Acquiring Freehold
Cases
Whelan v Cork Corporation [1991] ILRM 19
MURPHY J
This matter came before me by way of motion for an interlocutory injunction to restrain the defendants from carrying out certain road works adjoining the plaintiffs’ *21 premises known as Instow on the Douglas Road Cork which the plaintiffs claim would be in breach of a negative covenant contained in an indenture of lease dated 8 February 1937 (the 1937 underlease) made between the Bank of Ireland of the first part, Cornelius Duggan of the second part and James William Bogan and another of the third part. The parties have agreed to treat the application as the trial of the action.
The 1937 underlease contains a covenant in the following terms:
that the lessors will not at any time during the said term hereby granted build or erect or permit or suffer to be built or erected on any part of the portion of the said lands of Ballincurrig coloured yellow on the said plan hereon endorsed any building or erection of a greater height than twelve feet from the existing ground level.
In accordance with established conveyancing practice the bank which demised the premises as mortgagee was defined as including:
the person or persons for the time being entitled to receive the rent hereby reserved where the context so admits.
And the parties of the first and second part respectively to the 1937 underlease were expressed to covenant in the terms following:
and each of them the lessors and the said Cornelius Duggan, so far as relates to their or his own acts and deeds and the acts and deeds of persons claiming under them or him, hereby covenant with the lessees in manner following etc.
The interest of the lessee under the said underlease (together with the term of years demised by an indenture of lease in reversion dated 2 October 1958 made between Patrick Duggan of the one part and William Cullinam of the other part) is now vested in the plaintiffs and the dwellinghouse erected on those lands in pursuance of the covenant in that behalf contained in the underlease is now known as Instow.
The 1937 underlease was carved out of a superior lease dated 15 August 1908 (the 1908 lease) made between John Bianconi of the one part and Cornelius Duggan of the other part by which the said John Bianconi demised some 28 acres of land at Douglas, Cork to the said Cornelius Duggan for the term of 99 years from 25 March 1908 subject to the yearly rent of £58.7s.6d. Again the superior lease was extended by an indenture of lease in reversion dated 1 July 1948 by which the Bianconi Estate demised to Patrick Duggan the lands comprised in the 1908 lease for a term of 500 years from 25 March 2007. The defendants are in occupation of the lands coloured yellow on the map annexed to the 1937 underlease and the major roadworks currently planned and partly *22 implemented by the defendants will unquestionably involve the erection of buildings to a greater height than twelve feet on those lands. The issue in the present case is whether the covenant restraining building is binding on the defendants in the particular circumstances of the case.
The title of the defendants to the lands coloured yellow on the 1937 underlease is as follows. By an indenture of underlease dated 20 May 1948 made between the National Bank Ltd of the first part, Patrick Duggan of the second part and Henry Fitzgerald Smith of the third part that part of the Duggan Estate adjoining Instow was demised to Henry Fitzgerald Smith for the term of 59 years from 29 September 1947. The 1948 underlease contained a covenant by the lessee, Henry Smith, to erect a dwellinghouse on the lands thereby demised and not to erect any further buildings thereon and then went on (at paragraph 9 of the lessee’s covenants) to provide as follows:
Not to build or erect or permit to be built or erected at any time during the said term any building or structure whatsoever of a height greater than twelve feet from the existing ground level on any part of the premises hereby demised that lies on the Douglas Road side of the line marked A to B on the map annexed to these presents.
Whilst the letters A and B do not appear in that context in the 1937 underlease and indeed the map annexed to the 1948 underlease does not identify any line by reference to those letters, the covenant prohibiting buildings to a height greater than twelve feet obviously reflects clearly the covenant in that behalf contained in the 1937 underlease. Perusal of the maps makes it clear what the parties intended and in fact no issue arises between the parties to the present litigation as to the extent of the prohibition because the defendants would concede that the works envisaged by them would involve structures in excess of twelve feet over the greater part of the property involved. By a lease in reversion dated 22 June 1964 made between Patrick Duggan of the one part and Norman P. Butler of the other part, the said Patrick Duggan granted to the said Norman P. Butler a lease in reversion for a term of 200 years from 29 September 2006. The lease in reversion repeated the covenant against erecting structures to a height exceeding twelve feet on the lands thereby demised. Between the date of the 1948 underlease and the lease in reversion the lessee had erected a dwellinghouse in pursuance of the covenant in that behalf therein contained and those premises ultimately became known as ‘the Cottage’ Riverbank.
By an indenture of assignment dated 6 March 1989 made between John Noel Buckley of the one part and the plaintiffs of the other part the Instow lands became vested in the plaintiffs for all of the residue of the term of years granted by the underlease dated 8 February 1937 and the lease in reversion dated 2 October 1958 subject to the rents thereby reserved and the covenants on the part *23 of the underlessee therein contained.
By an indenture of assignment dated 20 December 1984 made between Giovanni Silvestrini of the one part and the defendants of the other part the Riverbank Cottage was assigned to the defendants for all of the residue of the term of years granted by the 1948 underlease and the 1964 lease in reversion subject to the rents thereby reserved and the covenants on the part of the underlessee and the conditions therein contained. The interest of the defendants under the said underleases was registered in the Land Registry under Folio Number 12542L in the Register of Leaseholders County Cork. By a further indenture of assignment dated 8 November 1989 made between Bridget Doherty of the first part, James W. O’Donovan and others of the second part and the defendants of the third part the interest of the Duggan Estate in the Cottage Riverbank under the 1908 lease and the 1948 lease in reversion was assigned to the defendants for all of the residue of the term of years granted by the said lease and the said lease in reversion subject to the rents thereby reserved but indemnified against the greater part thereof by other premises comprised in the said leases and not included in the assignment. Finally, by a conveyance dated 15 November 1989 made between Mary Margaret Nuala Moore of the first part, Charles Joseph Tyndall of the second part and the defendants of the third part the interest of the Bianconi Estate, that is to say, the interest in fee simple, in the premises the Cottage Riverbank was conveyed to and vested in the defendants in fee simple subject to and with the benefit of the 1908 lease and the 1948 lease in reversion and expressed to be subject to the intent that those terms of years should forthwith merge and be extinguished in the freeholder reversion expectant on the determination thereof.
