Enforcement of Lease
Cases
Coyle v Coughlan & anor
[2019] IEHC 506
Allen J.
1. By a letting agreement dated 1st December, 2017 made between William Coughlan and Elizabeth Coughlan, as landlord, and Paul Coyle and Meta Coyle trading as Sugar Sisters, as tenant, Mr. & Mrs. Coughlan agreed to let Mr. & Mrs. Coyle to take the premises known as Units 1 and 2 Acol House, Courthouse Square, Maynooth, Co. Kildare, for a term of three years from 1st November, 2017, subject to a monthly rent of €2,000 payable in advance and the terms and conditions therein contained.
2. The demised units were two of six units, in two buildings, one adjoining Mr. and Mrs. Coughlan’s house and the other developed by Mr. & Mrs. Coughlan on what previously had been the garden attached to their house. One of the buildings fronts onto Courthouse Square. The ground floor is in two units, one let to an electrical shop called Three Pin, and the other to a coffee shop called The Brewery Coffee House. Above those units is a business called the Treatment Room. To the north of the coffee shop is a laneway leading into a small carpark, at the west of which is the second building, Acol House, which comprises two retail units on the ground floor, Units 1 and 2, and a room above which is used as a bridge club.
3. The carpark serves all six units in the commercial development and is also used by Mr. and Mrs. Coughlan, whose house is immediately to the southeast, to park their car.
4. The letting to Mr. & Mrs. Coyle included a licence to park two cars in the carpark. Special Condition 8 of the Letting Agreement provided: –
“8. The tenant shall have permission to use two undesignated car parking spaces from 9am to 6.30pm during normal working days. No liability for any loss or damage caused to any vehicle at any time whatsoever shall be attributable to the landlord and the tenant, its servants, agents and invitees use any such car parking spaces at their own risk. Without prejudice to the foregoing, the landlord may impose regulations, terms and conditions relating to the use of the said car parking space at any time. The tenant accepts and agrees that the Bridge Club players shall have priority concerning the car parking spaces after 6.30pm each and every day during the term.”
5. The Sugar Sisters business is retail cake decoration and tuition in cake decorating, and that was the user permitted by the letting agreement. Mr. & Mrs. Coyle’s plan was to use one of the units as a shop and the other as a workshop for cake decorating classes and demonstrations.
6. For the first seven months or so, all was well. Mr. & Mrs. Coyle, with the considerable assistance of their daughters Ms. Amy Coyle and Ms. Emily Coyle, fitted out the units and opened for business. In the early months of the demise the Misses Coyle worked long hours, seven days a week. Ms. Amy Coyle described that Mr. Coughlan kept an eye on her in the evenings, which she was grateful for. Mr. & Mrs. Coughlan were invited to the opening of the new business and brought a bottle of champagne. In the spring of 2018, Mr. & Mrs. Coughlan’s granddaughter had her birthday party in the studio.
7. The carpark serving the development could reasonably comfortably accommodate ten cars, although if it was full, the cars parked in two of the spaces would be blocked in. Mr. & Mrs. Coughlan allowed the tenants of each of the commercial units to park one car. They used one themselves, and one was assigned to the Bridge Club, which was earmarked for the use of a disabled member. Save for the area immediately beside the entrance to the Bridge Club, the surface of the carpark was not marked but the tenants knew where they were supposed to park.
8. The licence which Mr. & Mrs. Coyle had was limited to 9am to 6.30pm on ” normal working days “, but this was not observed or enforced. In the early months, as I have said, Ms. Amy Coyle often worked late and there was no objection to her keeping her car in the carpark. Similarly, in the early months, the Misses Coyle ran classes at the weekends and there was no objection to them or their students parking in the carpark.
9. The Bridge Club operated during the daytime as well as in the evenings. In the daytime, when bridge lessons were run, the bridge players, with the exception of the lady with mobility difficulties, were asked to park elsewhere than in the carpark. In the evenings, when games were played from 7.30 pm, the bridge players parked in Mr. & Mrs. Coughlan’s car park. Because the bridge players would all be leaving together, they parked their cars very close together, so that the last car in would have to move before those who had arrived earlier could leave. On most weekday mornings Mrs. Coughlan gave lessons in the Bridge Club but on Tuesdays a game was played.
10. This case was fought tooth and claw over four days in the High Court. A half dozen incidents were examined and re-examined in exquisite detail. On both sides, recollections were clouded, to a greater or lesser extent, by the bitterness that had developed. Some of the incidents had been videoed and the videos were the subject of minute examination and comment.
11. In the chronology of this saga, the first bitter fight was about the date of Mr. and Mrs. Coughlan’s granddaughter’s birthday. The Coughlan side said that it was in February. The Coyle side were adamant that it was in April. Ms. Emily Coyle, who had hosted the party, when it was put to her that she was wrong about the date refused to accept that and called up on her mobile phone a photograph, dated 15th April, 2018 of a blond child blowing out her candles. The phone was shown to the court and to counsel and eventually (by-passing Mr. and Mrs. Coughlan) to the child’s father: who inevitably confirmed that the child in the photograph was not his. Of course the date of Miss Coughlan’s birthday was nihil ad rem but the exchange was evidence of the dogged pursuit by Ms. Coyle of an argument which she was bound to lose.
12. The premise of the plaintiff’s case was that all had been well for the first seven months of the letting but that the relationship had thereafter deteriorated by reason of the unreasonable conduct of the defendants. But in evidence a number of encounters in March or April were recalled and reimagined. As with the date of Miss Coughlan’s birthday, the evidence on these issues goes to the reliability of the witnesses more than the substance.
13. There were a couple of minor glitches in March or April. Understandably, the passage of time meant that the witnesses’ recollections of the dates was uncertain, but the dates can be tied down by reference to a note given by Mr. Coughlan to Mr. Coyle dated 23rd April, 2018.
14. The Misses Coyle sometimes stayed late, after the shop had shut. One evening in March or April Ms. Amy Coyle was working in the shop with her boyfriend, David. She described how a foreign couple, who were not Sugar Sisters customers, had arrived at the door of the shop to say that they had been parked in. Ms. Coyle thought that it was about 6.30 pm. Mrs. Coughlan was adamant that it was 7.45 pm, after the game had started at 7.30 pm. Ms. Amy asked David to go upstairs to ask that the owners of whichever of the bridge players’ cars as were blocking in the foreign couple’s car, to move to let them out. Ms. Coyle described that Mrs. Coughlan was out of control. Mrs. Coughlan, it was said, was never warm and exuded negative energy. Mrs. Coughlan’s account of the event was that she said that if people parked after 6.30pm they would get parked in. I think that this incident did happen after the bridge game had begun. The rule was that all cars, other than bridge cars, had to be out by 6.30 pm. Ms. Amy did not know it, but the request to move the bridge players’ cars disrupted the game. Because it was David who had come up, Mrs. Coughlan probably thought that the blocked in car was a Sugar Sisters customer’s car. I think that Ms. Amy was overstating the position when she said that Mrs. Coughlan was out of control but I am satisfied that she was annoyed, and made her annoyance known.
15. Following that incident Mr. Coughlan spoke to Ms. Amy to explain why cars other than the bridge players’ cars had to be out by 6.30 pm.
16. The other glitches involved overnight parking. Overnight parking was not allowed. One day in the late spring or early summer Ms. Frances Coby, Mr. and Mrs. Coyle’s sales assistant, lost her car key and left her car in the car park, she thought, overnight, Mrs. Coughlan thought over the weekend. When she eventually arrived to recover her car she was challenged by Mr. and Mrs. Coyle as to why the car had been left and why she had not notified them that it would be left there. She felt scolded. Mr. Coyle, in his examination of Ms. Coby, and in his cross examination of Mr. Coughlan and of Mrs. Coughlan, went into excruciating detail in the hope of establishing that Mr. Coughlan should have known, or should, by reviewing the CCTV footage of the carpark over the previous days or weeks, have established, that it was Ms. Coby’s car but it is clear from the evidence that it was not that big a deal at the time.
17. The second overnight parking incident involved Ms. Amy Coyle. Ms. Amy arrived in her car one evening on the way to dinner with the intention of parking overnight. She was approached by Mrs. Coughlan who said that she was not allowed to park overnight. Ms. Amy described Mrs. Coughlan pacing in circles, in a flap, and hysterically pointing at other cars. I am satisfied that Mrs. Coughlan told Ms. Coyle that she was not allowed to park overnight. I am satisfied that Mrs. Coughlan was annoyed but, again, I am satisfied that Ms. Coyle greatly exaggerated what happened.
18. As I have said, I think that these incidents, such as they were, can be anchored by reference to a note given to Mr. Coyle on 23rd April, 2018. This note (a copy of which was not kept by Mr. And Mrs. Coughlan, but the original of which was produced by Mr. Coyle) reminded Mr. Coyle that cars needed to be out of the carpark by 6.30 pm; reminded Mr. Coyle that the lease limited him to two spaces; advised Mr. Coyle that it was unacceptable that Ms. Amy or Ms. Emily should come up to the Bridge Club to ask that cars be moved; and reminded, or informed, Mr. Coyle that some of the bridge players had mobility issues. The note pointed out that parking at weekends was not a problem up to 6.30 pm and warned that there was ” absolutely NO overnight parking without first texting or phoning [the number given].”
19. While on the one hand leading evidence which it was hoped would show a breach of the covenant for quiet enjoyment, on the other hand Mr. Coyle said that he had absolutely no problem with the position taken by Mr. and Mrs. Coughlan in relation to evening and overnight parking.
20. I am satisfied that in the period up to the end of April Mr. and Mrs. Coughlan politely engaged with Mr. Coyle to ensure (or I should probably say, in the hope of ensuring) that parking was kept more or less to the agreed times: strictly to 6.30 pm on weekdays, with an indication of flexibility at the weekends. Mr. Coughlan is a mild mannered man, who was described by Ms. Emily as pleasant and always obliging and by Ms. Amy as a grandad figure. Mrs. Coughlan is more forthright but she is not the harridan portrayed by the Misses Coyle. The Misses Coyle are young, ambitious, determined and opinionated young women who resented, and in their evidence exaggerated, Mrs. Coughlan’s attempts to regularise the use of the car park. I am satisfied that Mrs. Coughlan was perfectly entitled to intervene in relation to evening and overnight parking and that her interventions were perfectly proper and reasonable.
21. The trouble started in June 2018.
22. The Misses Coyle, besides the weekend parties and demonstrations which were going very well for them, devised a diploma in cake decorating which would be earned over five weeks by attending all-day classes on successive Tuesdays. The course was advertised on the basis there was ” parking at the door “. Ms. Emily explained that Sugar Sisters had a competitor about 15 minutes’ drive away, where parking was readily available, and that the availability of parking at the Sugar Sisters premises was a selling point. Those classes attracted eight or ten or up to a dozen customers. The carpark simply could not accommodate the traffic. Mr. Coyle parked his customers’ cars tightly together, but this inevitably displaced the other tenants and their customers, who, in the case of the other tenants being entitled to use the car park, and in the case of their customers, being in the habit of doing so, variously were unable to get in or, having got in, found no space available. This led to cars being left in the circulation area while the drivers did whatever business they had to do, which inevitably inconvenienced those who had completed whatever business they had to do and wished to leave.
23. For good measure, Tuesday was a day on which bridge was played, by players in the habit of parking, rather than taught to aspirants who had been instructed to park elsewhere.
24. On 6th July, 2018 Mr. Coughlan sent Mr. Coyle a note. The car parking, Mr. Coughlan said, was just chaos, to say the least. That was the fact and Mr. Coyle accepted it. Mr. Coughlan said that he would be putting down car parking lines, hopefully that week. He again reminded Mr. Coyle that Sugar Sisters had two car parking spaces available and asked Mr. Coyle to advise his customers that there was no all-day parking available.
25. Mr. Coyle replied by email on the same day. He said that he was in agreement with parking lines and no parking areas but suggested that this was a significant lease change and wished to be consulted about the details before he agreed. Mr. Coyle expressed concern that the changes proposed would make the Sugar Sisters business more difficult to run and that he and Mrs. Coyle had agreed to rent the unit on the basis that there was customer car parking available. In the same email Mr. Coyle complained about the manner in which some of his customers had been spoken to and asked that any further issues with Sugar Sisters’ customers should be brought to the attention of him or Mrs. Coyle or their staff.
26. On the evening of 8th July, 2018 Mr. Coughlan met with Mr. and Mrs. Coyle at the premises. The meeting lasted four hours but it was common case that it got nowhere. Mr. Coyle was unshakeable in his view that nothing could be done without his agreement. He suggested that an engineer should be engaged to advise on the layout of the carpark and that the other tenants, who he called the stakeholders, should be consulted. Mrs. Coyle said that she was shocked at Mr. Coughlan’s attitude. She and her husband had, she said – and they had – built up an expectation on the part of their customers that parking would be available. As far as Mr. Coughlan was concerned, there was a serious problem with parking, it was his carpark, and he had a responsibility to his other tenants and their customers. Towards the end of the meeting Mr. Coyle suggested that if agreement could not be reached the matter would end up in court which, he said, would cost him €150 but Mr. Coughlan €50,000. The meeting went on so long that Mr. Coughlan was late for his dinner and Mrs. Coughlan came over. Mrs. Coughlan’s contribution to the meeting was that the only thing that was important was the lease, to which Mr. Coyle’s response was that he would not obey the lines anyway.
27. In the course of the trial there was a good deal of talk about cars belonging to other tenants and their customers being parked where they ought not to have been, and complaint that nothing was said or done to them. As to that, I say two things. Firstly, even if other tenants or their customers were abusing the carpark, that would not have justified Mr. and Mrs. Coyle in doing so. Secondly, no one other than Sugar Sisters were inviting their customers to park all day. Mr. and Mrs. Coyle appeared unable to recognise that the cause of the congestion and blockages in the carpark was that their numerous long-term customers were displacing everyone else.
28. Mr. and Mrs. Coughlan employed a carpark management company which first of all erected signs on the walls warning that unauthorised cars would be clamped and then issued parking permits to the tenants and erected signs. Mr. Coyle objected to the signs on the ground that fewer of his customers came into the carpark.
29. At the end of August or early September the lines were painted and a moveable bollard was erected on the space earmarked for the disabled bridge player. Mr. Coyle thought that this happened on 20th August. Mr. Coughlan said that it was the first week of September. Nothing turns on precisely when it was that the lines were drawn. Ms. Emily Coyle recalled that the painting took under an hour. Mr. Coyle took the view that the lines disrupted his customers and that the placing of the bollard took up a valuable space.
30. I am satisfied that the painting of the lines caused some disruption in the use of the car park for a short time. That was inevitable but the painting of the lines was perfectly reasonable and it was done in the exercise by Mr. and Mrs. Coughlan of the right they had reserved, or had spelled out, in the lease, to manage the use of the carpark.
31. I am satisfied that the lines, when painted, disrupted Mr. and Mrs. Coyle’s customers in parking whenever, and wherever, and for so long as they liked. That was the whole point of the lines and the signs. The bollard did not take up a space which was valuable to Mr. Coyle but ensured that a space which was assigned to and valuable to any disabled member of the Bridge Club would be available for that member when required. The bollard, no less than the lines, was lawfully placed in the exercise by Mr. and Mrs. Coughlan of their rights.
32. A quite inordinate time was spent viewing and discussing the video tapes of three incidents, not only what was happening and what the videos showed, and did not show, but the make, model and ownership of the vehicles. These incidents were said to show the wrongful conduct of the defendants.
33. The first was taken on 28th July, 2018. The video does not show, but the witnesses described, that Mrs. Coughlan, on driving into the carpark, found her way blocked by a red jeep. She is said to have beeped her horn and flashed her lights, which drew Mr. Coyle to the door of his premises and Mr. Coughlan out into the car park in his wet gear. The video does not show, but Mr. Coyle described, that when Mrs. Coughlan flashed her lights or sounded her horn, he asked one of his customers to move a black car. The black car, before it was moved, had not been causing an obstruction but it was moved to a place where it prevented Mrs. Coughlan from reversing into her space. Mrs. Coughlan wanted the black car moved. Mr. Coyle took the view that it had been moved once and he blocked Mrs. Coughlan from entering the shop to ask the owner of the car to move it. The situation was eventually diffused by Mr. Coughlan encouraging Mrs. Coughlan to drive, rather than reverse, into the space. This unedifying spectacle was said to be evidence of intimidation by Mr. and Mrs. Coughlan. It was not. It showed boorish behaviour on the part of Mr. Coyle.
34. The second video was of an incident on 4th September, 2018. A Sugar Sisters customer who wished to park in the carpark – elsewhere than in a Sugar Sisters space – was turned away by Mrs. Coughlan. Before the video started, Mrs. Coughlan attempted to get the attention of those within the demonstration area by knocking on the window. A fair amount of time was spent debating whether Mrs. Coughlan tapped, or rapped, or knocked, or banged on the window. Ms. Emily Coyle was indignant that Mrs. Coughlan had the temerity to make any approach to her because, she said, Mrs. Coughlan had been told by Mr. Coyle not to talk to the staff. By the time of the incident, Miss Emily’s demonstration had been going on for an hour and a half. As far as Ms. Emily was concerned, if Mrs. Coughlan had something to say she should contact her father: and she said so. As far as Ms. Coyle was concerned, the disturbance of her icing demonstration during the day to have cars which ought not to have been there moved, was no different to David disturbing the bridge game in the evening to have cars which were entitled to be there moved to facilitate the departure of cars which ought not to have been there.
35. To the extent that it is necessary for the High Court to decide the issue as to the strength or volume of the knock on the window, I find that it was neither a tap nor a bang, but a good, sharp and probably testy rap.
36. The video records Ms. Emily Coyle advising her customer as to the availability of parking locally and Mrs. Coughlan saying ” You have two spaces and no more.” In Ms. Coyle’s view, Mrs. Coughlan was brusque and was harassing her customer. In my view Mrs. Coughlan was firm and clear. The Coyles had set their faces against abiding the parking rules and if Mrs. Coughlan was brusque, she was entitled to be. There is no evidence in this clip of harassment.
37. On Mr. Coyle’s view of the world, any breach by Mr. and Mrs. Coughlan of his edict on 6th July that they should not approach his staff or customers was a breach of their covenant for quiet enjoyment. I reject that argument. Mr. and Mrs. Coughlan were perfectly within their rights to complain about irregular parking.
38. The third incident was the most serious. The video did not show, but Mr. Coughlan described, and was not contradicted, that on 8th September, 2018 Mr. Coughlan saw Mr. Coyle direct one of his customers to park in a space which was not a Sugar Sisters space, at a time when one of the Sugar Sisters spaces was free. Mr. Coughlan went to the door of the shop and asked Ms. Emily to get her father. Mr. Coyle came to the door, caught Mr. Coughlan by both elbows, and pushed him backwards down the wheelchair ramp. Undaunted, Mr. Coughlan returned, he said, to deliver his message, or as Mr. Coyle saw it, to enforce his will in relation to parking. One of the Misses Coyle videoed what happened next. The video shows Mr. Coughlan coming to the door of the shop and shows Mr. Coyle pushing him forcibly out the door. Mr. Coughlan is seen to stagger slightly. Then Mr. Coyle follows Mr. Coughlan into the car park, filming. Mr. Coyle, who plainly followed Mr. Coughlan, is heard to ask Mr. Coughlan to stop following him. Mr. Coughlan is heard to say that Mr. Coyle pushed him out (which he had) and Mr. Coyle is heard to say that he has the right to use whatever force he required. At some stage Mr. Coyle called the Gardaí. There was not much, if any, difference between the account given by each of Mr. Coughlan and Mr. Coyle.
39. Mr. Coughlan was 76 years of age. He is fit and well. He is trim and of average build. Mr. Coyle did not say what age he is but he is in his early fifties. He is a very tall, lean, and strong man. The proposition that he or anyone else might have been intimidated by Mr. Coughlan or by Mrs. Coughlan who is a little younger than her husband was risible and Mr. Coyle moved from his suggestion that he had been intimidated to saying that he had been frustrated. I am satisfied that Mr. Coyle was annoyed at being asked to obey the rules and to confine his use of the carpark to that permitted by the lease: and that he made no attempt to hide his annoyance.
40. Mrs. Coyle gave evidence that she was very shocked by what she saw on 8th September. Ms. Emily Coyle gave evidence that she was in complete shock and visibly shaking and that the atmosphere in the shop changed. I am sure that she was, and that it did. It had nothing whatsoever to do with anything that Mr. Coughlan did.
41. In cross-examination it was put to Mr. Coyle that the Gardaí had decided to prosecute him, but not Mr. Coughlan, for assault. Whatever view the Gardaí may have taken of the video, or the reports made to them, was irrelevant to my decision as to what happened but the pending criminal prosecution means that I have to be circumspect in what I say. I will content myself by saying that Mr. Coughlan was perfectly within his rights to go to the door of the shop to remonstrate with Mr. Coyle and that there is no evidence whatsoever of Mr. Coughlan intimidating Mr. Coyle.
42. On 10th September, 2018 Mr. Coyle applied ex parte to the High Court for injunctions restraining Mr. & Mrs. Coughlan from entering the demised premises and from interfering, watching, besetting, threatening, or otherwise approaching him or Mrs. Coughlan, or their staff, servants, customers or agents of Sugar Sisters. Mr. Coyle was given leave to effect short service of a motion but did not issue his summons until 7th November, 2018.
43. By letter dated 19th September, 2018 Mr. & Mrs. Coughlan’s solicitors called upon Mr. Coyle to provide, by the following Friday, evidence of the discharge of all outgoings on the premises; evidence of insurance as required by Special Condition 3 of the lease; evidence of the discharge of commercial rates; and evidence of the discharge of the management fee which, by Special Condition 2, was payable to Mr. & Mrs. Coyle.
44. In his reply of 21st September, 2018 Mr. Coyle protested that the time allowed was insufficient and expressed concern as to the rationale for the request and suspicion that Mr. and Mrs. Coughlan hoped to gain the justification for evicting him. Mr. Coyle was perfectly right. I am quite satisfied that Mr. and Mrs. Coughlan had had enough of Mr. Coyle and, although the rent was at that time paid up to date, had come to the view that he was more trouble than he was worth. Mr. and Mrs. Coughlan’s motivation, however, is irrelevant in law.
45. On 6th November, 2018 Mr. and Mrs. Coughlan gave notice pursuant to s. 14 of the Conveyancing Act, 1881 complaining of breach of covenant on the part of Mr. and Mrs. Coyle in failing to pay the rates, failing to maintain insurance as required, and causing a nuisance and obstruction by parking; and threatening forfeiture unless the breaches were remedied in seven days. By delivery of their counterclaim on 4th December, 2018 (to which Mrs. Coyle was joined) Mr. and Mrs. Coughlan formally re-entered and forfeited the lease.
46. There was some discussion in the course of the hearing as to whether the fact that Mr. and Mrs. Coyle had an arrangement with Kildare County Council to pay arrears of rates by way of instalments meant that the rates were paid up to date, and whether a policy of insurance which was obviously voidable for breach of warranty was sufficient compliance with the covenant to insure, but in the event those issues evaporated.
47. About a week before the trial started, Mr. Coyle returned the keys to the property. At the trial Mr. and Mrs. Coyle agreed that the forfeiture had been effective and said that they were not making any claim for relief against forfeiture. They declared themselves willing to renegotiate the lease or to take a lease on terms that would allow them and their customers to park as many cars as they liked for as long as they liked, but did not wish the lease which they had to be reinstated.
48. It was common case that the rent was paid up to the end of November, 2018 and that nothing had been paid since. It was not contested that the value of the use and occupation was the same as the rent which had been agreed. Besides the rent, Mr. and Mrs. Coyle had the benefit of services for which they agreed to pay €2,000 per annum by monthly instalments. I measure the value of the use and occupation at €2,166.67 per month.
49. Mr. Coyle’s legal submission was not easy to follow. He pressed his claim for damages under a number of headings. The substance of his claim was that Mr. and Mrs. Coughlan had breached the covenant for quiet enjoyment by imposing unreasonable restrictions on their use of the carpark and by intimidation. It was argued that by reference to their initial proposal and the conduct of the parties in the first seven months, Mr. and Mrs. Coyle had ” an implied contract that ran alongside an express contract “. In defence to the counterclaim, he argued that clause 8 of the letting agreement was ” devoid of fairness and proportionality ” and that the forfeiture of the lease meant that the counterclaim was a nullity. He argued that in view of Mr. and Mrs. Coughlan’s conduct there should be no order as to costs.
50. Mr. Coyle’s claim is entirely devoid of merit. Mr. and Mrs. Coughlan’s tolerance of large numbers of Sugar Sisters customers parking for long periods of time at the weekends did not give rise to a right to continue to do so, still less to a right to do so on weekdays. By encouraging their customers to park all day on weekdays, Mr. and Ms. Coyle introduced chaos, to the great inconvenience of Mr. and Mrs. Coughlan and the other tenants and their customers. Mr. and Mrs. Coughlan were perfectly entitled to insist on compliance with the terms of the letting agreement and to put the regulation of the car park on a more formal footing. Whether the regulation of parking was required for health and safety reasons is irrelevant.
51. It is settled law that neither evidence of antecedent negotiations nor subsequent conduct is admissible in construing a contract. Apart from that, I cannot forbear to observe that it was not suggested that Mr. and Mrs. Coughlan had ever said or given reason to believe that Mr. and Mrs. Coyle would have any more than two spaces available to them or their customers.
52. There will be an order dismissing the action with an order for payment by the plaintiff of the defendants’ costs, including all reserved costs, and the costs of discovery.
53. On the counterclaim there will be an order against both defendants to counterclaim for possession of Units 1 and 2 Acol House, Courthouse Square, Maynooth, Co. Kildare; a decree for €15,166.00 for mesne rates; and an order for costs.
Arthur C. Heathcote and others v Michael P. Maguire
High Court of Justice.
26 November 1928
[1928] 62 I.L.T.R 189
Johnston J.
Johnston, J.
This is an action for an injunction by the owners of certain licensed premises in Parnell Street, Dublin, to restrain the defendant, who is the lessee and holder of the licence, from exercising the right of transfer which is conferred upon him by section 11 (1) of the Intoxicating Liquor Act, 1927. That section provides that a person who is at the one time the holder of a six-day licence and the holder of an onlicence which is not a six-day licence (in the section called the seven-day licence), the premises being in the same licensing area, is entitled to have the seven-day licence transferred to the other premises. The six-day licence is not to be renewed and the premises to which the seven-day licence was attached are to be deemed never to have been licensed for the purposes of the Licensing (Ireland) Act, 1902. The defendant is the owner or lessee of premises at No. 18 Phibsborough Road, to which a six-day licence is attached, and the lessee of the premises Nos. 218 and 219 Parnell Street, of which the plaintiffs are the owners and to which a seven-day licence is attached. He has served the necessary notice to have the seven-day licence transferred to the premises in Phibsborough Road, and the District Court has adjourned the application pending the hearing of this action. The result of the defendant’s application, if successful, will be that the premises in Parnell Street will cease to be licensed pre *189 mises and will be statutorily deemed to be premises that never have been licensed. So that when the lease expires the plaintiffs will get back premises to which no licence is attached, and they will, by reason of the statutory pronouncement in section 11 (1) be unable to apply for a new licence under the Act of 1902.
The Act of 1927 contains in sections 36 to 54 certain provisions for the reduction of the number of licences for the sale of intoxicating liquor in the Irish Free State. Proceedings for the purpose of such reduction may be initiated by an officer of the Gárda Síochána, and where the statutory conditions exist an abolition order may be made by the “compensation authority” under the Act. The powers that are given by these sections are of a compulsory character—not unlike the compulsory powers in the Licensing Acts of 1904 and 1910—and an elaborate machinery is set up for the compensating of the two classes of persons who are presumed by the Act to be persons who may be injured by the abolition of licences—namely, the person having the occupation interest and “the immediate lessor.” The amount of the compensation is dependent upon loss of value, and loss of value is to be determined in accordance with the provisions of sub-sections 3 to 7 of section 42, a distinction being made in the case of premises which are “tied” and premises that are not. I have mentioned this matter for the purpose of showing that the Legislature, recognising the possible necessity for a reduction in the number of licensed premises, has provided suitable machinery for effecting that result and has provided also an elaborate financial scheme for the compensating of persons who may be affected by abolition.
Section 11, which is a portion of Part II of the Act dealing with the general question of the licensing of publichouse premises, forms no part of the general code for the abolition of licences and appears to me to be merely a provision for the personal convenience and profit of the class of persons to whom the section applies. I think that in this case the interest of the defendant in the premises in Parnell Street is an interest which would come within the definition of “occupation interest” in Part IV. of the Act, and the plaintiff would come within the definition of “immediate lessor,” and it would seem that if proceedings were initiated under that part of the Act both parties would be entitled to be compensated for their respective loss of values. It is hard to think that the Legislature intended that the defendant should, on his own initiative and for his own profit, have the power to detach from the premises of which the plaintiff is the owner part of their “value” for the purpose of adding to the “value” of other premises in his own hands, without any regard for the interest of the plaintiff.
It is argued here on behalf of the plaintiff that, apart altogether from the actual terms of the contract under which the defendant holds these premises (which, I am satisfied, were licensed for the sale of intoxicating liquors at the date of the lease in 1909), the transfer of the licence at the instance of the defendant to his other premises would be an act of waste which can be enjoined by this Court. It is a well established principle that a lessee has no right or power to change the nature of the thing demised, and it is contended by counsel for the plaintiffs that, as a result of the defendant’s conduct, the premises will be changed from a place where a particular trade is being and can be carried on into a place where that trade cannot be carried on either now or in the future. All the cases upon the doctrine of waste of which I am aware, however, were cases in which some structural change or physical alteration in the premises had been made or threatened. I know of no case in which it was held that the voluntary act of a lessee by which some valuable licence, privilege or franchise attached by statute law or otherwise to corporeal property was lost, amounted in law to waste. There is no doubt that in the present case the loss of the licence will result in a loss of value—a loss that will be felt by the plaintiffs in 1930, when the lease will expire—and that value will become attached, by virtue of this very novel enactment, to the defendant’s other premises In Kelly v. Montague (29 Ir. L. R. 429) it was assumed by the Court that a licence to sell intoxicating liquors was to be regarded as a sort of goodwill, and it was held that there was no property in the licence or the goodwill apart from the premises to which it was attached. The effect of this decision, and others of a later date, is that the premises and the licence form a composite whole. In Murphy v. Crean, [1915] 1 I. R. 111, Lord O’Brien puts the matter in this way:—“There is no doubt whatsoever that there can be no property in a spirit licence in Ireland apart from the premises in which the business is carried on by the licensed person. It is not that in a sense it does not and may not represent very valuable property, but it cannot be severed from the house and have the character of separate property.”Section 11 of the new Act, however, has changed all that, and for the first time *190 the right of severance is conferred upon the “holder” of the licence. The contention that is now advanced by the plaintiffs’ counsel is in effect this, that the purpose of section 11 was to confer upon the licensing authorities a power that, as was decided in Murphy v. Crean, [1915] 1 I. R. 111, they did not formerly possess, but that the holder of a licence cannot take advantage of that new jurisdiction unless he is in a position to do so by virtue of some degree of ownership in the licence that he “holds,” or by virtue of some arrangement with the owner. It seems to me that there must be some limitation placed upon the meaning of the word “holder” in the section. It could scarcely extend to a person who was the holder of the licence and who had no interest whatever in the premises, nor to a person who was the holder merely as trustee for another. The judgment in Dawson v. Paver (5 Hare, 415) sets out very clearly the rule of construction upon which this general question ought to be decided.
The plaintiffs, however, contend that they are entitled to succeed for a reason that is much less general in its character. It is argued that the matter is concluded by the actual contract between the parties and that the covenants in the lease by which the defendant has bound himself precludes him from taking advantage of this statutory right. On this narrow ground, I think that the plaintiffs are entitled to succeed, and it becomes unnecessary, therefore, to decide the general question.
The lease, which was made on October 1, 1909, for a term of twenty-one years, is very badly drawn and does not contain many of the clauses which are usually inserted for the protection of an owner s interest. It purports to demise (inter alia) the premises “now known as the licensed houses Nos. 218 and 219 Great Britain Street,” and it contains a number of covenants on the part of the lessee, including the following:—“And will not do, or suffer to be done, on the premises any act whereby the retail licence attached to Nos. 218 and 219 Great Britam Street as an inn, tavern or publichouse may be forfeited or the renewal thereof withheld” It is argued on behalf of the defendant that this is merely the ordinary covenant that licensing offences will not be committed on the premises, and I am pressed to say that such a covenant cannot be regarded as forbidding the exercise by the licence-holder of a new statutory privilege that did not exist when the lease was made. There is much to be said in favour of this view—in strict law, at any rate, if not in fair play; but I think that the plaintiffs are entitled to rely on that covenant as an admission by the defendant that the licence was in existence previously to the lease and that the plaintiffs have an interest in its preservation.
It is, however, the next covenant that in my opinion preserves the plaintiffs’ rights. The original lessee covenants that she “will at her own expense insure against forfeiture the said licence in the joint names of the lessors and lessee in some insurance company to be approved of by the agent of the lessors in the sum of £500, and for that purpose pay all sums of money payable in respect of such insurance and will from time to time, when required, produce to the lessors, their heirs or assigns, the policy of such insurance and the receipt for every such premium and sum of money.” There is also a covenant for the insurance by the lessee of the premises themselves from loss or damage by fire. The covenant for the insurance of the licence is obviously taken from a book of English precedents, and is a form of covenant that came into common use after the passing of the Licensing Act, 1904. It is plain that the word “insure,” taken with the context, means “insure and keep insured during the currency of the lease” (see Bray v. Fogarty, I. R. 4 Eq. 544), and the property to be insured is “the said licence,” which in the previous covenant is spoken of as “the retail licence attached to Nos. 218 and 219 Great Britain Street” If, therefore, the defendant is bound, in the interest both of the lessors and the lessee, to insure and keep insured the licence against forfeiture during the whole course of the term, can he be allowed, by his own voluntary act and for his own profit, to detach the licence from the premises and attach it to other premises in which the plaintiffs have no interest? I do not think he can. The covenant is a continuing one, and the defendant cannot get rid of his liability thereunder by getting rid of the subjectmatter of the covenant.
The case of Rae v. Yates, Castle Brewery Co. and Another (67 J. P. Rep. 427), badly reported as it is, is some authority for the conclusion at which I have arrived. The plaintiff was the owner of a beerhouse which had attached to it a licence granted previously to May 1, 1869. The renewal of such a licence could not be refused by the Justices except upon one or other of the four specific grounds set out in the Wine and Beerhouse Act, 1869. It appeared that the magistrates had intimated that a reduction in the number of licences was desirable, and the defendant company (the lessees), in pursuance of some arrangement arrived at between themselves *191 and other members of the trade, had agreed to surrender the licence of the beerhouse in question. The plaintiff had not authorised this arrangement, but he had subsequently offered to accept compensation. He brought an action to restrain the defendants from surrendering the licence. The following is the summary of the judgment set out in the report:—“Hall, V.-C., pointed out that the plaintiff had offered to accept compensation, and it was too late for him to go back on that offer and ask for an injunction. At the same time, the defendants could not deprive him of valuable property without paying compensation, and therefore an inquiry would be ordered as to the amount to be paid to him. The defendants ought not to have interfered with his property until some definite arrangement had been arrived at, and therefore they must pay the costs of the action” In the case of Dartford Brewery Co. v. Till (95 L. T. R. 636), an injunction was granted at the instance of the owners of a publichouse against the defendant (the lessee), who had issued a notice that he intended to limit the class of trade that he was carrying on in the publichouse. It was considered by the Court that such a limitation would injure the plaintiffs’ interest in the licensed premises and was contrary to the covenants entered into by the lessee, and an injunction was ordered.
An injunction, therefore must issue in the terms of the plenary summons, and by arrangement this motion will be treated as the trial of the action. The defendant must pay the plaintiffs’ costs.
Albion Properties Ltd -v- Moonblast Ltd & Anor
[2011] IEHC 107
Hogan J.
1. Where a commercial tenant defaults in a material respect on the payment of rent to a landlord, does this Court have a jurisdiction to grant a mandatory interlocutory injunction requiring the tenant to deliver up possession of the premises in question to the landlord? While it might seem surprising that the existence of such a jurisdiction is in dispute, this is the net question which arises following an application to this Court by the plaintiff landlord (“Albion Properties”) for such an injunction.
2. In the original judgment delivered by me on 12th November 2010 I gave summary judgment in favour of Albion Properties as against the first defendant (“Moonblast”) in the sum of €75,080 in respect of unpaid rent. That application had arisen in the following circumstances, the details of which may now be briefly re-stated.
3. In these proceedings the plaintiff had originally claimed summary judgment in the sum of €191,566. Moonblast is a company which was engaged in the running of a newsagent’s outlet at Unit 12, Phibsboro Shopping Centre, Dublin 7. The second named defendant is a director of Moonblast and he also executed a guarantee which is the subject matter of the present proceedings. Moonblast ceased trading at the Unit 12 premises on December 24, 2010.
4. The parties originally entered into a lease of the premises in 12th November, 2001. The lease was for a period of four years and nine months and it was expressed to run from 6th November, 2001, to 6th August, 2001. It provided for a rent of the unit for the sum of IR£50,000.00, albeit that this was abated to IR£45,000.00 for the first year of the lease. The background to the present dispute has it origins at the time the lease was due to expire in August, 2006. At the time, the tenant was anxious to stay in the premises. The plaintiff landlord, on other hand, was determined to ensure that the tenant would not acquire any statutory rights to a new tenancy and it was, therefore, not anxious to continue the lease.
5. A curious situation then ensued whereby the first named defendant (“Moonblast”) paid the monthly rent of €5,750 via standing order to the plaintiff’s agents, Chatham Services Ltd. (“Chatham”). However, these sums were repaid at the behest of Albion Properties because it did not want Moonblast to acquire any statutory rights in respect of the retail unit in question. It is not in dispute but that at the end of January, 2007 Chatham sent Moonblast a notice to quit which was previously sent on the 12th August, 2006. The letter was addressed to Mr. Killalea and stated:
“Please find enclosed a copy of ‘notice to quit’ which was previously issued to yourself. I have also enclosed cheques totalling of €28,750.00, the amount of five months direct debits of €5,750.00 which were received into our account in error. Please arrange to have your direct debit cancelled with immediate effect”.
6. At the first hearing in early November 2010, it appeared to be common case that the cheques which were then sent on by Chatham were not cashed by either Moonblast or Mr. Killalea. If this was correct, then the effect of this was that Albion Properties had actually received rent in the sum of €28,750.00. It equally followed that the maximum sum which Albion Properties could recover by way of unpaid rent is thus reduced to the sum of €162,816.00. In effect, therefore, on this analysis, the rent was paid for September, October, November, December, 2006 and for January, 2007. I should here record that in advance of the latest hearing before me on 7th March 2011, Albion Properties’ financial controller, Mr. O’Sullivan, swore a further affidavit disputing whether Moonblast is, in fact, entitled to claim credit in respect of €28,750 for the period now in dispute. For the purposes of the present application, at least, it is unnecessary to examine this question further and it must remain an open question as to whether I have any jurisdiction to re-open this issue, at least so far as the summary judgment issue is concerned.
7. Returning to the narrative, Moonblast remained in occupation of the premises. It appears that it continued to pay the monthly rent by standing order until in or about August 2008, but that on each occasion a corresponding cheque for the sum in question was issued by Chatham on behalf of Albion Properties and, on this occasion, the cheques were actually cashed by Moonblast.
8. By August, 2008, the economic storm clouds were gathering and Albion Properties had second thoughts with regard to Moonblast. It decided that it did want Moonblast as a tenant after all. While Moonblast did pay the rent by standing order up until August 2008, this was cancelled out by the fact that Chatham sent Moonblast a corresponding amount on Albion Properties’ behalf which cheques, as we have just seen, were cashed by Moonblast on this occasion. The effect of this was that Moonblast has in fact paid no rent in respect of the premises in question since early 2007. Clause 4(b) of the lease provides that:-
“If the tenancy hereby created should continue beyond the term herein specified it shall, in the absence of a new agreement, be deemed to be a tenancy determinable by one calendar month’s notice in writing to be given by either party to the other and expiring on any gale day.”
9. Having regard to the provisions of Clause 4(b), it is difficult, at least at first blush, to see how the tenancy did not continue on the same terms and conditions as heretofore obtained before the lease expired in August 2006. While it is true that Clause 4(b) does not in precise terms, quite provide for this, this, in my view, is nonetheless the clear sense of that provision.
10. It is, of course, quite correct to say that Albion Properties had served a notice to quit on Moonblast. But since they took no steps in pursuant to this notice to quit, the position remains as if it had never been served. On the face of it, therefore, the tenancy remains in place by virtue of the continuation clause in Clause 4(b), the expiration of the original lease notwithstanding.
11. This latter point is, however, vigorously denied by Moonblast. They contend that the lease was, in fact, altered by virtue of an oral agreement dating from 15th March, 2007. But, in his first affidavit of 1st December, 2007, Mr. Killalea says at para. 6:-
“At the said meeting of [15th March, 2007] a verbal binding agreement was reached between your deponent and the plaintiff to the effect that the original lease would be disregarded for the purpose of creating a new lease, but that the first named defendant [would] remain in occupation of the said retail unit as a tenant of the plaintiff herein. The position pertains as of the date of swearing hereof. The terms of the new written lease were to provide for a significant increase in the rent of retail unit 12 so as to reflect the current market value rent applicable at that period, and it was furthermore agreed that the premium rent was no longer to apply. I received a further representation at this meeting to be that redevelopment works in the shopping centre were imminent and would be completed by mid 2010.”
12. While the existence of this agreement is vigorously denied by affidavits filed on behalf of Albion Properties, Mr. Killalea contends that the net rent payable was some 67% over the going market rent. The defendants thus contend that the rent payable in respect of unit 12 was IR£45,000.00 as compared with IR£27,000.00 which was the rent payable by unit 11 next door. They thus contend that Moonblast was paying some 67% over the going market rate at the time.
13. Thus, on behalf of the defendants, Mr. Ó Scanaill S.C. submitted that while Moonblast remained on as tenant of the premises, the terms of that tenancy were not agreed and were not reduced to writing. He further contended that Moonblast is not governed by the lease of 2001, but rather by the verbal agreement of March 2007.
14. I took the view that it would be inappropriate to determine these contentions save by means of a plenary hearing. It was, however, significant that Mr. Ó Scanaill S.C. did not deny but that the plaintiff was entitled to payment in respect of the rent due and that rent is due since January, 2007. While Mr. Ó Scanaill S.C. maintained that no new terms are agreed, as I read para. 3 of the second affidavit of Mr. Killalea, the height of the defendants’ case is that the rent which Moonblast was paying in respect of unit 12 is 67% over the going market rate at the time. While this particular contention was vigorously denied by the plaintiff, this averment nonetheless shows the furthest to which Moonblast have advanced – or could advance – their case. The affidavit thus acknowledges the lowest rent which would be payable would be at least IR£27,000 per annum, which equates to some €34,283. Putting this another way, this is the lowest possible annual rent which Moonblast could realistically have hoped to pay even if all of its contentions regarding the re-negotiation of the rent in March, 2007 were to be accepted at a full hearing.
15. While it should be appreciated that this was a rent which was never actually agreed, I took the view that it would be unfair to Albion Properties if Moonblast could have avoided summary judgment at this stage in circumstances where substantial rent is clearly due to Albion Properties, simply because it contended that the actual amount of the rent was never finally agreed in the wake of the March 2007 negotiations. It is clear that rent is outstanding for some two years and six months to the date of the commencement of the proceedings, i.e., from February, 2007 to July, 2009 inclusive. By my reckoning, even if the lowest realistic annual rent of €34,283 was taken as the benchmark, that figure for unpaid rent comes to €75,708.
16. It was for these reasons that I directed a summary judgment in favour of the plaintiff in the sum of €75,708. I further directed that the balance of the plaintiff’s claim, including the claim for interest on that sum be adjourned to plenary hearing. By order of 23rd November 2010, I directed that this sum was to be discharged in three tranches, commencing on 15th January 2011. The uncontradicted affidavit evidence shows that, to date, Moonblast have not adhered to this payment schedule and there does not appear to be any prospect that it will do so.
17. There is, in addition, the question of the guarantee given by the second defendant. While I appreciate that the guarantee is joint and several, I took the view that it was not appropriate at that juncture to give summary judgment as against Mr. Killilea, since I considered that it would only be fair to give Moonblast a reasonable opportunity to discharge the judgment in its own right before there was any question of recourse to the guarantor. At the conclusion of the first hearing, I therefore adjourned the application as against the second defendant and gave the plaintiff liberty to apply for summary judgment in the event of default by Moonblast in respect of the sum €75,708.
18. In view of the acknowledged default by Moonblast, Albion Properties then issued a further motion seeking judgment as against Mr. Killilea in his capacity as guarantor in the sum of €75,708. Albion Properties also sought a mandatory interlocutory injunction order permitting it to re-enter Unit 12 and, if necessary, to re-let that unit to a fresh tenant. At the second hearing, I indicated that I was in a position to accommodate the parties by offering an early trial of the main action which is presently scheduled for 24th May 2011. I accordingly adjourned the application for summary judgment in respect of the guarantee to that hearing.
Whether the Court has jurisdiction to grant an interlocutory injunction
19. There remains, therefore, the question of the jurisdiction of this Court to grant an interlocutory injunction requiring Moonblast to vacate the premises. Mr. Ó Scanaill SC urges that where a plaintiff has elected to go by way of summary summons, he cannot seek an injunction. He further submitted that it was inappropriate for this Court to grant an injunction in circumstances where I had adjourned the balance of the claim to plenary hearing, since – or so the argument ran – the granting of an injunction in such circumstances would be effectively to pre-determine the outcome of that claim. In effect, therefore, it was urged that I could only look to the balance of the claim for this purpose and that I could not have any regard to the summary judgment.
20. It seems to me that such an approach would be wholly artificial. The plain fact of the matter is that Moonblast has been in occupation of the premises without the payment of rent since 2007. Even though I directed summary judgment in the sum of €75,708, I also allowed a relatively generous payment schedule for the discharge of this sum. Moonblast has defaulted on the first of these payments of €25,000 and there is absolutely no suggestion that it would be in a position to comply with the order regarding the payment of the two further tranches of some €25,000.
21. It is all too obvious that Moonblast has not discharged highly material obligations under the lease and, furthermore, that it is unlikely to be able to do so, not least given that it ceased trading from the unit in December 2010.
22. It is true that the courts are very reluctant to grant a mandatory interlocutory injunction, save in the clearest of cases: see, e.g., the judgment of Keane C.J. in Attorney General v. Lee [2000] IESC 80, [2000] 4 IR 68. Because the effect of such relief is generally to disturb the status quo ante, the granting of such an order is properly regarded as exceptional. It would normally not be granted unless it was more or less inevitable that the plaintiff would succeed at the trial of the action or, at least, where a strong prima facie case had been made out: see, e.g., ICC Bank plc v. Verling [1995] 1 I.L.R.M. 123 at 130, per Lynch J.. In addition, the balance of convenience would have to favour the grant of such exceptional relief. In this respect, the test for relief is higher and more exacting than that which obtains under the conventional Campus Oil criteria (Campus Oil Ltd. v. Minister for Industry and Commerce (No.2) [1983] I.R. 88).
23. In my view, however, this is such an exceptional case for reasons I will shortly set out. It is true, of course, that a plaintiff who elects to proceed by way of summary summons must normally be confined to the limits of that procedure. It is also true that Ord. 2 (dealing with procedure by way of summary summons) does not normally envisage the grant of an injunction. Nevertheless, Ord. 2, r. 1(2) provides that the summary summons procedure may be adopted in the following classes of claim-
“In actions where a landlord seeks to recover possession of land, with or without a claim for rent or mense profits –
….. (b) for non-payment of rent.”
24. This Court enjoys a general jurisdiction to grant an injunction whenever it is just and convenient to do so: see s. 27(7) of the Supreme Court of Judicature (Ireland) Act 1877, as applied to this Court by s. 48 of the Courts (Supplemental Provisions) Act 1961. In this regard, I entirely agree with the submission of counsel for Albion Properties, Mr. Gibbons, that it would be pointless to require his client to issue separate plenary proceedings before an interlocutory injunction of this kind could either be sought or granted. A requirement of this kind would simply represent legal formalism at its worst. Any supposed jurisdictional bar which prevented the court from granting injunctive relief in an appropriate case to require a defaulting tenant to yield up possession of a commercial tenancy would be at odds with duty imposed on the courts by Article 40.3.2 of the Constitution to ensure that the property rights of the plaintiff landlord are appropriately vindicated in the case of injustice done. The courts are under a clear constitutional duty to ensure that the remedies available to protect and vindicate these rights are real and effective: see, e.g., the comments of Kingsmill Moore J. in The State (Vozza) v. O’Floinn [1957] I.R. 227 at 250; those of Murray C.J. in Meadows v. Minister for Justice, Equality and Law Reform [2010] IESC 3 and the authorities set out in my own judgment in S v. Minister for Justice, Equality and Law Reform [2011] IEHC 31. For good measure, a similar obligation is imposed on the State by Article 13 of the European Convention of Human Rights, albeit that it must be recalled that the courts are not an “organ of the State” for the purposes of s. 3(1) of the European Convention of Human Rights Act 2003, with the result that the courts are not, apparently, as such under any direct statutory obligation to perform their functions in a Convention compatible manner. The question of whether the courts are under any duty independently of the constitutional considerations which I have just mentioned to re-fashion or re-shape existing remedies in order to secure compliance with Article 13 ECHR is a mater which must await an appropriate case for resolution.
25. In my view, it would be entirely just and convenient to grant a mandatory interlocutory injunction at this juncture for the following reasons.
26. First, it has already been judicially determined that the Moonblast owes Albion Properties a substantial sum in rent. In this respect, Albion Properties have already gone much further than that required of a plaintiff in the first limb of the Campus Oil test, namely, establishing that there is a fair question to be tried.
27. Second, Moonblast has defaulted on the payment schedule directed by the court and there is no reason to think that it will able to discharge these debts.
28. Third, Moonblast has indisputably defaulted in a material and fundamental on its basic obligations qua tenant by not paying rent for a long period of time.
29. Fourth, it is obvious that considerations based on the balance of convenience which might obtain in the case of a viable business do not apply here, not least where Moonblast ceased last December to trade at the unit. In this respect, the present case is very different from the situation which obtained in Barnaton Investments Ltd. v. O’Leary [2004] IEHC 155. In that case Peart J. refused to grant an interlocutory injunction in circumstances where there was a genuine dispute as to whether a lease had been lawfully assigned to the defendant. Furthermore, the balance of convenience favoured permitting the defendant to continue to trade as a restaurant while the plaintiff could be adequately compensated in damages. It is plain that Moonblast would simply not be in a position to compensate Albion Properties in the event that an injunction were refused. It may also be noted that in ICC v. Verling the inability of the defendant to pay any damages was also a factor which was held by Lynch J. to warrant the granting of interlocutory relief requiring the tenant to yield up possession to the landlord: [1995] 1 I.L.R.M. 123 at 129. It seems all too obvious that Moonblast will not be able to pay the rent which would fall due on the property in the event that the injunction is refused.
30. Fifth, the existence of a closed-up premises within the precincts of the shopping centre doubtless creates a negative impression on the general public and acts as a depressing effect on business generally within the centre. This clearly prejudices the interests of the landlord.
31. In such circumstances, it is all but inevitable that Albion Properties will succeed at the trial of the action and recover possession of the unit. It would be intolerable if a landlord could not immediately recover possession of the property in circumstances of repeated and continuous material breaches of the tenant’s obligations, not least where there is every probability that damages would be ultimately prove to be inadequate remedy. While acknowledging that the grant of a mandatory interlocutory injunction is confined to exceptional cases for the reasons indicated by the Supreme Court in Lee, this is, to my mind, for the reasons just stated, one such case.
Conclusions
32. Since I consider that in these circumstances the claim of Albion Properties for possession of the property is virtually unanswerable and since the balance of convenience is very much in its favour, I propose to grant a mandatory interlocutory injunction with immediate effect requiring Moonblast to yield up possession of Unit 12. This, however, is subject to two conditions. First, I record here that Albion Properties have, through counsel, tendered the usual undertaking as to damages. Second, I will require it to withdraw the existing Circuit Court proceedings seeking possession of Unit 12 (which proceedings, I understand, were issued but not served on the defendants) and not to seek the costs of those proceedings.
33. Subject to this, I propose to discuss the precise form of order with counsel.
Dublin Port Company v Automation Transport Ltd
[2019] IEHC 499
McDonald J.
1. In these proceedings, the plaintiff seeks possession of business premises on Promenade Road, Dublin 1 occupied by the defendant pursuant to a lease dated 11th February, 2013. The proceedings seeking possession of the Promenade Road premises were commenced by plenary summons (record no. 2018 No. 2349p) issued in March 2018 in which the plaintiff also seeks damages for alleged breach of certain repairing covenants (described in more detail below).
2. In addition to the proceedings commenced in March 2018, there is also a second set of proceedings before the court between the same parties. This second set of proceedings (record no. 2018 No. 9972 P) were commenced in November 2018. In these proceedings, the plaintiff alleged that, following an inspection of the Promenade Road premises in November 2018, it was discovered that the defendant had been engaged, contrary to the terms of the lease, in the processing or production of plastics in the premises. A number of different provisions of the lease were relied on in support of the claim made in these proceedings. While a series of allegations were made, I believe that it is fair to say that the principal complaint made in the proceedings related to the alleged processing of plastics which the plaintiff maintained was contrary to a covenant in the lease that the defendant should not use the premises for anything other than the permitted user – namely the operation of a road haulage business. Reliance was also placed on a covenant in the lease that the defendant would not contravene any applicable laws, regulations or requirements relating to environmental or pollution control. Immediately after the commencement of this second set of proceedings, the plaintiff brought a notice of motion seeking an interlocutory injunction against the defendant restraining the alleged unlawful use of the premises. Ultimately, that application was not pursued to a hearing. Instead, it was agreed that the proceedings would be heard alongside the possession proceedings described in para. 1 above. On the basis of the evidence heard by me during the course of the trial, it appears that the proceedings launched in November 2018 were based on a mistaken understanding of the activities carried on by the defendant on the Promenade Road premises. For convenience, I will refer to the proceedings commenced in November 2018 as ” the injunction proceedings “. I will refer to the proceedings described in para. 1 as ” the possession proceedings “.
Background
3. The plaintiff is a significant landlord in Dublin Port. Against a background where there are limitations on the ability of the plaintiff to reclaim land from the sea, the plaintiff has sought to prioritise the use of lands at the port for what it considers to be core port uses. According to the plaintiff, core users include the roll-on roll-off and load-on load-off operators. The plaintiff considers hauliers, warehouse operators and storage facilities to be non-core users and it has sought to encourage those users to move to a new site of approximately 40 hectares in the vicinity of Dublin Airport which it has named the ” Dublin Inland Port”.
