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Cite as: [1983] IESC 2

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Campus Oil Ltd & Ors v Minister for Industry and Energy & Ors [1983] IESC 2 (17 May 1983)

The Supreme Court

Between

Campus Oil Limited and Others

Plaintiffs

And

The Minister for Industry and Energy and Others

Defendants

1982 No. 9256 P [17^th May, 1983]

O'Higgins C.J.:

The plaintiffs in these proceedings, five of whom are the appellants on this appeal, are companies that are engaged in the importation and sale of fuel oils and together they constitute an association known as the Irish Independent Petroleum Association. The main defendants are the Minister for Industry and Energy and the Irish National Petroleum Corporation; the Corporation was established by the State in 1979 for the purpose of the purchase and importation of oil products and it now owns and operates, on behalf of the State, the oil refinery at Whitegate in the county of Cork. 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 the Fuels (Control of Supplies) Order, 1982 (hereinafter called the Order) which was made by the Minister on the 25th August, 1982, pursuant to the provisions of the Fuels (Control of Supplies) Acts, 1971-1982. 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 the Whitegate refinery 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 and, in particular, to articles 30 and 31 thereof.

Having commenced these proceedings, the plaintiffs then applied in the High Court for an interlocutory injunction restraining the defendants, pending the trial of the action, from implementing the mandatory regime. That application was heard by Mr. Justice Murphy and was refused by him for reasons which he outlined in a reserved judgment which he delivered on the 22nd September, 1982: see Campus Oil Ltd. v. Minister for Industry and Energy [1983] ILRM 258. 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 High 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 that application, suggested that, if such a preliminary question were asked, a further question should be posed in regard 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 Treaty which is in the following terms: -

"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 statues 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 a. 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 decisions thereof is no judicial remedy under national law, that court or tribunal shall bring the matter before the Court of Justice."

It is apparent from article 177 that Mr. Justice Murphy had a discretion as to whether or not to make the reference sought by the plaintiffs. He concluded that he ought to seek a preliminary ruling and, in so doing, he 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 his decision to this Court, but their appeal was dismissed. Campus Oil v. Minister for Industry (No. 2) [1983] IR 82). Consequent on the decision to seek the preliminary ruling, the further hearing and trial of the action has been adjourned.

At that stage the defendants decide to seek full observance, of the mandatory regime. They concluded that this was necessary in order to maintain the Whitegate refinery. Their decision was complied with by the large multinational oil companies (known as "the Majors") who were trading in this country; but their decision was resisted by five of the plaintiff companies. The fifth plaintiff complied with the defendants' decision, with the result that it is not involved in this appeal. The other five plaintiff companies continued to import their requirements without taking any percentage from the Whitegate refinery. The Minister and the Corporation were concerned that a continuance of this situation might lead to the Majors also withdrawing from the mandatory regime. If that occurred it would result in the immediate closing of the Whitegate refinery with considerable disorganisation and damage to the Corporation's plans for its maintenance as a viable refinery. For this reason, haring 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 refusing to comply with the order of 1983 The defendants' application was heard by Mr. Justice Keane in the High Court. Having considered the issue very carefully, he decided to grant the injunctions sought by the defendants. He did so on the grounds stated in his reserved judgment. Against his decision this appeal has been brought.

The basic contention of the plaintiffs as been that Mr. Justice Keane, in granting interlocutory relief on the application of the defendants, failed to have regard to the correct criteria to be applied in considering an application for an interlocutory injunction and, in particular, when considering an application for an injunction of a mandatory nature. 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 to an applicant where what he complains of is continuing and is causing him harm or injury which may be irreparable in the sense that it; may not be possible to compensate him fairly or properly by an award of damages. Such relief 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 applicant'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. The application for an interlocutory injunction is often treated by the parties as the trial of the action. When that happens, the rights of the parties are finally determined on the interlocutory motion. In cases where rights are disputed and challenged and where a significant period must elapse before the trial, the court must exercise its discretion (to grant interlocutory relief) with due regard to certain well-established principles. Not only will the court have regard to what is complained of and whether damages would be an appropriate remedy but it will consider what inconvenience, loss and damage might be caused to the other party, and will enquire whether the applicant 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 their counterclaim would succeed at the trial and that the plaintiffs' claim would be dismissed. Mr. Fitzsimons, on behalf of those plaintiffs, 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 Ltd. v. Fitzpatrick [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 ed.) which was quoted by Lavery J. at p. 336 of the report. That reference, in its context, is of doubtful significance. However, at p. 337 of the report, Lavery J. 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 the suggested 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 that the principle is stated correctly in the following passage from Kerr on Injunctions (6th ed. p. 2), which was noted by Lavery J. in the Educational Company Case [1961] IR 323 : -

"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 status quo."

The application of the plaintiffs' criterion on a motion for interlocutory relief would involve the Court in a determination 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 the relief. If such a question has been raised, it is not for the Court to determine that question on an interlocutory application: 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 which are appropriate to the exercise of its discretion to grant interlocutory relief. In this regard, I note 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 American Cyanamid v. Ethicon Ltd [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 defendants 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 the trial judge was correct in approaching the exercise of discretion on that basis.

