 10th May 2001. Owing to the lateness of the hour when the hearing concluded and the order of this Court was made, the Court reserved to a later date the statement of the reasons for its decision.
5. The dispute between the parties has been lengthy and complex. The original proceedings between them were at hearing before O’Higgins J. in the High Court for ninety five days. Following a number of interim judgments the proceedings culminated in a lengthy (158-page) judgment delivered by O’Higgins J. on 5th April 2001. The learned High Court judge then put the matter back for mention to permit the parties and their legal advisers to read and study his judgment and to make submissions. On the 24th April it was agreed that submissions on costs and other issues should be heard by O’Higgins J. on 15th May 2001. This Court is informed that it is the intention of Meridian to appeal against a number of the aspects of the decision of the High Court in these proceedings.
6. In the meantime the events which gave rise to Meridian’s present application for injunctive relief occurred.
7. The background and history of the commercial relations between the parties is set out fully and with admirable clarity by O’Higgins J. in his judgment of 5th April 2001. There is no need to repeat it here. For the purposes of the present dispute a summary of the bare bones of the matter is sufficient. From in or about 1997 onwards a Volume Discount Agreement (VDA) existed between Meridian and Eircell. This agreement enabled Meridian to rent mobile telephone lines in bulk from Eircell at a considerable discount. Meridian then rented these lines on to individual subscribers at an overall price which was lower than that normally charged to subscribers by Eircell but which enabled Meridian to make a profit on the transaction. It appears that at the time when the injunction proceedings came before this Court Meridian had a base of some 20,000 subscribers.
8. For reasons which can readily be appreciated Eircell was not particularly happy with the expansion of Meridian’s business which had occurred from November 1998 onwards and sought to bring the VDA to an end when the then current agreement expired. Meridian brought proceedings to require Eircell to continue to supply air time at a discount on the expiry of the VDA. A number of other issues also arose in the proceedings. In the first judgment of O’Higgins J. which was delivered on 4th April 2000 he held inter alia that the Plaintiffs were not entitled to enforce the renewal of the VDA. The proceedings before O’Higgins J. continued at hearing to deal with a number of other issues including breach of contract and breach of competition law. In his judgment of the 5th April 2001 O’Higgins J. held for the Plaintiffs on some of the breach of contract issues but against the Plaintiffs on the main competition law issue.
9. In the interim Eircell had continued to supply mobile telephone services to Meridian on the basis of an undertaking given to this Court in October 1999 that they would continue the service until the determination of the proceedings in the High Court.
10. Over time and during the currency of the proceedings in the High Court there have been continuing disputes between Eircell and Meridian over levels of billing for the lines operated by Meridian subscribers. Meridian allege that there is a high level of error in billing and that virtually all such errors have been in favour of Eircell. Meridian also assert that billing difficulties have been exacerbated by Eircell’s refusal to bill Meridian electronically and its insistence on issuing individual paper based bills in bulk. Eircell on the other hand assert (which is admitted) that a number of recent direct debit payments due to them by Meridian have remained unpaid due to cancellation by Meridian of the direct debits involved. At present the level of indebtedness of Meridian to Eircell for telephone services remains in dispute.
11. During the Easter Vacation Eircell moved against Meridian by terminating the ability to send international calls on their lines or to ring premium numbers. Correspondence, which it is unnecessary to detail here, was exchanged between the parties and there was some direct contact between executives of the two companies. On 13th April 2001 (Good Friday) Eircell issued a letter pursuant to Section 214 of the Companies Act 1963 (as amended) in preparation for bringing a petition to wind-up the Plaintiff company. On Tuesday 17th April 2001 Eircell cancelled a proposed meeting with Meridian and indicated that termination of telephone service to Meridian subscribers was imminent. Meridian made enquiries and confirmed that Eircell intended to terminate service the following day. Termination of lines to some subscribers began on 18th April.
12. On 18th April 2001 Meridian applied for and obtained the interim injunction from Herbert J. (sitting in the Vacation). As has already been mentioned, on the 25th April Meridian’s application for an interlocutory injunction was refused by Lavan J.
13. By the time the appeal from this refusal came on for hearing before this Court the factual situation had somewhat changed. It was acknowledged by Meridian that its business as dependant on the VDA could not continue. Senior Counsel for Meridian, Mr Gordon, explaining the situation, said that it was Meridian’s intention to wind-up this business and to sell the one major asset which Meridian still possessed – its “subscriber base” . This had already been somewhat reduced by Eircell’s action in cutting off international and premium calls but was, he submitted, still worth up to ten million pounds. Negotiations to sell this subscriber base to one of Eircell’s competitors were at an advanced stage; a contract for sale could be signed virtually immediately if Meridian were to be released from the undertaking given to by Herbert J. and the process of the transfer of the business to the new owners could be completed in two weeks. Any indebtedness to Eircell and other creditors could be met from the proceeds of sale following negotiations to establish the true amount of monies owed. It would then also be possible for Meridian to pursue their appeal to this Court against the judgment and orders of O’Higgins J.
14. Mr Gordon submitted that Eircell’s action in endeavouring to terminate service to Meridian subscribers and in bringing a petition under the Companies Acts was aimed (a) at preventing a sale to competitors and (b) at reducing Meridian to a position where it could not pursue its appeal in the main proceedings.
15. Senior Counsel for Eircell, Mr Brady, pointed out that Eircell had succeeded in the major issues in regard both to the VDA and to competition law in the main proceedings in the High Court. They were faced with a situation where they were providing services to Meridian at a loss. Meridian had repeatedly cancelled direct debit payments and appeared to be insolvent. It was therefore both logical and reasonable that Eircell should move to terminate the service provided and to bring a petition under the Companies Acts in order to recover as much as possible of the monies owed. He evinced considerable scepticism as to the possibility of Meridian meeting the demands of all its creditors from the proceeds of sale of the subscriber base. He was extremely critical of the fact that Eircell had given little or no information by way of exhibited accounts or other detailed figures in regard to its present finances. He argued that in their original application to the High Court for an interim injunction Meridian had not fully disclosed the financial facts in the affidavit grounding their application. In particular they had not revealed the fact that they themselves had cancelled direct debit payments.
16. In the court below Lavan J. rejected the Plaintiffs application for an interlocutory injunction on equitable grounds. He was strongly of the opinion that the Plaintiffs did not come to the Court with “clean hands” . He correctly pointed out that “the first proposition of law is that on any application made ex-parte the utmost good faith must be observed and the Applicant is under a duty to make a full and fair disclosure of all of the relevant facts which he knows. And where the supporting evidence contains material misstatements of fact or the Applicant has failed to make sufficient or candid disclosure the ex-parte order may be set aside on that very ground.” He felt that the Plaintiffs had failed this test.
17. This Court accepts that the financial information provided by the Appellants/Plaintiffs in their affidavits is sparse enough, and that the original grounding affidavit on behalf of 1Meridian contains only an oblique and obscure reference to the fact that Meridian had deliberately failed to meet direct debit payments. This failure might well have grounded an initial application by Eircell to set aside the interim injunction granted by Herbert J. At the interlocutory stage, however, the learned High Court judge appears to have been very heavily influenced by the unfavourable view of Meridian’s case which he seems to have formed at an early stage of the proceedings before him. While towards the end of the transcript of his decision he refers to the fact that he was not satisfied that there was a serious issue to be tried, by far the main ground for his decision appears to have been the lack of “clean hands” on the part of Meridian. It should perhaps be added that the application before the High Court seems to have suffered from unavoidable pressure of time both in its preparation and in its hearing.
18. This Court has had the advantage both of an opportunity to read fuller background papers (including the transcript of the proceedings in the High Court) and of being able to provide the equivalent of a full day’s hearing. It seems to the Court that in the events which had transpired since the judgment of O’Higgins J. on the 5th April 2001 neither party has been entirely free of fault. This is a business which has been for some time carried on contrary to the clear wishes of one of the parties. The parties have engaged in lengthy, complex and no doubt extremely expensive litigation, which appears to be going to proceed further through an appeal to this Court. It is scarcely surprising that they are slow to co-operate and that each side may try to “take advantage” from time to time. In the circumstances this Court would not refuse the relief sought on the grounds which were relied on by the learned High Court judge.
19. The Court must therefore approach the matter in the light of the well known principles set out in the case of Campus Oil Limited v Minister for Industry and Commerce (No. 2) [1983] IR 88 . In so doing it must also be borne in mind that what is primarily sought – the continuation of telephone service – amounts in practical terms to a mandatory injunction rather than a mere prohibitory injunction. The standard therefore must be a strict one. In that case Griffin J. , at page 111 of the report states:
“In a number of cases in recent years this Court has applied, as the true test, the test of determining whether a fair or serious question has been raised for decision at the trial and, if so, whether the balance of convenience was in favour of granting or refusing the interlocutory injunction sought.”
20. The question must also arise as to whether damages would be an adequate remedy for the Applicant in each case.
21. An application which bears some similarities to the present application was recently considered by this Court in the case of Noel Ó Murchú trading as Talknology v Eircell Limited (Supreme Court) unreported Geoghegan J. 21st February 2001). In his judgment (with which both I and Hardiman J. agreed) Geoghegan J. set out the “three well known factors ” to be considered as follows:-
“1. Is there a serious issue to be tried?
2. Are damages an adequate remedy?
3. Does the balance of convenience favour the granting rather than refusing of an injunction?”
22. In that case the Applicant sought a number of interlocutory injunctions the effect of which would have been to compel the Respondent, until further order, to continue supplying or permitting the supply of “Ready to go mobile phones” to the Appellant and to treat the Appellant as an authorised agent for this purpose. Geoghegan J. in his judgment held that there was a serious issue to be tried between the parties but that damages would be an adequate remedy. He felt that any damages which fell to be assessed would be within a limited period and would be ascertainable. He went on to say (at page 9 of the judgment):-
“But even if I had doubts as to whether damages were an adequate remedy I am satisfied that the balance of convenience favours refusing the injunction. First of all there is the well known principle that in general the Courts will not grant an injunction which would involve ongoing supervision. A Court, therefore, is very slow to grant injunctions in either service contracts or trading contracts because it is very difficult to assess., at any given time thereafter, as to whether such injunctions are being obeyed or not. It is also usually impracticable and undesirable that two parties be compelled to trade with one another when one, for reasons which are perfectly rational, does not want to carry on such trading. The Appellant’s bad debt situation and the unsatisfactory nature of his relationship with the Respondent make it prima facie reasonable that the Respondent would not want to continue trading with him and I doubt that it would be practicable for a Court to force such continued trading.”
23. The crucial difference between those cases and the instant case is that here the Court is being asked to grant an injunction where the original proceedings have already been determined by the High Court. On Mr Gordon’s submissions, it appears that what the Court is really being asked to do is to preserve Meridian’s right to appeal the decision of O’Higgins J. He assures the Court that serious and substantive issues arise in this appeal, issues which will affect the structure and practice of the telecoms industry generally as well as the private interests of the Appellants/Plaintiffs. I would accept this submission, based as it is on the lengthy hearing before O’Higgins J. and on his judgments in the matter. The licensing issue, the VDA issue and the competition law issues are all of considerable general importance.
24. There is, however, substance in the contention that damages would be an adequate remedy for the Appellants/Plaintiffs. The issue is in essence a commercial one. It appears that the present business being carried on by Meridian must, even in the short term, cease to exist. Many of the considerations referred to by Geoghegan J. in the Talknology case apply. Eircell and Meridian are clearly deeply unhappy trading partners. It seems to me that there can be no question of this Court maintaining an injunction which would purport to force the continuance of this business in the long term, or even until the determination of the appeal process. Should Meridian succeed in its appeal there would be no insuperable difficulty in calculating a suitable award of damages.
25. Mr Gordon, however, argues strongly that the balance of convenience favours at least a short term injunction which would, with the permission of the Court, permit the sale of Meridian subscriber base and the transfer of its subscribers to the new owner. The parties should then endeavour to reach a conclusion as to the amount of money owed by Meridian to Eircell and any such debts could be paid to Eircell out of the proceeds of sale.
26. Mr Gordon also submitted that Eircell would not in fact suffer any loss by being compelled to continue to supply airtime to Meridian during the period of the injunction sought. Eircell would be more than compensated by the revenue received by it from the initiators of calls to Meridian customers – revenue which would be lost to it if the service was definitively terminated. He offered, in addition, undertakings to secure the payment to Eircell of amounts received by it during this period. Furthermore, he argued, Eircell would benefit from the sale of the subscriber base, which would improve the financial position of Meridian as a debtor of Eircell. The essence of these arguments was not seriously contested by Eircell, except in respect of the likely outcome of current attempts to organise the sale, in circumstances where Meridian have maintained strict commercial confidentiality over these arrangements.
27. Mr Brady opposes this solution, largely on the grounds that neither Eircell nor the Court have sufficient information in regard to Meridian’s financial position to have any idea of whether Meridian will in fact be able to satisfy Eircell and its other creditors, which may, of course, include the Revenue Commissioners. He argues for an orderly and proper winding up of the Meridian company through a petition to the High Court.
28. With some hesitation, and bearing in mind the undoubted lack of information concerning Meridian’s financial position, this Court was willing to grant a temporary injunction in the terms of paragraph 1 of the Appellants/Plaintiffs notice of motion and to enable Meridian to sell its subscriber base asset. The Court takes some comfort, in taking this step, from the arguments suggesting that Eircell will not be at a significant loss. There can be no question of granting a further or continuing injunction.
29. The balance of convenience would be served by permitting the proposed orderly winding-up of Meridian’s affairs by the company itself and the proper payment of the various creditors, in particular Eircell. It would also be to the advantage of Eircell if a relatively prompt payment were to be made of the monies owing to it. It would be of immense advantage to all concerned if the parties could co-operate reasonably in reaching a conclusion as to the amount of Meridian’s indebtedness to Eircell.
30. The granting of this injunction was accompanied by a number of conditions which have been set out in the order of this Court made on the 27th April 2001. These conditions were directed towards protecting the position of Eircell and ensuring the proper disbursement of any monies made from the sale of the subscriber base.
31. I now turn to the matter of the petition under the Companies Acts which Eircell have proposed to bring. The principles applicable where it is sought to restrain the presentation of a winding-up petition have been fully and clearly set out by Keane J. (as he then was) in the High Court in the case of Truck and Machinery Sales Limited v Marubeni Komatsu Limited [1996] 1 IR 12 . These are set out in the head note as follows:-
“(a) Since a winding-up petition was not a legitimate means of enforcing payment of a debit which was bona fide disputed, the presentation of a petition would, in normal circumstances be restrained if the company, in good faith and on substantial grounds disputed all liability in respect of the debt claimed.
(b) Where a company admitted its indebtedness to the creditor in a sum exceeding £1,000 but disputed the balance, even on substantial grounds, the creditor should not normally be restrained from presenting a winding-up petition.
(c) Even where the company appeared to be insolvent, the Court, might in the exercise of its equitable jurisdiction, restrain the presentation of the petition where it was satisfied that the petition was being presented for an ulterior or collateral purpose and not in good faith; but that the Court must approach the position of such a company with the interests of the creditors particularly in mind.
(d) the jurisdiction to restrain the presentation of the petition should be exercised only with great caution.
(e) Since an application to restrain the presentation of a winding-up petition involved not the restraint of an alleged violation of a Plaintiff’s right but of the exercise by a creditor of his right of access to the Courts, the normal considerations of a fair question to be tried, the adequacy of damages as a remedy and the balance of convenience did not arise; instead, it was for the Plaintiff to establish at least a prima facie case, which would in many instances be established by evidence that the petition was bound to fail or, at the least, that there was a suitable alternative remedy.”
32. This Court accepts that these are in principle the correct standards to be applied.
33. While it is suggested on the part of Meridian that the errors in billing made by Eircell are so gross that it is possible that Meridian in reality does not owe any money to Eircell, it seems extremely unlikely that what purports to be a debt of some millions of pounds could be reduced below the figure of one thousand pounds mentioned by Keane J., or even anything near that figure. If the proposed sale and settlement of indebtedness does not proceed in the near future, there would seem to be no proper grounds for restraining Eircell from bringing the proposed petition.
34. However, it would seem to be a proper exercise of the equitable jurisdiction of this Court to restrain the bringing of the Respondent’s petition until after the expiry of the injunction already granted. The Court therefore granted the relief sought in paragraph 4 of the Appellants/Plaintiffs notice of motion for a period of two weeks to expire at 4 p.m. on the 11th May 2001.
35. The Court, therefore, for the reasons set out above allowed the appeal and granted limited relief as set out in the order of 27th April 2001.
Cavankee Fishing Co. Ltd v Minister for Communication, Marine and Natural Resources
, High Court, Kelly J., March 4, 2004,JUDGMENT of Mr. Justice Kelly delivered the 4th day of March, 2004.
Background
All of the plaintiffs are the owners of fishing vessels and are members of the Killybegs Fishermen’s Organisation. The vessels in question have fished within the Refrigerated Sea Water (RSW) Pelagic Segment of Ireland’s fleet. They have done so with licences issued under the Fisheries (Consolidation) Act 1959 as amended from time to time.
The licensing of sea fishing boats is now governed by s. 222B of the Fisheries (Consolidation) Act, 1959 as inserted by s. 4 of the Fisheries (Amendment) Act, 2003. Under the 2003 Act the second defendant is given jurisdiction in the first instance to grant a sea fishing boat licence.
On the 20th December, 2002 the Council of the European Communities adopted a Regulation No. 2371/2002 on the conservation and sustainable exploitation of fishery resources under the Common Fisheries Policy. Amongst other things that regulation provided for the transfer to Member States of responsibility for the details of the adjustment of fishing capacity of their respective fleets. The Commission subsequently prepared and published implementing rules in respect of that Council Regulation. These rules were subsequently contained in Commission Regulation 1438/2003 laying down implementing rules on the Community Fleet Policy as defined in chapter 3 of Council Regulation 2371/2002.
The plaintiffs contend that these regulations give greater responsibility and flexibility to Member States to achieve overall EU objectives within its own fleet. This it is said marks a new departure in the Common Fisheries Policy as it provides for the transfer to member states of responsibility for the details of the adjustment of fishing capacity of their respective fleets.
The Fisheries Amendment Act, 2003 provides at s. 3 that the Licensing Authority in relation to sea fishing boats shall be the second named defendant. That defendant is to be independent in the exercise of his functions subject to inter alia such policy directives in relation to sea fishing boat licensing as the Minister may give in writing from time to time. Such a policy directive may require certain prohibitions or conditions to be imposed in relation to sea fishing for the purposes of protecting, conserving or allowing the sustainable exploitation of living marine aquatic species.
Section 4 of the 2003 Act substitutes for s. 222B of the 1959 Act the new s. 222B. Subsection 3(d) of the new s. 222B provides inter alia that in deciding on the grant or refusal of a sea fishing boat licence or the attachment of conditions to licences, the Licensing Authority may take account of economic and social benefits which the operation of a boat would be likely to contribute to the coastal communities and regions which the quotas within the meaning of Regulation 2371/2002 are designed to benefit including the protection, conservation and sustainable exploitation of living marine aquatic species and requirements of the Common Fisheries Policy of the European Community.
In accordance with s. 3 of the Act of 2003 the Minister has given a written Policy Directive to the second named defendant. The plaintiffs question the legality of one part of that Directive set forth at paragraph H thereof. In a few moments I will consider the case which they make in that regard but before doing so I ought to set out the overall objectives of the policy directive.
As stated by the Minister, the key objective of the new licensing policy is to create a new, open and transparent policy which will facilitate the achievement of a sustainable and viable livelihood for fishermen operating in the various types of fisheries taking account of available fishing opportunities and fishing resources. The policy must also deliver the required fleet capacity targets set down in EU Fleet Policy. In addition, the introduction of a transparent and settled licensing policy will give stability and certainty to the industry. The policy proposals being proposed take account of the current situation and the policies and structures inter alia for the fleet and fisheries management that have evolved since 1990 and seek to achieve these objectives.
Reasons are given for this new policy and they include the Government Programme, the Council Regulation 2371/2002 and a comprehensive review of the situation of the Irish fishing fleet and related capacity.
Paragraph H
The policy directive 2/2003 from the Minister, dated the 17th November, 2003 contains fifteen paragraphs lettered from A to O.
Paragraph H reads as follows
“Replacement capacity which has not been provided by vessel owners in the RSW Pelagic Segment of the fleet in respect of works claimed as “safety tonnage” (in respect of certain vessels licensed during the Fourth EU Multi-Annual Guidance Programme [MGP IV]) will be required to be provided by means of the removal of “on” or “off” register polyvalent or beam trawl capacity on the basis of a 2.2 polyvalent or beam trawl GT’s + 9kw’s for one outstanding RSW Pelagic Segment GT. This capacity must be removed from the fleet on a phased basis – at least 30% by the 31st January 2004, at least 70% by 30th April 2004, and 100% by the 30th September 2004. Fishing licenses may only be issued where these phased requirements are met. Licenses will not be granted for vessels replacing vessels with outstanding “safety tonnage” capacity until such time as all of the outstanding replacement capacity has been provided in the manner set out above. Vessel owners with outstanding “safety tonnage” capacity in respect of their existing vessels and who do not propose to introduce a replacement vessel may sell or otherwise transfer the capacity of their vessel to a third party on the basis that the outstanding “safety tonnage” debt is also transferred. The new vessel owner will only be licensed subject, inter alia, to having provided full replacement capacity, including outstanding “safety tonnage”, in the manner set out above. The sole situation in which polyvalent or beam trawl replacement capacity may be used towards the licensing of a vessel in the RSW Pelagic Segment is where the vessel concerned is currently licensed and has outstanding replacement capacity, and only in respect of the amount of that outstanding replacement capacity. Any capacity awarded to the vessel owners following a successful EU court challenge in respect of the existing outstanding “safety tonnage” will be credited to the owners in the form of RSW Pelagic Segment tonnage. The use of any such capacity awarded is subject to section E above”.
The Plaintiffs’ Contention
The plaintiffs contend that paragraph H of the Ministerial Policy Directive is unlawful. The essence of their complaint is that while replacement capacity has been a feature of the Common Fisheries Policy of the European Community in recent years they object to the requirement that they have to decommission dormant off register polyvalent capacity at a ratio of 1:2.2 GT plus 9kw in an entirely different segment of the Irish fleet. The financial consequences of being required so to do are spelled out in the affidavits and need not be rehearsed for the purposes of this ruling.
The plaintiffs make five different contentions concerning the terms of
paragraph H. They say that it is unlawful because:-
(a) it is penal, disproportionate and an interference with the plaintiffs property rights or legitimate expectations or is discriminatory
(b) it is ultra vires s. 3 of the Fisheries Amendment Act, 2003
(c) it amounts a levy or charge which can only be enforced or applied by primary legislation
(d) it constitutes a device to circumvent and subvert the protections and limitations provided by the European Communities Act, 1972 as amended
and
(e) it cannot be used to create a similar offence or amend in a significant manner offences which are provided for under the Fisheries Act, 1959 to 2003.
The plaintiffs contend that they have shown a serious issue to be tried in respect of these contentions, that damages would not prove an adequate remedy for them and that the balance of convenience lies in favour of the grant rather than the refusal of the injunction.
The Injunction
The injunction which is sought is as follows
“an injunction restraining the defendants, their servants or agents or anyone having knowledge of the said order from applying s. H of Policy Directive 2/2003 to the plaintiffs’ vessels until the outcome of these proceedings”.
Although sought on behalf of all of the plaintiffs on the present state of facts it is an injunction which, in practical terms, if it be of benefit at all, will benefit the fifth and sixth named plaintiffs which own the Neptune and the Aine which have not yet been licensed and are tied up. Indeed they cannot be licensed under the present regime unless they comply with the requirements of paragraph H.
Serious Issue
Strong arguments were made by the defendants to the effect that the plaintiffs do not have any serious issue for trial. If the defendants be correct in that then the plaintiffs fall at the first hurdle and no question of an injunction can arise. Tempted as I am to adjudicate on that issue I do not think that it is necessary to do so and it is probably preferable that I should not express my views on the topic.
For the purposes of this judgment therefore I am prepared to assume though without deciding that the plaintiffs do in fact have a serious issue for trial in relation to some at least of the arguments which they make in condemnation of paragraph H.
Damages
I turn therefore to consider whether or not damages would be an adequate remedy for the plaintiffs in the event of them succeeding at trial but without an interlocutory injunction being granted. The plaintiffs’ case is that they will be entitled to damages which they have already suffered and will continue to suffer because of the imposition of the Ministerial Policy upon them. I have to approach this application on the basis that that is the case which the plaintiffs make and will make successfully at trial. I am quite satisfied having regard to the affidavit evidence that the damages suffered by the plaintiffs here can be quantified and that the loss which they allegedly suffer is quite clearly a commercial loss. There is no doubt about the capacity of the defendants to pay any damages awarded against them. Such being so, I am quite satisfied that damages would be an adequate remedy. I am not convinced that it would be difficult to assess such damages but even if it were I have to bear in mind what was said by Finlay C.J in the Curust Financial Services [1994]1 I.R. 450 case that difficulty, as distinct from complete impossibility, in the assessment of damages should not be a ground for characterising the awarding of damages as an inadequate remedy.
I am therefore quite satisfied that damages will be an adequate remedy for the plaintiffs in the event of them succeeding at trial.
It is of course true that the defendants deny that there could be any liability on their part to pay damages even if the plaintiffs are successful in striking down paragraph H. They contend that there is no scope for any such damages in circumstances where the defendants have acted at all times bona fide and reasonably. But it seems to me that I have to approach the plaintiffs’ application on the basis which the plaintiffs contend for, namely that damages will be available notwithstanding the plea of the defendants in that regard. If damages are available they will be an adequate remedy in my view. Having so concluded no question of an injunction can arise.
Lest however I am wrong in the conclusion which I have formed, either as to the adequacy of damages or as to the approach which I should adopt in relation to the plaintiffs who assert that damages will be available as a remedy despite the defendants plea I turn now to the question of balance of convenience.
Balance of Convenience
I have already set forth the form of relief which is sought. It is important to bear in mind that the plaintiffs are not seeking (nor indeed could they seek) a mandatory injunction requiring the second named defendant to register their vessels. What they seek to do is to suspend for the purposes of an application for vessel registration, paragraph H of the policy. If therefore they were to present themselves before the second named defendant with the benefit of such an injunction, he would be obliged to put into effect the parts of the policy which are not suspended. In that regard paragraph C requires that the one to one replacement capacity requirement in terms of GT and kW will remain in place other than in the limited cases specified thereunder. Paragraph H is one of the limited cases specified. If that is suspended then the remainder of the policy remains extant. In these circumstances I cannot see how there is any benefit to be obtained by the plaintiffs from the order which they seek.
I also bear in mind that apart from one other owner who is not contesting the provisions of paragraph H, the plaintiffs were alone in being granted temporary licences for their vessels without having to surrender equivalent capacity. The reason for that was that they claimed that in contrast to the other segments of the fleet there was no capacity readily available in the RSW Pelagic Segment. It seems to me that the plaintiffs were alive to this from in or about 1997 at which stage they made their decisions to build new larger vessels or to extend their existing vessels requiring additional capacity. They seem to have done so in the hope that the additional tonnage would be treated as safety tonnage so that the problem which they now face is not a new one, still less one caused by paragraph H of the Policy Directive, I am of the view that I am entitled to take that into consideration on the question of balance of convenience. It also seems to me that the plaintiffs here are being asked to extinguish tonnage in the same way as every other applicant for a fishing licence. True, they are being asked to extinguish tonnage from a different sector of the fleet but the cost appears to me to be comparable to that applicable as if they were required to extinguish tonnage from their own sector. In addition, I am of opinion that there is a strong likelihood that if the plaintiffs succeed in their case before the European Court, or this case, the net effect is that they would have purchased tonnage in the RSW Pelagic Sector of the fleet surplus to their needs. It is clear that this is a valuable tradable commodity and they will be able to dispose of it thereby minimising if not eradicating any financial loss which they may suffer if the injunction is refused.
I also bear in mind that what is sought to be done here is to suspend a provision of a policy which is specifically provided for by the 2003 Act. That policy has been formulated by the Minister and laid before both Houses of the National Parliament. I am not saying that the court would be powerless to intervene to prevent the implementation of such a policy in a suitable case but I am of the view that that jurisdiction is one which has to be exercised sparingly and only in a very clear case. It would have the effect in this case of requiring the second named defendant to effectively ignore such a policy in circumstances where it has not been condemned. The observations of Murphy J. in Riordan v. Ireland (No. 6) 2002 41.R 404 are apposite. There he said “this court would find it difficult to imagine any circumstances in which a public official would be directed by means of interlocutory mandatory order to carry out an act which would be in direct breach of the express terms of legislative provisions unless and until those provisions have been condemned by a court of competent jurisdiction”. Whereas the injunction sought here is not mandatory, the effect of it would be to require the second named defendant to consider an application for registration absent the provisions of paragraph H before the court had an opportunity of considering whether that paragraph should be condemned or not.
I am furthermore of the view that the grant of the injunction sought would have the effect of placing the State in breach of EU legal obligations and subject to censure and fines as described in the affidavit of Dr. Beamish.
Given these considerations I am quite satisfied that despite the losses allegedly being suffered and the inconvenience being sustained be the plaintiffs the balance of convenience lies against rather than in favour of an injunction being granted. The injunction is refused.
JUDGMENT of Mr. Justice Kelly delivered the 4th day of March, 2004.
Background
All of the plaintiffs are the owners of fishing vessels and are members of the Killybegs Fishermen’s Organisation. The vessels in question have fished within the Refrigerated Sea Water (RSW) Pelagic Segment of Ireland’s fleet. They have done so with licences issued under the Fisheries (Consolidation) Act 1959 as amended from time to time.
The licensing of sea fishing boats is now governed by s. 222B of the Fisheries (Consolidation) Act, 1959 as inserted by s. 4 of the Fisheries (Amendment) Act, 2003. Under the 2003 Act the second defendant is given jurisdiction in the first instance to grant a sea fishing boat licence.
On the 20th December, 2002 the Council of the European Communities adopted a Regulation No. 2371/2002 on the conservation and sustainable exploitation of fishery resources under the Common Fisheries Policy. Amongst other things that regulation provided for the transfer to Member States of responsibility for the details of the adjustment of fishing capacity of their respective fleets. The Commission subsequently prepared and published implementing rules in respect of that Council Regulation. These rules were subsequently contained in Commission Regulation 1438/2003 laying down implementing rules on the Community Fleet Policy as defined in chapter 3 of Council Regulation 2371/2002.
The plaintiffs contend that these regulations give greater responsibility and flexibility to Member States to achieve overall EU objectives within its own fleet. This it is said marks a new departure in the Common Fisheries Policy as it provides for the transfer to member states of responsibility for the details of the adjustment of fishing capacity of their respective fleets.
The Fisheries Amendment Act, 2003 provides at s. 3 that the Licensing Authority in relation to sea fishing boats shall be the second named defendant. That defendant is to be independent in the exercise of his functions subject to inter alia such policy directives in relation to sea fishing boat licensing as the Minister may give in writing from time to time. Such a policy directive may require certain prohibitions or conditions to be imposed in relation to sea fishing for the purposes of protecting, conserving or allowing the sustainable exploitation of living marine aquatic species.
Section 4 of the 2003 Act substitutes for s. 222B of the 1959 Act the new s. 222B. Subsection 3(d) of the new s. 222B provides inter alia that in deciding on the grant or refusal of a sea fishing boat licence or the attachment of conditions to licences, the Licensing Authority may take account of economic and social benefits which the operation of a boat would be likely to contribute to the coastal communities and regions which the quotas within the meaning of Regulation 2371/2002 are designed to benefit including the protection, conservation and sustainable exploitation of living marine aquatic species and requirements of the Common Fisheries Policy of the European Community.
In accordance with s. 3 of the Act of 2003 the Minister has given a written Policy Directive to the second named defendant. The plaintiffs question the legality of one part of that Directive set forth at paragraph H thereof. In a few moments I will consider the case which they make in that regard but before doing so I ought to set out the overall objectives of the policy directive.
As stated by the Minister, the key objective of the new licensing policy is to create a new, open and transparent policy which will facilitate the achievement of a sustainable and viable livelihood for fishermen operating in the various types of fisheries taking account of available fishing opportunities and fishing resources. The policy must also deliver the required fleet capacity targets set down in EU Fleet Policy. In addition, the introduction of a transparent and settled licensing policy will give stability and certainty to the industry. The policy proposals being proposed take account of the current situation and the policies and structures inter alia for the fleet and fisheries management that have evolved since 1990 and seek to achieve these objectives.
Reasons are given for this new policy and they include the Government Programme, the Council Regulation 2371/2002 and a comprehensive review of the situation of the Irish fishing fleet and related capacity.
Paragraph H
The policy directive 2/2003 from the Minister, dated the 17th November, 2003 contains fifteen paragraphs lettered from A to O.
Paragraph H reads as follows
“Replacement capacity which has not been provided by vessel owners in the RSW Pelagic Segment of the fleet in respect of works claimed as “safety tonnage” (in respect of certain vessels licensed during the Fourth EU Multi-Annual Guidance Programme [MGP IV]) will be required to be provided by means of the removal of “on” or “off” register polyvalent or beam trawl capacity on the basis of a 2.2 polyvalent or beam trawl GT’s + 9kw’s for one outstanding RSW Pelagic Segment GT. This capacity must be removed from the fleet on a phased basis – at least 30% by the 31st January 2004, at least 70% by 30th April 2004, and 100% by the 30th September 2004. Fishing licenses may only be issued where these phased requirements are met. Licenses will not be granted for vessels replacing vessels with outstanding “safety tonnage” capacity until such time as all of the outstanding replacement capacity has been provided in the manner set out above. Vessel owners with outstanding “safety tonnage” capacity in respect of their existing vessels and who do not propose to introduce a replacement vessel may sell or otherwise transfer the capacity of their vessel to a third party on the basis that the outstanding “safety tonnage” debt is also transferred. The new vessel owner will only be licensed subject, inter alia, to having provided full replacement capacity, including outstanding “safety tonnage”, in the manner set out above. The sole situation in which polyvalent or beam trawl replacement capacity may be used towards the licensing of a vessel in the RSW Pelagic Segment is where the vessel concerned is currently licensed and has outstanding replacement capacity, and only in respect of the amount of that outstanding replacement capacity. Any capacity awarded to the vessel owners following a successful EU court challenge in respect of the existing outstanding “safety tonnage” will be credited to the owners in the form of RSW Pelagic Segment tonnage. The use of any such capacity awarded is subject to section E above”.
The Plaintiffs’ Contention
The plaintiffs contend that paragraph H of the Ministerial Policy Directive is unlawful. The essence of their complaint is that while replacement capacity has been a feature of the Common Fisheries Policy of the European Community in recent years they object to the requirement that they have to decommission dormant off register polyvalent capacity at a ratio of 1:2.2 GT plus 9kw in an entirely different segment of the Irish fleet. The financial consequences of being required so to do are spelled out in the affidavits and need not be rehearsed for the purposes of this ruling.
The plaintiffs make five different contentions concerning the terms of
paragraph H. They say that it is unlawful because:-
(a) it is penal, disproportionate and an interference with the plaintiffs property rights or legitimate expectations or is discriminatory
(b) it is ultra vires s. 3 of the Fisheries Amendment Act, 2003
(c) it amounts a levy or charge which can only be enforced or applied by primary legislation
(d) it constitutes a device to circumvent and subvert the protections and limitations provided by the European Communities Act, 1972 as amended
and
(e) it cannot be used to create a similar offence or amend in a significant manner offences which are provided for under the Fisheries Act, 1959 to 2003.
The plaintiffs contend that they have shown a serious issue to be tried in respect of these contentions, that damages would not prove an adequate remedy for them and that the balance of convenience lies in favour of the grant rather than the refusal of the injunction.
The Injunction
The injunction which is sought is as follows
“an injunction restraining the defendants, their servants or agents or anyone having knowledge of the said order from applying s. H of Policy Directive 2/2003 to the plaintiffs’ vessels until the outcome of these proceedings”.
Although sought on behalf of all of the plaintiffs on the present state of facts it is an injunction which, in practical terms, if it be of benefit at all, will benefit the fifth and sixth named plaintiffs which own the Neptune and the Aine which have not yet been licensed and are tied up. Indeed they cannot be licensed under the present regime unless they comply with the requirements of paragraph H.
Serious Issue
Strong arguments were made by the defendants to the effect that the plaintiffs do not have any serious issue for trial. If the defendants be correct in that then the plaintiffs fall at the first hurdle and no question of an injunction can arise. Tempted as I am to adjudicate on that issue I do not think that it is necessary to do so and it is probably preferable that I should not express my views on the topic.
For the purposes of this judgment therefore I am prepared to assume though without deciding that the plaintiffs do in fact have a serious issue for trial in relation to some at least of the arguments which they make in condemnation of paragraph H.
Damages
I turn therefore to consider whether or not damages would be an adequate remedy for the plaintiffs in the event of them succeeding at trial but without an interlocutory injunction being granted. The plaintiffs’ case is that they will be entitled to damages which they have already suffered and will continue to suffer because of the imposition of the Ministerial Policy upon them. I have to approach this application on the basis that that is the case which the plaintiffs make and will make successfully at trial. I am quite satisfied having regard to the affidavit evidence that the damages suffered by the plaintiffs here can be quantified and that the loss which they allegedly suffer is quite clearly a commercial loss. There is no doubt about the capacity of the defendants to pay any damages awarded against them. Such being so, I am quite satisfied that damages would be an adequate remedy. I am not convinced that it would be difficult to assess such damages but even if it were I have to bear in mind what was said by Finlay C.J in the Curust Financial Services [1994]1 I.R. 450 case that difficulty, as distinct from complete impossibility, in the assessment of damages should not be a ground for characterising the awarding of damages as an inadequate remedy.
I am therefore quite satisfied that damages will be an adequate remedy for the plaintiffs in the event of them succeeding at trial.
It is of course true that the defendants deny that there could be any liability on their part to pay damages even if the plaintiffs are successful in striking down paragraph H. They contend that there is no scope for any such damages in circumstances where the defendants have acted at all times bona fide and reasonably. But it seems to me that I have to approach the plaintiffs’ application on the basis which the plaintiffs contend for, namely that damages will be available notwithstanding the plea of the defendants in that regard. If damages are available they will be an adequate remedy in my view. Having so concluded no question of an injunction can arise.
Lest however I am wrong in the conclusion which I have formed, either as to the adequacy of damages or as to the approach which I should adopt in relation to the plaintiffs who assert that damages will be available as a remedy despite the defendants plea I turn now to the question of balance of convenience.
Balance of Convenience
I have already set forth the form of relief which is sought. It is important to bear in mind that the plaintiffs are not seeking (nor indeed could they seek) a mandatory injunction requiring the second named defendant to register their vessels. What they seek to do is to suspend for the purposes of an application for vessel registration, paragraph H of the policy. If therefore they were to present themselves before the second named defendant with the benefit of such an injunction, he would be obliged to put into effect the parts of the policy which are not suspended. In that regard paragraph C requires that the one to one replacement capacity requirement in terms of GT and kW will remain in place other than in the limited cases specified thereunder. Paragraph H is one of the limited cases specified. If that is suspended then the remainder of the policy remains extant. In these circumstances I cannot see how there is any benefit to be obtained by the plaintiffs from the order which they seek.
I also bear in mind that apart from one other owner who is not contesting the provisions of paragraph H, the plaintiffs were alone in being granted temporary licences for their vessels without having to surrender equivalent capacity. The reason for that was that they claimed that in contrast to the other segments of the fleet there was no capacity readily available in the RSW Pelagic Segment. It seems to me that the plaintiffs were alive to this from in or about 1997 at which stage they made their decisions to build new larger vessels or to extend their existing vessels requiring additional capacity. They seem to have done so in the hope that the additional tonnage would be treated as safety tonnage so that the problem which they now face is not a new one, still less one caused by paragraph H of the Policy Directive, I am of the view that I am entitled to take that into consideration on the question of balance of convenience. It also seems to me that the plaintiffs here are being asked to extinguish tonnage in the same way as every other applicant for a fishing licence. True, they are being asked to extinguish tonnage from a different sector of the fleet but the cost appears to me to be comparable to that applicable as if they were required to extinguish tonnage from their own sector. In addition, I am of opinion that there is a strong likelihood that if the plaintiffs succeed in their case before the European Court, or this case, the net effect is that they would have purchased tonnage in the RSW Pelagic Sector of the fleet surplus to their needs. It is clear that this is a valuable tradable commodity and they will be able to dispose of it thereby minimising if not eradicating any financial loss which they may suffer if the injunction is refused.
