Judgment
Title: | Fermoy Fish Limited -v- Canestar Limited & anor |
Neutral Citation: | [2015] IESC 93 |
Supreme Court Record Number: | 334/2011 |
High Court Record Number: | 2006 1350 P |
Date of Delivery: | 12/09/2015 |
Court: | Supreme Court |
Composition of Court: | Laffoy J., Dunne J., O'Malley J. |
Judgment by: | Dunne J. |
Status: | Approved |
Result: | Appeal allowed and Vary |
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| Judgments by | Link to Judgment | Concurring | Dunne J. | | Laffoy J., O'Malley J. | |
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THE SUPREME COURT[Appeal No. 334/2011]
Laffoy J.
Dunne J.
O’Malley J.
BETWEEN
FERMOY FISH LIMITED
PLAINTIFF/APPELANT
AND
CANESTAR LIMITED AND DAN O’REGAN
DEFENDANTS/RESPONDENTS
Judgment of Ms. Justice Dunne delivered on the 9th day of December 2015
Fermoy Fish Limited, the appellant herein was previously known as Wrights of Howth Galway Limited and changed its name after judgment was delivered in the High Court. For ease of reference I will refer to the appellant as Fermoy Fish. Likewise, I will refer to the respondents as Canestar and Mr. O’Regan respectively. Somewhat confusingly, Canestar once traded as Fermoy Fish but unless the context otherwise requires, a reference to Fermoy Fish in the course of this judgment is a reference to the appellant herein.
Background
Canestar was in the business of packaging, distributing and supplying fresh and frozen fish under its own label or as directed by its customers. Its principal clients were Musgraves and Dunnes Stores. One of its major suppliers was a Galway company. That company got into financial difficulties and was the subject of an asset sale agreement which resulted in Fermoy Fish acquiring its assets in September 2004. As a result of that agreement, Fermoy Fish became the main supplier of fish to Canestar. By August 2005 Canestar owed a sum of €889,692 to Fermoy Fish. Given the extent of the outstanding debt, the parties entered into negotiations and ultimately an asset sale agreement was concluded between Canestar and Fermoy Fish together with a consultancy agreement under which Canestar and Mr. O’Regan agreed to manage customer accounts on behalf of Fermoy Fish.
In order to understand the issues that arose in this appeal it is necessary to set out some information as to the terms of the asset sale agreement (ASA). Certain sums were to be paid by Fermoy Fish to Canestar on foot of the ASA, namely,
€400,000 for equipment of which €250,000 was to be paid on signing of the ASA and €150,000 was to be paid subject to compliance with Clause 4.4 of the ASA.(I will refer to this clause at a later stage in this judgment).
The stock held by Canestar was to be purchased for its value as at the transfer date provided for in the ASA, of which €100,000 was to be paid on the signing of the ASA and the balance due for stock was to be paid thirty days after the signing of the ASA.
A sum of €300,000 was to be paid for the goodwill of Canestar on signing the ASA.
It was further provided that on signing the ASA, the sum of €489,682.24 being part of the debt due by Canestar to Fermoy Fish was payable by Canestar. Thus, after all appropriate allowances were made, a net figure of approximately €160,000 was required to be paid by Fermoy Fish to Canestar on signing the ASA.
After the adjustment of figures was made on the signing of the agreement, a balance of some €400,000 remained outstanding by Canestar in respect of its pre-existing debts to Fermoy Fish and it was agreed that that sum was to be offset against monthly payments due to Canestar by Fermoy Fish until discharged. Accordingly, it can be seen that from the point of view of Fermoy Fish, the thrust of the agreement was to recoup the sum of €889,682.24 owed by Canestar. The monthly payments mentioned above were in respect of a percentage commission provided for in the ASA paid by Fermoy Fish to Canestar based on monthly sales.
As a result of entering into the ASA, Canestar and Mr. O’Regan were engaged in managing the sale, packaging and distribution of fresh and frozen fish for Fermoy Fish to the former customers of Canestar.