4. The defendant has operated its road haulage business from various premises within the port for a significant number of years. It currently employs nineteen people, eighteen of whom are full time employees and one is employed part time. The defendant has twelve truck tractor units and 40 trailers all of which are purpose built for bulk loads. There are also two fork lifts and one lift truck. The principal activity of the defendant consists of transporting intermodal bulk material from the port to customers. The containers are collected dockside at the port and thereafter transported to the haulage yard currently on the Promenade Road premises. Deliveries are made as and when customers require the material. Mr. Simon Crosbie (who gave evidence on behalf of the defendant) explained that the principal customers of the plaintiff are those involved in continuous process industry and he emphasised that the defendant had to be in a position to supply material as and when they were required for use in the industrial process in question.
5. Prior to the execution of the lease of the Promenade Road premises, the defendant had been in occupation of part of a site on Tolka Quay Road which is also within the port. The Tolka Quay Road premises (along with premises on the same road known as the Tolka Quay Road extension premises and also a premises on Bond Road known as the State warehouse) were the subject of negotiations between the plaintiff and Mr. Henry A. Crosbie (” Mr. Crosbie Snr .”) (the father of Mr. Simon Crosbie) and two companies controlled by him namely Henry A. Crosbie (Containers) Ltd and Storecon Ltd. The plaintiff wished to acquire these premises which were held under leases by Mr. Crosbie Snr. and his company. At this time, Mr. Crosbie Snr. was, as part of his arrangements with the National Asset Management Agency (” NAMA “), involved in the disposal of his interests in a number of different properties.
6. Following negotiations involving Mr. Crosbie Snr., NAMA and the plaintiff, an agreement was entered into on 17th September, 2012 under which Mr. Crosbie Snr. and the two companies named above agreed to sell to the plaintiff the three premises described in para. 5 above for €5 million. Although Mr. Crosbie Snr. was disposing of his interest in the properties, it appears that he was concerned to ensure that the business of the defendant company run by his son, Mr. Simon Crosbie, would continue to have the ability to service its customers from premises within the port. There was some dispute at the hearing as to whether the concern for the business of the defendant was prompted by Mr. Crosbie Snr. or by NAMA. According to Mr. Simon Crosbie, it was prompted by a concern on the part of NAMA to maintain employment. However, it appears to be clear from the contemporaneous correspondence that representations were in fact made to NAMA by an associate of Mr. Crosbie Snr. (namely Mr. Auke Van Der Werff) to allow the business of the defendant to continue. In those circumstances, it was agreed in the contract for sale of the three premises to the plaintiff that arrangements would be made to allow the defendant to remain on the Tolka Quay Road premises then occupied by it under licence until new premises – namely the Promenade Road premises – would become available. The agreement envisaged that the defendant would be given a three month licence to continue to occupy the Tolka Quay Road premises while the Promenade Road premises were refurbished at a cost of €100,000 (which was to be paid by the plaintiff). The plaintiff also agreed that, upon the expiration of the three month licence and the vacation of the Tolka Quay Road premises by the defendant, it would grant to the defendant a lease of a new site in a form which had been negotiated and agreed at the time the contract was entered into. Clause 4.35 of the draft lease contained a covenant on the part of the defendant in the following terms:-
“The Tenant shall execute a Deed of Renunciation waiving any renewal rights past, present or future, previously acquired or which may be acquired in accordance with s. 47 of the Civil Law (Miscellaneous Provisions) Act, 2008”.
7. I should explain that s. 47 of the Civil Law (Miscellaneous Provisions) Act, 2008 (“the 2008 Act”) contains an important amendment to s. 17 of the Landlord & Tenant (Amendment) Act, 1980. In particular, it makes a renunciation of rights to a new tenancy by a business tenant lawful where the renunciation is executed in writing and where the tenant has received independent legal advice in relation to the renunciation. Thus, if a valid renunciation existed in this case, it would defeat the right claimed by the defendant to a new tenancy in the Promenade Road premises even if the defendant, as of the date of expiry of the break notice, had been in continuous occupation of those premises for a period of five years.
8. According to the evidence of Gerard Barry (the retired Estate Facility Manager of the plaintiff), the Promenade Road premises had been re-acquired by the plaintiff from Heatons, the well-known building providers. While Heatons were in occupation, the premises had been used for the storage and distribution of timber products. Mr. Barry’s evidence was that, in 2012, the premises were relatively old but in a ” reasonable condition” and suitable (with some adaptation) for the defendant’s purposes. In broad terms, the premises consist of an open yard surfaced in concrete (without reinforcement) with a number of corrugated iron sheds of fairly rudimentary construction. There is also a two storey office building on site.
9. Ultimately, the lease in respect of the Promenade Road premises was executed on 11th February, 2013. It will be necessary, in due course, to consider the terms of the lease in greater detail. At this point, it is sufficient to note that, in addition to the covenant in relation to renunciation (quoted in para. 6 above) the lease also contained a break clause. In particular, clause 6.13 provided that either party might terminate the lease on the expiration of each of the fifth, tenth and fifteenth years of the twenty year term of the lease. During the course of the hearing, it was suggested on behalf of the defendant that an earlier draft of the lease had restricted the exercise of the break clause to the tenth year of the lease. However, I am not convinced that this is a relevant or necessary consideration having regard to the well-established principle that, in interpreting a written contract, the prior negotiations of the parties are inadmissible as an aid to its construction.
10. Under clause 6.13(b), a break notice seeking to avail of the break clause was required to be served not less than six months and not earlier than twelve months prior to the relevant termination date.
11. On 13th March, 2017, Mr. Barry hand delivered a copy of a break notice to the defendant invoking the provisions of clause 6.13 of the lease and requiring the defendant to vacate the premises no later than 10th February, 2018. On 22nd March, 2017, Mr. Simon Crosbie, on behalf of the defendant, acknowledged receipt of the letter stating:-
“We are still processing its content and will be in touch in due course”.
12. Many months later, on 8th February, 2018, a long and detailed letter was written by M.E. Hanahoe solicitors on behalf of the defendant to the plaintiff in which it was contended that the provisions of clause 6.13 were amended on or about the date of the contract for sale and that at that point the defendant was not in a position to negotiate but was forced to accept the amended lease (providing for a five year rather than a ten year break clause). The letter suggested that, in effect, a ” gun ” had been put to the head of the defendant. The letter also made the case that the break notice was not effective to terminate the defendant’s interest in the premises. That case was maintained by the defendant up to December, 2018.
13. In the meantime, in March 2018 the possession proceedings were commenced. As noted above, those proceedings also included a claim for damages for breach of a repairing covenant in the lease. In turn, on 4th May, 2018, the defendant served a notice of intention to claim relief under the Landlord and Tenant (Amendment) Act, 1980. A statement of claim was delivered in July 2018 in which the exercise of the break option was relied upon (insofar as the claim for possession was concerned) and in which an allegation was made that there was a breach by the defendant of the covenant to keep the premises in repair. According to para. 11 of the statement of claim delivered in June 2018, the plaintiff was not in a position to provide detailed particulars of disrepair and lack of decoration but nonetheless it was alleged that there had been a breach of the covenant to repair. It emerged in the course of the evidence of Mr. Cormac Kennedy, the Head of Property of the plaintiff, that, notwithstanding the right of inspection given to the plaintiff under clause 4.9(a) of the lease, no inspection of the premises had taken place prior to the issue of the plenary summons or the delivery of the statement of claim. Under cross-examination, Mr. Kennedy admitted that the plaintiff had no ” definitive knowledge ” of any breaches of covenant at the time the possession proceedings were commenced. Furthermore, no letter before action was written by the plaintiff alleging any breach of the repairing covenant and calling upon the defendant to remedy any alleged breach. I have to say that I find this approach to be unimpressive. While the claim for possession was not grounded on any breach of covenant but was instead based on the break clause in the lease, it is both surprising and very unsatisfactory that any party (let alone a public body such as the plaintiff) would make an allegation of breach of a covenant to repair without any prior enquiry or inspection having been made and without any evidence of a breach of the covenant relied upon.
14. An inspection of the premises for the purposes of carrying out a schedule of dilapidations subsequently took place on 9th November, 2018 attended by Mr. Stephen Scott of Scott Murphy Chartered Building Surveyors on behalf of the plaintiff. This led to the commencement of the injunction proceedings described in para. 2 above.
15. As noted above, the injunction proceedings were commenced on the basis of a mistaken understanding by the plaintiff that the defendant was involved in some form of processing or production of plastics on the Promenade Road premises. That case was made not only in the statement of claim delivered in the injunction proceedings but also in the written legal submissions delivered on behalf of the plaintiff and in the précis of the proposed evidence of Mr. Scott dated 31st January, 2019 (less than two months prior to the commencement of the trial). However, when Mr. Scott came to give his evidence on day three of the hearing, he confirmed that he was not making the case that any manufacturing of plastic was undertaken on the premises. In the course of his direct examination on that day (at p. 75 of the transcript) Mr. Scott confirmed that he was willing to accept that there was no process taking place by which raw plastic was heated and turned into liquid form. Under cross-examination on the same day (at p. 100 of the transcript) Mr. Scott further confirmed that although his précis of evidence had suggested that the defendant was carrying on a manufacturing process in the Promenade Road premises, he ” on reflection asked that [it] be removed because there was no manufacturing as such taking place on the site “.
16. Again, I have to observe that it is surprising and unsatisfactory that a public body such as the plaintiff would commence proceedings alleging very serious breaches of covenant without properly interrogating the intended claim so as to ensure that it was fully understood and that it had a proper evidential basis. It should be recalled in this context that, not only did the plaintiff commence proceedings to this effect, but it also invoked the jurisdiction of the court to grant an interlocutory injunction. While ultimately that application was not pursued to a hearing, a case was made on affidavit that the breaches of covenant were so serious as to justify the grant of an interlocutory injunction.
17. There is one further surprising feature of the plaintiff’s conduct in these proceedings which should be noted. Following delivery of a very full defence and counterclaim on behalf of the defendant in the possession proceedings in which ( inter alia ) the defendants sought a declaration that the defendant is entitled to a new tenancy pursuant to Part II of the Landlord and Tenant (Amendment) Act, 1980 (“the 1980 Act”), the plaintiff, in December 2018, delivered an amended statement of claim in which clause 4.35 of the lease (quoted in para. 6 above) was invoked for the first time. Under that clause, the defendant covenanted to sign a Deed of Renunciation of any renewal rights that it might acquire under s. 47 of the 2008 Act.
18. Paragraph 10 of the amended statement of claim contained the following plea:-
“Despite request, no Deed of Renunciation was ever executed by the Defendant pursuant to Clause 4.35 of the Lease. The Defendant will not execute a Deed of Renunciation unless ordered by this Honourable Court to do so”.
19. Paragraph 12 of the amended statement of claim also contended that, having regard to clause 4.35 of the lease, the defendant is estopped from seeking a new tenancy of the premises. In the prayer, an order was sought requiring the defendant to execute a Deed of Renunciation of its entitlement to a new tenancy. An order for specific performance of the obligation contained in clause 4.35 was also sought.
20. When Mr. Kennedy came to provide his witness statement in the possession proceedings in January 2019, he referred to a letter dated 7th December, 2018 sent by the plaintiff’s solicitors to the solicitors acting for the defendant calling upon the defendant to execute a Deed of Renunciation in accordance with clause 4.35. In his witness statement, Mr. Kennedy stated that the defendant had previously executed a Deed of Renunciation in November 2012 but that, following service of the break notice, the plaintiff became aware that this deed ” may not relate to occupation of the premises by the defendant pursuant to the lease “. Furthermore, in a witness statement provided by Martin Colman (the solicitor in Arthur Cox who acted on behalf of the defendant in relation to the transactions of 2012 and 2013) he stated:-
“It was contemplated that the defendant would execute a Deed of Renunciation in favour of the Plaintiff for the Lease and I understand that the Defendant is contractually required to do so under clause 4.35…”.
21. Thus, a positive case was made by the plaintiff at that time that the defendant had failed, notwithstanding a belated demand in December 2018, to execute a Deed of Renunciation of its rights under the 2008 Act and that it was thereby in breach of clause 4.35 of the lease. However, on Friday 8th March, 2019 (just two working days prior to the commencement of the trial) the solicitors for the plaintiff wrote by email to the solicitors for the defendant informing them that, at the time the amended statement of claim was filed, it was the plaintiff’s understanding that the defendant had not executed a Deed of Renunciation. The email explained that the plaintiff was aware of the existence of a deed dated 12th November, 2012 executed by the Defendant but understood that it related to the licence of the Tolka Quay Road premises (formerly occupied by the defendant) rather than the lease of the Promenade Road premises. The email then explained that, on the previous day (namely Thursday 7th March, 2019), an inspection of the Arthur Cox file had taken place and, from a review of the documents on that file, it now appeared that the Deed of Renunciation dated 12th November, 2012 was in fact referable to the lease the subject matter of these proceedings. A copy of the signed Deed of Renunciation was attached to that email.
22. Subsequently, on 12th March, 2019 (namely on Day 1 of the trial) a re-amended statement of claim was delivered in which, directly contrary to the terms of the amended statement of claim described in para. 18 above, a case was now made that on 12th November, 2012 the defendant had executed a Deed of Renunciation whereby it renounced any entitlement it might have to any rights under Part II of the 1980 Act to a new tenancy in the Promenade Road premises. It was also alleged that, having regard to the provisions of s. 17 (1) (a) (iiia) of the 1980 Act (as inserted by s. 47 of the 2008 Act), the defendant is estopped or precluded from seeking a new tenancy in the premises. A declaration to that effect was also sought in the prayer to the re-amended statement of claim.
23. On the evening of Day 2 of the trial, a new witness statement of Mr. Colman (the solicitor who had acted on behalf of the plaintiff in the relevant transactions) was also provided by the plaintiff. In that witness statement, Mr. Colman referred to the Deed of Renunciation of 12th November, 2012 and said that, while there were ” certain errors ” in the deed, he was ” satisfied beyond doubt that the Deed …was intended to and does relate to the premises and the Lease”.
24. I regret to say that the manner in which the plaintiff has presented its case is unimpressive. I am left with the impression that no proper investigation was undertaken by the plaintiff of its case prior to the launch of these proceedings or even before delivery of its witness statements. This is particularly difficult to understand given that the plaintiff has invoked the jurisdiction of the Commercial Court. Before invoking the jurisdiction of the Commercial Court, one would expect that a party had thoroughly investigated the case which it proposed to pursue so that it would be in a position to deliver its pleadings and witness statements in an accurate and comprehensive form and in a timely way. In this context, it is noteworthy that when Mr. Gerard Barry (the retired Estates Manager of the plaintiff) came to give his evidence on Day 3 of the hearing, he revealed, under cross-examination, that, at the time of service of the break notice, he was aware of the existence of the renunciation and that he had a copy of it on file. The following exchange then took place between counsel for the defendant and Mr. Barry: –
“Q. And did you read it?
A. Yes.
Q. And did you see the references to one year term and exclusively as
offices?
A. Correct.
Q. Did that give you any pause?
A. It did, yeah.
Q. But you decided to run with it anyway?
A. No, I decided – sorry, I took some advices on it. I didn’t decide it
myself, that in the context of what had preceded it, in the context of the
understanding of the parties were, in the context of the lease in the
clause that we effectively had a deed. There was a Deed of
Renunciation that had been signed off by Automation.”
Surprisingly, Mr. Barry was not re-examined on this issue. At the conclusion of his cross-examination I enquired of him whether I was right in understanding his evidence that, when he came to serve the break notice in 2017, he investigated whether a renunciation existed in relation to the lease. In response, he confirmed that he did so and he was happy that it existed. He also confirmed that he checked the position with Mr. Colman of Arthur Cox at that time. Mr. Barry was not personally aware of what subsequently happened when the proceedings were issued. However, his evidence on this issue exposes a very significant failing in the manner in which the plaintiff mounted and pursued these proceedings. On the basis of the clear discrepancy between Mr Barry’s evidence on the one hand and the terms of the amended statement of claim (described in para. 18 above) on the other, it appears that no attempt was made to check the position with Mr. Barry prior to the commencement of the proceedings – notwithstanding that he had only recently retired. The proceedings were accordingly commenced (and an amended statement of claim was delivered) on the incorrect premise that no renunciation existed.
The Renunciation
25. If the case made in the re-amended statement of claim is correct (and if, as a consequence, the case made in the amended statement of claim is incorrect) and there is a valid Deed of Renunciation in place executed by the defendant, that would have the consequence that the defendant would not be entitled to pursue a claim to a new tenancy under the 1980 Act. For that reason, it may be helpful to address the case made on foot of the Renunciation before attempting to consider any of the other issues in the case. As described in para. 27 below, a number of issues arise in relation to the Renunciation. In particular, as outlined below, it is, at first sight, difficult to relate the text of the renunciation to the lease of the Promenade Road premises.
26. In order to appreciate the extent of the inconsistencies between the renunciation and the lease, it is necessary to set out the terms of the renunciation in full:-
“LANDLORD & TENANT (AMENDMENT) ACT, 1994
RENUNCIATION OF RIGHTS TO A NEW TENANCY
THIS RENUNCIATON dated the 12th day of November, 2012.
1. In this renunciation the following words and expressions have the following meanings:
1.1 ‘Premises’ means the premises as so defined and described in the First Schedule of the Lease;
1.2 ‘Landlord’ means the landlord named in the Lease;
1.3 ‘Lease’ means the lease attached to this Renunciation which is intended to be entered into between the Landlord and the Tenant; and
1.4 ‘Tenant’ means the Tenant named in the Lease.
2. The Tenant has negotiated with the Landlord to take a tenancy of the Premises which are a tenement within the meaning of the landlord and tenant Act for the term of one year and upon the terms and conditions contained and set out in the Lease including the condition that the Use of the Premises shall be wholly and exclusively as an office.
3. The Tenant acknowledges that he has received independent legal advice in relation to the Renunciation from a qualified solicitor who holds a practising certificate from the Law Society of Ireland, and has been advised that under existing landlord and tenant legislation he would, subject to the terms of that legislation, be entitled to a new tenancy in the Premises at the expiry (or sooner determination) of the proposed Lease if it should continue for any reason for five years or more.
4. Having received and considered such advice, and under the provisions of Section 4 of the Landlord & Tenant (Amendment) Act, 1994, the Tenant hereby RENOUNCES any entitlement which he may have under the provisions of the landlord and tenant Acts to a new tenancy in the premises should such entitlement, but for this Renunciation, accrue upon the expiration or sooner determination of the proposed Lease.
5. The Tenant hereby acknowledges that he has not yet been permitted into possession of the Premises and that the tenancy to be created by the proposed Lease has not yet commenced.”
27. There are a number of striking features of this document:-
(a) In the first place, the references in the document to the 1994 Act have no application to the Promenade Road premises. In the context of a renunciation, the 1994 Act was relevant solely to premises which are used wholly and exclusively as an office. The Promenade Road premises clearly do not fall within that category. The 1994 Act must be seen in light of s. 85 of the 1980 Act which prohibits the contracting out of all rights available under the Act. However, s. 4 of the 1994 Act, for the first time, made it possible to renounce the right to renew a business tenancy where the relevant tenement was used wholly and exclusively as an office and where the tenant had, prior to the commencement of the relevant tenancy, executed a valid renunciation of his entitlement to a new tenancy and had received independent legal advice in relation to the renunciation.
(b) Secondly, the terms of para. 2 of the renunciation bear no relationship to the terms of the lease or to the Promenade Road premises. Paragraph 2 refers to negotiations between the tenant and landlord to take a tenancy of the premises for a term of one year. The term of the lease (subject to the break clause) is 20 years. Similarly, para. 2 refers to a condition of the lease that the use of the premises should be wholly and exclusively as an office. That is patently inapplicable to the Promenade Road premises. The permitted user under the lease of the Promenade Road premises is:-
“The operation of a road haulage business to include parking of lorries, tractors, trailers and other equipment used in the Tenant’s business and the cleaning and maintenance of the Tenant’s tankers, lorries, tractors, trailers and other equipment used by the Tenant in the Tenant’s business, together with the temporary handling, storage and transhipment only of goods on behalf of direct customers of the Tenant in his business as a haulier of goods imported/exported through the Port of Dublin. For the avoidance of doubt, the Tenant shall not be permitted to use or advertise the Demise Premises as a public warehouse facility for use by third parties”.
(c) Thirdly, para. 3 refers to the tenant as ” he “. The defendant here is a limited company and the reference to ” he ” is clearly inappropriate. Nonetheless, this error is not quite on the same scale as those identified at (a) and (b) above;
(d) Fourthly, the operative paragraph of the document (namely para. 4) under which the tenant purported to renounce the entitlement to a new tenancy expressly invokes s. 4 of the 1994 Act. As already discussed, that Act was of no application to premises of the kind in issue here.
(e) There is also the curiosity that Mr. Simon Crosbie’s signature appears above the word ” tenant “. However, I do not believe that anything turns on this in circumstances where, opposite the signature of Mr. Crosbie, it is stated that the document is signed for and on behalf of Automation Transport Ltd.
(f) It should also be noted that there is an issue in the case (addressed below) as to whether the defendant received independent legal advice. In this context, it should be noted that, in addition to the terms of para. 3 of the document (which expressly acknowledges that the tenant has received independent legal advice), the execution of the document was witnessed by Mr. Edward Spain of William Fry, solicitors. Mr Spain is a well-known conveyancing solicitor.
(g) In the course of the hearing, an issue was also raised in relation to whether there was evidence as to the authority of Mr. Crosbie to sign the document on behalf of the defendant. For reasons which I discuss in greater detail below, this does not seem to me to be a significant point, on the evidence.
(h) Clause 1.3 of the document is potentially important. It makes clear that the lease, the subject of the renunciation, is attached to the document and is intended to be entered into between the landlord and tenant. The evidence of Mr. Colman was that a draft of the lease was so attached.
(i) The definition of ” premises ” in clause 1.1 allows the premises to be identified by reference to the first schedule to the lease. Thus, if a draft of the lease was attached to the renunciation, it follows that it would be possible to identify that the document was intended to refer to the Promenade Road premises, the subject matter of these proceedings.
28. A significant number of issues arise in relation to the renunciation which were debated in the course of the trial. Logically, the first issue that requires to be determined is whether, notwithstanding the inconsistencies described in para. 27 (a) to (e) above, the document can be said to constitute a renunciation of any right that the defendant may otherwise have under the 1980 Act to a new tenancy in the Promenade Road premises.
The correction of mistakes by construction
29. In this context, the plaintiff has sought to invoke the ability of the court to correct obvious mistakes in documents by construction. The term: ” correction of mistakes by construction” was coined by Brightman L.J. in East v. Pantiles (Plant Hire) Ltd (1981) 263 EG 61 where he explained that two conditions must be satisfied if the court is to take this approach. In the first place, there must be a clear mistake on the face of the document. Secondly, it must be clear what correction ought to be made in order to cure the mistake. If those conditions are both satisfied, Brightman L.J. took the view that: ” the correction is made as a matter of construction”.
30. The ability of the court to take this approach was also recognised in what has now become a classic statement of the principles to be applied in the construction of contractual documents namely the speech of Lord Hoffmann in ICS v. West Bromwich B.S . [1998] 1 WLR 896 (which was subsequently adopted by the Supreme Court in Analog Devices BV v. Zurich Insurance Company [2005] 1 IR 275). It is unnecessary, for present purposes, to quote, in full, what was said by Lord Hoffmann in that case. It is sufficient to recall that Lord Hoffmann identified the importance of looking at documents against the backdrop of the relevant factual matrix (excluding previous negotiations of the parties and any declarations of subjective intention). In particular, Lord Hoffmann explained that a consideration of the background might also identify that the parties had made mistakes in the language of the relevant document. In that context, he said at p. 912:-
“(4)…The background may not merely enable the reasonable man to choose between the possible meaning of words which are ambiguous but even (as occasionally happens in ordinary life) to conclude that the parties must for whatever reason, have used the wrong words or syntax; …
(5) The ‘rule’ that words should be given their ‘natural and ordinary meaning’ reflects the commonsense proposition that we do not easily accept that people have made linguistic mistakes, particularly in formal documents. On the other hand, if one would nevertheless conclude from the background that something must have gone wrong with the language, the law does not require judges to attribute to the parties an intention which they plainly could not have had. Lord Diplock made this point more vigorously when he said in Antaios Compania S.A. v. Salen A.B. [1985] A.C. 191, 201:
‘If detailed semantic and syntactical analysis of words in a commercial contract is going to lead to a conclusion that flouts business commonsense, it must be made to yield to business commonsense’.”
31. Subsequently Lord Hoffmann returned to the issue again in C hartbrook Ltd. v. Persimmon Homes Ltd [2009] 1 AC 1101 at p. 1114 where he said:-
“22. In East v Pantiles (Plant Hire) Ltd (1981) 263 EG 61 Brightman LJ stated the conditions for what he called ‘correction of mistakes by construction’:
‘Two conditions must be satisfied: first, there must be a clear mistake on the face of the instrument; secondly, it must be clear what correction ought to be made in order to cure the mistake. If those conditions are satisfied, then the correction is made as a matter of construction.’
23. Subject to two qualifications, both of which are explained by Carnwath LJ in his admirable judgment in KPMG LLP v Network Rail Infrastructure Ltd [2007] Bus LR 1336, I would accept this statement, which is in my opinion no more than an expression of the common sense view that we do not readily accept that people have made mistakes in formal documents. The first qualification is that ‘correction of mistakes by construction’ is not a separate branch of the law, a summary version of an action for rectification. As Carnwath LJ said (at p. 1351, para 50):
‘Both in the judgment, and in the arguments before us, there was a tendency to deal separately with correction of mistakes and construing the paragraph ‘as it stands’, as though they were distinct exercises. In my view, they are simply aspects of the single task of interpreting the agreement in its context, in order to get as close as possible to the meaning which the parties intended.’
24. The second qualification concerns the words “on the face of the instrument”. I agree with Carnwath LJ … that in deciding whether there is a clear mistake, the court is not confined to reading the document without regard to its background or context. As the exercise is part of the single task of interpretation, the background and context must always be taken into consideration.
25. What is clear from these cases is that there is not, so to speak, a limit to the amount of red ink or verbal rearrangement or correction which the court is allowed. All that is required is that it should be clear that something has gone wrong with the language and that it should be clear what a reasonable person would have understood the parties to have meant. …”.
32. These principles (which, for convenience, I will refer to as the ” Chartbrook principles “) have been approved and applied in Ireland in a number of cases including by Clarke J. (as he then was) in Moorview Developments Ltd v. First Active Plc [2010] IEHC 275 at paras. 3.5 to 3.6 and, more recently, by Haughton J in Knockacummer Wind Farm Ltd. v Cremins [2016] IEHC 95. In Moorview , a guarantee had been executed by Mr. Brian Cunningham in favour of First Active Plc. The relevant guarantee referred to the liabilities of a company called Moorview Properties Ltd. There was no such company. First Active Plc sought to enforce the guarantee against Mr. Cunningham in respect of the liabilities of a company called Moorview Developments Ltd. It was contended that the reference to Moorview Properties Ltd was an obvious mistake and that the guarantee was always intended to refer to Moorview Developments Ltd. Clarke J. upheld the claim of First Active. At p. 7 he said:-
“3.7 The evidence in relation to this case was given on behalf of First Active by Mr. John Collison. Mr. Collison drew attention to the fact that all of the letters and contractual documents passing between the parties at or around the time of the guarantee … made reference to loans being advanced or to be advanced by First Active to Moorview Developments Limited. Mr. Collison gave evidence that, to the best of his knowledge, no one in First Active had ever heard of a company called Moorview Properties Limited. The guarantee was entered into as part of a package of financial arrangements between the Cunningham Group and Mr. Cunningham on the one side and First Active on the other side. The relevant loans were all entered into between First Active and Moorview Developments Limited. Likewise, evidence was produced from the company’s register which showed that there never was a company called Moorview Properties Limited.
3.8 In those circumstances there is only one conclusion. The reference to Moorview Properties Limited in the guarantee was a clear mistake. Not only was it a clear mistake but also what the correct reference should have been is equally clear. The guarantee should have made reference to Moorview Developments Limited. Moorview Properties did not exist. It never existed. Moorview Developments was, at exactly the same time as the guarantee was entered into, involved in entering into loan arrangements with First Active. It is inconceivable that there could have been any other intention of the parties but that the company whose liabilities were to be guaranteed was Moorview Developments Limited and not Moorview Properties Limited.”
33. The plaintiff argues that, on the evidence here, a similar approach should be taken. In particular, the plaintiff submits that the evidence establishes that there was a very clear mistake made in the drafting of the renunciation here and that it is equally very clear what corrections are required in order to remedy the mistake. It is therefore necessary to consider the material available in relation to the renunciation.
The material available in relation to the renunciation
34. On behalf of the plaintiff, Mr. Colman gave evidence that Arthur Cox (of which firm he was then a partner) was instructed by the plaintiff in relation to the transactions that became the subject of the contract of 17th September, 2012 under which Mr. Crosbie Snr. and two of his companies agreed to sell to the plaintiff the three premises described in para. 5 above for €5 million and under which the defendant was to obtain the benefit of a lease from the plaintiff of the Promenade Road premises. As outlined in para. 6 above the transaction also involved the defendant remaining in occupation of the Tolka Quay Road premises under licence for a period of three months pending the Promenade Road premises being refurbished and made available. Mr. Colman explained that Arthur Cox acted on behalf of the plaintiff, Ms. Majella Egan of McCann Fitzgerald acted on behalf of NAMA and Mr Edward Spain of William Fry acted for Mr. Crosbie Snr. and the companies controlled by him. Mr. Colman described Mr. Spain as a leading property lawyer. It is unnecessary to set out here, in any detail, the evidence given by Mr. Colman as to his dealings with Ms. Egan of McCann Fitzgerald and Mr. Spain of William Fry. It is sufficient to record that Mr. Colman explained that, for the purposes of the transaction, three Deeds of Renunciation were sought by him on behalf of the plaintiff. These were a Deed of Renunciation in respect of the Promenade Road premises, a renunciation to be executed by the defendant in respect of the licence to be granted to the defendant in respect of the Tolka Quay Road premises, and a renunciation to be executed by Storecon Ltd in respect of a twelve month licence (as provided for in special condition 7 to the contract of sale) in respect of the Tolka Quay Road premises occupied by it. Mr. Colman identified the completion list which had been prepared in preparation for the closing of the contract which showed the Storecon Deed of Renunciation at item 13 and the renunciation in respect of the Tolka Quay Road licence to be granted by the defendant at item 45. In addition, he drew attention to item 47 on the completion list (which had been inserted by him) dealing with the execution of a Deed of Renunciation by the defendant in respect of the lease of the Tolka Quay Road premises. It is clear from the completion list and from the terms of the contract itself that only one lease was to be executed as part of the transaction namely the lease to be granted by the plaintiff to the defendant in respect of the Promenade Road premises.
35. Mr. Colman then identified each of the three Deeds of Renunciation that were executed. These included the Deed of Renunciation executed by Mr. Crosbie Jnr. on behalf of Storecon which was witnessed by Mr. Spain of William Fry and recorded that Storecon had received independent legal advice from Mr. Spain. Mr. Colman also identified the Deed of Renunciation that had been executed in respect of the licence to be granted to the defendant in respect of the Tolka Quay premises which also was signed by Mr. Crosbie Jnr. Again, his signature was witnessed by Mr. Spain and the document recorded that the defendant had received independent legal advice from Mr. Spain. Mr. Colman also identified the renunciation signed by Mr. Crosbie Jnr. and witnessed by Mr. Spain (quoted in full in para. 26 above). Mr. Colman acknowledged that the deed contained the errors described above. He was asked by counsel for the plaintiff whether he could be satisfied beyond doubt that it relates to the premises in the lease. His response was:-
“I suppose there is a number of items; one is that the focus was… to have a renunciation of the new site lease on completion and you will see from the list of completion requirements that that was there. It is also the case that this renunciation has a draft to the lease attached to it in the documents in Arthur Cox which I inspected too. And generally speaking it was a case that I wanted or needed to have a Deed of Renunciation for each of the occupations or future occupations of the premises and this one related to the lease.”
36. Mr. Colman sought to explain the error on the basis that it appeared that the: ” incorrect precedent was used and as a result I suppose that error in using the incorrect precedent led to there being a number of errors on the face of the document “. In other words, Mr. Colman’s explanation was that an old precedent relating to the amendments made by the 1994 Act was used rather than a precedent based on the broader terms of the amendment made by the 2008 Act.
37. Under cross-examination, Mr. Colman explained that in accordance with the Law Society Practice Note on Deeds of Renunciations it is recommended that a draft of the lease should be attached to the renunciation and he said that he followed this recommendation. Mr. Colman accepted that he had no direct contact with Mr. Crosbie Jnr. in relation to the signing of the document. He confirmed that he had dealt solely with Ms. Egan of McCann Fitzgerald on behalf of NAMA and she, in turn, had dealt with Mr. Spain of William Fry.
38. Mr. Colman also accepted, under cross-examination, that he knew that the premises were an industrial type property (i.e. not an office as stated in the renunciation). He was also cross-examined in relation to his first witness statement which was in very terse terms and did not provide any of the detail set out in the witness statement delivered in the course of the hearing. In his first witness statement, he had stated in para. 6 that the defendant had executed a Deed of Renunciation. However, in para. 7 he said that it was: “contemplated that the Defendant would execute a Deed of Renunciation in favour of the Plaintiff for the Lease and I understand that the Defendant is contractually required to do so under clause 4.35 …”. To these questions, his response was that there: ” might have been a misunderstanding at some point as to whether the renunciation existed or not but there was never any doubt in my mind”. In fairness to Mr. Colman, it should be noted that in his first witness statement, he had said that he had reviewed the title documents held by Arthur Cox relating to the lease but that he had not examined the file. While I do not believe that it was appropriate to prepare a witness statement on that attenuated basis, it does provide some level of explanation for the inconsistencies between the first and second witness statements.
39. It was also put to Mr. Colman in cross-examination that the reference to one year in the renunciation might have been understood by Mr. Crosbie Jnr. to relate to the Storecon premises in circumstances where Storecon was to have a one year licence. Mr. Colman, in response, drew attention to the way in which the renunciation in this case does not mention Storecon but clearly mentions the defendant. It should be noted, in any event, that, when Mr. Crosbie Jnr. subsequently came to give his evidence, he did not make the case that he understood the renunciation in issue in these proceedings to relate to the Storecon premises. In addition, it is worth bearing in mind that the renunciation also refers to a lease and, as noted above, the only lease to be executed by the defendant was that proposed in respect of the Promenade Road premises. In this context, it was put to Mr. Colman on cross-examination that special condition 6.2(a) of the contract envisaged that a Deed of Surrender would be executed by the defendant in relation to what was described as its “sub leasehold interest” in part of the Tolka Quay Road premises. This line of cross-examination was pursued with a view to suggesting that the renunciation executed by Mr. Crosbie Jnr. related to the ” sub-lease ” rather than the lease the subject matter of these proceedings. However, Mr. Colman explained that a Deed of Surrender was executed by the defendant in respect of any sub-lease of the Tolka Quay Road premises. The Deed of Surrender in question says in very clear terms that the defendant surrendered the premises to the plaintiff: ” to the intent that the residue of the term and all or any other estate, right title to or interest of the tenants shall merge and be extinguished. In the reversion immediately expectant on the determination of the term “. Counsel for the defendant very properly accepted that this was quite categoric language. As s. 17 (1) (a) (iii) of the 1980 Act makes clear, no entitlement to a new tenancy will arise where the tenant terminates a tenancy by notice of surrender. In circumstances where the defendant executed a surrender, there was plainly no need to execute, in addition, a renunciation of rights.
40. It was also suggested to Mr. Colman, in the course of his cross-examination, that he should have procured a copy of the memorandum and articles of association of the defendant and a copy of all relevant resolutions of that company. Mr. Colman responded that it is not standard practice to do that. There was no contrary evidence from any solicitor called on behalf of the defendant.
41. When Mr. Crosbie Jnr. came to give evidence in relation to the renunciation, he maintained that William Fry were not acting on behalf of the defendant. However, he acknowledged that Mr. Crosbie Snr. was the sole or primary shareholder of the defendant at the time of the transaction and remained so until March 2013 when he also resigned as a director of the defendant. Mr. Crosbie Jnr. confirmed that his father had instructed William Fry and that it was possible that he had instructed William Fry to act on behalf of the defendant. Nonetheless, Mr. Crosbie maintained that no one was acting on behalf of the defendant directly because the new lease to be granted to the defendant was, in his words, just one tiny insignificant element of the disposal of assets undertaken by his father at the behest of NAMA.
42. Mr. Crosbie Jnr. accepted that the transaction was necessary for the survival of the defendant. He also accepted that, if new premises had not been found for the defendant, it would have been wound up at that point. It was put to him by counsel for the plaintiff that this was accordingly a transaction to which he, as a director of the defendant, would have paid significant attention. He confirmed that this was correct. He also confirmed that the lease, the subject matter of these proceedings, is the only lease that the defendant has ever entered into in the Port of Dublin.
43. According to Mr. Crosbie Jnr., he signed whatever he was asked to sign and whatever he was told was necessary to execute. He explained that there were so many documents that it simply was not possible to read all of them. In the course of his direct evidence he maintained that he was not advised by William Fry as to the content of any of the documents he was asked to sign. His evidence was:-
“But at no point as I said we were in a process where it was kind of like nearly a fire sale and at no point did I, was I advised that I would be renouncing my rights because part of what made me accept the deal, not that I had a choice, was that we had security of tenure and that we could survive this because I can’t state it more plainly, I mean it was a time of survival and, you know, certain bits of paper were floating in front of you and you might be able to survive. I signed everything in the presence of people but as I said, nothing was made clear to me …that I would be renouncing my rights”.
44. However, on cross-examination he confirmed that there might have been “general overviews but nothing specific “. He confirmed that he did not ask any questions of William Fry in relation to the documents and that he never took the opportunity to raise any questions in relation to them.
45. In the course of his cross-examination, Mr. Crosbie accepted that he executed the renunciation quoted in para. 26 above. He was pressed as to whether he was going so far as to contend that he did not get legal advice from Mr. Spain of William Fry in relation to the document. Ultimately, his response was that he could not remember whether or not he got such advice. He confirmed that he executed the renunciation as a director of the defendant and that he was authorised to sign it on behalf of the defendant. He also confirmed that the signature of the witness was that of Mr. Spain.
The position taken by the defendant in relation to the renunciation
46. In response to the attempt by the plaintiff to rely on the renunciation, the defendant raised a number of issues as follows:-
(a) It was submitted that any renunciation would have to be strictly construed against the party seeking to rely upon it. In support of this proposition the defendant drew attention to the approach taken by Lardner J. in Bank of Ireland v. Fitzmaurice [1989] ILRM 452 and more particularly to the observations of Charleton J. in Edward Lee & Co. Ltd v. N1 Property Developments Ltd [2012] 3 IR 201. In the latter case, Charlton J. said at p. 209:-
“At issue here is whether there has been a scheme to effectively force the tenant to surrender the tenement in advance of the term and thereby disbar the fixing of a new tenancy … by application to the court. Such a scheme would render the relevant clause void under the Act of 1931, which in all material respects is the same as the Act of 1980. The entire contract is not void, simply the offending clause: …. I do not believe that a court is entitled, however, to rewrite a clause by running a blue pencil through offending words so as to rewrite the meaning of what the parties intended into a meaning that they never intended . The law is strict. Direct and indirect attacks on rights under either the Act of 1931 or the Act of 1980 will not be tolerated. …”. (Emphasis added).
(b) The next argument made was that the authorities on which the plaintiff seeks to rely are not appropriate in the context of the renunciation which is not a negotiated document between two parties;
(c) It was also submitted that, if the plaintiff wished to rely on a document emanating from a ” third party “, the plaintiff had a duty to take extra care to ensure that the document was reliable. In this context, the defendant sought to characterise itself as a third party to the sale contract between the plaintiff and the vendors;
(d) It was further argued that there was an obligation on the plaintiff to ensure that the defendant obtained fully independent legal advice. It was suggested that William Fry were not in a position to give independent legal advice because they were acting for Mr. Crosbie Snr. and his companies and that the defendant needed to have fully independent advice in circumstances where in the words of counsel:
“Nothing about this was in their interest because they received nothing apart from a smaller site further away from the dock. So the idea that somehow they’d negotiated some benefit for themselves and this was some flipside of the benefit is illusionary…”;
(e) A further submission was made that the plaintiff had an obligation, if it wished to be in a position to rely on the purported renunciation, to ensure that it obtained a copy of the relevant minute of the meeting of the directors of the defendant, a copy of the resolution of the directors authorising Mr. Crosbie Jnr. to sign the renunciation and a certificate from Mr. Spain of William Fry addressed to the defendant confirming that he has advised the defendant in relation to its rights under the 1980 Act. I deal further below with the issue relating to legal advice. I do not, however, believe it is necessary to deal in any detail with the submission made that there was an obligation to obtain the suite of confirmatory documents mentioned above. In my view, there is no evidence to substantiate the submission made that the plaintiff had any such obligation. In particular, there was no evidence called on behalf of the defendant to controvert what was said by Mr. Colman (as summarised in para. 40 above). Moreover, the point seems to me to be entirely academic in circumstances where Mr. Crosbie Jnr. very properly confirmed that he executed the renunciation as a director of the defendant and that he was authorised to sign it on behalf of the defendant.
(f) The defendant also submitted that the Chartbrook line of authority was not appropriate to landlord and tenant law. As I understand it, this argument proceeded on the basis that landlord and tenant law represented an entirely discrete and separate corpus of law. I can deal with that submission quite briefly. In my view, it is mistaken. It is clear from the judgment of the Supreme Court in Stapleyside Company v. Carraig Donn Retail Ltd [2015] IESC 60 that the ordinary principles of contractual interpretation apply in the context of property documentation. In that case, Clarke J. (as he then was) observed at paras. 6.2-6.3:-
“6.2 …a court is required to do the best it can with the language used by the parties (the text) to be construed in the light of all of the circumstances in which the agreement was entered into (the context). But it is important to acknowledge that both text and context are relevant in the proper interpretation of commercial documents.
6.3 Those principles of interpretation (the ‘text in context’ method) apply to no lesser extent in the field of property documentation. To ignore context is to ignore the well accepted fact that words used in agreements would be seen by any reasonable person having knowledge of the surrounding circumstances as being potentially affected as to their meaning by the context in which the agreement was entered into in the first place. But equally, the text must be given all appropriate weight, for it is in the terms of that text that the parties have settled on their arrangement .” (Emphasis added).
It should also be noted that, in England, the principle has been applied specifically in the landlord and tenant context in Littman v. Aspen Oil (Broking) Ltd [2006] 2 P & CR 2. In that case, a break clause in a lease allowed either party to terminate the lease by giving not less than six months-notice in writing. The clause was subject to the proviso that: ” in the case of a notice given by the Landlord the Tenant shall have paid the rents …reserved and shall have duly observed and performed the covenants on the part of the Tenant …” (Emphasis added). The reference to ” the Landlord ” was considered by Hart J. to be an obvious mistake and that instead the word “Landlord” should be read as ” Tenant ” even though the effect of correcting the error had significant consequences for the tenant in that, if the tenant was to exercise the right to terminate under the break clause (as corrected in the manner suggested by Hart J), it would have to show that it had complied with all of the covenants under the lease.
(g) It was also argued on behalf of the defendant that the Chartbrook line of authority has no application unless there is a common mistake and that it would be inappropriate for the court to apply equitable principles to correct that mistake. In making this submission, the defendant appears to have had in mind the principles that apply in the context of an action for rectification. The distinction between the correction of mistakes by interpretation and the equitable remedy of rectification is explained as follows by Lewison in ” The Interpretation of Contracts ” 6th Ed., 2015, at p. 495 as follows: –
“a distinction between the correction of errors by interpretation and the equitable remedy of rectification was pointed out in North Circular Properties Ltd. v. Internal Systems Organisation Ltd. The Deputy Judge said:
‘of course the court will not lightly, as part of a construction process, tamper with the actual words used, particularly in a commercial document such as a Lease. On the other hand, the law is not such an ass as to compel the court to hold the parties to the actual words used when it is, as in my judgment it is in this case, clear from the document itself, without looking at extrinsic evidence, that such words were used only by virtue of a draftsman’s blunder. Such a process of correction of obvious drafting errors in the process of construction is of course distinct from the equitable doctrine of rectification. The former can only be adopted where the fact that a mistake has been made and the nature of the mistake can be ascertained with certainty from a consideration of the relevant instrument in the context of objective circumstances surrounding its execution. Rectification, on the other hand, will be appropriate in many other cases where the existence and nature of a mistake are apparent only from extrinsic evidence of the actual intention of the parties’.”
The plaintiff has not, however, sought rectification of the renunciation. The plaintiff has confined itself to contending that the Chartbrook principle applies. It therefore appears to me to be unnecessary to consider this argument on behalf of the defendant. It is important to bear in mind that, by confining itself to the Chartbrook principle, the plaintiff is limited to asking the court to consider the renunciation itself by reference to its own terms but also construed against the relevant factual background. In contrast to a case where the equitable remedy of rectification is invoked, the plaintiff is not entitled to lead evidence of the subjective intention of the parties.
(h) Counsel for the defendant also suggested that there are cases where a document contains a fatal error and accordingly no reliance can be put on it. In this context, counsel said that: ” if this was a guarantee to a bank and [it] failed to mention the proper parties or the proper facility it would simply be unreli able”. However, I do not believe that this submission is sound. It is clear from the decision of Clarke J. in Moorview Developments Ltd v. First Active Plc [2010] IEHC 275 (discussed in para. 32 above) that the Chartbrook principle is capable of application to a guarantee which names an incorrect party. I therefore do not believe that it is necessary to deal further with this argument.
47. Of the arguments identified in para. 46 above, I have already addressed those at sub. paras. (e) to (h). I address the balance of the arguments in paras. 48 et seq . below. In those paras., I also address the application of the Chartbrook principle more generally.
Strict construction
48. As noted in para. 46 (a) above, the defendant contends that any renunciation would have to be strictly construed against the party seeking to rely upon it. This argument appears to have been significantly influenced by the observation made by Charleton J. in Edward Lee & Co. Ltd. v. M.1 Property Developments Ltd (quoted in para. 46 (a) above) to the effect that the law is strict and that direct and indirect attacks on rights under the 1980 Act ” will not be tolerated “. Those observations should, however, be seen against the backdrop of s. 85 of the 1980 Act which expressly renders void any attempt to vary, modify or restrict tenants’ rights under the 1980 Act. Charleton J. was clearly concerned in that case by an attempt to circumvent s. 85. That is quite different to a renunciation of rights which is expressly permitted under the 1980 Act. The amendments made by s. 47 of the 2008 Act very clearly provide for renunciation of a tenant’s right to a new tenancy. Of course, any renunciation must comply with the provisions of s. 17 (1) (a) (iiia) of the 1980 Act if the renunciation is to be relied upon. That is an issue which I address further below. In addressing that issue, it will be necessary to bear in mind that, because a renunciation necessarily involves the giving up of a potentially valuable right, I will have to be satisfied that the terms of the renunciation are sufficiently clear and unambiguous to constitute a valid renunciation. Furthermore, I must keep in mind that the renunciation was drafted not by the defendant but by the solicitor for the plaintiff and in those circumstances any ambiguity in the renunciation must be construed contra proferentem . It is important, however, to bear in mind that, as Clarke J. (as he then was) explained in Danske Bank v. McFadden [2010] IEHC 116 at para. 4.1, the contra proferentem rule is to be applied only in cases of ambiguity and where other rules of construction fail. Thus, it does not displace the Chartbrook principle. That principle is an inherent part of the principles of interpretation of contracts embodied in the Investor Compensation Company principles approved by the Supreme Court in Analog Devices . In the Danske Bank case, Clarke J. said:-
“The so called, contra proferentem rule, is, of course, only to be applied in cases of ambiguity and where other rules of construction fail . As such, the rule can only come into play if the court finds itself unable to reach a sure conclusion on the construction of the provision in question, …. The origin and first purpose of the rule is to limit the power of a dominant contractor who is able to deal on his own “take it or leave it” terms with others, …. The rationale for the rule is as set out in Tam Wing Chuen v. Bank of Credit and Commerce Hong Kong Ltd [1996] 2 B.C.L.C. 69, where at p. 77, Lord Mustill states that:-
‘ The basis of the contra proferentem principle is that the person who puts forward the wording of a proposed agreement may be assumed to have looked after his own interests …. ‘” (Emphasis added).
Clarke J. also stressed that the rule only applies in cases of genuine ambiguity.
Applying the Chartbrook principle
49. At this point, the next issue that arises is whether the Chartbrook principle can properly be applied to the renunciation in issue. If it is capable of being applied, then the renunciation would be construed by correcting any obvious mistakes which fall within the application of the principle (i.e. where the necessary corrections are equally obvious). If I come to the conclusion that the Chartbrook principle is capable of being applied and that the renunciation can properly be read in the manner suggested by the plaintiff, it would then become necessary to consider whether the renunciation (corrected in accordance with the Chartbrook principle) complies with the requirements of s. 17 (1) (a) (iiia). At that point, it will also be necessary to consider the defendant’s arguments in relation to duty of care and independent legal advice. On the other hand, if the Chartbrook principle cannot be applied in the manner suggested by the plaintiff, then it seems to follow that the renunciation cannot be relied upon by the plaintiff. In such circumstances, it would become necessary to consider whether the plaintiff is entitled, at this stage, to rely upon the covenant contained in clause 4.35 of the lease.
50. Accordingly, I now turn to consider whether the Chartbrook principle can be applied to the renunciation. Having regard to the factors discussed in para. 46 (f) above, I do not believe that there is any basis to suggest that the Chartbrook principle is incapable of application to a document such as a renunciation of rights under the 1980 Act. There is nothing in the case law to support such a proposition. On the contrary, the case law suggests that the ordinary principles of contractual interpretation apply equally to property documents including leases.
51. Nonetheless, in light of the sheer number of problems with the text of the renunciation in this case, I have considered whether that, of itself, renders the Chartbrook principle inapplicable. However, on reflection, I do not believe that it does. On the contrary, as Lord Hoffmann made clear in the Chartbrook case itself, there is no limit to the amount of red ink or verbal rearrangement or correction which the court is allowed under the principle. The principle therefore appears to be capable of application in any case where the court, having regard to the relevant factual background, can come to a clear conclusion that (a) the parties to a contractual document have failed to express themselves correctly such that there are obvious mistakes in the document and (b) it is equally obvious how those mistakes should be corrected.
52. Turning to the mistakes in the renunciation in this case (as quoted in para. 26 above) the following observations can be made:-
(a) In the first place, insofar as the reference to ” he ” is concerned, that is a very obvious mistake in circumstances where it is clear from the document itself that the entity purporting to renounce its rights is a corporate body in respect of which the inanimate pro-noun ” it ” should have been used. This is an obvious mistake which a court can readily correct by reference to a consideration of the document as a whole.
(b) However, there are a series of words and phrases in the renunciation which bear no relationship to the Promenade Road premises. These include the reference to negotiations between the tenant and landlord to take a tenancy of the premises for a term of one year. The relevant term of the lease of the Promenade Road premises (subject to the break clause) is 20 years. There is then the reference to a condition that the use of the premises should be wholly and exclusively as an office. That is equally inapplicable to the Promenade Road premises where the permitted user is focused on the operation of a road haulage business. If these are to be considered to be ” mistakes “, one would have to be confident that the renunciation was intended to refer to the lease of the Promenade Road premises and not to some other premises.
(c) In my view, it is clear from a consideration of the background facts that the renunciation was intended to apply to the Promenade Road premises. There are a number of features of the factual background that overwhelmingly point to this conclusion. In the first place, as Mr. Crosbie Jnr. acknowledged in the course of his evidence, the defendant has only once entered into a lease in relation to premises within the Port of Dublin namely the Promenade Road premises. Second, it is clear that the renunciation had a copy of the draft lease attached to it in which, of course, the Promenade Road premises were identified. Third, as Mr. Colman confirmed in his evidence, the Promenade Road lease had been drafted at the time of execution of the contract between Mr. Crosbie Snr. and his company and the plaintiff. It is specifically referred to in the Document Schedule at para. 4.3. In turn, the form of the lease is specifically referenced in special condition 6.2 (a). The draft lease contained a covenant that the tenant should execute a Deed of Renunciation waiving any renewal rights in accordance with s. 47 of the 2008 Act. Fourth, a Deed of Renunciation in respect of the Promenade Road premises was expressly included in the completion list for the purposes of completion of the contract. Mr. Colman confirmed that it appears at Item 47 on that list.
(d) In my view, all of these factors point in one direction. There is a renunciation which is signed by Mr. Crosbie Jnr. on behalf of the defendant which refers to a lease to be given to the defendant. We know that the only lease of Dublin Port premises ever taken by the defendant was in respect of the Promenade Road premises. In addition, the draft version of that lease contained a covenant to execute a renunciation. It must follow that the renunciation can only relate to the Promenade Road premises. There is no other plausible explanation why the defendant should execute a renunciation in respect of those premises.
(e) In circumstances where it can only relate to the Promenade Road premises, I believe it is clear that something has gone wrong with the language contained in the renunciation. In particular, it seems to me that the references therein to office premises and to a one year term are very clear errors in the document. The Promenade Road premises are not solely – or even mainly – for office use. Likewise, there was never any question that the term of the lease would be for one year only.
(f) It seems to me to be equally clear what corrections need to be made to the document. The references to a term of one year and to the use of the premises ” wholly and exclusively as an office ” are not only inappropriate but they are otiose. Having regard to the terms of s. 47 of the 2008 Act (which is referenced in clause 4.35 of the Lease) there was no need to include that language. In these circumstances, I am of the view that clause 2 of the renunciation should be interpreted as though those references did not appear therein.
(g) The remaining error of substance in the document is the reference in para. 4 to s. 4 of the 1994 Act and the reference in the title to the 1994 Act. Again, it seems to me that this is a clear error in the document. Section 4 of the 1994 Act has no application whatever to premises of the kind found on the Promenade Road premises. Section 4 of the 1994 Act is confined very narrowly to tenements which were used wholly and exclusively as an office. Having regard to that very obvious fact and having regard to the terms of clause 4.35 of the lease, it seems to me that the correction to be made to the language of para. 4 of the renunciation is very clear – namely that it should refer to s. 47 of the 2008 Act which, at the time of execution of the renunciation, was the relevant statutory provision in force providing for renunciation of the rights in respect of premises of the kind in issue here.
(h) Accordingly, in my view, subject to the discussion below in relation to legal advice, para. 4 of the renunciation should be read as though the reference to s. 4 of the 1994 Act actually cited s. 47 of the 2008 Act. In my view, the Chartbrook principle very clearly applies.
(i) Moreover, even though para. 4 refers erroneously to s. 4 of the 1994 Act, the operative language of para. 4 very clearly evidences an intention to renounce any entitlement which the tenant might have under the provisions of the Landlord and Tenant Acts to a new tenancy. There is no error in any of that language. Nor is there any ambiguity. On the contrary, the terms of para. 3 of the renunciation are plain. In the circumstances, I cannot see any scope for the application of the contra preferentem principle. That principle only applies where there is ambiguity in the language used.
(j) Paragraph 3 is the critically important provision in the renunciation. By its terms, the defendant unambiguously gave up any right to a new tenancy under the Acts. In circumstances where (for the reasons outlined above) the renunciation must refer to the Promenade Road premises (notwithstanding the errors in the language in other paragraphs of the document) I am of the view that para. 4 very clearly constitutes a renunciation of rights to a new tenancy in those premises.
