Supreme Court dismisses appeal on speculative loss of profits calculation using a comparator business method.

THE SUPREME COURT

Record Nos. 362 & 372/07

Hardiman J.

O’Donnell J.

McKechnie J.

Between:

Emerald Meats Limited

Plaintiff

And

The Minister for Agriculture, Ireland and the Attorney General

Defendants

Judgment of O’Donnell J. delivered the 30th day of July 2012

1 This appeal marks the latest stage in a legal battle between the parties in respect of events that occurred more than 20 years ago.

In a lengthy judgment delivered on the 8th October, 2007, Feeney J. awarded to the plaintiff company the sum of €2.45 million by

way of general damages in respect of a breach by the State of its duty to grant to the plaintiff company a licence for the importation

of 277 tonnes of GATT meat for the year 1990. The plaintiff (“Emerald”) has appealed against the award and the defendant (“the

Department”) has cross-appealed.

2 The methodology ultimately adopted by the trial judge in calculating damages was relatively simple. Since Emerald had effectively

ceased trading, the claim was for loss of profits from business which was not carried on over the succeeding years. This is a

necessarily speculative exercise. Having rejected the primary submissions made by both Emerald and the Department as to the

correct approach to this calculation, Feeney J. accepted that an appropriate method was to seek to measure Emerald’s loss by

reference to a comparator business that had continued to trade in the market in which Emerald claimed it would have traded and

thrived but for the wrongdoing of the Department in 1990. He accepted that Emerald could be compared with another meat trading

company, NWL, which had traded since 1990. On the approach taken by the judge, 1989 was the last period during which NWL and

Emerald were both trading in a market unaffected by the Department’s wrongdoing. During this period NWL was some seven times

larger in turnover terms than Emerald. In addition, an adjustment was made to the available turnover figures for NWL to arrive at a

turnover for the period matching Emerald’s claim, that is for the period between 1991 and 2001. That process produced an adjusted

turnover figure for NWL over the period of IR£402.5 million. Applying a one-seventh ration to that would suggest a turnover for

Emerald of IR£57.5 million. From that figure was subtracted a figure for turnover of Emerald actually achieved between October 1990

and September 1991 of IR£4.9 million, leaving an estimated loss of turnover of IR£52.6 million. There was some dispute as to the

appropriate net profit margin to be applied. The court applied a figure of three percent because it accepted that it was probable that

Emerald’s overall profit margin would have been higher than the margin achieved within the Irish industry as a whole including NWL, or

indeed that of Emerald London, a company closely related to Emerald. The application of the three percent profit margin to the net

turnover figure produced a loss of profit figure of IR£1.578 million as of 2001, which converted to a figure of €2,003,346.60. The trial

judge also accepted that Emerald was entitled to interest on that amount to compensate for the fact that damages assessed as of

2001 were being awarded in 2007. In the words of the trial judge, the figure for interest was not an exact calculation “but represents

a realistic approximation that results in a total figure of €2,450,000”. This is indeed an apt description of the process of calculation of

loss as a whole. It is apparent therefore that there were a number of assumptions underlying the assessment of damages in this case.

To understand how the judge came to assess damages in this way, and indeed why he was engaged in assessing general damages for

the period 1991 to 2001 and the criticisms made by both parties to the outcome, it is necessary to set out in some detail the

background to this litigation.

3 It can be said that the history of Emerald has been one of a relatively short period of successful trading in a niche market,

principally between 1986 and 1989, with a very protracted period of litigation thereafter. One of the few beneficial by-products of this

process is that the background to the dispute has been the subject of consideration in judgments of Irish courts, and indeed courts

further afield. For a very detailed and lucid account of the circumstances giving rise to Emerald’s first claim, reference may be made

to the comprehensive judgment delivered by Costello J. on the 9th July, 1991 and reported at [1992] 1 C.M.L.R. 462. That judgment

was upheld in a unanimous judgment of the Supreme Court delivered by Blayney J. and reported at [1997] 1 I.R. 1. What follows is

therefore a necessarily truncated account of a complex dispute.

4 The origins of this dispute lie in the Common Agricultural Policy of the European Community, in particular as it affected Ireland in the

late 1980s. The structure of the Community at that time required the removal of internal barriers to trade, the support of prices for

Community produced agricultural products, and the imposition of tariffs on imports. Beef was a particularly important product in

Ireland because as of the time of this dispute Ireland was a net exporter of considerable quantities of beef. This difficulty was

compounded by the fact that in Ireland, the beef trade was predominantly grass based, and therefore suffered from a problem of

seasonality of supply. The advent of the European Community with an enlarged market for the beef being produced in Ireland,

together with a market support mechanism, had a very significant impact upon Irish cattle producing and meat processing businesses,

which rapidly adapted to the fact that developments at the European Community level would have very significant impact upon the

opportunities and profits available.

5 The meat business in Ireland was competitive and tough. It involved large cash flow, small profit margins, and required a continuous

ability to match fluctuating supply from farmers with the demands of a large number of disparate customers. It has been

characterised by considerable success and spectacular failures. At a micro level, the purchase of cattle at too high a price, or the

sale of the meat at too low a price, or the failure to sell all the meat produced, could each destroy any profit margin, and rapidly

render a business unprofitable. One consequence of this was that meat traders could operate successfully in a market with such

continuous fluctuations, since they could seek to match potential customers with suppliers of meat which those suppliers needed to

sell.

6 Emerald was effectively a one man business. Mr. John McCarthy was an able businessman. As a young man in 1975 he became

involved in the meat business and learnt the business of meat trading. In 1983 he set up his own business as Emerald Meats. The

relative success of the business is illustrated by the fact that the credit facilities allowed to the company by his bankers steadily

increased from a figure of IR£20,000 in the early stages to IR£200,000 by 1989. In the words of the trial judge, Mr. McCarthy had

demonstrated “an astute and inventive business mind capable of identifying and exploiting a real business opportunity”. The

opportunity referred to was that presented by the terms of a scheme introduced by the European Community to permit the

importation of limited quantities of beef from non member states under the applicable provisions of the General Agreement on Tariff

and Trade (“GATT”), agreed as part of international trade talks under the auspices of the World Trade Organisation.

7 Under the relevant GATT agreement, the European Community had agreed to a quota arrangement under which beef and veal from

“white listed states” (Australia, New Zealand, Norway, Sweden and Finland) could be imported and put on the market in the European

Community subject to payment of a duty at a preferential rate of 20%. Initially, quotas were allocated to the member states which

could then distribute them as they saw fit. In Ireland, importation of meat was relatively unknown and was indeed prohibited on

veterinary grounds. In 1985, however, that derogation came to an end. One of the side effects of this was that GATT quota became

available in Ireland for the first time. In 1986 it was allocated by the Department of Agriculture to existing meat processors. At a

European level, a GATT quota was a valuable thing since even after meeting the cost of importation and payment of the duty, GATT

meat was cheaper than the then prevailing price for beef produced within the European Community. However, at an Irish level the

concept of importing beef into a country which itself was a substantial exporter of beef may have seemed like a “coals to Newcastle”

endeavour. In the event, meat processors were content not to become engaged in the business of importing GATT meat and instead

transferred their entitlement to entities who were willing to pay for that right (colloquially, though as Costello J. pointed out,

somewhat inaccurately described as “selling the licence”). The existence of a licence which was not being used by the licensee who

was therefore willing to sell it or the rights it conferred, presented a form of arbitrage opportunity that Mr. McCarthy saw and

exploited.

