Texaco Ltd v Mulberry Filling Station Ltd
| Jurisdiction | England & Wales |
| Court | Chancery Division |
| Year | 1972 |
| Date | 1972 |
Restraint of Trade - Sale of goods - Restriction on brand of goods - Mortgage of garage premises to secure advances by oil company - Covenants to buy and sell company's petrol - Duration - Whether restraint reasonable - Considerations of public and parties' interests - Injunction - Interlocutory - Restraint of trade - Solus tie agreement - Breach of covenant - Maintenance of status quo - Whether relief to be granted
By a legal charge made on January 22, 1965, under the terms of which a petrol-supplying company (“Texaco”) was to advance moneys repayable over 20 years at a low rate of interest to a petrol retailing company (“Mulberry”) for the redevelopment of its garage premises, Mulberry covenanted to purchase its petrol requirements exclusively from Texaco.
By a second legal charge made on January 30, 1968, and securing the balance of moneys repayable under the 1965 charge, the final instalment to be paid by August 1, 1972. Mulberry covenanted not to purchase or sell at its garage any petrol other than that supplied by Texaco. In January 1971 an unofficial strike of tanker drivers prevented delivery of Texaco's petrol to Mulberry, who then took petrol from another supplier and continued to do so after the strike ended and Texaco was willing and able to deliver. In March 1971 Texaco issued a writ claiming that Mulberry's covenants under the 1968 charge were “valid, binding and enforceable” until redemption of the charge. On a motion for an injunction, to restrain Mulberry until trial or further order from purchasing selling or advertising at its garage any petrol other than that supplied by Texaco:—
Held, (1) that the 1968 charge was a new legal charge for a new consideration; accordingly the covenant in restraint was for the period appearing on the face of the 1968 charge, viz. four years and seven months and was in all the circumstances reasonable (post, pp. 823F, 824A–B).
(2) That, as to the interests of the parties, whether in a commercial contract a tie was required for the covenantee's protection and was therefore reasonable in the parties' interests was a matter for business decision by the parties provided that there was bargaining equality between them (post, p. 826G).
(3) That, as to the interests of the public, the expression was part of the doctrine of restraint of trade directed to securing the common law liberty of persons to contract and to trade and not some economic advantage to the public at large; that, further the question whether a restraint on liberty was in any particular case unreasonable had to be decided by the court in the light of the present-day organisation of industry and society, and that, on that basis, the tie in the present case had imposed no unreasonable restraint on Mulberry's liberty to trade (post, pp. 827E, 828F–H, 829A–B).
(4) That as Texaco had shown a probability of succeeding at the trial, relief should be granted since Texaco was not disentitled on grounds of delay and damages would be an inadequate remedy; that accordingly, the relief given would be maintenance of the contemporary situation, but excluding any repetition of past violations of Texaco's prima facie right (post, pp. 830C–D, 831F–G).
The following cases are referred to in the judgment:
Attorney-General of Commonwealth of Australia v. Adelaide Steamship Co. Ltd. [
Dickson v. Pharmaceutical Society of Great Britain [
Doherty v. Allman (
Esso Petroleum Co. Ltd. v. Harper's Garage (Stourport) Ltd. [
Hampstead & Suburban Properties Ltd. v. Diomedous [
Jenkins v. Jackson (
Nordenfelt v. Maxim Nordenfelt Guns and Ammunition Co. [
North Western Salt Co. Ltd. v. Electrolytic Alkali Co. Ltd. [
Underwood (E.) & Son Ltd. v. Barker [
The following additional cases were cited in argument.
British Motor Trade Association v. Gilbert [
Cleveland Petroleum Co. Ltd. v. Dartstone Ltd. [
Donmar Productions Ltd. v. Bart (Note) [
Haynes v. Doman [
Horwood v. Millar's Timber & Trading Co. Ltd. [
McEllistrim v. Ballymacelligott Co-operative Agricultural and Dairy Society [
Monkland v. Jack Barclay Ltd. [
Morris (Herbert) Ltd. v. Saxelby [
Petrofina (Gt. Britain) Ltd. v. Martin [
Sefton v. Tophams Ltd. [
Vancouver Malt & Sake Brewing Co. Ltd. v. Vancouver Breweries Ltd. [
MOTION
By a legal charge dated January 22, 1965, the plaintiff, Texaco Ltd. (formerly Regent Oil Co. Ltd), advanced to the defendant, Mulberry Filling Station Ltd., £21,000 and agreed to advance a further £15,000 for the redevelopment by the defendant of its garage at 48 Beddington Lane, Croydon. The sums advanced were charged on the garage premises and were repayable in half-yearly instalments over a period of 20 years beginning February 1, 1966. Further, under the terms of the charge, the defendant covenanted to purchase its motor fuel requirements exclusively from the plaintiff.