53. I have also considered whether the case now made by the plaintiff that there are obvious mistakes in the Deed of Renunciation can properly be made by it in circumstances where the plaintiff (as outlined earlier in this judgment) did not even rely on the renunciation in the statement of claim in its original form or in its first amended form and where Mr. Kennedy, the plaintiff’s head of property expressly said that he understood that, at the time of making his witness statement, no renunciation had in fact been executed in respect of the Promenade Road premises. Under cross-examination, Mr. Kennedy said that he formed the view that the correct Deed of Renunciation was not in place. However, while the approach taken by the plaintiff is unimpressive, I do not believe that it defeats the ability of the plaintiff to rely on the Chartbrook principle. In truth, the subjective opinion of the plaintiff is entirely irrelevant to the application of the Chartbrook principle. That has been made clear in all of the cases in relation to the proper approach to be taken in interpreting contractual documents. One cannot have regard to statements of subjective intention. In those circumstances, it appears to me to follow that the failure of the plaintiff to advert to the renunciation until a very late stage in the proceedings does not deprive the plaintiff of the ability to rely on the principle.
54. One further issue arises in relation to the application of the Chartbrook principle. As noted in para. 46 (e) above, it was argued on behalf of the defendant that the renunciation was not put in place pursuant to any negotiations directly between the defendant and the plaintiff and that in those circumstances the Chartbrook principle can have no application. However, having reflected on the issue, I do not believe that this submission is sound. There are many circumstances where a document having contractual force is required from a third party as a consequence of an agreement between two contracting parties. A relatively common example is the provision of a guarantee to a bank to guarantee the liabilities of a borrower. Although the guarantor may have no direct dealings with the bank, the guarantee is capable of having contractual force as between the bank and the guarantor. It could scarcely be suggested that the Chartbrook principle could not be relied upon in the context of such a guarantee. The Moorview case is an obvious illustration – albeit that, in that case, there appears to have been some direct dealings between the guarantor, Mr. Cunningham and the relevant lender there (First Active).
55. It is also important to keep in mind the rationale for the application of the Chartbrook principle. As explained by Lord Hoffman, it is to correct obvious errors in the language used by parties to contractual documents. There is no reason in principle why that rationale cannot apply to a unilateral document having contractual force (such as a renunciation or a guarantee) notwithstanding that it is executed by one party only. The reason why a court is entitled to form the view that the language in the contractual document contains a clear error does not depend on what transpired between the parties in the negotiations leading up to the execution of that document. On the contrary, what was said between the parties is inadmissible in order to construe the true meaning and intention of the document. The court is limited to the objective factual background. That objective factual background is equally available in the case of a negotiated document or in the case of a document which is executed unilaterally. I can therefore see no reason why the Chartbrook principle cannot be applied to a document such as the renunciation here.
56. Moreover, there have been cases where the courts have applied the Chartbrook principle to documents executed unilaterally. An example is to be found in the judgment of Asplin J. in ICM Computer Group Ltd. v. Stribley [2013] EWHC 2995 (Ch). That case concerned a deed of amendment to the terms of a pension scheme which was executed by the trustees of the scheme. The amendment was intended to give effect to an EU requirement that the retirement age of male and female members of a pension scheme should be the same. Prior to the amendment, the retirement age of female members had been 60 while the retirement age for men had been 65. The deed of amendment provided in one paragraph that the retirement age should now be 60 for both males and females. However, other clauses of the document suggested that the retirement age was intended to be 65 for both males and females. Although the document was a unilateral one which was not the subject of negotiation between any of the parties to the pension scheme, Asplin J. nonetheless applied the Chartbrook principle and held, having considered the language of the deed as a whole and some relevant background facts, that the deed should be construed as intending to make 65 the uniform retirement age for both males and females.
57. In these circumstances, I am of the view that there is no reason why the Chartbrook principle should not be applied to the renunciation in this case. It is clear that something has gone wrong with the language of the renunciation. I have already dealt with the errors and inconsistencies that appear in the document. While there are a surprisingly large number of such errors and inconsistencies, it seems to me that these are very clearly mistakes in the document and it is equally clear what corrections ought to be made. Accordingly, the document should be read in the manner outlined in para 52 above. When read in that way, it seems to me that the document is clear on its face. There is no ambiguity in its terms such as to attract the application of the contra proferentem principle. In particular, para. 4 of the renunciation contains a clear and unequivocal renunciation by the defendant of any right which it might acquire to a new tenancy under the Landlord and Tenant Act.
Independent legal advice
58. As noted in para 46 (c) and (d) above, the defendant argues that if the plaintiff wished to rely on a renunciation emanating from a third party such as the defendant, it had a duty to take extra care to ensure that the document is reliable. In addition, it was argued that there was an obligation on the plaintiff to ensure that the defendant obtained truly independent legal advice. In the latter context, it was also contended that William Fry were not in a position to give such advice to the defendant because they were acting for Mr. Crosbie senior and his companies.
59. I have come to the conclusion, in this context, that the only issue to be considered is that relating to legal advice. I can see no basis (and none was identified in the course of argument) to suggest that the plaintiff had any wider duty to take extra care that the renunciation was reliable. Moreover, this seems to me to be an entirely academic argument in circumstances where, as he very fairly acknowledged, Mr. Crosbie Jnr. was authorised to sign the renunciation on behalf of the defendant and did so. The only issue raised by Mr. Crosbie Jnr. in his evidence was in relation to legal advice. Initially, his evidence was that he did not receive such advice. Ultimately, however, on cross-examination, he said that he could not remember whether any such advice had been given.
60. Before addressing the legal advice issue in any detail, a preliminary point arises as to whether the plaintiff is entitled to rely on a confirmation in relation to legal advice contained in a renunciation which plainly refers to an incorrect statutory provision namely s. 4 of the 1994 Act. An issue arises as to whether that reference (albeit mistaken) calls into question whether appropriate legal advice was given at all. Having reflected on the issue, it seems to me that the reference to the 1994 Act does not have that effect. The nature of the legal advice to be given to a tenant is not identified either in the amendments made by s. 4 of the 1994 Act or the wider amendment made under s. 47 of the 2008 Act. Those provisions merely provide statutory authority for a tenant to renounce the right to a new tenancy. In both cases, they impose, as a condition to the validity of the renunciation, that the tenant should have received independent legal advice. However, neither provision prescribes the parameters of the advice that must be given. In circumstances where neither section is prescriptive as to the nature of the advice to be given, I do not believe that it is fatal to the renunciation in this case that the document refers to the inapplicable 1994 Act. I might well have reached an entirely different conclusion if the respective provisions of the 1994 and 2008 Acts set out different criteria in relation to the extent or nature of the advice to be given.
61. Both provisions are entirely consistent insofar as they each require that the advice to be given is independent legal advice. In circumstances where the test is the same in both cases, it seems to me that the reference to the 1994 Act is not sufficient of itself to invalidate the renunciation.
62. The next question to be considered is whether the statutory requirement in s. 17(1) (a) (iiia) of 1980 Act (as inserted by s. 47 of the 2008 Act) as to independent legal advice has been satisfied in this case. In this context, the renunciation (which is quoted in full in para. 26 above) contains an express acknowledgement that the defendant has received independent legal advice. As noted in para. 52 (a) above, while there is a reference to ” he ” in that paragraph, it is perfectly obvious that this should read ” it ” since the use of the pro-noun ” he ” is clearly referable to the word ” tenant ” (i.e. the defendant) in the same line. The acknowledgement is not merely that the tenant has received independent legal advice but it also records that the advice which has been given was to the effect that under: ” existing landlord and tenant legislation he would, subject to the terms of that legislation, be entitled to a new tenancy in the Premises at the expiry (or sooner determination) of the proposed Lease if it should continue for any reason for five years or more”.
63. Thus, on the face of the document, there is an express acknowledgement that the defendant was advised as to its rights under the 1980 Act in the event that it entered into the Lease and remained in occupation for a period of five years. As noted above, no guidance is given in s. 17 (1) (a) (iiia) of the 1980 Act (as inserted by s. 47 of the 2008 Act) as to the nature of the legal advice that must be given to a tenant in relation to a renunciation. Nor was I referred to any authority which provides any assistance as to the nature of the legal advice to be given. However, it seems to me to be clear that the reason why the Oireachtas imposed a requirement that a tenant should receive independent legal advice, was to ensure that, before taking the very significant step of renouncing rights, the tenant should be aware of the rights that exist under the 1980 Act to a new tenancy. By stipulating such a requirement, the Oireachtas has made sure that, before abandoning this valuable right, tenants will be apprised of the nature of the right they are asked to renounce. Such an approach is not peculiar to the 1980 Act. The importance attached to such a requirement can also be seen in other contexts. For example, in the case of the abandonment or waiver of a constitutional right, the courts have stressed the need for full knowledge. As Walsh J. observed in G. v. An Bord Uchtala [1980] I.R. 32 at p. 80, before anybody can be said to have surrendered or abandoned a constitutional right, it must be shown that he or she is aware of what the rights are and of what he or she is doing. While Walsh J. was concerned, in that case, with the potential waiver of a constitutional right, it seems to me that the basic concern is the same whether one is concerned with the abandonment or waiver of a constitutional right or of a legal right.
64. Furthermore, it seems to me that para. 3 of the renunciation in this case clearly records that advice was given to the defendant here that under existing landlord and tenant legislation, it would have an entitlement to a new tenancy in the premises should it continue to occupy the premises for a period of five years or more. On the face of the renunciation, it is therefore clear that the defendant was told of the right which it would have, absent the renunciation. That seems to me to encapsulate the nature of the advice which a tenant should be given so that the tenant will be aware of the effect of the renunciation.
65. Quite apart from the text of para. 3 of the document, I have come to the conclusion that legal advice was given to Mr Crosbie Jnr. by William Fry. In this context, as noted above, Mr. Crosbie Jnr. has accepted, in the course of his evidence, that the document was signed by him on behalf of the defendant. I appreciate that, in his evidence, Mr. Crosbie Jnr. initially contended that he was not given legal advice. Ultimately, however, his evidence, on cross-examination, was that he could not remember whether such advice was given. On a consideration of his evidence as a whole, I do not accept that Mr. Crosbie Jnr. was not given advice as to the effect of the renunciation. In the first place, the relevant exchange which took place between Mr. Crosbie Jnr. and counsel for the plaintiff, in the course of his cross-examination is important. Having acknowledged that he signed the renunciation, that he was authorised to do so as a director of the defendant and that his signature was witnessed by Mr. Spain, the following exchange took place between him and counsel:-
“Q. And in relation to that document, again what is your position? Are you saying that –
A. The same position as before, there was a huge amount of documents, a huge amount of stuff going on and I do not remember any specifics about anything.
Q. OK, so again, and I’m sorry for this, Mr. Crosbie but it is just important to be precise about this, are you positively asserting that Mr. Spain did not advise you in relation to this document or are you saying you can’t remember?
A. I can’t remember”.
66. Secondly, at a later point in his cross-examination, Mr. Crosbie Jnr. conceded that William Fry gave him an overview of the documents that he was asked to sign. This was not something that he had addressed in his evidence in chief. Thirdly, the suggestion that the advice was not given is utterly inconsistent with the terms of the document which Mr. Crosbie accepts that he signed (with the authority of the defendant). The document records on its face the nature of the advice that was given. For the reasons explained above, that advice seems to me to encapsulate what is required for the purposes of 17 (1) (a) (iiia) of the 1980 Act.
67. Furthermore, having signed the document which records the giving of advice, I do not believe that it is open to Mr. Crosbie Jnr. to now contend that such advice was not given. The truth is that the advice given is apparent on the face of the document which Mr. Crosbie signed. Moreover, no case was made at the hearing that the defendant is entitled to rely on the defence of non est factum in relation to the renunciation. In this context, the Court of Appeal in Allied Irish Banks Plc v. Higgins [2015] IECA 23 has reiterated that, in accordance with the decision of the House of Lords in Saunders v. Anglia Building Society [1971] AC 1004, three conditions must be satisfied before the defence of non est factum can be accepted namely:-
(a) That there was a radical or fundamental difference between the document that a person signed and what that person thought he was signing;
(b) The mistake must have been as to the general character of the document as opposed to its legal effect; and
(c) That there was a lack of negligence i.e. that the person signing the document took all reasonable precautions in the circumstances to find out what the document was.
68. Although no defence of non est factum has been pursued, it seems to me that a similar principle applies by analogy in the context of the renunciation here insofar as it has been submitted by the defendant that, contrary to the terms of para. 3 of the renunciation, the defendant did not have the benefit of legal advice. While I appreciate that Mr. Crosbie Jnr. was asked to sign a significant number of documents, it is clear from his evidence that he did not take the opportunity to ask William Fry any questions about the contents of the documents and he likewise did not take the opportunity to raise any queries in relation to the documents. Mr. Crosbie took this course even in relation to the lease itself. In the course of his cross-examination, he was asked whether he was aware that the lease contained a covenant that a Deed of Renunciation would be executed by the defendant, as tenant. His answer was:-
“A. No, the only thing I familiarised myself with was the user clause because I just wanted to be specific about that.
Q. Would it be fair to say that when it came to the detail of the various covenants, you didn’t read those and you took those to be sort of legal matters and you didn’t concern yourself with them?
A. Possibly”.
69. Mr. Crosbie Jnr. is undoubtedly a very intelligent man. He was signing documents in a solicitor’s office. The very fact that he had to attend a solicitor’s office to sign documents would have carried its own message. The renunciation in question is clearly headed: ” RENUNCIATION OF RIGHTS TO A NEW TENANCY “. I find it impossible to accept that, in these circumstances, the defendant is entitled to contend that the legal advice recorded in para. 3 of the renunciation was not duly given to a defendant prior to its execution by Mr. Crosbie Jnr. on the defendant’s behalf.
70. In the course of the hearing, a suggestion was made on behalf of the defendant that, in the circumstances of this case, it should have been advised not to execute a renunciation. It was also argued on behalf of the defendant that the only advice that would suffice for the purposes of satisfying the s. 17 (1) (a) (iiia) requirement was positive advice that it was in the tenant’s interest to renounce and that there was no evidence here that went that far. However, no authority was cited in support of either of these propositions. Nor can I find any support for them in the text of s. 17 (1) (a) (iiia) of the 1980 Act (as amended by the 2008 Act). As noted previously, the Act provides no guidance as to the advice to be given. For the reasons already explained above, I believe that what the Oireachtas had in mind was that a tenant should be advised of the nature of the right which would otherwise be available to it in the absence of a renunciation so that the tenant will understand the significant effect any renunciation will have. I cannot see anything in the language of the sub-s. either to require that a tenant should be advised against entering into a renunciation or to require that the only form of advice that would work is positive advice that it is in the tenant’s interest to renounce.
71. There is no suggestion, here, that the defendant or Mr. Crosbie Jnr. (who signed the renunciation on its behalf) were to be treated as vulnerable persons or that the renunciation constituted an improvident transaction. While it was suggested, in the course of argument, that the arrangements put in place for the defendant, as part of the overall arrangements entered into between Mr. Crosbie Snr. and his companies on the one hand and the plaintiff on the other, was not in the defendant’s interests, that stopped well short of suggesting that the transaction was improvident. Moreover, the suggestion that the move to Promenade Road was not in the defendant’s interest was never substantiated by any appropriate analysis or detailed argument. The defendant (and Mr. Crosbie Jnr. acting on its behalf) are very far removed from the positon of the vulnerable donor considered by Budd J. in Gregg v. Kidd [1956] IR 183 or by the Supreme Court in Carroll v. Carroll [1999] 4 IR 241. In these circumstances, I cannot see any basis for the contention that only positive advice to proceed will suffice or for the contention that the tenant must be advised not to proceed. Equally, I cannot see any basis to suggest that a tenant (who, in contrast to the donors in Gregg v Kidd and Carroll v Carroll , is a commercial entity capable of weighing where its business interests lie) must be advised not to renounce. No authority for that proposition has been identified. Nor was any principle of law or logic identified that would support the proposition.
72. As noted above, it was also argued that the advice given by William Fry to the defendant in relation to the renunciation could not be said to be ” independent ” as required by s. 17 (1) (a) (iiia) (as amended). It was argued that William Fry were ” conflicted ” in circumstances where they also acted for Mr. Crosbie Snr. and the other companies controlled by him. It was argued that there was a conflict between the interests of Mr. Crosbie Snr. and his other companies on the one hand (in seeking to come to terms with NAMA) and the interests of the defendant (which it should be noted was also controlled by Mr. Crosbie Snr. at this time) on the other. The suggestion was that Mr. Crosbie Snr. and his companies were anxious to finalise the arrangements with NAMA (which required the sale of the Tolka Quay Road premises) while, on the other hand, the defendant had a manifest interest in remaining either in the Tolka Quay Road premises or in some other premises within Dublin Port.
73. In my view, the defendant faces a significant difficulty in seeking to put forward this argument. Although a witness statement was furnished by Mr. Crosbie Snr., he was not ultimately called as a witness by the defendant. I therefore heard no sufficiently detailed evidence as to the nature of the arrangements between Mr. Crosbie Snr. and his companies, on the one hand, and NAMA, on the other. I am therefore not in any position to make any necessary findings of fact in relation to the alleged conflict of interest. The evidence of Mr Crosbie Jnr did not substantiate the existence of such an alleged conflict.
74. Furthermore, even if this evidential difficulty did not arise, I cannot see any legal basis for the defendant’s contention. In my view, when the Oireachtas spoke of ” independent ” legal advice, it clearly had in mind advice which is independent of the landlord. In this context, s. 17 (1) (a) (iiia) must be seen in context. It is a provision that deals with the rights of a landlord and tenant inter se . It is situated within Part II of the 1980 Act. The entire of that part is concerned with the right to new tenancies as between landlord and tenant. Part II is not concerned with third parties at all. Thus, when s. 17 (1) (a) (iiia) refers to ” independent legal advice in relation to the renunciation “, it seems to me to follow that what the Oireachtas had in mind was legal advice in relation to the renunciation which is independent of the other party to the landlord and tenant relationship – namely the landlord. It is crucial that the advice should be given by someone who is independent of the landlord so as to ensure that the tenant is not influenced to grant the renunciation as a consequence of advice that is given by a lawyer associated with the landlord. This is consistent with the approach which the courts take in a range of circumstances involving the validity of inter partes transactions. Thus, for example, in the case of improvident transactions, as the decision in Carroll v Carroll illustrates, the courts will frequently set such transactions aside where it is shown that the only advice available to the donor was advice from a solicitor who also acted for the donee.
Is the defendant estopped from contending that it did not receive independent legal advice?
75. In the circumstances, I am satisfied that the defendant had the benefit of independent legal advice within the meaning of s. 17 (1) (a) (iiia) of the 1980 Act (as amended). Lest I am wrong in that conclusion, I will, for completeness, also consider the alternative argument put forward by the plaintiff – namely that the defendant is estopped from contending that it was not in receipt of independent legal advice within the meaning of the subsection.
76. The plaintiff relies on two species of estoppel for this purpose namely estoppel by convention and estoppel by representation. The nature of both forms of estoppel was addressed by Charleton J. in the Supreme Court in Ulster Investment Bank Ltd v. Rock Rohan Estate Ltd [2015] 4 IR 37. In that case, Charleton J., at p. 52, endorsed the explanation of estoppel by representation given in the 32nd edition of Snell where the author stated at para. 12 – 009:-
“Where by his words or conduct one party to a transaction freely makes to the other a clear and unequivocal promise or assurance which is intended to affect the legal relations between them (whether contractual or otherwise) or was reasonably understood by the other party to have that effect, and, before it is withdrawn, the other party acts upon it, altering his or her position so that it would be inequitable to permit the first party to withdraw the promise, the party making the promise or assurance will not be permitted to act inconsistently with it”.
77. At p. 53, Charleton J. explained that, where the estoppel alleged is based on a representation, it should be a relatively straightforward process to identify whether the relevant requirements have been met. On the same page, he also explained how estoppel by convention may arise. He said:-
“Where, … it is a matter of both parties proceeding on the basis of a clear common understanding, the mutual convention of the parties may suffice as a foundation for estoppel. Depending on the facts, estoppel may become operative in that situation, but only because of that common understanding. In Treitel’s The Law of Contract, 13th Ed. (Sweet & Maxwell, 2011), at pp. 124 and 125, the editor sets out the law thus:
‘3.094. Estoppel by convention may arise where both parties to a transaction act on an assumed state of fact or law, the assumption being either shared by both or made by one and acquiesced in by the other. The parties are then precluded from denying the truth of that assumption, if it would be unjust or ‘unconscionable’ to allow them (or one of them) to go back on it. Such an estoppel differs from estoppel by representation and from promissory estoppel in that it does not depend on any ‘clear and unequivocal’ representation or promise. It can arise where the assumption was based on a mistake spontaneously made by the party relying on it, and acquiesced in by the other party, though the common assumption of the parties, objectively assessed, must itself be ‘unambiguous and unequivocal'”.
78. In this case, there was a clear representation made in para. 3 of the renunciation (quoted para. 62 above). The representation is quite clear in its terms that the defendant had received independent legal advice. Furthermore, the evidence of Mr. Colman was that he relied on the fact that the language of para. 3 was included in the renunciation. In the course of his direct examination he was asked about para. 3 of the renunciation:-
“Q Can you explain to the court from your perspective as a conveyancing solicitor, what’s the importance of that paragraph in a renunciation?
A. Well I suppose for the renunciation to be valid there has to be independent legal advice and you would expect either there to be a reference to who the solicitor providing the advice was or that they would countersign or witness the Deed of Renunciation.
Q. Would a renunciation in writing be acceptable if it didn’t contain that confirmation?
A. Well you would probably need an additional document to back it up to say that I received independent legal advice, so arguably no, it’s a prerequisite for a renunciation.
Q. What reliance, if any, did you place on the fact that the renunciation in writing contained that statement?
A. Well that it is valid on the basis that there is (a) renunciation of the rights and (b) there is independent legal advice….” (Emphasis added).
79. This element of Mr. Colman’s evidence was not explored on cross-examination. Understandably, the cross-examination focused on the series of errors in the document. He was also cross examined in relation to the covenant in the lease to execute a Deed of Renunciation. It was also suggested to him that William Fry were not in a position to give independent legal advice. In the course of his cross-examination, Mr. Colman suggested that the independent legal advice that is required to be given to a tenant is advice as to the effect of the renunciation. The following exchange also took place between counsel for the defendant and Mr. Colman:-
“Q. You see I am suggesting to you, Mr. Colman, that where a Deed of Renunciation renouncing rights which are essentially if (sic) ease of the landlord here, your client, that it would be good practice and I would suggest to you obligatory for the landlord to ensure that the renunciation, in terms of a renunciation, that the tenant got independent legal advice and executed the renunciation in a proper way.
A. You know, I wouldn’t see that as an obligation of the landlord. I disagree. I think there was a solicitor who purported to give independent legal advice and there was a confirmation that the rights that may arise are renounced and I would have understood on that basis that it was properly executed.”
80. No evidence was led by the defendant to substantiate the proposition that it was either obligatory or good practice for the landlord to take the steps outlined in the question put to Mr. Colman, on cross-examination, quoted in para. 79 above. I therefore have no contrary evidence to that given by Mr. Colman.
81. I have come to the conclusion that a clear case of estoppel by representation arises. In taking that view, I draw attention to the following: –
(a) In the first place, as I outlined above, a clear representation was made in para. 3 of the renunciation that independent legal advice was provided to the defendant.
(b) Secondly, the statements made in a document such as the renunciation were clearly intended to be acted upon by the recipient of the renunciation (namely the plaintiff). The renunciation was clearly put forward as a legal document signed by the defendant as required by the plaintiff in order to close the transactions contemplated by the contract entered into by Mr. Crosbie Snr. and his companies on the one hand and the plaintiff on the other.
(c) Thirdly, the evidence of Mr. Colman establishes that the representation that independent legal advice had been provided to the defendant was acted upon by the plaintiff.
(d) Fourthly, the insistence by Mr. Colman that the renunciation (containing this representation) should be available on closing of the transaction reinforces his evidence that the plaintiff required a renunciation in order to close the transaction.
(e) Having entered into the transaction on that basis, it would clearly be inequitable now to permit the defendant to resile from the representation made in expressed terms in para. 3 renunciations.
82. For the reasons outlined in para. 81, I am of the view that, even if I am wrong in the conclusion which I have reached in relation to the availability of independent legal advice, the defendant is estopped by its own representation (made in writing in para. 3 of the renunciation) from contending that it did not receive independent legal advice. In these circumstances, it appears to me to be unnecessary to consider the case made by the plaintiff based on estoppel by convention.
The plaintiff’s alternative case to enforce clause 4.35 of the Lease
83. If I am wrong in the conclusions reached by me in relation to the interpretation of the renunciation, the availability of independent legal advice and the alternative conclusion reached by me in relation to estoppel, there is one further aspect of the plaintiff’s case for possession that requires to be considered – namely the case for specific performance of clause 4.35 of the lease. The terms of that clause have already been quoted in para. 6 above. In summary, clause 4.35 contains a covenant on the part of the defendant to execute a Deed of Renunciation waiving any renewal rights ” in accordance with s. 47 Civil Law (Miscellaneous Provisions) Act, 2008″.
84. In response to this element of the plaintiff’s case, the defendant makes two arguments as follows: –
(a) In the first place, the defendant maintains that clause 4.35 of the lease is caught by s. 85 of the 1980 Act and is therefore void;
(b) Secondly, the defendant submits that the plaintiff has lost the ability to rely on the covenant in circumstances where the plaintiff did not seek to rely on it until after it had exercised the break option in the lease.
85. I propose to deal with these arguments in reverse order. The second argument can be readily disposed of. In my view, the second argument ignores the provisions of clause 6.13 (h) of the lease which expressly provides that any termination under the break clause: ” shall be without prejudice to any right or remedy of either the Landlord or the Tenant in respect of any antecedent breach by the other of any of their respective covenants contained in this Lease”. In my view, clause 6.13 (h) makes very clear that any failure by the tenant (or by the landlord as the case might be) to comply with a covenant in the lease will be enforceable even after the termination of the lease pursuant to the break option. In this context, the obligation of the tenant (if it is enforceable) under clause 4.35 to execute a Deed of Renunciation is not dependent on any demand made by the landlord. It is a self-standing obligation to execute a Deed of Renunciation. The opening words of clause 4 of the lease makes clear that the tenant’s obligations under the covenants which follow are to continue throughout the term of the lease. Thus, the obligation to comply with clause 4.35 continued throughout the term of the lease. It was not dependent upon a demand being made. Accordingly, on the assumption that clause 4.35 is enforceable, the failure of the tenant to comply with that obligation during the currency of the lease constituted an ” antecedent breach ” of the covenant contained in clause 4.35. If the covenant is a lawful covenant (an issue addressed below) it remained enforceable even after the exercise of the break option by the plaintiff and the expiry of the lease.
86. On the other hand, the argument made by the defendant in relation to s. 85 of the 1980 Act raises a significant issue. On its face, clause 4.35 of the lease requires the defendant to execute a Deed of Renunciation waiving any renewal rights in accordance with s. 47 of the 2008 Act. By its terms, on the execution of the lease, the defendant committed itself to executing a Deed of Renunciation come what may. This is the very basis on which the plaintiff has sought specific performance of the defendant’s obligation under clause 4.35. However, s. 85 of the 1980 Act (as amended by s. 6 of the 1994 Act and s. 48 of the 2008 Act) expressly renders void (a) any provision of a contract excluding the application of the 1980 Act or (b) any provision which varies, modifies or restricts the application of the Act in anyway. The defendant argues that, in so far as it commits the defendant to execute a renunciation, clause 4.35 has the effect of excluding the application of those provisions of the Act dealing with the right to a new business tenancy. The clause, by its terms, does not make the renunciation conditional upon the provision of independent legal advice.
87. The defendant draws attention to the way in which s. 85 (2) of the 1980 Act (as substituted by s. 47 of 2008 Act) expressly provides that subs. (1) (i.e. the subs. which renders void any contractual provision excluding or restricting the application of the Act) does not apply to a renunciation referred to in s. 17 (1) (a) (iii) (as inserted by s. 47 of the 2008 Act). Thus, a renunciation which complies with the requirements of s. 17 (1) (a) (iii) of the 1980 Act is not void. However, the defendant argues that clause 4.35 of the lease cannot take the benefit of s. 85(2) in circumstances where it is not itself a renunciation which complies with the requirements of s. 17 (1) (a) (iii). In particular, clause 4.35, by its terms, constitutes a commitment by the defendant, given in advance of the receipt of legal advice, to execute a renunciation. The defendant accordingly argues that clause 4.35 cannot comply with the requirements of s. 17 (1) (a) (iii).
88. In my view, the argument made by the defendant has very significant force. I accept fully that, as Wylie observes in ” Landlord and Tenant Law “, 3rd Ed., 2014, at para. 30.26, the way in which the 2008 Act amendment drops any reference to ” prior to the commencement of the tenancy ” (which had appeared in the amendment made by the 1994 Act) means that a renunciation can be made at any time, i.e. before, at the time of, or after the grant of a tenancy. However, it seems to me to be clear from the terms of s. 17 (1) (a) (iiia) of the 1980 Act (as inserted by s. 47 of the 2008 Act) that the independent legal advice to be provided to the tenant must exist at the time of renunciation. This seems to me to follow from the language of the subsection which expressly refers to: ” the tenant … has received independent legal advice in relation to the renunciation …” (emphasis added). Moreover, the protection of independent legal advice would be of no benefit to the tenant if it were to be provided after the renunciation had been executed. As noted earlier, the underlying policy of the provision appears to be clear – namely that a tenant should be aware of the valuable right being renounced before renouncing that right.
89. It might, of course, be said that there is no reason why the advice could not be given before the formal renunciation is executed by the defendant pursuant to clause 4.35. However, that would seem to entirely undermine the policy of the Act. By committing the tenant to renounce, clause 4.35 could plainly have the effect that a tenant would lose the right to a new tenancy before the tenant has had the benefit of any independent legal advice as to the nature of the right to be renounced. It would reduce the requirement that the tenant should have the benefit of independent legal advice to a purely formal step. The tenant would be committed to executing the deed of renunciation irrespective of the advice subsequently given and irrespective of whether the tenant had understood (prior to the execution of the lease) the valuable right that would otherwise be available in the event that the conditions for the entitlement to a new tenancy were satisfied.
90. I am very conscious that, in circumstances where the renunciation has become the main plank of the plaintiff’s case, the issue in relation to the enforceability of clause 4.35 was not addressed extensively in the plaintiff’s argument. I am also very conscious that, in light of the view which I have formed in relation to the renunciation, any view I express on this issue is strictly obiter . Subject to those very important qualifications, it seems to me that the argument of the defendant in relation to this aspect of the case is correct. On the basis of the arguments which I have heard, it seems to me that clause 4.35 is caught by the prohibition contained in s. 85 (1) of the 1980 Act. It is clearly a provision which restricts the rights of the defendant under the 1980 Act and s. 85 (1) therefore prima facie applies. In circumstances where it cannot itself be said to constitute a renunciation which complies with the requirements of s. 17 (1) (a) (iiia) of the 1980 Act, it does not seem to me to have the benefit of s. 85 (2). In those circumstances, it must follow that clause 4.35 is void and unenforceable.
91. I do not believe that it is necessary to deal with the plaintiff’s alternative argument, based on estoppel principles, in relation to clause 4.35. If clause 4.35 is void under s. 85 (1) of the 1980 Act, I cannot see any basis on which estoppel could be said to arise. If I am right in my view that clause 4.35 of the lease is void, then the lease must be interpreted as though clause 4.35 did not exist within it. In those circumstances, the argument made by the plaintiff that clause 4.35 estops the defendant from claiming a new tenancy in the premises must, of necessity, fall away.
92. The view set out in para. 90 above is, however, of no avail to the defendant. For the reasons stated earlier in this judgment, I am of opinion that the plaintiff is entitled to rely on the renunciation which was in fact executed after the necessary legal advice had been given. It follows that the plaintiff must also be entitled to an order for possession of the Promenade Road premises.
The covenants to repair
93. In addition to the claim for possession, the plaintiff also seeks to enforce the repairing covenants in the lease. In its statement of claim, its amended statement of claim and its re-amended statement of claim in the possession proceedings, the defendant relies on clause 4.6, 4.7 and 4.8 of the lease in support of its contention that the defendant is in breach of its repairing obligations under the lease. The plaintiff contends, on the basis of a report from Mr. Scott, that it has sustained damages of the order of €307,479.24 (inclusive of estimated professional fees) arising out of the alleged failure by the defendant to honour its repairing obligations. The single largest element of this claim relates to the concrete hardstanding (i.e. the concrete surface of the yard contained in the Promenade Road premises). The amount claimed in respect of this item is €115,830.00. It is alleged that the concrete hardstanding has been allowed to fall into a poor state of repair due to the operations of the defendant.
94. Before addressing the complaints made by the plaintiff, it is necessary to consider the nature of the repairing obligation imposed on the defendant under the lease. In this context, the language of clauses 4.6, 4.7 and 4.8 is important. Insofar as clause 4.6 is concerned, it contains a covenant on the part of the defendant to:-
“…to keep clean and tidy and to maintain, repair, replace and reinstate and to put into and keep in good order repair and condition the interior and exterior of the Demised Premises which shall include the obligation to rebuild the entire or any part of the buildings on the Demised Premises and every part of it and any additions, alterations and extensions to it including, without derogating from the generality of the foregoing, the roof, structure, drains, foundations, walls…”.
95. However, as the defendant has emphasised in the course of the hearing, this clause is not unqualified in its terms. The final sentence in clause 4.6 (a) is important:-
“Notwithstanding the above the Tenant shall not be obliged to put the Demised Premised (sic) into any better condition than evidenced in the Condition Survey to be carried out by the Landlord within eighteen months of the Term Commencement Date and to be appended to Schedule 6 hereto”.
96. The final sentence of clause 4.6 (a) must be seen against the backdrop of the condition of the premises at the time the defendant took the lease. Although the plaintiff had agreed to spend €100,000 on the premises, they were nonetheless in a very rudimentary state. Furthermore, no work was intended to be done on the surface of the concrete hardstanding which, from photographs which were produced at the hearing, was already significantly cracked at this time. The last sentence in clause 4.6 (a) was therefore clearly included to provide some measure of protection for the defendant as incoming tenant so as to ensure that it should not be required, as a consequence of the ordinary legal effect of a repairing covenant, to carry out works to the existing premises which would effectively involve an improvement of the premises over and above their pre-existing state of repair. As Buckley L.J. explained in Lurcott v. Wakely [1911] 1 KB 905 at pp. 923-924 (a case discussed by the Supreme Court in Gro ome v. Fodhla Printing Company Ltd . [1943] I.R. 380) a common form repairing covenant can operate to require a tenant, in effect, to improve the demised premises through the carrying out of necessary repairs. As he said:
“Repair always involves renewal; renewal of a part; of a subordinate part. A skylight leaks; repair is effected by hacking out the putties, putting in new ones, and renewing the paint. A roof falls out of repair; the necessary work is to replace the decayed timbers by sound wood; to substitute sound tiles or slates for those which are cracked, broken or missing; to make good the flashings, and the like. Part of a garden wall tumbles down; repair is effected by building it up again with new mortar, and, so far as necessary, new bricks or stone. Repair is restoration by renewal or replacement of subsidiary parts of a whole….”.
97. It should be noted that the plaintiff accepts that no condition survey was ever carried out. As a consequence, there was never anything appended by way of Schedule 6. The obligation to carry out the condition survey was clearly placed by clause 4.6 (a) on the plaintiff as landlord. That is clear from the language quoted above. The failure of the plaintiff to carry out such a condition survey is of some importance in circumstances where the plaintiff clearly bears the burden of proof insofar as this element of the case is concerned. It is for the plaintiff to establish that the defendant is in breach of the covenant to repair.
98. Although clause 4.7 is also relied on by the plaintiff, it did not feature significantly in the course of the hearing. Under clause 4.7, the defendant is under an obligation to keep the Promenade Road premises in a condition fit for use and in a condition compliant with all relevant Health and Safety regulations. In the closing submissions made on behalf of the plaintiff, the obligation under clause 4.7 was treated in the same way as the obligation which arises under clause 4.6 (a) and clause 4.8. Furthermore, the obligation imposed by each of those clauses was collectively characterised (on p. 47 of the transcript on Day 6) as an obligation to ” keep the premises in repair, in the state of repair that they were in at the commencement of the demise “. In these circumstances, it does not seem to me to be necessary to analyse the language of clause 4.7 any further.
99. The plaintiff placed significant reliance on clause 4.8 (a) which provides as follows:-
“At the expiration or sooner determination of the Term to quietly yield up the Demised Premises to the Landlord in such good and substantial repair and condition as shall be in accordance with the covenants on the part of the Tenant in this Lease…”.
100. Again, the language of clause 4.8 (a) is not unqualified. It will be seen that the obligation to yield up the premises in good and substantial repair is qualified by the words: ” As shall be in accordance with the covenants on the part of the Tenant in this Lease”. Accordingly, the obligation in clause 4.8 (a) is no greater than the obligation imposed by clause 4.6 (a) under which the tenant is not obliged to put the Promenade Road premises into any better condition than evidenced in the Condition Survey to be carried out within eighteen months of the commencement of the terms of the Lease.
101. In the course of his evidence, Mr. Kennedy conceded that there had been a failure to carry out a condition survey as envisaged by clause 4.6 (a) of the lease. He had no explanation as to why it was not carried out. When Mr. Barry subsequently gave his evidence he also acknowledged that no condition survey had been carried out. However, he drew attention to a number of photographs that had been taken on 26th October, 2011 after the previous tenant (Heatons) had vacated the Promenade Road premises. He also drew attention to a number of other photographs that had been taken on 4th February, 2013 during the course of the carrying out of the works to the value of €100,000 prior to the defendant taking up occupation of the premises.
102. However, these photographs (such as they are) fall far short of a condition survey. Furthermore, the quality of the photographs is extremely poor. A significant number of the photographs are so dark and indistinct as to be virtually indecipherable. Unfortunately, the photographs were not taken (or arranged) in any methodological way. They do not record every aspect of the condition of the premises either in October 2011 or in February 2013. Nonetheless, the photographs give some impression of the state of the premises prior to its occupation by the defendant. Thus, for example, a photograph taken on 26th October, 2011 at 10.43 a.m. (regrettably no steps were taken by the plaintiff to number the photographs for identification purposes) shows the very rudimentary nature of the corrugated iron sheds along one side of the premises. They are clearly of a very basic nature. The same photograph shows that the concrete hardstanding was already significantly cracked as of 26th October, 2011. It is important to keep in mind in this context that no work was done to the concrete hardstanding as part of the works carried out prior to occupation of the premises by the defendant.
103. Similarly, a photograph taken at 10.43 a.m., on the same day (with a portacabin in the background) shows the concrete hardstanding with several potholes which are partially filled with water. In circumstances where the foreground of the photograph is in the shade (and is accordingly indistinct) it is difficult to say anything more about the surface of the concrete in that area of the yard. However, a photograph taken of a wider area on the same day at 10.42 a.m. (with sheds on the right hand side of the photograph and the office building and entrance gate in the background) again shows many puddles in an expansive area of the concrete hardstanding shown. This photograph also suggests that the area of concrete in the vicinity of the entrance gate and the office building is already significantly cracked. There are also areas of cracking in the middle distance to the left hand side of the photograph. Regrettably, the foreground of the photograph is so dark and indistinct as to be of no assistance.
104. There is a further photograph taken at 10.50 a.m. on 26th October, 2011 which shows the concrete hardstanding in the foreground with the corrugated iron sheds in the background and an estate motor car. The photograph is very dark and indistinct. However, one of the striking features of the photograph is that it shows the concrete hardstanding laid out in largely rectangular sections with significant gaps between each section. It also shows extensive cracking in the concrete hardstanding in the right foreground of the photograph.
105. A somewhat better quality photograph was taken at 10.52 a.m. on the same day. It shows a view of the concrete hardstanding looking towards the office building with the entrance gates to the premises on the right hand side of the photograph. In the only well-lit section of this photograph (in the right foreground) one can see the concrete hardstanding with substantial and extensive cracking. This is consistent with what is seen of the hardstanding shown in the photograph taken at 10.42 a.m. on the same day (discussed in para. 103 above). There also seems to be cracking in the concrete hardstanding in the left foreground of the photograph but it is difficult to be certain of this. What is clear is that even in this section of the yard, the surface is very uneven as confirmed by the large puddle of water in the immediate left foreground.
106. Insofar as the February 2013 photographs are concerned, their quality is, again, very poor. There is one photograph taken at 11.04 a.m. on 4th February, 2013 (again, regrettably, the photographs were not numbered for identification purposes by the plaintiff) which shows the area of the concrete hardstanding immediately adjacent to the entrance gate to the yard. The surface is extremely pitted and there are also significant cracks.
107. A photograph taken at 10.08 a.m. on 4th February, 2013 shows the sheds in the background. This element of the photograph is well lit. Although work had been done to the sheds, it is very much of a patchwork nature and the fundamental condition of the sheds (as basic corrugated iron structures) largely remained the same. The foreground (which unfortunately is quite dark) shows some of the concrete hardstanding. Again, it is noteworthy that the photograph shows (particularly on the right hand side where it is reasonably well lit) very significant and extensive cracking in the concrete hardstanding.
108. There is a further photograph taken at 10.46 a.m. on 4th February, 2013 which shows some panels of corrugated iron which had been replaced apparently as part of the works carried out by the plaintiff but it is clear that only occasional panels were replaced. The overall appearance of the corrugated shell of the sheds remains very untidy and rudimentary.
109. Some emphasis was placed by the plaintiff on a photograph taken at 10.58 a.m. on 4th February, 2013. This shows an area of low bund walls with an area of the concrete hardstanding in the background and the corrugated iron sheds in the distant background. The section of the concrete hardstanding in the foreground (while appearing to be extensively pitted) does not exhibit the same level of cracking as can be seen in some of the photographs discussed above. However, it could not conceivably be suggested that this photograph is representative of the state of the yard as a whole. In the first place, it is only one section of the concrete hardstanding which is shown clearly. Most of the concrete hardstanding shown in the photograph cannot be seen clearly at all. Secondly, the remaining photographs (discussed above) convey a different picture of the state of the concrete hardstanding as of 2011 and 2013.
110. Moreover, when the plaintiff’s expert, Mr. Scott came to give his evidence, there was no corresponding photograph to that taken on 4th February, 2013 (taken at 10.58 a.m.) showing the same location. In fact, notwithstanding Mr. Barry’s evidence that the photographs of 2011 and 2013 were intended to convey some picture of the state of the premises prior to their occupation, no attempt was made on behalf of the plaintiff to co-relate the photographs taken in 2018 with the photographs taken in 2011 and 2013. It would have been a very simple matter for the plaintiff to arrange that up to date photographs would be taken of the same locations and from the same angles as the photographs taken in 2011 and 2013. Yet, this very obvious and basic step was not taken. As a consequence, it is impossible to conclude that any one area of the concrete hardstanding (or indeed of the corrugated iron cladding) is in a worse condition now than it was when the defendant first occupied the premises.
111. Mr. Scott took a number of photographs in the course of his inspection of the premises in 2018. They show extensive cracking of the hardstanding. They also purport to note, for example, that there are ” excessive gaps between concrete hardstanding slabs “. However, the very same gaps are evident in the photograph taken at 10.50 a.m. on 26th October, 2011 as described in para. 104 above. These gaps in the hardstanding clearly existed at the time the defendant took up occupation of the premises and appear to have been part of the design of the hardstanding.
112. Insofar as the cracking in the concrete hardstanding is concerned, the defendant’s witnesses were entirely frank that the cracking is likely to have increased since the defendant took up occupation. This was accepted by Mr. Crosbie Jnr., by Mr. John Foskin, the defendant’s transport manager and also by Mr. Val O’Brien, the surveyor, called as an expert witness by the defendant. Mr. O’Brien’s evidence, on Day 4, was very stark. He explained that a cracked concrete surface is likely to crack further the more it is used. His evidence was as follows:-
“…if you have cracked concrete hardstanding, any form of crack, cracked roadway and you drive across it, every time you drive across it, particularly heavy vehicles it can only crack more. There was some reference I noticed in the transcripts to concrete rocking in places underneath the foot. If you’ve a cracked surface of course it’s going to rock. It would have been rocking back in 2013. But drive a lorry across it once or twice and that big fragment is going to go into two or three fragments and drive across it again it’s going to go into more. It will eventually end up in dust. It’s inevitable.”
113. In the course of his cross-examination, it was suggested to Mr. O’Brien that the broken bits of concrete can be taken out and replaced with new concrete. The relevant exchange between counsel for the plaintiff and Mr. O’Brien on Day 4 is illuminating:-
“Q. so if we take for example just a residential building that’s an old building, that’s one leaf wall rather than a cavity wall and you’re putting that into a state of repair, you can put it into a state of repair with a single leaf wall, you don’t have to knock it down –
A. Agreed.
Q. – and build a new cavity wall.
A. I agree.
Q. And even though it doesn’t meet modern standards in terms of comfort or anything like that, you will repair the wall as is.
A. Agreed in that context, yes, but you can’t do that with a yard. It is completely broken.
Q. And you can take out the broken bits and you can put in replacement concrete?
A. To break again?
Q. Well, it will break again in the future but that’s to put it back into the state and condition it was.
A. There is no loss to the landlord. Taking out something to put something else that is going to break up the next time a lorry drives on it? Not going to happen. Complete and utter waste of money. The landlord wouldn’t even benefit from it. The landlord does not gain by somebody putting in substandard concrete. Of course you could cut out and repair the cracks. You could take – what Stephen [Scott] has allowed for is not all the yard, he has probably allowed for too much but you could break out – there is two areas where it is particularly badly cracked, you could break those areas out and put in a bit of concrete, yes, you could, of course you could.
Q. And Mr. Scott is not suggesting that the entire yard is being replaced. As you say, he has identified the bad portions of the yard.
A. Yes, but I would suggest on any person’s money, €89,000 putting concrete into a hole that is going to crack doesn’t make sense. It doesn’t make any form of sense and I don’t think it is the intent of the lease or the intent of the law to support that sort of illogical expenditure in terms of trying to, when there is already some lack of clarity about the degree of repair and the degree of cracking in the concrete before we started.”
114. Although Mr. O’Brien was criticised (with some justification) for taking a somewhat adversarial approach in some aspects of his evidence, this exchange between counsel and Mr. O’Brien highlights a fundamental difficulty with this part of the plaintiff’s case. In light of the photographs which exist from 2011 and 2013, it is undoubtedly the case that, at the time the defendant took up occupation of the Promenade Road premises, the concrete hardstanding was already significantly cracked, heavily pitted, and very uneven. While there may have been some areas where no cracking had occurred, I have not been provided with any evidence to identify those areas and to show that those particular areas have become cracked for the first time since the defendant first entered the premises. That evidence is singularly lacking. Bearing in mind the proviso to clause 4.6 (a) (quoted above) the plaintiff, if it is to succeed in this element of its case, must prove what elements of the cracking that are seen in the hardstanding today have arisen since the defendant first occupied the premises. Having regard to the proviso to clause 4.6 (a) there is no basis on which the plaintiff can contend that it is entitled to have every crack in the hardstanding repaired by the defendant. As noted above, the plaintiff bears the burden of proof in demonstrating that the defendant is in breach of its covenant. If the defendant is to be held liable, the plaintiff would have to be in a position to identify which of the broken bits of concrete are due to the defendant’s user of the premises rather than the pre-existing condition of the premises so that those particular items can be taken out and replaced with new concrete.
115. In my view, the plaintiff has wholly failed to prove which elements of the cracking in the concrete have arisen since the defendant took up occupation of the Promenade Road premises. Thus, notwithstanding the frank admissions by the defendant’s witnesses that the cracking has increased since the defendant took up occupation of the premises, there is no mechanism by which the court, on the basis of the evidence available, can evaluate this element of the plaintiff’s claims. As noted at the outset, it was for the plaintiff to prove the breach of covenant. Having regard to the final sentence of clause 4.6 (a), if the plaintiff is to succeed in relation to this element of its claim, the plaintiff must, in my view, prove the element of disrepair which has arisen over and above the state of disrepair of the premises at the time the defendant entered into occupation. Had the plaintiff carried out a condition survey it might have been in a position to prove this element of the case. Similarly, if the plaintiff had taken the simple expedient of taking a comprehensive suite of photographs of the premises immediately prior to the defendant moving in, the plaintiff might have been in a position to establish a yardstick against which the alleged state of disrepair of the concrete hardstanding might have been assessed. All the plaintiff would have to do, in such circumstances, would be to present a new suite of photographs of precisely the same locations (taken from the same angles) which would indicate to the court and to the defendant the extent of any alleged breach of the obligation to repair insofar as the concrete hardstanding is concerned. As noted above, the plaintiff had some photographs from 2011 and 2013 but they were far from complete and, moreover, they were of limited assistance in circumstances where they were of such poor quality. Furthermore, as noted above, the 2018 photographs that were taken were not taken by reference to the same locations and the same angles. Thus, even if the 2011 and 2013 photographs had been of better quality, it would still have been difficult for the plaintiff to prove this element of its case.
116. Quite apart from the considerations identified in paras. 114 to 115 above, I am also concerned about the futility of any exercise of repairing the concrete hardstanding. The evidence of Mr. O’Brien was very strong in this context. His position was entirely understandable. In this context, it seems to me that the exercise would be futile for two reasons. In the first place, it is impossible to understand how a tenant could put a cracked pavement into the condition it was in five years previously when it was already significantly cracked at that time. Having regard to the final sentence of clause 4.6 (a), if the surface of the yard was broken up at the time the defendant commenced occupation (which it was) the fact that it may be more broken up now does not require the defendant to put in place a smooth and even surface that never existed in the first place. In this context, it is very important to bear in mind that the repairing covenant here is qualified in a way that was absent in the repairing covenant considered by the Supreme Court in Groome v. Fodhla Printing Co. Ltd. [1943] IR 380 (on which the plaintiff sought to place significant reliance). If the final sentence in clause 4.6 (a) did not exist, I could well see that a tenant might have an obligation to replace the concrete surface of the yard even if it had been cracked at the time the tenant took up occupation. It is clear from the judgement of O’Byrne J. in Groome (with which Maguire C.J. agreed) at p. 401 that he took the view that this followed from the decision in Lurcott v. Wakely (from which the extract from the judgment of Buckley L.J. quoted in para. 96 above has been taken). Crucially, however, there was no qualification on the repairing covenant in either Lurcott v. Wakely or in Groome v. Fodhla Printing Co . In both cases, the repairing covenant was in fairly standard terms. It did not contain a qualification of the kind set out in the final sentence of clause 4.6 (a) of the Lease in this case.
117. The works which the plaintiff contends are necessary to the concrete hardstanding are also futile in a different sense. In this context, it is clear from the evidence of Mr. Kennedy on Day 2 of the hearing, that it is intended to subsume the Promenade Road premises into a bigger yard to be used by a customer of the plaintiffs. It is also clear from Mr. Kennedy’s evidence on the same day that it is not intended to retain the corrugated iron sheds. If the sheds are to go, and if the yard is to be subsumed into an adjoining premises, it is inevitable that works will have to be done to ensure that there is a similar surface in both premises at a similar level or height. In those circumstances, in my view, it is simply not credible that the current surface of the Promenade Road premises would be retained (even if it was not cracked to the extent it is now or to the extent it was prior to occupation by the defendant). Under cross-examination, Mr. Kennedy said that the intention was that the yard (when subsumed into the adjoining premises) would be used for trailers. Mr. O’Brien gave evidence that the appropriate surface that would be required for a modern yard fit to take substantial lorries would be either clause 804 aggregate or a 300mm reinforced concrete structure designed by a structural engineer. In the course of his evidence, Mr. Barry, the retired Estates Manager of Dublin Port, confirmed that clause 804 aggregate would be standard for other transport operations in the Port. While Mr. Barry sought to suggest that a concrete surface was more ” high-spec ” than clause 804, this is manifestly not so in the case of the hardstanding here as borne out by the photographs taken in 2011 and 2013. The concrete surface (unsupported by any reinforcement) was plainly unsuitable for the purposes of the heavy duty use to which it was put by the defendant and, before it, by Heatons, the timber merchants.
118. In light of the considerations identified in paras. 116-117 above, I have come to the conclusion that even if the plaintiff had been in a position to prove the breach of the repairing covenant in relation to the concrete hardstanding, it would be inappropriate to award any damages to the plaintiff in respect of that breach in circumstances where (a) as a consequence of the findings made earlier in this judgment, the plaintiff will recover possession of the premises and (b) it is apparent that the concrete hardstanding will not, in fact, be used in the future.
119. I have reached a similar conclusion in relation to the corrugated iron sheds. While Mr. Crosbie Jnr. frankly acknowledged that some damage had been done to the corrugated iron sheds while the defendant has been in occupation of the premises, in circumstances where the plaintiff is to recover possession of the premises, it would serve no useful purpose to direct that the defendant should repair the corrugated iron sheds in the manner suggested by Mr. Scott at a cost of approximately €15,000 (excluding professional fees). Under cross-examination, Mr. Kennedy conceded that the plaintiff did not intend to retain the sheds. In these circumstances, it would be wholly inappropriate to direct the defendant to compensate the plaintiff for the damage done to sheds which the plaintiff has no intention of using in the future.
120. In the course of his evidence, Mr. Crosbie Jnr. also conceded that the condition of the office had deteriorated to the extent that some relatively minor repairs and redecoration are required. In this context, however, I note that Mr. Kennedy, under cross-examination indicated that no decision had yet been made by the plaintiff to retain the office. His evidence was that, within the plaintiff, a debate about the future of the office building was ongoing. This requires to be clarified.
121. In Mr. Scott’s report, there are sundry other items which are raised. However, when Mr. O’Brien came to present his report, he indicated that these were matters that could readily be dealt with by negotiation and agreement between the surveyors for the parties. This led to the plaintiff, on the day prior to the commencement of the trial, to (somewhat belatedly) suggest to the defendant that such discussions should take place. An application was subsequently made to me on the first day of the hearing that the damages issue should be separated from the question of liability on the basis that it was hoped (but this could not be guaranteed) that, if discussions took place between the surveyors, the issue of damages would not trouble the court. That application was opposed at the time by counsel for the defendant. I can well understand why counsel for the defendant should take that course given the very late suggestion made by the plaintiff. In circumstances where the case had been fixed for hearing for a period of six days and where the plaintiff’s suggestion would inevitably mean splitting the trial with no guarantee that the damages issue would not require a court resolution, I took the view, in light of the defendant’s opposition to the application, that the most appropriate course was to direct that the trial should proceed in the usual way.
122. With regard to the sundry items that arise in Mr. Scott’s report, it strikes me, having now had an opportunity to consider all of the evidence, that these should be well capable of resolution between the parties. There is, clearly, not the same level of dispute between the parties in relation to these items as there was in relation to the concrete hardstanding and the corrugated iron sheds. I therefore believe that discussions should take place between the surveyors with a view to amicably resolving any issues which arise in relation to such items. Obviously, in light of the findings made by me earlier in this judgment, the defendant will now also have to vacate the premises. It will therefore be necessary for the defendant to remove all of its fixtures and fittings in the usual way. Again, it strikes me that it would make sense for the surveyors to discuss this issue also with a view to agreeing how this can be best achieved. If any further dispute arises between the parties either in relation to the sundry items mentioned above or in relation to the removal of fixtures and fittings, the matter can be re-entered before me.