8 In 1986 Ireland was allocated 455 tonnes of GATT quota. In 1987 the figure was 395 tonnes, and 418 tonnes and 318 tonnes in

1988 and 1989 respectively. As Costello J. stated at para. 5 of his judgment of July, 1991:

“Very quickly the meat processors found that it was much more profitable for them to sell their quotas than to

manufacture GATT meat themselves. They did so, not just to the plaintiff but to other meat traders both in this country

and in the United Kingdom and a brisk market arose in the purchase and sale of the quotas allocated to the meat

processors.”

Mr. McCarthy through his business became the most successful entrepreneur in this business and by 1988 he in fact purchased over

90% of the entire Irish share of the GATT quota from the meat processors to whom the department had allocated it.

9 Emerald did not however engage directly in the business of sourcing a supply of meat in the relevant countries, importing it into

Ireland, processing it or selling it on to customers. Instead it engaged in something described as “turnabout business”. Beef imported

into the European Community, for example into the United Kingdom, and held in bonded storage was not considered to have been

placed on the market at that point and duty was not payable at that point. Accordingly, it was possible to import it into Ireland

before it continued on its way to the ultimate customer. The passage through Ireland involved putting the beef on the market in the

European Community and accordingly, it became eligible for the preferential duty applicable under the GATT quota, held in this case

by Emerald. Emerald was able therefore to utilise the GATT quota it had acquired by introducing one essential step into the

transaction organised by others which allowed the importation into the Community at the preferential rate. From Emerald’s perspective

it was essentially a paper transaction. To so describe the business is not in any sense to diminish Mr. McCarthy’s acumen in

identifying and exploiting the opportunity. It is however relevant in considering the damages claim to understand what was involved in

the business Mr. McCarthy had established through the years 1986 to 1989. In particular, the critical focus of that business was the

ability to make contacts both with traders seeking to import beef into the Community from the white listed countries and with meat

processors in Ireland or elsewhere who had an entitlement quota but no ability, or perhaps more accurately, inclination to exploit it.

10 Some other features of the business established by Mr. McCarthy should be noted. Mr. McCarthy’s business had close links with

the United Kingdom. In 1987 Emerald Meats London Limited (“Emerald London”) was established by Mr. McCarthy, together with a

friend and former colleague and beef trader, Mr. Des Marshall. Mr. McCarthy was a 50% owner of that business which was then

engaged in the trade. Mr. McCarthy also pursued interests outside the meat industry. By as early as 1985 he had diversified part of

the funds available to the company into property and had acquired properties in the Herbert Street and Lansdowne Road areas of

Dublin. This is impressive testimony to Mr. McCarthy’s drive and appetite for business, but the property portfolio undoubtedly made

significant demands on the cash flow and profitability of the business, a feature relied upon in different ways by both parties in this

case.

11 Finally, it is necessary to explain a technical distinction in the manner in which the quota was allocated in the years 1987 and 1988

on the one hand, and 1989 on the other. In 1987 and 1988, Mr. McCarthy entered into agreements with the meat processors and

purchased their entitlement to a licence. However the Department issued the licence to “Emerald Meats Limited for and on behalf of

[the relevant meat processor]”. In 1989 Mr. McCarthy was aware of the likely change in the regime and considered it possible that

the European Commission might establish criteria based on past imports for the allocation of the Community managed quotas.

Accordingly, he had a meeting in the Department of Agriculture and the Department agreed to drop the formula “for and on behalf of”

and instead agreed to issue a licence to the meat processor and then record upon it a transfer to Mr. McCarthy. The ambiguity in

that phrase and the suggestion of agency contained in it was at the very heart of the dispute which has given rise to litigation

spanning three decades.

12 It is useful to reflect at this point on the nature of the business established by Mr. McCarthy with considerable success by 1989,

the damage to which was to be assessed in these proceedings. Although a relatively lucrative business during the period between

1986 and 1989, it was also somewhat precarious. It depended for its continued profitability on a number of factors which were not

within Mr. McCarthy’s control. First, it was dependent upon the continued existence of the GATT quota regime and indeed the price

differential which made it at all profitable to seek to import GATT beef into any country in the European Community. A second

important factor was a regime which permitted meat processors who received the quota entitlement to trade that entitlement to

entities such as Emerald. A third factor was the continuing willingness of those meat processors to trade their entitlement to a licence

and to do so at a price which would continue to make the transaction profitable for a company such as Emerald.

13 In 1989 a change occurred in the legal structure, described by Costello J. as “momentous”. In September of the previous year, the

European Court of Justice had decided the case of EC Commission v. EC Council [1988] E.C.R. 5459 concerning general issues relating

to tariff preferences on industrial and textile products. It was recognised by interested observers, including Mr. McCarthy and the

Department, that the outcome of the case could have important ramifications for the practice of national allocation of the GATT

quota. In 1989 a transitional arrangement was introduced which gave an indication of the shape of any future regime. It was in part

because Mr. McCarthy apprehended that the European Commission might establish criteria based on past imports that he was so keen

to ensure that the licences issued by the Department of Agriculture would record Emerald as the importer in 1989.

14 On 11th December, 1989 Council Regulation No. 3889/89 was adopted. It provided that a Community tariff quota for GATT meat

totalling 53,000 tonnes would be open for 1990, subject to the tariff of 20%. The quota would be administered at Community level in

relation to applicants who had been determined by the national authorities, in this case the Department, to qualify. The effect of the

regime was described by Costello J. at paragraph 29 of this judgment as follows:

“This quota was to be divided into two parts. Article 2(1)(a) provided that the first part was to be 90 percent of the total

quota (that is 47,700 tonnes) and this part was to be “apportioned amongst importers who can prove that they have

imported” GATT meat during the last three years, that is in 1987, 1988 and 1989. Thus the major part of the quota was

reserved for “traditional importers”. Article 2(1)(b) provided for the second part (of 5,300 tonnes) was to be apportioned

“for operators who can prove that they engage in trade involving a minimum quantity and for a period to be determined

with third countries in beef and veal” other that GATT meat. The “newcomers” share in the quota was thus not limited to

“importers” as the newcomers share in 1988 had been limited, but was now open to “traders” (including exporters) to third

countries subject to the conditions to be determined by the Commission.”

All of this was to be carried out quite rapidly. The Commission Regulation implementing this decision was adopted on the 21st

December, 1989. It provided that the necessary steps had to be taken to prove importation by the 19th of January of the following

year and that the member states were required to forward to the Commission by the 31st January, 1990, at the latest, a list of

applicants including the quantities applied for and the countries of origin indicated.

15 This was indeed a significant change. For Emerald, it provided opportunities but also threats. It was potentially helpful, since if

Emerald could establish itself as a traditional importer it would acquire an entitlement to GATT quota in its own right and would not be

dependent on dealing with meat processors to obtain GATT quota. That was perhaps the major change in the regime. However, that

right would only confer an entitlement to a share of GATT quota. It was still necessary to find the business which could avail of the

quota. The creation of the concept of “newcomer quota” also had the possibility of significantly diluting the value of the traditional

importer quota. Each newcomer quota became entitled to participate in the traditional importer quota in the following year. In the

decade which followed, much time and effort was directed to exploiting this provision by routing business through newly created

subsidiaries known as “daughter companies” to obtain newcomer quota. Thus, there was a continual dilution effect and a traditional

importer could only retain its proportion of GATT quota if it was capable of winning the same proportion of newcomer quota through

subsidiary or associate companies set up for that purpose. However newcomer quota was available to those who could be shown to

have exported to third countries as well as those who had imported from them, and in any event was limited to meat described as

“non GATT meat” i.e. meat from or to countries other than those the subject of the traditional GATT quota. This of course was a

trade in which Emerald was not then engaged. Furthermore, meat processors with export trade to such countries had an immediate

potential advantage in this regard.