I also bear in mind that what is sought to be done here is to suspend a provision of a policy which is specifically provided for by the 2003 Act. That policy has been formulated by the Minister and laid before both Houses of the National Parliament. I am not saying that the court would be powerless to intervene to prevent the implementation of such a policy in a suitable case but I am of the view that that jurisdiction is one which has to be exercised sparingly and only in a very clear case. It would have the effect in this case of requiring the second named defendant to effectively ignore such a policy in circumstances where it has not been condemned. The observations of Murphy J. in Riordan v. Ireland (No. 6) 2002 41.R 404 are apposite. There he said “this court would find it difficult to imagine any circumstances in which a public official would be directed by means of interlocutory mandatory order to carry out an act which would be in direct breach of the express terms of legislative provisions unless and until those provisions have been condemned by a court of competent jurisdiction”. Whereas the injunction sought here is not mandatory, the effect of it would be to require the second named defendant to consider an application for registration absent the provisions of paragraph H before the court had an opportunity of considering whether that paragraph should be condemned or not.
I am furthermore of the view that the grant of the injunction sought would have the effect of placing the State in breach of EU legal obligations and subject to censure and fines as described in the affidavit of Dr. Beamish.
Given these considerations I am quite satisfied that despite the losses allegedly being suffered and the inconvenience being sustained be the plaintiffs the balance of convenience lies against rather than in favour of an injunction being granted. The injunction is refused.
Miss World Ltd v Miss Ireland Beauty Pageant Ltd
, High Court, Laffoy J., February 10, 2004JUDGMENT of Miss Justice Laffoy delivered on 10th February, 2004.
The Application
This is the plaintiffs’ application for an interlocutory injunction restraining the defendants from passing off any of their events or pageants as or for the Miss Ireland pageant of the plaintiffs and from passing off any of their events, pageants or products as being associated with the Miss Ireland pageant of the plaintiffs. The plaintiffs also seek certain ancillary interlocutory orders, namely:
(1) an injunction requiring the cancellation of the defendants’ domain name and e-mail address, which include in the name and address the term “Miss Ireland”, and, pending cancellation, the disconnection of the domain name from any active internet address;
(2) an injunction requiring the defendants to cease operating any business under any name or style consisting of or including the term “Miss Ireland” or any other confusingly similar name;
(3) an injunction requiring the defendants to remove the term “Miss Ireland” from all business documentation; and
(4) an injunction requiring the defendants to remove from their websites the term “Miss Ireland” and any references to the Miss World competition that could cause visitors to that website to believe that the defendants are franchisees of the first named plaintiff and restraining the defendants from doing any act or thing that could cause confusion in this respect in the future.
The first named plaintiff is a private company incorporated under the laws of Jersey, having its principal place of business in the United Kingdom. Its business is the organisation and running of the Miss World beauty pageant and other beauty pageants, including the Miss Ireland beauty pageant. The second and third named plaintiffs carry on business in the State and are currently the franchisees of the first named plaintiff to organise a beauty pageant in Ireland to select a representative, designated as “Miss Ireland”, to participate in the Miss World contest.
The first named defendant, a limited liability company, was incorporated in the State in 1998. The second named defendant is a director and shareholder of the first named defendant. Formerly he held the franchise from the first named plaintiff to organise a beauty pageant in Ireland to select a representative, designated as “Miss Ireland”, to participate in the Miss World contest. Currently he holds franchises to send contestants to represent Ireland at three international beauty pageants: the Miss Universe contest, the Miss Europe contest and the Miss International contest.
These proceedings were initiated by a plenary summons issued on 16th September 2003. On the same day, the notice of motion which is before the court, which was first returnable for 24th September 2003, was issued. Six affidavits have been filed on behalf of the plaintiff and six on behalf of the defendants. The principal affidavits filed on behalf of the plaintiffs were sworn by Julia Morley (Mrs. Morley), the chairperson and a director of the first named plaintiff. The second named defendant swore the principal affidavits in reply. As is to be expected in a matter of this nature, the affidavits are disputative, argumentative and raise a plethora of conflicts of fact. It is not the function of the court to attempt to resolve such conflicts on this application. The function of the Court is to determine whether –
(a) the plaintiffs have raised a fair and bona fide question to be tried,
(b) if they have, in the event of being refused an injunction and succeeding in the action, the plaintiffs would be adequately compensated by damages,
(c) if they would not, in the event of the injunction being granted and the plaintiffs failing to succeed in the action, the defendants would be adequately compensated by damages, and
(d) the balance of convenience lies in favour of granting or refusing the injunction.
Both sides drew the Court’s attention to the following statement of Finlay C.J. in Westman Holdings Limited v. McCormack [1992] 1 I.R. 151 (at pp. 157-158):
“Having regard to the decision of this Court in Campus Oil v. The Minister for Energy (No. 2) [1983] I.R. 88, I am satisfied that once a conclusion is reached that the plaintiff seeking an interlocutory injunction has raised a fair question to be tried at the hearing of the action in which, if he succeeded, he would be entitled to a permanent injunction that the Court should not express any view on the strength of the contending submissions leading to the raising of such a fair and bona fide question, but should proceed to consider the other matters which then arise in relation to the granting of an interlocutory injunction.”
Fair question to be tried
The wrong which the plaintiffs allege and contend the Court should intervene to remedy is passing off. There is agreement as to what the plaintiffs will have to prove in order to succeed in the action. Both sides referred the court to the three part test formulated by Lord Oliver in Reckitt & Colman Products Limited v. Borden Inc. & Others [1990] 1 All ER 873. In his speech (at p. 880) Lord Oliver said:
“The law of passing off can be summarised in one short proposition, no man may pass off his goods as those of another. More specifically, it may be expressed in terms of the elements which the plaintiff in such an action has to prove in order to succeed. These are three in number. First, he must establish a goodwill or reputation attached to the goods or services which he supplies in the mind of the purchasing public by association with the identifying “get-up” (whether it consists simply of a brand name or a trade description, or the individual features of labelling or packaging) under which his particular goods or services are offered to the public, such that the get up is recognised by the public as distinctive specifically of the plaintiff’s goods or services. Second, he must demonstrate a misrepresentation by the defendant to the public (whether or not intentional) leading or likely to lead the public to believe that goods or services offered by him are the goods or services of the plaintiff. Whether the public is aware of the plaintiff’s identity as the manufacturer or supplier of the goods or services is immaterial, as long as they are identified with a particular source which is in fact the plaintiff. For example, if the public is accustomed to rely on a particular brand name in purchasing goods of a particular description, it matters not at all that there is little or no public awareness of the identity of the proprietor of the brand name. Third, he must demonstrate that he suffers or, in a quia timet action, that he is likely to suffer damage by reason of the erroneous belief engendered by the defendant’s misrepresentation that the source of the defendant’s goods or services is the same as the source of those offered by the plaintiff.”
First element of the test: reputation/goodwill
Counsel for the defendants laid particular emphasis on the requirement that, to establish a goodwill or reputation, the brand name must be recognised by the public as distinctive specifically of the plaintiffs’ services. For the plaintiffs to succeed in their action, he submitted, they must establish that the name Miss Ireland is exclusively associated with them; in other words, that it is distinctive of their business. He urged that the evidence before the Court shows that the name Miss Ireland could not on any basis be said to be exclusively associated with the plaintiffs and that, accordingly, the plaintiffs have not established that there is a serious issue to be tried.
The history of the involvement of the Miss World organisation (the expression adopted by Mrs. Morley to collectively describe the first named plaintiff and its predecessor, Mecca Limited) with the Miss Ireland pageant is outlined in the affidavits of Mrs. Morley. She averred that Mecca Limited inaugurated the Miss Ireland pageant in 1949 in Belfast, two years before the Miss World pageant was first held. The winner was to participate in the National Bathing Beauty Contest held in Morecambe in Lancashire, which she averred was run by the Miss World organisation in conjunction with the Sunday Dispatch, a newspaper then in circulation throughout Ireland, and the Borough of Morecambe and Heysham. In the late 1950s Mecca Limited took over sole control of the Miss Ireland competition, which she believes was run by Mecca Limited “together with the Sunday Dispatch” up to that time. Subsequently, the Miss World organisation decided to franchise out the running of the Miss Ireland pageant. To date, there have been five successive franchisees namely:
(1) Ann Murray (1976 and 1977)
(2) Starlight Magazine (1978 and 1979)
(3) Krish Naidoo (1980 to 1996), who traded under the name Miss Ireland Beauty Pageant,
(4) the second named defendant (1997 to 2002); and
(5) the second and third named plaintiffs (2003, when the second named defendant’s franchise was not renewed, to date).
The winner of the Miss Ireland pageant, who was exclusively known as Miss Ireland in Ireland, represented Ireland in the Miss World contest each year. In December 2003 Miss Ireland who was selected at the plaintiffs’ pageant held in August 2003 won the Miss World title, thereby, Mrs. Morley averred, increasing the goodwill and reputation of the Miss Ireland contest. During the years in which the franchise from the Miss World organisation was held by Mr. Naidoo and the second named defendant, contestants to represent Ireland at other international beauty competitions, for example, the Miss Universe pageant, were also chosen at the Miss Ireland pageant. However, this happened with the permission of the Miss World organisation. The contestants so selected were not known as “Miss Ireland”. The winner of the Miss Ireland pageant was solely entitled to the title Miss Ireland in Ireland and went on to represent Ireland at the Miss World contest. On one occasion only, in 1980, a person other than a franchisee of the Miss World organisation ran a Miss Ireland competition in parallel with that run for the Miss World organisation: Ann Murray, an ex franchisee of the Miss World organisation held a competition under the name Miss Ireland in that year to select a representative for the Miss Universe contest. While Mr. Naidoo was the franchisee he clearly and publicly acknowledged that the Miss Ireland title was owned by the first plaintiff and was licensed to him.
It emerged during the legal submissions that the involvement of Mecca Limited in the competition held in Morecombe was the subject of proceedings in the Chancery Division of the High Court of Justice in the 1960s in which the Borough claimed exclusive title to the name Miss Great Britain: The Borough of Morecambe and Heysham v. Mecca Limited [1962] RPC 145 – interlocutory application; Morecambe and Heysham v. Mecca Limited [1966] RPC 423 – trial. In the Morecambe case the plaintiff sought to restrain Mecca Limited from conducting a pageant under the name “Miss Britain”, but was unsuccessful both at the interlocutory stage and at the trial.
In urging that the evidence does not establish that the name Miss Ireland is exclusively owned by and associated with the plaintiffs and that the plaintiffs’ claim must, accordingly, fail in limine, counsel for the defendants advanced a variety of arguments, some legal and some factual, including the following.
First, relying on a passage from the judgment of Wilberforce J. at the interlocutory stage of the Morecombe case to the effect that the name “Miss Great Britain” consisted of words of common parlance and was not specifically indicative of any particular product, it was submitted that the name Miss Ireland is primarily a descriptive name and could not be said to be inherently distinctive. However, in his judgment in the Morecambe case, following the trial of the action, Buckley J. took a different view. He stated (at p. 438):
“The plaintiffs contend, and I think contend correctly, that the title here used by them is in the nature of a fancy expression, one in which they have acquired a certain measure of goodwill or, at any rate, one which is in a certain measure associated with the goodwill which they have in their contest . . .”
Secondly, it was submitted that certain facts can be extrapolated from the judgments in the Morecambe case, which it is contended are findings which bind the first named plaintiff as the successor of Mecca Ltd., which controvert assertions made by Mrs. Morley as to the creation of and the use thereafter of the name Miss Ireland. Counsel for the plaintiffs argued that this approach is not a proper use of the authority. Thirdly, it was submitted that facts deposed to by Mrs. Morley proved the concurrent use of the Miss Ireland title during the 1980s and indicated that the first named plaintiff did not have exclusive rights. Counsel for the defendants exemplified the following matters:
(a) the single instance in 1980 when two Miss Ireland contests were held in parallel;
(b) the fact that, when a trade mark, a device mark, including the words “Miss Ireland” was registered in the name of the first named plaintiff under the Trade Marks Act, 1963 in 1986, a disclaimer was registered to the effect that registration gave no right to the exclusive use of the words “Ireland” and “Miss”, a fact which counsel for the plaintiffs contended should carry no weight as it is attributable to the nature of the trade mark legislation in force in 1986;
(c) the fact that an agreement entered into between Miss Universe Inc. and the first named plaintiff in 1982, which was exhibited by Mrs. Morley, contained a provision whereby Miss Universe Inc. appointed the first named plaintiff its exclusive franchisee to supply a contestant from Ireland to compete in the annual Miss Universe contest, who would be designated by the title of “Miss Ireland”, a fact which counsel for the plaintiffs submitted was not inconsistent with the first named plaintiff’s claim to exclusive use of the title in Ireland; and
(d) the terms of the franchise agreement which over the years the first named plaintiff entered into with successive franchisees, in which there is no reference to a “Miss Ireland” contest or to the name “Miss Ireland” being the property of the first named plaintiff, which Mrs. Morley attributed to the agreement being the standard form of agreement designed to serve in all countries of the world, including countries in which the Miss World Organisation does not claim to have acquired exclusive rights in national titles.
In mentioning some only of the features of the evidence and the legal principles applicable to which counsel for the defendants has drawn attention in support of his contention that the evidence does not establish that the name “Miss Ireland” is exclusively associated with the first named plaintiff, I may not have done justice to the very thorough and comprehensive submission made on behalf of the defendants. However, it seems to me, that while the features outlined challenge the plaintiffs’ assertion that the first named plaintiff has exclusive rights in the Miss Ireland name and brand in Ireland, there remains a fair and bona fide issue to be tried that there is goodwill attached to the plaintiffs’ Miss Ireland pageant in the mind of the public by association with the name “Miss Ireland” which is recognised by the public as distinctive specifically to the plaintiffs’ national pageant in Ireland.
The respective positions of the plaintiffs and defendants clarified
At this juncture, it would be useful to record matters which have been clarified by the parties in the course of the hearing. The first named plaintiff is not claiming:
(a) that it has the sole and exclusive right to hold beauty pageants or contests in Ireland, or
(b) that it has the sole and exclusive right to use the Miss Ireland title outside Ireland, or
(c) that it has exclusive rights in respect of the usual format of beauty pageants.
On this application, the defendants do not –
(i) put in issue the right of the plaintiffs to the Miss World title or the first named plaintiff’s right to licence the running of national contests to select national candidates for the Miss World pageant (although they reserve the right to raise an issue as to the first named plaintiff’s entitlement to terminate its arrangement with the defendants at the trial), nor
(ii) seek to establish that they are the sole owners of the Miss Ireland name (although they reserve the right to make the case that they purchased the right to hold what they described as “the omnibus pageant”, formerly run by Mr. Naidoo, for the purposes of finding entrants to represent Ireland at each of the four international beauty contests previously mentioned).
The defendants assert an entitlement to use the Miss Ireland name in connection with beauty pageants and competitions and intend to hold their next pageant later in the Spring of 2004. The defendants have not run a pageant since the franchise from the first named plaintiff expired at the end of 2002. They had intended to run an event in October, 2003 but they gave an undertaking to the Court in these proceedings not to do so.
Second element of the test: misrepresentation/confusion
I return now to the issue of whether the plaintiffs have established that there is a fair and bona fide question to be tried and, in particular, to the second element of the test as to the existence of passing off.
Consideration of the second test must be predicated on the assumption that the plaintiffs have an exclusive right to use the name Miss Ireland in connection with their beauty pageant in Ireland, which remains to be proved at the trial of the action. It was submitted on behalf of the plaintiffs that the use of a name that is identical to that of an established business on and in relation to the identical field of endeavour or business within the same territory, will inevitably cause confusion which will amount to the kind of misrepresentation envisaged in the test. In the instant case, it was submitted, the defendants propose to confer on representatives selected at their pageant the identical title which the plaintiffs have used for over fifty years and, in addition, they propose to use an identical name to that of the plaintiffs’ pageant for their pageant, which will be very similar in format to that of the plaintiffs.
On behalf of the defendants, it was submitted that the authorities suggest that a relatively small change in the title will be sufficient to differentiate a defendant’s activities from those of a plaintiff. In support of this proposition counsel for the defendants relied on an Australian case involving the first named plaintiffs, Miss World (Jersey) Ltd. v. Misses of the World Pageants Inc. (Federal Court of Australia, 1st February, 1988), in which Pincus J. said:
“Both ‘Miss’ and ‘World’ are of course very ordinary and common words. The applicants have chosen for their mark a word consisting of a title held by a large proportion of the women and girls in English speaking countries, combined with the name of our planet. It is my view that a court would not readily expand the prima facie scope of protection afforded by registration of the relevant mark [the Miss World Mark] by conceding a monopoly also over similar titles such as ‘Mrs.’ or ‘Mr.’ in connection with such contest.”
While infringement of a trade mark was at issue in that case, it was submitted that the principle is also of relevance in the context of passing off. The defendants also rely on the fact that at an early stage, in a letter dated the 23rd September, 2003 from their solicitors to the plaintiffs’ solicitors, they made it clear that they were prepared to differentiate their pageant from the plaintiffs’ pageants, the suggestion made being in the following terms:
“Generally we would advise that if your clients are prepared clearly to identify the competition that they wish to run as Miss Ireland World, our clients could then entitle their competitions Miss Ireland Universe, and Miss Ireland International and so forth. Obviously, however, your client is not entitled to prevent our client continuing on with such contests.”
That remains the defendants’ position. However, counsel for the plaintiffs submitted that the recognition by the defendants that clarification is necessary to distinguish the business of the plaintiffs and the business of the defendants is implicit recognition of the likelihood of confusion.
It seems to me that the plaintiffs have established that there is a fair and bona fide question to be tried that, even with the clarification suggested, the public will confuse the defendants’ business with the plaintiffs’ business.
Third element of test: damage
As to the third element, in essence, as regards the principal relief sought by the plaintiffs, an order prohibiting the defendants from running a pageant in Ireland under the name “Miss Ireland Pageant”, this is a quia timet application. It seems to me that the plaintiffs have established that there is a fair and bona fide question to be tried that their goodwill would be likely to be adversely affected if the defendants were to run a pageant so styled, which, of itself, would give rise to an assumption of resulting damage (C & A Modes v. C & A Waterford Ltd [1976] I.R. 198, per Henchy J. at p. 213). As was pointed out by Murphy J. in Falcon Travel Limited .v. Owners Abroad Group plc. [1991] 1 I.R. 175 at p. 182, it is the appropriation of goodwill which constitutes the damage necessary to sustain an action for passing off.
Adequacy of damages/balance of convenience
In B & S Ltd. v. Irish Autotrader Ltd. [1995] 2 I.R. 142, McCracken J., having outlined the tests in relation to adequacy of damages and balance of convenience which the courts apply in determining whether an interlocutory injunction should be granted by reference to the judgment of Lord Diplock in American Cyanamid v. Ethicon Ltd. [1975] AC 396, went on to say:
“While Lord Diplock only used the phrase, ‘balance of convenience’ when considering the position if damages were not an adequate remedy for either party, I would be more inclined to the view that the entire test rests on a balance of convenience, but that the adequacy of damages is a very important element, and may frequently be the decisive element in considering where the balance of convenience lies.”
I respectfully agree.
I think it would be helpful at this stage to reiterate the parameters of the plaintiffs’ claim. The plaintiffs claim the exclusive use of the name “Miss Ireland” in association with their beauty pageant in Ireland. They do not claim that the defendants are not entitled to conduct a beauty pageant in Ireland, adopting the usual format of such an event. They do not claim that the defendants are not entitled to honour their commitments to the promoters of the international pageants, from whom they hold franchises. In particular, they do not claim that a representative selected at a pageant run by the defendants for such an international pageant, for example, the Miss Universe pageant, is not entitled to be designated Miss Ireland at the international pageant held outside Ireland. What the plaintiffs claim is that the defendant is not entitled to use a name in which the words “Miss” and “Ireland” are conjoined in association with a pageant conducted in Ireland or to designate the winner at such pageant as “Miss Ireland” in Ireland. However, the defendants contend that, in order to maintain their credibility, the Irish entrant to Miss Universe must be entitled to designate herself by reference to the geographical name, Ireland, within the State because, otherwise, it would be impossible to express and recognise her national status and the fact that she has won a nationwide competition.
The submissions made by the parties on the issue of adequacy of damages must be analysed in the context of the claim being advanced by the plaintiffs. From the plaintiffs’ perspective, the question is whether, if the defendants are permitted to run a rival Miss Ireland pageant and select three representatives for three international pageants, each of whom is entitled to designate herself as “Miss Ireland” in Ireland in the year 2004 and in each subsequent year until these proceedings are concluded, the plaintiffs would be adequately compensated by an award of damages for the consequential damage to their goodwill, adverse effect on their ability to attract publicity, sponsorship and media interest, and dilution of the worth of the title. It seems to me that it would be impossible, not merely difficult, to quantify in damages loss of this nature.
From the defendants’ perspective, the issue is whether, if prevented from using the name Miss Ireland in connection with their pageant and from designating each of the representatives selected for the international pageants as “Miss Ireland” in Ireland, and it transpires that they should not have been so prevented, any consequential impact on the development of their goodwill and business and any other damage would be adequately compensated in damages. Equally, it seems to me that such loss would be impossible to quantify.
The defendants have questioned the plaintiffs’ ability to meet an award of damages which might ultimately be made in the defendants’ favour, primarily on the basis that the first named plaintiff is a company incorporated in Jersey and the accounts are not readily available to the defendants. There is before the Court an affidavit of Michael Macario, the Financial Director of the first named plaintiff, who avers that he has knowledge of its accounts and he can confirm that it is solvent and in good standing and has a long and successful trading history. I reject the defendants’ argument on the ability of the plaintiffs to meet their undertaking.
Therefore, whether to grant an interlocutory injunction or not must be decided on the balance of convenience. I think the balance of convenience lies in favour of the plaintiffs because the first named plaintiff has been in the marketplace in its own right, either directly or through franchisees, for over fifty years and has run a Miss Ireland pageant each year during that period. The second named defendant has not been in the marketplace, other than as a franchisee of the first named plaintiff, and the defendants have never run a Miss Ireland pageant in their own right.
Decision
There will be an order in the terms sought by the plaintiffs in paragraphs 1, 4, 5, 6 and 8 of the Notice of Motion save that, in relation to the domain name, the order will direct the disconnection of the domain name from any active internet address.
Cavankee Fishing Co. Ltd v Minister for Communication, Marine and Natural Resources, High Court, Kelly J., March 4, 2004,
Rooney v. Kilkenny
[2001] IEHC 32 (9th March, 2001)
JUDGMENT of Mr. Justice Kinlen delivered the 9th day of March, 2001.
1. The Plaintiff issued Plenary Summons on the 26th January, 2001. The general endorsement of claim includes a request for a declaration that the Plaintiff is entitled to payment of her salary as a term and condition of her employment whilst on certified sick leave and that she is and continues to be in the permanent and pensionable employment of the Defendants as personal assistant to the first named Defendant. She also sought other declarations, injunctions and orders. She then brought a motion dated the 29th January, 2001 for the following orders and relief:-
An Injunction restraining the Defendants their servants and agents from treating the Plaintiff as other than continuing to be employed by the Defendant.
An Injunction requiring the Defendant to maintain the Plaintiffs sick pay until further order or the trial of the action.
Without prejudice to the relief sought at paragraph 2 aforesaid an injunction requiring the Defendants to pay the Plaintiffs salary as it falls due and requiring the Defendants to discharge all other incidents of the Plaintiffs employment and in particular the relevant pension premiums.
An Injunction restraining the Defendants from dismissing or purporting to dismiss the Plaintiff from her said post.
An Injunction restraining the Defendants, their servants and agents from appointing any person other than the Plaintiff to the Plaintiffs said position and restraining the discharge of the Plaintiffs function and responsibilities by any person other than the Plaintiffs. She also seeks further and other relief and costs.
2. This Motion is presently before this Court. The Plaintiff is a certified chartered Accountant and the Defendants are partners in an accountancy firm, practice under the style of O J Kilkenny & Co. The Plaintiff has been personal assistant to the first named Defendant since the month of February 1990. She alleges that she is being subjected to oppressive, abusive and bullying treatments by Mr. Kilkenny since at least 1999. She had only had one days illness off work since she started until January 2000. As a result of the alleged confrontation on the 19th January, 2000 she was away from work for approximately 2 weeks with stress related disorder. The Plaintiff was diagnosed by her psychiatrist as having a severe stress reaction which she ascribed directly to work stress. She also certified her as unfit to work.
3. Since the Plaintiffs problem was mainly with her immediate boss the first named Defendant, the second named Defendant offered to meet her to discuss her grievances. She refused to attend this meeting unless she was accompanied by her solicitor in view of her medical condition. The Defendants solicitors replied in a letter of the 24th October, 2000. Inter alia it states:-
“At a recent hearing in the Law Society in relation to a claim made by Mr. Ernie Fallon it was stated by your clients representative that she would be not returning to her employment with O. J. Kilkenny and Co. You might confirm that that is the position and if so our client is prepared to offer your client 3 months pay in lieu of notice together with a bonus in the sum of £50,000.00 and to arrange for the transfer of her pension entitlements under the scheme. If your client is maintaining the position that she is returning to work our client will need to take steps to ascertain her fitness to return to work and the likely date of such return.
You might note that our client has no contractual arrangement with your client in relation to payment of sick pay. Notwithstanding this our client has been paying your client her full salary for a considerable period of time. Your client has, we assume, applied for and obtained Social Welfare Benefit for this period and you might arrange for any Benefit Payments to be remitted to our client. Our client will be reviewing its position in relation to sick pay as it cannot continue to pay your client sick pay on an indefinite basis. Our client will pay your client for the month of October, 2000 (that such payment will be deducted from the three months notice mentioned above).
A reply of Messrs. A & L Goodbody, Solicitors for the Defendants on the 31st October, 2000 reads:-
“For the record and as was made clear to the Disciplinary Tribunal of the Law Society the position is that our client remains unfit for work. Her medical advise is that her health problems are entirely due to her situation at your clients work place. We enclose a copy of her medical report in this respect.
Accordingly, the position is not, as seems to be suggested in your letter, one of our clients deciding not to return to her employment but rather that your client has wrongfully created that situation. If you are in any doubt as to whether our client can or can not return to work now or at all, we would suggest that you arrange for a medical examination to confirm the position.
With regard to Social Welfare Benefit we will advise our client appropriately. As regards sick pay your client does have an obligation to continue payment. We are instructed that another employee was paid for at least as long. If your client wishes to be seen to be dealing with this serious matter appropriately it would need to rethink the strategy and messages conveyed with reference to continuing payment of our client. Furthermore, we could point out for the record that our client has earned and is due from your clients the bonus of £50,000.00 which sum has been due since July, 1997 and unless payments together with interest is made by return we are instructed to issue proceedings forthwith.”
4. By Notice of Motion dated the 29th January, 2001 and returnable for the 5th February of this year the Plaintiff seeks:-
An Injunction restraining the Defendants their servants and agents from treating the Plaintiff as other than continuing to be employed by the Defendants
1 An Injunction requiring the Defendant to maintain the Plaintiffs sick pay until further order or the trial of the action.
2 Without prejudice to the relief’s sought at paragraph 2 hereof an Injunction requiring the Defendant to pay the Plaintiff a salary as it falls due and requiring the Defendants to discharge all other incidents of the Plaintiffs employment and in particular the relevant pension premiums.
3 An Injunction restraining the Defendants from dismissing or purporting to dismiss the Plaintiff from her said post.
4 An Injunction restraining the Defendants, their servants and agents from appointing any person other than the Plaintiff to the Plaintiffs said position and restraining the discharge of the Plaintiffs functions and responsibilities by any person other than the Plaintiff.”
5. It is agreed by the both parties that this Plaintiff has not been dismissed. However, it is clear that unhappy differences have arisen between the parties. The sooner this case is expedited to a full hearing in Court the better for both parties. It is not necessary at this stage to decide on the merits of the case. Senior Counsel has stated it is not necessary for this Court to decide whether she is difficult, whether her employer is the root of the problem. The question is simply is she entitled to sick leave? The parties agree that the contract of employment still endures. There is no statutory right to sick leave. The problem about repayment of Social Welfare Benefit has been resolved between the parties. The Court has been referred to Boyle -v- An Post 1992 2 IR 437, Morrison -v- Bell 1939 2 KB p.187 1939 1 AER 745. In the Morrison -v- Bell case Scott L J says at p.198 of the official report.
“In the contrary these cases say in my opinion quite clearly, that under a contract of service irrespective of the question of the length of notice provided by that contract wages continue through sickness and incapacity from sickness to do the work contracted for until the contract is terminated by a notice by the employer in accordance with the terms of the contracts”
6. This case lists a long series of English cases in which eminent Judges come to the same conclusion as Scott L J in Morrison -v- Bell case . The Court is also being referred to the 6th ed. of Dix and Crump on contracts of employment at p. 82 at paragraph B.52 states:-
“If under the terms of his contract expressed or implied the employee is entitled to wages through temporary sickness. He is entitled during such absence to receive his full remuneration in accordance with the terms of his employment. This may, in certain circumstances include the bonus.”
7. The Court was also refereed to Jakeman and Others Plaintiffs in the South West Thames Regional Health Authority and London Ambulance Service Defendants 1990 Industrial Relations Law Reports p. 62 which found that mandatory interlocutory relief is sought a more onerous test generally applies than that of whether the Plaintiffs have a good arguable claim that there is a question to be tried as laid down in the American Cyanamid Company -v- Ethicon Limited. The headnote reads:-
“In the present case while there was undoubtedly a serious question to be tried the Plaintiffs case could not be said to be a clear one. Nor were there any special circumstances either hardship or otherwise which made it inappropriate to apply the Locabail test (1986 1 WLR 657 CA) that a clear case must be shown and that would justify granting mandatory relief on the basis that there was a serious question to be tried. Although for the Plaintiffs to do without the wages claimed until the issue was finally determined might well be difficult for them, such is the case in every claim by an employee for wages paid to him by his employer and in many other claims for money not arising out of the employment relationship. In any event whether the initial test was one of a clear case or of a serious issue to be tried the balance of convenience lay in favour of refusing the interlocutory relief in that if the Plaintiffs were to succeed at trial in establishing their right to the deducted wages they would be adequately compensated by an award of damages. No authority was cited in which the Court had regarded temporary hardship as a ground for granting interlocutory relief in a claim for payment of wages. This was understandable since otherwise nearly every strong case for unpaid wages would attract such an Order for interlocutory relief. Mandatory interlocutory relief is generally not appropriate even in a clear case of entitlement to unpaid wages.”
8. In the 6th ed. Of Dix and Crump on Contracts of Employment paragraph 3.52 p. 82 the following appears:-
“If under the terms of this contract expressed or implied the employee is entitled to wages during temporary illness, sickness he is entitled to during such absence to receive his full remuneration in accordance with the terms of his employment. This may in certain circumstance include a bonus.”
“The authority for that statement is Morrison -v- Bell already cited. I should also draw attention to the Terms of Employment (Information) Act, 1994 Reilly -v- The Irish Press Limited ILTR 1971 p.194 Maguire P states at p.195 “as was said by Mr. Martin Maguire a custom or usage of any kind is a difficult thing to establish. Before a usage such as is contended for here can be established it must be proved by persons whose position in the world of journalism entitles them to speak of with certainty and knowledge of its existence. I have to be satisfied that it is so notorious well known and acquiesced in, that in the absence of agreement in writing it is to be taken as one of the terms of the contract between the parties.”
It is argued that the letter of the 24th October already cited was not a termination of employment , merely a termination of sick pay. Is it right that an employer who refuses to pay is in a better position than someone who pays for a reasonable period based on generosity ?. If there is, that is something for a trial judge. The Defendant says 6 months is good practice and is so regarded by big firms and in public services. This was not contradicted. The Defendant should not be penalised for doing the decent thing. The difficulty in this case is in very similar circumstances Laffoy J made an Order similar to the one sought here. That is Mary Charlton -v- H. H. The Aga Khan’s Studs Société Civile 1998 No. 9515P judgment given the 22nd December, 1998 .
9. The Court has to be satisfied that there is a fair issue to be tried between the parties and that damages would not be an adequate remedy and that the balance of convenience favours the granting rather than the refusing of the injunctive relief claimed.
10. There are undoubtedly fair issues to be tried in this case for example as to whether she is entitled to sick pay and if it is restricted to “a reasonable period” and if so what is the legal definition of “a reasonable period”. As she had been out on three occasions due to illness she states that another employee had been out a longer period and was paid in full this may involve finding there is an implied term for the payment (after deduction of state benefit sick pay). There is also a conflict on the affidavits regarding the “fault” had in the relationship between the Plaintiff and the first named Defendant.
11. On the question of the balance of convenience Laffoy J refers to the line of authorities commencing with the decision of Costello J, as he then was, in Fennelly -v- Generali Spa 1985 3ILTR 73:-
“damages would not be an adequate remedy for the Plaintiff if it were to be found at the trial of the action she was entitled to as she contends to sick pay having regard to the circumstances of the matter justice requires that the Defendant should be ordered to discharge her sick pay and reserve her pension entitlements pending the trial of the action subject to the Defendants reasonable requirements in relation to verification of the Plaintiffs incapacity for work on medical grounds being adhered to”
“If the Plaintiff becomes fit for work before the trial of the action her entitlement to sick pay will cease. The Defendants acknowledges that the Plaintiffs contract of employment still subsists and, if the Plaintiffs incapacity ceases, and she presents for work it would be for the Defendants then to decide what steps to take.”
12. The Court would adopt as its decision in this case the last preceding two paragraphs. It is important to realise that in this particular case it is alleged that the Plaintiffs incapacity is due in part or entirely to the conduct of the first named Defendant. This is another factor which will be taken into account on the question of the balance of convenience.
13. Having regard to all those factors at this stage damages may not be adequate . The Court will adopt the judgment of Laffoy J by making similar orders. It is of utmost importance that the trial of the action should be expeditied. I propose fixing a date for the trial and making any Orders in relation to pleadings, discovery and such like as are necessary on hearing Counsels submissions pending the trial of the action the following orders will be enforced.
An Order that the Defendant pays the Plaintiff a weekly sum equivalent to her nett salary less a sum as the Plaintiff is entitled to by way of disability or other benefit from the state provided that the Plaintiff furnishes to the Defendant on a weekly basis evidence in the form of a certificate from a medical practitioner of her unfitness for work and that the Plaintiff complies with reasonable requirements of the Defendant that the Plaintiff be examined by a Medical Practitioner nominated by the Defendant and that the Defendant maintain the Plaintiffs pension rights, superannuation and other benefits by paying the premiums in respect thereof.
Each party shall have liberty to apply. The costs are reserved to the trial judge. The Plaintiff does not have “a blank cheque” and must do everything possible to expedite her case.
Ryan Air Ltd. v. Aer Rianta CPT
[2001] IEHC 12 (25th January, 2001)
THE HIGH COURT
Note of ex tempore Judgment delivered by Mr. Justice Kelly on the 25th day of January 2001.
1. The Applicant seeks two injunctions against the Respondent pending the trial of these proceedings.
2. The first injunction seeks to restrain the Respondent from imposing and recovering certain monetary charges which were notified to the Applicant on the 7th of December, 2000, relating to its activities at Dublin Airport.
3. The second injunction seeks to restrain the operation of ‘ Rules of Conduct ’ promulgated by the Respondent on the 15th of December, 2000.
4. On the 22nd of December, 2000, leave was granted by Kinlen J to seek Judicial Review of each of these decisions of the Respondent. The principal relief sought is an Order of Certiorari seeking to have both the charges and the ‘ Rules of Conduct ’ quashed by this Court.
5. At the time that he granted leave Kinlen J also granted interim injunctions restraining the implementation of both the charges and the ‘ Rules of Conduct ’ and these injunctions have, subject to a modification agreed before the President at a hearing on the 29th of December, 2000, continued in force ever since.
6. This application seeks to continue these injunctions until the trial of these Judicial Review proceedings.
7. Mr. Hogan S.C. on behalf of the Applicant invited me to depart from the well established principles which apply to the grant of interlocutory injunctions in considering the Applicant’s case. These principles are well known. They are that in the exercise of its discretionary jurisdiction the Court ought to grant an interlocutory injunction only when satisfied that the Applicant has demonstrated:-
the existence of a serious issue to be tried,
the inadequacy of damages as a remedy for the mischief complained of, and
that the balance of convenience favours the grant of such an injunction.
8. Mr. Hogan contends that his case in law both as to the invalidity of the charges and the ‘ Rules of Conduct ’ is so strong that I ought not to apply these well established principles but should proceed to grant an injunction pending trial based on the strength of his case alone and without regard to either adequacy of damages as a remedy or balance of convenience.
9. I reject this invitation. I do so on two grounds. First, such an approach is unprecedented. No case was cited in support of it. It is an invitation which is extended in the teeth of authoritative statements from the highest Courts both in this jurisdiction and in England.
In Campus Oil Limited v The Minister for Industry and Energy and Others [1983] IR 88 Griffin J at page 110 said this by reference to the decision of the House of Lords in American Cyanamid v Ethicon [1975] AC 396
“Lord Diplock continued at pages pp 407 – 408 of the report “Your Lordship should in my view take this opportunity of declaring that there is no such rule. The use of such expressions as “a probability”, “a prima facia case”, or “a strong prima facia case” in the context of the exercise of a discretionary power to grant an interlocutory injunction leads to confusion as to the objective sought to be achieved by this form of temporary relief. The Court no doubt must be satisfied that the claim is not frivolous or vexatious; in other words, that there is a serious question to be tried. It is no part of the Courts function at this stage of the litigation to try to resolve conflicts of evidence on Affidavit as to facts on which the claim of either party may ultimately depend nor to decide difficult questions of law which call for detailed argument and mature consideration. These are matters to be dealt with at the trial. One of the reasons for the introduction of the practice of requiring an undertaking as to damages upon the grant of an interlocutory injunction was that “it aided the Court in doing that which was its great object, viz. abstaining from expressing any opinion upon the merits of the case until the hearing”. ( Wakefield v Duke of Buccleugh ). So unless the material available to the Court at the hearing of the application for an interlocutory injunction fails to disclose that the Plaintiff has any real prospect of succeeding in his claim for a permanent injunction at the trial, the Court should go on to consider whether the balance of convenience lies in favour of granting or refusing the interlocutory relief that is sought”.
10. Later in his speech an American Cyanamid V Ethicon Lord Diplock said “the governing principle is that Court should first consider whether if the Plaintiff were to succeed at the trial in establishing his right to a permanent injunction he would be adequately compensated by an award of damages for the loss he would have sustained as a result of the Defendant’s continuing to do what was sought to be enjoined between the time of the application and the time of the trial. If damages in the measure recoverable at common law would be adequate remedy and the Defendant would be in a financial position to pay them no interlocutory injunction should normally be granted, however strong the Plaintiff’s claim appeared to be at that stage”.
11. This last quotation is relevant not merely to this aspect of the matter but to a further aspect of this case which I will consider under the heading of adequacy of damages.
12. These quotations make it clear that the Court ought not to attempt an evaluation of the strengths or weaknesses of either sides case at this stage of the proceedings save in the limited circumstances identified subsequently in the speech of Lord Diplock which are not relevant here.
13. My second reason for rejecting the invitation is that even if Mr. Hogan were correct and there was such a principle which would enable me to depart from the normal rules governing the grant of interlocutory injunctive relief on the basis of the Applicant having made out a virtually unanswerable case in law it would not be applicable here. I am not at all satisfied that the Applicant’s case is so clear at law as to be unanswerable by the Respondent. It follows therefore that even if there was a legal basis for this approach urged upon me by Mr. Hogan it would have no application to the present case.
14. I will therefore deal with this case on the conventional and well established basis upon which the Court exercises this discretionary jurisdiction.
SERIOUS ISSUE TO BE TRIED
15. The Applicant has already satisfied Kinlen J of the existence of an arguable case in respect of its complaints against the Respondent. If it had not done so, leave to seek Judicial Review would not have been granted. A higher standard of proof is applicable on this application for an interlocutory injunction pending trial. In my view it has been achieved both in respect of the charges and the ‘ Rules of Conduct ’. Indeed that much is not seriously disputed by the Respondent’s for the purpose of this application. I am therefore satisfied that the Applicant has demonstrated a serious issue for trial in respect of each of the decisions which are sought to impugned in these proceedings.
ADEQUACY OF DAMAGES
16. I have already quoted a passage from the speech of Lord Diplock setting forth how the Court ought to approach the question of adequacy of damages. It is clear that if the Court concludes that damages would be an adequate remedy for the mischief complained of by the Applicant and the Respondent would be in a financial position to pay them then no interlocutory injunction should normally be granted however strong the Plaintiff’s claim appears to be. That is the test which is applicable here.
17. Insofar as the question of the charges which are being imposed by the Respondent are concerned there can be no doubt but that damages would provide a complete remedy to the Applicant should it have to pay them in the meantime in circumstances where the charges are subsequently at trial found to be unlawful. There is no doubt but the Respondent could repay such monies together with interest thereon and that is not in question. Not merely are damages an adequate remedy but in the Affidavit evidence before the Court they have even at this stage actually been quantified. Such being the case it is fatal to the claim of the Applicants for an interlocutory injunction and indeed was always so.