The plaintiffs’ claim to enforce as against the defendants the covenant not to erect structures to a greater height than twelve feet on the Riverbank Cottage lands is based essentially on the principle established in the well-known case of Tulk v Moxhay 2 Ph 774. The principle in that case was explained by Pringle J in an unreported decision delivered on 19 June 1970 in Williams and Co. Ltd v LSD and Quinnsworth (at p. 16 of the transcript of the judgment) in the following terms:
The principle established in the well-known case of Tulk v Moxhay [is] that a negative bargain, as for instance a covenant against a particular use of land retained on a sale or lease of part of an estate, may be enforced by any person entitled in equity to the benefit of that bargain against any person bound in equity by notice of it, either express or to be imputed at the time of acquisition of his title.
The defendants contest that claim on the following grounds:
(1) That the defendants were purchasers (withing the meaning of s. 1 of the *24 Conveyancing Act 1882) of Riverbank Cottage and purchased the same without knowledge or notice of the restrictive covenant.
(2) That the terms in which the covenant was expressed were not sufficiently wide to capture the defendants.
(3) That the restrictive covenant was not ‘a contract concerning the lands’ and accordingly could not be enforced by a tenant against an assignee of his landlord having regard to the provisions of s. 13 of the Landlord and Tenant Law Amendment, Ireland, Act 1860.
(4) That the defendants had by virtue of s. 8 of the Landlord and Tenant (Ground Rents) (No. 2) Act 1978, as incident to their interest under the 1948 underlease the right to enlarge that interest into a fee simple and that having done so s. 28 of the 1978 Act operated, with the result that the restrictive covenant ceased to have effect.
As to the actual knowledge by the defendants of the restrictive covenant it appears from the affidavit of Mr Niall Bradley, the assistant city manager of Cork Corporation that they, the corporation, ‘had no notice of the existence of the incumbrance as the same did not appear on the leasehold title purchased by them’. In the context in which that statement was made it is clear that Mr Bradley was referring to the acquisition by the corporation in December 1984 of the interest in possession in Riverbank Cottage under the 1948 lease and the reversionary lease thereon and not to the later stages at which superior interests were acquired in the same premises. Furthermore I assume that Mr Bradley intended to refer to the actual knowledge of the corporation as distinct from knowledge which would be imputed to them by virtue of the doctrine of notice.
The plaintiffs accept as a matter of fact that the defendants did not have actual knowledge of the restrictive covenant in 1984. What is said is that such knowledge should be imputed to them on the basis that if they had made such enquiries and inspections as ought reasonably to have been made by them that the existence of the restrictive covenant would have come to their knowledge.
This was a matter on which the two experienced conveyancing counsel who appeared before me made conflicting submissions. No evidence was tendered as to the practice of conveyancers and I was left to resolve the issue as a matter of law.
It seems to me that a purchaser acquiring by way of lease property which is by the terms of the lease itself subject to a particular covenant for the benefit of the lessor is unlikely in ordinary circumstances to enquire as to whether any other parties are entitled by virtue of any other transaction to enforce as against the lessee a covenant to the same effect. If the purchaser/lessee is obliged to perform the covenant it would hardly be a matter of concern to him to establish the identity of the persons (if any) who, in addition to the lessor, were entitled to enforce the restrictive covenant. It seems to me that this issue would be more likely to arise if and when the lessee contemplated relieving himself of the *25 burden of the covenant by acquiring the interest of his immediate lessor. Certainly I think that the lessees would be prudent at that stage to ensure that there were no other persons entitled to enforce the covenants contained in the lease.
In the present case the question of imputed knowledge at the date of the acquisition of the interest of the Duggan Estate does not arise. At that stage, November 1989, the defendants had been put on actual notice by letter dated 1 March 1985 that the plaintiffs were entitled to the benefit of the restrictive covenant in question.
As I say the question whether third parties might have the right to enforce covenants to a like effect as those expressly contained in the lease may not be a matter of practical importance on the acquisition of the interest in possession but insofar as the question does require to be resolved it seems to me that in the present case the circumstances were such as would put the lessee upon enquiry as to the existence and identity of such third parties. In my view this follows partly from the nature of the covenant but most particularly from the map annexed to the 1948 lease which makes it clear that the restrictive covenant is for the benefit of the persons occupying the adjoining lands now known as Instow. Once that fact is appreciated then it seems to me that the enquiries which should be made would necessarily reveal the existence of the restrictive covenant contained in the 1937 underlease.
With regard to the construction of the covenant contained in the 1937 underlease the defendants summarized their argument by saying that first as assignees of the interest of the lessee under the 1948 underlease that they, the defendants, were not persons claiming under the lessors and secondly that they are not, as successors in title to the Duggan Estate or Bianconi Estate, entitled to receive the rent payable under the 1937 underlease and accordingly did not fall within the term ‘the lessors’ as defined in that instrument.