16 It seemed that in 1990 the principal focus was upon the traditional importer’s quota. Where Mr. McCarthy saw an opportunity, the

obverse analysis was the case for the meat processors. Whereas hitherto they had received the GATT quota and been able to trade

it, the changes introduced by the regulation meant that they would no longer be entitled to the quota as of right and could only

obtain it if they could demonstrate that they were indeed the traditional importers. In the event, the meat processors made an

application for the traditional importer quota on the basis that it was they and not Emerald which were entitled to the quota for those

qualifying imports organised by Emerald under the turnabout scheme.

17 It will be recalled that the Department of Agriculture was obliged to forward to the Commission the names of the applicants by the

30th January, 1990. There were 277 tonnes of quota potentially available and now in dispute. The Department of Agriculture

forwarded the names of the individual meat processors in respect of that quota attributable to the imports made in 1987 and 1988,

but forwarded Emerald’s name in relation to the 100 tonnes of quota in respect of the imports made in 1990 under the licences which

Mr. McCarthy had so presciently had endorsed with a transfer to Emerald. The refusal of Emerald’s application for the quota in relation

to the 177 tonnes is the core issue which gave rise to the litigation which has led to this appeal.

18 The litigation commenced by Emerald concerned, in the main, the Department’s decision in respect of the traditional importer’s

licence for the 177 tonnes of quota available in respect of qualifying imports in the years 1987 and 1988. However, there was also a

separate dispute in relation to the newcomer quota provided for under Article 2(1)(b) of Council Regulation No. 3889/89. Emerald had

been refused an application for 15 tonnes of quota under this heading. As a result, it applied for and obtained a mandatory

interlocutory injunction from the High Court on the 22nd November, 1990 and the Department complied with that order. In the

meantime however, Ireland had returned the 15 tonnes of quota to the Commission which, by Regulation No. 2983/90, made provision

for the reallocation of 35 tonnes of GATT quota. Apprehending that its right to obtain a quota could be prejudiced if it did not obtain

an interlocutory injunction, Emerald brought proceedings in the European Court of Justice (“ECJ”) seeking suspension of the new

regulation and interim relief. A settlement of the claim was reached and the application for interim measures was withdrawn. The

costs of that application became part of the damages claim in the High Court proceedings.

The First High Court Judgment

19 The case was at hearing in the High Court before Costello J. for some 16 days. Judgment was delivered on the 9th July, 1991. It

was a comprehensive victory for Emerald. The High Court declared that Emerald was entitled to a quota in respect of the imports

during the years 1987, 1988 and 1989. Because Emerald had only obtained 100 of the 277 tonnes of quota to which the High Court

had held it was entitled in 1990, the value of the 177 tonnes of quota was held to be payable to them and assessed at a figure of

IR£385,922. In addition, the fees and costs incurred in pursuing interim relief before the ECJ in October 1990 were awarded in the sum

of BEF662,926 (Belgian francs) or its equivalent in Irish pounds. The judge agreed to hear submissions in relation to losses in 1991 and

future years in the light of the findings made in the judgment. In the event, Emerald obtained its full entitlement of quota in respect

of those and subsequent years and the judge did not award any damages in that respect. Costello J. also observed that there had

been a delay in issuing the licences which Emerald had obtained in 1990 (in respect of the 100 tonnes) in that it did not obtain

licences until the end of July 1990. He considered however that Emerald had not established that it suffered any loss by virtue of that

delay. Finally, and critically for present purposes, he stated at paragraph 171 of the judgment:

“I should also add that I am satisfied that the failure to obtain the quota to which it was entitled severely disrupted the

plaintiff’s business and its relationship with other traders. I am not presently satisfied that the plaintiff is entitled to

general damages for this disruption but, if required, I will hear submissions on the point.”

A stay of execution was placed on the recovery of the sums contained in the judgment. In the event, Emerald made application to

the Supreme Court to lift the stay on the grounds that it was suffering serious cash flow difficulties and in a further landmark decision

in favour of Emerald, the Supreme Court lifted the stay on the 6th July, 1992. In relation to the entitlement to quota, the High Court’s

declaration remained the law unless and until reversed. In any event that aspect became somewhat academic because three months

after the judgment in the High Court, the Commission made Regulation No. 3021/91/EEC which endorsed the decision in the following

terms:

“The Irish authorities shall revise the entitlements to the GATT quota in 1990 and the imports eligible pursuant to

Regulation (EEC) No. 3889/89 in the light of the judgment of the Irish High Court of 9 July 1991.”

The Supreme Court Appeal

20 There remained an issue in the Irish litigation as to the correctness of the decision of the High Court and more particularly, the

award of damages. The Supreme Court heard that appeal over five days and judgment was delivered on the 3rd March, 1997 by

Blayney J. That judgment upheld the High Court judgment on every ground in favour of Emerald. Indeed it went further and also

allowed Emerald’s cross-appeal on the question of damages.

21 It will be recalled that the High Court judge had indicated that he was not satisfied, as a matter of law, that Emerald was entitled

to general damages for the disruption to its business and relationship with other traders. In due course, the High Court heard

submissions on that issue and on the 19th July, 2011 delivered a brief ex tempore judgment refusing to make an award of general

damages. The relevant portion of the ruling is as follows:

“I have been asked, on behalf of the plaintiff, to award general damages to the plaintiff company by reason of damages

to its business. Any such business would be in addition to the amount of £385,922 and interest of £30,873.76 and

662,926 Belgian francs pursuant to the provisions of the Courts Act 1981 which I have already decided to award.

Damages have been awarded against the defendant, the Minister for Agriculture, in his capacity as intervention agency

for the European Economic Community and in connection with his duty to administer the relevant provisions of the

European Community law relating to the agriculture section. I accept the submission made to me by counsel on behalf of

the plaintiff that the breach of duty by the Minister is analogous to a breach of statutory duty under national law. I do

not believe that, for such a breach of statutory duty, general damages would be awarded by an Irish court against the

Minister. For that reason, I refuse to award any general damages to the plaintiff.”

The Supreme Court overturned that decision. In a brief passage at pp.19-20, Blayney J. explained his reasoning:

“In taking the view that general damages would not be awarded against the Minister for Agriculture by an Irish court for a

breach of statutory duty, the learned trial judge was making a distinction between damages awarded for special damage

and damages awarded for general damage, and was concluding the damages for the latter type of damage, i.e. general

damage, would not be awarded against the Minister. I have been unable to find any authority to support this view. And I

do not think that this is surprising. All damage suffered as a result of a tort is divided into “special damage” and “general

damage” and the plaintiff is entitled to recover damages under each head. The distinction between these two heads of

damage was described as follows by Bowen L.J. in his judgment in Radcliff v. Evans [1892] 2 Q.B. 524 at p.528:-

“… It is desirable to recollect that the term “special damage” which is found for centuries in the books,

is not always used with reference to similar subject matter, nor in the same context. At times (both in

the law of tort and of contract) it is employed to denote that damage arsing out of the special

circumstances of the case which, if properly pleaded may be super-added to the general damage which

the law implies in every breach of contract and every infringement of an absolute right: see Ashby v.

White 2 Ld. Raym 938. In all such cases the law presumes that some damage will flow in the ordinary

course of things from the mere invasion of the plaintiff’s rights, and calls it general damage. Special

damage in such a context means the particular damage (beyond the general damage) which results from

the particular circumstances of the case, and of the plaintiff’s claim to be compensated, for which he

ought to give warning in his pleadings in order that there may be no surprise at the trial.”

