The High Court has restrained Flogas Ireland Limited from terminating its distribution arrangement with Benson Fuels Limited without cause while the companies’ case proceeds to trial or until further order. The interlocutory order preserves the arrangement for now; it does not decide the underlying contractual dispute.
Benson Fuels sought the injunction after Flogas gave notice in August 2022 that its authorised retail and filling distribution arrangement would end on 30 April 2023. The company argued at the injunction hearing that, if the relationship could be ended, it was entitled to reasonable notice and that nine months was insufficient. It said 18 months would be reasonable. Benson Fuels reserved its argument that a three-year fixed-term agreement had arisen for the trial.
Flogas argued that the last written agreement expired in September 2021 and that subsequent business was conducted on an individual orders basis, so no notice was required. Alternatively, it said the notice given was reasonable.
In a judgment delivered on 28 April 2023, Mr Justice Rory Mulcahy found a serious issue to be tried about whether a continuing contractual relationship existed and whether the notice was inadequate. He said the injunction application should be assessed under the threshold for a prohibitory injunction, rather than the higher threshold for a mandatory injunction, because the order was directed at maintaining the status quo pending trial.
The judge also considered the balance of convenience. Benson Fuels said Flogas accounted for about two-thirds of its revenue and that losing the distribution business could force the family company into liquidation. The judge was not satisfied that damages could confidently be treated as an adequate remedy for the company. He found that Flogas had provided little detail of commercial loss it would suffer if the injunction were granted, and considered its undertaking as to damages to have substance.
The judgment noted that the parties had continued trading after the written agreement expired and that Flogas had not shown steps to appoint an alternative distributor for the territory served by Benson Fuels. It also took account of the availability of an early trial. The court did not resolve the parties’ competing accounts of the contract or determine what notice period, if any, was legally required.
The order restrains Flogas from terminating the existing arrangement without cause pending trial or further order. The judge said Flogas could ask the court to discharge the injunction if an early trial proved impossible or Benson Fuels delayed progressing the case. The matter was listed for 9 May 2023 to fix directions and finalise orders, including costs.