Case involving Pottinger and machinery dealer goes to the High Court

Late last month, the High Court delivered its ‘ex tempore judgment’ on a case involving Pottinger Ireland (Poettinger Ireland Ltd) and machinery dealership Unilift Ltd (trading as Suirway Farm Machinery).

Pottinger is a major Austrian-based manufacturer of forage and tillage equipment; the brand is familiar to farmers and agricultural contractors all over the country.

Suirway Farm Machinery, based in Carrick-on-Suir, Co. Tipperary, is a machinery dealership which is especially well-known for supplying Pottinger equipment – especially forage equipment such as self-loading silage wagons.

AgriLand reported on July 13 that Poettinger Ireland and Tipperary-based Suirway Farm Machinery had parted company, in a split that was not believed to be “amicable”.

Pottinger

Fast forward to July 26, at which point the High Court had rendered its ‘ex tempore judgment’ on the matter. The case, according to online reports, concerned the alleged “wrongful termination” by Poettinger Ireland of its alleged “franchise agreement” with the plaintiff (Unilift Ltd) on June 30, 2017, with immediate effect.

This apparently followed a meeting between the parties, in which it was indicated that it was the intention of the defendants to end the trading relationship – as the relationship had broken down.

Interlocutory injunctions were sought by the plaintiff, pending a full trial of the dispute between the parties. In essence, the plaintiff was seeking to ensure that Poettinger Ireland would continue to supply it with grassland and tillage farm machinery, pursuant to the alleged “franchise agreement”.

In addition, the plaintiff was seeking an order prohibiting Poettinger Ireland from appointing any dealer in respect of counties Waterford, Tipperary and/or Kilkenny – in light of the terms of the alleged “franchise agreement” granting the plaintiff exclusive rights in certain counties.

The alleged “franchise agreement” contained a clause requiring three years’ notice for the termination of the agreement, but the defendants claimed that the agreement was signed without the authority of Poettinger Ireland and that the agreement was not legally binding.

Against this background, the court asserted that, based on the facts asserted by the parties, the plaintiff’s claim that there was a legally binding “franchise agreement” (dating back to 2013) between the parties was inconsistent and not sufficiently credible for the court to find that the plaintiff had a strong arguable case that such a binding agreement existed.

Pottinger

It was noted, in the ‘ex tempore judgment’, that the court was not deciding whether or not the alleged “franchise agreement” was authentic or binding on Poettinger Ireland, as claimed by the defendants, since this would be the function of a court which would hear that full case at a later time – were it to be brought to court.

This court’s function, according to the ‘ex tempore judgment’, was limited to determining whether the plaintiff had established that it had a strong case that was likely to succeed that the “franchise agreement” was a legally binding agreement. The court concluded that it had failed to do so.

Since counsel for the plaintiff had accepted that the relief which the plaintiff sought was fairly and squarely based on the legally binding nature of the “franchise agreement”, the court refused to grant the interlocutory injunction sought.

This court found that the plaintiff’s case – that the alleged “franchise agreement” was binding – was inconsistent and not sufficiently strong or credible to merit an interlocutory injunction. The judgement listed a number of reasons for this finding.

One such reason was evidence from a current director of Poettinger Ireland that it was not the defendants’ practice to enter into contracts with their trading partners, such as the plaintiff.

The current general manager of Poettinger Ireland gave evidence that he had been in the agricultural product business for 20 years and he had never seen a notice period of three years in supply contracts – and that it went against all industry standards. There were also references to another document – a so-called “non-legally binding franchise agreement” – which referred to a termination notice period of just six months.

The judgement also referred to the alleged “franchise agreement” between the plaintiff and Poettinger Ireland as “a curious document to say the least”.

Pottinger

According to the judgement, the court also took the view that the existence of a binding “franchise agreement” between the plaintiff and Poettinger Ireland since August 2013, as alleged, was inconsistent with a subsequent exchange of emails and the exchange of a draft “non-legally binding franchise agreement”.

The judgement added that even if the plaintiff had satisfied the court that it had a strong case, it was the court’s view that, based on a previous, separate case heard by the Supreme Court in 1994, this was a case where damages would be an adequate remedy for the plaintiff – since the loss arising from the alleged wrongful termination of the “franchise agreement” would be easily quantifiable based on what the plaintiff would have earned over the three-year period – if three years’ notice had been given, as was alleged by the plaintiff.

Indeed, according to the judgement, even if the plaintiff were to go out of business – as a result of the actions of the defendants – which was not alleged by the plaintiff to be a consequence of the termination, in such a scenario the commercial loss would be easily quantifiable and so damages would be an adequate remedy.

Pottinger

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