Since “general damage” is damage which the law implies in every infringement of an absolute right, and special damage

means particular damage beyond general damage, it is difficult to see how the Minister could be liable for the former and

not for the latter. Furthermore since both are equally caused by the wrongful act, there is no reason why the Minister

should not be liable for both.”

22 The court invited submissions on the question of whether damages should be assessed by the Supreme Court or remitted to the

High Court for assessment. In the event, the matter was remitted to the High Court.

The High Court Hearing on the Assessment of Damages

23 The hearing of the damages claim directed by the Supreme Court did not occur for a period of nine years. That in itself was

patently unsatisfactory and indeed, unacceptable. When it did proceed, it took the form which could hardly have been imagined either

by Costello J. when he considered that general damages were not available for Emerald’s claim or indeed, when the Supreme Court

reversed that decision but considered that the damages might have been capable of assessment by that Court. The points of claim

delivered on the 27th February, 2001 claimed a total of IR£15,176,000, equating to EUR€19,271,000. By the time the case opened, it

was presented as a claim for €20.2 million. The Department’s response was to deny any loss at all and no open offer of settlement

was made. Accordingly, Emerald’s claim to damages had to be determined by a lengthy hearing in the High Court, itself a protracted

and expensive method of determination of losses and producing a result with which neither party was satisfied. Furthermore, the

Department’s stance was to refuse to agree to an exchange of witness statements or to any meeting of the experts, even when that

was suggested by the President of the High Court. The Department’s position was that it could not put its case as to quantum until it

understood how Mr. McCarthy explained and justified his claims. Inevitably there was discussion of this position at the outset of the

case and with encouragement, and indeed admirable pressure from the court, the Department agreed to exchange the accountants’

expert report. The result was that it was only after the case had commenced that both sides had in their possession the lengthy and

no doubt expensively compiled reports from accountancy experts running to more than 70 pages each together with a series of

appendices. Even then, the rival positions were €20.2 million and zero, and neither addressed the calculation which was ultimately

adopted by the High Court judge.

24 It is worth pausing to consider the claim made by the Emerald, which was valued in such startlingly different amounts by expert

witnesses whose primary function, it should be recalled, was to offer their independent expert opinion to the court. The wrong done

to Emerald, as determined by Costello J. in the High Court, and upheld in the Supreme Court, was that in 1990 it had been deprived of

177 tonnes of quota and had been delayed in receiving 100 tonnes of quota. Furthermore, it had been refused new quota until the

injunction granted by the High Court in late 1990 was lifted. In respect of 1991, Emerald’s position was vindicated by the decision of

the High Court in the first place and by that of the European Commission shortly thereafter so that it received its full entitlement for

that year, albeit later than it would have if the Department had not made the erroneous decision that the meat processors were

entitled to quota in respect of imports made in 1987 and 1988. In addition to this, Emerald had received damages in respect of the

loss of quota in 1990 but did not receive the funds until the Supreme Court lifted the stay in 1992. Furthermore, the case was made

on behalf of Emerald that it remained at risk, insofar as if the Supreme Court appeal succeeded, it may have had to repay the award

of damages and incur costs. It was said that Mr. McCarthy, who was the prime mover in Emerald, was required to devote his

attention to the prosecution of the litigation with an inevitable adverse impact on his capacity to pursue the business. It was also

claimed that the management of the litigation, the payment of the costs incurred, and the delay in receiving damages, all created

cash flow problems for the business, together with the adverse impact on his reputation caused by the fact that the Department had

not granted to it its full entitlement of quota. The primary wrong therefore, was the refusal of full quota in 1990, a wrong that was

itself remedied at least prospectively by the determination of the High Court in 1991, and the decision of the European Commission,

and in respect of the refusal of that portion of quota in 1990, by the award of damages. Arising from that wrong, and notwithstanding

the remedies granted, it was said that Emerald had still suffered enormous losses because of the factors just identified.

25 At this point it is worth recalling that the essence of Emerald’s claim was the calculation of anticipated lost profits in the meat

trading business following the changes introduced in 1990. However, the changes effected in 1990, while potentially helpful to

Emerald, were not all in its favour. In particular, it rapidly became apparent that the acquisition of newcomer quota would become the

critical way in which GATT quota could be a source of profitable business. However, newcomer quota was dependent upon different

trade with different customers in different countries. Furthermore it could now be acquired by exporting to those countries as well as

importing from them. This was effectively a new, although related, business to that in which Emerald had traded with some success

between 1986 and 1989. Emerald’s case was however that Mr. McCarthy’s undoubted entrepreneurial skills and his capacity to exploit

the quota system in the most profitable way would have meant that, absent the wrong done to him by the Department of

Agriculture’s decision in 1990, Emerald would have traded very profitably in this new area.

26 The details of the experts’ reports in this case are now only of historical significance in this appeal because the trial judge rejected

both hypotheses put forward by Emerald’s expert to justify the figure of €20.2 million. His reasons are set out in the judgment

delivered herein and it is necessary to say no more than that I fully agree with him. In the event, no appeal was brought by Emerald

against that determination. Instead, Emerald’s appeal is focussed entirely on the assertion that certain adjustments ought to have

been made to the methodology which the High Court judge adopted in coming to his own assessment of damages. By the same token,

the judge rejected the contention made on behalf of the Department that Emerald had suffered no damage beyond that compensated

for already in the award of damages made by Costello J. Again, the Department’s cross-appeal does not seriously contest that

conclusion but itself focuses on aspects of the judge’s methodology, such as the profit margin he allowed, which it was said had been

unduly generous to Emerald.

27 The result is that the extensive experts’ reports provided just after the commencement of the trial were relevant to the hearing

only in the sense that they were rejected and are almost completely irrelevant to the appeal. Much of the 17 day hearing before the

High Court was taken up with an analysis of the various hypotheses contained in these reports. In the end, however, the critical

piece of evidence which underpinned the judge’s assessment of damages was the third of three very short “alternative views”

provided by the Department’s experts only on the eleventh day of the trial. It will be necessary to return to that evidence and the

judge’s approach to it in due course but before doing so it is necessary to consider further the circumstances under which the rival

contentions advanced by the parties were discarded by the judge.

28 I fully recognise the difficulties of dealing with the assessment of damages of the future loss of profits of a business which has

ceased. It is all the more difficult when the enterprise in question is involved in a somewhat precarious and volatile business, has itself

a very limited track record of earnings, and where the bulk of the profits claimed by it to have been lost by reason of the defendants’

wrongdoing are alleged to have been capable of being gained by the plaintiff in an aspect of the business in which it had not

participated up to then. However, if court time is to be used efficiently, it means that only those disputes which really require judicial

determination should reach the point of consuming both the time in court for the hearing of evidence and the time out of court for its

assessment, analysis and adjudication by a judge of trial, and if necessary, on appeal. In theory, expert witnesses owe a duty to the

court to provide their own independent assessment. It is only because of their expertise and assumed independence that they are

entitled to offer opinion evidence on matters central to the court’s determination. If this process functions properly, there should not

be wide and unbridgeable gaps between the views of experts. Where there are differences, those should be capable of identification

along with the relevant considerations so that the particular issue or issues which require judicial determination should be capable of

ready exposition. Ideally, all of this should occur outside a courtroom and well in advance of the trial. It is not merely that the

resolution of disputed issues in a trial forum is an expensive and often frustrating process of determination; it is also that the early

identification of the real areas in dispute may encourage parties to come to their own resolution which is likely to be more satisfactory

to them, and certainly cheaper. It is important that experts, and particularly accountancy witnesses, do not simply accept their

client’s instructions as to certain matters and then construct calculations on the basis of those instructions. If that is all that is done,

then the expert report is no more than the provision of a very expensive calculator. The court is entitled to expect that such experts

will apply their critical faculties and their expertise to the case being made by their clients. Furthermore, experts who are willing to

provide such realistic advice to their clients are entitled to expect that the courts will, where appropriate, identify and be critical of

exaggeration and lack of realism when that is detected. I do not wish to make any more detailed observations directed to the

evidence in this particular case since the trial judge has not addressed this issue in his comprehensive judgment. However, by way of

example only, I find it difficult to believe that if, in late 1989, Mr. McCarthy was seeking to sell some or all of the business of Emerald,

any expert accountant would have advised a purchaser to pay in excess of €20 million for a somewhat precarious business, with only

three years track record of limited profits, on the basis that it was capable of generating that profit over the next ten years. By the

same token, I think it unlikely that any expert accountant would have advised Mr. McCarthy that the company was effectively

worthless. It was partly because the figures proffered by both sides did not fit comfortably with what could be observed of the nature

of the business and its prospects that the court was driven to the limited and undoubtedly somewhat rudimentary analysis which is

now the focus of this appeal.