18. Accordingly insofar as the injunction concerning the imposition of these charges is concerned it is refused and indeed it is difficult to see how it could ever have been sought.
19. The position in respect of the ‘ Rules of Conduct ’ is not so clear. It might well be said that any damage which might occur from the imposition of this code would not be capable of compensation in damages. But the gravamen of the Applicant’s case is not that it is at present being damnified by any provision of the code. Rather it is that one part of the code would permit the Respondents to unilaterally alter existing alleged contractual rights which the Applicant contends that it has with the Respondent in respect of pier A at Dublin Airport. It is not however in dispute that to date no attempt had been made by the Respondent to operate the provisions of the code which would allegedly enable it to bring about such a unilateral alteration to the Applicant’s contractual rights. Not merely that but the position of the Respondent is dealt with at paragraph 59 of the Affidavit of the Deputy Chief Executive of the Respondent as follows:-
“Insofar as the Applicant contends that the enforcement of the new ground handling rules should be restrained, I believe it important to bear in mind the following considerations. First, there is no question at this point in time of any contractual rights of the Applicant of the nature suggested in Mr. Cliffden’s first Affidavit, being overridden consequent upon the due and proper enforcement of these rules. That being the case the Applicant’s claim for injunctive relief in this regard, at this point in time, does not properly arise and is premature. Second, and in any event as I have stated above, the power to achieve this only arises where action is necessary in order to ensure the fair allocation of space or facilities between all handlers, including new entrants, as required by regulation 14 of the regulations, and in compliance therewith. Third, these rules are to such extent a codification of the existing rules, protocols and agreements offered at Dublin Airport, that no real practical consequence from the Applicant’s perspective will follow from their being allowed to come into force as anticipated”.
20. Such being the position it is clear that the injunction which is sought in respect of the rules of conduct is sought quia timet.
21. The principles which are applied by the Court in the grant of interlocutory quia timet injunctions have most recently been considered by Geoghegan J (when a Judge of this Court) in Szabo and others v Esat Digifone Limited and others [1999] 2 LIRM 102 . In that case Geoghegan J held as follows:-
“There is no difference as between the legal principles to be applied to quia timet injunction and those to be applied in the case of any other injunction. Ipso facto there is no difference between the principles to be applied to an interlocutory quia timet injunction and those applicable to any other kind of interlocutory injunction.
However, the fact that no breach of the rights of the Plaintiff’s has taken place as of the date of the hearing is of relevance in that it may be more difficult to establish, as a matter of evidence, that there is sufficient risk of future injury to justify the immediate grant of an injunction. In these circumstances the Court must balance the magnitude of the evil against the chances of its occurrence.
In order to grant a quia timet injunction there would have to be a proven substantial risk of danger Attorney General (Boswell) v Rathmines and Pembroke Joint Hospital Board [1904] IR 161 considered”.
22. I am not satisfied that this test has been met by the Applicant here. There is not in my view a sufficient risk of future injury to justify the immediate grant of an injunction. The application for this injunctive relief is premature.
BALANCE OF CONVENIENCE
23. Even if I am wrong in the view which I have expressed concerning the injunction relating to the ‘ Rules of Conduct ’ I would nevertheless in any event refuse such injunction on the balance of convenience.
24. It appears to me to be highly undesirable that at an Airport catering for 117 airlines and 14 million passengers per annum a clear and comprehensive set of rules should apply to 116 of those airlines and another set of rules (which depend on a mixture of custom, practice, informal rules and agreements of varying types) should apply to 117th airline. That in my view could not be regarded as good, sensible or orderly management of an airport facility and ought not to be forced on the Respondent by the Court. The Respondent is responsible for the management of Dublin Airport, not this Court. It follows therefore that on this ground also I refuse the injunction sought concerning the ‘ Rules of Conduct ’.
25. Both injunctions are therefore refused.
26. There is one other matter to which I ought to allude. An allegation was made by the Respondent to the effect that in seeking the interim orders from Kinlen J there was non disclosure of material matters by the Applicant. Three such species of non disclosure were identified and I have considered them.
27. I do not depart one iota from the observations which I made in the case of Adams v The Director of Public Prosecutions and others (unreported 12th April 2000) concerning the duty of disclosure in ex parte applications. There I said
“Whilst the St. George’s Health Care case which I have just mentioned is not authority for the proposition which was made, it is of relevance to an aspect of this case which I find very troubling. That is the obligation on the part of Counsel in seeking orders ex parte. In the course of the judgment of the Court delivered by Judge L J he said (at page 966):- “An interim injunction is granted ex parte only in exceptional circumstances and then only subject to the triple safeguards of:-
The duty of full and frank disclosure,
The cross undertaking in damages which is required as a matter of course,
The right of the Party enjoined to apply to vary or discharge the ex parte order. If an interim declaration were a remedy known to English law it could hardly be obtainable without these safeguards being put in place”.
Reference is there made to the duty of full and frank disclosure. That is reminiscent of the statement made by Kennedy C J in Brennan V Lockyer [1932] IR 100 at 107 where he said in relation to the order in question there:- “That, in my opinion, is one the very matters to which on an ex parte application of this kind, the long established rule requiring uberrima fides on the part of the Applicant ought to be strictly applied”.
On any application made ex parte the utmost good faith must be observed, and the Applicant is under a duty to make a full and fair disclosure of all of the relevant facts of which he knows, and where supporting evidence contains material misstatements of fact or the Applicant has failed to make sufficient or candid disclosure, the ex parte order may be set aside on that very ground”.
28. I am not satisfied that there has in the present case been a departure from these obligations. The Applicant might perhaps have been more prudent to have put the relevant material before the Court if only to avoid an allegation of the sort which was made, being made. But the failure to do so does not appear to me to have amounted to a non- disclosure of material facts. Consequently this complaint does not give rise to further consideration.
29. The order of the Court will be to refuse both injunctions pending the trial of these proceedings.
Cases Threshold
Keating & Co. Limited v. The Jervis Shopping Centre Limited and Pierce Contracting Limited,
[1997] IR 512
Keane J.
1st March 1996
The first defendant (hereafter “the developer”) is engaged in a very extensive development project in the City of Dublin on a site bounded by Jervis Street, Liffey Street, Mary Street and Abbey Street on part of which the Jervis Street Hospital formerly stood. The second defendant (hereafter the builder”) is the building company carrying out the actual work. The plaintiff (hereafter “Keating”) is the owner of a licensed premises on the corner of Jervis Street and Mary Street and of sites in Mary Street and Jervis Street adjoining the licensed premises.
Keating has issued proceedings against the developer and builder claiming damages for nuisance, negligence, trespass and wrongful interference with Keating’s contractual relations with its customers. It has now brought a motion seeking interlocutory relief in the following form:
“(a) An injunction restraining the defendants or either of them either by themselves or by their servants or agents or any party having notice of this order from carrying out development work at the Jervis Street Shopping Centre site insofar as such work would constitute a nuisance to the premises of the plaintiff situate at Mary Street, Dublin 2 and/or interfere with the conduct of the plaintiff’s lawful business thereon until further order;
(b) An injunction restraining the defendants or either of them their respective servants or agents or any party having notice of this order from carrying out such development work at the Jervis Street Shopping Centre site unless they undertake or agree to abide by certain terms and conditions in relation to the carrying out of the said development work as are recited in a Schedule dated the 22nd December, 1995, issued by Gilroy McMahon, architects, which is exhibited in the affidavit of John Keating upon which this application is grounded.”
When the application came on for hearing before me last Friday, Mr. Leonard, counsel on behalf of Keating, indicated that the form of relief which was now being sought was significantly more confined in its nature. In effect, it is now sought simply to restrain the operating by the builder of a tower crane on a site adjoining the licensed premises to the extent that the jib of the crane moves into the air space above the licensed premises and also to restrict the parking of lorries and other vehicles close to the licensed premises. He seeks to have these restrictions imposed only during certain hours of the day.
Although the relief now being sought is thus far more confined than the terms of the notice of motion indicate, it is still necessary to recount, in necessarily summary form, how the dispute between the parties developed. Keating acquired the licensed premises at No. 15 Mary Street and No. 23 Jervis Street from a company called Cementation Ltd. and began to trade there in 1990. The adjoining premises at Nos. 16 and 17 Mary Street and No. 22 Jervis Street were also in the ownership of Cementation Ltd., as was No. 17 Mary Street. Cementation Ltd. sold No. 16 Mary Street to Keating and No. 17 Mary Street and No. 22 Jervis Street to the developer. In turn the developer sold No. 22 Jervis Street to Keating by an agreement in writing dated the 30th September, 1994. By deed dated the 30th September, 1994, and made between Keating, the developer and other parties, various easments and rights relating to the property were extinguished. On the 13th October, 1995, the developer entered into an agreement with Keating with regard to the demolition and reconstruction of a party wall between Nos. 16 and 17 Mary Street. This also provided for the construction of a new party wall between No. 22 Jervis Street and No. 21 Jervis Street (the ownership of which was retained by the developer).
In addition to the complaints already referred to, Keating has objected to other features of the developer’s activities. It says:
(a) The developer has closed Jervis Street to vehicular traffic for longer periods than were permitted by Dublin Corporation.
(b) There is a very large volume of trucks and heavy traffic on the site of the development at points close to Keating’s premises, resulting in problems of dirt and debris, which Keating says is deterring potential customers from entering its premises.
(c) Building works have been frequently carried out on a twenty-four hours basis by the builder, thus causing an undue volume of noise.
(d) The builder has erected hoardings in certain locations, which have the effect of interfering with the visibility of the licensed premises to persons using the western end of Henry Street.
(e) Essential services to the licensed premises have been cut off, including the water supply.
On the 22nd December, 1995, Keating’s solicitors wrote to the solicitors for the developer and builder enclosing a report from Gilroy McMahon, architects, detailing conditions which the architects advised should be applied to the development so as:
“To minimise the effect on (Keating’s) business, while letting the development proceed for the common good.”
The accompanying letter requested an undertaking by the developer and the builder that the conditions contained in this report would be complied with, failing which an application would be made for an injunction.
The developer and builder contended that the conditions in question were unreasonable and unnecessary and in the affidavits resisting the application exhibited a report to that effect from another architect, Mr. O’Reilly. As I have already said, however, at the hearing before me the only complaints pursued were in relation to the operation of a tower crane and the parking of lorries and other vehicles in the immediate vicinity of the licensed premises.
I shall deal first with the question of the crane. There were originally three tower cranes on the site. After the proceedings were instituted, but before the hearing of the application, a fourth tower crane was brought on to the site by the builder at a point adjoining the site of No. 22 Jervis Street which, it will be recalled, was the site which the developers had agreed to sell to Keating. Keating says that the jib of this crane swings across its property and the footpaths adjacent to the licensed premises and is extremely dangerous. It further says that it carries on occasions steel goods through its air space and that there is a serious risk that such goods will fall and damage its premises or cause apprehension to its customers. It refers to the fact that its premises has a glass dome roof. It is suggested on its behalf that this crane is not required for the development of the site.
The builder and developer say that, while the crane in question was brought on to the site after the institution of these proceedings, it was made clear to Keating’s representatives that this was about to happen. They say that the crane is needed at this point in order to carry out the erection of the party walls which is their obligation under the agreements to which I have already referred and which work, they say, is for the benefit of Keating. They rely in particular on clauses 18 and 19 of the special conditions contained in the agreement of the 30th September, 1994, and which are as follows:
“18. Overriding Objective
The vendor and the purchaser hereby acknowledge and agree that the overriding objective of the within agreement is to enable each party to achieve, in so far as possible, a self-contained holding of their respective premises which can be independently developed to their mutual advantage in the best spirit of co-operation possible and with the minimum of inter-dependence.
19. Mutual co-operation
The parties hereto agree to co-operate in all ways with each other in resolving any matters which may arise in relation to the implementation of this agreement or any part thereof with a view to facilitating the construction and re-development of their respective premises. The parties hereto further agree to mutually co-operate in the timing of the construction of the new party walls referred to at special conditions 10 and 11 hereinbefore contained in the course of their respective developments.”
Mr. Leonard submitted that where, as here, a trespass has unarguably taken place, the party against whom the trespass is committed is entitled to an interlocutory injunction, even though he may not be in a position to prove any irreparable damage, since, at the hearing of the action, he would be entitled in any event to an injunction to restrain the trespass, although only nominal damage could be proved. He said that, in the present case, the fact that the jib of the crane would travel across the air space over his client’s property was not disputed by the developer and the builder and that, accordingly, his client was entitled to the injunction, irrespective of whether irreparable damage had been proved.
Mr. Brady, on behalf of the developer and builder, submitted that there was a fair question to be tried as to whether any movement of the jib of the crane into the air space over Keating’s premises constituted a trespass, having regard to the fact that it was required in order to carry out the obligations of the developer as was envisaged in clauses 18 and 19 of the special conditions and hence was impliedly licensed by the relevant agreements. He submitted that, in these circumstances, since Keating had failed to establish that there was any irreparable damage, the question as to the legality of the builder’s operations should be determined at the trial of the action. He referred to the fact that Mr. T.J. McKenna, a consultant engineer, retained on behalf of Keating, and Mr. O’Reilly had taken different views as to the necessity of having the tower crane on the site for the purpose of erecting the party walls and submitted that this difference of opinion could only be resolved at the trial of the action.
As to the parking of vehicles in close proximity to the licensed premises, Mr. Leonard submitted that the evidence on affidavit by his client indicated that the steady rise in the turnover of the business had markedly fallen off during the time that the vehicles and lorries were being parked in close proximity to the licensed premises. He said that it was reasonable in these circumstances to require the builders not to park their vehicles at Nos. 14, 15 and 16 Mary Street and on either side of Jervis Street at No. 23 at least between mid-day and midnight.
Mr. Brady submitted in reply that while they complied with whatever parking regulations were applicable to them, the builder also enjoyed a right at common law to park vehicles on the highway and that there was a fair question to be tried on this issue. Even if Keating had a cause of action, he submitted, any loss they had suffered or would suffer was clearly quantifiable and could be remedied by an award of damages.
Before dealing with the individual reliefs now claimed on behalf of Keating, it is necessary to point out that, as this is the hearing of an application for an interlocutory injunction, this court cannot express any concluded view on the respective contentions of the parties, both in matters of fact and law. The determination of the various issues which have arisen between the parties will have to await the trial of the action.
I shall consider first the question of the crane. It is clear that a land-owner, whose title is not in issue, is prima facie entitled to an injunction to restrain a trespass and that this is also the case where the claim is for an interlocutory injunction only. However, that principle is subject to the following qualification explained by Balcombe L.J. in the English Court of Appeal in Patel v. W.H. Smith (Eziot) Ltd. [1987] 1 W.L.R. 853 at p. 859:
“However, the defendant may put in evidence to seek to establish that he has a right to do what would otherwise be a trespass. Then the court must consider the application of the principles set out in American Cyanamid Co. v. Ethicon Ltd. [1975] A.C. 396 in relation to the grant or refusal of an interlocutory injunction.”
In the present case, it is perfectly clear that the developer and the builder are asserting a right, by virtue of the agreements to which I have referred, to move the jib of the crane over the licensed premises, at least to the extent that this is required for the implementation of the agreement for the erection of the party walls. I am satisfied that there is a serious question to be tried between the parties as to whether this is so or not and it follows that Keating would not be entitled to an interlocutory injunction unless it could satisfy the court that damages would not be an adequate remedy. In the present case, Keating has not established that damages would be an inadequate remedy. If it succeeds in establishing its contention that its trade has suffered as a result of the building operations in its vicinity, including the movement of the crane over its premises, the court at the trial of the action will be in a position to award whatever is a fair and reasonable sum in relation to that loss and it is clear that the developer and builder are a sufficient mark for such damages.
Apart from that consideration, I would, in any event, take the view that an injunction would have to be refused, having regard to the behaviour of the parties. I adopt in this context the same approach as that taken by Stamp J. (as he then was) in the English case of Woollerton and Wilson Ltd. v. Richard Costain Ltd. [1970] 1 W.L.R. 411, where it was also sought to restrain the intrusion of the jib of a tower crane into the plaintiffs’ air space. Stamp J. observed at p. 415:
“Nor do I think I ought to ignore in considering whether an immediate injunction ought to be granted the fact that the air space in question has only assumed any value at all by reason of those particular defendants’ necessities. This is not a case such as was before McNair J. in Kelsen v. Imperial Tobacco Co. Ltd. [1957] 2 Q.B. 334 where the air space could be let to a party other than the defendant company which was trespassing on it and it is not a case where the defendants have been insisting upon the right to swing the crane over the plaintiffs’ land as a matter of right.”
I am also satisfied that, at best from Keating’s point of view, a fair question has been raised as to whether the parking by the builder of vehicles in the vicinity of the licensed premises is lawful or unlawful. In Attorney General v. Brighton and Hove Co-operative Supply Association [1900] 1 Ch. 276, the Court of Appeal in England held that a trader wasprima facie entitled in respect of his premises bordering on a highway to use it in a reasonable way for the purpose of unloading and loading goods from and into vehicles for the purpose of his business and that such loading and unloading would not necessarily be an unreasonable user of the highway merely because it might cause some inconvenience to passers-by or others using the street. However, while all the relevant authorities were not opened, it is also the case that Keating, as the owner of a premises adjoining the highway, has a private right of access to the highway which must also be available to its customers, provided that this does not obstruct the passage of the public over the highway (see Vanderpant v. Mayfair Hotel Co. Ltd. [1930] 1 Ch. 138). It may be held at the trial of the action that the activities of the builders have amounted to a use of the highway so unreasonable as to constitute an unlawful interference with Keating’s private right of access from their premises to the highway. Again, however, they have not established that damages will not be an adequate remedy for any loss they may establish at the hearing and, accordingly, I am satisfied that they are not entitled to an interlocutory injunction.
The application for an interlocutory injunction will, accordingly, be refused.
B. & S. Ltd v Irish Auto Trader Ltd
1995 No. 1504P
High Court
14 March 1995
[1995] 2 I.L.R.M. 152
(McCracken J)
McCRACKEN J
delivered his judgment on 14 March 1995 saying: The plaintiff has for some years published a magazine entitled ‘Buy and Sell’. It consists of advertisements placed by persons wishing to buy or sell anything from a bantam hen to a wedding dress, including as a very important part of its contents, motor vehicles and accessories. Since December 1993 the section of the magazine dealing with motor vehicles has the heading ‘autotrader’ on the top of each page. At times, going back at least to February 1994 the cover page, which is headed ‘Buy and Sell Ireland’s Free Ads Paper’, has also carried the words ‘including autotrader’. Since the beginning of February of this year the back page has been given over to promoting ‘autotrader’. It is a feature of the plaintiff’s magazine that private advertisers do not pay for the insertion of advertisements, although trade advertisers do so. Since July 1994 the plaintiff has also advertised ‘autotrader’ by placing the name on the side of a rally car.
The defendant is one of a group of associated companies which have published a magazine in twelve different local versions throughout the United Kingdom since 1985 under the name ‘Auto Trader’. This is a similar type of magazine to that published by the plaintiff restricted to motor vehicles and accessories, but all advertisements are paid for by the advertiser. A minimal number of these magazines were sold in Ireland over the years, but about six months ago the Scottish edition was put on sale in Northern Ireland and in December 1994 the defendant produced some form of supplement to its Scottish edition which was confined to Northern Ireland.
On 23 February 1995 the defendant launched an Irish edition of its magazine. On the front page it was stated: ‘Ireland’s Own Auto Trader serving Northern Ireland and the Republic’, although in fact the advertisements were almost entirely from Northern Ireland. However, it must be acknowledged that there is a considerable sale of motor vehicles from Northern Ireland to purchasers in the Republic.
The plaintiff has sought an interlocutory injunction restraining the defendant from publishing, printing or distributing its magazine in this jurisdiction, and claims that by doing so the defendant is passing off its magazine as and for that of the plaintiff.
The accepted test at this stage of the proceedings is to determine whether there is a serious issue to be tried. It is strongly urged on me by the defendant that there is no such serious issue in the present case. The nature of the issue is whether there has been passing off, and I adopt the speech of Lord Diplock in Erven Warnink BV v. J. Townsend and Sons (Hull) Ltd [1979] AC 731 at p. 742 as identifying the characteristics of passing off as:
(1) a misrepresentation,
(2) made by a trader in the course of trade,
(3) to prospective customers of his or ultimate consumers of goods or services supplied by him,
(4) which is calculated to injure the business or goodwill of another trader (in the sense that it is a reasonably foreseeable consequence), and
(5) which causes actual damage to a business or goodwill of the trader by whom the action is brought or (in a quia timet action) will probably do so.
The defendant says that passing off is not an issue in this case as the plaintiff did not use the word ‘autotrader’ in a prominent way until February of this year, and that in fact the plaintiff changed its use of the word to give much more prominence to it as a pre-emptive strike against the defendant’s magazine. It also says that there is no evidence of confusion or the likelihood of confusion. As the defendant only sold one issue, I cannot really criticise the lack of evidence of confusion. This is almost a quia timet application.
The plaintiff has filed a number of affidavits from persons in the motor trade who say that they associate the name ‘autotrader’ with the plaintiff’s magazine. These affidavits certainly go a considerable way towards establishing a reputation on the part of the plaintiff in the name. In my view there is a serious issue to be tried based on the argument that persons seeing the defendant’s magazine might think that the plaintiff had extracted the motor section of its Buy and Sell magazine and launched it as a separate magazine, and therefore potential customers would purchase the defendant’s magazine in the belief that it was published by the plaintiff.
The evidence certainly carries an implication of the possibility of confusion on this basis, and if such confusion were to be established, it would probably bring the case within the definition quoted above, although Lord Diplock did caution that a cause of action did not automatically arise if these characteristics were present. However, at this stage it is sufficient to say that the facts appear to give rise to a serious issue to be tried.
I now turn to whether on a balance of convenience an interlocutory injunction should be granted. The leading case on the tests to be applied on this point are set out by Lord Diplock in American Cyanimid Co. v. Ethicon Ltd [1975] AC 396. These tests have been applied and approved many times in this jurisdiction, and can be summarised in that if it is shown there is a serious issue to be tried then:
1. An interlocutory injunction should be refused if damages would adequately compensate the plaintiff for any loss suffered between the hearing of the interlocutory injunction and the trial of the action, provided the defendant would be in a position to pay such damages.
2. Should this test be answered in the negative, an interlocutory injunction should be granted if the plaintiff’s undertaking as to damages would adequately compensate the defendant, should he be successful at the trial, in respect of any loss suffered by him due to the injunction being in force between the date of application for the interlocutory injunction and the trial, again assuming that the plaintiff would be in a position to pay such damages.
3. If damages would not fully compensate either party, then the court may consider all relevant matters in determining where the balance of convenience lies, but these will vary depending on the facts of each case.
4. It is normally a counsel of prudence, although not a fixed rule, that if all other matters are equally balanced, the court should preserve the status quo.
5. Again, where the arguments are finely balanced, the court may consider the relative strength of each party’s case as revealed by the affidavit evidence adduced at the interlocutory stage where the strength of one party’s case is disproportionate to that of the other.
While Lord Diplock only used the phrase ‘balance of convenience’ when considering the position if damages were not an adequate remedy for either party, I would be more inclined to the view that the entire test rests on a balance of convenience, but that the adequacy of damages is a very important element, and may frequently be the decisive element, in considering where the balance of convenience lies. In the present case, the defendant has offered to have its parent company joined as a co-defendant, so as to ensure that the plaintiff would be able to recover damages should they be awarded, and thus the question of the ability of either party to pay does not seem to me to enter into the issue.
In a case such as this, where a plaintiff is seeking to injunct a competitor from entering the market for the first time, the question of assessing damages on either side becomes extremely difficult. If no injunction is granted, the plaintiff’s loss will be its loss of actual business due to confusion with the defendant’s magazine, and possibly some loss of good will, particularly if some of the plaintiff’s customers should come to believe that the plaintiff was no longer offering free advertising. Both of these are matters which would be extremely difficult to assess in monetary terms. On the other hand, the defendant is *157 producing a magazine which may well only be economic if it is sold in both Northern Ireland and the Republic, and is seeking to break into what it sees as a lucrative market at the present time, where it may well prove considerably cheaper for a purchaser in the Republic to buy a second hand car in Northern Ireland, and therefore is seeking to offer even its Northern Ireland advertisers access to the Republic of Ireland market. If it is prevented from doing this, it may fail to attract the relevant number of advertisers in Northern Ireland, and of course will attract no advertisers from the Republic. It will also have its sales reduced, but as only one issue has so far been published, it is certainly impossible to assess at this time, and probably will be impossible to assess at any time with accuracy, how many sales would have been lost, or indeed how many advertisers would have been lost. In my view, therefore, neither party can be adequately compensated in damages.
While I accept that in these circumstances the court will normally maintain the status quo, which in this case would be to grant an injunction, I feel that there are other factors in the present case which must be taken into consideration. The first of these is that the defendant has clearly acted in a totally bona fide manner, and has not chosen its name with a view to taking advantage of the plaintiff’s business, but simply because it is an extension of the defendant’s own business in Great Britain and elsewhere. Secondly, I feel that the possible loss to the defendant would considerably exceed the possible loss to the plaintiff. It has been suggested that all the defendant has to do is to change the name of its magazine, and that would be so in many cases such as this, but it is not so in the present case. It would clearly be quite unrealistic for the defendant to produce a magazine with a different name for the Republic of Ireland, and I think it is almost equally unrealistic to expect it to produce a magazine for the whole of Ireland under a different name from that used by it in Great Britain. I also take into account that a considerable amount of the advertising in both magazines comes from traders, and indeed the plaintiff’s evidence in relation to reputation has come entirely from traders. I think it highly unlikely that any traders would be confused. Finally, in the short term I think it is quite clear that the defendant’s magazine is largely going to be based in Northern Ireland, and that while a purchaser may purchase the magazine believing it to be the plaintiff’s magazine, the probability is that they will only make this mistake once, as they will very quickly find out it is not the same magazine.
Accordingly, I think this is one of these unusual cases where the balance of convenience lies in favour of refusing an interlocutory injunction, notwithstanding the fact that this is altering the status quo.
Howberry Lane Ltd v Telecom Éireann, Radio Telefís Éireann and NTL Inc
[1999] 2 I.L.R.M. 232
MORRIS P
delivered his judgment on 6 May 1999 saying: This matter comes before the court on foot of the plaintiff’s notice of motion dated 25 April 1999 in which it seeks an injunction:
(a) Restraining the first and second named defendants from selling Cablelink Ltd to the third named defendant.
(b) Restraining the first and second named defendants from selling Cablelink Ltd to any other prospective purchaser who has calculated his purported final bid by reference to a formula rather than by reference to a specific monetary amount.
(c) Restraining the first and second named defendants from negotiating with the third named defendant for the sale of Cablelink.
(d) Restraining the first and second named defendants from negotiating with any other prospective purchaser for the sale of Cablelink who calculated his proposed bid by reference to a formula rather than by reference to a specific monetary amount.
I propose to summarise the facts in this case only in so far as it is necessary for me to do so to enable me to determine the issues which arise. I am satisfied that these issues are the issues identified as being appropriate in applications of this nature by the Supreme Court in Campus Oil Ltd v. Minister for Industry and Energy (No. 2) [1983] IR 88. They are, first has the applicant satisfied me that there is a fair question to be determined at the trial of the action concerning the existence of the right which he seeks to protect or enforce by the injunction. Secondly has the applicant satisfied me that the circumstances are such that the *235 balance of convenience lies on the side of granting the injunction.
Cablelink is a leading cable service provider in Ireland and is owned as to 75% by the first named defendant and 25% by the second named defendant. In 1998 the first and second named defendants had been giving consideration to selling Cablelink and retained N.M. Rothschild and Sons Ltd (‘Rothschild’) to advise and to act on their behalf in relation to the proposed sale.
On 27 August 1998 Rothschild wrote to a number of parties to enquire if they were interested in participating in a tender process. Among those to whom they wrote were Esat Telecom Group plc (Esat). Esat were interested and so informed Rothschild. On 29 January 1999 Rothschild wrote to another Esat company outlining the procedure which was to be followed for the bidding process. This was a process to identify interested bidders and required that indicative bids from prospective purchasers be submitted not later than 12 midday on Wednesday, 10 March 1999. On 18 February 1999 Rothschild wrote a further letter indicating that it was the wish of the first and second named defendants to ensure that the sale procedure was ‘fully transparent.’ A number of indicative bids were submitted including one from Esat in the amount of £260m.
As a result of this process five prospective bidders were identified and among them Esat and the third named defendant. The range of indicative bids was from £240m. to £360m.
On 15 March 1999 Rothschild invited these five parties to submit ‘final bids’ by 12.00 on Friday, 23 April 1999 and to sign a share purchase agreement. It was required that the bids be made in a specific monetary amount.
Prior to submitting the final bid Esat entered into an agreement with two other companies Charter and Vulcan to form the plaintiff company. The ‘final bid’ was therefore transmitted in the name of the plaintiff company.
Two days prior to the closing date for the final bid namely, 21 April 1999 Rothschild again wrote to the plaintiff restating the vendor’s intention to maintain a transparent and open process and indicating ‘if a clear leading bid emerges then the shareholders may elect to move rapidly to conclude a transaction with that bidder (although they would be under no obligation to do so). The shareholders would expect such a bid to be in the region of 5% higher than the next highest bid’.
The amount of the ‘final bid’ made by the plaintiff was £410m. The amount of the ‘final bid’ made by the third named defendant was an indication that it was willing to pay 15% more than the highest bid for the purchase of Cablelink.
On 26 April 1999 Rothschild informed the plaintiff that the two highest bids were £410m (the plaintiff bid) and £471.5m (the amount of the third named defendant’s bid calculated in accordance with the formula).
On 26 April 1999 Rothschild again wrote indicating that the parties were required by 12 midday on Tuesday, 27 April to submit revised bids to be expressed in a fixed number of Irish punts and that formula bids were not to be *236 accepted.
Under protest, for the reasons to which I will refer, in order to protect its commercial position the plaintiff submitted a revised final bid of £485m. The third named defendant had submitted a bid in excess of this amount.
The plaintiff makes a number of complaints as to the manner in which the bidding process has been conducted by Rothschild on behalf of the first and second named defendants. These complaints include:
(a) A submission that the ‘formula bid’ submitted by the third named defendant was an invalid bid and that in the circumstances it should have been disregarded by Rothschild. As a consequence the plaintiff’s bid would have been the highest valid bid and it was entitled to be declared the purchaser of Cablelink.
(b) The plaintiff submits that since the ‘final bid’ was to have been the conclusion of the bidding procedure a third round of bidding was improper.
(c) It is submitted that the third named defendant having failed to put in a valid ‘final bid’ should have been excluded from further participation in the bidding procedure.
(d) The plaintiff submits that the disclosure of the amounts of the bids by Rothschild was a breach of the confidentiality and gave the third named defendant an unfair advantage.
(e) The failure on the part of Rothchild to inform the plaintiff that there was a ‘cap’ on the formula bid deprived it of valuable and useful information to which it was entitled.
(f) The time limit for the lodging of the third round of bids (24 hours or two banking days) was unreasonably short and put the plaintiff at a disadvantage.
The bid documentation which emanated from Rothschild contained the following provisions:
Following receipt of such further offers, the shareholders intend to select a preferred purchaser with whom they will proceed to conclude a sale of the company. However, the shareholders reserve the right to proceed to sell the company to any person at any time or to vary or discontinue this sale process at any time with notice. The shareholders are under no obligation to accept the highest bid offered or any bid at all. (See letter 29 January 1999).
… They reserve the right without advance notice (and without giving any reasons), to change the procedure for the sale of Cablelink or terminate negotiations at any time prior to the signing of any binding sale and purchase agreement and the right to negotiate with one or more prospective purchasers at any time and to enter into a sale and purchase agreement or any other transaction relating to the sale of the company or its business without prior notice to the *237 recipient of this memorandum or any other prospective purchasers. The issue of this memorandum shall not be taken as any form of commitment on the part of the shareholders of the company to proceed with the transaction. (See information memorandum enclosed with letters 29 January 1999).
Following submission of final bids, the shareholders may elect to complete a contract with one bidder or may choose one or more bidders with whom to conduct further negotiations. In making this choice the shareholders will give consideration to the above criteria. (See letter 15 March 1999).
We may conduct negotiations for the possible sale of the company at the same time with persons other than you. We may at any time and without notice and without any liability to you or your directors, officers, employees, agents or advisers:
7.4.1 negotiate with you or another person to any timetable and on any terms we may decide.
7.4.2. Provide different information or access to information to different persons.
7.4.3. Terminate negotiations with you.
7.4.4. Accept or reject any offer made irrespective of whether it is highest offer and reject all other offers.
7.4.5. Sign a written agreement for the possible sale of the company. (See paragraph 7.4 of the confidentiality agreement).
The shareholders retain the right expressed in the information memorandum and elsewhere to amend, curtail or alter the sale process at their sole discretion. The shareholders may, for instance, undertake negotiations on an individual basis with one or more parties after the submission of final bids or may conduct further bidding rounds between some or all of the bidders. (See letter 12 April 1999).
Bidders should note again that the shareholders reserve the right to proceed to close a transaction with any bidder at any time. (See letter 12 April 1999).
The shareholders continue to reserve the right not to accept any offer or to vary, amend or curtail the sale process at their sole discretion to conduct further bidding rounds or to conduct negotiations with one or more bidders as they see fit. (See letter 26 April 1999).
*238
The reliefs which are claimed by the plaintiff in the plenary summons are 18 in number but can be broadly divided into two reliefs. First a declaration condemning the purported final bid of the third named defendant seeking that it be excluded from the bidding process and an injunction restraining the first and second named defendants from selling Cablelink either to the third named defendant or any other bidder who bid by way of a formula bid. Secondly the plaintiff seeks a declaration that its final bid was the highest bid and seeking an order directing that the first and second named defendants sell Cablelink Ltd to the plaintiff. (The remainder of the summons goes on to claim damages, interest and costs).
I am satisfied that the true relief sought by the plaintiff is an order directing the first and second named defendants to sell Cablelink to it. I am satisfied that the other declaratory reliefs sought are no more than preparatory to this ultimate and final relief. I am satisfied that it is this final relief which I must consider in terms of whether the plaintiff has made out a fair case to be tried.
I am satisfied that even if the plaintiff were to succeed in obtaining all the other declaratory reliefs it is still not entitled as of right to the order sought. As has been set out the first and second named defendants on a number of occasions provided that the shareholders reserve the right to sell the company ‘to any person at any time’ and that ‘the shareholders are under no obligation to accept the highest bid offered or any bid at all’. Again they reserve the right ‘to accept or reject any offer made irrespective of whether it is the highest offer.’ Again the shareholders reserve the right ‘not to accept any offer or to vary amend or curtail the sale process at their discretion.’
Accordingly I am in no doubt that even if the plaintiff were to succeed in establishing a right to the declaratory reliefs no case has been made out that it is entitled to acquire the shares in Cablelink.
Counsel for the plaintiff has sought to rely upon a series of Canadian cases in which the courts have inserted an implied term into the contract which effectively overrides provisions similar to those herein before referred to so as to require the vendor to complete the transaction with the highest bidder. I am satisfied that in all of those cases special circumstances existed in which the courts saw it appropriate to introduce such an implied term. I am also satisfied that under no circumstances is such a term to be implied under the present law in this jurisdiction. Sweeney v. Duggan [1997] 2 IR 531; [1997] 2 ILRM 211 is clear authority for the following proposition; per Murphy J at pp. 539–540/217:
Whether a term is implied pursuant to the presumed intention of the parties or as a legal incident of a definable category of contract it must be not merely reasonable but also necessary. Clearly it cannot be implied if it is inconsistent with the express wording of the contract and furthermore it may be difficult to infer a term where it cannot be formulated with reasonable precision.
*239
In the present case such an implied term is not necessary and moreover it would be clearly inconsistent with the express wording of the contract.
Accordingly I do not accept the Canadian authorities as any indication of an emerging jurisprudence in this jurisdiction.
Even if I am wrong in assuming that the principal relief sought by the plaintiff is as stated above, namely that the first and second named defendants be directed to sell Cablelink to it and if it be a fact that the principal relief sought is that the third named defendant’s bid be declared invalid and that the first and second named defendants be precluded from selling to it, then in those circumstances it appears to me that the only possible reason for seeking such relief would be to discommode the third named defendant to such an extent that the plaintiff would find it possible to steal a march on it and acquire Cablelink while the third named defendant was under the disability of an injunction.
It is my view that under no circumstances should a court of equity render relief to a plaintiff seeking to achieve such an unfair advantage.
Counsel for the plaintiff has advanced an argument again based upon a series of Canadian authorities which, summarised amount to this. It is submitted that upon submitting a bid in a transaction such as this the bidder enters into a contract, in the authorities referred to as contract A, and that under the terms of this contract providing that his bid is otherwise satisfactory, for instance that he is the lowest bidder, he is entitled to enter into a second contract for the carrying out of the relevant work or provision of the relevant goods.
It is submitted by counsel that in the present case the plaintiff is entitled to regard himself as having entered into contract A with the first and second named defendants and that he is entitled to be offered contract B which will be the contract for the sale of the shares.
Even if, as counsel submits, this is a recognised emerging jurisprudence in Canada I do not accept it as representing the law in this jurisdiction. Moreover I am satisfied that it cannot apply to the circumstances of this case since the vendors have at all stages reserved for themselves the right to withdraw from the tendering procedure.
Finally, on this aspect of the case, counsel for the plaintiff has submitted that the conduct alleged by Mr O’Brien of Mr Gregg in that it is alleged that he attempted to form a ‘ring’ so as to destabilise the bidding procedure should disentitle the third named defendant from participating further in the bidding procedure. I can see no circumstance in which this submission can affect the first and second named defendants’ rights to negotiate the sale of the shares with whomsoever they consider appropriate and I am not satisfied that the complaints referred to in the affidavit of Mr O’Brien, even if they are established would disentitle the third named defendant from acquiring the shareholding in Cablelink.
Accordingly I am not satisfied that the plaintiff has discharged the onus of *240 proof of satisfying me that he has a fair case to make so as to entitle him to the injunctive relief sought.
Balance of convenience
It is submitted by the plaintiff that the balance of convenience is in its favour and that it is weighted towards granting the injunction rather than refusing it. It puts its case in this way. It says that if the sale of Cablelink goes through then it will have lost forever the opportunity of acquiring Cablelink whereas if the sale is merely halted for a number of months while this action is coming to trial then, in the event that the plaintiff is found not entitled to the relief claimed the loss to the third named defendant would be quantifiable as it extends over a limited period of time and that likewise the loss to the first and second named defendants, the vendors, will be readily capable of being calculated.
I do not accept this submission. I accept that the loss of the acquisition of Cablelink to the plaintiff will be a loss of great magnitude and indeed the loss may be incalculable. However I have no doubt that the loss to the third named defendant if this injunction were to be imposed would be no less. The form in which the injunction is sought is that the third named defendant and it alone would be precluded from acquiring Cablelink. I am satisfied that in the nature of things the first and second named defendants would seek an alternative buyer during the currency of the injunction and I am satisfied that the opportunity to have acquired this company will have vanished.
Given that I am satisfied that the loss or ‘lack of convenience’ is equal then it is clear to me that the plaintiff has not discharged the onus of proof. It has been submitted by counsel that in these circumstances it is appropriate for me to look at the strength of the plaintiff’s case. In those circumstances I merely add this. I am far from satisfied that it is appropriate to do so but if I were to do so, and while I have made my judgment independent of having done so, I will be satisfied that the plaintiff’s case is so weak that it would tip the balance against it.
Harkins v. Shannon Foynes Port Company
[2001] IEHC 6 (29th January, 2001)
JUDGMENT of O’Sullivan J delivered 29th January, 2001
1. The Plaintiff seeks to restrain the Defendant from advertising the position of Harbour Engineer (however styled, and including the style of “ Operations Manger ”) which job he says has been his own job with the Defendant for several years.
2. Mr. Hogan SC for the Defendant submits that due to the amalgamation of the functions of the Limerick and Foynes Harbour Authorities and their areas the job which the Defendants are advertising does not, and certainly does not materially, overlap with the Plaintiff’s job, but comprises, rather, a new level of management which will involve from the, Plaintiff’s point of view a new reporting function.
3. Accordingly, it is submitted, that there can be no question of “less beneficial conditions of service” within the meaning of Section 39 (1) of the Harbours Act, 1996, which Section protects the pre-existing conditions of service of employees of Harbour Authorities who are transferred in circumstances such as apply to the Plaintiff in the present case.
4. Mr. Hogan further submits that the present is a clear example of a change in work practice rather than change in conditions of service.