Unfortunately, matters did not work out as anticipated. It transpired that sums collected by Canestar on Fermoy Fish pursuant to the agreements were not paid over by Canestar to Fermoy Fish as discovered by Fermoy Fish early in 2006. The total amount involved was €484,896 and the discovery that money had not been paid over to Fermoy Fish led to the commencement of these proceedings. An interlocutory injunction was granted by the High Court on the 27th March, 2006 freezing Canestar’s bank account. The parties then exchanged pleadings, making claim and counterclaim for sums alleged to be due to each party and the proceedings eventually came on for hearing in the High Court (Murphy J.). Following a lengthy hearing, judgment was delivered on the 7th June, 2011. The outcome of the proceedings was that Canestar was found to be entitled to judgment in the sum of €420,682 after taking into account all sums due to Fermoy Fish.
Appeal
Fermoy Fish has appealed the judgment and order of the High Court made herein. There are some nineteen grounds of appeal but the focus at the hearing of the appeal was mainly on the amounts found to be due by Fermoy Fish to Canestar in relation to payments that fell to be made under the asset sale agreement. At the conclusion of his judgment, the learned trial judge set out a table showing payments that were required to be made under the asset sale agreement by Fermoy Fish to Canestar. These consisted of the following sums:
Goodwill: €300,000
Stock: €221,000
Equipment: €400,000
Commission: €995,160
Total: €1,916,160
In calculating the net sum found to be due to Canestar the learned trial judge took into account sums that were due on foot of the consultancy agreement from Fermoy Fish to Canestar and deducted from the overall sum due certain payments that had been made by Fermoy Fish to Canestar including what was described as “payment withheld in the amount of €484,896 and the sum of €160,318 which was paid over on the signing of the ASA”. The emphasis of Fermoy Fish at the hearing of the appeal was on two of the items listed above, namely the amount allowed in respect of stock in the sum of €221,000 and the amount allowed in respect of equipment in the sum of €400,000. I will come back to these issues in due course.
The other issue of importance raised in the appeal was the finding of the learned trial judge that the parties were not fiduciaries and that the non-payment of the sum of €484,896 by Canestar to Fermoy Fish did not amount to a breach of trust.
Finally, an issue was raised as to the manner in which the costs of the hearing in the High Court was dealt with.
Breach of fiduciary duty
I propose to deal with the issue of whether or not the trial judge was correct to reject the argument made on behalf of Fermoy Fish that there was a breach of fiduciary duty by Canestar by reason of the non-payment of the sums due by Canestar to Fermoy Fish. Fermoy Fish had made a claim for damages for breach of fiduciary duty in the course of the pleadings. That claim turned on the failure of Canestar to pass over sums totalling €484,896 which was payable pursuant to the terms of the ASA agreement in respect of payments made by customers to Canestar on behalf of Fermoy Fish in respect of the supply of fish to those customers by Fermoy Fish. Fermoy Fish made the point that this was not simply a case of withholding or retaining the monies concerned, it was a case of wrongfully converting the money due to Fermoy Fish to its own use. As was previously mentioned, these proceedings commenced with an application for a Mareva injunction and in the course of that application Mr. O’Regan conceded in a replying affidavit sworn on the 12th April, 2006 that certain payments out of the monies received by Canestar on behalf of and due to Fermoy Fish were made, amounting to approximately €451,576, to various creditors of Canestar. This included a sum of €25,500 paid to the Revenue Commissioners, the sum of €170,767 to Ulster Bank, and €141,960 to Mr. O’Regan. It was pointed out on behalf of Fermoy Fish in the course of the hearing that the learned trial judge in the course of his judgment made a number of comments as to the conduct of Canestar in this regard. Thus at page 77 of the judgment he stated:
“Neither was it within the spirit of the agreement to withhold payments for a few weeks to several months on the basis that further monies would be owing from the plaintiff to the defendants.”
Further on the same page, he said:
“It was clearly an obligation on the defendants to ensure that monies would be lodged to the plaintiff’s account.”
At page 144 of the judgment he observed:
“Canestar wrongly converted monies due and owing to [Fermoy Fish].”
At page 146 he stated:
“The court deprecates the conversion by Canestar of sums properly due to [Fermoy Fish] all the more in the light of breach of warranty of insolvency.”
Finally, he observed at page 151:
“The Court cannot condone the non-compliance with the agreement and the wrongful conversion of funds due to [Fermoy Fish] . . .”
