Jersey Unreported Judgments

2001/100A

ROYAL COURT

(Samedi Division)

 

10^th May 2001 

 

 

 

 

 

Application by Plaintiff for leave to withdraw their application

for interim injunctions.

 

Applications by Interveners for leave to intervene and for their costs.

 

 

Advocate N. Benest for the Plaintiff.

Advocate C.P.G. Lakeman for the Defendant.

Advocate J.D. Kelleher for the Interveners.

 

 

judgment

the deputy bailiff:

1.      The Court was going to sit today to hear an application by the plaintiff for interim injunctions.  In briefest summary the plaintiff says that it had an agreement with the defendant entered into on 9th February 2001 whereby the defendant agreed to sell its crop of Jersey Royal new potatoes this year through the plaintiff, which is a marketing organisation.

 

2.      The plaintiff alleges that the defendant has breached that agreement and was seeking interim injunctions in the following terms:

 

(i)      "restraining the defendant whether directly or indirectly or by itself or by its servants, agents or otherwise howsoever from disposing, alienating, pledging or charging in any way the entirety of its potato crop grown during the year two thousand and one to any person or body save the plaintiff;

 

(ii)     requiring the defendant to deliver to the plaintiff the defendant's potato crop for the year two thousand and one pursuant to the contract entered into between the plaintiff and the defendant."

 

It is therefore clear that the plaintiff was in effect seeking an injunction that the defendant should perform the contract which it entered into.

 

3.      Originally the plaintiff applied for an ex parte injunction last Thursday.  I refused that but directed that an early hearing of an inter partes application should take place and that was fixed for today.

 

4.      The defendant's bundle of documents was produced and served on the plaintiff late last night.  Included in the bundle was a sale agreement dated 20th March between T.O.P Produce Ltd and the defendant whereby the defendant sold its crop of potatoes to T.O.P. which is a rival marketing firm to the plaintiff.  T.O.P. Produce and its associated company, Fairview Farm Ltd have applied this morning to intervene in the proceedings on the basis that the granting of the injunctions as requested by the plaintiff would materially damage their business.

 

5.      In the light of the production of the sale agreement the plaintiff now seeks to withdraw its application for interim injunctions because of the well-known principle that the Court will not interfere with third party rights by reason of the granting of interim injunctions.  But the plaintiff seeks an order for its costs against the defendant.  Conversely, the defendant asks for an order that the plaintiff should pay the defendant's costs.  Furthermore, the interveners, T.O.P. Produce and Fairveiw Farm, ask for an order that the plaintiff should be ordered to pay their costs as well.

 

6.      On the face of it the plaintiff, having withdrawn the application, has lost and therefore one might expect costs to follow the event.  But Miss Benest, on behalf of the plaintiff, says that there are specific circumstances why that should not take place.  In particular she says that, if only the defendant had told the plaintiff earlier that there had been a sale of its crop, then there would have been no application for an interim injunction.  In other words, she says, the defendant brought this application upon itself by its failure to disclose the sale.

 

7.      To assess the strength of this I must refer briefly to the correspondence which took place.  It is to be recalled that the defendant entered into the sale agreement with T.O.P. Produce on 20th March 2001.  On 21st March Mr. Le Marquand, a director of the defendant company, wrote to the plaintiff as follows:

 

"Dear Sir

I regret to inform you that I have decided to sell my potato crop in its entirety.  I have reached this decision having suffered from stress brought about by the ongoing pressures of agriculture and having taken advice from my general practitioner.  Should I wish to return to growing at some time in the future I may contact you once again."

 

8.      Miss Benest contends that the first paragraph is ambiguous.  It does not make it clear that there had in fact been a binding sale.  The language used was equally consistent with an intention to sell elsewhere in future.

 

9.      The plaintiff replied on 23rd March.  That letter read as follows:

 

"I acknowledge receipt of your letter advising that you have agreed to sell the entirety of your potation crop.  I was concerned and disappointed to read that letter. You will be aware that you executed an agreement to supply to J.P.M.O .your potato crop for this season.  We have taken legal advice in relation to this agreement.  I regret that if you breach the agreement and fail to supply J.P.M.O. in accordance therewith, the organisation will have no option other than to seek an immediate injunction against you requiring our agreement of supply to be fulfilled.  J.P.M.O. would not take such action lightly but you will appreciate that given the nature of our operation we need to ensure the sanctity of agreements concluded with our various growers.  Further if injunction proceedings are required, we shall seek an order that you pay the organisation's legal costs.  The organisation's solicitor also advises me to reserve my position in relation to any claim in damages for breach of contract.  I very much regret the need to write to you in these terms.  May I strongly urge you to telephone me to arrange a meeting at a time and place of your convenience so that we may discuss these matters.  May I please hear from you before close of business on Monday 26th March 2001 failing which I shall need to instruct the organisation's solicitors to issue the necessary proceedings."

 

10.    There was no reply to that by the defendant and on 28th March the plaintiff's advocates and solicitors, Benest and Syvret, wrote to the defendant and I quote, starting at the second paragraph:

 

"We note that your letter of 21st March 2001 states the intention of your company to sell your potato crop in its entirety to a third party; this in breach of your company's agreement with the Jersey Produce Marketing Organisation Ltd to market the entirety of your 2001 potato crop through our client company.  In the light of this anticipated breach we have advised our client company that they will be entitled to seek the assistance of the Court to obtain an immediate injunction requiring your potato crop to be marketed through the Jersey Produce Marketing Organisation.  We are instructed to prepare proceedings and supporting affidavit forthwith.  In a final attempt to avoid the issue of proceedings may we please ask you to make contact with us to provide a clear and unequivocal undertaking that the potato crop will not be sold to a third party as stated in your letter of 21st March 2001 and that you will continue to honour the agreement entered into on 9th February 2001.  In the absence of a receipt of such an undertaking we will make the necessary application for injunctions to the Bailiff in Chambers.  The costs of the proceedings will be substantial and an order in respect of costs will be sought against you.  Further in the event that notwithstanding the injunctions some breach of contract between yourself and our client company arises damages will be payable.  We would strongly urge you to carefully consider your position in this matter and revert to us without delay."