5. The Plaintiff in his affidavit says that he was invited on 4th January, 2000 to apply for the new position of Operations Manager but subsequently became concerned that this new position would absorb or subsume his existing job or part of his existing job as Harbour Engineer. He was alerted to this by the terms of the advertisement which indicate five areas of responsibility for which the Plaintiff says he already has responsibility himself in his present job. In his replying affidavit Derry Gray who is joint interim Chief Executive of the Defendant’s says (at paragraph 4 (d) ):-
“The Defendants do not intend to remove the Plaintiff from his post as a result of the proposed appointment and it is important to stress that the Plaintiff remains in good standing with the Defendants.”
6. And further on he deposes:-
“In this regard, the Plaintiff will remain in his present role if he does not secure the new appointment and the only difference will be that he will be reporting to the Operations Manager.”
7. In response the Plaintiff amplifies his concerns under each of the headings already referred to by enlarging his account of his existing responsibilities under each heading and says:-
“…the position being advertised clearly encompasses the functions carried out by this deponent.”
(See paragraph five of his further affidavit sworn on 25th January, 2001).
8. There is a further response from Derry Gray which points out the obvious namely that the Plaintiff does not have responsibility for the deep water port of Foynes, but accepts that the Plaintiff has management functions in regard to the 20 persons now employed (in the Limerick area) and a distinction is made between maintenance management (part of the Plaintiff’s job) and development management (part of the new job). The new Operations Manager will have responsibility for reconciling the two work forces which is not part of the Plaintiff’s job and the new manager will have overall responsibility for the Plaintiff’s job and will give instructions to the Plaintiff who now reports to existing higher management and gets direct instructions from them.
9. Despite the eloquent submissions of the Defendant’s Counsel I am left with the impression that there is a degree of overlap between the Plaintiff’s present responsibilities and those of the new Operations Manager, or at least that the parameters of each have not been thought through with the boundary now insisted on by the Plaintiff clearly in mind.
10. That being the case, I consider that the Plaintiff has made out a case for trial to the effect that the Defendant’s proposal would entail him having to accept less beneficial conditions of service within the contemplation of Section 39 (1) of the Harbours Act, 1996.
11. With regard to the balance of convenience it is clear that if the Defendant is permitted to continue with making the present appointment the Plaintiff’s position at trial will be devalued, possibly irretrievably and in a way that money could not compensate.
12. On the other hand the Defendant has statutory obligations, it must take account of changing circumstances and should not be kept waiting for an avoidably lengthy period – pending litigation – in a situation where it is disabled from carrying out its statutory functions.
13. In my view, given the clear averment in Derry Gray’s first affidavit to the effect that the only difference from the Plaintiff’s point of view in the new regime will be that he the Plaintiff will be reporting to the Operations Manager – a position emphasised by his Counsel at the hearing today before me – it should be possible for the Defendant to set out clearly a job description of the new position which will demonstrate clearly (possibly by referring to the job description of the Plaintiff’s functions) that the new position of Operations Manager will not intrude on the functions of the Plaintiff.
14. That being the case, I consider that if I were to prohibit the Defendant from advertising the position of Operations Manager unless and until such advertisement makes it clear that the position advertised involves no overlap with or incorporation of the functions of the Harbour Engineer (a position now held by the Plaintiff) I would not unduly frustrate the legitimate purposes of the Defendant and accordingly I am prepared to make an Order in those terms.
Boyhan v Tribunal of Inquiry into Beef Industry
[1993] 1 IR 210, [1992] ILRM 545
Denham J: This is an application by the plaintiffs for interlocutory relief against the defendant seeking:
1.A mandatory injunction directing the said tribunal to grant the plaintiff association full representation for that part of the proceedings of the said tribunal of inquiry as encompasses the relevant allegations . The plaintiffs deposed that they were of the opinion that certain of the allegations contained in the document prepared by the tribunal entitled Allegations – D il ireann and World in Action Programme are particularly relevant to the UFA and or members of the farming community – these they call relevant allegations . These relevant allegations encompass:
(a)Fraudulent practices at the meat plants – general.
(b)The Waterford and Ballymun investigations;
(c)The Eir Freeze investigation;
(d)Other allegations of fraudulent practices;
(e)Anti-competitive practices;
(l)Goodman and Classic Meats; and
(m)The role of the regulatory authorities.
2.Alternatively, a mandatory injunction directing that the plaintiff association be granted representation for that part of the proceedings of the said tribunal as encompasses any purported refutation by or on behalf of the other parties represented of the evidence of the said witnesses made available to the said tribunal by the plaintiff association in relation to the relevant allegations .
3.A mandatory injunction directing the said tribunal to furnish to the plaintiff association s legal advisers such portions of the book of documents as relate to the relevant allegations .
4.In the alternative, a mandatory injunction directing the said tribunal to furnish to the plaintiff association s legal advisers such portions of the books of documents as comprise evidence tending to support or refute the evidence to be given by the witnesses made available to the said tribunal by the plaintiff association in support of the relevant allegations .
5.Such further or other relief as the High Court shall deem fit.
Submissions
The plaintiffs submitted that they should get full representation at the tribunal throughout the inquiry to represent their members and to protect the interests of the farmers as no one else is present to do that. That even if the Attorney General is representing the public interest (which they maintain he is not) farmers are entitled to be represented for their special interest. They maintain that they are entitled to relief as: (a) there is a fair question to be determined at the trial concerning the existence of rights they seek to protect; and (b) the balance of convenience lies on the side of granting this injunction; (c) the granting of the injunction is justified on the special circumstances. They submit that it is in the interests of justice and fair procedures and especially in view of the Constitution that they should be granted full representation. That the limited representation granted – to be present when their witnesses gave evidence and to have the right to examine their witness and to participate in the tribunal at that time – was unfair. That their witnesses would not be protected. That they have not been allowed representatives to be present when evidence might be given in refutation of their witnesses evidence. That if witnesses are not going to be protected in public inquiries they will not come forward. They point out that nothing in their affidavits is being denied. Mr McGonigal, on behalf of the tribunal, submitted that this is an application for full representation to be granted to the UFA on the grounds:
1.That they wish to represent the public;
2.That they have a special interest, and
3.That there is a danger that the tribunal in exercising its function will not give to witnesses the protection to which witnesses are entitled.
He submitted that it is the function and duty of the Attorney General to represent the public interest. That the determination of legal representation is a matter for the chairman of the tribunal and that the application for legal representation for the UFA was considered by the chairman of the tribunal. That there are no allegations made against the UFA. And that the UFA have put a booklet of statements before the tribunal, that out of the 30 statements, nine were statements made by farmers who presumably are members of the UFA. The balance are by ex-employees of Goodman Industries or companies in the beef processing industry. These are all persons giving evidence as witnesses to the tribunal; they are not a person against whom allegations have been made. He drew a distinction between witnesses and persons against whom allegations are made.
He submitted that the chairman had a discretion under s 2(b) of the Tribunals of Inquiry (Evidence) Act 1921 and that he arrived at his decision after considering the submissions and evidence before him. That the chairman had said on numerous occasions that the principle of natural justice would apply to the proceedings of the tribunal. That these principles of natural justice are applicable to the context of the tribunal to different persons in different ways. That full legal representation has been granted to those against whom allegations have been made. That limited representation had been given to six others, including the UFA. That all these six have the same type of limited representation. None of them have been given the full books of documents. He submitted that the tribunal had granted legal representation according to the principles set out In re Haughey [1971] IR 217 and that the plaintiffs here are in the position of being mere witnesses who will give evidence of which they have knowledge on matters within the terms of reference.
Facts
Hamilton P is the sole member of the tribunal of inquiry appointed by warrant of the Minister for Agriculture and Food dated the 31st May 1991 following a resolution passed by D il Eireann on the 24th May 1991 and by Seanad Eireann on the 29th May 1991. Applications were made on behalf of the UFA to the said tribunal for full legal representation at the inquiry to be undertaken. These applications cited that the UFA were entitled to such full legal representation as they represented the public, the farmers, their organisation, their witnesses and that they needed to protect their interests and witnesses by being present throughout the proceedings. The tribunal determined that they had an interest but that it is a limited interest and allowed them limited representation.
On the 26th July 1991 the tribunal heard an application by counsel on behalf of the UFA for full representation. It was refused and limited representation granted. The tribunal stated:
The tribunal has considered the submissions that are being made on behalf of his clients and if and when these submissions are being considered by the inquiry or any witness referred to in his submissions are being called it is only right and proper that limited representation be given to the UFA when and if these matters are being dealt with by the tribunal and they will be notified in ample time if these matters which are referred to in the submissions are being considered by the tribunal in order to enable them to be represented on a limited basis while these matters are being dealt with.
This limited representation was clarified on the 30th September 1991 when in response to counsel s further application the chairman of the tribunal stated:
Your interest and your representation before this tribunal was granted on a limited basis, that is made quite clear. You will be heard when any witnesses whom you have made available to the tribunal will be dealt with by the tribunal and that is the basis of the representation and it is the only representation which you have got and it is the only representation you will get.
There are no allegations made against the UFA, and the tribunal has no evidence or submissions at this time which suggests that there will be allegations against the UFA. Thus the UFA are in the position that they have approached the tribunal and sought to adduce evidence before the tribunal through witnesses. The tribunal has accepted that they have an interest but that in the context of the inquiry it is a limited interest. The tribunal has indicated that it may call the witnesses proffered by the UFA and that when that is done the UFA may be legally represented at the tribunal, may take part in the tribunal and may examine the witnesses.
Representation of the public
The UFA maintain that they represent the public and the farmers in the circumstances that have evolved at the inquiry. The chairman of the tribunal deposed that he is satisfied that the Attorney General is the person to represent the public interest at the inquiry and that the UFA have no interest over and above the interests of any member of the public. It appears to me that this is correct.
If it is necessary that the public interest be represented at the tribunal, this is adequately done. The very essence of the tribunal is that it is an inquiry into certain matters. This inquiry is at the instigation of the D il and Seanad, for the public. It is not a court – it is a public inquiry sought by the public s representatives As such, the counsel for the tribunal represent the public.
The Attorney General is also represented and while he is representing State authorities against whom there are allegations, he also represents any State authority from which the tribunal might require assistance . See the statement by counsel on behalf of the Attorney General on the 21st June 1991. In addition, the Attorney General, through his counsel, would be a representative of the State and hence the people of Ireland. I do not consider that the words of counsel to the tribunal in describing his representation were exclusionary of the constitutional role of the Attorney General.
The farmers
The UFA cannot appropriate on to themselves the duty of representing either the public or the farmers. They have no mandate to so do. Their interest is limited to their association. Thus their interests for the purpose of the tribunal and the 1921 Act is limited to that of their association. There is no special interest established by the UFA other than the interest determined by the tribunal.
Status of the UFA
There are no allegations against the UFA. Thus the UFA is in the position of a willing witness who has approached the tribunal and sought to give evidence. The interest is limited to this situation. Should the position change later – should there be allegations against the UFA – then that is another matter and not for this Court. The UFA will be legally represented when their witnesses are in court. Thus if they are cross-examined as to credibility, or their veracity or good name are called into question, counsel will be present to protect their interest.
The plaintiff made the case that the UFA were victims, and represented victims, of the fruit of the allegations. That they were, and represented, cattle farmers who sold their produce to factories. That thus they were affected by the competent operation of factories, and intervention under CAP. That they were interested persons pursuant to s 2(b) of the Act.
Defendant s counsel referred to the report of the tribunal of inquiry on the disaster at Whiddy Island, to the annex thereto, and to the position of the applicant Shell Portuguesa SARL, owners and underwriters of a cargo of oil on the Betelgeuse whose application for full legal representation was initially refused, but who was granted a right of legal representation limited to its own witnesses. Counsel for the defendant here said that this is a similar situation and a similar ruling. I was referred to appendix 4 of the said report, and to paragraph 3 thereof, by counsel for the defendant, and it was indicated to me that the same principles were applied in this tribunal. I was referred especially to the view it took on those economically affected, where it is stated that the tribunal … took the view that, whilst the economic and financial interests of these applicants might have been affected by the disaster, this fact alone did not give them a right to be legally represented before the tribunal – clearly no reflection on the conduct of any of these applicants could arise in the course of the evidence or in the tribunal s findings. They were not, in the tribunal s view, interested persons within the meaning of this section . I am satisfied that the interpretation of the section by the Whiddy Tribunal is a correct interpretation, it is the common sense and reasonable interpretation. Thus, this issue has been determined before and is not an issue new to the law on tribunals. A very wide band of persons would be eligible for the full legal representation if economic and financial interests alone gave them a right to full legal representation.
Mandamus was sought directing the Whiddy Tribunal to authorise legal representation before it of certain persons whose applications had been refused by the tribunal. The High Court refused these applications on the 8th May 1979, though there is no written judgment or record of the judgment.
Constitutional protection
Counsel for the UFA cited In re Haughey as an authority. D laigh J at p 263 stated that Mr Haughey s counsel submitted that:
The minimum protection which the State should afford his client was (a) that he should be furnished with a copy of the evidence which reflected on his good name; (b), that he should be allowed to cross-examine by counsel his accuser or accusers; (c), that he should be allowed to give rebutting evidence and (d) that he should be permitted to address again by counsel the committee in his own defence.
Protection (b) and (d) had not been granted. The issue then was whether Mr Haughey was a party or a witness. D laigh CJ at p 263 states:
In my opinion counsel is right in his submission that Mr Haughey is more than a mere witness. The true analogy, in terms of High Court procedure, is not that of a witness but that of a party. Mr Haughey s conduct is the very subject matter of the committee s examination and is to be the subject matter of the committee s report.
And at p 264 he states:
Where, as here, it is considered necessary to grant immunity to witnesses appearing before a tribunal, then a person whose conduct is impugned as part of the subject matter of the inquiry must be afforded reasonable means of defending himself. What are these means? They have already been enumerated at (a) and (d) above. Without the two rights which the committee s procedures have purported to exclude, no accused – I speak within the terms of the inquiry – could hope to make any adequate defence of his good name.
Further down p 264 he stated:
Clause (iii) of the committee s procedures, while valid in respect of witnesses in general, in this instance would, if applied in the circumstances of this case, violate the rights guaranteed to Mr Haughey by the provisions of Article 40.3 of the Constitution … The provisions of Article 38.1 of the Constitution apply only to trials of criminal charges in accordance with Article 38; but in proceedings before any tribunal where a party to the proceedings is on risk of having his good name, or his person or property, or any of his personal rights jeopardised, the proceedings may be correctly classed as proceedings which may affect his rights and in compliance with the Constitution the State, either by its enactments or through the courts, must outlaw any procedures which will restrict or prevent the party concerned from vindicating these rights.
On the facts herein it is clear that the UFA is not an accused. Its conduct is not being investigated by the tribunal. There are no allegations against the UFA or its members. It is a witness which has proffered itself. As such, while its constitutional rights must at all times be protected it does not appear that its rights – to good name, for example – are in jeopardy in any way at all. The position of the UFA at this time in relation to the tribunal is analogous to a witness in a trial and as such it is not entitled to the protection as set out at (a) and (d) by D laigh CJ. Its position, as a witness, is fully protected by the limited legal representation awarded by the tribunal.
Natural justice
The tribunal has on several occasions clearly stated that the principles of natural justice will be applied. On the 21st June 1991 the chairman said:
I must at this stage emphasise it is neither a civil nor a criminal trial. It is, however, a judicial proceeding and the principles of natural justice apply. It is a basic rule of natural justice all parties to any form of judicial proceedings must be given a full and fair hearing. Natural justice further requires parties who make or have made allegations against any other party or parties to be required to substantiate them, and that the other party or parties be given the fullest opportunity of dealing with such allegations.
And on the 26th August 1991 he said:
It is also becoming quite clear that certain allegations will be made against witnesses who will be required to give evidence before the tribunal and natural justice requires that each of these witnesses, apart from the parties presently before the tribunal, will be afforded ample opportunity, having been informed of the allegations, to deal with them in their own choice.
Thus, while at this time the plaintiffs do not need the full representation that they seek it is equally clear that they and their witnesses position will be protected should a need arise and that the matter will be reviewed by the tribunal. Indeed this has already been stated by the tribunal. On the 30th September 1991 Mr Callan SC (at p 13 of the transcript) pointed out that a relevant matter may arise on the giving of evidence of the witnesses for the Department of Agriculture and pointed out that under the current ruling his clients would not have the right to cross-examine. The chairman, in reply to this point, stated:
That will be dealt with during the course of the tribunal, Mr Callan, I am making no order on it now.
The tribunal clearly indicating that it proposes to apply the rules of natural justice, and the plaintiff being afforded limited representation at this time, there is no indication that the plaintiff s rights under the Constitution will be in jeopardy or abused.
The law
Under s 2(b) of the Tribunal of Inquiry (Evidence) Act of 1921 the tribunal has power to grant a right of representation. Section 2(b) states:
A tribunal to which this Act is so applied as aforesaid – (b) shall have power to authorise the representation before them of any person appearing to them to be interested to be by counsel or solicitor or otherwise, or to refuse to allow such representation.
This section gives to the tribunal a discretion. This discretion must be exercised in accordance with the law and the Constitution.
Legal discretion
The decision to grant representation, subject to constitutional rights, is that of the chairman, pursuant to s 2(b) of the Tribunals of Inquiries (Evidence) Act 1921. The decision here was given after full submissions, and a reason was given for the decision. As determined above, there is no breach of constitutional protection to the UFA. The decision falls to be analysed solely on its legal (as opposed to its constitutional) position. The principles as enunciated by Finlay CJ in O Keeffe v An Bord Plean la [1992] ILRM 237 are relevant. After referring to the State (Keegan) v Stardust Victims Compensation Tribunal [1987] ILRM 202, the Chief Justice stated at p 261:
In dealing with the circumstances under which the court could intervene to quash the decisions of an administrative officer of the tribunal on grounds of unreasonableness or irrationality Henchy J in that judgment set out a number of such circumstances in different terms. They are:
1.It is fundamentally at variance with reason and common sense.
2.It is indefensible for being in the teeth of plain reason and common sense.
3.Because the court is satisfied that the decision maker has breached his obligation whereby he must not flagrantly reject or disregard fundamental reason or common sense in reaching his decision . I am satisfied that these three different methods of expressing the circumstances under which a court can intervene are not in any way inconsistent one with the other, but rather compliment each other and constitute not only a correct but a comprehensive description of the circumstances under which a court may, according to our law, intervene in such a decision on the basis of unreasonableness or irrationality.
There is not a scintilla of evidence before this Court to suggest that the decision of the tribunal was made other than within reason and or common sense and jurisdiction. Consequently the plaintiff has not made out a fair question to be decided by this Court on the law.
I was referred to the Royal Commission on Tribunals of Inquiry 1966, CMND 3121.
The six cardinal principles set out at pp 17 and 18 of the said report advance the law no further than the constitutional requirements established in In re Haughey. As there are no allegations against the plaintiff, who is not a party in that sense, the principles set out therein would not appear to apply to the plaintiff. In fact, the tribunal will have no function in treating the plaintiff in any way other than a witness. This was also the decision of the High Court in K Security Ltd and William Kavanagh v Ireland (Gannon J, 15 July 1977). At p 13 thereof Gannon J said:
But the tribunal had no function nor authority to deal with the plaintiff or his activities in any way other than on his capacity as a witness before them. In my opinion neither the good name, reputation, business connections or property rights nor any other personal rights of the plaintiff were ever interfered with or exposed to unjust attack or injustice of any kind of the proceedings before the tribunal nor did they require vindication or defence during the course of the proceedings of the inquiry.
Documents
The plaintiffs being in the position of witnesses for the tribunal, they are not entitled to the documents, the books of the tribunal. I know of no authority which enables a witness to be served with a book of evidence. Consequently, the plaintiff has not made out that there is a fair question to be tried on this issue at a trial.
Conclusion
It is clear that the plaintiffs are in the position of a witness to the tribunal. There are no allegations made against them and the tribunal is satisfied that the UFA will not be prejudicially affected in any way by the evidence which may be given at the hearings – or by any of the tribunal s findings. A tribunal is not a court of law – either civil or criminal. It is a body – unusual in our legal system – an inquisitorial tribunal. It does not have an adversary format. There is no evidence that the plaintiffs will be prejudiced by the tribunal. The tribunal has clearly stated that the rules of natural justice will apply.
It is manifestly clear that the tribunal was acting within its discretion and jurisdiction in making its decision. There is no evidence which even questions the decision on the ground of reasonableness or jurisdiction.
In these circumstances, I do not consider that the High Court has jurisdiction to interfere with the decision of the tribunal. The remedy which is sought by the plaintiff is that of a mandatory injunction. This is a powerful instrument of the High Court. On the facts in this case, it would effectively mean an order of mandamus to the tribunal. If this were an application for mandamus it could not succeed. In seeking this exceptional form of relief, a mandatory injunction, it is up to the plaintiffs to establish a strong and clear case – so that the court can feel a degree of assurance that at a trial of the action a similar injunction would be granted. I do not believe that such an injunction would be granted at a full trial herein. It appears to me that the plaintiffs have misconstrued the position of the tribunal and perceived it as a court with the adversarial system of procedure in which the plaintiff is in jeopardy. This is not the case. Nor indeed have the plaintiffs established that there is a fair question to be tried on the issues raised on the facts herein, for the same reasons as set out before. The plaintiffs have not presented an arguable case that the tribunal s decision is untenable or endangers constitutional rights. The plaintiff has not established a right to the mandatory injunction sought.
I refuse the application.
The Society for the Protection of Unborn Children (Ireland) Ltd v Grogan
[1989] IR 753, [1990] ILRM 350 (Supreme Court)
Finlay CJ: This is an appeal brought by the plaintiff against an order made in the High Court on the 11th October 1989 by Carroll J on an application made by it for an interlocutory injunction against the defendants.
By plenary summons issued on the 25th September 1989 the plaintiff claimed against the defendants:
1.A declaration that any publication published or distributed under the aegis of the defendants which contains information calculated to inform persons (including pregnant women) of the identity and location of and the method of communication with a specified clinic or clinics where abortions are performed is contrary to the provisions of the Constitution of Ireland and in particular Article 40.3.3 thereof.
2.An injunction restraining the publication or distribution of such information.
By notice of motion dated the 25th September 1989 and made returnable for the 9th October 1989, the plaintiff sought an injunction by way of interlocutory injunction restraining the defendants from publishing or distributing or assisting in the printing, publishing or distribution of any publication produced under their aegis providing information to persons (including pregnant women) of the identity and location of and the method of communication with a specified clinic or clinics where abortions are performed.
The defendants are persons who are members of three separate groups, namely, the Union of Students of Ireland, the Students Union of University College Dublin, and the Students Union of Trinity College Dublin.
Affidavits filed in support of the motion for an interlocutory injunction established that each of these three groups had published and asserted that the defendants, amongst others, were intending to distribute the information mentioned in the injunction claimed.
The affidavits filed on behalf of the defendants did not dispute that they were publishing and intending to distribute information of the identity and location of and the method of communication with specified abortion clinics in the United Kingdom. In these affidavits and through counsel at the hearing in the High Court, the defendants claimed to be entitled to publish and distribute this information by virtue of European Community law. The submission made on their behalf was and is before this Court that pregnant women in Ireland had a right under European Community law to travel to any other member state where abortion was legal in order to have the service of an abortion performed on them; that a corollary to that legal right was a right to information about the identity, location and method of communication with abortion clinics in the United Kingdom. Having regard to that right vested in a pregnant woman in Ireland, it was urged that the defendants had a corresponding right vested in them by European Community law to publish and distribute that information.
Having heard submissions on the application for an injunction, Carroll J decided to refer certain questions to the Court of Justice of the European Communities for a preliminary ruling in accordance with Article 177 of the Treaty establishing the European Economic Community.
The relevant curial part of the High Court order of the 11th October 1989 reads as follows:
And it appearing to the court that a decision of the Court of Justice of the European Communities on questions to be formulated and submitted to the court is necessary to enable this Court to give judgment on the plaintiffs said motion for an interlocutory injunction herein it is ordered that the said questions be referred to the said Court of Justice of the European Communities for a preliminary ruling in accordance with Article 177 of the Treaty Establishing the European Economic Community and the court both request the said Court of Justice to give a ruling thereon.
There is no express order refusing or adjourning the application for an interlocutory injunction, and when counsel for the plaintiff after Carroll J had delivered judgment, inquired what ruling she was making concerning the application for an interlocutory injunction the learned trial judge stated:
In order to reach a decision as to whether it should be granted I need an opinion from the European Court.
Counsel for both parties agree that the probable time required for the delivery of an opinion from the European Court is a minimum of eighteen months, and more probably longer.
Jurisdiction of this Court to entertain this Appeal
Counsel for the defendants has challenged the jurisdiction of this Court to entertain this appeal on the grounds that the only decision made by Carroll J in the High Court was a decision to refer questions pursuant to Article 177 of the Treaty to the European Court of Justice and that having regard to the judgment of this Court in Campus Oil Ltd v Minister for Industry and Energy (No 1) [1983] IR 82, such a decision to refer was not appealable.
Counsel for the plaintiff submits that irrespective of the form of the order made by Carroll J, she in fact made two decisions, one being to refer the questions pursuant to Article 177 and the other being to decline or refuse an interlocutory injunction.
I have come to the conclusion that the submission made on behalf of the plaintiff is correct.
The application before the High Court was for an interlocutory injunction, that is, for an injunction lasting only until the trial and determination of the action. The purpose of an interlocutory injunction is, of course, to maintain a particular situation, without alteration, from the time when the order is made until the court can adjudicate on all the issues involved between the parties. To defer or postpone reaching a decision on such an application for a period which certainly equals and probably exceeds the time necessary to bring the action to hearing is, in my view, to decline or refuse to make an interlocutory injunction.
The appellate jurisdiction of this Court in respect of matters arising in the High Court is provided for in Article 34.4.3 of the Constitution, which reads as follows:
The Supreme Court shall, with such exceptions and subject to such regulations as may be prescribed by law, have appellate jurisdiction from all decisions of the High Court, and shall also have appellate jurisdiction from such decisions of other courts as may be prescribed by law.
The interests of the plaintiff are very clearly affected by the ruling of Carroll J on its application for an interlocutory injunction. In seeking to reverse that ruling by appeal in this Court the plaintiff is asserting an important constitutional right.
The judgment of O Higgins CJ and Walsh J in People v Conmey [1975] IR 341 which formed the majority decision of the court in that case, both emphasised that for any Act of the Oireachtas to provide an exception or regulation to the constitutional right of appeal from the High Court to the Supreme Court, clear and unambiguous terms would be necessary because of the fundamental nature of that right.
For the same reasons I am satisfied that no mere absence of formal words from a High Court order could be permitted to remove from the appellate jurisdiction of this Court a determination of a High Court judge which affects one of the parties involved and has all the characteristics of a decision.
It is clear from the decision of this Court in Campus Oil Ltd v Minister for Industry and Energy (No 2) [1983] IR 88, that it was open to the learned High Court judge in this case to grant an interlocutory injunction at the same time as she decided to refer questions of law for the determination of the European Court of Justice.
There is, therefore, in my view, no question of her decision to make a reference under Article 177 having automatically the effect of postponing a decision on the application for an interlocutory injunction. Her declining to grant an injunction, therefore, when applied for, clearly, constitutes a decision of the High Court appealable, by virtue of the Constitution to this Court.
I reject the contention that for this Court to consider an appeal involving the question as to whether or not an interlocutory injunction should be granted at this stage is, in effect, reviewing on appeal a decision to refer under Article 177 in a manner inconsistent with the decision of this Court in Campus Oil Ltd v Minister for Industry and Energy (No 1). The making of the reference remains unaltered, the only matter being reviewed is the question of the granting of an interlocutory injunction. I am, therefore, satisfied that this preliminary objection to the jurisdiction of the court fails and that the court must then consider the merits of the plaintiff s appeal against the decision of the High Court declining to make an interlocutory injunction.
The nature of the injunction sought
The nature of the plaintiff s asserted cause of action in aid of which the injunction is sought and the defendants main defence to it is of fundamental importance for the determination of this appeal.
The plaintiff seeks to protect by injunction the right to life of the unborn which is acknowledged and guaranteed protection by Article 40.3.3 of the Constitution.
The defendants assert that the acknowledgment and guarantee of protection to the life of the unborn contained in Article 40.3.3 of the Constitution must, by virtue of the provisions of Article 29.4.3 of the Constitution, be interpreted as being subject to and qualified by a right in the defendants, arising from European Community law, by the publication and distribution of material in Ireland, to inform the mother of an unborn child of the location, identity and method of communication with abortion clinics in the United Kingdom in which she may, if she so wishes, obtain a service consisting of the intentional termination of the life of her unborn child.
It is submitted on behalf of the defendants that since it appears from the affidavits that the information, publication and distribution of which was sought to be restrained, had already been published and distributed in various ways prior to the application that the status quo ante was the availability of such information and that accordingly no injunction could or should be granted.
This submission, in my view, completely ignores the nature of this action and the principles applicable to it. It was decided by this Court in Attorney General (Society for the Protection of Unborn Children Ireland Ltd) v Open Door Counselling Ltd [1989] ILRM 19 that the activities of the defendants, their servants or agents in assisting pregnant women within the jurisdiction to travel abroad to obtain abortions by referral to a clinic, by the making of their travel arrangements, or by informing them of the identity and location and method of communication with a specified clinic or clinics are unlawful, having regard to the provisions of Article 40.3.3 of the Constitution. This Court by the same order restrained the defendants in that action by permanent injunction from carrying on these activities.
That decision clearly establishes that the actual activity which the defendants in this case are claiming and intending to pursue as of right is unlawful, having regard to the provisions of Article 40.3.3 of the Constitution.
I reject as unsound the contention that the activity involved in this case of publishing in the students manuals the name, address and telephone number, when telephoned from this State, of abortion clinics in the United Kingdom, and distributing such manuals in Ireland, can be distinguished from the activity condemned by this Court in the Open Door Counselling case on the grounds that the facts of that case were that the information was conveyed during periods of one-to-one non-directive counselling.
It is clearly the fact that such information is conveyed to pregnant women, and not the method of communication which creates the unconstitutional illegality, and the judgment of this Court in the Open Door Counselling case is not open to any other interpretation.
This application for an interlocutory injunction, therefore, consists of an application to restrain an activity which has been clearly declared by this Court to be unconstitutional and therefore unlawful and which could assist, and is intended to assist in the destruction of the right to life of an unborn child, a right acknowledged and protected under the Constitution. That constitutionally guaranteed right must be fully and effectively protected by the courts.
If and when a decision of the European Court of Justice rules that some aspect of European Community law affects the activities of the defendants impugned in this case, the consequence of that decision on these constitutionally guaranteed rights and their protection by the courts will then fall to be considered by these courts.
Having regard to that duty of the court, it is clearly quite inappropriate to approach the exercise of the discretion to grant or refuse an interlocutory injunction, upon the basis of a supposed status quo ante consisting of activities which are constitutionally forbidden acts.
The true principle which falls to be considered in this case in relation to the exercise of that discretion is the unqualified existence of the relevant provisions of the Constitution at the time of the application for an injunction which, in my view, having regard to the constitutional law applicable, replaces the ordinary concept of status quo ante arising in interlocutory injunction cases.
With regard to the issue of the balance of convenience, I am satisfied that where an injunction is sought to protect a constitutional right that the only matter which could properly be capable of being weighed in a balance against the granting of such protection would be another competing constitutional right.
I am quite satisfied that in the instant case where the right sought to be protected is that of a life, there can be no question of a possible or putative right which might exist in European law as a corollary to a right to travel so as to avail of services, counterbalancing as a matter of convenience the necessity for an interlocutory injunction.
One further submission remains to be considered. On behalf of the defendants it was submitted as a final alternative that if all the other contentions made on their behalf were to fail that this Court was obliged by the terms of Article 177 of the Treaty to refer to the European Court of Justice for preliminary determination the question as to whether the granting of an interlocutory injunction was possible or appropriate according to European law. This submission was almost entirely based on the decisions of the House of Lords in Factortame Ltd v Secretary of State for Transport [1989] 2 All ER 692.
In that case what was being sought pending the determination by the European Court of Justice of certain questions of community law rights pursuant to Article 177, was an injunction restraining the implementation of an Act of the United Kingdom parliament.
Having regard to the supremacy of parliament in the constitutional law of the United Kingdom, such a relief was absolutely prohibited by national law.
The question, therefore, which was by the decision of the House of Lords referred under Article 177, was as to whether such an interim or interlocutory injunction was either obligatory or permissible under European Community law and if it were permissible only, by what standards the discretion as to whether to grant or refuse it should be exercised.
No such question arises in our national law where an injunction such as is here sought is not only consistent with but is in full accord with our constitutional law.
It is quite clear that where the courts of a member state decide to refer a question pursuant to Article 177 of the Treaty, for a preliminary ruling by the European Court of Justice, that both the question as to the stage of the action in the member state at which that reference is made and what steps, if any, other than a final determination of the action the courts of the member state may take pending that determination, is peculiarly a matter for the national courts to be considered and decided in accordance with national law.
I would, therefore, allow this appeal, and I would grant to the plaintiff an injunction in terms of the notice of motion of the 25th September 1989. Such injunction should last until the trial and final determination of this action, with liberty to either party to apply to the High Court for a variation of this order in the light of the preliminary ruling by the European Court of Justice, prior to that time, of the questions referred to it by the High Court under Article 177 of the Treaty.
Any application in respect of the enforcement of this injunction would, of course, be made in the High Court.
Walsh J: I fully agree with the judgment which has just been delivered by the Chief Justice and I have little to add to it.
The very wording of the Eighth Amendment of the Constitution forecloses any attempt to argue that life does not exist before birth. The decision of this Court in the action between the present plaintiffs and Open Door Counselling and others has given an interpretation to the Eighth Amendment which is not open to question in any court in this State or in any other State or in any international court. The interpretation of the Constitution of Ireland is within the exclusive competence of the courts of Ireland.
The procedural issue raised in this case is subordinate to the overriding issue in the case which is the issue of life and death. The unquestionable purpose of the eighth Amendment is the preservation of life. The most basic of all human rights is life itself. All procedural questions must be subordinated to the defence of that fundamental right.
In the present case it has been sought to argue that the activities of the defendants in relation to the question of abortion can be distinguished from those of the defendants in the Open Door Counselling case. In the latter case what was involved was described as one to one counselling. The present case involves the same type of assistance being offered in a broadcast manner to all pregnant women whether married or unmarried. This is not a lesser infringement of the Constitution than was impugned in the one to one form of assistance and by its very nature is greater and more indiscriminate.
The defendants and the student body they represent are right to be concerned with the problems which arise from pregnancy among their fellow female students although their booklet is not in any sense strictly confined to those. The defendants are to be commended for their efforts to explain the options which are available and which necessarily involve the preservation of life namely, that the mother should retain her child or put it into fosterage or have the child adopted. As the courts know only too well the last course is one frequently fraught with great emotional distress to the mother of the child and the prospective adopting parents who frequently are themselves childless. It is a drastic step which cannot be recalled but it does ensure the preservation of life. The fourth option put forward by the defendants though admittedly in a non-directive and non-judgemental manner is the option of the death of the unborn life. This is beyond question in open conflict with the Eighth Amendment and no effort has been made to disguise that fact. The intentional destruction of unborn life is not a permissible option. This Court has already held that when a pregnant woman is intent upon the destruction of the life of her unborn child that all of those who assist her or facilitate her in the accomplishment of that intention are acting in violation of the Constitution. The information provided by the defendants in the present case is indisputably the offer of such assistance and facilities. The booklet is notable for the fact that there is a total omission of any reference to the right to life of the unborn child.
When a woman becomes pregnant she acquires rights which cannot be taken from her namely, her right to protect the life of her unborn child and the right to protect her own bodily integrity against any effort to compel her by law or by persuasion to submit herself to an abortion. Such rights also carry obligations the foremost of which is not to endanger, or to submit to, or bring about the destruction of, that unborn life. There is no doubt that particularly in the case of an unmarried pregnant woman intense pressures of a social kind may be brought to bear upon her to submit to an abortion, even from her peers or her parents. There may even be specious arguments of an economic nature ranging from those of the neo-Malthusian type to those which would seek to determine for economic reasons that the population should be structured in a particular way even to the point of deciding that the birth of too many persons of one sex should be prevented. The destruction of life is not an acceptable method of birth control. The qualification of certain pregnancies as being unwanted is likewise a totally unacceptable criterion. The total abandonment of young children or old persons or of those who by reason of infirmity, mental or physical, or those who are unable to look after themselves too often occurs throughout the world. There is clear evidence that they are unwanted by those who abandon them. That would however provide no justification whatever for their elimination. On the economic plane there are, no doubt, some distorted minds which could make a case for the elimination of what they would regard as all useless and unproductive human units. To be unwanted is not justification for the destruction of one s life.
When the present matter came before the High Court it was clear beyond all doubt that the activities complained of were contrary to the Constitution. The decision of the High Court judge to adopt the course which she did namely, to leave the matter undecided was in effect to suspend the provisions of the Eighth Amendment of the Constitution for an indefinite period. It is not open to any judge to do anything which in effect suspends any provisions of the Constitution for any period whatsoever. Article 177 of the Treaty of Rome does not oblige any judge of first instance to refer a case for preliminary opinion to the Court of Justice of the European Communities and any such national judge is quite free to determine any matter of Community law arising in a case without any such reference. Therefore any judge of first instance who decides to refer a case for preliminary opinion must bear in mind that such power does not give a completely free and untrammelled power in respect of all other issues in the case. The power of a judge of first instance to make such a reference for a preliminary opinion has been upheld in this Court in its decision in the Campus Oil (No 1) case and such power, per se, is protected against interference. The exercise of this power to refer does not by its nature affect the parties concerned in the sense that it does not determine any of the issues in the case. But neither does it permit the judge concerned to avoid deciding issues in a case which must be decided and the failure to decide which may be the subject of an appeal procedure or review procedure in a higher national court. The stage at which the High Court judge decided to refer the question in the present case was during the application for an interlocutory order. The Campus Oil (No 1) case was not an interlocutory matter. If the learned trial judge had decided to treat the hearing of the interlocutory application as the hearing of the action similar issues would arise and similar consideration would apply as are applicable in the present case. So far as the interlocutory application is concerned the failure to grant it amounted to a withdrawal, for a period at least, of the protection of unborn lives in being from the effects of the activities of the defendants. Apart from the question of the maintenance of the juridical status quo, already referred to by the Chief Justice, this in truth was in fact a failure to maintain the status quo of those unborn lives namely, their continued existence. The destruction of any such life could never be remedied. By its nature the case could not give rise to any question of the balance of convenience being tilted against the unborn lives. It is the undoubted duty of this Court to ensure that the protection guaranteed by the Eighth Amendment is not put in abeyance. It is a matter to be worked out between the High Court judge and the Court of Justice of the European Communities to decide what, if any, steps should be taken on foot of the decision to refer, but it does not appear to me to preclude the consideration of the matter in the terms of the reference which may be of assistance in the final determination of this case.
It has been sought to be argued in the present case that the effect of the amendment of Article 29 of the Constitution, which was necessary to permit our adhesion to the treaties of the European Communities, is to qualify all rights including fundamental rights guaranteed by the Constitution. The Eighth Amendment of the Constitution is subsequent in time, by several years, to the amendment of Article 29. That fact may give rise to the consideration of the question of whether or not the Eighth Amendment itself qualifies the amendment to Article 29. Be that as it may, any answer to the reference received from the European Court of Justice will have to be considered in the light of our own constitutional provisions. In the last analysis only this Court can decide finally what are the effects of the interaction of the Eighth Amendment of the Constitution and the Third Amendment of the Constitution.
What has been sought by the High Court in the present case is an opinion on the question of the right to receive information on certain services which are available in other member States of the European Community although available under differing conditions. The availability of abortion is subject to differing regulations and restrictions. The fact that abortion is virtually available on demand in some of the member states can scarcely be regarded as a criterion. Although the provision of abortions within the law in particular member states provides profit for those engaged in it that could scarcely qualify it to be described as a service of economic significance of a type which must be available in all the members states of the Communities especially when it is manifestly contrary not only to the public morality of the member state in question and to the ordre public but also destructive of the most fundamental of all human rights namely, the right to life itself. The fact that particular activities even grossly immoral ones, may be permitted to a greater or lesser extent in some member states does not mean that they are considered to be within the objectives of the treaties of the European Communities, particularly the Treaty of Rome, which is the treaty of the European Economic Community. A fortiori it cannot be one of the objectives of the European Communities that a member state should be obliged to permit activities which are clearly designed to set at nought the constitutional guarantees for the protection within the State of a fundamental human right.
It appears to me that the High Court judge in the present case made a fundamental error in her initial premise by assuming that there was a right vested in a pregnant woman to receive in this State information calculated to assist her in the accomplishment of her intent to terminate, either within or without this State, the protected unborn life. Such a right does not exist.
In my opinion the interlocutory injunction sought by the plaintiffs must be granted.
