1. This
matter comes before the Court pursuant to a Notice of Motion dated the 27
October, 1989 in which the Plaintiff seeks a number of reliefs. However, the
Motion has proceeded on the basis that the reliefs which the Plaintiff seeks
are those set out in paragraph (2), (3) and 4 of the Notice of Motion that is
to say:-
(2)
An order directing sequestration of the corporate property of the Defendant for
its wilful disobedience of the undertaking and order made on the 19 August 1998
in the proceedings herein.
(3)
An Order attaching the Directors and Officers of the Defendant and in
particular David Harpur for his wilful disobedience of the Undertaking and
Order made on the 19 August 1998 in the proceedings herein.
(4)
An Order directing the sequestration of the property of the Directors and
Officers of the Defendant and in particular David Harpur for his wilful
disobedience of the Undertaking and Order made on the 19 August 1998 in the
proceedings herein.
The
relevant background to this case can be summarised as follows:
The
Plaintiff is a "Dealer" within the meaning of an agreement made between the
parties the effect of which was to appoint the Plaintiff a Dealer in Rover Cars
from the 5 August, 1994. A second and similar agreement exists in respect of
another product which the Defendants manufacture namely Range Rovers. The
Parties rights and obligations towards one another are embodied in these and an
additional agreement entitled "Vehicle finance agreement" made between the
Parties.
Prior
to the 19 August 1998 disagreements had arisen between the Parties arising from
these contracts as a result of which the Plaintiff instituted proceedings
against the Defendant. It would appear that the Defendants had discontinued
supplying Rover cars to the Plaintiff as a result of which his business was
adversely affected. As a result a Notice of Motion was issued as a matter of
extreme urgency seeking interlocutory relief and this came on for hearing on
the 19 August 1998 during the long vacation. In this Notice of Motion the
Plaintiff sought inter alia
(1)
An Order being an interlocutory injunction restraining the Defendants from
breaching the terms of two agreements entered into between the Parties on the 5
October 1995 whereby the Plaintiff was appointed to sell the Defendant's
vehicles.
(2)
In particular an Order being an interlocutory injunction directing the
Defendants to continue to supply the Plaintiff vehicles subject to the usual
terms and conditions as applicable between the Parties.
Prior
to the hearing of this Application on the 19 August, 1998 the Parties entered
into an Agreement which provided, inter alia,
(1)
That the Defendants undertook to recommence with immediate effect the supply of
parts and vehicles to the Plaintiff herein in accordance with existing or
future Rover terms
(2)
Such vehicles and parts to be paid for by direct debit (or such other means as
may be agreed in the interim between the parties herein)
(3)
The Plaintiff to be allowed:
(a)
£40,000 (net of VAT) credit for all vehicles comprising "sold orders"
subject to Rover Dealer terms;
(b)
£100,000 (net of VAT) for all vehicles for stock purposes subject to Rover
Dealer terms;
(c)
£20,000 (inclusive of VAT and VRT) credit for courtesy/demonstration
models (R2 vehicles not including a Range Rover or five door discovery estate,
whichever is the greater subject to Rover Dealer terms)
(4)
Order and delivery of vehicles as per existing agreement.
(5)
The Plaintiff to maintain an overdraft facility of £50,000 with AIB
Longford and to notify the Defendant of any variation therein.
(6)
The Plaintiff's Director Michael Byrne to execute a personal guarantee to cover
all vehicles and parts supplied pursuant to the agreement herein, prior to
recommencement of delivery by the Defendant herein of the vehicles and parts
referred to herein.
(7)
The Plaintiff to pay by Bank Draft (without admission of liability) to the
Defendant the sum of £10,000 within seven days of this agreement to the
account for parts received to date. The Defendant to furnish a detailed account
of all sums due for parts to the Plaintiff and the balance (if any) to be paid
by the Plaintiff within 14 days. In the event of a dispute between the Parties
herein, existing procedures to apply.
(8)
All parts supplied under this agreement to be paid for within 30 days by direct
debit.
(9)
The Plaintiff to forthwith have access to the full parts file.
(10)
The Defendants to replace the four existing vehicles at present held in stock
by the Plaintiff upon the terms of existing agreements.
(11)
The Plaintiff to furnish the Defendants with its audited accounts up to date
within 4/6 weeks of today's date and in the event of the accounts up to June
1998 not being certified, final and management accounts to be furnished for
that period.