The remaining covenants in issue
123. In the injunction proceedings, the plaintiff claimed that the defendant was in breach of a significant number of covenants in the Lease. These can, conveniently, be divided into three categories: –
(a) Covenants relating to environmental matters;
(b) Covenants as to user; and
(c) Covenant as to storage of fuel on the premises.
124. Insofar as the first of those categories is concerned (namely environmental matters) the principal ground of complaint made by the plaintiff related to the mistaken understanding of the plaintiff that the defendant was engaged in some form of manufacturing or processing of plastics on the premises. In addition, following a detailed inspection of the premises by Mr. Shane Herlihy of Environmental Risk Solutions Limited, the plaintiff also identified a number of other concerns. Those concerns were addressed by the defendant following Mr. Herlihy’s inspection of the premises. On Day 5 of the hearing, Mr. Crosbie Jnr. very properly accepted that a clean-up had been required and had been carried out. In turn, on Day 6 of the hearing, counsel for the plaintiff, in his closing submissions, very helpfully accepted that the concerns of the plaintiff had been remedied and that there was nothing further that required the intervention of the court in relation to the environmental covenants. It is therefore unnecessary to make any findings in relation to the issue.
125. Insofar as user is concerned, the complaint made in the statement of claim delivered in the injunction proceedings, focused on the fact that fuel is stored on the premises without a licence which, it is alleged is contrary to clause 4.14 (a) of the Lease and also contrary to the Dublin Port and Docks Board Bye Laws. No complaint was made about storage of goods.
126. Notwithstanding the terms of the statement of claim, the plaintiff, in the course of the hearing, also complained that the defendant was, in breach of its covenant as to user, also storing the personal effects of Mr. Crosbie Jnr. or other directors of the defendants. In this context, the only form of storage which is permitted under the Lease is the temporary handling storage and shipment of goods on behalf of direct customers of the defendant in its business as a haulier of goods either imported or exported through Dublin Port. The plaintiff maintained that, accordingly, by storing materials of the directors on the premises, the defendant was in breach of this covenant. In the course of the cross-examination of Mr. Crosbie Jnr., he accepted that such material was stored on the premises. When it was put to him that this was not in compliance with the user clause, his evidence was: –
“I think you might be splitting hairs there with respect because when we emptied out of our other facility, Tolka Quay Road, … took then and they have been sat there since. I suppose technically you are probably correct but perhaps a bit harsh.”
127. In the course of his closing submissions, counsel for the plaintiff very wisely acknowledged that the plaintiff’s claim in relation to the storage of goods is not a significant issue. I agree. Not only was the matter not pleaded, but it is also clear that such storage was not injurious to the interests of the plaintiff in any way. In this context, the covenant in respect of user appears to have been directed towards the storage for commercial purposes of goods and materials on the premises which might be unconnected with the import and export of goods through the Port. If there was a breach in this case, it was a very technical kind and is not one which, in my view, should result in any relief in favour of the plaintiff.
128. The remaining complaint of the plaintiff relates to the storage of fuel on the premises. For this purpose, the plaintiff relied upon clause 4.25 of the Lease which explicitly provides that the defendant should not keep or store any petrol, oil, gas or similar flammable material for any purpose save in accordance with a licence from the plaintiff. In the course of the hearing, the defendant acknowledged that it was storing fuel on the premises for its own purposes. Mr. Crosbie Jnr. gave evidence that he mistakenly understood that a licence was not required in those circumstances. In the course of his cross-examination on Day 5 of the hearing, he explained the position as follows: –
“…there was an issue in the Tolka Quay Road site where Harry [Crosbie] and Auke [Van der Werff] were bunkering fuel to third parties and it was a big issue. So in Storecon we were bunkering fuel, we were selling it to third parties. My mistake I made was that I did not think we needed it [in the Promenade Road Premises] and as soon as this process is over in whatever form it takes, I will be applying to rectify that and I do apologise to the Port for that.”
129. The unauthorised storage of fuel by a tenant would ordinarily be a very serious matter. A landlord will wish to be assured that the storage of flammable material is undertaken safely and there are obvious risks for a landlord if appropriate precautions are not taken by the tenant. However, in this case, it was conceded by Mr. Barry, in the course of his cross-examination, that he could see no obvious reasons why the defendant would not receive a licence for the storage of fuel. Thus, although there has been a breach of covenant in relation to the storage of fuel as a consequence of the failure of the defendant to obtain a licence for that purpose pursuant to the Petroleum Bye-Laws of the Port, the breach is one which is capable of being readily remedied. In any event, I have not been asked by the plaintiff, at this point, to grant any relief in relation to this breach of covenant. In the course of his closing submissions, counsel for the plaintiff noted the apology made by Mr. Crosbie Jnr. and his undertaking to remedy the situation and indicated that he might wish to address the court further on this issue after delivery of this judgment.
The defendant’s counterclaim
130. In its defence and counterclaim, the defendant counterclaimed for an order declaring that it is entitled to a new tenancy in the premises under the 1980 Act. It also sought damages including punitive, aggravated and/or exemplary damages. In light of my findings in relation to the renunciation of rights, the counterclaim as to the defendant’s entitlement to a new tenancy must fail and be dismissed.
131. In so far as the defendant claims damages, the basis for that claim has not been adequately explained either in the pleadings or in the case made at trial. The only basis pleaded was that, in circumstances where the defendant was alleged to be entitled to a new tenancy, the proceedings were incapable of delivering any benefit to the plaintiff and were accordingly an abuse of process. However, in light of my findings in relation to the renunciation, the claimed basis falls away and I must therefore dismiss the defendant’s damages claim.
132. While I have criticised several aspects of the manner in which the plaintiff has conducted these proceedings, this is an issue which may have some relevance to costs. On the basis of the counterclaim, as pleaded, I cannot see any basis on which it sounds in damages.
Conclusion
133. In light of the findings made earlier in this judgment, I am of opinion that the plaintiff is entitled to recover possession of the Promenade Road premises from the defendant. This follows from my finding that the defendant has executed a valid renunciation of any right it might otherwise have under the 1980 Act to a new tenancy. In circumstances where the defendant is not contesting the exercise of the break clause in the lease, the lease has come to an end and the defendant, in the absence of a right to a new tenancy, must deliver up possession of the premises to the defendant. I will hear submissions from the parties as to an appropriate timeframe for that purpose.
134. In view of the findings I have made with regard to the concrete hardstanding and the corrugated iron sheds, I will dismiss the plaintiff’s claim for damages for breach of covenant in respect of those items. Pending the holding of discussions between the parties’ surveyors, I will defer making any further order in relation to the remaining elements of the plaintiff’s claim for damages for alleged breaches of the repairing covenant.
135. I will also dismiss the plaintiff’s claim in so far as it alleged that the defendant was carrying out any form of processing or manufacture of plastics on the premises. With regard to the remaining breaches of covenant alleged, I will make no order but I will, as requested by counsel for the plaintiff, give liberty to apply in relation to the fuel covenant.
136. To the extent that it may be necessary to do so, I will also hear the parties in due course in relation to costs.
Walsh & Ors v Kearney
[2020] IEHC 52
JUDGMENT of Mr. Justice Quinn delivered on the 11th day of February, 2020
1. The plaintiffs are businessmen who own a building at No. 56 MacCurtain Street, Cork,having acquired the long leasehold interest on 19th April 2005. By a lease dated 5th June,2006, they leased the ground floor of the building to the defendant for a term of 25 yearsfrom 1st June, 2005.2. In reliance on arrears of rent, the plaintiffs effected a peaceable re-entry of the groundfloor on 2nd December, 2009. The plaintiffs claim that the condition of the building at thetime when they re-entered it was such as to necessitate extensive repair works to beundertaken. They claim also that the condition of the premises was caused by alterationsmade by the defendant to the ground floor without their prior consent. They claimdamages in respect of the costs of repair incurred by them and other costs including lossof rental income until the building was fit to be re-let in July, 2010.3. The defendant claims that the plaintiffs had consented to the works he undertook anddenies that his works had the effect claimed by the plaintiffs or were the cause of the costwhich the plaintiffs incurred in their remedial works after re-entry. He counterclaims forthe value of chattels which he claims were his property and were on the premises at thetime of the re-entry and which the plaintiffs wrongfully failed to return to him. He alsocounterclaimed for the costs of the works undertaken by him but that element of thecounterclaim was not pursued at the trial.Chronology4. On 19th April, 2005 the plaintiffs purchased the long leasehold interest in the building for€1.5million. One of the plaintiffs, David Brady had previously carried on business from aportion of the premises.5. When the plaintiffs purchased the building the ground floor had been trading as a barknown as the Agora Bar.6. The first floor had been occupied as office space and the second floor as an apartment.The first and second floors have been the subject of refurbishment works from time totime, but the issues giving rise to these proceedings relate to works undertaken at theground floor level.7. The plaintiffs granted possession of the premises to the defendant as of 1st June, 2005.They also agreed to transfer to him the Ordinary Seven Day Publicans On Licenceattached to the ground floor.Page 2 ⇓8. The plaintiffs agreed that the defendant could convert the Agora Bar into an offlicence/wine shop which he was planning to open, to be known as the Naked Grape.The Lease9. The lease of the premises was executed on 5th June, 2006. The term was 25 years from1st June, 2005. The initial yearly rent was €40,000, increasing by €5,000 per annum foreach of the first five years, and rent reviews every five years thereafter.10. In many respects the terms of the lease were standard in that it included covenants forthe payment of rent, insurance premiums, to discharge outgoings and to comply withrelevant enactments and fire requirements. It included covenants concerningmaintenance and repair of the building, prohibiting alterations without consent,prohibiting change of use, assignment or underletting without prior consent, prohibitingobstruction of doorways windows or other openings, covenants requiring compliance withplanning acts and covenants indemnifying the landlord in respect of any claims arisingfrom the state of repair or condition of the building.Tenant’s covenants11. A number of the clauses in the lease are of central importance to the determination ofthese proceedings.12. Clause 3.3 concerns “enactments” and provides as follows:“At all times during the said term to observe and comply in all respects with theprovisions and requirements of any and every enactment for the time being in forceor any orders or regulation thereunder for the time being in force or any orders orregulation thereunder for the time being in force …”13. Clause 3.4 provided as follows:“At all times during the said term to comply with all the recommendations orrequirements or the appropriate Authority whether notified or directed to theLandlord or the Tenant in relation to fire precautions and to indemnify the landlordagainst any costs or expenses in complying with any such requirement orrecommendation …”14. Clause 3.6 provided as follows:“To keep clean and tidy and to repair and keep in good order, repair and conditionfrom time to time and at all times during the term hereby created the interior of thedemised premises …”15. Clause 3.12 concerned alterations and modifications and provided as follows: -“Not to erect or suffer to be erected any buildings or erections on the demisedpremises save as here in before provided nor without the previous consent inwriting of the Landlord to cut alter maim or injure or permit to be cut alteredmaimed or injured any of the ceilings roofs walls floors or timbers of the demisedPage 3 ⇓premises or alter or change or permit to be altered or changed the plan elevation orarchitectural decorations thereof or alter any of the Landlord’s fixtures fittings andappliances in and about the demised premises or make or permit to be made anyexternal alterations or additions whatsoever.”16. Clause 3.18 provides as follows:“Not to use or permit the demised premises or any part thereof to be used for anypurpose other than as an Off Licence and Shop and for no other purpose save withthe Landlord’s written consent which consent shall not be unreasonably refused.”17. Clause 3.20 provides as follows:“Not to assign transfer or underlet or part with the possession or occupation of thedemised premised or any part thereof or suffer any person to occupy the demisedpremises or any part thereof as a licensee but so that notwithstanding theforegoing the landlord shall not unreasonably withhold its consent to an assignmentof the entire or underletting of the entire or part of the demised premises subject tothe following provisions as such then as may be appropriate [namely requirementsregarding information and costs and appropriate covenants of the part of an underlessee].”18. Clause 3.30 contained provisions regarding the “yielding up” obligations of the tenant atexpiry of the term as follows:“At the expiration or sooner determination of the said term quietly to yield up thedemised premises together with all the landlords fixtures and all other fixtures andfastenings that now or which during the said term shall be affixed or fastenedthereto (except Tenant’s or trade fixtures), in such good and substantial repair andcondition as shall be in accordance with the covenants on the part of the tenantherein contained …”19. Clause 5 provided that in the event of rent becoming overdue for fourteen days or in theevent of breaches of covenant on the tenant’s part or certain other events then it wouldbe lawful for the landlord to enter the premises and repossess same without prejudice toany right of action or remedy in respect of any antecedent breach.The 2005 Works20. After taking possession in 2005 the defendant undertook the works necessary to convertthe Agora Bar to an off licence known as the Naked Grape from which he then traded.21. The plaintiffs consented to these works and no complaint is made relating to them in theproceedings. The defendant sought in the proceedings to suggest that the problemsencountered by the plaintiffs were attributable to the condition of the building pre-June2005, although he did not before these proceedings make any complaint about thecondition of the building as of the time he was granted possession.Page 4 ⇓The 2007 Works22. The plaintiffs say that in early 2007 they learned that the defendant had undertakenfurther works to the ground floor. The plaintiffs’ evidence was that the first they becameaware of the works when their attention was drawn to them by the owner of anotherbusiness on the street who had seen a skip outside the premises.23. The effect of the works was to convert the premises back into a bar. It is said that thisincluded a reconfiguration of the layout of the ground floor including the removal of akitchen at the rear to make space for a seating and music area, the removal of fire exitcorridors and the relocation of toilet areas. The premises was then reopened as a barknown as “The Flux Bar”. I shall return later to the details of these works.24. In early 2008, a firm of architects whose offices were on the first floor complained thatthe floor had subsided. The true extent of the settlement is considered later but it causedthe plaintiffs to investigate the matter and engage an engineer to survey the building andidentify remedial works required.25. On 23 November, 2009, the plaintiffs’ engineer, Mr. Nugent, inspected the premises andidentified the settlement of the flooring complained of by the architects.26. On 2 December, 2009, the plaintiffs effected a peaceable re-entry. They found the groundfloor abandoned, and the electricity discontinued, the account having been unpaid, andfound unopened letters on the floor. Rates and water rates were also unpaid.Circuit Court proceedings27. By October 2009, the defendant had fallen in to rental arrears and on 20 October, 2009,the plaintiff commenced ejectment proceedings in the Circuit Court. In these proceedings,the plaintiffs claimed that the defendant failed to observe the covenants and conditions inthe lease in the following particular respects: -(1) Failed to comply with the requirements of relevant enactments and to do suchworks as may be required for such purpose.(2) Failed to pay outgoings and rates.(3) Performed alterations to the premises amounting to substantial works without theprior consent of the plaintiffs.(4) Failed to keep the premises clean and tidy and to keep them in good order, repairand condition.(5) Failed to renew and keep up the licence on the premises.(6) Failed to yield up the premises in good and substantial repair and condition.28. During the currency of the Circuit Court proceedings a request was made by the plaintiffsthat the defendant consent to unlimited jurisdiction in the Circuit Court. This request wasdeclined.Page 5 ⇓29. On 31 March, 2011, an order was made by the Circuit Court granting the plaintiffsjudgment in the sum of €16,000.34 and costs in respect of arrears of rent.These proceedings30. These proceedings were commenced on 27 January, 2012. The plaintiffs claimed damagesfor breach of the covenants in the lease, in an amount totalling €83,879.00. This wassubsequently revised downwards to a sum of €63,928.00, reflecting certain allowances inrespect of rent and rates.31. The defendant denies failure to observe the covenants and conditions in the lease. In hiscounterclaim, he originally claimed sums totalling €149,437.00 being the value ofcontents of the premises wrongfully withheld by the plaintiffs, and further sums totalling€201,000.00 in respect of costs of refurbishing the premises by works which he says weremade with the consent of the plaintiffs.32. In relation to the 2007 works this Court is required to determine whether they caused theplaintiffs to incur the amount of the costs claimed by them and whether the plaintiffs hadconsented to the works as the defendant claims.33. Evidence was given by each of the plaintiffs and by the defendant and by engineersretained by each side, and by the contractor retained by the defendant, Mr. David Hanlon,who is also a person who the defendant says he had put in possession of the premises forthe purpose of trading the Flux Bar.34. There were extensive contradictory versions of the extent of the works undertaken. In theabsence of a properly documented structural survey of the premises as of thecommencement of the lease term, it is difficult to be definitive as to the scale of theworks and their effect. The nearest such information available to the court was theevidence of the engineers retained by the respective parties to which I shall turn firstly.The plaintiff’s engineer: Mr. Paul Nugent35. Mr. Nugent inspected the property on 23 November, 2009 and produced a report inDecember, 2009. The relevant extracts from his report are as follows: -“The property is a mature structure with external walls of a solid masonryconstruction. Upper floor construction appears to consist of timber flooring ontimber floor joists, on load bearing masonry walls. The premises appear to havebeen substantially refurbished in the recent past, with first floor areas in particularundergoing completely refurbishment in 2005. Drawings forwarded to us in thisregard would appear to indicate that upgrading of ground floor accommodation mayhave been undertaken at a similar date.We understand from our client that further alterations have been undertaken to theground floor area, in the more recent past i.e. in the last 12-month period. Frominspection of the ground floor accommodation, it would appear that a number ofinternal walls toward the rear of the property have been removed to facilitate thelayout of new toilet accommodation. A protected corridor indicated on Fire SafetyPage 6 ⇓Certificate drawing previously referenced also appears to have been removed (referattached copy of ground floor layout plan indicating location of extent of internalwalls which appear to have been removed). An air handling system also appears tohave been added as part of these recent ground floor alterations.Description of DefectsSubstantial movement/settlement was noted to the first floor structure onthe date of inspection. Movements noted were to the rear of the first floorarea, with settlement most pronounced at the location of the partitiondividing Office Unit 1 from the tearoom/toilet area to the rear of Office Unit 2(refer attached First Floor Layout plan).Settlements in the order of some 25mm were noted in the floor structurealong the line of this partition, with most severe movement adjacent to theentrance door from the common escape stairwell to office unit 1. Associatedsettlement cracking was noted to the partition of this location, notably at thejoint of partition and ceiling. Flooring in the tearoom/toilet area would alsoappear to have settled and are off level (Refer attached photographs).From inspection of the ground floor area, it would appear that the affectedfirst floor structure is immediately over the area of the ground flooraccommodation which, as previously noted, has recently had alterationsundertaken.The floor structure in this area was examined on the date of inspection, witha single ope being made in the ground floor ceiling (Refer Photographattached). Floor structure at the location where ope was made is consistentof 225 x 50mm timber floor joists, at 300mm centres. Joists appeared tohave a clear span of some 6.2 metres. It is unclear whether the internal wallsremoved as part of the ground floor alterations previously provided internalsupport to the first floor over, however, we would note that the floorstructure exposed on the date of inspection would not be capable of carryingimposed loading over the clear span of 6.2 metres which currently exists. Wewould also note that the ceiling mounted air handling unit is locatedimmediately under the area of the first floor where settlement of thestructure is most pronounced.… the fire escapes indicated in the Ground Floor licensed premises areaappeared to have been significantly altered by the changes made on theground floor area.Conclusion and RecommendationWe are of the opinion that significant movement to the rear section of thefirst floor structure has occurred/is occurring. The existing floor structure,Page 7 ⇓judged by the limited opening up works undertaken, does not have adequatestructural capacity to safely carry applied loading over the existing clear floorspan. In this regard we would recommend the following…”36. The report continued by identifying a requirement for propping of floor structures,strengthening of floor structures, and steel frameworks and that the approval of the fireofficer be sought for the existing layout.37. In his evidence before the court, Mr. Nugent said that it appeared to him that the toiletwalls which were previously providing support to the beam supporting the floor abovewere now gone. He said that it was unlikely to be a coincidence that the floor settlementoccurred and appeared following the 2007 works.38. It was put to Mr. Nugent in cross-examination that the defendant’s engineer, Mr. Ryan,would say that the deflection and settlement which occurred on the first floor occurredover a longer period and, therefore, could not have been attributable to the 2007 works.Mr. Nugent said that this was simply not possible.Defendant’s engineer: Mr. Jim Ryan39. Mr. Ryan inspected the property in early 2010 and delivered his report on 26 February,2010. In his report, he made the following observations: -“It is clear that vital supports to the first floor have been removed. The stud wallsof the architectural practice on the first floor have settled. There is no dispute tothis.The holes in the ceiling on the ground floor show that the original joists are still inplace and that they span north south. They are spliced over a timber runner whichruns east west some 3 metres or so from the rear wall. This timber runner isinadequate as a support beam. Deflection was inevitable. The lack of use of the firstfloor heretofore would have contributed to this deflection not being detected.It is clear that this runner was originally on top of a support wall, or a series ofsupport pieces orientated east – west. The north – south joists were cut to sit onthis east – west structure, and the runner was the means of transferring the loadfrom the joists to the wall. That is the only plausible case for such a runner to bethere.Joe Kearney employed Dave Hanlon to carry out the alteration works for him in2006 . Dave Hanlon has advised Joda that the partitions he removed were simplestud partitions consisting of 12mm of plasterboard either side of light studs. It tookless than an hour to demolish the walls. These partitions were built up to a fireceiling. The fire ceiling was below an older ceiling. Thus the studwork was not builtto support the runner under the joists. There were steel columns, robust supportswithin the studs to prop the runner.Page 8 ⇓It would therefore seem that during alteration works in the past to install the toiletsand kitchen, the original supports to this runner were removed.CulpabilityThe builder who installed the toilets and kitchen is primarily culpable forremoving a load bearing structure. His stud walls for the toilet and kitchenwould have put back material support but only enough for deflection not tobe evident.Joe Kearney’s builder has a minor responsibility in that he should havechecked the structure of the floor over the partitions he was demolishing.However, in view of the nature of the studwork he removed and the fact thatit was only taken to a lower ceiling, there is a case to be made that what hedid appeared sensible and therefore his culpability would be low.” [emphasisadded]40. Mr. Ryan went on to comment on estimates of costs which had been given originally byMr. Nugent at circa €30,000.00, expressing his view that works to include making goodthe ceiling and relevant declaration could be done for under €5,000.00.41. In evidence before the court, Mr. Ryan indicated that a timber beam which had beensupporting the floor above and whose original purpose was to support that floor was nowmissing. He said that it seemed to him that that must have been removed by “anirresponsible contractor”. Mr. Ryan said that based on the instructions he had received,the defendant had not undertaken any works which affected the ceiling of the groundfloor and, therefore, these works could not have contributed to the deflection ofsettlement now occurring. He said that if as part of the 2007 works any support had beentaken from below the floor of the first floor, it would have collapsed immediately and notcaused the gradual settlement which has been the subject of the complaint.42. Mr. Ryan also indicated that it seemed to him that the toilet walls had been constructedonly to the level of the fire ceiling of the ground floor and, therefore, cannot have been asupport to the floor above.43. Critically, Mr. Ryan acknowledged in his evidence that the works must have been carriedout by a person who is not familiar with the structure of the building and, therefore, notfamiliar with the potential effects to the floors above. In this regard, the defendantconceded in his evidence that the 2007 works were not designed or supervised by anycompetent professional or expert.Other evidence of 2007 works44. The evidence given by the plaintiffs themselves related principally to what they foundafter the re-entry of the premises, and they were somewhat reliant on the evidence of Mr.Nugent as to the works actually carried out. Of the plaintiffs, the person most familiarwith the building itself was Mr. Brady, who had traded from there before purchasing theproperty in partnership with his co-plaintiffs. In his evidence, he confirmed that thePage 9 ⇓plaintiffs had no concern about the works undertaken by the defendant after he enteredthe premises in 2005. Alterations to facilitate the opening and trading of the Naked Grapehad been completed by the first half of 2006.45. Each of the plaintiffs confirmed that they had no difficulty with the works undertaken in2005 and 2006 as it had always been agreed that such works as were necessary toestablish the Naked Grape would be appropriate and were not structural in nature.46. Mr. Field gave evidence that the works undertaken in 2007 amounted to the removal ofthe shopfront of the Naked Grape and removal of the wall at the centre of the groundfloor and the eventual relocation of the toilet areas to prepare a seating/music area to therear.47. Photographs, architect’s drawings and other illustrations were put into evidence, by bothparties. Most of these were not agreed as regards their true provenance and dating, andthey were of limited assistance to the court. Nor were any drawings, plans orspecifications for the 2007 works exhibited to the court, if indeed such ever existed. Thedefendant produced a letter dated 20 June, 2007, post-dating the 2007 works, from aWilliam O’Connor Architectural Services, referring to a drawing and stating that “theproposed works on the attached drawing did not involve the removal of any structuralelements of the existing building.” Mr O’Connor was not called to give evidence and thedefendant himself conceded that no construction professional or expert advised on orsupervised the works as they were performed.48. The defendant gave evidence that he had not done the works himself but had contractedMr. David Hanlon, the person who, together with a partner, ultimately took over the tradeof the Flux Bar. He said that all of the work was done within a period of approximatelyone and a half days and that it had amounted to no more than a clear out and amovement of certain partition walls, and that it was not structural work such as couldhave affected the floor above.49. The most coherent evidence as to the works was that of the engineers. Whilst theyexpressed different views as to the “culpability”, as Mr. O’Neill put it, for the condition ofthe property at the time of the re-entry, even Mr. O’Neill acknowledged that the 2007works, were undertaken by an “irresponsible contractor” and that “vital supports” hadbeen removed. Although he sought to suggest that earlier works may have caused theproblem, he did not contradict Mr. Nugent’s opinion that the affected first floor areastructure was immediately over the ground floor accommodation which had recently beenaltered and that it was “unlikely to be a coincidence” that the floor sagging occurred whenthe supports were removed as part of the 2007 works.50. On the balance of all the evidence I have concluded that the settlement or “sagging” ofthe first floor complained of by the architects at that level can only have been caused bythe works undertaken by the defendant in early 2007 and that this necessitated theremedial work done by the plaintiffs. Even if it could not be definitively established thatthe walls of the toilets which were moved were themselves concrete or masonry I amPage 10 ⇓persuaded that such a radical alteration of the layout of the ground floor caused thedeflection of the floor above and necessitated the works which were undertaken by theplaintiffs following the re-entry.51. I shall return later to the question of whether the full quantum of costs of which theplaintiffs seek reimbursement are properly attributable to these works.Consent for the 2007 works52. It is common case that consent was not given in writing, such as would comply with theprovisions of clause 3.12 of the lease.53. The defendant gave evidence of meeting Mr. Richard Walsh at the Metropole Hotel inNovember, 2006. He informed Mr. Walsh that trade at the Naked Grape wasunsatisfactory and therefore he wished to convert the ground floor back into a bar andmusic venue.54. The evidence given by the defendant was that Mr. Walsh had indicated that he was opento such alterations being made but he would first need to see the plans and specificationsand consult with his partners.55. The defendant initially claimed in his evidence the consent was given in the course of atelephone conversation with Mr. Walsh on Christmas Eve 2006. Mr. Walsh swore that nosuch conversation occurred and said that if there had been such a call on Christmas Evewhen he was spending time with his family he would have recalled the interruption.56. Mr. Walsh also gave evidence of the November meeting at the Metropole Hotel. He saidthat he was approached by the defendant who had certain ideas in relation to thebusiness. He said that the defendant said he wished to alter the layout of the groundfloor which would at least reduce the size of the Naked Grape, or close it, and reinstatethe premises to a public house.57. Mr. Walsh said that he had responded that if the defendant submitted drawings and otherinformation such as specifications, he would consult his partners about the matter.58. Mr. Walsh gave evidence that he had also indicated that he would need details of thescope of work and needed to know that appropriate and competent professionals wereengaged. Mr. Walsh said that no such information was ever submitted and no consent hadbeen given either in writing or orally.59. The other plaintiffs Mr. O’Brien, Mr. Field and Mr. Brady each confirmed that they had notgiven their consent.60. Having heard the evidence of the defendant and the plaintiffs I have concluded that evenif Mr. Walsh indicated to the defendant that an application for consent would beconsidered, no consent was given. Accordingly, the 2007 works were in breach of clause3.12 of the lease. This finding informs the approach to be taken to other aspects of thecase, in that it illustrates the willingness of the defendant to proceed with the 2007 worksPage 11 ⇓in breach of his contractual obligation to, at the very least, obtain consent before doingsuch works.61. To the extent that there could have remained any doubt as to the exact cause of the floorsettlement, the defendant at the very least placed himself in a position where a failure toobtain consent to the 2007 works, in clear breach of Clause 3.12, exposed him to the riskof liability for the consequences of the state of the building after the works.Other considerations62. This is not an equity case in which the general conduct of the parties towards each otherwould inform the court in the exercise of discretion. However, there are a number offeatures of the manner in which the defendant conducted himself which reveal to thecourt that over a period of time the defendant regarded himself as no longer bound bythe clear contractual obligations contained in the lease without having obtained consent,waiver or agreement to a variation or a surrender of the lease or otherwise being releasedfrom those contractual obligations, and acted accordingly. These features include thefollowing.Proposed assignment to Mr. Hanlon63. By the time the ejectment proceedings were commenced in October 2009 the defendantwas in arrears of rent to the extent of €27,118.64. It appears that from time to time during the term of the lease the defendant wasdependent to some measure on sourcing payments from Mr. Hanlon, whom he hadpermitted to become an operator of at least part of the ground floor premises. Thedefendant claimed that somehow Mr. Hanlon was responsible for rent arrears. He claimedalso that he had proposed to the plaintiffs that they consent to an assignment of the leaseof the ground floor to Mr. Hanlon. He did not go so far as to assert that such anassignment had been consented to, only stating that he never received a reply to hisrequest for such consent.65. There is no doubt that no assignment of the lease was ever consented to. The significanceof this issue is that it revealed an attitude on the part of the defendant that he could overtime regard himself as no longer bound by all of the terms and covenants of the lease,and could somehow “transfer” responsibility for compliance to Mr. Hanlon.Seven-Day Publican’s Licence66. By the time the plaintiffs effected the re-entry in December, 2009 the licence had expired.Again it appears from the evidence given by the defendant that he had regarded this asno longer his responsibility. Mr. Hanlon had been operating the Flux Bar and the evidencealso showed that later in 2009 further modifications had been made to the premises andit was now trading as “Snoopies Bar and Nightclub”.67. The defendant submitted that the lease contained no express provision obliging him tomaintain the intoxicating liqueur licence. The plaintiffs invoke clause 3.3, which was anobligation on the part of the tenant “to observe and comply in all respects with theprovisions and requirements of any and every enactment for the time being in force”.Page 12 ⇓There was some debate as to whether the absence of an express covenant relating to thelicence meant that the defendant was under no obligation in this regard.68. Clearly, the Licencing Acts are an “enactment” for the purposes of Clause 3.3 and I acceptthe submission of the plaintiffs that clause 3.3 conferred an obligation to comply with theActs. Quite apart from that contractual obligation, the defendant was the person inpossession of the premises pursuant to the terms of the lease. He was responsible for thetrade on the ground floor and was therefore required to maintain a licence under theLicensing Acts.69. The defendant submitted that he could have applied for a renewal of the licence up totwelve months after the expiry of the last licence and was, he claimed, taken by surpriseby the re-entry. He submitted that were it not for this intervention there was no reasonwhy he would not have secured renewal of the licence if requested to do so. That did notabsolve the defendant from the obligation to keep the licence current.70. During the hearing, there was some discussion concerning the contents of a letter dated11 July, 2007, from Messrs Cantwell Keogh & Associates regarding the fire safetycertificate application, arising from an inspection undertaken by Messrs Cantwell Keogh &Associates on 10 July, 2007.71. In their report, they confirmed that, in their opinion, the layout of the bar was insubstantial compliance with the Building Regulations, 1997 except for two issues, namely:-(1) The front and rear exit doors which needed to have a clear width of at least 950mmbut only had a width of 900mm; and(2) The external rear steps needed to be widened.The defendant conceded in evidence that these matters had not been addressed. He said,however, that he believed that he was in compliance and also expressed the view thatbecause the issues regarding the exit doors and the external rear steps were outside thearea leased to him, they were not matters with which he needed to concern himself.72. At the heart of the defendant’s submission regarding the license was his assertion thatlong before the re-entry the trade of the ground floor was being performed by Mr. Hanlonas the Flux Bar. He said that at this time, he had been in open discussions with theplaintiffs regarding the potential for assignment to Mr. Hanlon. He insisted that theplaintiffs had never refused consent to an assignment to Mr. Hanlon and were aware thatMr. Hanlon was trading from the premises. In circumstances where the plaintiffs neverconsented to an assignment to Mr. Hanlon, Clause 3.3 remained binding on the defendantand he breached this contractual obligation.Abandonment73. Evidence was given by a Mr. Roy Gavin that in the summer of 2009, he was asked by Mr.Hanlon to work in the Flux Bar which at this stage had a dancefloor at the back. HePage 13 ⇓accepted the offer and he started employment in October. He said that in preparation forthe Cork Jazz Festival, the name was changed to “Snoopy’s Nightclub”. Mr. Gavin saidthat he never met the defendant and as far as he could see, Mr. Hanlon was acting as thelicensee of the property.74. Mr. Gavin said that after the Jazz Festival, the premises deteriorated generally and wasbeing treated by Mr. Hanlon and his associates as a form of “party house”.75. Mr. Gavin said that in the middle of November, the premises was closed for business. Atthat stage, the Electricity Supply Board had cut off the supply for non-payment, havingtried unsuccessfully to gain access.76. Whilst there was some question about the accuracy of some aspects of the evidence ofthis witness, the significance of his evidence, as far as it went, was the fact that Mr. Gavinhad never met the defendant. This fact was not contradicted and was consistent with theconclusion that, before Mr. Gavin came to work at the premises, the defendant had, ineffect, put Mr. Hanlon in possession of the trading premises, thereby abandoningpossession of the premises and his own contractual obligations. I have come to theconclusion that this again evidenced that the defendant had, without any formal releaseor surrender, regarded himself as free to disregard his obligations under the lease.Particulars of damage claimed77. I now turn to the evidence which was given in respect of the particulars of damage whichthe plaintiffs say flow directly from the alterations to the building made in breach ofClause 3.12. These were originally particularised in para. 9 of the statement of claim in anamount totalling €83,879 but reduced subsequently to revised particulars totalling€63,928.09. The third named plaintiff, Mr. Field, gave evidence to prove the individualitems and supporting documents and I shall consider each of them under the headingsbelow: -1) Replacement of locks – €279.50.This cost was clearly incurred as a necessary consequence of the validlyeffected re-entry and will be allowed in full.2) Repair of alarm – €326.88.This charge related to a call out fee and replacements of battery andreconnections made on 9 February 2010 and clearly flows as a consequenceof the re-entry.3) Replacement of fire alarms – €78.32.This appears to relate to a further call out on 15 February 2010 when a faultybattery was replaced. It is not obvious to the court that this arose as a directconsequence of the defendant’s actions and therefore this item is disallowed.4) New Fire Certificate Application – €1,996.50.Page 14 ⇓This relates to the invoice of Messrs Cantwell Keogh and Associates,chartered fire and safety consulting engineers, and relates to theirprofessional fee for the application for a new fire safety certificate. Thisclearly arises as a consequence of the defendant’s actions and will be allowedin full.5) Design of new support structure – €907.50.This relates to the professional fees of Paul Nugent, consultant engineer, forhis site attendances and meetings and design of the new support structureand preparation of specification. Again, it arises as a consequence of thedefendant’s actions and will be allowed in full.6) Extra replacement of Fire Extinguishers – €338.80.During the course of the evidence a discrepancy arose in the calculations onthe invoice of AJ Fire Extinguishers, and the claim was reduced to €300. Ishall allow that amount as clearly it related to necessary works.7) Building Works to Property – €13,915.In respect of this item there appears to have been some measure ofengagement between the engineers, and correspondence between the partiesas to the scope and cost of the repair works. Mr. Nugent had articulated thecost originally at €30,000, which Mr. Ryan advised was excessive. Furtherengagement took place between the parties and it was acknowledged by Mr.Nugent that his original estimate was an “order of magnitude” estimatebased on preliminary inspections. The plaintiffs obtained a quote from acontractor, Brian Curran, which was for a total sum of €26,177.02.Mr. Ryan had obtained a quote from an alternative contractor, SummerhillConstruction Limited, in the sum of €7,900 for the works excluding VAT plusan additional item of €1,500 for “additional slab sealing in the area”.Ultimately, the plaintiffs reduced the amount of works which Mr. Nugent hadindicated should be undertaken, thereby reducing by almost one half Mr.Curran’s total charge to a sum of €13,915. Having done this, the plaintiffswere under no obligation to engage with the contractor from whom thedefendant had obtained a quote, and this court does not regard the amountultimately incurred to be excessive. Accordingly, this amount is allowed infull.8) Opening works for inspection of property – €729.00A quote had been obtained from Mr. Curran for the total sum of €930. Thisappears only to be a quote in respect of opening up and inspection works,with some charge associated with removal of rubbish and a skip. There is noevidence that this amount was actually discharged and I shall disallow it.9) Fire exit works – €4,029.25Page 15 ⇓This relates to the fee of Shandon Iron Works, and related to the supply andfit of galvanised stairs with handrails and sundry additional items. Again thisappears to have been properly incurred and it will be allowed in full.10) Engineer’s fee – €726This appears to duplicate with the amount of €907.50 referred to at (5)above and is disallowed.11) Legal fees in respect of Circuit Court licencing application – €7,609.59This relates to the professional fees of Messrs J.W. O’Donovan solicitors andcounsel David O’Dwyer BL, for a licencing application concerning thepremises including such items as court fees. It includes outlays of €2,003.09These items have been properly incurred as a consequence of thedefendant’s failure to comply with Clause 3.3 of the lease (enactments) and Iallow it in full.12) Loss of rental income (six months) December 2009 to May 2010 – €32,470This amount was calculated by reference to the contracted rent for the yearin which the re-entry occurred, namely year five, where the annual rent was€65,000. It was argued on behalf of the defendants that case law supportsthe proposition that following a forfeiture, the only amount which could bepursued would be a rent equivalent to mesne rates reflecting market rent(O’Reilly v Gleeson [1975] IR 258 and Edward Lee & Co (1974) Ltd v N1Property Developments Ltd [2013] IEHC 162). Mr. O’Sullivan of BarryAuctioneers was called by the defendant and gave evidence that anappropriate market rent for the ground floor at the time was €23,000 perannum. As regards the level of rent, this claim is not in the nature of mesnerates for overholding, but is a claim for breach of contract to pay thecontracted rent. I am not persuaded that the rent should only be recoverableby reference to mesne rates or a market rent, and I shall allow this claim atthe contracted rent, so that the plaintiffs will be put in the position theywould be in had the breach not occurred.The defendant also submitted that because works were only put out to tenderin May 2010 and completed by July 2010 the repairs could have beencompleted at a much earlier date and would have taken only a matter ofdays.I accept the submission of the defendant that the works could have beencompleted earlier than July 2010 and that the plaintiffs could have placed theproperty on the market earlier. Taking every aspect into account, I shallallow one half of the amount claimed in respect of rent, which is one quarterof the then prevailing annual rent, namely €16,250.13) Repairs to refrigeration condensers – €522.00Page 16 ⇓This claim is based on an invoice from, Coolflow Limited, “Beer CoolingSystems, Cold Rooms, Ice makers Etc.” The invoice relates to “relocation” ofbeer cooler condensing units. No evidence was given as to the connectionbetween this cost and the actions of the defendant in breach of the lease andaccordingly this item is disallowed.78. The total amount accordingly which should be allowed in respect of the particulars ofdamage referred to is €45,614.22.Counter claim79. The defendant counter claimed under two headings: -1) Damages for detinue and/or conversion totalling €149,427.2) Reimbursement of cost of building works which he claims were undertaken with theconsent of the plaintiffs, €201,990.23.80. The claim in respect of works undertaken was withdrawn at the hearing. It has a residualsignificance in that its quantum is inconsistent with the defendant’s assertion that the2007 works were inconsequential and could not have had the effects on the structure ofthe building contended for by the plaintiffs.81. In the counter claim it is alleged that on 2 December, 2009, the plaintiffs took possessionof the premises and of the defendant’s chattels. The defendant claims that on numerousoccasions he had requested the plaintiffs to return the chattels and that the plaintiff haswrongfully failed to do so.82. A Scots schedule was produced at the hearing identifying differences between the partiesin relation to each category of item claimed in terms of whether or not they were locatedat the premises at the date of the re-entry, and in some cases items still available forcollection, and the different views of the respective parties as to the value of the itemsconcerned.83. The aggregate value of the items subject to this counter claim, based on the invoicedcosts of the goods to the defendant was €149,427, although that was reduced at thehearing.84. On 16 December, 2009, the defendant’s solicitors, Messrs Daly Derham Donnelly, wroteto the plaintiff’s solicitors, J.W. O’Donovan. In this letter they acknowledged a letterreceived from Messrs O’Donovan enclosing a Stock List and stated: -“Your clients are well aware that the person in possession of this premises and theperson who was operating the business was Mr. David Hanlon and they shouldensure that they send a copy of the Stock List to Mr. Hanlon, as the stock referredto therein is the stock of Mr. Hanlon”.Page 17 ⇓Messrs Daly Derham Donnelly continued by referring to lease agreements “in place withLombard & Ulster, the Bank of Scotland Ireland and the Friends First” for certain contents,listed in that letter. They continued: -“These contents were originally leased by our client and the responsibility of theseLeases were taken over by David Hanlon, they are all subject to Lease Agreementsand accordingly there is retention of title in favour of the Loan Institutions andaccordingly you might please confirm a time and date that is suitable for our clientto call and collect the items so that they can be returned to their rightful owners”.85. This led to protracted correspondence between the respective solicitors which related bothto the question of contents of the premises and to the plaintiff’s complaints regarding thecondition of the property at the time of re-entry.86. In further correspondence through 2010, Messrs Daly Derham Donnelly continued toprotest that their client had not received the return of the contents. Ultimately arisingfrom this correspondence and further exchanges a meeting took place on 22 June, 2011,at the business premises of the third named plaintiff, Mr. Field, ESI Technologies,attended by the defendant and Mr. Field.87. The defendant claimed in evidence that he had attended on that occasion for the purposeof taking possession of items which were his property but that when he was shown anumber of them, they appeared to be in very poor condition. Photographs were exhibitedto the court showing a small number of items, principally a number of stools. Althoughthese were undoubtedly in a much deteriorated condition, there was no conclusiveevidence even by photographs, as to the condition of these items at the time of the re-entry.88. The defendant insisted that when he attended it became clear that the relevant goodswere not all available for collection and that those that were made available even forinspection were not in a fit and proper condition.89. The evidence of Mr. Field was that when the defendant attended at his premises heattended in a motor car only and without any equipment or capacity to remove therelevant chattels. He said that the defendant had indicated that he would return later toremove the relevant property but never did so.90. Having considered the evidence of Mr Field and the defendant as to the meeting at ESI on22 June, 2011. I have concluded that on that day no meaningful effort was made by thedefendant to secure release of his chattels.91. The essential ingredients of the tort of detinue are proof of ownership, demand for releaseof the chattels and a refusal of such release. In this case, the correspondence suggeststhat there was some delay on the part of the plaintiffs in confirming to the defendant thathe could remove chattels. However, the correspondence also reveals that the defendant’ssolicitor was on the one hand claiming that the defendant had leased a number of thePage 18 ⇓items yet, on the other hand, was claiming that responsibility for the leases had beentaken over by Mr. Hanlon. It was also suggested in the first such letter that stock left atthe premises was owned by Mr. Hanlon. This ambiguity in the defendant’s attitudetowards the contents of the premises is reflective of his ambivalence, to put it at itslowest, towards his contractual obligations under the lease itself. Of direct relevance inthis regard is that at the very least six weeks before the re-entry, the defendant hadabandoned possession of the ground floor without regard to his contractual obligations.No evidence was adduced, or submissions made that he had sought to negotiate asurrender of the lease to secure a release of his obligations or that he had sought to makeand then been refused any orderly arrangements in relation to the contents, whether theywere owned by himself or third parties.92. This court cannot speculate as to the terms the plaintiffs may have imposed on asurrender, even if they been willing to accept a surrender. However, in circumstanceswhere the defendant abandoned possession of the premises without either a surrender orany orderly communication with the plaintiffs, he cannot later assert that the plaintiffsacted unlawfully in relation to the contents. If the defendant had sought to make anorderly departure from the premises by agreement with the plaintiffs, it would have beena matter for him to ensure that appropriate arrangements, including removal of chattels ifnecessary, were in place and this he failed to do.93. I shall therefore, dismiss the counter claim.94. I shall order that the defendant pay to the plaintiffs damages for breach of contract in theamount of €45,614.22.
Result: Damages awarded. Counter claim dismissed.