Griffin J: I concur with the judgment of the Chief Justice.
Hederman J: I agree with the judgments of Finlay CJ and Walsh J.
McCarthy J: The status of the appellants to maintain proceedings to call the judicial power in aid of the guarantee contained in Article 40.3.3 of the Constitution has been clearly established in SPUC v Coogan [1989] IR 734.
In AG(SPUC) v Open Door Counselling [1988] IR 593, this Court held that the activities of the defendants in that case constituted a clear breach of the subsection. Those activities included, admittedly in a one to one situation, giving information as to the names, addresses and telephone numbers of abortion clinics in England. The defendants here do not deny that they are giving similar information to the public but claim that it is not assisting in the same manner as in the Open Door Counselling case. I am bound by the decision of this Court in the latter case; I cannot identify any real difference between the conduct of the defendants here and that of Open Door Counselling save that these defendants are more flamboyant in the manner of giving the information. It follows, there being a continuing breach of the constitutional guarantee and a status to sue in the plaintiffs that the courts must enforce the guarantee and must do so forthwith.
In the High Court, as here, the defendants submitted that there was a question of European Community law to be resolved and this required a reference under Article 177 of the Treaty of Rome. The question was whether or not Article 59 of the Treaty is to be interpreted as meaning that a member state may forbid the giving of information within its territory about the provision of a service in another member state where the provision of that service is illegal in the first but lawful in the second member state (affidavit of Ivana Bacik).
Assuming that the students union guide books, insofar as they deal with abortion, are confined to providing information about the availability of the service of abortion in Great Britain and related information, the respondents contend that they have such a right under community law and under Article 10 of the European Convention for the Protection of Human Rights and Fundamental Freedoms.
Article 40.3.3 is self executing. In the order made in the Open Door Counselling case this Court declared that the activities of the defendants, their servants or agents, in assisting pregnant women within the jurisdiction to travel abroad to obtain abortions by referral to a clinic, by the making of their travel arrangements or by informing them of the identity and location of and method of communication with a specified clinic or clinics (emphasis added) are unlawful having regard to the provision of Article 40.3.3 of the Constitution. The sole authority for the construction of the Constitution lies in the Irish courts, the final authority being this Court. Article 29.4.3 may exclude from constitutional invalidation some provision of the Treaty of Rome the enforcement of which is necessitated by the obligations of membership of the European Communities; it may be that in enacting the Eighth Amendment to the Constitution as explained by this court in the Open Door Counselling case, the People of Ireland did so in breach of the Treaty to which Ireland had acceded in 1973. In the course of argument, counsel for the respondents submitted that the wording of the Eighth Amendment itself recognised that there could, in certain circumstances, be a lawful abortion in this State. The constitutional guarantee by the State is in its laws to respect and, as far as practicable, by its laws to defend and vindicate the right to life of the unborn. No relevant law has been enacted by the Oireachtas since the Eighth Amendment came into force, the direct criminal law ban on abortion still deriving from the Offences against the Person Act 1861. As was pointed out by the Chief Justice in the Open Door Counselling case:
If the Oireachtas enacts legislation to defend and vindicate the constitutionally guaranteed right it may well do so in wider terms than are necessary for the resolution of any individual case (at 26).
It is unfortunate that the Oireachtas has not enacted any legislation at all in respect of this constitutionally guaranteed right.
In the High Court Carroll J, requiring as she said the view of the Court of Justice as to the validity of the defendants argument, in referring the matter under Article 177 made no other order, even an order of adjournment of the motion for the interlocutory injunction. In the course of argument, counsel for SPUC was invited to make a submission on whether or not it was suggested that the learned High Court judge was avoiding the issue. He declined to do so stating he did not wish to personalize the matter. Whatever the intent in making the reference, the clear effect was to postpone the issue – the real issue as to whether or not the constitutional guarantee would be immediately enforced. It is common case that the reference would, in effect, postpone the determination of the interlocutory motion for at least 18 months. Such a result, in my view, is a breach of the constitutional guarantee and a refusal of the duty of the courts to enforce that guarantee.
The fact that Carroll J made no order of adjournment is, in my view, of no importance. The effect of the order of the High Court was to deny the undoubted right to have the guarantee enforced. No argument was advanced calling in aid the constitutional guarantee of freedom of expression or its effect, if any, on that contained in Article 40.3.3 .
In the light of the availability of such information from a variety of sources such as imported magazines etc, I am far from satisfied that the granting of an injunction to restrain these defendants from publishing the material impugned will save the life of a single unborn child, but I am more than satisfied that if the courts fail to enforce, and enforce forthwith, that guarantee as construed in the Open Door Counselling case, then the rule of law will be set at naught.
I would allow this appeal.
Moylist Construction v Doheny, Deloitte & Touche, Ulster Bank and O’Carroll
[2010] IEHC 162
Judgment of Miss Justice Laffoy delivered on the 21st day of April, 2010.
The background
1. The fourth defendant in these proceedings is the owner of a development site comprising eighteen holiday homes known as The Greens at Ballybunion, County Kerry, to which I will refer as “the development”. The development is registered on Folio 3855F of the Register of Freeholders County Kerry. The fourth defendant has been registered as owner on the Folio since 29th November, 2006.
2. By a mortgage dated 21st June, 2006 made between the fourth defendant of the one part and the third defendant of the other part (the mortgage), which was an “all sums” mortgage, the fourth defendant charged the lands registered on Folio 3855F in favour of the third defendant. The charge was registered as a charge for present and future advances repayable with interest as a burden on Folio 3855F on 27th February, 2008 and the third defendant was registered as owner of the charge. While there was no express power to appoint a receiver in the mortgage, the statutory power under s. 19 of the Conveyancing Act 1881 applied and by virtue of clause 8 was exercisable at any time after demand. It was provided in clause 11 that any receiver appointed might enter and manage the development and provide services and carry out repairs and suchlike. It was provided in clause 12 that any receiver appointed should be deemed to be the agent of the fourth defendant and the fourth defendant should be solely responsible for the receiver’s acts or defaults and for his remuneration.
3. After the mortgage was created, by a building agreement dated 31st July, 2006 (the building agreement), which was in the standard form published by R.I.A.I., the plaintiff contracted to execute and complete the works involved in the construction of the eighteen holiday homes with associated site development and ancillary works (the Works) on the development at a contract price of €2.672m. The provisions of the building agreement which were adverted to at the hearing and their effect were the following:
(a) Clause 2 defined the scope of the contract and the plaintiff’s obligation to carry out and complete the Works.
(b) Clause 28, in conjunction with the Appendix, provided that possession of the development would be given to the plaintiff on 1st August, 2006 and that the plaintiff would thereupon begin the Works and regularly proceed with and complete same on or before 28th August, 2007, subject nevertheless to provisions for extension of time contained in the building agreement.
(c) Clause 30 dealt with delay and extension of time. It provided that, if the Works were delayed by reason of certain factors listed in Clause 30, the Architect (identified in the Articles of Agreement) should make a fair and reasonable extension of time for completion of the Works. The factors listed ranged from force majeure and strike to any act or default of the fourth defendant causing delay in the progress of the works.
(d) Clauses 33 and 34 provided for determination of the building agreement by the fourth defendant and the plaintiff respectively. The plaintiff’s position is that neither party has invoked his or its termination provision. However, counsel for the plaintiff has placed emphasis on the provisions of Clause 34, namely,:
(i) on paragraph (a) of Clause 34 which provided:
“If the [fourth defendant] does not pay the [plaintiff] within the period for honouring certificates … the [plaintiff] after five working days notice to the [fourth defendant] may suspend the Works for a period of ten working days and upon the expiry of this period unless payment shall have been made in the meantime may determine his own employment under this Contract as from the date of such expiry. When work is suspended under this provision the time for completion shall be extended by two working days for each working day of each suspension.”
(ii) on the proviso to paragraph (b) of Clause 34, which is in the following terms:
“Provided that in addition to all other remedies the [plaintiff] upon the said determination may take possession of and shall have a lien upon all unfixed materials and goods intended for the Works which may have become the property of the [fourth defendant] under [the building agreement] until payment of all money due to the [plaintiff] from the [fourth defendant].”
While, in accordance with paragraph (b) of Clause 34 that lien would arise, inter alia, where a receiver is appointed over the assets of the fourth defendant, and that situation has arisen here, the lien only relates to “unfixed materials and goods”, not to the structures and apparatus which have been affixed to the site of the development.
(e) Clause 35(a)(i) provided for the setting up of a “Guaranty Account” in a bank to be named in the Appendix to the building agreement for the protection of the plaintiff. However, the Appendix makes it clear that this provision was not applicable.
4. The third defendant demanded repayment of the monies secured by the mortgage, which aggregated €3.637m at the time, by letter dated 14th October, 2009. On 15th October, 2009 the fourth defendant appointed the first defendant to be receiver and manager of all the undertaking, property and assets whatsoever and wheresoever charged by the mortgage, so that he would have the powers conferred on a receiver and manager by the mortgage and by law. It was expressly provided that the first defendant, in accordance with the terms of the mortgage, would be the agent of the fourth defendant and that the fourth defendant should be responsible for his remuneration. By a separate deed, the third defendant appointed the first defendant as its agent of all the undertaking, property and assets whatsoever and wheresoever charged by the mortgage, so that he should have the powers conferred on the bank as mortgagee under the mortgage and at law including power to enter and take possession of the property the subject of the mortgage.
5. On the evening of his appointment, the first defendant took possession of, and effectively secured, the development. That move, and, indeed, the appointment of the first defendant as receiver, was instigated by information given by the plaintiff to the agents of the third defendant that it was the intention of sub-contractors to enter on the development to re-possess items which had been supplied by them, apparently, under retention of title clauses. In these proceedings, in an affidavit sworn on 11th December, 2009, the plaintiff has acknowledged that he “misrepresented” the position that his sub-contractors were threatening to remove materials from the development.
6. By the time the first defendant was appointed as receiver, the position on the ground, according to the first and third defendants, was that the eighteen holiday homes were to all intents and purposes completed, although the plaintiff’s position is that the Works had not been completed under the building agreement. The plaintiff had suspended work on the development as of 21st December, 2007 until outstanding payments due to it had been made. On 14th April, 2008 the plaintiff issued a summary summons in this Court (Record No. 2008/845S) against the fourth defendant claiming payment of €328,297.88, being the balance of monies due and owing by the fourth defendant to the plaintiff in respect of works done and services rendered. Around the beginning of November 2009 the plaintiff brought a motion in the summary proceedings seeking liberty to enter final judgment against the fourth defendant. It appears from an affidavit sworn on 2nd November, 2009 by Michael Mulvihill, the Managing Director of the plaintiff, to ground the motion for judgment, that the plaintiff invoked Clause 34(a) in suspending the work. On the motion the plaintiff claims the higher sum of €332,579.32 which it is claimed is the amount owing by the fourth defendant to the plaintiff.
The proceedings
7. Against that background these proceedings were initiated by a plenary summons which issued on 9th November, 2009. The statement of claim was delivered on 3rd December, 2009. The case pleaded by the plaintiff against the defendants is as follows:
(a) that the first and second defendants have been appointed “as the Receiver” on foot of the mortgage and have unlawfully entered the development as trespassers and secured the same, thereby expelling the plaintiff, by reason of trespass and of waste the plaintiff has suffered loss and damage;
(b) that the trespass was “instructed by” or “colluded in” by the third defendant and the fourth defendant as a result of which the third defendant and the fourth defendant “are also guilty of trespass and waste” and conspiracy to commit trespass and waste, by reason of which the plaintiff has suffered loss and damage;
(c) that the first, second and third defendants induced the fourth defendant to commit a breach of contract, namely, the unlawful taking back of the development and the breach of the plaintiff’s contractual licence to remain on the development until the completion of the Works and/or any lawful termination of the building agreement, it being pleaded that -;
(i) the Works have not been completed, and
(ii) the building agreement has not been terminated and the plaintiff has not operated Clause 34(b),
so that the building agreement still subsists and the plaintiff is entitled to continue to possess the development until completion of the Works.
(d) that there is €328,297.88 due and owing to the plaintiff by the fourth defendant pursuant to architect’s/surveyor’s Recommendations;
(e) that the fourth defendant, in breach of Clause 35(a)(i) failed to comply with the provisions in relation to the guarantee account; and
(f) that “as the funder” of the building agreement, which characterisation, apparently, is based on Clause 35 of the building agreement, the third defendant owed a duty of care to the plaintiff to ensure that the fourth defendant complied with the terms and conditions of the building agreement, but, in breach of that duty of care, failed to ensure that the fourth defendant established the guarantee account and further the third defendant was in breach of its duty of care by failing to ensure that the plaintiff continued in possession of the development until the completion of the works, which the plaintiff alleges have not been completed.
Arising out of the foregoing pleas, the plaintiff claims the following relief in the statement of claim:
(I) an order that the defendants forthwith relinquish possession of the development to the plaintiff;
(II) an order restraining the defendants from removing, selling or in any other manner interfering with all goods, materials and equipment situated on the development whether attached to the same or otherwise;
(III) an order restraining the defendants from in any way restricting or interfering with the plaintiff’s access to the development, its contractual licence to exclusive possession thereof or any other rights under the building agreement in respect of the construction of the works;
(IV) as against the first and second defendants, an order for payment of the sum of €328,297.88 and interest forthwith;
(V) a declaration that the sums owed to the plaintiff by the defendants rank in advance in equity of any mortgage proved by the defendants to exist;
(VI) damages;
(VII) judgment in the sum of €328,297.88 against all four defendants; and
(VIII) interest
8. The second defendant is the accountancy firm by which the first defendant is employed and of which the first defendant is a director, but not a partner. It is unquestionably the case that the first defendant was appointed as sole receiver of the property the subject of the mortgage by the third defendant and as sole agent for the third defendant, although he was identified in both deeds of appointment by reference to the second defendant’s firm. The joinder of the firm as a defendant is these proceedings, in my view, is totally misconceived.
The applications
9. There are three applications before the Court.
10. Chronologically, the first is the plaintiff’s application for interlocutory relief on foot of a notice of motion filed on 12th November, 2009. The interlocutory relief sought by the plaintiff against the defendants is interlocutory relief in the terms of the injunctive relief set out in the prayer in the statement of claim. The plaintiff also seeks an order against the first and second defendants for the payment of the sum of €328,297.088. That order would not be an appropriate order to make on an interlocutory application. Similarly, the declaration sought by the plaintiff that the sums owed to the plaintiff rank in advance in equity of any mortgage proved by the defendants to exist, is not an appropriate relief to seek on an interlocutory application. Therefore, consideration of the interlocutory application will be confined to consideration of the injunctive relief claimed by the plaintiff.
11. The Court was informed that the plaintiff’s motion has not been served on the fourth defendant. Accordingly, the plaintiff’s application falls to be considered as against the first, second and third defendants only.
12. The second application is the application of the first and second defendants for the following orders:
(a) pursuant to Order 19, rule 28 of the Rules of the Superior Courts striking out the statement of claim insofar as it relates to these defendants on the ground that it discloses no reasonable cause of action and/or staying or dismissing the proceedings against these defendants on the basis that the same were frivolous and vexatious;
(b) an order pursuant to the inherent jurisdiction of the Court striking out the proceedings as against these defendants on the basis that they are unsustainable and bound to fail and/or are frivolous and vexatious.
The application of the first and second defendants was brought on foot of a notice of motion dated 8th December, 2009.
13. As I have already indicated, I consider the joinder of the second defendant in these proceedings to be totally misconceived. As early as 20th November, 2009, the solicitors for the first and second defendants, Arthur Cox, wrote to the plaintiff’s solicitors advising them that it was the first defendant who was appointed as receiver and agent by the third defendant and enclosing copies of the relevant deeds. In the same letter the plaintiff was informed that the first defendant is not a partner of the second defendant. The continuance of the proceedings against the second defendant, in my view, was an abuse of process from that point on. I consider that the plaintiff’s claims against the second defendant must be struck out under the Court’s inherent jurisdiction.
14. The third application is the application of the third defendant, on foot of a notice of motion of 30th November, 2009, seeking to strike out the claims against the third defendant either under Order 19, rule 28 or the Court’s inherent jurisdiction.
15. I propose to consider the applications in the following order: the plaintiff’s application first; then the application of the first and second defendants; and finally the application of the third defendant. That seems to me to be the logical order in which to consider the applications. However, I propose first analysing the plaintiff’s case as to its current status under the building agreement and vis-à-vis the first and third defendants.
Analysis of the plaintiff’s case
16. As I understand the plaintiff’s case against the first defendant, the receiver, and the third defendant, the mortgagee which appointed the first defendant as receiver, it is based on two propositions. The first is that under the building agreement the plaintiff has a contractual licence to remain in possession of the development until it comes to an end when the Works are completed. The Works have not been completed and, accordingly, vis-à-vis the fourth defendant, the plaintiff is entitled to remain in possession until it is paid the balance of the monies due to it by the fourth defendant. It is not clear that the plaintiff was at any stage, or is, committed to completing the Works it contends remain unfinished, if the balance of the monies alleged to be owing by the fourth defendant are paid. The second proposition is that neither the first defendant, as receiver, nor the third defendant, as mortgagee, can be in any better position than the fourth defendant.
17. In support of the first proposition, counsel for the plaintiff relied entirely on the decision of the High Court of England and Wales in Hounslow L.B.C. v. Twickenham G. D. Ltd. [1971] 1 Ch. 233, which it is necessary to consider in detail. In that case, the plaintiff council, which had entered into a building contract with the defendant contractors, was relying on a clause in the building contract which provided that, if the contractors made default by failing to proceed regularly and diligently with the works, the architects could give notice specifying the default and, if the contractors continued such default for fourteen days thereafter, could give notice to determine their employment, but such notice was not to be given unreasonably or vexatiously. The works were beset by industrial relations problems which gave rise to delays. After the works had resumed the condition in the contract was invoked by the council. At the end of the fourteen day notice period, the council, on the basis that the contractors had failed to proceed with the works regularly and diligently purported to determine the contractors’ employment. The contractors refused to accept what they called “repudiation” of the contract and elected to proceed with the work on the site. The council issued a writ claiming against the contractors damages for trespass in failing to vacate the site and an injunction to restrain trespass. They also sought an interlocutory injunction restraining the contractors from entering on the site pending judgment. A number of issues were raised by the contractors in that case which do not arise on the plaintiff’s argument here, for example, a challenge to the validity of the architect’s notice and an argument that the contractors had a licence coupled with an interest. The plaintiff’s argument as I understand it is based on the consideration by Megarry J. of the effect of a contractual licence created in a building agreement.
18. On that point, counsel for the plaintiff relied on the following passage from the judgment of Megarry J. (at p. 247):
“Quite apart, then, from the question whether the contractor has a licence coupled with an interest, there is the question whether the contractor has a contractual licence which either expressly or by implication is subject to a negative obligation by the borough not to revoke it. If this is so, then, on the law laid down by the Court of Appeal, equity would interfere to prevent the borough from revoking the licence or if it had been revoked, from acting on the revocation. A fortiori, equity would refuse to grant the borough an injunction to enforce the revocation.
Now in this case the contract is one for the execution of specified works on the site during a specified period which is still running. The contract confers on each party specified rights on specified events to determine the employment of the contractor under the contract. In those circumstances, I think there must be at least an implied negative obligation of the borough not to revoke any licence (otherwise than in accordance with the contract) while the period is still running, …. “
19. Later, Megarry J. (at p. 248) emphasised the fact that the plaintiff council was seeking equitable relief, namely, an injunction to expel what on one view might be a trespasser and another view might be someone with a contractual right to remain, and on the latter view the council was asking the Court to assist it in breaking its contract. Megarry J. stated the general principle that equity will not assist a man to break a contract. Accordingly, he concluded that, if the council had not validly determined the employment of the contractors under the condition in issue, one of the grounds on which the contractors could resist an injunction to leave the site was that the council was seeking to evict in breach of contract.
20. There was another ground on which it was sought to resist the injunction: that the contractors had a licence coupled with an interest. In the consideration of that ground, Megarry J. “broadly” summarised the position in relation to contractual licences as follows (at p. 254):
“(1) A licence to enter land is a contractual licence if it is conferred by a contract; it is immaterial whether the right to enter the land is for the primary purpose of the contract or is merely secondary. (2) A contractual licence is not an entity distinct from the contract which brings it into being, but merely one of the provisions of that contract. (3) The willingness of the court to grant equitable remedies in order to enforce or support a contractual licence depends on whether or not the licence is specifically enforceable. (4) But even if a contractual licence is not specifically enforceable, the court will not grant equitable remedies in order to procure or aid a breach of licence.”
Megarry J. made further observations elaborating on that summary. Of significance for present purposes is that later (at p. 254) he stated:
“… I find it difficult to see how a contractual licensee can be treated as a trespasser so long as his contract entitles him to be on the land; and this is so whether or not his contact is specifically enforceable. I do not think that the licence can be detached from the contract, as it were, and separately revoked; the licensee is on the land by contractual right, and not as a trespasser. I may add that I say nothing about the rights of licensees against third parties.”
21. The outcome of the Hounslow case, that the council was refused the interlocutory injunction, occurred because Megarry J. considered that, although the council had established some sort of a case for having validly determined the contract, that case fell “considerably short of any standard upon which … it would be safe to grant this injunction on motion”. The case pre-dated the decision in the House of Lords in American Cyanamid v. Ethicon Ltd. [1975] AC 396. The principles and standard applied by Megarry J. in determining whether an interlocutory injunction should be granted are at variance with the principles and standard laid down by the House of Lords and adopted in this jurisdiction by the Supreme Court in Campus Oil Ltd. v. Minister for Industry and Energy (No. 2) [1983] I.R. 88. Therefore, the outcome of the Hounslow case is of no assistance in determining the issues on the plaintiff’s application.
22. Insofar as it is of precedential value on the broader issue of the status of the contractual licence which arose under the building agreement, as I will demonstrate later, there is an inherent unreality in attempting to apply the ratio of the aspect of the Hounslow decision relied on by the plaintiff. If it were to be applied, the questions which would arise are whether, in relation to the current contractual position of the plaintiff and the fourth defendant under the building agreement, the plaintiff’s contractual licence still subsists and is subject to a negative obligation (implied, given that there is no express provision in the building agreement) that the fourth defendant will not revoke the licence except in accordance with the building agreement and whether the fourth defendant is in breach of that obligation. In addressing the first question, the Court is being invited to assume that the following propositions advanced on behalf of the plaintiff are correct at this interlocutory stage in the proceedings:
(a) that the expiration of the period for completion stipulated in the building agreement on 28th August, 2007 is immaterial;
(b) that the Works have not been completed;
(c) that the fourth defendant has not yet determined the building agreement in accordance with its terms;
(d) that in December 2007 the plaintiff validly suspended the Works in accordance with Clause 34(a) and that the fourth defendant did not make payment as required under that clause; and
(e) that the plaintiff has not determined the building agreement either under Clause 34(a) or Clause 34(b).
23. The essence of the plaintiff’s case is that, having invoked Clause 34(a) and not having received payment from the fourth defendant, the plaintiff can continue the suspension of the Works and remain on the development in accordance with its contractual licence indefinitely, if it is not paid the sums due to it. As counsel for the plaintiff put it, time has been put at large by the suspension. The plaintiff’s case is that while the suspension continues, the licence subsists and cannot be determined in accordance with the building agreement by the fourth defendant, who, in any event, is not before the Court on these applications.
24. The unreality inherent in attempting to apply the decision in the Hounslow case in the manner suggested by counsel for the plaintiff is that, in a situation analogous to the situation which arose in the Hounslow case, the fourth defendant would be seeking an injunction against the plaintiff on the basis that determination of the contractual licence had occurred. In that hypothetical situation, it defies reason and common sense to assume that the fourth defendant would sit back and regard the plaintiff’s licence as continuing indefinitely. It is reasonable to assume that there would be a dispute between the plaintiff and the fourth defendant as to whether there had been a valid determination of the licence in accordance with the terms of the building agreement and that the fourth defendant would be seeking to have the dispute determined either in the proceedings in which he was seeking an interlocutory injunction or on arbitration. All of that is hypothetical. However, if it were to happen, the likelihood is that, in accordance with the principles laid down in the American Cyanamid case the Court would grant the injunction to the fourth defendant on the basis that the balance of convenience favoured that course.
25. That is what happened in Tara Civil Engineering Ltd. v. Moorfield Developments Ltd. (1989) 46 BLR 72, a decision of the Queen’s Bench Division of the English High Court, which counsel for the plaintiff brought to the Court’s attention. In that case, the employer served a notice on the contractor condemning certain works and notified the contractor that it intended to expel it from the site. The contractor obtained an ex parte injunction restraining the employer from removing it from the site pending the determination by arbitration as to whether the termination of the contract was effective. The interim order was discharged on the application of the employer. Referring to a submission based on the decision of Megarry J. in the Hounslow case, Judge Bowsher Q.C. stated:
“As I understand the submission [of counsel for the plaintiff], it is said that until the arbitrator has determined the disputed facts it is to be assumed that Tara Civil Engineering Limited is not in breach of contract and that it would be wrong for the court to assist Moorfield Developments Limited to break the contract by putting Tara Civil Engineering Limited off the site and preventing them from performing the contract. I am not at all sure that that is what Megarry J. decided, but if that was his decision, it seems to me to disregard the agreement of the parties as to what should be done between a dispute arising and the determination of that dispute by an arbitrator. At this stage there is no intention by the court to take sides in the determination of the ultimate disputes between the parties. The concern of the court is far from seeking to assist either party to break the contract. It is impossible to decide at this stage what is the conduct which would be in breach of the substantive terms of the contract. The court’s present concern is to enforce the terms of the contract with regard only to the matters presently under consideration, namely, the regulation of the conduct of the parties pending the resolution of the substantive dispute by arbitration.”
26. As I have said, in my view, there is an unreality in attempting to apply the ratio of the aspect of the Hounslow case relied on by the plaintiff to the situation which prevails here. What might happen if the fourth defendant took an active position in relation to the status of the contractual licence is wholly hypothetical. The most important factor, of course, is that, as the fourth defendant is not before the Court, it would be inappropriate to reach any conclusion as to the current status of the contractual licence as between the plaintiff and the fourth defendant. Therefore, it seems to me that, when one proceeds to the second proposition advanced on behalf of the plaintiff, it must be approached in the abstract, in the sense of not having reached any conclusion in relation to the contractual position of the plaintiff vis-à-vis the fourth defendant.
27. The essence of the second proposition is that, if the contractual licence of the plaintiff is ongoing and the fourth defendant could not oust it from the development, the first defendant, as receiver, can have no better rights against the plaintiff whether he is acting as agent for the third defendant or as agent for the fourth defendant. Counsel for the plaintiff asserted that the rights of the third defendant under the mortgage do not have priority over the rights of the plaintiff under the building agreement, even though the mortgage was first in time, because the mortgage was not registered on the folio until after the building agreement came into existence. Apart from that, it was submitted that the third defendant knew that the fourth defendant was entering into a standard form building agreement when it advanced money to the fourth defendant and took the mortgage. Therefore, in equity, the third defendant’s rights under the mortgage and the first defendant’s right to possession are in suspension until the building agreement properly comes to an end either by completion or proper determination. It was also submitted that, even if the mortgage is regarded as the first in time, that is not sufficient to entitle the first defendant, as receiver, to possession because the lands changed in character after the creation of the mortgage by reason of the construction of the holiday homes.
28. Those submissions were made against the backdrop of the stated position of the plaintiff being that it has no objection to the appointment of the first defendant as receiver and is not seeking the termination of the appointment of the first defendant as receiver. The plaintiff’s complaint is as to the manner in which the receiver has acted in taking possession of the development.
29. The proposition that the first defendant, as receiver, appointed under the mortgage, is in no better position in relation to the implementation of the building agreement than the fourth defendant, is based on the premise that the first defendant, in that capacity, is bound by the building agreement. That premise, in my view, is incorrect.
30. Most of the authorities dealing with the liability of a receiver relate to situations in which the receiver was appointed by a company, rather than by a natural person. However, I am satisfied that the position of the first defendant, as a receiver appointed on foot of the mortgage, which was given to the third defendant by the fourth defendant, a natural person, rather than by a company, is no different than if the mortgagor in the mortgage had been a company. In Courtney on the Law of Private Companies (2nd Ed., Tottel Publishing, 2000) the position of a receiver is outlined as follows (at para. 22.063):
“A receiver will not as a general rule, in the absence of bad faith, while acting within his authority be liable for a breach of contract by the company, nor be guilty of inducing a breach of contract.”
In support of that proposition, Courtney cites a decision of the Queen’s Bench Division of the High Court of England and Wales in Lathia v. Dronsfield Bros. Ltd. [1987] BCLC 321. There, the first defendant company had contracted to supply the plaintiff with equipment. On the failure of the first defendant to deliver the equipment, the plaintiff commenced an action for breach of contract and joined the second and third defendants, who had been appointed receivers and managers of the first defendant, claiming damages from them for inducing a breach of the contract to supply. An application by the second and third defendants to strike out the action against them on the ground that the statement of claim showed no reasonable cause of action was successful. Delivering judgment, Sir Neil Lawson stated as follows (at p. 324):
“The receivers can adopt or decline to adopt a contract which the company has entered into and which is unexecuted. It follows from this, and the agency clause, that the agent is personally immune from claims for damages for breach of contract or procurement of breach of contract. The agent has an immunity from a claim for inducing breach of contract unless he has not acted bona fide or acted outside of the scope of his authority, i.e. he has not acted as agent.
… So far as the authority is concerned, the authority of the receivers is to be found under cl 8 of the debenture. Furthermore their authority resides on a general obligation to act so as to effect the best realisation of the company’s assets for the debenture holders.
On authority, one must look at the context to determine to whom the duties are owed. Primarily, they owe a duty to the debenture holders, and also as agents of the company. In my judgment, they do not owe a duty to the general creditors, to contributors, to officers of the company and members.”
31. A similar view was adopted in this jurisdiction in Ardmore Studios (Ireland) Ltd. v. Lynch [1965] I.R. 1. The decision of the High Court (McLoughlin J.) in that case arose in the context of an industrial relations dispute, where the receiver and manager of the plaintiff company had refused to recruit electricians from a seniority list in accordance with an alleged agreement between the company and a trade union, which pre-dated the appointment of the receiver. The Court held that, even if the alleged agreement between the company and the union was in existence at the date of the appointment of the receiver, it was not binding upon him. McLoughlin J. stated (at p. 40) as follows:
“The defendants’ arguments put most reliance on the clause in the debenture deed that the receiver is made the agent of the Company, but it should be pointed out that this does not make him the servant of the Company … As agent for the company, the company is made fully responsible for his acts but it is not a corollary to this that he is bound by all Company contracts and agreements entered into by the Company before the date of his appointment.
The mortgaged property of which the receiver entered into possession as defined by the deed includes also the property charged and assigned, i.e., all the undertaking and assets, machinery, book debts and goodwill; the argument of the defendants amounts to this: that he also took over, by operation of law, the obligations of the Company under the alleged agreement …
I have no hesitation in holding that there is no legal basis for their contention that the agreement as to the seniority list, even if it existed as an agreement on the date of the appointment of the receiver, became binding on him.”
32. The position of receiver was also considered by the Chancery Division of the High Court of England and Wales in Astor Chemicals v. Synthetic Technology [1990] B.C.L.C. 1. Having quoted from Buckley on the Companies Acts (14th Ed., 1981), that a receiver appointed by a debenture holder is not under any personal liability on the company’s contracts current at the date of his appointment, as they are not his contracts and as between himself and the other parties he has an undoubted right to decline to fulfil them, although in so doing may render the company liable in damages for breach, Vinelott J. stated (at p. 9):
“To that extent the receiver is in a better position than the company. Similar statements will be found in other leading textbooks. The principles are most fully stated in a passage in Lightman and Moss in Law of Receivers of Companies (1986) …. It is in these terms (at p. 81):
(1) If a person is granted a charge on property with actual knowledge of a contractual obligation in favour of another person inconsistent either with the grant or enforcement of the charge, the grant or enforcement will constitute a tort and an injunction may be granted to restrain its commission.
(2) In the absence of such knowledge, the chargee (and the receiver as his agent) is free (vis-à-vis the third parties) to cause the company to repudiate or ignore its outstanding contractual obligations to third parties, though this course may give rise to a claim in respect of the loss occasioned by the company if involving an unnecessary and unreasonable exercise of their powers.
(3) The receiver as agent for the company is equally free of liability to third parties for causing the company to breach its contracts with them, for no person can be liable for the tort of interference with contractual relations if he acts as agent for one of the contracting parties. ….
(4) Neither the receiver nor the debenture holder can interfere with existing equitable rights of third parties over property of the company having priority to the charge. A threat of such action may be restrained by injunction …”
The tort referred to in paragraph (1) is obviously inducement of breach of contract.
33. Counsel for the plaintiff stated that the plaintiff is relying on paragraph (1) of the quotation from Lightman and Moss. He submitted that the fourth defendant knew, and the third defendant knew or ought to have known, that the building agreement was about to be entered into with the plaintiff. On the same basis, he submitted that there is no absence of knowledge, so that paragraph (2) has no application. I do not accept those submissions as being correct.
34. First, paragraph (1) applies where the mortgagee has “actual knowledge” of the contractual obligation to the third party. On the facts before the Court, there is no evidence that the third defendant had actual knowledge before the mortgage was created that the fourth defendant would enter into a building agreement with the plaintiff. Neither the loan sanction on foot of which it was created, which was dated 16th September, 2005, nor the charge itself, nor any other evidence adduced establishes, or even gives an impression of, actual knowledge.
35. Secondly, paragraph (1) preserves a contractual obligation which is inconsistent either with “the grant or the enforcement of the charge”. For example, an enforceable contract by the fourth defendant to sell the development to a third party, which pre-dated the charge and of which the third defendant was aware, would be inconsistent with a subsequent attempt by the third defendant to enforce the charge by selling it, say, by auction. In such circumstances, the third defendant would be bound and the third party would be protected both by paragraph (1) and paragraph (4). The building agreement between the fourth defendant and the plaintiff, in my view, could not be said to be inconsistent with either the grant or the enforcement of the charge over the development in favour of the third defendant. Moreover, it did not create any equitable right in favour of the plaintiff.
36. To illustrate the point that the plaintiff’s contractual right under the building agreement is not inconsistent with the enforcement of the mortgage, it is instructive to refer to an authority relied on by counsel for the third defendant in a different context. In dealing with the plea in the statement of claim in relation to Clause 35 of the building agreement, which, as I have stated earlier, did not apply to the contractual relationship of the plaintiff and the fourth defendant, counsel for the third defendant referred the Court to a report of a judgment of the Court of Appeal in England and Wales in MacJordan Construction Ltd. v. Brookmount Erostin Ltd., reported in The Times, 29th October, 1991 (and also reported at [1992] B.C.L.C. 350). In that case, the Court of Appeal held that, where a property developer had failed to set up a retention fund in breach of the terms of a building contract with a builder and became insolvent, the builder’s contractual rights to have the retention fund established could not take precedence over a bank’s charge, even though the bank had express notice of the building contract when its charge was executed. The building contract pre-dated the charge which contained a floating charge. The judgment of the Court of Appeal was delivered by Scott L.J. The report records that he identified the question for determination as “whether the bank was bound in equity to give effect to the builder’s contractual right to have the retention fund appropriated and set aside”. Scott L.J. is reported as having stated that, when the charge was executed, the bank had express notice of the terms of the building contract. He stated that there are circumstances in which notice of contractual rights will be held to bind persons who acquired interests in property affected by those contractual rights, referring to De Mattos v. Gibson (1858) 4 De G & J 276 and the analysis of it contained in the judgement of Browne-Wilkinson J. in Swiss Bank Corporation v. Lloyds Bank [1979] 2 All ER 853. Scott L. J. is also reported as having stated that he was not satisfied that the case before him was covered by the De Mattos proposition, which is reflected in paragraph (1) of the passage from Lightman and Moss, because there were two distinguishing features in the case before him. The first was that in De Mattos the contractual rights in question related to a specific item of property, a ship, whereas the contractual right in the case before him did not relate to any specific assets. The second, which is of no relevance to the facts of this case and which has been the subject of criticism (e.g. in the 3rd Ed. of Lightman and Moss, 2000, at para. 7 – 056), was that the bank’s charge in the case before him was not, when granted, inconsistent at all with the builder’s contractual right, because the terms of the charge did not, until the crystallisation of the floating charge, prevent effect being given to the builder’s contractual right.
37. A contracting party’s obligation in relation to a specific asset, for example, to a third party under a charter party in relation to a ship, is essentially different to the obligation which the plaintiff contends the fourth defendant is under on the facts of this case. The contractual licence in the building agreement exists to enable the plaintiff to fulfil its obligations to the fourth defendant whose obligation, in turn, is to pay the plaintiff for performing its obligations. In reality, the breach of contract for which it is alleged the fourth defendant is liable, is his failure to make payment to the plaintiff. The exercise of its rights under the mortgage by the third defendant, including the taking of possession by the first defendant of the development on foot of the powers in the mortgage, in my view, does not interfere with the performance by the fourth defendant of his contractual obligation which it is alleged has been breached.
38. On the application of paragraph (4) quoted by Vinelott J., counsel for the plaintiff described the reliance by the first defendant and the third defendant on the mortgage being prior in time to the building agreement as semantics. The fact is that the mortgage was prior in time to the building agreement. The fact that it was not registered as a burden on the folio when the building agreement was entered into is immaterial. By analogy to the decision of Costello J. (as he then was) in Gale v. First National Building Society [1985] I.R. 609, when the mortgage was created, and before the third named defendant was in a position to exercise its statutory rights as the registered owner of a charge under the Registration of Title Act 1964, as amended, the third defendant, and a receiver appointed by the third defendant, had a contractual licence to enter, take possession of and manage the development pursuant to the terms of the mortgage.
39. For completeness, I should say that, in my view, none of the conclusions I have reached earlier is affected by the fact that by the second deed of appointment of 15th October, 2009 the third defendant appointed the first defendant as its agent. As is made clear in the deed, the first defendant was to be the agent of the third defendant in the exercise of the powers conferred on the third defendant as mortgagee under the mortgage. Insofar as such powers are exercised by the first defendant he will be acting as agent of his principal, the third defendant.
The application of the plaintiff
40. Adopting the pithy summary of the factors to be considered on an application for an interlocutory injunction, as set out by Geoghegan J. in his judgment in
Ó Murchú t/a Talknology v. Eircell Ltd. (the Supreme Court, 21st February, 2001) [2001] IESC 15 at p. 25, they are:
(a) Is there a serious question to be tried?
(b) Are damages an adequate remedy?
(c) Does the balance of convenience favour the granting rather than refusing an injunction?
41. In his replying submissions, counsel for the plaintiff identified the serious issue which he contended requires to be tried as follows: under the standard R.I.A.I. contract does a receiver in the case of a charge created by a private individual, not a company, appointed as agent of the “funder” and the employer, have a right to terminate the contractual licence of the builder to remain on the site in the absence of an allegation of breach of contract against the builder? I am satisfied, on the authorities referred to earlier, that the position of a receiver is well settled. In this case, the first defendant, as receiver, in exercise of his powers on foot of the mortgage was entitled to enter the development and take possession of it to the exclusion of the plaintiff and notwithstanding whatever rights the plaintiff had against the fourth defendant under the building agreement. As regards the third defendant, I am satisfied that the third defendant is not in possession of the development, but, if it were, its entitlement to take and remain in possession to the exclusion of the plaintiff would be the same as that of the first defendant, as receiver.
42. In the event, I have absolutely no doubt that damages would be an adequate remedy for the plaintiff. The plaintiff’s objective is to be paid the sum of €332,579.32 which he alleges the fourth defendant owes to him and also an unidentified sum in retention money due to him by the fourth defendant on completion of the building agreement. Quite frankly I cannot see how there could be any difficulty in quantifying any additional damages which may be due by the fourth defendant to the plaintiff. I have no doubt that damages will be an adequate remedy for the plaintiff in this case if he is refused an injunction and, indeed, it is quite clear that his objective is to get money and nothing else.
43. On the question of the balance of convenience, one is entitled to ask whether any useful purpose would be served from any perspective if an injunction in the terms sought were granted to the plaintiff. The only reasonable inference which can be drawn from the facts is that the plaintiff has no intention of carrying out any further works on the site because the reality is that he has no prospect of being paid by the fourth defendant for any additional work performed. Therefore, in my view, it is not unreasonable to infer that the objective of the plaintiff in seeking to exclude the receiver from possession of the development is to put pressure on the third defendant to do a deal with it in relation to the monies due by the fourth defendant. On the other hand, if an interlocutory injunction is granted, it will mean that the first defendant, whom the plaintiff accepts has been validly appointed as receiver, will be unable to fulfil his functions as receiver for the benefit of the persons to whom he owes a duty. I have no doubt that the balance of convenience lies in favour of refusing the injunction.