29 The genesis of the calculation relied upon by the court is to be found in an appendix to the report of the Department’s accountant

which was submitted on the 19th January, 2007, day 14 of the trial. As noted above, the witness provided three different calculations

described as “alternative views”. Mr. John White, who, as it happened, had been involved in the meat trading business NWL, had

given expert evidence on behalf of the Department in relation to the general business and Emerald’s prospects. In the course of his

evidence he had stated that NWL was, in terms of turnover, roughly seven times larger than Emerald in 1989. On this basis the

accountancy witness stated as follows:

“I have also examined the information of NWL provided by Mr. John White in his evidence. Mr. White stated that NWL, in

terms of turnover, was seven times larger than the plaintiff in 1989 and achieved a cumulative turnover of IR£350 million

in the ten years following this. This period is one and a half years shorter than the period of the claim. Adjusting the

turnover to cover the entire period of the claim the adjusted turnover would be IR£402.5 million.

Assuming that the relative size and growth rates of the companies would remain constant, it is possible to conclude that

the plaintiff would have achieved one seventh the level of turnover as NWL in the period being IR£57.5 million. The

plaintiff achieved a turnover of IR£4.9 million between October 1990 and September 201. One could therefore conclude

that the different of IR£52.6 million represents a loss of turnover to the plaintiff.

At the profitability levels discussed above of 1.5% this loss turnover would have resulted in a lost profit of IR£0.789 million

(EUR€1.002 million).”

30 What occurred in this case therefore, is that the trial judge having rejected (correctly in my view) the various hypotheses put

forward on behalf of Emerald and initially on behalf of the Department, and further rejecting the first two alternative views proffered,

if even belatedly, on behalf of the Department, accepted this third and last piece of evidence as at least a plausible way of

calculating the damages which he considered were due to Emerald. Accepting the limitations of NWL as a comparator, the court

accepted the adjustment made to the turnover of NWL to accord with the period of claim asserted on behalf of Emerald (although

that was in itself a somewhat arbitrary period). He also accepted the broad conclusion that if so, Emerald could have achieved one

seventh of the level of the turnover of NWL, which adjusting for the turnover actually achieved, should suggest a lost turnover over

the ten year period of IR£52.6 million. However, the trial judge was prepared to accept that Emerald would have generated a better

level of net profit (3%) on that figure and then awarded interest on top of that figure arriving at the ultimate award of EUR€2.45

million. The fact that this almost back of the envelope calculation which emerged only towards the end of the trial, during the course

of the Department’s evidence, could nevertheless form the basis of the court’s determination and be accepted as broadly valid by

both parties for the purpose of this appeal, is not only its own melancholy comment on the wasteful, lengthy and expensive process

that had preceded that point, but is also critical to an understanding of the issues which arose on this appeal. This methodology was

not presented by Emerald in its point of claim nor subjected to analysis, debate and refinement in advance of the trial. Instead it

emerged as the third of a series of alternatives put forward at a very late stage when the Department eventually and belatedly

engaged with the possibility that Emerald might have been entitled to recover some damages. The calculation by the Department’s

expert was itself rough and ready and the judge’s adjustments of it were necessarily crude. Nevertheless, it formed the basis of the

determination of the High Court, and at least as methodology, was not seriously challenged on this appeal. It is now possible to turn

to the rival contentions on this appeal.

The First Argument and the Emerald’s Motion to Admit Fresh Evidence

31 The first and principal ground of appeal argued was that while it was conceded that the trial judge was entitled to adopt NWL as a

comparator, he was nevertheless wrong in assessing damages on the basis that NWL was seven times larger than Emerald and that

accordingly, Emerald could be assumed therefore to have achieved one seventh of the turnover of NWL during the period 1990 to

2001. In order to make this case, Emerald sought liberty to adduce fresh evidence on the hearing of this appeal. The motion in that

regard was heard at the same time as the appeal proper. This was a convenient course because it is sometimes easier to assess the

import of the fresh evidence, the extent to which it could have been expected to have been available at the time of the trial, and its

likely impact upon the trial, when those matters are addressed in the light of all the arguments on the appeal.

32 Here the motion sought liberty to adduce the abridged financial statements of NWL Ireland Limited for the year ending 31st

December, 1989 and the nine months ending the 31st December, 1990. The grounding affidavit was sworn by Mr. McCarthy himself.

He exhibited the accounts of NWL Limited and asserted that while these accounts did not themselves show a turnover figure, such a

figure could be deduced from the figure shown for gross profit and the margin also referred to. In the case of 1989, therefore, the

gross profit figure was IR£1.103 million and the margin referred to was 5.4% which suggested a turnover figure of IR£20,428,370. On

this basis the ratio of comparison between Emerald and NWL Limited was 1:3 or 1:4, rather than the 1:7 used by the trial judge,

adduced by Mr. White on behalf of the Department, and adopted by the Department’s accountancy experts as one of the alternative

grounds for the calculation of damages. If this was so, then the assumed turnover and net profit figures for Emerald should have been

much higher, and accordingly the damages should have been greater than those awarded. Mr. McCarthy said that Mr. White’s

evidence was “false and misleading”. Significantly, however, no expert witness swore an affidavit in support of the analysis Mr.

McCarthy offered.

33 Emerald acknowledged that the application could not satisfy the test set out in Murphy v. The Minister for Defence [1991] 2 I.R.

161, and in particular, the requirement set out by Finlay C.J. at p. 164 that the evidence sought to be adduced “must have been in

existence at the time of the trial and must have been such that it could not have been obtained with reasonable diligence for use at

the trial”. This was because, as it happened, the particular accounts referred to by Mr. McCarthy were not only available at the time

of the trial, but were availed of (although not put in evidence) during the cross-examination on behalf of Emerald of Mr. Murphy,

another of the Department’s expert witnesses. The thrust of this cross-examination was directed to showing that, on a gross profit

basis, Emerald and NWL were broadly similar. It was explained in court on this appeal (although not on affidavit) that when NWL

began to be referred to and relied upon in the evidence of the Department, Mr. McCarthy had himself gone to the company’s office

and sought copies of the available accounts which were then provided to counsel for the cross-examination. However, because the

matter was a developing one, it was not appreciated either that the question of the turnover of NWL would become an important

issue in the calculation of damages eventually arrived at by the trial judge, or that the accounts which had been obtained could be

the source of useful information in that regard.