Walsh & Ors v Kearney
[2020] IEHC 52
JUDGMENT of Mr. Justice Quinn delivered on the 11th day of February, 2020
1. The plaintiffs are businessmen who own a building at No. 56 MacCurtain Street, Cork,having acquired the long leasehold interest on 19th April 2005. By a lease dated 5th June,2006, they leased the ground floor of the building to the defendant for a term of 25 yearsfrom 1st June, 2005.2. In reliance on arrears of rent, the plaintiffs effected a peaceable re-entry of the groundfloor on 2nd December, 2009. The plaintiffs claim that the condition of the building at thetime when they re-entered it was such as to necessitate extensive repair works to beundertaken. They claim also that the condition of the premises was caused by alterationsmade by the defendant to the ground floor without their prior consent. They claimdamages in respect of the costs of repair incurred by them and other costs including lossof rental income until the building was fit to be re-let in July, 2010.3. The defendant claims that the plaintiffs had consented to the works he undertook anddenies that his works had the effect claimed by the plaintiffs or were the cause of the costwhich the plaintiffs incurred in their remedial works after re-entry. He counterclaims forthe value of chattels which he claims were his property and were on the premises at thetime of the re-entry and which the plaintiffs wrongfully failed to return to him. He alsocounterclaimed for the costs of the works undertaken by him but that element of thecounterclaim was not pursued at the trial.Chronology4. On 19th April, 2005 the plaintiffs purchased the long leasehold interest in the building for€1.5million. One of the plaintiffs, David Brady had previously carried on business from aportion of the premises.5. When the plaintiffs purchased the building the ground floor had been trading as a barknown as the Agora Bar.6. The first floor had been occupied as office space and the second floor as an apartment.The first and second floors have been the subject of refurbishment works from time totime, but the issues giving rise to these proceedings relate to works undertaken at theground floor level.7. The plaintiffs granted possession of the premises to the defendant as of 1st June, 2005.They also agreed to transfer to him the Ordinary Seven Day Publicans On Licenceattached to the ground floor.Page 2 ⇓8. The plaintiffs agreed that the defendant could convert the Agora Bar into an offlicence/wine shop which he was planning to open, to be known as the Naked Grape.The Lease9. The lease of the premises was executed on 5th June, 2006. The term was 25 years from1st June, 2005. The initial yearly rent was €40,000, increasing by €5,000 per annum foreach of the first five years, and rent reviews every five years thereafter.10. In many respects the terms of the lease were standard in that it included covenants forthe payment of rent, insurance premiums, to discharge outgoings and to comply withrelevant enactments and fire requirements. It included covenants concerningmaintenance and repair of the building, prohibiting alterations without consent,prohibiting change of use, assignment or underletting without prior consent, prohibitingobstruction of doorways windows or other openings, covenants requiring compliance withplanning acts and covenants indemnifying the landlord in respect of any claims arisingfrom the state of repair or condition of the building.Tenant’s covenants11. A number of the clauses in the lease are of central importance to the determination ofthese proceedings.12. Clause 3.3 concerns “enactments” and provides as follows:“At all times during the said term to observe and comply in all respects with theprovisions and requirements of any and every enactment for the time being in forceor any orders or regulation thereunder for the time being in force or any orders orregulation thereunder for the time being in force …”13. Clause 3.4 provided as follows:“At all times during the said term to comply with all the recommendations orrequirements or the appropriate Authority whether notified or directed to theLandlord or the Tenant in relation to fire precautions and to indemnify the landlordagainst any costs or expenses in complying with any such requirement orrecommendation …”14. Clause 3.6 provided as follows:“To keep clean and tidy and to repair and keep in good order, repair and conditionfrom time to time and at all times during the term hereby created the interior of thedemised premises …”15. Clause 3.12 concerned alterations and modifications and provided as follows: -“Not to erect or suffer to be erected any buildings or erections on the demisedpremises save as here in before provided nor without the previous consent inwriting of the Landlord to cut alter maim or injure or permit to be cut alteredmaimed or injured any of the ceilings roofs walls floors or timbers of the demisedPage 3 ⇓premises or alter or change or permit to be altered or changed the plan elevation orarchitectural decorations thereof or alter any of the Landlord’s fixtures fittings andappliances in and about the demised premises or make or permit to be made anyexternal alterations or additions whatsoever.”16. Clause 3.18 provides as follows:“Not to use or permit the demised premises or any part thereof to be used for anypurpose other than as an Off Licence and Shop and for no other purpose save withthe Landlord’s written consent which consent shall not be unreasonably refused.”17. Clause 3.20 provides as follows:“Not to assign transfer or underlet or part with the possession or occupation of thedemised premised or any part thereof or suffer any person to occupy the demisedpremises or any part thereof as a licensee but so that notwithstanding theforegoing the landlord shall not unreasonably withhold its consent to an assignmentof the entire or underletting of the entire or part of the demised premises subject tothe following provisions as such then as may be appropriate [namely requirementsregarding information and costs and appropriate covenants of the part of an underlessee].”18. Clause 3.30 contained provisions regarding the “yielding up” obligations of the tenant atexpiry of the term as follows:“At the expiration or sooner determination of the said term quietly to yield up thedemised premises together with all the landlords fixtures and all other fixtures andfastenings that now or which during the said term shall be affixed or fastenedthereto (except Tenant’s or trade fixtures), in such good and substantial repair andcondition as shall be in accordance with the covenants on the part of the tenantherein contained …”19. Clause 5 provided that in the event of rent becoming overdue for fourteen days or in theevent of breaches of covenant on the tenant’s part or certain other events then it wouldbe lawful for the landlord to enter the premises and repossess same without prejudice toany right of action or remedy in respect of any antecedent breach.The 2005 Works20. After taking possession in 2005 the defendant undertook the works necessary to convertthe Agora Bar to an off licence known as the Naked Grape from which he then traded.21. The plaintiffs consented to these works and no complaint is made relating to them in theproceedings. The defendant sought in the proceedings to suggest that the problemsencountered by the plaintiffs were attributable to the condition of the building pre-June2005, although he did not before these proceedings make any complaint about thecondition of the building as of the time he was granted possession.Page 4 ⇓The 2007 Works22. The plaintiffs say that in early 2007 they learned that the defendant had undertakenfurther works to the ground floor. The plaintiffs’ evidence was that the first they becameaware of the works when their attention was drawn to them by the owner of anotherbusiness on the street who had seen a skip outside the premises.23. The effect of the works was to convert the premises back into a bar. It is said that thisincluded a reconfiguration of the layout of the ground floor including the removal of akitchen at the rear to make space for a seating and music area, the removal of fire exitcorridors and the relocation of toilet areas. The premises was then reopened as a barknown as “The Flux Bar”. I shall return later to the details of these works.24. In early 2008, a firm of architects whose offices were on the first floor complained thatthe floor had subsided. The true extent of the settlement is considered later but it causedthe plaintiffs to investigate the matter and engage an engineer to survey the building andidentify remedial works required.25. On 23 November, 2009, the plaintiffs’ engineer, Mr. Nugent, inspected the premises andidentified the settlement of the flooring complained of by the architects.26. On 2 December, 2009, the plaintiffs effected a peaceable re-entry. They found the groundfloor abandoned, and the electricity discontinued, the account having been unpaid, andfound unopened letters on the floor. Rates and water rates were also unpaid.Circuit Court proceedings27. By October 2009, the defendant had fallen in to rental arrears and on 20 October, 2009,the plaintiff commenced ejectment proceedings in the Circuit Court. In these proceedings,the plaintiffs claimed that the defendant failed to observe the covenants and conditions inthe lease in the following particular respects: -(1) Failed to comply with the requirements of relevant enactments and to do suchworks as may be required for such purpose.(2) Failed to pay outgoings and rates.(3) Performed alterations to the premises amounting to substantial works without theprior consent of the plaintiffs.(4) Failed to keep the premises clean and tidy and to keep them in good order, repairand condition.(5) Failed to renew and keep up the licence on the premises.(6) Failed to yield up the premises in good and substantial repair and condition.28. During the currency of the Circuit Court proceedings a request was made by the plaintiffsthat the defendant consent to unlimited jurisdiction in the Circuit Court. This request wasdeclined.Page 5 ⇓29. On 31 March, 2011, an order was made by the Circuit Court granting the plaintiffsjudgment in the sum of €16,000.34 and costs in respect of arrears of rent.These proceedings30. These proceedings were commenced on 27 January, 2012. The plaintiffs claimed damagesfor breach of the covenants in the lease, in an amount totalling €83,879.00. This wassubsequently revised downwards to a sum of €63,928.00, reflecting certain allowances inrespect of rent and rates.31. The defendant denies failure to observe the covenants and conditions in the lease. In hiscounterclaim, he originally claimed sums totalling €149,437.00 being the value ofcontents of the premises wrongfully withheld by the plaintiffs, and further sums totalling€201,000.00 in respect of costs of refurbishing the premises by works which he says weremade with the consent of the plaintiffs.32. In relation to the 2007 works this Court is required to determine whether they caused theplaintiffs to incur the amount of the costs claimed by them and whether the plaintiffs hadconsented to the works as the defendant claims.33. Evidence was given by each of the plaintiffs and by the defendant and by engineersretained by each side, and by the contractor retained by the defendant, Mr. David Hanlon,who is also a person who the defendant says he had put in possession of the premises forthe purpose of trading the Flux Bar.34. There were extensive contradictory versions of the extent of the works undertaken. In theabsence of a properly documented structural survey of the premises as of thecommencement of the lease term, it is difficult to be definitive as to the scale of theworks and their effect. The nearest such information available to the court was theevidence of the engineers retained by the respective parties to which I shall turn firstly.The plaintiff’s engineer: Mr. Paul Nugent35. Mr. Nugent inspected the property on 23 November, 2009 and produced a report inDecember, 2009. The relevant extracts from his report are as follows: -“The property is a mature structure with external walls of a solid masonryconstruction. Upper floor construction appears to consist of timber flooring ontimber floor joists, on load bearing masonry walls. The premises appear to havebeen substantially refurbished in the recent past, with first floor areas in particularundergoing completely refurbishment in 2005. Drawings forwarded to us in thisregard would appear to indicate that upgrading of ground floor accommodation mayhave been undertaken at a similar date.We understand from our client that further alterations have been undertaken to theground floor area, in the more recent past i.e. in the last 12-month period. Frominspection of the ground floor accommodation, it would appear that a number ofinternal walls toward the rear of the property have been removed to facilitate thelayout of new toilet accommodation. A protected corridor indicated on Fire SafetyPage 6 ⇓Certificate drawing previously referenced also appears to have been removed (referattached copy of ground floor layout plan indicating location of extent of internalwalls which appear to have been removed). An air handling system also appears tohave been added as part of these recent ground floor alterations.Description of DefectsSubstantial movement/settlement was noted to the first floor structure onthe date of inspection. Movements noted were to the rear of the first floorarea, with settlement most pronounced at the location of the partitiondividing Office Unit 1 from the tearoom/toilet area to the rear of Office Unit 2(refer attached First Floor Layout plan).Settlements in the order of some 25mm were noted in the floor structurealong the line of this partition, with most severe movement adjacent to theentrance door from the common escape stairwell to office unit 1. Associatedsettlement cracking was noted to the partition of this location, notably at thejoint of partition and ceiling. Flooring in the tearoom/toilet area would alsoappear to have settled and are off level (Refer attached photographs).From inspection of the ground floor area, it would appear that the affectedfirst floor structure is immediately over the area of the ground flooraccommodation which, as previously noted, has recently had alterationsundertaken.The floor structure in this area was examined on the date of inspection, witha single ope being made in the ground floor ceiling (Refer Photographattached). Floor structure at the location where ope was made is consistentof 225 x 50mm timber floor joists, at 300mm centres. Joists appeared tohave a clear span of some 6.2 metres. It is unclear whether the internal wallsremoved as part of the ground floor alterations previously provided internalsupport to the first floor over, however, we would note that the floorstructure exposed on the date of inspection would not be capable of carryingimposed loading over the clear span of 6.2 metres which currently exists. Wewould also note that the ceiling mounted air handling unit is locatedimmediately under the area of the first floor where settlement of thestructure is most pronounced.… the fire escapes indicated in the Ground Floor licensed premises areaappeared to have been significantly altered by the changes made on theground floor area.Conclusion and RecommendationWe are of the opinion that significant movement to the rear section of thefirst floor structure has occurred/is occurring. The existing floor structure,Page 7 ⇓judged by the limited opening up works undertaken, does not have adequatestructural capacity to safely carry applied loading over the existing clear floorspan. In this regard we would recommend the following…”36. The report continued by identifying a requirement for propping of floor structures,strengthening of floor structures, and steel frameworks and that the approval of the fireofficer be sought for the existing layout.37. In his evidence before the court, Mr. Nugent said that it appeared to him that the toiletwalls which were previously providing support to the beam supporting the floor abovewere now gone. He said that it was unlikely to be a coincidence that the floor settlementoccurred and appeared following the 2007 works.38. It was put to Mr. Nugent in cross-examination that the defendant’s engineer, Mr. Ryan,would say that the deflection and settlement which occurred on the first floor occurredover a longer period and, therefore, could not have been attributable to the 2007 works.Mr. Nugent said that this was simply not possible.Defendant’s engineer: Mr. Jim Ryan39. Mr. Ryan inspected the property in early 2010 and delivered his report on 26 February,2010. In his report, he made the following observations: -“It is clear that vital supports to the first floor have been removed. The stud wallsof the architectural practice on the first floor have settled. There is no dispute tothis.The holes in the ceiling on the ground floor show that the original joists are still inplace and that they span north south. They are spliced over a timber runner whichruns east west some 3 metres or so from the rear wall. This timber runner isinadequate as a support beam. Deflection was inevitable. The lack of use of the firstfloor heretofore would have contributed to this deflection not being detected.It is clear that this runner was originally on top of a support wall, or a series ofsupport pieces orientated east – west. The north – south joists were cut to sit onthis east – west structure, and the runner was the means of transferring the loadfrom the joists to the wall. That is the only plausible case for such a runner to bethere.Joe Kearney employed Dave Hanlon to carry out the alteration works for him in2006 . Dave Hanlon has advised Joda that the partitions he removed were simplestud partitions consisting of 12mm of plasterboard either side of light studs. It tookless than an hour to demolish the walls. These partitions were built up to a fireceiling. The fire ceiling was below an older ceiling. Thus the studwork was not builtto support the runner under the joists. There were steel columns, robust supportswithin the studs to prop the runner.Page 8 ⇓It would therefore seem that during alteration works in the past to install the toiletsand kitchen, the original supports to this runner were removed.CulpabilityThe builder who installed the toilets and kitchen is primarily culpable forremoving a load bearing structure. His stud walls for the toilet and kitchenwould have put back material support but only enough for deflection not tobe evident.Joe Kearney’s builder has a minor responsibility in that he should havechecked the structure of the floor over the partitions he was demolishing.However, in view of the nature of the studwork he removed and the fact thatit was only taken to a lower ceiling, there is a case to be made that what hedid appeared sensible and therefore his culpability would be low.” [emphasisadded]40. Mr. Ryan went on to comment on estimates of costs which had been given originally byMr. Nugent at circa €30,000.00, expressing his view that works to include making goodthe ceiling and relevant declaration could be done for under €5,000.00.41. In evidence before the court, Mr. Ryan indicated that a timber beam which had beensupporting the floor above and whose original purpose was to support that floor was nowmissing. He said that it seemed to him that that must have been removed by “anirresponsible contractor”. Mr. Ryan said that based on the instructions he had received,the defendant had not undertaken any works which affected the ceiling of the groundfloor and, therefore, these works could not have contributed to the deflection ofsettlement now occurring. He said that if as part of the 2007 works any support had beentaken from below the floor of the first floor, it would have collapsed immediately and notcaused the gradual settlement which has been the subject of the complaint.42. Mr. Ryan also indicated that it seemed to him that the toilet walls had been constructedonly to the level of the fire ceiling of the ground floor and, therefore, cannot have been asupport to the floor above.43. Critically, Mr. Ryan acknowledged in his evidence that the works must have been carriedout by a person who is not familiar with the structure of the building and, therefore, notfamiliar with the potential effects to the floors above. In this regard, the defendantconceded in his evidence that the 2007 works were not designed or supervised by anycompetent professional or expert.Other evidence of 2007 works44. The evidence given by the plaintiffs themselves related principally to what they foundafter the re-entry of the premises, and they were somewhat reliant on the evidence of Mr.Nugent as to the works actually carried out. Of the plaintiffs, the person most familiarwith the building itself was Mr. Brady, who had traded from there before purchasing theproperty in partnership with his co-plaintiffs. In his evidence, he confirmed that thePage 9 ⇓plaintiffs had no concern about the works undertaken by the defendant after he enteredthe premises in 2005. Alterations to facilitate the opening and trading of the Naked Grapehad been completed by the first half of 2006.45. Each of the plaintiffs confirmed that they had no difficulty with the works undertaken in2005 and 2006 as it had always been agreed that such works as were necessary toestablish the Naked Grape would be appropriate and were not structural in nature.46. Mr. Field gave evidence that the works undertaken in 2007 amounted to the removal ofthe shopfront of the Naked Grape and removal of the wall at the centre of the groundfloor and the eventual relocation of the toilet areas to prepare a seating/music area to therear.47. Photographs, architect’s drawings and other illustrations were put into evidence, by bothparties. Most of these were not agreed as regards their true provenance and dating, andthey were of limited assistance to the court. Nor were any drawings, plans orspecifications for the 2007 works exhibited to the court, if indeed such ever existed. Thedefendant produced a letter dated 20 June, 2007, post-dating the 2007 works, from aWilliam O’Connor Architectural Services, referring to a drawing and stating that “theproposed works on the attached drawing did not involve the removal of any structuralelements of the existing building.” Mr O’Connor was not called to give evidence and thedefendant himself conceded that no construction professional or expert advised on orsupervised the works as they were performed.48. The defendant gave evidence that he had not done the works himself but had contractedMr. David Hanlon, the person who, together with a partner, ultimately took over the tradeof the Flux Bar. He said that all of the work was done within a period of approximatelyone and a half days and that it had amounted to no more than a clear out and amovement of certain partition walls, and that it was not structural work such as couldhave affected the floor above.49. The most coherent evidence as to the works was that of the engineers. Whilst theyexpressed different views as to the “culpability”, as Mr. O’Neill put it, for the condition ofthe property at the time of the re-entry, even Mr. O’Neill acknowledged that the 2007works, were undertaken by an “irresponsible contractor” and that “vital supports” hadbeen removed. Although he sought to suggest that earlier works may have caused theproblem, he did not contradict Mr. Nugent’s opinion that the affected first floor areastructure was immediately over the ground floor accommodation which had recently beenaltered and that it was “unlikely to be a coincidence” that the floor sagging occurred whenthe supports were removed as part of the 2007 works.50. On the balance of all the evidence I have concluded that the settlement or “sagging” ofthe first floor complained of by the architects at that level can only have been caused bythe works undertaken by the defendant in early 2007 and that this necessitated theremedial work done by the plaintiffs. Even if it could not be definitively established thatthe walls of the toilets which were moved were themselves concrete or masonry I amPage 10 ⇓persuaded that such a radical alteration of the layout of the ground floor caused thedeflection of the floor above and necessitated the works which were undertaken by theplaintiffs following the re-entry.51. I shall return later to the question of whether the full quantum of costs of which theplaintiffs seek reimbursement are properly attributable to these works.Consent for the 2007 works52. It is common case that consent was not given in writing, such as would comply with theprovisions of clause 3.12 of the lease.53. The defendant gave evidence of meeting Mr. Richard Walsh at the Metropole Hotel inNovember, 2006. He informed Mr. Walsh that trade at the Naked Grape wasunsatisfactory and therefore he wished to convert the ground floor back into a bar andmusic venue.54. The evidence given by the defendant was that Mr. Walsh had indicated that he was opento such alterations being made but he would first need to see the plans and specificationsand consult with his partners.55. The defendant initially claimed in his evidence the consent was given in the course of atelephone conversation with Mr. Walsh on Christmas Eve 2006. Mr. Walsh swore that nosuch conversation occurred and said that if there had been such a call on Christmas Evewhen he was spending time with his family he would have recalled the interruption.56. Mr. Walsh also gave evidence of the November meeting at the Metropole Hotel. He saidthat he was approached by the defendant who had certain ideas in relation to thebusiness. He said that the defendant said he wished to alter the layout of the groundfloor which would at least reduce the size of the Naked Grape, or close it, and reinstatethe premises to a public house.57. Mr. Walsh said that he had responded that if the defendant submitted drawings and otherinformation such as specifications, he would consult his partners about the matter.58. Mr. Walsh gave evidence that he had also indicated that he would need details of thescope of work and needed to know that appropriate and competent professionals wereengaged. Mr. Walsh said that no such information was ever submitted and no consent hadbeen given either in writing or orally.59. The other plaintiffs Mr. O’Brien, Mr. Field and Mr. Brady each confirmed that they had notgiven their consent.60. Having heard the evidence of the defendant and the plaintiffs I have concluded that evenif Mr. Walsh indicated to the defendant that an application for consent would beconsidered, no consent was given. Accordingly, the 2007 works were in breach of clause3.12 of the lease. This finding informs the approach to be taken to other aspects of thecase, in that it illustrates the willingness of the defendant to proceed with the 2007 worksPage 11 ⇓in breach of his contractual obligation to, at the very least, obtain consent before doingsuch works.61. To the extent that there could have remained any doubt as to the exact cause of the floorsettlement, the defendant at the very least placed himself in a position where a failure toobtain consent to the 2007 works, in clear breach of Clause 3.12, exposed him to the riskof liability for the consequences of the state of the building after the works.Other considerations62. This is not an equity case in which the general conduct of the parties towards each otherwould inform the court in the exercise of discretion. However, there are a number offeatures of the manner in which the defendant conducted himself which reveal to thecourt that over a period of time the defendant regarded himself as no longer bound bythe clear contractual obligations contained in the lease without having obtained consent,waiver or agreement to a variation or a surrender of the lease or otherwise being releasedfrom those contractual obligations, and acted accordingly. These features include thefollowing.Proposed assignment to Mr. Hanlon63. By the time the ejectment proceedings were commenced in October 2009 the defendantwas in arrears of rent to the extent of €27,118.64. It appears that from time to time during the term of the lease the defendant wasdependent to some measure on sourcing payments from Mr. Hanlon, whom he hadpermitted to become an operator of at least part of the ground floor premises. Thedefendant claimed that somehow Mr. Hanlon was responsible for rent arrears. He claimedalso that he had proposed to the plaintiffs that they consent to an assignment of the leaseof the ground floor to Mr. Hanlon. He did not go so far as to assert that such anassignment had been consented to, only stating that he never received a reply to hisrequest for such consent.65. There is no doubt that no assignment of the lease was ever consented to. The significanceof this issue is that it revealed an attitude on the part of the defendant that he could overtime regard himself as no longer bound by all of the terms and covenants of the lease,and could somehow “transfer” responsibility for compliance to Mr. Hanlon.Seven-Day Publican’s Licence66. By the time the plaintiffs effected the re-entry in December, 2009 the licence had expired.Again it appears from the evidence given by the defendant that he had regarded this asno longer his responsibility. Mr. Hanlon had been operating the Flux Bar and the evidencealso showed that later in 2009 further modifications had been made to the premises andit was now trading as “Snoopies Bar and Nightclub”.67. The defendant submitted that the lease contained no express provision obliging him tomaintain the intoxicating liqueur licence. The plaintiffs invoke clause 3.3, which was anobligation on the part of the tenant “to observe and comply in all respects with theprovisions and requirements of any and every enactment for the time being in force”.Page 12 ⇓There was some debate as to whether the absence of an express covenant relating to thelicence meant that the defendant was under no obligation in this regard.68. Clearly, the Licencing Acts are an “enactment” for the purposes of Clause 3.3 and I acceptthe submission of the plaintiffs that clause 3.3 conferred an obligation to comply with theActs. Quite apart from that contractual obligation, the defendant was the person inpossession of the premises pursuant to the terms of the lease. He was responsible for thetrade on the ground floor and was therefore required to maintain a licence under theLicensing Acts.69. The defendant submitted that he could have applied for a renewal of the licence up totwelve months after the expiry of the last licence and was, he claimed, taken by surpriseby the re-entry. He submitted that were it not for this intervention there was no reasonwhy he would not have secured renewal of the licence if requested to do so. That did notabsolve the defendant from the obligation to keep the licence current.70. During the hearing, there was some discussion concerning the contents of a letter dated11 July, 2007, from Messrs Cantwell Keogh & Associates regarding the fire safetycertificate application, arising from an inspection undertaken by Messrs Cantwell Keogh &Associates on 10 July, 2007.71. In their report, they confirmed that, in their opinion, the layout of the bar was insubstantial compliance with the Building Regulations, 1997 except for two issues, namely:-(1) The front and rear exit doors which needed to have a clear width of at least 950mmbut only had a width of 900mm; and(2) The external rear steps needed to be widened.The defendant conceded in evidence that these matters had not been addressed. He said,however, that he believed that he was in compliance and also expressed the view thatbecause the issues regarding the exit doors and the external rear steps were outside thearea leased to him, they were not matters with which he needed to concern himself.72. At the heart of the defendant’s submission regarding the license was his assertion thatlong before the re-entry the trade of the ground floor was being performed by Mr. Hanlonas the Flux Bar. He said that at this time, he had been in open discussions with theplaintiffs regarding the potential for assignment to Mr. Hanlon. He insisted that theplaintiffs had never refused consent to an assignment to Mr. Hanlon and were aware thatMr. Hanlon was trading from the premises. In circumstances where the plaintiffs neverconsented to an assignment to Mr. Hanlon, Clause 3.3 remained binding on the defendantand he breached this contractual obligation.Abandonment73. Evidence was given by a Mr. Roy Gavin that in the summer of 2009, he was asked by Mr.Hanlon to work in the Flux Bar which at this stage had a dancefloor at the back. HePage 13 ⇓accepted the offer and he started employment in October. He said that in preparation forthe Cork Jazz Festival, the name was changed to “Snoopy’s Nightclub”. Mr. Gavin saidthat he never met the defendant and as far as he could see, Mr. Hanlon was acting as thelicensee of the property.74. Mr. Gavin said that after the Jazz Festival, the premises deteriorated generally and wasbeing treated by Mr. Hanlon and his associates as a form of “party house”.75. Mr. Gavin said that in the middle of November, the premises was closed for business. Atthat stage, the Electricity Supply Board had cut off the supply for non-payment, havingtried unsuccessfully to gain access.76. Whilst there was some question about the accuracy of some aspects of the evidence ofthis witness, the significance of his evidence, as far as it went, was the fact that Mr. Gavinhad never met the defendant. This fact was not contradicted and was consistent with theconclusion that, before Mr. Gavin came to work at the premises, the defendant had, ineffect, put Mr. Hanlon in possession of the trading premises, thereby abandoningpossession of the premises and his own contractual obligations. I have come to theconclusion that this again evidenced that the defendant had, without any formal releaseor surrender, regarded himself as free to disregard his obligations under the lease.Particulars of damage claimed77. I now turn to the evidence which was given in respect of the particulars of damage whichthe plaintiffs say flow directly from the alterations to the building made in breach ofClause 3.12. These were originally particularised in para. 9 of the statement of claim in anamount totalling €83,879 but reduced subsequently to revised particulars totalling€63,928.09. The third named plaintiff, Mr. Field, gave evidence to prove the individualitems and supporting documents and I shall consider each of them under the headingsbelow: -1) Replacement of locks – €279.50.This cost was clearly incurred as a necessary consequence of the validlyeffected re-entry and will be allowed in full.2) Repair of alarm – €326.88.This charge related to a call out fee and replacements of battery andreconnections made on 9 February 2010 and clearly flows as a consequenceof the re-entry.3) Replacement of fire alarms – €78.32.This appears to relate to a further call out on 15 February 2010 when a faultybattery was replaced. It is not obvious to the court that this arose as a directconsequence of the defendant’s actions and therefore this item is disallowed.4) New Fire Certificate Application – €1,996.50.Page 14 ⇓This relates to the invoice of Messrs Cantwell Keogh and Associates,chartered fire and safety consulting engineers, and relates to theirprofessional fee for the application for a new fire safety certificate. Thisclearly arises as a consequence of the defendant’s actions and will be allowedin full.5) Design of new support structure – €907.50.This relates to the professional fees of Paul Nugent, consultant engineer, forhis site attendances and meetings and design of the new support structureand preparation of specification. Again, it arises as a consequence of thedefendant’s actions and will be allowed in full.6) Extra replacement of Fire Extinguishers – €338.80.During the course of the evidence a discrepancy arose in the calculations onthe invoice of AJ Fire Extinguishers, and the claim was reduced to €300. Ishall allow that amount as clearly it related to necessary works.7) Building Works to Property – €13,915.In respect of this item there appears to have been some measure ofengagement between the engineers, and correspondence between the partiesas to the scope and cost of the repair works. Mr. Nugent had articulated thecost originally at €30,000, which Mr. Ryan advised was excessive. Furtherengagement took place between the parties and it was acknowledged by Mr.Nugent that his original estimate was an “order of magnitude” estimatebased on preliminary inspections. The plaintiffs obtained a quote from acontractor, Brian Curran, which was for a total sum of €26,177.02.Mr. Ryan had obtained a quote from an alternative contractor, SummerhillConstruction Limited, in the sum of €7,900 for the works excluding VAT plusan additional item of €1,500 for “additional slab sealing in the area”.Ultimately, the plaintiffs reduced the amount of works which Mr. Nugent hadindicated should be undertaken, thereby reducing by almost one half Mr.Curran’s total charge to a sum of €13,915. Having done this, the plaintiffswere under no obligation to engage with the contractor from whom thedefendant had obtained a quote, and this court does not regard the amountultimately incurred to be excessive. Accordingly, this amount is allowed infull.8) Opening works for inspection of property – €729.00A quote had been obtained from Mr. Curran for the total sum of €930. Thisappears only to be a quote in respect of opening up and inspection works,with some charge associated with removal of rubbish and a skip. There is noevidence that this amount was actually discharged and I shall disallow it.9) Fire exit works – €4,029.25Page 15 ⇓This relates to the fee of Shandon Iron Works, and related to the supply andfit of galvanised stairs with handrails and sundry additional items. Again thisappears to have been properly incurred and it will be allowed in full.10) Engineer’s fee – €726This appears to duplicate with the amount of €907.50 referred to at (5)above and is disallowed.11) Legal fees in respect of Circuit Court licencing application – €7,609.59This relates to the professional fees of Messrs J.W. O’Donovan solicitors andcounsel David O’Dwyer BL, for a licencing application concerning thepremises including such items as court fees. It includes outlays of €2,003.09These items have been properly incurred as a consequence of thedefendant’s failure to comply with Clause 3.3 of the lease (enactments) and Iallow it in full.12) Loss of rental income (six months) December 2009 to May 2010 – €32,470This amount was calculated by reference to the contracted rent for the yearin which the re-entry occurred, namely year five, where the annual rent was€65,000. It was argued on behalf of the defendants that case law supportsthe proposition that following a forfeiture, the only amount which could bepursued would be a rent equivalent to mesne rates reflecting market rent(O’Reilly v Gleeson [1975] IR 258 and Edward Lee & Co (1974) Ltd v N1Property Developments Ltd [2013] IEHC 162). Mr. O’Sullivan of BarryAuctioneers was called by the defendant and gave evidence that anappropriate market rent for the ground floor at the time was €23,000 perannum. As regards the level of rent, this claim is not in the nature of mesnerates for overholding, but is a claim for breach of contract to pay thecontracted rent. I am not persuaded that the rent should only be recoverableby reference to mesne rates or a market rent, and I shall allow this claim atthe contracted rent, so that the plaintiffs will be put in the position theywould be in had the breach not occurred.The defendant also submitted that because works were only put out to tenderin May 2010 and completed by July 2010 the repairs could have beencompleted at a much earlier date and would have taken only a matter ofdays.I accept the submission of the defendant that the works could have beencompleted earlier than July 2010 and that the plaintiffs could have placed theproperty on the market earlier. Taking every aspect into account, I shallallow one half of the amount claimed in respect of rent, which is one quarterof the then prevailing annual rent, namely €16,250.13) Repairs to refrigeration condensers – €522.00Page 16 ⇓This claim is based on an invoice from, Coolflow Limited, “Beer CoolingSystems, Cold Rooms, Ice makers Etc.” The invoice relates to “relocation” ofbeer cooler condensing units. No evidence was given as to the connectionbetween this cost and the actions of the defendant in breach of the lease andaccordingly this item is disallowed.78. The total amount accordingly which should be allowed in respect of the particulars ofdamage referred to is €45,614.22.Counter claim79. The defendant counter claimed under two headings: -1) Damages for detinue and/or conversion totalling €149,427.2) Reimbursement of cost of building works which he claims were undertaken with theconsent of the plaintiffs, €201,990.23.80. The claim in respect of works undertaken was withdrawn at the hearing. It has a residualsignificance in that its quantum is inconsistent with the defendant’s assertion that the2007 works were inconsequential and could not have had the effects on the structure ofthe building contended for by the plaintiffs.81. In the counter claim it is alleged that on 2 December, 2009, the plaintiffs took possessionof the premises and of the defendant’s chattels. The defendant claims that on numerousoccasions he had requested the plaintiffs to return the chattels and that the plaintiff haswrongfully failed to do so.82. A Scots schedule was produced at the hearing identifying differences between the partiesin relation to each category of item claimed in terms of whether or not they were locatedat the premises at the date of the re-entry, and in some cases items still available forcollection, and the different views of the respective parties as to the value of the itemsconcerned.83. The aggregate value of the items subject to this counter claim, based on the invoicedcosts of the goods to the defendant was €149,427, although that was reduced at thehearing.84. On 16 December, 2009, the defendant’s solicitors, Messrs Daly Derham Donnelly, wroteto the plaintiff’s solicitors, J.W. O’Donovan. In this letter they acknowledged a letterreceived from Messrs O’Donovan enclosing a Stock List and stated: -“Your clients are well aware that the person in possession of this premises and theperson who was operating the business was Mr. David Hanlon and they shouldensure that they send a copy of the Stock List to Mr. Hanlon, as the stock referredto therein is the stock of Mr. Hanlon”.Page 17 ⇓Messrs Daly Derham Donnelly continued by referring to lease agreements “in place withLombard & Ulster, the Bank of Scotland Ireland and the Friends First” for certain contents,listed in that letter. They continued: -“These contents were originally leased by our client and the responsibility of theseLeases were taken over by David Hanlon, they are all subject to Lease Agreementsand accordingly there is retention of title in favour of the Loan Institutions andaccordingly you might please confirm a time and date that is suitable for our clientto call and collect the items so that they can be returned to their rightful owners”.85. This led to protracted correspondence between the respective solicitors which related bothto the question of contents of the premises and to the plaintiff’s complaints regarding thecondition of the property at the time of re-entry.86. In further correspondence through 2010, Messrs Daly Derham Donnelly continued toprotest that their client had not received the return of the contents. Ultimately arisingfrom this correspondence and further exchanges a meeting took place on 22 June, 2011,at the business premises of the third named plaintiff, Mr. Field, ESI Technologies,attended by the defendant and Mr. Field.87. The defendant claimed in evidence that he had attended on that occasion for the purposeof taking possession of items which were his property but that when he was shown anumber of them, they appeared to be in very poor condition. Photographs were exhibitedto the court showing a small number of items, principally a number of stools. Althoughthese were undoubtedly in a much deteriorated condition, there was no conclusiveevidence even by photographs, as to the condition of these items at the time of the re-entry.88. The defendant insisted that when he attended it became clear that the relevant goodswere not all available for collection and that those that were made available even forinspection were not in a fit and proper condition.89. The evidence of Mr. Field was that when the defendant attended at his premises heattended in a motor car only and without any equipment or capacity to remove therelevant chattels. He said that the defendant had indicated that he would return later toremove the relevant property but never did so.90. Having considered the evidence of Mr Field and the defendant as to the meeting at ESI on22 June, 2011. I have concluded that on that day no meaningful effort was made by thedefendant to secure release of his chattels.91. The essential ingredients of the tort of detinue are proof of ownership, demand for releaseof the chattels and a refusal of such release. In this case, the correspondence suggeststhat there was some delay on the part of the plaintiffs in confirming to the defendant thathe could remove chattels. However, the correspondence also reveals that the defendant’ssolicitor was on the one hand claiming that the defendant had leased a number of thePage 18 ⇓items yet, on the other hand, was claiming that responsibility for the leases had beentaken over by Mr. Hanlon. It was also suggested in the first such letter that stock left atthe premises was owned by Mr. Hanlon. This ambiguity in the defendant’s attitudetowards the contents of the premises is reflective of his ambivalence, to put it at itslowest, towards his contractual obligations under the lease itself. Of direct relevance inthis regard is that at the very least six weeks before the re-entry, the defendant hadabandoned possession of the ground floor without regard to his contractual obligations.No evidence was adduced, or submissions made that he had sought to negotiate asurrender of the lease to secure a release of his obligations or that he had sought to makeand then been refused any orderly arrangements in relation to the contents, whether theywere owned by himself or third parties.92. This court cannot speculate as to the terms the plaintiffs may have imposed on asurrender, even if they been willing to accept a surrender. However, in circumstanceswhere the defendant abandoned possession of the premises without either a surrender orany orderly communication with the plaintiffs, he cannot later assert that the plaintiffsacted unlawfully in relation to the contents. If the defendant had sought to make anorderly departure from the premises by agreement with the plaintiffs, it would have beena matter for him to ensure that appropriate arrangements, including removal of chattels ifnecessary, were in place and this he failed to do.93. I shall therefore, dismiss the counter claim.94. I shall order that the defendant pay to the plaintiffs damages for breach of contract in theamount of €45,614.22.
Result: Damages awarded. Counter claim dismissed.
Hemani v Ulster Bank (Ireland) Ltd.
[2019] IECA 331 Whelan J.McGovern J.Costello J.
Ms. Justice Máire Whelan delivered on the 20th day of December 2019Introduction1. This appeal arises from the judgment and order of the High Court dated the 18th May,2017 which dismissed the appellant’s claims against his landlord, the respondent, save forthe claim that he suffered direct economic loss consequential upon the respondent’salleged failure to maintain premises which he occupied in Sligo town on foot of an oralperiodic tenancy. The orders to strike out or in the alternative to dismiss the appellant’sproceedings, were sought by the respondent primarily pursuant to the inherentjurisdiction of the Court and alternatively under the rule in Henderson v. Henderson.Factual and procedural background2. The appellant, a litigant in person, was granted an oral periodic tenancy in or about May1978 by the respondent’s predecessor over part of the 2nd Floor in a building situate atthe corner of O’Connell and Grattan Street known as 52 O’Connell Street, Sligo (“thepremises”). He occupied the said premises for the purpose of carrying on a printingbusiness. Ownership of the premises subsequently passed to First Active plc. Therespondent, having taken over from First Active plc, became owner of the premises in oraround 1990 and thereafter the relationship of landlord and tenant subsisted between theparties.3. The appellant alleges that since 2006, the respondent has failed to carry out essentialrepairs to the premises and that this failure impacted negatively on his printing businesswhile the respondent claims that the appellant acted unreasonably by preventing accessto the property, frustrating necessary repairs including those necessitated by the terms ofa Fire Safety Notice.4. An initial notice to quit was served on the appellant in 2003. A subsequent notice to quitwas served on or about the 28th March, 2006. An Ejectment Civil Bill for Overholding wasissued by the respondent on or about the 1st August, 2006 returnable before Sligo CircuitCourt.Page 2 ⇓5. The appellant served on the respondent a Notice of Intention to Claim Relief pursuant tothe provisions of the Landlord and Tenant (Amendment) Act, 1980, as amended, on the27th November, 2006 and issued a Landlord and Tenant Civil Bill on the 5th December,2006 seeking, inter alia, that the Court fix the terms of a new statutory tenancy underPart II of that Act. That action was ultimately heard by Judge Flanagan at the CircuitCourt in Sligo on the 15th March, 2013 whereupon an order was made granting theappellant a new lease and fixing the terms of the said tenancy pursuant to the provisionsof the 1980 Act for a term of 17 years from the 16th May, 2006 at a yearly rent of €6,100together with a direction that the tenant be responsible for internal repairs and thelandlord be responsible for external repairs and granting the appellant 50% of his costs.6. The appellant appealed the Circuit Court order by notice of appeal dated the 25th March,2013.7. Subsequently, pending hearing of the appeal, a Fire Safety Notice pursuant to s. 20 of theFire Safety Act, 1981 was served on the respondent on the 4th July, 2013 by the FireSafety Authority, Sligo Fire Service, in relation to the entire premises. The noticeidentified the premises as a potentially dangerous building as defined by s. 19 of the 1981Act and directed the respondent, as owner, to carry out essential works to fulfil the FireSafety Authority’s requirements including provision of a safe and effective means ofescape. The execution of these repairs appears to have exacerbated tensions between theparties.8. It is clear that there was some urgency attached by the Fire Safety Authority to the worksbeing carried out. At one point the respondent had indicated the 7th January, 2014 as thelikely start-date for the said works with an anticipated completion date of February, 2014.The relationship between the parties was characterised then – as now – by a high degreeof mistrust with inevitable attendant mutual misunderstandings. The appellant soughtthat structural repairs, which he considered were necessitated by the damage caused tohis demise from ingress of water from leaking of the building roof over the years, werealso required to be carried out in addition to the works necessitated by conditions in theFire Safety Notice.9. The appellant’s Circuit appeal came before the High Court on Circuit in Sligo on the 9thMay, 2014, when Mr. Justice Barry White accepted an undertaking given by therespondent that it would carry out structural repairs, that the appellant would move out ofthe premises, that certain pieces of large equipment, the property of the appellant and inuse in connection with his printing works, would be stored safely in the premises duringthe carrying out of the works and that any rent due during the construction phase wouldbe suspended. Further, the appellant was to be paid compensation during this periodwhile he was out of the premises, together with certain other removal and advertisingcosts. The Court note stated: “Landlord will do the works needed.” Counsel for therespondent is noted as having stated: “[Plaintiff] will be compensated for loss”. The Courtnote continues: “Undertakings given by both sides (not sworn) … Works will take 3-4weeks to start & 6-8 weeks to complete”.Page 3 ⇓10. The appellant moved out and works were commenced around 24th June, 2014 andcarried out to the premises. A dispute subsequently arose between the parties as towhether and when the premises were ready and fit for re-occupation by the appellant.The appellant further alleged that damage had been caused to his fixtures/equipmentstored in the premises during the refurbishment works.11. The appellant issued a notice of motion alleging that the respondent had been incontempt of court by reason of non-compliance with the undertakings given to the HighCourt in Sligo on the 9th May, 2014 referred to above. The appellant also claimed€86,999 for reimbursement of the cost of replacement of damaged equipment and loss ofincome. That motion and the substantive appeal of the Circuit Court orders madepursuant to the Landlord and Tenant (Amendment) Act, 1980 were heard and determinedby Mr. Justice Michael White by way of Circuit appeal in 2015.12. The appeal was heard on the 23rd, 24th, 25th and 26th February, 2015. In his judgmentdelivered on the 14th May, 2015 ([2015] IEHC 292) White J. considered that thematters to be determined by the Court in the Circuit appeal were as follows:“(1) The appropriate rent.(2) The commencement date of the Lease.(3) The terms of the Lease.(4) The date when the premises were ready for occupation after the refurbishmentwork.(5) Does the Landlord have a responsibility to put in heating, and ancillary matters(6) The Costs Order in the Circuit Court.”13. White J. noted in his said judgment at paras. 18-19 that: -“This Court does not have jurisdiction to consider the loss of income claim for aperiod of three years by the Plaintiff totalling the sum of €61,128.The Court has jurisdiction to consider the claim for the damage to the equipmentwhich was supposed to be stored safely.”White J. found at paras. 23 -24 of his judgment that: -“The fact that substantial repairs had to be undertaken subsequent to the service ofthe Fire Safety Notice, indicates the Defendant did not properly observe impliedcovenants to repair under the Lease. There was a failure of the Defendants toaddress these issues over a period of years in a timely manner. The Defendant …should have been more proactive to ensure that the fabric of the building wassecured and that the building complied with relevant Fire Safety Regulations. TheDefendant was confronted by a lot of unreasonable behaviour on the part of thePage 4 ⇓Plaintiff, who was … not proactive about addressing repairs…after the service of theFire Safety Notice, this Court is satisfied that the Defendants embarked on aprogramme of refurbishment, which in many ways went beyond their remit, andthe Court is quite satisfied that the present condition of the premises is satisfactory.There is no requirement on the Defendant to install any form of heating system,that is a matter for the Plaintiff. Likewise the issue of the phones, carpets andsecurity meshes for windows are a matter for the Plaintiff.”14. He continued: -“The Plaintiff although rightly concerned about the damage to his equipment had aduty to minimise his loss and take up possession as soon as he could…. I considerit appropriate to fix the 7th January, 2015, as a date for the Plaintiff to take uppossession of the premises again and when the Defendant would no longer be liablefor any compensatory payments to the Plaintiff.”White J. further found that:“It is appropriate that the Landlord be responsible for the repair and maintenanceof the exterior of the building including the roof and the windows. The Plaintiffshould be responsible for the internal repairs and maintenance of the demise.”15. The Court fixed the annual rent at €5,200 per annum from 16th May, 2006 to 16th May,2016. The respondent was ordered to pay weekly compensation to the appellant while hewas out of possession for the period up until 7th January, 2015. The respondent wasresponsible for the repair and maintenance of the exterior of the building including theroof and windows. The appellant was held responsible for the internal repairs andmaintenance. Having further reserved its decision in respect of some outstanding mattersfrom time to time and until 31st July, 2015 and 23rd October, 2015 respectively, White J.also ordered, inter alia, the sums be payable to the appellant: -“…of €7,500 for a replacement camera and €3,000 as an omnibus figure to allowfor delay in the appellant accessing the premises and any ancillary expenses inactivating the machinery which had been mothballed and THE COURT refuses anyfurther relief in respect of damage to the equipment.”At a further hearing the Court directed that the aforesaid allowed sum totalling €10,500should not be payable directly to the appellant but rather was to be credited against theoutstanding rent.Current proceedings16. The appellant issued a plenary summons on the 7th April, 2016. The initial statement ofclaim dated the 9th May, 2016 claimed damages against the respondent for, inter alia: -“1) Breach of landlord’s duty to repair within a reasonable time frame.2) Landlord’s negligence to repair extending over a number of years.Page 5 ⇓3) Landlord’s failure to take reasonable care to prevent the premises from becoming asource of danger.4) Mental distress, depression, damage to reputation and loss of confidence.5) Discomfort, inconvenience and interference with quiet enjoyment.6) Loss of opportunity and consequential losses.7) Expense.8) Breach of Undertakings and negligence in complying with undertakings given inCourt on 14/05/2014 including: -a) Failure to protect equipment.b) Failure to insure.c) Denial of access to the premises.d) Failure to pay weekly loss of earnings as per agreement.9) Inordinate and unreasonable delay in completion of works and replacement ofdamaged equipment followed by denial of access over several months leading tofurther deterioration of parts in other equipment and subsequently resulting in thedestruction of my 37 year old business.10) Infringement of Constitutional right to earn a livelihood due to sufferance,oppression, negligence, and breach of landlord’s duty to repair.11) Abuse of total control assumed by the Defendant over the activities and operationof the process regarding issues mentioned herein12) …claim for damages amounting to €509,892.00…”17. A further document entitled “Amended Statement of Claim Part 1 Loss of Income” dated17th May, 2017 was included the Book of Pleadings lodged in this appeal. It runs to about50 pages in length.The Motion18. The respondent, by way of notice of motion dated the 18th November, 2016, sought tohave the appellant’s claim dismissed, or in the alternative struck out, pursuant to theinherent jurisdiction of the Court on the basis that the issues raised were res judicatahaving been determined in prior proceedings, that the claims amounted to Henderson v.Henderson abuse of process, were frivolous and vexatious, factually unsustainable, boundto fail and were statute barred.Decision of the High Court19. During the hearing of the respondent’s motion on the 4th May, 2017, the groundingaffidavit sworn by the respondent’s solicitor dated the 16th November, 2016, whichoutlined the history of the proceedings between the parties from the respondent’sperspective was considered in detail. Relevant passages of the said affidavit state that: -Page 6 ⇓“(5) As appears from the judgment of White J and the citation by White J fromdirections given by Mr. Justice Barry White on 9 May 2014, the obligations of theBank in relation to the carrying out repairs to the premises were an issue in theCircuit Court proceedings and were the subject of an undertaking given by the Bankto the Court:‘The essence of the undertaking was that the Defendant would carry outessential structural repairs, that the Plaintiff would move out of the premisesbut certain pieces of large equipment would be stored safely in the premisesduring the construction phase of the work and that any rental due during theconstruction phase would be suspended. The Plaintiff was to be paidcompensation during his time out of the premises and certain other removaland advertising costs.’(6) …The Order of 27 November 2015 records Orders and determinations made byWhite J on a number of dates…(7) As appears from the said Order, the issues referred to in the statement of claimdelivered by the Plaintiff in the within proceedings have been the subject of a finaland binding determination by the High Court. The state of repair of the premisesand the respective obligations of the parties to address the state of repair of thepremises was an ongoing issue in the Circuit Court proceedings…(8) Accordingly, the dispute between the parties about who was obliged to repair thepremises and when that was to have been done has been finally determined by theJudgment and Order of White J…”20. Counsel for the respondent further referred to the judgment and orders of Mr. JusticeMichael White and the various affidavits of the appellant, in particular, his replyingaffidavit dated the 22nd December, 2016; it was contended that the nearly all the issuesaverred to were the subject of a direct and final determination in the High Court beforeWhite J.21. The respondent argued that the only claims that were not definitively determined in priorproceedings were the claims for general damages, for mental distress, stress, depression,damage to reputation and loss of confidence and the claim for consequential losses. Theseclaims, it was argued, were unstateable for two reasons:i. The factual basis for the claims had already been determined by the High Courtand while it might not have had jurisdiction to deal with general damages inlandlord and tenant proceedings, White J. had dealt with the question as to therights and wrongs of the repairing position and to when the repairs oughtreasonably be deemed to have been completed.ii. Even if there was a factual basis for bringing the claims, in the absence ofexceptions to the general rule applicable to the measure of damages for breachof contract, the appellant cannot recover damages for worry and stress.Page 7 ⇓High Court decision22. In an ex tempore judgment Barrett J. agreed with the submissions of the respondentthat, having regard to the judgment of Mr. Justice Michael White, the majority of theappellant’s claims were in “res judicata and/or Henderson v. Henderson territory”, savefor the loss of income claim, and were matters that had been addressed by White J. orthat should have been addressed by him or should have been addressed in the priorproceedings. Barrett J. ordered that: -“…the within proceedings be dismissed with the sole exception of the Plaintiff’sclaim that he suffered direct economic loss as a consequence of the Defendant’salleged failure to maintain the premises situate at the corner of O’Connell Street inthe Parish of St. John Barony of Carbury and Borough and County of Sligo (‘thePremises’) and that the Plaintiff do deliver an amended Statement of Claimconfining his claim to the claim that he suffered direct economic loss as aconsequence of the Defendant’s alleged failure to maintain the Premises.”Grounds of Appeal23. The notice of appeal encompasses the following grounds:i. That the respondent misled and confused the Court on the 4th May, 2017 by itsreference to the appellant’s affidavit on damages dated the 22nd April 2014, tosupport its claim of res judicata, implying that the claim on damages had been partof previous proceedings, where in fact damages were specifically excluded from theHigh Court’s jurisdiction, as demonstrated by the judgment of White J. of the 14thMay, 2015 and supplemented by the Court transcript. (Grounds 2(a) & 3)ii. That the affidavit of the respondent’s solicitor, dated the 16th November, 2016misled the Court in terms of res judicata as it included irrelevant points on the stateof repair of the premises and respective obligations in circumstances where therespondent’s failure to maintain the premises, making it a source of danger andcausing damage to the appellant’s business, was never addressed. (Ground 2(b))iii. That the claim for damages could not have been brought in the Sligo County CircuitCourt proceedings as the extent of damage caused to the premises was not fullyknown at this time and, per the appellant’s statement of claim, the amount claimedin damages would have exceeded Circuit Court margins. The Court in theseproceedings was not aware that the appellant was renting a premises that was notfire compliant or that the premises would be condemned as potentially dangerousby the Fire Safety Authority shortly after the proceedings meaning the claim fordamages cannot be viewed as falling within the ambit of Henderson v. Henderson.(Ground 4)iv. That, by confining the order to direct economic loss only, Barrett J. failed toaddress the ultimate damage incurred – damage to the appellant’s reputation, theloss of opportunity and consequential losses, loss of future earnings, mentaldistress, depression, inconvenience and interference with the quiet enjoyment ofthe appellant’s business and its ultimate destruction. (Ground 5)Page 8 ⇓Submissions of the appellant24. The appellant acknowledges that he is not contesting the High Court’s final and bindingdetermination on the grant and terms of the lease, obligations for repair work and rent.He argues that the issue of general damages, including for breach of repair covenant, wasnot addressed in the judgment as White J. considered the issue to be outside the Court’sjurisdiction. The appellant asserted that the respondent had objected at the Circuit appealhearing to general damages being considered on the grounds that a separate claim fordamages would have to be initiated. To support this, the appellant referred to thetranscript of the hearing on the 26th February, 2015 (Page 46 – lines 25-27) whereinWhite J. states: -“I mean the whole issue of Damages for loss of business and stuff like that is not anissue for this Court. I have to clearly make that – but I mean the whole issue of therepairs and what impact it has on the conditions is an issue”.25. The appellant contends that the phrase “and stuff like that” as used by the judgedemonstrates that the non-jurisdiction applied to more than just loss of income and thatBarrett J. failed to take account of or have sufficient regard to the full and propermeaning of White J.’s assertion and the context in which it was made. The appellantfurther argues that the respondent misled the Court (Barrett J.) on the 4th May, 2017 byreferring to various affidavits and implying that the claim on damages had been part ofprevious proceedings and thus amounted to Henderson v. Henderson abuse of processand/or res judicata.26. The appellant submits that Barrett J. failed to have sufficient regard to the direct andobvious link between various aspects of economic loss suffered and damage inflicted asan inevitable result of a want of care on the respondent’s part and that by confining theorder to direct economic loss only, the High Court failed to address the ultimate damageincurred.27. The appellant argues that the trial judge erred in failing to give any proper considerationand not showing any flexibility in his consideration of Henderson v. Henderson and/or resjudicata resulting in the appellant being denied the opportunity of ever having a hearingon the issue of damages inflicted upon him as a result of the respondent’s negligence andfailure to observe express and implied repair and quiet enjoyment obligations in a timelymanner.Submissions of the respondent28. Counsel for the respondent fairly conceded in oral submissions that, pursuant to Deasy’sAct, 1860, the covenant of quiet and peaceful enjoyment was implied in the oral periodictenancy. The respondent agrees that the appellant did not bring a claim for damages forthe alleged breach of the covenant to repair in the Circuit Court proceedings. Theappellant is thus entitled to bring a claim for damages for breach of covenant to repairand breach of covenant for quiet enjoyment of the premises – but the respondent arguesthat such a claim is confined to the period prior to the repair works being carried out.Page 9 ⇓29. The respondent submits that the appellant cannot seek to re-litigate in these proceedingsmatters that were the subject of a final and binding determination in the Circuit Courtproceedings. The respondent submits that the appellant cannot bring any claim in respectof the period when the property was under repair or the period following completion ofthe repairs in circumstances where the nature of the repair works, the efficacy of themanner in which they were carried out and the payment of compensation to the appellantin respect of the period when he was obliged to leave the premises have all been thesubject of a final and binding determination in the High Court.30. The respondent contends that the appellant’s characterisation of Barrett J.’s decision isincorrect insofar as it suggests that by confining the order to solely economic loss, hefailed to address the ultimate damage alleged to have occurred or that the trial judgeerred in failing to give any proper consideration or show any flexibility in his considerationof the Henderson v. Henderson principle and/ or res judicata. The respondent argues thatwhile the trial judge dismissed some of the appellant’s claims on the ground they were resjudicata, other claims were dismissed on the ground that they were bound to fail havingregard, inter alia, to the findings made by White J.31. The respondent argued that there is no basis for the proposition that the personal injuriesor other damages claimed by the appellant arose as a result of the condition of thepremises in the period prior to the repair works being carried out. His complaints areconcerned with the outcome of the Circuit Court proceedings and the fact that – for thereasons identified by him – his business closed when he did not go back into occupation.DiscussionRes judicata32. The essential prerequisites for a successful res judicata plea were identified by Kelly J. (ashe then was) in McConnon v. President of Ireland [2012] 1 I.R. 449 where he observed atparas. 14-15: -“The inherent jurisdiction to dismiss or strike out proceedings in limine can also beinvoked in circumstances where somebody attempts to relitigate matters alreadydecided conclusively by a judicial tribunal of competent jurisdiction. Such adetermination is conclusive. A party is precluded from relitigating the mattersdecided in the judgment or indeed from giving evidence to contradict them insubsequent proceedings.In order to successfully rely on this doctrine, it must be shown that there was:-(a)A previous decision of a judicial tribunal of competent jurisdiction.(b)That decision must have been a final and conclusive judgment.(c)There must be an identity of parties.(d)There must be an identity of subject matter.”Page 10 ⇓Henderson v. HendersonThe succinct explanation of the rule in Henderson v. Henderson given by Cooke J. in theHigh Court in Re: Vantive Holdings & Others and the Companies Acts 1963-2006[2009] IEHC 408, at paras. 32 to 33 and set out hereafter, was cited with approval by MurrayC.J. in Re: Vantive Holdings [2010] 2 I.R. 118, at para. 21: -“The rule in Henderson v. Henderson is to the effect that a party to litigation mustmake its whole case when the matter is before the court for adjudication and willnot afterwards be permitted to reopen the matter to advance new grounds or newarguments which could have been advanced at the time. Save for special cases, theplea of res judicata applies not only to issues actually decided but every point whichmight have been brought forward in the case. In its more recent application thisrule is somewhat mitigated in order to avoid its rigidity by taking into considerationcircumstances that might otherwise render its imposition excessive, unfair ordisproportionate.”33. This Court subsequently in Small v. Governor and Company of the Bank of Ireland &others [2018] IECA 393 considered the Henderson doctrine in the context of anassertion of res judicata observing as follows at paras. 56 – 61: -“The decision of Wigram V.C. in Henderson v. Henderson was relied upon asauthority for the wider sense of res judicata classifying it in effect as part of the lawof abuse of process.Subsequently, the statement of Wigram V.C. came to be considered in detail by theHouse of Lords in Arnold v. National Westminster Bank PLC [1991] 2 A.C. 93.The partly obiter judgment of Lord Keith of Kinkel stated at p. 104:‘Cause of action estoppel arises where the cause of action in the laterproceedings is identical to that in the earlier proceedings, the latter havingbeen between the same parties or their privies and having involved the samesubject matter. In such a case the bar is absolute in relation to all pointsdecided unless fraud or collusion is alleged, such as to justify setting asidethe earlier judgment. The discovery of [a] new factual matter which could nothave been found out by reasonable diligence for use in the earlierproceedings does not, according to the law of England, permit the latter to bereopened.’The judgment continues at p. 105:‘Issue estoppel may arise where a particular issue forming a necessary ingredient ina cause of action has been litigated and decided on in subsequent proceedingsbetween the same parties involving a different cause of action to which the sameissue is relevant, one of the parties seeks to re-open that issue.’Page 11 ⇓It is now generally accepted, based on the dictum of Lord Keith that, in relation to issuesnot determined in the earlier litigation, Henderson v. Henderson offers:‘…the possibility that cause of action estoppel may not apply in its full rigourwhere the earlier decision did not in terms decide, because they were not raised,points which might have been vital to the existence or non-existence of a causeof action.’ (p. 105)The judgment of Lord Keith suggests that where the first decision has determined therelevant point the result will differ as between cause of action estoppel and issueestoppel:‘… there is room for the view that the underlying principles upon whichestoppel is based, public policy and justice, have greater force in cause ofaction estoppel, the subject matter of the two proceedings being identical,than they do in issue estoppel where the subject matter is different.’ (p.108)”34. I accept this to be a correct statement of the relevant law.Inherent Jurisdiction35. There is unquestionably an inherent jurisdiction in the Court to strike out an action if it isclear that it must fail. That jurisdiction was described by Costello J. in Barry v. Buckley[1981] I.R. 306 at p. 308 where, in his judgment he observed that: -“Basically its jurisdiction exists to ensure that an abuse of process of the courtsdoes not take place. So, if the proceedings are frivolous or vexatious they will bestayed. They will also be stayed if it is clear that the plaintiff’s claim must fail…”As to the exercise of that jurisdiction, Costello J. stated that it was to be “…exercisedsparingly and only in clear cases”.36. The rationale for this approach was explained by McCarthy J. in his judgment in theunanimous decision of the Supreme Court in Sun Fat Chan v. Osseous Limited [1992] 1I.R. 425 at p. 428 were he said:“Generally, the High Court should be slow to entertain an application of this kindand grant the relief sought. Experience has shown that the trial of an action willidentify a variety of circumstances perhaps not entirely contemplated at earlierstages in the proceeding; often times it may appear that the facts are clear andestablished but the trial would disclose a different picture. With that qualification,however, I recognise the enforcement of a jurisdiction of this kind as a healthydevelopment in our jurisprudence and one not to be disowned for its noveltythough there may be a certain sense of disquiet at its rigour.”37. It follows from this that a court should be particularly cautious when its inherentjurisdiction is invoked at an early stage in proceedings such as in this case where thepleadings have not yet closed.Page 12 ⇓It will be recalled that in Sun Fat Chan McCarthy J. sounded a note of caution at p. 428: -“By way of qualification of the jurisdiction to dismiss an action at the statement ofclaims stage, I incline to the view that if the statement of claim admits of anamendment which might, so to speak, save it and the action founded upon it, thenthe action should not be dismissed.”Frivolous and vexatious38. Ó Caoimh J. in his judgment in Riordan v. Ireland (No. 5) [2001] 4 I.R. 463, at p. 46 citeda Canadian decision of the Ontario High Court in Re Lang Michener & Fabian (1987) 37D.L.R. (4th) 685 at p. 691 which had categorised a series of factors which generallytended to show litigation as being vexatious in the following terms:“(a) The bringing up on one or more actions to determine an issue which has alreadybeen determined by a court of competent jurisdiction;(b) Where it is obvious that an action cannot succeed, or if the action would lead to nopossible good, or if no reasonable person can reasonably expect to obtain reliefs;(c) Where the action is brought for an improper purpose, including the harassment andoppression of other parties by multifarious proceedings brought for purposes otherthan the assertion of legitimate rights;(d) Where issues tend to be rolled forward into subsequent actions and repeated andsupplemented, often with actions brought against the lawyers who have acted foror against the litigant in earlier proceedings;(e) Where the person instituting the proceedings has failed to pay the costs ofunsuccessful proceedings;(f) Where the respondent persistently takes unsuccessful appeals from judicialdecisions”.I am not satisfied at this stage, in light of the jurisprudence, that the proceedings canfairly be categorised as frivolous and vexatious nor should the entire proceedings bestruck out or dismissed pursuant to the inherent jurisdiction of the Court.Claim for mental distress arising from breaches of the contract of tenancy39. The respondent correctly relied on the Supreme Court decision in Murray v. Budds & ors.[2017] 2 I.R. 178 which decided that damages for worry or mental distress which havenot given rise to psychiatric injury arising out of a breach of contract are not recoverable.In that judgment Denham C.J. observed at paras. 34-35: -“It was established in Addis v Gramophone Co. Ltd [1909] AC 488, that Courtswould not in general permit damages for worry or upset as a consequence of abreach of contract…Lord Atkinson stated pp. 494 to 496: -Page 13 ⇓‘I have always understood that damages for breach of contract were in thenature of compensation, not punishment.…In Sikes v Wild (1861) 1 B. & S. 587, at p. 594, Lord Blackburn says:“I do not see how the existence of misconduct can alter the rule of law by whichdamages for breach of contract are to be assessed. It may render the contractvoidable on the ground of fraud or give a cause of action for deceit, but surely itcannot alter the effect of the contract itself.”There are three well-known exceptions to the general rule applicable to themeasure of damages for breach of contract, namely, actions against a banker forrefusing to pay a customer’s cheque when he has in his hands funds of thecustomers to meet it, actions for breach of promise of marriage, and actions likethat in Flureau v Thornhill (1776) 2 W. BI. 1078, where the vendor of real estate,without any fault on his part, fails to make title. I know of none other.…In many other cases of breach of contract there may be circumstances of malice,fraud, defamation, or violence, which would sustain an action of tort as analternative remedy to an action for breach of contract. If one should select theformer mode of redress, he may, no doubt, recover exemplary damages, or what issometimes styled vindictive damages; but if he should choose to seek redress inthe form of an action for breach of contract, he lets in all the consequences of thatform of action; Thorpe v Thorpe, (1832) 3 B. & Ad. 580. One of theseconsequences is, I think, this: that he is to be paid adequate compensation inmoney for the loss of that which he would have received had his contract beenkept, and no more.’ (emphasis added)This has long remained the foundation case identifying the jurisprudential rationalefor the limits on such damages in a contract action, with the few exceptions to thegeneral principles as identified by Lord Atkinson…”Denham C.J. continued at para. 38: -“The law was further described in Watts v Morrow [1991] 1 WLR 1421 by BinghamL J: -‘A contract-breaker is not in general liable for any distress, frustration,anxiety, displeasure, vexation, tension or aggravation which his breach ofcontract may cause to the innocent party. This rule is not, I think, founded onthe assumption that such reactions are not foreseeable, which they surely areor may be, but on considerations of policy. But the rule is not absolute.Where the very object of a contract is to provide pleasure, relaxation, peacePage 14 ⇓of mind, or freedom from molestation, damages will be awarded if the fruit ofthe contract is not provided or if the contrary result is procured instead.’(emphasis added)”40. In McDermott & McDermott, Contract Law (2nd edition, Bloomsbury Professional, 2017)at paras. 23.76 – 23.77, the theory behind the exclusionary rule was provided: -“Many factors explain the courts restrictive approach to non-pecuniary losses. TheAddis decision reflects the individualist orientation of traditional contract law underwhich contracts are impersonal relationships, concerned primarily with economicexchange, and do not typically involve other elements of the parties’ personalities.It also reflects an historical desire not to restrict unduly the ability of employers todismiss employees and a mistrust of exemplary damages (which appeared to bewhat the plaintiff was seeking in Addis). In Baltic Shipping v Dixon [1993] 176 CLR344, Mason CJ observed that: -‘The conceptual policy foundations of the general rule are by no means clear. Itseems to rest on the view that damages for breach of contract are in essencecompensatory and that they are confined to the award of that sum of moneywhich will put the injured party in the financial position the party would havebeen had the breach of contract not taken place.’Mason CJ held that the policy is based on an apprehension that the recovery ofcompensation for injured feelings will lead to inflated awards of damages incontract cases. Other reasons put forward include: -(i) It is too harsh on the defendant to have to pay damages for mental distress.(ii) Mental distress is incapable of exact proof.(iii) The risk of mental distress is voluntarily assumed by the plaintiff uponentering into the contract.”41. No stateable basis has been identified which would take any of the impugned aspects ofthe appellant’s claim within any of the narrow exceptions to the principle in Addis whichhave evolved in the jurisprudence. Accordingly, those aspects of the claim are notmaintainable and were correctly struck out by the High Court.Conclusionsi. The allegations in the notice of appeal that the respondent and its legal advisorsmisled the High Court are demonstrably groundless and ought not to have beenmade. Such allegations were made without any reasonable or objective justificationand I reject same in their entirety.ii. The aspects of the appellant’s claim which seek compensation for alleged damageto his reputation, loss of confidence, mental distress, depression and variousarticulations of same are not justiciable, require to be struck out and were correctlydealt with by the trial judge. The legal position was reviewed by the Supreme Courtin Murray v. Budds where Denham C.J., upholding earlier common law authorities,Page 15 ⇓reaffirmed the position that in general as a matter of public policy a party whobreaches a contract is not in law, subject to limited exceptions which do not arise inthe instant case, liable for any mental distress, frustration, depression, anxiety,displeasure, annoyance, tension or aggravation which same may cause to theinnocent party.iii. A generalised claim based on alleged damage to the appellant’s reputation islikewise not maintainable and was correctly struck out by the trial judge.iv. In regard to the respondent’s contention that the claim ought to be dismissed orstruck out as being Henderson v. Henderson abuse of process, it is noteworthy thatthe litigation instituted by the appellant before the Circuit Court in 2006 aroseprocedurally from the prior service of a statutory Notice of Intention to Claim Reliefand concerned the fixing of the terms of a new tenancy under Part II of the 1980Landlord and Tenant (Amendment) Act, 1980. Order 51 Rule 2 (8) of the CircuitCourt Rules (S.I. No. 510 of 2001) provides: -“Any application under the 1980 Act may be brought together with any otherapplication or applications upon the same Civil Bill.”v. Whilst at least some such claims, insofar as they related to events said to haveoccurred prior to December 2006, might have been brought within the ambit of the2006 Landlord & Tenant Civil Bill and were not, such an approach by the appellantwas not unreasonable in the context of that litigation and the circumstances whichobtained at the date of the institution of the said proceedings in 2006.vi. I am not satisfied as a matter of law that any omission to pursue other claimsarising in relation to alleged breaches of covenant including the covenant to repairand the covenant for quiet possession reaches the threshold of Henderson v.Henderson abuse of process properly understood. It would be “…excessive, unfairor disproportionate…” in the language of Cooke J. in Vantive Holdings to shut outthe claims of the appellant for damages for breach of covenant to repair and breachof covenant for quiet enjoyment based on the Henderson doctrine in thecircumstances of the case.vii. The claims in damages for breaches of covenants – express and implied – arisingprior to as well as after the grant of the written lease are not res judicata insofar asthey relate to assertions of breach of covenant of quiet possession and breach ofcovenant to repair. Same were not the subject of adjudication in the prior litigationbetween the parties save and except as expressly provided for in the orders madeby White J. in the High Court on Circuit referred to above.viii. Whereas the High Court judge correctly noted in his judgment that “… the disputebetween the parties about who was obliged to repair the premises and when thatwas to have been done has finally been determined by the Judgment and Order ofWhite J…”, the discrete issue regarding the claims for damages for breaches ofPage 16 ⇓specified covenants remains appropriately before the High Court and fall to bedetermined.ix. The appellant is not entitled to pursue any claim in these proceedings which hasbeen the subject-matter of a final determination encompassed in the orders madeon various dates by Mr. Justice White such as, for instance, where the said judgemeasured compensation for damage to certain of the appellant’s equipment,fixtures and fittings which occurred during the carrying out of remedial works at thepremises the subject matter of the demise, stating; “€7,500 for a replacementcamera and €3,000 as an omnibus figure to allow for delay in the appellantaccessing the premises and any ancillary expenses in activating the machinerywhich had been mothballed…”x. The issue of the Statute of Limitations was raised by the respondent and is aspecific ground relied on in their original notice of motion. The provisions of theStatute are generally a matter for pleading and can be raised by the respondent intheir defence as they see fit.xi. The appellant succeeds to a limited extent only in his appeal. He is entitled topursue – in addition to the claim permitted by the High Court judge, namely “thathe suffered direct economic loss as a consequence of the Defendant’s allegedfailure to maintain the premises…” – a claim for reliefs, including damages, forbreach of express or implied covenants. This includes the covenant to repair. AsWylie, Landlord & Tenant Law (3rd edition, Bloomsbury Professional, 2014) at14.11 notes such a claim “…may include loss of interest or loss of profits in the caseof a business premises.” As referred to above, White J. in his Circuit appealjudgment at para. 18 noted that the Court did: – “.. not have jurisdiction toconsider the loss of income claim…” Further, the appellant is entitled to pursue hisclaim for damages for breach of covenant for quiet enjoyment of the premises.However, the appellant must confine these claims to the period prior to the dateWhite J. determined that it was reasonable for him to go back into possession, the7th January, 2015.xii. I would direct that the appellant do deliver an amended statement of claimconfining his claim to the specific grounds identified above in addition to the groundthat he suffered direct economic loss as a consequence of the respondent’s allegedfailure to maintain the premises as was permitted by order of the High Court. Theamended statement of claim should be served within 28 days of the perfecting ofthe order of this Court and should comply with the rules of the Superior Courts andnot be unduly prolix.I would dismiss all other grounds of appeal.