Notwithstanding these observations, the learned trial judge rejected the contention that there had been a breach of fiduciary duty on the part of Canestar.
The concept of a fiduciary relationship was considered in Clements & Ors. v. Meagher & Ors. [2008] IEHC 258 (Feeney J. at paragraph 3.1 of his judgment). He said:
“It is not possible to provide a complete definition of the categories of persons who occupy fiduciary positions. The categories of fiduciary relationships are not closed and it is well recognised that fiduciary duties may be owed notwithstanding the fact that the relationship in question does not fall within one of the settled categories of fiduciary relationships. That is so, provided the circumstances justify the imposition of fiduciary duties. A fiduciary is not subject to fiduciary obligations because he is a fiduciary; it is because he is subject to them that he is a fiduciary.
It follows that a fiduciary is a person who owes fiduciary duties. A fiduciary relationship, therefore, is a relationship between two or more persons in which at least one of them is a fiduciary who owes fiduciary duties to the other or others. (see paragraph 7 - 04 of the 31st Edition of Snell’s Equity). Whilst there is no universal or uniform description of a fiduciary relationship, the approach adopted by Millett L. J. in Bristol and West Building Society v. Mothew [1998] Ch 1, at p. 18, is apposite:-
‘A fiduciary is someone who has undertaken to act for or on behalf of another in a particular matter in circumstances which give rise to a relationship of trust and confidence. The distinguishing obligation of a fiduciary is the obligation of loyalty. The principal is entitled to the single-minded loyalty of his fiduciary. This core liability has several facets. A fiduciary must act in good faith; he must not make a profit out of his trust; he must not place himself in a position where his duty and his interest may conflict; he may not act for his own benefit or the benefit of a third person without the informed consent of his principal. This is not intended to be an exhaustive list, but it is sufficient to indicate the nature of fiduciary obligations. They are the defining characteristics of the fiduciary.’”
I agree with the views expressed by Feeney J. as to the meaning of a fiduciary position and the nature of a fiduciary relationship. In the context of this case, it is in my view the case that Canestar was in a fiduciary relationship with Fermoy Fish and owed a fiduciary duty to Fermoy Fish. By virtue of the agreements entered into between the parties, Canestar and Mr. O’Regan undertook to manage the customer accounts of Fermoy Fish for a period of twenty four months in consideration of a sum of money. Fermoy Fish was entitled to payments made by customers to Canestar on behalf of Fermoy Fish. Clearly, in circumstances where Canestar received a sum of €484,895 on behalf of Fermoy Fish it was under an obligation to pay that sum to Fermoy Fish. It could hardly be thought otherwise than that Canestar had a relationship of trust and good faith towards Fermoy Fish. Despite that, Canestar received money belonging to Fermoy Fish from its customers and, instead of paying it over to Fermoy Fish as it was obliged to do, used the money to discharge its creditors and to make payments to Mr. O’Regan. In my view, having regard to the facts and circumstances of this case, the learned trial judge was mistaken in coming to the conclusion that there was no breach of fiduciary duty. I am satisfied that a breach of fiduciary duty has been established on behalf of Fermoy Fish.
Given that conclusion the question then arises as to how such a finding avails Fermoy Fish.
It was suggested on behalf of Fermoy Fish that the finding that there was a breach of fiduciary duty could give rise to three possible remedies:
(1) A claim for damages for breach of fiduciary duty.
(2) An entitlement on the part of Fermoy Fish to refuse to pay fees to Canestar and Mr. O’Regan under the consultancy agreement.
(3) A claim for interest at the Courts Act rate on the sum of €484,896 up to the date of judgment.
It should be borne in mind that as a matter of contract between the parties each was obliged to make payments to the other in accordance with the terms of the contract. It was open to Fermoy Fish in the proceedings before the High Court to prove that it had suffered loss by not receiving payments in the sum of €484,896 when due and any such loss could have been quantified. If that had been done, any such loss could have been taken into account in determining the amount due on foot of the counterclaim of Canestar and Mr. O’Regan. However no such evidence was adduced. Accordingly, even if, in addition to a breach of contract, there was a breach of fiduciary duty on the part of Canestar and Mr. O’Regan to Fermoy Fish, the position is the same. Therefore as was properly conceded by Mr. Dignam, S. C. on behalf of Fermoy Fish this Court cannot make an award of damages in respect of any such loss which might have existed. As the matter was not addressed at first instance, there is no basis for remitting the question as to whether Fermoy Fish is entitled to damages for breach of fiduciary duty and if so, the amount of such damages.