 

11.    It appears that there was a telephone conversation between Mr. Le Marquand and Mr. Syvret of Benest and Syvret on 10th April following which Mr. Le Marquand wrote a letter on that day which states:

 

"With reference to our telephone conversation earlier today.  As previously stated I have been suffering from ill-health and have been quite surprised at the very intimidating approach that your client company has taken towards me at such a difficult time.  As a result I have taken advice and have been informed that I do not have a binding contract.  In order for it to be such, it requires for there to be a detail of both 'offer' and 'acceptance' and would further require 'consideration' to be present."

It is clear that in the context the defendant is there referring to the agreement of 9th February. There the matter rested until the plaintiff sought the interim injunctions as already described.

 

12.    Miss Benest asserts that it is absolutely critical to this case that there has been a sale of the potatoes so that a third party is therefore affected.  She says that the defendant failed to make this sufficiently clear and therefore he must be penalised in costs because he did not do so.

 

13.    I consider that the letter of 21st March is ambiguous.  It has to be borne in mind that it was written by someone who was not a lawyer and it could refer to a past sale or it could refer to the possibility of a future sale.  What, in my judgment, is critical is that at no stage did the plaintiff or its advisers ever make enquiries about this topic which it now says is absolutely critical.  None of the letters which I have read asked the defendant whether in fact it had sold its crop and, if so, to whom and whether the sale had taken effect or not.  The letters repeatedly simply assert that the defendant must stick by the agreement or it will be injuncted.    In my judgment it would be wholly unreasonable to penalise the defendant for not spotting the significance of the issue as to whether there had already been a sale when the plaintiff and its lawyers did not raise the issue with the defendant.

 

14.    Furthermore, it appears from paragraph 24 of the second affidavit sworn by Mr. Barette on behalf of the plaintiff on 4th May that, by that time, the plaintiff must have had a very good idea that there had been a sale because paragraph 24 asserts that Mr. Barette had been told by third parties that one of the plaintiff's competitors, namely T.O.P. Produce or its associates, had started to dig some of the fields forming part of the 500 vergees pledged by the defendant to the plaintiff.

 

15.    To apply for an interim mandatory injunction is a very serious step.  The authorities are clear that there is a very high burden upon a party that seeks an interim mandatory injunction.  This is because the granting of a mandatory injunction is often decisive of the whole case and it requires the defendant positively to do something rather than simply desist from taking action.  In this case, as I have already said, the interim injunction in effect requires the defendant to perform its contract.  Accordingly it would in many ways be decisive of the whole issue subject only to any claim for damages thereafter.  As I have said, there is therefore a high burden upon a plaintiff.

 

16.    In my judgment this is a case  where costs must follow the event.  The plaintiff has sought an interim mandatory injunction; it has then not proceeded with it; it has in effect lost.

 

17.    As to the plaintiff's submissions this is all down to the failure of the defendant to make clear that there had been a sale, it is in my judgment unfair and unreasonable to penalise the defendant and its lay directors for not appreciating the significance of this issue.  The defendant had written a letter which could mean that there had been a sale.  The fault lies, in my judgment, with the plaintiff in not following up that position and seeking clarification.  At all events it would be wrong on that basis to penalise the defendant by depriving the company of its costs in the normal way.

 

18.    I turn next to the question of the interveners.  T.O.P. Produce and Fairview Farm Ltd, as I have said, seek leave to intervene.  This was on the basis that they wished to contest the granting of the injunction.  The application having now been dropped the interveners seek an order for their costs.  In my judgment it was entirely reasonable for the interveners to wish to intervene.  It is clear that the granting of an injunction would have had a material effect on the supply of potatoes available to them at a sensitive time in the potato season.  It was therefore perfectly reasonable for them to seek leave to intervene in order to argue their case.  It is not at all uncommon for persons affected by an injunction to seek leave to intervene and in passing we note in the leading case of Galaxia Maritime SA -v- Mineralimportexport [1982] 1 WLR 539 that a third party affected by the injunction had intervened.

 

19.    In my judgment costs should follow the event in this respect, too.  I see no reason why the interveners should not be awarded their costs which have arisen out of the application of the plaintiff for an interim injunction which it has now withdrawn.  In order to ensure the technical procedures are adequately complied with, we therefore give leave to the interveners to intervene on this application for an interim injunction.  We give leave to the plaintiff to withdraw the application on terms therefore that it pays the costs not only of the defendant but also of the interveners, both of those on the standard basis.

 

20.    That leaves the order of justice as between the plaintiff and defendant and we place that on the pending list.  The leave granted to the interveners relates only to this application for an interim injunction which is now withdrawn.  It follows that if the interveners wish to proceed with any of the other matters which they raise in their representation, they should issue an order of justice against the plaintiff in the ordinary way and no doubt consideration will be given to consolidating the two actions at the material time.

Authorities

Galaxia S.A. -v- Mineralimportexport [1982] 1 WLR 539.