44. As the plaintiff fails to comply with all three factors, its application must be dismissed.
45. Having regard to that conclusion, it is unnecessary to consider the submission advanced on behalf of the third defendant that, because of the misrepresentation made by the plaintiff which led to the appointment of the receiver and his taking of possession of the development, the plaintiff does not come with clean hands and should not be afforded equitable relief.
The application of the first defendant
46. The Court’s jurisdiction to strike out proceedings under Order 19, rule 28 or under its inherent jurisdiction is well settled. The question for consideration here is whether it is clear that the plaintiff’s claims against the first defendant and the third defendant must fail (per Costello J., as he then was, in Barry v. Buckley [1981] I.R. 306, 308). While conscious of the oft repeated caveat that the jurisdiction of the Court should be exercised sparingly, nonetheless, I have come to the conclusion that this is a case in which the jurisdiction may and should be exercised on the application of the first defendant.
47. The wrongs alleged against the first defendant are:
(a) trespass and waste; and
(b) inducement of breach of contract.
It is clear that, as a matter of law, the first defendant, as receiver, lawfully took possession of the development and lawfully remains in possession. It is also clear as a matter of law that, irrespective of the contractual position of the plaintiff vis-à-vis the fourth defendant, the first defendant as receiver cannot be liable in tort for inducement of breach of contract. Further, as a matter of law, the first defendant could not be made liable for any of the reliefs claimed by the plaintiff in the statement of claim.
48. Accordingly, in my view, the plaintiff’s case against the first defendant is bound to fail and will be struck out under the Court’s inherent jurisdiction.
Application of the third defendant
49. The principles set out at 46 above also apply to the application of the third defendant to have the proceedings struck out.
50. The wrongs alleged against the third defendant are:
(a) trespass and waste and conspiracy to commit trespass and waste;
(b) inducement of breach of contract; and
(c) breach of duty of care to the plaintiff to ensure that the fourth defendant complied with Clause 35 of the building agreement and to ensure that the plaintiff was left in possession of the development until the development was completed.
51. It is the first defendant who is in possession of the development. To the extent that the first defendant is in possession as agent of the third defendant, it is clear that, as a matter of law, he is there lawfully and the allegation of trespass and waste against the third defendant must fail as must the allegation of conspiracy to commit trespass and waste.
52. As a matter of law, the third defendant, as mortgagee, and as principal of the first defendant, has no duty at law to ensure that the fourth defendant’s outstanding contractual obligations to the plaintiff are fulfilled. As a matter of law, irrespective of the position as between the plaintiff and the fourth defendant on foot of the building agreement, the third defendant cannot, as a matter of law, be liable for inducement of breach of contract. As I have already stated, it is clear that Clause 35 of the building agreement was intended to have no application to the contractual relationship between the plaintiff and the fourth defendant. The letters “N/A” appear in the appendix opposite “Guaranty Account” 35(a)(i) Bank”. The third defendant is not mentioned at all in the building agreement. For the avoidance of doubt, if the assumption I have made that the third defendant is characterised “as the funder of “ the building agreement on the basis of Clause 35 is incorrect and the plaintiff is contending for a wider duty of care by a lender to a developer owed to third parties contracting with the developer, in my view, as a matter of law, no such duty exists. If it did it would totally stifle lending.
53. I am satisfied that, as a matter of law, the plaintiff is not entitled to any of the reliefs claimed against the third defendant. Accordingly, for the foregoing reasons, the plaintiff’s claim against the third defendant is bound to fail and must be struck out under the Court’s inherent jurisdiction.
Orders
54. The following orders will be made:
(a) an order striking out the plaintiff’s claims against the second defendant for the reasons set out in paragraph 13 above;
(b) an order dismissing the plaintiff’s application for an interlocutory injunction against the first, second and third defendants for the reasons set out at para. 44 above;
(c) an order striking out the plaintiff’s claims against the first defendant for the reasons set out at 48 above; and
(d) an order striking out the plaintiff’s claims against the third defendant for the reasons set out in para 53 above.
Garda Representative Association v Minister for Public Expenditure & Reform
[2014] IEHC 237
Judgment of Mr Justice Michael Peart delivered on the 7th day of May 2014:
1. In these judicial review proceedings, the applicant association has recently been granted leave by this Court to challenge the lawfulness of the Public Service Management (Sick Leave) Regulations, 2014 (S.I. 124 of 2014) which came into operation on the 31st March 2014 on the ground that they are ultra vires the respondent Minister. It is contended that they have been brought into effect in breach of fair procedures and/or the legitimate expectation of the applicant. That leave was granted on foot of an ex parte application brought under the provisions of Order 84 RSC.
2. Before the Court now is an application for an interlocutory injunction, brought on notice to the respondent, whereby the applicant seeks to restrain the respondent Minister from operating the 2014 Regulations in respect of members of An Garda Siochána pending the determination of these proceedings. The applicant does not seek to have the Minister restrained from operating the 2014 Regulations in respect of other public servants to whom they apply.
3. There is no doubt that the 2014 Regulations introduce a sick leave regime for all public servants (excluding a member of the judiciary, a member of the Defence Forces, and a member of staff of the Central Bank of Ireland) which is radically different from those previously operating, and all the more so in respect of An Garda Siochána whose sick leave arrangements were particularly favourable historically.
4. It appears that as far back as May 2012 the Minister announced proposals to reform the sick leave in the public service, including An Garda Siochána, as part of the State’s obligations under the Memorandum of Understanding between the Government and the Troika. According to the affidavit evidence before me the cost of sick leave in the public service in the year 2011 was more than €500,000,000, and the cost of sick leave within An Garda Siochána alone for the year 2012 was €27,000,000. The Minister’s aim was to effect changes to sick leave arrangements by January 2014.
5. The May 2012 proposals were the subject of a consultation process between the GRA and the Minister for Justice and the Minister for Public Expenditure and Reform. That process took place during 2012 and 2013. Part of the process involved a Working Group which presented its recommendations to the respondent Minister in November 2013. An Garda Siochána indicated its view that there should be a derogation for members of An Garda Siochána in any new sick leave regime for public servants. The GRA in its grounding affidavit has stated that it was assured that any changes to pay and conditions for its members would negotiated through the Conciliation and Arbitration Committee. However, no such derogation was provided for by the Oireachtas in the Public Service Management (Recruitment and Appointments) (Amendment) Act, 2013.
6. The applicant says that it was given an assurance by email dated 3rd December 2013 that its members would not be included in the proposed new Regulations in the first instance. However, the respondent says that immediately thereafter he announced that the new Regulations would include An Garda Siochána, but that those new Regulations would be deferred until the end of March 2014. The Minister believes that the GRA and its members were aware of this, and in addition says that he made that position clear in speeches to the Dáil and Seanad on the 12th and 18th December 2013.
7. The Minister considers that sufficient time and opportunity for consultation and discussion was provided to the applicant and its members. He says also that their views were considered, but that the case for a derogation for An Garda Siochána under the Act and the Regulations to be made thereunder was rejected by him.
8. The applicant is not making the case that the Minister does not have the power to make the regulations which have now come into force, including without a derogation for its members. Rather, it is submitting that it was given an assurance amounting to a legitimate expectation, that the Minister would not do so prior to the conclusion of the Conciliation and Arbitration process, and/or that he would not so act prior to the conclusion of the Haddington Road Agreement negotiations which commenced in September 2013 and were due to conclude in June 2014.
9. I think it is fair to say that the primary ground on which the applicant seeks to challenge the 2014 Regulations is on the basis of this alleged legitimate expectation that its members would not be included in the new Regulations in the first instance. It does so also on the ground of fair procedures based on a lack of full and proper consultation. In addition it is contended that the Minister failed to have regard to a relevant consideration, by failing to consider the need to protect the health of public servants in so far as he failed to consider the case put forward on behalf of members of An Garda Siochána. Finally, the applicant has submitted that the Regulations, and in particular Regulations 9 and 10 are incomprehensible as to their meaning, and in so far as a meaning can be gleaned from the plain and ordinary meaning of the words used, they do not in fact achieve the stated intention of the Minister, namely to effect significant reduction in the cost of public service sick leave. The Minister rejects that the Regulations are in any way opaque or unclear, and is confident that they achieve his purpose.
10. This Court granted leave to seek the reliefs contained in paragraph D of the Statement of Grounds. As I have stated, that was pursuant to an ex parte application. On the present application for an interlocutory injunction, the Court must be satisfied that a fair issue arises for the Court’s determination. It is not to be concluded from the mere fact that leave has been granted that a fair issue has been raised for the purposes of an interlocutory injunction application. On the present application, both sides are present unlike on an ex parte application. On the ex parte application the Court proceeds on the basis of prima facie facts and submissions, and on the basis that by virtue of the decision in G v. DPP the applicant must show that he has an arguable case. That is accepted to be a low threshold. It is inevitable that on an application to set aside leave, and when the respondent has an opportunity to put before the Court other facts than those disclosed by the applicant on the ex parte application, or puts forward legal submissions even on the same or agreed facts, the Court hearing the set aside application can come to the conclusion that having had the opportunity to hear the respondent, the applicant has not in fact established an arguable case for the purpose of leave being granted, and can make an order setting aside that leave order.
11. A fortiori on the present application, it is submitted by the respondent that the Court should consider, by reference to a threshold higher than mere arguability and in the light of facts appearing in its replying affidavit as well as in the light of the respondent’s legal submissions, whether the applicant has established a serious or fair issue to be tried. In fact the respondent submits that the applicant in reality seeks a mandatory injunction requiring the Minister to continue to apply to members of An Garda Siochána the previous and more favourable sick leave regime pending the determination of these proceedings, and accordingly that the test to be applied is whether the applicant has made out a strong case that is likely to succeed, in accordance with the judgment of Fennelly J. in Maha Lingham v. Health Service Executive [2006] 17 ELR 137.
12. The first matter to address is the issue of locus standi which has been raised against the applicant by the respondent. The applicant association was established under the Garda Siochána (Associations) Regulations, 1978 (S.I. No. 135/1978) in the following terms:
“4. An association to be known as the Garda Representative Association is hereby established for the purpose of representing members of the Garda Siochána holding the rank of Garda in all matters affecting their welfare and efficiency.
13. The reference to “welfare” therefore must be seen as enabling the association to represent the interests of is members in negotiations and discussions with the relevant Minister in relation to any proposed changes to sick leave arrangements.
14. The respondent accepts that the GRA has the necessary standing to bring a challenge to the new Regulations on the basis of its legitimate expectation and on the basis that it would be consulted as alleged. But he does not accept that such standing extends to an entitlement to seek an injunction on behalf of all its members to suspend their operation pending the determination of that challenge, and in so far it seeks an injunction it does so only on the basis of a ius tertii. It is submitted that only an individual member who stands to be personally affected by the new Regulations could have an entitlement to seek such an injunction as part of a challenge to their lawfulness, since only in such a case could the Court realistically consider matters such as the adequacy of damages, the balance of convenience and the worth of any undertaking as to damages which may be available on the application.
15. In this regard, Eileen Barrington SC for the respondent has referred to the judgment of McCracken J. in Construction Industry Federation v. Dublin City Council [2005] 2 IR 496. That was a case where the applicant association brought a challenge on behalf of its members (being construction firms and property developers in the State) to a certain scheme whereby such members could be required as a condition of a planning permission to make a financial contribution towards the costs of public infrastructure and facilities to be provided by a local authority in its area whether or not same would benefit a particular development. In the High Court Gilligan J. decided that the applicant federation has standing to bring the challenge, but found against the applicant on the merits. The applicant appealed, but before deciding the substantive appeal, the Supreme Court directed a preliminary issue in relation to locus standi, and concluded that although there could be circumstances in which the general ius tertii rule might not apply, nevertheless, as in that case, where the applicant federation could not point to any damage to itself which might be caused by the impugned decision, then the Court was being asked to deal with a hypothetical question and furthermore there was no evidence that the members of the federation were financially incapable of mounting a challenge in their own right. In reaching this conclusion, McCracken J. (Murray CJ. and Fennelly J. concurring) stated at pp. 526-527:
“In the present case the applicant claims to have a sufficient interest on the basis that the proposed scheme affects all or almost all of its members in the functional area of the respondent and, therefore, the applicant has a common interest with its members. However, it appears to me that to allow the applicant to argue this point without relating it to any particular application and without showing any damage to the applicant itself, means that the court is being asked to deal with a hypothetical situation, which is always undesirable. This is a challenge which could be brought by any members of the applicant who are affected and would then be related to the particular circumstances of that member ………”.
16. The applicant on the other hand seeks to distinguish the present case, and for that purpose points to the remainder of that quoted paragraph where McCracken J. went on to state:
“The members themselves are, in many cases, very large and financially substantial companies, which are unlikely to be deterred by the financial consequences of mounting a challenge such as this. Unlike many of the cases in which the parties with no personal or direct interest have been granted locus standi, there is no evidence before the court that, in the absence of the purported challenge by the applicant, there would have been no other challenger. Indeed the evidence appears to be to the contrary.”
17. Feichin McDonagh SC for the applicant submits that unlike the builders and developers who made up the membership of the CIF, ordinary rank and file members of An Garda Siochána are not wealthy individuals to be expected to be in a position to bring individual challenges to these Regulations. While I have no evidence of that, it is a fair submission to make, and perhaps it is something of which I can have judicial notice. Nevertheless, and in line with the concession made by the respondent in this regard, that factor is sufficient to enable the Court to conclude that the GRA should be considered to have the necessary standing for the purpose of the challenge to the Regulations, certainly on the basis of the asserted legitimate expectation and the alleged entitlement to be further consulted before the Regulations were brought in respect of its members. But it does not in my view get over the question of standing to seek an injunction to prohibit the application of the new regime, or in effect to provide for a derogation from the new regime for members of An Garda Siochána, pending the determination of the proceedings.
18. To grant an injunction as sought would be to do so on a hypothetical basis, and on an assumption that in all the cases which might arise damages would not be an adequate remedy for any individual member on sick leave. A line of jurisprudence has developed in employment law cases where a dismissed teacher, for example, may be granted a mandatory injunction requiring his/her salary to be paid pending the determination of a claim that his/her dismissal is unlawful, but that is a discrete area where the Courts have taken into account that the employee’s salary is his/her only means of support, and the likelihood of resultant destitution, and has taken the view that despite the distinct possibility that it may not be possible for the defendant to recoup from the employee the amount of salary paid as a result of the injunction, in the event that the plaintiff ultimately fails in the claim, the balance of convenience rests in favour of granting the injunction (see Fennelly v. Assicurazioni Generali Spa [1985] 3 I.L.T 73). That is a far cry from the present case.
19. However, I accept that under the new Regulations it is possible that an individual Garda officer might, given his or her particular sick leave history, be entitled to no sick leave pay under the new Regulations should he/or she have become ill again after the 31st March 2014. But that possibility is insufficient itself to give standing to the GRA to seek an injunction generally in respect of the 2014 Regulations pending the determination of these proceedings. It is perfectly possible for such a Garda if sufficiently adversely affected by the new Regulations, to seek to be joined in the present proceedings for the purpose of seeking an interlocutory injunction to enable him to receive sick pay under the old regime, but it would be dependent upon the actual facts and circumstances of his particular case. It is safe to assume, I think, that the GRA would continue to fund and pursue its proceedings even though it had another passenger on boards. Alternatively if preferred he or she could bring an individual challenge, and therein seek an injunction. But the Court would have to be satisfied on Campus Oil grounds that an injunction was warranted. Indeed, the higher Maha Lingham test might have to be surmounted, albeit ameliorated perhaps by reference to considerations of possible Fennelly-type destitution arguments referred to above. But it is inescapable that the Court must reach conclusions in relation to any such injunction restraining the operation of the 2014 Regulations by reference to a particular case and particular facts and circumstances affecting a particular Garda. Only then can the Court consider the matters I have adverted to already, namely the adequacy of damages, the balance of convenience, and the sufficiency of any undertaking as to damages required. I add now that in the present case no undertaking as to damages is on offer from the GRA.
20. I am not satisfied that the applicant has standing to seek injunctive relief, and for that reason alone I refuse the application.
21. However, I would like to go further and say that even if locus standi was not a problem for this applicant, and even if I assume for present purposes that the applicant has raised a serious or fair issue or issues for determination, and that damages are not an adequate remedy, I am disinclined to conclude that the balance of convenience lies in favour of granting the injunction sought. In that regard I refer to the judgment of Finlay CJ in Pesca Valentia Limited v. The Minister for Fisheries and Forestry and others [1985] IR 193. That was a case in which the plaintiff succeeded in obtaining an injunction restraining the enforcement of an impugned condition attaching to its fishing licence (which included the prosecution of an offence) pending the determination of proceedings in which the plaintiff sought a declaration that, inter alia, the section under which the licence was issued was unconstitutional. In his judgment, Finlay CJ. was satisfied that there was no impediment to the Court granting an injunction pending the determination of a claim with regard to the constitutionality of a statute, even where a consequence was to postpone or suspend the trial of an offence under the impugned legislation. In that regard he stated that “in particular, it seems to me that this power must exist in an appropriate case where the form of action is under a penal section and involves conviction of and the imposition of a penalty for the commission of a criminal offence”. In the present case, one is not of course dealing with penal legislation or Regulations made under any penal legislation. There is that distinction to be drawn with Pesca Valentia. But in addition it is noteworthy that at page 201 Finlay CJ expressed his view that the consequences that might flow from the granting of an injunction which prevents the Executive from carrying out its powers under a statute which enjoys the presumption of constitutionality is a factor to be taken account of in the consideration of the balance of convenience. In that regard he stated:
“I am, therefore, satisfied that the presumption of constitutional validity which applies to the Fisheries (Amendment) Act, 1983, expressly authorising the insertion of this condition in these licences is material in relation to the determination by the Court as to whether the plaintiff has established a fair question to be tried at the hearing of his action. I am also satisfied that the consequence arising from the making of an interlocutory injunction of preventing the Executive from carrying out powers vested in them by a statute enjoying that presumption and, in particular, the consequence of postponing the bringing to trial of a criminal offence created by such a statute, is a matter for consideration on the balance of convenience. I am not, however, satisfied that there is any special principle applicable to an application for an interlocutory injunction of this kind.”
22. In his judgment in D v. Ireland and others, [2009] IEHC 206, Clarke J. emphasised that while such a jurisdiction clearly existed it was nevertheless one which ought to be exercised “most sparingly”. He explained the reasons why this should be so at pp. 5-6 as follows:
“The reasons for this are obvious. Legislation which has been passed into law by the Oireachtas enjoys a presumption of constitutionality. If it were to be the case that persons who were able to establish a fair case to be tried concerning the validity of the relevant legislation having regard to the provisions of the Constitution (which is not a particularly high threshold) were able to obtain an injunction preventing, in practice, the application of the legislation to them until the proceedings had been determined, then it would follow that legislation could, in practice, be sterilised pending a final determination of the constitutional issues raised. Those considerations apply with equal force where the statute concerned is one which creates a criminal offence.
While, in general terms, the principles applicable to the grant or refusal of an interlocutory injunction in a case such as this are no different from those which apply in the case of any other interlocutory injunction, it has to be emphasised that a very significant weight indeed needs to [be] attached, in considering the balance of convenience, to the desirability that legislation once coming into force should be applied unless and until such legislation is found to be invalid having regard to the Constitution. It should only be where significant countervailing factors can be identified or where it is possible to put in place measures which would minimise the extent to which there would be any interference with the proper and orderly implementation of the legislation concerned, that a court should be prepared to grant an injunction which would have the effect of preventing legislation which is prima facie valid from being enforced in the ordinary way.”
23. Clarke J. revisited this point in his judgment in Okunade v. Minister for Justice, Equality and Law Reform [2012] 3 IR 153, albeit in the context of a challenge to a deportation order. At paragraph 92 he stated:
“However, there is a further feature of judicial review proceedings which is rarely present in ordinary injunctive proceedings. The entitlement of those who are given statutory or other power and authority so as to conduct specified types of legally binding decision making or action taking is an important part of the structure of a legal order based on the rule of law. Recognising the entitlement of such persons or bodies to carry out their remit without undue interference is an important feature of any balancing exercise. It seems to me to follow that significant weight needs to be placed into the balance on the side of permitting measures which are prima facie valid to be carried out in a regular and orderly way. Regulators are entitled to regulate. Lower courts are entitled to decide. Ministers are entitled to exercise powers lawfully conferred by the Oireachtas. The list can go on. All due weight needs to be accorded to allowing the systems and processes by which lawful power is to be exercised to operate in an orderly fashion. It seems to me that significant weight needs to be attached to that factor in all cases ……….. An order or measure which is at least prima facie valid (even if arguable grounds are put forward for suggesting invalidity) should command respect such that appropriate weight needs to be given to its immediate and regular implementation in assessing the balance of convenience.”
24. In the present case, the new Regulations have been introduced by the respondent Minister in order to reduce the very significant cost to the taxpayer of the sick leave arrangements for public servants including An Garda Siochána, and at the same time meet obligations arising from the Memorandum of Understanding entered into by the Government with the Troika. This must be regarded as a pressing need in the national interest. That consideration need not in all circumstances trump the interest of any particular litigant who may seek to challenge a measure and seek an injunction to restrain its effect upon him or her pending the determination of proceedings commenced, but it must weigh heavily in the balance when the Court comes to consider the balance of convenience. In the present case, the GRA will not suffer any direct loss as a result of the new Regulations coming into operation. I have addressed that question as part of the locus standi issue already. But even if one was to overlook that question and consider the question of an injunction from the standpoint of an individual member of An Garda Siochána who is represented by the GRA, the question of the adequacy of damages would loom large. It seems to me that if any individual member seeks to challenge the new Regulations on the same or similar basis as the GRA has, the Court would have to consider whether that individual is likely to suffer loss pending the determination of the proceedings which could not be compensated in damages. Such an individual may, under the new Regulations, have a more limited entitlement to paid sick leave or indeed no entitlement, after 31st March 2014, and he/she will suffer financial loss and even hardship while the litigation is pending if no injunction is granted. But the losses are easily quantifiable, and there could be no question of any risk that damages would not be recoverable. That adequacy of damages would be sufficient in my view to disentitle such an individual member to an interlocutory injunction, barring some exceptional circumstance which any particular individual member may be able to demonstrate. But it would be an exceptional case, and indeed might well be one capable of being dealt with in a way which did not interfere with the general application of the Regulations.
25. If the Court got as far as having to consider the balance of convenience, I have no doubt that, again barring some truly exceptional circumstances in an individual and exceptional case, the balance of convenience must lie against prohibiting the operation of measures which are prima facie lawful pending a determination of the issues arising. In this regard I refer to what Clarke J. has stated at paragraphs 93 and 94 of his judgment in Okunade.
26. I want to refer also to what he stated at paragraphs 95-98 of his judgment in relation to the role which can be played by an assessment of the strength of the plaintiff’s case in judicial review proceedings “where the risk of injustice may be evenly balanced”. In that regard, he stated as follows:
“Finally, so far as the cases where the risk of injustice may be evenly balanced are concerned, it does seem to me that there may be greater scope, in the context of judicial review proceedings, for the court to take into account the strength of the case, as it appears on the occasion of the application for a stay or injunction, then may apply in an ordinary injunction case. I have already set out the reasons why it is neither desirable nor practicable in ordinary cases for the court to have to routinely form an assessment of the strength of the case. However it is of some interest to note the way in which this question was put as far back as the decision of the House of Lords in American Cyanamid v. Ethicon Ltd [1975] AC 396. At p. 407, Lord Diplock said the following: –
‘It is no part of the court’s function at this stage of the litigation to try to resolve conflicts of evidence on affidavit as to facts on which the claims of either party may ultimately depend nor to decide difficult questions of law which call for detailed argument and mature considerations. These are matters to be dealt with at the trial.’
It is well worth recalling that Lord Diplock spoke of the court refraining from deciding questions of disputed fact or “difficult” questions of law. In the context of an application for an interlocutory injunction in the commercial, contractual, property or allied fields the wisdom of those remarks is obvious. If it were to be otherwise then the problems referred to earlier, as noted in Allied Irish Banks Plc v. Diamond [2011] IEHC 505, [2012] 3 I. R. 549, would loom large. However, those considerations may be of significantly less weight in judicial review applications. First, it is rarely the case that questions of fact as such are an issue in judicial review proceedings. Even if the decision maker had to decide facts, then the only question which can arise before the court in a judicial review challenge to the decision in question is as to whether the decision maker could rationally (in the sense in which that term is used in this jurisprudence) have come to the conclusion of fact concerned. On that question the only matters that the court ordinarily needs to consider are the materials which were before the relevant decision maker.
In addition, while there may well be some judicial review proceedings which could come within the parameters of what Lord Diplock spoke of as “difficult” questions of law, many such cases involve either very in net questions of law or involve the application of well-established principles to the circumstances of the case. It seems to me, therefore, that in considering whether to grant a stay or injunction pending the progress of judicial review proceedings, the court can have regard to the strength of the case at least where, as will frequently be the case, the challenge does not involve issues of fact as such or the sort of complex questions of law which, in the words of Lord Diplock at p. 407 “call for detailed argument and mature considerations”.
27. While in the present case I do not consider the question of the greater injustice to be evenly or even finely balanced, I want to say that if on the other hand I had done so, then in order to tip the scales towards refusing an injunction I would have considered that the applicant’s case, as argued at this stage at least, has weaknesses even though its arguability to the low threshold of arguability required at ex parte leave stage was considered to be surpassed. I mentioned much earlier that it appears to me that the main plank of the applicant’s case is based on the alleged breach of the applicant’s legitimate expectation, arising out of certain assurances, that members of An Garda Siochána would not be included in the new proposed Regulations in the first instance, and that any changes to pay and conditions would be proceeded with by way of Conciliation and Arbitration. I cannot actually recall if on the ex parte application seeking leave the provisions of section 7 of the Act of 2013 which provides for the insertion into the Principal Act of Part 7A after Part 7 thereof was opened or referred to. But Part 7A contains sections 58A, 58B, and 58C, the last of which provides:
“58C. – This Part has effect notwithstanding –
(a) any provision made by or under —
(i) any other Act,
(ii) any statute or other document to like effect of a university or other third level institution,
(iii) any circular or instrument or other document,
(iv) any written agreement or contractual arrangement, or
(b) any verbal agreement, arrangement or understanding or any expectation” [emphasis added]
28. It seems to me that even if the applicant can establish the necessary ingredients of a legitimate expectation arising from such assurances and other communications made to it during the consultation process which took place since May 2012, paragraph (b) above excludes the possibility that it could prevent Part 7A from having effect. It is hard at this stage to see what deus ex machina might be contrived in order to rescue the applicant’s case on legitimate expectation from the apparently fatal embrace of paragraph (b). Absent such an escape on that issue, the applicant is left with a case on lack of consultation which, on the facts, cannot be the strongest limb of the case, as well as an argument that the provisions of Regulations 9 and 10 are worded in such a way as to be incomprehensible and unworkable and such as not to achieve the stated purpose of the Minister, and the argument that the Minister failed to have regard to a material consideration, namely the Minister’s obligation to have regard to the need to protect the health of public servants. I do not of course express any concluded view on the ultimate merits of all these arguments. I am merely stating that if I was to have to resort to assessing the strength of the applicant’s case as part of the balancing of justice or balance of convenience between the parties, I would, based on what has been urged to date, consider that the case is not a strong case.
29. For these reasons I refuse the application for an interlocutory injunction.
Local Ireland Ltd v. Local Ireland-Online Ltd.
[2000] IEHC 67; [2000] 4 IR 567 (2nd October, 2000)
THE HIGH COURT
No. 2000 7854P
BETWEEN
LOCAL IRELAND LIMITED AND NUA LIMITED
PLAINTIFFS
AND
LOCAL IRELAND-ONLINE LIMITED AND
CON DALY TRADING AS DALY FINANCIAL
DEFENDANTS
Judgment of Mr Justice Herbert delivered on the 2nd day of October 2000
1. The second named Plaintiff in these proceedings, Nua Limited, which was incorporated on the 20th of September 1995 developed in or about September 1996 an Internet Information Classification System which would provide users of the internet requiring information which related to Ireland with a simple and charge free means of accessing that information without having to engage in random searches through an ever expanding volume of information on the internet relating to Ireland. For this service the Second named Plaintiff devised the business name, “Localireland”, alternatively “Local ireland”, sometimes written as a single word and sometimes as two separate words. In either case by way of a distinctive logo the initial letter, “L” is presented in upper case with a swirl device like a crook or concentric crescents with one pair of the adjacent horns joined by a transverse line integrated into the right upper quarter of the vertical stroke of the letter and with the horizontal stroke of the letter presented as an equilateral triangle. The other eleven letters are always presented in lower case. The first five letters, including the initial “L” are always presented in bold type and where colour printing is used are always in a darker shade of colour.
2. In February 1997 a serious of electronic addresses for this system, generally known as, “domain names” were registered by the second named Plaintiff with an international control organisation known as, “Network Solutions” . These domain names are “local.ie”; “localireland.com” ; “local-ireland.com” ; “local-ireland.org”, and “local-ireland.net” .
3. The first named Plaintiff, Local Ireland Limited was incorporated on the 24th November 1998, initially under the name “Chingola Limited”, which was changed on the 11th December 1998 to its present name as a step in a joint venture business arrangement with Telecom Eireann now as known as Eircom plc. By an Intellectual Property License Agreement, dated 4th December 1998, the second named Plaintiff granted to the first named Plaintiff a non exclusive, non transferable licence in respect of its intellectual property rights in the reputation and goodwill in the name, get up and logo, “ Localireland” alternatively “Local-ireland”, and in the domain names, “Localireland.com” and “local.ie”. On the 23rd June 2000 the first named Plaintiff became aware, as a result of a reply received by them to a newspaper advertisement, that an entity describing itself as, “Local Ireland-Online” alternatively “local ireland-online” was seeking staff. Contact was established with this entity which proved to be the first named Defendant a company which was incorporated on the 20th of June 2000. On behalf of the first named Defendant it was confirmed that it was trading and proposed to continue to trade under the business name, “Local Ireland-Online”, offering a subscription business listing service through which local businesses would become accessible on the internet through the central web site of the first named Defendant. The Plaintiffs subsequently ascertained that a domain name, “localireland-online.com” had been registered by the second named Defendant on his own behalf on the 30th June 2000. It was subsequently confirmed that the first named Defendant was using and intended to continue to use this domain name.
A “cease and desist” letter, dated 27th June 2000 was sent to the first named Defendant and was acknowledged by a letter dated the 3rd of July 2000 from a firm of solicitors acting on behalf of both the Defendants. A similar letter dated the 4th July 2000 was sent to the second named Defendant. The Defendants maintain a legal right to use and unequivocally indicated an intention to continue to use the business name, “Local Ireland-Online” and the domain name, “localireland-online.com”. The first named Defendant presented this business name as three separate words, with the middle word in bold type and separated by a hyphen from the final word. Sometimes the initial letter of each word was presented in upper case but otherwise each word was presented in lower case.
4. On the 6th of July 2000 the Plaintiffs issued a plenary summons and also a notice of motion. The notice of motion claimed an interlocutory injunction and was grounded on the affidavit of Mr Gerry McGovern, Chief Executive Officer of each of the Plaintiffs, sworn on the 6th of July 2000. By an Order of this Court, (Mr Justice McCracken) made ex parte on the 6th of July 2000 the notice of motion was made returnable for the 10th of July 2000. The plenary summons, the notice of motion, the grounding affidavit and exhibits were served on each of the Defendants on the 7th of July 2000. An appearance was entered on behalf of both the Defendants on the 10th of July 2000. A Replying Affidavit was sworn on the 13th July 2000 by Mr Con Daly the second named Defendant in these proceedings and a director of the first named Defendant, on behalf of the first named Defendant. A further affidavit on behalf of the Plaintiffs was sworn on the 14th July 2000 by Mr Eoin MacGiolla Ri internal legal advisor of the first named Plaintiff.
5. As appears at paragraphs 12 and 17 of the affidavit of Mr Con Daly, the Defendants decided after the commencement of these proceedings to change the business name, “ Local Ireland – Online ” to, “ Locally Irish ” and in future to use only this name, “Locally Irish ”. This name is presented as two separate words with the second word always presented in bold type and sometimes with the initial letter in each word presented in upper case but always with the remaining letters in each word presented in lower case. No shading or colour differentiation is made between the two words. This get-up is accompanied by a logo consisting of two concentric crescents differentiated by colour or shading with a dark arrow like device entering between the horns of the inner crescent and the entire casting a dark lateral shadow and resting upon a white partial mirror image of itself. Sometimes the crescents face left with the arrow shaft in the two o’clock position and sometimes right with the arrow shaft in the ten o’clock position and are presented as standing vertically on a surface, colour or shading differentiated and either clear or with a variety of art work including a map of Ireland showing county outlines and names.
6. In addition a new domain name, “ locallyirish.com”, “with all international variants”, has been registered with Network Solutions. Why, and as regards the domain name, when, these changes were made is a matter of a very considerable dispute between the parties which I cannot resolve on this application and in respect of which I therefore draw no inferences whatsoever. For the purposes of this application it is sufficient to record that the Plaintiffs contend that notwithstanding the differences in get-up and logo which they claim are in any event insufficient, the use by the Defendants of the business name, “ LocallyIrish” and the domain name, “ locallyirish.com”, or the business name, “Local Ireland-Online” and the domain name “ localireland-online.com”, amounts to parasitic and imitative trading by the Defendants or one or other of them, is a material infringement of the Plaintiffs’ property rights, and constitutes the tort of, “ passing off ”. In the Affidavit of Mr. Gerry McGovern sworn in these proceedings on behalf of the Plaintiffs’ on the 6th of July 2000 it is asserted that since December 1998 the first named Plaintiff has built up and operated an Internet Information Service, now covering the whole island of Ireland, featuring some 1700 towns and villages and with 3000 subject classifications. It is stated on oath that this website is the second most busy website in the State with approximately 205,000 separate visits to the site per month. Corroboration of this statistic is provided in the form of a User Audit Certificate for the month of March 2000, furnished by A.B.C. Electronic Media Audits Limited, of Hertfordshire, England. The first named Plaintiff estimates that approximately 23 per centum of all visits to its website are by residents of this Jurisdiction.
7. The basis for this estimate is not stated, however, it is clear from the website extracts exhibited in the Affidavit of Mr. Gerry McGovern that a considerable part of the information featured on the website would be of immediate interest to persons in this Jurisdiction, for example, sports news, business news, share prices, business and service directories, mortgage stores, theatre arts and entertainment guides, news and weather. At paragraph 6 of his Affidavit sworn in these proceedings on behalf of the first named Defendant on the 13th of July 2000, Mr. Con Daly submits that the emphasis of the plaintiffs website is on geneological services and a diary of local events and festivals. While such services and information are indeed provided by the plaintiffs website it is clear from the Affidavit evidence that such information forms but a small part of the overall information provided on the Plaintiffs website.
8. It is stated upon oath in the Affidavit of Mr. Gerry McGovern that since September 1998 the first named Plaintiff has spent in the region of £594,000.00 on advertising its business name and services in Ireland and abroad. Corroborative evidence for such expenditure abroad is provided in the form of a Preliminary Market Report, covering advertising and promotion of the Plaintiffs business name and services in the United States of America on and about the 17th March 2000. In the State this advertising is stated to have been in the print media on television and in outdoor advertisements. A further sum of £200,000 is stated to have been committed to be spent in launching the Plaintiffs’ website accommodation service and the Court was informed by Counsel for the plaintiffs that some of this £200,000 has already been spent.
9. It is further averred that since its incorporation the first named Plaintiff has invested over £3 million in employing persons to devise software, to gather and present information and to negotiate and conclude agreements with Local Partners or Franchisees. It is stated that the purpose of these agreements is to enable such Local Partners or Franchisees to establish their own web presence as part of the plaintiffs website and to offer advertising and subscription based business listings through which local businesses can obtain an internet presence via the plaintiffs website. It is sworn that to date two such agreements have been concluded and are in operation while a further eight such agreements are at an advanced stage of negotiation. In addition the plaintiffs say that they actively seeking another twenty such Local Partners or Franchisees. The Plaintiffs claim that having regard to this extensive use made of the website of the first named Plaintiff and to the substantial marketing advertising and promotion of the business name “ Local Ireland” or alternatively “ Localireland”, they have established a substantial and exclusive reputation in this business name its get-up and its related logo and that the business and services conducted and sold by them under this business name and associated domain names are associated in the minds of the purchasing public exclusively with the Plaintiffs or one of them.
10. The Plaintiffs claim may be summarised as follows: the similarity of the business names and associated domain names, the similarity of the get-up, the similarity of the logo of the first named Defendant and the first named Plaintiff, and the similarity of the services offered, that is, “a subscription listing of commercial undertakings accessible through the central website of the provider ”, would, as a reasonable probability, result in customers and prospective customers of the first named Plaintiff being misled into thinking that the services offered by the Defendants or one of them was as a Branch or Licensee of the first named Plaintiff or was otherwise linked with or connected to the first named Plaintiff. The Plaintiffs having pointed to one identified instance of confusion go on to say that they truly believe that further confusion of the business of the Defendants with their business is in the above circumstances inevitable. They claim that the result of such confusion would be to cause damage to their business for which an award of damages would be an insufficient remedy. Such damage is claimed under four headings which I venture to summarise as follows:-
That they would lose and the Defendants as business rivals would to a definite but unquantifiable extent gain the benefit of their very substantial expenditure on advertising promotion and research as already detailed ;
That their inability to control the quality of the service provided by the Defendants, which customers and potential customers were misled into believing was part of or associated with their business, could discourage customers dissatisfied with the quality of the Defendants’ services from using the Plaintiffs business subscription listing or other services in the future;
That the activities of the Defendants if permitted to continue would in all probability result in similar activity on the part of others so that the Plaintiffs would entirely loose the benefit of their reputation or that reputation would become so swamped and debased that the loss to them would be incalculable in monetary terms, and,
That their application for the registration of a European Union Trademark in the name, “Local Ireland” might not be accepted as a result of the activities of the Defendants which included a similar application in respect of the name, “Local Ireland-Online”.
11. The Defendants case, as set out in the replying Affidavit of Mr. Con Daly, and here again I am summarising, is that there is no misrepresentation involved in their use of the business name, “Local Ireland-Online ”, or in the business name, “ Locally Irish ”, particularly having regard to their getup and logo. In his Affidavit on behalf of the first named Defendants Mr. Con Daly avers that these business names, their getup and logo, their associated domain name and the services provided by the first named Defendant are so clearly distinct from the business name, getup and logo of the Plaintiffs, their associated domain names and the services provided by them, that persons are not likely to be misled into believing that the services of the first named Defendant are the services provided by the first named Plaintiff or that the first named Defendant is a Branch or Licensee of the first named Plaintiff or is in any way associated with it.
12. Counsel for the Defendants argued that the Plaintiffs, having adopted a business name containing words in common use are not entitled to an unfair monopoly in those words and that accordingly the Court should accept the differences in the business names getup and logos, even if the Court should consider them to be small, which the Defendants submit which they are not, as none the less sufficient to distinguish the business of the Defendants from that of the Plaintiffs. This is particularly so, Counsel argued, having regard to what the Defendants alleged to be differences in the services provided and what the Defendants submit are different areas from which the businesses are carried on. Counsel for the Defendants referred to the cases of, Reddaway and Company -v- Banham , (1896) A.C. 199, ( H of L ); Office Cleaning Services Limited -v- Westminster Office Cleaning Association , (1946) 1. AER 320, and B.S. -v- Irish Auto Trader , (1995) 2.ILRM. 252, in support of this argument.
13. Despite the suggestion by Counsel for both sides that the outcome of this application for interlocutory relief is likely to determine the dispute there was no agreement to treat the hearing of this Motion as the trial of the Action. In such circumstances, having regard to the decision of the Supreme Court in the Campus Oil Limited -v- The Minister for Industry and Energy , (2), (1983) I.R.88, I am not entitled at this juncture to inquire into the merits of the case or to consider the probabilities of success of any party at the trial of the Action. Provided that the Plaintiffs, upon whom the onus of proof lies, have shown to the satisfaction of this Court, that there is a fair bona fide question to be tried as between them and the Defendants and that if they are correct in this contention that the continuance of the Defendants activities until the trial and determination of the Action is likely to cause substantial damage to them for which an award of damages at the trial would not be adequate compensation, I am obliged, as the law now stands, to determine this Application solely on the balance of convenience, that is on the relevant extent of the damage to one or other party if the injunction is or is not granted.
14. It seems to me somewhat regrettable that in the present case where most if not all of the relevant facts appear to be before the Court on Affidavit, that the parties by agreeing to treat the hearing of this Motion as the trial of this Action, “did not use the interlocutory injunction as a simple quick and relatively and cheap way of asking the Court who is right”. (See, Kerly’s , Law of Trade Marks and Trade Names, (12th Edition: (1986), page 322 note 84).