The second issue raised related to the argument on behalf of Fermoy Fish that it was entitled to refuse to pay consultancy fees and other expenses to Canestar and Mr. O’Regan by virtue of the breach of fiduciary duty. No authority was advanced to support such a proposition. This argument was roundly rejected by the learned trial judge in the course of his judgment. He made it clear that while there was undoubtedly an obligation on Canestar to ensure that money due to Fermoy Fish would be remitted to Fermoy Fish that did not justify Fermoy Fish in refusing to pay the sums due in turn to Canestar and Mr. O’Regan. As he said at p. 78, “it does not seem to me that whatever the degree of misrepresentation there may have been, that the plaintiff was justified in refusing to pay the defendants.” The sum of €191,562 found to be due by Fermoy Fish on foot of the Consultancy Agreement was made up of fees of €54,060 due in respect of consultancy, a figure of €81,000 due in respect of wages and a sum of €56,512 in respect of rent It should be borne in mind that despite the breaches of the agreement that came to light in early 2006, the agreements continued in place, albeit with some variations, until its term expired, during which period sales of €8,293,391 were achieved, leading to the situation that Canestar was entitled to be paid commission in the sum of €995,160 on foot of those sales. That figure was one of the sums taken into consideration by the learned trial judge in calculating the sum ultimately found to be due to Canestar and was not disputed. However, so far as the sum of €191,562 is concerned, it is hard to see how that sum was not payable by reason of the breach of fiduciary duty and I reject the suggestion that Fermoy Fish was entitled to refuse to pay the consultancy fees and other expenses to Canestar and Mr. O’Regan under the Consultancy Agreement by virtue of the breach of fiduciary duty.
I now want to turn to the question of interest. The claim for interest was first articulated by Mr. Des Peelo in his report of the 13th July, 2010 on behalf of Fermoy Fish. He stated:
“The summary of claims on page 3 of this report shows net monies of €285,690 owed to [Fermoy Fish] (before interest). It appears reasonable to include interest. [Fermoy Fish] lost the use of cash converted by Canestar and re the incurred costs. It is understood that [Fermoy Fish] had substantial borrowings/interest at the time. This interest is calculated at the Courts Act rate of 8% (simple interest) on an average outstanding balance of circa €400,000 for 3.5 years (i.e. €400,000 x 28% equals €112,000).”
It is not necessary to consider the amount of interest or whether the sum for interest as calculated by Mr. Peelo is correct. The question is whether or not Fermoy Fish is entitled to claim interest at all. There was no provision for interest contained in the ASA or the Consultancy Agreement and accordingly the only basis upon which interest could be claimed is pursuant to the provisions of s. 22 of the Courts Act 1981 which provides as follows:
“Where in any proceedings a court orders the payment by any person of a sum of money (which expression includes in this section damages), the judge concerned may, if he thinks fit, also order the payment by the person of interest at the rate per annum standing specified for the time being in section 26 of the Debtors (Ireland) Act, 1840, on the whole or any part of the sum in respect of the whole or any part of the period between the date when the cause of action accrued and the date of the judgment.”
It is clear that the power to award interest is a discretionary power. The learned trial judge observed at page 150 of his judgment:
It was contended on behalf of Fermoy Fish that the learned trial judge erred in failing to award Fermoy Fish interest on the sum of €484,896 in circumstances where the judge held that there was a “deliberate withholding of money due”. It was pointed out that the money concerned was at all times the money of Fermoy Fish and was not a debt owed to Fermoy Fish.