Notwithstanding the general principle (accepted by Pringle J in the Williams case) that a restrictive covenant as to the letting or user of property should be construed strictly, it has been decided that a restrictive covenant by a lessor, his heirs, executors, administrators and assigns will in fact bind a lessee of the lessor (see Holloway Brothers Ltd v Hill [1902] 2 Ch 612). In Ricketts v Churchwardens of the Parish of Enfield [1909] 1 Ch 544 where again it was held that the word ‘assign’ was sufficiently wide to include a lessee, Neville J went on to explain why this should be so in the case of a restrictive covenant (at p. 555) as follows:
Now the covenant is not expressed in very grammatical language, but I think that what it means is this, that neither the lessors nor their assigns will erect or permit to be erected any building on the adjoining plot in front of the building line; so that, if the assigns erect a building infringing the building line, it will *26 be a breach of the covenant. It is said that Thomas is not ‘an assign’ of the lessors because his only interest in the land is under the conditional agreement for a lease. Now I think, looking at the context of the covenant in the lease, that ‘assigns’ must mean the persons who are in possession of the adjoining land deriving title from the defendants, because they are the only persons who could erect a building on the land. I hold, therefore, that Thomas is an ‘assign’ within the meaning of that covenant, and consequently that the defendants are liable for his breach of the covenant.
It seems to me that the argument made by the defendants in this regard places too narrow a construction on the interpretation of the terms used. A covenant in respect of the conduct of the person entitled to receive the rent payable under the 1937 underlease by virtue of his having a reversionary interest only in the lands comprised in that lease would be meaningless. Such an interest would not enable him to give a covenant in respect of adjoining lands. The terms of the 1937 underlease are intelligible only on the basis that the lessor had an estate or interest, as he did, which gave him control over a sufficient parcel of land which entitled him first to receive rent issuing out of part of it and secondly to impose burdens on other parts. In other words the right to receive the rent was effectively identifying what I have described as the Duggan Estate and not merely the immediate right to receive the rent reserved by the 1937 underlease.
The position could have been made a great deal clearer and it does seem to me — though it is by no means the invariable practice — that it is more helpful to express impersonally the obligations imposed by a restrictive covenant than to identify such a covenant with the actions or inactions of a particular group of persons. However it seems to me that the interpretation which I have placed on the covenant is what would now be described as a ‘purposeful interpretation’ and accords with the practical approach adopted by Neville J in the Ricketts case.
It seems to me that the argument based on s. 13 of Deasy’s Act has no application to the present case. The extent to which a lessor or lessee or the respective assigns may sue each other by virtue of the relationship of landlord and tenant is entirely distinct from the doctrine in Tulk v Moxhay. In essence, as Pringle J pointed out, liability in equity on foot of a restrictive covenant arises merely by virtue of the knowledge whether actual or imputed of the restriction at the time of the acquisition of the property by the purchaser. There is no reason why a person acquiring leasehold property would be in any better or worse position in relation to his liability in equity to comply with such a restriction than a person acquiring a freehold interest though of course there may be practical differences between the two categories with regard to the enquiries or inspections which can or should be made by a purchaser depending upon the nature of the estate or interest which he is acquiring.
*27
I turn then to consider the argument upon which the defendants most confidently rely, that is to say, the argument based on s. 28 of the Landlord and Tenant (Ground Rents) (No. 2) Act 1978.
The plaintiffs have contended that s. 28 should be given a restricted interpretation. In particular it is claimed that it should be limited to covenants between the lessee and his lessor and should not extend to covenants in favour of third parties. On the face of it it would be difficult to reconcile such an interpretation with the express words of the section. The section extends to ‘all covenants subject to which he (the lessee) held the land’. Nevertheless the plaintiffs contend that the narrower interpretation should be preferred as the literal interpretation would involve (or so the plaintiffs contend) an infringement of the plaintiffs’ constitutional rights.
It is clear that a right, even a negative right, over the property of another person may be a valuable intangible right of property. Accordingly it is said that the section should be construed in accordance with the principle laid down in East Donegal Co-operative v Attorney General [1970] IR 317 and elsewhere so as to bring the section into harmony with the Constitution and in particular the property rights guaranteed thereunder.
The relevant principle in the East Donegal Co-operative case is set out at p. 341 of the report in the following terms:
Therefore, an Act of the Oireachtas, or any provision thereof, will not be declared to be invalid where it is possible to construe it in accordance with the Constitution; and it is not only a question of preferring a constitutional construction to one which would be unconstitutional where they both may appear to be open but it also means that an interpretation favouring the validity of an Act should be given in cases of doubt. It must be added, of course, that interpretation or construction of an Act or any provision thereof in conformity with the Constitution cannot be pushed to the point where the interpretation would result in the substitution of the legislative provision by another provision with a different context, as that would be to usurp the functions of the Oireachtas. In seeking to reach an interpretation or construction in accordance with the Constitution, a statutory provision which is clear and unambiguous cannot be given an opposite meaning.
It is difficult to escape the wide net cast by the words ‘all covenants’ subject to which the land was held and any argument that the comprehensive expression should be limited to the relationship between the lessee and those entitled to the superior interests would be inconsistent with the subsequent provisions of the section which provide that certain convenants which do not cease to have effect may be enforced ‘by any person aggrieved by breach of the covenant’. The Oireachtas clearly recognized that the covenants which were ceasing to have effect (subject to a very limited number of exceptions) included covenants for *28 the benefit of a wide range of covenantees and not only the lessor or owner of a superior interest. In my view the Oireachtas has shown a clear and unambiguous intention to eliminate a wide range of covenants, including those for the benefit of third parties, where the fee simple is acquired under the provisions of the 1978 Act. This does not necessarily render the section unconstitutional. Indeed it would be impossible to reach such a conclusion without the benefit of hearing argument from the Attorney General to the contrary.
It may be that the plaintiffs or any other covenantee in the same position could claim under s. 17 of the Landlord and Tenant (Ground Rents) Act 1967 or otherwise to have paid to them some apportioned part of the purchase price payable by the lessee acquiring the fee simple interest. Alternatively it may be suggested that the statutory termination without the payment of compensation of covenants affecting lands comprised in a building or proprietary lease does not constitute an unjust attack on the property rights of the covenantees. Perhaps in a constitutional issue relating to s. 28 of the 1978 Act, the Attorney General would argue that the rights such as those enjoyed by the plaintiffs over the lands of others are now more effectively and more justly protected and vindicated under the Local Government (Planning and Development) Acts 1963 to 1982 and by the evolution and general acceptance of environmental planning which regulates property rights of this nature in accordance with the principles of social justice.