34 A replying affidavit was sworn by Mr. White. He took issue with the suggestion that his evidence had been simply wrong and

misleading. He pointed out that his evidence was not given in the context of any precise calculation of the sizes of NWL and Emerald

with a view to the calculation of potential losses. Instead his evidence was directed to suggesting that the claim for EUR€20 million in

damages was unsustainable since it was based on assumptions as to the likely business Emerald could have done. He submitted that

this was unrealistic when viewed in the context of NWL, a larger and better resourced company. He also explained that he had not

been referring to the accounts exhibited by Mr. McCarthy which were those of NWL. He said he had been referring to what he

described as the statutory financial statements of NWL Group which had been audited by KPMG. Those accounts included the

subsidiaries of NWL. For 1989 he accepted that they showed a turnover of IR£28.1 million. He also pointed out that the 1988 figure

was IR£31 million. The evidence which he had given was in general rather than specific terms: it was that NWL’s turnover was

“something in the order of £31 or 32 million”. He may have mixed up the years but even if the figure for 1989 was taken, the ratio was

closer to 1:6.5 rather than 1:4. He also pointed out, significantly, that the same passage of evidence contained a separate

inaccuracy which this time favoured Emerald. He had referred to NWL’s turnover figure as IR£350 million. That error was then repeated

in the evidence and subsequent report of Mr. Caplin which gave rise to the alternative view calculation relied upon by the judge. In

fact the correct figure was EUR€350 million. This error was in Emerald’s favour in the calculation of damages and more than

outweighed the impact of his attribution of the 1988 turnover figures to 1989.

35 Mr. McCarthy then took issue in reply with Mr. White’s reliance on the audited accounts and disputed whether it was appropriate

to include the results of the subsidiaries and one company in particular, Anthony McNicholl Limited, in the calculation of turnover. This

was countered by the Department recalling that the nature of the business involving newcomer quota necessarily involved the

establishment and maintenance of subsidiaries. On the hearing of the appeal a further dispute arose as to the effect of consolidation

on those accounts. It was apparent therefore that although the motion sought liberty to adduce the evidence on the appeal, it was

inevitable that if such evidence was admitted, the case would have to be remitted to the High Court for a fresh hearing which would

necessarily be of some length and detail, even if limited to the use of NWL as a comparator.

36 The rules on the admission of fresh evidence on an appeal are quite strict. This is as it should be. There are very few cases in

which the losing side does not regret that different witnesses were called, evidence given or points made either in cross-examination

or in submission. But a trial is not a laboratory experiment where one element can be substituted and all other elements maintained

and a different outcome obtained. It is important that parties are aware of the finality of litigation, and bring forward their best case

for adjudication. Cases develop organically and unpredictably. One of the benefits which litigation brings at some cost is certainty. A

party may reasonably dispute the merits of a conclusion, but cannot doubt that it is a conclusion. The court must make its decision

on the evidence and case advanced on the day, or in this case, over the 17 days. It is partly for this reason that the rules and

practice of the courts go to such elaborate lengths to attempt to ensure that both sides are fairly apprised of what is in dispute and

have an adequate opportunity to prepare for the litigation. It is also why appellate courts have developed rigorous tests on

applications to admit fresh evidence. There are few cases which in hindsight could not be rerun with different witnesses, evidence,

arguments, or advocates, but to consider that such a course is in the interests of justice is to engage in the delusion that endless

litigation is a desirable rather than a tormented state.

37 The Department relied upon the decision of this Court in Lynagh v. Mackin [1970] I.R. 180 in which the majority of the Supreme

Court (O’Dalaigh C.J. and Budd J., Walsh J. dissenting) refused to grant leave to adduce further evidence on the hearing of an appeal.

In that case, the plaintiff had sought a declaration in relation to a right of way. The defence had been that the right of way had been

abandoned. At the hearing of the action the defendant gave evidence that this abandonment was alleged to have occurred by the

construction of a silage pit in 1946 to the knowledge of the plaintiff’s husband who had therefore acquiesced in its construction. The

trial judge upheld the defendant’s defence relying on this evidence. The plaintiff said that this evidence had taken her by surprise. On

the appeal she sought to adduce evidence from workmen who had constructed the pit, not in 1946, but rather in 1951, at which

stage the plaintiff’s husband was in ill health and actually died. It was asserted therefore that it was highly unlikely that the plaintiff’s

husband had knowledge of the construction of the pit, still less acquiesced in its construction. However, the majority of the court

refused to admit the evidence. In this case, the facts are a little different but in the particular circumstances of this case, and the

way it developed, I consider that the fact that the accounts were in fact available at the trial, and availed of, is fatal to Emerald’s

application. In my view, the test that the relevant evidence could not with reasonable diligence have been available for the trial is a

reasonably flexible test. I would not wish to rule out the possibility that where a trial takes an unexpected turn, the mere fact that

some information was available and could have been obtained for the trial, should not mean that it should be excluded on an appeal,

particularly when the issue may be decisive, the evidence cogent, and its potential relevance could not have been known in advance

of the trial. However, in this case, it is important to have regard to the precise circumstances in which the challenged evidence came

to be given and the issue in respect of which it was relied upon by the trial judge.

38 It is quite clear from the way that this trial proceeded that the court was forced to rely on what was no more than a rudimentary

calculation because of the unsatisfactory nature of the principal evidence of calculation of loss adduced on behalf of both Emerald

and the Department. The calculation made by the trial judge was self-evidently a rough and ready one in respect of which there was

a significant element of estimation on his part. It is, I think, to be inferred that he adopted this method of calculation in default of a

better alternative and because it produced an outcome broadly consistent with the view he took of the likely damage done to

Emerald. That was an assessment made with the undoubted benefit of having heard the case over an extended period. There were

other elements to the equation: the percentage of net profit and the amount of interest payable were clearly matters of some

flexibility, and it is wrong in principle to demand precision on one aspect of that equation while leaving intact other aspects of the

equation, which if reviewed, could conceivably have reduced the calculation of damages. This is all the more so in the light of the

acknowledged error as to the currency of the figure for turnover, an error which clearly favoured Emerald.

39 This approach is reinforced by a consideration of the nature of the issue for the court. This was the assessment of damages

described by the Supreme Court as “general damages”. It is open to doubt if the term was being used in precisely the same context

by Costello J. in the High Court, and Blayney J. in the Supreme Court. As Bowen L.J. observed in the portion of the judgment in

Radcliffe v Evans [1892] 2 Q.B. 524 at 528, cited in the judgment of the Supreme Court:

“It is desirable to recollect that the term “special damage,” which is found for centuries in the books, is not always used

with reference to similar subject matter, nor in the same context.”

Nevertheless, taking a broad view, this was the assessment of the disruption to Emerald’s business and its relationship with other

traders caused by the failure to obtain the quota. There is something initially incongruous about detailed accountancy and calculation

evidence being given for the purposes of assessing general damages. It was accepted however that the court was engaged in the

assessment of general damages which in the words of Martin B. in Prehn v Royal Bank of Liverpool (1870) L.R.M. 5 Ex 92:

“[a]re such as the jury may give when the judge cannot point out any measure by which they are to be assessed, except

the opinion and judgment of a reasonable man.”

In McGregor on Damages (London: Sweet and Maxwell, 15th ed., 1988, 14) it is stated that:

“This type of general damages is usually concerned with non pecuniary losses, which are difficult to estimate, the

principal examples being injury to reputation and defamation and the pain and suffering in cases of personal injury.

Pecuniary loss is also occasionally general damages within this meaning, both in contract and in tort.

In tort there is the loss of business profits caused by the defendant’s inducement of breach of contract or passing off.”