(12)
The Plaintiff to deliver a statement of claim within five weeks of the date
hereof, the Defendant to thereafter file a defence within a period of four
weeks from the receipt of the statement of claim, both Parties thereafter to
use all reasonable speed and diligence to bring these matters to a hearing.
(13)
Liberty to apply to both Parties on three working days notice to the other side.
(14)
Registration by the Plaintiff of sold orders to be made within seven days.
(15)
Costs reserved.
(16)
Without prejudice to the foregoing the dealer agreement, rover agreement and
finance agreement continued to apply and the dealer trading terms apply.
(17)
The above matters (1) to (16) to be made a Rule of Court.
The
said matter came before Kelly J on the 19 August 1998 and by consent an Order
was made staying the proceedings save as may be necessary to enforce the
consent, upon the terms set out in the consent. Liberty to apply was reserved
(so as to enforce the terms of the consent) and the Court made the following
Order "the Court doth note the Undertaking given by said Counsel for the
Defendant on behalf of the Defendant in the terms of Paragraph (1) of the
Consent namely that the Defendant undertakes to recommence with immediate
effect the supply of parts and vehicles to the Plaintiff herein to include the
supply of vehicles for stock purposes as well as sale in accordance with
existing or future Rover terms." The said Order went on to provide for the
delivery of the statement of claim within five weeks.
Notwithstanding
this Agreement I am satisfied that thereafter the Parties failed to achieve a
comfortable trading relationship with each other. For the Plaintiffs part he
alleges that while he fully complied with the terms in relation to payment, the
Defendant's failed to supply him with Rover motor cars and he alleges that they
effectively set about driving him out of business by starving him of supplies.
The Defendants dispute this assertion and say that within the terms of the
Rover Dealership agreement they always supplied ordered vehicles save in
circumstances where there was a breach by the Plaintiff of the terms of the
agreement.
The
ongoing dispute came to a head on or about the 8 October, 1998 when two letters
of that date were received. The first was received by the Plaintiff from the
Defendant and the second by the Defendant's Solicitors. These letters formally
notified the Plaintiff of "the immediate termination of your dealership with
Rover Ireland Limited." The grounds for this termination are set out in the
letter of the 8 October, 1998 from the Defendant's Solicitor to the Plaintiffs
Solicitor.
There
are six grounds and they can be summarised as follows:
(a)
The Defendants complained that there was a failure on the part of the Plaintiff
to provide them with accounts as he was required to do, within six weeks from
the date of the settlement.
(b)
The Defendants allege that on the 30 September 1998 they carried out a stock
take on the Defendant's premises and this disclosed that of the 13 cars which
were forwarded to the Plaintiff 8 were not present and they had not been
notified that these vehicles were no longer in the Plaintiffs possession.
(c)
The Defendants point out that the Statement of Claim has not been delivered.
(d)
The Defendants complain that the names and addresses of customers who had
purchased vehicles from the Plaintiff had not been furnished to them and say
that this was of importance as they required to maintain a
manufacturer/customer relationship with these purchasers.
(e)
The Defendants say that "the gravest of all concerns" was the fact that it has
come to their attention that Mr Michael Byrne had been arrested and charged
with a criminal offence relating to stolen goods, that the premises had been
sealed off by the National Bureau of Criminal Investigation, that the DPP had a
file in relation to insurance fraud which contained Mr Michael Byrne's name and
that the above gave substantial adverse publicity.
(f)
That there was a failure on the part of the Plaintiff to concern himself with
his locality and that he had failed to sell vehicles in that locality.
In
the course of debate with Counsel I indicated to counsel that it was my view
that irrespective of the validity of the complaints which the Defendants make
of the Plaintiffs conduct, that the Defendants had no right to unilaterally
disregard and ignore the Order made by the Court and the Undertaking given to
the Court and I expressed the view that if it were their intention to resile
from the agreement reached on the 19 August 1998 that they could do so only
with the approval and consent of the Court and by varying the Order made on the
19 August. I also expressed the view that I would be prepared, by consent of
the Parties, to treat this motion, in addition to a motion for committal for
contempt, as a motion by the Defendants to seek to be relieved of the
obligations which they undertook by reason of the Order of the Court of the 19
August. Counsel on behalf of each Party agreed to this procedure.