It is impossible to anticipate all of the arguments which might be raised by the Attorney General on a constitutional issue less still to adjudicate upon them in advance of a plenary hearing. It is sufficient for the purposes of this case to say that I am not convinced that a literal interpretation of s. 28 of the 1978 Act would necessarily render that section in conflict with the Constitution. In any event it seems to me that the words used are so clear and unambiguous that they do not admit of the interpretation which the plaintiffs seek to place on them.
In these circumstances the plaintiffs’ claim on the motion and in the action must fail.
In the Matter of the Landlord and Tenant Acts 1967–1983
James Whelan v. Cork Corporation Defendant (SC)
Supreme Court 15th November 1990
Finlay C.J.
15th November 1990
This is an appeal brought by the plaintiffs against an order and judgment of Murphy J. in the High Court. It was delivered as a reserved judgment on the 13th February, 1990, in an application in certain proceedings instituted by plenary summons, which was an application for an interlocutory injunction and was treated by the consent of the parties by the learned High Court judge as the hearing of the action (see [1991] I.L.R.M. 19).
The plaintiffs are husband and wife and are owners of a house and garden immediately adjoining the Douglas Road in the city of Cork. The defendants are the Corporation of Cork and the action arises in the following way. The defendant is in the process of doing extensive road
[1994]
3 I.R. Whelan v. Cork Corporation
Finlay C.J. 369
S.C.
work immediately adjoining the premises which are owned and occupied by the plaintiffs. That road work is being done by them on ground which was acquired by them being the site of a house adjoining that of the plaintiffs. The plaintiffs assert that they have in the lease, which they acquired by assignment, which is the lease in possession of the house which they occupy, a covenant on the part of the lessor not to build or to permit to be built on the portion of the land of the premises known as Riverbank Cottage, which had been acquired by Cork Corporation, a building higher than twelve feet. The land that was acquired by Cork Corporation was acquired for the specific purpose of assisting them in building a major road development consisting of a ring road around the city of Cork and what they intend to do with the precise area the subject matter of this covenant is to build on it the approaches to a flyover bridge and it will involve a building well in excess of twelve feet high.
The issue which arose in the case was basically speaking as to whether the covenant on the part of the lessor in the lease dated 1937 of which the plaintiffs are the assignees of the lessee’s interest, was enforceable by them in the events that have happened and in the derivation of titles that has occurred in the meantime against Cork Corporation. The question as to whether it was enforceable or not was taken as a completely preliminary point by the learned High Court judge. He did not adjudicate upon any question, if it were enforceable, of the form of remedy which in all the facts of the case might be appropriate.
With regard to the enforceability of the covenant the learned High Court judge held that by virtue of the provisions of s. 28 of the Landlord and Tenant (Ground Rents) (No. 2) Act, 1978, the covenant was in effect not enforceable because it could not be enforced by reason of the fact that the covenant in the lease of which Cork Corporation was the assignee, that is to say the sublease of 1948 had been extinguished by that section. It was agreed by counsel before us on the hearing of this appeal that that was the first issue that must be determined and if it were determined against the plaintiffs then they had no further issue on which they could succeed in this application.
I have come to the conclusion very clearly and definitely that the learned High Court judge was correct in his interpretation of s. 28 of the Act of 1978. Accordingly it does have the effect of extinguishing the covenant with regard to building above the height of twelve feet which is contained in the sublease of 1948 of which the Corporation was the assignee and that in those circumstances this appeal should be dismissed.
[1994]
3 I.R. Whelan v. Cork Corporation
Finlay C.J. 370
S.C.
Having reached that conclusion and having been made aware at the time when this case was given a very high priority it was important to have the matter decided ultimately in this Court from the point of view of the road development, I have come to the conclusion that I should not reserve judgment but deliver it now.
The question which arises is purely and simply a question of the true and proper interpretation of the section of the Act of 1978. The Act is the Landlord and Tenant (Ground Rents) (No. 2) Act, 1978. That was an Act dealing with ground rents dealing with landlord and tenant law. Section 28, sub-s. 1 reads as follows:
“Where a person having an interest in land acquires the fee simple in the land all covenants subject to which he held the land other than a covenant specified in subsection (2) shall thereupon cease to have effect and no new covenant shall be created in conveying the fee simple.”
I will deal with sub-s. 2 in a different context. It is agreed that the precise covenant with which we are dealing in this case is not one mentioned in sub-section 2.
The first matter which arises is that s. 28, sub-s. 1 is quite clearly a sub-section which in ordinary language does not contain any ambiguity. The covenants which are dealt with are completely and comprehensively described. They are all covenants subject to which he held the land. The covenant contained in the lease of 1948 restricting building on this land above twelve feet in the area designated on the map is a covenant subject to which the Corporation as assignee of the original lessee held the land at the time it acquired the fee simple in the land.
The point that arises in this case and Ms. Laffoy’s submission on it is that this is an ambiguous provision and that being an ambiguous provision it is open to her to submit to this Court that the proper interpretation of it is not the literal interpretation, but rather it is an interpretation which would have the consequence or effect that the covenants referred to in it would read:
“All covenants other than any covenant enforceable by a person other than the person or persons from whom he is acquiring the fee simple and any intermediate interest.”
To put the matter in another way she submitted that s. 28, sub-s. 1 of the Act of 1978, does not apply to anything except landlord and tenant covenants and therefore does not apply to a covenant enforceable under the rule in Tulk v. Moxhay (1848) 1 H. & TW. 105.
