The High Court has refused an application by John Fraser and Liam Fraser, trading as Fraser Oil, to stop Great Gas Petroleum (Ireland) Limited from receiving €130,000 under a bank guarantee. The court dismissed the application for an interlocutory injunction and ordered that the interim injunction lapse.
The dispute arose from a fuel supply contract under which the plaintiffs agreed to buy fuel exclusively from Great Gas for five years or until they had purchased 50 million litres. The plaintiffs alleged that Great Gas had overcharged them, causing losses. Great Gas denied breaching the contract and said the plaintiffs owed it more than €375,000 for fuel supplied.
The guarantee, issued by AIB Bank in August 2010 at the plaintiffs’ request, capped the bank’s liability at €130,000. Great Gas demanded that amount in October 2012 as partial payment of the alleged outstanding balance. The plaintiffs challenged the underlying debt but did not challenge the validity of the guarantee itself.
Justice Laffoy said the court could not conclude that Great Gas could not honestly have believed its demand was valid. The affidavit evidence on alleged overcharging was conflicting and technically complex. The court did not decide whether overcharging occurred or whether the plaintiffs were owed compensation; those issues remained for the substantive proceedings.
The judge said the exceptional test for restraining payment under a guarantee was not met. The plaintiffs had not alleged fraud in the demand, and there was no evidence that AIB knew of any fraud. The court therefore refused to restrain the bank from paying or to direct Great Gas to withdraw its demand. It did not need to decide the balance of convenience.
Justice Laffoy also considered Great Gas’s claim that the plaintiffs had failed to make full disclosure when seeking the initial interim order. She identified errors and omissions in the plaintiffs’ first affidavit, including an incorrect statement that no demand had been made for the alleged debt. She accepted that the failures were inadvertent and said they would not, by themselves, justify refusing interlocutory relief.
The plaintiffs had argued that payment would exhaust their available overdraft and threaten their business and 55 jobs. The judge said she could see no equitable basis to order the €130,000 returned to their account pending trial. The application was dismissed, and the interim injunction lapsed.