15. I am satisfied that the Plaintiffs have raised so far as this may be done on Affidavit, a strong prima facie case that as regards the business name, “ Local Ireland ”, and its associated domain names that there already exists in this jurisdiction as well as abroad a large body of the public which in the words Barron, J., in the case of Muckross Park Hotel Limited -v- Randles and Others , (High Court: 10/11/1992, unreported judgment available), “ know it and what it stands for ”, namely the Internet Information Service of the Plaintiffs’. I am also satisfied that the Plaintiffs’ have made out a strong prima facie case that they have in this jurisdiction as well as abroad a very valuable reputation in the business name, “ Localireland” or alternatively, “ Local Ireland ”, and its associated domain names.
16. I am satisfied that the Plaintiffs have made out a bona fide case to be tried that the use by the Defendants or either of them of the business name, “ Local Ireland-Online ”, and its associated domain name, “ localireland.com”, which takes over and incorporates the name of the first named Plaintiff as a whole, would result in a very high probability of deception as amounting to, “ a misrepresentation by the Defendants to the public (whether or not intentional) leading or likely to lead the public to believe that the services offered by (them) are the services of the Plaintiff(s)”, ( See, Reckitt and Coleman Products Limited -v- Borden , (1990) 1 AER873 at 880), or that the Defendants in providing such services are in some way associated with the Plaintiffs’ business, for example as a Branch or Licensee of the Plaintiffs’.
17. I am further satisfied that the Plaintiffs’ have made out a fair bona fide case to be tried that the use by the Defendants’ or either of them of the business name, ” Locally Irish “, and its associated domain name, ” locallyirish.com”, are so close to the business name and domain name of the first named Plaintiff that no sufficient or real distinction could reasonably be said to exist between them, particularly having regard to the similarity of the relevant service, that is, ” the subscription listing of commercial undertakings accessible through the central web of the provider “, carried on by the first named Plaintiff and the first named Defendant and that as a matter of reasonable probability the public are likely to be similarly misled. I do not consider the fact that the Plaintiffs’ also provide other services under the same business name and associated the domain name lessens the force to their argument.
18. In the case of the business name, ” Locally Irish “, and the business name, ” Local Ireland-Online “, and their associated domain names, I am satisfied that the Plaintiffs’ have established a fair bona fide case to be tried that the getup and logo of the Defendants’ is in the case of each business name so similar to their getup and logo as to lead to similar public confusion to the detriment of the Plaintiffs’ between their services and business and those of the first named Defendant, or alternatively, that the Defendants’ getup and logo is not in the case of either business enough to constitute a sufficient distinction between the Defendants’ services and business and those of the Plaintiffs’ so as to prevent the public from being misled to the detriment of the Plaintiffs’.
19. I am further satisfied, particularly having regard to the decisions in Polycell Products Limited -v- O’Carroll and Others , (1959) IJR, 34; and Mitchelstown Co-operative Agricultural Society Limited -v- Golden Vale Food Products Limited , (High Court: 12/12/1985 per Costello J), that the Plaintiffs’ have made out a strong prima facie case that on the balance of probability if customers and potential customers are misled as alleged that the Plaintiffs’ as a reasonably foreseeable consequence of the misrepresentation on the part of the Defendants’ or one of them will suffer in the interval pending the hearing and determination of this action serious permanent injury to or a complete swamping and loss of their reputation for which an award of damages at the trial of the action would be an altogether inadequate compensation to the Plaintiffs’.
20. I am satisfied that the Defendants’ bona fide intend to defend this claim and that their defence as disclosed in the Affidavit of Mr. Con Daly is neither frivolous nor vexatious. If the Court grants the injunctive relief sought by the Plaintiffs’ it is probable that the Defendants’, if they wish seriously to remain in the market as a provider of the relevant services will be constrained at the very earliest possible opportunity to choose, establish and promote a new business name, getup and logo, and to choose and register a new domain name or names. This will undoubtedly result in considerable loss and expense to the Defendants’ which they estimate is likely to be in the region of £10,000. In addition the Defendants’ will probably loose some market advantage vis a vis the Plaintiffs’ and other possible entrants into this particular market niche. They will in all probability loose whatever reputation (if any) which they may have established in the very short period during which they have been using their existing business names and domain names.
21. Notwithstanding the undertaking as to damages which the Plaintiffs’ must give to this Court as a condition of being granted any interlocutory relief, and in this respect the Defendants’ accept at paragraph 8 of the Affidavit of Mr. Con Daly, ” that the Plaintiffs’ have vast resources at their command “, the extent of the loss to the Defendants’ in having to start de novo as soon as possible in a new guise, or in the interval pending the determination of this action continuing but without trading maintaining their existing business names and associated domain names in the hope of being able to continue with those names would if quantifiable, not be such as would be adequately compensated by an award of damages should the Plaintiffs’ not succeed in obtaining a perpetual injunction at the trial of this action. It is averred at paragraph 17 of the Affidavit of Mr. Con Daly as follows:-
“More than any medium, good ideas from new players for the development of the internet can be thwarted easily. In practice if there is delay or a perception of indecisiveness as to name or identity a new competitive business may be stillborn despite the uniqueness of its focus and the quality of its execution”.
22. This is not denied by Mr. Eoin Mac Giolla Ri at paragraph 11 of his Affidavit on behalf of the Plaintiffs’ sworn on the 14th of July 2000, where he considers what was averred at paragraph 17 of the Affidavit of Mr. Con Daly.
23. In the circumstances I am satisfied that damages would not be an adequate remedy for either party in these proceedings and so I must consider whether on the special facts of this particular case the damage suffered by the Plaintiffs’, should the Court decline to make the Order sought, would on the balance of probability be greater than the damage suffered by the Defendants’ should the Court grant the Order sought.
24. The Plaintiffs’ have given clear and to a considerable extent independantly corroberated evidence of a present widespread Trade and reputation enjoyed by them both here and abroad in the name ” Local Ireland ” and its associated domain names as hereinbefore set-out. The first named Defendant while referring to “the goodwill established to date”, has offered no evidence of any kind in support of this claim. The first named Defendant was incorporated only on the 26th June 2000, a week before the “cease and desist letter” and at the date of that letter was still in search of employees. Given this time factor and the paucity of the evidence offered by the first named Defendant as regards trade, investment and reputation, on the balance of probability I feel that I am entitled to proceed upon the basis of the first named Defendant having very little or no present reputation in the names ” Local Ireland – Online ” and ” Locally Irish ” and their associated domain names, such as would be adversely affected by the granting of an interlocutory injunction.
25. Given the evidence, with some independent corroberation, advanced by the Plaintiffs’ for a real and present awareness on the part of and use by the public in this jurisdiction and abroad of the Plaintiffs’ web site, and of the very significant absence of any such evidence on the part of the first named Defendant, it seems to me that the likelyhood of confusion and hence damage can at present and for the foreseeable future only operate to the disadvantage of the Plaintiffs’.
26. The probable likely financial consequence, especially in the sense of investment thrown away, of damage to the Plaintiffs’ actual existing trade and reputation must in my judgment be altogether disproportionate to any similar consequence, (if any) to the first named Defendant.
27. The Plaintiffs’ aver that approximately 3¾ million pounds has been spent in developing their services and in promoting and advertising their business name both here and abroad. Of this sum, £594,000 is claimed to have been expended on advertising alone. In contrast, at paragraph 10 of the Affidavit of Mr. Con Daly it is averred that the first named Defendant, “has invested considerable sums in its business”. No details or figures are given. The only figures mentioned in this Affidavit amount to a sum of approximately £10,000 and relate to money spent and indebtedness occurred, in apparantly equal proportions in changing the business name of the first named Defendant from, ” Local Ireland – Online ” to ” Locally Irish “.
28. In my judgment it is important to note that the Defendants would not be excluded from the market in the relevant services should the Court grant the interloctory relief sought by the Plaintiffs’. They would be perfectly at liberty to continue to offer the relevant services under a new business name and domain name. The period during which the first named Defendant has been using the business name ” Local Ireland – Online ” and even more so the business name ” Locally Irish “, with their associated domain names has been for a period of months only whereas the first named Plaintiff has been using its present business and domain names since at least December 1998. I do not doubt as submitted by the Defendants that the services of professionals and printers in this field are at a premium in the present period of major economic boom, but having regard to the rapidity with which the first named Defendant was able to change its business and domain name in July of this year, I see no reason to doubt that a further such name change could be accomplished with equal facility and dispatch should the Court be disposed to grant the relif sought by the Plaintiffs’ in this Motion and the Defendant be determined to continue in the market as providers of the relevant services.
29. At paragraph 18 of the Affidavit of Mr. Con Daly, the first named Defendant accepts that the Plaintiffs’, “have vast resources at their command”. In these circumstances there can be no doubt as to the value of any undertaking as to damages which the Plaintiffs’ might give to this Court and no doubt as to the ability of the Plaintiffs’ to meet an award of damages in favour of the Defendants on the largest scale which this Court may reasonably
contemplate. By comparison, there is no evidence which would enable the Court to conclude that the Defendants’ or either of them have or has a similar ability.
30. In the circumstances I am driven to the conclusion that the balance of convience clearly lies in granting rather than in refusing the injunctive relief sought by the Plaintiffs’. Subject to an undertaking by the Plaintiffs’ jointly and severally to discharge whatever sum or sums, by way of damages as the Defendants and each of them may be awarded at the trial of this Action should the Court determine that the granting of an injunction was not justified, the Court will make an Order restraining the Defendants and each of them, by themselves their officers, servants or agents or otherwise howsoever from commencing and alternatively or additionally from carrying on business under the name style or title ” Local Ireland – Online Limited ” ” localireland – online.com “, ” Locally Irish Limited” or ” locallyirish.com” or any other name style or title in which the words ” local” and ” Ireland or their cognates appear sequentially in either order: or form posessing, holding,operating, managing or controlling an Internet address or domain name under the name style or title ” localireland – online.com ” or ” locallyirish.com” pending the final determination of this Action or until further Order.
Buckley v National University of Ireland Maynooth
[2009] IEHC 58
Judgment of Mr. Justice Roderick Murphy, dated the 13th day of February, 2009
1. Background facts
This case arises out of the employment of the plaintiff on two successive fixed term contracts as a Research Fellow in the Department of Music at the National University of Ireland, Maynooth (“NUIM”). The plaintiff sought funding in 2002 for a research project from the Irish Research Council for the Humanities and Social Sciences (“IRCHSS), a state-run body providing research grants. It was a condition of the funding that the plaintiff be based at a third-level institution. The plaintiff approached NUIM to meet this condition, stating that “This requirement could be met simply by an agreement that I would be awarded a contract for the duration of the grant.”
The defendant wrote to the IRCHSS stating its willingness to host the plaintiff’s project at NUIM. Subject to the associated funding being made available by IRCHSS, the defendant stated that it would employ Dr. Buckley on a fixed term contract of employment for a three year period. This contract commenced on 1st October, 2003. The plaintiff’s salary was paid from the grant provided by IRCHSS. She was provided with an office by the University. The plaintiff sought further funding from IRCHSS in 2006 for a new research project which was to commence on the expiration of the first project. Her application was successful and she was issued with a second fixed-term contract that commenced on 1st October, 2006. This contract was for a two year period and was thus to expire on 30th September, 2008.
On 23rd November, 2007, Dr. Buckley wrote to the Personnel Officer of NUIM, stating that she believed herself to be a permanent employee of the University pursuant to s. 9 of the Protection of Employees (Fixed-Term Work) Act of 2003. The University did not agree with her interpretation of the 2003 Act and refused to confirm that the plaintiff was now a permanent employee of the University.
The plaintiff brought a case to the Rights Commissioner pursuant to the statutory mechanism provided for in the 2003 Act. The Rights Commissioner upheld the plaintiff’s claim in a decision of 8th August, 2008. The Rights Commissioner declared that the plaintiff was entitled to a contract of indefinite duration with the University and to receive compensation of €5,000.
The plaintiff’s second fixed-term contract expired on 30th September, 2008. On 27th August, 2008, the University’s Director of Human Resources informed the plaintiff that they were making her redundant from 30th September, 2008, and enclosing a statutory form of redundancy together with a copy of the University’s appeal against the decision of the Rights Commissioner to the Labour Court. The appeal is a full de novo appeal pursuant to s. 15 of the 2003 Act. The decision of the Labour Court remains pending at the date hereof.
At the Labour Court hearing on 16th October, 2008, the defendant made a new case that the plaintiff was never an employee of the University. An adjournment was granted by the Labour Court so the plaintiff could consider the new case being made by the University. At this hearing, it is alleged that the University gave an undertaking to the Court that they would maintain the status quo in relation to the position of the plaintiff. Subsequent to the hearing, the plaintiff was asked by the University authorities to vacate the office which she had been provided with in the music department. Dr. Buckley received a letter from Brendan Baker, the Director of Human Resources in the University on 2nd December, 2008, in which he stated:-
“The undertaking given to the Labour Court is in respect of your salary only and no other arrangements.
You are therefore requested to vacate room 35 (the office) by Friday the 5th of December, 2008. Your co-operation in the matter is appreciated.”
The Irish Federation of University Teachers (of which the plaintiff is a member) responded to this letter and wrote to Mr. Ray McGee, Deputy Chairman of the Labour Court on 4th December 2008. The Labour Court responded by letter of 5th December, 2008, to the IFUT General Secretary and Mr. Baker, stating as follows:-
“The Court would wish to remind the parties that, on the day [of the hearing], the Court, in granting the adjournment, expressed a hope that such adjournment would be a short one of only a couple of weeks, but that on receipt of IFUT’s legal submission, which were to be copied to the NUI Maynooth, a new date would be set.
In the interim, the Court remarked to the parties that it would prefer that there be no change in the status quo regarding the claimant. The College’s response as recorded was that it was willing to continue the arrangements, including payment.
Obviously, the Court’s only direct role in this matter is under the specific provisions of the Protection of Employees (Fixed-Term Work) Act, 2003.
The Court would prefer that this be the only matter at issue on resumption of the case and is simply reminding the parties what occurred on the 16th October last.”
The resumed hearing before the Labour Court occurred on 16th December, 2008. By letter of 18th December from the defendant’s solicitors, the plaintiff’s representative was informed that the University would cease to pay the plaintiff with effect from 12th January, 2009. The letter stated:-
“We are aware that, while an undertaking was mentioned at the Labour Court hearing, there was no undertaking given at the Labour Court.
As you know, the University has continued to make certain payments to Dr. Buckley since the expiry of her fixed-term contract on 30th September, 2008. This was an ex gratia payment on the part of the University as a gesture of goodwill and in ease of Dr. Buckley until the hearing of the Appeal.
Please note that, as the hearing of the Appeal has now taken place, the University will cease to pay your client with effect from 12th January, 2009. The University also requires your client to vacate her office on Monday, 5th January, 2009, due to accommodation needs.
The University’s position is that Dr. Buckley has no entitlement to ongoing pay in circumstances where the decision of the Rights Commissioner is under appeal and as Dr. Buckley has had no contract since 30th September. 2008. Furthermore, in the context of any remedy sought by your client, damages would be an adequate remedy.”
On 22nd January, 2009, the plaintiff attended at her office in the University. She left the office at lunchtime. When she returned the door locks on her office had been changed and she was unable to obtain access to the office.
2. Issues to be tried
The plaintiff alleges that as a result of the actions of the University she has been gravely injured in her reputation as an academic and that she has been greatly embarrassed and humiliated. She alleges that she is still an employee of the University and the actions of the University in taking her off the payroll and in locking her out of her office have been arbitrary, illegal and in breach of fair procedures.
The plaintiff is seeking an interlocutory injunction restraining the defendants from terminating the plaintiff’s contract of employment; restraining the defendant from interfering with or reducing the remuneration of the plaintiff and directing payment to the plaintiff of the aforesaid remuneration; restraining the defendant from breaching the plaintiff’s terms and conditions of employment; and an injunction restraining the defendant from interfering with the discharge by the plaintiff of her role and function as Senior Research Fellow with the defendant. The plaintiff argues that the actions of the University in discontinuing her salary and removing her from office were a unilateral decision which is prejudicial to the plaintiff’s rights and which seeks to pre-empt the Labour Court’s determination.
The defendant argues that its position of maintaining the status quo communicated to the Labour Court on 18th December, 2008, related only to salary and was clearly offered as a goodwill gesture on an ex gratia basis in circumstances where the Labour Court does not have the power to require a party to give a legally binding undertaking. The defendant argues that there is currently no continuing contract between the plaintiff and the defendant. Even if the plaintiff is successful before the Labour Court, the defendant argues that the redundancy as previously notified would operate to determine any such indefinite contract. The defendant submits that if the plaintiff is successful before the Labour Court, there is a separate statutory means of enforcement pursuant to s. 16 of the 2003 Act. In those circumstances, the defendant submits that there is no jurisdiction and/or no necessity for the High Court to intervene in the manner sought by the plaintiff.
3. The Legal Issues
The law relating to interlocutory injunctive relief in the context of employment disputes was helpfully summarised by Edwards J. in Coffey v. Connolly (Unreported High Court, 18th September, 2007), where he stated:-
“The Supreme Court in Campus Oil v. The Minister for Industry (No. 2) [1983] 1 I.R. 88 identified the principles to be applied by a court in the granting or withholding of interlocutory injunctive relief. Firstly, the court must be satisfied that the strength of the plaintiff’s case meets a certain minimum threshold. In the case of a prohibitory injunction the plaintiff is required to satisfy the Court that there is a fair issue to be tried. However, if the applicant is seeking a mandatory interlocutory injunction the threshold is higher. In the case of Maha Lingham v. Health Service Executive [2006] E.L.R. 137, Fennelly J. stated:-
‘It is well established that the ordinary test of a fair case to be tried is not sufficient to meet the first leg of the test for the grant of interlocutory injunction where the injunction sought is in effect mandatory. In such a case it is necessary for the applicant to show at least that he has a strong case that he is likely to succeed in the hearing of the action.’
Secondly, the court must consider whether damages would be an adequate remedy for the party seeking the injunction, if he was successful at the trial of the action; and thirdly, whether the balance of convenience favours the grant or refusal of an injunction at the interlocutory stage.”
Of course, before examining whether the plaintiff meets these thresholds in seeking interlocutory relief, it is necessary to identify the legal basis for the plaintiff’s claim before this court. The defendant submits that the rights claimed by the plaintiff are wholly bound up with the successful resolution of her claim under the Protection of Employees (Fixed Term Work) Act, 2003. Counsel for the defendant argued that in this case, the 2003 Act provides the statutory scheme which the plaintiff must invoke to determine that dispute.
It is clear that the 2003 Act does provide for a specialised statutory regime for determination of claims and the enforcement thereof. Sections 14 and 15 of the Act provide that complaints under the Act may be made to the Rights Commissioner and thereafter appealed to the Labour Court. Section 16 provides the necessary enforcement mechanism:-
(1) If an employer fails to carry out in accordance with its terms a determination of the Labour Court in relation to a complaint under section 14 within 6 weeks from the date on which the determination is communicated to the parties, the Circuit Court shall, on application to it in that behalf by –
(a) the employee concerned,
(b) with the consent of the employee, any trade union of which the employee is a member, or
(c) the Minister, if the Minister considers it appropriate to make the application having regard to all the circumstances,
without hearing the employer or any evidence (other than in relation to the matters aforesaid) make an order directing the employer to carry out the determination in accordance with its terms.
(2) The reference in subs.(1) to a determination of the Labour Court is a reference to such a determination in relation to which, at the expiration of the time for bringing an appeal against it, no such appeal has been brought, or if such an appeal has been brought it has been abandoned and the references to the date on which the determination is communicated to the parties shall, in a case where such an appeal is abandoned, be read as a reference to the date of that abandonment.”
The impact of the 2003 Act in proceedings before the courts was considered by the Supreme Court in Maha Lingham v. Health Service Executive [2006] E.L.R. 137 where Fennelly J. stated:-
“In addition the plaintiff/appellant relies on the implementation in the Act of 2003, the Protection of Employees (Fixed-Term Work) Act 2003 implementing Council Directive 99/70 of June 28, 1999. However, having looked at that Act the court cannot see that it significantly alters the matter. It is unnecessary to go into it except that the general policy of the directive and the Act seems to be to protect employees who are employed on short-term fixed term contracts and who have been employed on such basis for a certain minimum number of years, either three or four years, and accepting for the sake of the purpose of the present case, that the plaintiff is employed under such a contract of employment, the question would be whether he could make out a case to justify the grant of an interlocutory injunction. There are two major obstacles in the place of the plaintiff/appellant in this context; first, that is that the implementing Act, the 2003 Act, contains, like the Unfair Dismissals Act, its own statutory scheme of enforcement and it does not appear to be envisaged by the Act that it was intended to confer independent rights at common law or to modify in general the terms of contracts of employment to be enforced by the common law courts; and the second is that in any event the general provisions and policy of the Act and of the directive seems to be to put persons who were in such short term contracts in the same position as if they were persons who were on fixed long term contracts but in neither event does it appear to interfere with the ordinary right and obligation of the employer to terminate the contract on the giving of reasonable notice and for that reason the matter comes back within the general ambit, therefore, of the sort of remedy that would be available to the plaintiff/appellant for the termination of the contract.”
It is thus clear that the 2003 Act is not of direct impact in the within proceedings. Rather, the plaintiff’s claim must be assessed by reference to the common law of wrongful dismissal. As noted above, the common law confers an obligation on the employer to terminate the contract on the giving of reasonable notice and in accordance with fair procedures.
3.1 Is there a subsisting contract of employment between the parties?
The first question that arises is whether there is a subsisting contract of employment between the parties. The fixed term contract expired on 30th September, 2008. On 8th August, 2008, the Rights Commissioner held that the plaintiff was entitled to a contract of indefinite duration, pursuant to the 2003 Act. The plaintiff was informed by the defendant on 27th August, 2008, that they were making the plaintiff redundant with effect from 30th September, 2008. The defendant also enclosed a copy of the University’s appeal of the Rights Commissioner’s decision. The defendant submits that, if the plaintiff is entitled to a contract of indefinite duration, this has been terminated by the statutory notice of redundancy.
It is clear that there is only a subsisting contract of employment between the plaintiff and the defendant if the plaintiff is successful in her appeal to the Labour Court. The Rights Commissioner has held that the plaintiff is entitled to a contract of indefinite duration. The defendant is not bound by that ruling until the statutory right of appeal is exhausted. This can be reasonably inferred from s.15(8) of the Act, which provides:-
“Where a decision of a rights commissioner in relation to a complaint under this Act has not been carried out by the employer concerned in accordance with its terms, the time for bringing an appeal against the decision has expired and no such appeal has been brought, the employee concerned may bring the complaint before the Labour Court and the Labour Court shall, without hearing the employer concerned or any evidence (other than in relation to the matters aforesaid), make a determination to the like effect as the decision.”
This determination of the Labour Court can then be enforced pursuant to s. 16 of the Act. It is clear, therefore, that the decision of the Rights Commissioner cannot be enforced until any appeal thereof has been heard and determined, or where the statutory period for the bringing of an appeal has expired without any appeal being brought.
3.2 What is the status of the undertaking given by the Defendant?
The court then must consider the status of the alleged undertaking by the defendant. The Court heard evidence that the defendant gave an undertaking on the first hearing at the Labour Court on 16th October, 2008, to maintain the status quo in relation to the plaintiff. The defendant continued to pay the plaintiff, though she was requested in December, 2008, to vacate her office, the defendant maintaining that the undertaking related to salary only. On hearing of this development, the Labour Court reminded the parties that it would prefer that there would be no change in the status quo regarding the claimant. However, it stated that “the Court’s only direct role in this matter is under the specific provisions of the Protection of Employees (Fixed Term Work) Act, 2003.” Following the resumed hearing on 16th December, 2008, the plaintiff was informed by the defendant that it would cease paying her salary with effect from 12th January, 2009.
Counsel for the defendant submitted that there can be no enforceable undertaking in circumstances where the 2003 Act does not make provision for the Labour Court to request an undertaking from the parties. It is clear from the statutory scheme of the 2003 Act that no provision is made for the giving of undertakings in the course of proceedings under that Act. Thus the defendant maintains that it made an offer to make an ex gratia payment of salary to the plaintiff, which it has now resiled from. I am inclined to agree with the defendant that this Court can play no role in enforcing a promise in circumstances where it would not be enforceable by the Labour Court, to whom it was allegedly given, as a matter of law.
3.3 Has the plaintiff made out a strong case?
The matter now falls back within the ambit of the remedies that would be available to the plaintiff at common law for the termination of the contract. The first leg of the test requires the plaintiff to show that she has a strong case that she is likely to succeed in the trial of the action.
Counsel for the plaintiff sought to rely upon the implied term of mutual trust and confidence in contracts of employment. This implied term was addressed in the context of dismissal by the Supreme Court in Maha Lingham v. Health Service Executive [2006] E.L.R. 137 where Fennelly J. stated:-
“The argument developed by Mr. O’Reilly in particular on behalf of the plaintiff/appellant is that there has developed in parallel with the statutory scheme of things the tendency of the courts to imply a term of good faith and mutual trust into contracts of employment. That implies, as far as the employee is concerned that he will work faithfully and respect the employment obligations that he has towards his employer and that is he should act in good faith towards his employer, but by purity of reasoning, therefore, the employer is equally bound not to act so as to undermine the contract of employment but to act also in good faith on the basis that there is a relationship of mutual trust between the parties.
This is a development which is perhaps at its early stages and it is not contested, in the present case, by Mr. O’Reilly that he needs to develop that law further in order to bring it to bear in the present case and to secure the injunction that he seeks. There has been a discussion of course of the English case of Eastwood v. Magnox Electric plc [2004] 3 All ER 991 decided this year and referred to in the judgment of Carroll J. and in particular in the majority speech in the House of Lords in that case where Lord Nicholls, as cited by Carroll J., took the view that because of the statutory code relating to unfair dismissal, in effect that it was not for the courts to extend further into the common law, the implied term regarding mutual trust in such a way as to upset the balance set by the legislature. In other words that the principle that there is an implied term of mutual trust and good faith in contracts of employment does not extend so as to prevent the employer terminating a contract of employment by giving proper notice and, having already said that it is not contested that proper period of notice was given in this case, the question is whether the plaintiff has made out the sort of case that would be necessary to show that the contract of employment had been undermined to such an extent by the employer in this case that the employer was deprived of the right to give a proper period of notice of termination.
For reasons already given it would appear necessary for the plaintiff to establish a strong and clear case that this was so in the present case. For reasons already mentioned in the summary of the evidence there is a very significant gap indeed. So far as the defendant is concerned the employment was terminated for the simple straightforward reason that the employment was not authorised and was not funded and that there was no question of the dismissal being motivated by any suggestion of racial discrimination or racial slur. It is not necessary, it seems to the court, to decide on the full ambit of such an implied term. No doubt, if the plaintiff/appellant had been able to produce a strong and clear body of evidence that the defendant in the present case was motivated by a policy of racial discrimination, the matter would be entirely different but, so far as the court can see, the evidence does not measure up to anything like to that extent and accordingly in the view of the court the plaintiff/appellant has not made out a case such as satisfies the test that could be posited on the basis of a development of the principle of the implied term of mutual trust.”
It is clear, therefore, that this implied term of mutual trust and confidence may avail the plaintiff in the context of a dismissal in very limited circumstances, where it is shown that the employer undermined the contract of employment to such an extent that the employer was deprived of the right to terminate the contract upon reasonable notice. As noted above, the decision of the Rights Commissioner that the plaintiff is entitled to a contract of indefinite duration is unenforceable until the statutory right of appeal has been exhausted. However, the defendant has attempted to pre-empt any decision of the Labour Court in the plaintiff’s favour by issuing the plaintiff with statutory notice of redundancy on 27th August, 2008. The defendant argues that even if the plaintiff were to succeed before the Labour Court, this statutory notice of redundancy operates to terminate any contract of employment of indefinite duration. While it is not for this Court to adjudicate on the validity or otherwise of the purported redundancy, it is evident that the actions of the defendant are motivated by a desire to thwart the plaintiff’s claim that she is entitled to a contract of indefinite duration.
However, I am not persuaded that the common law can be of assistance to the plaintiff in this regard. She may be protected by the statutory law of unfair dismissals or redundancy, but that is a matter for the specialist tribunals which have statutory jurisdiction over those matters. In this regard, I am guided by the remarks of Carroll J. in Orr v. Zomax Ltd. [2004] I.R. 486. There the plaintiff claimed that he was unfairly dismissed as there was no valid redundancy and he was really dismissed because of criticisms made about him. It was claimed that there must be an implied term in the contract that the employer must act reasonably and fairly. Carroll J. stated the following:-
“In Johnson v. Unisys Limited [2001] UKHL 13, [2003] 1 AC 518, the House of Lords, dealing with the statutory regime of unfair dismissal introduced in its original form by the Industrial Relations Act 1971 and subsequently in force under the Employment Rights Act 1996, held that an employee had no right of action at common law to recover financial loss arising from the unfair manner of his dismissal. A conclusion to the contrary would be inconsistent with the statutory system for dealing with unfair dismissals established by parliament in 1971 to remedy deficiencies in the laws that then stood. The remedy adopted by parliament was not to build on the common law by creating a statutory implied term that the power of dismissal should be exercised fairly or in good faith leaving the courts to give a remedy on general principles of contractual damage. Instead, it set up an entirely new system outside the ordinary courts at which tribunals applied new statutory concepts and offered statutory remedies. For the judiciary to construct a general common law remedy for unfair circumstances attending dismissal would be contrary to the evident intention of parliament that there should be such a remedy but it should be limited in application and extent….
It has therefore been held by the Supreme Court that the common law claim for damages for wrongful dismissal and the statutory claim for unfair dismissal are mutually exclusive. The House of Lords decision in Johnson v. Unisys Limited [2001] UKHL 13, [2003] 1 AC 518 underlines this. What the plaintiff is seeking to do is to introduce a new obligation under the common law on the employer to act reasonably and fairly in the case of dismissal. As the law stands, at common law an employer can terminate employment for any reason or no reason provided adequate notice is given. In cases involving dismissal for misconduct, the principles of natural justice also apply, but that does not arise here.”
.
Here there is no allegation that the period of notice given to terminate the plaintiff’s contract was inadequate. In light of the Supreme Court decision in Maha Lingham v. Health Service Executive [2006] E.L.R. 137, I am not inclined to agree with counsel for the plaintiff that the implied term of mutual trust and confidence avails the plaintiff in the present case.
4. Conclusion
For the above reasons, I find that the plaintiff is not entitled to the interlocutory reliefs sought. The alleged undertaking given to the Labour Court is unenforceable as a matter of law and the plaintiff has failed to establish a strong case that she is likely to succeed at the trial of the action.
Meade v Minister for Agriculture, Fisheries and Food
[2010] IEHC 105
Judgment of Miss Justice Laffoy delivered on the 3rd day of March, 2010.
The application
1. On this application the plaintiff seeks interlocutory injunctions in the following terms:
(1) restraining and/or prohibiting the defendant from implementing interim arrangements for the opening of Polyvalent Spring Mackerel Fishery whereby certain vessels in the over 65 foot category, and in particular the plaintiff’s motor fishing vessel “Buddy M”, are to be given a quota allocation for vessels in the under 65 foot category;
(2) restraining and/or prohibiting the defendant from discriminating against certain owners of vessels within the over 65 foot category, and in particular, the plaintiff with respect to quotas allocated to the “Buddy M”; and
(3) if necessary, an order directing the defendant to treat all owners of vessels over 65 foot equally with respect to the allocation of mackerel quotas in the Polyvalent Spring Mackerel Fishery.
The foregoing relief is sought on foot of a notice of motion which issued on 1st February, 2010, the proceedings having been initiated by plenary summons which issued on the same day.
The factual background
2. The “interim arrangements” referred to in the notice of motion arise from a decision made by the defendant pursuant to the powers conferred on him by s. 13 of the Sea-Fisheries and Maritime Jurisdiction Act 2006 (the Act of 2006) on 27th January 2010, which was communicated to the plaintiff by letter dated 28th January, 2010. Sub-section (1) of s. 13 provides that the defendant may, “for the proper and effective management and conservation and rational exploitation of fishing opportunities and fishing effort for Irish sea-fishing boats under the common fisheries policy”, at his discretion grant to a person an authorisation in respect of a specific boat, authorising, subject to s. 13, “the utilisation of the boat’s fishing effort for the capture and retention on board of a specified fish stock … from the boat in a specified area … and the landing or transhipment of the specified stock … during such period as is specified in the authorisation”.
3. The decision in issue on this application relates to the mackerel quota for the year 2010 and, more specifically, for the Spring of 2010. When the defendant made his decision on 27th January 2010, the final national allocation had not been agreed at EU level because bilateral negotiations between the EU and Norway had not been completed. At the December 2009 Fisheries Council an interim national quota for 2010 at 65% of the 2009 quota was set. The decision in issue related to the allocation out of that interim quota of the Spring 2010 quota. While the total allowable catch and the final quota have been subsequently agreed at EU level, following the successful conclusion of negotiations between the EU and Norway, it is important to emphasise that these proceedings and the relief claimed relate to the decision made on 27th January 2010 as to the allocation of the interim national quota.
4. Mackerel quota is allocated between Refrigerated Sea Water (RSW) vessels and polyvalent (i.e. multi-purpose) vessels, including hand liners. A set quantity is allocated to hand liners. The balance of the polyvalent allocation is divided between vessels over 65 feet and vessels under 65 feet.
5. In distributing the polyvalent allocation for Spring 2010 between the two categories of vessels, the defendant’s decision was to distribute the allocation of 5,505 tonnes as follows:
(a) 4,486 tonnes was allocated to the over 65 foot vessels, of which there are 17, each vessel receiving an allocation of 263 tonnes; and
(b) 1,018 tonnes was allocated to the under 65 foot vessels, distinguishing between –
(i) vessels of over 50 foot, of which there are 16, each of which got an allocation of 32 tonnes; and
(ii) vessels under 50 foot, of which there are 32, each of which was allocated 16 tonnes.
I would observe that the distribution does not tally mathematically with the available allocation, but nothing turns on that.
6. The manner in which the defendant’s decision affected the plaintiff was that, as he was informed in the letter dated 28th January, 2010 from the defendant’s department, a fishing authorisation in respect of the “Buddy M” was issued to him with an allocation of 32 tonnes of mackerel in respect of the period to 28th February, 2010. He was informed that a “re-allocation” of mackerel was planned after 28th February, 2010 for vessels in his mackerel quota allocation category (under 65 foot) for the period to run to 7th April, 2010. What was meant by “re-allocation” in that context is explained in the replying affidavit sworn on 18th February, 2010 by Josephine Kelly, a principal officer in the defendant’s department. Ms. Kelly averred that it is planned to have two fishing periods for the Spring season in respect of the under 65 foot category. Vessels which have not landed a minimum of 10% of the mackerel allocation in the first period, i.e. up to 28th February, 2010, will not be eligible for an allocation in the second period. As I understand it, the unfished quota will be “re-allocated”, which, in reality, means re-distributed between the vessels in the relevant category who have exceeded the threshold and the distribution will be on a pro-rata basis, although that has not been averred to on behalf of the defendant.
7. The plaintiff fished his entire allocation of 32 tonnes on 3rd February, 2010, so that he has crossed the threshold for a further distribution. His complaint is that, for allocation purposes, the “Buddy M” should have been allocated 263 tonnes as a vessel over 65 feet, because –
(a) since 11th December, 2009 the “Buddy M” has been registered in the Register of Fishing Boats with a registered length of 19.83 metres, which brings it within the over 65 foot category, and
(b) the Sea-fishing Boat Licence in respect of the “Buddy M” has been renewed by the Licensing Authority for Sea-fishing Boats with effect from 1st January, 2010 without pelagic preclusion in relation to mackerel, which means that it can fish for mackerel.
8. It is not disputed by the defendant that the “Buddy M” was registered as an over 65 foot vessel when the defendant made his decision in late January 2010. The basis on which the defendant treated the “Buddy M” as an under 65 foot vessel for the purposes of allocation of quota was that he decided to freeze all quota management arrangements for Spring 2010 as they were in Spring 2009, pending the evaluation and consideration of long-term arrangements as part of a mackerel review which is ongoing. That meant that, in accordance with the defendant’s decision, all vessels continue to be treated in 2010 for quota allocation purposes as they were treated in 2009. The “Buddy M” was an under 65 foot vessel for the purposes of the Spring 2009 allocation and, accordingly, it was similarly treated for the purposes of the Spring 2010 allocation.
9. The defendant’s position is that he made the decision to freeze all quota at 2009 levels having first notified the industry representatives, including the Producers’ Organisation (the Irish South West Producers’ Organisation), of which the plaintiff is a member, by letter of 24th July, 2009, that he intended to undertake a review of mackerel management and pelagic licensing policy for the polyvalent segment of the fishing fleet. In that letter, the defendant warned the owners of vessels that the review might change the criteria for determination of mackerel allocation and the allocation of other pelagic stocks within the polyvalent segment of the fleet. He also warned that actions planned or recently taken by owners might not qualify them for an increased share of the stocks. In particular, he warned owners with vessels then in the 65 foot and under category for mackerel and other pelagic stock allocations, who were intending to modify their vessels, that such modification might not secure entry into the over 65 foot mackerel and other pelagic fisheries. Subsequent to that letter, the Minster received representations from some fishing organisations. Later, he invited industry representatives to a meeting in his department on 18th December, 2009. The plaintiff attended that meeting and, as Ms. Kelly’s notes of the meeting, which have not been contradicted, disclose, the plaintiff apprised the meeting of his circumstances and, in particular, that he owns a vessel, which had been extended in length to move from the under 65 foot category to the over 65 foot category.
10. The notes of the meeting of 18th December, 2009 illustrate the divergent views within the fishing industry as to how the defendant should allocate the mackerel quota. Before making his decision on the allocation which he made for Spring 2010 on 27th January 2010, the defendant issued a letter on 15th January, 2010 to the representative organisations in which he indicated his intention to introduce a new allocation based on 50% of the over 65 foot allocation for four vessels, including the “Buddy M”, which were lengthened to meet the over 65 foot registered length requirement in 2009. However, the response from the industry once again reflected divergent views. There was strong opposition to the defendant’s proposal, which was dropped and, instead, the defendant made the decision on 27th January 2010 which is the subject of these proceedings.
11. The plaintiff’s case is that he should have been allocated mackerel quota relevant to an over 65 foot boat for Spring 2010 (i.e. 263 tonnes) on a number of grounds. First, he asserts that the defendant has retrospectively altered the criteria for the granting of quota to vessels over 65 feet and he contends that the defendant should have put all persons in his position on express notice of his intention so to do within a reasonable period of time. It was submitted on his behalf that the letter of 24th July, 2009 was not addressed to him. However, the plaintiff has not averred that he was not aware of the contents of that letter at the time. Secondly, he asserts that he acted to his detriment in taking measures to secure quota relative to a vessel over 65 feet and, in this regard, he cites the changes he had effected to the “Buddy M” and also the fact that over the course of four years he took the steps necessary to meet the criterion of 100% “active pelagic” history for the purposes of securing the quota allocation. The plaintiff contends that he has expended considerable time and money in those endeavours and that at all material times officers of the defendant’s department were engaged in the process and were fully aware of the steps he was taking. In this connection, the plaintiff exhibited correspondence from the defendant’s department, including two letters from Adrian Hosford of the Sea Fisheries Administration Division dated respectively 9th March, 2009 and 23rd October, 2009. In the latter letter, Mr. Hosford set out what the plaintiff had to do to comply with the requirement of having 100% “active pelagic” capacity from 1st January, 2010. It is clear that the plaintiff fulfilled the requirement, which involved, inter alia, taking steps to have the engine power of the “Buddy M” reduced from 663kW to 368kW, which no doubt involved expense. Mr. Hosford made it clear in his letter of 23rd October, 2009 that the letter concerned the licensing of the vessel only and did not in any way concern the allocation of quota.
Analysis of the relief claimed against the factual background
12. The defendant has issued authorisations on foot of the decision he made on 27th January 2010 to the owners of vessels in the polyvalent fleet, so that the quota available has been allocated for the first period. Insofar as there is currently quota available for re-distribution following the expiration of the first period on 28th February, 2010, that unused quota will be distributed by the defendant in accordance with that decision. The position, accordingly, is that the decision has been largely implemented.
13. In effect, what the plaintiff is seeking on this application is that the Court should direct the defendant to grant an authorisation to the plaintiff for additional quota amounting to 231 tonnes (i.e. the 263 tonnes allocated to vessels which were over 65 feet in 2009 less the 32 tonnes already allocated to the plaintiff and already fished by him) pending the trial of the action. In substance, what the plaintiff is seeking is a mandatory interlocutory injunction. Counsel for the plaintiff properly acknowledged that.