I
am satisfied on the authority of Irish Commercial Society Limited and Others v
Peter Plunkett and Others [1986] ILRM 624 that there is vested in the Court a
jurisdiction to reconsider interlocutory Orders made by consent. In the course
of his Judgment, Costello J in that case said "The first issue for decision is
whether the Court has jurisdiction to make an Order, pursuant to the present
interlocutory motion, to set aside the Consent Order of the 22 May 1984, the
Defendants submitting that such an Order could only be made (in) a substantive
action to set aside the contract into which the Parties had entered. This
submission, it seems to me, fails to take into account the distinction between
final orders made on consent and interlocutory orders so made. As pointed out
by Lord Denning in Purcell v Trigell Limited [1971] 1 QB 358, the Court always
has control over interlocutory orders and it may in its discretion vary or
alter them even though made originally by consent. Whether or not it should
exercise it in a given case will largely depend on the circumstances in which
the consent order was made and the reasons advanced for its discharge. (See
also Ainsworth v Wilding [1896] 1 CH 673 and Mullins v Howell (1879) 11 CHD 763).
In
considering whether the Defendants should be allowed to resile from the
agreement which they entered into I am of the view that they should only be
allowed to do so if it is established to the satisfaction of the Court that
there has been a fundamental breach on the part of the Plaintiff of his
obligations under the contract of the 19 August.
On
that basis I now turn to consider the six grounds upon which the Defendants
claim to be entitled to terminate the Plaintiffs dealership. This in effect
means an entitlement to discontinue providing him with Rover motor cars in
accordance with the terms of the Dealership Agreement and accordingly an
entitlement to resile from the contract of the 19 August 1998.
(a)
(Failure to provide accounts)
I
am satisfied that as a matter of fact there was a failure on the part of the
Plaintiff to furnish the accounts within the time limit provided for in the
agreement (4/6 weeks). I am also satisfied that prior to the agreement of the
19 August the Defendants had considerable concern about the solvency of the
Plaintiff company. However I am of the view that at no stage did the fact that
the Plaintiff had failed to comply with his obligations to furnish the accounts
assume the proportions and importance now attributed to this fact by the
Defendants. In the Plaintiff's Affidavit he says that the failure to supply the
accounts in time arose from the fact that his accountant, who is dealing with
this item, had been on holidays for two weeks during the month of September. He
says "the Defendant company has been made aware of that fact and we have at all
times facilitated the Defendant company in its enquiries and have undertaken to
furnish such accounts as soon as same are produced." I am satisfied that the
failure to provide the accounts did not, in the circumstances of this case,
constitute a fundamental breach and I believe that the reason for the
Defendants terminating the Plaintiff's distributorship in no way related to
this fact. I am of the view that the Plaintiff now seeks to rely on this as a
reason for the termination when in fact it was not. The criticism which they
now make of the matters disclosed in the accounts are of no relevance as this
information only became available to them after the 8 October, 1998.
(b)
With regard to the second ground (the absence of eighteen cars on the
stocktaking of the 30 September, 1998) in his Affidavit at paragraph (8) the
Plaintiff gives a full explanation for the fact that the apparent absence of
the cars relates to the fact that retail sales cards in respect of the vehicles
may not have been noted by the Defendants.
I
accept the submission on behalf of the Defendants that it is of vital
importance to the Defendants that they should be made aware of the name and
address of the purchaser of their vehicles so that they may maintain a good
customer relationship with the person and so promote the sales network and for
other reasons and I consider a failure on the part of the Plaintiff to comply
with his obligations in relation to the returning of this documentation to the
Defendant would be of importance. However I am of the view that it was not the
fact that the retail sales cards had not been returned to the Defendant that
concerned the Defendants at that time but the fact that they believed that a
number of vehicles had disappeared from the Plaintiffs premises. I am satisfied
that the Defendant's Managing Director wrote to the Plaintiff on the 5 October
saying "In the light of the stock take on the 30 September which disclosed the
absence of eight vehicles out of thirteen that were purportedly in your
possession, we are reserving our position in relation to any Orders".
I
am satisfied that in the circumstances it is not reasonable to consider the
vehicles as "absent". The circumstances in which the Defendants may not have
had full knowledge concerning these vehicles are set out in the Plaintiff's
Affidavit. I am unable to say if these facts are correct. However, I am
satisfied that an explanation for the problem was readily available to the
Defendants if they had chosen to seek and consider it. Accordingly I do not
regard this as a fundamental breach and I do not consider that the Defendants
were justified in coming to the conclusion that the reason that the cars were
absent from the Defendant's premises resulted from the Plaintiff's improper
behaviour without at least seeking an explanation from him.
(3)
(Failure to deliver the Statement of Claim)
I
do not regard this as a fundamental breach nor do I believe that it in any way
concerned the Defendants.