The plaintiffs 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 to say that a mandatory injunction does not usually issue prior to the trial of an action. However, there are exceptions and, in my view, this case is one of them. 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 appellant plaintiffs have stood aside and have openly defied its implementation. On the evidence, their action clearly threatens the continued operation of the regime established by the Order, This is so because the other oil companies, particularly the Majors, have threatens the continued operation of the regime established by the order. It seems to me that in such circumstances it was proper to direct, by, way of mandatory injunction, compliance with the order of 1983. 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 the Whitegate refinery. 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.

In my view, this appeal should be dismissed for these reasons.

Griffin J.:

I agree with the judgment of the Chief Justice. However, I would 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 forms part of the domestic law of the State, this Court, before determining whether or not the interlocutory injunction sought by the defendants should be granted, should first interpret articles 30, 31 and 36 of the Treaty. He submitted that this Court to interpret those articles in anticipation of the rulings of the 31 apply to a system such as that established by the Fuels (Control of Supplies) Order, 1982, and that, if 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, Mr. Justice Murphy has referred to the Court of Justice of the European Communities pursuant to article 177 of the Treaty for the preliminary rulings of that court. Before doing so, he had to determine that the ruling of the Court of Justice 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 at the hearing of 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 Court of Justice. 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 Court of Justice to interpret the provisions of the Treaty, and it is for our Courts to apply it. In my opinion, Mr. Fennelly was correct in pointing out, on behalf of the first three defendants, that the primary object of article 177 is to ensure the 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 an 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 Court of Justice any questions of Community law that have been raised.

On the question of the principles to be applied in determining whether to grant or to refuse an interlocutory injunction, Mr. Fitzsimons sought to rely on the judgment of Lavery J. in Educational Company of Ireland Ltd. v. Fitzpatrick [1961] IR 323 as establishing that an applicant who seeks the injunction must satisfy the court that the probability is in favour of the respondent's 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 from Kerr on Injunctions as settling the principles on which an interlocutory injunction will be granted. Those passages are set out in the judgment of Mr. Justice Keane 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 applicant's right 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 those two passages, Lavery J. dealt with the issues that arose in that case. He referred (p. 337) to he requirement that the plaintiffs in that case had to establish "that there is a fair question raised to, be decided at the trial" and gave as his opinion that the issues "raise a question and a difficult one." At p. 338 he said: -"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." However, he did not deal with the question of whether or not the "probability" test had been satisfied. Maguire C.J., who dissented, cited with approval the passage from p. 15 of Kerr on Injunctions which Lavery J. approved, but the Chief Justice 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 Smith v. Beirne (Supreme Court: 29^th January, 1953) in which the Court unanimously held that on the facts, as accepted by the judge of first instance, a serious question of law arise 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 at p.342 of the report: -"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." Ó Dálaigh J. said that he inclined to the view that the constitutional issue raised by the plaintiffs was prima facie sufficient to turn the scales in their favour and that, accordingly, their only remaining matter was the balance of convenience. Maguire J. agreed with Lavery J., and also with Kingsmill Moore and Ó Dálaigh 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 Ó Dálaigh J. were satisfied that there was a serious question to be tried.

Subsequently, in Esso Petroleum Co. (Ireland) Ltd. v. Fogarty [1965] AC 396 Ó Dálaigh C.J., with whom Lavery J. agreed, accepted that the principles to be applied were well summarised in the passages from Kerr on Injunctions which were cited in the judgment of Lavery J. in the Educational Company Case [1961] IR 323 Having stated that the plaintiffs were required to show that, in the language of Kerr, there were substantial grounds for doubting the existence of the alleged legal right, the exercise of which they seek to prevent, he said at p. 539 of the report: -"The Court before stripping him of this right must be satisfied that the probability is in favour of the defendants' case ultimately failing in the final issue of this suit." On the other hand, Mr. Justice Walsh stated the principle applicable as follows at p. 541 of the report: - "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 status quo pending the trial of the action if it is of opinion that there is a substantial question to be tried." That 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 a court, in exercising its discretion to grant of to refuse 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 upon 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."

Lord Diplock then continued at pp. 407-8 of the report: -"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 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 (1865)12 LT 628). 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."

It was submitted on behalf of the plaintiffs that there are differences between the test applied in the American Cyanamid Case [1975] AC 396 and those applied in the Educational Company Case [1961] IR 323 and the Esso Petroleum Case [1965] IR 531 but any such differences are more apparent than real, as Mr. Justice Murphy noted in his judgment ruling the plaintiffs' application for an interlocutory injunction. 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 Mr. Justice Walsh ("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 the President of the High Court in Rex Pet Foods Ltd. v. Lamb Brothers (Dublin) Ltd. (High Court: 26^th August, 1982) where he stated that the statement of principles contained in these decisions do not differ but that, to some extent, each complements the other in certain aspects of the questions raised.

It seems to me that the passage which. I cited from the speech of Lord Diplock has much to recommend it in logic, common sense and principle. 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, 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. The latest of these cases was T.M.G. Group Ltd. v. Al Babtain Trading and Contracting Company (Supreme Court: 28^th March, 1980) By reason of their extremely urgent nature, in none of them was judgment reserved.

Mr. Justice Keane has held that there is a fair question to be tried on the hearing of this action, and that is undoubtedly so. In terms of the balance of convenience between the parties and the preservation of the status quo, he also held that he should exercise his discretion in favour of granting the interlocutory injunctions sought by the defendants. In my opinion, there was evidence before him on which he was justified in coming to that conclusion. I would dismiss this appeal.

Hederman J.

I agree with the judgment of the Chief Justice, and I adopt the comments of Mr. Justice Griffin.