I am satisfied having made that submission with regard to ambiguity Ms. Laffoy then submitted that on either of two basis or in both of them the alternative she suggested was the proper interpretation. The first of those basis was that to interpret s. 28, sub-s. 1 as meaning what it appears to say namely, as covering all covenants subject to which the person held the land is to interpret it as achieving an unconstitutional result of dispossessing a person of a valuable right without compensating him and that the rule in East Donegal Co-Operative Livestock Mart Ltd. v. The Attorney General [1970] I.R. 317 comes into play. The alternative of the two possible constructions which would achieve a constitutional result must be the correct one. The second submission is that if there are two possible alternative interpretations that the interpretation which is literal under s. 28, sub-s. 1 creates an anomaly or an absurdity and that the general provision with regard to the interpretation of statutes quite apart from constitutional principles is against anomalies and absurdities and makes appropriate the alternative interpretation.
I accept these two principles but I am absolutely satisfied that neither of them becomes the subject matter of applicability to any case unless and until the Court is genuinely satisfied that an ambiguity in the terms of the section arises.
I would emphasise here that there is no challenge before this Court now nor are these proceedings so framed, nor are the parties to them so constituted that there could be a challenge before the Court to the constitutional validity of s. 28, sub-section 1. I express no view of any description on that question. With that reservation it seems to me clear that it would be doing significant violence to the provisions of s. 28, sub-s. 1 looking at it in itself to construe it in the manner which has been submitted on behalf of the plaintiffs.
I am confirmed in that view by the consideration of the provisions of s. 28, sub-s. 2 which do exclude a number of covenants, many of which appear to me prima facie at least potentially to include covenants which are not to be put within the general description of landlord and tenant covenants. So far therefore, as the submission of the detailed interpretation of this section made by Ms. Laffoy involves – she says it does, I think correctly – a shorter submission that the sub-section does not apply to anything except landlord and tenant covenants, the exceptions provided for in sub-s. 2 of the section seem to be inconsistent with that submission. What is clear, if it were necessary to look at the code and I do not think it is, is that there was what counsel all agree was a difficult and not over clear provision aimed at the same objective contained ins. 31 of the Act of 1967. The legislature rightly or wrongly from a constitutional point of view it would appear to me clearly in this Act by s. 28, sub-s. 1 have made an extinction of all covenants other than those which they expressly save in sub-s. 2 of the same section. That being so it is not permissible for the Court to enter into a question as to the preferred interpretation. It seems to me abundantly clear that if the Court were so to do it would be legislating by inserting a sub-clause or paragraph into s. 28, sub-s. 1 which indeed has been drafted as an explanation of the consequence for making the alternative interpretation.
In those circumstances I am satisfied that the learned High Court judge was correct in his view. There has been a cross-appeal of other issues in the case but having regard to my decision in this matter and having regard to the agreement of counsel that this determines the case when deciding it in that way I express no view on that cross-appeal. The order will accordingly be to dismiss the appeal.
Hederman J.
I agree.
O’Flaherty J.
I agree.
Metropolitan Properties Ltd v. John O’Brien and OPW
the Commissioners of Public Works in Ireland
1991 No. 309
Supreme Court
[1995] 2 I.L.R.M. 383
(Hamilton CJ, O’Flaherty and Egan JJ)
Cases referred to in judgments
Bank of Ireland v. Irish Life Assurance Co. Ltd, Supreme Court, 5 June 1979
Bank of Ireland v. Purcell [1989] IR 327; [1990] ILRM 106
Smiths (Harcourt Street) Ltd v. Hardwicke Ltd, High Court 1970 No. 3225 P (O’Keeffe P) 30 July 1971
Representation
John Farrell SC and Daniel Herbert for the appellant
John Sweetman SC and Brian Leonard for the first named respondent
Richard Nesbitt SC for the second named respondents
HAMILTON CJ
delivered his judgment on 3 April 1995 saying: I agree with the judgment delivered by O’Flaherty J in so far as it deals with the question whether the applicant is entitled as against the first named defendant to enlarge the interest vested in it under and by virtue of the 1948 under-lease in Parsons’ Bookshop into a fee simple notwithstanding
(a) that the fee simple interest in the said premises is vested in the Commissioners of Public Works in Ireland who are not bound by the provisions of the Landlord and Tenant (Ground Rents) (No. 2) Act 1978.
I agree that the applicant is not entitled to acquire the interest of the first named respondent in the indenture of lease dated 6 April 1948 and made between *385 Mary Margaret Parsons of the one part and Edward Byrne of the other part.
The applicant would only have been entitled to acquire such interest if it was entitled to enlarge such interest into a fee simple interest.
As the fee simple interest in the premises is vested in the Commissioners of Public Works in Ireland, who are not bound by the provisions of the said Act, the applicant is not entitled and could not become entitled to acquire the fee simple interest in the premises, it is not entitled to acquire the interest in the premises of the first named respondent.
Consequently, the answer to both questions raised in the case stated should be in the negative.
Being of such a view, I do not consider it necessary to deal with that portion of question (1) set forth at (b) thereof and defer consideration of that issue to a more appropriate case.
O’FLAHERTY J:
This is a case stated pursuant to the provisions of s. 38(3) of the Courts of Justice Act 1936 for the determination by the court of certain questions which arose on the hearing in the High Court, before Murphy J, of the appeal herein.
Since the facts of the matter, the legal issues arising and, indeed, the submissions made are set out so comprehensively in the case stated, I propose to reproduce it in full.