As set out above, the claim for interest before the High Court was advanced on the basis set out in Mr. Peelo’s report. Interest is now claimed on the sum of €484,896. Leaving aside the difference in the figures and the basis on which interest was claimed, it does seem when one considers the manner in which Mr. Peelo sought to calculate interest that it was intended to rely on the claim for interest as an alternative to proving loss or damage accruing by reason of the loss of use of the money wrongfully withheld by Canestar. The learned trial judge was entitled in his discretion to disallow the claim for interest put forward on that basis. This Court will not lightly interfere with the exercise of discretion by a trial judge. There is no basis for interfering with the exercise of discretion by the learned trial judge although Fermoy Fish have sought to rely on the fact that that Canestar owed a fiduciary duty to Fermoy Fish. Even if that provided a basis for informing the discretion to be exercised by a judge in considering whether to award interest pursuant to s. 22 of the Courts Act 1981, it is quite clear that the learned trial judge took into account the deliberate withholding of money due and accordingly, I cannot see how Fermoy Fish is entitled to overturn the finding of the trial judge in respect of its claim for interest pursuant to the provisions of s. 22 of the Courts Act 1981.
Damages
At the hearing of this appeal, Fermoy Fish took issue with certain sums allowed or found to be due to Canestar on foot of the ASA. In addition, complaint was made as to the refusal by the learned trial judge to allow Fermoy Fish its claim in respect of a sum said to be attributable to the salary and expenses of Ms. Millward-O’Donoghue in relation to the implementation of a quality control system.
I propose to deal with the issues in relation to the sum of €221,000 for stock found to be due to Canestar, the sum of €40,917 claimed by Fermoy Fish in respect of Ms. Millward-O’Donoghue and finally, the sum of €150,000, part of the sum of €400,000 in respect of equipment, allowed to Canestar.
The sum of €221,000 in respect of stock was made up as follows:
Packaging: €80,000
Fresh fish: €19,000
Frozen fish: €122,000
Under the ASA, Fermoy Fish was obliged to pay for stock as follows: €100,000 was due on signing the ASA and the balance was to be paid within 30 days thereafter. There was a stocktaking exercise after the signing of the ASA but no conclusions were reached by the parties in respect of the stocktaking and no payment was made on foot of the stocktaking apart from the initial sum of €100,000 on signing the ASA. Hence, the amount due under this heading became an issue in the proceedings. The question of fresh fish was not pursued in the course of the appeal before this Court and therefore the sum allowed in respect of fresh fish is not the subject of any challenge. The sum of €80,000 was allowed by the learned trial judge to Canestar in circumstances where Canestar had claimed €91,000 in respect of packaging and Fermoy Fish said the sum due should have been €35,000. In the course of his judgment the learned trial judge found that some of the packaging was used by Fermoy Fish but they claimed that only some €30,000 of the packaging was good stock and only a small volume of labels was useable. The learned trial judge concluded that in the absence of further evidence on this issue he would allow the sum of €80,000 to Canestar. He obviously preferred the evidence on behalf of Canestar on this issue. It was suggested in the course of the argument on behalf of Fermoy Fish that the figure of €80,000 seemed to be too high but there is no basis upon which that figure can be set aside in the light of the clear finding of the learned trial judge. It was never suggested that the finding was unsupported by the evidence. Accordingly that sum stands.
The final figure in relation to stock consisted of the sum of €122,000 which was allowed in respect of frozen fish. Fermoy Fish had valued the frozen fish stock at €44,000 approximately whilst Canestar had valued the frozen fish stock at approximately €122,000. It had been suggested by Fermoy Fish in the course of the evidence that unusable or obsolete fish had been disposed of or destroyed. The sum of €122,000 was awarded by the learned trial judge who held that he was not satisfied that a significant volume of frozen fish was unusable or obsolete. This conclusion was based in part on an analysis by Mr. Carthy, the accountant on behalf of Canestar, who gave evidence that two internal invoices dated the 19th October, 2005 in respect of sums of €47,494 and €21,315 making together a total of €68,809 represented stock that was not destroyed. In that context the learned trial judge added that he was satisfied from the evidence of David and Eugene Garvey who gave evidence on behalf of Canestar that the stock was sold or transferred. The learned trial judge was entitled to come to the view on the evidence before him that the valuation of the frozen fish stock given in evidence on behalf of Canestar was to be preferred to that of Fermoy Fish. Accordingly, his finding of fact in regard to the value of frozen fish stock cannot be set aside.
