Contract Law – Solas Agreement – Dispute – Injunction Restraining the Purchase of Fuel From Other Suppliers
Irish Shell Limited v JH McLoughlin (Balbriggan) Limited, unreported High Court, 4 August 2005, Mr Justice Clarke This case is a good illustration of the application of the legal principles involved in granting an injunction while a related trial is pending (known as an interlocutory injunction). Facts: The plaintiff (Shell) sold a filling station in Balbriggan, County Dublin, to the defendant company in 2004. As a special condition in the contract for sale, the purchaser was to execute both a sales agreement and a letter of offer, which would require the purchaser to trade only in Shell fuel products for three years (known as a solas agreement). Although the sale of the property completed, these two documents were not executed. Shell instituted proceedings to order the defendant to sign the two documents. They also sought an injunction restraining the defendant from selling any fuel other than Shell fuel while this trial was pending. This judgment concerned the application for this interlocutory injunction. Held: Mr Justice Clarke granted the interlocutory injunction to Shell, applying the well-established three-step test for granting these injunctions: 1. He held that there was a fair issue to be tried. 2. He further held that damages would not be adequate for the plaintiff if they succeeded at trial. 3. He finally held that the plaintiff would suffer more from a refusal than the defendant would suffer from the granting of the injunction (known as the “balance of convenience” test). The court noted that if the injunction was refused at this point but granted at the trial stage, the later injunction would be of little value, as much time would have passed in which the defendant could have sourced fuel from other suppliers. The court also noted that the plaintiff had granted the defendant an undertaking to pay the defendant’s damages if the defendant succeeded at trial.