Havbell Dac. -v- Dias
[2018] IEHC 175
Costello J.
JUDGMENT of Ms. Justice Costello delivered on the 20th day of March , 2018
1. The plaintiff seeks an injunction restraining trespass to property and ancillary reliefs. The defendant is in occupation of the property and resists the applications and seeks to have the issues between the parties determined at a plenary hearing and that the injunctive relief sought should not be granted on an interlocutory basis.
The facts
2. On the 21st September, 2007 John Rooney of Windermere, Myrtleville, Crosshaven, County Cork entered into a loan agreement with Irish Life and Permanent Plc trading as Permanent TSB. It was an interest only commercial loan for a term of 20 years in the amount of €2.3 million. It was to be used to purchase a property known as 1-2 Phibsborough Road, Phibsborough, Dublin 7 ( “the property”) and Irish Life and Permanent Plc was to obtain a first legal charge over the property. At Clause 6 of the special conditions Mr. Rooney agreed:
“That no letting or renewal of letting of the property, the terms and conditions of which provide for a term of more than twelve months, be made without the prior consent of Permanent TSB in writing.”
The approval was subject inter alia to confirmation that the property had a minimum market value of €3.1 million and a rental income of €14,200 per month.
2. On the 10th January, 2008 Mr. Rooney granted Irish Life and Permanent Plc a legal charge over the lands comprised in Folio 77845F of the County of Dublin which were commonly described as 1-2 Phibsborough Road, Phibsborough, Dublin 7, the property. At Clause 5.11 Mr. Rooney covenanted:-
“Not without the prior written consent of Permanent TSB to make any disposition of the property subject to the mortgage nor create or purport to create any rent charge affecting it.”
Clause 9.1 of the mortgage provided:-
“The powers of leasing or agreeing to lease and of accepting surrenders of leases conferred on a mortgagor in possession by the Conveyancing Acts 1881 to 1911 or other statutory powers of leasing shall not apply to the mortgage and the mortgagor shall not otherwise grant or agree to grant any lease tenancy licence of part with or share possession or occupation of the property without the prior written consent of Permanent TSB.”
3. On the 18th March, 2008 Mr. Rooney was registered as full owner of the lands comprised of Folio 77845F and Irish Life and Permanent Plc was registered as the owner of a charge for present and future advances payable with interest on the 13th March, 2009.
4. On the 29th June, 2012 Irish Life and Permanent Plc changed its name to Permanent TSB Plc. On the 19th June, 2015 Permanent TSB Plc entered into a deed of transfer with Havbell Ltd. By the deed of transfer Permanent TSB Plc transferred to Havbell Ltd the charges set out in the schedule to the deed of transfer to include all the estate right title interest benefit and obligations of Permanent TSB Plc arising in, to or under the charges. The charge of Mr. John Rooney over the property was included in the schedule and was thereby transferred by Permanent TSB Plc to Havbell Ltd.
5. On the 15th July, 2015 Havbell Ltd was registered on Folio 77845F as the owner of the charge registered in favour of Irish Life and Permanent Plc on the 13th March, 2009.
6. On the 29th September, 2016 Havbell Ltd reregistered as Havbell Designated Activity Company, the plaintiff in these proceedings.
7. In 2015 Mr. Rooney was in default in respect of his obligations under the loan. He decided to surrender the property to Permanent TSB on a voluntary basis. On the 20th May, 2015 (prior to the sale of the charge to Havbell Ltd) he executed a voluntary surrender form in respect of the property. He voluntarily and unconditionally handed back vacant possession of the property to Permanent TSB. The form noted that the property was a residential property but he indicated that the property was held as an investment property. He indicated that the property was never his principal private residence. He said that the property was occupied by a tenant, Isabella (sic) Maria Dias (sic), the defendant in these proceedings. He informed Permanent TSB that there had been a tenant in the property for the last eighteen months and that he gave her notice to vacate the property four months prior to his surrender of the property to Permanent TSB. He said the tenant ignored his notice to vacate and had paid no rent in a number of months. He said the tenant signed a three year lease eighteen months ago but he no longer had a copy of the lease. This was the first notice that Permanent TSB had of the agreement between John Rooney and the defendant in relation to the property.
8. Originally the property comprised two separate properties which had been merged. The property had been let with the apparent knowledge of Irish Life and Permanent TSB to a company that ran a language school for a number of years but the company had gone into liquidation leaving unpaid rent due to Mr. Rooney. Mr. Rooney apparently then entered into an agreement with the defendant in September 2014. On one page the date is given as the 4th September and on another as the 1st September. Whatever may be the explanation for this inconsistency, it is stated to be an agreement for the letting of a business premises and the rent payable is €2,000 per month. The term is from the 1st August, 2014 to the 1st August, 2017. The letting is described as being a temporary convenience letting for the landlord/tenant but the rest of the Clause is left blank. Further conditions added in manuscript included:
“That any existing agreement with other parties (Mary) concerning this premises are ended. Any existing disputes between landlord and tenant are deemed ended.
Tenant to repair windows in lieu of rent outstanding at this time.
Tenant to have public liability and fire insurance on premises at all times.
Tenant to keep fire alarm working and to ensure fire exits are free.
In the event of a sale of the premises, tenant to be allowed a “viewing” at an agreed time once per week for required period,
Tenant to have an option to buy at market value at that time.
9. The agreement of September 2014 replaced an earlier agreement dated the 12th June, 2014. The agreement of 12th June, 2014 was between Mr. Rooney as landlord and Ms. Mary Lindon and Maria Isabel Diaz as the tenant. That agreement appears to be signed by the defendant but not by Ms. Mary Lindon. The added special condition 5 read “option to buy at €350,000”. However Special condition 3 of the September 2014 agreement expressly stated that any existing agreement concerning the premises “are ended”, so the June agreement has been superseded by the September agreement.
10. Following the acquisition of the charge, the plaintiff appointed Savills to manage the property and on the 10th July, 2015 a representative of Savills attended to inspect the premises. The keys furnished by Mr. Rooney to Permanent TSB would not work. It was not clear whether Mr. Rooney or the defendant had changed the locks. But the net effect was that the plaintiff had no access to the premises which had been surrendered to its predecessor in title. Savills conducted an inspection of the property in the presence of the son of the defendant. It was apparent that the property was being used as a guest house. It was being advertised on the website AirBnB. The representative from Savills was furnished with a schedule of booked guests who would stay at the premises up until 30th November, 2015.
11. On 17th August, 2015 solicitors then acting for the plaintiff wrote to the solicitors for the defendant pointing out that the tenancy agreement between Mr. Rooney and the defendant breached the terms of the mortgage between Mr. Rooney and the mortgagee. The letter pointed out that the mortgage provided that the mortgagor shall not grant or agree to grant any lease, tenancy, licence or part with possession or share possession or occupation of the property without the prior consent in writing of the Permanent TSB. The letter continued that the plaintiff was satisfied that Permanent TSB did not give its prior written consent to the creation of any lease or tenancy between the defendant and Mr. Rooney and that any tenancy agreement is absolutely void as against the plaintiff. The letter stated unambiguously that “your client’s continued occupation at the premises, without the consent of our client, is not on foot of a valid tenancy.” The letter asked for confirmation that the defendant would now be vacating the property.
12. The defendant’s solicitors, F.H. O’Reilly & Co., replied on the 27th August, 2015 stating that the defendant held the premises under a tenancy agreement dated 1st September, 2014 for a period up to 1st August, 2017 and maintained that she was entitled to performance of the said tenancy agreement. They also referred to the fact that the tenancy agreement contained an option to purchase the premises. The letter called upon the plaintiff to furnish evidence of its title to the premises. The letter confirmed that the defendant was in a position to discharge any arrears of rent that may have arisen under the agreement.
13. Thereafter there were exchanges of letters from September 2015 through to April 2016 with the defendant maintaining that she was entitled to remain in occupation of the premises on foot of the tenancy agreement and the plaintiff maintaining that the tenancy agreement was not binding upon it as the lessor had not obtained the prior written consent of the mortgagee to enter into any tenancy agreement.
14. On the 25th April, 2016 the plaintiff issued an Ejectment Civil Bill Title Jurisdiction against the defendant and her husband Tom Harvey and all other persons concerned in respect of the property. The solicitors acting for the defendant were not authorised to accept service of the Civil Bill. The plaintiff attempted to serve the Civil Bill by registered post at the premises but the document was returned marked “never called for”. Thus the Civil Bill was never in fact served upon the defendants.
15. The plaintiff believed that the solicitors it had instructed to issue the Civil Bill were progressing the proceedings. It was in frequent communication with the solicitors and was being told in detail of the difficulties with regard to service of the Civil Bill, contacts with the defendant’s solicitors, obtaining a date for hearing, obtaining an order for possession with a stay of three months and “teeing up the sheriff” to obtain possession of the premises. These telephone calls, emails and letters were in fact a total fiction. For eighteen months the solicitors acting for the plaintiff took no steps in the matter after the unsuccessful attempt to serve the proceedings. In October 2017 the plaintiff believed that it had reached the end of the litigation and that the sheriff was about to secure possession of the premises on its behalf. This was not the case.
16. When this startling fact came to light, the plaintiff immediately instructed new solicitors. The plaintiff’s new solicitors, Dillon Eustace, wrote on the 28th November, 2017 to the defendant explaining that they were now acting on behalf of the plaintiff in relation to the property and expressing the plaintiff’s very serious concerns with regard to fire safety at the property. The letter called upon the defendant to cease immediately renting any room within the property and to make the property available for a fire safety inspection by 5pm on Thursday, 30th November, 2017. The letter confirmed that the plaintiff was advised that any purported lease of the property to the defendant is/was void for lack of consent by the mortgage holder. The letter stated:
“Insofar as you [are] currently purporting to occupy the Property under a lease, you have no lawful entitlement to do so. You are currently trespassing on the Property.
Therefore, independent to the outcome of a fire safety inspection which may necessitate you to immediately vacate the Property, we hereby call on you to deliver vacant possession of the Property on or before Wednesday 6th December, 2017…with all belongings removed.”
17. A letter in identical terms was written to the occupants of the property. The letters were hand delivered to the property.
18. In response to the letters the defendant spoke to Mr. Ross Kavanagh of Wyse Property Management Ltd, the plaintiff’s new property agent. She explained that she was currently out of the country with her sick husband and could not return within this short time frame to allow access to the property. She suggested that an inspection could take place in January 2018 because she had a large family contingent coming to stay for the holidays.
19. The plaintiff believed that there was a degree of urgency and it could not postpone inspection of the property as requested to January 2018. The plaintiff’s former solicitors had previously advised that it did not have any exposure in relation to fire safety issues at the property. However, its new solicitors now advised that there may be an exposure for the plaintiff under the Fire Services Acts, 1981 and 2003. It was for that reason that the plaintiff urgently sought inspection facilities. Mr. Kavanagh confirmed from a visual external inspection of the premises that it appeared to be in multiple occupation and there appeared to be bars over at least some of the windows. These could of themselves give rise to fire safety concerns. While previously the plaintiff had not treated this point as a matter of urgency, it now did so in light of the up to date limited information concerning the property and its new legal advice.
20. The plaintiff could not proceed with the degree of urgency required in the Circuit Court proceedings in view of the lapse of time since they had been issued and the failure to serve the proceedings. It therefore initiated High Court proceedings with a view to seeking an early order for inspection of the premises and an order restraining the continued trespass by the defendant of the premises.
21. Upon the return date for the notice of motion the defendant agreed to allow a representative of the plaintiff to inspect the property and she undertook that the property would not be used for rental purposes and would not be advertised on AirBnB. The inspection was to take place at a mutually agreeable time. In fact, Mr. Kevin Hollingsworth, building surveyor on behalf of the plaintiff, gained access to the property with the consent of the defendant’s son but without having obtained the prior agreement from her solicitors as had been agreed. The defendant took very grave exception to the manner in which the plaintiff’s in fact proceeded to enter the property and to conduct the inspection.
22. Mr. Hollingsworth inspected the premises on the 19th December, 2017. He said that he was met by the tenant’s son, Mr. Marvin Harvey, and his fiancÉe, Chloe de La Chaise, the defendant and Thomas Harvey (her husband). Mr. Hollingsworth reported that he met “a Mexican gentleman …who stated he is studying in Dublin and has been living in this bedroom for the last three months”. He also met an Italian gentleman and there were suitcases located in the adjacent kitchen which Mr. Hollingsworth took to be an indication that the room was in short term use. Mr. Hollingsworth met a French girl in the living room with two backpacks. She confirmed that she was leaving that day after a short stay. He also noted that two rooms on the ground floor appeared to be used for commercial purposes.
23. In her replying affidavit the defendant inferred but did not positively state that the men from Mexico and Italy on the premises were friends of her son who were staying in the house as their guests. She said that three French girls present on the premises were cousins of Ms. Chloe de La Chaise, Marvin Harvey’s fiancÉe. She said that they were having a number of guests to stay in the house to celebrate her birthday the following week on the 24th December, 2017.
Preliminary issues
24. As a preliminary point counsel for the defendant argued that the plaintiff had not established sufficient evidence of its title to the charge or that it had been properly authorised to institute the proceedings against the defendant. The defendant’s solicitor required proof that the power of attorney by which the deed of transfer of June 2015 was affected should be proved. He also said that it was necessary to establish that both the vendor, Irish Life and Permanent Plc and the purchaser, Havbell Ltd, had power to sell and purchase the loans and associated securities and that each company had been duly authorised to enter into the transaction. He said that the plaintiff should have adduced by way of evidence the resolutions of the boards of the two companies in order to confirm that the transaction had complied with the requirements of company law. He also submitted that likewise there should be evidence of the resolution of the board of the plaintiff authorising the plaintiff to institute these proceedings against the defendant.
25. The plaintiff has established that Mr. Rooney borrowed money from Irish Life and Permanent Plc upon certain terms. He granted Irish Life and Permanent Plc a charge over the property as security for those borrowings. Mr. Rooney was in default and he voluntarily surrendered possession of the property to Permanent TSB Plc in 2015. Permanent TSB Plc subsequently sold Mr. Rooney’s loan and the associated security to the plaintiff. The plaintiff was entered on the Folio as the holder of the registered charge granted by Mr. Rooney to Irish Life and Permanent Plc.
26. Thus the plaintiff has established that it is the holder of the charge which was entered on the Folio on the 13th March, 2009.
27. I am satisfied that the proofs presented by the plaintiff to establish its title to the mortgage granted by Mr. Rooney to Irish Life and Permanent Plc are in order. Specifically, I do not believe that it is necessary in an action for trespass to require the plaintiff to prove firstly that Irish Life and Permanent Plc had capacity to sell the loans and related securities and secondly that the plaintiff had legal capacity to purchase the loans and legal securities. It is not necessary to prove that the appropriate board resolutions were passed in order to make out its title. If there were some facts upon which the defendant could rely which would tend to show that there may be a legal frailty in the transaction, that would be a different matter.
28. Furthermore, as was urged by the plaintiff, it has been registered on the Folio as the holder of the charge and that is conclusive evidence absent any evidence suggesting that the entry in the register ought to be deleted, varied or otherwise amended. No such fact was even suggested, never mind any evidence adduced.
29. Likewise, in the normal way, in the absence of any evidence suggesting that a company has not acted in accordance with its constitutional documents and the Companies Acts, it is not a requirement of a company who has instituted proceedings to prove that the proceedings have been duly authorised by the board of the company by exhibiting a resolution of the board to that effect.
30. I reject these preliminary arguments of the defendant as being without merit.
The defendant’s title
31. The defendant claims that she is entitled to remain in occupation of the premises upon three grounds. Firstly she says she has an equitable interest in the property by reason of the fact that she expended monies repairing, maintaining and restoring the premises. These were valued at between €50,000 and €80,000. Secondly she says that she has a valid tenancy agreement and that she has been in occupation of the premises on foot of that tenancy agreement. She has lived there with her family since either June or August 2014 and she claims that she has rights as result under Part IV of the Private Rented Dwellings Act, 2004 as amended. Thirdly, she says that she has an option to purchase the premises as set out in special condition no. 6 of the tenancy agreement of September 2014.
Legal authorities
32. In N17 Electrics Ltd (In Liquidation) [2012] IEHC 228 Dunne J. held that the parties to a mortgage were entitled to exclude entirely the statutory power of leasing created by s.18 of the Conveyancing Act, 1881 or alternatively to make the exercise of that power conditioned upon the mortgagor obtaining the prior consent of the mortgagee. She held that where the mortgagor was required to obtain the consent of the mortgagee before creating any lease in respect of the mortgaged property, a lease created without such consent would not generally be binding as against the mortgagee. There may be circumstances where the mortgagee might be bound by such a lease such as where the mortgagee required the tenant to pay the rent directly to him. She held that the onus of proving that a mortgagee had consented to a lease which contravened a mortgage lay on the party seeking to rely upon the terms of the lease.
Application of the principles
33. The letter of loan offer and the terms of the mortgage entered into between Mr. Rooney and Irish Life and Permanent Plc excluded the mortgagor’s power of leasing under the Conveyancing Act, 1881. It was an express term of the mortgage that the mortgagor must obtain the consent of the mortgagee in writing prior to the granting of any such lease. In this case the plaintiff and his solicitors have consistently informed the defendant that there was no consent in writing by the mortgagee, Irish Life and Permanent Plc, to the tenancy agreement of September, 2014. Counsel for the defendant suggested that it was for the plaintiff to establish that there had been no prior written consent to the lease. This is incorrect. Dunne J. was quite clear that it is for the party who asserts that this consent was obtained to so prove. The defendant has known since August 2015 that the plaintiff maintained that the tenancy agreement upon which she relied was granted in breach of the terms of the mortgage and was not binding upon the mortgagee. In the two years four months since she was alerted to this fundamental difficulty with her entitlement to occupy the property, she has not obtained any evidence to show that the mortgagee consented to the tenancy agreement or was aware of the existence of the agreement and affirmed it by accepting rent directly from her.
34. On the contrary, the evidence establishes that the first time the mortgagee, Permanent TSB, became aware of the existence of this tenancy agreement, it was also informed by Mr. Rooney that he had given her notice to vacate the property.
35. It is clear that on a number of occasions in August, September and October 2015 the defendant offered to pay the rent directly to the plaintiff or its agent but that the plaintiff at no stage accepted rent from her or acknowledge the validity of the tenancy agreement.
36. It follows that, applying N17 Electronics Ltd, the business tenancy agreement upon which the defendant relies in this case is not binding on the plaintiff and cannot defeat its entitlement to possession of the property.
Alternative grounds of defence
37. Counsel for the defendant was asked to state the basis upon which the defendant claimed to be entitled to remain in possession of the premises. He said that she had an equitable interest in the premises based upon the fact that she had invested between €50,000 and €80,000 in restoring and renovating the property on the representation that she would be afforded an opportunity to purchase the property.
38. There was no evidence from either the plaintiff or the defendant that any such representation was made either by Irish Life and Permanent Plc or the plaintiff or any of their agents.
39. Insofar as Mr. Rooney made any representations to the defendant, which were not established in evidence, any equitable or other rights she may have acquired in reliance on his representations were always subject to the prior rights of the mortgagee as the holder of the registered charge over the Folio.
40. The same objection applies to the option to purchase. It was created in September, 2014 and thus subsequent to the registration of the charge in favour of Irish Life and Permanent Plc. Furthermore, any purported disposition of the property by Mr Rooney to the defendant by way of an option to purchase the property, could only bind the mortgagee, if Mr Rooney obtained the prior consent in writing to the proposed disposition form the mortgagee in accordance with Clause 9.1 of the mortgage. There was no prior written consent to the grant of an option to purchase of any kind to the defendant. It follows that the option cannot bind the plaintiff and therefore cannot provide a defence to the plaintiff’s claim to possession of the property.
41. In summary, the plaintiff has established its rights to possession of the property. The defendant is unable to establish even an arguable case that she has an entitlement to occupy the property which could bind the plaintiff. It follows vis-à-vis the plaintiff the defendant is a trespasser on the property.
Possession against a trespasser
42. In Ferris v. Meagher [2013] IEHC 380 Birmingham J. held that the second named defendant was a trespasser who had no entitlement to remain in occupation of the lands in question. He held that the plaintiff was entitled to an order restraining the trespass “without the necessity of considering the Campus Oil principles”.
43. In Kavanagh v. Lynch [2011] IEHC 348 Laffoy J. considered an application by a receiver to restrain the defendants from remaining on or continuing in occupation of property over which he had been appointed receiver. She referred to the decision of Keane J. in Keating & Co. Ltd v. Jervis Shopping Centre Ltd [1997] 1 I.R. 512 where Keane J. held :-
“It is clear that a landowner, whose title is not in issue, is prima facie entitled to an injunction to restrain a trespass and that this is also the case where the claim is for an interlocutory injunction only.”
He noted that the principle was subject only to the qualification that the defendant may put in evidence to seek to establish that he has a right to do what would otherwise be a trespass. If a defendant did so, the court must consider the application of the principles in American Cyanamid Co. v. Ethicon Ltd. [1975] AC 396.
44. In Tyrrell v. Wright [2017] IEHC 92 I followed the decision of Keane J. in Keating & Co. Ltd v. Jervis Shopping Centre Ltd and I held that prima facia the plaintiff was entitled to an injunction to restrain a trespass on an interlocutory basis unless the defendant puts in evidence to establish that he has a right to do what would otherwise be a trespass.
45. In this case the defendant has not put in evidence to establish that she is entitled to remain in possession of the property as against the plaintiff. On that basis, it is not necessary to consider the principles in Campus Oil. The plaintiff is entitled to the injunctive relief it seeks.
Campus Oil Principles
46. In the event that I am incorrect in this conclusion, I shall consider the plaintiff’s application in the light of the Campus Oil principles. I am satisfied that the plaintiff has in fact made out a very strong prima facia case such that it not only meets the threshold established in Campus Oil but also satisfies the test in Maha Lingham v. Health Service Executive [2006] E.L.R. 127.
47. On the question whether damages would be an adequate remedy for the plaintiff, I note that Laffoy J. observed in Dwyer Nolan Developments Ltd v. Kingscroft Developments Ltd [2007] IEHC 24 that it is not necessary to prove damage in the case of trespass. I cited this decision with approval in Tyrrell v. Wright and the decisions in Metro International S.A. v. Independent News and Media Plc [2006] 1 ILRM 414; McCann v. Morrissey [2013] IEHC 288; Westman Holdings Ltd. v. McCormack [1992] 1 I.R. 151; AIB p.l.c. v. Diamond [2012] 3 I.R. 549 and Dellway Investments Limited v. NAMA [2011] 4 I.R. 1. In light of these authorities I concluded that there were two limbs to the adequacy of damages criterion. The first is whether in fact damages were an adequate remedy for a plaintiff and that in general as regards interests in land damages were not considered to be an adequate remedy. Secondly, and equally significantly, if an injunction is to be refused on the basis that damages would be an adequate remedy, the defendant liable to pay such damages must be able to do so.
48. In this case, there is no evidence at all that the defendant would be able to pay to the plaintiff the damages which it may sustain if it is not in a position to proceed to sell the property but must await the outcome of a trial of the action. The defendant has offered to purchase the property from the plaintiff with the assistance of monies she would be lent by a relative who lives abroad. The clear implication is that she does not have funds of her own which would enable her to purchase the property (which her valuer values at €475,000). This suggests that she would not be able to meet any award of damages in favour of the defendant, the second limb of the adequacy of damages criterion.
49. It must also be borne in mind that the defendant is not the borrower in this case and that any losses sustained by the plaintiff will ultimately be attributable to the borrower, Mr. Rooney. For all of these reasons I am not satisfied that damages would be an adequate remedy for the plaintiff.
50. The defendant argues that damages would not be an adequate remedy for her. If the injunction is granted at an interlocutory stage, effectively she will be made homeless. She will undoubtedly be required to vacate the property but that is not to say that she must thereby become homeless. On her case, she is a tenant of this property and there is no reason to believe that if she is in a position to pay rent in respect of the property that she could not rent an alternative property. Certainly no such evidence has been adduced to support this argument.
51. In addition, it is important to note that the tenancy agreement upon which she says she is entitled to occupy the property is a business letting agreement not a residential letting. The fact that she and her family reside in the premises does not make this a family home within the meaning of the Family Home Protection Act, 1976. The definition of a family home means any building or part of a building occupied as a separate dwelling … “and is not being used or developed primarily for commercial purposes…” In light of the fact that from 2015 to 2017 the premises operated as an AirBnB and her counsel accepts that there is a commercial aspect to the letting, it seems to me that the premises cannot be described as a family home within the meaning of the Act. Certainly, she has for a number of years profited from the use of the building as a guesthouse or hostel through the AirBnB website.
52. This conclusion does not mean that the property has not been her residence as well as her place of business. It is the home where she lives with her husband who suffers from ill health. However, she has known of the plaintiff’s demand for possession since August 2015 and of the fact that the plaintiff has consistently maintained that it is not bound by the terms of the tenancy agreement between Mr. Rooney and the defendant. If she is now required to vacate the premises, she has had more than two years in which to seek alternative accommodation upon a proper legal basis.
Equitable grounds for refusing an injunction
53. The defendant argues that the plaintiff has been guilty of considerable delay in seeking injunctive relief to such a degree that the court should refuse an injunction and the issue of possession of the property should abide the outcome of the trial. It is true that the plaintiff has known since August 2015 that the defendant is occupying the property and refusing to vacate it on the basis that she has a right to remain in occupation on foot of her tenancy agreement with Mr. Rooney. At all times the plaintiff has insisted that the tenancy agreement is not binding upon it. It did not act unreasonably in engaging with the defendant’s solicitors for some months to ascertain whether or not the defendant might be induced voluntarily to vacate the property. Once it became apparent that the defendant would not leave on a voluntary basis, the plaintiff instructed solicitors to commence proceedings to recover possession of the property. Quite properly, advices of counsel were obtained regarding the nature of the proceedings and ultimately Circuit Court proceedings issued in April 2016, as I have explained. What occurred thereafter was wholly unexpected and was not the fault of either party to these proceedings. Unquestionably the solicitors acting for the plaintiff were its agent and therefore they are responsible for the delay notwithstanding the fact that they were clearly mislead for a period of nearly two years as to the progress of the Circuit Court proceedings. If the defendant suffered any prejudice as a result of the delay in resolving the Circuit Court proceedings, then the plaintiff must bear responsibility for that prejudice. When counsel for the defendant was asked to identify the prejudice she had suffered by reason of the delay in the Circuit Court proceedings, he answered that there was a delay in resolving the issues in dispute between the parties and that had the matters progressed in the normal way, it was likely that the Circuit Court proceedings would have concluded by now. That of course applies equally to the plaintiff and I am not satisfied that it amounts to the prejudice suffered by the defendant. I agree with the submission of counsel for the plaintiff that it merely resulted in the plaintiff enjoying a continued occupation of the property at the expense of the plaintiff (and indeed, ultimately, Mr. Rooney). I do not accept that the delay in seeking the injunction in this case provides a ground for refusing the relief sought.
54. It was also argued that the institution of these High Court proceedings constituted an abuse of process and offended the rule in Henderson v. Henderson (1843) 3 Hare 100 in light of the continued existence of the Circuit Court proceedings. I do not accept this submission. The rule in Henderson v. Henderson is to prevent abuse of process. It requires parties to bring forward in the first set of proceedings all of the causes of action relevant to the dispute between the parties so that they may be disposed of in the first set of proceedings. The abuse lies in permitting the first set of proceedings to run their course and then advancing, in a second set of proceedings, claims or arguments which could properly have been advanced in the first set of proceedings.
55. This is far from what occurred in this case. The Circuit Court proceedings have been instituted but not served. It would be necessary for the plaintiff to seek an order of the Circuit Court extending time for the service of the proceedings. The defendant in effect has never been vexed by these proceedings as she has never been formally served with the proceedings and she has never entered an appearance. She has been put to no trouble whatsoever by the Circuit Court proceedings. In effect, her claim is that the mere existence of those proceedings, which would require an order of court to enable them even to be served upon her, ought to debar the plaintiff from instituting and progressing these High Court proceedings. The rule in Henderson v. Henderson is a discretionary one. Even if the facts of this case came within the ambit of the rule, in the exercise of my discretion in this case, I would not be prepared to hold that the institution and maintenance of these proceedings offends the rule.
56. The final ground upon which the defendant says that the plaintiff should be refused the relief it seeks is the fact that she has offered to purchase the property at a fair market value. She says that the plaintiff has refused to engage or negotiate with her in relation to the sale of the property to her. She says that this will inevitably result in the realisation of a lessor sum by the plaintiff when it ultimately sells the property with vacant possession. She has exhibited a report of Dougan FitzGerald, auctioneers, from Clonmel, dated 26th February, 2018 to support this argument. He was asked “to comment on the impact to the market price if the tenants were compelled to vacate their home resulting from a court order.” In light of his instructions Mr FitzGerald stated that :-
“…[I]t is standard practice to advise that maximum (price/values) are unattainable where it is commonly known that a dispute arises and/or where tenants are reluctant to give up possession voluntarily and/or where vacant possession has been achieved in a hostile environment or following contested litigation….We would conservatively estimate that my aforesaid valuation of €475,000 is reduced by at least 20% in circumstances as outlined (if a willing purchaser could be sourced).”
On the basis of this opinion she argues that the plaintiff is seeking to sell at a loss by its refusal to negotiate with her and by insisting on obtaining vacant possession before attempting to realise the security. She invites the court to refuse the relief on the equitable grounds that this amounts to an abuse by the plaintiff and that it is not acting bona fide in seeking the injunctive relief in this case.
57. This argument ignores the evidence of Savills who acted on behalf of the plaintiff. They advised that vacant possession of the property was required in order to realise the maximum value. It also ignores the evidence of Mr. Karl Smith, solicitor, who stated that the plaintiff was unable to solicit interest in the property or to market the property while the matters complained of persist. At an interlocutory hearing the court is not in a position to resolve conflicts of fact and I do not purport to do so. However, I am in a position to assess the bona fides of the plaintiff. I accept that the plaintiff is trying to maximise the return on the security for the loan and that it has advices that this is best achieved by selling the property on the open market with vacant possession, notwithstanding the fact that the defendant has evidence to suggest that this is not the case.
58. There is no legal obligation on the plaintiff negotiate with the defendant for the sale of the property. That is entirely a matter for the plaintiff. If, on the basis of professional advices, it wishes to sell the property on the open market with vacant possession, that is its entitlement. She is not the borrower and she has no right to argue a jus tertii. The argument she advances is one which it might be open to Mr. Rooney to advance but it is not one which is open to the defendant to raise. The fact that the occupier (who is not the borrower) is anxious to purchase the property prior to vacating it does not afford a reason to refuse the injunctive relief to which the plaintiff is otherwise entitled.
Conclusion
59. The plaintiff is entitled to possession of the property from the defendant and I will so order. I will hear the parties’ submissions in relation to the terms of the order.
The Mercers Company v M’Kerfrey
[1896] 30 I.L.T.R 41
Sir Peter O’Brien, Bart C.J., O’Brien, Gibson JJ.
Sir Peter O’Brien, Bart., C.J., after stating the facts as above, continued:—The question is this, whether or not, having regard to the provisions in the agreement that the defendant will not carry on the business of a dealer in spirituous liquors, and to the provision for re-entry, the plaintiffs are entitled to maintain ejectment on the title for these premises. It is argued, first, that the defendant was tenant from year to year, and the provision as to carrying on a trade in spirituous liquors is not incorporated, and, second, if it is incorporated it comes under the Conveyancing Act, and no proper notice under the Act has been given. Now, in the first instance, does the lease or what was intended for a lease cover what is complained of? The defendant got his spirit grocer’s licence and sold spirits. In my judgment, apart from authorities, I think it is quite plain that the covenant covers this particular case.
There is first the expression “licensed victualler,” that is a publican. A spirit grocer with a spirit grocer’s licence is, in common understanding, a “dealer in spirituous liquors,” and if we were to interpret its meaning as a publican we should then regard these words as surplusage. I think if it stood per se“dealer in spirituous liquors,” would be appropriate to a licensed grocer, a fortiori when we have the context of “licensed victualler” in the same sentence and where it would be surplusage. I think the plain meaning of the language is what I say. It is the apt word to describe a spirit grocer. If it were a lease, and if the Conveyancing Act were out of the way, there is no doubt whatsoever that there was a breach of the covenant and a right of re-entry, because the right of reentry was co-extensive with the covenant.
But no lease was executed. The question is, whether the covenant is incorporated in the yearly tenancy? In my judgment I think it is clear it is. I say that independent of any authority. But the case of Thompson v. Amey (12 Ad. & E. 476) seems to be completely conclusive.
It is said there is a distinction—that the lease was only to be executed on certain conditions, the conditions have not been fulfilled, the right to the lease did not arise, and therefore the defendant was in as a tenant from year to year irrespective of the lease. I cannot accept that proposition. I think he was in under the terms of the lease so far as it was co-existent with a yearly tenancy. This provision would be imported into a yearly tenancy, and the lessor would be entitled to recover if there was nothing else in the case. Is there anything else? Does the Conveyancing Act apply? By its language the fourteenth section applies to the breach of any covenant or condition, and then came the Act of 1892, section 5, which provides that *42 “lease” shall include an agreement for a lease where the lessee has become entitled to have his lease granted. My impression is, the defendant does not come within that at all. He got the spirit grocer’s licence, he was served with notice not to continue the business, and, notwithstanding, he persisted obstinately to violate the provisions of the agreement. Is it to be argued that he is to have specific performance of an agreement which he persistently disregarded? He has not built the wall, and he carries on the business in disregard of the notice, and he does not come within the relief given by the section. There is the important case of Swaine v. Ayres, where it was mooted by the judges, but not decided, that the lessee was entitled to specific performance. In my opinion this provision was introduced into the Act of 1892 to meet the difficulty of the judges in that case. It appears to me the defendant would not be entitled in a Court of Equity to specific performance. But assuming that he was entitled to specific performance of the lease, we have here the notice. It does not ask compensation to be made. But all the substantial requirements of the Act are found here. It points out the breach and the obligation. I am clearly of opinion that the plaintiffs are entitled to succeed.
O’Brien and Gibson, JJ., concurred.
Barnaton Investments Ltd v O’Leary
[2004] IEHC 155
Judgment of Mr. Justice Michael Peart delivered the 30th day of July 2004:
The plaintiff is currently the owner of an investment property in Cork, having by Deed of Assignment dated 31st May 2002 acquired same from an associated company,
Blasco Properties Limited which by Indenture of Lease dated 4th August 1999 had
leased portion thereof on the Ground Floor to two persons, namely Seamus O’Connell and John Magee, who in turn executed a Deed of Assignment in respect of their interest to the second named defendant company which is presently in occupation. It appears that Messrs. O’Connell and Magee, with others, were co-sponsors with the first named defendant of the second named defendant company at the time the lease was entered into in August 1999, and the reason why the assignment to the company took place was that Messrs O’Connell and Magee had ceased to be involved in the company, and it was thought best to have the leasehold interest transferred to the company. The company operated a restaurant business in the premises. There are other tenants of the plaintiff in other areas of the building.
Central to the facts of this application is the fact that for some reason not conclusively ascertained, but presumably through some oversight, it appears that the landlord’s consent to the assignment by Messrs O’Connell and Magee of the lease to the company was never obtained, and of course there is the usual covenant in that regard contained in the lease at clause 39 thereof. That clause reads:
“Not to assign, sublet or part with or share possession or permit the occupation by a licensee of the demised premises (or suffer any person to occupy the demised premises as licensee or concessionaire) without the prior consent in writing of the lessor, such consent not to be unreasonably withheld and not to assign, underlet or part with or share possession or permit the occupation by a licensee of part of the demised premises under any circumstances whatsoever.”
Clause 32 is also of relevance to this application, and it reads as follows:
“Not without the consent in writing of the Lessor first obtained, nor except in accordance with plans and specifications previously submitted to the satisfaction of the Lessor to erect or suffer to be erected any new building or erection on the demised premises, or make any alterations or additions whatsoever either externally or internally in or to the demised premises or any building or erection which may be erected thereon.
The restaurant traded over the past couple of years since the lease was granted. But it closed down recently and considerable works have been carried out to the interior of these restaurant premises in recent times by the company, and a full Restaurant Cerificate has now been obtained with a full Publican’s licence attached. Therefore the plaintiff has now in occupation without his consent a limited liability company which has carried out extensive internal work, and some exterior, in respect of which no plans and specifications were submitted for approval. The plaintiff in these circumstances seeks the reliefs set forth in the notice of Motion herein dated 2nd July 2004 as follows:
1. An order directing the defendants to vacate forthwith the premises known as Unit 3, 27-29 Courthouse Chambers, Washington Street, Cork pending the determination of these proceedings.
2. An order directing the defendants or either of them to cease the works being carried on by them or either of them within and on the said premises Unit 3 aforesaid and Unit 9, Courthouse Chambers aforesaid, affecting the structures of the premises Courthouse Chambers as a whole and the said units 3 and 9 aforesaid, pending the determination of these proceedings.
On the 2nd July 2004, injunctive relief was granted to the plaintiffs on an interim basis in terms similar to number 2 above- in other words to cease work on the premises. The matter is now before this court by way of motion seeking interlocutory relief in respect of paragraphs 1 and 2 set forth above. Put briefly, the plaintiffs want the defendants to vacate the premises because they have no title to be there since there was no consent to the assignment of the lease to the company either before the assignment was made. Neither has it been either granted or sought subsequently.
Before this Court also is an application on behalf of the plaintiff to be permitted to amend the claim by the addition of two reliefs, the first being for an order that the defendants cease trading in the premises pending the determination of these proceedings and until such time as a Fire Safety Certificate has issued in respect of the altered premises, and the second being for an order that the defendants remove all items affixed by them to the exterior of the premises, to include four chiller units and a satellite television dish. These latter items have been attached to one of the outside walls of the premises, again without any consent and contrary to clause 32 of the lease.
It is important to point out again, as I stated at the commencement, that the present landlord of the premises, the plaintiff, acquired its interest from an associated company, and the current property manager, William O’Mahoney had previously fulfilled that role for Blasco. The present occupier of the premises, Radius Pie Limited took an assignment from two of its own original promoters. For all practical purposes there has been no change of personnel, other than in name, on both sides of this matter. The same people have been dealing with each other on the ground so to speak. I will return to that aspect later.
I should also point to another relevant background matter – that is that there is rent claimed to be owing by the tenants in the sum of €43,308.03. In fact this appears to be owing not to the plaintiff in these proceedings but to the plaintiff’s predecessor in title, Blasco Properties Limited, since the dates in respect of which the rent is due predates the assignment of the landlord’s interest to the plaintiff company. However, the defendants say that it is not owing in fact, and that it is a sum which is disputed since there was some arrangement that a reduced rent would be payable at the outset of the term, while the business got off the ground and that this matter has not been agreed as yet with the landlord. However these arrears of rent have been referred to in submissions on behalf of the plaintiff company.
The defendants’ architect has sworn an affidavit in which he has averred that the works being carried out in the restaurant premises constitute a “re-fit” of the restaurant and that nothing of a structural nature is being undertaken. In effect, he says, what used to be an open plan interior is now broken up into sections by the use of partitioning. This partitioning is not load-bearing and provides no structural support. He says that the premises continue to operate as a restaurant. He avers that the works which have been carried out have not increased the size of the kitchen or the seating capacity of the restaurant area. The plaintiff’s consultant engineer on the other hand says that some work has been done to the external structural walls to facilitate the installation of what is described as chiller pipework, and he is of the view that all the works in the premises constitute material alterations and that they should not have taken place until the necessary fire safety certificate approval is issued.
The first named defendant has sworn a replying affidavit on behalf of both defendants. He says he has known the said William O’Mahoney for the past three years since he took over the running of the restaurant. He says that William O’Mahoney has visited the premises on many occasions – at least once a week, and that all his dealings with both the plaintiff company and its predecessor, Blasco, have
been made through him. He says that the second named defendant, Radius Pie Limited is a company that was formed in 1999 for the purpose of running the restaurant. He names eight individuals who were involved in the company, including Seamus O’Connell and James Magee who he describes as “the cheque signatories”. Those two individuals are the named tenants on the lease entered into at that time. He goes on to say that he himself provided the finance by way of a loan to the company in order to fit out the restaurant. He says that in 2001 Seamus O’Connell and James Magee and others left the company, at which stage he himself was owed a sum of about €340,000, and that he took over the running of the company and the restaurant. It was in these circumstances that the assignment of the lease from Seamus O’Connell and James Magee to Radius Pie Limited took place on the 21st November 2002. He also says that he believed that the landlord had consented to the assignment as he was aware that the company’s then solicitor had been in touch with Messrs Arthur Cox, solicitors for Blasco about such consent, and he also states that he has recently become aware of discussions and correspondence between his solicitor and Mr Frank Murphy, solicitor of Gleeson, McGrath, Baldwin, solicitors now acting for the plaintiff company. He also says that Messrs O’Connell and Magee have had no involvement with the restaurant since 2001 and that Mr O’Mahoney the property manager has been aware of this fact. He says that since that time he has dealt with all matters with the landlord related to the restaurant, and that Radius Pie Limited has paid the rent, rates and service charges, and that he himself has been the signatory on the company’s cheques. He says also that it is well known to Mr O’Mahoney and the plaintiff company that these payments have not been made on behalf of Messrs O’Connell and Magee. Relevant to that assertion is the fact that Mr O’Mahoney has exhibited in his affidavit a copy of what purports to be a letter dated 22nd July 2002 from a Mr Tony Leonard, Managing Director of the plaintiff company addressed to the said John Magee in which it is stated:
“I refer to our meeting last week with Billy O’Mahoney in Cork. You confirmed the position with the lease that yourself and Seamus O’Connell are the lessees of the above and that the monies we are receiving are being paid to us on your behalf. As discussed, I hope to be in Cork again shortly and if you wish to meet up you can contact me at the above number.
As requested, through Billy, I attach copy of statement of account for the
above.”
Mr. O’Leary says that he is a stranger to that letter, but if what appears in that letter represents reality at that time in July 2002, it certainly contradicts what Mr O’Leary has stated in relation to those persons having no involvement with the company or the restaurant since 2001 and that Mr O’Mahoney is aware of that fact. However I cannot resolve that issue of fact at this stage.
Mr O’Leary sets out at paragraph 7 of his affidavit a number of matters which he says indicate that Mr O’Mahoney is fully aware of the fact that Messrs O’Connell and Magee are no longer involved since 2001. He also states that he has kept Mr O’Mahoney fully informed with regard to the alterations to the premises, and the recent licensing application. He even goes so far as to state that the works which have been carried out have been consented to by the plaintiff company. I presume that this is a reference to Mr O’Mahoney being aware of what was happening, rather than that there was an application for such consent in writing and a furnishing of such consent in the usual way.
Mr O’Leary says that it is not the intention of the second named defendant to change the business from that of a restaurant. He says that a full licence was sought for the purpose of providing a fuller service to patrons in order to attract more customers. He acknowledges that some advertising material describes the new operation as a “Lounge Bar Restaurant” but says that this was for advertising purposes and in fact the premises is a restaurant with a full bar licence. He says that the seating capacity is the same and the number of employees is unchanged at 32, with 75% of these being engaged in relation to food. He says that if the injunction is granted to the plaintiff irreparable damage will be suffered by the company, and its reputation, and that damages would not be an adequate remedy. He also says that the rent and service charges are being paid as fall they due, and that there is no loss to the plaintiff company, and that the balance of convenience lies with refusing the relief sought pending the determination of the issues arising in the case.
Mr O’Mahoney has sworn a further affidavit in which he states that it is clear from Mr. O’Leary’s affidavit that he was well aware that the lease was in the name of Messrs O’Connell and Magee and that no consent had been obtained to the assignment to the company, and that it is not credible for him to say that he was not aware that the plaintiff company had not consented to the assignment. He also says that there is very good reason why consent to the assignment was not sought, and that is because Mr O’Leary was well aware that there was €43,308.03 owing in respect of arrears of rent.
Mr O’Mahoney says that the first discussion between him and Mr O’Leary about the works to the restaurant was on 24th June 2004, and that it was on that date that the plaintiff’s solicitors wrote to the defendants to cease the work. He says that prior to that date the defendants had closed the restaurant, and that prior to the 24th June 2004 there was no indication that works were to be carried out, and no consent was sought.
Further affidavits have been filed but there is no need for me to detail the contents. They deal with matters that are clearly relevant but as far as this application for interlocutory relief is concerned, I believe that I have set forth any facts which are material to the decision as to whether an interlocutory injunction ought to be granted pending the determination of these proceedings.
Clearly there are issues to be determined in these proceedings, such as whether the works carried out are in the nature of structural works and/or whether they are works in respect of which the landlord’s consent is required in advance under the terms of the lease. In addition there is an issue as to whether the failure to obtain the landlord’s consent to the assignment to the company in advance and in writing renders the assignment void, or whether that lacuna simply gives rise to other remedies. Linked to that issue, I suppose, would be whether if consent had been applied for, there are any circumstances whereby it would have been reasonable for that consent to have been refused, such as the outstanding rent due to Blasco, or the fact that the assignee is a limited company and not an individual. That latter point could be addressed by the requirement of a personal guarantee from Mr O’Leary or another suitable person, but that is not a matter for now. There is also an issue as to whether the chiller units and the satellite dish are additions to the exterior of the premises such as are caught by the prohibition against affixing any items to the outside walls. So there is no difficultly in the court coming to a conclusion that there is a fair issue to be tried, and the resolution of these issues will certainly require oral evidence, and no doubt some discovery of documents.
The question which next arises is whether damages are an adequate remedy for the plaintiff. On this question it is difficult for me to see what their loss is. If they are correct in their assertion that the assignment to the company is void because no consent was given or even sought, then the lease to Messrs O’Connell and Magee is still extant, and I have no evidence that those persons are not a mark for what would be their liability for the rent, and service charges. In fact the rent and charges are currently being paid by the defendant company, and in the event that no interlocutory injunction is granted the probability is that this rent will continue to be paid in the present fashion by the second named defendant.
If the injunction is granted, and it turns out that it ought not to have been granted, then the defendants can benefit from the undertaking as to damages given by the plaintiff, and again there is no suggestion that the plaintiff is not a mark for any damages which may arise on foot of that undertaking such undertaking. Of course damages which could arise can be difficult to quantify where they arise due to an ability on the part of the defendants to trade in the newly renovated restaurant. It is safe to assume that in that regard that the new fit out and renovation of the premises was carried out with a view to increasing the turnover and therefore the profit from the operation, when compared to the level of business carried out historically. Historic figures would not be an accurate guide for the purpose of assessing future loss, and if the new premises has never had the opportunity of trading, on what basis would the defendants’ damages be measured? That is a question relevant to the question of whether the balance of convenience nevertheless favours the refusal of relief at this stage.
If the plaintiff is correct that the second named defendant has no right or entitlement to be in occupation of the premises in the absence of a consent to the assignment to them, they will no doubt be entitled to an order directing them to vacate, and presumably to restore the premises to the state which preceded their unlawful occupation. That means that instead of receiving rent from Radius Pie Limited, they will be able to receive rent from Messrs O’Connell and Magee, who presumably will on the facts as known to the Court be none too willing to discharge same since they have apparently ceased to have any involvement in the company. It may be that in that event they would have some come-back against Mr O’Leary and/or Radius Pie Limited on foot of whatever agreement was entered into at the time of the severance of their relationship with the company.
It seems to me that commonsense, if not the law, would dictate that what should happen in the present situation is that the plaintiff company ought to consent to the assignment to Radius, but on condition that a personal guarantee is given by Mr O’Leary, and provided that at least an agreement is reached in relation to the arrears of rent, if any, due to Blasco, so that the company’s occupancy of the restaurant is regularised, and that thereupon approval should be given in respect of the works which have been carried out, so that the plaintiff can then continue to receive its rent from the actual operator of the restaurant, rather than revert to the previous lessee in that regard. Radius Pie Limited can then trade out of the restaurant in respect of which it has expended no doubt a significant sum of money.