It is now necessary to deal with the claim in respect of the sum of €40,917 in respect of salary and expenses claimed by Fermoy Fish in relation to Ms. Millward-O’Donoghue. The issue arose in the context of what was said to be non-performance of the consultancy agreement by Canestar and Mr. O’Regan. This claim arose in respect of quality control issues. Prior to entry into the ASA, there had been a problem with quality control in Canestar’s premises which had been identified as a result of an inspection by Ms. Boyle, a food safety and quality auditor from Musgraves who prepared a report on the issue in June 2005. Following the completion of the ASA, Ms. Millward-O’Donoghue also furnished a report. It is clear from the evidence that concerns were raised by Ms. Boyle on behalf of Musgrave and that work was done and standards were improved on foot of Ms. Boyle’s report. It is apparent from the references to the reports of Ms. Boyle and Ms. Millward-O’Donoghue at pages 156 and 157 of the judgment that the learned trial judge was of the view that the involvement of Ms. Millward-O’Donoghue in the area of quality control was not such as to justify the claim made for salary and expenses of Ms. Millward-O’Donoghue. He clearly was of the view that the report furnished by Ms. Millward O’Donoghue “appears to have been a standard form report, which was, in some instances, inappropriate to the premises at Crookstown.” As there was evidence before the learned trial judge to support his finding in this regard, there is no basis upon which this Court can interfere with his finding of fact. Accordingly, the sum claimed by Fermoy Fish in the sum of €40,917 cannot be allowed.
It is now necessary to deal with the sum claimed in respect of €150,000 allowed to Canestar in respect of equipment. It is necessary to consider a number of the provisions of the ASA. Clause 4 was headed “Sale and Purchase of the Business” and provided for commission to be paid to Canestar and also provided for the payment of sums in respect of equipment. Clause 4.1.2 provides as follows:
“€400,000.00 for the Equipment payable as follows:
a. €250,000.00 on the signing hereof.
b. €150,000.00 subject to compliance with Clause 4.4.”
Clause 4.4 provided:
“In the event that the aggregate sales figure at the end of the seventh month from the date hereof is at least €2,300,000.00, the vendor will be paid the sum of €150,000.00 which said sum shall be discharged thirty days after the expiration of the seventh month from the date hereof.”
There was no dispute between the parties as to the interpretation of those provisions of the ASA. It is the position of Fermoy Fish on the appeal that the condition stipulated in Clause 4.4 that the aggregate sales figure at the end of the seventh month, that is to say on the 18th March, 2006, would be at least €2,300,000 was not complied with and that accordingly Canestar was not entitled to the sum of €150,000 in accordance with Clause 4.4. At page 150 of his judgment the learned trial judge observed:
“No calculation appears to have been given in evidence of whether or not this target had been achieved or no on the 19th April, 2006.”
It is accepted by both sides that the reference to the 19th April, 2006 was incorrect and that the relevant date was the 18th March, 2006. Fermoy Fish have argued on the appeal that it was not liable for the payment of the sum of €150,000 on the basis that there was evidence before the trial judge that the aggregate sales by Canestar had only reached €2,299,257 by the 18th March, 2006 with the result that the aggregate sales fell short of the target set out in Clause 4.4 by €743. The learned trial judge stated in the course of the judgment at page 150 that:
“Mr. Carty, in his detailed report and on the basis of his understanding of the agreement, says that Canestar did achieve that turnover and, accordingly, was entitled to be paid €150,000. Even if this were not so it would seem unfair to deny such payment of an arbitrary provision which allowed for no graduated payment.”