The claim in this case is without doubt one for pecuniary losses “difficult to estimate” and for which there is no measure

but the opinion and judgment of a reasonable judge. In my view the court was not here concerned with the precise

calculation of special damages, particularly once it was obliged to reject the primary (and indeed to some extent the

secondary and tertiary) bases of calculation proffered by the parties. Rather, the evidence provided only a structure

(and, for the reasons set out above, a very loose one) for the court’s estimation of the pecuniary loss suffered by

Emerald. In this regard it seems to me that at each point of this calculation the court made assumptions favourable to

Emerald. Indeed, the very thrust of Mr. White’s evidence which gave rise to this issue was to the effect that any

comparison with NWL would be extremely generous to Emerald. This is illustrated, as it happens, by the very portion of

the evidence of Mr. White to which Mr. McCarthy refers in his affidavit. On day 12 Mr. White suggested that the

projections for business provided for by Emerald were simply unrealistic:

“This [Emerald] is a company which in 1990 has no customers. So I find the whole thing out of kilter with the type of

trading and the volumes of trading that I have seen in my experience on the exports side. Let me just, maybe, assist the

court here. I worked for NWL as I have said in my CV for the best part of 8 or 9 years. Now NWL is a company which was

a professionally run export trading meat company. It also did some business on the side in importing but 90% of its

business was exporting. We ran that company on the basis of – our strategy was to find customers – constantly find new

customers. Reinventing business constantly. If customers fall away, get new ones. Everybody in the company was on a

plane all the time. You are not allowed to sit in your office at home doing the crossword. You were out in the market

meeting customers or talking to them, finding out what they wanted, getting them to trust you, you looking at their

business and seeing can you trust them. That was the requirement of an export focussed company. We had four to five

traders in the office. There was a turnover in 1989 by NWL of something in the order of £31 or £32 million. I compare that

to the turnover of the plaintiff company which is claimed at £4.4 million – I am not sure – I will give the company 4.4

million for comparison purposes. We are looking at NWL which is a company seven times the size of the plaintiff company

in turnover terms. NWL was owned by a large Swedish operation which resourced it as much as it wanted. NWL had up to

£3-3.5 million in overdraft facilities available to it at this period. NWL did a turnover in the following ten years of £350

million an average of £25 million per annum. In that period NWL had 20 newcomer companies. I set up some of those

companies myself when I was in NWL. NWL, with all of its trading that it did – it did 22, I think 22 newcomer companies,

earned a total of 1,850 tonnes of GATT in the ten year period following 1990, an export focussed professional trading

company and doing so seven times the turnover of the plaintiff company in 1989. That is the volume of qualifying exports

that NWL achieved. That is why I look at that table, Emerald’s performance required export tonnes, it does not tally with

what I am seeing in my own experience. It is completely out of line.”

This is just one more area in which the judge approached the estimation of damages due to Emerald on a reasonably generous

approach to their claim. It is difficult to see that on the evidence available that the outcome was in any way unjust to Emerald.

40 Applying Lynagh v. Mackin with due regard to the flexibility inherent in that test, I would refuse Emerald’s application to admit the

fresh evidence. My conclusion in this regard is reinforced by my view that, even if the evidence were admitted, it would not lead me

to direct what would be yet one further hearing in the High Court on what is fundamentally an issue of estimation. Moreover, the

exercise of estimating has itself a relatively wide tolerance for differing views and in this case was made all the more difficult by the

fact that the judge could not rely on the principal theory advanced either by Emerald or the Department on the quantification of

damages. Counsel for Emerald sought to argue that he could advance the argument on NWL, even without the new evidence. I am

however satisfied that this is not possible and, in any event, the argument cannot surmount the difficulties just identified. It follows

that this ground of appeal must fail.

The Comparison of Emerald and NWL solely on the basis of Turnover

41 On the assumption that the court was correct in treating NWL as a comparator, Emerald argued forcefully that the correct basis of

comparison should not have been turnover, but rather a gross profit figure. This was ultimately put in a more nuanced way in which

counsel argued forcefully that even if it was correct to take into account turnover in making some comparison between the two

companies, the court was wrong in excluding a comparison of gross profits which is, after all, the ultimate outturn for any business,

and indeed the measure courts regularly use in awarding damages to businesses.

42 In this case it was said that this approach would have produced a quite different award, since in 1990 figures for gross profit were

broadly similar, asserted as being IR£790,000 for Emerald, and IR£899,000 for NWL. It is said that this emerged from the evidence of

Mr. Murphy, one of the expert accountant witnesses called on behalf of the Department and as it happens, from the passage of

evidence in which the accounts for NWL had been deployed by junior counsel in cross-examination. At an abstract level, I accept

that there is some logic to the proposition advanced by counsel. However, at almost every other level the argument is unsustainable.

It follows from the matters already referred to earlier in this judgment that the fact that this was an assessment of general damages,

and by definition therefore, an estimation of something not subject to precise calculation, that the court must have considerable

latitude as to the matters it relies upon in coming to that assessment. This point cannot be addressed in the abstract. The fact is

that the trial judge was driven to adopt a form of analysis which was itself dependent on a very limited amount of evidence, precisely

because the positions taken by both parties in advance of the trial, and indeed during it, were so unrealistic that they could not be

accepted. It is quite possible that if the case had started from the position that damages should be assessed by reference to an

appropriate comparator that there could have been a focussed analysis of a number of issues aided by appropriate expert evidence.

However, that did not occur here. Once the principal arguments on the both sides had been rejected, the trial judge was left with a

relatively small amount of evidence upon which to approach the task, and in that regard it is impossible to say that the method he

adopted, supported as it was by some evidence, was not a plausible or acceptable way of assessing damages.

43 I would however also regard the argument as flawed on the facts of this case. The argument that the gross profits of the two

companies were broadly similar in 1990, and hence that Emerald’s damages should be calculated on the assumption that it would have

achieved the same gross profit as NWL thereafter, has little if any support in the evidence in this case. Mr. Murphy himself did not

make the comparison nor suggest it was appropriate to draw the conclusion. What occurred on day 15 was that a hypothetical

calculation was put to Mr. Murphy which involved what was described as the gross profit of “approximately 150,000 gross” historically

achieved by Emerald and adding to it what was described as “the amount that Costello J. awarded that comes at about IR£640,000”.

Totalling those figures at IR£790,000 and suggesting that that figure could be treated as the figure for gross profit , counsel then

suggested it was “broadly similar to the position of NWL at the end of 1990 … I think the figures are actually 790 versus 899”. It is

notable, however, that neither during the trial nor on the application to admit fresh evidence in this appeal, was it suggested by any

person with relevant accountancy expertise that it was appropriate to add these two figures together to derive a figure for gross

profits for that year. It seems to me that that would be a dubious exercise, certainly if it is done for the purposes of drawing

conclusions as to Emerald’s future profitability and its degree of similarity to NWL. The figure for 1990 is significantly distorted by the

addition of the award of damages. To conclude from such a calculation, that when faced with the task of earning profits, not by

receiving an award of damages but rather by trading in the same market, and in the same way as NWL, that Emerald would have be in

a position to do so, not only successfully, but would also have been approximately six to seven times more efficient than NWL in

converting any turnover gained to gross profit, would be a process of reasoning more open to challenge than any of the aspects of

the judgment challenged in this case.

Net Profit as a basis for the Assessment of Damages

44 Counsel also argued that the High Court was wrong to award damages on the basis of net profit. Instead it should have awarded

gross profits, making some allowance for the variable costs incurred in achieving that profit. The theory was explained very lucidly by

counsel in his closing submissions as follows:

“Firstly the terms “net” and “gross margin” are apt to mislead because they can mean different things in different

circumstances. Certainly in the context of what the defendant puts forward in a figure, I think of £4 million for NWL over

the period, that is the equivalent of a net profit figure as demonstrated in NWL’s accounts which were sent into you. This

is nothing to do with the net profit of the company after it has paid all up its costs. As you know, the basis on which a

corporate plaintiff or any plaintiff makes a claim for loss of business is the value of that business, less the cost associated

with obtaining that business and you deduct that. That, then, is the lost money that the plaintiff has lost. That is

different from net profit, which is the figure arrived at after all of the earnings that the company are taking into account

and accountants preparing net profit figure for the purpose of dividend or tax. What you look at is the value of the lost

sales, taking into account the money that must have been expended to get those sales because that is what the plaintiff

has lost by losing the business.”

