The High Court has ruled that damages owed to Patrick O’Leary for Volkswagen Group Ireland’s breach of contract must be assessed on the basis that his dealership contracts ended on 30 April 2013. The court also ordered him to comply without further delay with the contracts’ requirements for removing Volkswagen signs and trademarks.
In a ruling on 14 February 2017, Mr Justice Binchy clarified the effect of his earlier judgment in the substantive proceedings. He had found that Volkswagen Group Ireland breached Article 20 of the contracts by failing to give detailed, objective and transparent reasons for terminating them. He had declined to declare the termination invalid, holding that damages were the appropriate remedy.
The dispute in this ruling was how those damages should be assessed. O’Leary argued that they should be calculated on the basis of lost profits from the end of the termination notice period, saying the contracts had not been expressly found to have been validly terminated. Volkswagen Group Ireland argued that the notice took effect and that damages should cover any losses caused by the failure to provide reasons that complied with Article 20.
Justice Binchy confirmed that damages must be assessed on the basis that the contracts were effectively terminated from 30 April 2013, and for losses, if any, sustained as a result of the breach. He said the termination notice was either effective or not, and that he had declined O’Leary’s request for a declaration that it was invalid.
The judge said the failure to provide adequate reasons was more than a technical breach, but not an egregious one. He cited the bona fide network review, the absence of a prohibited reason for termination, O’Leary’s delay in issuing proceedings, and the implementation of the new dealer network. He also noted that O’Leary had continued trading as an authorised Volkswagen dealer under a court undertaking, though he had to source vehicles through third-party dealers and faced reduced profit margins.
Volkswagen Group Ireland’s counterclaim sought, among other relief, the removal of its signs and an end to use of its trademarks. The court ordered O’Leary to comply with Article 21 without further delay. That article requires a dealer, following termination, to stop using the supplier’s trademarks and remove supplier-specific signs.