This suggests that the learned trial judge had some doubt as to whether or not Canestar had in fact achieved aggregate sales in the sum of €2.3m. It was pointed out on behalf of Fermoy Fish that the figure of €2,299,257 was a figure which was calculated by Mr. Carthy in his report and that insofar as Mr. Carthy in his report said that sales in the seven month period had exceeded €2.3m, Mr. Carthy took into account sales to various customers, namely Whelans Galway and Simro/Dunnes which were expressly excluded by the learned trial judge in the calculation of commission. Indeed counsel on behalf of Canestar and Mr. O’Regan described the decision of the learned trial judge not to take into account sales through Simro, Wrights of Howth Galway or Whelans in calculating aggregate sales as a huge setback to Canestar. Had the Court found otherwise, it was pointed out that Canestar would have reached a sales target of €2.8m approximately by the 18th March, 2006. It was further submitted in the course of the appeal on behalf of Canestar and Mr. O’Regan that having regard to the fact that the shortfall was so small, (they calculated that shortfall as being 0.032%), regard should be had to Clause 18.6 of the ASA wherein the parties agreed “to commit themselves to the spirit and letter of the agreement”. In effect, the submission on behalf of Canestar and Mr. O’Regan was that the Court should ignore the shortfall. It is clear that the decision of the learned trial judge to exclude certain sales from the calculation of commission means that there is no dispute between the parties that there is a shortfall in the sum of €743 in regard to the amount of sales required to trigger the payment of €150,000.
There is no dispute between the parties as to the interpretation of Clause 4.4. It is clear and unequivocal in its terms. Clause 4.4 may be somewhat unusual in that it provides that the sum to be paid for equipment was subject to Canestar achieving sales of the value of €2,300,000. One might observe that the equipment was either worth €400,000 or €250,000 but not both. However, this is what the parties themselves agreed in a complex agreement reached with the assistance of their respective legal advisers. In truth, this clause looks more like an incentive or bonus arrangement designed to encourage Canestar to use its best endeavours to achieve as many sales as possible with the obvious benefits that would gain for all parties. Either way, having regard to the findings made by the learned trial judge in expressly excluding certain sales from being used for the calculation of aggregate sales, the sales target of €2.3m was not reached by Canestar. Accordingly, it was not open to the learned trial judge to make the finding that he did at page 150 of the judgment that it would “seem unfair to deny such payment of an arbitrary provision which allowed for no graduated payment.” In coming to that conclusion, it is my view that the learned trail judge fell into error. The parties were entitled to reach agreement on the method of payment and did so. There is no dispute as to the interpretation of Clause 4.4 and as that was the agreement of the parties, it is not open to the Court to rewrite the agreement for them. Therefore, in my view, given that Canestar did not reach the target for sales set out in Clause 4.4 they are not entitled to the payment of the sum of €150,000 and accordingly the amount found to be due by Fermoy Fish to Canestar must be reduced by the sum of €150,000.
Conclusion
There was an error on the part of the learned trial judge in concluding that there was no breach of fiduciary duty on the part of Canestar and Mr. O’Regan. However, that breach in the circumstances described above does not give rise to a claim for damages. Insofar as the breach of fiduciary duty was relied on as justification for refusal to pay commission to Canestar and Mr. O’Regan the learned trial judge rejected that submission and there is no basis to overturn that finding. Further, this Court rejects the submission that there was any error on the part of the learned trial judge in his approach to the question of the payment of interest.
The learned trial judge made a number of clear findings of fact in relation to certain sums that were due to Canestar and Mr. O’Regan, namely the sum of €122,000 in respect of frozen fish and the sum of €80,000 in respect of packaging. There is no basis upon which this Court can interfere with those findings of fact.
The learned trial judge rejected the claim by Fermoy Fish in respect of the salary and expenses of Ms. Millward-O’Donoghue. Again there is no basis for interfering with the finding of facts made in that regard by the learned trial judge.
Insofar as the question of the payment of the sum of €150,000 in accordance with the provisions of Clause 4.4 is concerned, I am satisfied that there was an error of law on the part of the learned trial judge in reaching the conclusion that the sum of €150,000 required to be paid, notwithstanding that on the evidence accepted by the learned trial judge, it is clear that the target in respect of sales had not been met. The ASA in the clear and unambiguous terms of Clause 4.4 set a target of €2.3m in sales which had to be achieved in the first seven months of the agreement in order to trigger the payment of €150,000. As that target was not met, Canestar is not entitled to receive that sum.
Accordingly, the appeal of Fermoy Fish will be allowed insofar as the amount found to be due to Canestar in the sum of €420,682 will be reduced by the amount of €150,000.
Finally, Fermoy Fish disputed the order for costs made in the High Court. This Court will hear further submissions on this issue.