The case stated was as follows:
(1) This matter came before me on 26 November 1990, by way of appeal from an order of the Circuit Court made on 22 February 1990 on an application by way of appeal from an award of the county registrar dated 24 October 1989 for an order or award (but not so as to bind or purport to bind the secondly named respondents) declaring that the applicant was entitled pursuant to the provisions of Part II of the Landlord and Tenant (Ground Rents) (No. 2) Act 1978 to enlarge into a fee simple its interest in ALL THAT AND THOSE that part of the premises known as Bridge House, Upper Baggot Street in the City of Dublin consisting of the shop on the ground floor and the store on the right hand side of the passage leading from the said shop to the yard at the rear of the said premises and the lavatory and lock-up in the yard of the said premises and with the right of ingress, egress and regress in common with the first named respondent and the occupiers of the remainder of the said premises by and through the passage leading from the said shop to the said yard and also over said yard to Mespil Road, which said premises are situate in the Parish of St Peter and the City of Dublin. For convenience the premises in respect of which the statutory right is claimed are hereinafter described as ‘Parsons’ Bookshop’.
(2) The following facts were established or admitted:
(a) By an indenture of lease dated 29 June 1916 made between the Grand *386 Canal Company of the one part and Benjamin R. Parsons of the other part the Grand Canal Company demised to the said Benjamin R. Parsons ‘ALL THAT AND THOSE that plot of ground adjacent to Baggot Street Bridge on the southside of the Grand Canal measuring in front to Mespil Road and Upper Baggot Street three hundred and thirty feet six inches in the rear to the Grand Canal three hundred feet in depth from front to rear at the western end and thirty five feet in depth near the eastern end thirty nine feet be the said admeasurements or any of them more or less bounded on the north by the Grand Canal on the south by Mespil Road on the east by Upper Baggot Street and on the west by other premises in the possession of the lessors to HOLD the said demised premises unto the said Benjamin R. Parsons from 1 January 1916 for the term of 999 years subject to the yearly rent of £35 and subject to the covenants on the part of the lessee therein contained and in particular the covenant that the lessee would ‘within one year to be computed from 1 January 1916 expend the sum of at least £1,000 sterling in building and erecting and making fit for habitation and completing in a good and workman like manner with good and sound materials upon the premises hereby demised a good and substantial dwellinghouse or business premises in accordance with plans to be first submitted and approved by the lessor’s engineer and on the site and with a line of frontage thereon marked’.
(b) The interest of the Grand Canal Company in fee simple expectant on the determination of the 1916 lease became and is now vested in the secondly named respondents, the Commissioners of Public Works in Ireland.
(c) In pursuance of the covenant aforesaid the substantial three storey red bricked building sometimes known as Bridge House was duly erected in the year 1916.
(d) Bridge House aforesaid is displayed in a photograph annexed to the report of Messrs Hamilton Osborne and King which was admitted in evidence by agreement between the parties.
(e) By an indenture of lease dated 6 April 1948 made between Mary Margaret Parsons of the one part and Edward Byrne of the other part (hereinafter referred to as ‘the 1948 under-lease’) Parsons’ Bookshop (as described in the terms hereinbefore recited) was demised to the said Edward Byrne for the term of 99 years from 25 March 1948 subject to the yearly rent of £312 and in consideration also of the payment by the said Edward Byrne on the execution of the said under-lease of a fine of £5,400.
(f) By an indenture of assignment dated 25 August 1989 made between Mary Angela O’Flaherty of the one part and Metropolitan Properties Ltd of the other part Parsons’ Bookshop became vested in Metropolitan Properties Ltd for all of the residue of the term of years granted by the 1948 under-lease.
(g) By an indenture of assignment dated 22 September 1980 made between the Bank of Ireland of the one part and the above-named John O’Brien of the other part the premises demised by the 1916 lease being the premises now known as Bridge House Upper Baggot Street in the City of Dublin became and is now vested in the said John O’Brien for all of the term of *387 years granted by the 1916 lease subject to and with the benefit of the several under-leases described in the schedule of the said assignment and in particular the 1948 under-lease.
(h) The layout of Parsons’ Bookshop is shown in two plans put in evidence and prepared by Joseph McCullagh & Partners.
(i) There is no basement beneath Parsons’ Bookshop but there is an area below the greater part of it which has been described as a space or void measuring something between eighteen inches and three feet. Again the evidence establishes that most of the outer walls of Parsons’ Bookshop support the first and top floors of the building.
(3) I have concluded as a matter of construction of the terms of the 1948 under-lease and as an inference from the facts as a whole that the premises consisting of Parsons’ Bookshop and being the premises as described in and demised by the 1948 underlease comprise a three dimensional area defined and limited by the description of the structures thereby demised and that the ground floor premises so demised are no more (and no less) entitled to be described as ‘land’ than a flat or apartment on the first or second floors of the same building.
(4) All of the parties are agreed that in no circumstances would the applicants be entitled in any event to the enlargement of its leasehold interest into a fee simple as against the Commissioners of Public Works in Ireland having regard to the express provisions of s. 4 of the Landlord and Tenant (Ground Rents) (No. 2) Act 1978.
(5) Again it is common case that the applicant complies with the conditions set out in ss. 9 and 10 of the 1978 Act. In particular it is recognised that for the purposes of condition 7 of s. 10 that the fine paid by the under-lessee was more than fifteen times the yearly amount of the rent reserved by the under-lease.
(6) It is contended on behalf of the first named respondent that the applicant is not entitled to enlarge the interest held by him under the 1948 under-lease into a fee simple for the following reasons:
(a) That the fee simple interest is vested in the Commissioners of Public Works in Ireland and that such interest cannot be acquired from the commissioners. It is further said that as the purpose of the Act is to provide for the acquisition of the fee simple and the consequential termination of ground rents that the existence of such interest in the commissioners precludes not merely the acquisition of the fee simple but also of any intermediate interests in the property.