14. It is clear, on the basis of the information given to the Court, although this was not deposed to on behalf of the defendant, that of the total quota for 2010 to which Ireland is entitled under the recent agreement, 8065 tonnes, equivalent to roughly 13% thereof, will be allocated to the polyvalent segment. That means that there will be available to the defendant for allocation to the polyvalent fleet in Autumn 2010, 2,560 tonnes (8,065 tonnes less the Spring 2010 allocation of 5,505 tonnes). Accordingly, the defendant has the capacity to allocate 231 tonnes to the plaintiff and, indeed, to grant a similar allocation to the other three owners of vessels who extended their vessels during 2009 to over 65 feet.
The issues
15. The issues which arise in determining whether the plaintiff is entitled to the injunctive relief he seeks, which, as I have stated, in substance is a mandatory injunction are:
(a) whether he can show that he has a strong case that he is likely to succeed at the hearing of the action, following the decision of the Supreme Court in Maha Lingham v. Health Service Executive [2005] 17 ELR 137;
(b) whether damages would be an adequate remedy for the plaintiff if the injunction was refused and ultimately he was successful in the substantive action; and
(c) whether the balance of convenience favours the grant or the refusal of an injunction.
Strong case?
16. It was submitted on behalf of the plaintiff that he is entitled to an allocation of quota equivalent to the allocation to the owners of vessels which were in the over 65 foot category in 2009 on two bases.
17. First, it was submitted that the plaintiff had a legitimate expectation, having regard to the time and money he invested in extending the registered length of the “Buddy M” to over 65 feet and his four years of endeavours in building up one hundred per cent “active pelagic” history by 2010. The first essential ingredient of a successful claim based on failure of a public authority to respect legitimate expectations is that the public authority must have made a statement or adopted a position amounting to a promise or representation, express or implied, as to how it would act in respect of an identifiable area of its activity (per Fennelly J. in Glencar Exploration Plc v. Mayo County Council [2002] 1 IR 84 at p. 162). In determining whether that ingredient is present on the facts of this case, the question which must be answered in the affirmative is whether the defendant made a statement or adopted a position amounting to a promise or representation that he would grant mackerel quota in 2010 to the owners of vessels the registered length of which was extended so as to bring them from the under 65 foot category to the over 65 foot category in the year 2009. On the basis of the evidence which is now before the Court it is not possible to conclude that the plaintiff has shown that he has a strong case that his claim based on failure of the defendant to respect legitimate expectations is likely to succeed at the hearing of the substantive action. On the contrary, the evidence suggests that the defendant, and the officers of his department, were at pains not to raise hopes or expectations in owners of vessels who were contemplating modifying their vessels. The evidence indicates that clear and unequivocal caveats were issued to the industry in the defendant’s letter of 24th July, 2009. Additionally, I am not satisfied that the plaintiff has made out a strong case that he is likely to succeed in establishing the two other ingredients identified by Fennelly J. as essential elements in establishing a claim based on failure to respect legitimate expectations: the communication of the representation in such a way as to form part of a transaction or a relationship between the plaintiff and the defendant; and that the nature of the representation is such to create an expectation reasonably entertained by the plaintiff that the defendant would abide by the representation and that it would be unjust to permit him to resile from it. The evidence falls very short of indicating that a strong case can be made for establishing either ingredient.
18. The second legal basis on which counsel for the plaintiff contended that the defendant acted unlawfully in not granting the plaintiff a quota allocation of 263 tonnes was an assertion that he was in breach of the powers conferred on him by s. 13 of the Act of 2006. It was contended that his decision was not designed to promote “conservation and rational exploitation” of the fishing industry. If that were the case, the plaintiff’s complaint would more properly be met by a challenge to the validity of the defendant’s decision in judicial review proceedings or, alternatively, by an application for a declaration to that effect in these plenary proceedings. There is no such claim in the plenary summons issued in these proceedings. As I understand the factual foundation for the assertion that the defendant acted contrary to his powers under s. 13, it is that, in order to preserve his one hundred per cent “active pelagic” status for 2011, the plaintiff must fish for mackerel or herring or both on at least one occasion each week for sixteen weeks in the year 2010, because to date the defendant has not granted a “moratorium” reducing the requirement to maintain “active pelagic” history from sixteen weeks to eight weeks for the year 2010 or, indeed, for the year 2009, as he did for the years 2002 to 2008 inclusive. In consequence, the plaintiff, in order to maintain the required “active pelagic” history, will have to fish one day per week in each of sixteen weeks in 2010, notwithstanding that his quota was fished out on 3rd February, 2010 and although he is prohibited from landing the catch, which will result, it was submitted, in unnecessary destruction of fishing stock. As I understand it, the moratorium on “active pelagic” requirement was introduced and renewed under policy directives made under s. 3(2)(b) of the Fisheries (Amendment) Act 2003 and is a feature of the licensing regime for sea fishing boats, which is separate and distinct from quota management and allocation. On the basis of the submission made on behalf of the plaintiff, I cannot see that the plaintiff has made out an arguable, let alone a strong case, that he will succeed at the hearing of the action in establishing that the defendant has acted in breach of his powers under s. 13 on the ground alleged.
19. In determining whether a plaintiff has met the first test for the grant of a mandatory interlocutory injunction, the strong case test, the Court must be astute in avoiding resolving, or being seen to resolve, factual controversies. In arriving at a conclusion on the issue as to whether a strong case has been made out against the defendant on either or both of the two legal bases on which it was submitted by the plaintiff that he has, it has not been necessary to rely on any contested fact. That conclusion is that the plaintiff has not met the strong case test and, therefore, falls at the first hurdle.
Adequacy of damages
20. It was urged on behalf of the defendant that, if the Court should find that, as a matter of law or equity, the defendant should have granted the plaintiff an allocation of 263 tonnes, damages would be an adequate remedy for the plaintiff. On this point, counsel for the defendant relied on the decision of the Supreme Court in Curust Financial Services Ltd. v. Loewe-Lack-Werk [1994] 1 I.R. 450 and, in particular, the following passage from the judgment of Finlay C.J. (at p. 468):
“The loss to be incurred by Curust if it succeeds in the action and no interlocutory injunction is granted to them, is clearly and exclusively a commercial loss, in what had been, apparently, a stable and well established market. In those circumstances, prima facie, it is a loss which should be capable of being assessed in damages both under the heading of loss actually suffered up to the date when such damages would fall to be assessed and also under the heading of probable future loss. The difficulty, as distinct from complete impossibility, in the assessment of such damages, should not, in my view, be a ground for characterising the awarding of damages as an inadequate remedy.
21. Counsel for the defendant submitted that the facts set out in the plaintiff’s second affidavit sworn on 4th February, 2010 illustrate that the loss which the plaintiff contends he will incur, if he is not granted the additional quota he seeks, is readily quantifiable in damages. Apart from that, counsel for the defendant submitted that the loss would be clearly and exclusively a commercial loss. Counsel for the plaintiff, on the other hand, pointed to an averment contained in that affidavit in which the plaintiff averred that he would be “facing economic ruin”. The factor which the plaintiff pointed to as likely to give rise to such a disastrous outcome was if he “were to fish for the remainder of 15½ weeks in order to qualify for the over 65 foot category”, which I take to mean in order to maintain his “active pelagic” record, which, as I understand it, is a licensing requirement.
22. Where there is a risk that a commercial enterprise, whether conducted by an individual or a company, will be tipped over the edge into insolvency if an interlocutory injunction is not granted, provided there is appropriate evidence to support the existence of that risk, which would normally require up to date and precise financial data averred to by an accountant, in my view, it is open to the Court to conclude that damages would not be an adequate remedy, if the interlocutory injunction were not granted. I have so held in the past. However, in this case, even if the first hurdle had been surmounted, on the evidence now before the Court, one could not conclude that damages would not be an adequate remedy.
23. I have not overlooked the fact that counsel for the plaintiff relied in particular on the judgment of this Court (Kelly J.) in Mullarkey v. The Irish National Stud Co. Ltd. [2004] IEHC 116, in which it was held that damages would not be an adequate remedy for the plaintiff, where his family circumstances had been deposed to and were not controverted, and where he had ongoing obligations which would fall to be met and could not await any award of damages which might be ultimately be obtained at the trial. That case involved what has come to be known as an employment injunction and the issue was the payment of pay while on sick leave. The position of the plaintiff in that case, in my view, is distinguishable from the position of the plaintiff here.
Balance of convenience
24. In arguing that the balance of convenience favoured granting, rather than refusing, an interlocutory injunction, counsel for the plaintiff submitted that the defendant will suffer no prejudice, whereas the consequences of refusal will have a great impact on the plaintiff, in that his livelihood will be affected, his responsibilities to his crew will be affected, with repercussions for the community in Castletownbere, the port from which he operates. Counsel referred the Court to the judgment of the Supreme Court in Mitchelstown Co-operative Society Ltd. v. Societe des Produits Nestlé SA & Ors. [1989] ILRM 582. In that case, Mitchelstown Co-operative was seeking to restrain an Irish subsidiary of Nestlé from distributing yogurt and desserts in Ireland under the trade name “Chambourcy”, on the basis that Mitchelstown had the exclusive right to do so under a licence and trade mark user agreement entered into with Nestlé four years previously. The passage from the judgment from Finlay C.J. on which counsel for the plaintiff relied, which appears at p. 588 in the report, is in very general terms. What carried weight with Finlay C.J. in finding that the balance of convenience lay in favour of the grant of the injunction was that Nestlé had permitted Mitchelstown’s failure to commence to manufacture the product to continue for the previous four years, whereas the Irish subsidiary of Nestlé had only commenced its activity in July or August 1988, the decision of the High Court being appealed against being dated 11th October, 1988. I cannot see how that decision, which related to the grant of a prohibitory injunction to restrain an alleged breach of contract, assists the plaintiff’s claim in this case for a mandatory interlocutory injunction to compel the defendant to allocate additional quota.
25. I have mentioned the fact that, having regard to the final decision at EU level in relation to the national allocation, the defendant has capacity to meet the plaintiff’s claim, although that is not on affidavit, because it was submitted on behalf of the plaintiff that the defendant need not interfere with the quota entitlement in relation to other vessels in the polyvalent fleet, if an interlocutory injunction is granted. Therefore, so the argument goes, the defendant will not suffer any prejudice. Against that, counsel for the defendant submitted that it is the defendant’s responsibility under national and EU law to allocate the mackerel quota among Irish fishermen. It was submitted that the task poses severe difficulty for the defendant in circumstances where the fishermen cannot agree among themselves as to what allocation would be fair. That is certainly borne out by the uncontradicted evidence before the Court. If the Court were to grant the reliefs sought by the plaintiff, which amounts to directing the defendant to allocate him an additional 231 tonnes pending the trial of the action, effectively the Court would be ordering the defendant to impose new arrangements in respect of quota allocation across the board, which, as a matter of probability, would expose the defendant to legal action at the suit of other vessel owners, it was submitted.
26. For the reasons advanced on behalf of the defendant, I am of the view that the balance of convenience favours refusing the injunction. The fact that the defendant has capacity to meet the plaintiff’s demand is irrelevant. Judicial interference with the scheme which the defendant has put in place for the allocation of national quota would, to use a colloquial phrase, “upset the applecart”. In other words, it would disturb the status quo, rather than preserve it, as counsel for the plaintiff contended.
Decision and order
27. Primarily because I am not satisfied the plaintiff has met the strong case test, I have come to the conclusion that it would not be a proper exercise of the Court’s jurisdiction to grant the plaintiff what is, in effect, mandatory relief. There are secondary considerations also for reaching that conclusion. The plaintiff has not established that damages would not be an adequate remedy and I am satisfied that the balance of convenience favours refusing injunctive relief. Underlying the decision is the fact that to grant the reliefs sought would disturb the status quo, rather than preserve it.
28. There will be an order dismissing the plaintiff’s application.
Albion Properties Ltd v Moonblast Ltd
[2011] IEHC 107,
JUDGMENT of Mr. Justice Hogan delivered on the 16th day of March, 2011
1. Where a commercial tenant defaults in a material respect on the payment of rent to a landlord, does this Court have a jurisdiction to grant a mandatory interlocutory injunction requiring the tenant to deliver up possession of the premises in question to the landlord? While it might seem surprising that the existence of such a jurisdiction is in dispute, this is the net question which arises following an application to this Court by the plaintiff landlord (“Albion Properties”) for such an injunction.
2. In the original judgment delivered by me on 12th November 2010 I gave summary judgment in favour of Albion Properties as against the first defendant (“Moonblast”) in the sum of €75,080 in respect of unpaid rent. That application had arisen in the following circumstances, the details of which may now be briefly re-stated.
3. In these proceedings the plaintiff had originally claimed summary judgment in the sum of €191,566. Moonblast is a company which was engaged in the running of a newsagent’s outlet at Unit 12, Phibsboro Shopping Centre, Dublin 7. The second named defendant is a director of Moonblast and he also executed a guarantee which is the subject matter of the present proceedings. Moonblast ceased trading at the Unit 12 premises on December 24, 2010.
4. The parties originally entered into a lease of the premises in 12th November, 2001. The lease was for a period of four years and nine months and it was expressed to run from 6th November, 2001, to 6th August, 2001. It provided for a rent of the unit for the sum of IR£50,000.00, albeit that this was abated to IR£45,000.00 for the first year of the lease. The background to the present dispute has it origins at the time the lease was due to expire in August, 2006. At the time, the tenant was anxious to stay in the premises. The plaintiff landlord, on other hand, was determined to ensure that the tenant would not acquire any statutory rights to a new tenancy and it was, therefore, not anxious to continue the lease.
5. A curious situation then ensued whereby the first named defendant (“Moonblast”) paid the monthly rent of €5,750 via standing order to the plaintiff’s agents, Chatham Services Ltd. (“Chatham”). However, these sums were repaid at the behest of Albion Properties because it did not want Moonblast to acquire any statutory rights in respect of the retail unit in question. It is not in dispute but that at the end of January, 2007 Chatham sent Moonblast a notice to quit which was previously sent on the 12th August, 2006. The letter was addressed to Mr. Killalea and stated:
“Please find enclosed a copy of ‘notice to quit’ which was previously issued to yourself. I have also enclosed cheques totalling of €28,750.00, the amount of five months direct debits of €5,750.00 which were received into our account in error. Please arrange to have your direct debit cancelled with immediate effect”.
6. At the first hearing in early November 2010, it appeared to be common case that the cheques which were then sent on by Chatham were not cashed by either Moonblast or Mr. Killalea. If this was correct, then the effect of this was that Albion Properties had actually received rent in the sum of €28,750.00. It equally followed that the maximum sum which Albion Properties could recover by way of unpaid rent is thus reduced to the sum of €162,816.00. In effect, therefore, on this analysis, the rent was paid for September, October, November, December, 2006 and for January, 2007. I should here record that in advance of the latest hearing before me on 7th March 2011, Albion Properties’ financial controller, Mr. O’Sullivan, swore a further affidavit disputing whether Moonblast is, in fact, entitled to claim credit in respect of €28,750 for the period now in dispute. For the purposes of the present application, at least, it is unnecessary to examine this question further and it must remain an open question as to whether I have any jurisdiction to re-open this issue, at least so far as the summary judgment issue is concerned.
7. Returning to the narrative, Moonblast remained in occupation of the premises. It appears that it continued to pay the monthly rent by standing order until in or about August 2008, but that on each occasion a corresponding cheque for the sum in question was issued by Chatham on behalf of Albion Properties and, on this occasion, the cheques were actually cashed by Moonblast.
8. By August, 2008, the economic storm clouds were gathering and Albion Properties had second thoughts with regard to Moonblast. It decided that it did want Moonblast as a tenant after all. While Moonblast did pay the rent by standing order up until August 2008, this was cancelled out by the fact that Chatham sent Moonblast a corresponding amount on Albion Properties’ behalf which cheques, as we have just seen, were cashed by Moonblast on this occasion. The effect of this was that Moonblast has in fact paid no rent in respect of the premises in question since early 2007. Clause 4(b) of the lease provides that:-
“If the tenancy hereby created should continue beyond the term herein specified it shall, in the absence of a new agreement, be deemed to be a tenancy determinable by one calendar month’s notice in writing to be given by either party to the other and expiring on any gale day.”
9. Having regard to the provisions of Clause 4(b), it is difficult, at least at first blush, to see how the tenancy did not continue on the same terms and conditions as heretofore obtained before the lease expired in August 2006. While it is true that Clause 4(b) does not in precise terms, quite provide for this, this, in my view, is nonetheless the clear sense of that provision.
10. It is, of course, quite correct to say that Albion Properties had served a notice to quit on Moonblast. But since they took no steps in pursuant to this notice to quit, the position remains as if it had never been served. On the face of it, therefore, the tenancy remains in place by virtue of the continuation clause in Clause 4(b), the expiration of the original lease notwithstanding.
11. This latter point is, however, vigorously denied by Moonblast. They contend that the lease was, in fact, altered by virtue of an oral agreement dating from 15th March, 2007. But, in his first affidavit of 1st December, 2007, Mr. Killalea says at para. 6:-
“At the said meeting of [15th March, 2007] a verbal binding agreement was reached between your deponent and the plaintiff to the effect that the original lease would be disregarded for the purpose of creating a new lease, but that the first named defendant [would] remain in occupation of the said retail unit as a tenant of the plaintiff herein. The position pertains as of the date of swearing hereof. The terms of the new written lease were to provide for a significant increase in the rent of retail unit 12 so as to reflect the current market value rent applicable at that period, and it was furthermore agreed that the premium rent was no longer to apply. I received a further representation at this meeting to be that redevelopment works in the shopping centre were imminent and would be completed by mid 2010.”
12. While the existence of this agreement is vigorously denied by affidavits filed on behalf of Albion Properties, Mr. Killalea contends that the net rent payable was some 67% over the going market rent. The defendants thus contend that the rent payable in respect of unit 12 was IR£45,000.00 as compared with IR£27,000.00 which was the rent payable by unit 11 next door. They thus contend that Moonblast was paying some 67% over the going market rate at the time.
13. Thus, on behalf of the defendants, Mr. Ó Scanaill S.C. submitted that while Moonblast remained on as tenant of the premises, the terms of that tenancy were not agreed and were not reduced to writing. He further contended that Moonblast is not governed by the lease of 2001, but rather by the verbal agreement of March 2007.
14. I took the view that it would be inappropriate to determine these contentions save by means of a plenary hearing. It was, however, significant that Mr. Ó Scanaill S.C. did not deny but that the plaintiff was entitled to payment in respect of the rent due and that rent is due since January, 2007. While Mr. Ó Scanaill S.C. maintained that no new terms are agreed, as I read para. 3 of the second affidavit of Mr. Killalea, the height of the defendants’ case is that the rent which Moonblast was paying in respect of unit 12 is 67% over the going market rate at the time. While this particular contention was vigorously denied by the plaintiff, this averment nonetheless shows the furthest to which Moonblast have advanced – or could advance – their case. The affidavit thus acknowledges the lowest rent which would be payable would be at least IR£27,000 per annum, which equates to some €34,283. Putting this another way, this is the lowest possible annual rent which Moonblast could realistically have hoped to pay even if all of its contentions regarding the re-negotiation of the rent in March, 2007 were to be accepted at a full hearing.
15. While it should be appreciated that this was a rent which was never actually agreed, I took the view that it would be unfair to Albion Properties if Moonblast could have avoided summary judgment at this stage in circumstances where substantial rent is clearly due to Albion Properties, simply because it contended that the actual amount of the rent was never finally agreed in the wake of the March 2007 negotiations. It is clear that rent is outstanding for some two years and six months to the date of the commencement of the proceedings, i.e., from February, 2007 to July, 2009 inclusive. By my reckoning, even if the lowest realistic annual rent of €34,283 was taken as the benchmark, that figure for unpaid rent comes to €75,708.
16. It was for these reasons that I directed a summary judgment in favour of the plaintiff in the sum of €75,708. I further directed that the balance of the plaintiff’s claim, including the claim for interest on that sum be adjourned to plenary hearing. By order of 23rd November 2010, I directed that this sum was to be discharged in three tranches, commencing on 15th January 2011. The uncontradicted affidavit evidence shows that, to date, Moonblast have not adhered to this payment schedule and there does not appear to be any prospect that it will do so.
17. There is, in addition, the question of the guarantee given by the second defendant. While I appreciate that the guarantee is joint and several, I took the view that it was not appropriate at that juncture to give summary judgment as against Mr. Killilea, since I considered that it would only be fair to give Moonblast a reasonable opportunity to discharge the judgment in its own right before there was any question of recourse to the guarantor. At the conclusion of the first hearing, I therefore adjourned the application as against the second defendant and gave the plaintiff liberty to apply for summary judgment in the event of default by Moonblast in respect of the sum €75,708.
18. In view of the acknowledged default by Moonblast, Albion Properties then issued a further motion seeking judgment as against Mr. Killilea in his capacity as guarantor in the sum of €75,708. Albion Properties also sought a mandatory interlocutory injunction order permitting it to re-enter Unit 12 and, if necessary, to re-let that unit to a fresh tenant. At the second hearing, I indicated that I was in a position to accommodate the parties by offering an early trial of the main action which is presently scheduled for 24th May 2011. I accordingly adjourned the application for summary judgment in respect of the guarantee to that hearing.
Whether the Court has jurisdiction to grant an interlocutory injunction
19. There remains, therefore, the question of the jurisdiction of this Court to grant an interlocutory injunction requiring Moonblast to vacate the premises. Mr. Ó Scanaill SC urges that where a plaintiff has elected to go by way of summary summons, he cannot seek an injunction. He further submitted that it was inappropriate for this Court to grant an injunction in circumstances where I had adjourned the balance of the claim to plenary hearing, since – or so the argument ran – the granting of an injunction in such circumstances would be effectively to pre-determine the outcome of that claim. In effect, therefore, it was urged that I could only look to the balance of the claim for this purpose and that I could not have any regard to the summary judgment.
20. It seems to me that such an approach would be wholly artificial. The plain fact of the matter is that Moonblast has been in occupation of the premises without the payment of rent since 2007. Even though I directed summary judgment in the sum of €75,708, I also allowed a relatively generous payment schedule for the discharge of this sum. Moonblast has defaulted on the first of these payments of €25,000 and there is absolutely no suggestion that it would be in a position to comply with the order regarding the payment of the two further tranches of some €25,000.
21. It is all too obvious that Moonblast has not discharged highly material obligations under the lease and, furthermore, that it is unlikely to be able to do so, not least given that it ceased trading from the unit in December 2010.
22. It is true that the courts are very reluctant to grant a mandatory interlocutory injunction, save in the clearest of cases: see, e.g., the judgment of Keane C.J. in Attorney General v. Lee [2000] IESC 80, [2000] 4 IR 68. Because the effect of such relief is generally to disturb the status quo ante, the granting of such an order is properly regarded as exceptional. It would normally not be granted unless it was more or less inevitable that the plaintiff would succeed at the trial of the action or, at least, where a strong prima facie case had been made out: see, e.g., ICC Bank plc v. Verling [1995] 1 I.L.R.M. 123 at 130, per Lynch J.. In addition, the balance of convenience would have to favour the grant of such exceptional relief. In this respect, the test for relief is higher and more exacting than that which obtains under the conventional Campus Oil criteria (Campus Oil Ltd. v. Minister for Industry and Commerce (No.2) [1983] I.R. 88).
23. In my view, however, this is such an exceptional case for reasons I will shortly set out. It is true, of course, that a plaintiff who elects to proceed by way of summary summons must normally be confined to the limits of that procedure. It is also true that Ord. 2 (dealing with procedure by way of summary summons) does not normally envisage the grant of an injunction. Nevertheless, Ord. 2, r. 1(2) provides that the summary summons procedure may be adopted in the following classes of claim-
“In actions where a landlord seeks to recover possession of land, with or without a claim for rent or mense profits –
….. (b) for non-payment of rent.”
24. This Court enjoys a general jurisdiction to grant an injunction whenever it is just and convenient to do so: see s. 27(7) of the Supreme Court of Judicature (Ireland) Act 1877, as applied to this Court by s. 48 of the Courts (Supplemental Provisions) Act 1961. In this regard, I entirely agree with the submission of counsel for Albion Properties, Mr. Gibbons, that it would be pointless to require his client to issue separate plenary proceedings before an interlocutory injunction of this kind could either be sought or granted. A requirement of this kind would simply represent legal formalism at its worst. Any supposed jurisdictional bar which prevented the court from granting injunctive relief in an appropriate case to require a defaulting tenant to yield up possession of a commercial tenancy would be at odds with duty imposed on the courts by Article 40.3.2 of the Constitution to ensure that the property rights of the plaintiff landlord are appropriately vindicated in the case of injustice done. The courts are under a clear constitutional duty to ensure that the remedies available to protect and vindicate these rights are real and effective: see, e.g., the comments of Kingsmill Moore J. in The State (Vozza) v. O’Floinn [1957] I.R. 227 at 250; those of Murray C.J. in Meadows v. Minister for Justice, Equality and Law Reform [2010] IESC 3 and the authorities set out in my own judgment in S v. Minister for Justice, Equality and Law Reform [2011] IEHC 31. For good measure, a similar obligation is imposed on the State by Article 13 of the European Convention of Human Rights, albeit that it must be recalled that the courts are not an “organ of the State” for the purposes of s. 3(1) of the European Convention of Human Rights Act 2003, with the result that the courts are not, apparently, as such under any direct statutory obligation to perform their functions in a Convention compatible manner. The question of whether the courts are under any duty independently of the constitutional considerations which I have just mentioned to re-fashion or re-shape existing remedies in order to secure compliance with Article 13 ECHR is a mater which must await an appropriate case for resolution.
25. In my view, it would be entirely just and convenient to grant a mandatory interlocutory injunction at this juncture for the following reasons.
26. First, it has already been judicially determined that the Moonblast owes Albion Properties a substantial sum in rent. In this respect, Albion Properties have already gone much further than that required of a plaintiff in the first limb of the Campus Oil test, namely, establishing that there is a fair question to be tried.
27. Second, Moonblast has defaulted on the payment schedule directed by the court and there is no reason to think that it will able to discharge these debts.
28. Third, Moonblast has indisputably defaulted in a material and fundamental on its basic obligations qua tenant by not paying rent for a long period of time.
29. Fourth, it is obvious that considerations based on the balance of convenience which might obtain in the case of a viable business do not apply here, not least where Moonblast ceased last December to trade at the unit. In this respect, the present case is very different from the situation which obtained in Barnaton Investments Ltd. v. O’Leary [2004] IEHC 155. In that case Peart J. refused to grant an interlocutory injunction in circumstances where there was a genuine dispute as to whether a lease had been lawfully assigned to the defendant. Furthermore, the balance of convenience favoured permitting the defendant to continue to trade as a restaurant while the plaintiff could be adequately compensated in damages. It is plain that Moonblast would simply not be in a position to compensate Albion Properties in the event that an injunction were refused. It may also be noted that in ICC v. Verling the inability of the defendant to pay any damages was also a factor which was held by Lynch J. to warrant the granting of interlocutory relief requiring the tenant to yield up possession to the landlord: [1995] 1 I.L.R.M. 123 at 129. It seems all too obvious that Moonblast will not be able to pay the rent which would fall due on the property in the event that the injunction is refused.
30. Fifth, the existence of a closed-up premises within the precincts of the shopping centre doubtless creates a negative impression on the general public and acts as a depressing effect on business generally within the centre. This clearly prejudices the interests of the landlord.
31. In such circumstances, it is all but inevitable that Albion Properties will succeed at the trial of the action and recover possession of the unit. It would be intolerable if a landlord could not immediately recover possession of the property in circumstances of repeated and continuous material breaches of the tenant’s obligations, not least where there is every probability that damages would be ultimately prove to be inadequate remedy. While acknowledging that the grant of a mandatory interlocutory injunction is confined to exceptional cases for the reasons indicated by the Supreme Court in Lee, this is, to my mind, for the reasons just stated, one such case.
Conclusions
32. Since I consider that in these circumstances the claim of Albion Properties for possession of the property is virtually unanswerable and since the balance of convenience is very much in its favour, I propose to grant a mandatory interlocutory injunction with immediate effect requiring Moonblast to yield up possession of Unit 12. This, however, is subject to two conditions. First, I record here that Albion Properties have, through counsel, tendered the usual undertaking as to damages. Second, I will require it to withdraw the existing Circuit Court proceedings seeking possession of Unit 12 (which proceedings, I understand, were issued but not served on the defendants) and not to seek the costs of those proceedings.
33. Subject to this, I propose to discuss the precise form of order with counsel.
Downey v. Minister for Education
[2000] IEHC 76; [2001] 2 IR 727 (26th October, 2000)
THE HIGH COURT
2000 No. 6481p
JUDGMENT of Mr Justice Smyth delivered the 26th day of October 2000.
1. This is an application for an interlocutory injunction in which the reliefs claimed are as follows:-
(a) Provide forthwith pending the trial of the action for free primary education for the Plaintiff suitable to his needs and/or
(b) Finance to enable the Plaintiff’s next friend provide for free primary education suitable to his needs and
(c) Such further and other consequential orders and directions as to this Honourable Court may seem fit and proper including an Order reserving the costs of and incidental to this Application to the Trial Judge
2. In the event only the second relief aforesaid was pursued.
3. The facts of the case are that the infant Plaintiff who was born on the 24th of September, 1995 is the younger of two children born to the next friend and his wife. At the age of 2½ to 3 years they noticed that Luke was slow to talk. By the age of 3½ years they noticed he had language difficulty and Luke began to receive some speech therapy and thereafter went to playschool. In February, 2000 Luke was diagnosed as autistic and on a scale of 1 to 10 on a spectrum of autism, he was a 5. At this stage Luke was 4 years 5 months old. The next friend avers that when told of the autism by Miss Mary Fitzgerald it came as a complete shock to him and his wife. On the 11th March, 2000 a Mr. Allan Willis an Educational and Psychological Consultant in London met the Infant Plaintiff and carried out an assessment. Mr. Willis strongly recommended a teaching programme based upon Applied Behavioural Analysis. His opinion was, that Luke should attend a specialist provision for pupils with Asperger Syndrome or autism as a matter of priority, or that he has a home based education programme developed for him.
4. The next friend also had a report from Miss Fitzgerald of 20th March, 2000. Four letters were written to the Minister for Education on 3rd and 16th April and 1st and 10th May of the year 2000, and it is clear that an instant response was being sought to Luke’s problem. No instant solution was found and the writ issued. Mr. Downey proceeded to take a course of action, in which he, his wife and two children flew to America, stayed there for some 5/6 weeks while Luke was receiving exclusive specialist attention at the Behavioural Intervention Association, 2354, Powell Street, Suite B, Emeryville, California (hereinafter referred to B.I.A.). The family returned to Ireland and now two tutors have been engaged for a year. The total estimated cost of this exclusive specialist treatment or attention is of the order of £68,544.00 of which a claim is now submitted for payments to date of the order of £30,740.00. The parents of Luke have mortgaged their home to the extent of the sum of £55,000.00.
5. The background facts disclose that a report of 16th September, 1999 was sent to Miss Sinead Kelly to whom Luke had first been sent for speech therapy. This report was prepared by a Dr. Elizabeth Lewis, Psychiatric Registrar, of the Brothers of Charity, Child and Family Clinic in Cork where Luke was enrolled for educational purposes. This report (inter alia) records that:-
“Both, particularly Mum, appeared shocked and distressed by this information.”
6. The information was that the Clinic catered for children with special needs. Apparently the parents of Luke who was then 4 years old had not ever contemplated the possibility that Luke’s difficulties might extend beyond his language difficulties. Apparently the parents do everything for Luke themselves. As of September, 1999 this 4 year old was not attending playschool. I note most particularly that under the heading “General Behaviour”:-
“Both parents work outside the home. Luke is minded by his maternal grandmother.”
7. This information is confirmed under the heading of “Family Background”. The next friend was then aged 36 and worked for an Engineering Firm. Mr. Hickey S.C. for the Plaintiff informs me that the father is now self employed and who on the “budget estimate of costs” is earning money of the order of £50,000-00 per year.
8. Mrs. Downey was then aged 38 years and then worked in the Human Resources Department of a Pharmaceutical Firm. Luke’s responses to his father under “observation of Luke” are noted as the “Impression” left on Dr. Lewis which summarises Luke as having disordered language development, abnormalities of social interaction (opportunities for peer interaction being limited) restricted play activities and some ritualistic behaviours. Dr. Lewis records:-
“I have concerns regarding Luke’s overall intellectual ability and also the possibility of autistic spectrum disorder ”
9. And further in the report it is noted that:-
“Today, parents were understandably upset and expressed guilt about a number of issues including concerns that they were away from home through work too much. That Luke was staying with granny instead of attending playschool because of convenience all round, that they were treating Luke as a baby because he was the youngest.”
10. Dr. Lewis concluded her report (which I note was sent to Dr. Brady, G.P. Ballinhassig – who may have been the family doctor) with a “Plan” in which she notes:-
“6. As mentioned, parents had not been prepared for this type of assessment carried out today and found difficult to give definitive answers in certain areas.”
11. Amongst the reports exhibited is one dated 7th February, 2000 from Dr. Noel J. Tangney, Consultant Paediatrician in which he notes that the “family history is unhelpful”. Miss Fitzgerald’s report of March, 200 under the title “Perception” of Luke is as follows:-
“He did not initiate social contact with me and showed no reaction to praise . He did not seek my help for (sic) make eye contact with me.”
(emphasis added)
12. Under the heading “Social Interaction”, it is noted of Luke:-
“Luke is an affectionate little boy towards his family and other familiar people. He has had limited exposure to other people.”
13. And later in the report it is noted that:-
“Luke is generally dressed and toileted by an adult.”
14. As of the date of the report Luke was about 4½ years of age.
15. I mention these several reports so that what Mr. Willis reported and opined upon which in the papers and Counsel’s submissions is most heavily relied upon are all duly taken note of.
16. Initially Mrs. Downey wrote by letter dated 20th March, 2000 requesting Cork CABAS School that Luke be assessed for entry into the school and the letter also applied for a position for him there on the basis that Mr. Willis recommended the CABAS System. Both Mr. and Mrs. Downey wrote to the Defendant on the dates earlier referred to in this Judgment. The urgency of early intervention in the case of autism was stressed and that time was of the essence so that a place in the CABAS School would be available on or before 1st September, 2000. The Defendant replied by letter dated 12th April, 2000. Before sending Mr. Willis’ report to the Defendant an e-mail had been sent by Mr. and Mrs. Downey prior to the 14th April to B.I.A. with a completed application form. The e-mail from B.I.A. requested a twenty minute VHS video of Luke, 50% of which was to record parent-child interaction.
17. In a letter dated 16th April, 2000 Mr. and Mrs. Downey informed the Defendant that they had started initial discussions with B.I.A. for placement and that if Luke is not given a place in the Cork CABAS School they must get Luke started on a full-time home based ABA programme. The urgency of the position is stressed. By 1st May 2000 Mr. and Mrs. Downey wrote to the Defendant stating of Luke that he needs an Individual Educational Programme (IEP) with a one to one teacher for intensive weekly durations of 30 hours/maximum of 40 hours per week. A general indication of costs and commitments set out in the letter which also states:-
“If we get a place in the CABAS School for Luke it would be much better for all concerned. Luke would be getting an appropriate education, it is full time and we both can continue to juggle our full time careers to meet our current financial commitments and our priority commitment of an appropriate education for our 2 children.”
18. The letter concludes:-
“If we do not receive a written decision from you we will have no choice but to go ahead with this option” (the IEP) “and reclaim the funding through all legal channels open to us”.
19. The Solicitor’s preliminary letter is dated 10th May and proceedings issued on 2nd June 2000.
20. There are several matters in dispute in the Affidavits, in particular the options held out as available to the Plaintiff which were rejected. The Defence to the Statement of claim of 20th of July 2000 has been delivered. There are serious matters in contention between the parties.
The Plaintiffs submissions:-
1. Paul O’Donoghue (A Minor) -v- The Minister for Health, The Minister for Education, Ireland and The Attorney General [1996] 2 IR 20 and Jamie Sinnott (A person of unsound mind not so found suing by his mother and next friend, Cathryn Sinnott) -v- The Minister for Education, Ireland and The Attorney General (unreported: Barr, J. – 4th October 2000) established the constitutional obligation of the State to provide for free basic elementary education of all children and that such education consisted in giving each child such advice, instruction and teaching as would enable him to make the best possible use of his inherent and potential capabilities, physical, mental and moral, however limited these capacities might be.
2. The options offered were reasonably rejected.
3. Mr. Allan Willis’ expert opinion was not disputed.
4. The Plaintiff clearly signalled in advance the course he would take in the event of a place in the CABAS School not being available.
5. The averments in paragraph 10 of Mr. McCann’s Affidavit sworn on 5th October 2000 after the Sinnott Judgment envisaged, albeit on a without prejudice basis, the possibility of agreement which would permit of interim funding for a home education programme pending the determination of test cases in November.
The Defendant’s submissions:-
1. ‘The very first principle of injunction law is that prima facie you do obtain injunctions to restrain actionable wrongs for which damages are a proper remedy (per Lindley L. J. in London and Blackwall Railway Company -v- Cross (1886) 31 Ch. D. 354 at 369 ). This note from Bean on injunctions (7th Edition – 1996) is followed by the author’s observation:-
“It is comparatively unusual for the Defendant to be able to say that damages are the only available remedy in the case and that the Court does not even have a discretion to grant an injunction .”
21. Mr. P. Keane S.C. contended this is just such a case. To which Mr. Hickey responded that the Court can and does in appropriate cases obligate a Defendant to make payments to the Plaintiff pending the disposition of a case on plenary hearing (Patrick Courtney -v- Radio 2000 Ltd. [1997] E.L.R. 198 ).
2. Mr. Downey did not give the options a fair chance.
3. The essence of entitlement must rest on a proof thereof and whilst the O’Donoghue and Sinnott cases decided on the constitutional rights of some disadvantaged persons the entitlement to recover, if any, arises in the instant case only on a determination of the action.
4. The Plaintiff having in May 2000 signalled a requirement for a place in the Cork CABAS School now says he has no such requirement, but may require such facility in twelve or eighteen months time. It was not reasonable that an instant request should meet with an instant response being required of the Defendant (notwithstanding the apparent consensus that early intervention in autism is the proper response).
5. On the authority of Fitzpatrick -v- The Commissioner of An Garda Síochána (unreported: Kelly J. 16th October 1996) the approach to be taken on the adequacy of damages as set out at pages 8-15 of the Judgment should be followed.
CONCLUSION:
22. The Plaintiff is seeking a mandatory injunction for the payment of a sum of money which can be fairly viewed as an advance on or an interim payment of the damages that he believes he will receive at the conclusion of a plenary hearing. The reasonable inference to be drawn from an order so made is that there is no liability to be tried. A defence has been filed. It seems to me without sight of same that the O’Donoghue and Sinnott cases which are clearly distinguishable on their facts do not necessarily conclude the liability in the instant case. The facts as disclosed on the documents seem to raise such issues as
(a) has the constitutional provision supportive of the Mother, such as to enable her to be at home to nurture the children and save her from the economic need to work been honoured
(b) have the parents as the primary educators of the child discharged their duties and responsibilities concomitant to such right in the period before the diagnosis of autism and
(c) the obligation on the State to provide the one to one treatment indicated in this case, which circumstances excepted, is of a standard of personal tutors redolent of earlier centuries as the privilege usually of the aristocracy
(d) the duty, if any to provide and fund on six months notice or whatever period of notice a specific school and specific teaching which is determined by a parent on the opinion of one Educational Consultant.
23. The query arises as to whether the Defendant can be dictated to at short notice to provide (effectively at the expense of the rest of the community) the exact facilities a parent determines for his or her child. These are only some of the many issues that arise on the facts. I am aware of the mortgage raised and Mrs. Downey’s going back to full time work and of the cancelled holiday to Wales and many other matters, which would clearly warrant enquiry at a trial. At the end of the case, if the Plaintiff succeeds an award of damages is what will emerge. Matters have passed beyond those set out in the Affidavit of 7th June 2000 (particularly paragraph (11) thereof). The Plaintiffs next friend decided to proceed to put in place an ABA programme and having done so requires the Defendant at this stage before the rights or wrongs of the issues between the parties have been resolved to finance that programme. The Courtney case is one in which a contractual right stated to have been infringed left the complainant without a means of livelihood and the complainant was enjoined to perform duties referable to the contract if called upon as a condition of being made payments of salary pending the trail of the action. It is clearly distinguishable from the instant case. I have considered the balance of convenience: the status quo ante to litigation has since been unilaterally altered by the Plaintiff in the matter of monies which is what the motion is all about. I do not conceive the jurisprudence of the Court to equate to a form of Socialist Government intent on the redistribution of wealth in society. In law there must first be established liability before payment of damages. The energies of the parties should be devoted to progressing the action for an early trial. I refuse the relief sought. Damages not an injunction are at the fulcrum of this motion.