All that of course would be on the basis that the works which have been carried out meet all Fire Safety and other building regulations, if any, and provided that the business being carried out or to be carried out in the newly refurbished premises will not be such as to cause the plaintiff to be in breach of any covenant which it has with other tenants in their premises.
However when litigants meet head to head, it is sometimes difficult, for all sorts of reasons, for the concept of commonsense to prevail. There may well be some background to this case which has not yet emerged. However I need not say any more for the moment, but I feel compelled to make some comment, as I have, about the desirability as I see it, of taking a long term view of the practicalities in this case.
I have listened carefully to the submissions made on behalf of the plaintiff by Mr Felix McEnroy SC, and on behalf of the defendants by Mr Hugh O’Neill SC. I will not summarise these submissions in this judgment. I have reached the conclusion firstly that there is a fair issue to be tried, and I have no difficulty in deciding that any loss which the plaintiff may suffer (although as I have said I find it difficult to see how they could be at a loss for the reasons I have identified already) can be adequately compensated for in damages. But I am equally satisfied that even if I am wrong in that and have overlooked something, the balance of convenience clearly and easily lies in favour of refusing the relief sought so that this restaurant can trade while these proceedings are brought to trial and determined.
It seems to me that the worst that can happen as far as the plaintiff is concerned is that they win the case at hearing, succeed in getting vacant possession of the premises from the second named defendant, and revert to the earlier situation of having Messrs O’Connell and Magee in occupation of a premises which they do not want, and collecting rent from them. That situation might well result in those parties then applying for consent to a fresh assignment to Radius Pie Limited, and unless it was reasonable to refuse such consent, everybody would be back in the positions which they occupy at the moment.
That may be a somewhat nonsensical result bearing all the facts and realities of this case in mind, but from a legal point of view that could well be the result. To grant the relief sought would also inevitably result in the second named defendant company ceasing to trade with the consequent lay off of 32 staff members, and all the other financial consequences which do not have to be spelled out in this judgment. That is a further consideration, though one which if it were the only one, might not be sufficient to justify the refusal of the order sought.
I therefore refuse the relief sought in the plaintiff’s Notice of Motion dated 2nd July 2004.
In relation to the plaintiff’s second motion seeking leave to amend their claim by the addition of reliefs related to the absence of a Fire Safety Certificate, and for an order for the removal of items fixed to the exterior of the premises, I suspect that there is no need to make any order on that motion. Firstly it appears that a Fire Safety Certificate has now issued, and in relation to the other relief, I presume that any amendment can be achieved in the Statement of Claim which no doubt can be delivered speedily, but I will hear the parties in that regard.
Approved by Mr. Justice Michael Peart.
Forfeiture Relief Cases
The Minister for Local Government and Public Health v Richard J. Kenny
High Court.
30 July 1940
[1941] 75 I.L.T.R 26
Gavan Duffy J.
Gavan Duffy, J.:
By indenture of lease, dated 23rd July, 1934, the plaintiff, acting for the State under the State Lands (Workhouses) Act (No. 9 of 1930), demised to the defendant for 99 years, at the yearly rent of £50, the greater part of the buildings of the Ballinasloe Workhouse, standing upon some six acres of land included in the demise; the buildings of immense size had become seriously dilapidated through neglect, following misuse during military occupation, and their valuation was only £30.
The place seems to have been under the local control, subject to the Minister for Local Government and Public Health, of the Co. Galway Board of Health and Public Assistance as a result of the now statutory Galway County Scheme of 1921, and I hold that in the circumstances of this case the defendant, after the making of the lease, was entitled to regard the Board, which I shall call the Board of Health, as being for most purposes the agent of the Minister. The plaintiff is the present Minister, suing in his statutory capacity as a corporation sole.
By the lease the defendant covenanted not to carry on or commit, or permit to be carried on or committed, any offensive business, trade or occupation, or nuisance, but to use the property solely for the purposes of wool scouring and kindred industries, and not to assign, underlet or part with the possession of the demised premises or any part thereof, without the consent in writing of the lessor. I shall refer to the use of the property for the purposes of wool scouring and kindred industries as the sanctioned user. The lease contained a proviso for re-entry for breach of covenant. The nearest approach to a covenant against waste was a covenant to keep the demised premises in good condition and repair and so to yield them up on the determination of the term.
The defendant has not used the place for wool scouring, but has made some use of parts of it for collecting and grading and storing wool. It is not contended that this user was any breach of covenant, and a contention that it was a breach not to use the *27 property for wool scouring or a kindred industry at all times is now given up.
The defendant had taken some preliminary steps towards setting up a wool scouring factory with a view to exporting wool to Germany, when, in March, 1935, the Minister for Agriculture put an end to the free market in wool by an Order (S. R. & O. No. 57 of 1935) restricting the export of wool to Germany; the defendant states that, as a consequence of this Order, wool could no longer be sent to Germany without a licence and that he was unable to obtain a licence to export in quantities sufficient to justify the very large expenditure necessary to buy the machinery required for his proposed factory; and I have had some evidence that the defendant had good prospects of securing the necessary financial backing when this Order changed the position.
The Order remained in force for three years until it was revoked in April, 1938, by another Order (S. R. & O. No. 68 of 1938); the suggestion is that the grave uncertainty in the international situation at this time and the lapse of three years had grievously altered, or nullified, the prospects of carrying to success the plans for which the defendant had taken the lease. The defendant claims to have spent nearly £2,000 on or in connection with the property, but he has made no attempt to prove that expenditure in this Court.
Though the defendant did try somewhat informally and quite unsuccessfully to obtain the consent of the Minister to an alteration of the covenant for the sanctioned user, the statutory right of a lessee to insist that consent to an alteration of user shall not be withheld unreasonably and the question whether that right, if it applies, can be invoked against the Minister acting as statutory agent for the State have not, so far as I know, been raised between the parties, nor have they been discussed at all in this action.
The main purpose of this action is to enforce, on behalf of the State, a forfeiture of the lease on the ground of alleged breaches of covenant by the defendant. He has paid rent under his lease up to the 1st of June, 1935; I understand from Mr. Moloney for the Minister that any tender of rent for any later period would have been refused; the reason is that acceptance would have looked like waiver of the breaches.
On 1st May, 1936, the Minister wrote to the defendant stating that he deemed the lease to be at an end by reason of his breaches of covenant in sub-letting. The defendant does not seem to have asserted any claim to get the Minister’s consent under the Landlord and Tenant Act (No. 55 of 1931). The Minister then sued the defendant in the Circuit Court, as an overholding tenant, whose tenancy had expired on 8th May, 1936; the action was dismissed. On 13th October, 1937, the Minister sued the defendant in the High Court, claiming possession for sub-letting by the defendant in breach of covenant; this action was transferred to the Circuit Court and on 15th October, 1938, was dismissed, as also was a counterclaim by the defendant for damages on the ground that part of the demised premises had been withheld from him.
The first step towards the present action was taken when, on 26th January, 1939, the Minister caused a notice of specific breaches of covenant to be served on the defendant, in pursuance of section 14 of the Conveyancing Act, 1881, with a view to regaining possession. That notice was an essential preliminary in this case to any forfeiture, except a forfeiture for sub-letting, and it required the defendant to remedy certain specified alleged breaches of covenant within three months.
On 13th January, 1940, nearly a year later, this action was begun; the Minister’s claim is to forfeit the lease for specified breaches of the lessee’s covenants and alternatively to have an injunction, supported by a declaration as to the obligations of the defendant, to restrain the defendant from using the property otherwise than for the sanctioned user; and there is a claim for damages for breach of covenant; the Minister also claims damages for waste.
The statement of claim alleges that the defendant has not complied with the terms of the notice, that he persists in the breaches of covenant set forth in that notice and that he has committed further breaches, since the service of the notice, by using the property for purposes contrary to his covenant for the sanctioned user; the claim also complains of underletting in breach of covenant by the defendant; and it gives particulars of the waste which he is alleged to have committed.
As an answer to the claim for forfeiture based on a wrongful underletting the Minister is met with the defence that the dismiss in 1938 of his action in the Circuit Court for possession is an estoppel, preventing him from relitigating the claims based on subletting; as to this plea I need only say that I find no estoppel by record here.
At the trial the defendant has further claimed to be relieved from any forfeiture *28 that he may have incurred; except as to forfeiture for underletting, the defendant is entitled to make this claim, and he is entitled to make it at the trial (Mitchison v Thompson, 1 Cab. & Ell. 72).
I have allowed the claim for relief to be made in an informal kind of way so far, because the defendant, though his defence was settled by counsel, has conducted his case here in person; by so doing he has obtained some unsatisfactory concessions, rather, 1 fear, to the embarrassment of counsel for the Minister. The defendant is within his rights in not instructing counsel to appear; it is another question whether he was wise to dispense, in so complex a case as this, with legal knowledge and experience, in the hope that the Judge would fill the inevitable gaps in his personal conduct of the case.
I shall consider first the claim to forfeiture for underletting in breach of covenant; there can be no question of relief from forfeiture, for I have no jurisdiction to relieve, if the Minister establishes a breach of covenant by underletting without consent; a prayer for relief can be entertained only in connection with the other breaches alleged.
In my opinion, the Minister has failed to prove the alleged sub-lettings contrary to the covenant. As to the first underlease alleged, I find that the defendant allowed one, James MacDonnell, with his wife, to have certain rooms in the demised premises from 1935 to 1938 (or early 1939) and that the man and his wife lived there; he was also allowed to have the exclusive use of a large workroom, free of charge. On the evidence both MacDonnell and the defendant appear to have had keys for those rooms and for the workroom, but I need not decide how far this particular evidence is true, since the defendant has succeeded in avoiding both underletting and parting with possession in breach of covenant by reducing his agreement with MacDonnell to writing. It turns out to be a caretaker’s agreement for the rooms, dated 21st June, 1935, under which MacDonnell got the rooms as a caretaker and free of rent; and that agreement was no breach of that covenant.
Then it is averred that the defendant sublet to a member of the Garda Siochana. I cannot so hold, for, though I am not sure that he did not, I am not satisfied that he did. In a letter of 31st January, 1936, to the Board of Health, which was communicated to the Minister, the defendant mentioned having invited a detective to live in the place for its protection against looting. I do not know why the Minister did not at once write to the defendant objecting, if he objected and regarded the arrangement as-a breach of covenant.
I find that in October, 1935, the defendant let certain rooms verbally to the Garda at a weekly rent of 10/-, that the Garda brought his furniture there in the following July and lived there with his wife and children until the ensuing autumn. I find that the arrangement was a matter of temporary convenience; the Garda wanted the rooms while he was looking round for a house in the town and the defendant was glad to have him, because he had suffered from the depredations of thieves. But at this distance of time precise and accurate evidence as to the exact agreement is hard to obtain.
The defendant has a long lease and the proper construction of the covenant in question, as applied to this alleged breach, is not free from difficulty. I find that the learned Judge in the Circuit Court held that there was no underletting in breach of the covenant; he considered, as I understand, that the arrangement was merely a licence to occupy. At this distance of time and on the rather scanty evidence before me I do not feel justified in differing from the learned Judge. If the learned Judge was wrong as a matter of law, the Minister had a ready means of redress by appealing to the High Court; he did not appeal. Not only did he abstain from appealing, but he submitted to judgment against him in the action with costs, taxed at £74 14s. 9d. Further comment would be superfluous.
The forfeiture of a substantial property demised for a term of 99 years is no trivial matter and, as the idea of forfeiture is abhorrent, the law always requires a plaintiff in forfeiture to prove his case strictly. Apart from underletting, the Minister’s grounds for forfeiture must be found specifically—and when I say “must” I mean must —in the statutory notice served upon the defendant, setting out the breaches complained of; other breaches cannot afford him a ground of forfeiture in this action, however useful they may be to illuminate the attitude and conduct of the lessee, as a petitioner for relief from a forfeiture incurred.
Formerly the jurisdiction to give relief from forfeiture to a lessee was narrow, even in Equity; and it was found necessary to relieve the resultant hardships by statute. The statute imposed certain salutary restrictions upon the right of a landlord to forfeit for breach of covenant. I have no authority to relax those restrictions; on the contrary, *29 it is my duty to maintain them, quite apart from my opinion of the merits or demerits of any particular landlord or tenant.
The statute recognised an important distinction between remediable and irremediable breaches of covenant. The distinction is real and in no way subtle, but it is apt to be disregarded. Had it been appreciated by the Minister he would have circumvented one of the more formidable difficulties confronting him in a very troublesome action.
Section 14 of the Conveyancing Act, 1881, prevents the Minister from enforcing a breach of covenant (apart from underletting) by the forfeiture of the lease, unless and until he serves on the defendant a notice specifying the particular breach complained of and, if the breach is capable of remedy, requiring the defendant to remedy the breach, and unless and until the defendant fails within a reasonable time to remedy the breach; there is also a provision as to a money compensation.
The Minister served a notice on the defendant accordingly on 26th January, 1939. The object of the notice was clear and I pass over minor defects in it, which cannot have misled the defendant. I read the notice as containing a warning to the defendant to cease residing on the property and to cease using it otherwise than for the sanctioned user; but its main and direct purpose was to give him notice under section 14 of particular breaches set forth in a schedule.
Six of the scheduled breaches were abandoned at the trial; they were mainly concerned with the user of part of the property by local clubs at the wish of the Board of Health which had given them facilities before the lease was made; as to this and as to the defendant’s residence in the place since before the date of the lease, the Minister, no doubt, felt that his acquiescence must preclude a forfeiture. Acquiescence is a material factor upon defendant’s prayer for relief from any forfeiture which he may have incurred, although there is no plea of acquiescence in the defence.
I have no doubt that it is for the same reason that the forfeiture notice (as I shall call it for convenience) is silent as to public dances held by the defendant in the demised premises; the place had become one of the recognised dancing places of Ballinasloe; a very large number of dances had been held there and the defendant had obtained a succession, of licences for them from the District Justice; the Board of Health had been notified of applications for licences and, though the Minister made an objection on the first application, he stood by for years without protest of any kind, probably at the instance of the Board of Health, which had asked the defendant to let the clubs have the use of a hall for dancing. In view of the publicity given to this aspect of the case it is bare justice to the defendant to record the fact that the Minister’s forfeiture notice, setting out in detail his complaints against the defendant in January, 1939, says not one word about the public dancing, which had been going on for over three years.
There remain three breaches, and only three, scheduled to the forfeiture notice, upon which the Minister is entitled to rely, but only within the terms of section 14. Two of them present no difficulty. One is a charge against the defendant of having, in breach of covenant, taken in boarders and lodgers upon the demised property; the other is an allegation that the defendant, in breach of covenant, allowed James MacDonnell, a builder, to use part of the property as a residence, as a carpenter’s shop and for the manufacture of building blocks. I hold that both these breaches are proved.
Now the clear intention of section 14 is that there shall be no forfeiture, if the defendant obeys the injunction in the forfeiture notice to remedy the particular breaches complained of; the remedy indicated in the forfeiture notice was to cease committing the particular breaches; and he has done so. The last of his regular lodgers left in March, 1939, and the carpenter went to reside elsewhere and set up his business elsewhere shortly before or very soon after the notice was served. There can, therefore, be no forfeiture for these particular breaches.
It is true that the carpenter retains one large room as a store room for timber and tools, but this breach, trivial in itself, is a different breach from the particular breaches that the defendant was required to remedy. It is also true that the defendant gave board and lodging to the Galway Gaelic Football team in July, 1939, and made a small profit on the transaction, which lasted for less than a fortnight. He had desisted from his offence, as required by the Minister, but broke out again some four months afterwards. This was, I think, a new and casual breach of covenant, different from that which the notice required him to remedy; and the consequence is that the Minister cannot use it as a ground of forfeiture without serving another notice of breach, founded on this particular breach.
The fact is, in my opinion, that the Minister has misconstrued the section by treating *30 as remediable breaches that could not be remedied; the defendant has been quick to seize the loophole opened out for him, when the Minister told him, in effect, that he could avoid a forfeiture for the two specified breaches by ceasing to commit them. This question is one of far-reaching importance and will merit a little further examination.
Before I develop the matter let me mention the third breach specified in the schedule to the forfeiture notice. The defendant was charged with breach of covenant by using the property otherwise than for the sanctioned user; that charge will not do for a forfeiture notice, because it fails to specify “the particular breach complained of”; and the Minister’s advisers recognised that it would not do, by proceeding to specify the particular breaches committed in connection with the boarders and the carpenter’s shop. (Cp. Re Serle [1898] 1 Ch. 652).
The Minister’s grounds for forfeiture under section 14 of the Act of 1881 are thus reduced to the two which the defendant has remedied in obedience to the terms of the forfeiture notice; the result is that the whole claim to a forfeiture is gone, since I have rejected the only other head of forfeiture, that based on underletting.
Now the covenant, more fully set out above, was a covenant not to carry on any offensive business, but to use the property solely for the sanctioned user. Incidentally it has not been argued that the negative opening words cut down the apparent scope of the covenant. The gist of the covenant (for my present purpose) was the undertaking not to use the place otherwise than for the sanctioned user, so that the lessor would have been justified in assimilating it, in the application of section 14, to a negative covenant, which, if broken by the lessee, is broken once and for all.
That is, in my view, what the Minister ought to have done. Then he would have given a statutory notice in respect of breaches of the covenant particularly specified in the notice, but his notice would carefully have refrained from requiring the lessee to remedy those breaches; he would have taken the stand that those breaches were irremediable on the very simple ground of plain common sense that what is done cannot be undone. So long as the Minister continues to require the defendant to remedy breaches which he might reasonably and justly treat as being irremediable, so long is he likely to find himself bogged, stymied and baulked by a quandary from which there is no issue in his perplexing quest for a forfeiture.
This aspect of the matter is put with admirable clarity by MacKmnon, J., in Rugby School v. Tannahill [1934] 1 K. B. at p. 701. A landlord who accepts and acts upon the view that a breach of a negative covenant can be cured simply by desisting from the breach puts himself in a quite impossible position; he gives notice complaining of a particular breach, requiring the tenant to desist; thereupon the offender stops offending and the force of the notice is spent; the tenant may then offend again and again and the landlord, giving a similar notice upon every successive breach, will find his remedy gone every time upon the tenant’s compliance with each successive notice. So the Minister on his present tack looks like chasing a recurring decimal, unless his problem can be solved by the alternative claim to an injunction, without any forfeiture.
It may be said that the issue which I decide for the defendant is not raised by his defence; the answer is that the Minister must prove his case and fails because he has not done so; besides the issue is, if necessary, open on the defendant’s claim to relief from forfeiture.
I have allowed the defendant, appearing in person, to call some evidence in support of a claim to relief from forfeiture on the ground that the State cannot be allowed at the same time to approbate and reprobate, in order to see whether there was any case for the State to meet under this head of the claim to relief. I need express no opinion on this matter, since there is no forfeiture; it is enough to say that I find that, if there had been a case for forfeiture, I could not have shut out this contention, but would have required the defendant to formulate this particular claim to relief in black and white, so that the Minister should have a full opportunity of meeting it. This claim is uncommon and it is interesting. It is a claim to an equity against the State, entitling the defendant to relief from forfeiture, on the ground that the sanctioned user was made impracticable by the Order, whereby the export of wool was severely restricted by the Minister for Agriculture eight months after the lease was made by his colleague. Cp. Cornewall v. Dawson, 24 L. T. 664, and Craig v. Greer [1899] 1 I. R. 258.
I come to the Minister’s claims for a declaration and injunction. I see no need for any declaration. The injunction sought is an injunction to restrain the defendant from using the property otherwise than for the sanctioned user, and this is a claim which the Minister, in his capacity of lessor, is entitled to make. Having regard to the *31 defendant’s inveterate cacoethes for covenant-breaking, I have no hesitation in granting this injunction to the Minister, the injunction to endure so long as the lease and the covenant in question subsist; the order will prohibit any other user without the consent of the Minister.
The following breaches of the covenant, relied upon in the claim, have been proved, and the later breaches might have been material to consider on a claim to relief from forfeiture:—
(1) Taking boarders and lodgers;
(2) Allowing a carpenter’s shop and builder’s office on the property;
(3) Hire of hall and four rooms (including supper room and bar for the sale of liquor) for one week by a Carnival Committee, which held public dances and paid the defendant £22 10s. 0d. for the hire; this occurred in June-July, 1939, long after the service of the forfeiture notice in the previous January;
(4) Board and lodging provided for some 20 members of the Galway Gaelic Football Club (as it is known in English) at 28/- per man per week, in July, 1939, the defendant receiving a total sum of £44;
(5) Hire of hall on 30th July, 1939, to Mental Hospital Staff and others, at the price of £4, for a dance; and provision of supper at 1/6 a head, the defendant receiving £14 5s. for catering. Though expressly warned, the defendant continued to reside on the property in defiance of the Minister after receipt of the forfeiture notice; this breach and the last three incidents look to me like deliberate breaches of the covenant by the defendant with his eyes open.
The Minister claims £300 for damages for the defendant’s breaches of covenant; the Minister has a legal right to insist upon the defendant’s observance of a subsisting covenant, but the damages are imaginary, and the nominal damage suffered by the Minister will be fully compensated by the sum of one shilling, which I award.
As to waste, the Minister has made a primâ facie case for an inquiry. I shall exclude any damage resulting from the breaking down of the first wall broken at one extreme end of the building facing the road, on one’s right hand side as one approaches the building, since Mr. Moloney admits that this breach was justified as a way of necessity.
I shall also exclude from the inquiry any damage alleged to have been caused by the removal of a partition wall between the chapel of the workhouse and the dining room, since the evidence is that the defendant needed a very large hall for his wool scouring factory and obtained that hall by combining the two rooms; I shall also exclude the claim for damage by removal of part of the floor of the present hall, where a wooden floor has now been laid; this is a lease for 99 years and this claim founded on waste is premature; nor am I satisfied that the inheritance has been damaged by these works; but this exclusion will be without prejudice to any claim that the Minister may have in respect of these matters, when the lease terminates, by effluxion of time or by forfeiture or surrender or otherwise.
The inquiry will be confined to the damage occasioned to the reversion by the taking down of other walls. It will, if the deferdant so desires, include the question whether he was justified by any reasonable necessizy in taking down any one or more of these walls, regard being had to the sanctioned user and to the length of his term, and there will be no damages in any case where he is found to have been so justified. I grant the inquiry only because the Minister asks for it, as he is entitled to do, and not because. I think he has suffered any very substantial damage; but some of the waste seems to have been of a rather audacious character.
I wish to say nothing to prejudge the question whether the removal of old walls has injured the reversion to any serious extent; and possibly they or some of them could be suitably replaced by railings; I do not know. As I understand the evidence, the structural value of the place, its utility and its attractiveness (if any) have not suffered by the defendant’s acts of waste; possibly it has suffered to some degree; in its present condition, in the matter of letting value.
The inquiry must have regard to the shocking state of dilapidation of the demised premises at the date of the lease. It is by no means to be assumed, as the statement of claim suggests, that the true measure of damage is the cost of restoration of the walls. The main purpose of the inquiry will be to ascertain what damage has been done to the reversion by the waste alleged in paragraph 11 of the statement of claim, the excluded items excepted; the State is entitled to recover that damage, but nothing more.
I have no doubt that by far the most convenient forum for the inquiry will be the Circuit Court, as local evidence will be required and it is possible that the place may have to be viewed by the learned Judge. I propose, therefore, to transfer this part of *32 this action to the Circuit Court and the costs of the inquiry in the Circuit Court will be in the discretion of the learned Circuit Court Judge.
The decree should include any expenses which may be found to have been properly incurred by the plaintiff in detecting or verifying the damage done, besides expenses which would normally be included in a bill of costs as witnesses’ expenses. The order made in the High Court will cover the witnesses’ expenses in attending in the High court.
One further question remains to be decided before I can give effect to so much of this judgment as concerns waste, and that is whether the Minister is the proper plaintiff; a similar question would have arisen, had I be about to give judgment for a forfeiture.
As Meredith, J., pointed out in Doyle v. Griffin [1937] I. R. at p. 100, a defendant need not plead that a statement of claim discloses no cause of action, because the plaintiff cannot succeed unless it does. It does not necessarily follow from the fact that a reversion is not requisite under our law to constitute the relation of landlord and tenant that a lessor can sue for voluntary waste (at common law and apart from covenant) where there exists an immediate reversioner other than the lessor.
If the position is that the Minister has no estate in the lands, the reversion whereof belongs to the State, he may have a difficulty in sustaining the rôle of plaintiff. This question may involve a careful examination of the constitutional provisions and adaptations and the legislation concerning State Lands, including the anomalous section 8 of the Local Government (Temporary Provisions) Act, No. 9 of 1923, and the statutes coverning the position of Ministers of State The question is important and may arise under more than one enactment. I am not willing to dispose of it without argument.
There is also quite a minor difficulty, which, however, I am prepared to overlook. The plaintiff, who is a statutory corporation sole entrusted with the execution of public trusts under the present Constitution, avers in the statement of claim that the demise was made by the plaintiff in 1934, at a date when the plaintiff was still unborn. Perhaps this mistake, if mistake it be, is cured by section 4 of the Consequential Provisions Act, No. 40 of 1937; but, if not, I should not hesitate to allow the necessary amendment in view of the implied admission in the defence that the demise was made by the plaintiff. My attention was drawn to the matter by the omission in the claim of any averment that the plaintiff sues as successor of the Minister who in fact made the lease; but I need not pursue this matter.
The whole question of costs must stand over till final judgment can be given; but there is no reason why the Minister should not at once have his injunction, as to which no technical difficulty arises, and I shall give him an order accordingly in the terms that I have already indicated I wish the defendant to understand that he is liable to find himself in very serious trouble if he disregards the injunction. So long as the covenant remains to use the demised premises solely for the purposes of wool scouring and kindred industries, the effect of this injunction is to prohibit him from using them or any part of them for any other purpose; he must cease residing there; he must take no more boarders; he must allow no one to carry on a different business in the place; he must not let the hall for dances nor for any other purpose; nor conduct any catering business; nor allow a bar in the place; in a word he must not use it for any purposes whatever other than those allowed by the lease, unless he first gets the consent of the Minister for Local Government and Public Health. But he would be well advised to take advice as to the possible application to his case of section 57 of the Landlord and Tenant Act, No. 55 of 1931, which concerns the alteration of “covenants restrictive of user,” if he cannot come to a reasonable arrangement with the Minister.
I can dispose of this case at once if the Minister thinks proper to abandon his claim in waste.
Monument Creameries Ltd. v. Carysfort Estates Ltd.
Teevan J.
[1967] IR 463
T
This case gives me no difficulty whatever. The proviso to Clause 9 of the Lease was obviously drawn for the protection of the lessor, his rights under his contract, and his interest in the premises. The lessor’s interest in his reversion in leasehold premises might be very seriously endangered by a liquidation in certain circumstances, and consequently it became the custom to include conditions, such as that with which I am concerned, in leases in order to protect lessors against the insolvency of their lessees; and to give the widest possible protection the phrase “either compulsory or voluntary liquidation” was invariably used. Now prior to the statutes cited by Mr. Matheson (his interpretation of which is accepted by Mr. Walsh), no relief whatever could have been accorded by the courts to an incorporated lessee going into liquidation, either compulsorily or voluntarily. This is a voluntary liquidation and consequently at one time, in such an event, the lease would have been forfeitable and the plaintiff company would have been without relief. However, s. 14 of the Conveyancing Act, 1881, provided relief against forfeiture in certain cases, but sub-s. 6 of that section expressly excluded forfeiture for bankruptcy of the lessee from this relief. The legislature apparently came to the conclusion that this was unjust to the creditors of bankrupt lessees and accordingly provided by sub-s. 2 of s. 2 of the Conveyancing Act, 1892, that s. 14, sub-s. 6, of the Act of 1881 “is to apply to a condition for forfeiture on bankruptcy of the lessee, or on taking in execution of the lessee’s interest only after the expiration of one year from the date of the bankruptcy, or taking in execution, and provided the lessee’s interest be not sold within such one year, but in case the lessee’s interest be sold within such one year, subsection 6 shall cease to be applicable thereto.” Bankruptcy is defined in s. 2 of the Act of 1881 to include liquidation and, accordingly, since the passing of the Act of 1892 relief against forfeiture is available to incorporated lessees going into voluntary liquidation.
Now I accept the law as stated by Lord Hanworth M.R. in the case, cited by Mr. Matheson, of Gee v. Harwood (1)at p. 736:”Then comes the question whether the Company is entitled to relief from forfeiture. In the Conveyancing Act, 1881, no relief was given against the right of re-entry on bankruptcy, that being a case in which the operation of s. 14 was expressly excluded by sub-s. 6; but by s. 2, sub-s. 2, of the Conveyancing Act, 1892, it is provided that sub-s. 6 of s. 14 of the Act of 1881 ‘is to apply to a condition for forfeiture on bankruptcy of the lease, or on taking in execution of the lessee’s interest only after the expiration of one year from the date of the bankruptcy, or taking in execution, and provided the lessee’s interest be not sold within such one year.’ The effect of that sub-section, stated affirmatively, was to bring a right to relief from forfeiture on bankruptcy within s. 14 of the Act of 1881 under circumstances limited in time as expressed in the sub-section. The sub-section then went on to provide: ‘but in case the lessee’s interest be sold within one year, sub-section six shall cease to be applicable thereto.’ When s. 146 of the Law of Property Act, 1925, was passed, the limitation of the right of relief to the period of a year when there was no sale, and the right to relief, unrestricted in point of time, when there was a sale within a year was set out in two sub-Clauses.” I do not think I need read the rest of the passage which expounds the underlying legislative purpose. At the bottom of p. 736 he says:”It may often happen in the case of a liquidation that the company may be in possession of a lease which is of saleable value. It may not be easy to disentangle the affairs of the company or to ascertain the rights within a short time, and still less may it be possible to effect a sale of the lease within a short time; and, as I read the sub-section, its purpose is to give a twelve months’ period during which the liquidator can apply for relief and, further, in the case where there is a sale effected (it may be towards the end of the twelve months’ period), to ensure that the liquidator should not find himself brought up against a time limit which would imperil the success of his realization of the assets. I think therefore, that Russell J., as he then was, rightly interpreted in Civil Service Co-operative Society Ltd. v. McGrigor’s Trustee (1) the provisions for which s. 146 is substituted.”Now the latter case was referred to by Johnston J. in Re Drew (2) which was also cited to me. In Gee v. Harwood (3)we find the Master of the Rolls affirming the decision of Russell J. in that case and we find this in turn justified and taken over as authoritative by our own High Court in Re Drew (2).I have not considered the latter case fully but, from the citation opened by Mr. Matheson, it might well be said that so far as the facts in the Drew Case (2) were concerned it was probably obiter. But nevertheless s. 146 of the English Law of Property Act, 1925, is given the like interpretation as the earlier Acts of 1881 and 1892, and I accept the interpretation accorded to the earlier Acts given in those two cases.
Obviously this legislation was intended to give relief in cases such as the present and it is a relief conferred by statute on lessees placed in the situation of the plaintiff in the present case, and the defendants must therefore have good grounds for excluding the plaintiff company from the relief that the legislature allows me to grant in a proper case. I asked Mr. Walsh for the grounds upon which he says this is not a proper case for the granting of that relief. I asked him to tell me what factors or principles the Court should take into consideration in deciding to exclude a particular lessee from the relief provided by statute and he pithily submits, by deduction from a passage in the Simmonds edition of Halsbury’s Law of England (3rd Ed., Vol. 23, p. 677) that I ought to have regard to two matters, the conduct of the parties and all the other circumstances of the case. Now I interpret that in this way. I look to see if there is anything in the conduct of the plaintiff company to disentitle them to this statutory relief and I can find nothing, no hint, no least suggestion that there has been conduct on their part which would disentitle them.
As I said at the beginning, a condition such as is contained in this lease is for the protection of the landlord’s right. The landlord’s rights might still be in jeopardy in this particular case. A year is given by statute in which the proper matters can be investigated, the financial condition of the company, the state of the winding up and so forth, but in the present case I am quite satisfied that there is not the slightest hint or possibility, not to speak of probability, of any damnification being caused to this lessor by the liquidation. It is as healthy a liquidation on the evidence of the liquidator, so far as solvency is concerned, as if it were a mere reconstruction liquidation. In any event the plaintiff company has applied in due time for the relief and there has been nothing, if I may repeat myself, no conduct or no act or attitude on the part of the plaintiff company to disentitle them to this relief and consequently I would grant the relief claimed in the summons. In fact the plaintiff company has sold the property and the defendants have the further protection that assignment in pursuance of the sale is subject to their consent. There is no danger of an insolvent or worthless assignee being foisted on them. Now the summons sought to impeach the Notice served on the ground of its insufficiency or inadequacy and I am inclined to accept Mr. Walsh’s argument on that but I have not to give a ruling on it in view of the decision I have just pronounced.
As to costs, in my view all the merits are on the side of the plaintiff company which has succeeded in a High Court action and is entitled to the costs of the action. The situation is distinguishable from the cases where the landlord instituted the proceedings.
Laurence Ennis v Elizabeth Rafferty
14 January 1938
[1938] 72 I.L.T.R 56
Judge Shannon
Trial of Action.
The facts have been summarised in the head-note and are fully set out in the plaintiff’s Indorsement of Claim in the civil bill and the defence entered.
The civil bill was issued by Laurence Ennis against Elizabeth Rafferty on the 23rd of October, 1937, and in the Indorsement of Claim the plaintiff averred
1. By an Indenture of Lease dated the 8th day of April, 1929, and made between *56 Mrs. Mary Ennis of the first part, James Ennis and Mrs. Elizabeth Rafferty (the defendant herein) of the second part, and Laurence Ennis (the plaintiff herein) of the third part, the dwelling-house, shop and premises known as No. 70 Summerhill, in the City of Dublin, with the yards and outhouses belonging thereto, were demised to the plaintiff for the term of 100 years from the 8th day of March, 1929, at the yearly rent of £65 0s. 0d., subject to the weekly tenancy of one Daniel Doyle in the upper portion of the said premises, who was then and still is in possession thereof.
2. Upon the making of the said lease the plaintiff went into and still is in possession of the said premises.
3. The plaintiff sub-let the lower portion of the said premises, viz., the shop, store and yard to one, James Butler, who is still in possession thereof under the said sub-letting.
4. The said lease contained a covenant on the part of the plaintiff to pay the said rent by equal half-yearly payments on the 8th day of March and the 8th day of September in every year. The said lease also contained a clause entitling the lessors to re-enter upon the said premises in case the said rent or any part thereof was more than 21 days in arrear whether legally demanded or not.
5. The defendant is the assignee of all the lessors’ interest under the said lease.
6. There was due and payable to the defendant by the plaintiff on the 8th March, 1937, the sum of £28 11s. 0d. of the said rent.
7. The said sum of £28 11s. 0d. remaining unpaid by the plaintiff on the 15th day of April, 1937, the defendant instituted proceedings wherein she claimed possession of the said premises from the plaintiff by reason of the plaintiff’s non-payment of the said rent.
8. The hearing of the said proceedings took place in the Dublin Circuit Court on the 20th day of July, 1937, before His Honour Judge Davitt, who gave the defendant a decree for possession and ordered the plaintiff to pay the said defendant’s costs of the proceedings.
9. Since the date of the said decree the defendant has been in receipt of the rents formerly paid to the plaintiff by the said Daniel Doyle and the said James Butler.
10. On the 26th day of July, 1937, by a letter from the plaintiff’s solicitor to Brendan P. McCormack, solicitor for the defendant in the said ejectment proceedings, the plaintiff offered to pay the defendant the amount of the rent found to be due by the learned Circuit Court Judge and the costs of the said proceedings if the plaintiff were restored to his tenancy and given an account of the rents and profits received by the defendant. By a letter dated 29th day of July, 1937, from the said Brendan P. McCormack to the plaintiff’s solicitor, the said offer was refused by the defendant. On the 23rd day of August, 1937, the plaintiff tendered to the said Brendan P. McCormack, on behalf of the defendant, the sum of £42 4s. 0d. for the said rent and costs.
12. On the 3rd of September the defendant’s costs of the said ejectment proceedings were taxed by the County Registrar to the sum of £14 4s. 0d.
13. On the 13th of September, 1937, the plaintiff’s agent, Mrs. Elizabeth Dalton, on behalf of the plaintiff, tendered to the said Brendan P. McCormack, on behalf of the defendant, the said sum of £42 15s. 0d. The said tender was refused.
14. On the 21st day of October the plaintiff in person tendered to the defendant in person the sum of £42 15s. 0d. for the said rent and costs and the defendant refused the said tender and informed the plaintiff that she required possession of the said premises.
15. The Poor Law Valuation of the said premises does not exceed the sum of £60 0s. 0d., and the same are situated in the County of the City of Dublin.
16. The plaintiff is now able, ready and willing to pay to the defendant the amount of the said rent and costs and all rent which would have since accrued due but for the said decree made by His Honour Judge Davitt.
The plaintiff claims:—
(1) An order giving him liberty to pay the said sum of £42 15s. 0d. into Court; and that thereupon the said lease may stand redeemed from eviction or alternatively the defendant may be ordered to make a new lease of the said premises to plaintiff with the same terms and conditions as those in the said lease and subject to the same rent
(2) An order restraining the defendant from issuing execution on foot of the said decree for possession of the 20th day of July, 1937.
(3) An account of the rent and costs due to the defendant.
(4) An account of all sums received in respect of the premises by the defendant by way of rent or otherwise.
(5) Payment by the defendant to the plaintiff of the amounts found due to the plaintiff upon a balance of such accounts.
(6) Further or other relief.
(7) The costs of the proceeding.
The defence was as follows:—
(1) With reference to paragraph 2 of the *57 civil bill herein the defendant denies that the plaintiff was, prior to the hearing of the ejectment proceedings mentioned in paragraphs 7 and 8, in actual possession of the premises the subject of this action. The defendant further says that, since the decree for possession which was given by His Honour Judge Davitt in the Dublin Circuit Court on the 20th day of July, 1937, as set out in paragraph 8, the tenancy of the plaintiff and all his estate and interest in the said premises was determined and put an end to, and that the defendant is hereby lawfully in receipt of the rents formerly paid to the plaintiff by the said Daniel Doyle and the said James Butler.
(2) The defendant admits the tenders of rent and costs set out in paragraphs 11 and 13.
(3) In answer to the plaintiff’s claim the defendant avers as follows:—
(a) On the 8th of September, 1937, there accrued due and payable by the plaintiff to the defendant the sum of £32 10s. 0d., being one half-year’s rent of the said premises reserved by the lease dated the 8th of April, 1929, referred to in paragraph 1 of the particulars in the said civil bill. The plaintiff has not paid, or tendered, or offered to pay, nor has he any means of paying the said sum of £32 10s. 0d. or any part thereof, and the entire of the said sum is due and owing by the plaintiff to the defendant over and above the sum of £42 15s. 0d. rent and costs referred to in paragraphs 13 and 14 of the said particulars.
(b) The plaintiff is guilty of a continuing breach of the first covenant in the said lease that he would, during the continuance of the term thereby granted, pay the yearly rents thereby reserved and made payable on the days and in the manner stipulated in the said lease and without any deduction except as therein provided.
(c) By the said lease the plaintiff covenanted that he would from time to time and at all times during the said term well and substantially repair, preserve, uphold and maintain and keep the said demised premises and all buildings and erections which then were or might at any time during the said term, be erected on and all additions made to the demised premises and the fixtures therein, and the painting, papering and decorations thereof in good and sufficient tenantable repair, order and condition internally and externally.
(d) The plaintiff has broken and failed to perform the said last mentioned covenant and has suffered the said premises to fall into and be, and the same now are, in a state which is not a state of good or sufficient tenantable repair, order or condition internally or externally.
The defendant submits and will contend that by reason of the circumstances set out in the civil bill and of the matters and facts in this paragraph pleaded, the plaintiff is not entitled at law or in equity to and ought not to be given the relief claimed or any part thereof.
The Trial of the Action took place before Judge Shannon on 29th November, 1937, when evidence in support of the averments in the civil bill and in the defence was given.
John Hooper for the plaintiff. The right to redemption under Landlord and Tenant (Ir.) Act, 1860 (23 & 24 Vic., c. 154), Sections 52 to 71, does not apply to an ejectment based on a breach of the covenant to pay rent. Tenant is left to his old equitable right to relief against forfeiture on payment of rent and costs. Chartres v. Muldoon (57 Ir. L. T. R. 102); Bowser v. Colby (1 Hare 125); Whipp v. Mackey [1927] I. R. 372. There is no specific time required for tender of outstanding rents and the costs of ejectment procedure as 4 Geo. 1, c. 5, s. 3, and 11 Anne, c. 2. s. 2, are repealed by Landlord and Tenant (Ir.) Act, 1860 (23 & 24 Vic., cap. 154), Section 104, and Schedule B. The only question which the Court is concerned with is whether the payment of money puts the landlord back in the same position as if the covenant for payment had not been broken. Whipp v. Mackey, [1927] I. R. 372 per Kennedy, C.J., at page 385: “Generally speaking where the forfeiture is only for securing payment and where there is no injury from the delay in payment or only such injury that payment for a sum for interest and—if needs be—costs will be a full compensation for it equitable relief will not be refused.” The Court is not entitled to consider the tenant’s future financial ability to pay the rent and perform the covenants. Breaches of other covenants such as that for repair are not sufficient to disentitle the tenant to relief. Newenham v. Mahon (3 Ir. Eq. R. 304); Mulloy v. Goff (1 Ir. C. R. 27). Equitable relief will not be refused if money and costs are full compensation. Whipp v. Mackey (supra); Bowser v. Colby (supra); Canny v. Hodgens (Hay and J. 769). As regards costs of this action the question of breach of covenant for non-repair was first raised in the defence. It is an endeavour to get round the provisions of the Conveyancing Act, 1881 (44 and 45 Vic., cap. 41), sect. 14. Up to the time the defence was filed plaintiff had done everything necessary to entitle him to relief. Plaintiff should be either given *58 the costs of this action or should at least be relieved from any responsibility for defendant’s costs.
William Black, S.C. (with him Edward Fahy ). The granting of equitable relief against forfeiture is a matter for the exercise of judicial discretion. Whipp v. Mackey, [1927] I. R. 372, at page 385. The Court can consider the conduct of the tenant in relation to the premises and other breaches of covenant. (Bowser v. Colby (1 Hare 125). Berney v. Moore (2 Ridg. P. C. 323). The plaintiff should bear all costs of this action. Newenham v. Mahon (3 Ir. Eq R. per Chief Baron at p. 313); MacDougall v. Nolan (15 Ir. L. T. R. 48). There should be in this case no restitution order because of the breach of the covenant to repair. The Court will not make any restitution order unless accrued rent is paid or provided for. In Blake v. Hogan (67 Ir. L. T. R. 237; see also 67 I. L. T. & S. J. 98 and 333) the Court refused to grant relief where the tenant had been twice in default as the conduct of the tenant was deliberate and contumacious. The tenant in this action is contumacious as he had more than £150 per annum from the property. He has no money and no means of raising the necessary moneys to execute the requisite repairs or to continue paying rent. Relief should not therefore be granted. Whipp v. Mackey, [1927] I. R. 372.
At the conclusion of the argument Judge Shannon decided to adjourn the case to give plaintiff an opportunity of raising the necessary moneys to execute the requisite repairs. The case was adjourned to 6th December, 1937, and again to the 14th January, 1938, when
John Hooper for the plaintiff intimated that the plaintiff, on relief being granted, would be in a financial position to carry out the repairs.
Judge Shannon
The order which will go from this Court is that the lease of the 8th of April, 1929, do stand redeemed and discharged from the decree of ejectment granted in the Dublin Circuit Court on July the 20th, 1937, upon fulfilment of all the following terms and conditions:—
1. That plaintiff within 10 days from to-day’s date do pay defendant £14 4s. 0d., costs of said decree.
2. That the plaintiff do within the said time pay the sum of £61 1s. 0d. the arrears of rent due by the plaintiff to the defendant on foot of said lease to the 8th day of September, 1937, less such sum (if any) as may be found in accordance with directions hereinafter contained to be due by the defendant to the plaintiff.
3. That plaintiff do within a reasonable time put the premises comprised in and demised by the said lease into good and sufficient tenantable repair, order and condition in accordance with the terms in that behalf contained in the lease of the 8th April, 1929.
4. That, the parties so consenting, the certificate in writing of Mr. John J. Robinson, Architect, as to the compliance or non-compliance with the previous condition be final and binding on both parties.
5. That plaintiff do pay to Mr. Robinson his fees of and in connection with the foregoing matters.
6. That plaintiff do pay to the defendant her costs with counsel of and incidental to these proceedings when taxed and ascertained by the County Registrar.
7. That if necessary an account of all moneys received by the defendant out of the rents and profits of the said premises since the 20th day of July, 1937, be taken and that the defendant do allow the plaintiff credit for such sum against said sums of £61 1s. 0d. and £14 4s. 0d. and do pay the excess (if any) to the plaintiff.
Either party will have liberty to apply to the Court as they may be so advised.
Breaden v. Fuller and Son, Ltd.
[1949] IR 291
Davitt J.
The defendant Company is in possession of the lands the subject-matter of this action since late 1946, or early 1947, ultimately under an indenture of lease, dated the 3rd November, 1947, made between the plaintiff, of the one part, and the defendant Company of the other part. The term was five hundred years from the 1st January, 1947. The lease contains, inter alia, a covenant by the defendants to build sixty-five dwelling-houses, of a value of £2,000 each, at least, within a period of four years from the date thereof. These houses were to be built according to plans and specifications to be approved by the plaintiff. It also contains covenants that the houses would be built as follows, viz., ten houses in the first year of the term; twenty-five houses in the second year; fifteen houses during the third year; and a final fifteen houses during the fourth year. In point of fact the period for building the first ten houses was extended by consent until the 30th June, 1948. No building was possible save with the licence of the Department of Industry and Commerce and the approval of the Town Planning Authorities of the Dublin County Council. The necessary licence and approval were forthcoming at an early stage, and the only obstacle of any potential reality to securing the final approval of the County Council was the occupation of a cottage on the site by a Mr. O’Riordan under a tenancyprima facie protected by the Rent Acts. The construction of the type of house required by the plaintiff became virtually illegal on and from the 17th January, 1949, but the defendants had the whole period from early 1947, at latest, until January, 1949, to secure the necessary licences (which they did in October, 1947) and to build the houses in compliance with their covenant. They have not in fact built a single house. They did prepare the ground for the erection of the entire number of houses covenanted to be built. In doing this, I think they displayed a serious lack of discretion. It was a costly enterprise, and, in my opinion, had something to do with their subsequent failure to build. They would have been better advised to have restricted their preparations to what was necessary for compliance with their immediate obligations under the covenant. That they have failed to perform their covenant is unquestioned, but they attempt to excuse their failure on a number of grounds, and ask for relief against forfeiture. In my opinion there is no reality in their excuses. I am satisfied that they could have complied with this covenant, despite the difficulties which arose. There were difficulties to be overcome, but where there’s a will there’s a way. In this case it was the will that was lacking. I do not believe that the defendants wanted to comply with their covenants. I believe that the reasons why they failed to do so were, first, that they did not proceed with the initial work in a sensible fashion, thereby involving themselves in considerable outlay; secondly, that they realised that the type of houses they had agreed to build was not readily saleable and that they would not make the profit which they had expected on those houses; and thirdly, that, by reason of the second matter just referred to, they were anxious to try to arrange to have the covenant altered so that they could build a cheaper type of house which would qualify for a free grant from the Government. They made no genuine effort to build, and did not intend to do so.
There are two matters upon which the defendants placed strong reliance as excusing their conduct and I will deal with them in more detail. First, it is suggested that, by reason of the fact that a dwelling situated on the lands in question was in the occupation of a man called O’Riordan, the defendants could not proceed to build until he had vacated, and that as he could successfully rely upon the protection of the Rent Restrictions Act, 1946, it was impossible to get clear possession until he left voluntarily in June, 1948, which explained the whole delay and the present position. I do not regard this as a genuine excuse for the breach of covenant to build. The defendants were fully aware of O’Riordan’s occupation when they entered into this agreement, and they were presumably advised in the matter by their then solicitor who, to the knowledge of the Court, is particularly experienced in such matters. Furthermore, if the matter of O’Riordan’s occupation of the cottage had been a severeobstacle to the performance of their covenant by the defendants, I would have expected Mr. Fuller to have given some evidence as to the efforts to secure possession from O’Riordan. Mr. Fuller did not, however, although he was in Court, elect to give evidence, and in my opinion the excuse that the presence of O’Riordan made it impossible for the defendants to build in compliance with their covenant is not convincing. I do not believe that any genuine effort was made to persuade O’Riordan to leave.
The defendants also rely on the fact that, by reason of the policy of the Government as regards erection of houses at present, they cannot now obtain a licence to build houses of the required type, and they argue that as they cannot lawfully comply with the covenant they should be relieved from the terms thereof and allowed to build another type of house, whilst paying compensation to the plaintiff. Whilst it is true that they are now unable to get a licence to build houses of the type required by their covenant, I do not consider that this fact would justify my granting relief against forfeiture. That state of affairs is entirely a consequence of the defendants’ own action, or, rather, inaction. At the time of the service of the notice under the Act of 1881 it was within their power to comply with it, and they failed to do so. The licence which they received for this purpose lapsed through their own default. In my view, owing to delay which was mainly, if not wholly, wilful, the defendants now find themselves in the position that they cannot legally fulfil their covenant. They are now. in my view, seeking relief, not merely against forfeiture, but against the very terms of the covenant with which they have failed to comply. They cannot build the type of house which the plaintiff requires; they wish, however, to continue to have the benefit of the lease, and, through the assistance of the Court, to compel the plaintiff to alter his requirements as to the type of house to be built, on being paid compensation. Let me say, generally, as to the matter of compensation, that no assistance upon the matter was offered to the Court by either side.
The usual terms on which relief would be granted in a case of this kind are that the defendants should be allowed a certain period within which to comply with their covenant upon payment of compensation to the plaintiff for any loss incurred by him. This solution of the difficulty is not now possible. Owing, as I have said, to the defendants’ wilful default the covenant cannot now be complied with legally. In these circumstances I do not think this is a case in which relief against the forfeiture should be granted. I will,
accordingly, enter judgment for the plaintiff on his claim for possession and dismiss the defendants’ counterclaim.
As regards the claim for damages, if the covenant had been complied with, thirty-five houses would have been completed by the 31st December, 1948. In respect of twenty-five of these the plaintiff would have been in receipt of an additional rent of eleven guineas per house. These rents would have been payable half-yearly on the 23rd March, 1949, and the 25th September, 1949. I must consider these rents as accruing de die in diem and on that basis, to the date of hearing, I allow a sum of £153 13s. 6d., for which amount I enter judgment.
Eleanor Mary Dickeson v Abraham Lipschitz
17 November 1967
[1972] 106 I.L.T.R 1
His Honor Judge Wellwood
Judge Wellwood:
This is an action in which the plaintiff, who is the lessor of the demised premises, claims an order for possession of the premises, and damages for breach of covenant, against the defendant who is the lessee for the residue of a term of ninety-nine years from the 1st November, 1907, created by an indenture of lease of the 24th September, 1908 Under the terms of that indenture of lease, there is a covenant whereby the original lessee covenanted, for himself his executors, administrators and assigns, to repair the said premises, and to keep the same in repair in accordance with the terms of the covenant in the said Indenture.
On the 21st November, 1963, the plaintiff served on the defendant a notice under section 14 of the Conveyancing Act, 1881, in which full particulars of the alleged breach of covenant on the part of the defendant in failing to repair, and to keep in repair, the premises are set out, and requiring him to remedy the said breaches, and to pay £50 compensation to the plaintiff. The defendant was given a resonable time of three months in which to carry out the repairs to the satisfaction of the plaintiff’s architect.
Under section 14(2) of the Conveyancing Act, 1881, a lessee may apply to the Court for relief against forfeiture for breach of covenant. The Court is empowered under that sub-section to grant, or refuse, relief, as, having regard to the proceedings and conduct of the parties, and to all other circumstances, it thinks fit; and in case the Court grants relief, it may do so on such terms, if any, as to costs, expenses, damages, compensation, penalty, or otherwise, including the granting of an injunction to restrain any like breach in the future as the Court, in the circumstances of each case, thinks fit.
I am satisfied that the service of the notice by the plaintiff was justified as the premises were in a bad state of repair, and, for a considerable period prior to that, no repairs had been done by the defendant as required by the covenant in the lease. The ruinous condition of the premises was due partly to age and partly to the failure of the defendant to comply with the covenant to repair the premises, and to keep them in repair. If the defendant had carried out periodical repairs to the premises, as he was required to do since he obtained possession in 1946, this would have considerably lengthened the life of the fabric.
A lengthy correspondence took place between the solicitors for the respective parties from which it appears clear that the attitude of the plaintiff was reasonable from the start and, even at a late stage in the correspondence, the plaintiff was willing to compromise with the defendant in having the matter settled by purchase of the lessor’s interest The defendant, on the other hand, delayed in doing anything positive in the matter, and eventually forced the plaintiff to commence proceedings.
In these circumstances how is the Court to grant equitable relief when the fundamental conditions for the granting of such relief have not been complied with by the defendant?
I will not exercise my discretion in favour of the defendant. The plaintiff is claiming possession of the premises on the grounds of forfeiture due to breach of covenant by the defendant, and the plaintiff also claims £50 damages for breach of covenant to repair.
I will allow the plaintiff £20 damages which is the amount proved in Court by which the value of the plaintiff’s reversion has been diminished. I will also give a decree for possession and refuse the defendant’s counterclaim for relief against forfeiture. I will also allow such costs to the plaintiff as will be allowed on taxation
O’Reilly v. Gleeson
[1975] IR 260
Butler J.
By lease dated the 16th August, 1895, Patrick O’Reilly (the grandfather and predecessor in title of the plaintiff) demised to Richard F. Tobin the premises which are the subject matter of these proceedings; the term was 20 years from the 15th July, 1895, and the lease reserved a yearly rent of £125. The demised premises are described in the lease as @”. . . the dwellinghouse garden and yard stable coach house and premises known as Number 60 on the east side of Stephen’s Green in the Parish of St. Peter and County of the City of Dublin which said house and premises are bounded . . . on the east by Leeson Lane . . . which said premises are more particularly described on the map hereunto annexed.”# There was also granted to the lessee a right of way by a door from Leeson Lane along a passage leading into the yard of the premises and there was reserved to the lessor a like right of way over portion of the yard which was enclosed by a newly built wall. The map clearly shows the stable opening directly out on Leeson Lane and. alongside it, the passage and gate or door referred to. By an endorsement dated the 19th June, 1903, the term granted by the lease of 1895 was extended for a period of 30 years from the expiration of the term originally granted, i.e., from the 15th July, 1915. In 1916 the Irish Sisters of Charity acquired the lessee’s interest in the lease and the premises have since been used by them in conjunction with, and as part of, the former St. Vincent’s Hospital.
