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Ex-manager ordered to pay £40k over cooking oil firm's lost profits

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Belfast High Court

Belfast High Court

Belfast High Court

A former manager at a cooking oil firm must pay it more than £40,000 for profits lost after a rival business was set up, a High Court judge in Belfast has ruled.

Madam Justice McBride held that Paul James Gilroy breached an agreement aimed at restricting competition with a subsidiary of Northern Ireland supplier Frylite.

Part of the company's operation involves the recovery of used cooking oils and fats (UCOs). Frylite dismissed Mr Gilroy following an investigation into a direct competitor, GreaseCo, which began trading in late 2010, the court heard.

It claimed that he had used his position to direct customers to GreaseCo - allegations which he vehemently denied. Legal action was launched by Frylite, contending breach of agreements and losses in excess of £500,000.

The court was told Mr Gilroy's wife, Michelle, had owned another business, Rof Environmental, which also collected UCOs.

Under an Asset Purchase Agreement in 2006 Rof was bought by Agri Energy Ltd, with the terms of the deal including a restriction on competing against its business on the island of Ireland.

In 2010 Frylite acquired Agri and went on to employ Mr Gilroy as a manager at its depot in Craigavon, Co Armagh, according to evidence in the case.

Frylite boss Eamon McKay stated that he wanted to retain him because he had more than 20 years experience in the waste fats collection industry.

Although Frylite's core business was selling fresh cooking oil and fats, it also recovered and disposed of UCOs.

The company traditionally shipped UCOs to England, but has also invested £2 million in its own processing plant in Strabane, the court heard.

According to Mr McCay Frylite became aware in March 2011 of a new operator in the waste fats collection market - GreaseCo.

Defending the lawsuit, Mr Gilroy denied breaching the terms of any restrictive covenant or entering into a Service Agreement.

He accepted that he had helped his wife to set up GreaseCo, the court was told, but insisted he was not the owner.

Ruling on the dispute Madam Justice McBride held that Mr Gilroy acted in breach of a Service Agreement and the implied terms of his employment.

Turning to the damage sustained by Frylite, she described the loss of profits set out in a report as "over-inflated" after noting some reduction was due to other competitors.

The judge determined that 40% was down to competition from GreaseCo, with losses sustained due to Mr Gilroy's breach put at just over £40,000.

She concluded: "I find for the plaintiff and make an order that the defendant pay the plaintiff the sum of £40,855."

Belfast Telegraph