(b) That Part II of the 1978 Act applies only to a person ‘who holds land under a lease’ and that the applicant herein does not hold land but holds buildings only. While clause 14 of the schedule to the Interpretation Act 1937 defines the word ‘land’ as including ‘messuages, tenements and hereditaments, houses and buildings, of any tenure’ it is pointed out that the definition aforesaid is to take effect ‘unless the contrary intention appears’. It is contended on behalf of the respondents that there is a clear contrary *388 intention manifest in the 1978 Act. It is said that the reference to ‘permanent buildings on the land’ indicates a distinction to be drawn between buildings and land. Again it is said on behalf of the respondents that if the legislature had intended to confer on the owners or occupiers of buildings as such the right to acquire the fee simple in part of a building be it on the ground floor or an upper floor that it would have expressly so stated by using words appropriate to confer that right such as ‘buildings’ or the concept created by the Landlord and Tenant Act 1931 of the ‘tenement’. Furthermore it is pointed out that there are no provisions in the 1978 Act for defining the boundaries of the take or compelling the parties affected to grant a variety of cross-covenants and easements which would be necessary to protect the interests of a person owning the fee simple interest in a horizontal slice or area above and detached from the earth.
(7) Counsel for the applicant relies strongly on the Interpretation Act and contends that there is no sufficient indication of a contrary intention so as to prevent the word ‘land’ being given the meaning assigned to it by that Act. Again it is pointed out (and agreed by counsel on behalf of the respondents) that the concept of a ‘floating freehold’ is known to and accepted in Irish law. With regard to cross-covenants and easements it is contended that these would follow by implication and that in particular that the applicant was willing to grant whatever express covenants or easements might be appropriate. The applicant contends that there is no more reason for excluding from the operation of the 1978 Act a horizontal strip of a building comprising several floors than there would be from excluding one of several houses constituting a terrace of houses erected on land demised by a lease. Even in the case of terraced houses cross-covenants and easements might be required to enable the parties to make proper use of the premises vested in them.
(8) In addition to the various Landlord and Tenant Acts reference was made to the unreported decision of the then President of the High Court in Smiths (Harcourt Street) Ltd v. Hardwicke Ltd, High Court 1970 No. 3225P (O’Keeffe P) 30 July 1971 and a note made by the instructing solicitor of his attendance when Griffin J delivered his judgment on 5 June 1979 in a case of the Bank of Ireland v. Irish Life Assurance Co. Ltd.
(9) The documents of title comprised in a booklet agreed between the parties forms part of this case stated.
(10) Both parties asked me to state a case for the opinion of the Supreme Court upon the submissions made by counsel for the respective parties.
(11) The questions for the determination of the Supreme Court are:
1. Is the applicant entitled as against Mr O’Brien to enlarge the interest vested in, under and by virtue of the 1948 underlease in Parsons’ Bookshop into a fee simple notwithstanding:
(a) that the fee simple interest in the said premises is vested in the Commissioners of Public Works in Ireland who are not bound by the provisions of *389 the 1978 Act and
(b) that the premises demised by the 1948 underlease comprise and consist of buildings and not the land on which the same were erected.
2. In the alternative, is the applicant entitled to acquire the intermediate interest of Mr O’Brien notwithstanding that the fee simple is vested in the Commissioners of Public Works in Ireland who are not bound by the provisions of the 1978 Act?
The case stated was signed by the learned High Court judge on 18 December 1991.
As appears from the case stated, the matter came before Murphy J on 26 November 1990 by way of appeal from an order of the Circuit Court made on 22 February 1990 on an appeal from an award of the county registrar dated 24 October 1989. That award had declared (but not so as to bind the Commissioners of Public Works) that the applicant was entitled pursuant to Part II of the Landlord and Tenant (Ground Rents) (No. 2) Act 1978 to enlarge into a fee simple its interest in Parsons’ Bookshop. The Circuit Court allowed the appeal and refused the application.
The three pertinent interests in the property are as follows:
(a) The fee simple is now vested in the second named respondents. In 1916 it was vested in the Grand Canal Company. See para. (2)(b) of the case stated.
(b) By a lease of 29 June 1916 the plot of ground fully described in para. (2)(a) of the case stated was demised to Benjamin R. Parsons for the term of 999 years from 1 January 1916 at the yearly rent of £35. There was a lessee’s covenant to erect a building at a cost of at least £1,000. Para. (2)(c) of the case stated finds that the building was erected in 1916. Parsons’ Bookshop is part of the property. This estate became vested in the first named respondent in 1980: see para. (2)(g) of the case stated.
(c) By a sub-lease dated 6 April 1948 (‘the 1948 under-lease’) Mary Margaret Parsons demised Parsons’ Bookshop (as described in para. (1) of the case stated) to Edward Byrne for the term of 99 years from 25 March 1948 at the yearly rent of £312 with a fine of £5,400. That estate became vested in the applicant in 1989: see para. (2)(f) of the case stated.
It is common case that the applicant complies with the conditions set out in ss. 9 and 10 of the Act, in particular that the fine paid on the granting of the 1948 under-lease was more than 15 times the yearly rent thereby reserved.
S. 4 of the Act provides:
This Act shall not bind a minister of the government, the Commissioners of Public Works in Ireland or the Irish Land Commission.
It is accepted that the Commissioners of Public Works in Ireland (hereinafter *390 ‘the commissioners’) cannot be bound by any order that the court might make as between the applicant and the first named respondent.
The first matter for resolution, put simply, is whether because of the fact that the commissioners are not bound by the legislation that that affects the applicant’s entitlement in relation to the property in question.
Part II of the Act has the heading ‘Purchase of Fee simple’, with a subheading ‘General Right’.
S. 8, which is the first section in that part, provides:
A person to whom this Part applies shall, subject to the provisions of this Part, have the right as incident to his existing interest in land to enlarge that interest into a fee simple, and for that purpose to acquire by purchase the fee simple in the land and any intermediate interests in it and the Act of 1967 shall apply accordingly.