On the 29th August, 1946, the plaintiff made a further lease of the premises to six lessees as joint tenants. The term was 30 years from the 15th July, 1945the date of expiration of the extended term of the lease of 1905. The lessees were nominees of the Sisters of Charity and the defendant is the sole survivor. It is recited that the lease is granted by way of renewal of the earlier lease pursuant to an application made under the provisions of the Landlord and Tenant Act, 1931. In reciting the lease of 1895, the lease of 1946 refers to the premises as @”therein and hereinafter further demised.”# There can be no doubt, therefore. that the premises intended to be demised by the lease of 1946 were the same as those comprised in the lease of 1905. In the lease of 1946 the premises are described as:@”. . . the dwellinghouse, garden, yard, garage, shed and premises known as Number Sixty on the east side of Saint Stephen’s Green in the Parish of Saint Peter and County of the City of Dublin which said dwellinghouse and premises are more particularly described on the map endorsed hereon and thereon coloured red.”# The map again clearly shows the garage opening directly in Leeson Lane and the passage over which other buildings had apparently been erected.
From the statements of the parcels in both leases and from both maps, it is clear beyond any question that the premises demised by the lease of 1946 extended to and was bounded by Leeson Lane and comprised the garage and the buildings over the original right of way. During the hearing this was (for the first time) admitted to be so on behalf of the defendant.
In 1971 the Sisters of Charity put the premises up for sale as part of the former St. Vincent’s Hospital. Conditions of sale, a tender form and a guide plan of the entire property for sale were prepared, published and circulated on behalf of the vendors. The guide plan shows the premises demised by the lease of 1946 in two portions: one portion was coloured brown and comprised the area of the house, the garden and portion at least of the original yard, the other portion was coloured blue and comprised the area of the stable or garage and possibly portion of the stable yard.
There are a number of references to the premises in the particulars and conditions of sale. First, Lot B of the property for sale is described as @”All That And Those the premises known as Number 60 St. Stephen’s Green in the City of Dublin as indicated on the plan annexed to these conditions and thereon coloured brown.”# The garage and the frontage to Leeson Lane are, therefore, excluded from the description. The premises are stated to be held under the lease of 1946 with the exception of a small hatched area which appears to correspond to the portion of the stable yard which was excluded from the lease of 1895. This portion is stated to be held in fee simple free of rent.
Secondly, Lot A of the property for sale is described as @”All That And Those the premises known as St. Vincent’s Hospital in the City of Dublin consisting of the premises Numbers 55, 56, 57, 58 and 59 St. Stephen’s Green and premises on the West side of Leeson Lane as indicated on the plan annexed to these Conditions and thereon coloured red and blue respectively.”# The premises on the west side of Leeson Lane (i.e., those coloured blue) are stated to be held under a lease dated the 12th July, 1933, from the Earl of Pembroke and Montgomery to Honoria O’Connor and others for the term of 10,000 years from the 29th September, 1936, at the yearly rent of one peppercorn.
Thirdly, clause 4 of the special conditions relating to Leeson Lane states:@”The purchaser’s particular attention is drawn to the map annexed to the lease dated 29th day of August, 1946 (in Lot B) made between Patrick O’Reilly of the one part and Mary Carew and others of the other part for a term of 30 years from 15th day of July, 1945, at the yearly rent of £295. Upon the map (which refers to the leasehold portion of No. 60 St. Stephen’s Green) a small portion of Leeson Lane premises which is
hatched on the plan annexed hereto is shown as being demised by the said lease. The purchaser shall be bound to assume and admit that the said map on the lease is erroneous in this respect and no objection or requisition shall be taken or made in respect of such error.” These three references constitute a clear and unambiguous statement that the plaintiff is not entitled to the lessor’s interest in that portion of the premises demised by the lease of 1946 which is shown coloured blue and hatched on the guide plan and that. on the contrary, the Sisters of Charity hold the premises under the 10,000 year lease from the Pembroke Estate.
On the 17th September, 1971, the defendant’s solicitors sent a copy of the conditions of sale and guide plan to the plaintiff for his information. The plaintiff was immediately concerned at the references which sought to exclude the Leeson Lane frontage from his property and consulted his solicitors. On the 24th September the plaintiff’s solicitors wrote to the defendant’s solicitors protesting at this denial of the plaintiff’s title; stating that clearly there had been no error in the map on the 1946 lease; pointing out that the disclaimer seriously depreciated the value of his property while appreciating that of the vendors; asking the defendant’s solicitors to indicate as a matter of urgency the future attitude of their clients in the circumstances; and, finally, pointing out that the plaintiff’s consent to any sale of the property would only be given if it comprised the whole of the property demised by the lease.
There followed a long correspondence characterised on the part of the defendant’s solicitors by continuing repetition of the defendant’s claim of title adverse to the plaintiff’s and by what I can only describe as a blustering arrogance which combined threats of an action for substantial damages, should the proposed sale be delayed or impeded, with the imputation that the plaintiff and his solicitors were deliberately putting forward a claim which they knew to be false for the purpose of causing the vendors the maximum amount of embarrassment and with the object of monetary advantage to the plaintiff.
The plaintiff finally took counsel’s advice and, acting on it, commenced these ejectment proceedings on the title. The claim is based on the plaintiff’s right to forfeit the lease for the defendant’s breach of condition in denying the plaintiff’s title. The question to be determined is whether the plaintiff was entitled to forfeit the lease and re-enter the premises.
At common law a denial or disclaimer of the title of him of whom land was held gave rise to a forfeiture of the tenant’s interest in the land. The rule is stated in Bacon’s Abridgement (6th ed., vol. 4, p. 219) as follows:”Here it is to be observed, that any act of the lessee by which he disaffirms or impugns the title of his lessor, occasions a forfeiture of his lease. For to every lease the law tacitly annexeth a condition, that if the lessee do any thing that may affect the interest of his lessor, the lease shall be void. and the lessor may re-enter. Besides, every such act necessarily determines the relationship of landlord and tenant; since . . . to affect to hold under a lease, and at the same time to destroy that interest out of which the lease ariseth, would be the most palpable inconsistency. A lessee may thus incur a forfeiture of his estate by act in pais, or by matter of record. By matter of record . . . where in an action by his lessor grounded upon the lease he resists the demand under the grant of a higher interest in the land . . .”#
The law has always recognised that the rule might operate harshly and inequitably, and that it could be used unconscionably by a landlord to deprive the tenant of possession. Hence proof of the terms and intent of the disclaimer had to be strict and unambiguous. Furthermore, apart from one or two cases which have since been disapproved or which are peculiar to their own facts, the disclaimer had to go further than mere denial of title. It was necessary that it expressly or impliedly sought to set up an adverse title in the tenant or some other person. or otherwise to affect adversely the landlord’s interest.
Thus denial of title by conduct had to be in writing and had to amount to an adverse claim. Putting the denial on the record was always regarded as a sufficiently solemn and unambiguous act of disclaimer. As has been pointed out by Lord Denning at p. 312 of the report of Warner v. Sampson 1,in early times a mere disclaimer on the record, even without setting up an adverse claim, forced the landlord to bring a writ of right to prove his title. This was not always possible or convenient and, in the meantime, the landlord was deprived of his feudal services and the remedies therefor. Consequently, in early times such mere denial of title did work a forfeiture. However. with the loosening of feudal ties and the disappearance or commutation of feudal services, a mere denial on the record ceased to be sufficient and it became necessary, as in the case of act in pais, that it be accompanied by a claim of adverse title. However, there are cases in the books in which statements applicable to one class of case have frequently been cited and sought to be applied to the other, so that a certain confusion has arisen. There are statements which unless properly understood, would seem to indicate that forfeiture for denial of title is no longer part of the law, or alternatively, that it is confined to cases of disclaimer on the record.
An example of this is Warner v. Sampson 2 which was strongly relied upon by Mr. Keane in his submissions on behalf of the defendant. The passage upon which Mr. Keane relied is in Lord Denning’s judgment and commences at p. 315 of the report:
@”So ends the medieval law as to forfeiture by matter of record. Thenceforward it seems to have fallen into disuse for over 300 years. . . . It is a pity that it was not left in oblivion, for it is quite inappropriate at the present day. All the circumstances which gave rise to this medieval law have now disappeared; and with their passing the old law has gone too. A tenant for years does not owe homage to his landlord. He does not take an oath of fealty. He is under no duty to defend the interest of the reversioner. His rights and duties are defined by the lease; and there is no room for any implied condition that he is not to dispute the landlord’s title, either on the record or off it. The landlord is sufficiently protected by the rule that the tenant is estopped from denying his landlord’s title. This rule ensures that no denial of title is of any avail to the tenant except in those cases where he may properly put the landlord to proof. To go further and say that the denial involves a forfeiture would be a punishment on the tenant which cannot be justified.”#
This sounds very clear until it is realized that Lord Denning is speaking, not of denial on the record accompanied by a claim to set up an adverse title, but of a bare (and in that case formal and inadvertent) denial of the landlord’s plea that he was landlord. To say that forfeiture by matter of record fell into disuse for over 300 years is plainly nonsense if it is sought to cover every class of case. Instances of such forfeiture occur in every series of reports down to the present day. What did fall into disuse was the rule that a mere denial of the landlord’s title worked a forfeiture. Lord Denning rightly points out there is no instance of such forfeiture between 1590 and the case of Kisch v. Hawes Brothers Ltd. 3 in 1934. That the rule as to forfeiture in its mitigated form survives is clear from the fact that Lord Denning (also at p. 315 of the report of Warner v. Sampson 2) states in reference to Coke on Littleton (Vol. 2, s. 251b):@”Throughout his discourse it is plain that a disclaimer by a tenant in a court of record does not give rise to a forfeiture unless it amounts, expressly or impliedly, to an assertion or affirmance by the tenant of title in himself or in a stranger. His analysis of the law on the subject has been accepted by all who have followed him . . .”# This reference I construe as acceptance by Lord Denning and approval of the rule therein stated.
Furthermore, Ormerod L.J., who agreed with Lord Denning in Warner v. Sampson 4 says at p. 323 of the report:@”The question has been considered recently by this court in Wisbech St. Mary Parish Council v. Lilley 5,when Lord Evershed M.R. cited a passage from the judgment of Lord Lyndhurst C.B. in Doe d. Ellerbrock v. Flynn 6 as follows: ‘I think that the jury, upon the facts proved at the trial, came to a right conclusion. If the tenant sets up a title hostile to that of his landlord, it is a forfeiture of his term: and it is the same if he assists another person to set up such a claim. Whether he does the act himself, or only colludes with another to do it, it is equally a forfeiture.’ Lord Evershed M.R. then went on to say: ‘Of course, the conception of the relation of landlord and tenant has undergone many changes since that case was decided in 1834. The rule asserted was founded upon the feudal law, as counsel in the case pointed out. Still, if the facts were strictly brought within the scope of the decision in Doe d. Ellerbrock v. Flynn 6 I do not doubt that even today the court would follow it.’ Romer L.J. said: ‘I accept Mr. Bridges’ submission that even now, if a tenant does in fact deliberately assert a title in himself adverse to his landlord. or if he lets a stranger into possession with the intention of enabling him to set up a title adverse to the landlord, then that amounts to a repudiation of the landlord’s title.’ We were referred to numerous authorities, many of them very old, but it seemed to me that Doe d. Williams & Jeffery v. Cooper 7 stated the position clearly, when Tindal C.J. said: ‘To constitute a disclaimer, there must be a renunciation by the party of his character of tenant, either by setting up the title of a rival claimant, or by asserting a claim of ownership in himself.'”#
Warner v. Sampson 4 is the most modern relevant English case and from it and the authorities in general it is, I think, clear that where a tenant, whether on or off the record, clearly and unambiguously denies his landlord’s title in a manner which may adversely affect the landlord’s estate or reversion, the landlord is entitled to forfeit the lease in respect of the property (being the whole or part of the demised premises) to which the denial extends. So far as I am aware, no case, in which the matter was considered, suggests either that this never was the law or that it has ceased to be the law. It is, of course, true that the rule has its origin in feudal times but, even in Bacon, the rule is stated in terms which are not in conflict with the modern contractual relationship of landlord and tenant. Thus Bacon speaks of an implied condition annexed to the lease, and of the inconsistency of affecting to hold under the lease and at the same time destroying the interest out of which it arises. This is equivalent to the contractual rule that a man cannot at the same time seek to approbate and reprobate his contract.
Mr. Keane also relied on the case of Wallace v. Daly & Co. Ltd. 8 That was a case in which the matter to be decided was whether there had been a denial of the landlord’s title on the record of the Circuit Court where the original defence, which might have amounted to a denial, had been amended to a form which contained no denial. In the Supreme Court Murnaghan J., with whom Geoghegan J. concurred, held that only the amended pleading could be considered and hence there was no disclaimer. O’Byrne J., with whom Maguire C.J. concurred, held that the record as a whole must be looked at and hence there was a disclaimer and a forfeiture. Black J. agreed that the record as a whole should be looked at but held that, as there was a denial not of the lease but of the plaintiff’s derivitive title, there had been no forfeiture. I think Mr. Keane cited that case for the following passage in the judgment of Black J. at p. 374 of the report: @”Further, Doe d. Graves v. Wells 9, like Rees d. Powell v. King 10 and Doe d. Dillon v. Parker 11, shows that in the case of a tenant for a term of years, such as the present defendants, a disclaimer of the landlord’s title must be a matter of record in order to create a forfeiture.”# Although it is clear that this observation is merely obiter and did not touch on anything which was at issue in the case, I would have the greatest respect for anything which the learned judge gave as his opinion as being the law. However, on looking at the cases referred to, I do not find that they support the proposition stated. They are authority for the undoubted requirement that in order to incur the forfeiture of a term of years, a disclaimer must be in writing. This rule appears in many cases; for example, in Doe d. Phillips v. Rollings 12 Maule J. states:@”Where a term of years is vested in a party it is contrary to the statute of frauds to allow the term to be divested out of him by matter of parol.”#
For the sake of completeness I should perhaps mention that at a relatively late date a special application of the forfeiture rule came to be recognised, viz., that where a tenant from year to year disclaimed the title of his landlord he could be ejected without the necessity of serving a notice to quit. The cases exemplifying this special application of the rule contain dicta which are again confusing when applied to other cases of forfeiture. There is, however, nothing in any of these cases that invalidates my conception of the law as set out earlier in this judgment.
If I am correct in my view of the law, its application in the present case presents no difficulty. The defendant has clearly and unambiguously and in writing denied the plaintiff’s title as lessor in respect of the portion of the demised premises coloured blue and hatched on the guide plan. She has stated that the vendors hold this portion of the premises under the lease of 1933 from the Pembroke Estate, and she seeks to bind the purchaser of the premises to assume and admit that the map on the plaintiff’s lease is erroneous. This denies the plaintiff’s title and sets up an adverse title. It is also calculated to cause the plaintiff the practical difficulty of getting a purchaser under these conditions of sale to accept the plaintiff as landlord during the continuance of the term, and as reversioner at its termination. Accordingly, the plaintiff was entitled to forfeit the defendant’s interest in the premises and is entitled to possession.
In feudal law such a forfeiture would have extended to the whole lease. Because the modern relationship of landlord and tenant is merely contractual, the forfeiture extends only to the portion of the demised premises in respect of which there has been a disclaimer of the plaintiff’s title, namely, that portion of the premises demised by the lease of 1946 which is coloured blue and hatched on the guide map or plan mentioned in the conditions of sale.
The defendant appealed to the Supreme Court from the judgment and order of the High Court. The appeal was heard on the 18th and 19th June, 1974. by FitzGerald C.J., Henchy and Griffin JJ.
R. Keane S.C. (with him P. J. Geraghty) for the defendant:
A tenant is estopped from disputing his landlord’s title in ejectment proceedings, but the interest of a lessee for a term of years can only be forfeited by the lessee’s specific denial of the lessor’s title appearing on the record of the court: Gowrie Park Utility Society Ltd. v. Fitzgerald 13; Wallace v. Daly & Co. Ltd. 14 [He also referred to Doe d. Graves v. Wells 15] It is not sufficient to ground a forfeiture to show that the tenant has merely put the landlord on proof of his title; the tenant must positively and deliberately assert an adverse title: Warner v. Sampson 16; Wisbech St. Mary Parish Council v. Lilley 17; Doe d. Ellerbrock v. Flynn 18 [He also referred to Rees d.
Powell v. King 19; Doe d. Dillon v. Parker 20; Doe d. Whitehead v. Pittman 21; Doe d. Phillips v. Rollings 22; Doe d. Lewis v. Cawdor 23; Hunt v. Allgood 24; Jones v. Mills 25, Doe d. Calvert v. Frowd 26; Doe d. Gray v. Stanion 27; Doe d. Williams v. Cooper 28; Ackland v. Lutley 29; Throgmorton v. Whelpdale 30; Doe d. Williams v. Pasquali 31; Doe d. Jefferies v. Whittick 32; Doe d. Davies v. Evans 33; Doe d. Lansdell v. Gower 34; Vivian v. Moat 35; Doe d. Grubb v. Grubb 36; Doe d. Price v. Price 37 and the Conveyancing and Law of Property Act, 1881, s. 14]
G. E. Gill S.C. (with him J. N. Garland ) for the plaintiff:
The medieval doctrine that the denial by a lessee of his lessor’s title involved a forfeiture was modified in the 18th century when the chancery courts granted relief against forfeiture in cases where the lessor’s title was denied only in the sense of being put to proof. In this case there was not a mere technical denial of that type but the plaintiff’s title to the land coloured blue on the map was repeatedly denied and the defendant’s title to that land was asserted unequivocally. These are sufficient to ground a forfeiture even though the denial was directed only to part of the lands demised. [He referred to Doe d. Phipps v. Gowen 38; Doe d. Maddock v. Lynes 39; Wisbech St. Mary Parish Council v. Lilley 40; Warner v. Sampson 41: Wallace v. Daly & Co. Ltd. 42; Doe d. Graves v. Wells 43: and Furlong on Landlord and Tenant (1869) Vol. 1, p. 578]
Cur. adv. vult.
The Chief Justice died on the 17th October, 1974, without having delivered judgment. The parties agreed to be bound by the judgments of the other two members of the Court.Henchy J.
20th January 1975
In 1971 the Irish Sisters of Charity put up for sale the complex of buildings constituting St. Vincent’s Hospital, St. Stephen’s Green, Dublin. Those buildings had become vacant when the hospital moved to new premises. It was decided that the sale would be by tender. A brochure was printed and circulated and it gave particulars of the property and set out the general conditions of sale. Amongst the people to whom the brochure was sent was the plaintiff. It was sent to him as a matter of courtesy because he owns the fee simple estate in No. 60 St. Stephen’s Green, one of the buildings being sold, and it was thought that he might be interested in tendering for the leasehold estate which was being sold.
The defendant’s interest in No. 60 arises under a lease of the 29th August, 1946. By that lease the plaintiff demised the property known as No. 60 St. Stephen’s Green (as more particularly delineated on a map endorsed on the lease) to six lessees for the term of 30 years from the 15th July, 1945, at the yearly rent of £295. The lessees were apparently trustees of the Irish Sisters of Charity and the defendant, as the sole survivor of them, has become entitled to the lessees’ interest.
When the plaintiff got the brochure, he noticed that it was intended that the purchaser would be bound to accept that the map endorsed on the lease of 1946 was wrong. The brochure said, in effect, that a piece of ground, measuring some 30′ by 50′ and situated at the back of No. 60 St. Stephen’s Green, was erroneously included in the lease of 1946, and that the vendors held that piece of ground under a lease of the 12th July, 1933, from the Earl of Pembroke for the term of 10,000 years at the yearly rent of one peppercorn. The plaintiff’s solicitor took the matter up forthwith; he claimed that his client’s title as lessor was being disclaimed and he threatened proceedings unless the vendors dropped their claim to hold the questioned piece of ground under the lease from the Earl of Pembroke. An acrimonious and unyielding correspondence followed, resulting in the present proceedings in which the plaintiff claims, primarily, possession of the whole of the property demised by the lease of 1946 and, alternatively, possession of the piece of ground which the defendant says was erroneously included in the map endorsed on the lease of 1946. The basis of the claim is that the defendant has worked a forfeiture by disclaiming her lessor’s title. The claim succeeded in the High Court, for Mr. Justice Butler held that there had been such a disclaimer and that it had effected a forfeiture; but he limited the forfeiture to the disputed piece of ground. From that order the defendant now appeals to this Court.
It goes without question that the defendant, through her agents, has clearly and repeatedly asserted in writing, and has sought to bind a purchaser to the same conclusion, that the plaintiff erroneously included the disputed area in the lease of 1946. While that conduct may possibly not damnify the plaintiff during the currency of the lease, it is calculated to put part of the property demised outside the reach of the plaintiff’s reversion. It is an unequivocal denial of the plaintiff’s title to part of the property demised. Furthermore, although made bona fide, it would seem to be an unjustified denial: but it would be wrong to express a concluded opinion to that effect in the absence of the Earl of Pembroke who may possibly wish to claim, under the lease of 1933, a reversion in the disputed area.
Where a lessee for a term of years asserts in writing that the lessor erroneously included a particular area in the property demised, does such denial of the lessor’s title work a forfeiture of the lease? That is the central question in this case.
The legal rules governing forfeiture of a lease by disclaimer of the lessor’s title derive from the feudal law of medieval England. It is said that forfeiture of this kind may be occasioned by act in pais (i.e., an act done without legal proceedings) or by matter of record. The legal history of forfeiture by matter of record is summarised in the judgment of Lord Denning M.R. in Warner v. Sampson. 44 Forfeiture by the record does not arise in this case, so there is no need to consider which version of the law on that kind of forfeiture should now be accepted as correct by this Court in the light of the conflicting judgments in both Warner v. Sampson 44 and Wallace v. Daly & Co. Ltd. 45
The law of forfeiture by act in pais does not always appear clear or coherent in either the text-books or the cases. This is largely due to a failure to appreciate that the law has distinguished tenancies for fixed terms from periodic tenancies for the purpose of this kind of disclaimer. In the case of a periodic tenancy, if the tenant impugns the landlord’s title he runs the risk that the landlord may proceed to have him ejected without notice to quit, on the ground that the tenant’s disclaimer of title is to be treated as a determination of the tenancy: per Lord Denman C.J. in Doe d. Graves v. Wells 46 and per Sir Raymond Evershed in Wisbech St. Mary Parish Council v. Lilley. 47 But as to leases for a term certain, whatever the law of forfeiture by act in pais may have been in its feudal origins, the only reported case in modern times of forfeiture of a term of years by actin pais is Doe d. Ellerbrock v. Flynn 48 which turned on the fraud of the tenant in delivering up the possession of the premises and of the lease to a person claiming under a hostile title: see Doe d. Graves v. Wells 49; perBlack J. at p. 374 of the report of Wallace v. Daly & Co. Ltd. 50; and De Moleyns’s Landowner’s and Agent’s Practical Guide (8th ed., vol. I, p. 460). Indeed, Lord Denning M.R. went so far as to say in Warner v. Sampson 51 at p. 316 of the report that @”there is no room for any implied condition that (the tenant) is not to dispute the landlord’s title, either on the record or off it.”# Leaving aside forfeiture by the record (because it does not arise in this case), I agree that there is no room in the modern law of landlord and tenant for forfeiture of a lease by act in pais. No example of it is to be found in the reports since at least 1834 when Doe d. Ellerbrock v. Flynn 52 was decided. In that case a forfeiture was held to have been effected, but the case can be justified in its result as one where the lessee, by his fraudulent conduct in passing possession of the property and of the lease to a person who was asserting a title adverse to the lessor, was held to have thereby determined the term.
In Doe d. Graves v. Wells 49 at p. 435 of the report Lord Denman C.J. said of Doe d. Ellerbrock v. Flynn 52:
@”There it was thought that the tenant had betrayed his landlord’s interest by an act that might place him in a worse condition: if the case went farther than that, I should not think it maintainable. The other instances are cases either of disclaimer upon record, which admit of no doubt as to the nature of what is done, or of leases from year to year, in speaking of which the nature of the tenancy has been sometimes lost sight of, and the words ‘forfeiture’ and ‘disclaimer’ have been improperly applied. It may be fairly said, when a landlord brings an action to recover the possession from a defendant who has been his tenant from year to year, that evidence of a disclaimer of the landlord’s title by the tenant is evidence of the determination of the will of both parties, by which the duration of the tenancy, from its particular nature, was limited. But no case, I think, goes so far as the present: and I feel the danger of allowing an interest in law to be put an end to by mere words.”#
Furthermore, it was stated in Doe d. Graves v. Wells 49 by Patteson J. at p. 436 of the report that @”No case has been cited where a lease for a definite term has been forfeited by mere words.”# The reason for the absence of such cases would seem to be that even in the heyday of feudal tenures, mere words, whether spoken or written, would not have produced a forfeiture of a lease for a term certain. The only example of forfeiture by act in pais given in Bacon’s Abridgment (7th ed., vol. 4, p. 884) is where the tenant alienates the fee; and he says that even then forfeiture will not result if the conveyance is for any reason ineffective to convey the fee. This means that even if a repudiation of the lessor’s title appeared from the recitals or the habendum of the ineffective conveyance, a forfeiture would not be caused. Elsewhere (7th ed., vol. 3, p. 196) Bacon makes the position clear when he says:@”in our law these acts which plainly amount to a denial must be done in a court of record, to make them a forfeiture . . . and all other denials, that might be used by great lords for trepanning [i.e., ensnaring] their tenants, and for a pretence to seize their estates, by our law were rejected, for such convictions might be made by such great lords where there was no just cause.”# That is to say, forfeiture by mere words could arise only by matter of record, and the only recognized forfeiture by act in pais was by a tortious feoffment, whereby the tenant for years could convey the fee. With the abolition of tortious feoffments by s. 4 of the Real Property Act, 1845, there has been no place in the modern law of leaseholds for the operation of forfeiture by acts in pais.
Whatever may be the result of a disclaimer of the lessor’s title in pleadings (as to which I express no opinion), leases are now held by the courts to be terminated at the instance of a lessor on the ground of forfeiture only when the forfeiture arises from a provision expressly incorporated in the lease: per Lord Russell of Killowen (with whom Lord Goddard agreed) in Cricklewood Property & Investment Trust Ltd. v. Leighton’s Investment Trust Ltd. 53
Therefore, I would hold that the defendant’s conduct, even if it amounted to a disclaimer of the lessor’s title, would not have worked a forfeiture of the lease for there is no provision in the lease which could be relied on to support a forfeiture on that ground.
Even if a lease could be forfeited by mere disclaimer of the lessor’s title by the lessee, the question would arise whether what the defendant did in this case amounted to a disclaimer.
It is fundamental to the relationship of landlord and tenant that the tenant is estopped from denying (i.e., disclaiming) his landlord’s title. That is to say, he cannot assert the rights of a tenant and at the same time say, in effect, that there is no tenancy because the landlord had no title to grant the tenancy, or because the title is in himself or in someone else. He cannot have it both ways. If what he does is a repudiation of the relationship of landlord and tenant, then in the case of a periodic tenancy terminable by notice to quit, he is debarred from insisting on the necessity for a notice to quit if the landlord chooses to eject him without serving one. The reason is that a notice to quit is necessary only when there is an admitted tenancy, so when the tenant repudiates the existence of a tenancy he thereby admits that there is nothing to terminate and that a notice to quit is unnecessary. However, as I have pointed out, in the case of a lease for a fixed term not terminable by notice to quit, the estate of the lessee in the land is not defeasible by mere disclaimer of title on his part.
But even if a lease for a fixed term could be forfeited by disclaimeror if a notice to quit, in the case of a periodic tenancy, is rendered unnecessary because of a disclaimerthe disclaimer must be not of some particular aspect of the landlord’s title but of the landlord’s whole title as landlord.If it were otherwise, the tenant could question, only at the peril of forfeiture or ejectment, any error, large or small, in the extent of the land leased or let, or in the terms of the lease or tenancy, or in the extent of the rights or duties (such as the use of furniture, or trading restrictions) incorporated in the lease or tenancy. The landlord could question such mistakes with impunity and have them rectified, whereas the lessee or tenant would imperil his leasehold or tenancy if he raised them. If that were the law, it would be unequal and oppressive.
In my opinion, the law is correctly stated in Woodfall on Landlord and Tenant (27th ed., para. 2058) as follows:@”In order to make either a verbal or written disclaimer sufficient, it must amount to a direct repudiation of the relation of landlord and tenant, or to a distinct claim to hold possession of the estate upon a ground wholly inconsistent with that relation, which by necessary implication is a repudiation of it. A disclaimer, as the word imports, must be a renunciation by the party of his character of tenant. either by setting up a title in another or by claiming title in himself.”# What the lessee in the present case did was much less than that. What she wrote, through her agents, amounted to this:@”I acknowledge the plaintiff as my lessor under the lease of 1946 but I say that the lease erroneously included a piece of ground in the area intended to be demised: and I shall require the purchaser of my leasehold interest to accept that the lease is erroneous in that respect.”# That was far from being a repudiation of the relationship of landlord and tenant. It was in fact an affirmation of that relationship coupled with a proviso as to an error in the area demised.
It does not follow from this conclusion that a lessor is without remedy if the lessee groundlessly questions or repudiates some aspect of the lease. He may have the true position asserted and protected by bringing proceedings for a declaration or for an injunction or, in an appropriate case, for damages.
However, in the present case this aspect need not be looked at further since the plaintiff does not claim to have suffered any loss and since the defendant has given an undertaking to this Court not to repeat, during the currency of the lease of 1946, the allegation of error in that lease.
Two further points need to be made.
First, the authorities show that if the defendant’s conduct had produced a forfeiture it would have been a forfeiture of the lease in toto. The only case cited in which there was a forfeiture of part of the property held by the lessee was Doe d. Phipps v. Gowen 54, but in that case the piece of ground held to have been forfeited was not demised by the lease but was acquired by the lessee by adverse possession. There cannot be a forfeiture of part of the property demised; this follows as a matter of principle as well as of practicalities. The theory behind recovery of possession on the ground of forfeiture is that the lessor has elected to treat as void the lease which became voidable as a result of the lessee’s conduct. Once the court treats that election as legally effective. it treats the lease as being void in every respect. A partial avoidance of the lease is not possible. In practice it would involve a re-writing of the lease in terms of the area demised and, therefore, in terms of rent, covenants, conditions etc.thus producing a contractual relationship and a leasehold estate different from that envisaged by the parties and expressed in the lease.
Secondly, I think it right to point out that, unfortunately, some of the authorities on which this judgment is based were not opened by counsel in the High Court: if they had been, the judgment given in that court might well have been different.
I would allow the defendant’s appeal against the order for possession made in the High Court.
Griffin J.
I agree.
e by which he disaffirms or impugns the title of his lessor, occasions a forfeiture of his lease. For to every lease the law tacitly annexeth a condition, that if the lessee do any thing that may affect the interest of his lessor, the lease shall be void. and the lessor may re-enter. Besides, every such act necessarily determines the relationship of landlord and tenant; since . . . to affect to hold under a lease, and at the same time to destroy that interest out of which the lease ariseth, would be the most palpable inconsistency. A lessee may thus incur a forfeiture of his estate by act in pais, or by matter of record. By matter of record . . . where in an action by his lessor grounded upon the lease he resists the demand under the grant of a higher interest in the land . . .”#
The law has always recognised that the rule might operate harshly and inequitably, and that it could be used unconscionably by a landlord to deprive the tenant of possession. Hence proof of the terms and intent of the disclaimer had to be strict and unambiguous. Furthermore, apart from one or two cases which have since been disapproved or which are peculiar to their own facts, the disclaimer had to go further than mere denial of title. It was necessary that it expressly or impliedly sought to set up an adverse title in the tenant or some other person. or otherwise to affect adversely the landlord’s interest.
Thus denial of title by conduct had to be in writing and had to amount to an adverse claim. Putting the denial on the record was always regarded as a sufficiently solemn and unambiguous act of disclaimer. As has been pointed out by Lord Denning at p. 312 of the report of Warner v. Sampson 1,in early times a mere disclaimer on the record, even without setting up an adverse claim, forced the landlord to bring a writ of right to prove his title. This was not always possible or convenient and, in the meantime, the landlord was deprived of his feudal services and the remedies therefor. Consequently, in early times such mere denial of title did work a forfeiture. However. with the loosening of feudal ties and the disappearance or commutation of feudal services, a mere denial on the record ceased to be sufficient and it became necessary, as in the case of act in pais, that it be accompanied by a claim of adverse title. However, there are cases in the books in which statements applicable to one class of case have frequently been cited and sought to be applied to the other, so that a certain confusion has arisen. There are statements which unless properly understood, would seem to indicate that forfeiture for denial of title is no longer part of the law, or alternatively, that it is confined to cases of disclaimer on the record.
An example of this is Warner v. Sampson 2 which was strongly relied upon by Mr. Keane in his submissions on behalf of the defendant. The passage upon which Mr. Keane relied is in Lord Denning’s judgment and commences at p. 315 of the report:
@”So ends the medieval law as to forfeiture by matter of record. Thenceforward it seems to have fallen into disuse for over 300 years. . . . It is a pity that it was not left in oblivion, for it is quite inappropriate at the present day. All the circumstances which gave rise to this medieval law have now disappeared; and with their passing the old law has gone too. A tenant for years does not owe homage to his landlord. He does not take an oath of fealty. He is under no duty to defend the interest of the reversioner. His rights and duties are defined by the lease; and there is no room for any implied condition that he is not to dispute the landlord’s title, either on the record or off it. The landlord is sufficiently protected by the rule that the tenant is estopped from denying his landlord’s title. This rule ensures that no denial of title is of any avail to the tenant except in those cases where he may properly put the landlord to proof. To go further and say that the denial involves a forfeiture would be a punishment on the tenant which cannot be justified.”#
This sounds very clear until it is realized that Lord Denning is speaking, not of denial on the record accompanied by a claim to set up an adverse title, but of a bare (and in that case formal and inadvertent) denial of the landlord’s plea that he was landlord. To say that forfeiture by matter of record fell into disuse for over 300 years is plainly nonsense if it is sought to cover every class of case. Instances of such forfeiture occur in every series of reports down to the present day. What did fall into disuse was the rule that a mere denial of the landlord’s title worked a forfeiture. Lord Denning rightly points out there is no instance of such forfeiture between 1590 and the case of Kisch v. Hawes Brothers Ltd. 3 in 1934. That the rule as to forfeiture in its mitigated form survives is clear from the fact that Lord Denning (also at p. 315 of the report of Warner v. Sampson 2) states in reference to Coke on Littleton (Vol. 2, s. 251b):@”Throughout his discourse it is plain that a disclaimer by a tenant in a court of record does not give rise to a forfeiture unless it amounts, expressly or impliedly, to an assertion or affirmance by the tenant of title in himself or in a stranger. His analysis of the law on the subject has been accepted by all who have followed him . . .”# This reference I construe as acceptance by Lord Denning and approval of the rule therein stated.
Furthermore, Ormerod L.J., who agreed with Lord Denning in Warner v. Sampson 4 says at p. 323 of the report:@”The question has been considered recently by this court in Wisbech St. Mary Parish Council v. Lilley 5,when Lord Evershed M.R. cited a passage from the judgment of Lord Lyndhurst C.B. in Doe d. Ellerbrock v. Flynn 6 as follows: ‘I think that the jury, upon the facts proved at the trial, came to a right conclusion. If the tenant sets up a title hostile to that of his landlord, it is a forfeiture of his term: and it is the same if he assists another person to set up such a claim. Whether he does the act himself, or only colludes with another to do it, it is equally a forfeiture.’ Lord Evershed M.R. then went on to say: ‘Of course, the conception of the relation of landlord and tenant has undergone many changes since that case was decided in 1834. The rule asserted was founded upon the feudal law, as counsel in the case pointed out. Still, if the facts were strictly brought within the scope of the decision in Doe d. Ellerbrock v. Flynn 6 I do not doubt that even today the court would follow it.’ Romer L.J. said: ‘I accept Mr. Bridges’ submission that even now, if a tenant does in fact deliberately assert a title in himself adverse to his landlord. or if he lets a stranger into possession with the intention of enabling him to set up a title adverse to the landlord, then that amounts to a repudiation of the landlord’s title.’ We were referred to numerous authorities, many of them very old, but it seemed to me that Doe d. Williams & Jeffery v. Cooper 7 stated the position clearly, when Tindal C.J. said: ‘To constitute a disclaimer, there must be a renunciation by the party of his character of tenant, either by setting up the title of a rival claimant, or by asserting a claim of ownership in himself.'”#
Warner v. Sampson 4 is the most modern relevant English case and from it and the authorities in general it is, I think, clear that where a tenant, whether on or off the record, clearly and unambiguously denies his landlord’s title in a manner which may adversely affect the landlord’s estate or reversion, the landlord is entitled to forfeit the lease in respect of the property (being the whole or part of the demised premises) to which the denial extends. So far as I am aware, no case, in which the matter was considered, suggests either that this never was the law or that it has ceased to be the law. It is, of course, true that the rule has its origin in feudal times but, even in Bacon, the rule is stated in terms which are not in conflict with the modern contractual relationship of landlord and tenant. Thus Bacon speaks of an implied condition annexed to the lease, and of the inconsistency of affecting to hold under the lease and at the same time destroying the interest out of which it arises. This is equivalent to the contractual rule that a man cannot at the same time seek to approbate and reprobate his contract.
Mr. Keane also relied on the case of Wallace v. Daly & Co. Ltd. 8 That was a case in which the matter to be decided was whether there had been a denial of the landlord’s title on the record of the Circuit Court where the original defence, which might have amounted to a denial, had been amended to a form which contained no denial. In the Supreme Court Murnaghan J., with whom Geoghegan J. concurred, held that only the amended pleading could be considered and hence there was no disclaimer. O’Byrne J., with whom Maguire C.J. concurred, held that the record as a whole must be looked at and hence there was a disclaimer and a forfeiture. Black J. agreed that the record as a whole should be looked at but held that, as there was a denial not of the lease but of the plaintiff’s derivitive title, there had been no forfeiture. I think Mr. Keane cited that case for the following passage in the judgment of Black J. at p. 374 of the report: @”Further, Doe d. Graves v. Wells 9, like Rees d. Powell v. King 10 and Doe d. Dillon v. Parker 11, shows that in the case of a tenant for a term of years, such as the present defendants, a disclaimer of the landlord’s title must be a matter of record in order to create a forfeiture.”# Although it is clear that this observation is merely obiter and did not touch on anything which was at issue in the case, I would have the greatest respect for anything which the learned judge gave as his opinion as being the law. However, on looking at the cases referred to, I do not find that they support the proposition stated. They are authority for the undoubted requirement that in order to incur the forfeiture of a term of years, a disclaimer must be in writing. This rule appears in many cases; for example, in Doe d. Phillips v. Rollings 12 Maule J. states:@”Where a term of years is vested in a party it is contrary to the statute of frauds to allow the term to be divested out of him by matter of parol.”#
For the sake of completeness I should perhaps mention that at a relatively late date a special application of the forfeiture rule came to be recognised, viz., that where a tenant from year to year disclaimed the title of his landlord he could be ejected without the necessity of serving a notice to quit. The cases exemplifying this special application of the rule contain dicta which are again confusing when applied to other cases of forfeiture. There is, however, nothing in any of these cases that invalidates my conception of the law as set out earlier in this judgment.
If I am correct in my view of the law, its application in the present case presents no difficulty. The defendant has clearly and unambiguously and in writing denied the plaintiff’s title as lessor in respect of the portion of the demised premises coloured blue and hatched on the guide plan. She has stated that the vendors hold this portion of the premises under the lease of 1933 from the Pembroke Estate, and she seeks to bind the purchaser of the premises to assume and admit that the map on the plaintiff’s lease is erroneous. This denies the plaintiff’s title and sets up an adverse title. It is also calculated to cause the plaintiff the practical difficulty of getting a purchaser under these conditions of sale to accept the plaintiff as landlord during the continuance of the term, and as reversioner at its termination. Accordingly, the plaintiff was entitled to forfeit the defendant’s interest in the premises and is entitled to possession.
In feudal law such a forfeiture would have extended to the whole lease. Because the modern relationship of landlord and tenant is merely contractual, the forfeiture extends only to the portion of the demised premises in respect of which there has been a disclaimer of the plaintiff’s title, namely, that portion of the premises demised by the lease of 1946 which is coloured blue and hatched on the guide map or plan mentioned in the conditions of sale.
The defendant appealed to the Supreme Court from the judgment and order of the High Court. The appeal was heard on the 18th and 19th June, 1974. by FitzGerald C.J., Henchy and Griffin JJ.
R. Keane S.C. (with him P. J. Geraghty) for the defendant:
A tenant is estopped from disputing his landlord’s title in ejectment proceedings, but the interest of a lessee for a term of years can only be forfeited by the lessee’s specific denial of the lessor’s title appearing on the record of the court: Gowrie Park Utility Society Ltd. v. Fitzgerald 13; Wallace v. Daly & Co. Ltd. 14 [He also referred to Doe d. Graves v. Wells 15] It is not sufficient to ground a forfeiture to show that the tenant has merely put the landlord on proof of his title; the tenant must positively and deliberately assert an adverse title: Warner v. Sampson 16; Wisbech St. Mary Parish Council v. Lilley 17; Doe d. Ellerbrock v. Flynn 18 [He also referred to Rees d.
Powell v. King 19; Doe d. Dillon v. Parker 20; Doe d. Whitehead v. Pittman 21; Doe d. Phillips v. Rollings 22; Doe d. Lewis v. Cawdor 23; Hunt v. Allgood 24; Jones v. Mills 25, Doe d. Calvert v. Frowd 26; Doe d. Gray v. Stanion 27; Doe d. Williams v. Cooper 28; Ackland v. Lutley 29; Throgmorton v. Whelpdale 30; Doe d. Williams v. Pasquali 31; Doe d. Jefferies v. Whittick 32; Doe d. Davies v. Evans 33; Doe d. Lansdell v. Gower 34; Vivian v. Moat 35; Doe d. Grubb v. Grubb 36; Doe d. Price v. Price 37 and the Conveyancing and Law of Property Act, 1881, s. 14]
G. E. Gill S.C. (with him J. N. Garland ) for the plaintiff:
The medieval doctrine that the denial by a lessee of his lessor’s title involved a forfeiture was modified in the 18th century when the chancery courts granted relief against forfeiture in cases where the lessor’s title was denied only in the sense of being put to proof. In this case there was not a mere technical denial of that type but the plaintiff’s title to the land coloured blue on the map was repeatedly denied and the defendant’s title to that land was asserted unequivocally. These are sufficient to ground a forfeiture even though the denial was directed only to part of the lands demised. [He referred to Doe d. Phipps v. Gowen 38; Doe d. Maddock v. Lynes 39; Wisbech St. Mary Parish Council v. Lilley 40; Warner v. Sampson 41: Wallace v. Daly & Co. Ltd. 42; Doe d. Graves v. Wells 43: and Furlong on Landlord and Tenant (1869) Vol. 1, p. 578]
Cur. adv. vult.
The Chief Justice died on the 17th October, 1974, without having delivered judgment. The parties agreed to be bound by the judgments of the other two members of the Court.
Henchy J.
20th January 1975
In 1971 the Irish Sisters of Charity put up for sale the complex of buildings constituting St. Vincent’s Hospital, St. Stephen’s Green, Dublin. Those buildings had become vacant when the hospital moved to new premises. It was decided that the sale would be by tender. A brochure was printed and circulated and it gave particulars of the property and set out the general conditions of sale. Amongst the people to whom the brochure was sent was the plaintiff. It was sent to him as a matter of courtesy because he owns the fee simple estate in No. 60 St. Stephen’s Green, one of the buildings being sold, and it was thought that he might be interested in tendering for the leasehold estate which was being sold.
The defendant’s interest in No. 60 arises under a lease of the 29th August, 1946. By that lease the plaintiff demised the property known as No. 60 St. Stephen’s Green (as more particularly delineated on a map endorsed on the lease) to six lessees for the term of 30 years from the 15th July, 1945, at the yearly rent of £295. The lessees were apparently trustees of the Irish Sisters of Charity and the defendant, as the sole survivor of them, has become entitled to the lessees’ interest.
When the plaintiff got the brochure, he noticed that it was intended that the purchaser would be bound to accept that the map endorsed on the lease of 1946 was wrong. The brochure said, in effect, that a piece of ground, measuring some 30′ by 50′ and situated at the back of No. 60 St. Stephen’s Green, was erroneously included in the lease of 1946, and that the vendors held that piece of ground under a lease of the 12th July, 1933, from the Earl of Pembroke for the term of 10,000 years at the yearly rent of one peppercorn. The plaintiff’s solicitor took the matter up forthwith; he claimed that his client’s title as lessor was being disclaimed and he threatened proceedings unless the vendors dropped their claim to hold the questioned piece of ground under the lease from the Earl of Pembroke. An acrimonious and unyielding correspondence followed, resulting in the present proceedings in which the plaintiff claims, primarily, possession of the whole of the property demised by the lease of 1946 and, alternatively, possession of the piece of ground which the defendant says was erroneously included in the map endorsed on the lease of 1946. The basis of the claim is that the defendant has worked a forfeiture by disclaiming her lessor’s title. The claim succeeded in the High Court, for Mr. Justice Butler held that there had been such a disclaimer and that it had effected a forfeiture; but he limited the forfeiture to the disputed piece of ground. From that order the defendant now appeals to this Court.
It goes without question that the defendant, through her agents, has clearly and repeatedly asserted in writing, and has sought to bind a purchaser to the same conclusion, that the plaintiff erroneously included the disputed area in the lease of 1946. While that conduct may possibly not damnify the plaintiff during the currency of the lease, it is calculated to put part of the property demised outside the reach of the plaintiff’s reversion. It is an unequivocal denial of the plaintiff’s title to part of the property demised. Furthermore, although made bona fide, it would seem to be an unjustified denial: but it would be wrong to express a concluded opinion to that effect in the absence of the Earl of Pembroke who may possibly wish to claim, under the lease of 1933, a reversion in the disputed area.
Where a lessee for a term of years asserts in writing that the lessor erroneously included a particular area in the property demised, does such denial of the lessor’s title work a forfeiture of the lease? That is the central question in this case.
The legal rules governing forfeiture of a lease by disclaimer of the lessor’s title derive from the feudal law of medieval England. It is said that forfeiture of this kind may be occasioned by act in pais (i.e., an act done without legal proceedings) or by matter of record. The legal history of forfeiture by matter of record is summarised in the judgment of Lord Denning M.R. in Warner v. Sampson. 44 Forfeiture by the record does not arise in this case, so there is no need to consider which version of the law on that kind of forfeiture should now be accepted as correct by this Court in the light of the conflicting judgments in both Warner v. Sampson 44 and Wallace v. Daly & Co. Ltd. 45
The law of forfeiture by act in pais does not always appear clear or coherent in either the text-books or the cases. This is largely due to a failure to appreciate that the law has distinguished tenancies for fixed terms from periodic tenancies for the purpose of this kind of disclaimer. In the case of a periodic tenancy, if the tenant impugns the landlord’s title he runs the risk that the landlord may proceed to have him ejected without notice to quit, on the ground that the tenant’s disclaimer of title is to be treated as a determination of the tenancy: per Lord Denman C.J. in Doe d. Graves v. Wells 46 and per Sir Raymond Evershed in Wisbech St. Mary Parish Council v. Lilley. 47 But as to leases for a term certain, whatever the law of forfeiture by act in pais may have been in its feudal origins, the only reported case in modern times of forfeiture of a term of years by actin pais is Doe d. Ellerbrock v. Flynn 48 which turned on the fraud of the tenant in delivering up the possession of the premises and of the lease to a person claiming under a hostile title: see Doe d. Graves v. Wells 49; perBlack J. at p. 374 of the report of Wallace v. Daly & Co. Ltd. 50; and De Moleyns’s Landowner’s and Agent’s Practical Guide (8th ed., vol. I, p. 460). Indeed, Lord Denning M.R. went so far as to say in Warner v. Sampson 51 at p. 316 of the report that @”there is no room for any implied condition that (the tenant) is not to dispute the landlord’s title, either on the record or off it.”# Leaving aside forfeiture by the record (because it does not arise in this case), I agree that there is no room in the modern law of landlord and tenant for forfeiture of a lease by act in pais. No example of it is to be found in the reports since at least 1834 when Doe d. Ellerbrock v. Flynn 52 was decided. In that case a forfeiture was held to have been effected, but the case can be justified in its result as one where the lessee, by his fraudulent conduct in passing possession of the property and of the lease to a person who was asserting a title adverse to the lessor, was held to have thereby determined the term.
In Doe d. Graves v. Wells 49 at p. 435 of the report Lord Denman C.J. said of Doe d. Ellerbrock v. Flynn 52:
@”There it was thought that the tenant had betrayed his landlord’s interest by an act that might place him in a worse condition: if the case went farther than that, I should not think it maintainable. The other instances are cases either of disclaimer upon record, which admit of no doubt as to the nature of what is done, or of leases from year to year, in speaking of which the nature of the tenancy has been sometimes lost sight of, and the words ‘forfeiture’ and ‘disclaimer’ have been improperly applied. It may be fairly said, when a landlord brings an action to recover the possession from a defendant who has been his tenant from year to year, that evidence of a disclaimer of the landlord’s title by the tenant is evidence of the determination of the will of both parties, by which the duration of the tenancy, from its particular nature, was limited. But no case, I think, goes so far as the present: and I feel the danger of allowing an interest in law to be put an end to by mere words.”#
Furthermore, it was stated in Doe d. Graves v. Wells 49 by Patteson J. at p. 436 of the report that @”No case has been cited where a lease for a definite term has been forfeited by mere words.”# The reason for the absence of such cases would seem to be that even in the heyday of feudal tenures, mere words, whether spoken or written, would not have produced a forfeiture of a lease for a term certain. The only example of forfeiture by act in pais given in Bacon’s Abridgment (7th ed., vol. 4, p. 884) is where the tenant alienates the fee; and he says that even then forfeiture will not result if the conveyance is for any reason ineffective to convey the fee. This means that even if a repudiation of the lessor’s title appeared from the recitals or the habendum of the ineffective conveyance, a forfeiture would not be caused. Elsewhere (7th ed., vol. 3, p. 196) Bacon makes the position clear when he says:@”in our law these acts which plainly amount to a denial must be done in a court of record, to make them a forfeiture . . . and all other denials, that might be used by great lords for trepanning [i.e., ensnaring] their tenants, and for a pretence to seize their estates, by our law were rejected, for such convictions might be made by such great lords where there was no just cause.”# That is to say, forfeiture by mere words could arise only by matter of record, and the only recognized forfeiture by act in pais was by a tortious feoffment, whereby the tenant for years could convey the fee. With the abolition of tortious feoffments by s. 4 of the Real Property Act, 1845, there has been no place in the modern law of leaseholds for the operation of forfeiture by acts in pais.
Whatever may be the result of a disclaimer of the lessor’s title in pleadings (as to which I express no opinion), leases are now held by the courts to be terminated at the instance of a lessor on the ground of forfeiture only when the forfeiture arises from a provision expressly incorporated in the lease: per Lord Russell of Killowen (with whom Lord Goddard agreed) in Cricklewood Property & Investment Trust Ltd. v. Leighton’s Investment Trust Ltd. 53
Therefore, I would hold that the defendant’s conduct, even if it amounted to a disclaimer of the lessor’s title, would not have worked a forfeiture of the lease for there is no provision in the lease which could be relied on to support a forfeiture on that ground.
Even if a lease could be forfeited by mere disclaimer of the lessor’s title by the lessee, the question would arise whether what the defendant did in this case amounted to a disclaimer.
It is fundamental to the relationship of landlord and tenant that the tenant is estopped from denying (i.e., disclaiming) his landlord’s title. That is to say, he cannot assert the rights of a tenant and at the same time say, in effect, that there is no tenancy because the landlord had no title to grant the tenancy, or because the title is in himself or in someone else. He cannot have it both ways. If what he does is a repudiation of the relationship of landlord and tenant, then in the case of a periodic tenancy terminable by notice to quit, he is debarred from insisting on the necessity for a notice to quit if the landlord chooses to eject him without serving one. The reason is that a notice to quit is necessary only when there is an admitted tenancy, so when the tenant repudiates the existence of a tenancy he thereby admits that there is nothing to terminate and that a notice to quit is unnecessary. However, as I have pointed out, in the case of a lease for a fixed term not terminable by notice to quit, the estate of the lessee in the land is not defeasible by mere disclaimer of title on his part.
But even if a lease for a fixed term could be forfeited by disclaimeror if a notice to quit, in the case of a periodic tenancy, is rendered unnecessary because of a disclaimerthe disclaimer must be not of some particular aspect of the landlord’s title but of the landlord’s whole title as landlord.If it were otherwise, the tenant could question, only at the peril of forfeiture or ejectment, any error, large or small, in the extent of the land leased or let, or in the terms of the lease or tenancy, or in the extent of the rights or duties (such as the use of furniture, or trading restrictions) incorporated in the lease or tenancy. The landlord could question such mistakes with impunity and have them rectified, whereas the lessee or tenant would imperil his leasehold or tenancy if he raised them. If that were the law, it would be unequal and oppressive.
In my opinion, the law is correctly stated in Woodfall on Landlord and Tenant (27th ed., para. 2058) as follows:@”In order to make either a verbal or written disclaimer sufficient, it must amount to a direct repudiation of the relation of landlord and tenant, or to a distinct claim to hold possession of the estate upon a ground wholly inconsistent with that relation, which by necessary implication is a repudiation of it. A disclaimer, as the word imports, must be a renunciation by the party of his character of tenant. either by setting up a title in another or by claiming title in himself.”# What the lessee in the present case did was much less than that. What she wrote, through her agents, amounted to this:@”I acknowledge the plaintiff as my lessor under the lease of 1946 but I say that the lease erroneously included a piece of ground in the area intended to be demised: and I shall require the purchaser of my leasehold interest to accept that the lease is erroneous in that respect.”# That was far from being a repudiation of the relationship of landlord and tenant. It was in fact an affirmation of that relationship coupled with a proviso as to an error in the area demised.
It does not follow from this conclusion that a lessor is without remedy if the lessee groundlessly questions or repudiates some aspect of the lease. He may have the true position asserted and protected by bringing proceedings for a declaration or for an injunction or, in an appropriate case, for damages.
However, in the present case this aspect need not be looked at further since the plaintiff does not claim to have suffered any loss and since the defendant has given an undertaking to this Court not to repeat, during the currency of the lease of 1946, the allegation of error in that lease.
Two further points need to be made.
First, the authorities show that if the defendant’s conduct had produced a forfeiture it would have been a forfeiture of the lease in toto. The only case cited in which there was a forfeiture of part of the property held by the lessee was Doe d. Phipps v. Gowen 54, but in that case the piece of ground held to have been forfeited was not demised by the lease but was acquired by the lessee by adverse possession. There cannot be a forfeiture of part of the property demised; this follows as a matter of principle as well as of practicalities. The theory behind recovery of possession on the ground of forfeiture is that the lessor has elected to treat as void the lease which became voidable as a result of the lessee’s conduct. Once the court treats that election as legally effective. it treats the lease as being void in every respect. A partial avoidance of the lease is not possible. In practice it would involve a re-writing of the lease in terms of the area demised and, therefore, in terms of rent, covenants, conditions etc.thus producing a contractual relationship and a leasehold estate different from that envisaged by the parties and expressed in the lease.
Secondly, I think it right to point out that, unfortunately, some of the authorities on which this judgment is based were not opened by counsel in the High Court: if they had been, the judgment given in that court might well have been different.
I would allow the defendant’s appeal against the order for possession made in the High Court.
Griffin J.
I agree.