This, as might be expected, is entirely logical in its approach. However, no objection was taken to the manner in which the damages

were calculated, either in the notice of appeal or in the written submissions filed in this Court. That in itself is a substantial and

normally fatal objection to an argument such as this. In any event, it is an argument which is inconsistent with the basis upon which

the High Court proceeded. First, as already observed, the case was an assessment of general damages in respect of which any

calculation was merely a guide. Furthermore, the court took the approach that it did on what was a very limited evidential basis

because of the failure of the much more ambitious calculations asserted on behalf of Emerald and the judge’s rejection of the

Department’s position. It may be a correct observation that the decision of the court was arrived at on a limited evidential basis, but

it was hardly a valid criticism of the decision when the limited nature of that evidence was a consequence of the way in which the

parties approached the case. Indeed, Emerald here succeeded in obtaining a substantial award of damages based upon the evidence

not of any witness advanced on their behalf, but rather on the evidence, belated and reluctant though it may have been, advanced

on behalf of the Department. In this specific context, it is noteworthy that if, as Emerald now assert, the correct approach was to

calculate the sales forgone and the costs associated with those sales by reference to some comparison with the business achieved

by NWL, the High Court simply could not have carried out that calculation since it did not have any evidence directed to that specific

approach.

Revenue Settlement

45 Emerald also rely on the fact that Mr. McCarthy himself gave evidence on day 3 that Emerald had fallen into arrears with the

Revenue, going back to the events in 1992, and had as of 2006, what he described as a liability for tax penalties and interest of €1.5

million. It is said that the award of general damages should have included an amount to cover this loss.

46 I am unable to accept this argument. Once again it seems to mix an approach more appropriate to the assessment of special

damages specifically pleaded and investigated, with what was in this case the assessment of general damages on a limited evidential

record. The revenue debt was never particularised in the pleadings and there was no attempt made even in Mr. McCarthy’s evidence

to draw any close, let alone causal, connection between the existence of this debt and the core of Emerald’s claim being the

Department’s wrongful refusal to grant quota of 177 tonnes in 1990. That difficulty is compounded by the fact that Emerald was at

the same time investing in property which was a significant drain on its resources and had an association with Emerald London to

which it transferred its quota. It is a fact that the Department of Agriculture wrongly refused quota in 1990, which position was

restored by the decision of the High Court and that of the European Commission the following year. It is also a fact that as of 2006,

Emerald had a liability of €1.5 million to the Revue Commissioners. It seems to me to be a very dubious exercise to assume that these

are in any way causally related or that such liabilities would be reasonably foreseeable as of 1990, so that a specific award ought to

have been made. In fairness, I do not read Mr. McCarthy’s evidence in this way. I understand it to have been a general reference to

the difficult position in which the company found itself, and perhaps a hint, not necessarily illegitimate, that if any award was to be of

benefit to the company, it should be able to cover these liabilities. However, it cannot be said that the judge erred in failing to make

a specific award in this regard.

Interest

47 A final point made by counsel for Emerald is that the award of interest assumed that a lump sum had not been paid in 2001, and

therefore covered the period from 2001 to 2007. However, if the award was calculated on the basis of profits lost for each year

between 1991 and 2001, then a more sophisticated calculation was necessary which should have calculated the interest due on the

profits lost in each year from that year so that, for example, the deemed loss of profits in 1992 ought to have carried an award of

interest on it for the period 1992 to 2007.

48 Once again, the internal logic of this argument is unassailable. However, there are compelling objections to it. First, the concept of

assessing damages over a ten year period from 1991 to 2001 is perhaps the only thing that had survived from the expert evidence

advanced on behalf of Emerald. There is no particular logic to it taking this period, and the assessment of interest was itself a rough

calculation made by the trial judge. Normally, general damages do not attract interest. I do not think that the trial judge saw the

award as a result of anything other than a rough calculation which arrived at a conclusion just having regard to all of the evidence.

This is, in my view, how the award should be approached and unless this Court comes to the conclusion that the award is

dramatically out of line with what might appear just, then I do not think that this Court should interfere with it. In the circumstances I

am satisfied that the trial judge coped admirably with an extremely difficult case in which he adopted an approach which was in many

respects favourable to Emerald. Accordingly, I would dismiss all grounds of Emerald’s appeal.

Cross-appeal

49 The Department were not content to accept the judgment, but sought to appeal against aspects of the decision. On this appeal

the Department focussed on two points. First, the contention that a figure of three percent ought not to have been allowed for net

profits, and second, an argument that the trial judge had not given sufficient weight to the fact that Emerald was heavily involved in

the acquisition of property at the relevant time, which was a significant drain on Emerald’s resources.

50 The logic in applying a three percent net profit figure was the assertion made on behalf of Emerald that historically they had

always had a higher net profit figure that either Emerald London or NWL. However, the Department argued that even if this was so, it

was not reasonable to assume that it would continue to do so, particularly when what was being assessed was Emerald’s capacity to

trade profitably in the new area of business. The Department pointed out that Emerald’s capacity to generate high percentages of net

profit was due to the fact that during the relevant years its business consisted solely of turnabout business, which by definition did

not involve any significant overheads. Not only was this not likely to be a feature of the future business of Emerald, it was already

taken into account in the turnover actually achieved by Emerald. In other words, the €52 million turnover from which the net profit

figure was assessed was all newcomer business or GATT business generated by newcomer business assumed to have been acquired in

the same way as NWL had acquired it. There was no reason therefore to assume that Emerald could acquire such business more

efficiently and cheaply than NWL had.

51 The Department made a slightly different point in relation to the property business of Emerald. It was suggested that the trial

judge had not given sufficient weight to the significant effect this had, both in diverting the cash flow of the business to other

purposes and in becoming a drain upon it. This analysis formed a significant part of the criticism made by the Department’s experts of

Emerald’s contention that its financial predicament as of 2007 could be attributed to the dispute with the Department of Agriculture in

1990.

52 It must be recognised that an argument that insufficient weight was given to a point is one on which it is difficult to succeed in an

appellate court, all the more so in the particular circumstances of this case. Fundamentally the argument which tells most strongly

against Emerald’s grounds of appeal is equally effective against the Department’s cross-appeal. The task of the High Court in

assessing general damages in this case was a necessarily crude calculation, made all the more difficult by the paucity of evidence and

analysis on the one approach to an assessment of Emerald’s loss which the court found plausible. It is not possible to approach such

a generalised determination as if it were a precise calculation of special damages the subject of distinct pleadings, a process of

discovery, the exchange of focussed expert reports, and detailed cross-examination. To succeed in the cross-appeal it would be

necessary to show either that the court ought not to have taken the approach it did at all (something which neither party now

argues) or that the result arrived at departed so clearly from what was a reasonable or plausible assessment of damages that it could

not be allowed to stand. In this case that would necessarily involve a further hearing in the High Court in which it would be difficult to

confine to the question of the assessment of damages by reference to NWL as a comparator. However, that course could have been

adopted by both parties at the outset of this litigation and was not. On the information, arguments and evidence made available to

the High Court, I do not see how the determination of the High Court can be faulted. Accordingly I would dismiss both the appeal and

the cross-appeal.