It is submitted on behalf of the applicant that since the Act is a remedial statute it should be construed as widely and liberally as can fairly be done. In this regard reference was made to the judgment of Walsh J in Bank of Ireland v. Purcell [1989] IR 327 at p. 333; [1990] ILRM 106 at p. 108. That judgment dealt with the Family Home Protection Act 1976. In the present case, it is submitted, the Oireachtas has ameliorated the positions of certain lessees and tenants who, broadly speaking, could be said to have built or bought their houses or other properties.
The submission then advances to say that a reference to ‘the right’ in s. 8 means just that and because the commissioners have an exemption, so to speak, the right is not taken away. It does not bind the commissioners but otherwise the right remains intact. Therefore, it is submitted, Mr O’Brien is bound even though the commissioners are not.
The ‘right’ given by s. 8 of the Act is to ‘enlarge that interest into a fee simple’. For that ‘purpose’ a qualifying applicant may purchase: (i) the fee simple and (ii) any intermediate interests. The applicant submits that that ‘right’ and the things an applicant may do for the ‘purpose’ of that right remain intact save in so far as s. 4 clearly provides otherwise.
On behalf of Mr O’Brien, it is urged that there can be no ‘right’ unless it is an enforceable right. Here, s. 4, which comes before Part II, has clearly provided that the commissioners are not to be bound. Therefore, there is no ‘right’ in the true sense to acquire the fee simple. Of course, the applicant counters this by pointing out that the right in s. 8 is said to be ‘subject to this Part’ and s. 4 is not in Part II.
While the submission made on behalf of the applicant has a certain attraction, nonetheless, it seems to me that before you can have a right there must be a duty or obligation on someone to respect and fulfil that right. Otherwise, it is not a *391 right. That is the situation here. The commissioners are not bound. I would, accordingly, answer the questions posed in this regard accordingly.
That, in itself, would be sufficient to dispose of the case but since the second question was also argued in full I think I should provide an answer to that as well. The submission on behalf of the respondents in this regard goes as follows: that the premises demised by the 1948 underlease comprise buildings and not the land on which the same were erected. It is accepted, however, that the concept of a ‘flying freehold’ or ‘floating freehold’ is known to and accepted in Irish law. As recounted in Dr Lyall’s recent treatise Land Law in Ireland (1994) at p. 36:
Freehold land can be held in separate horizontal layers, each one being a separate fee simple estate. These are known to lawyers as ‘flying freeholds’. An obvious case where one might expect to find such freeholds in practice would be flats.
Nonetheless, while it is now accepted in Irish law, it is a comparatively recent concept. As recounted by Kenny J, writing in 1968 in the foreword to the 1st edition of Professor Wylie’s Irish Conveyancing Law : ‘In 1961, when I was appointed to the High Court, the sale of flats was unknown’.
It is submitted on behalf of the applicant that since the Act has no definition of ‘land’ the Interpretation Act 1937 comes into play and that provides by item 14 in the Schedule that: ‘The word ‘land’ includes messuages, tenements, and hereditaments, houses and buildings, of any tenure’.
It is submitted that Parsons’ Bookshop prima facie comes within that definition and so the question is: does a contrary intention appear? It is said on behalf of the applicant that there is no contrary intention and counsel point to the fact that in s. 16(2)(a) of the Act certain ‘flats’ are excluded.
On behalf of Mr O’Brien it is urged that there is a contrary intention and so buildings as such must be excluded and that an analysis of Part II brings this out. For instance, Part II applies only to land with permanent buildings on the land and they point with some emphasis to the reference to ‘buildings on the land’ in s. 9(1)(a), which is only consistent with what they contend. They submit that if it had been intended to confer on owners of buildings as such the right to acquire the fee simple it would have been expressly and clearly so stated in the legislation. They have put before the court (and have furnished examples from precedents) the care that a conveyancer must bring in attempting the conveyance of horizontal slices or fragments of buildings and they say, too, that the section dealing with covenants (s. 28) would have been drafted in different and certainly more precise terms if it was intended to deal with a take such is at issue in this case.
I find the submissions very evenly balanced. However, I think what tilts the *392 scale in favour of the respondents is the relative novelty of the idea of being able to buy the fee simple in a premises such as this. It would have been a fairly new concept in 1978 and I believe that if the legislature had intended that this could be done it would have provided for it in more explicit terms.
I appreciate that the Chief Justice and Egan J wish to reserve their positions in regard to the matters debated arising on the contents of paragraph (b) of the first question for a case where their resolution is essential for the decision in the case. While having regard to these reservations, I would propose — subject to hearing the submissions of counsel — that both questions submitted should be answered in the negative.
EGAN J:
The parties are agreed that the applicant is not entitled to the enlargement of its interest into a fee simple interest as against the Commissioners of Public Works having regard to the provisions of s. 4 of the Landlord and Tenant (Ground Rents) (No. 2) Act 1978. S. 8 of Part II of the Act provides:
A person to whom this Part applies shall, subject to the provisions of this Part, have the right as incident to his existing interest in land to enlarge that interest into a fee simple, and for that purpose to acquire by purchase the fee simple in the land and any intermediate interests in it and the Act of 1967 shall apply accordingly.
The section makes it clear that the right to purchase an intermediate interest only exists for the purpose of enlarging the present interest into a fee simple interest. Where the latter cannot be done (as is the position in the present case) there is no right to purchase the intermediate interest.
The foregoing conclusion is sufficient to determine the rights of the parties to this suit. An additional objection was made, however, to the effect that the section only gave a right as incident to an existing interest in ‘land’ and would not embrace property which was not physically situate on the ground.
This raises a matter of great importance but because it is not necessary for the purposes of this case to resolve it, I will not attempt to do so and will, therefore, leave the question unanswered.