By a legal charge dated January 30, 1968, the defendant charged the Croydon land and premises with repayment to the plaintiff in half-yearly instalments of the sum of £32,400 not then repaid under the legal charge dated January 22, 1965, the final instalment being repayable on August 1, 1972. Under the terms of the legal charge the defendant covenanted that it would carry on at the premises the business of a petrol station, and further by clause 3 (vi) that it would purchase its total requirements of motor fuel for sale only from the plaintiff and would not sell or advertise any other brands.
In January 1971 an unofficial strike of the plaintiff's tanker drivers prevented petrol deliveries being made to the defendant's station. On January 12 the defendant took delivery of V.I.P. petrol as it was entitled to do under the express terms of the charge but it continued to do so after the strike ended.
On March 16, 1971, the plaintiff issued a writ claiming inter alia a declaration that until the redemption of the legal charge of 1968 on August 1, 1972, the covenants under clause 3 (vi) were valid, binding and enforceable. On March 30, 1971, the plaintiff gave notice of motion for an order restraining the defendant until judgment in the action or further order from purchasing otherwise than from the plaintiff any motor fuel for sale at the defendant's Croydon filling station and from selling or advertising for sale at the station any brand of motor fuel other than that supplied by the plaintiff.
The facts are stated in the judgment.
Peter Oliver Q.C. and D. J. Nicholls for the plaintiff.
John Balcombe Q.C. and Gavin Lightman for the defendant.
December 14. UNGOED-THOMAS J. read the following judgment. The plaintiff's motion is for an interlocutory injunction pending judgment at the trial to restrain the defendant from (1) purchasing otherwise than from the plaintiff any motor fuel for sale or use at the defendant's filling station at 48, Beddington Lane, Croydon, and (2) selling or advertising for sale at that station any brand of petrol not supplied by the plaintiff.
The issues. It is common ground (a) that what is sought to be restrained is what the defendant has covenanted not to do; (b) that such agreement is of a kind (namely, a solus tie agreement) that is subject to the legal doctrine which avoids certain contracts as being in restraint of trade; (c) that the plaintiff has to establish a strong prima facie case or the probability that it will succeed in establishing at the trial that the covenants will not, in accordance with that doctrine, be held void; and that if such prima facie case or probability of success is established, that it will then follow that the right in respect of whose violation the plaintiff seeks relief is also thus established; (d) that if such right is so sufficiently established, then there has been a violation of that right. This common ground leaves in dispute, as is rightly acknowledged by both parties, the questions (1) whether the plaintiff has established such strong prima facie case or probability that the covenants are not void; (2) whether in the circumstances injunction by way of interlocutory relief should, in the exercise of the court's judicial discretion, be granted.
The facts. I will deal first with the facts leading to the action. The plaintiff's original name was Regent Oil Co. Ltd. but it changed that to its present name in November 1967. The defendant was at all material times until October 1968, wholly or virtually owned and controlled by George William Tandy. The defendant has at all material times been owner of 48, Beddington Lane, Croydon, and carried on there the business of a petrol filling station.
By a legal charge dated January 22, 1965, between the defendant of the first part, the plaintiff of the...
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VITIATING FACTORS IN CONTRACT LAW — THE INTERACTION OF THEORY AND PRACTICE
...the context of the law relating to restraint of trade, the observations of Ungoed-Thomas J in Texaco Ltd v Mulberry Filling Station Ltd[1972] 1 WLR 814. 415 See supra, note 413. 416 See generally eg, PS Atiyah, The Rise and Fall of Freedom of Contract (1979). Reference may also be made to P......
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Specific Performance and Injunctions
...do so”). 201 See generally Sharpe, above note 1, ch 2; Berryman, above note 1, ch 2. 202 See Texaco Ltd v Mulberry Filling Station Ltd , [1972] 1 WLR 814 (Ch); Crampton v Robertson , [1977] 6 WWR 99 (BCSC). THE LAW OF CONTR ACTS 1134 With respect to the first factor, the traditional treatm......