(4)
(Failure to provide customers names)
I
can well understand that serious consequences flow from an inability by the
Defendants to have a record of the purchasers of their vehicles. The most
obvious problem would of course arise in that if there was a failure on the
part of the customer to pay for the vehicle then it would be impossible to
follow up the transaction. However, this is not a relevant factor in this case
because of the trading arrangements, which the Plaintiff observed, for payment
by direct debit on sale of the vehicle. In paragraph (10) of his Affidavit the
Plaintiff explains the circumstances in which a change of purchaser may take
place between the placing of the order and the ultimate purchase of the
vehicle. I am satisfied that with the smallest good will on the part of the
Defendant any problem arising in this area could have been overcome by the
simple expedient of making an enquiry. The Defendant has not satisfied me that
any problem of significance arises under this heading such as would promote the
problem to the status of a fundamental breach.
With
regard to item 5 described as (the gravest of all concerns from our clients
point of view) relates to the charge of Mr Michael Byrne with a criminal
offence.
I
am satisfied that under Clause 8A(e) of the Dealership Agreement it is provided
that either party may by notice forthwith terminate the agreement in any of the
following events:
.
. . if any person concerned in the direction, control or ownership of the
business of the dealer shall be convicted of a criminal offence or shall commit
a fraudulent act or gross misconduct which may in the opinion of the company
adversely affect the ownership operation, business reputation or interest of
either the dealer or the company.
If
it were the case that this information had come to the knowledge of the
Defendant subsequent to the 19 August then I would be satisfied that they were
perfectly within their rights to terminate the agreement in accordance with the
foregoing section. However, I am satisfied that they were aware of the
existence of the accusation against the Plaintiff at the time when they chose
to enter into the out of court arrangement of the 19 August. It is submitted
that they did not know the detail of these allegations. I do not consider this
to be of significance. In the circumstances and since they knew of the
existence of this problem prior to the 19 August, it is my view that it is not
open to the Defendant to introduce this fact now as a ground for resiling from
the interlocutory arrangement.
(6)
(Failure to sell vehicles in the Plaintiffs locality)
The
complaint which the Defendant makes under this heading is that the Plaintiff
was appointed to a given area, namely Longford and Roscommon and while this is
not expressly stated in his Dealership Agreement the Defendant says that it is
well recognised that he and other dealers are appointed to a locality and they
are required to promote sales in that locality. They say that if there is a
failure on the part of the Plaintiff to do so then they should be free to
appoint somebody that will. They make another point and that is that if the
Plaintiff sells outside the Jurisdiction then this generates a variety of trade
difficulties particularly where the sales are to a company in England which is
apparently without resources.
It
may well be that these difficulties do arise. However I am unable to identify
any term in the Dealership Agreement which makes the sale of vehicles in
Northern Ireland or in the UK a fundamental breach of the Agreement and I am
satisfied that it is not. It may be that where vehicles are to be sold on to a
customer outside of the Jurisdiction that in these circumstances there might be
justification on the part of the Defendant for refusing to supply the said
vehicles. However, I am not prepared to hold that on the state of the
contractual relationship between the parties that it constituted a fundamental
breach of the contract to sell vehicles outside the Jurisdiction. Moreover I am
satisfied that if there was a failure on the part of the Plaintiff to sell a
sufficient number of vehicles within his "area" this arose to a significant
extent by the failure on the part of the Defendant to maintain amicable trading
relationships with him.
In
general I am satisfied that after the 19 August 1998 the Defendant became
disenchanted with the Plaintiff and regretted their decision in coming to the
out of court settlement. I am satisfied that they determined to terminate his
dealership and sought a justification for so doing. I am satisfied that they
have not made out any fundamental breach on the part of the Plaintiff such as
would justify their resiling from the agreement of the 19 August nor should
move the Court to amend the Order made on that date.
Accordingly
insofar as the Defendant's motion is concerned I will refuse the relief sought.
It
now remains to consider the Plaintiffs motion.
I
am satisfied that whatever may be the Defendant's attitude towards the
Plaintiff, there was no intention on their part to disregard the Order of the
Court. Counsel on behalf of the Defendant has apologised to the Court and
explains the occurrence as arising from a misunderstanding of the position. I
am prepared to accept that explanation and in the circumstances I propose to
adjourn Judgment on the Plaintiffs motion so as to enable the Defendants to
recommence trading with the Plaintiff in accordance with the terms of the
agreement or until further Order.